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 Management support Software design
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 Organizational Human resource factors
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 Risk management
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
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. What business misjudgments occurred?
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. Nation’s fourth largest pharmaceutical distributor
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
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. Two systems for most important business systems
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
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. FoxMeyer got major new client
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