Managing An ERP Project: © Prentice Hall, 2005: Enterprise Resource Planning, 1 Edition by Mary Sumner

Enterprise Resource Planning, 1st
Edition by Mary Sumner
Chapter 8:
Managing an ERP Project
© Prentice Hall, 2005: Enterprise Resource Planning, 1 st Edition by Mary Sumner 8-1
Objectives
• Acknowledge the importance of project

management and control
• Examine the process of organizational
change
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
Factors Causing Information
Systems Project Failures
• Poor technical methods
• Communication failures
• Poor leadership
• Initial evaluation of project
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
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
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
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
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
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
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
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
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
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?
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
• 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
– 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
• 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
– 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
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
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
Enterprise Resource Planning, 1st
Edition by Mary Sumner
Chapter 9:
Supply Chain Management and the
eMarketplace
Objectives
• Examine the supply chain participants

• Acknowledge the interrelationships
among business processes that
support the supply chain
• Understand the role of ERP in
supporting eBusiness
• Recognize how business intelligence
tools are used in decision analysis
Supply Chain Management
(SCM)
• Integrated planning of the activities in a
supply chain
• Planning and control of flow of goods,
services, money, and information
• Allows customers and suppliers to
partner together
– Maximize responsiveness and flexibility
– Reducing costs and paperwork
– Gain sustainable competitive advantage
Supply Chain Relationships
• Can be maintained by manufacturer

– Continuous replenishment
– Can link into POS systems
• Cross-docking
• Creates linkages between supplier and
retailer
– Lower costs
– Better customer service
– Increased profitability
• Information sharing along supply chain
– Translates sales transactions into production
processes and material requirements
Supply Chain Management
(SCM), continued
• Benefits
– Cost reduction
– Inventory reduction
– Cycle time improvement
– Improved customer service
• Integration requires commitment to strategy,
process, organization, and technology
– What linkages should be established
– Communications
– Data integration
Partnership Evolution
• VMI
– Responsibility of inventory management on
supplier
– Supplier monitors level and replenishes
inventories
– No risk of stockouts
– Quicker response time
– Retailer reduces inventory and administration
costs
– Supplier gets more business
– No expedited orders
– Returned goods to supplier drops
SCM Evolution
• Electronic linkages facilitate JIT systems

• Reduced costs, improved response time,
increased responsiveness to customer
eBusiness Value Chain
• Evolution of virtual value chain

– Provides information-based channels
– Changed from transaction-based to
contract-based relationships
– Moved from vertically integrated to
selective sourcing
– Core firm outsources all parts of its
business
eProcurement
• eProcurement
– RFBs on web
– Bidding more competitive
• Free-market bidding levels playing field
– Increased choices
– Reduced transaction costs
B2B Hubs
• B2B hubs
– Spot sourcing of operating inputs
– Systematic sourcing of inputs
– Bring suppliers of similar or
complementary products together at one
web site
• One-stop shopping
– Automate transactions and reduce costs
eSupply Chain
• Facilitates real-time updates across chain

– From consumers to suppliers
– Greater ability to fill orders
– Better understanding of customer needs
Business Intelligence with ERP
Data
• Data warehouse
– Repository for making management decisions
– Data integrity accomplished by cleaning
– Consistent formatting applied
• Data mart
– Data storage for specific set of users
• Special data analysis
• Data mining
– Analysis of data for trends, sales forecasting,
inventory management
• Identifies problem, develops research, collects and
analyzes data
Future of ERP
• Increased integration through SCM

• ASPs will provide cost efficiency and access
to latest technology
• Netsourcing
– Renting ERP services, applications, and
infrastructure over web
– Additional risks in migration, contracts
– Internal IT capabilities must be maintained
• Application software integration of legacy
systems with ERP
– Plug and play
– Flexible, modular
Case: Data Solutions
• Specializes in network implementation

and management
– Provides network services to companies
with no internal networking analyst or IT
manager
– Uses legacy accounting software for
financial accounting and financial
management
– Added billing package for client services
– Wants CRM
Case: TechKnowledge
• Disitributor of presentation
technologies
• Wants to netsource back-office
functions
– Has no internal IT capability
– Wants and ERP vendor via hosting
arrangement
Featured Article: Leveraging the ERP
Backbone?
• Dow Corning implemented SAP’s Business

Information Warehouse
– Integrate global business processes
• Gain efficiency and reduce costs
• Wanted to fully automate
– Improve business intelligence
• Consolidate internal and external information
– Replaced legacy systems on mainframes
– Beta-tested system
• Important to evaluate software with all details decided
– Hopes to facilitate rapid scale-up of data
warehouse capabilities
• Vital to business intelligence infrastructure
Summary
• Supply chain management offers an

integrated planning and control of goods,
services, money, and information between
suppliers and customers
– Produces lower costs and reduced inventories
– Improves customer service
– Increases profitability
• Virtual value chains provide information-
based channels
– Contract-based
– Applies selective sourcing instead of vertical
integration
Summary, continued
• eProcurement employs web-based

RFBs
– More competitive and more choices of
suppliers
• eSupply chains facilitate real-time
updates, responding to customer
needs
• Business intelligence is increased by
mining data warehouses and data
marts

Managing An ERP Project: © Prentice Hall, 2005: Enterprise Resource Planning, 1 Edition by Mary Sumner

Uploaded by

Copyright:

Available Formats

Managing An ERP Project: © Prentice Hall, 2005: Enterprise Resource Planning, 1 Edition by Mary Sumner

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Managing An ERP Project: © Prentice Hall, 2005: Enterprise Resource Planning, 1 Edition by Mary Sumner

Uploaded by

Copyright:

Available Formats

Enterprise Resource Planning, 1st

Edition by Mary Sumner

• Acknowledge the importance of project

• Project division into subprojects

• Was FoxMeyer misled?

• Nation’s fourth largest pharmaceutical

– Two systems for most important business

– FoxMeyer got major new client

• A number of factors will effect the success or

• Success in ERP projects includes

• Examine the supply chain participants

• Can be maintained by manufacturer

• Electronic linkages facilitate JIT systems

• Evolution of virtual value chain

• Facilitates real-time updates across chain

• Increased integration through SCM

• Specializes in network implementation

• Dow Corning implemented SAP’s Business

• Supply chain management offers an

• eProcurement employs web-based

You might also like