Enterprise Resource Planning, 1st Edition by Mary Sumner

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
8-1
Objectives
Acknowledge the importance of project

management and control
Examine the process of organizational
change
8-2
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
8-3
Factors Causing Information

Systems Project Failures
Poor technical methods

Communication failures
Poor leadership
Initial evaluation of project
8-4
8-5
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
8-6
Risk Factors, continued
User involvement
Project management
Lack of commitment
Ineffective communication
Conflicts
Inadequate familiarity with technologies
Size and structure
Control functions
Project escalation
Societal norms
Continue pouring resources into sinking ships
8-7
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
8-8
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
8-9
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
8-10
8-11
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

8-12
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
8-13
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
8-14
8-15
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
8-16
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?
8-17
Featured Article: FoxMeyers Project Was a

Disaster. Was the Company Too Aggressive or
Was It Misled?, continued
Nations 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
8-18

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 18
months
Modules to be implemented in 2-3 months
Unrealistic could take up to 12 months

All modules fast-tracked
8-19

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
8-20

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
8-21

FoxMeyer got major new client
Out of capacity of mainframe

Issues on balancing system traffic
Unisys-based management system eventually
failed
Information wasnt being received timely
FoxMeyer suffered losses in transferring
inventory to new centers
Customers received incorrect shipments
New customer didnt deliver expected volume
FoxMeyer overspent
8-22
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
8-23
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
8-24

Enterprise Resource Planning, 1st Edition by Mary Sumner

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Enterprise Resource Planning, 1st

Edition by Mary Sumner

Acknowledge the importance of project

Factors Influencing Information

Factors Causing Information

Poor technical methods

Changing requirements and scope

Developing wrong functions, wrong user interface

Risk Factors, continued

Human resource factors

Managing Large-Scale Projects

Managing ERP Projects

Include business analysts on project team

Factors in Successful ERP

Increases time and cost

Use of external consultants

Offer expertise in cross-functional business processes

Supplier relationship management

Need effective relationships to facilitate and monitor

People are resistant to change

Create specific metrics at start of project

Project division into subprojects

Additional Factors in the Success

Management reporting requirements

FoxMeyer versus Dow Chemical

Project went over budget because of new client

Had project implementation problems

Featured Article: FoxMeyers Project Was

Was FoxMeyer misled?

Featured Article: FoxMeyers Project Was a

Nations fourth largest pharmaceutical

Claimed to be misled by SAP, Anderson

Featured Article: FoxMeyers Project Was a

FoxMeyer had orders for over 300,000 items per

Processing hundreds of thousands of transactions each

Old system was Unisys mainframe

Modules to be implemented in 2-3 months

Unrealistic could take up to 12 months

Featured Article: FoxMeyers Project Was a

SAP supplied the accounting and

Warehouse system from McHugh Software

Added complexities to project

Featured Article: FoxMeyers Project Was a

Featured Article: FoxMeyers Project Was a

Out of capacity of mainframe

A number of factors will effect the success

Operational methods and techniques

Risk factors effecting projects must be

Organizational factors, management support,

Success in ERP projects includes

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