Project Management Body of Knowledge (PMBOK) applied to an ERP Project Andres E. Diaz, P. Eng., MBA,...

Project Management Body of Knowledge (PMBOK) applied to

an ERP Project

Andres E. Diaz, P. Eng., MBA, PMP

Hunter Business Group Inc.

www.hunter-inc.com

ERP technology

• ERP systems are used worldwide regardless of company size.

• AMR press release suggested that, by 2004, the ERP market has reached $ 78 Billion in sales (AMR Research Centre press release June 2000) and all of it requires implementation.

ERP technology• “Furthermore, those who have already implemented report that 70 % of their implementation have failed, have come over budget or have been seriously postponed” (“ERP Implementation Secrets White Paper”, Michael A. Roman, Manufacturing Practices Inc., 2005.).

• So why don’t ERP systems deliver what they promise?

ERP systems: Is there something wrong with “the

system” technology?

• Most ERP technology embodies a proven set of Logistics, Manufacturing, Customer Relations and Financial practices.

• When you embark in an ERP system purchase you are implicitly and explicitly accepting those practices as the business process framework for your firm.

ERP systems: Is there something wrong with “the

system” technology?

• Although the “best” package may have been selected, why is that we still have implementation problems?

• Everything seems to point to the approach taken to manage the implementation project.

Managing a project

• Identifying requirements

• Establishing clear and achievable objectives

• Balancing the competing demands for quality, scope, resources, risk, time and cost to produce a quality deliverable.

• Adapting the specifications, plans, and approach to the different concerns and expectations of the various stakeholders.

Defining effective project management.• “Effective Project Management requires that

the project management team understand and use knowledge and skills from, at least, five areas of expertise” (PMBOK Guide, PMI)

– Interpersonal skills

– General management knowledge and skills

– Understanding the project environment

– Application area knowledge, standards and regulations

– The Project Management Body of Knowledge.

Project Management Body of Knowledge

• Project Life Cycle Definition

• Five Project Management Process Groups

• Nine Knowledge Areas


• Project Life Cycle Definition

–Project Phases

–Project Stakeholders

–Organizational Influences


• Stakeholders’ influence

–The influence of stakeholder is high at the project initiation. At initiation, the cost of changes is also low.

–Those stakeholders who have responsibility and authority in selecting the “best” package are not the ones with responsibility and authority in using it.


• Stakeholders’ influence

–“Using” stakeholders come to exert their influence in the intermediate phases of the project life cycle (such as in Conference Room Pilot mode), when satisfying them is significantly more costly.

–Most methodologies correctly identify the former group (“selecting stakeholders”) but tend to ignore the latter one (“using stakeholders”).


• Five Project Management Process Groups

–Initiating

–Planning

–Executing

–Monitoring and Controlling

–Closing


• Traditional methodologies tend to emphasize “executing” and ‘‘monitoring and controlling” process groups in detriment of “planning” and, more importantly, “initiating” process groups.


• For instance, the PMBOK suggests that an outcome of “initiating” is a Project Charter and a Preliminary Project Scope Statement (which is an input to “planning”) instead of a project plan (which is an input to “executing”).– Most ERP implementation methodologies are “initiated” with a project

plan.

–“In multi-phase projects, initiating processes are carried out in subsequent phases to validate the assumptions made during Develop Project Charter and Develop Project Scope Statement processes” (PMBOK Guide p. 43)


• So what should be the scope of your ERP implementation?

–Although ERP technology is expected to deliver positive results once implemented, results are delivered by processes executed by individuals who may or may not use the technology to carry their processes out

–Many ERP vendor driven implementation methodologies tend to see the project scope and deliverables as “implementing the package” instead of dealing with business processes.

Forget about tools, techniques and the PMBOK. What about people?

• Implementation methodologies depend on people to function

– “Project team members are not dedicated to the project 100%”

– “Senior management members can not agree on the goals and metrics for success”

– “No time and money is spend on building the team – people are just thrown together and expected to work together from the first day”

Forget about tools, techniques and the PMBOK. What about people?

• Are people issues in reality methodology issues?

– Clearly, weak implementation methodologies are more people dependent, i.e. super project leader/consultant/user etc. syndrome

• However, the incorrect or no application of “generally recognized good practices” hinders success over a wide range of different projects.

• 23


• Scope Management

–Scope Planning

–Scope Definition

–Create Work Breakdown Structure (WBS)

–Scope Verification

–Scope Control

A sampling of commonly found implementation methodologies

• “Information Technology (IT) will do it”

–Generic education for IT personnel with technical bias instead of functionality applicability

–Current processes mechanics (as IT understands them today) are programmed into the new ERP package

–IT educates users

–Limited involvement of the real process owners


• “Information Technology (IT) will do it”

–Scope focuses on completion of programs and not on process improvement and strategic match.

–Overall project deliverable is technical in nature

–Go live with programmers making sure that the system (and their programs) “works”.

–Programming and education budget may not be overrun but expect low system utilization and inefficient business process execution


•“Most Common”

–Generic Package Education for project team and others key users.

–Some form of Process Simulation (Conference Room Pilot) to identify gaps between package and “as-is” version of business processes.

–Identified gaps (as the selected group understands them) are programmed into the new ERP package.


•“Most Common”

–More education to those users identified as “super users” who, in theory, are the people owning and keeping the system current (T. H. Willis, p. 37)

–Scope focuses on reproducing the existing current state of business processes and not on process improvement and strategic match

–Go live with programmers making sure that the system (and their programs) “works”.

–Expect budget overruns and very little process improvement (but things look like before)


• “Don’t worry about it (or do it yourself)”

–Generic education

–Technical set up and system configuration done by vendor or third party.

–Budget was kept low and may have been met but your investment is significantly underutilized ((and things still look like before)


• “Consultants’ dream”

–Discovery (lots of it)

–Massive documenting of current practices without any benchmarking (non value added process mapping)

–Generic System Education for project team and others (lots of it)

–Pre-configured Conference Room Pilot to sort out issues (still too many modifications)

–Some refresher education

–Huge budget to begin with

–Go live (lots of consultants)


• These methodologies do two things (wrongly) in relationship to scope definition and project initiation.

–First they look at using the ERP technology through the glass of existing company functions and business processes, instead of facilitating process improvement and re-alignment vis-à-vis such factors as the firm’s marketing and manufacturing strategies or the market place demanding the achievement of goals and objectives not currently being attained.

A better implementation methodology

• The challenge of a better implementation methodology is to implement a set of improved and re-aligned business processes supported by the ERP technology tool within budget and timeline. In order to meet this challenge the project methodology must include the following generic steps:


–Business definition–Logical system design–Package Selection–Essential Processes Model–Process validation and training –Final deployment and Go-live


• Non PMBOK complaint methodologies use the CRP sessions to identify mismatches and discrepancies between the ERP system and the “as-is” vision of business processes as understood by those stakeholders performing them; a different scope begins to “creep up” (hence the term “scope creeping”)

• The result is an expensive retrofitting exercise that ends up consuming most of the implementation resources and the ERP project’s success is seriously compromised.

Successfully Managing a project

• Identifying requirements.

• Establishing clear and achievable objectives

• Balancing the competing demands for quality, scope, resources, risk, time and cost to produce a quality deliverable.

Successfully Managing a project

• Adapting the specifications, plans, and approach to the different concerns and expectations of the various stakeholders.

• Select appropriate processes from Project Management Process Groups.

• Applying the right combination of knowledge areas to project activities in order to meet requirements.

Contact Information

• Andres E. Diaz, P.Eng, MBA, PMP

• Hunter Business Group Inc.– Web Site: www.hunter-inc.com

• Office:1-905-477-9241

• Cellular: 1-416-721-9835

• Email: [email protected]

Project Management Body of Knowledge (PMBOK) applied to an ERP Project Andres E. Diaz, P. Eng., MBA,...

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