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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
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Page 1: EDUCAUSE Center

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

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Presentation Agenda

• Industry Overview – current snapshot of higher education’s experience with “enterprise systems”

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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

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Caveats

•Sample is not random – sample bias (acceptable)

•Small N in sub populations (Carnegie, vendor …)

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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?

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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”

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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”

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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

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CIOs and business officers were most involved with ERP implementations

Respondents­were­asked­to­assess­overall­difficulty­on­a­1-4­scale,­with­1­being­“Not­At­All”,­and­4­being­“Active­Involvement”.­­Figures­represent­weighted­means

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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

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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

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“Plain vanilla” was the preferred implementation strategy, and most institutions came close

•Customization­was­found­to­be­the­most­statistically­significant­variable­affecting­project­outcomes•Doctoral­institutions­were­the­most­likely­to­customize,­across­all­modules•Overall,­Student­systems­were­the­most­heavily­customized•HR­Systems­in­private­institutions­showed­by­far­the­least­degree­of­customization

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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

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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

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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

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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

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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

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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

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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%

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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%


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