Project Management Issues

in Implementing ERP
Frédéric ADAM, David SAMMON & Fergal
CARTON
Business Information Systems
University College Cork, Cork, Ireland
 Introduction
• ERP Projects are large and Important projects
• Critical in terms of their potential and actual impact
• The track record is far from excellent
• Benefit realisation is questionable
• Preparedness is critical but badly understood
• This leads to problems during the implementation phase
that are not solved properly => dysfunctional ERP
• Very low levels of end-user satisfaction are reported

• Essentially different from traditional IS projects => need

for a different approach in terms of project management
 Concerns with ERP
Implementations Summarised
Intelligence Design Choice Review

Problem Business Best Fit Measurements

Finding Map Analysis of success
Package Competition
Business evaluation Benefits
Clear
Case realisation
Complexity decision
of packages making
Alternative On-going
to ERP Sales ZERO Development
Offerings choice Of ERP (ERPII)
Prerequisites Marketing Resistance
hype to change
Vendor-independent,
methodology-independent
analysis
 As a result
• Poor preparation for project
• Lack of managerial awareness of risks / opportunities
• Lack of understanding of how to select software
• Lack of vision of the business impact
• Poor rationale for ERP
• Poor understanding of how to scope project
• Poor perception of system a priori in user community

• Project management nightmare

• No guide book to find out where to start
• Project leader may not be an experienced project
manager (ownership)
 PMBOK
1 Project Integration 2 Project Scope 3 Project Time
Management Management Management

1.1 Project Plan Development 2.1 Initiation 3.1 Activity Definition

1.2 Project Plan Execution 2.2 Scope Planning 3.2 Activity Sequencing

1.3 Integrated Change Control 2.3 Scope Definition 3.3 Activity Duration Estimating

2.4 Scope Verification 3.4 Schedule Development

2.5 Scope Change Control 3.5 Schedule Control

4 Project Cost 5 Project Quality 6 Project Human

Management Management Resource Management

4.1 Resource Planning 5.1 Quality Planning 6.1 Organisational Planning

4.2 Cost Estimating 5.2 Quality Assurance 6.2 Staff Acquisition

4.3 Cost Budgeting 5.3 Quality Control 6.3 Team Development

4.4 Cost Control

7 Project Communications 8 Project Risk 9 Project Procurement

Management Management Management

7.1 Communications Planning 8.1 Risk Identification 9.1 Procurement Planning

7.2 Information Distribution 8.2 Quantitative Risk Analysis 9.2 Solicitation Planning

7.3 Performance Reporting 8.3 Risk Response Planning 9.3 Solicitation

7.4 Administrative 8.4 Risk Monitoring and Control 9.4 Source Selection

9.5 Contract Administration

 Case Study organisations
Key Features Firm A Firm B

Type of firm Multinational Public sector

Industry Pharmaceutical Education
Size (emp.) 100,000 2000
Turnover $21 billion (2002) Euro 200 million (approx.)
Scope of project Comprehensive Financials / Procurement / projects
Type of implement. Worldwide roll out in 4 waves Single site in 2 phases
Duration 5 years 9 months (expected)
Project leadership Steering committee Steering committee
Project managers Local top managers in sites Finance officer
Project teams Approx. 70 at each site + 45 in core team 15 full and part time
Key issues in ERP implementation

Rationale for project Seeking FDA compliance Old system crumbling

Key problems
Deserve special mention
 Managing differences between sites
 Setting up the template and sticking to
it
 Managing difference versions of SAP
 Saving local gains whilst implementing
single instance
 Deadlines imposed worldwide
 Communicating with staff / negotiating
changes to work practices
No attempts to justify investment beyond
compliance
 Lack of awareness of magnitude of change
needed
 Managing expectations
 Trade off between doing the right thing and
doing it right
 Tight budgetary constraints and lack of top
management support
 Difficulties in getting every one to agree on
specification
 Managing different cultures internally
Comprehensive ITT process to select package
Project Integration Management
• General preparedness
• Awareness of what projects entails –
volume of effort required, effect on staff
assigned to ERP team, budget, training…

• Firm A: excellent on average but very

uneven between sites
• Firm B: no understanding of project / far
too much expected of inexperienced team
 Project Scope Management
• Critical for ERP:
• number of modules, number of areas, extent of
customisation, number of interfaces with legacy
system, size of user population
• Surveys indicate most firms would change scope in
insight (*)
• Change in scope mid way through project
responsible for most cost /time slippages
• Firm A: well defined (template) but imposed by
HQ without consideration of local practices (time
wasted)
• Firm B: little thought given to scope / entire
modules added without considering impact
 Project Time Management
• ERP projects are amongst the longest
• Multi-wave global roll out up to 5 years
• Initial sites 2 software versions behind last ones
• In fact ERP needn’t take so long
• Firm A: all deadlines externally decided + no
choice
• Some sites failed to keep pace
• Firm B: core functionality on time, but difficult
areas (e.g.: research contracts) left behind
 Project Cost Management
• ERP projects are costly or highly costly
• Much of the costs are hidden to a certain
extent – e.g.: training

• Firm A: externally decided, but large

enough for all sites (pharmaceutical firm)
• Firm B: “mean” budget throughout
• Both firms used “super-users” for training
 Project Quality Management
• ERP projects require a serious
transformation process that must be
validated – e.g. invoicing, payroll…
• Many aspects require hard-to-get
expertise
• Application / organisational knowledge
dilemma (eg: use of consultants)
• Firm A: COMPLIANCE
• Firm B: new chart of accounts
 Project HR Management
• Project team (full time) + business as usual
dilemma – who can you afford to use?
• Support for project at local level

• Firm A: very organised – opportunities for

promotion after project – no casualties
• Firm B: the right people are not there + top
management think they can be on team and
pursue their normal duties
 Project Communication
Management
• Other side of coin: “selling” the project internally and
externally
• Can change be negotiated?
• How much will it cost?
• Not always a case of “stupid” resistance to best practice
• Firm A: full time consultant hired + monthly newsletter +
many meetings behind closed doors
• Firm B: fragmentation of certain functions makes
consultation process very tricky – too many to please
(on-going)
 Project Risk Management
• ERP projects can jeopardise earlier work
• They also disturb everyday work over long
periods
• They can lead to unworkable situations
(Hershey, workarounds…)
• Firm A: much to lose (can-do attitude)
• Firm B: odds stacked against success =>
actively preparing for failure by refusing
proper budget allocation
 Project Procurement
Management
• Which one is the one?
• How are vendors really selected?

• Firm A: SAP logical choice (FDA)

• Firm B: thorough process of ITT +
comparative analysis
• But other cases were not so neat (political
or unethical decisions – non-decision
making)
Additional Areas Specific to ERP
projects

• Project Rationale (global versus local)

• Project Review
• Global Project Management
 Conclusions
• Many common stories in the 2 cases
• ERP Projects are special
• Many common stories in the ERP
implementation cases
• ERP Project Management is tricky and
different
• Certain areas deserve additional scrutiny