Managing ERP Implementation Failure
#1

Presented By
Nishigandha Adke
Smita Srikant

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Managing ERP Implementation Failure: A Project Management Perspective
Motivation

Enterprise resource planning (ERP) is the industry term used to describe a broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business.
Information technology (IT) projects are susceptible to changes in the business environment, and the increasing velocity of change in global business is challenging the management of enterprise systems such as enterprise resource planning (ERP).
The failures of first implementation of ERP system lead to the formation of the second.
Example: A California based multi-national company experienced project management lessons in both failed and successful ERP implementation.
Objective
This research adopts a case study approach to examine how poor project management can imperil the implementation of an ERP system.
The failures of the phase I of implementation explained further are the main reasons for implementing the phase II.
The main objective here, is to eliminate scope creep, poor risk management, inadequate allocation of human resources over time and vendor management.
Failures of first implementation
These are a few failures that lead to the approach of second implementation:
ERP implementation is, at its core, a people project
Employee resistance
Lack of top management commitment
Inadequate training and education
Inadequate requirements definition
Inadequate resources
Conceptual Background
To provide a better understanding of ERP implementation, this study adopts 3 conceptual models used in the literature.
Stage model
Project management knowledge areas
IT engagement model
Stage model
Project management knowledge areas
The project management institute systemizes the body of knowledge of project management into 9 areas:
Scope management
HR management
Risk management
Communications management
Procurement management
Integration management
IT Engagement model
Phases in ERP implementation
The evolution of ERP implementations is analyzed
based on the descriptive stage model
Initiation
Contagion
Control
Integration
ERP Implementation: Phase I
Initiation: Evolution of IT in organizations begins in an initiation stage.
Contagion: Although IT was introduced in the initiation stage, poor project management practices, meager involvement of senior management, high resistance level from functional areas was observed in this stage.
Control: Due to poor outcomes of implementation and support there was a representative control to the project management departments such as HR, ERP support and MIS
Integration: Due to loosely and ill-defined “vanilla” ERP implementation, first phase ended in this stage of the model.
ERP Implementation: Phase II
Initiation : More strict and well defined “vanilla” ERP implementation was designed consisting of two folds: 1) redesigning business processes 2) minimizing customizations were adopted.
Contagion: It enabled easy up gradation and made maintenance more manageable job
Control: provides mechanism of managing user requests and providing direction of maintenance and support to the ERP system.
Integration: ERP maintenance and support practices were successfully incorporated into daily operation in this stage.
Comparison between phase I and II of ERP implementation
Continued…
Drawbacks
Customization is problematic.
Re–engineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities.
Integration of truly independent businesses can create unnecessary dependencies.
Extensive training requirements take resources from daily operations.
Advantages
They eliminate the need to synchronize changes between multiple systems—consolidation of finance, marketing and sales, human resource, and manufacturing applications
They enable standard product naming/coding.
They provide a comprehensive enterprise view (no "islands of information"). They make real–time information available to management anywhere, anytime to make proper decisions.
They protect sensitive data by consolidating multiple security systems into a single structure
Future Research
Researchers may want to focus on just one particular project management area while expanding the number of case sites.
For instance, the process of risk management and comparing risk management practices at several firms within the same industry or even across different industries.
Grant’s and Pennypacker’s research on project management maturity.
Overall, it is expected that this research provides a foundation upon which future research can be built, and project management and ERP should continue to be a fruitful area of research.
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