ERP and project Management

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Enterprise Systems

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ERP Project management

1 Project Integration 2 Project Scope 3 Project Time

Management Management Management

1.1 Project Plan Development 2.1 Initiation 3.1 Activity Definition

1.2 Project Plan Execution 2.2 Scope Planning 3.2 Activity Sequencing

1.3 Integrated Change Control 2.3 Scope Definition 3.3 Activity Duration Estimating

2.4 Scope Verification 3.4 Schedule Development

2.5 Scope Change Control 3.5 Schedule Control

4 Project Cost 5 Project Quality 6 Project Human

Management Management Resource Management

4.1 Resource Planning 5.1 Quality Planning 6.1 Organisational Planning

4.2 Cost Estimating 5.2 Quality Assurance 6.2 Staff Acquisition

4.3 Cost Budgeting 5.3 Quality Control 6.3 Team Development

4.4 Cost Control

7 Project Communications 8 Project Risk 9 Project Procurement

Management Management Management

7.1 Communications Planning 8.1 Risk Identification 9.1 Procurement Planning

7.2 Information Distribution 8.2 Quantitative Risk Analysis 9.2 Solicitation Planning

7.3 Performance Reporting 8.3 Risk Response Planning 9.3 Solicitation

7.4 Administrative 8.4 Risk Monitoring and Control 9.4 Source Selection
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9.5 Contract Administration
 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
 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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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

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Factors Causing ERP Project Failures

 Poor technical methods

 Communication failures

 Poor leadership

 Initial evaluation of project

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ERP Systems

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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

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Risk Factors, cont………….inued

 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

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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
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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 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

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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

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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

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CASE

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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
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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?

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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

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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

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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

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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

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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

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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

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