ERP Final Report

and Presentation

指導老師: 吳思佩 教授
Our ERP Literatures
 Wu et al. A Methodology for ERP Misfit
Analysis, Information & Management, 44,
666-680, 2007
 Hitt et al., “Investment in ERP: Business
Impact and Productivity Measures, JMIS,
19:1, 71-98, 2002.
Our Members
 932654 留毓吟
 951612 張豐疇
 951616 李采霞
 951634 趙子萱
 951640 柯廷蓁
 A methodology
for ERP misfit analysis
Wu et al. A Methodology for ERP Misfit Analysis, Information & Management, 44, 666-680, 2007

951612 張豐疇
951634 趙子萱
951634

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Abstract
 Research has indicated that about three quarters of
attempted ERP projects are unsuccessful: a common
problem encountered in adopting ERP software has
been the issue of fit or alignment .

 This paper presents an ERP selection methodology,

grounded in task-technology fits theory, for measuring,
at a high-level, the misfit between ERP candidates and
the enterprise's requirements ex-ante implementation.

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Introduction
 A common problem results from misfits: the gaps between the
functions offered by ERP and the adopting organization's
requirements. The misfit types can be clustered into four categories:
 Goal
 Functional
 Data and output
 Better understanding of these provides insight into ERP selection
decisions and thus reduces the risk of project failure.

951634
ERP selection
 Several approaches, e.g., from a financial, socio-
technical or functional perspective, have been developed
to help select software packages. However, in ERP
selection, it may not be possible to express everything in
dollar figures.

 From a TTF standpoint, the ERP selection methodology

involves the fit between the enterprise requirements and
ERP provided functions. Therefore, we focus on the
requirement phase of the software development process.

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Modeling tools
 Goal-based use case

 Activity diagram

 Drawing and data glossary

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Goal-based use case
 The use case is valuable in goal modeling.
 The goal-based use-case approach classifies
goals into two facets: soft and rigid goals.

 Rigid goal：a target system's minimum

requirement; it must be completely satisfied.
 Soft goal：can be partially satisfied; it describes
a desirable property.

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Activity diagram
 An activity diagram represented using
UML is commonly used today in modeling
business process flow.

 It includes several elements: Activity, Start

Activity, End Activity, Transition, Fork,
Branch, Merge, and Join.

951634
Drawing and data glossary
 A drawing is a way of effectively expressing
input and output information, such as the title,
presentation position, lines, figures, and tables;
these are widely used in systems analysis and
design.

 One data glossary record format might contain

the Data_type, Origin_type, Source_field, and
Computing_rules that describe the data fields
that make up an activity.

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ERP system selection
methodology
 The selection process consists of three
phases: goal, functional, and data/output
misfit matching.

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951634
Goal misfit matching
 （1）A goal-based use-case models the
goals in the enterprise against the
capabilities if the candidates.

 （2）The firm in conjunction with the

vendor analyzes the output for each rigid
goal.

951634
Goal misfit matching
 If this rigid goal is not matched, a misfit exists,
but if the rigid goal is matched, soft goal
matching will be performed and a goal matching
report generated.

 Purpose：Firm and vendor know the location of

the goal misfits, and thus whether the firm's
minimum requirements are achieved and how
many desired soft goals are satisfied.

951634
 Goal misfit matching
(Case study)
 Its goal-based use case contained eight use
cases, four rigid goals and two soft goals.

 After reviewing the diagram and discussing them

with consultants, the ERP project team felt that
all functions were satisfied by SAP except that of
application approval. there was a goal misfit.

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951612

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Functional misfit matching
 This consists of scenario modeling and
matching appraisal.

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Scenario modeling
 Scenario modeling involves the
comparison of required business process
flow and the capabilities of the best
practice candidate using the activity
diagram, drawing, and data glossary for
further requirement mapping and gap
analysis.

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Scenario matching appraisal
 The scenario matching appraisal is
intended to show where the misfits lie
based on the scenario modeling results.

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Activity correspondence
identification
 The appraisal identifies the activity
provided by the candidate system based
on the firm's activity for each scenario.

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Scenario matrix model
generation
Input: A scenario 輸入：一個劇本（情節）
Output: A scenario matrix 輸出：一個情節矩陣
Begin 開始
(1) Initialize an (n + 1) × (n + 1) matrix, where n is the number of activities in the scenario
(2) Enter the first n rows using all the activities and the last row with MJ
(3) Enter the first n columns using all of the activities in the same sequence with the first n rows and label the last column with FB
(4) For each activity ai within this scenario
(4.1) IF activity ai has a connection pointing to aj, THEN fill cells (ai,aj) with 1, OTHERWISE fill with 0
(4.2) IF the postcondition of activity ai is Fork, THEN fill cells (ai, FB) with 1
(4.3) IF the postcondition of activity ai is Branch, THEN fill cells (ai,FB) with 0
(4.4) IF activity ai has only one succeeding activity, THEN fill cells (ai, FB) with 0
(4.5) IF the precondition of activity ai is Merge, THEN fill cells (MJ, ai) with 0
(4.6) IF the precondition of activity ai is Join, THEN fill cells (MJ, ai) with 1
(4.7) IF activity ai has only one predecessor activity, THEN fill cells (MJ, ai) with 0
(4.8) IF activity ai is the end activity, THEN fill cells (ai, FB) with 5
(4.9) IF activity ai is the start activity, THEN fill cells (MJ, ai) with 5
Repeat this process until all activities have been examined
End
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Scenario matching
 This step identifies the connection and
condition misfits.

 MisFit(PF,PE): Identifying where the

connection and condition misfits lie, as
follows.

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951612
Functional misfit matching
（Case study）
 Scenario modeling :
The procurement scenario required by
AEIC and the equivalent SAP scenario
(J49: Procurement of Stock Materials)
were modeled using activity diagrams,
drawing and a data glossary

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951612
Functional misfit matching
（Case study）
 Scenario matching appraisal :
 Activity correspondence identification
Seven pairs of activities were found to
be identical.
The ‘Negotiate Price’ was not found in
SAP R/3.

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Functional misfit matching
（Case study）
 Scenario matrix model generation

 Scenario matching (Full-size table)

There were four possible situations:
(1) fail
(2) BPR
(3) add-on
(4) reconfiguration
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Output misfit matching
 Output misfit analysis
 Field correspondence identification
 This step is used to check whether each data field
needed by the firm exists in the corresponding
activity of the candidate. If it does not exist, we
mark it as an output misfit.
 Data_type and Origin_type analysis
 This step determines the Data_type and
Origin_type fields for each activity and records it in
the data glossary.
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Output misfit analysis

Input: Corresponding activity couples

Output: 1. Correspondence field couples

2. Field misfits (output misfit)

3. Data glossary for each required and target activity

Begin

(1) For each activity couple in the scenario sequence

(1.1) For each field in the required activity

(1.1.1) Find the target field that carries the same information as that of the required field

(1.1.1.1) IF there is a corresponding target field, THEN mark the required field and target field as corresponding ones

(1.1.1.2) OTHERWISE IF there is no such target field, THEN mark the gap as an output misfit

(2) For each activity couple in the scenario sequence

(2.1) Analyze the Data_type of each field in the activity

(2.2) Fill Data_type of each field into data glossary

(2.3) Analyze the Origin_type of each field in the activity

(2.3.1) Determine the Origin_type

(2.3.2) IF the Origin_type is ‘A’, ‘V’ or ‘AV’, THEN determine its Source_field

(2.3.3) IF the Origin_type is ‘C’, THEN analyze its Computing_rule

(2.4) Fill Origin_type, Source_field, and Computing_rule into the data glossary

End of output misfit analysis

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Data misfit analysis
 It has of four sub-steps:
 activity selection
 field selection
 Which field are independent of others should be analyzed
first.
 Data_type misfit analysis (data misfit)
 Different data category is not compatible with other data type.

 Origin_type misfit analysis (data misfit)

 This is found by comparing the data glossaries of the
activities.

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Data misfit analysis

Input: 1. Corresponding activities and field correspondence pairs

2. Data glossary for each corresponding activity couple

Output: Data misfits in Data_type and Origin_type

Begin

For each firm's activity that has corresponding target activity in the scenario sequence

For each required fields

(1) Field selection:

From the unanalyzed required fields that have corresponding target fields in the selected activity

(1.1) IF there are fields with Origin_type ‘U’ or ‘S’, THEN select one arbitrarily

(1.2) ELSE IF there are fields with Origin_type ‘A’ or ‘AV’, THEN select one arbitrarily

(1.3) ELSE select one of the fields with Origin_type ‘V’ or ‘C’ arbitrarily

(2) Data_type misfit analysis:

IF there is data type misfit between selected field and corresponding target fields,

THEN mark it as a format misfit (data type)

(3) Origin_type misfit analysis:

IF there is an origin type misfit between the selected field and corresponding target fields, THEN mark it as a format misfit (origin type)

End of Data misfit analysis 951612

Output misfit analysis
（Case study）

951612
Data misfit analysis
（Case study）
Data misfit

1.
BPR/AEIC agreed with consultant's suggestion and used the default data type provided by SAP R/3
A_PO:PurchaseO_Sta
BPR/AEIC同意顧問的建議和使用SAP R/3提供的預設資料型態。
ff

2.
Add-on/AEIC ask vendor to achieve this function by add-on
A_PO:PurchaseO_Ite
附加/AEIC要求賣主去藉著附加達成這個功能。
mNo

BPR/AEIC agreed with consultant's suggestion, because the default data type in SAP R/3 could satisfy their
3.
requirement according to the purchase orders over the years
A_PO:PurchaseO_Un
BPR/AEIC同意顧問的建議，因為SAP R/3預設的資料型態可以滿足他們的需求，根據BPR/AEIC的年度購買
itPrice
訂單。

4. BPR/AEIC agreed with consultant's suggestion, because the status information is enough
A_GR:Receive_Status BPR/AEIC同意顧問的建議，因為狀態資訊是足夠的。

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Conclusion
 The paper has presented an approach for identifying
goal (enterprise level), functional (scenario level), data,
and output misfits (activity level) in ERP selection.
 contribution
 It provides a systematic method that reduces the difficulty and
complexity in identifying goals, functional, data, and output
misfits.
 It integrates several concepts and models into the process to
facilitate misfit identification.
 The method with modeling tools (e.g., UML, drawing) provides a
conceptual link between the enterprise requirement and
subsequence system design and allows a form's IT professionals
and users and its consultants discuss on the requirement at
different levels of details.
 This also provides a way to its convenient use with an output
that can be reused in the subsequent implementation phase.
951612
 Enterprise Resource
Planning Systems:
A Case Study
Anand et al., :Enterprise Resource Planning Systems: A Case Study, NUS, 2004

932654 留毓吟
951616 李采霞
951640 柯廷蓁
951640

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Experts1 – Ms. Xiao Liu, SAP
 Expert’s background
 Ms. Xiao Liu
 Currently Regional NetWeaver/Technology
Consulting Director, Asia Pacific, Sap Asia
Private Limited.

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 Interview Abstract
 SAP focuses on full-blown ERP. It comprise
of many modules.
 SAP is solid, but not be very user-friendly.
 Clients combine the business re-engineering
with the SAP product expertise will have a
lethal combination.
 SAP now provides a generic implementation
provides guidance on the whole process.
 Two success key factor of SAP – the big
bang and the phased implementation.
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Experts2 – Mr. Chris Ip and Mr. Dino Ho
 Expert’s background
 Mr. Chris Ip
 A partner at McKinsey & Company and a leader

of Business Technology Office in Greater China,

based in Hong Kong.
 Mr. Dino John Ho
 An Engagement Manager with McKinsey &

Company and a core leader of Asia Business

Technology Office, McKinsey’s Information
Technology practice, based in Hong Kong.

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 Interview Abstract

 Values to enterprise by ERP

 An enabler for operations consolidation.
 The best practice efficient process.
 Rationalizes company’s IT legacy.

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 Interview Abstract (continue)

 Reasons for failure to ERP implementation

 Misguided efforts result in cost overruns.
 A wrong scope with data structure.
 Only focus on implementing ERP system.
 Lack of or ineffectiveness in complexity
management.
 Mismatch between objectives and
motivation of different players involved.

951640
 Interview Abstract (continue)

 Points consider before implementation

 Risk management.
 Prioritize the functionality.
 Cost-benefit analysis.

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932654 留毓吟

932654
ERP Report

從FoxMeyer看ERP導入

932654
What is the case about?
-The character which appear in this case
Characters’ Relationships:

FoxMeyer Drug Co.

client

SAP Andersen Consulting

The ERP software vendor The Implementation Partner

Pinnacle
The Warehouse Automation
Systems Provider
932654
What is the case about?
-The character which appear in this case (cont.)

 FoxMeyer Drug Co.

► Was the fourth largest distributor of pharmaceuticals to drug
stores and hospital in USA till 1996.

► In the mid-1990s, FoxMeyer planned for upgrading its ageing

Unisys systems using ERP for managing the expected increase in
volumes coming from surge in pharmaceutical sales.

► It decided to also upgrade its warehouse operations

simultaneously to develop cost advantages over the competitors
and successfully under-bid contracts.

932654
What is the case about?
-The character which appear in this case (cont.)

 SAP – the software vendor

► In the mid 1990s,was
considered to be the leader
supplier of ERP systems.
► ERP systems provide an
overview of the various
aspects of a business –
production, development,
sales etc.

932654
 What is the case about?
-The character which appear in this case (cont.)

 Andersen – The Implementation Partner

► One of the major IS consulting
firms in the world in 1990s, was
selected by FoxMeyer as the
implementation partner.

► It’s role was to install SAP and

align it with FoxMeyer’s business
processes.

932654
What is the case about?
-The character which appear in this case (cont.)

 Pinnacle – The warehouse automation

systems provider
► Was a leading provider of
Warehouse Automation
Systems.

► Was a stable system, which

prompted FoxMeyer to choose it.

932654
 What is the case about?
 Synopsis of the Problem
After the new systems implemented on August 1995:

► A mass exodus of warehouse workers

prevented a smooth transition between the old
warehouse and the new automated warehouse.
The declining morale cause US$34 million in
inventory losses.

► FoxMeyer was the price cutter in the industry.

The factor that combined with the IS and WM
initiative, at last pushed this company over the
edge.

932654
 What is the case about?
 Synopsis of the Problem (cont.)
After the new systems implemented on August 1995:

► SAP and Andersen contended that the

problem appeared to be that FoxMeyer did not
think through the project.

► FoxMeyer on the other hand, placed the

blame squarely on SAP and Andersen. They
contended that SAP oversold R/3’s capabilities,
and Andersen used inexperienced staff, which
bungled data conversions and built faulty
interfaces between the old and new systems.

932654
What does the Expert say?
Ms. Xiao Liu, (SAP) suggestion

1. No matter the developer or vendor, should provide a

step-by-step guidance manual.

2. Software should be chosen from the same vendor to

minimize the risk of integration.

3. The FoxMeyer decided to re-engineer the business

process instead of customizing the software is a lethal
combination for success.

932654
What does the Expert say?
Ms. Xiao Liu, (SAP) suggestion (cont.)

4. SAP/Andersen didn’t clearly informed the client about the

potential timeline and risks involved, the criticality of
Change Management was overlooked.

5. The shortage in the supply of experienced staff on ERP

implementation and The use of fresh graduates by
Andersen both caused the biggest risk in Software
Installation and Technical Integration making.

932654
 What does the Expert say?
Mr. Chris Ip and Mr. Dino Ho,
(McKinsey and Company) Suggestion:

1. A misguided or wrong interpretation of problem will result in failed

solution.
2. A correct scope is one of the major keys for success for the project.
3. High process complexity, cost and time overrun the implementation
process.
4. Mismatch between objectives and motivation of different players
involved.

932654
 What does the Expert say?
Mr. Chris Ip and Mr. Dino Ho,
(McKinsey and Company) Suggestion (cont.):
.
Conclusion:
The companies need to consider Risk Management,
Functional Priority and Cost-Benefit Analysis before
undertaking implementation.

932654
 What is the NUS opinion?
 Who is to blame?
What is MIT 1990s Alignment Model:

► MIT 1990s Alignment model emphasizes the mutual

adaptation of five elements of change:
Strategy, Structure, Process, Technology and People
and their alignment with the recipient organizations
business processes.

932654
 What is the NUS opinion?
 Who is to blame?
By Using MIT 1990s Alignment Model:
1.Strategy Alignment:
SAP McKinsey NUS opinion

Requirement of ERP represents a ERP can add values to Needs to analyze the
ERP solution to manage an enterprise in three requirement of ERP
the business process. direct ways-Operation based on cost-benefit
Many companies Consolidation, Efficient analysis and functional
have applied it and process and requirement.
benefited from it. Rationalization of
Company's IT legacy.
Phased vs. Big- Analyze the business Preferably roll out the Preferably Phased as
bang requirement. But, if a project in small pieces. the process entails
large change prefer Smaller the project, change of IT systems
big-bang but they lower is the and Business Process.
come with high risk. requirements and scope

932654
 What is the NUS opinion?
 Who is to blame?
By Using MIT 1990s Alignment Model:
1.Strategy Alignment (cont.):
SAP McKinsey NUS opinion

Choice of SAP product has Any ERP software Choose vendor most
Vendor reliability and can be chosen compatible to other
scalability systems in IT system.

Choice of Not many competent An acute shortage of Not much choice because
Consultant consultants who knew SAP Consultants in of shortage of consultants.
SAP as a product well early 1990s. Choose business
enough process re-engineering
experts and consultants
from the vendor
company.

932654
 What is the NUS opinion?
 Who is to blame?
By Using MIT 1990s Alignment Model:
2.Structure Alignment:
SAP McKinsey NUS opinion

Project Combine the business Mismatch between Need to have a clear

Management re-engineering objectives and vision of objectives of
expertise with the SAP motivation of the entire process. Set
product expertise; It different players milestones both in terms
might have a lethal involved of implementation and
Combination. adoption.
Manage To retire the old Minimize the variation
Technical systems and minimize of systems for a better
Integration Risks the number of interface management.
interfaces as much as Interface development for
possible, to prevent integration takes a huge
possible problems from amount of time and
integrating different money and is risky
interfaces. because of low testing

932654
 What is the NUS opinion?
 Who is to blame?
By Using MIT 1990s Alignment Model:
3.Business Process Alignment:
SAP McKinsey NUS opinion

IT supports Change the business ERP comes with Need to identify the key
Business process to built-in configurable strengths of IT system
Processes? accommodate the ERP processes and and Business Process
software’s requirements requires companies and model the other
and come out with to change their around the strength of
something useful for the business processes one.
company. to fit it

932654
 What is the NUS opinion?
 Who is to blame?
By Using MIT 1990s Alignment Model:
4.People Alignment:
SAP McKinsey NUS opinion

Different ERP implementation ERP is not solely in Resolve before

Technology project requires the the scope of IT. It implementation at such
Frames involvement and involves people large scale. Otherwise,
commitment of from other would lead to failure
everybody in the departments as well. owing to low user
company. adoption.

Internal Politics Business re- Companies tend to Communication of

engineering gives rise focus on expected results helps
to internal politics and implementing the assuage fear and reduce
upsets organizational system rather than resistance due to internal
cultural in the client on changing the politics.
company business.

932654
951616

951616
Andersen 2003 Information System
Success Model
 Software installation/configuration risks
 Technical integration risks
 Project risks
 Business risks

951616
Software installation/configuration
risks
 FoxMeyer
 Made the mistake of not planning ahead and
overlooking the risk of the project never being
operated at such high volumes.
 SAP
 To make the sale, SAP might have chosen to
keep Andersen and FoxMeyer in the dark about
the issue from this.
 This led to the working software being a poor
choice.

951616
Software installation/configuration
risks (continue)
 Andersen
 Lack a comprehensive Product Knowledge.
 Sent fresh and inexperienced graduates to
implement the system at FoxMeyer.
 This caused poor configuration and software
training.

951616
Systems integration
 There is high probability that both
FoxMeyer and Andersen did not have the
necessary knowledge.
 Expert believe training was not budgeted,
highlighting poor planning on part of
FoxMeyer as well as Andersen.

951616
Systems integration (continue)
 Expert speculate that data conversion was
also an issue, resulting from the evident
unavailability of skill personnel at
FoxMeyer, insufficient and different staffing
for the project.

951616
Project risks
 FoxMeyer
 Set a totally un realistic goal of achieving a schedule.
 Lack competent in-house IT personnel and capable
users
 Fail to consider the risk of being the first distribution
company.
 Did not have adequate change management policies
and procedures.
 Andersen
 Expert believe it was their responsibility to educate
the management at FoxMeyer about such a critical
issue.
951616
Project risks (continue)
 FoxMeyer and Andersen
 The debacle was a mix of Interaction and
Correspondence failure.
 Lack of user involvement.
 Lack of mutual understanding regarding
business needs, human resistance, poor
design quality, inadequate time and poor
internal management processes.

951616
Business risks
 FoxMeyer
 Lack of proper planning makes the strategic move
look like wishful thinking.
 FoxMeyer and Andersen
 Were jointly responsible for the implementation
process.
 Would have required a thorough understanding of the
complete business process and the requirements
from the project.
 A problem with the converted processes.
951616
Product Delivery - Conclusion
 Andersen and FoxMeyer are at fault, FoxMeyer
more so because they had their business
interests.
 FoxMeyer ought to improve its efficiency by merging
the ERP with warehouse, but they didn’t plan ahead.
 FoxMeyer were betting their company on these
system.
 Andersen did not manage the project to the full
extent.
 FoxMeyer was not just a technological failure but
also poor management.

951616
How would we re-do it?
 Technology has to be converged with
these four elements of an organization to
achieve the state of ”best fit”.
 Strategy
 Structure
 Business Processes
 People

951616
Strategy
 Need to know the product and test it
before buying.
 Implementing companies ought to be very
clear as to why they want to implement
and adopt it.
 They should have aligned the technology
to the strategy and not the strategy to the
technology.
951616
Structure
 They should have re-structured their operations
to reduce such complications.
 This requires the company to build mechanisms
in the organization structure which can absorb
such change.
 We would have create a mechanism in the
organization structure by this prototype method,
tested it, perfected it and then implemented it
across the entire organization.
951616
Business Processes
 R3 will re-engineer the business
processes at FoxMeyer and FoxMeyer will
have to adapt itself to R3.
 This decision then had to be clearly
communicated to people and training had
to provided to them to change in a smooth
manner.

951616
People
 Employees’ consensus should be
considered before final decisions are
made
 This will generate their commitment to the
project and make the implementation very
smooth.
 Technology is meant to be used by people
to make their lives easier.
951616
Conclude
 Expert feel all parties to the contract were
to blame.
 It was a case of corporate greed
overtaking rational decision making.

951616
The End~~