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Agile in ERP Projects

 

FEATURED PAPER

By Stefano Isetta and Marco Sampietr

Milan, Italy

 



ERP Implementation Projects

Implementing an ERP system is a major project requiring a significant level of resources, commitment and changes throughout the organization. Often an ERP implementation project is the single biggest project that an organization has ever launched (Moon 2007) and very often performance is less than expected.

The performance analysis of ERP implementation projects is probably the most discussed aspect in the literature on this topic.

For example, McNurlin (2001) found that only 34% of the companies were satisfied with their ERP system. Loonam & McDonagh (2005) found that 90% of the ERP systems implemented were late and more expensive than the companies had expected. In addition, 25% of the money invested in ERP system was considered as wasted and less than 75% of the ERP system’s effectiveness was utilized (Ettlie, 1998). Betts (2001) indicated that 80% of the ERP system failed to achieve the business objectives expected from the system. Notwithstanding this, many companies have implemented ERP systems, but few are effectively used (Yu, 2005).

Panorama Consulting Solution carried out a research where 215 respondents were collected.

Table 1. Project performance of ERP projects. Source: Panorama Consulting

According to Panorama Consulting, overall project cost has decreased while the percentage of respondents experiencing cost overruns has increased. Another issue that can be discussed is the sharp increase in the average duration from 2012 to 2015. However, this figure should not be interpreted as a negative trend, according to Panorama Consulting, this may be the acquisition of greater awareness of implementation timing by estimating longer and more realistic than the past.

The authors of the Panorama Consulting report, however, conclude this analysis with an observation that will be crucial to the analysis of ERP implementation projects: “The majority of organizations do not have the internal expertise needed to achieve ERP success. When they do not hire an experienced third party, they limit their level of benefits realization and reduce their potential ROI.”

To support the data reported with concrete examples of failures that have marked, and in some cases ended, the history of large organizations, it is convenient to cite some examples:

  • Unisource’s Worldwide, Inc., a $7 billion company that produces paper-based products. The company’s management has decided to abandon a national SAP implementation project after having spent $168 million;
  • FoxMeyer Drug the former $5 billion drug distributor went bankrupt in 2006 and has completed a $500 million lawsuit against SAP (Monk & Wagner, 2006). The company identified the ERP system vendor as one of the key reasons that led the company to bankruptcy;
  • Dell Computer Corp has abandoned SAP implementation after months of delays and extra costs;
  • Dow Chemical, after spending half a billion dollars over seven years of implementing SAP ERP R / 2, decided to start all over again on the new SAP R / 3 platform (Soh & Sia, 2007).

According to Kremzar & Wallace (2001), the implementation of ERP system revolutionizes the way a business operates. However, in order to grasp the highly positive aspects of using these software, management and organization as a whole must be ready to appreciate and accept the great change that implementation will have on enterprise and on day-to-day operations. All the data reported and the real cases of failed investments of big company in ERP system urge a need for better understanding of ERP implementation process.

More…

To read entire paper, click here

 

How to cite this paper: Isetta, S. & Sampietro, M. (2018). Agile in ERP Projects; PM World Journal, Vol. VII, Issue IX – September. Available online at https://pmworldjournal.net/wp-content/uploads/2018/09/pmwj74-Sep2018-Isetta-Sampietro-agile-in-erp-projects-featured-paper.pdf



About the Authors


Dr. Marco Sampietro

Milan, Italy

 

 

 

Marco Sampietro obtained a Ph.D. at the University of Bremen, Germany. Since 2000 he has been a professor at SDA Bocconi School of Management, Milan, Italy. SDA Bocconi School of Management is ranked among the top Business Schools in the world (Financial Times, Forbes, Bloomberg, and The Economist rankings). He is a Core Faculty Member at SDA Bocconi School of Management and teaches Project Management in the MBA – Master of Business Administration, and GEMBA – Global Executive Master of Business Administration programs. He is Faculty Member at MISB – Mumbai International School of Business, the Indian subsidiary of Bocconi University, and Visiting Professor at IHU – International Hellenic University, Greece. He is also a Contract Professor at Bocconi University and Milano Fashion Institute for the Project Management courses.

He was a speaker at the NASA Project Management Challenge 2007, 2008, and 2011, in the USA, and a speaker at the PMI Global European Congress, Italy, 2010.

He is Member of the Steering Committee of IPMA-Italy. He is co-author and/or editor of 10 books on project management and 7 books on IT management. Among them: Empowering Project Teams. Using Project Followership to Improve Performance. CRC Press, 2014. He is the author of award-winning case studies and papers.  Dr. Sampietro can be contacted at: [email protected]

 


Stefano Isetta

Milan, Italy

 

 

 


Stefano Isetta
obtained a Bachelor degree at the Bocconi University of Milan in 2015 in Economics and Business Administration.  In 2016 he held a period of 5 months in India at the Indian Institute of Management (IIM) taking part in the Exchange program. During this period he attended several courses of the Post Graduate Program including the Project Management course held by Professor Sushil Kumar to deepen the issues related to project management.

In February 2017 he began working as a consultant in a company, based in Milan, specialized in the implementation of ERP systems where he learned about the issues and features related to this type of projects.

In March 2018 he obtained a Master’s Degree in Management at the Bocconi University in Milan with a thesis project entitled “Agile Methodology in ERP system Implementation”.

Contact: [email protected]