Chapter 8: Managing An ERP Project

Enterprise Resource Planning, 1st Edition by Mary Sumner
Chapter 8: Managing an ERP Project
Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner
8-1
Objectives
Acknowledge the importance of project management and control Examine the process of organizational change
8-2
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
8-3
Factors Causing Information Systems Project Failures

Poor technical methods Communication failures Poor leadership Initial evaluation of project
8-4
8-5
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
8-6
Risk Factors, continued

User involvement
Lack of commitment Ineffective communication Conflicts Inadequate familiarity with technologies Size and structure Control functions Societal norms Continue pouring resources into sinking ships
8-7
Project management

Project escalation
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
8-8
Managing Large-Scale Projects

MRP or ERP
Package implementation differs from custom implementation
Vendor participation User skills and capabilities Project champion Communication with stakeholders
Management commitment Training in MRP Good project management

8-9
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
Risk management
8-10
8-11
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
8-12
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
8-13
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
8-14
8-15
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 Had project implementation problems Dow had strong leadership and project champion Was able to adjust scope and maintain control Fostered open communications
8-16
Dow

Featured Article: FoxMeyers 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 FoxMeyers failure due to technology failure or business failure?
8-17
Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continued
Nations 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
8-18
Featured Article: FoxMeyers 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 SAPs 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
8-19
Featured Article: FoxMeyers 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

8-20
Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continued
FoxMeyer strategies
High volume Low price Anticipated savings from new computer system Wanted to win market share by further price-cutting Hoped new system would be more efficient, but did not improve processes
8-21
Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continued FoxMeyer got major new client
Out of capacity of mainframe Issues on balancing system traffic Unisys-based management system eventually failed Information wasnt being received timely FoxMeyer suffered losses in transferring inventory to new centers Customers received incorrect shipments New customer didnt deliver expected volume FoxMeyer overspent
8-22
Summary
A number of factors will effect the success or failure of a systems project
Operational methods and techniques Business management and style Leadership and communications
Risk factors effecting projects must be considered

Organizational factors, management support, software design, the levels of user involvement, and the scope and size of the project itself Implementation risks for technologies, the organization, and human resource
8-23
Summary, continued
Success in ERP projects includes factoring in
Consideration of customizations, use of external consultants, management of supplier relationships, establishing metrics, and change management Project-related concerns Technological changes, user training, and management requirements
8-24

Chapter 8: Managing An ERP Project

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Chapter 8: Managing An ERP Project

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Enterprise Resource Planning, 1st Edition by Mary Sumner

Chapter 8: Managing an ERP Project

Factors Influencing Information Systems Project Success

Factors Causing Information Systems Project Failures

Risk Factors, continued

Human resource factors

Managing Large-Scale Projects

Management commitment Training in MRP Good project management

Managing ERP Projects

Management support Commitment to change

Factors in Successful ERP Projects

Use of external consultants

Supplier relationship management

Additional Factors in the Success of a Project

Management reporting requirements

FoxMeyer versus Dow Chemical

Nations fourth largest pharmaceutical distributor

Warehouse system from McHugh Software International

Added complexities to project Functional holes in systems

Risk factors effecting projects must be considered

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