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ERP Implementation Life Cycle
A CASE STUDY FORM HM / AVTEC
Pre evaluation screening Package evaluation Project planning phase /
milestones Team / team leader finalization Vendor / implementation partner
finalization Requirements / gap analysis
Re Engineering System Configuration / System
Integration Implementation Team Training Data Migration / Verification System testing Trails / user walkthro’ End User Training GO LIVE Post implementation metrics
ERP Implementation Life Cycle
A CASE STUDY FORM HM / AVTEC
ENTERPRISE RESOURCE PLANNING –FOR HMPPDENTERPRISE RESOURCE PLANNING –FOR HMPPD A PERSPECTIVE ANALYSISA PERSPECTIVE ANALYSIS
HMPPD / MIS / 03-01-05SA
AGENDA
Executive Summary HM-PPD - Present I T Status , Issues and risks. Present Business Need / HM PPD Challenges Alternatives evaluation and related SWOT analysis Comparison in ERP and related SWOT analysis.
Oracle / Peoplesoft S A P
Action plan / CFT for Implementation Phased Implementation Methodology / suggested benefits Proposed Recommendation Proposed New System Arch.
HMPPD / MIS / 03-01-05SA
Executive Summary
Also the present Market Conditions demand a GLOBAL MARKET REACH,
supported by a SECURE, RELIABLE & STABLE IT ARCHITECTURE, with
very high availability. As such these are now a “ De-facto” organizational needs.
In the present context of global competition, it is imperative that Organization adapt current technology trends in Information Management for an improved Business AGILITY and competitive edge in Business.
Current Business Needs in I T :
Current Issues in I T in HM-PPD :
Obsolete I T Systems Hardware / Network / RDBMS Support for Database ( INGRES) withdrawn from Party M/s Mastek Manpower Crisis due to very high attrition.. reduced from 8nos to just 3 ( 70 % ) Support for Database Alpha SERVER being withdrawn by H P from Sep ’05 Overall a serious risk in ongoing maintenance of both Hardware& Database A clear ‘end-of-the-road’ crisis situation and needs immediate change / action
HMPPD / MIS / 03-01-05SA
Executive Summary
Evaluation & Comparisons were made between S A P and Peoplesoft E R P In the process of evaluation parties M/S ‘S A P’ and PEOPLESOFT had made presentations on Product features, ease of Configuration, Support Commitment implementation Cycle Time etc.
Emphasis was also laid on our Specific needs as TCO, Skills availability, adaptability Market leadership etc. A detailed RATING POINTS is enclosed
PPD had also initiated in house ERP development with Vendor M/s LINC SW & designed Prototype, which is now put on hold in view of ERP Evaluation.
Overall in terms of Rating comparison ‘ S A P ’ appear to have a clear EDGE as Compared to Peoplesoft ( Subject to negotiation of TCO ). Rating comparison & SWOT analysis are indicated separately,with tips on effective implementation.
Briefing on evaluation of alternative ERP :
HMPPD / MIS / 03-01-05SA
With the increasing Criticism on ERP Vendors on HIGH TCO , prices are
expected to be lesser than before and would be around one Crore for 60
Users License and also for Implementation. To this the cost of Network,
communication and Hardware is to be added which is expected to be
identical and Overall Cost Outlay is estimated to be around TWO Crores.
DETAILED PERSPECTIVE ANALYSIS IS ENCLOSED
Executive Summary
HMPPD / MIS / 03-01-05SA
General General High Manpower Attrition over 70 % Ingres crashed when a Export Sales was
being Invoiced. Declining enhancements ./ low uptime due to
Obsolescence.
Present Status & issues in Manpower / Database / Server
0
5
10
15
I II III IV V
Manpower
RDBMS ( Ingres)RDBMS ( Ingres) Product Related : Ingres is also not upgraded or updated for the past several months & \
GUI, web / XML features is not supported.. Service Related : There is no direct support from Mastek, Needs high AMC Cost
SERVER ( Dec Alpha 800)SERVER ( Dec Alpha 800) Dec Alpha, though a reliable architecture, is not OWNED by any one due to regular
take over and NOW OBSOLETE No clear road map for future growth .. Clearly “ end-of-the-road” situation.
Potential risks of down time, as Support is withdrawn from Sep’05.
POTENTIAL BUSINESS RISK … MANPOWER / HARDWARE / SOFTWARE
HMPPD / MIS / 03-01-05SA
The following are the focus areas as per HM PPD’s IT Strategy Development & Implementation of State of Art Web & XML enabled RDBMS
in a
current Business Server offering flexibility, Security & high reliability /
availability. Full Migration to GUI & OPEN STANDARDS of FRONT END ( IBM lBasic /
Web
sphere)
To fulfill this objective it is STRATEGICALLY IMPORTANT to have a stable, reliable & secure Database / Server Arch.with high availability, supporting web interface, XML / GUI / WEB technology, OLAP, Business Intelligence etc. The present database of INGRES does not support this.
POPULAR ERP AS ‘SAP ’ or ‘ PEOPLESOFT ‘ FULLY SUPPORT THIS BUSINESS NEED & I T STRATEGY
HM PPD – IT Strategy and Focus Areas
HMPPD / MIS / 03-01-05SA
Business Challenges clearly demand high AGILITY and response to
contain cost, improve cycle time, better retention of customers etc
through a better and Improved Business functionality with ERP.
Present Business Need
ERP in useUnder ImplEvaluationNo eRP
As indicated in this chart a VASTAs indicated in this chart a VASTMAJORITY HAD RESPONDED THATMAJORITY HAD RESPONDED THATERP is already in Use ( in SMB / MFG /ERP is already in Use ( in SMB / MFG /AUTO Sector )( SAP/ BAAN / Peoplesoft)AUTO Sector )( SAP/ BAAN / Peoplesoft)
HMPPD / MIS / 03-01-05SA
To meet Business Challenges VAST majority of Organizations in &
around HOSUR / BANGALORE have a better & Improved Business
functionality with ERP Applications Software.
Present Business Need
ERP in useUnder ImplEvaluationNo eRP
Percentage of Companies in Discrete MFGPercentage of Companies in Discrete MFGSector who have Implemnted ERP packageSector who have Implemnted ERP package
HMPPD / MIS / 03-01-05SA
Aberdeen report for SMB / AUTO sector summarizes following as key
Concerns
Present Business Need
• Pressure to REDUCE Operating Cots• Need to improve Productivity / Cycle Times• Concern for Topline growth / Customer growth / retention• Commoditization of Products and Services• Product Innovation / enhanced R & D• Improved Retention / Hiring of Key talents
Response as to what BEST STRATEGY is adapted to meet these needs
posed to Leading FORTUNE Companies, the responses are as under…
• 21 % responded that SIX SIGMA / LEAN MFG as key success Strategy• 49 % responded that ERP / CRM / SCM / SRM as key success Strategy• 30 % responded on other strategies
HMPPD / MIS / 03-01-05SA
The following are perceived as PPD issues / challenges in terms of I T solution
** High / Imbalanced Inventory / High operating Cost
** Productivity / Cycle time/ Lead time Improvement
** Cash to cash Cycle time high – High receivables
HM-PPD CHALLENGES
** Dynamic / immediate response to planning / changes in planning
** Dynamic response /compliance to STATUTORY / TAX related changes etc. THESE CHALLENGES ARE BEST MET BY ERP PACKAGE
The following is also a MAJOR CHALLENGE in ERP Implementation in HM-PPD
** With the BPR enabled Streamlined and proven Business Process, with
a clear Process MOPs, value added, quality certified processes /, etc., ADAPTABILITY of this process and CONFIGURATION of the Business Process in ERP System would be a complex task.
** We may need to Compromise some proven Functionality to fall in line with
the ERP package. However the matter MUST BE RESOLVED by related
Implementation Consultant
HMPPD / MIS / 03-01-05SA
Alternatives & SWOT analysis
Functionality / SWOT
In-House ERP
Packaged (SAP / Peoplesoft)
Remarks
High IntegrationWeb/ Net EnableWorkflow enabledWorld Class Bench Mark / Business
Process
Weak Strong Packaged ERP is better
T C O( total cost
of ownership) Strong Weak In House ERP
less by 75 %, in terms of TCO
BI Capability ( Business Intelligence)
Weak Strong Opportunity in SAP
Attrition Weak Weak Common ThreatOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESSOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESS
HMPPD / MIS / 03-01-05SA
0
10
20
30
40
50
60
S A P
Peoplesoft
OTHERS
Many benchmark comparisons and white papers rate S A P as superior product. Though they
are Criticized for high T C O. Overall they enjoy a high Market Share of nearly 50 % in
the
Engineering Industries / AUTO Sector as shown above.
RATING COMPARISON IN TERMS OF SWOT ANALYSIS IS ENCLOSED FOR SAP / Peoplesoft
ERP : Comparison between S A P / Peoplesoft
Source : CIO magazine
SA HMPPD / MIS / 03-01-05
ERP : S A P / Peoplesoft – ComparisonHMPPD/ HMCCP / HMPUP Team rating
Criteria KR ML SA VRB SKJ AKM Total Av SAP PS
Statutory Compliance - Response 9 10 9 9 9 9 55 9.2 7 5Support - Product 8 9 9 9 9 9 53 8.8 8 6Population - Market Share 10 9 7 8 7 9 50 8.3 8 2Implementation Time 8 8 9 8 9 7 49 8.2 8 8Total Cost of Ownership 8 8 9 6 8 5 44 7.3 7 8People / Skill availability / Attrition 8 6 8 6 6 6 40 6.7 8 5Ease of Configuration 7 7 7 6 7 5 39 6.5 7 8Product Enhancement 5 6 6 6 5 7 35 5.8 8 5Adaptability / Suitability to business 4 6 5 5 6 6 32 5.3 8 6
69 53
Implementation Partner: BS IBM BC
Track Record 5 8 7Skills availability 5 8 7Commitment 10 8 8Cost 8 5 7Total 28 29 29
SoftwareVoting by Team Members in 0-10 Scale
(KR- K Ramesh, ML- MurariLal, SA- S Appan,VRB-V Rajeshbabu,SKJ- S K Joseph,AKM-AK Mathur ) BS = Birlasoft , BC = Bristle Cone
HMPPD / MIS / 03-01-05
ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS
CRITERIA PARTICULARSS A P PeopleSoft REMARKS
a) STRENGTHTRACK RECORD 8 6 SAP Market presence for over 14 yrs.MARKET SHARE- AUTO SECTOR 8 6Bench mark World class PROCESS 8 7Product Enhancements 8 7
WEB Services / Web enabled process 7 8Peoplsoft developed in WEB SPHERE
SW24x7 World wide product support 8 6 SAP is rated better
b) WEAKNESSConfiguration Complexity 6 7 Peoplesoft Relatively simplerSkills Availability / Attrition 5 5 Common ProblemHIGH TCO / AMC COST 5 7 SAP is more expensive
SWOT ANALYSIS RATING ( 1 to 10 )
HMPPD / MIS / 03-01-05
ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS
c) OPPORTUNITY S A P Peoplesoft RemarksIndustry Vertical Solution 7 5 S A P is rated betterBusiness Intelligence feature 7 5 …do…
d) THREATAcquisition threat 8 2 Peoplesoft taken over by Oracle
Support withdrawal / product fading 8 5Peoplsoft product support withdrawal a
distinct possibility
AGGREGATE RATING 93 76
NETT RARING ( 1 to 10 SCALE) 7.2 5.8Source : IDC BENCH MARKS
HMPPD / MIS / 03-01-05
S A P (VS) PEOPLESOFT
** S A P has offered to transfer ‘FREE OF COST’ unutilized / excess licenses available
at ‘ HM-CCP’, to other divisions. This would be beneficial in terms of TCO.,and saves
COST.
** Recent take over of “PEOPLESOFT” by ORACLE, would mean that the Commitment for
Product Support and enhancement would suffer as ORACLE may pursue their own range
of “ORACLE ERP ‘. This would be a definite RISK in the long term period, for customers of
‘PEOPLESOFT’ and fading of this product range by ORACLE may be a distinct possibility.
We also have positive feedback in terms of Product Support Commitment by S A P
from HM-CCP and regular Product enhancements by S A P.
Overall the above SWOT analysis makes S A P a preferred choice.
ERP : S A P / Peoplesoft – Comparison / SWOT
HMPPD / MIS / 03-01-05
PRIMARILY ERP IMPLEMENTAION STARTS WITH THE
FOLLOWING BASIC NEEDS
a. TOP Management / Executive Sponsor / Commitment
b. CFT Formation – Various Function for FULL TIME
c. ERP BENEFITS / GOAL Targeting / Brain Storming
d. Partner selection – CFT to involve to target ERP goals
e. PHASED IMPLEMENTATION PROJECT PLANNING
( Indicated in the enclosed pages )
ERP : ACTION PLAN – CFT FOR IMPLEMENTATION
HMPPD / MIS / 03-01-05
Number of other white papers have clearly stated and users also have confirmed that
ERP System is a Company Wide, top driven Change Management Commitment. Over 66 % of ERP efforts are SOFT SKILLS as TEAM Commitment, TOP EXECUTIVE
support, CFT formation & FULL TIME Involvement in implementation,users commitment etc.
In summary various aspects of successful implementation based on survey is shown below
ERP : ACTION PLAN – CFT FOR IMPLEMENTATION
Source : META Group0 1 2 3 4 5 6 7 8 9 10
TOP MGMTSupport
CFT Commitment
Partner Skills
Vendor Support
TeamCommitment
User Involvemnt
ERP Success
HMPPD / MIS / 03-01-05
ERP : ACTION PLAN – CFT FOR IMPLEMENTATION
TRANSACTION /BUSINESS PROCESS
CONTROLS /REPORTING
Strategic Value
It is important to follow the above step FISRT and TARGET ERP GOALS for all the 3It is important to follow the above step FISRT and TARGET ERP GOALS for all the 3Spheres of Management Hierarchy…. for next 3 to 4 years Spheres of Management Hierarchy…. for next 3 to 4 years
CFT TO PLAN STREAMLINING PROCESSPRODUCTIVITY IMPROVEMENT / THRO’PUTTIME REDUCTION ETC & TARGET MANPOWERRATIONALISATION IN SUPPORT AREAS
CFT / HODS TO PLAN CONTROLS / TARGET REDUCEDINVENTORY / REDUCED OPERATING COSTS etc.
TOP MANAGEMENT TEAM TO PLAN STRATEGIC VALUEPROPOSITION WITH ERP.
Time = 3- 4 Yrs
Time = 1-2 Yrs
Time = 6M-1Yr
HMPPD / MIS / 03-01-05
PHASED IMPLEMENTATION METHODOLOGY / BENEFITS
Phased implementation methodology is the most successful approach to ensure effective and Timely ERP Implementation
As indicated in the CHART below a vast majority have implemented FINANCE and the MATERIALS first , though a few have attempted a BIGBANG approach
0
10
20
30
40
50
60
70
Finance/Matls
BIGBANG
OTHERS
HMPPD / MIS / 03-01-05
PHASED IMPLEMENTATION METHODOLOGY / BENEFITS Phased implementation methodology is briefly presented below
I Phase- Sponsor / Plan• Project Scoping/funding• Staffing / CFT Formation• Benefits Targeting • Change mgmnt approach
II Ph: Business Process Mapping
• Business Process Model/design.• Process / Data analysis• Process Modeling for ERP• Data Analysis
III Ph: SW Configuration
• Process Configuration • SW / Process Interfacing• Sizing / Data Cleansing/ Reporting
HMPPD / MIS / 03-01-05
PHASED IMPLEMENTATION METHODOLOGY / BENEFITS Phased implementation methodology is briefly presented below
IV Phase- Data Migration• Data Conversion / Testing• Interfacing / user testing• Integration Testing• End user training• Pre Production run
V Phase – GO LIVE
• HELP DESK .• INTERFACE SUPPORT• Process Improvements Monitor• Data Analysis / Benefits Monitor
HMPPD / MIS / 03-01-05
Conclusion / Recommendations
ERP / I T are presently ESSENTIAL INFRASTRUCTURE for a competitive Business Agility and dynamic response to Customers
It is imperative that we soon adapt a suitable ERP as a part of our overall Business Infrastructure, to stay competitive
In HM-PPD, where we already have a streamlined business process and a in-house ‘near ERP package’ in legacy System, CONFIGURATION of our process for ERP System may pose complex issues. However this is to be fully examined so that we do not compromise proven functionality
Over all the trends strongly suggest that ERP package is becoming quite essential. Propose System Arch. is enclosed
HMPPD / MIS / 03-01-05
Thin Thin ClientClient
Rich Rich ClientClient
BACKENDBACKENDDB2-RDBMSDB2-RDBMS
PROPOSED NEW ArchitecturePROPOSED NEW Architecture
ERP PACKAGE / MIDWARE
ERP PACKAGE / MIDWARE
ERP FRONT END IN WEB
ERP FRONT END IN WEB
BROWSER BROWSER
HMPPD / MIS / 03-01-05