Question

At Ozark, ERP implementation may be the answer to their challenges. The recent compromises in quality may turn customers away and towards competitor’s brands. Instead of rushing head-first into an ill-informed ERP decision, Ozark’s Leslie Daniels (CFO) and Raj Johnson (head of IT) came up with three proposals summarized here:

Ozark revenue is $600 Million, should Ozark choose proposal 1 over proposal 3? Must contain 300 words or more.

1.)    A full implementation of a new ERP system, fully committed IT upgrade, 9-18-month implementation with Raj’s IT implementation team. Estimated cost can exceed ten million dollars at the high end - five million at the low end.

2.)    Only implement select ERP system modules, a.k.a. going into ERP at a 50/50 decision. Leaves the door open for additional module implementations in the future, if needed. Avoids major cost of full ERP implementation.

3.)    Implement only best-of-breed packages for the weakest IT infrastructure processes. Each best-of-breed system costs $100,000 - $1,000,000. This option is cost effective and does not require lengthy implementations.

Answer 1

Ozark should go for proposal 3 rather than proposal 1.

Proposal 1 refers to Direct method of implementation. When a new system is implemented without any phased or pilot implementation, it is said to be direct. The old system is retired, and the new system goes live. Some major disadvantages of this system is that if you are not sure the system will work, this method of implementation may not be a good idea. To prepare the employees for a successful kickoff , the company will spend months converting and transferring data into the new system, as well as testing, training the staff. Full testing is difficult prior to going live.

Proposal 3 refers to Phased method of implementation. When small parts of the new system gradually replace small parts of the old system, the implementation method is said to be phased. It rolls your software out sequentially, gradually introducing the new system piece by piece.It involves breaking down the implementation by module, business unit, geographical area, or business priority. Major advantages under proposal 3 would be:

• Training can be completed in small parts
• A failure of the new system has minimal impact because it is only one small part
• Issues around scale can be addressed without major impact.
• The cost of implementation is low
• More time to adjust to changes
• More comprehensive incremental testing
• Complete takeover will be done only after the company is 100% sure about the new system

When a system implementation is poorly planned, there is an increased chance the system will fail. It all comes down to good planning. There is another real-world issue you should be aware of. There is a wide range of emotional reactions to change. Some users will welcome change, others will be uncertain, some will be openly hostile whilst others will attempt to sabotage it. The best implementation strategy for your company is one that balances the lowest cost with the lowest risk.