Enterprise Resource Planning, 1st Edition by Mary SumnerChapter 8:Managing an ERP Project

ObjectivesAcknowledge the importance of project management and controlExamine the process of organizational change

Factors Influencing Information Systems Project SuccessNumber of modificationsEffective communicationsAuthority for project implementationBusiness managementAbility to generate additional funds to cover implementation

Factors Causing Information Systems Project FailuresPoor technical methodsCommunication failuresPoor leadershipInitial evaluation of project

Risk FactorsOrganizational factorsChanges in scopeSufficiency of resourcesMagnitude of potential lossDepartmental conflictsUser experienceManagement supportChanging requirements and scopeLack of commitmentSoftware designDeveloping wrong functions, wrong user interfaceProblems with outsourced components

Risk Factors, continuedUser involvementLack of commitmentIneffective communicationConflicts Inadequate familiarity with technologiesProject managementSize and structureControl functionsProject escalationSocietal normsContinue pouring resources into sinking ships

Implementation RisksTechnologyConsistencies with current infrastructureOrganizationalCustomization increases risksRedesign of business processes to fit package decreases riskHuman resource factorsIT staff skills and expertiseProject size

Managing Large-Scale ProjectsMRP or ERPPackage implementation differs from custom implementationVendor participationUser skills and capabilitiesManagement commitmentProject championCommunication with stakeholdersTraining in MRPGood project management

Managing ERP ProjectsImplementation factorsRe-engineering business processesChanging corporate cultureProject teamInclude business analysts on project teamManagement supportCommitment to changeRisk management

Factors in Successful ERP ProjectsCustomization Increases time and costBPR advantage from best practices adoptions lostUse of external consultantsOffer expertise in cross-functional business processesProblems arise when internal IT department not involvedSupplier relationship managementNeed effective relationships to facilitate and monitor contractsChange managementPeople are resistant to changeOrganizational culture fostering open communicationsBusiness measuresCreate specific metrics at start of project

Project-Related FactorsProject division into subprojectsProject leader with proven track recordProject focus on user needs instead of technologyProject championSlack time in project schedule

Additional Factors in the Success of a ProjectUser trainingFocus on business, not just technicalCriticalManagement reporting requirementsMay need to add query and reporting toolsTechnological challengesData conversionInterface development

FoxMeyer versus Dow ChemicalFoxMeyerProject went over budget because of new clientImplemented two new systems at same timeTechnical issues with the ERP softwareNo open communicationsUnrealistic expectations on ROIDowHad project implementation problemsDow had strong leadership and project championWas able to adjust scope and maintain controlFostered open communications

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?

Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continuedNations fourth largest pharmaceutical distributor1990s engaged in enterprise-wide software and warehouse automation projectFiled Chapter 11 in 1996Claimed to be misled by SAP, Anderson Consulting, Pinnacle AutomationClaimed vendors oversold capabilitiesComputer integration problems topped $100 millionVendors blame management

Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continuedBackgroundFoxMeyer had orders for over 300,000 items per day, anticipated much growthProcessing hundreds of thousands of transactions each dayOld system was Unisys mainframeWanted scalable client/server systemTested SAPs software on both DEC and HP against benchmarksImplementations scheduled by Andersen for 18 monthsModules to be implemented in 2-3 monthsUnrealistic could take up to 12 monthsAll modules fast-tracked

Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continuedTwo systems for most important business systemsSAP supplied the accounting and manufacturing software Claims volume was issueWarehouse system from McHugh Software International Purchased through PinnaclePinnacle also supplied some hardwareAdded complexities to projectFunctional holes in systems

Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continuedFoxMeyer strategiesHigh volumeLow priceAnticipated savings from new computer systemWanted to win market share by further price-cuttingHoped new system would be more efficient, but did not improve processes

Featured Article: FoxMeyers Project Was a Disaster. Was the Company Too Aggressive or Was It Misled?, continuedFoxMeyer got major new clientOut of capacity of mainframeIssues on balancing system trafficUnisys-based management system eventually failedInformation wasnt being received timelyFoxMeyer suffered losses in transferring inventory to new centersCustomers received incorrect shipmentsNew customer didnt deliver expected volumeFoxMeyer overspent

SummaryA number of factors will effect the success or failure of a systems projectOperational methods and techniquesBusiness management and styleLeadership and communicationsRisk factors effecting projects must be consideredOrganizational factors, management support, software design, the levels of user involvement, and the scope and size of the project itselfImplementation risks for technologies, the organization, and human resource

Summary, continuedSuccess in ERP projects includes factoring inConsideration of customizations, use of external consultants, management of supplier relationships, establishing metrics, and change managementProject-related concerns Technological changes, user training, and management requirements