Business Analysis – I

Jeeshan George
Session 4
28th Aug, 2010

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Last time we saw…

1. CSF Method

Option 1 Option 2

SDLC

2. BSP Method

Option 3 Option 4

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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In this session… Continue Step 2

Deployment Approach

System Landscape

People

CSF - Project

Methodology

Phases

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Step 2 : Deployment Approach

Big Bang Old New

Parallel Old
New

Phased Old New

Pilot Old
New
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Step 2 : Deployment Approach

• Big- Bang
• Total : All pieces together
• Mini Big-Bang: Partial Vendor Implementations

• Phased
• Phased by module : Good for large projects
• Phased by Geographies : Legal, Distances, staff constraints
• Parallel
• Can be used for either, safe approach
• Pilot
• Complicated business processes
• When risk of low acceptance

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Step 2 : Deployment Approach

However, Big bang helps achieves integration between modules. Its advantages could
be:
• Better team working in big bang
• Better learning on integration
• Better solutions for integration

This is while phased approach risk the following:

• Conflicting settings
• Overall testing will be required frequently
• Require all processes experts approvals every phase

In phased approach, lengthy implementation lose users buy-in, because of social

inertia
• “Social Inertia” = trying hard to make something happen, while things stay the
same.

Phased approach doesn’t guarantee integration, organizational change maybe less

At anyway, careful evaluation is needed to choose the right approach

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Step 2 : Deployment Approach

So what approach is used more often?

months small large

Big bang 41.4% 14.9 47% 14%

Mini big bang 16.6% 16.8 24% 9%

Phased by module 17.3% 22.1 20% 20%

Phased by site 22.7% 30.0 8% 48%

Phased by module & site 2.3% 24.8

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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 Step 2 : System Landscape (Ground rules)

The next choice the management needs to make is the system landscape
definition, including
• Vanilla or Customized?
• Are Bolt-ONs required?
• Re-engineer or Customize?

Vanilla
• Easy to implement
• Follow vendor prescribed methodology
• Consultants with specialized expertise
• Usually on time and on budget
Customized
• Time and costs increase
• Not easily integrated into new version

Most companies significantly underestimate the effort required for code modification.
Vendor’s code should be used as much as possible, even if this means sacrificing
functionality, so upgrades from release to release can be done easily. Therefore, every
modification request should be carefully evaluated and approved, or rejected, after
considering all the options.
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Step 2 : System Landscape

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Step 2 : System Landscape (Ground rules)

• Add-ons and bolt-ONs are programs that extend the MIS’s capabilities
• Some of these programs are certified from the MIS vendor, as testing their
compatibility could be very hard
• They could be programs for: backups. Tuning, enhancing security systems
• Now they cover CRM & SCM & production optimization systems.

Bolt-On Example Vendor

Demand planning Demand Planner BAAN

E-procurement Ariba Network Ariba, Inc.

Business to business MANAGE:Mfg Cincom

Integrated suites Manugistics 6 Manugistics

Order tracking Intelliprise American Software

Factory plan/schedule Capacity Planning JDEdwards

Data mining Enterprise Miner SAS Institute

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Step 2 : Project teams

• Project Champion (s)

• A PM with proven Project mgt experience
• Product experts (consultants)
• Business process experts (functional areas)
• Technical experts in the areas of:
• System-to-system interfaces (inbound & outbound)
• Current system data (especially targeted systems)
• Database, network, & operating system experts
• Geographic business process experts (legal, taxes, currencies …etc.)

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 Step 2 : Project teams

Project champions or sponsors are individuals who have a clear

understanding of what is going on; they are very critical to implementation
success. Champions ideally should have experience in previous
implementation efforts to manage conflicts that arise before and after
implementation. Project champions perform the crucial functions of
transformational leadership, facilitation, and marketing the project to the
users. Project champions play a critical role in the acceptance of the
technology and he/she is usually at senior management level so they have
the authority to make substantial organizational changes occur.

Nearly 14% MIS projects fail due to the ‘Image’ the project created. It is essential to have a
change management plan before and during the implementation.

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Step 2 : Methodology

• What phases would the project have?

• Who are the principal owners of each phase?
• What kind of documentation would be made available?
• How many test cycles would be involved?

If pre-packaged products are used, they generally come with their own
implementation methodology. For example :
• ASAP is the proprietary one for SAP
• AIM is the proprietary one for Oracle
• MS Dynamics implementation methodology - SureStep
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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Step 2 : Phases

1 2 3 4 5
Requirements As-Is To-Be Gap Analysis Solution

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 Step 2 : Phases

Requirement collection is the 1st and probably the most significant process.
It can be conducted in any of the following ways:
• Meeting (Individuals or groups)
• Workshops (involving functional groups)
• Subject matter experts
• Super-user groups

The next 3 steps are:

• Uncovering existing processes - “As Is” picture
• Creating a set of ideal processes - “To Be” picture
• Performing an analysis of differences between those 2 sets of processes –
Analyzing the “Gaps”

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 Step 2 : Phases

The ‘As-Is’ process

• Refine the project scope (what functional areas are included in each cycle of
the project rollout)
• Define the organization structure & map it to the MIS: company codes,
plants, sales organizations …etc.
• Determine the process requirements: what processes & what business rules
for reporting
• Define configuration standards &
• Set a process for coordinating the setup of the system (especially shared and
independent areas)
• Determine types of users for each process area, to help design the security
system
• Determine the information requirements (reports, queries, etc.) for each
functional area by type of user.
• Determine required interfaces with legacy systems for both: the one-time
conversion & those outside the scope of the implementation project.

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 Step 2 : Phases

The ‘To-Be’ process

• Customer focus, & objective driven
• Using cross-functional team
• Use phased approach including these 5 steps
• Assess customer-driven objectives of the process
• Map or define the current process
• Analyze the current process (what places can be redesigned)
• Redesign these places
• Implement & evaluate

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 Step 2 : Phases

The ‘Gap Analysis’ process

• Compare the ‘As-Is’ and ‘To-Be’, process by process
• List gaps by process area
• Evaluate options to address gaps
• Customization options
• Process changes
• Business impact

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 Step 2 : Phases

The ‘Solutioning’ process

• Where should the process change?
• Impact to business process
• Change management
• Related processes
• Where should the system change?
• Cost of the change
• Dependencies
• Impact on upgrades
• Maintenance effort

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 Step 2 : Phases

Top-down vs. bottom-up requires:

• Identifying the company’s core business processes
• Compare between: how they are now – called “as is” status - and how they
are in the software/package - called “to be” status.
• For the divergence between these 2 situations either: change the process or
change the product.

Bottom-up is an “as is” oriented strategy (used with CSF approach)

Top down is a “to be” oriented one (used with BSP approach)

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Session plan

Last session we saw…

… from here on

Step 2: Deployment approach

Step 2: System landscape

Step 2: Project team

Step 2: Methodology

Step 2: Phases

Step 2: Project CSFs

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Step 2: Project CSFs

• Measurable outcomes & milestones is required -

• To show progress
• Help keep the project on track
• Help modifying it

• The implementation of an MIS system is a huge, strategic and complex

project involving considerable risks reflected in the time, scope, and cost
of project implementation.

• Because of the complexity of implementation it is critical not to focus

exclusively on the implementation methodology steps but also to create
conditions in which the chosen solution can be implemented in the
expected time, scope, and budget. This means that organizations should
be aware of critical success factors (CSFs) in implementation.

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Step 2: Project CSFs

• Over the past several years considerable research has been published on
CSFs in MIS implementation. Fourteen CSFs were mentioned by majority
of authors-

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Top management support and involvement

Top management support is critical because top managers have to make fast
and effective decisions, resolve conflicts, bring everyone to the same thinking
to promote company-wide acceptance of the project, and build co-operation
among the diverse groups in the organization.

Clear goals, objectives and scope

Clearly defined business and strategic objectives are in the most cases very
important critical factor. Having a clearly defined vision and mission, and a
formulation of the right policies and strategies, serves as the blueprint for
organizational success. Clear goals and objectives should be specific and
operational and have to indicate the general directions of the project. They
should also provide a clear link between business goals and IS strategy. Well-
defined objectives help to keep the project constantly focused, and are
essential for analyzing and measuring success.

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Project team competence and organization
Selecting and motivating the right employees to participate in
implementation processes is critical for the implementation’s success. Teams
must consist of the right mix of business analysts, technical experts, and
users from within the organization and consultants from external companies,
chosen for their skills, past accomplishments, reputations, and flexibility.
User training and education
A lack of user training and understanding of how MIS systems work appears
to be major reason for many problems and failures in MIS implementation.
Several authors highlight cases of inadequate training. If the employees do
not understand how a system works, they will invent their own processes
using the parts of the system they are able to manipulate. The full benefits of
MIS is not realized until end users are using the new system properly.
Minimal customization
Most companies significantly underestimate the effort required for code
modification. Vendor’s code should be used as much as possible, even if this
means sacrificing functionality, so upgrades from release to release can be
done easily. Therefore, every modification request should be carefully
evaluated and approved, or rejected, after considering all the options.
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 Questions
Afterthoughts

jeeshan@gmail.com

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Generic reading …

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Large system implementation failures

FoxMeyer Drug Bankrupt

Hershey’s 19% drop in profit

29% increase in inventory

City of Oakland Erroneous paychecks

Miller Industries Inefficient ERP – operating loss

WW Grainger Inc Earnings dropped $11 million

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Failures – high level problems

• Some never work

• others over budget, very late, or both
• others perform less than design
• others meet design specifications, but maintenance & enhancement nightmares

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 FoxMeyer Drug

Large drug distributor

Wanted to implement MIS

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FoxMeyer Corp

• Holding company in health care services

• wholesale distribution of drugs & beauty aids
• served drug stores, chains, hospitals, care facilities
• US: 23 distribution centers
• Sought market niches, such as home health care

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FoxMeyer

• Due to aging population & growth in health care, expected high growth
• Market had extreme price competition, threatening margins
• Long-term strategies:
• efficiently manage inventory
• lower operating expenses
• strengthen sales & marketing
• expand services

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Prior FoxMeyer IS

• 3 data processing centers, linked

• included electronic order entry, invoice preparation, inventory tracking
• 1992 began migration of core systems
• Benefits not realized until system fully integrated

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FoxMeyer Process

• Customer fills out electronic order

• Order sent to 1 of the 3 data processing centers
• Orders sent to the appropriate distribution center (within 24 hours)
• Orders filled manually and packaged
• Had just completed national distribution center with multiple carousels &
automated picking
• Could track inventory to secondary locations

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New System

• Needed new distribution processes & IS to capitalize on growth

• Wanted to be able to undercut competitors
• Replacing aging IS key
• PROJECT: 1994 - hoped to save $40 million annually (estimated cost $65 million)
• complete ERP installation & warehouse automation
system (another $18 million)

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FoxMeyer Project

• Select ERP
• hundreds of thousands of transactions
• meet DEA & FDA regulations
• benchmarked & tested for months
• picked SAP R/3
• hired Andersen Consulting to integrate
• hired Pinnacle Automation for warehouse
automation system

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Operations

• FoxMeyer expected the new systems to improve operational efficiency

• Signed several giant contracts
• counted on savings, underbid competitors
• Counted on being up and running in 18 months

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Problems

• SAP & warehouse automation system integration

• two sources, two installers - coordination problems
• New contracts forced change in system requirements after testing &
development underway
• Late, Over budget
• SAP successfully implemented

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Outcomes

• Lost key customer - 15% of sales

• To recoup, signed new customer, expected $40 million benefit from ERP
immediately - pushed ERP project deadline ahead 90 days, no time to reengineer
• Warehouse system consistently failed
• late orders, incorrect shipment, lost shipments
• losses of over $15 million
• August 1996 filed for Chapter 11
• McKesson bought

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Reasons for Implementing IS ( 5 is best)

Most important Avg Small Large Sig.

Replace legacy systems 4.06 87% 90%

Simplify & standardize 3.85 72% 95% ***

Improve interactions-suppliers & customers 3.55 71% 76%

Gain strategic advantage 3.46 70% 92% **

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Reasons for Implementing IS ( 5 is best)

Less important Avg Small Large Sig.

Link to global activities 3.17 36% 74% ***

Keep up with competitors 2.99 42% 60%

Ease of upgrading systems 2.91 35% 54% ***

Restructure company organization 2.58 33% 35%

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Implementation Time Required

• 6 months or less 9%
• 7 to 12 months 25%
• 13 to 18 months 24%
• 19 to 24 months 21%
• 25 to 36 months 11%
• 37 to 48 months 6%
• Over 48 months 2%
Rate of technology change makes 18 month IT projects dubious

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Estimated System Life

Less than 3 years 3.1%

3-5 years 12.2%
5-7 years 30.6%
7-10 years 26.5%
over 10 years 27.6%

Now days less:

• Due to technology change
• Designed obsolescence

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Strategic Approach used

• Single package 40%

• Several packages best-of-breed 4%
• Single package supplemented 50%
• Multiple packages supplemented 5%
• Totally in-house 0.5%
• In-house supplemented 1%

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System Cost

≈ 6% annual revenue (less for larger; up to

50% for smaller)

<$5 million 42.3% <$50 mill revenue

$5 to $25 mill 33.0% $251 to $750 mill revenue

$26 to $50 mill 10.4% Widespread

$51 to $100 mill 7.2% $1.5 bill to $5 bill revenue

>$100 million 7.1% Over $5 billion revenue

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