In the last few years we have seen two different implementation methodologies emerge. When buying a new ERP system you should make sure you understand the methodology proposed by the vendor or re-seller and its pro’s and con’s.
The first methodology is the Traditional methodology since it has been around from the early 1980’s. This methodology uses the following phases:
- Planning. The project managers (customer and vendor) work together to form the implementation team, and plan the project based on a methodology the project scope and available resources. A kickoff meeting involves the entire team to review the project plan and communicate the company objectives for the project.
- Education. The vendor consultants educate the implementation team. In this methodology this is a very important step. Most advocates of this methodology believe the education of the core team is the key to the customer’s self sufficiency and a successful project.
- Design/Configuration. The consultants assist the implementation team in designing, configuring and setting up the new system and business processes. The vendor consultants support the implementation team and the team does the work.
- Conference Room Pilot. The implementation team tests the system in multiple Conference Room Pilots (CRP). The final CRP becomes a simulated “go live” At the end of the phase the system is accepted by the team as ready to go live. The vendor consultants support the team’s effort. By the end of this phase the customer team has established a complete understanding of the new system.
- Cutover Activities. The implementation team plans the cutover process, and trains the rest of the end users on the new system. The implementation team performs the training and the vendor consultants support the team.
- Go Live Support. The implementation team supports the end user in the use of the new system. The implementation team provides real time support. The vendor consultants are also on site during the first month to support the quick resolution of new problems as they arise.
The second methodology is the Turnkey methodology because it is clearly a vendor lead method. This methodology uses the following phases:
- Planning. The activities are the same in this phase as the traditional methodology, with the vendor consultant taking a bigger role in the construction of the plan. Also the vendor project manager is planning the vendor consultants time since they are involved full time in the next four phases of the project.
- Discovery/Setup/Configuration. In this phase we see the major difference in the two methodologies In this phase the vendor consultants review the current process, design/configure/setup of the new processes, and perform an initial test with minimal involvement of the customer team. The customer implementation team is only involved in discovery by providing input on current processes. In essence the vendor team is providing a “turnkey” approach to system design and the setup of the new system.
- Prototype Review/Education. In this phase the vendor team delivers the new system to the customer implementation team and begins to educate the customer team through prototype demonstration workshops. In these reviews the customer team is getting educated on the new system and the capabilities of the product. In the sessions the vendor team identifies issues and adjust the new system as needed. At the end of this phase the customer team accepts the design of the new system.
- Conference Room Pilot. In this phase the vendor team leads the customer team through several phases of a conference room pilot (CRP). The last CRP becomes a simulated “go live”. When this CRP is completed the customer team accepts the new system and is ready to go live.
- Cutover Activities. The implementation team plans the cutover process, and trains the rest of the end users on the new system. The implementation team performs the training and the vendor consultants support the team.
- Go Live Support. The implementation team supports the end user in the use of the new system. The implementation team provides real time support. The vendor consultants are also on site during the first month to support the quick resolution of new problems as they arise.
This “turnkey” methodology is being used by SAP with their All in One (AI1) industry templates, and by Oracle with their Accelerator templates. The pre configured industry templates and this methodology allow them to offer a low cost implementation to compete with the Tier II vendors.
Here are the pro’s and cons of each method are:
Traditional
Pro
- Customer lead process. The customer takes responsibility for the project
- Requires less vendor consulting support
- Puts responsibility on the business team to understand the system
- Requires the customer to gain self sufficiency in knowledge and use of the ERP system
Con
- Requires a high level of ERP competency within the customer team
- Requires a greater commitment of time from the customer team
Turnkey
Pro
- Can yield a faster implementation path (16 weeks compared to 26 to 40 weeks)
- Company must adopt vendor’s best practice processes
Con
- The total cost of ownership will be higher over time
- Can result in higher on going support costs
- Puts a responsibility on the vendor consultants to learn the customer’s business
- The customer places a greater reliance on the vendor for a successful implementation
Choosing the right methodology for your company is important.
If your company has strong ERP competency, and the majority of your team has had previous ERP implementation experience (within 5 years), than the traditional model can apply. This approach places the responsibility for a success on your team.
If your company does not have experienced ERP users and the users have been using an older legacy system for many years, the turnkey model may be your best choice. This model is also attractive to companies that have downsized and have lean staff that will struggle with the added burden of implementing a new ERP system.
The trend is up for successful ERP implementations, but customer management needs to be very careful in staffing the project, choosing the right project manager, hiring the right vendor consultants, and selecting the right implementation methodology.