=Paper=
{{Paper
|id=Vol-2814/paper-A2-2
|storemode=property
|title=Internal Resource Demand for ERP-System and Partner Evaluation at a Medium-Sized Enterprise with a Discrete Manufacturing Business Model in 2020
|pdfUrl=https://ceur-ws.org/Vol-2814/paper-A2-2.pdf
|volume=Vol-2814
|authors=Holger Kreisel
|dblpUrl=https://dblp.org/rec/conf/se/Kreisel21
}}
==Internal Resource Demand for ERP-System and Partner Evaluation at a Medium-Sized Enterprise with a Discrete Manufacturing Business Model in 2020
==
https://ceur-ws.org/Vol-2814/paper-A2-2.pdf
S. Götz, L. Linsbauer, I. Schaefer, A. Wortmann (Hrsg.): Software Engineering 2021 Satellite Events,
Lecture Notes in Informatics (LNI), Gesellschaft für Informatik, Bonn 2021 1
Internal Resource Demand for ERP-System and Partner
Evaluation at a Medium-Sized Enterprise with a Discrete
Manufacturing Business Model in 2020
Holger Kreisel1
Abstract: This paper presents and analyzes data of the internal human resources spent by a medium
sized Austrian industrial company to evaluate an implementation partner and the fitting ERP system
to replace the existing legacy system.
Keywords: ERP evaluation project; resources; medium-sized enterprise
1 Introduction
Replacing legacy ERP systems in medium-sized enterprises with a discrete manufacturing
business model is a challenge that affects the whole organization running that system. Given
the presumed average product lifespan of a typical ERP installation of 15-20 years and the
ERP digitalization wave in the early 2000s many ERP installations currently are – or are
increasingly becoming – due to be replaced. Choosing a new ERP system and the partner
to implement it is a strategic decision that will greatly impact the following 20 years (or
more) of the organization running on that ERP installation. The question how much internal
human resources such an evaluation project would consume is hard to answer, little data
is available to compare a project plan to empirical data of past projects for validation of
planning, allocating and – not at least – protecting internal resources from overplanning and
avoiding unnecessary risk to the evaluation project. This article aims to shed light on the
internal resource impact of an ERP evaluation project on a medium-sized enterprise with a
discrete manufacturing business model. To this aim we are using collected data of the ERP
system and partner evaluation project at “Company” during the year 2020 and analyze the
data in context of the project’s structure, plan and achieved actual project progress. [Be03;
MSR12; NC09; RGM]
1 Poloplast GmbH & Co KG, Leonding, Austria, kreisel.holger@poloplast.com
cb Copyright © 2021 for this paper by its authors.
Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
2 Holger Kreisel
2 Methodology
2.1 Collection of actual data on internal resource demand
Starting with the project kick-off in February 2020 we kept record on our personal actual
time spent on the project. Records for time spent on the project was exact to a quarter of
a person day and assigned to the name of the person, the project work package / stream,
sometimes supplemented with a comment.
The data collected for this paper covers the project time from March 2020 until October
2020, after the main workload of requirements definition, fact-finding and shortlisting was
done. 3 months of planned negotiation and closing were yet ahead when writing this paper.
We presume that the internal effort of the 3 remaining months in the project will be mainly
allocated to the PM-stream (project management / core team meetings) and SL-stream
meaning final negotiations with the shortlisted vendors and the then identified target vendor.
3 Analysis
3.1 Starting Situation at “Company”
“Company” develops, produces and distributes strengthened multi-layer plastic pipe systems.
Since over 60 years these innovative pipe systems find various applications in structural and
civil engineering. Traditional core markets are Austria and Germany which are considered as
home markets due to production facilities in Leonding (Austria) and Ebenhofen (Germany).
France, Italy, Scandinavia, Spain and Switzerland are the most important export destinations
with growing market success in the Middle East, Northern Africa and South-East Asia.
The existing legacy ERP-solution in Leonding is used by approx. 80 users. The legacy ERP
solution in the German production site is not yet integrated except from a BI-interface
and was considered out of scope for the current ERP evaluation. Nevertheless, a future
integration of both production sites in one ERP system is a long-term goal and should
provide integration benefits.
In 2020 “Company” was running its logistics operations on a legacy INFOR AS ERP
installation dating back to 2004 combined with a 2011 introduced SAP R3 installation for
finance and controlling. The fact that daily operations still need to work on the old AS400
hosted green screen for certain functions seems anachronistic in a world of user experience
optimized mobile apps and service oriented architectures in cloud-hosted environments
programmed using function-rich, open-source community reviewed object oriented highly
reusable and unit tested code of fourth-generation programming languages.
Internal Resource Demand for ERP-System and Partner Evaluation at a Medium-Sized Enterprise
with a Discrete Manufacturing Business Model in 2020 3
Even though the legacy ERP system in use was dated, the pressure to replace it did not
mainly come from lack of functionality, connectivity or usability. Key users and users
were in fact quite satisfied with individually programmed custom functions tailored to the
exact business process needs of the organization over a lifespan of many years. Usability
issues were not pressing, as long as keyboard-shortcut driven user interaction guaranteed
high productivity in day-to-day operations. Connectivity – even with a high degree of EDI
connections to customers – was solved mainly using FTP data exchange to a high level of
satisfaction for the business.
The pressure to replace the ERP system came mainly from a perceived lack of support and
a continuing decline in the number of active consultants for INFOR AS. Not least because
highly valued know-how carriers inside the organization of “Company” were about to reach
their retirement age was there a perceived risk of know-how loss and a risk of declining
system productivity and stability that led to the kick-off of an ERP replacement evaluation
project.
Additionally, the system barrier between logistics in INFOR AS and finance/controlling in
SAP that only exchanged creditors, debitors and bookings via text-file-based asynchronous
interface functions left a lot of actual enterprise controlling to be done in third-party software
for business intelligence or spreadsheet calculation with a high degree of human effort to
keep data synchronized and results consistent. On top of that, comprehending the sequence
flow of business documents over two systems proved to be a tedious task requiring excessive
manpower when analyzing possibly erroneous cases.
3.2 ERP evaluation project approach
We structured the ERP evaluation project in two phases: In the first phase we analyzed
our internal requirements and started a detailed fact finding on a longlist of 20 possible
partners with different ERP systems. After preselecting a set of 10 partners based on our
scoring of their reference customer projects, we performed 2 hour “reference visits” using
videoconference technology and screensharing. Based on our scoring of the perceived
performance on these reference visits we narrowed down 7 competitors to present their
respective system based on a detailed script covering presumed ERP-standard use-cases that
are particularly relevant to our business processes. Scoring and discussing these use-case
performances resulted in a shortlist of 4 competitors.
By the time we decided on our shortlist we had also finished our detailed requirements
document. The finalized requirements description was a 130-page document listing 970
requirements items grouped by the project work streams and was the main document of our
call for bids sent out to the shortlisted competitors.
The second phase started by sending out our detailed requirements documentation to the
previously decided shortlist of competitors. A first deadline required the competitors to send
4 Holger Kreisel
in questions to the requirements that were compiled and answered by the project team. All
questions and answers were again provided to all competitors. On this basis the competitors
had a final deadline to send their finalized quotations and present them in a time slot of
two hours in front of the project core team. Following these quotation presentations, we
would identify our target partner and achieve an optimal agreement based on the comparable
competitors’ offers and conditions by negotiating the finalized project agreement.
Deciding on a target system would optimally cover our requirements together with a target
partner that had proven to understand our “business language” finalizing a project treaty in
order to be ready for the follow-up implementation project was the defined aim and end of
the evaluation project.
3.3 ERP Evaluation Project Organization
The project organization was structured as follows: A steering committee composed of
the two top managers and the CIO. Project Sponsor was one of the two top managers.
Project management was assigned to the head of the ERP team within the IT department.
The project core team assembled the two ERP-team members and one key user from each
of the main internal ERP stakeholders: finance, controlling, customer service, warehouse
management, production planning, purchasing and supply chain management. Two external
consultants accompanied the evaluation project providing ERP-evaluation know-how, best
practices and training for the core team to find a common understanding of ERP core context,
the “big picture” and the use of de-facto-standardized “ERP language” as far as such a thing
exists over the different ERP domains of the big ERP software vendors.
3.4 Compiled Data Grouped by Work Package
The streams defined and assigned during the project kick-off were as follows:
• FF: Fact-Finding, including design, sending and analysis of a fact-finding inquiry
targeted at the longlist of competitors and efforts for “reference visits” using video-
conference technology at selected reference customers named by competitors in the
evaluation.
• PM: Project Management, including core team meetings and any coordination efforts
over different work packages.
• I2O2C: Inquiry to Order to Cash meaning the requirements for the sales and delivery
process, partly interconnecting or even covering warehouse management requirements,
due to the structure of our organization.
• SCM: Supply Chain Management requirement definition including a connection of
the different processes and work packages with a special emphasis on forecasting and
planning.
Internal Resource Demand for ERP-System and Partner Evaluation at a Medium-Sized Enterprise
with a Discrete Manufacturing Business Model in 2020 5
• FICO: Finance and Controlling.
• M2S: Make to Stock meaning our requirements for production planning process with
special regards to the integrated forecasting process in cooperation with the sales
department. This work package also included special requirements to guarantee high
efficiency in production execution with regards to optimizing production setting-up
and coupling the production of similar product groups in plastics extrusion and
injection molding.
• SL: Shortlisting and final selection of the implementation partner in the second phase
of the project.
• DM: Data Migration meaning to describe master data structures and possibly relevant
transaction data to be migrated to the future system.
• P2P: Purchase to Pay, meaning our purchasing and vendor management requirements.
• MM: Material Management requirement definition meaning mainly to describe the
specialties of the historically grown structure of the material master data in the legacy
system.
• LDT: Warehouse Management and transport distribution, although partly covered in
the I2O2C work package.
• R2R: Record to Report covering requirements for ETL-processes in order to guarantee
the existing BI-solution to work properly and provide consistent reporting before and
after the project mainly based on ERP data.
Internal effort: Person Days per Month 2020
Stream
03 04 05 06 07 08 09 10 Sum
FF 2.5 0.8 1 8.6 13 3.1 29.3 58.2
PM 6.8 2.3 8.2 5.4 9.6 4.5 5.1 1.6 44.7
I2O2C 3.8 3 8.8 1.8 0.3 0.7 18.2
SCM 1.3 0.1 2.1 2.6 4.6 10.7
FICO 5 0.6 3.1 0.4 0.1 10.1
M2S 0.7 6.2 0.5 0.3 7.6
SL 1.3 4.9 6.2
P2P 1.5 2.9 4.4
MM 1.4 0.2 1.3 0.6 3.5
LDT 1.9 1.4 3.3
DM 1 0.5 1 2.5
R2R 0.3 0.3
Sum 22 3.2 12.9 29.9 38.6 11.6 42.8 6.2 169.6
Tab. 1: Effort in person days (1 PD = 8 hrs) by work stream and month
6 Holger Kreisel
3.5 Compiled Data Grouped by Person (anonymized)
The anonymized roles of project members can be assigned to the following roles in the
project:
• PM – Project Manager (Head of ERP-Team)
• SCM – SCM Manager, head of logistics
• M2S – Project core team member for M2S
• P2P – Head of Purchasing
• I2O2C – Project core team member for I2O2C, reporting to SCM Manager
• FI – Head of Accounting
• CO – Head of Controlling
• MM – Head of Planning and Material Master Data
• ERP 1 – ERP project core team member (junior)
• ERP 2 – ERP project core team member (senior)
Internal effort: Person Days per Month 2020
Stream
03 04 05 06 07 08 09 10 Sum
PM 6.5 2.5 3.3 6.5 10.0 3.0 12.0 5.8 49.5
SCM 3.0 1.0 3.7 3.8 2.3 6.6 0.1 20.5
M2S 1.4 0.9 2.4 5.5 1.5 5.0 16.7
P2P 0.3 0.3 0.9 1.9 5.2 1.0 4.8 15.1
I2O2C 3.3 1.4 5.7 3.7 14.0
FI 2.5 0.8 3.1 2.0 0.6 4.2 13.6
CO 2.0 0.8 3.6 1.1 0.6 2.6 0.3 11.4
MM 2.1 0.5 0.9 1.3 1.9 1.0 2.5 10.9
ERP 1 2.5 0.8 3.8 0.3 4.0 11.3
ERP 2 1.0 0.5 1.0 1.7 1.4 1.2 6.7
Sum 22.0 3.2 12.9 29.9 38.6 11.6 42.8 6.2 169.6
Tab. 2: Effort in person days (1 PD = 8 hrs) by project member and month
The noticeable drop of internal resources spent on the project in April and May is due
to a project-pause and then restart ordered by the project sponsor caused by the Austrian
COVID-Lockdown and reduced working time at “Company” during wave 1 of the SARS-
COV-2 pandemic of 2020 when all remaining internal effort of the company was allocated
to short-term damage limitation and most essential business processes. This project pause
right after the kick-off month was an immense setback for project progress and caused a
substantial delay of the planned project end date.
Internal Resource Demand for ERP-System and Partner Evaluation at a Medium-Sized Enterprise
with a Discrete Manufacturing Business Model in 2020 7
The noticeable drop of internal resources spent on the project in August is due to the planned
summer vacation time when less project progress and less resources were expected.
The maximum of resources spent on the project in September 2020 is due to 4-hour use case
presentations by each of the then 7 competitors with subsequent discussion and scoring in
mostly full attendance of the project core team while finalizing the requirements description
in the same month.
Many project team members contributed to many work streams. Therefore, sums of persons
responsible for certain work packages do not necessarily equal sums of the respective work
streams. For instance, all project members took part in project core team meetings, time
allocated to the PM-stream. All project members took part in video conference reference
visits, time allocated to the Fact-Finding stream. The project manager took part in many of
the requirements workshops in the different work streams, time allocated to the respective
work stream.
Project member ERP 1 joined the company mid-project in May 2020. The project member
responsible for the warehouse management (LDT) was not able to keep records of time
allocated, so this data is to be considered missing.
4 Conclusion
Finding a vendor to replace the legacy ERP system in a in medium-sized enterprises with
a discrete manufacturing business model is a long-term binding decision with strategic
impact and deserves allocated effort to find the right software and partner and guarantee
transparency and comparability of effort drivers between the different bidding competitors.
Tracking internal resources by our project members allocated to the work streams of the
evaluation project provided us with a clear indication of how much effort ran into the
different streams and how much resources we are generally capable to put into ERP-renewal
efforts within our organization. This provides valuable data for reasonable planning of the
implementation project.
We note that roughly one third of the whole project effort could be allocated to each of the
respective high-level tasks of
1. Fact Finding about the current ERP market
2. General Project management and coordination
3. Requirements definition in the work streams
We note that the single project team members from non-IT departments allocated a project-
span average between 1.4 and 2.9 PDs per months. When filtering on only the high productive
months of the project (June, July and September) these values rise to between 1.9 and 4.7.
The maximum values of PDs spent by single non-IT project members were between 2.5 and
6.6.
The project manager role allocated 6.2 PDs on average through the measured project time.
8 Holger Kreisel
The project month of September when each project member spent an average of 4.8 PDs
brought the organization to its limit of allocating internal resources to a project as complaints
arose that time allocated to the project lead to noticeable effects on progress in daily business.
The project-pause in Apr/May 2020 required efforts on its own to re-initiate the project
work that resulted in a project delay of significantly more time than only the duration of the
project pause. Pausing the project for 1.5 months resulted in an effective delay of 3 months
to the project end.
5 Future Work
We will continue to gather data in the evaluation project and the subsequent ERP replacement
project and will be happy to share the insights with the scientific community.
References
[Be03] Berlak, J.: Methodik zur strukturierten Auswahl von Auftragsabwicklungssyste-
men, Dissertation. Herbert Utz Verlag, Muenchen, 2003.
[MSR12] Meier, C.; Schmidt, C.; Runge, S.: Auswahl und Einführung von ERP-/PPS-
Systemen. Springer Verlag, Berlin, Heidelberg, 2012.
[NC09] Nissen, V.; C., S.: Kernaufgaben und Vorgehensmodelle in der IV-Beratung.
2009.
[RGM] Rouhani, S.; Ghazanfari, M.; M., J.: Ealuation model of business intelligence
for enterprise systems using fuzzy TOPSIS.