total cost of ownership, user acceptance and *perceived success of erp software
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Total Cost of Ownership, User Acceptance and
Perceived Success of ERP Software
Simulating a Dynamic Feedback Perspective in the Higher Education
EnvironmentMeg FrylingAssociate DirectorClient Support ServicesInformation Technology ServicesUniversity at Albany
Agenda
• Overview and Rationale
• Approach, Methods and Design
• Case Study Institution
• Model Conceptualization Review
• Policy Analysis
Overview and Rationale
The Problem• Underestimate time and
resources required• BPR vs. customization• Implementation decisions
driven by short-term goals• Lack of framework to
predict long-term TCO• Homegrown vs. ERP -
Paradigm shift
Research Questions
• What are the dynamic relationships involved in maintaining ERP systems?
• How can we better predict long-term total cost of ownership of maintaining ERP systems?
• What is the impact of customization versus business process reengineering on total cost of ownership, system acceptance and perceptions of success?
Research Objectives
• Investigate impact of ERP implementation decisions on long-term recurring costs, system acceptance and perceptions of success
• Develop a formal ERP dynamics simulation model
• Provide an effective communication framework via simulation modeling– Policy analysis
Model Building Blocks• Literature Review
• Researcher’s Mental Model
• Case Study Data – Identify model constructs and calibrate
• Interviews– Case study project participants– Experts from other institutions
Approach, Methods and Design
System Dynamics
• “…computer-aided approach to policy analysis and design”
• Applicable to…– “dynamic problems arising in complex social,
managerial, economic, or ecological systems”– “dynamic systems characterized by
interdependence, mutual interaction, information feedback, and circular causality.”
Richardson, G. P. (1996). System Dynamics. Encyclopedia of Operations Research and Management Science. S. Gass and C. Harris. Norwell, MA, Kluwer Academic Publishers.
Feedback Relationships
Bundles/Upgrades
Rework/Recustomization
Time to
Implement ERP
Dynamic Behavior to Consider
• Recurring reapplication of customizations• TCO of customization increases
indefinitely– Must eliminate customization to stop growth
• Expectation that customization will always exist
• Difficult to justify selective customization– political slippery slope
Dynamic Behavior to Consider
• Customizations often break delivered software components– Domino effect– Vendors do not support
customizations
• Upgrade preparation– Tasks completed multiple times
• Resources tied up on upgrade work – Task backlog
Case Study Institution
The University at Albany (UAlbany)
Institution Overview
• Established in 1844
• Designated a University Center of the State University of New York in 1962
• Public research institution
• 13,000 undergraduate students, 5,000 graduate students, 1,040 faculty and 4,330 non-faculty employees
Case Study Institution
• Data sources– Documentation– Archival records– Interviews
• Time boundary– 6 years (2003-2009)– Post-Implementation– One Major Upgrade
Project Milestones• March 1999 – Prospects• June 2000 – Human Resources• November 2000 – Admissions• March 2001 – Orientation• September 2002 – UPGRADE• June 2003 – Student Records• January 2004 - Financial Aid• May 2005 – Student Financials• August 2008 - UPGRADE
Project Charter• Reengineered and policy changes to fit the
software...
• The PeopleSoft software has been built based on “best business practices” ....
• Software customizations will be kept to a minimum…
• The project management teams must make every effort to manage and reduce costs
Percentage of Rework Tasks Each Month
Tasks Opened Per Month
Upgrade vs. Non-Upgrade Tasks
Upgrade Task Percentages
Upgrade Task Effort (%)
Percentage of High Effort Tasks by Task Type
Summary of Opportunities
Actual Cost Breakdown From 1998-2006
Model Conceptualization Review
Semi-Structured Interviews
Interview Protocol
• Semi-structured interviews– Functional and Technical– Case Study Institution and 3 Others– Likert-type scale questions (agree/disagree)
and follow-up discussion– Open ended questions
Customization vs. BPR
Technology Acceptance
Communication and Collaboration
Perceptions of Success
Policy Analysis Scenarios
• Base Run – Based on case study data
• No Customizations and/or Add-ons
• No Bundles and/or Upgrades
• Increase pre-implementation relationship building efforts
• Add consulting partner for initial implementation
No Bundles/UpgradesFatigue
2
1.5
1
0.5
0
0 22 44 66 88 110 132 154 176 198 220 242 264 286Time (Week)
frac
tion
Fatigue : No UpgradesFatigue : No Bundles
Fatigue : Base Run
Thank you!
Copyright Meg Fryling 2010
• 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.