CHAPTER 5

IMPLEMENTATION
STRATEGIES

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 Learning Objectives
• Acquire a greater knowledge base of ERP components
and how they work together to support business.
• Learn why third party products are needed to
operationally round out ERP system functionality and
the issues involved in using them.
• Appreciate the impact of an ERP implementation on
platform components such as data security, system
reliability, and sustainability.
• Understand implementation approaches, the
differences between vanilla and chocolate
implementations, and the short and long term impacts
on the system and company.

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 Preview

• A start-up process involves assessing the business

environment, culture, and skills of the staff and
“readiness” of the company.
• Early in the project, open and honest assessments are
critical to project planning
• It is often said that the ERP software is the inexpensive
component of an implementation—other surrounding
systems components and resources cost more.
• With any ERP implementation strategy, all the
implementation components need to be identified and
planned.
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 ERP Components

• Hardware
– An ERP system will require a powerful set of servers for
development, testing, and production environments.

• Key Resources
– Servers. High-end multiprocessor systems, several gigabytes
of main memory and several terabytes of secondary storage

– Clients. People accessing ERP systems (e.g., end-users, IT

support staff, and developers)

– Peripherals. Print servers, printers, back-up power supply

equipment, and networking hardware

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 ERP Components (Cont’d)

• Software
– A set of operating instructions and logic called programs that
control and direct the computer hardware to perform its
functions.

• Key Components
– System Software. Operating system platform (e.g., Microsoft
Windows Server, Linux, and Sun Solaris)

– Database Management System (DBMS). (SAP/R3 works with

IBM-DB2, Oracle, Microsoft SQL)

– Application Software. Project management software,

development software, remote access software, and automated
software for monitoring system traffic, virus protection, etc.

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Figure 5-1 Typical ERP Architecture

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Table 5-1 Software Components with
Oracle/PeopleSoft ERP

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 ERP Components (Cont’d)
• People Resources
– End-users. Employees, clients, vendors, and others who will
ultimately use the system

– IT specialists. Database administrators, IT operations support,

developers, change management, trainers, and others in IT

– The project manager. Puts together a harmonious team, works

with top management in getting support and resources for the
project, and champion the system and its benefits to the end-
users

• ERP implementation team includes various sub-teams

from business or functional areas, change management,
development, data migration, and system support.
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 ERP and Virtualization

• A virtual machine (VM) server technology can be

described as providing a “technique to run multiple and
isolated virtual servers on a single physical device, thus
optimizing hardware usage.”
• Each virtual server that is installed in the same physical
server operates under its own OS independently of the
other VMs present
• The two more common models used for mission critical
application are known as
– Hardware virtualization
– Paravirtualization
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 ERP Vendors and Virtualization

• Microsoft: The two virtualization choices available are

Microsoft Virtual Server and Microsoft Virtual PC.
“Microsoft does not test or support its software running
together with non-Microsoft virtualization software”
• Oracle: Same as Microsoft. Oracle VM uses para-
virtualization architecture based on the Xen open-source
technology that brings with it both Linux and Windows
support
• SAP: Strategy does not dictate what software customers
can use to virtualize applications. They provide customers
with tools, code tweaks, and support needed to make sure
their SAP virtualization projects go smoothly.
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 Benefits of Virtualization
• Enhanced hardware utilization allowing an organization to
consolidate underutilized servers
• Makes provisioning and deploying more agile.
• Through consolidation, virtualization can lower total cost
of operations TCO at the data center by the following:
– Deferred purchase of new servers
– Smaller data center footprint
– Lower maintenance costs
– Lower power, ventilation, cooling, rack, and cabling requirements
– Lower disaster recovery costs
– Reduced server deployment costs
• Enhances business continuity and availability
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 Drawbacks of Virtualization

• Tendency to try to squeeze more performance out of a

physical server by creating too many virtual machines
leading to significant concerns when the server is
operating at peak loads
• Security- If a hacker compromises the security of the
hypervisor, he or she might get access to all virtual
machines running on the host server

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 Third Party Products

• Add-on software components either to make the system

operational or to add missing functionality.
• Integration with ERP
– Integration defined as the sharing of data and data elements
directly with the ERP system without data redundancy.
• Strategic Partners
– Assist in addressing integration and interface issues with third
party products
• Middleware
– Assists with the development of reporting databases that use
extract translate and load tools
• Support- Third party product support

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 Database Requirements
• For an ERP system to perform up to expectations, the
update or transactional component and the reporting
component must respond in a timely fashion.
• Large ERP system implementations require a robust
relational database system (Oracle, DB2, Sybase,
Microsoft SQL).
• Selecting a relational database
– Availability of software applications
– Availability of skilled, trained technical staff
– Overall functionality of the database itself
• Staffing and database Administration
– Options include the use of full time staff and consultants.

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 ERP Approaches

• Governance
– Governance should outline and define committees and
workgroups that are responsible for the different components of
the implementation, their interaction and decision making.
– Components
• Technical development
• Hardware and software installation
• Functional components
• Communications and reporting
• Change management
• Project management
• Project owners and sponsors
• Budget management
• Issue escalation process

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 Roles and Responsibilities

• Owners (Consisting of Senior Management)—

Determine overall policy, budget, and scope of the
project.
• Project Executive—Oversees project activities,
provides broad project oversight, resolves policy level
issues, and ensures that the project stays within scope.
• Steering Committee—Oversee the project’s efforts and
ensure appropriate leadership.
• Application Steward—Works with the other business
owners to develop an overall business direction of the
system, developing consensus, and resolving functional
issues raised to the steering committee.

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 Roles and Responsibilities (Cont’d)

• Chairperson—Oversee the activities of the steering

committee, ensuring that the committee functions in
accordance with the overall project oversight. This
includes budget, resources, deliverables, risk, and
expectations management.
• Project Management Office—Consists of the project
executive, business and technical project manager(s),
and the implementation partner. Manage the day-to-day
aspects of the project.

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 Roles and Responsibilities (Cont’d)

• Project Teams—Provide direction and ERP application

knowledge with respect to business process design,
configuration, conversion, testing, training, reporting,
and implementation. The following teams will exist:
– Cross-functional component team
– Functional component teams
– Technical Infrastructure team
– Development team
– Change management team
– Conversion team
– Reporting team

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 Roles and Responsibilities (Cont’d)
• Project Team Leads—Provide leadership and overall
direction for the implementation, ensuring the quality of
deliverables and adherence to the project plan and
milestones.

– The project team leads will inform the project managers of any and all
issues that are identified by their respective project team.

• Cross Functional Team—The integration team will consist of

the module or project team leads from the business modules
and the development leads.

– This group will meet as needed to discuss and resolve cross-module

issues.

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 Sample Set of Meetings

• Project Sponsors Meeting

• Steering Committee Meeting
• Project Management Office Meeting
• Module or Project Leads Meeting
• Module or Project Team Status Meeting
• Issues Meeting
• Cross-Functional Module Meeting
• Database Planning Meeting

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 Implementation Methodology

• When a system implementation does not have a well-

defined methodology, deadlines will likely be missed,
budgets overspent, and the functionality may not meet
the client’s requirements.

• ERP system implementations are very risky, but a well-

defined project methodology will assist in managing
those risks.

• The selected methodology should be able to address all

components for the entire project including project start-
up through system stabilization

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Figure 5-2 Sample Project Methodology

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 Vanilla Implementation

• A vanilla implementation is when the company chooses

not to modify or customize the system, but instead to
change business practices to fit the system.

• Reasons to consider Vanilla Implementation.

– Businesses with relatively straightforward business practices that
are not unique
– Businesses that are not skilled or experienced at building or
changing systems
– For a company using a purchased ERP system where the
financial component is critical for reporting
– All of a company’s branches are running the same system in a
single instance, and entering and retrieving data in a similar
fashion
– For a competitive advantage, it is important to know the ability of
what and where things are around the world with the business.

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 Modifying an ERP

• Businesses that have highly skilled IT developers and a

proven process for managing modifications can choose
to change the system to match their processes
• Benefits
– A single-system instance is easier to maintain and support.
– Assessing organizational change along with modifying the
system to meet the needs of the business will help to minimize
risk.
• Drawbacks
– If a system is modified, each modification will need to be
analyzed in light of the upgrade to see if it needs to be
incorporated in the upgrade or removed.
– An upgrade can sometimes turn into a re-implementation, which
requires more resources and time.
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 Platform Issues

• Servers
– Servers that make up the infrastructure will need to grow as the
system grows and expands with enough storage to ensure data
is quickly retrievable.
• Network
– Businesses need a reliable and secure network in place.
• Security
– Several components must be installed and implemented to
ensure that the ERP system is secure from unauthorized
access.
• Disaster Recovery and Business Continuity
– Planning for a disaster and providing business continuity is a
part of every ERP implementation.
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 Implications for Management
• An implemented ERP system can create opportunities for a
business to grow and change for the better.

• Decisions around the hardware, software, governance,

methodology, and level of modifications need to be based
on the goals set out for the purchase of the ERP system.

• Two initial management decisions

– Use of an implementation methodology
– Whether or not to modify the system

• Management must decide on whether or not to customize

prior to the start of the implementation process and it must
be communicated to all on the project.
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 Summary

• Many components make up an ERP system. The

software, as well as the surrounding operational
software and third party software are needed to ensure
that the business can accomplish its goals.
• ERPs are all about change, both to business flows and,
more importantly, to employees making it very high risk.
• Managing the risk throughout the project with a proven
implementation methodology is key to being successful.
• One key decision to make before the implementation is
whether or not to modify the system, change business
processes, or use some combination of modification and
business change.

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 Summary (Cont’d)

Hardware Software
•Application servers •Operating system
•Database servers •Database management system
•Web servers •ERP system
•Personal computers •Software development
•Storage devices •System performance
•Printers •Virus protection
•Networking equipment •Report distribution
•Uninterruptible power supply •Batch run control
•Software version control

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 Review Questions

1. What are the components of an ERP system?

2. Why would a company choose to implement an ERP?
3. What are third-party products and why are they
needed?
4. What is an implementation methodology and why is it
important in ERP implementations?
5. What are the pros and cons of implementing a system
without customization?
6. Why are there differences between a transactional and
reporting database?
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Publishing as Prentice Hall

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