Factors Of ERP Implementation Information Technology Essay
Cisco’s focus on completing the process without modifications brought clarity about the kind of modifications needed. The modifications were not viewed as showstoppers and a strategy was developed to keep the project moving.
Also the fact that the tests performed before Go-Live were not sufficient. In spite of this, it is the forward thinking of cisco that allowed problems to be resolved without additional expenditure for the project. Both Oracle and other hardware vendors agreed to contracts for long-term functionality of the software and hardware and Because the contracts were based on promised capability, the vendors bared the costs of fixing the equipment. This formed the basis for the decrease in total project expenditure.
Another important reason was the support from the top management esspecially the CEO who made it clear to the organization how important this project was for CISCO thus having an organization wide support.
The most important reason however, that the project became successful was because of internal recruiting. The team consisted of the best business people. The company just did not rely on IT department, instead IT and business people worked together to meet the core objectives. It was very important to fill a sense of pride in the people associated to the project to attract the best people and company was largely successful in achieving that. Additionally company laid emphasis on involving the vendors and consultants even in the steering committee that helped bring focus into the project from all the stakeholders involved
Some of the smart moves that lead to the success of implementation project include:
Efficient Decision-Making- The company did not spend significant amounts of time debating. Some of the needs were immediately understood and company took and acted on those decisions very fast.
Focus on Core business – The company held its focus while in implementation towards manufacturing which was the core of operations
Strong Cross functional teams – The project was viewed as a Business relevant project rather than IT initiative. This helped broaden the perspective and bring in more participation.
Reputed Partner – KPMG was known to be building specific expertise around the topic and their knowledge helped Cisco identify the right vendor.
Committed vendor – Cisco rightly identified the main issue that this is the first major release of oracle which company wanted to use as the showcase and therefore it would be in the best interest of Oracle to pursue the success of the project.
Aggressive Implementation schedule – Cisco set extremely aggressive timelines that kept all the stakeholders on the vigil leading to timely identification of the issues and their resolution mechanisms.
Smart contract on Performance- Cisco entered the contracts on the guaranteed performance rather than the package.
Top Management Support- A defining moment for every project. ERP implementation was viewed as one of the strategic projects in 1994.
Focus on limited customization of the base package- Limited customization approach that could facilitate easier upgrades.
Project end date decided by Business Factors- so as to have least impact on the due course of business
Although there were many things that Cisco did right when it comes to implementation part, we feel that there are grounds/ potential risks that were overlooked by the company and yet it did not affect the project significantly. In this sense they were largely lucky for the following grounds:
Firstly Cisco chose the double Bang approach and went for complete implementation in one go. This could adversely affect the operations .There were temporary glitches but their size which was much smaller at the time of implementation gave them such flexibility.
They were able to achieve an overly aggressive implementation time line which everyone though unrealistic to start with.
They did not perform any cost benefit analysis to calculate the ROI. After a few years it turns out that they had immense cost savings due to ERP implementation but at that time no effort was made to understand this.
It was a first major release of oracle ERP solution. As a new software it could have been error prone. It proved to be relatively stable.
They did not test the data in a full proof manner, and in fact they tested the operations sequentially rather than simultaneously. However, this did not cost them due to the nature of the contract.
The cost/timeline predictions and the actual were much in line in spite of many roadblocks.
They did the due dilingence for the configurations in just 2 days, something that typically takes upto 6 months for implementation of this size and yet were able to achieve 80% accuracy. Cisco incorporated their existing tasks within their new ERP system, not framing the design system within carefully planned, desired processes.
The implementation team was organized in functionally rather than by process. Although this led to some initial problems but eventually everything was quite stable by Q4 of 1995 as predicted.
Could Cisco replicate the success of this project in future?
Cisco’s chance of replicating the implementation is very slim to none because many different variables that can partially be attributed to luck (as explained above), fell into place during the first project. The strong relationships formed for the project were the result of good timing in the sense that Oracle was really looking for a big win and signed an unusual contact based on performance amidst tight time lines and with high levels of interest. A large part of the success of the project came from the timing and this would be nearly impossible to replicate as Oracle nd most other vendors have become sizeable now. Another part of the relationships that could not be replicated was the cost of the overall implementation. Some of Cisco’s partners used many of their best resources in this project, but did not charge Cisco for that use. This enabled for the systems price to stay on the smaller side. Again, without the relationships and timing, the cost of implementation and resources would be difficult to replicate.
Lastly, the size of the company was then quite favorable to go the implementation. Due to enormous growth of the organization , the organizational mass will come into play in undertaking such projects and will cause significant problems in future.
Also , Cisco’s approach would be difficult for other companies to reproduce. The main reason for this would be the fact that the management of the company was willing to spend almost any necessary amount for the implementation. Without strong backing from upper management a large project could not make it off the ground. Some parts of the approach that could work for companies are discussed in the opening paragraphs of the analysis section. Overall, the possibility for the any company to replicate the approach of Cisco’s implementation would be difficult.
Reasons Tektronix implemented ERP in stages
The concept of waves allowed the employees to see the progress happening and that kept them energized and ready to take on the forthcoming challenges.
The implementation of each wave allowed the team to learn from the past mistakes and get both technical as well as managerial skills to be developed within the team
This snowball approach enabled the team to validate the business model and to de-risk from the issues arising out of doing a big –bang rollout. This also causes minimal disruption to the business at any point of time.
In using the approach of staged implementation they could separate the technical issues from the actual business related problems. This greatly reduces the risk of a complex implementation
Regular feedback can be provided and reviews of the plan and schedule after each phase can be given. This encourages learning from previous experience and mistakes
The skill set of the team get improvised and they become more efficient in planning for the future phases and their judgment and foresight improves greatly
Stage wise reporting provides the modularity to manage and report on the various issues which is critical to ensure the top management commitment to the project.
Since the project is implemented in phases the timelines also are managed effectively. Prioritizing the tasks and ensuring that the objectives are kept in mind while making the selections are possible in this approach
The critical success factors for Tektronix ERP implementation
The vision and leadership of the project : Neun was a visionary leader in the sense that he could anticipate that changes need to be done and that too quickly in order to turnaround the organization and turn it profitable. The vision statement that he came up with was very simple and each one in the organization could understand it easily and associate themselves with it. The changes that he wanted to bring about was not incremental but was radically different from the previous systems that were being followed. His execution of this project proves his mantle as a visionary leader.
Backing from the Top Management: The task of implementing this new system was changing every aspect of the way things were being done. From an originally functional way to a process oriented way needed a change to the culture of the company which is very difficult to implement. Questions regarding the authority of the person in-charge would have caused this initiative to fail miserably. Instead the way in which the higher levels handled this by giving unquestioned control to Neun and his decisions provided a critical factor.
The initiative was not treated as only a Technology change: The criticality of the change was communicated in the right way and was seen to have no alternative and no short-cuts to this process. The rules were well defined and exceptions were not entertained. The benefits of getting the desired level of visibility into the day to day operations and the advantages were unambiguously defined. Hence the buy-in from the employees was assured and they didn’t have two minds to the adoption of the new processes.
Long term project Momentum: It is very crucial to keep up the employee morale for a long term project to ensure success. The phased approach helped the employees with short term wins and a sense of fulfillment. By combining the right skills the team as a whole along with the cross-functional experts and the business partners took ownership and responsibility for the success of the entire implementation.
Risks in the ERP implementation
Tektronix lacked the expertise and experience in implementing a project of this size. They overcame that by partnering with Aris and other consultants to provide them with the required expertise
All the key Players in each functional and geographic area were identified and their buy-in was ensured. They acted as negotiators when business change was needed. This resolved issues through a combination of technical and functional strengths.
The Implementation risks were handled by creating a thorough plan which was backed by the top management. All issues and obstacles were documented in great detail. They used this documentation to fully analyze the business and the actual need to focus on. They could identify the areas which were critical to the success of the implementation and the organization as a whole. The geographic spread of the businesses created additional challenges but they managed to find a common thread across all units and leverage that to create a model that could be used as the base for all their implementations.
Sharing of services and setup between all the units enabled them to further reduce the risk of having multiple setups and other dependencies that arise out of this. They shared AR, GL, Chart of Accounts and the same item master table which would be common for all the divisions.
Getting project buy in from each of the divisional leaders, as well as the IT department management was important to implement tough decisions like downsizing of the European employees, imposing English as the worldwide internal company language.
De-motivation risk in a long term project like this was managed by using the snowball approach. Each milestone was acknowledged and felicitated. This increased the confidence of the people working on the project.
Vendor management was carried out very strategically. They did not give an opportunity for the Vendor to blame anybody else as they ensured they created a network of Oracle consultants who could reach out to the product team and sort out issues arising in the application implementation. This also ensured that the latest patches and bug fixes would be made available at the earliest. This kind of team would take responsibility and work on the issue rather than just blaming someone else for the fault.
The Roll-out was timed well and the order in which they selected the divisions ensured they could de-risk any complex issues arising. First the US CPID was picked followed by US VND and finally US MBD. The language issues arising in localized implementations was kept to the end and ensured that they did not hamper the initial roll-out. Simultaneously they kept working on the approach to be followed in the most complex unit which had many products and was not dealing only with a couple of products which was easier to handle.
The company chose to buy a complete system instead of making it in-house. They thus did not have to deal with all issues of developing software. They realized it was not their core strength to build it at home and instead thought it better to leverage the external organization’s R&D efforts which would have yielded a better product over much iteration as they would have fixed all issues that arose in their previous implementations. They also chose a single ERP vendor instead of adopting a best of breed approach. This helped them to reduce support, maintenance and integration issues.
They deployed multiple instances to satisfy the objectives of different divisions. However they did not standardize unconditionally and chose to retain the specific customizations which had a competitive advantage for the business unit.
The company leveraged all the shared services to the maximum. It also provided a way of bringing in a common platform to compare the different business unit to evaluate their performance on certain aspects.
They decided to stay as plain vanilla as possible in order to further reduce any upgrade challenges. Customizations make maintenance and upgrades difficult. Only where it is a competitive advantage for the company would exceptions be made. This kind of a universal rule enabled them to enforce certain decisions which would have encountered significant resistance if taken on a case by case basis.
Tektronix chose to retain the same team on whom they had built their confidence and ensured a continuing Relationship. This further reduced the implementation risks and improved the execution. Defining the scope of the implementation was tough and instead of going with the fixed bid approach Tektronix chose to use a Time and Material approach in which they could select the type of resources to satisfy the roles required for the team at that point in time and also rotate the same resources for different task depending on the phase of implementation.
Overall Assessment of Tektronix ERP implementation
The ERP implementation at Tektronix seems successful and well managed. There were many right decisions taken to facilitate the success of the implementation however couple of additional points could have been considered in greater depth.
The decision to go with Oracle needed a proper justification. Need to evaluate the solution to embark on rather than jump straight in to Oracle ERP. Alternatives might also need to be considered besides using ERP.
The decision to Outsource needs to be evaluated from multiple perspectives. A dependence was created on Aris and other consultants for all the technical and functional knowledge and Tektronix employees handled only the business requirements. They however downplayed the knowledge transfer aspects which were required to de-risk the dependency on any particular organization providing the solution. Speed of execution would be achieved at the cost of staking the entire implementation.
Also Tektronix should have considered hiring some of the consultants as employees to ensure that the retention of knowledge is quick and also get some visibility into the technical aspects
Budget was not a factor at all. It is necessary to some extent to have focus on the job rather than the cost. But in this case there was no one entrusted the responsibility of justifying any expenses and have control on any of the expenses that were unwarranted. This kind of freedom could be misused and any advantages arising out of the act could be washed out in this manner. Tektronix was not in a good financial state and hence the risk associated with this approach was higher. The damage done by this implementation if it hadn’t been successful would be way over the limit where it could have been reversed.
Approach of using a standard way implementation across – The flexibility of the organization could be lost by imposing the standardization across all the units and could result in the organization being worse off. Any kind of creativity could be lost in this and all divisions would be forced to operate in a particular manner. While taking a decision of this magnitude we need to pay more attention to the details and hence the objective of speed of implementation could have adverse effect on the due diligence that need to have been done in every case.
How were the approaches taken by the 2 companies different:
Cisco Approach: CISCO Implementation is outlined by the fact that it was a big bang approach, a clear case of accelerated implementation. They are understood to have completed this project in nine months at estimated cost of $15 million. This exemplary success was made easy by the fact that they were much smaller then in 1994that gave them extra flexibility. Also they had a simpler Legacy system which they could look to replace. Complimenting this was the fact that at the time they were growing exponentially and and their legacy systems were not able to keep pace with the growth leading to outages as well. They did many things right to get the system selected, implemented, and stabilized in a relatively short period of time.
Tektronix Approach: Tektronix faced a bit different implementation challenge. As an older company, primarily a manufacturer of measurement instruments and color printers, they had a much more complex legacy environment compared to Cisco, Larger Variety of products and product families, and a more geographically distributed implementation rollout. In the light of the differences arising out the nature/size of businesses, Tektronix provides an excellent example of how functionally and geographically phased implementation can work.
Extra Information: As much as their implementation approaches, what sets these two companies apart is what they were able to do post-implementation. Cisco has been able to document billions of dollars in value that stem, in large part, from their ability to build off a solid, integrated information technology infrastructure. Tektronix was able to leverage their new infrastructure not only to improve data visibility across the enterprise, but also to clearly identify operating relationships in support of their strategy for business acquisition and divestiture.
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