Project Success/Failure: ERP Implementation at Rolls Royce

This case study examines the implementation of an ERP system at Rolls Royce, focusing on the criteria for project success and failure. The report begins with an introduction and background of the company, highlighting the need for an ERP system to integrate various disparate IT programs. It then out...Read More

Project Success or Failure Criteria – Case study
Contents
Introduction...........................................................................................................................................2
Background of the company..................................................................................................................2
Project success / failure criteria.............................................................................................................3
Analysis of case.....................................................................................................................................6
Conclusion.............................................................................................................................................9
Recommendations.................................................................................................................................9
References...........................................................................................................................................10
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Project Success or Failure Criteria – Case study
Introduction
This report is prepared primarily to understand how a real-life project could be analysed from
the view point of project management. This report would also discuss many different
theoretical constructs that helps determine an appropriate project resolution, their success
factors as well as failure factors. In order to understand, how these factors affect the success
of project management, an implementation of ERP in Rolls Royce corporation was
considered.
Background of the company
Rolls Royce is a British corporation that designs and develops Aircraft engines and is
currently the second largest in the world. Apart from that, Rolls Royce also designs and
manufactures luxury vehicles. The company is now wholly owned by Rolls Royce PLC. Over
the period of time, Rolls Royce has become a global organization with operation that spans
across several countries and has over 14 services. Rolls Royce has developed over 1500
different IT programs that is quite difficult and expensive to operate.
Now, these 1500 different systems did not operate seamlessly, did not give consistent data
and were not tightly integrated with another. For instance, Rolls Royce developed MERLIN
for managing their logistics but this system lacked any communication whatsoever with IBS
which was their manufacturing system. There were many such instances where their
multitude of systems lacked cohesiveness. As a result, the company planned to launch an
ERP system which will integrate all of the other systems.
Case
Rolls-Royce also had planned an implementation of a specific ERP solution that was
provided to them by SAP. This also involved an implementation of R/3 Package from SAP.
This soltion involved a tight integration of all different functional process of Rolls Royce that
included but were not limited to Financial systems, Supply Chain, HR systems among others.
Rolls Royce also went ahead to hire EDS for managing the entire project whereas SAP
remained their ERP solution provider. Afterwards, a project team was created and then
further segregated into smaller teams for better management. Every business unit were given
freedom to prepare a plan for required activities and then post that a release strategy was
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Project Success or Failure Criteria – Case study
defined that involved validation, cleaning, identification etc of legacy data and also acquiring
of new hardware. The project was divided in three different phases and was expected to get
completed within 1998 to 2000. A steering committee was also created to help and assist in
financial guidance.
Project success / failure criteria
13 different factors were defined by the Jiang which included as follows:
 Clear Goals: Goals included the philosophy and project mission that helps
determine the goals of the project team.
 Competent Project Management: It was very important that the project manager
be well experienced and well versed with these kind of project and must possess
the adequate skillsets required to handle such a type of project.
 Management support: The project needs to get a nod from the top management
and executives of the organization.
 Communication channel: An appropriate communication strategy must be adopted
for communication and a commonly defined channel must be used to
communication information such as project progress, risks, feedbacks, issues and
status.
 Responsiveness: The PM must be responsive at all times to the client and must
keep them updated with the project.
 Competent team: The team members must be competent, available and must have
experience with such kind of projects.
 Good Resource allocation: Resources such as time, finance, human resources
should be allocated to the project appropriately.
 Control Mechanism: The project must have an effective control mechanism.
 Client acceptance: The client should accept the project and must understand the
importance and should accept the deliverables in a positive manner.
 Feedback capabilities: Formal channels for accepting feedbacks in connection to
project status and reviews needs to be established such that the team members are
able to provide their feedback quickly and effectively.
 Technical Tasks: Technologies used in the development needs to be efficient as
well as reviews provided by consultants as well as project manager should be put
in use within the project.
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Project Success or Failure Criteria – Case study
 Management of Trouble-shooting: Project team members needs to have a method
to record issues with the project and needs to be encouraged by the PM to seek
solutions for any kind of problems independently.
Based on the Chaos report, any outcome of the project could be easily divided in three
different resolutions and they include project success, challenges and impairment.
Success of a project: When any project is completed within the allocated budget and time
and has fulfilled all the desired requirements, it is considered a success.
Challenges of a project: When any project that is completed and is also operation with
majority of requirements but has exceeded either budget or time then it could labelled as
‘Challenged’ project.
Impairment of a project: When any project that has been cancelled during it’s lifecycle.
Then such projects are labelled as impaired.
The Chaos report would define both failure and success factors which include:
Success:
• User Involvement: For any kind of project that can be successful the needs and
requirements of the user must be met and if at any time they are unable to achieve
this, then the project will turn out to be a failure (Salmon, 2009)
• Managerial Support: Support from the top-level management is essential for the
project (Attarzadeh, 2008).
• Clear Requirements: Any base level of requirements never work in such complex
and large projects and thus the requirement specifications need to be detailed. If the
requirements are not detailed, then problem is likely to occur in later stages of the
project (Nelson, 2007)
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Project Success or Failure Criteria – Case study
• Efficient Planning: This is essential for the success of the project and has to consider
all the aspects of the project including resources availability, management flexibility,
stakeholders and client’s requirements (Nelson, 2005)
Failure
• Planning and Estimation of project: The planning stage involves estimation of
schedule and the cost and if they are incorrectly estimated then the project could turn
out to be a failure (Hoffman, 2003).
• Implementation of project: In complex software project, implementation becomes
an extremely important step that needs to have a proper methodology. Apart from
this, there should be a sound testing plan that ensures all requirements are being
met(Elenbass, 2000)
• Human Factor in project: PMs should have considerable experience and skills to
manage the project effectively. If the PM does not have enough skills and experience
and is unable to apply project management principles on the project, then the chances
of failure increases by manifold.
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Project Success or Failure Criteria – Case study
Critical Success Factors, besides the ones mentioned above:
Analysis of case
The first step towards analysis is to understand if the project was successful, impaired or
challenged.
Schedule: The implementation was divided in three phases and the first phase involved
strategy development, the second phase involved project planning and foundational
development of the ERP system and the third phase involved operational focus, development
of assembly, spares and pilot development. The go live was originally planned for the 2nd
quarter of 2000. However, the phase to extended beyond the original timeline as the first
phase itself went beyond the original timeline as it involved some significant changes to be
made. The schedule deviation occurred because of:
 To have more time for cleaning and preparation of data.
 To get more time for the development of Pilot.
 To have more time for completion of prerequisites.
 To have more time for issues resolutions.
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Project Success or Failure Criteria – Case study
The go live phase took two weeks which was beyond the original timeline due to issues
relating to authorization, work halts and incorrect value transfers. Thereby the go live
happened after a total of 1 year from the pilot implementation.
Budget: The overall cos of the development rose to 2.8 Million USD which was significantly
higher than the original planned budget and the main causes were delays, scope creep, fall in
productivity, communication issues among others (Olson, et al., 2005).
Features and operations: The project had to face severe scope creeps and had faced many
modifications within the original scope. User authorization issues, data variances to name a
few.
As a result, it can be said that the project was ultimately challenged and not entirely
cucessful. There are lot of things that could be learned from this project implementation.
Some of the success and failure factors of the ERP project are enumerated below:
Clarity of goals: The goals of he project were clear from the beginning as a multitude of
systems need amalgamation.
Competency of Project Manager: The responsibility for management of the project was
given to EDS and it was an external company but they had experienced in working SAP
projects. EDS also has a great track record in working in the Aerospace industry.
Communication mediums: Company also made use of regular seminars and meetings for
communication and letting everyone know of any changes or feedback exchanges.
Competency of project team: The project team was well segmented and had considerable
experience in working with similar projects.
Allocation of resources: The resource allocation was entirely left to the the organization that
was managing the project and there were efficient in doing that.
Control measures: A core team was made to see the development of the ERP project and to
report any deviations and changes.
Acceptance by client: Considerably high amount of customization was done by SAP and
that is why Rolls Royce were satisfied with the deliverables planned. The client i.e., Rolls
Royce was also involved throughout the project development and modification of the features
and requirements.
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Project Success or Failure Criteria – Case study
Technical Tasks: The organization faced trouble in terms of data compatibility. The old
legacy systems cannot be discarded as they were still needed for operations and therefore
those data were normalized and then cleaned and transferred to the newer system and thereby
an interface between them had to be constantly developed increasing the overall cost and
scope of the project.
Management of trouble shooting: For managing trouble-shooting, the organization used a
risk management technique which was a risk register. They maintained a list of all the risks
and key risks from this register are given below:
 Inability to align HR with the goals of the project.
 Inability to provide enough support for implementation.
 Hardware unavailability during implementation.
 Resistance by employees fearing the change in their systems.
 Ineffective commitment by top-level management.
 Lack of knowledge of employees for the newer ystems.
 Inefficient testing of the newer ERP system.
 Inappropriate amount of priority given to the ERP project.
 Data compatibility issues.
 Significant impact on various accounts within the organization.
 Significant extensions made to the go live phase of the project.
Management Support: The top level management were not complete familiar and
technically oriented with the project and thereby an initiative was taken to train them for the
buy-in.
Clarity of requirement: An extensive investigation in the beginning had resulted in the
clarify of requirements.
Efficient Planning: The core plan developed at the beginning of the project was highly-
detailed and considered all the critical aspects of the requirements.
Planning and Estimation: Various different reviews were done on the project so as to come
up with an effective guidance that could be used to estimate timelines and cost. These
reviews were design review, high-level review and operation review.
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Project Success or Failure Criteria – Case study
Implementation: The overall implementation of the project faced three types of issues
including scheduling, planning and operating.
Human Factor: The overall project team had expected that the employees would
immediately accept the project which did no happen and thereby a training plan was realized.
Fortunately, the training plan imbibed the employees with required skills and knowledge and
they could see the potential of the new system.
Conclusion
This report was made to understand the implementation of ERP systems within Rolls Royce.
It was found that a project is not considered entirely successful if the project fails to be
delivered within the given timeline and budget even if is functionally complete. Thus the
project was not entirely complete and can be considered as ‘Challenged’.
Recommendations
The recommendations for an overall better project management in the case of ERP
implementation includes the following:
 Risk management should always be a critical and integral part of the overall project.
As this project had detailed risk identified and risk mitigation strategies planned, the
management was able to overcome them.
 The overall estimates for cost and duration should be highly detailed and must
consider all the factors as well as include a sound contingency as well.
 The buy-in from the end-users and employees should be done at the beginning of the
project as later there could be significant amount of resistance.
 Any sort of data migration could be a severe issue while planning in projects that
relates to IT. It should also be considered in risk management plans.
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Project Success or Failure Criteria – Case study
References
Yusuf, Y., Gunasekaran, A. & Abthorpe, M. S., 2004. Enterprise information systems project
implementation: A case study of ERP in Rolls-Royce. Int. J. Production Economics, Volume 87, p. 251–
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Attarzadeh, I., 2008. Project Management Practices: The Criteria for Success or Failure. CIBIMA,
1(28), pp. 234-241.
Sauter, V. & Frese, R., 2003. PROJECT SUCCESS AND FAILURE: WHAT IS SUCCESS, WHAT IS FAILURE,
AND HOW CAN YOU IMPROVE YOUR ODDS FOR SUCCESS?, s.l.: UMSL.
Olson, D. L., Chae, B. & Sheu, C., 2005. Issues in multinational ERP implementation. Int. J. Services
and Operations Management, 1(1), pp. 8-21.
Yusufa, Y., Gunasekaranb, A. & Abthorpec, M. S., 2004. Enterprise information systems project
implementation:: A case study of ERP in Rolls-Royce. International Journal of Production Economics,
87(3), p. 251–266.
Belassi, W. & Tukel, O. I., 1996. A new framework for determining critical success/failure factors in
projects. International Journal of Project Management, 14(3), pp. 141-151.
King, J., 2003. Survey shows common IT woes. Computerworld, 13 December.
O’Brochta, M., 2002. Project Success – What Are the Criteria and Whose Opinion Counts?. San
Antonio, TX, Project Management Institute Annual Seminars & Symposiums.
Attarzadeh, I. & Ow, S. H., 2008. Project Management Practices: The Criteria for Success or Failure.
CIBIMA, 1(28), pp. 234-241.
Salmon, P., 2009. Projects Key Issue sin Success/Failure, Wellington: ISACA .
Hoffman, T., 2003. Corporate Execs Try New Ways to Align IT with Business Units. Computerworld,
27 October.
Nelson, R. R., 2007. IT Project Management: Infamous Failures, Classic Mistakes, and Best Practices.
MIS Quarterly Executive, 6(2), pp. 67-77.
Nelson, R. R., 2005. PROJECT RETROSPECTIVES:EVALUATING PROJECT SUCCESS, FAILURE, AND
EVERYTHING IN BETWEEN. MIS Quarterly Executive , 4(3), pp. 361-372.
Elenbass, B., 2000. Staging a Project – Are You Setting Your Project Up for Success?. Houston, TX,
Project Management Institute Annual Seminars & Symposiums.
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