Assessing and Managing the Benefits of Enterprise Systems

Mike Mazza

BUS-550

Customer Relations Management

Human Resources Management

Financial Resource Planning

FRP

Manufacturing Resource Planning

Supply Chain Management

Criteria for Assessment

Q: From who’s perspective?

Senior Manager?

Business Unit Manager?

A: Depends on which business factor

Criteria for Assessment

Q: Domain of Study, Level & Purpose

A: ES impact on firm’s organizational and functional levels for the purpose of managing and improving ES

3-Year time frame for the upcoming study

Criteria for Assessment

Q: What types of data will be used and against which referent

A: Subjective Data (ie..financial ratios)

A: Perceptual (OOI) = Overcoming Organizational Inertia

A: Optimal Success or Stated Goals

OBES Model

Organizational Benefits from system use of

Enterprise System

OBES Model Overview

LONG TERM BENEFITS MODEL

can be achieved by following

SHORT TERM BENEFITS MODEL

Short-Term ModelDependent Variable

• Dependent variable (what we want to achieve)

• Organizational benefits from system use from perspective of management

*For This Project*

Short-Term ModelIndependent Variable I

• Functional Fit (FF) is the extent to which the functional capabilities embedded and configured within an ES package match the functionality that the organization needs to operate effectively.

Example - Features and Fields

• Delivered and measured project by project

Short-Term ModelIndependent Variable II

• Overcoming organizational inertia (OII) is the extent to which members of the organization have been motivated to learn, use, and accept the new system.

• Change management important

• Concentrate on measuring project by project

Long-Term ModelDependent Variable

• Dependent variable (what we want to achieve)

• Organizational benefits from system use from perspective of senior management

Long-Term ModelIndependent Variable I

Integration of Information Systems: Unification of processes, systems, and/or data from multiple systems…not necessarily in the ONE organization. Links efforts of units through shared data.

Has sufficient integration occurred?

Long-Term ModelIndependent Variable II

Process Optimization:

Have the projects improved the efficiency and effectiveness of the organization’s processes?

Long-Term ModelIndependent Variable III

Improved access to information to key organizational decision makers.

Does ES provide quicker access to relevant, accurate information?

Long-Term ModelIndependent Variable IV

On-going major ES improvement

The number and extent of investment in major business improvement projects for improving and extending its ES.

Implementation -> Customize -> Upgrade-> To other business units ->

OBES Model

Strength of Evidence

Hypothosis SOE 1 SOE 2 SOE 3 Total %Functional Fit 0.13 0.44 0.37 0.94Integration 0.18 0.33 0.44 0.95Process Optimization 0.25 0.47 0.14 0.86On-going Projects 0.28 0.4 0.07 0.75Overcoming Org. Inertia 0.18 0.26 0.28 0.72Improved Access to Info 0.18 0.14 0.12 0.44

Summary of Evidence Supporting the Six Hypotheses+ 3 Yrs

.95

.52

.95

.88

.67

.68

Perceived Net Benefit Flow

PNBF: Reflects manager’s assessment of Net Benefit progress over initial 3 Year period from “Go Live”

Operational PNB

Operational Benefits include:• Labor, Inventory and

Administrative cost reduction• Customer and Employee

Support cycle time reduction• Productivity, Quality and

Customer Service Improvement

FROM: Business managers asked about value chain benefits

Managerial PNB

• Improved resource management

• Improved decision making and planning – Real time analysis for effective strategic planning

• Overall performance improvement - Financial, manufacturing, overall efficiency and effective management.

FROM: Business managers asked about goal achievement

Strategic PNB• Support business growth• Support business alliance via

easy consolidation and integrated resources

• Enhance innovation• Build cost leadership via

streamlining operations• Enabling world wide expansion• Support e-commerce

FROM: Senior Mangers asked about strategic goal achievement

IT Infrastructure PNB

• Provide immediate flexibility and extendibility to external stakeholders

• Lower cost of change• Reliable single platform• Continuous, customizable

improvements

FROM: IT managers asked about cost and technology changes

Organizational PNB

• Improved work patterns via coordination and harmonization between departments

• Shortened learning curves• Overall improvement in

organizational skill level• Building common/consistent vision

across organizational levels

FROM: Business managers asked about attitudes and cross-functional successes

Organizational PNB cont.

• Shifting work focus to customer, market and process

• Increased moral and satisfaction due to improved access to information, increased efficiency and knowledge

FROM: Business managers asked about attitudes and cross-functional successes

PRESENTATION QUESTION #1

Q - What acronym did Lee, Wrangler, Northface & Reebok assign to their customized ES?

A. (CAS) Consolidated Apparel Solution

B.(APS) Apparel Production Solution

C.(AFS) Apparel Footwear Solution

PRESENTATION QUESTION #2

Q - Which independent variable does not belong in the Long Term Benefits Model ?

A.Process Optimization

B. Integration

C.Functional Fit

D.Improved Access to Information

PRESENTATION QUESTION #3

Q (3a) What kind of graph is this

Q (3b) For what domain?

A.Organizational

B.Strategic

C.Managerial

D.Operational

Perceived Net

Benefit Graph

Sources

Seddon & Shang, (2002). Assessing and managing the benefits of enterprise systems: the business manager’s perspective. Information Systems Journal, 12, 271-299 http://cba.uah.edu/guptaj/m680/erpbenefits.pdf

Seddon, Calvert & Lang, (2010). A Multi-Project Model of Key Factors Affecting Organizational Benefits From Enterprise Systems. Management Information Systems Quarterly, (34)2, 305-328

http://aisel.aisnet.org/misq/vol34/iss2/7/