FIT9123 INTRODUCTION TO BUISNESS INFORMATION SYSTEMS

Semester 1, 2020

Assignment 1: Evaluation of ERP System Failure: Critical Factors, Failure

Types, and Recommendations

Value: This assignment is worth 100 marks. It however contributes to 20% of

your overall assessment for the unit.
Submission Date: Friday, Week 7, S1 2020
Type of Assignment: Individual
Value: 20%

1. Submission: The assignment must be submitted in electronic format only through

Moodle. Please follow the submission process described below:

a) Your assignment deliverables include a single file: Assignment Report (in .pdf
format). The filename should contain Unit Code, Assignment Number and your
student ID number, similar to the following example:
FIT9123Assignment1Report_StudentID.pdf
b) Submit an electronic version (in .pdf format, without completed Individual
Assignment Cover Sheet) of your completed Assignment Report through the
Moodle site of this unit, by Week 7 (Friday). In doing so, please click on the
acceptance box of Individual Assignment Submission.
2. Late Submissions: Late assignments submitted without an approved extension
may be accepted (up to two weeks late) at the discretion of the Lecturer, but will
be penalised at the rate of 5% of total assignment marks per day (including
weekends). Assignments received later than two weeks after the due date will not
normally be accepted.
3. References: Students are encouraged to look for relevant readings, and draw on
scholarly literature. All sources of information must be fully and appropriately
acknowledged using in-text citation and reference list. Please use APA style of
referencing.
4. Format and Length: The format of the assignment report is shown below:
• Title page (with Assignment title, Student name, ID, Unit code, TA name)
• Table of contents
• Introduction section
• Responses to assignment tasks
• Conclusion section
• Use one single aggregated Reference list at the end of the document.
• Use Times New Roman format, font 11 or 12, and single space.
• Each page (except the Title page, Table of contents) must be numbered.
• Assignment length should not exceed 4000 words (excluding Title, Table of
contents, and Reference List)

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FIT9123 Assignment 1, S1 2020
5. Other Questions: Please contact your Teaching Associate (TA)or Lecturer should
you require further clarifications.

6. Assignment Assessment Criteria: Assignment 1 will be evaluated in terms of the

following criteria:
• Written communication skills
• Logical structure of report
• Critical analysis/synthesis
• Correctness of analysis
• Identification of key issues as well as rich discussion
• Literature used (relevance, up-to-date) and referencing/citation technique
• Use of in-text references and list of references in APA style
7. Warning: Students are encouraged to use materials from a variety of sources BUT
materials copied from other sources that are NOT acknowledged in appropriate
references will be considered as PLAGIARISM and is a serious offence that will
result in failure (see Section 8 on “Plagiarism and Collusion” section below for
more details). Any students suspected of copying other students’ work will be
immediately referred to the relevant disciplinary committee.
8. Plagiarism and Collusion: Note that this is an Individual assignment. While
general collaboration between students in terms of understanding of concepts is
acceptable, the assignment report must reflect entirely your own work. You must
not:
• Use another student’s work as the basis for your own.
• Steal, appropriate or make use of the work of another student without their
knowledge.
• Lend your work to another student for any reason.
• Use the ideas, words or other intellectual property of anyone without
proper acknowledgement.
9. Extension Policy: Note the extension policy in the Unit Guide. When an extension
is to be requested, students should consult the Lecturer.
10. Broad Assignment Aim: This assignment aims at assessing understanding of
students on how they perceive the conditions that may trigger to the unsuccessful
use or even failure of ERP systems in organisations.
11. Specific Instructions: Students are required to carefully read the case reports
(Appendix-A). It contains TWO cases of an ERP systems failure at a company.
Please choose only a single case of ERP systems failure, and prepare a report
addressing the following tasks [Note: Please feel free to make any relevant assumptions (if
needed) in support of your arguments and clearly articulate these assumptions in your report]:

Task 1: Identify and describe FOUR (4) most critical factors that you believe may
have contributed to the failure of the ERP system at the case company.
Support those factors in light with the existing ERP literature.
(10 marks for each factor, Total marks: 4 x 10 = 40)
Task 2: Discuss the ERP system failure at the case company and classify it in
terms of the IT systems failure taxonomy proposed by Lyytinen and
Hirschheim (1987).
(5 marks for each type of failure, Total marks: 3 x 5 = 15)

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 Task 3: Assume that you represent the Chief Information Officer of the case
company that you have selected. Provide FOUR (4) recommendations
to the case company in order for them to avoid the ERP system failure.
(4 x 10 marks = 40 marks)
Task 4: Adherence to the format and length of the report as outlined in Section
4. Include several scholarly references and cite them in the body of your
assignment report and add full references in the bibliography (use APA
style). (5 marks)

Appendix-A
Case A: ERP System Failure at a Soft Drink Company
Introduction: Being one of the largest independent bottlers in the soft drink industry,
keeping up with the latest bottling technology was the name of the game. Knowing
that canning and bottling technology could make or break the bottom line, the bottler
always maintained the latest and greatest equipment. On the other hand, information
technology was something that had been swept under the rug for some time and not
kept current.
Since its inception in 1935, the bottler had been acquiring territory and expanding the
business. As a result, the need for better information grew. To keep up with company
growth, new computer systems were added in different departments as the need
beckoned. In doing so, care was not always taken to ensure compatibility. As the
company continued to grow, the different stand-alone systems became more and more
mismatched, and the need for an integrated system became extremely apparent.
Although further territorial growth was not really a consideration at the time, the
addition of new products was always a reality. Consumers are always demanding
more and the bottler wanted to be prepared. Not only were new product lines a factor,
but the executives of the company had continuously expressed their desire for timelier
financial information and decision-making tools from the different departments. The
existing systems, which were unique to each department, were unable to handle such
requests. Any customized reporting was developed from a multitude of sources and
compiled manually.
ERP, having gained recognition over the years, became the topic of discussion as
alternatives were contemplated and the company tried to formulate a solution that
would meet the needs of the individual departments, be compatible companywide,
and facilitate the integrated communication that was desperately needed.
Due to the fact all these issues were significant enough to warrant an overall
reengineering of business practices, the bottler decided to start researching viable
options. A great deal of time and money was spent to research options, outline
necessary attributes, and perform feasibility studies. Employees spent several months
completing a study to justify expenditures for the new system. These studies, along
with the inherent need for a new, integrated system, led to the decision to implement
ERP.
The Decision to Implement ERP: After a great deal of research and discussion, an
executive steering committee, with the guidance of outside consultants and the
consensus of the information technology (IT) department, decided to implement an
ERP system. The new system would be capable of handling company growth,
communicating between departments, and producing customizable, robust reports.
The ERP vendor that was “slicing and dicing” capabilities for reporting that
accompanied the software.
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This ERP vendor offered other features that were attractive to the soft drink bottler.
The financial module, with its abilities to track profit, forecast sales, and manage cash
flow, was also a feature the executives liked. They also liked the fact that the human
resources and payroll modules would feed benefit, compensation, and time and labor
information to the profit reports. Management appreciated the fact that production
scheduling, cost of goods, and inventory would all automatically update the income
statement. Once sold on the overall package, the executive committee gave the green
light to go ahead with ERP implementation.
Project Initiation: Although the ERP product seemed to be the solution to all its
problems, the bottler still had an enormous amount of work to do. No matter the size
of the company, implementing an ERP system is not a trivial project. The bottler
chose not to take the advice of the independent consultants it had hired during the
ERP product evaluation and recommendation phase, and chose its own path for the
implementation effort.
This lack of faith in the consultants’ advice made the implementation process even
more challenging. For the bottler, with a young, inexperienced professional staff and
a very limited IT staff, the undertaking was more than everyone bargained for. Too
much time-consuming and technical work was assigned to employees who did not
have ERP expertise or the proper training. In addition to this lack of expertise,
employees were not provided assistance when it came to keeping up with their regular
job duties.
Recommendations, once again from the independent consultants, suggesting part-
time help be provided to employees involved in the project, were ignored. The bottler
had a history of a “do-it-yourself” philosophy for all projects undertaken in the
organization. Due to the enormous workload of the ERP implementation effort, a
great deal of strain was placed on the employees involved in the project.
Communication issues, including employee encouragement concerns, also added to
the burden of the human resources problem. Due to breakdowns in the channels of
communication, and the lack of management support, many constituents, including
high-level employees, resigned. Some were voluntary; many others were not.
Team Members and Their Involvement: The selection of ERP project team members
lead to additional project and personnel issues. Although the consultants stressed the
importance of quality representation, the bottler did not select the best candidates for
the job. Some of the people who were selected to work on the project had only been
with the company for a few months and were new to the manufacturing environment
altogether. In fact, most team members were fresh out of school with degrees in
management information systems.
While this may be a good criterion for choosing project team members, it should not
be the only selection criterion. These team members were barely trained in their day-
to-day job activities and were not experts in the business practices within their
department. Although other employees were not as well-rounded in their educational
background, they would have been much better candidates to be involved with the
ERP implementation effort. It is merely in the company’s best interest to choose the
employees who are the most familiar with the processes they will be reengineering.
While selecting the best and most knowledgeable employees may mean doing without
their normal contributions for a while, a company must be willing to make that
sacrifice. The importance of involving the right people in the implementation cannot
be stressed enough. This does not mean burning out people and expecting them to
work 80 or 90-hour weeks either. It does mean hiring temporary help, or calling on

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other employees to take up some of the slack. Employees should not be expected to
work long hours on both the ERP implementation effort and their regular duties. The
team members should not be expected to perform at breakneck speed, nor be given
more than normal implementation responsibilities in order to keep tedious, time-
consuming tasks away from consultants. This is exactly what the consultants are there
for. An inhuman pace, on a project like this, is unreasonable and will more than likely
lead to the failure of the ERP implementation effort.
Not only were employees stressed out by the number of hours they were required to
work, but they were frustrated by what was expected of them and the lack of
appreciation they were receiving. Employees were not offered incentives or
recognition at important milestones — or upon completion of the project.
Management scoffed at the idea when it was mentioned.
Communication Challenges: In addition to the lack of management support, other
communication issues plagued the project. Certain project leaders and upper
management did not see the importance of sharing certain aspects of the project across
modules and departments. When they did, they were not consistent about the format
of the information. Important details regarding the way the new system would handle
day-to-day actions were not revealed until insurmountable problems arose. When the
problems were revealed, it was often too late and someone was being blamed for the
additional time and money it was going to cost the company.
When a communication breakdown came to a head at the bottler, it resulted in the
firing of the project leader. The head of the IS department was terminated because of
a verbal miscommunication between himself and another department head. Effective,
thorough communication that is documented and administered through the proper
channels can alleviate many headaches and save valuable, costly resources,
particularly human resources.

Case B: ERP System Failure at a SME in Norway

Introduction: The company ABC (a pseudonym) represents a SME with
approximately 90 employees and revenues of approximately US$40 million. It is
located in southern Norway and sells various office supplies through stores and the
web. It has sales offices in three different locations. ABC decided to replace its
existing back-end legacy IT system in early 2008. An ERP system was needed to
improve ABC company’s logistics operations. A consulting company was involved
in the ERP systems implementation project at ABC.
The ABC company experienced many problems during its ERP system
implementation, and the implementation budget (US$6 million) far exceeded its
initial allocated budget of US$3 million and estimated time of six months (ranging
from January 2009 to June 2009). ABC had a difficult relationship with the consulting
company, and there was great dissatisfaction among the employees during the course
of the ERP systems implementation.
The ERP systems implementation project commenced in mid-2008 when ABC
realised that it had out-grown its existing legacy system and decided to look for a new
ERP system. The flow of goods had increased significantly, and ABC needed to
become more efficient. The CEO noted that “We move ten times as much goods as
we did for the same revenue 15 years ago.”
The ABC management evaluated four ERP vendors and their ERP systems.
Eventually, ABC selected an ERP system and a reputable ERP vendor by the end of
2008. ABC realised that it did not have enough competence internally to implement
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the selected ERP system. It thus looked for a consultancy company to lead the
implementation of the ERP system at their company. ABC decided to employ the
skills of a large consultancy company, which has experience in the chosen ERP
system. The size of the consultancy company was deemed to be important to secure
long-term access to the ERP competence. The consultancy company stated that it was
very proficient on ERP project management and would successfully lead the
implementation process at ABC the whole way. ABC checked with previous
customers and invited the consultancy company to tender for the job.
The Pilot Project: A pilot project was run in February 2009 by a group of consultants
chosen from the consulting company and several department managers from ABC.
They mapped the business processes of ABC. One of the consultants was then
assigned the main responsibility for the pilot project and was located in ABC during
the implementation project. The CFO/COO was appointed as the internal project
leader and the spokesperson for the employees in the accounting department. The
head of the logistics department was also involved and represented the employees in
the logistics department. The CEO then withdrew from the pilot project. He however
received the pilot project report and found that it satisfactorily addressed the needs of
the various departments of ABC. Shortly after the pilot project, ABC advised the
consultants to proceed with the full-scale ERP systems implementation throughout
the company. ABC decided that the go-live date would be July 1, 2009, and it asserted
that the system would be well under way by August when the busy season started.
The pilot project was received positively by most managers.
General employees of the ABC company were however more critical. One criticism
was that only managers were involved in the pilot project group and that their voices
were not heard in this process. Instead, department managers represented their
departments and spoke on their behalf. One of the employees in the accounting
department noted that the people in the pilot project team were probably not aware of
the extent of employees´ work duties.
ERP Implementation Journey: The go-live date (July 1, 2009) was discussed
thoroughly in the pilot project. The issue was whether it should be before or after the
summer. The CEO noted several benefits of going live before the summer, such as
there being less activity during this period, and the CEO suggested that it would be
easier to correct errors during this period. He further added that “implementing in
August won’t work.”
Many employees, on the other hand, were more critical of the go-live date, especially
end-users. Several end-users believed that the holiday would interfere with user
training and had requested that the go-live date (July 1, 2009) should be moved
forward. Many employees went on holiday around the go-live date and were not
proficient enough in using the ERP system when they returned from holiday.
Consultant #1 commented that “what was unfortunate ... was that some [employees]
went right out on holiday. One [employee] went on holiday almost at the time we
started. When she returned, the others were on holiday, and she was alone. It goes
without saying that this ERP system will fail.”
Most employees noted that the project management was poor and that this was a major
reason for the problems that occurred in the ERP project. ABC had given the
consultancy company the responsibility for the ERP project management. The project
team lacked a strong leader during the implementation process. Several employees
noted that the CEO should have taken charge. They further commented that the
appointed internal project leader was not up to the task.

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The consultancy company admitted that their ERP systems implementation project
management was not good enough, but it claimed that ABC was also to blame. The
consultancy company claimed that it strongly advised ABC to hire an external (third-
party) project leader. The CEO of ABC however dismissed this advice. Many of the
employees commented that the communication with and between the consultants did
not work properly. ABC addressed these problems several times and was promised
that it would be better. According to the employees, communications did not improve.
The branch manager noted that “Each consultant was perceived as competent on his
part, but the ERP implementation project lacked coordination.”
The consultancy company for its part felt that the customer’s company (i.e. ABC) had
problems with its communication and project organisation. One of the consultants
noted that employees were supposed to route their requests for customisation to IS
employee #1, who would then forward it to Consultant #2. The CEO however had
decided that there would be minimal customisation. The assigned consultant still
received many requests for customisation of various parts of the ERP system. Another
problem was that many promises and messages were only given orally. This made it
difficult to keep a record of what had been said and done. Both parties admitted that
they should have documented things better.
Customisation of the ERP System: Although the CEO had clearly stated that there
would be as little customisation as possible, the consultants made many adjustments
to the system. Many of the adjustments were not necessary, for example, minor
customisations of the screen images. It was noted that neither the consultant nor ABC
was firm enough when employees requested adjustments. IS employee #1 was
supposed to route the requests for customisation. This clearly did not work properly,
and it led to disorder and many unnecessary adjustments.
Training and Use of the ERP System: The user training in itself was perceived as fairly
good among employees and managers, but evidently there were some problems. One
issue was that consultants were still doing adjustments to the ERP system even on the
training day. The two consultants were located in different places and did not
communicate very well. This led to problems for several employees. Another problem
was the timing of the user training. It was right before most of the employees had
their summer holiday. The training was fairly basic, just enough to get a feel for the
ERP system. The CEO noted that this was not sufficient. There was not sufficient
support during the training period. One consultant was assigned to this task, but he
was fairly busy with other tasks. The users were, therefore, waiting for help and often
resorted to workarounds. Several managers noted that the dissatisfaction and the
resentment grew among users.
There were many problems with the ERP system during and after the go-live period
(which was delayed from July 1, 2009 to October 30, 2009). These led to many users
resorting to workarounds to get their work done. The employees found it difficult to
follow the specified routines in the beginning, also taking into account that many
employees were on holiday. This situation emerged because it was difficult for the
employees to perform their tasks when there was chaos in the data and the system.
There was also a lot of frustration among the employees over the way the
implementation process was handled. Many of the numbers in the ERP system were
wrong, and this led to distrust in the system and the figures. The internal project leader
also used workarounds. Since the routines were not working properly, the accounting
numbers did not match. There were errors up to US$1.5 million. The internal project
leader resolved this by distributing the accounting errors manually among the
departments.

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Post-Implementation Problems: The user support was very weak. The consultant in
charge of the user support (Consultant #2) was very occupied with coding in the ERP
system. This led to long response times. The consultant was under a lot of stress. The
CFO/COO left ABC in June 2010, and the CEO took charge of responsibility for the
ERP project. He soon discovered that there were serious problems with the accounting
data. Work routines were also not performed correctly, which led to more errors in
the transaction and accounting data. As a result, the annual statements for 2009 were
incorrectly posted. The CEO fixed the accounting errors by distributing the missing
amounts to the various departments, but believed that the ERP system did not
satisfactorily address their initial aim of improving logistics operations of the ABC
company. Furthermore, the ERP system project far exceeded budget (from US$3
million to US$6 million) and time (from six months ranging from Jan 2009 to June
2009 to eventually October 2009). The end-users were not happy as well, as they do
not have any confidence in the system.
(The End)

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