Enterprise Resource Planning, 1 st Edition by Mary Sumner

1. 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

2. Objectives • Acknowledge the importance of project management and control • Examine the process of organizational change © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

3. 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, 1st Edition by Mary Sumner

4. Factors Causing Information Systems Project Failures • Poor technical methods • Communication failures • Poor leadership • Initial evaluation of project © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

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6. 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, 1st Edition by Mary Sumner

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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

8. 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, 1st Edition by Mary Sumner

9. 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, 1st Edition by Mary Sumner

10. 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

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12. 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, 1st Edition by Mary Sumner

13. 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, 1st Edition by Mary Sumner

14. 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, 1st Edition by Mary Sumner

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16. 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, 1st Edition by Mary Sumner

17. 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, 1st Edition by Mary Sumner

18. 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, 1st Edition by Mary Sumner

19. 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, 1st Edition by Mary Sumner

20. 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, 1st Edition by Mary Sumner

21. Featured Article: FoxMeyer’s 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

22. Featured Article: FoxMeyer’s 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 wasn’t being received timely • FoxMeyer suffered losses in transferring inventory to new centers • Customers received incorrect shipments • New customer didn’t deliver expected volume • FoxMeyer overspent © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

23. 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

24. 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 © Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner