Phases in the ERP life cycle

Once an organization has selected an ERP system, it will use this system for several years. Surveys show that the first implementation project in an organization takes twenty months on average [FEI, 2002].

It takes considerable time before the benefits of ERP are visible: the impact of ERP on the financial performance of the organization is only realised ater several years [Hunton et al, 2003; Poston & Grabski,

2001]. after a first implementation, organization do not abolish their ERP lightly. As an example: SAP assumes that the relationship with a customer will last at least eight years ater the initial acquisition [Luijten, 2000]. In this long life cycle of ERP in an organization various phases can be distinguished.

Several authors have described the phases of an ERP life cycle [Sneller, 2004]. Although they all use their own definitions, their phasing methods are not fundamentally different. In this book the phases deined by Markus & Tanis [2000] will be used, because these have been used by various other authors. According to these authors, an organization that uses ERP can distinguish four phases: ex ante evaluation, configuration & roll out, go live, and onward & upward. In many cases, the combination of the first three phases, that is ex ante evaluation, configuration & roll out, and go live, is indicated as implementation; the remaining onward & upward phase is also know as the production or run phase. In Figure 5.1, the four phases are depicted graphically. In the remainder of this section, each phase will be described briefly, and an overview is given of methods that are available to manage each of the phases. Phase 1 is the ex ante evaluation. This phase is carried out prior to the other phases. In this phase, the direction is set for the further course of the implementation. A business case is created in which the objective and the approach for the implementation are described. On the basis of this business case, a go-no go decision can be made for the next phases of the implementation.

Although thousands of ERP implementations have been carried out worldwide, relatively few complete methods are available for the execution of an ERP ex ante evaluation. Neither ERP suppliers nor ERP implementation partners have published methods that satisfy even the most basic requirements. his is remarkable, because ERP can have a positive impact on the organisation, but it is also a costly, complex and risky operation. A well-structured approach for an implementation is therefore essential, and this starts with a thorough ex ante evaluation.

Phase 2 is the configuration & roll out. In this phase, the business logic is built into the ERP system: the best practices that the organization intends to use are configured, the system is localized where needed, and adaptations are programmed. Moreover, the conversion of data from existing systems into the new integrated database is prepared, and interfaces between the ERP system and other computer systems are developed. Finally, the future users of the ERP system are trained to prepare them for the execution of the tasks required once the ERP system has gone live.

Several methods are available for configuration & roll out of ERP. Both ERP suppliers and implementation partners often have detailed standards and guidelines that can be used to carry out the configuration & roll out. A well-known method developed by SAP is called Accelerated SAP (or: ASAP). In below Figure SAP describes a number of examples where the use of ASAP shortened the configuration & roll out phase considerably. An other method is Stepwise that was developed by the company Intention for the implementation of their ERP system Movex, and has by now been used for more than twenty years [Intentia, 2014]. Methods for configuration & roll out are often not suitable for all ERP systems; they have exclusively been developed for one specific ERP system.

Phase 3 is the go live, which is also known as shakedown or production start. In this phase the users start working with the ERP system for their daily work. The project team that has carried out the configuration

& roll out phase is gradually dissolved; the implementation partner finalizes its work and the application server provider assumes its responsibility for keeping the ERP system up and running.

In general, methods like ASAP and stepwise also comprise the go live phase of the ERP life cycle.

Phase 4 in the ERP life cycle is called onward & upward. This is the longest phase of the ERP life cycle. The largest part of the benefits of the ERP implementation will only be realized in this phase. During the onward & upward phase the system is kept up and running and the users are being supported. Within this phase, new implementations are carried out regularly: new modules are being implemented, new versions of the ERP system are being rolled out, or newly acquired subsidiaries start using the ERP system. Every project in the onward & upward phase has its own life cycle, with an ex ante evaluation, a configuration & roll out, and a go live phase. Methods that have been used in the initial implementation for these three phases can also be applied in the onward & upward phase.

The four phases of an ERP life cycle are not necessarily executed by each organization. They are also not always carried out in the above order. As an example, it is well possible that an organizations decides not to start configuration & roll out, because the ex ante evaluation shows that the required investment for the ERP system is prohibitive for an acceptable business case. It is also conceivable that a company carries out several go live phases, one for each manufacturing location, and thus executes several configurations and roll out phases in parallel.

With respect to implementation methods, this book focuses on the ex ante evaluation phase. This phase is crucial for the whole ERP life cycle. After all, an organization sets the scene for the whole ERP life cycle in the ex ante evaluation. It is also important that the organization makes up its own mind on the next phases of ERP independently and that therefore ERP suppliers and implementation partners with their potentially conflicting commercial interests keep a certain distance. In later phases organizations can use methods specifically suitable for the selected ERP system, such as ASAP or stepwise; as this book is not written for a specific ERP system, no methods for later phases are presented.

Before the next chapters, in which the focus will shift to ex ante evaluation, the remainder of this chapter is dedicated to four essential principles that have to be determined before the start of an ERP implementation. This is the preselection of potential suppliers, the sourcing basis between own employees and external implementation partners, the roll out strategy and the go live strategy.