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What is customization in ERP?

Customization is the job of fitting the ERP software to meet the demands of a particular organization.

This would mean the mapping of the organizational structures, processes & environment of the

organization into the corresponding model of the organization that is embedded in the ERP software. In

other words, it is a mapping of the real world into the model world of the particular ERP software. Thestructure and processes represent one part of customization; the creation of master data, input-output

forms, validations, reports, queries, formats, authorization, backup / restore procedures, data

administration procedures, disaster recovery processes etc., represent the full gamut of customization.

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What is the ERP life cycle?

The set of activities through which ERP is implemented in an organization constitutes the ERP life cycle.

This can be compared to the well developed System Development Life Cycle (SDLC) in the traditional

Structured System Analysis and Design (SSAD). Typical ERP project consists of the following steps:

Step 1: ERP readiness assessment

Step 2: Preparing the organization for ERP

Step 3: ERP Feasibility Study

Step 4: Process modelling and documenting the "AS IS" processes & "TO BE" processes (along with BPR)

Step 5: Detailed plan for ERP implementation (includes ERP software selection, selection of

implementation partners, implementation methodology - "Big Bang" or Modular Implementation - and

the final and precise extent of implementation)

Step 6: Detailed implementation including development, quality assurance and production system

Step 7: Preparing to "go live" including data migration

Step 8: Going live

Step 9: Performance assessment, documentation, training (continues in early stages also) and future

plans.

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Is there a good time to "go live"?

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Yes. Most implementations of ERP include financial module. Every organization has a financial (fiscal)

year both for internal use as well as far legal / governmental consolidation. Since the account books

must be closed and financial reports prepared (including the balance sheet and the profit and loss

statement) for the financial year, most ERP implementations try to synchronize their "go live" date with

that of the financial year. (April 1 in India). If for some reason it cannot be on (April 1), many

organizations "go live" on October 1 at the end of the half-year. Technically ERP software doesn't

impose any restrictions. Any day is good enough to "go live" as long as it is not " tomorrow"!

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What is the role of implementation partner?

Implementation partners generally come from specialized ERP consulting houses that are generally

outside the organization. Being experts in a particular area (materials, production, finance or

distribution), these experts from outside, not only bring software expertise with respect to particular

ERP software, but also bring the extra benefit from their vast prior experiences in other firms where

they would have implemented that particular ERP. Over the years, the implementation partners have

developed enough know-how in the form of templates for implementation. These templates

significantly reduce the cost and time of implementation and errors of implementation. Though

implementation consultants charge a high fee, they bring significant amount of value, thanks to their

prior experiences.

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Why do ERP consultants charge a high fee?

ERP consultants operate in the "high risk high reward" area. Contemporary ERP software are complex

pieces which need years to master. ERP consultants invest significant amount of time and effort, which

need to be rewarded. ERP Consultancy is also given to the highest levels of management often at the

level of CEO. CEO level consulting cannot come cheap. A well-implemented ERP can translate to crores

of rupees of saving for an organization justifying once again the high cost of ERP consultants. ERP

consultants also combine a rare combination of communication skill, domain knowledge and software

expertise, once again justifying the high cost. Last, but not the least, ERP sales are growing fast and the

demand for ERP consultants is all time high. The gap in supply-demand also explains the unusually high

cost of ERP consultants.

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What is the role of process-modeling tools ERP implementation?

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Process Modelling provides a means to map the organization processes and visualize it in a graphical

manner. This helps in communication, clarification and documentation of the "AS IS" and "TO BE"

processes. Process modelling can be used to reinforce the central theme of ERP, namely, a shift from

function orientation to process orientation.

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What is the drawback of over customization?

Customization is the process of fitting the chosen ERP software to the needs of a specific organization.

Whenever the processes represented in the ERP software differ significantly from the processes used by

the firm one has two options. First is to build the organizational process into the ERP software through

customization. The second one is to change the practice followed by the firm to suit the process native

to the ERP software. Traditional common sense would force people to customize the software to suit

the individual demands of the organization. This leads to two problems. The first one arises out of thefact that any customization done locally is outside the core ERP software. Accordingly, the next release

of the ERP software would not support local customization. They have to be re-done by the end user for

the new release. Second the very purpose of ERP is to take advantage of the best practices in industry

that come embedded with the ERP software. By over customizing the implementers would deprive the

benefit of world - class practice to the organization that is implementing ERP.

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What are the three dominant approaches to ERP implementation?

The three dominant approaches to ERP implementation are "big bang", location-wise and module-wise

implementation. In the big bang approach the organization decides to implement all relevant modules,

for example - Financials, Logistics & HR- all at the same time. This has the advantage of getting the full

benefit of the integrated software across all functions of the organization. However there is a risk of the

implementation getting out of control. In "Location-wise" implementation, the organization chooses a

specific location, say, the head office, one of the new plants etc. The choice could be based on better

infrastructure, better IT culture, more co-operative set of users, higher level of automation etc. In

"module-wise" implementation individual modules are taken up for implementation in a phased manner

depending on the criticality of applications. Once again a module taken up for implementation can beimplemented across all locations or just one location. Later they can be rolled out to other locations.

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What is 'big bang' approach to ERP?

This has already been explained elsewhere. See previous answer.

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ERP being integrated software does one benefit by implementing only specific modules?

Yes. The full benefit of ERP would accrue if all the ERP modules are implemented. However many

organizations implement ERP only in those functions, which are, considered to be of strategic

importance. Some of the modules, though they appear to be limited to specific functions, in fact

integrate with many other functions indirectly. For example finance module primarily targets the

accounting and finance functions. However the accounts payable module address all the material

purchases and in turn impacts the entire materials management functions. Many more examples can be

quoted to reinforce our viewpoint. The process orientation of ERP software definitely contributes to a

better management of the organization. Even partial implementation of the ERP therefore leads to

significant benefits.

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Why are "financials", the first module implemented in many Indian ERP implementations?

Financial modules provide the basic pulse of an organization. It also impacts all other modules.

Successful implementations of financials show up immediately reinforcing the faith of an organization in

ERP. Other modules cannot be implemented without the financial module in place. All these factors

explain the fact that financial modules are taken up first.

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Why do consultants recommend changing business practice to suit the ERP software rather than

customizing the software to every user needs?

A key contribution of ERP software is the bundled business process knowledge that come along with ERP

software. These processes have evolved over the past two decades of ERP implementation in some of

the most well-managed corporations around the world. By adapting to those processes that have

proved successful in some of the finest corporations around the world, an organization implementing

ERP would get the advantage of these "best of the breed" practices. That is the reason behind the

consultant recommendations.

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I have a large MIS department with outstanding programmers and analysis - Should I create my own

ERP?

Unless your line of Business is so unusual that no existing ERP software available in the market meets

your needs you should not attempt to develop your own ERP software. The reason why ERP software

has been so successful is due to the deficiencies of software developed in house by MIS departments.

IS/IT staff who generally constitutes the MIS department lack business and process orientation. The

success of ERP is due to the fact that ERP software development teams have business knowledge. In

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house software development has also proved to be more costly and time consuming compared to the

implementation of packaged ERP software. No MIS department can afford to hire hundreds, if not

thousands of professionals dedicated to software development.You should attempt ERP software

development only if you want to address the general business needs of an enterprise through a

standard ERP software product, not to meet the requirements of your organization. As you can readily

see these are entirely different games. A software giant Microsoft decided to use SAP R/3 rather than

develop it in-house!

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Is there a benchmarking tool to fine tune ERP performance?

Every ERP vendor provides performance guidelines that can be used by system administrators to fine

tune performance. Some of them are very comprehensive and address fine-tuning at the application,

database, operating system, processor and even the network level. Other ERP vendors provide tools

that can leverage the leading edge database tuning, operating system tuning and network performance

tuning tools.

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How to prepare an organization for ERP implementation?

There is no easy magic through which one can prepare an organization for ERP implementation.

Exposing the top management to the benefits of ERP through the real world case studies, sharing of

experience by other corporations that have successfully implemented ERP and creation of awareness is

the first step. Convincing the top management to use a high risk, high reward scheme such as ERP is a

major challenge. Almost all the members of the organization should get the excitement about ERP

project implementation. Communicating and sharing of the ERP vision is the most important

organizational preparation for a successful ERP implementation.

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What is an ERP Project team?

ERP project team would be charged with the responsibility of implementing the ERP for the specific

organization. A champion, who is skilled in communication and understands the organization well

should head the ERP team. The leader must be well accepted by the most employees of the

organization. The leader also must be a person who can keep the motivation level of the

implementation team at fairly high levels throughout the several months of implementation. The

implementation team would consist of dozens of people. There will be a number of teams for each of

the functional area with every team consisting of key users and IT personnel to provide technology

support.

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Who are the project champions?

Project champions (for the crore processes that are taken up for implementation) would be those

individuals who would take the ownership of implementation. They are expected to provide the

leadership so as to sustain the trials and tribulations of ERP implementation.

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What does "going live" mean?

After many months of implementation plan every organization would decide a particular date when

they would shift from their legacy system to the ERP system. Up to that time the ERP software would be

under development followed by testing and quality assurance. Once by ERP implementation team feels

convinced that the development is complete and testing is satisfactory, they would decide to "go live".

In a sense "go live" date marks the end of ERP project completion. Generally most ERP project "go live"

on the starting of the fiscal/ financial year, namely April 1 in India.

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How is "data migration" managed for ERP implementation?

To complete the ERP implementation one would need to migrate master data, including customer

master, material master, budget head, employee list etc from legacy systems. Large number of earlier

transaction (pending transaction for completion, archived transaction for analysis) would also be

transported to the ERP system. In a typical corporation these would call for significant amount of data

transport. Often they many not be available in machine-readable form. Often manual data will have

inconsistencies such as incorrect code numbers, multiple code numbers to represent the same item,

misspellings etc that needs data cleansing. Data cleansing itself could be a major activity. Even if data isavailable in machine-readable form, it may be distributed across heterogeneous hardware and software

platforms. Reasonable amount of effort must be spent in reconciling such data. Special utilities are

available for data migration both from ERP vendors and third party vendors. For the Indian IT industry

data migration itself could be a major business opportunity.

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For ERP implementation across multiple location does one need dedicated communication channels like

leased lines/ V SAT terminals?

Many ERP implementation sites that are geographically distributed need reliable communication linksfor on-line transaction processing. In the absence of public data network in India, most organizations are

forced to go for VSAT networks and leased line circuits in India.

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What is the main reason for end users accepting ERP?

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ERP speaks the end user language more than any other software piece. ERP implementation had been

successful whenever it was driven by business goals and not IT goals. ERP vendors have been successful

in convincing the end users to take ERP decisions. Rarely IT departments take the decision to go far ERP.

The ERP training and skills to use ERP can be developed by end users quite easily. All these together

have generated substantial user acceptance of ERP.

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