Transcript The Enterprise Application Market, 2000

ISYS90036 – Enterprise Systems
Lecture 8A
Lessons from “Go Live” Failure at
RMIT
Dr. Sherah Kurnia
Outline
•
Feedback:
–
Week 7 submission and SSLC
•
Importance of Project Management
•
Project success factors
•
What happened at RMIT?
•
Explaining the problems at RMIT – Workshop
Slide 2
Week 7 Submission - Feedback
• Q1. ES implementation affect all aspects of
organisational design based on Galbraith’s Star
Model (Capability, Process, People, Structure and
Rewards), including Strategy.
• Q4a. OOI – emphasis should be on overcoming,
not the organisation’s resistance
• Q4b. Why OOI important? Should emphasize on
significant changes introduced by ES which create
resistance
• A handful students still do not answer all questions
explicitly. Do not simply cut and paste from lecture
notes.
Slide 3
References
• Seddon, P.B., Lessons from the Packaged Application
Software “Go Live” Failures at Cambridge and RMIT
Universities, 2007
• Motiwalla and Thompson (2012), Enterprise Systems for
Management, 2nd Edition, Pearson
• Additional: Chen et al (2009) Managing ERP
Implementation Failure: A Project Management
Perspective, IEEE Transactions on Engineering
Management, 56(1), Feb 2009, pp 157-170.
Slide 4
Examples of ES Implementation Failures
(Seddon 2007, p4)
ISYS20006 Shaping the Enterprise with ICT
Slide 5
ES/ERP Implementation
(Chen et al 2009)
• High failure percentage due to complexity involved
• Diverse stakeholders are involved with different and
sometimes conflicting interests
• Lifelong journey
– Ongoing project involving management of requirements,
organisational change, user support, maintenance and
upgrade
– Corporate strategy (involving power and politics) that
affects ES projects may change over time (Lee and Myers
2004)
• Many reasons contributing to failure and some are
highly related to poor project management
Slide 6
Project Management
(Motiwalla and Thompson 2011)
• Project management is about “planning and
executing the work required to deliver the end
product” (p 228)
• The focus is on tactical matters
• ERP implementation often involves several
functional projects
• Each project is managed by a Project Manager
and involves different project teams
• What skills are required from a Project Manager?
Slide 7
Project Manager Knowledge Areas
• Scope
• Human resources
• Risk
• Communication
• Procurement – partnership relationship management
• Integration – alignment between business strategy and
IT strategy
Chen et al (2009)
Slide 8
Example: Importance of Project Management
(Chen et al 2009)
• A study of a California-based multinational company that
provides a total solution for the automation needs of
industrial and commercial clients
• Established in 1958
• Headquarters is in California
• Strategic business units (SBUs) are located in California,
Australia, China, Hong Kong, Macao and Taiwan
• SBU in Taiwan has different taxation requirements
• The company had an urgency to improve the visibility and
decided to replace the legacy Sales and Distribution system
with an ERP
• Two phase implementation of an ERP was involved
Slide 9
Example: Project Management Improvement
(Chen et al 2009)
Slide 10
Example: Project Management Improvement – cont’
(Chen et al 2009)
Slide 11
IT Engagement Model
(Chen et al 2009)
• Strategic
• Corporate level
directives
• Top-down
• Tactical
• Project level activities
• Bottom-up
Slide 12
Program Management
(Motiwalla and Thompson 2011)
• Program management is about the coordination of
inter-related projects over time to achieve particular
business goals
• Managed by a Project Director (Program Manager or
Project Executive or Executive Sponsor or Project
Champion)
• Links various projects together to ensure that
business goals are addressed
• The focus is on strategic matters
• Skills: management, leadership, communication,
negotiation + deep knowledge of the organisation and
experience in large-scale system implementation
Slide 13
Important Roles in ES Implementations
• Executive Sponsor / Program Manager
– “a vested interest in a successful outcome”
– Provides the vision for the project
• Project Manager
– Multilingual
– Gatekeeper
– Maestro
– Cattle driver
– Excellent communicator
Seddon (2007)
Slide 14
Sample Organization Project Structure
(Motiwalla and Thompson 2011, p 230)
Slide 15
Project Management Success Factors:
3 streams of the literature (Seddon 2007)
Project Management
generally
Pinto and Slevin (1988a, b)
de Wit (1988)
Belassi and Tukel (1996)
Morris (1996, 2000)
Pinto (2000)
Cooke-Davies (2002)
White and Fortune (2002)
Ross (2003)
IT Project Management
ERP Implementation projects
Ewusi-Mensah (1997)
Larsen and Myers (1997)
Standish (1999)
Jurison (1999)
Alter (1999a, b)
Sauer et al. (1999, 2001)
Schmidt et al. (2001)
Parr et al. (1999)
Holland and Light (1999)
Sumner (1999)
Somers and Nelson (2001)
Scott and Vessey (2002)
Umble et al. (2003)
Brown and Vessey (2003)
Fitz-Gerald & Carroll (2003)
Slide 16
Project Management Success Factors:
Project Management Perspective
Contextual factors
External
1a. Business Competitive
environment
1b. Clear cost benefit
1c. Urgency, deadlines
1d. Vendor failure
Organizational
1d. IT infrastructure
1e. Knowledge/skills
1f. Business processes
1g. Organizational
structure, e.g.,
multinational
1i. Organizational culture
Project Success factors
Limited control or influence High level of control
3a. Sound project planning and
2a. Top Management
control
support
3b. Competent staff and
2b. Organizational
knowledge
commitment to change
3c. Achieving fit between
2c. Clearly-defined goals
software and business
and scope
needs (e.g., vanilla)
2d. Adequate resources
3d. Training and change
2e. Effective leadership
management
2f. Project champion
3e. Data conversion
2g. Flexibility
3f. Testing
2h. Clear communication
3g. Vendor support
2i. Managing stakeholders
3h. Technical problems
3i. Political influence
exercised by project leader
Slide 17
ES-project Critical Success Factors
From Senior Management Perspective
Top Management support
• Top-management support (25)
• Project champion (10)
• Visioning and planning (15)
• Business leadership of project
• Commitment to change
Achieving Functional fit
• Sound software selection (7)
• BPR & software configuration (23)
• Balanced team (12)
Other
•Consultant selection & relationship (16)
•IT infrastructure (8)
Strong Project Management
• Best people fulltime (21)
• Implementation strategy &
timeframe (17)
• Deliverable dates
• Strong project manager (6)
• Good methodology
• Data conversion
• System testing
• Vanilla implementation (6)
Change Management and Training
• Change management (25)
• Communicate, communicate (10)
• Training and job redesign (23)
• Managing cultural change
Note: most Key Success factors revolve around
people and management issues, not technology!
Slide 18
RMIT University Case Study
(Seddon 2007)
• “One of Australia’s leading educational institutions”
• Went live with PeopleSoft Academic Management
Systems (AMS) on 29/10/01 to replace legacy systems
already in use since 1982
• Goals: to “significantly streamline the University's
administrative processes, and in turn provide enormous
benefits to staff and an enhanced level of service to
current and potential students” (RMIT 2000).
Slide 19
RMIT - “Go Live” Failure
• Budget cost A$12.6M
• Repairing the system, including the corrupted database,
cost A$18M in 2002
• Total cost after repairs was A$47 M (= 4 x budget)
• The software was so highly customized that two
independent consulting firms advised it would be easier
to reconfigure the system afresh, rather than to try to
repair the current system. (Auditor-General of Victoria,
2003)
Slide 20
AMS Implementation Management
Structure, 1999-2001
The VC “had people who
were favorites and
those who weren’t.”
(The Project Director
was a favorite.)
Strong informal
channel, based
on trust
“An appropriately skilled
internal Project Director and
Project Manager were not
part of the project team”
(A-G report, para 5.79)
“The AMS Project
Steering Committee was
viewed as ineffective.”
(A-G report, para 5.79)
Two Important People
• Project Director
– A highly influential person at RMIT
– Head of the university’s academic Department of Computer Systems
Engineering, Director of the Learning Technology Services Group,
and had also been Vice-President of the RMIT Branch of the
National Tertiary Education Union (NTEU) between 1993-1998
– a charismatic, “passionate RMIT person”, … someone who would
“thump the table and yell” at meetings to get his way
• Vice Chancellor
– Appointed to her position in October, 2000, a year after the project
was underway
– Approved for AMS to go live based on assurances from the Project
Director and the AMS team that the system was ready
– Resigned in August 2004
Slide 22
What happened at RMIT?
Functionality
• “since going live, the AMS has suffered a number of
functional and technical problems including:
– Difficulty in billing fee-paying students
– Difficulties in issuing HECS statements
– Delays in processing and advising enrolment details
– Problems with meeting statutory and legislative reporting
requirements
– Interface difficulties between the AMS and the RMIT general
ledger; and
– Shortcoming relating to systems performance of both the
hardware and software”
(Victorian Auditor-General’s report, 2003)
Slide 23
What happened at RMIT?
Cost
• 1999 budget A$12.6 M + $6M over 3 years for other works
• Dec 2001 cost was $13.5 M
• By end 2002 an extra $18.2 M on remediation
• 2003 expenditure of $15.5 M ($7.4 M on consultancies)
• Grand total to end 2003 financial year is $47.2M (cf. RMIT’s
annual budget of $480 M in 2002)
Slide 24
What happened at RMIT?
Customization
• “RMIT needed to re-implement a student solution, as the
implemented PeopleSoft-based AMS solution had been
heavily customised resulting in significant technical
and functional problems.
• The reviews also concluded that it would not be costeffective to attempt to rectify the existing AMS
solution”
(Victorian Auditor-General’s report, 2003)
Slide 25
Summary of Problems
(Direct Quotes, Victorian Auditor-General 2003)
• “the AMS ‘go live’ decision did not consider whether all
features required of the system had been fully delivered…”
• “the AMS implementation was based on a student
administration solution that had neither been proven nor
excepted elsewhere, within Australia”
• “the AMS ‘go-live’ decision was not based on assessing the
readiness of the entire organisation”
• “The AMS went live during a critical RMIT processing
period…”
• “The whole AMS project went live at the one time…”
• “RMIT did not undertake adequate user acceptance testing…”
Slide 26
Summary of Problems (cont’)
• “Limited documentation to demonstrate an adequate level
of project governance”
• “…lack of communication… between the AMS Project
Team and business users…”
• “…status reports to the Project Steering Committee were
inadequate”
• “…lack of… documentation on the current problems with
the AMS and the activities required to address these
problems”
Victorian Auditor-General 2003
Slide 27
Explaining the problems at RMIT
Contextual factors
Contextual factors
External
1a. Business Competitive
environment
1b. Clear cost benefit
1c. Urgency, deadlines
1d. Vendor failure
Organizational
1d. IT infrastructure
1e. Knowledge/skills
1f. Business processes
1g. Organizational
structure, e.g.,
multinational
1i. Organizational culture
Project Success factors
Limited control or influence High level of control
3a. Sound project planning and
2a. Top Management
control
support
3b. Competent staff and
2b. Organizational
knowledge
commitment to change
3c. Achieving fit between
2c. Clearly-defined goals
software and business
and scope
needs (e.g., vanilla)
2d. Adequate resources
3d. Training and change
2e. Effective leadership
management
2f. Project champion
3e. Data conversion
2g. Flexibility
3f. Testing
2h. Clear communication
3g. Vendor support
2i. Managing stakeholders
3h. Technical problems
3i. Political influence
exercised by project leader
Slide 28
Explaining the problems at RMIT
Contextual factors
•
External factors
– The late 1990s boom in IT industry, plus demand for
IT staff to solve the Year 2K problem, led to shortage
of experienced consultants and staff in 1999 when the
project commenced.
•
Organisational context
1. The VC and tensions at University Council
2. Status and power of the AMS Project Director (who
also lacked experience with projects of this scale and
complexity)
3. Organisational knowledge of ES - not in the Project
Director’s head.
Slide 29
Discussion: Explain the problems at RMIT based on
the project success factors
Contextual factors
External
1a. Business Competitive
environment
1b. Clear cost benefit
1c. Urgency, deadlines
1d. Vendor failure
Organizational
1d. IT infrastructure
1e. Knowledge/skills
1f. Business processes
1g. Organizational
structure, e.g.,
multinational
1i. Organizational culture
Project Success factors
Limited control or influence High level of control
3a. Sound project planning and
2a. Top Management
control
support
3b. Competent staff and
2b. Organizational
knowledge
commitment to change
3c. Achieving fit between
2c. Clearly-defined goals
software and business
and scope
needs (e.g., vanilla)
2d. Adequate resources
3d. Training and change
2e. Effective leadership
management
2f. Project champion
3e. Data conversion
2g. Flexibility
3f. Testing
2h. Clear communication
3g. Vendor support
2i. Managing stakeholders
3h. Technical problems
3i. Political influence
exercised by project leader
Slide 30
Summary
•
•
•
•
Enterprise System implementation is a lengthy and
complex process, which needs to be managed very
carefully.
Various stakeholders in ES implementation have
different interests that may create conflicts
Sound project management skills in the areas of
project scoping, HR, risks, communication,
procurement and integration management can
greatly improve the success of ES implementation.
Project directors and project managers play a
critical role in project success or failure.
Slide 31