chapter 8: managing an erp project

8/13/2019 Chapter 8: Managing an ERP Project

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Prentice Hall, 2005: Enterprise Resource Planning, 1stEdition by Mary Sumner 8-1

Enterprise Resource Planning, 1stEdition by Mary Sumner

Chapter 8:

Managing an ERP Project


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Objectives

Acknowledge the importance of projectmanagement and control

Examine the process of organizationalchange


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Factors Influencing InformationSystems Project Success

Number of modifications

Effective communications

Authority for project implementation Business management

Ability to generate additional funds to

cover implementation


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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


7/24 Prentice Hall, 2005: Enterprise Resource Planning, 1stEdition by Mary Sumner 8-7

Risk Factors, continued

User involvement Lack of commitment

Ineffective communication

Conflicts Inadequate familiarity with technologies

Project management Size and structure

Control functions

Project escalation Societal norms

Continue pouring resources into sinking ships



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



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


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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


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Factors in Successful ERPProjects

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


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Project-Related Factors

Project division into subprojects

Project leader with proven track record

Project focus on user needs instead oftechnology

Project champion

Slack time in project schedule


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Additional Factors in the Successof 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


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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

Feat red Article Fo Me ers Project Was


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Featured Article: FoxMeyers Project Was

a Disaster. Was the Company TooAggressive 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 totechnology failure or business failure?

F t d A ti l F M P j t W


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Featured Article: FoxMeyers Project Was a

Disaster. Was the Company Too Aggressive orWas It Misled?, continued

Nations fourth largest pharmaceuticaldistributor

1990s engaged in enterprise-wide

software and warehouse automationproject

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



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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 18months

Modules to be implemented in 2-3 months Unrealisticcould take up to 12 months All modules fast-tracked



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Two systems for most important businesssystems

SAP supplied the accounting and

manufacturing software Claims volume was issue

Warehouse system from McHugh SoftwareInternational

Purchased through Pinnacle Pinnacle also supplied some hardware

Added complexities to project

Functional holes in systems



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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 moreefficient, but did not improve processes



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FoxMeyer got major new client Out of capacity of mainframe

Issues on balancing system traffic

Unisys-based management system eventuallyfailed

Information wasnt being received timely

FoxMeyer suffered losses in transferringinventory to new centers

Customers received incorrect shipments

New customer didnt deliver expected volume

FoxMeyer overspent


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Summary

A number of factors will effect the successor failure of a systems project

Operational methods and techniques Business management and style Leadership and communications

Risk factors effecting projects must beconsidered

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


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Prentice Hall 2005: Enterprise Resource Planning 1st Edition by Mary Sumner 8-24

Summary, continued

Success in ERP projects includesfactoring in

Consideration of customizations, use ofexternal consultants, management ofsupplier relationships, establishingmetrics, and change management

Project-related concerns Technological changes, user training, and

management requirements

chapter 8: managing an erp project

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