Actividad 1: Taller de exploración

According to the Project Management Institute (PMI) (2013), a “project is a temporary endeavour to create a unique product, service or result”. The temporary nature of a project specifies that it has a defined start and finish date and every project, whether it has been able to meet its objectives or not, will be terminated. The Project Management Body of Knowledge (PMBOK ®) is a best practice guide for project management, developed and maintained by the PMI in the United States (Ara & Al-Mudimigh, 2011). In the PMBOK guide, there are five process groups identified for project management: initiation, planning, execution, controlling and closing; together with ten key knowledge areas for effective project management (PMI, 2013). These knowledge areas are: project integration management, scope management, time management, cost management, quality management, human resources management, 69 | P a g e

communications management, risk management, procurement management and project stakeholder management.

Carton et al. (2008) conducted a research study on project management strategies and used the PMBOK guide as a tool, stating that the governance of a project at multi-levels of the organisation is critical for the success of an ERP implementation project. This multiple level governance structure would ensure that the project is managed appropriately, maintaining the key focus and reducing delay or rework for its timely completion. Ara and Al-Mudimigh (2011) argued that for a successful ERP project, it is important to manage associated risks effectively. It was stated that project management is all about the practical application of knowledge, skill, tools and techniques to project activities to meet and deliver required outcomes (Ara & Al- Mudimigh, 2011). Furthermore, it was highlighted that strategic project management at an early stage of implementation should be used. This would enable success by dictating a need for change in the relevant departments and core functions. Understanding and serving the needs of relevant resources within an organisation would also be critical by actively addressing the changing needs of people, process and technology.

Edward et al. (2003) discussed an ERP system life cycle model presented by Esteves and Pastor, (1999) that explains six different stages of ERP systems, includes, Adoption decision, Acquisition, Implementation, Use and maintenance, Evolution and Retirement.

Risk management

ERP applications use common database and standard procedures while sharing the data between functional areas of the system. Yet ERP system implementation is not simply a computer system project but rather an expensive and high risk investment project that would impact on the organisation’s primary and support processes, as well as its business process structure and procedures from existing legacy systems. In addition, ERP also impacts on and changes the roles and responsibilities of existing staff and the way they have been performing their duties over the years. Aloini et al. (2012) identified other risks associated with ERP, such as hidden costs and intangible benefits. Furthermore, it was stated that based on research estimates, 90% of the SAP R/3 ERP projects ran late while another study concluded that out of 7,400 IT projects, 34% ran late, 31% were over budget and only 24% were completed on time and on budget. It was suggested that one of the reasons for having so many ERP projects fail is that their managers do not take sensible measures to assess the associated risks and appropriately plan to mitigate those risks. Therefore, it was concluded that to maximise

success in ERP projects, it is important to have associated risks identified and their consequences understood.

Similarly, Ara and Al-Mudimigh (2011) suggested that from the very start of an ERP project, key components such as procurements and deployment through to completion are analysed to assess potential risks. A successful ERP implementation could become the backbone of business intelligence and process efficiency, yet the implementation itself has significant associated risks including technical problems, business process gaps, functionality management, change adoption, training, people/human risks, risk of cost/budget blow out and so forth.

Aloini et al. (2012) further explained that while managing risks within an ERP project, it is important to define ‘risk’. For effective project management, it is important to manage all sources of uncertainties clearly and effectively. According to Aloini et al. (2012), quantitative (or qualitative) risk assessment processes can systematically guide risk management activities by collecting and evaluating data on the potential severity of effect and/or consequence to the risk event and probability of its occurrence. In complex projects, risk management could lead to a range of organisational benefits and reduce uncertainties for the project outcomes. These benefits include:

• Enhancing the organisational control over the project.

• Effective resourcing.

• Increased confidence in achieving project milestones.

• Precise estimation.

• Improved project outlook.

• Enhanced ability to take advantage of situations.

• Minimising surprises and unexpected events.

• Improving chances of success.

• Effective planning at the time of disaster.

• Avoiding rework and

• An ability to promote a win-win situation. (Aloini et al., 2012)

Aloini et al. (2012) suggested some established frameworks for effective risk management, including:

• PRM Guide (Professional Risk Manager Guide by PRMIA provides guide for risk management);

• PMBOK Guide (Project Management Body of Knowledge Guide by PMI USA, provides standard for project management);

• RAMP Guide (Risk Analysis and Management for Projects is a strategic framework for managing project risk and their financial implications);

• the Australian Standard and SHAMPU process (Shape, Harness and Manage Project Uncertainty processes for effective risk mitigation); and

• PRINCE2 project management methodology (Projects in Controlled Environments, v2; a project management methodology, a de facto standard by UK government).

According to Hunton et al. (2004), due to some features of ERP systems such as automated work flows and rational databases, there has been a substantial amount of risk involved in setting up ERP in relation to business interruption and process interdependency. Hunton et al. (2004) further argued that if access controls of the system are comparatively weak, then there is higher risk in ERP system security. When there is strong monitoring over authentication, authorisation and password control issues, there is no reason to believe that ERP system security is greater than anything else. Weak security can provide easy passage for unauthorised access to the system and its database, which could result in unauthorised modification or creation of record entries. It was further stated by Hunton et al. (2004) that three key security aspects of ERP environment (network, database and application) could be an appropriate solution for implementation of control. The difference in knowledge between specialist and non-specialist could be one of the many reasons associated with security related weaknesses of the system.

Aloini et al. (2012) stated that performing risk management for an ERP project is an ambitious and tedious task. ERP projects are complex and the associated risks could involve a myriad of technological, managerial, psychological and social aspects. Furthermore, Aloini et al. (2012) stated that interconnected and indirect factors of the project could make risk management more difficult, uncertain and significant than normal projects. Ara and Al- Mudimigh (2011) stated that ERP projects are risky and complex; hence their risk management is difficult to manage. Risks could be mitigated via strong executive sponsorship, effective communication, and thorough engagement with core stakeholders and good project management. Ara and Al-Mudimigh (2011) defined ERP project within four levels: process failure, expectation failure, interaction failure and correspondence failure. All of these critically

relate to project activities and could be managed with effective project management techniques.

Lessons learned – Post-implementation

It is suggested that at the end of a project or after critical stage(s), a realistic lessons learnt exercise would enable an identification of implementation weaknesses and record corrective measures used to overcome them. While evaluating the performance of ERP project delivery (Gefen et al., 2005), it is important to examine the value of ERP at a modular basis instead of as a whole system. The selection and implementation of ERP modules strictly depends upon the business attributes and the expected benefits derived from the module depends upon the specific needs and the characteristics of the organisation. The benefits derived from ERP implementation depend upon the organisational expectations, which may be different from module to module (Gefen et al., 2005).

2.8.5 Section summary

ERP Implementation is a process to practically deliver an application that could serve the business needs. Implementation starts with planning, followed by analysing business requirements, setting up and designing the system, reengineering, installation, configuration and testing of the system before it goes live.

There are strategies proposed for successful implementation of ERP systems, categorised by the organisational, technical and people domain. The change and stakeholder management along with communication are considered important for the organisational strategies. Data conversion, interfacing and reporting are important for technical delivery. Furthermore, the end user experience, training; project team building and competencies are important the people domain. Some researchers identified ERP implementation planning prerequisites comprising of technical, human and management aspect, delivering a detailed list of associated factors. Another researcher related ERP implementation with 4Ps (People, Product, Process, Performance) and argued that the stakeholder expectation management and end user training could be considered as critical factor for success. There were other critical success factors discussed by different researchers including, human resource capabilities, cross functional interaction, coordination and communication, application configuration, effective change management, strong leadership, identification of project champion or sponsor, strategy for legacy system management and an effective project management.

Establishment of selection criteria for ERP application selection is vital. It was argued that due to complexities of ERP applications; the level of change required within an organisation, it would be important to test the suitability of an application and its potential alignment with the existing business process before it is implemented. Some researchers provided parameters to consider while establishing selection criteria for ERP applications.

For an effective project management in ERP, there are documented standard such as, PMBOK guide for management and PRICE2 methodology for governance in each stage of implementation. Effective risk mitigation and management are considered important for the success of a project. Best practice frameworks available within PRINCE2 methodology, PMBOK and other guides including PRM, RAMP could be considered for an effective risk management.