Management Challenges in
Enterprise Resource Planning
(ERP) Post-Implementation
Dr Celeste Ng, Ph.D.
吳思佩
@ Celeste Ng, YZU; 15th Oct 2004
@ Celeste Ng
Session 1:
Previous Research Experience
- what is ERP?
- what is ERP post-implementation?
- what is ERP maintenance?
- previous research outcomes
@ Celeste Ng
Section 1: Previous research experience
What is ERP?
• Enterprise resource planning
– Characteristics: integrated, cross-functional,
modern business application packaged software
– Vendor (int’l): SAP (Germany), Oracle (Calf.,USA),
PeopleSoft (USA), J.D. Edward (USA)
– Vendor (Taiwan): Data Systems Consulting Co., Ltd. (
鼎新電腦), Wellan System Co., Ltd. (偉盟系統股份有
限公司),Datawin (鉅茂科技股份有限公司).
– Market: generate nearly $20B in revenue in year
2002
@ Celeste Ng
What is ERP post-implementation?
• Activities after system implementation
@ Celeste Ng
What is ERP maintenance?
• Post-implementation activities
• Undertaken by the client-organization
• Targeting at
– keeping the system running correctly
– operating well in a changed environment
– providing user-support
– realizing more business benefits
– maintaining the installed system a supported
version
SOURCE: Ng, C.S.P., G.G. Gable, and T. Chan, "An @
ERP-client
Celeste Ng
Benefits-oriented Maintenance Taxonomy",
Journal of Systems and Software, 64(2), pp. 87-109, 15 November 2002.
Outcomes – for maintenance request classification
Who
Who is the source?
Why
What
Affect client's
module?
Why?
Business Benefit Oriented
Maintenance
category
Any business
benefit?
B.1
Realize benefits and/or make
enhancements
C.1
Yes
Enhancement
D.1
Yes
B.2
Make adjustments and adaptations
C.2
Yes
Adaptive
D.2
No
B.3
Fix bugs and error
C.3
Yes
Corrective
D.3
No
B.4
Provide user support
C.4
No
User-support
D.4
No
Business benefit
catefory
Competitive
advantage
A.1
Client-organization
Other
A.2
Vendor
Globalization
Other
B.5
Realize substantial benefits and/or
make enhancements
C.5
Yes
Functional
Upgrade or minor
enhancement
D.5
Yes
B.6
Keep the system vendor-supported
- long-term
C.6
Yes
Technical
Upgrade
D.6
Yes
B.7
Keep the system up to the standard
required by the vendor
- short-term
C.7
Yes/
No
Patchmaintenance:
standard
D.7
Yes
Patchmaintenance:
adaptive
D.8
No
Patchmaintenance:
corrective
D.9
No
Integrated
system
Best Practice /
Business
Processes
C.8
No
B.8
Make adjustments and adaptation
B.9
Fix bugs and error
Other
C.9
Yes
Cost effective /
reduction
C.10
No
C.11
Yes
Legend:
"Who" is to be assessed by - IT-staff
"Why" is to be assessed by - IT-staff and system user
"What" is to be assessed by - IT-staff
"Benefit-oriented" is to be assessed by - Senior Managers (including IT-managers and business managers)
Other
ADAPTED FROM: Ng, C.S.P., G.G. Gable, and T. Chan,
@ Celeste
"An ERP-client
Ng
Benefits-oriented Maintenance Taxonomy",
Journal of Systems and Software, 64(2), pp. 87-109, 15 November 2002.
Outcomes – for decision-making process (1)
Cost Function
If enhancement
maint_cost_enh = implement_cost * + ongoing_maint_cost** + fixed_cost
implement_cost = #_of_hours*** X cost_per_hour
ongoing_maint_cost = (#_of patch_project + #_of _upgrade) X (a_fraction_of_implement_cost)
Initiator
Trade-off
If corrective****
maint_cost _corr = #_of_hours*** X cost_per_hour + fixed_cost
Maintenance cost
If master-data-change****
maint_cost _master_data = #_of_hours*** X cost_per_hour + fixed_cost
If user-support
maint_cost _user_support = personnel + training + documentation + fixed_cost
System users:
User opportunity
cost
If enhancement
Oppor_cost_user_enh = (prob_not_avail X Oppor_cost) + [prob_avail X (Oppor_cost ongoing_maint_cost)]
Oppor_cost =  (benefit_category_weight X unrealized_benefit_value)
If corrective, master data change or user-support****
Oppor_cost =  (benefit_category_weight X unrealized_benefit_value)
Maintenance cost
IT-staff:
User opportunity
cost
Maintenance
Activities
Maint_cost_prov_enh = #_of_hours*** X cost_per_hour + ongoing_maint_cost** +
fixed_cost
Oppor_cost_CSA_enh = (prob_not_avail X Oppor_cost) + [prob_avail X
(Oppor_cost - ongoing_maint_cost)]
Oppor_cost =  (benefit_category_weight X unrealized_benefit_value)
Maintenance cost
Maint_cost_patch = (#_of_hours X cost_per_hour) +
[(#_of_modification) X a_fraction_of_implement_cost] +
fixed_cost
User opportunity
cost
Oppor_cost =  (benefit_category_weight X unrealized_benefit_value)
Notes:
* The user-enhancement
implementation cost is
charged back to the
requestor's organization.
Therefore, it is not included
in CSA's ERP Decision
Framework.
** This cost is incurred if the
enhancement done is
affected by the future
patch-maintenance or
upgrade.
*** The number of hours for
the client-initiated
maintenance activities can
be estimated by considering
the task complexity and
maint. category, and other
factors.
Vendor (patch):
Upgrade cost
Vendor (New
Version Upgrade):
Reduction in
Maintenance cost
User opportunity
cost
****Corrective or masterdata-change requests could
also be initiated by IT-staff.
Upgrade_cost = software + hardware + user_training_cost + consultant_fees + + reapply_modification_cost +
upgr_implementation_cost + fixed_cost
reapply_modification_cost = modification_required X hour_per_modification X cost_per_hour
consultant_fees = #_of_consul_hour X consul_cost_per_hour
upgr_implementation_cost = (complexity X version_gap) X (integration_and_testing_cost + sys_disruption_cost)
reduce_maint_cost = - [ (#_of_modification - modification_required) X ongoing_maint_cost +
(patch_decrease_rate X ave_annual_patch_cost) ]
Oppor_cost =  (benefit_category_weight X new_version_unrealized_benefit_value)
SOURCE: Ng, C.S.P., "A Decision Framework for Enterprise
@ Celeste
Resource
Ng
Planning Maintenance and Upgrade: A Client
Perspective", Journal of Software Maintenance and Evolution: Research and Practice, 13(6), pp. 431-468, 2001.
Outcomes – for decision-making process (2)
5
Opportunit y cos t  W j x j
Globalization
Competitive
Advantage
Best Practice /
Business
Processes
j 1
W j = relative weight for a benefit category-j
xj = unrealized benefit value of a request evaluated under benefit-j
Integrated System
Cost Effective /
Reduction
SOURCE: Ng, C.S.P., G.G. Gable, and T. Chan, "An @
ERP-client
Celeste Ng
Benefits-oriented Maintenance Taxonomy",
Journal of Systems and Software, 64(2), pp. 87-109, 15 November 2002.
Outcomes – for decision-making process (3)
Examples of maintenance requests and benefit quantifications
Objective of the
Benefit descriptions
Benefit quantifications

Reduced time and cost
# of staff involved X total time (in
spent
hours) taken to complete a match-
maintenance request
Maintenance-request-1:
Electronically
payments
matched
against
open
manually
matching
invoices
receipts
and
invoices
“Cost reduction” category
transaction
X
transactions
per
#
of
match-
month
X
staff
hour
X
334
hourly rate
E.g.:
3
staff
X
0.25
transactions X $100 = $25,050

Maintenance-request-2:
Easy
access
reports
of
to,
current
and
and
historical sales information
More
accurate
sales
“Competitive
advantage”
E.g.:
50 sales unit X $200 = $10,000
category

Additional unit of sales per month
X net revenue per unit sales
planning.
Better
information
to
Amount of time saved in dealing
inform
managers
of
with a customer X # of customers
local
per month X manager’s hourly rate
global
and
customer
history
negotiating
when
payment
or
contract terms.
E.g.:
0.5 hour X 20 customers X $150 =
$1,500
“Globalization” category
User opportunity costs and maintenance request priorities
Maint.
request
Benefit categories (Thousand $)
User
Cost
Maint.
Opport. costs request
Comp.
Global.
Integrated
Best prac.
advantage
(W5 =
system
(W3 =.1 28) reduction
(W4 = .056)
.078)
(W2=.266)
Request-1
0
0
0
0
25.05
11.85
1st
Request-2
10
1.5
0
0
0
0.677
3rd
Request-3
0
0
10
3
0
3.044
2nd
(Thousand $) priority
(W1 = .473)
SOURCE: Ng, C.S.P., "A Decision Framework for Enterprise
@ Celeste
Resource
Ng
Planning Maintenance and Upgrade: A Client
Perspective", Journal of Software Maintenance and Evolution: Research and Practice, 13(6), pp. 431-468, 2001.
Outcomes – for decision-making process (3)
• Total cost of ownership, Z is:
Z   C IMPLEMENTATION   C PATCH _ MAINTENANCE _ REQUEST   C INTERNAL _ MAINTENANCE _ REQUEST 
C
UPGRADE
  CUSER _ OPPORTUNITY 
C
ANNUAL LICENCE FEE
C
DOCUMENTATION
  COUTSOURCING   CTRAINING 
  C EQUIPMENT   CMANAGEMENT& SERVICE
SOURCE: Ng C. S. P. 2005. Enterprise Resource Planning Maintenance Concepts. Encyclopedia of Information
Science and Technology; Khosrow-Pour M.(Ed.). Idea Group, Inc.: Hershey, PA; (In-press)
@ Celeste Ng
Outcomes – for maintenance methodology
P.2
Estimate
resources
requirement
P.3
Determine the
vendor
maintenance
support *
P.4
Establish the
maintenance
organization
P.5
Define the
maintenance
management
issues
P.6
Define
maintenance
service for
system users
P.7
Establish
configuration
management
plan
P.8
Develop training
and helpdesk
policies
P.9
Sketch the
desired
maintenance
procedure
TM, M
TM, M
TM, M
M
M
M
M
M
M
M.1
Maintenance
request
identification
M.3
Search for
availability of
maintenance
support *
M.5
Issue quotation
M.7
Implement the
solution
M.9
Conduct testing
H, A
A
M, U
P
A, P, T, I, U, M
M.2
Maintenance
classification,
approval, and
prioritization
M.4
Propose
solutions
M.6
Design solution
M.8
Conduct impact analysis,
and perform modificationenhancements
adjustment*
M, U
M, A, P
A, P
A, P
M.10
Deliver the
changes to the
users
P, M,T, I
U.1
Design an
upgrade project
methodology
U.3
Develop a
business case
U.5
Make full assessments of
the new functionality and
technical requirements in
each upgrade option *
U.7
Install the new
version onto the
development
system
U.9
Conduct a
thorough testing
of the upgrade
system
U.11
Go live and
deliver the new
system
M
TM, M
M, A, C
M, A, P
M, A, P, U, T, I
M, P, T, I
ERP Software
Upgrade
SOURCE: Ng,
C.S.P., G.G.
Gable, and T.
Chan,"An ERP
Maintenance
Model," in IEEE
Proceedings of
the IEEE
Hawaii
International
Conference on
System
Sciences
(HICSS), pp.
(on CD-ROM),
2003.
P.1
Define
maintenance
ERP Maintenance
Procedure
ERP Maintenance
Preparation
• A documented maintenance methodology is produced
that follows SEI software process modeling.
Activity name
Participants
U.2
Research for
upgrade options
available *
U.4
Make full assessment of the
modification-enhancements
and technical environment of
the current version
U.6
Conduct impact analysis
between the new upgrade
version and the current
version *
U.8
Construct the new system,
and perform modificationenhancements adjustment
U.10
Carry out the
trial upgrades
M
M, A, C
M, A, P
A, P, I
M, A, P, T, I
TM = Top Management, M = Maintenance Manager, H = Helpdesk, A = Business Analyst, U = System User, P = Programmer, T = Tester, I = Integrator, C = Consultant
*
= An Activity is new and/or unique to the ERP environment.
@ Celeste Ng
Outcomes – for maintenance data-model
M.3
Search for
availability of
maintenance
support
M.1
Maintenance
request
identification
M.2
Maintenance
classification,
approval, and
prioritization
- problem ID
- product ID
- service desk ID
- originator
- date and time
of occurrence
- criticality
- major
functional area
- functional area
- problem
description
- rationale for
request
- existence of
business benefit
- existence of
impact on
installed
module(s)
M.4
Propose
solutions
- maintenance
category
(problem type)
- benefit category
- urgency
- problem ID
- product ID
- service desk ID
- originator
- date and time of
occurrence
- criticality
- major functional
area
- functional area
- problem
description
- rationale for
request
- existence of
business benefit
- existence of
impact on installed
module(s)
- number of
patches
implemented
- number of
modificationenhancements
- maintenance
category (problem
type)
- benefit category
- urgency
- problem ID
- product ID
- service desk ID
- originator
- date and time of
occurrence
- criticality
- major functional
area
- functional area
- problem
description
- rationale for
request
- existence of
business benefit
- existence of
impact on installed
module(s)
- uniqueness
- projected
availability
- estimate time
- action to be
taken
- Issues of
consideration
- tailoring option
- defect found in
- error detection
difficulty
- method for
detection
- number of
patches
implemented
- number of
modificationenhancements
- maintenance
category (problem
type)
- benefit category
- urgency
- problem ID
- product ID
- service desk ID
- originator
- date and time of
occurrence
- criticality
- major functional
area
- functional area
- ..........
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost
centre
- uniqueness
- projected
availability
- estimate time
- action to be taken
- Issues of
consideration
- tailoring option
- defect found in
- error detection
difficulty
- method for
detection
- number of
patches
implemented
- number of
modificationenhancements
- maintenance
category (problem
type)
- benefit category
- ...........
- problem status
- problem status
date
- approved by
- patch number
(vendor change
request)
- details before
sw modification
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost centre
- uniqueness
- projected
availability
- estimate time
- action to be taken
- Issues of
consideration
- tailoring option
- defect found in
- error detection
difficulty
- method for
detection
- ..........
M.9
Conduct testing
M.8
Conduct impact analysis,
and perform modificationenhancements adjustment
M.6
Design solution
Investigation Phase
Maintenance activity
M.7
Implement the
solution
M.5
Issue quotation
- changes made
to
- analyst
- programmer
- problem status
- problem status
date
- approved by
- patch number
(vendor change
request)
- details before sw
modification
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost centre
- uniqueness
- projected
availability
- estimate time
- action to be taken
- Issues of
consideration
- tailoring option
- defect found in
- error detection
difficulty
- ..........
- related changes
- details after sw
modification
- released
- changes made to
- analyst
- programmer
- problem status
- problem status
date
- approved by
- patch number
(vendor change
request)
- details before sw
modification
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost centre
- uniqueness
- projected
availability
- estimate time
- action to be taken
- Issues of
consideration
- tailoring option
- .............
Resolution Phase
M.10
Deliver the
changes to the
users
- approval to
migrate
- related changes
- details after sw
modification
- released
- changes made to
- analyst
- programmer
- problem status
- problem status
date
- approved by
- patch number
(vendor change
request)
- details before sw
modification
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost centre
- uniqueness
- projected
availability
- estimate time
- action to be taken
- ................
- applied
- accepted by
- approval to
migrate
- related changes
- details after sw
modification
- released
- changes made to
- analyst
- programmer
- problem status
- problem status
date
- approved by
- patch number
(vendor change
request)
- details before sw
modification
- business value
- implementation
cost
- ongoing
maintenance cost
- task complexity
- quote
- quote type
- client cost centre
- uniqueness
- projected
availability
- ............
Delivery Stage
Maintenance attributes to be collected
SOURCE: Ng, C.S.P., G.G. Gable, and T. Chan, "A Maintenance-data-model
@ Celeste Ng
of Enterprise Resource Planning,"
in Proceedings of the Australasian Conference on Information Systems (ACIS), pp. 483-492, 2001.