Critical decisions for
ERP integration:
Small business issues
International Journal of Information Management(2009)
Management Information System
指導教授 林娟娟教授
資碩專一
98756011 李怡夢
98756003 顏臺良
Outline
Abstract
ERP
B2BI
Small Business
SB VS ERP
Methodology
ERP framework
Conclusions
Abstract
Motivation
SME significant challenges
ERP Expensive and risky
Recommend
Six critical decisions
Finding
Enhanced success of ERP
implementation
ERP
ERP introduction
Enterprise Resource planning
Integrate all information and processes
Unified database
IT infrastructure
ERP implements affects
Suppliers and customers
Expensive cost
ERP implements evaluate difficulty
necessary organizational changes
predicting the return on investment
ERP cost
ERP
ERP contributes
Standardization
Transparency
Globalization
Automating and integrating corporate
cross-functions
B2Bi
ERP next phase :B2Bi
Electronic document exchange in
small businesses vertical or horizontal
Vertical
Standard : RosettaNet
Horizontal
Standard : ebXML
Small Business
SB introduction
Backbone of the economy
Independently owned and operated
Not dominant in its field
Majority of personnel perform multiple
job functions
SB VS ERP
Small Business limited resources
Financial
Technical personnel
Technology
Lack of alignment of implementation
practices
Risk and cost
Methodology
Research methodology
Academic databases
ABI Inform
Academic Source Complete
Emerald
IEEE
Key terms
ERP implementation
Small business
Methodology (cont.)
Selection of the six critical decisions
Interviewee
Manufacturing sector
Had recently completed ERP
implementations
ERP framework
(Critical decisions for implementation)
Six critical decisions
Assumptions
Keep any customization to a minimum
Ensure that the business processes
directly supported by the software
package
Have an ERP package with an intuitive
and easy-to-use interface to minimize
training and user support costs
The cost of implementation
Definition of critical decisions
工作小組的組成(Program team structure)
實施的策略(Implementation strategy)
選擇過渡技術(Selection of transition
technique)
資料庫轉換策略(Database conversion
strategy)
風險管理策略 (Risk management strategy)
變更管理策略(Change management
strategy)
Program team structure
The team structure can be broken
down into four categories
Isolated Function, A-Team, and
Lightweight
Require fixed personnel on each function ,
financial and technical resources to maintain
Heavyweight
Flat management hierarchy
The highest chance
Alternative team structures
Method
Description
Advantages
Disadvantages
Isolated
function
Participants from each
functional area are
responsible for their
own implementation
and use of the software.
1. Resources of the
organization are
focused on the
implementation
2. They have the most
knowledge about their
business processes and
will be very
knowledgeable endusers later
1.insufficient
communication
between functional
groups
2.workflows that span
multiple functional
modules may be
incorrectly
implemented, or may
not be implemented
Lightweight
The project team
consists
1.Functional managers
2.Lead persons
3.A lightweight project
manager
Improved crossfunctional
communication through
regular project team
meetings
Conflicts are common
and it takes a long time
to resolve issues as
several participants
have to reach an
agreement.
Alternative team structures
Method
Description
Advantages
Disadvantages
*Heavyweight
A senior manager has
direct authority and
control over the ERP
project
Straight forward
communication
gives a clear sense
of direction.
Strategy turns
increasingly difficult to
use as the size and
complexity of the ERP
implementation
increases.
A-Team
This team structure is
similar to heavyweight
structure
1.A senior manager
manages the project team.
2.all the functional
managers are full time
members of the ERP team
The complete
authority to make
most of the
decisions at all
levels lies within
the team.
As decisions can be
made by the core team
without the need to
communicate with
other team members
there may be limited
buy-in for these
decisions
Implementation strategy
Seven generally deployed strategies
Breakneck
Star
Turnkey, Low Risk, and In-House
Not have the luxury of full time human
resources to an ERP implementation
Budget
Partner
Implementation strategies
Method
Description
Advantages
Disadvantages
Breakneck
Implement an ERP
solution on a low
budget very rapidly
The company has a
quick solution if
strategy works
A very high risk approach
which rarely works
Star
Do the right way with a
senior manager in
charge and dedicated
team members
The implementation
usually results faster
and cheaper
Full time resources are
needed
Turnkey
Subcontract to ERP
system integrators and
providers all ERP
implementation
activities.
1.The implementation
is done by
experienced people.
2.No internal resources
are needed
1.The configured product
does not match business
needs.
2.Outsiders cannot fully
understand the functional
specifications
In-house
Use only internal
The strategy generates
resources to implement cost savings coupled
the ERP system
with internal
ownership
1.An inexperienced team
requires a long time for
implementation
2.this turns out expensive
Implementation strategies(cont.)
Method
Description
Advantages
Disadvantages
Budget
Focus costs cutting by
limiting the scope of
the ERP project and
eliminating consultants
There is a perception
that this approach is
cheaper
A general lack of support
from senior management
produces lack of interest
on the project by the
users
Partner
Use both internal and
external resources. Split
the responsibility of the
ERP project
Partners complement
the strength of the
internal team and have
partial ownership of
the project
The implementation
usually takes longer due to
conflicts between the
supply chain partner
Low risk
Commit a high level of
resources with low
complexity and relax
milestones to minimize
High probability of
success
Implementation takes a
long time
Selection of transition technique
Four basic transition techniques
Big bang
entails substantial risk
Phased
Process lines
Usually lack multiple process lines
Parallel
limited resources for small business.
ERP transition techniques
Method
Description
Advantages
Disadvantages
Big Bang
new system go live at the
same time the legacy
system is taken offline
Costs are reduced since no
interface programs are
required
high failure rates
are common
Phased
One functional module at
a time is transitioned in
sequential order
1.Companies feel
comfortable implementing
one module at a time
2.the resources needed at
any given time are low
The transition
takes a long time.
Parallel
Both the legacy and the
new ERP systems operate
in parallel
Good recovery options are
available if any thing goes
wrong with the new system
Considerable
more resources
Process
line
1.in big bang fashion
2.only one process line at
a time
The experience gained from
doing one process line at
the time benefits the next
implementation
adds complexity
Database conversion strategy
Two basic data conversion methods
Electronic
Writing custom programs
Process is rapid
Verifiable Data is difficult
Manual
Judgments necessary during the conversion
Familiar with the new ERP system and
develop a sense
Risk management strategy
Three Risks
Small business location
Realities of small business
Company’s niche and company’s
management
Risk management strategy
Minimize internal politics and
resistance to change
Appointment of a heavyweight project
manager
Adopting a partner implementation
strategy to allow the internal team to
focus on strategic tasks
Change management strategy
The project manager, or champion,
should accept and deal with the
internal politics and resistance to
change rather than go into denial
Effective communications must be a
priority
Management should lay out the vision
of the company and explain the
expected benefits
Conclusions
Decision to install an ERP
Assigning a heavyweight project manager
Partnering with an external organization
with the requisite experience
Implementing the ERP package in a
phased manner
Adopting a predominantly manual
database conversion strategy
Proactively managing project risk and
internal change
Team structure
Transition technique
Risk management
Critical decisions
Number
Critical decisions
Number
Critical decisions
Number
Isolated function
0
Big Bang
0
Initial ERP cost
6
Lightweight
1
Phased
4
4
Heavyweight
4
Parallel
2
A-Team
1
Process line
0
Compatibility
with business
niche
Project scope
3
Implementation strategy
Database conversion
Change management
Critical decisions
Number
Critical decisions
Number
Critical decisions
Breakneck
0
Manual
5
Star
2
Electronic
1
Employee
2
awareness of ERP
Turnkey
0
In-house
1
Budget
0
Partner
3
Low-Risk
0
Number
Communication
by Project
Manager
4
Communication
by Executive
Management
3
Articulation of
ERP vision
2
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