Advanced Materials Research Vol. 338 (2011) pp 152-155 Online available since 2011/Sep/02 at www.scientific.net © (2011) Trans Tech Publications, Switzerland doi:10.4028/www.scientific.net/AMR.338.152
Enterprise Resource Planning (ERP) Implementation Process: Project Management Perspective Abdoulmohammad Gholamzadeh Chofreh1, a, Feybi Ariani Goni2,b and Mahdieh Gholamzadeh Jofreh3,c 1
Khuzestan Water and Sewage Company, Ahvaz, Iran
2
School of Information Technology, Universiti Kebangsaan Malaysia, Bangi, Malaysia
3
School of Management, Sharif University of Technology International Campus, Kish Island, Iran a
b
c
[email protected],
[email protected],
[email protected]
Keywords: Enterprise Resource Planning, Implementation Process, Project Management.
Abstract. Enterprise Resource Planning (ERP) system is an advanced manufacturing system that enables the integration of transactions-oriented data and business functions throughout an enterprise. ERP system holds the potential of greatly enhancing organizational performance and establishing competitive advantage. ERP project team can reduce their implementation costs by having a well thought out ERP implementation process. This research examines the ERP implementation process from the project management based perspective. The theoretical framework is developed to specify the ERP implementation process, which is categorized into five phases in project life cycle: initiating, planning, executing, controlling and closing. The research adopts the iterative triangulation as a methodology to establish this study, and one large company in Iran has been chosen by researchers to examine the proposed framework. Introduction A considerable number of researches have been established on ERP system implementation in organization. The significant benefits can be enormous by organizations in implementing ERP system [1]. On the other research, [2] mentioned that many ERP system implementation have failed because of many problems that occur during implementation. Good and effective project management is essential to solve this issue. In his research, [3] stated that the scope of complexity of ERP system implementation is different from traditional analysis and design project. Therefore, suggesting ERP system implementation process based on project management perspective is valuable to be developed for managing the project. In this paper, the authors leverage an investigation in a production and service company in Iran. A theoretical framework is suggested for achieving successful ERP implementation. Literature Review Project Management. ERP implementation is very complex. It needs vast combination of hardware, software, and organisational issues [4]. In order to overcome this complexity, the needs for project management as a methodological planning and calculated management are stressed [5]. Project management needs improvisation that becomes a part of the skill set of ERP project managers [6] to establish and use appropriate measures of success. Project management activities span the life of the project from initiating the project to closing it [7]. Based on the project management body of knowledge (PMBOK), project management processes can be organized into five phases: initiating, planning, executing, controlling and closing. The process groups are linked by the results they produce; the result or outcome of one becomes an input to another. Among the central process groups, the links are iterated—planning provides executing with a documented project plan early on, and then provides documented updates to the plan as the project progresses [8]. All rights reserved. No part of contents of this paper may be reproduced or transmitted in any form or by any means without the written permission of TTP, www.ttp.net. (ID: 175.138.117.197-22/09/11,12:06:58)
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ERP Implementation Process. There were many established researches in ERP implementation which was focused on the implementation process. Different ERP research revealed different process for implementing ERP successfully. [9] categorized the ERP implementation process into strategic level, tactical level, and operation level. In their research, [10] classified ERP implementation process into four stages: analysis stage, planning and designing stage, implementation, and post-implementation stage. [11] proposed a framework, which is focused on project chartering, project configuration, and shakedown phases, for ERP implementation successful. Nevertheles, none of those researchers integrate these ERP implementation process to the project life cycle in project management. According to the researcher’s point of view, the integration between ERP implementation process and project management can assist ERP project team for implementing ERP system successfully. This integrative concept is illustrated in a theoretical framework. Research Methodology This study is based on a single case study in Iran. The authors use iterative triangulation as a methodology to establish the study. Analysing existing case studies taps an often abundant source of field-based information, while conserving valuable resources that would have been needed to conduct multiple, original case studies. Ideally, cases can provide thorough description of constructs, construct interrelationships, organizational contexts, and processes from multiple stakeholder perspectives, data collection methods, and levels of analysis [12]. Iterative triangulation unfolds in four phases: groundwork, induction, iteration and conclusion (see Figure 1). Phase I: Groundwork
Phase II: Induction
Review Literature
Select Cases Literature
- Define theoretical domain - Develop review framework
- Define population and identify sampling frame - Skim cases and tabulate codes - Sample cases
Analyse Case Data Literature
Shape Conjectures Literature
- Analyse data within cases - Analyse data across cases
- Develop initial conjectures - Compare conjectures to data
Phase III: Iteration Refine Theory - Extend conjectures - Do mental experiments - Survey case authors - Reach closure
Phase IV: Conclusion Refine Theory - Evaluate theories - Suggest future research directions
Fig. 1 The Iterative Triangulation Methodology
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Framework of ERP Implementation Process. ERP Implementation Process: Project Management
Initiati ng
Planni ng
Execu ting
Contr olling
Closin g
Integration: - Develop the objectives of implementing ERP - Analyze the benefits of implementing ERP system in organization - Define the key success factors for ERP system implementation - Analyze the business process of an organization - Define the issues and challenges of ERP system implementation for organization - Define the business plan - Make the project charter document - Choose the correct methodology to implement ERP system [13] Scope: - Determine the organization’s needs - Identify the scope of ERP implementation Time: - Create the initial timetable of ERP project implementation Cost: - Perform financial evaluation by using cost-benefit analysis technique, which compares the cost to implement a project versus the benefit to be realized Quality: - Acquire flexible ERP information technology that can accommodate rapidly changing business conditions Human Resource: - Support and commitment from the top management - Identify the key employees of each department - Assess the skills and prepare management for ERP pre-implementation training Communications: - Provide a professional work environment Risk Management: - Identify the initial risk assessment, which includes internal and external organization, and risk of not doing project Procurement Management: - Choose ERP software that is similar to the organisation’s business processes [14] - Check the ERP vendor stability and ability by site visiting where they have implemented similar type of implementation successfully [14]
Integration: - Develop the project plan - Breakdown the project into natural phases or subsystems for modular planning and for development of cross-functional communications [15] Scope: - Develop the scope statement Time: - Estimate the time for implementing ERP project - Determine the overall schedule to indicate when work is to be performed in the future - Find the critical path of the project - Define and sequence the activities of ERP implementation Cost: - Estimate the cost of project implementation - Determine the overall budget Quality: - Define the quality for the project and how it will be measured Human Resource: - Assemble project team - Prepare plans for the recruitment, selection, and training of the necessary personnel for the project team [15] - Involve all of the users in ERP implementation planning [14] - Plan the user training along with ERP implementation to create more interest and better understanding in users [14] - Recruitment and selection plan for the necessary personnel in ERP project team - Promote users’ participation throughout the project planning - Use multi-functional project team in planning processes Communications: - Use appropriate planning styles for different tasks, detailed task plans for tangible tasks, iterative plans for evolving tasks, and personal communications plans for change management [15] - Provide a professional work environment - Inform the stakeholders with a detailed ERP project plan Risk Management: - Identify the risk management plans - Preparing solutions for unexpected challenges Procurement Management: - Develop the procurement plan, which is started with a description of the needed product and/or services, goes through a make/buy/lease decision process, and then develops a draft statement of work
Integration: - Complete work activities - Promote collaborative system development between users and developers [15] - Propose possible ways for restructuring personnel and systems to accommodate the new technology including maximising of system integration and interfacing [15] - Promote users’ participation throughout the project implementation Scope: - Scope verification - Make less software customization based on organization’s needs, because too much customization can ruin the budget of implementation [14] Time: - Schedule review for managing risk of delay Cost: - Make less software customization based on organization’s needs, because too much customization can ruin the budget of implementation [14] Quality: - Software quality assurance Human Resource: - Select a leader for ERP project - Recruit and select the necessary personnel in ERP project team - Use multi-functional project team in executing processes to bring complementary capabilities during the total life of the project Communications: - Distribute the information, such as progress update - Develop the progress meetings - Provide a professionally stimulating work environment [15] - Promote client consultation and user participation and obtain approval from parties for what is being undertaken throughout the project [15] - Use intra-project teams and intra and inter industry networking for technology transfer [15] - Inform the stakeholders with a detailed ERP project implementation - Use pro-active communications to establish more realistic expectations about the technology capabilities while communicating in tailored way to each division or unit [15] - Establish the user training along with ERP implementation to create more interest and better understanding in users [14] Risk Management: - Managing the risk of delay. This can be addressed through answers to a series of questions: what can go wrong? Procurement Management: - Solicitation plan - The project manager must rely on the accuracy and timelines of vendor reports
Integration: - Control the overall changes - Minimize the additional work of data acquisition and processing - Manage by exception to the project plan Scope: - Control the project change for the benefit of the project and resulting product Time: - Control the schedule Cost: - Control the cost Quality: - Control the quality - Measuring the effectiveness of an ERP system that has been implemented - Measure the satisfaction factors: stated requirements, unstated requirements, acceptance testing, and product reliability Human Resource: - Control the user training along with ERP implementation to create more interest and better understanding in users [14] - Team morale and the morale of other stakeholders can be monitored through various types of interviews or surveys. Communications: - Report the software performance - Provide a professional work environment - Collecting users’ feedback about the new system for user acceptance and testing Risk Management: - Control the risk response Procurement Management: - Contract administration
Integration: - Formal acceptance Scope: - Scope verification Time: - Project closing Cost: - Procurement audits close out Quality: - Whether the objectives of the ERP system were realised fully [15] - Whether the scheme options were considered adequately [15] - Whether the estimates and project information were accurate [15] - Whether or not the agreed practices and techniques were complied with any other factors that are considered appropriate [15] Human Resource: - Project team members release Communications: - Administrative closure - Provide a professional work environment - Documenting the learning and experiences from the ERP project - Keep communicate with chosen ERP vendor for ongoing support Risk Management: - Closing project risks when the risk has occurred or no longer occur Procurement Management: - Contract closeout is done by the procurement office and ensures that all contracts are properly completed, all vendors are paid, and all inventory issues are settled
Fig. 2 The Proposed Theoretical Framework
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Case Analysis and Finding Khuzestan Water and Sewage is one of large company in Iran which was established in Ahvaz since 1992. Khuzestan Water and Sewage is the only one company specializing in water and sewage in Khuzestan. This company was awarded the ISO 9001:2000 accreditation in 2005 by IQNet. Khuzestan Water and Sewage Company has 49 branches spread throughout the city in Khuzestan. At that time, the information was not integrated each others. Therefore, management of the company had problems in difficulty and slowly of decision making. Management of Khuzestan Water and Sewage intended to implement ERP system, because they knew that it would be an appropriate tool to handle their works. The management wanted to know about financial, production, logistics and sales reports in faster way, so that the management of Khuzestan Water and Sewage can improve the time for decision making. Conclusion Conclusively, the choice of case study appears to be suitable for examining the ERP process based on project management perspective. The theoretical framework was proposed to Khuzestan Water and Sewage Company for its successful ERP system implementation project. This adds to our understanding of the ERP system implementation in organization. References [1] Shang and Seddon, in: Assessing and managing the benefits of enterprise systems: the business manager's perspective, Information Systems Journal, (2002), p. 271-299. [2] C. Holland, and B. Light, in: A critical success factors model for ERP implementation, Manchester Business School, Manchester: IEEE Software, (1999). [3] T. Davenport, in: Mission Critical: Realizing the Promise of Enterprise Systems. Boston: Harvard Business School Press, (2000). [4] H. Ryan, in: Managing development in the era of large complex systems. Information Systems Management, (1999), p. 89-91. [5] F. Soliman and M. Youssef, in: The role of SAP software in business process reengineering. International Journal of Production and Operations Management, (1998), p. 886-895. [6] R. Macredie and C. Sandom, in: IT-enabled change: evaluating an improvisational perspective, European Journal of Information Systems, (1999), p. 247-259. [7] J. A. Hoffer, J. F. George, and J. S. Valacich, in: Modern Systems Analysis and Design. MA: Addison-Wesley, (1998). [8] PMI Standards Committee, in: A Guide to the Project Management Body of Knowledge, PA, USA: PMI Communications, (1996). [9] A. Al-Mudimigh, M. Zairi, and M. Al-Mashari, in: ERP software implementation: an integrative framework, European Journal of Information Systems, (2001), p. 216-226. [10] M. Al-Mashari, M. Zairi, and K. Okazawa, in: Enterprise Resource Planning (ERP) implementation: a useful road map, International Journal of Management and Enterprise Development, (2006), p. 169-180. [11] V. Kumar, B. Maheshwari, and U. Kumar, in: An investigation of critical management issues in ERP implementation: emperical evidence from Canadian organizations, Canada: Elsevier Science Ltd., (2002), p. 147-172. [12] R. Yin, in: Case Study Research: Design and Methods, Beverly Hills, CA: Sage, (1984). [13] H. Neal, in: ERP Implementation Strategies - A Guide to ERP Implementation Methodology, www.softwareadvice.com, (2010). [14] N. Mutt, in: ERP Implementation Strategy, www.nickmutt.com, (2009). [15] P. Mandal and A. Gunasekaran, in: Issues in implementing ERP: A case study. European Journal of Operational Research, 146, (2003), p. 274–283.
Product Design and Manufacturing doi:10.4028/www.scientific.net/AMR.338 Enterprise Resource Planning (ERP) Implementation Process: Project Management Perspective doi:10.4028/www.scientific.net/AMR.338.152
