ERP System Installation Options

1. ERP System Installation Options MIS 489 / IST 402

2. ERP Projects • ERP system implementations have unique features: • Less system design than conventional IT projects • Contract for help from vendor, consultants • Large project management team • Outsource all or part of operation

3. ERP Implementation Options • Full ERP package from one vendor • One ERP vendor with modifications to code • Best-of-breed / modules from multiple vendors • Modules from vendor with internal changes • In-house development • In-house development supplemented by some vendor products • Application service provider (ASP)

4. ERP Implementation Options • Mabert et al. surveyed approach of 479 manufacturing firms (ASP not on survey)

5. Project Management Results • KPMG survey of 250 companies • 30% exceeded original budget and time frame by a factor of 2 or did not conform to specifications • Standish Group 1994 survey of 365 companies • Only 16% came in on time and budget • Only 42% of features and functions in the final software • Standish Group 1995 report • Over half software projects would cost 189% over original estimate

6. Project Management Results • Gartner Group estimated up to 30% of ERP projects involve integration • With related systems like CRM, SCM, knowledge management • With other systems • Include portals for end-user data access

7. IT Risk Identification • Bank of America • 2 year project, budget of $25 million • On-line updating and automated generation of monthly statements • 5 years later, cost of $80 million, systems rejected by users • Accounting problems…slow…unreliable access to data • Institutional accounts dropped from 800 to 700 • Assets under management shrank from $38 billion to $34 billion

8. IT Risk Identification • Primary ways to identify risk: • Individual work by a risk analyst • Interview project team • Discuss with those impacted…especially users • Risk management is a continuous process, occurring throughout a project

9. Systems Failure MethodFortune and Peters • Systems view intending to identify risk in proposed projects by examining failure in similar efforts in the past • Disasters – systems that do not satisfactorily support users • Negative disasters– decisions to substantially modify a project, reverse a project, or abandon it. • Positive disasters– system implemented despite heavy criticism and dissatisfaction of key users

10. Systems Failure Method • Try to understand cause-and-effect relationships • Pre-analysis: define purpose, determine perspectives, gather source material • Identification of failures and select systems • Modeling: clarify the nature of the system • Comparison: gain understanding • Analysis • Synthesis

11. Systems Failure Method • Failure of systems is commonly a result of: • Deficiencies in org. structure & lack of performance control • Lack of a clear statement of purpose • Subsystem deficiencies • Lack of effective communication b/n subsystems • Inadequate design • Insufficient consideration of environment & insufficient resources • Imbalance of resources, & inadequate testing

12. Techniques to Implement • Waterfall Model • Software Life-Cycle • Prototyping • Spiral Model • Outsourcing • Application service providers (ASP)

13. Waterfall Model Requirements analysis Design Code Test Maintenance

14. Spiral Model • Important features: • Risk analysis • Prototyping • Iterative framework allowing ideas to be checked and evaluated • Explicitly encourages alternatives to be considered • Good for large and complex projects but not simple ones

15. Spiral Model