Enterprise Resource Planning, 1st Edition by Mary Sumner Chapter 8: Managing an ERP Project © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-1/24 Objectives • • Acknowledge the importance of project management and control Examine the process of organizational change © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-2/24 Factors Influencing Information Systems Project Success • • • • • Number of modifications Effective communications Authority for project implementation Business management Ability to generate additional funds to cover implementation © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-3/24 Factors Causing Information Systems Project Failures • • • • Poor technical methods Communication failures Poor leadership Initial evaluation of project © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-4/24 © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-5/24 Risk Factors • Organizational factors – – – – – • Changes in scope Sufficiency of resources Magnitude of potential loss Departmental conflicts User experience Management support – – • Changing requirements and scope Lack of commitment Software design – – Developing wrong functions, wrong user interface Problems with outsourced components © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-6/24 Risk Factors, continued • User involvement – – – – • Project management – – • Lack of commitment Ineffective communication Conflicts Inadequate familiarity with technologies Size and structure Control functions Project escalation – – Societal norms Continue pouring resources into sinking ships © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-7/24 Implementation Risks • Technology – Consistencies with current infrastructure • Organizational – Customization increases risks – Redesign of business processes to fit package decreases risk • Human resource factors – IT staff skills and expertise • Project size © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-8/24 Managing Large-Scale Projects • MRP or ERP – Package implementation differs from custom implementation • • Vendor participation User skills and capabilities – Management commitment • • Project champion Communication with stakeholders – Training in MRP – Good project management © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-9/24 Managing ERP Projects • Implementation factors – Re-engineering business processes – Changing corporate culture – Project team • Include business analysts on project team – Management support – Commitment to change ã Risk management â Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-10/24 © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-11/24 Factors in Successful ERP Projects • Customization – – • Increases time and cost BPR advantage from “best practices” adoptions lost Use of external consultants – – • Offer expertise in cross-functional business processes Problems arise when internal IT department not involved Supplier relationship management – • Need effective relationships to facilitate and monitor contracts Change management – – • People are resistant to change Organizational culture fostering open communications Business measures – Create specific metrics at start of project © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-12/24 Project-Related Factors • • • • • Project division into subprojects Project leader with proven track record Project focus on user needs instead of technology Project champion Slack time in project schedule © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-13/24 Additional Factors in the Success of a Project • User training – Focus on business, not just technical – Critical • Management reporting requirements – May need to add query and reporting tools • Technological challenges – Data conversion – Interface development © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-14/24 © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-15/24 FoxMeyer versus Dow Chemical • FoxMeyer – – – – – • Project went over budget because of new client Implemented two new systems at same time Technical issues with the ERP software No open communications Unrealistic expectations on ROI Dow – – – – Had project implementation problems Dow had strong leadership and project champion Was able to adjust scope and maintain control Fostered open communications © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-16/24 Featured Article: FoxMeyer’s Project Was a Disaster Was the Company Too Aggressive or Was It Misled? • • • • Was FoxMeyer misled? What strategies could have been put into place to avoid the project disaster? What business misjudgments occurred? Was FoxMeyer’s failure due to technology failure or business failure? © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-17/24 Featured Article: FoxMeyer’s Project Was a Disaster Was the Company Too Aggressive or Was It Misled?, continued • Nation’s fourth largest pharmaceutical distributor – 1990s engaged in enterprise-wide software and warehouse automation project – Filed Chapter 11 in 1996 • Claimed to be misled by SAP, Anderson Consulting, Pinnacle Automation – Claimed vendors oversold capabilities – Computer integration problems topped $100 million – Vendors blame management © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-18/24 Featured Article: FoxMeyer’s Project Was a Disaster Was the Company Too Aggressive or Was It Misled?, continued • Background – FoxMeyer had orders for over 300,000 items per day, anticipated much growth • – – – – Processing hundreds of thousands of transactions each day Old system was Unisys mainframe Wanted scalable client/server system Tested SAP’s software on both DEC and HP against benchmarks Implementations scheduled by Andersen for 18 months • Modules to be implemented in 2-3 months – – Unrealistic – could take up to 12 months All modules fast-tracked © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-19/24 Featured Article: FoxMeyer’s Project Was a Disaster Was the Company Too Aggressive or Was It Misled?, continued – Two systems for most important business systems • SAP supplied the accounting and manufacturing software – Claims volume was issue • Warehouse system from McHugh Software International – Purchased through Pinnacle » Pinnacle also supplied some hardware • • Added complexities to project Functional holes in systems © Prentice Hall, 2005: Enterprise Resource Planning, st Edition by Mary Sumner 8-20/24