ERP Management System Project - Case Study Example

PROJECT MANAGEMENT TECHNIQUES Project management techniques Name Course Tutor Date Table of contents Project overview This project was initiated after eliciting user requirements. E-Com Corporation has been in operation for the last few years with considerable expansion opportunities evident from their annual turnover records. Because of this, it has been profitably envisaged to implement an online enterprise resources management (ERP) system to meet the clients’ requirements effectively while providing a centralized management approach. This plan is about this process. The purpose of this project plan is to describe the necessary details that must be followed to ensure a successful online ERP project completion based on the project management standards, and budget. This is necessary because the company’s customers have had delays that have affected E-Com Corporation negatively. This system must also serve the management and the corporation’s customers in the most instantaneous and innovative manner. The main business objective is to satisfy customer requirements in a manner of reliable and efficient ERP system to expedite processing, and share resources between remote sites thereby generating profit for E-Com Corporation while streamlining the corporation’s internal processes and resource use. The system will also improve the decision-making process at E-Com Corporation. This project plan will be presented to the sponsors for approval. The activities of the project will commence upon approval of the project plan and the availability of the resources needed to implement it. The project plan will include a scope report the schedule, cost, and estimates, and project schedule. The main purpose of the online ERP management system project is to integrate all the systems at E-Com Corporation and its subsequent implementation aimed at proactively addressing the corporation’s management, and customer needs. On the completion of this project the major deliverable is the online ERP system that will be delivered to E-Com Corporation. The method of changeover will be direct to ensure a seamless integration with minimal interruption to the normal operations of the company (Duncan, 1996). Deliverable Recipients Delivery Date Delivery Method Online ERP system E-Com Corporation June 2012 Phased/pilot changeover Table 1: Project deliverable summary details A project manager has been authorized by the corporation’s board to liaise with E-Com management to acquire the necessary resources for the project as well as assign the responsibilities within the project framework. The project manager’s responsibility is to monitor and maintain control of the project by determining project performance and initiating any corrective action that may be needed. The complete project plan will be developed by the project manager and submitted to the corporation’s management who are the sponsors for approval by 1st June 2012. Upon approval, the resources will be assigned within the next 14 days whereupon work will commence. The work is expected to run as scheduled and the project manager is mandated to obtain any schedule changes affecting the project progress. The online ERP system project will cost $250,000 funded by E-Com Corporation. This project deliverable is considered important for the corporation’s management and customers by addressing the needs of each of them uniquely and differentiating the product and service based on every customer requirement. E-Com Corporation has recently penetrated the Asian market with focus on Singapore. In order to ensure competitive advantage, they are investing in the online ERP system to identify and uniquely address particulate management, and customer needs. Lack of technical manpower to develop and optimize the online ERP system and inadequate financial resources are typical constraints. It is assumed that the project will proceed as planned, and within the budget, and the sponsor who is E-Com Corporation will cater for the necessary expenses and requirements fully funding the project to completion. It is expected that the project will run on schedule and be complete within six months. It is assumed that the project support staff will be sourced from within E-Com Corporation whereas the technical expertise will be outsourced. Work breakdown structure (WBS). E-Com Corporation has penetrated the Asian market recently with focus on Singapore. In order to ensure competitive advantage, the company is investing in an online ERP system to enable identification of management, and customer needs. Project management approach requires an ordered approach to planning and control of a project. This is important to ensure that resources are not wasted that can affect the project negatively. As such a forecast of the project using available tools and techniques can help the project stakeholders to show the outputs expected from each of the stages of the project. These outputs also can be tied to a specific time schedule so that the project’s progress can be continuously monitored. The milestones constitute an important stage or output within the project life cycle. As such the online ERP project requires a well defined milestone schedule that will also include acceptance criteria. This project is an online system that will be developed over a period of six months commencing January 2012. It is expected that the development process will carry on iteratively using prototyping as the main development approach for the system. In this case an initial model of the system will be developed by the designers during the initial phase of the project, and this model or prototype will be presented to the user for testing and approval. At this milestone the user is required to try carefully to note down any more requirements that were missed out in this initial model that must be added to the subsequent model. This prototype will be evolutionary and three iterations will be carried out each of which will elicit user requirements previously overlooked. The final iteration will give rise to the system that will be adopted by the company as their online ERP system. The prototypes (models) from each of the iterations are important milestones for this project. As such after one and a half months into the project, a prototype will be ready marking one milestone. This will undergo a test with the user’s representative, and the user will be expected to fill a test approval form to capture the user feedback. The intention of this exercise is to elicit more user requirements to improve subsequent milestone deliverables. A second iterative testing process will take place after three months in the project when the other milestone will be set. Here the initial prototype will have been modified based on the user feedback from the first milestone. Accordingly, more user requirements will be capture using the test approval form and these requirements will also be used to modify the second prototype to give a third and final prototype that will go through the same process marking the final milestone in the design phase. Running concurrently will be a database design process to support the system’s backend processing. The prototype after the third milestone of the design phase will be adopted by the company, hosted by an Internet service provider and activated so that a true and live test can be finally carried out involving all the staff dispersed at the headquarters and different branches. The system will be commissioned and the E-Com Corporation will finalize the payments to the developer before handover and project closeout. In summary each successful test requires that the user involved signs a test approval form as acceptance criteria. This form will also be counter signed by the developer or analyst who set up the testing environment. The table (Table 2) below summarizes this project’s milestones, possible dates, and stakeholders involved Milestone Completion date Stakeholder Acceptance criteria Completing the scope statement 10/01/2012 E-Com Corporation management Project manager Project charter review Tentative project schedule 17/01/2012 Project manager User representative Approval of project charter Approval of the project budget 19/01/2012 E-Com Corporation management Project manager Project signoff Project initiation 20/01/2012 Project manager Project kick off Roles and responsibilities approval 23/01/2011 Project manager Project team Team formation Requirements definition 4/02/2012 Project team (Analyst) User representative Statement of requirements Requirement definition approval 7/02/2012 Project team User representative Requirements approval Data conversion and mapping 21/04/2012 Project team Project implementation 28/05/2012 User representative Project team Formal acceptance and project close out Table 2: Project milestone and acceptance criteria summary details Basing on the milestones identified and the general work packages for this project a work breakdown structure (WBS) can be derived. A work breakdown structure shows the sequence of activities particulate to every work package (Billows, 2010). The table (Table 3) below illustrates the work breakdown structure that the online ERP system project will follow. LEVEL ONE LEVEL TWO LEVEL THREE DURATIONS (Days) Online ERP system development 1.1 Planning 1.1.1 Project charter development 1.1.2 Charter submission and approval 1.1.3. Project scope development 1.1.4. Project sign off 1.1.5 Team creation 1.1.6 Roles and responsibility definition 17 1.2 ERP system design 1.2.1. Requirements definition 1.2.2. Requirements approval 16 1.3 ERP system development 1.3.1. Model 1a 1.3.2. Validation testing 1.3.3. Model 1b 1.3.4. Validation testing 1.3.6. System testing 90 1.4 ERP database integration 1.4.1. Model 1 1.4.2. Validation testing 21 1.5 ERP system implementation 1.5.1. Integration testing 1.5.2. Online ERP system publishing 1.5.3. User acceptance testing 21 1.6 Report compilation 1.6.1 Project audit review 14 1.7 Project Close out 1.7.1 Formal acceptance and handover 1 Table 3: Project work breakdown structure Assumptions: (a) The project will take six months to complete running from the beginning of January 2012. (b) There are enough resources to ensure that the project goes to completion (c) There are no overtimes and the team works through public holidays within the week (d) Model 1a, 1b and 1 is the same model under evolutionary prototyping. See appendix for the Gantt chart for the planning work package Project resource schedule The online ERP system project schedule will be created using a scheduling technique/software tool such as Microsoft Project (MS Project 20xx). The basis of this schedule will be the deliverables as identified within this project’s work breakdown structure (WBS) tabulated above. The activity definitions will identify work packages particulate to the project whose completion account for a certain project deliverable. A sequence will be used to determine the order of work packages and relationships between the various project activities (Gido and Clements 2010; Lewis, 2002). The duration estimates are used to work out the number of hours or days needed to complete work packages. Resource estimations are used to assign the resources to the packages completing the schedule development. The project team can review the resulting preliminary schedule including any resources tentatively assigned to project tasks. The project resources should be aligned with the schedule including the work package assignments, and durations. The project sponsor revises and endorses the schedule. Resource management remains one of the main undertakings for any project manager. As such a number of tools and techniques are presently available to enable the manager to plan and assign the available resources on the project and attain maximum productivity (Schwalbe, 2005). Planning is fundamental for the success of any project. It is critical that this project management work package is well defined because it includes all the activities necessary for the successful initiation of the project. Planning is also where all the resources of the project can be envisioned and based on their adequacy or inadequacy; the project will go on or be abandoned. The planning phase for this project will consist of a number of activities. On appointment of the project manager, a project charter will be drawn. This represents a contract between the project team led by the project manager and E-Com Corporation who is the project owner and sponsor. The project charter defines a number of important features of the project and sets the stage for the various stakeholders to endorse the project. In part the charter may lay a basis for the project plan that will cover aspects such as a scope statement the schedule, cost, and estimates, project schedule, quality, stakeholder, risk, and procurement management as well as project control (Project Management Institute, 2008). The charter is submitted and approved depending on whether or not the project should continue. Once an approval has been made, the project manager will define the project scope based on the available resources. The underlying factor is the satisfaction of a user requirement. The scope is translated by the project manager into a suitable work break down structure that highlights all the activities and associated work packages that can be carried out during the project’s life cycle. This scope must be drawn with the committed resources in mind. Based on the scope, E-Com Corporation who is the project sponsor can approve it to ensure the project kicks off. The sponsor may also disapprove in which case there may be an option to abandon the project or re-define the scope within the agreeable project constraints. A successful sign off means that the project manager will carefully select a project team and assign roles and responsibilities to each of the members within this team. The responsibility matrix (RAM) is a chart used to show who within the project team is responsible to what task. The matrix is more understandably used with the RACI chart to demarcate the responsibilities within a project. The responsibility assignment matrix (RAM) below has been drawn for the project under study here. Project Activities Project manager (Joseph) IT Department (Mike & Sophie) Marketing Department (Joanna) Purchasing Department (John) Application programmer (Christian) Business Analyst (Alexandra) Derive the customers’ demographics patterns for testing. X X Find the testers X Design the tests X Preparing the on-site testing facilities. X X Create the survey and various methods to get customer feedback X X X Analysis of the results X X The names used here are fictitious The responsibility, accountability, confirmed, and informed (RACI) chart shows how each of the team members within a project is involved in the project (Schwalbe, 2005). The RACI chart indicates that the project manager must be informed when all the activities of the project are scheduled to take place. The project manager will also be consulted on the preparation of on-site testing process and is accountable for the results of the analysis. The RACI chart below has been drawn for the online ERP system project. Project Activities Project manager (Joseph) IT Department (Mike & Sophie) Marketing Department (Joanna) Purchasing Department (John) Application programmer (Christian) Business Analyst (Alexandra) Determination of customer tester demographics I A I C I Find the testers I A C Develop the test I R C On-site testing facility preparation C R C I Survey and customer feedback methods I C R C Results analysis A I The names used here are fictitious Legend: R= Responsibility A= Accountability C= Consultation I= Informed Another technique used to represent resource estimate and use during the online ERP system project is the resource histogram (Schwalbe, 2005). The resource histogram graphically illustrates the resources as cumulative against time. From the histogram, a cumulative human resource of eight is needed for the first six months of the project. Thereafter, cumulative human resources of six will be needed to complete the last six months of the year. (See appendix for the resource histogram) The eight human resources needed for project development include a project manager, a business systems analyst, a network support specialist, four business application programmers, and one project documentation support personnel. The project will run on for the next six months requiring the business systems analysts, network support specialist, and four management trainees from E-Com Corporation. Project cost planning The cost of planning the online ERP system project will consist of a number of categories. These cost categories are broadly divided into human resources cost and office equipment costs. For activities such as charter submission and approval under the planning work package, the costs are considered negligible. A tentative budget to cover the planning work package for this project can be well defined using the earned value management technique (Nicholas, 2000). The Earned value management is an important practice within project management. This analytical technique enables a project manager to determine the cost and schedule requirements as the project progresses on. This can be compared to the budgeted indicators to determine whether the project or work package is under budgeted. Determining the budget for the planning work package for the online ERP system project requires a definition of a number of elements typical of the earned value management technique. Four important questions that are addressed during the earned value management technique to project cost budgeting include the following: (a) How much money has been spent for work completed? (b) How much is budgeted for total planning work package? (c) What is the value of the work already performed? (d) What is the value of the work expected to be done? Answers to these questions will give a dynamic picture of how much has been spend during each activity within the planning work package against what was budgeted for each of the activities. The following table (Table 4) gives a summary budget of the planning phase work package. It is assumed that the activities will involve the project manager who is contracted at a rate of $200 per day. The other project team members will be assigned roles and responsibilities after the planning phase. Phase Activity Resources Duration (days) Actual cost ($) Budgeted cost ($) Planning Charter development Project manager 4 800 950 Scope development Project manager 5 1000 950 Team creation Project manager 1 200 200 Roles and responsibility definition Project manager 4 800 950 Table 4: Project summary budget details for the planning work package Project risk management Every project will have a number of risks. These risks can be analyzed to come up with a contingency plan. These threats can be prioritized and ranked to come up with an effective contingency plan. There are a number of risks that have been defined for this online ERP system project. One of the typical risks is resistance to change. The introduction of a new system in an organization is likely to elicit resistance. When the user or stakeholders resist change this is likely to slow down or fail the project. This may also affect the reputation of the company. Therefore, project management team should be aware and able to handle this resistance. The project manager must be a good communicator, and tactfully able to convince as many stakeholders as possible (Schwalbe, 2005). The interruption of the business processes is another potential risk. The progressive implementation of this online ERP system will affect the normal processing at E-Com Corporation. However, a phased or pilot approach to implementation is likely to reduce the impact to minimum. The system will be integrated by department, starting with the administration, sale, and marketing departments. At some point, the ERP system may fail to meet the user requirements although on extremely rare occasion. This would mean that the user would not be able to draw maximum benefit from the implementation, and this further heightens his or her discontent. The failure to complete the project on time is a likely risk and as a result this may lead to an overstretched budget or abandonment of the project. This is typical when there is lack of goodwill from the project sponsors. As such, they may commit insufficient financial resources to support the project, and this can be a threat to the project. ERP implementation is a complex process, and so there may also be insufficient technical skills that will also affect the project’s success (Magal and Word, 2011). Additionally, off-the-shelf substitutes are available as an option at sometime during project development. With such an option, the project sponsor may sometimes abandon an in-house project such as this online ERP system and opt for an off-the-shelf solution. This is likely to put the development process at risk. Whenever companies like E-Com Corporation begin new projects these are areas of uncertainty, especially when developing unique and new services or products. The main purpose of a risk management plan is to set up a framework from where the project team can identify typical project risks (Marchewka, 2009). This will help them to derive strategies to avoid the risks or mitigate. Risk management is one of the most fundamental issues necessary for the success of any project. A vital undertaking by any project manager is to identify, prioritize, and mitigate any likely project risks. The project manager can set up a risk chart covering these risks and their priority based on the likely impact to the project because of such risk occurrence. The risks with a higher possibility of occurrence and a greater impact on the project progress are addressed adequately or their effects addressed to reduce impact to a bare minimum (Kim, 2007; Nicholas, 2000). All this is important for successful implementation of the project. An effective project manager will keenly identify likely project risks and be able to address them through a risk identification and mitigation plan (Marchewka, 2009; Wheelwright and Clark, 1992). Typical this project may have risk like schedule and budget that must be addressed by involving all the stakeholders and keeping them updated. There may also be the risk in achieving customer acceptance of the deliverables. This can be achieved by carrying out an iterative and user-oriented process involving the user at all levels. Generally, risk assessment may be viewed from two perspectives, explicit and implicit. The table (Table 5) highlights the explicit risks identified for the online ERP system project Risk Description Risk Impact Actual Risk Response Recommended Response Lack of user goodwill for the project  Unsatisfactory system specification definitions.  None  Broader consultation with all stakeholders before project initiation and kick off. Limited user involvement in the project  Unfulfilled system specification requirements.  None  Thorough fact-finding exercise involving all the stakeholders within the project. Inadequate system testing and hurried implementation  Failing system components during system integration hence unsatisfied user. Blurred testing processes that did not cover all the components of the system.  Adequate testing strategy to also include user acceptance tests. Table 5: Project explicit risk summary The table (Table 6) highlights the implicit risks identified for the online ERP system project Risk Description Trigger Ranking Recommended Mitigation /  Response Single sourcing policy by the board Organizational bureaucracy   4  Avoidance by redefinition of the company’s sourcing policy to a more open and competitive one. Poor communication channels and irregularly scheduled project progress review meetings. Inadequate status information for the project.   1  Avoidance by constitution of a well defined project team structure with defined roles and responsibilities for the team members. Appropriate scheduling of tasks and establishment of progress review mechanisms and frequency. Lack of a well-defined project management team and inexperienced project managers. Lack of accountability during the project life cycle.   2  Avoidance by the establishment of a project management team internally or engaging consultancy firm for the same services. Engagement of competent project management based on credentials and experience. Impractical project schedule. Erratic deliverable timelines that the team never achieved   3 Avoidance by practice of sound project management techniques suitable to project scheduling in order to ensure a realistic project schedule Table 6: Project implicit risk summary The table (Table 7) summarizes the typical risks for the online ERP system project, risk owner, and the contingency plan for each of the risks identified. Project risk/ Assumptions Risk owner Contingency plan Requirements change Project manger Requirements document will be constantly reviewed and carefully considered during the planning / initial working phase Personal motivation reduces / illness Project manager Project plan has buffer time Unrealistic project plan Project manager Project plan has buffer time built in Hardware failure e.g. laptop crashes, floppy disk corrupted Project manager and team Have a number of copies of all documents and related work – stored on laptop, portable drive space, a floppy disk and a CD. Software problems e.g. required software is not available Project manager and team Ensure software can be accessed from more than one location Natural disaster Offsite back up of both software and hardware if possible Cost escalations Project sponsor A dedicated financial reserve for the project Table 7: Project risk filter summary details Reference List Billows, D. 2010. Work breakdown structure, [Online]. Available at: [Accessed 21st Dec 2011] Duncan, W.R. 1996. A guide to the project management body of knowledge. Sylva, North Carolina: Project Management Institute. Gido, J, and Clements, J.P. 2010. Successful Project Management, 4th ed. London: Cengage Learning Kim, D. 2007. PMP study notes, [Online]. Available at: [Accessed on 21st December 2011] Lewis, P. J. 2002. Fundamentals of project management. New York, NY: McGraw Hill Marchewka, J.T. 2009. Information technology project management, 3rd ed. New York: Wiley & Sons. Magal, S.R. and Word, J. 2011. Integrated business process with ERP systems. New York: Wiley. Nicholas, J.M. 2000. Project management for business and technology: Principles and practice 2nd ed. New Jersey, Jersey, Upper Saddle River: Prentice Hall. Project Management Institute. 2008. A Guide to the Project Management: Body of knowledge, 4th ed. Newtown Square, Pennsylvania: Project management institute Inc. Schwalbe, K. 2005. Information technology project management, 6th ed. Cambridge, Massachusetts: Course Technology. Wheelwright S.C. and Clark K.B.1992. Creating project plans to focus development. Harvard Business Review 1992, [Online]. Available at: [Accessed on 21st December 2011] Appendix 1: Resources histogram for the online ERP system project Legend: Appendix 2: Gantt chart for the Online ERP system project Planning work package A NETWORK DIAGRAM FOR THE CORRESPONDING PLANNING WORK PACKAGE ACTIVITIES Read More