Total Cost of Ownership, User Acceptance and *Perceived Success of ERP Software


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  • Other tasks = new tasks & bundle/upgrade prep tasks
  • This does NOT include rework
  • Total Cost of Ownership, User Acceptance and *Perceived Success of ERP Software

    1. 1. Total Cost of Ownership, User Acceptance and Perceived Success of ERP Software Simulating a Dynamic Feedback Perspective in the Higher Education Environment Meg Fryling Associate Director Client Support Services Information Technology Services University at Albany
    2. 2. Agenda <ul><li>Overview and Rationale </li></ul><ul><li>Approach, Methods and Design </li></ul><ul><li>Case Study Institution </li></ul><ul><li>Model Conceptualization Review </li></ul><ul><li>Policy Analysis </li></ul>
    3. 3. Overview and Rationale
    4. 4. The Problem <ul><li>Underestimate time and resources required </li></ul><ul><li>BPR vs. customization </li></ul><ul><li>Implementation decisions driven by short-term goals </li></ul><ul><li>Lack of framework to predict long-term TCO </li></ul><ul><li>Homegrown vs. ERP -Paradigm shift </li></ul>
    5. 5. Research Questions <ul><li>What are the dynamic relationships involved in maintaining ERP systems?  </li></ul><ul><li>How can we better predict long-term total cost of ownership of maintaining ERP systems? </li></ul><ul><li>What is the impact of customization versus business process reengineering on total cost of ownership, system acceptance and perceptions of success? </li></ul>
    6. 6. Research Objectives <ul><li>Investigate impact of ERP implementation decisions on long-term recurring costs, system acceptance and perceptions of success </li></ul><ul><li>Develop a formal ERP dynamics simulation model </li></ul><ul><li>Provide an effective communication framework via simulation modeling </li></ul><ul><ul><li>Policy analysis </li></ul></ul>
    7. 7. Model Building Blocks <ul><li>Literature Review </li></ul><ul><li>Researcher’s Mental Model </li></ul><ul><li>Case Study Data </li></ul><ul><ul><li>Identify model constructs and calibrate </li></ul></ul><ul><li>Interviews </li></ul><ul><ul><li>Case study project participants </li></ul></ul><ul><ul><li>Experts from other institutions </li></ul></ul>
    8. 8. Approach, Methods and Design
    9. 9. System Dynamics <ul><li>“… computer-aided approach to policy analysis and design” </li></ul><ul><li>Applicable to… </li></ul><ul><ul><li>“ dynamic problems arising in complex social, managerial, economic, or ecological systems” </li></ul></ul><ul><ul><li>“ dynamic systems characterized by interdependence, mutual interaction, information feedback, and circular causality.” </li></ul></ul>Richardson, G. P. (1996). System Dynamics. Encyclopedia of Operations Research and Management Science . S. Gass and C. Harris. Norwell, MA, Kluwer Academic Publishers.
    10. 10. Feedback Relationships + + + Bundles/Upgrades Rework/Recustomization Time to Implement ERP
    11. 11. Dynamic Behavior to Consider <ul><li>Recurring reapplication of customizations </li></ul><ul><li>TCO of customization increases indefinitely </li></ul><ul><ul><li>Must eliminate customization to stop growth </li></ul></ul><ul><li>Expectation that customization will always exist </li></ul><ul><li>Difficult to justify selective customization </li></ul><ul><ul><li>political slippery slope </li></ul></ul>
    12. 12. Dynamic Behavior to Consider <ul><li>Customizations often break delivered software components </li></ul><ul><ul><li>Domino effect </li></ul></ul><ul><ul><li>Vendors do not support customizations </li></ul></ul><ul><li>Upgrade preparation </li></ul><ul><ul><li>Tasks completed multiple times </li></ul></ul><ul><li>Resources tied up on upgrade work </li></ul><ul><ul><li>Task backlog </li></ul></ul>
    13. 13. Case Study Institution The University at Albany (UAlbany)
    14. 14. Institution Overview <ul><li>Established in 1844 </li></ul><ul><li>Designated a University Center of the State University of New York in 1962 </li></ul><ul><li>Public research institution </li></ul><ul><li>13,000 undergraduate students, 5,000 graduate students, 1,040 faculty and 4,330 non-faculty employees </li></ul>
    15. 15. Case Study Institution <ul><li>Data sources </li></ul><ul><ul><li>Documentation </li></ul></ul><ul><ul><li>Archival records </li></ul></ul><ul><ul><li>Interviews </li></ul></ul><ul><li>Time boundary </li></ul><ul><ul><li>6 years (2003-2009) </li></ul></ul><ul><ul><li>Post-Implementation </li></ul></ul><ul><ul><li>One Major Upgrade </li></ul></ul>
    16. 16. Project Milestones <ul><li>March 1999 – Prospects </li></ul><ul><li>June 2000 – Human Resources </li></ul><ul><li>November 2000 – Admissions </li></ul><ul><li>March 2001 – Orientation </li></ul><ul><li>September 2002 – UPGRADE </li></ul><ul><li>June 2003 – Student Records </li></ul><ul><li>January 2004 - Financial Aid </li></ul><ul><li>May 2005 – Student Financials </li></ul><ul><li>August 2008 - UPGRADE </li></ul>
    17. 17. Project Charter <ul><li>Reengineered and policy changes to fit the software... </li></ul><ul><li>The PeopleSoft software has been built based on “best business practices” .... </li></ul><ul><li>Software customizations will be kept to a minimum… </li></ul><ul><li>The project management teams must make every effort to manage and reduce costs </li></ul>
    18. 18. Percentage of Rework Tasks Each Month
    19. 19. Tasks Opened Per Month
    20. 20. Upgrade vs. Non-Upgrade Tasks
    21. 21. Upgrade Task Percentages
    22. 22. Upgrade Task Effort (%)
    23. 23. Percentage of High Effort Tasks by Task Type
    24. 24. Summary of Opportunities
    25. 25. Actual Cost Breakdown From 1998-2006
    26. 26. Model Conceptualization Review Semi-Structured Interviews
    27. 27. Interview Protocol <ul><li>Semi-structured interviews </li></ul><ul><ul><li>Functional and Technical </li></ul></ul><ul><ul><li>Case Study Institution and 3 Others </li></ul></ul><ul><ul><li>Likert-type scale questions (agree/disagree) and follow-up discussion </li></ul></ul><ul><ul><li>Open ended questions </li></ul></ul>
    28. 28. Customization vs. BPR
    29. 29. Technology Acceptance
    30. 30. Communication and Collaboration
    31. 31. Perceptions of Success
    32. 32. Policy Analysis Scenarios <ul><li>Base Run </li></ul><ul><ul><li>Based on case study data </li></ul></ul><ul><li>No Customizations and/or Add-ons </li></ul><ul><li>No Bundles and/or Upgrades </li></ul><ul><li>Increase pre-implementation relationship building efforts </li></ul><ul><li>Add consulting partner for initial implementation </li></ul>
    33. 33. No Bundles/Upgrades
    34. 34. Thank you!
    35. 35. Copyright Meg Fryling 2010 <ul><li>This work is the intellectual property of the author. Permission is granted for this material to be shared for non-commercial, educational purposes, provided that this copyright statement appears on the reproduced materials and notice is given that the copying is by permission of the author. To disseminate otherwise or to republish requires written permission from the author. </li></ul>