Enterprise resource planning 1st by mary summer chapter 08

Factors Causing Information Systems Project Failures • Poor technical methods • Communication failures • Poor leadership • Initial evaluation of project... Implementation Risks• Technolo

Enterprise Resource Planning, 1st

Edition by Mary Sumner

Chapter 8:

Managing an ERP Project

Factors Influencing Information

Systems Project Success

Factors Causing Information

Systems Project Failures

• Poor technical methods

• Communication failures

• Poor leadership

• Initial evaluation of project

– Developing wrong functions, wrong user interface

– Problems with outsourced components

Risk Factors, continued

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

Managing ERP Projects

• Implementation factors

– Re-engineering business processes

– Changing corporate culture

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

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

– Had project implementation problems

– Dow had strong leadership and project champion– Was able to adjust scope and maintain control

–

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

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

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

Featured Article: FoxMeyer’s Project Was a Disaster Was the Company Too Aggressive or

Was It Misled?, continued

did not improve processes

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

• 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