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EDUCAUSE Center for Applied Research. The Promise and Performance of Enterprise Systems May 22, 2003 Robert B. Kvavik Senior ECAR Fellow. Presentation Agenda. Industry Overview – current snapshot of higher education’s experience with “enterprise systems”. Background. - PowerPoint PPT Presentation
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EDUCAUSE Center for Applied ResearchEDUCAUSE Center
for Applied Research
The Promise and Performance of Enterprise
Systems
May 22, 2003
Robert B. KvavikSenior ECAR Fellow
The Promise and Performance of Enterprise
Systems
May 22, 2003
Robert B. KvavikSenior ECAR Fellow
Page 2
Presentation Agenda
• Industry Overview – current snapshot of higher education’s experience with “enterprise systems”
Page 3
Background
•Findings based on study of nearly 500 colleges and universities conducted in mid-late 2002
•CIO/IT organization perspective (dominantly)
•Study conducted by ECAR, authored by Kvavik and Katz, with a significant research team
•Quantitative, qualitative, and case study methodologies employed
*New = implemented 7/1995 – 7/2002
Page 4
Caveats
•Sample is not random – sample bias (acceptable)
•Small N in sub populations (Carnegie, vendor …)
Page 5
The study addressed four questions:
•What is ERP and why should universities invest in it – the business case?
•What is the current status of ERP implementation nationally? What were the perceived benefits and costs?
•What lessons were learned?
•And lastly, what is next?
Page 6
The survey respondents were mostly CIOs and other IT professionals
243
2595
7
65
16
11
18
CIO (or equivalent)
Vice President / Vice Provost
Dir. AdministrativeComputing
Project Manager
Other IT Management
Other Admin. Management
Other Academic Mgmt.
Didn't Answer
43% of respondents have been in their positions for five or more years62% of respondents have been with their institution for five or more years
N=480
Page 7
The majority of respondents participated in the entire ERP project in a significant role
In position beforeplanning for ERPBegan
In position afterplanning but beforeimplementation began
Hired during theimplementation
Hired after theproduct wasimplemented
When Did Respondents Join the Project?
78% of respondents indicated that they played a significant role on the project, either as an executive sponsor, project leader, management team member, or
functional / technical specialist
N=257
Page 8
Identifying who implemented ERP for purposes of this study
Gartner described ERP systems as having the following attributes. This definition was adopted for purposes of this study. Multipleinscope,trackingarangeofactivitiesincludingHumanResourcesSystems(HR),StudentInformationSystems,andFinancialSystems
Integrated,meaningwhendataisaddedinonearea,informationinallareasandrelatedfunctions,alsochange
Modularinstructure Industryspecificsolutionsthatenhancestandardsystemsbyprovidingbestpracticesforkeybusinessprocesses
In addition, this study bounded survey responses with the following criteria: Institutionshadtohaveimplementedatleastonevendor-suppliedFinance,HR,orStudentmodule
ImplementationsmusthavebeencompletedafterJuly1,1995
256 of 480 (54%) institutions responding to the survey implemented ERP, according to these criteria
Page 9
Implementation by period and Carnegie Class
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Year Implemented
%
of
Mo
du
les I
mp
lem
en
ted
In
Ea
ch
Pe
rio
d
AA
BA
MA
Dr. Ext.
Dr. Int
AA 12% 19% 43% 27%
BA 17% 17% 34% 33%
MA 16% 18% 30% 37%
Dr. Ext. 14% 19% 37% 30%
Dr. Int 13% 9% 36% 43%
1980-94 1995-97 1998-2000 2001-
The largest number of implementations were reported in the 1998 – 2000 timeframe
N=646totalimplementations
Page 10
SCT (30%), PeopleSoft (25%) and Datatel (19%) installed the most modules for our respondents
43
32
13
58
4
65
23
37
158
58
4
55
25
45
32
1
47
0
82
16
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Financal HR StudentERP Module
ERP module by vendor
OtherSCTSAPPeopleSoftOracleJenzabarDatatel
N=646totalimplementations
Page 11
Distinctive purchasing patterns were evident in each Carnegie Class
Carnegie Class/ERP module
Financial HR Student
Doctoral Intensive
SCT/PeopleSoft SCT/PeopleSoft SCT/PeopleSoft
Doctoral Extensive
PeopleSoft PeopleSoft SCT/PeopleSoft
MA SCT/PeopleSoft SCT/PeopleSoft SCT/Datatel
BA Jenzabar/SCT SCT/Datatel Jenzabar/Datatel
AA SCT/PeopleSoft SCT/PeopleSoft SCT/PeopleSoft
Canada SCT/Datatel SCT/Datatel SCT/Datatel
Top two vendors, by number of reported implementations, for each Carnegie Class group
Page 12
What combination of modules were installed?
Module combinations Number Percent
Financial only 17 6%
HR only 4 1%
Student only 68 24%
Financial and HR 71 25%
Financial and Student 28 10%
HR and Student 5 2%
All three 96 33%
Ofthosewhohavenotimplementedallthreemodulesbutplannedtoinstalladditionalmodulesinthefuture,56%saytheyarefollowingaphasedimplementationplan,andhaven’tfinishedyet
Page 13
Six primary reasons emerged for package selection decisions
Factor Frequency Percent
Features/ functionality best fit requirements 193 20%Architecture best fit with IT strategy/goals 127 13%Vendor's reputation 126 13%Vendor's ability to provide a complete solution 124 13%Price 110 12%Vendor product/v ision 99 10%Advice from peers 67 7%Previous experience with vendor 41 4%Part of larger purchasing group that selected product 38 4%Advice from consultant/ industry analyst 28 3%
Why did institutions pick a particular vendor?
Respondentswereaskedto“pickallthatapply”
Notethatthisdoesnotnecessarilymeanthatthesewerethemostimportantreasonspackageswereselected–justthattheyplayedaroleinthedecision
Page 14
The primary reason institutions implemented ERP was to replace aging legacy systems
Mean of Factors Identified
Respondentswereaskedtogaugetheimportanceofeachofthesefactors,with
“1”being“mostimportant”
Frequencies of factor identified as “most important”
RespondentswereaskedtoselectoneoftheseastheprimaryreasontheyimplementedanERPsystem
ThepatternofresponseswassimilaracrossCarnegieClasses
Page 15
Cost of ERP and viability of legacy systems are the most important factors preventing wider adoption of packaged
software
What would need to change Frequency Percent
Significant drop in price of software/cost of maintenance 79 20%
Insurmountable problem with current system 71 18%
Costs and risks of implementation drop significantly 64 16%
Other competing priorities are addressed 48 12%
Strong success stories in industry 34 9%
Strong project champion emerges 33 8%
Vendors make significant changes to software 8 2%
Not answered 52 13% Respondentswereaskedto“selectallthatapply”
Page 16
ERP implementations were more difficult than other large technology projects, particularly around process change
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Financial HR Student
Difficulty of InitialImplementation
Technical Difficulty
Process & Org.Change
Support
Difficulty compared to other large technology projects
Respondentswereaskedtoassessoveralldifficultyona1-5scale,with1being“VeryEasy”,3being“AbouttheSame”,and5being“VeryDifficult”
Page 17
The largest obstacles to ERP implementations were internal to the institutions
Obstacles Ranked by ERP System Financial
Rank HR
Rank Student
Rank Resistance to change 1 2 1 Data issues 5 4 2 Customization 7 6 3 Lack of understanding of software capabilities 4 3 4 Lack of internal expertise 2 1 5 Alignment between software and business practices 3 5 6 Conflicts with other priorities 8 7 7 Quality of software 6 10 8 Lack of consensus among business owners 11 9 9 Technical issues 9 11 10 Scope creep 10 8 11 Lack of financial resources 13 12 12 Inadequate training 12 13 13 Project schedule 14 14 14 Lack of consensus among senior management 17 16 15 Inadequate communication strategy 16 17 16 Issues with external consultants 15 15 17 Respondentswereaskedtoselectthethreelargestobstaclestoimplementingeachsystem.
Responsesarerankedbyweightedmeans
Page 18
CIOs and business officers were most involved with ERP implementations
Respondentswereaskedtoassessoveralldifficultyona1-4scale,with1being“NotAtAll”,and4being“ActiveInvolvement”.Figuresrepresentweightedmeans
Page 19
Consultants played a role in a significant number of implementations
Project Activity Financial HR Student
Training 1 1 2
Upgrades 2 6 4
Project management 3 3 8
Ongoing support 4 2 3
System selection 5 4 1
System design 6 7 6
Project planning 7 5 5
Technical implementation 8 8 7
Process redesign 9 9 9
Consultant Support For Implementation Activities
Figuresrepresentrankorderofpercentageofprojectteamcomprisedofconsultants
•2/3ofrespondentsusedconsultantsforatleastoneaspectoftheirimplementation•ConsultantswereusedmorefrequentlyforStudentimplementations•90%ofrespondentsagreedorstronglyagreedthatconsultantshelpedtheinstitutionachieveitsimplementationobjectives•2/3ofrespondentsfelttheirconsultingdollarswerewellspent.However,50%indicatedconcernwithpricesthatexceededestimates,orfeesthatwerenottiedtoachievingmilestones
Page 20
Most implementations were reported to be finished on their original timeline and budget
Modules/ Schedule
Earlier On Schedule Over by up to 50%
Over by more than
50% Financials(222)
2% 72% 18% 4%
HR(184) 3% 66% 22% 7%SIS(201) 2% 63% 25% 7%
Budget/System Financial HR
Student
On or under budget 68% 73% 68%
Over budget by up to 50% 28% 24% 27%
Over budget by more than 50% 4% 3% 5%
60%ofrespondentsindicatedtheirmoduleswentlivewithin1-2yearsafterplanningPlanningandpurchasingtookunder1yearat80%ofinstitutions
Onaverage,Financialsystemswentinthequickest,andStudenttheslowest
Page 21
“Plain vanilla” was the preferred implementation strategy, and most institutions came close
•Customizationwasfoundtobethemoststatisticallysignificantvariableaffectingprojectoutcomes•Doctoralinstitutionswerethemostlikelytocustomize,acrossallmodules•Overall,Studentsystemswerethemostheavilycustomized•HRSystemsinprivateinstitutionsshowedbyfartheleastdegreeofcustomization
Page 22
No major project management issues were apparent, although the responses show room for improvement
Implementation assessment Mean Excellentbudgeting/financialmanagement 3.00Excellentsoftwarerolloutstrategy 2.99Scopeofprojectwaswelldefined 2.96ProvidedtimelytrainingforERPsystemusers 2.95Excellentjobmanaging/assessingdataconversion 2.88Excellentexecutiveengagement 2.82Excellentjobidentifyingprojectoutcomes 2.77Projecthadanexcellentwrittenstrategy 2.73Exemplaryjobcommunicatinggoals/status/changes 2.66Trainingprovideduserswithunderstandingofsystem'scapacities 2.57Broadagreementonbenchmarksfortheproject 2.53Excellentjobmeasuringandcommunicatingprojectoutcomes 2.52 Responsesrepresenta1-4scale,with1being“StronglyDisagree”,and4being“StronglyAgree”.
Figuresrepresentweightedmeans
•Full-timeprojectmanagerswereassignedat55%ofinstitutions•75%ofprojectmanagerswereinternal,10%external,and15%jointinternalandexternal•54%oftheprojectmanagershadnopreviousexperienceimplementingERP,and75%hadnotimplementedthechosenpackagebefore
Page 23
For the majority of institutions, desired project outcomes were mostly achieved
Outcomes Mean ERPparticipantsgainedfromexperienceprofessionally 3.30Addednewservicesforstudents,faculty,andstaff 3.29Improvedservicestostudents,faculty,andstaff 3.25Easiertotakeadvantageofnewtechnologies 3.22Managementinformationismoreaccurateandaccessible 3.12Enhancedregulatorycompliance 3.11Improvedinstitutionalprocesses 3.04Increasedinstitutionalaccountability 3.03Enhancedinstitution'sbusinessperformance 3.02Reducedbusinessrisk 2.97Enhancedsupportofacademicmission 2.92Enhancedprimaryusers'knowledgeandskills 2.91Increasedstakeholder'sconfidenceininstitution 2.79Lesscostlytointegratethanprevioussystem 2.56Lesscostlytoupgradethanprevioussystem 2.16Removedsomeservicesthatstudents,faculty,andstaffvalued 2.15Lesscostlytooperateandmaintainthatprevioussystem 2.01We asked our respondents whether they achieved their intended project outcomes.
124 or 51% answered yes, 112 or 46% partially, and only 6 or 3% answered no
Page 24
However, the benefits of ERP are not immediate in many cases, and may require institutional change to achieve
How long to achieve desired outcomes?
Frequency Percent
Immediately 48 21%
Within three months 34 15%
Within three to six months 39 18%
Within six months to one year 55 24%
Over one year 49 22%
•54%ofrespondentsindicatedthattheirinstitutionalproductivitydroppedimmediatelyaftertheimplementation•70%indicatedthattheirproductivityhasimprovedtoday•69%indicatedthattheworkloadatboththecentralanddepartmentallevelhasincreased•66%believethenatureoftheworkperformedbytheinstitution’semployeeshaschangedsignificantly
Page 25
The majority of respondents indicated their institutions received major benefits from ERP
The respondents were asked to assess the impact the ERP had on management, students, staff, and faculty
• 87% perceived significant benefit for management, 85% for staff, 78% for students, and 68% for faculty
• 85% of respondents indicated that their implementation was worth the cost
Page 26
The majority of respondents indicated they would take a similar approach again, with some improvements
•The respondents were asked whether they would build or buy if they were to do it again. 88% would buy, 7% would build, and 5% had no opinion.
•Two-thirds of the respondents would use a similar approach if they were to do an ERP project again. 46%, of the non-ERP schools would continue with their current approach.
What would you change? Frequency Communications 112Processredesign 102Trainingprocess 90Projectschedule 88Projectbudget 71Projectgovernance 61Internalteamstructure 58Softwarecustomizations 52Projectmanager 50Projectscope 48Externalconsultants 43Software 41Technologyinfrastructure 29
Page 27
Support costs went up in many instances
Support cost Mean
% decreased or stayed the same
% increased up to 25%
% increased over 26%
Packagedsoftware 3.25 25% 26% 49%Database 3.44 31% 29% 40%Training 3.72 27% 25% 48%Staff/personnel 3.84 35% 33% 32%Hardwareandinfrastructure 3.97 38% 26% 36%Desktopproductsandservices 4.13 52% 24% 24%Helpdesk&usersupport 4.17 46% 33% 27%Systemoperationsandmanagement 4.24 46% 29% 35%Consulting 4.28 57% 23% 20%Internalapplicationsandcode 4.95 66% 23% 11%
Responsesrepresenta1-7scale,with1being“IncreasedSignificantly”,5being“DidnotChange”,and7being“DecreasedSignificantly”
Responsesareorderedbyweightedmeans
Page 28
ERP implementations are ongoing, with new components being added at many institutions
New additions to ERP System
I mplemented or
implementing
Within 1 year
1-3 years
3-5 years or not under
consideration New modules of core applications
47% 23% 16% 14%
Add/substitute best of breed applications
19% 7% 16% 65%
Archiving/ imaging 26% 13% 28% 33% CRM 18% 6% 15% 61% Data warehousing 39% 10% 27% 23% eCommerce/eProcurement 35% 20% 24% 21% Portal 40% 14% 30% 15% Workflow 25% 16% 23% 74%
Page 29
A Word About Non-Implementers (n=203)
Factor Frequency Percent Existing System Works 69 31% Not Ready 36 16% Other Priorities 33 15% Waiting for Product(s) to Mature 11 5% Don’t See the Value 10 5% Existing Systems Don’t Fit Needs 7 3% Waiting for Prices to Drop 7 3% Other 40 16% Did Not Answer 10 5%