This document discusses UAB's implementation of an ERP system and efforts to measure its ROI. It provides background on UAB, outlines their vision for the ERP, and describes their methodology for measuring intangible and tangible benefits across operational, managerial, strategic, IT and organizational dimensions. Key findings include improved performance, reduced cycle times and costs, and the need for advanced user training. Moving forward, UAB aims to better integrate systems, build business intelligence, refine processes, and minimize shadow systems to maximize the ROI of their ERP investment.

1. Real world ROI of an ERP Implementation
Measuring the Tangibles and Intangibles
Rahul Thadani
University of Alabama at Birmingham

2. Introduction : About UAB
§ Over 18,600 Employees.
UAB Mission Statement § Over 17,000 Students
“UAB is a research university and academic § 70 research centers
§ 82 City Blocks
health center that discovers, teaches and applies
§ Decentralized
administrative structure
knowledge for the intellectual, cultural, social
§ UAB Hospital: Consumer
and economic benefit of Birmingham, the state Choice Award: 12
consecutive years
and beyond.” § Largest employer in the
state of Alabama
University of Alabama at Birmingham

3. Where are we?
University of Alabama at Birmingham

4. Vision for UAB’s ERP system
“.. a system that enables fast, accurate, efficient tracking and
reporting of administrative activities… eliminate redundant entry
of information… eliminate need for voluminous paper reports….
Provide sufficient information in flexible formats to eliminate the
need for departmental shadow systems ..” (UAB, 1998)
University of Alabama at Birmingham

5. ERP System Life Cycle
Change Management
People
Process
Product
Adoption Use &
Decision Acquisition Implementation Maintenance Evolution Retirement
1998 2000 2004 2006 2010
ERP life-cycle framework – (Esteves & Pastor, 1999).
University of Alabama at Birmingham

6. Measuring ROI
Average cost of ERP: upwards of 11m
Measuring Benefits
Quantifying KPIs
Success Factors
Perceptions
Quantifiable Data Elements
Original Vision
University of Alabama at Birmingham

7. Measuring UAB’s ROI
• Intangibles: Measure the satisfaction of the various
constituents based on their expectations of the system and their
experience with it.
• Tangibles: Analyze raw financial and HR data to look
at trends, changes in growth and attempt to relate these
changes to the system based on the feedback from users .
University of Alabama at Birmingham

8. Intangibles
1. Executives
2. Power Users
3. End Users
4. IT
University of Alabama at Birmingham

9. Intangibles Shang & Seddon Model
Measuring ROI across 5 dimensions
Operational
Organizational Managerial
IT
Strategic
Infrastructure
University of Alabama at Birmingham

10. Intangibles Shang & Seddon Model
Operational 1. Cost reduction (Labor, Inventory, Administrative)
2. Cycle time reduction,
3. Productivity improvement
4. Quality improvement (error rate, redundancy,
accuracy, reliability)
5. Customer services improvement (ease of data
access for customer queries)
University of Alabama at Birmingham

11. Intangibles Shang & Seddon Model
Managerial 1. Better resource management (Better workforce
management)
2. Improved decision making and planning(reports,
real-time use of data, accessibility)
3. Performance improvement (financial, operational
efficiency, and effectiveness management)
standardization, compliance
University of Alabama at Birmingham

12. Intangibles Shang & Seddon Model
Strategic 1. Support business growth (transaction volume,
capacity, capability, new functions)
2. Build cost leadership (economies of scale, shared
services)
University of Alabama at Birmingham

13. Intangibles Shang & Seddon Model
IT 1. Build business flexibility for current and future
Infrastructure
changes (integration with other systems)
2. IT costs reduction (hardware, support staff, etc)
3. Increased IT infrastructure capability
(standardized platform, performance, reliability,
availability, disaster recovery etc)
University of Alabama at Birmingham

14. Intangibles Shang & Seddon Model
Organizational 1. Support organizational changes
2. Facilitate Business learning (cross training of
employees)
3. Empowerment (accountability, value added
responsibility, users have ownership)
4. Built common visions (efficient communications ,
collaboration)
5. Better Employee morale and job satisfaction
(improved skill levels)
University of Alabama at Birmingham

15. Tangibles
Collected thru:
HR and Financial Oracle system
UAB Financial Reporting
Auxiliary Systems
University of Alabama at Birmingham

16. Realizing the Benefits
Aggregate Response
Significant
Improvement
Improvement
No
Change
Deteriora5on
Significant
Deteriora5on
POWER USERS END USERS
University of Alabama at Birmingham

17. Operational Dimension: Observations & Findings
Operational
Significant
Improvement
2
END USERS
1.24
POWER USERS
Improvement
1 0.85
No
Change
0
1.1 Cost 1.2 Cycle time 1.3 1.4 Quality 1.5 Customer
Overall
reduction reduction Productivity improvement services
Operational
improvement improvement
Deteriora5on
-1
Sub Dimension
Significant
Deteriora5on
Cost Reduction; Cycle Time; End Users; Level of expectations
University of Alabama at Birmingham

18. Managerial Dimension: Observations & Findings
Managerial
Significant
2
Improvement
END USERS
1.10 1.06
Improvement
1
POWER USERS
No
Change
0
Overall 2.1 Better 2.2 Improved 2.3 Performance
Managerial resource decision making improvement
management and planning
Deteriora5on
-1
Significant
Sub Dimension
Deteriora5on
Decision Making, Compliance
University of Alabama at Birmingham

19. Strategic Dimension: Observations & Findings
Strategic
Significant
2
Improvement
POWER USERS
Improvement
1 0.88
0.50 END USERS
No
Change
0
Overall 3.1 Support 3.4 Build cost
Strategic business growth leadership
Deteriora5on
-1 Sub Dimension
Significant
Deteriora5on
Cost Leadership, realization of promised benefits, shadow
systems
University of Alabama at Birmingham

20. IT Infrastructure Dimension: Observations & Findings
Significant
IT Infrastructure
Improvement
2
Improvement
1
IT
No
Change
0
4.1 Build 4.2 IT costs 4.3 Increased IT
-0.14 business reduction infrastructure
flexibility capability
Overall IT
-1
Deteriora5on
Significant
Sub Dimension
Deteriora5on
-2
Personnel Costs, Technology changes, DR, High Availability, H/
W costs
University of Alabama at Birmingham

21. Organizational Dimension: Observations & Findings
2 Organizational
Significant
Improvement
1.06 POWER USERS
0.97
1
Improvement
END USERS
No
Change
0
Overall
Organization
al
Deteriora5on
-1
Significant
Deteriora5on
Sub Dimension
Organizational Changes, Business Learning, Employee Morale
University of Alabama at Birmingham

22. Tangibles: UAB Today
UAB Financial Highlights UAB Resources
2686
3000
15.85 18.7
2500 18.6
1100
20 14
2000 1180 15.1
$ million
15
1500 10.4
562 858
617 10
1000
248 540
500 5
0 0
1997 1997
2004 2004
2011 2011
Grant in $m Payroll $m Sq feet in million Employees '000
Hospital Revenue $m Total UAB Revenue $m Students '000
University of Alabama at Birmingham

23. Tangibles
Change in Job Profiles 2004-2010
Professional/
20.00% Non Faculty,
12.95% Techical/
Executive /
Administrative, Paraprofessional,
7.80% 10.02%
10.00%
% Change in Jobs
0.00%
Total Jobs,
-10.00% Secetarial/
-0.41%
Clerical,
-19.82%
-20.00%
-30.00% Total Jobs Job Profile
xxx
University of Alabama at Birmingham

24. Tangibles
1,000,000 Documents Processed Annually
PO
750,000 HR
TEL
LD
Journal Batch
500,000 Requistions
250,000 Invoices
0
2005 2006 2007 2008 2009 2010
University of Alabama at Birmingham

25. Tangibles
Cycle Time Reduction
HR/
LD
2.56 5.5
Invoice
Approval
2.84
4.9
Requisi5on
1.44 2.44
Time
Entry
0.31 0.908
0 1 2 3 4 5 6
Days
2010 2005
Process Improvement; Transactional Transparency; Accuracy
University of Alabama at Birmingham

26. Tangibles
HR On Boarding
8.1
Avg
5me
for
New
Hire
10.19
0 2 4 6 8 10 12
Days
2010 2005
xxx
University of Alabama at Birmingham

27. Tangibles
80%
70%
46%
Overall Hardware Cost
60% Reduction since 2004
Database Server
50%
front end servers
40%
interface server
30% SAN
load balancer
20%
firewall etc
10%
0%
H/W Cost Savings: % change since 2004
Hardware cost savings: % Change since 2004
University of Alabama at Birmingham

28. Tangibles
Annual System Maintenance
Compliance
Bug Fix Enhancemen
6%
18% ts
45%
Maintenance
31%
University of Alabama at Birmingham

29. Key Findings : Information Technology
Complexity of Data Security: Four categories: Academic, Administrative,
Clinical and Research.
IT strategy and planning: Dependent on the vendor schedule for upgrades
and planning.
Improved Performance and Maintainability: higher reliability and negligible
failure rates. Easier Cloning and Backups
IT costs: IT costs are higher than initial projections; Cost of development
staff increased by 50%. Hardware costs down 46%
University of Alabama at Birmingham

30. Key Findings : End Users
System Use Optimization: System capacity and capability. Policy decisions
and current design are main causes of current limitations. real time view of
data/transactions.
Training: Need for advanced training that focuses on business processes
used at UAB and how to optimize the use of the system for greater
operational and managerial efficiencies.
Embrace Shadow Systems: Costs may be reduced through better
integration, policy changes and reporting methods.
University of Alabama at Birmingham

31. Key Findings : Power Users
Operational Benefits: standardization of -> better system wide
reporting and analysis of data. compliance requirements and external
reporting needs. A significant amount of workload has been pushed
back to end users, enabling staff to focus more on core activities.
Workforce requirements: Quality and skill sets of work professionals.
University of Alabama at Birmingham

32. Key Findings : Executive
Lessons Learned:
- Design that is structured around functional silos..
- Avoid replication of old processes in new system.
- Business processes should be changed to match that of the system
functionality.
- Risk assessment more complex, and window for management of risk is
smaller.
- Transparency of data and finances leads to less fraud and more
accountability.
University of Alabama at Birmingham

33. The Path Forward : Maximizing the ROI
Vision:
To utilize the system to a higher potential through use of
better integration, accessibility and reducing inefficiencies
Objectives:
• System Level Architecture design
• Build better Business Intelligence
• Re-focus of activities based on cost analysis : fine tune
process flows and eliminate process inefficiencies
• Minimize need for shadow systems
University of Alabama at Birmingham

34. Questions?
“The highest type of efficiency is that which can
utilize existing material to the best advantage”
Rahul Thadani
rthadani@uab.edu
University of Alabama at Birmingham
University of Alabama at Birmingham