Erp implementation transition strategies

TRANSITION STRATEGIES
ERP IMPLEMENTATION
9/12/20171 Prof.K.D.Zinjurde

INTRODUCTION
 The most important factor that decides the
success of and ERP implementation is the
transition strategy.
 Selecting and implementing a new ERP system
and parallel changes in process is a complex.
 Regardless (without considering) of your size and
perceived resources, an ERP implementation is
that should be approached with a great careful
planning.
 Following are the five reasons for poor results :

Five Reasons For Poor Results
 The implementation or transition strategy chosen
was not the one suited for the organization
 The implementation took much longer than
expected.
 The implementation preparation activities were
done poorly, if at all.
 People were not well prepared to accept and
operate with the new system.
 The cost to implement was much greater than
anticipated(expected).

Transition Strategies
 An ERP Implementation Strategy determines how the
ERP will be installed.
 Different companies may install same ERP software
in totally different process.
 The same company may implement different ERP
software in different ERP software in the same
approach.
 There are four basic transition strategies as follows:
1. Big bang
2. Phase
3. Parallel
4. Process line
5. Hybrid

Transition Strategies Conti..
 These techniques focus on the strategy of how to
make the transition from a legacy system to a
new ERP system.
 The selection of the transition strategy that is best
suited for each organization is difficult as a wrong
strategy can result in a failed or flawed
implementation.
 There are three pillars commonly used for
implementing ERP system.
 Process
 People
 Technology
 Failure to use any one of these or failure to use
them in the best possible manner can result in9/12/20175 Prof.K.D.Zinjurde

BIG BANK STRATEGY
 In this strategy organization plan a grand ERP
implementation for their companies.
 The installation of ERP systems of all modules
happens across the entire organization at once.
 The big bang approach promised to reduce the
integration cost in the condition of thorough(strict)
and careful execution.
 This method dominated early ERP implementations
and it partially contributed to the higher rate of
failure in ERP implementation.
 But today, not many companies dare to attempt it.

BIG BANK STRATEGY Conti..
 In big bang strategy the company moves from the
existing or legacy (traditional) system to the new
ERP system on a specific dateLegacy
System
New ERP
System
Finance Finance
Past Go Live
Date
Futur
e
Manufacturing Manufacturing
Human Resource Human Resource
Materials Management Materials Management
Quality Management Quality Management
Plant Maintenance Plant Maintenance
Marketing Marketing
Sales and Distribution Sales and Distribution
Fig 1. Big Bang Transition 9/12/20177 Prof.K.D.Zinjurde

 In big bang strategy the company moves from the
existing or legacy (traditional) system to the new
ERP system on a specific date shown in above fig.
 The big bang strategy is seldom used and often not
recommended by ERP vendors, systems
integrators and service providers.
 Many companies struggle in deciding whether the
big bang approach is the right choice for their
company.
 One of the reasons given for not using the big bang
approach is that it consumes too many resources to
support the go-live of the ERP system.
 The high failure rates have been found using the
big bang approach.

 Success in using the big bang strategy comes with
careful preparation and planning prior to using big
bang.
 It is not a question of whether the big bang is a
good approach for the ERP systems. The success
of the big bang strategy depends on how well an
organization plans and prepares itself prior to
implementation.
o Bridges
o Skyscrapers
o Satellites
o Space shuttles
o Fighter Planes
o Ships etc. all above are more complex project than9/12/20179 Prof.K.D.Zinjurde

 Advantages of Big Bang Strategy
1. The overall cost of implementation is less because no
interface program are required to communicate between the
legacy system and the new ERP system.
2. Big bang eliminates all of the sequencing and decision-
making of implementing one module at a time.
3. It is well designed for rapid implementations.
4. It creates a strong central focus for all the ERP team
members.
5. It can avoid complex integration issues. 9/12/201710 Prof.K.D.Zinjurde

 Disadvantages of Big Bang Strategy
1. The amount of time and cost of careful planning and
preparation for the go live
2. Bottleneck of critical resources, like lack of funds, non
availability of professionals, etc. during the implementation
can result in failed implementation.
3. The recovery process, if something has gone wrong is more
difficult in this approach; it is a do-it-right-the-first-time
project.
4. The consequences of a failed implementation can range

PHASED IMPLEMENTATION
 The phased approach implements one functional module at
a time, in sequential order.
 The phased approach also known as modular, functional
and sequential approach.
 The method of modular implementation is one ERP module
at one time.
 This limits the scope of implementation usually to one
functional department.
 This approach suits companies that do not share many
common processes across dept. or business units.9/12/201712 Prof.K.D.Zinjurde

PHASED IMPLEMENTATION Conti..
Legacy System New ERP System
Past Futur
e
Go Live Date
Finance
Manufacturing
Human Resources
Materials Management
Quality Management
Plant Maintenance
Marketing
Sales and Distribution
Finance
Manufacturing
Human Resources
Quality Management
Plant Maintenance
Marketing
Sales and Distribution
Phased ERP Implementation 9/12/201713 Prof.K.D.Zinjurde

 Independent modules of ERP systems are installed in each
unit while integration of ERP modules takes place at a later
stage of the project.
 This has been the most commonly used methodology of ERP
implementation.
 Modular implementation reduces the risk of installation,
customization and operation of ERP systems by reducing the
scope of the implementation
 The successful implementation of one module can benefit the
overall success of an ERP project. 9/12/201714 Prof.K.D.Zinjurde

 These interface programs are required to bridge the gap
between the legacy ERP system and the new ERP system
until the new ERP system becomes fully functional.
 Example, when the financial modules go live on the new ERP
software while the inventory module still remain active on the
legacy ERP system.
 The use of interface and conversion programs the financial
activity that occurs in the inventory modules is exported to the
new financial system in a format that can be understood by
the new ERP system.

 Advantages of Phased Approach
1. It allows companies to implement on functional
module at a time before another is attempted.
2. Many companies feel more comfortable taking this
stepping stone approach
3. The total number of resources needed at any one
given point in time may be less
4. Additional flexibility may also be gained in the
scheduling of people.

 Disadvantages of Phased Approach
1. This approach needs a large amount of technical
resources. Technical resources are usually needed
in this kind of approach because of the conversion
and interface programs that are required between
the two ERP system
2. The overall cost and time to implement is usually
higher using this approach
3. Higher turnover rate can also be expected among
key ERP team members because of the lengthy
durations that usually accompany this approach9/12/201717 Prof.K.D.Zinjurde

PARALLEL IMPLEMENTATION
Legacy System New ERP System
Finance
Human Resource
Manufacturing
Marketing
Sales & Distribution
Quality Management
Plant Maintenance
Finance
Manufacturing
Human Resource
Quality Management
Plant Maintenance
Marketing
Sales & Distribution
PAST FUTURE
GO LIVE DATE
LEGACY
SHUTDOWN

PARALLEL IMPLEMENTATION Conti..
 The parallel approach keeps both the legacy
system and the new ERP System active
simultaneously for a length of time.
 The amount of time the systems are both in
operation ranges from one day to several months.
 Portions of the same functional business areas
(including software) such as finance,
manufacturing, marketing etc. are operating at the
same time for the legacy and ERP systems.
 An advantage to the parallel approach is that it
has good recovery options in case something
goes wrong.
 Because both the legacy system and the new
ERP system are in operation at the same time for
a particular module, the company’s business9/12/201719 Prof.K.D.Zinjurde

 The parallel approach provides an exact number
comparison in real world conditions.
 The parallel approach consumes more resources
than other techniques during the transition.
 All functional interaction with the legacy system
must also be duplicated exactly in the new ERP
system.
 Confusion often erupts when people do not
interact with both systems in exactly the same
way
 This is often detected upon inspection of ending
period balances when they are found to be
different.
 Once the errors are detected, the process of
investigation begins to determine whether the

 The parallel approach is ideally suited for mission
critical situations that cannot survive a major
malfunction of an ERP system. Like banking,
insurance, pharmaceutical, or medical companies.
 The parallel approach does not work well in
situations where the legacy system has an
expiration limitation that is within the needed
amount of time for the system to operate in
parallel mode.
 Example of this was the year 2000 situation. They
could not continue beyond December 31 1999
their expiration date. It would of course, be
impossible to run in parallel mode beyond this
date.

PROCESSED IMPLEMENTATION
Legacy System-
Product 1
New ERP System-
Product 1
Past Go Live Product
1
Futur
e
Legacy System-
Product 2
New ERP System-
Product 1
Go Live Product
2
Finance Finance
Finance Finance
Human Resource Human Resource
Human Resource Human ResourceMaterials
Management
Materials
Management
Marketing Marketing
Marketing Marketing
Sales & Distribution Sales & Distribution
Sales & Distribution Sales & Distribution

PROCESSED IMPLEMENTATION Cont..
 The process line strategy is following the strategy of
mini big bang and parallel implementation.
 However, it breaks the implementation strategy to
manage parallel product lines.
 Example, a company making two products where
both products are manufactured in the same plant
and few resources are shared between them
 This approach is utilized by many small to mid-sized
companies, which tend to have less complex internal
business processes.
 In processed strategy firstly all modules small parts
(Go Live Product 1) are transformed from old system
to new ERP System at once i.e. mini big bang.

PROCESSED IMPLEMENTATION Cont..
 But company will not depends fully on big bang
strategy so simultaneously follow the Parallel
Transition Strategy till the Go Live Product 2 as
shown in above figure.
 This initial success victory helps to build
organizational trust in the new ERP system,
increasing its overall probability of success.
 Upon the completion of the first process line,
resource is then loaned to the more difficult and
challenging process line.

HYBRID TRANSITION STRATEGY
 The Hybrid Strategy is a combination of the
Phased, Parallel, and Processed Transition
Strategies.
 At the beginning of an ERP implementation it is
predicted whether to implement Hybrid or not.
 The complexity of a hybrid strategy varies
tremendously depending upon the situation.
 The concept of hybrid strategy is not necessarily
fixed over the implementation of an ERP system.
 It can changes as people learn more about the
software and project scope changes.

HYBRID TRANSITION STRATEGY Cont..
 Many implementations use hybrid strategies
because they are flexible in adapting to the
specific needs of the situation.
 It requires great deal of communication is
required, combined with strong leadership, for
these to be effective.
 Without intensive communication ERP team
members can abruptly lost the project.

Erp implementation transition strategies

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