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Information about csf

Published on November 2, 2007

Author: Pumbaa

Source: authorstream.com

Critical Success Factors:  Critical Success Factors What matters tend to correlate with the success (or not!) of ERP projects? Somers & Nelson (2001): Mean rankings of CSFs by degree of importance in ERP implementation:  Somers & Nelson (2001): Mean rankings of CSFs by degree of importance in ERP implementation 1. Top management support 4.29 2. Project team competence 4.20 3. Interdepartmental cooperation 4.19 4. Clear goals and objectives 4.15 5. Project management 4.13 6. Interdepartmental communication 4.09 7. Management of expectations 4.06 8. Project champion 4.03 9. Vendor support 4.03 10. Careful package selection 3.89 11. Data analysis & conversion 3.83 12. Dedicated resources 3.81 13. Use of steering committee 3.79 14. User training on software 3.79 15. Education on new business proc. 3.76 16. Business Process Reengineering 3.68 17. Minimal customization 3.68 18. Architecture choices 3.44 19. Change management 3.43 20. Partnership with vendor 3.39 21. Use of vendors tools 3.15 22. Use of consultants 2.90 (86 CIOs answered questionnaire) Nah et al 2003: CSFs revisited:  Nah et al 2003: CSFs revisited Top Management Support 4.76 Project Champion 4.67 ERP Teamwork and Composition 4.65 Project Management 4.59 Change Management Culture and Program 4.50 Communication 4.39 Business Plan and Vision 4.31 BPR 4.22 Software Development, Testing and Troubleshooting 4.20 Monitoring and Evaluation of Performance 4.19 Appropriate Business and IT Legacy Systems 3.48 (54 CIOs answered questionnaire) But then again:  But then again What is success, anyhow? Can it be measured? How? Or even recognized? Well, it’s easy to recognize when things go wrong… The KCI Konecranes story, part 1:  The KCI Konecranes story, part 1 KCI Konecranes Commences Arbitration Against Baan Company N.V. 26 February, 2001 11.30 AM KCI Konecranes' computer based enterprise resource planning systems project, The Omniman, was discontinued in April 2000 because of severe problems and uncertainties relating to the software itself, its functionality and its main contractor, Baan Company N.V. from the Netherlands. All units, which had attempted to switch over to the Baan software switched back to the use of previous systems. In negotiations with the vendor he has not presented any acceptable proposals on how he intends to fulfil the original delivery requirements. The Group has therefore initiated measures aimed at damage recovery. Slide7:  The balance sheet includes receivables related to license, development and implementation fees and costs paid to the vendors. As the parties have not reached mutual understanding in the negotiations KCI Konecranes has requested that the dispute with the Baan Company N.V. be settled by arbitration for damage recovery. KCI Konecranes has included in the consolidated balance sheet 2000 receivables (EUR 15.2 million) related to license, development and implementation fees and costs paid to the vendors. KCI Konecranes is one of the leading crane companies in the world. The KCI Konecranes activity is organised along three Business Areas: Maintenance Services, Standard Lifting Equipment and Special Cranes. In 2000, Group sales were EUR 703 million with almost 4500 employees in 34 countries all over the world. See also www.konecranes.com. KCI Net Income 2000 23.4 MEUR KCI Equity 12/2000 155.3 MEUR The KCI Konecranes story, part 2:  The KCI Konecranes story, part 2 KCI KONECRANES INTERNATIONAL PLC STOCK EXCHANGE RELEASE 1 (2) 29 October, 2002 10.15 a.m. UPDATE ON THE BAAN PROCESSES The legal processes relating to the failed OMNIMAN ERP-project continue. The arbitration process in Stockholm against Baan Company N.V. continues but the progress in the arbitration has been slow. Final hearings are now expected to be held during the summer in 2003. In the arbitration KCI Konecranes claims damages from Baan and Baan has a counterclaim against KCI Konecranes. KCI Konecranes has informed of the start of the arbitration by a Stock Exchange release of 26 February 2001. KCI Konecranes has taken a number of interim measures in the Netherlands against Baan and its parent Invensys International B.V including succesfully attaching a number of assets in the Baan/Invensys Group. Slide9:  Baan/Invensys have initiated a lawsuit against KCI Konecranes and its US subsidiary and Novasoft Information Technology, Inc in the United States District Court of the Northern District of California claiming, among other things, an unspecified amount of damages, to be proven at trial, but which the Plaintiffs state to believe not to be less than USD 50 million and treble and punitive damages for an alleged breach of contract and various other alleged acts. As to its factual background and the parties, the dispute relates closely to the above mentioned arbitration proceedings pending in Stockholm. KCI Konecranes considers the claims initiated in the US Court as completely unfounded and will undertake all necessary measures to protect its interests and to recover any costs and other damage caused by the lawsuit. “It seems that Baan and Invensys are seeking for every possible means to strenghten their position in their disputes with us, and put further pressure on us. We feel it is unfortunate that unrealistic amounts are claimed without any specification or base in the real world,” says Mr Stig Gustavson, President & CEO. The KCI Konecranes story, part 3:  The KCI Konecranes story, part 3 KCI KONECRANES PLC STOCK EXCHANGE RELEASE 1 2 June, 2003 2.00 p.m. KCI KONECRANES WON MOTION IN CALIFORNIA AGAINST INVENSYS/BAAN On October 29, 2002 KCI Konecranes informed in a stock exchange release that Baan/Invensys had initiated a lawsuit against KCI Konecranes in the United States District Court of the Northern District of California. The Plaintiffs said they believe damages not to be less than USD 50 million and treble and punitive damages for an alleged breach of contract and various other alleged acts. KCI Konecranes requested the whole motion to be dismissed or to be referred to arbitration in Stockholm as the dispute concern the same project, which already is in arbitration in Stockholm. Slide11:  The United States District Court in California granted KCI Konecranes motion and referred all aspects of the dispute between Plaintiffs and KCI Konecranes Plc and Konecranes, Inc. to arbitration before the Arbitration Institute of the Stockholm Chamber of Commerce. The arbitration process in Stockholm against Baan Company N.V. continues. In the arbitration KCI Konecranes claims damages from Baan for a software project in 1998, which failed. Baan has a counterclaim against KCI Konecranes. According to reports in the media Invensys is going to sell Baan. A possible sale is not expected to affect the arbitration. The KCI Konecranes story, part 4:  The KCI Konecranes story, part 4 KCI KONECRANES PLC STOCK EXCHANGE RELEASE 1 8 September, 2003 09.30 a.m. KCI KONECRANES: FINAL SETTLEMENT IN BAAN DISPUTE KCI Konecranes Plc, KCI Konecranes Inc. (KCI Konecranes US subsidiary), Baan Company N.V., Baan International B.V., Baan Development B.V., Baan USA Inc and SSA Global Technologies, Inc. (Baans new owner) have reached a settlement regarding the terminated ERP-project (a.k.a. the OMNIMAN-project). The settlement agreement includes the full and final settlement of all disputes, in Sweden as well as in the Netherlands and in the United States. The details of the settlement agreement are confidential, but will cause a negative total non-recurring effect on after tax profits of approx. 5.5 million euros. The settlement agreement does not include any immediate cash flow effect, but will support the Groups cash flow in the future. Gore (-tex), 1999:  Gore (-tex), 1999 NOVEMBER 01, 1999 - W. L. Gore & Associates Inc., maker of the waterproof fabric GoreTex, last week sued PeopleSoft Inc. and Deloitte & Touche over an allegedly bungled software installation. Gore stands to win more than $10 million if a Delaware court awards it treble damages. The suit, filed last week, charges the software maker and the consultancy with failing to properly install PeopleSoft's Human Resources Management System to the point of damaging Gore's business operations. The suit alleges that Deloitte & Touche consultants weren't the PeopleSoft experts they purported to be and that Gore, in Newark, Del., "suffered because of PeopleSoft's and D&T's scheme to defraud and failure to perform as promised." According to the suit, Gore paid Deloitte & Touche, in Wilton, Conn., approximately $3.5 million for the software implementation, not including the cost of the software itself, after Deloitte & Touche had provided an estimate of less than half that amount. Both PeopleSoft and Deloitte & Touche declined to comment on the allegations. Goretex, part 2:  Goretex, part 2 Gore counsel Jay Eisenhofer said the company was forced to hire integrators from PeopleSoft to reinstall the software. Eisenhofer said the company's human resources, benefits and payroll administration were in chaos subsequent to taking the PeopleSoft application live in July 1997. "They have no complaints with the PeopleSoft software," he said, "but the partnership is a big, sophisticated scam." While Gore's allegations are pointed, the cause of the apparent failure within the firm may be indeterminable, information technology consultants and users said. Pleasanton, Calif.-based PeopleSoft confirmed that Deloitte & Touche is a service partner in PeopleSoft's outsourcing certification program. "It's never necessarily just the implementation partner" influencing success or failure, said Tatia Wagner, vice president of business development at Carrera-Maximus, a Sacramento-based consulting firm and a PeopleSoft-certified integrator. Gore employees acknowledged that the company's unusual culture and structure could be a factor in its troubles. FoxMeyer, R.I.P., 1998:  FoxMeyer, R.I.P., 1998 Bankrupt firm blames SAP for failure News Story by Tom Diederich AUGUST 28, 1998 - A bankrupt pharmaceutical company is suing SAP AG and its U.S. subsidiary for $500 million on the grounds that the German software giant had a direct role in its demise two years ago. In a lawsuit filed Monday in U.S. District Court in Delaware, Carrollton, Texas-based FoxMeyer Corp. accused SAP of fraud, negligence and breach of contract in connection with a 1993 order for the company's enterprisewide R/3 client/server system. That order, the firm charges, "led to the demise of FoxMeyer, a once-thriving $5 billion wholesale drug distribution company with over 2,500 employees." SAP, based in Walldorf, Germany, denied the charges. "This action is without merit and at odds with the facts. The company met all of its contractual commitments and plans to vigorously defend against the claims," said Eric Rubino, senior vice president and general counsel at SAP America, Inc., in a statement. FoxMeyer, part 2:  FoxMeyer, part 2 Mark Ressler, an attorney at the New York firm representing FoxMeyer, said that in 1993, SAP assured the drug company that its R/3 system would improve sales and distribution, order processing, inventory, accounting and other operations. "The Unisys mainframe system, which was replaced by the R/3 client/server system, handled 420,000 [customer orders] a day," he said. The SAP system, on the other hand, was able to process just 10,000 orders per day -- about 2.5% of the former capacity, said Bart Brown Jr., the court-appointed trustee who filed the suits with Ressler's firm, Kasowitz, Benson, Torres & Friedman LLP. "SAP has historically been used by manufacturing companies, not distribution companies," Ressler said. "But SAP assured them that they could handle the order." However, after the nearly $6 million system was installed, he said it was clear that it couldn't handle FoxMeyer's daily invoice volume. In all, SAP's "breaches of contract" caused more than $500 million in damages to FoxMeyer, according to the lawsuit. Brown is also suing Houston-based Andersen Consulting for an additional $500 million for "an installation project it mismanaged and was unable to satisfactorily perform." "We're convinced that we have a valid suit against SAP and intend to vigorously pursue it," Brown said. "The distribution business operates on big volume and low margins. The key to success is to constantly expand and do it more efficiently than the competition. And today that depends on the ability of your systems to work and work efficiently. And this one never did." Hershey, 1999:  Hershey, 1999 Failed ERP Gamble Haunts Hershey - Candy maker bites off more than it can chew and 'Kisses' big Halloween sales goodbye NOVEMBER 01, 1999 - A $112 million ERP project has blown up in the face of Hershey Foods Corp., which last week said it's still struggling to fix order-processing problems that are hampering its ability to ship candy and other products to retailers. Analysts and sources in the industry said the Hershey, Pa., manufacturer appears to have lost a gamble when it installed a wide swath of SAP AG's R/3 enterprise resource planning applications, plus companion packages from two other vendors, simultaneously during one of its busiest shipping seasons. The sources said Hershey squeezed what was originally envisioned as a four-year project into just 30 months before going live with the full ERP system in July. That's when retailers begin ordering large amounts of candy for back-to-school and Halloween sales. Slide18:  But the company said in mid-September that it was having trouble pushing orders through the new system, resulting in shipment delays and deliveries of incomplete orders. Last week, when Hershey announced a 19% drop in third-quarter profits, CEO Kenneth Wolfe said the system fixes are taking longer than expected and are requiring more extensive changes. When the difficulties first came to light, Hershey vowed to get shipments back to normal by this week. But during a conference call with financial analysts, Wolfe said he now doesn't expect that to happen until the end of the year, if not later. "This is a difficult bear that we have here," he said. Hershey wouldn't specify whether the problems stem from its configuration of the system or the software itself, which also includes planning and scheduling applications developed by Manugistics Group Inc. in Rockville, Md., and a pricing promotions package from Siebel Systems Inc. in San Mateo, Calif. Slide19:  Tom Crawford, general manager of the consumer products business unit at SAP America Inc. in Newtown Square, Pa., said the company has consultants on-site at Hershey to help resolve problems. But no revisions of R/3 are in the works for Hershey, he added. "There are really no software issues per se, in terms of bugs or fixes that need to be applied to make [R/3] work any differently than it is now," Crawford said. The SAP workers "are just making sure they're using the business processes [built into the software] correctly." Manugistics said it's working with Hershey and the other vendors on "business process improvements." A spokesman for IBM, the lead consultant on the project, said the new system required "enormous" changes in the way Hershey's workers do their jobs. Siebel officials weren't available for comment. Hershey's plants continue to churn out products such as Hershey's Kisses and the company's namesake candy bars, but the chocolates are piling up in warehouses instead of sitting on store shelves. Product inventories at the end of September were up 29% from last year's levels because of the order-processing problems, according to Hershey executives. "They've missed Halloween, they're probably going to miss Christmas, and they might even start missing Easter," said William Leach, a financial analyst at Donaldson, Lufkin & Jenrette Inc. in New York. At Hershey, the system problems will likely result in lost market share and could lead fed-up retailers to drop some of the company's products from their shelves. Whirlpool, 1999:  Whirlpool, 1999 NOVEMBER 08, 1999 - Whirlpool Corp. made a risky and ultimately damaging business decision by going live with its SAP R/3 implementation over the Labor Day weekend knowing that "red flags" had been raised, according to SAP AG officials. Fixing the problem would have delayed Whirlpool's go-live date by a week, SAP said. But pressure to take advantage of the long holiday weekend -- and to get off of its legacy system well before 2000 -- pushed Whirlpool ahead. The decision resulted in a botched shipping system that, until it was fixed Nov. 1, left appliances sitting in warehouses. Some stores experienced six- to eight-week delays before receiving their orders. Things seemed to be running smoothly days after the launch when 1,000 system users processed appliance orders. But by Sept. 18, with 4,000 users placing orders, performance started to disintegrate, Zimmerman said. That's when stores that sell Whirlpool appliances started feeling the pinch. Foremost Appliance in Chantilly, Va., which gets one-third of its revenue from Whirlpool sales, had shipments from Whirlpool's Carlisle, Pa., distribution center delayed six to eight weeks. "Some people are ordering four or five appliances, and we get one this week, none for them the next week. Then one more the week after. It's been a dilemma," said Bill Brennan, store manager. Brennan said he's been steering customers who don't want the long wait to other brands. Mabert, Vincent A. et al (2001a): Enterprise Resource Planning: Common Myths Versus Evolving Reality. Business Horizons, May-June 2001:  Mabert, Vincent A. et al (2001a): Enterprise Resource Planning: Common Myths Versus Evolving Reality. Business Horizons, May-June 2001 field study of 15 implementations + interviews with 6 senior consultants reports $300 - 500M cost for large companies cost of implementation as % of revenues: 3 - 6% for smaller firms 1.5 - 2% for large companies Cost structure:  Cost structure Mabert, Vincent A. et al (2001b): Enterprise Resource Planning: Measuring Value. Production and Inventory Management Journal, 3rd Quarter 2001::  Mabert, Vincent A. et al (2001b): Enterprise Resource Planning: Measuring Value. Production and Inventory Management Journal, 3rd Quarter 2001: questionnaire answers from 75 big US manufacturing firms (2000) 65% SAP R/3 avg revenue $4.86B avg ERP cost $77.2M (1.58% of revenues) Details:  Details Mabert, Vincent A. et al (2001b) A.T Kearney 1986-88:  A.T Kearney 1986-88 26 big US companies costs of financial function as % of sales avg 2.17%, range .9 - 3.6% as % of total payroll avg 6.1%, range 1.5 - 11.8% AICPA / Hackett 1997:  AICPA / Hackett 1997 650 companies, sales $50M-$90B employees in financial function 50-14000 (!) average tc / sales drops 36% from 2.2% (1988) to 1.4% (1996) average nr of employees in financial function drops 9% 1988-1996 Differences:  Differences Manufacturing Tc/sales avg 1.6% for sales < $1B Tc/sales avg 1.4% for $1B < sales < $5B Tc/sales avg 1.0% for sales > $5B Services Tc/sales avg 2.1% for sales < $1B Tc/sales avg 1.6% for sales > $1B Per transaction:  Per transaction Cost / sales invoice average $.67, best $.04 Cost / purchase transaction average $3.55, best $.35 avg 12500, best 92500 tr/employee/year Cost / payroll transaction average $1.91, best $.36 avg 23200, best 87400 tr/employee/year Miscellaneous:  Miscellaneous Monthly financial statements average 5-8 days, best 2 days Annual budget cycle avg 95 days, best 60 days Henrik Karlsson 1998:  Henrik Karlsson 1998 Case study: activity-based cost analysis of financial function in 2 small companies Marko Aarttila 2000:  Marko Aarttila 2000 36 responses from questionnaire to Finnish SMEs (sales 10M€ - 450M€) descriptive statistics on cost per transaction attempt to find drivers – statistically significant correlations between costs and size, structure, industry, system, BPR... Costs (Aarttila):  Costs (Aarttila) Minna Kippola 2002:  Minna Kippola 2002 Cases – 4 small companies (sales < €40M) Process benchmarking / abc approach Costs mostly salaries

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