Implementation of an ERP at Wei Corporation

Business Report
Santiago Noriega Ardila Student id: 43174485 Assignment 2, ITEC871 04/09/2012

Contents
Executive Summary................................................................................................................................. 2 Introduction ............................................................................................................................................ 4 The Case .................................................................................................................................................. 5 Wei Corporation: ................................................................................................................................ 5 Technology timeline:........................................................................................................................... 5 Benefits of an ERP: .............................................................................................................................. 5 Specifications: ..................................................................................................................................... 6 Project champion: ........................................................................................................................... 6 Committee: ..................................................................................................................................... 6 Team: .............................................................................................................................................. 6 Consultant Team: ............................................................................................................................ 6 Selected system: ............................................................................................................................. 6 Main issues: ........................................................................................................................................ 6 Lack of support from top management: ......................................................................................... 6 Steering committees lack of interest: ............................................................................................ 7 Lack of good project management ................................................................................................. 8 User participation ........................................................................................................................... 8 Conclusions ........................................................................................................................................... 10 Recommendations ................................................................................................................................ 11 References ............................................................................................................................................ 12

Executive Summary
Wei Corporation started implementing information systems in the early 1980s with the implementation of an accounting system, after that the system started evolving to overcome the need at a certain time. The system evolved until the homemade system just wasnt enough. The company decided to implement an ERP system, and under some very high level analysis the Oracle Applications Version 10.4 was the chosen system to implement, however problems arose even before the system selection. Lack of support from top management was the first identified issue with the implementation. Top management didnt understand the cost and implications of the project and only thought about the final benefits; the resources provided were insufficient, they lost interest really fast, stopped attending to the status meetings and after more than a year of delays and failures the project was cancelled. Then comes the steering committees lack of interest. This group which was formed by the project champion, the consultant team and other Wei Corporation employees had a challenge to implement the ERP but for various reasons such as lack of time, understanding and organization they lost interest in the project and replaced all the work with their day to day tasks. The lack of good project management was visible from miles away; inherent tasks to the position were poorly performed or even not performed at all. Scheduling, budgeting and even scoping were badly done not to mention the lack of leadership and poor guidance from the project manager as well as the selection of the software which was made with the wrong priorities. Lack of user participation was the last main issue identified in the case in which it is evident that the users werent involved in the right way, there wasnt at least a user per area who would take up on the testing and the users who did test werent happy with the system and instead of improving and revising what could be done the measure to mitigate this was simply to deploy the legacy system in parallel. All these issues are going to be explored in detail in the document. The issues were identified as exclusive to this case and solutions were found for the new proposal of trying the implementation again with the newest version of the software. The recommendations for the company include: Organize teams according to specifications Lay out the requirements Check the business process, do a business process reengineering Select a software and check different options, not close down to Oracle, look for the software that suits better Check other types of platforms different to the classic ERP such as a two tier ERP that might fit the company better and might benefit not only the costs of the project but also the benefits that will come if the project is successfully implemented. Hire the consultant team

Set mandatory meetings Make every member comply with the conditions of the project

These are some of the recommendations that will be looked at in depth in the recommendations section of this document to prove how suitable this project is for the company and what to do to make it successful and bring all the benefits of an ERP to the company.

Introduction
Wei Corporation is a Taiwanese company based in their home country Taiwan. With customers and suppliers all over the country and even overseas, the company needs some robust systems to help keep the company on track. With more than 2000 employees and more than a hundred of industrial companies, Wei Corporation started to feel the need of a computerized accounting system in the early 1980s. This report is an analysis of the implementation of an ERP system inside the company, it contemplates: The background of the project The options they had The plan they laid for this implementation The implementation Results And further options and recommendations

The Case
Wei Corporation:
What do we know about the company? Company based in Taiwan More than 2000 employees More than 100 industrial customers Supplier base inside and outside the country

Technology timeline:
Date Early 1980s Early 1990s Technology Introduction of computerized accounting systems FOXPRO-based accounting system developed by an IT team which was part of the company according to the companies need. Data is captured in batch mode and updated daily from the different departments: o Stores/Inventory o Sales o Purchases o Payroll o Accounting FOXPRO system replaced with RDBMS (relational database management) using INGRES. For this system the different modules were linked. Legacy system grows so much that the DP department is not able to meet the demands from the users Initiation of the implementation of Oracle applications 10.4 Project conclude as a failure and the legacy system is still running in parallel Evaluation of the implementation of the new Oracle ERP 11i

Early 1990s

1993-1995

24 months later NOW

Benefits of an ERP:
Implementing an ERP has its inherent benefits that can help the company improve the way they work in different areas as well as generating a new view in the way day to day processes and tasks that seem trivial. These were some of the benefits: Align the strategies with the operations Gives immediate access to the enterprise information Reduce risk

Reduce costs Improve productivity Support the change tendencies of the industry Improve financial management Organize company structure and duties Improve corporate governance

Under these apparent benefits Wei Corporation decided to implement an ERP system which went wrong for various reasons that will be analysed.

Specifications:
Project champion:

Companys senior manager Committee:

Head of departments and as chair of the steering committee the head of the IT department Team: IT head of department In-house team: 3 full time users and 5 part time users Consultant Team:

project manager 2 technical consultants 3 Functional consultants

Selected system:

Oracle Applications Version 10.4

Main issues:
This project had multiple reasons why it failed. These reasons are going to be analyzed in detail to realize if the issues that were presented in the implementation are embedded in the company dooming every future implementation of an ERP, or if these issues were just consequential of this implementation. Lack of support from top management:

The first visible and crucial issue with the ERP implementation for Wei Corporation was a lack of involvement of the higher grounds of the companies. Having unconditional top management support has been targeted as one of the most important success factors in the implementation of an IT project and ERP projects arent the exception. Top management is in charge of not only providing the resources such as money and personnel, but they also bring to the table an effective leadership, they coordinate the advances of the project, take crucial decisions regarding issues such as when to change the scope, methodology or even when to cancel a project due to its feasibility. For Wei Corporation the issues were visible from miles away starting from a visible misunderstanding of the scope and the implications of the implementation of a high impact project like the Oracle ERP. Also, it is evident that top management didnt have any formal reviews after the project kicked off, which lead to a serious loss of interest of the project and the passion that lead to the project in the begging was lost. Management withdrew their support for the project and the consultant team and the in-house development were on their own, a classic characteristic of a project that, like this one, ends up as a failure. Steering committees lack of interest:

A steering committee must be completely involved in the project; they need to have the disposition and knowledge to implement this project. Their guidance of the project is absolutely crucial for a successful result. The project champion is the head of this committee and it is very important that this person has a good understanding not only of the plan to follow but also of the technology to be implemented; in addition this person must understand the business and the context of the company. The project champion for Wei Corporation was one of the senior managers, even though he had experience in project implementation he wasnt the correct pick for this specific project. He had a serious lack of understanding of the context of the project, as well as a lack of any knowledge about the ERP technology. Lack of preparation for the implementation lead to a misunderstanding of the system and assumptions were made which turned out to be false. The system wasnt as customizable as they desired and this meant that they had to run parallel systems which are very confusing for the user as well as ineffective and expensive for the company. The meetings of the committee planned once a month were not attended by the members of this group, which lead to misunderstandings and varying opinions about the status of the project. Finally, the hierarchy inside the committee wasnt well defined - giving too much power to members such as the CFO who can only appreciate the economic benefits and drawbacks and didnt have a good understanding of the project, especially if it goes over budget.

Lack of good project management

An IT project implementation is composed of various factors which the project manager is in charge of, including: budgeting, scheduling and progress checkups and reports. An affective management is crucial for the implementation of the project. Business plan Scope Schedule Requirements

These are elements that need to be really well defined and handled by the project management and his team. All these need to be plausible and of course inside the limitations of the company. Realistic values for time and money are absolutely necessary, with the necessary annotation that these values are very likely to change and the scope needs to be realistic and not too ambitious to ensure the projects success. For Wei Corporation various issues were identified: The scope wasnt realistic to the software and hardware capabilities. To put it in the original words: The scope of the project, therefore, was ambitious The budgeting was terrible, the capabilities of the software and hardware werent measured causing unnecessary costs like running the two programs in parallel for a lack of functions of the new ERP system in comparison to the legacy system, also, hardware updates because the old hardware could not support the software The product selection was done more based on the facilities that the local customer service could give them than on its actual capabilities. Timing was terrible in the implementation; for example - the users were trained long before the project was ready to test. Support wasnt given to users to take into account their experience to find solutions to the software problems There was a lack of commitment from the teams, and project management could not make this change The lack of leadership gave room for Maverick behavior The processes were analyzed after the project started, making every finding a problem to implement to what was already implemented.

User participation

User participation is a key aspect in the implementation of IT project, because they are the people who actually leave the change, who can tell if it is going to work or not. Higher management waits for the implementation and then wait for the results and hope for the best, but the users are part of

this day-to-day implementation which, if it is successful, will bring numerous benefits to them, helping people make their daily tasks easier. Users experience and user testing must be taken very seriously and done constantly because they can tell if something is not good about a product or something that they know how it should work is not working fine, therefore it is a great way to solve issues on time when it is cheaper. In Wei Corporation: Users werent very involved in the project Not every area had people testing the functionalities The product lacked capabilities they had before so they didnt like it The business rules were changed and this took authority away from some and gave it to others - creating internal problems The complexity of the system made users dislike it. A report that the old system gave with a click now needed three screens to get to it and didnt even have all the details. Goals, project importance and scope werent clear to many users Team members were busy with their day-to-day work and didnt have any time to invest in the project. No leader figure organized the project structure completely; users did not know what to do. This resulted in the project being severely disorganized

Conclusions
Wei Corporation needed a software upgrade The project had various issued why it didnt work, such as: o o o o Lack of support from top management Steering committees lack of interest Lack of adequate project management Lack of user participation

The main issues with the project implementation were part of the companies first experience trying to launch a project like this without having the proper knowledge The top management support was the main issue why the project didnt work, with no upper management interest the project doesnt work Software requirements need to be very neatly expressed to choose the software wisely The organization for the project was deficient. The project manager and champion didnt comply to their tasks as expected A project of this kind can work in a Wei Corporation with a few changes to the structure of how it is going to be done.

Recommendations
The recommendation for Wei Corporation is to restart the initiative of implementing an ERP system. The failure from the last project only taught them what not to do, however the potential benefits of a successful ERP project are clear and the company shall go for it taking in account the following recommendations: 1. Clarify the scope, goals and objectives of the project. For this not only checks out the old system but also the processes and to a BPR, (business process reengineering) and also analyse the business rules, e.g -who does what? 2. Name a team that will dedicate full time to the project and organize the hierarchy of authority for the project, choose people with experience in projects and make sure that the person that is commanding the project has a full understanding of the context of the company and is in charge of people that completely understand the content of the project and the company itself. 3. With the team complete, lay down the functionalities the ERP would need to have to fully replace the actual system 4. Based on these functionalities, consult what vendors can offer and how much work and customization would each need, consider major vendors such as Oracle or SAP, but also talk to the IT team and consultants about options for implementing a two tier ERP to join modules from the old system with the new one, consult Netsuite. 5. Choose the vendor 6. Separate the implementation in phases and set target dates and budget. Clarify to the stake holders that this could change down the track but that this is the expectation. 7. Plan status meetings every certain period of time and make them mandatory for the steering committee plus stakeholders and sponsors. 8. Since the project is divided into phases use a RUP or agile methodology to create/customize, test, implement, deploy for each phase. 9. Start the implementation 10. Keep track at every time, that why there is a consultant team and a full time in-house team dedicated to the implementation of the project.

References
Diamond. D (2011); The Reasons Why ERP Projects Fail Krycer. I, (2012); ITEC871 Week 2 ERP Overview Krycer. I, (2012); ITEC871 Week 2 ERP Implementation Krycer. I, (2012); ITEC871 Week 3 Two Tier ERP Snider. B et al (2009); ERP implementation at SMEs: analysis of five Canadian cases http://www.sap.com/solutions/business-suite/erp/businessbenefits/index.epx