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InnoDiff: A project-based model for successful IT innovation diffusion
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International Journal of Project Management 30 (2012) 37 – 47 www.elsevier.com/locate/ijproman
InnoDiff: A project-based model for successful IT innovation diffusion Majid M. Altuwaijri a , Mohammad S. Khorsheed b,⁎ a
King Saud bin Abdulaziz University for Health Sciences, (KSAU-HS), Saudi Arabia b King Abdulaziz City for Science and Technology, (KACST), Saudi Arabia
Received 21 December 2010; received in revised form 20 April 2011; accepted 26 April 2011
Abstract In spite of the importance of information technology (IT) for many organizations to help manage the enterprise daily transactions, IT project failure rates still remain high and are of great concern. This obliges continued exploration of new process models and organization structures to nurture strong project performance. This paper presents a new generic model for successful implementation of IT projects referred to as InnoDiff. The model uses Enterprise Resource Planning (ERP) as a test bed. Furthermore, the paper also presents a case study that demonstrates the detailed application of InnoDiff during the course of executing the Human Resource Management System (HRMS) within the Wide Access Network (WAN) at the National Guard Health Affairs (NGHA) in Saudi Arabia. © 2011 Elsevier Ltd. APM and IPMA. All rights reserved. Keywords: ERP; CSF; Innovation; PMO; Knowledge barriers
1. Introduction The implementation of large information systems (IS) is still considered as a complex and risky exercise which leads to several problems concerning budgets, quality, and time schedules (Bakker et al. 2010; Hsu et al., 2011). Sauer and Reich (2009) have found that UK-based IT project managers reported increasing levels on 14 dimensions including technical complexity, rate of technology change, importance of security, business change involved in projects, prevalence of virtual teaming, organizational instability, and interdependence with other organizations. Many studies have found that IS project failures are very common. Only 32% of IS projects succeed (delivered on time, on budget, with required features and functions) according to a Standish Group study (The Standish Group International, 2009). It is estimated that around 44% of IS projects partially fail with time and/or cost overruns and/or other problems. Around 24% of IS projects are total failures and abandoned.
⁎ Corresponding author. Tel.: +966 14814511; fax: +966 14814748. E-mail address: [email protected] (M.S. Khorsheed).
The failure rate of IS projects is even worse in the public sector reaching around 84%. The financial impact of the IS project failures is huge. Around 150 billion US dollars are wasted annually on IS failures in the United Sates and a similar number is reported in the European Union (Gauld, 2007). The Royal Academy of Engineering and the British Computer Society found significant difficulties in managing IT projects as follows (Rodriguez-Repiso et al., 2007): • • • •
•
IT project are often poorly defined and in some projects not many lessons are learned from the past experience. Increasing pressures to deliver in the shortest time even if it affects the quality of the IS. The rapid pace of technological changes makes IT projects more complicated. IT projects involve continuous interactions between the different individuals involved in the design and implementation. IT projects related to product innovation development are extremely complex, risky, and expensive.
Some IS projects fail as a result of poor knowledge management, poor project management, inadequate reuse of
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past experiences and lessons learned, and/or insufficient understanding of the technology and its limitation (Desouza and Evaristo, 2006; Thomas and Fernandez, 2008). Other reasons might include the lack of consistency in management, the lack of formal tracking, and the lack of functional user involvement (Stewart, 2008). Moreover, some organizations lack the methods, skills, and tools required for selecting the right portfolio of IT projects that match the vision of the organization. Some organizations tend to repeat the same mistakes too often, particularly in terms of knowledge transfer from past projects. There is an expanding literature on IS project failures including both the theory and case studies. Some of the studies identified ‘Critical Success Factors’ (CSFs) that, upon careful consideration by the project team, increase the success rate of the IS projects. While providing a useful checklist for the project team, this approach is too static. It fails to account for the dynamics of social and organizational aspects that surround IS projects (Gauld, 2007). Although this finding is more obvious in government organization, there is no evidence that private sector does not face similar issues in implementing IS projects. Moreover, there is no general agreement on which set of factors are the key to success for a specific IS such as the Enterprise Resource Planning (ERP). Different studies have identified different set of CSFs even for the same information system let alone different systems. Moreover, different cultures, government regulations, and economics differ among countries which make the set of CSFs differ (Nagi et al., 2008). In this paper we propose a new model for successful implementation of IT projects. The model consists of three integrated components; the first component is concerned with the project management stages taken by organization to deploy new technology innovations. This in turn consists of four stages: visioning, matching vision, deployment, and evaluation and improvement. The second component deals with the main knowledge barriers to IT innovation diffusion as suggested in literatures. The third component is concerned with the CSF of IT innovation implementation as suggested in various literatures. The proposed model calls for the establishment of a Program Management Office (PMO) to implement corporate strategy for project management and to transform the organization into a learning one. The model is explained in details using an example of ERP implementation. The paper is organized as follows: Section 2 presents a review of the prior art including an overview of ERP systems. Section 3 introduces the proposed model. Detailed description of the model, using ERP system as an example, is presented in Section 4. Section 5 illustrates the application of the proposed model via presenting a study case of implementing one of the ERP modules. Finally, Section 6 is discussing concluding remarks and future trends. 2. Literature review 2.1. ERP system overview ERP information systems are integrated systems that support organization activities and transactions. ERP systems target
functional areas such as logistics, purchasing, human resources, finance, maintenance, inventory control, and warehouse management (Aladwani, 1985). They usually utilize a unified database that can be accessed by different users leading to a better platform for planning, future forecasting and control being provided to the administrative and management staff (Waters, 1996). ERP provides cross-operational integration of data through embedded business workflow. ERP systems became very popular during the 1990s when major companies used them as replacements to their legacy systems. However, despite the growing interest in ERP systems, some industries like health care industry have been late in considering ERP solutions (Merode et al., 2004). ERP applications can be implemented and deployed moduleby-module. Organizations often selectively implement the ERP modules that match their business needs. ERP can either be tailored to fit the business processes of an organization or organization can tailor their processes to fit the ERP structure. The degree of customization affects the complexity and the cost of the implementation process. ERP systems share the following characteristics (O'Leary, 2000; Umble et al., 2003): •
Modular design comprising many modules. Centralized database. Integrated modules with real-time data flow among modules. • Complex and costly. • Time consuming. • •
2.2. ERP critical success factors (CSFs) In spite of the great benefits, promised by ERP system, some ERP projects failed. ERP system implementation is a difficult and challenging task and it involves a high degree of organization transformation processes (Tsai et al., 2011). Therefore it is important for organizations to be aware of certain CSFs before implementing ERP solutions. Careful consideration of these factors will ensure higher success chance and will ensure the realization of most benefits of the ERP systems. In 2003, F. Nah et al. conducted a survey of Chief Information Officers (CIOs) from Fortune 1000 companies on their perceptions of the CSFs in ERP System's implementation (Nah and Lau, 2001; Nah et al., 2003). The degrees of criticality of each of these factors were assessed in a survey administered to the CIOs. The five most critical factors identified by the CIOs were top management support, project champion, ERP teamwork and composition, project management, and change management program and culture. In addition to the internal factors for ERP success, the ERP system implementation involves external entities such as System vendors and implementation consultants. External entities are usually required to provide expertise not found within the organization (Tsai et al., 2011). Very few researchers considered measures beyond the boundaries of the organization, in spite of the fact that few organizations can implement ERP successfully without external help. There is a shortage in the literature of an integrated model that deals with internal and external factors for ERP success. Very few studies give
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attention to previous IT projects executed in the organization. Moreover, the assessment of post-implementation success of ERP systems in organizations is another area that is not sufficiently researched (Ifinedo et al., 2010). A number of authors have commented on the importance of preparedness for embarking on an enterprise-wide IS project. However, few attempted to examine the impact of these factors on the outcome of the project (Sammon and Adam, 2010). 2.3. IS success model DeLone and McLean conducted a comprehensive review of IS success literature and proposed a model of IS success (Delone and McLean, 1992). This model suggested that the success can be represented by the system quality, the output information quality, consumption (use) of the output, the user's response (user satisfaction), the effect of the IS on the behavior of the user (individual impact), and the effect of the IS on organizational performance (organizational impact). DeLone and McLean proposed an updated model that differs from previous one in more than one aspect (Delone and McLean, 2003): •
The addition of service quality category to reflect the importance of service and support in successful e-commerce systems. • The addition of “intention to use” to measure user attitude, and • The merging of individual impact and organization impact into one category concerned with net benefits. 2.4. Knowledge barriers Various study researches highlighted several barriers to innovation (Attewell, 1992; Rogers, 1995; Tanriverdi and Iacono, 1999). The adoption and implementation of complex IT solution is influenced by the organization's ability to lower or remove the various knowledge barriers. Knowledge barriers associated with the adoption of larger-scale IT solutions can be categorized into four categories: project/economic barrier, technical barriers, organization barriers, and behavior barriers (Rogers, 1995). 1. Project/economic barriers: This category is concerned with the financing and project management issues faced when acquiring innovation. 2. Technological barriers: This category is concerned with the lack of knowledge required to carry out technical tasks needed to adopt new innovations. 3. Organizational barriers: This category is concerned with the difficulties of deploying a new technology into existing practices and processes. 4. Behavior barriers: This group is concerned with the resistance to change among individuals affected by the implementation. It is also concerned with organizational power dynamics.
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3. The proposed model Fig. 1 shows the proposed model for successful implementation. InnoDiff model consists of three main components; the first component is concerned with the stages taken by organization to deploy a new technology innovation which is in turn composed of four stages: visioning, matching vision, deployment, and evaluation and improvement. In visioning phase, institutions define the corporate mission, objectives, and strategy. This phase is mainly concerned with identifying and prioritizing the organizational problems and opportunities that form the basis of the need to acquire innovation. The second phase is concerned with the fit between a need identified in the first phase and the innovation proposed. In this stage we should determine whether the innovation will solve one of the problems identified in the first phase. At the end of this phase, the organization decides whether or not to approve the innovation project. In the event of the project approval, the third phase of the process, deployment, begins. This phase includes all decisions and actions related to the deployment of the innovation. It includes also the assimilation and the integration of the innovation within the organization. At the end of this phase, the IT innovation solution is deployed within the organization. Evaluating performance is an important step for ensuring the quality of the innovation deployment. This phase emphasizes process flow optimization and continuous expansion of the system to gain competitive advantage. After the successful deployment of innovation, the list of benefits and lessons learned feeds a knowledge base which in turn feeds all three components described in the model. The second component deals with the main knowledge barriers to IT innovation diffusion. The third component is concerned with the CSFs of IT innovation deployment as suggested by various literatures. The proposed model calls for the establishment of a PMO to implement corporate strategy for project management. The main goal of this office is to translate the organization's strategic plan into projects and programs. In this context, we adopt the PMO's definition proposed by the Project Management Institute (Bolles, 2004; PMI, 2004): “An organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain. The responsibilities of the PMO can range from providing project management support functions to actually being responsible for the direct management of a project”. The PMO will be accountable for enterprise-wide distribution of project management best practices. The main advantages of InnoDiff is the strategic alignment of projects which bears on the synergy created by the management of relations between projects, and the ability to develop a better understanding of the challenges faced in carrying out information systems projects, the factors for success, and the strategies required to take advantage of IT. Knowledge sharing behavior facilitates learning among the project team members and enable them to resolve problems similar to situations encountered by others in the past, thus
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Fig. 1. InnoDiff: a proposed model for IT innovation diffusion.
enabling more successful projects. The acts of sharing are very important since a project's knowledge will not have much impact on the organization unless it is made available to other projects. Such learning organizations would be aware of the repeated knowledge barriers to innovation adoption and a welldefined plan to address these barriers would be developed. Moreover, the knowledge base will help these organizations refine their strategies and prioritized plans. This allows for focusing on preparation for future projects which is rarely covered in literature. It is very important to mention that this model is not restricted to ERP projects but it is applicable to other IS projects. Therefore, more efforts in this paper are exerted to present the model with its integrated components. Normally, an organization adopts a set of CSFs from the literature and then along the course of the project this set is fine-tuned accordingly to accommodate various issues within the environment. In this paper we used the list of CSFs included in the study conducted by Nah et al. (2003) in order to illustrate how the model can benefit from the literature especially when it is first put in use. Therefore, it is important for organizations which want to apply this model to review the literature and agree on the list of CSFs that is more appropriate for the IS to be implemented.
4. Applying the model for ERP deployment Fig. 2 shows the detailed model for ERP implementation which will be explained in the following sections. 4.1. Visioning As mentioned in the previous section, in this phase, institutions define the corporate mission, objectives, and strategy. As shown in Fig. 2, organizations develop their strategic plan during this phase. This task is usually continuously done by the governing board of the organization. Institutions should align the strategic vision process with the budgeting process to produce a realistic prioritized strategic plan. The strategic plan will be used as an input to the IT strategic plan in order to ensure that the IT plan is closely integrated with the organization's strategic initiatives and business directions and provides the opportunity to use IT as a tool to enable systems integration as well as deliver information as a strategic resource. The visioning phase should address the economic barrier which is concerned with the financing and project management issues faced when acquiring innovation. Moreover, there are some strategic CSFs related to this phase such as top management support, business plan and
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Fig. 2. The ERP implementation model using InnoDiff.
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vision, and cost/benefit analysis. Top management support factor also affect the subsequent phases. 4.1.1. Addressing the economic/project barrier When acquiring an ERP solution, organizations must address two factors: the financing issues related to deploying the solution and the benefit/cost analysis of the project. Moreover, multi-site implementation of ERP presents special concerns. Firstly, each site had its own processes which may not be consistent with other sites. Secondly, multi-site organizations need to choose whether the implementation is done simultaneously in all facilities or in one facility at a time. 4.1.2. Some CSFs for the visioning phase • Top management support: Successful deployment of IT innovation requires strong leadership, commitment, and continuous support by top management (Nah and Lau, 2001; Somers and Nelson, 2000). • Business plan and vision: The IT strategic plan along with the organization's strategies should provide a clear communicated business plan and vision to steer the direction of the ERP project and other IT projects (Nah and Lau, 2001; Somers and Nelson, 2000). • Cost/benefit analysis: This analysis is instrumental for organizations in order to secure fund. This analysis would act as the basis for defining the success criteria for the ERP project (Nah and Lau, 2001). 4.2. Matching the vision This phase is concerned with the fit between a need identified in the first phase and the innovation proposed. As shown in Fig. 2, the PMO plays an important role in matching the fit between projects proposed by departments and the organization vision and strategies. In this phase the organization should decide if the projects proposed match the vision or not. In case there is a match, a decision is made to invest on the proposed solution. If there is no match, the PMO should update the organizational knowledge base and explain the reasons. In some cases, the project proposals need further research before a decision is made. This phase is affected by the same barrier and CSFs as in the previous phase. 4.3. ERP deployment 4.3.1. ERP package selection Organization should make an extensive review of available ERP System in the market to select the package that has the best match of the organization's vision and strategies. The decision should be based on several factors including price, supplier support, ease of implementation, closeness to fit to the organization business, technological risks, and local experience (Al-Mashari et al., 2003). 4.3.2. ERP project life cycle (PLC) Organizations implementing ERP systems usually modify business processes (as reasonably required) to conform to “best
practices” discovered during the implementation of the Oracle ERP project. These opportunities for process improvements would be identified during Business Process Analysis workshops, consulting visits and by the project team members as they become familiar and comfortable with the system. Process change proposals would be considered and approved by the Project Management, Steering and Policy Committees as part of the governance of the project. This phase is concluded when the ERP solution is deployed and is running within the organization. 4.3.3. Addressing knowledge barriers • Technical barriers: These include the technical infrastructure readiness. Organizations might need to upgrade their network infrastructure, upgrade the data center's servers, and recruit technical and functional analysts to support the project. Data migration from legacy IT systems to the new ERP is an essential task in this project. Finally, a maintenance contract is required to ensure the availability of the ERP solution. • Organizational barriers: These include change management processes to align the ERP with existing practices and processes. One of the main issues might be to comply with the governmental rules with regard to purchasing and tendering and unified catalog manual system. This issue is more obvious in government organization. • Behavior barriers: These include end-users resistance to new innovations. Organizations should conduct sufficient training sessions to introduce the new innovation. It must be stressed to all end-users that this project is not meant to lay off some of the staff rather to improve the quality. However, for those who would remain resistant to the whole project, organizations might have to make difficult decisions to move them. 4.3.4. Some CSFs for this phase • Package selection: Organizations should make careful ERP package selections as explained in Section 4.3.1 above (Al-Mashari et al., 2003). • Project champion: The existence of a project champion who also might be the project sponsor is very crucial to the success of the project. The project champion should have excellent leadership skills to resolve conflicts and manage resistance (Nah and Lau, 2001). • Teamwork and composition: Organizations should create a project team to implement the ERP. This team should ideally be composed of three groups; functional consultants, technical consultants and IT specialists. Organizations should consider external help if they lack skilled employees. The team members should be working full-time for the project (Nah and Lau, 2001). • Communication: Organizations should have a detailed communication plan. This plan includes meetings' minutes, project newsletter, and a project homepage on the intranet (Nah and Lau, 2001). • Project management: Organizations should appoint a dedicated full-time project manager. The management of the project covers the technical and functional aspects. A
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•
•
•
•
•
•
qualified project manager manages five main functions; managing scope, managing project team, managing quality, managing cost, and managing time (Nah and Lau, 2001). IT legacy system: Organizations should have a clear plan for migrating data from the legacy systems and the ERP. Moreover, when ERP is implemented in phased approach interim interfaces should be developed to ensure the continuity of the existing workflow cycle (Nah and Lau, 2001). Process management: Organizations should be willing to make a decision to use the ERP project as a vehicle for change. Organizations should have a clear change management strategy which includes analysis of the current business processes to identify the areas for improvement (Nah and Lau, 2001). System testing: Organizations should have a comprehensive system testing plan to test the functionality of each module alone and in conjunction with other modules. Additionally, there should be a parallel run for the new modules installed and only after a successful run the old system would be shut down (Nah and Lau, 2001). Training: This is probably the most recognized CSF for ERP implementation. Organizations should have a comprehensive training plan. The plan should include functional and technical aspects of the project. In large organizations, “train the trainer” approach is usually considered (Nah and Lau, 2001). Culture change: There is sometimes a need to process data in different languages for external use. This is true in the Chinese and Arabic countries (Yusuf et al., 2006). Vendor support: During the “go-live” period it is essential to have the maximum possible support by the vendor. Organizations should also have maintenance and support contracts for the ERP. It is essential to keep the ERP package up-to-date with the latest version of the package (Somers and Nelson, 2000).
It is also important that the PMO assembles a list of lessons learned from this project. The list of project benefits and lessons learned are then fed into the organization knowledge base. The knowledge base will provide projects information back to the organization visioning process and will be used to refine the list of CSFs and knowledge barriers for future projects. The feedback loop will transform the organization to becoming a learning one. 5. HRMS case study The National Guard Health Affairs (NGHA) is a large health organization providing modern medical care to National Guard employees and their dependents. NGHA has four hospitals and sixty primary and secondary health centers around the Kingdom having 2000 in-patient beds in total. NGHA serves more than 2.5 million out-patients and around 60,000 in-patients annually. NGHA is organized in three regions as shown in Fig. 3 with the Eastern Region having two hospitals. 5.1. Visioning NGHA developed its first IT strategic plan in 1999 and it was revised in 2005 and 2009. The main strategic goals of the IT strategic plan included the following: •
Develop a flexible, integrated, enterprise-wide IT infrastructure (which includes technologies, processes, and people) that will support the full continuum of care. • Assure that IT applications are enterprise wide and are fully utilized through effective deployment and comprehensive user training.
4.4. Evaluation and improvement Finally, evaluation and improvement phase come into action after the ERP system is already deployed within an organization. It is important that organizations define the success criteria of the ERP project and use it to monitor the project. ERP system should be monitored forever and should receive continuous improvement (Al-Mashari et al., 2003). Organizations usually assume that their operational performance will be improved immediately after the “go-live”. Instead, due to the complexity of ERP systems, organizations should expect an initial decline in their performance. Once the system is stable and users are more aware of its capabilities, improvements will take place. It is recommended that organization establish a multi-disciplinary taskforce to monitor and evaluate the system and recommend areas of improvement. 4.5. ERP benefits, lessons learned, and updating the knowledge base After the ERP system is already deployed, the PMO should measure the benefits realized by the project and tie them to the organizational strategic goals.
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Fig. 3. The Application Service Provider (ASP) model used in NGHA.
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•
Allocate the financial and human resources necessary to accomplish IT goals, objectives, and actions outlined in this Plan. • Assure that IT investments are made only when they provide significant value to the organization and are made in the most cost/effective manner possible. NGHA, in its effort to standardize processes and systems across all its hospitals, adopted the Application Service Provider (ASP) Model as a primary concept in the infrastructure design of its IT Strategic Plan; ASP Model requires that Applications such as ERPs are hosted in a central location. However, they can be accessed remotely through the web (Internet) or Intranet from any NGHA facility as shown in Fig. 3. 5.2. Matching the vision Prior to implementing the new Human Resource and Management System (HRMS), NGHA had implemented an ERP solution based on Oracle platform except for the HR component which was acquired from a third party. Consequently, NGHA had faced several integration issues between the financial component of the ERP and the external HR module. Moreover, NGHA could not achieve a single workflow that cross several departments and auditing was difficult to achieve. As a result, a new project proposal was presented to the NGHA executive board in January 2007. The project was found to have a great match with the organization vision to have an integrated ERP solution to manage its resources. The proper management of Human Resource is crucial, as 70% of the NGHA budget is HR budget. Moreover, NGHA strategic plan called for the implementation of a centralized ERP System to support all NGHA facilities located in the country. The HRMS solution was intended to automate most of the HR procedures and provides the staff with all the knowledge needed for better service, control, planning and forecasting the future needs of the organization.
Phase 1 – Definition Establish the business objectives and related requirements. Develop a high-level conceptual architecture. Define the project work plan. Phase 2 – OperationAnalysis: Analyze the operations and map organizational requirements to . standard application functionality Phase 3 – Solution Design: Develop detailed designs for the optimal solutions to meet the future business requirements. Phase 4 – Build: Prepare development environment. Develop, test, and accept custom software. Phase 5 - Transition Convert and verify converted data. Deploy the finished solution into the production system. Phase 6 - Production: Go Live Audit and maintain Production system.
Fig. 4. A sample Project Life Cycle of an ERP project (Attewell, 1992).
to effectively and efficiently plan, conduct, and control project phases and steps. The PLC consisted of six phases. Within each phase, there are various processes with each process consisting of a number of tasks. Table 1 illustrates five CSFs and the corresponding measures taken by NGHA to ensure a high degree of project success.
5.3. HRMS deployment The implementation of this project started in March 2008. NGHA had parallel run trials during the period of December 2009 till June 2010. The system went live in July 2010 with 8 months behind schedule. The key components of this project include: • •
HRMS with manpower management support. HRMS payroll system. • Internet procurement • Self service support. • Seamless integration with accounts payable and receivables and general ledger. Fig. 4 shows a sample Project Life Cycle (PLC) for the ERP implementation based on the Application Implementation Methodology (AIM) (Oracle Corporation, 2003). AIM is used
5.4. Project benefits The project benefits can be classified into five groups as follows (Shang and Seddon, 2000): 1. Operational: cost reduction, cycle time reduction, productivity improvement, quality improvement, and customer services improvement. 2. Managerial: better resource management, improved decision making and planning, and performance improvement. 3. Strategic: supporting business growth, supporting business alliance, building business innovations, building cost leadership, generating product differentiation, and building external linkages. 4. IT infrastructure: involving building business flexibility, IT cost reduction, and increased IT infrastructure capability.
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Table 1 The top FIVE CSFs for the HRMS and the actions taken by NGHA to address those factors. Topic
Description
F1: Top management support ❖ Approval and support from top management of NGHA, CEO, COO, CIO, HR, Executive & Finance Executive (CFO), in addition to Internal Audit Executive. ❖ NGHA management set the priority of the project as top priority. ❖ Allocate resources ❖ Steering committee composed of high management have given highest support for the project committee and pushed the implementation forward to completion. ❖ Incentives raised by the project committee for the different teams participating were approved. F2 Project champion ❖ Existence of champion ❖ High level executives sponsor the project champion ❖ Project sponsor committee F3: Team work and composition ❖ Best people on team were selected for the project functional, IT and application consultants (specialists) ❖ Full time members ❖ Empowered decision makers
A kick off meeting was hold and started the project, the project team and the contractor submitted the final project plan and the project charter. The importance of the project was emphasized by the COO, CFO & HR Executive expressed highest importance for this project. Project charter was distributed to all members of the committees indicating the official start date. Project committee was formed with Executives from all concerned department in this project. HR, Finance, Internal Audit & ISID (IT) chaired by IT reporting to high level steering committee headed by COO. Moreover, proper resources were identified and allocated to the project combining functional and technical professional skills.
F4: PM ❖ Assign responsibilities ❖ Identify project scope ❖ Control project scope ❖ Evaluate process change requests ❖ Control scope change and assess change requests ❖ Define project milestones and end dates ❖ Enforce project timelines ❖ Coordinate project activities
F5: Change management ❖ Recognizing the need for change ❖ Enterprise culture and structure management ❖ Users education and training ❖ IT workforce—enhancing their skills ❖ Commitment to change perseverance and determination
The COO of NGHA was the project sponsor. The champion of the HRMS project was identified from the HR Dept. He was assigned as the chairman of the project committee. The champion was influential enough to introduce new process and change old practice and obtain approval on new business processes. ERP department in Information systems and informatics division in NGHA has a team dedicated for the HR project, and this team combine both functional and technical skills they perform support tasks for the legacy HRMS, and they helped in the implementation on the new HRMS especially data migration and training, and most important business process changes and incorporation in the new system. IT project managers to facilitate all IT support services needed were named and lead the IT team in the project. Also the contractor has allocated his team with a strong project manager, both PMs were reporting to the project committee. The HRMS project scope was defines in a PM template used for all IT projects in the IT division, the Template in addition to the scope clearly identify Deliverables, Boundaries, stakeholders, requirements, and project dependencies, and Risks. The project Scope was enhanced and additional requirements were added to the project due to the fast expansion and growth in NGHA, for that there was an immediate need to change business processes to accommodate the high level of expansions and growth. Project plan and phases where identified according to Oracle AIM new methodology of implementation which is more suitable for fast changing environment like ours. Project implementation supervision from Oracle was maintained due to the strong agreements between NGHA and Oracle. Project timelines where shifted due to the changes introduced to the project and the implementation was delayed for some time. Emphasis on project committee to be lead by the champion was an excellent approach that gave the project extra momentum in implementation and support from end users. NGHA had a suffering from the legacy HR system, it was independent of other ERP modules, and integration was hard, in addition there were so many discrepancies and tally never matched between finance modules and the HR-Payroll. Enterprise use and depend heavily on ERP modules in procurement and all financial functions, and most of NGHA budget is for Salaries almost 70%. IT understands the importance of the project and allocated the right resources in addition to outsourced consultants. User's group's needs for training were identified and assessed with a training plan for all sites of NGHA.
5. Organizational: supporting organizational changes, facilitating business learning, empowering, and building common visions.
Cause analysis for the project with the help of an international consultant. The reasons of this delay were: •
5.5. Project challenges and lessons learned In spite of the benefits realized as a result of this project, it is important to also discuss the challenges faced by the project which resulted in 8 months of delay. NGHA conducted a Root–
The change key members of the project in the middle of the project: There have been several critical team changes over the duration of the project including the change of the project committee chairman and the project manager from the vendor. These changes resulted in considerable changes in the project requirements and scope. However, when reviewing the project documentations, it was found that
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some of these decisions were not reflected in the project risk plan. • It was found that the training was not sufficiently provided to all end users. There is a need to develop a comprehensive and continues training plan whereby employees can get trained regularly on the system. It is important that all new employees undergo mandatory training to familiarize them with both the system and process. • Legacy data migration issues. Even though the data were migrated correctly, some issues regarding the rounding of digits appeared during the Go-live. As a result of these lessons learned from this project and other projects, NGHA established an enterprise PMO in January 2011. The PMO will enforce all foundational project management activities.
The acts of sharing are very important since a project's knowledge will not have much impact on the organization unless it is made available to other projects. Although knowledge exists at different levels of an organization, for instance, at the individual, team, and organization levels, sharing of knowledge at the individual level is critical to an organization. It is expected as organizations use this model for several projects; more knowledge would be gained and used towards more successful project in the future. CSFs would be refined more and be closely tied with organization culture. Such learning organizations would be aware of the repeated knowledge barriers to innovation adoption and a well-defined plan to address these barriers would be developed. Moreover, the knowledge base will help these organizations refine their strategies and prioritized plans. Finally, the authors would like to suggest the following guidelines to help those organizations considering using our model:
6. Conclusion Enterprise-wide daily transactions are difficult to manage due to their complexity and scope in terms of rendering services to their clients. As a result, many organizations employ IT to manage their enterprise-wide transactions and to ensure quality of services. IT, when properly selected and implemented, helps organizations increase their efficiency and capabilities which improves the organization's competitive advantages. In spite of the importance of IT, IT project failure rates still remain high. This suggests continued exploration of new process model and organization structure to nurture strong project performance. In spite of the large number of articles in the literature addressing information system project failures, the majority of these studies concentrated on identifying sets of CSFs. While providing a useful checklist for the planners, this approach is too static. It fails to account for the dynamics of the social and organizational aspects that surrounds IS projects. Unfortunately, there is no general agreement on which set of factors are the key to success for a specific IS such as ERP. Moreover, most of the previous studies focused on the information system implementation after the selection process is already made. This approach does not find solutions to a key problem which is tied to the fact that many organizations lack the methods, skills, tools required for selecting the right IT projects that match the organization vision. In light of the above issues, this paper proposes a new model for successful implementation of IT projects (InnoDiff). The model consists of three main components; the first component is concerned with the stages taken by organization to deploy new technology innovations. The second component deals with the main knowledge barriers to IT innovation diffusion as suggested in literatures. The third component is concerned with the CSFs of IT innovation implementation as suggested in various literatures. InnoDiff model calls for the establishment of a program management office to implement corporate strategy for project management and to transform the organization into a learning one. The model is explained in details thru an example of ERP implementation.
1. Train key IT staff in the area of project management and encourage them to seek certification. 2. Consider establishing a PMO office. The PMO office could be used to manage all projects and not limited to IT projects. 3. It is recommended to implement the model in phases, and start with phase one by focusing linking all IT projects with the organization vision. Organizations should start requesting all departments to use a template for new-project proposal. 4. Organizations should review the literature and assemble a list of general CSFs to be used in the model. As organizations implement more and more projects, a refined list of CSF will be generated that is more customized for the organization. References Aladwani, A., 1985. Change management strategies for successful ERP implementation. Business Process Management Journal 7 (3), 266–275. Al-Mashari, M., Al-Mudimigh, A., Zairi, M., 2003. Enterprise resource planning: a taxonomy of critical factors. European J. of Op. Research 146 (2), 352–364. Attewell, P., 1992. Technology diffusion and organizational learning: the case of business computing. Organ Sci. 3, 1–19. Bakker, K., Boonstra, A., Wortmann, H., 2010. Does risk management contribute to IT project success? A meta-analysis of empirical evidence. International Journal of Project Management 28 (5), 493–503. Bolles, D., 2004. Building project management centers of excellence. AMACOM. DeLone, W., McLean, E., 1992. Information systems success: the quest for the dependent variable. Information Systems Research 3 (1), 60–95. DeLone, W., McLean, E., 2003. The DeLone and McLean model of information system success: a ten-year update. Journal of Management Information Systems 19 (4), 9–30. Desouza, K., Evaristo, J., 2006. Project management offices: a case of knowledgebased archetypes. International Journal of Information Management 26 (5), 414–423. Gauld, R., 2007. Public sector information system project failures: lessons from a New Zealand hospital organization. Government Information Quarterly 24 (1), 102–114. Hsu, J., Chang, J., Klein, G., Jiang, J., 2011. Exploring the impact of team mental models on information utilization and project performance in system development. International Journal of Project Management 29 (1), 1–12.
M.M. Altuwaijri, M.S. Khorsheed / International Journal of Project Management 30 (2012) 37–47 Ifinedo, P., Rapp, B., Ifinedo, A., Sundberg, K., 2010. Relationships among ERP post-implementation success constructs: an analysis at the organizational level. Computers in Human Behavior 26, 1136–1148. Merode, G., Groothuis, S., Hasman, A., 2004. Enterprise resource planning for hospitals. International Journal of Medical Informatics 73 (6), 493–501. Nagi, E., Law, C., Wat, F., 2008. Examining the critical factors in the adoption of enterprise resource planning. Computers in Industry 59 (6), 548–564. Nah, F., Lau, J., 2001. Critical factors for successful implementation of enterprise systems. Business Process Management Journal 7, 285–296. Nah, F., Zuckweiler, K., Lau, J., 2003. ERP implementation: Chief Information Officers perceptions of critical success factors. International Journal of Human-Computer Interaction 16 (1), 5–22. O'Leary, D., 2000. Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic Commerce, and Risk. Cambridge University Press, Cambridge (UK). Oracle Corporation, 2003. Oracle Application Implementation Methodology. Found at www.oracle.com. Project Management Institute, 2004. A Guide to the Project Management Body of Knowledge 3rd edition. Newton square, OA. Rodriguez-Repiso, L., Setchi, R., Salmeron, J., 2007. Modelling IT projects success: emerging methodologies reviewed. Technovation 27 (10), 582–594. Rogers, E., 1995. Diffusion of Innovations, 4th edition. Free press, New York, NY. Sammon, D., Adam, Frederic, 2010. Project preparedness and the emergence of implementation problems in ERP projects. Information & Management 47, 1–8.
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Sauer, C., Reich, B., 2009. Rethinking IT project management: evidence of a new mindset and its implications. International Journal of Project Management 27 (2), 182–193. Shang, S., Seddon, P., 2000. A comprehensive framework for classifying the benefits of ERP systems. Proceedings (AMCIS'2000), 2, pp. 1005–1014. Somers, T., Nelson, K., 2000. The impact of critical success factors across the stages of enterprise resource planning implementation. Proceedings (HICSS-34). Stewart, R., 2008. A framework for the life cycle management of information technology projects: ProjectIT International Journal of Project Management 26 (2), 203–212. Tanriverdi, H., Iacono, C., 1999. Knowledge barriers to diffusion of telemedicine. Proceedings (ICIS 20th), Charlotte, NC, pp. 39–50. The Standish Group International, 2009. CHAOS Summary 2009 Report. Found at www.standishgroup.com. Thomas, G., Fernandez, W., 2008. Success in IT projects: a matter of definition? International Journal of Project Management 26 (7), 733–742. Tsai, W., Shaw, M., Fan, Y., Liu, J., Lee, K., Chen, H., 2011. An empirical investigation of the impacts of internal/external facilitators on the project success of ERP: a structural equation model. Decision Support Systems 50 (2), 480–490. Umble, E., Haft, R., Umble, M., 2003. Enterprise resource planning: implementation procedures and critical success factors. European Journal of Operational Research 146 (3), 241–257. Waters, D., 1996. Operation Management. Addison-Wesley. Yusuf, Y., Gunasekaran, A., Wu, C., 2006. Implementation of enterprise resource planning in China. Technovation 26 (12), 1324–1336.
International Journal of Project Management 30 (2012) 37 – 47 www.elsevier.com/locate/ijproman
InnoDiff: A project-based model for successful IT innovation diffusion Majid M. Altuwaijri a , Mohammad S. Khorsheed b,⁎ a
King Saud bin Abdulaziz University for Health Sciences, (KSAU-HS), Saudi Arabia b King Abdulaziz City for Science and Technology, (KACST), Saudi Arabia
Received 21 December 2010; received in revised form 20 April 2011; accepted 26 April 2011
Abstract In spite of the importance of information technology (IT) for many organizations to help manage the enterprise daily transactions, IT project failure rates still remain high and are of great concern. This obliges continued exploration of new process models and organization structures to nurture strong project performance. This paper presents a new generic model for successful implementation of IT projects referred to as InnoDiff. The model uses Enterprise Resource Planning (ERP) as a test bed. Furthermore, the paper also presents a case study that demonstrates the detailed application of InnoDiff during the course of executing the Human Resource Management System (HRMS) within the Wide Access Network (WAN) at the National Guard Health Affairs (NGHA) in Saudi Arabia. © 2011 Elsevier Ltd. APM and IPMA. All rights reserved. Keywords: ERP; CSF; Innovation; PMO; Knowledge barriers
1. Introduction The implementation of large information systems (IS) is still considered as a complex and risky exercise which leads to several problems concerning budgets, quality, and time schedules (Bakker et al. 2010; Hsu et al., 2011). Sauer and Reich (2009) have found that UK-based IT project managers reported increasing levels on 14 dimensions including technical complexity, rate of technology change, importance of security, business change involved in projects, prevalence of virtual teaming, organizational instability, and interdependence with other organizations. Many studies have found that IS project failures are very common. Only 32% of IS projects succeed (delivered on time, on budget, with required features and functions) according to a Standish Group study (The Standish Group International, 2009). It is estimated that around 44% of IS projects partially fail with time and/or cost overruns and/or other problems. Around 24% of IS projects are total failures and abandoned.
⁎ Corresponding author. Tel.: +966 14814511; fax: +966 14814748. E-mail address: [email protected] (M.S. Khorsheed).
The failure rate of IS projects is even worse in the public sector reaching around 84%. The financial impact of the IS project failures is huge. Around 150 billion US dollars are wasted annually on IS failures in the United Sates and a similar number is reported in the European Union (Gauld, 2007). The Royal Academy of Engineering and the British Computer Society found significant difficulties in managing IT projects as follows (Rodriguez-Repiso et al., 2007): • • • •
•
IT project are often poorly defined and in some projects not many lessons are learned from the past experience. Increasing pressures to deliver in the shortest time even if it affects the quality of the IS. The rapid pace of technological changes makes IT projects more complicated. IT projects involve continuous interactions between the different individuals involved in the design and implementation. IT projects related to product innovation development are extremely complex, risky, and expensive.
Some IS projects fail as a result of poor knowledge management, poor project management, inadequate reuse of
0263-7863/$36.00 - see front matter © 2011 Elsevier Ltd. APM and IPMA. All rights reserved. doi:10.1016/j.ijproman.2011.04.007
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past experiences and lessons learned, and/or insufficient understanding of the technology and its limitation (Desouza and Evaristo, 2006; Thomas and Fernandez, 2008). Other reasons might include the lack of consistency in management, the lack of formal tracking, and the lack of functional user involvement (Stewart, 2008). Moreover, some organizations lack the methods, skills, and tools required for selecting the right portfolio of IT projects that match the vision of the organization. Some organizations tend to repeat the same mistakes too often, particularly in terms of knowledge transfer from past projects. There is an expanding literature on IS project failures including both the theory and case studies. Some of the studies identified ‘Critical Success Factors’ (CSFs) that, upon careful consideration by the project team, increase the success rate of the IS projects. While providing a useful checklist for the project team, this approach is too static. It fails to account for the dynamics of social and organizational aspects that surround IS projects (Gauld, 2007). Although this finding is more obvious in government organization, there is no evidence that private sector does not face similar issues in implementing IS projects. Moreover, there is no general agreement on which set of factors are the key to success for a specific IS such as the Enterprise Resource Planning (ERP). Different studies have identified different set of CSFs even for the same information system let alone different systems. Moreover, different cultures, government regulations, and economics differ among countries which make the set of CSFs differ (Nagi et al., 2008). In this paper we propose a new model for successful implementation of IT projects. The model consists of three integrated components; the first component is concerned with the project management stages taken by organization to deploy new technology innovations. This in turn consists of four stages: visioning, matching vision, deployment, and evaluation and improvement. The second component deals with the main knowledge barriers to IT innovation diffusion as suggested in literatures. The third component is concerned with the CSF of IT innovation implementation as suggested in various literatures. The proposed model calls for the establishment of a Program Management Office (PMO) to implement corporate strategy for project management and to transform the organization into a learning one. The model is explained in details using an example of ERP implementation. The paper is organized as follows: Section 2 presents a review of the prior art including an overview of ERP systems. Section 3 introduces the proposed model. Detailed description of the model, using ERP system as an example, is presented in Section 4. Section 5 illustrates the application of the proposed model via presenting a study case of implementing one of the ERP modules. Finally, Section 6 is discussing concluding remarks and future trends. 2. Literature review 2.1. ERP system overview ERP information systems are integrated systems that support organization activities and transactions. ERP systems target
functional areas such as logistics, purchasing, human resources, finance, maintenance, inventory control, and warehouse management (Aladwani, 1985). They usually utilize a unified database that can be accessed by different users leading to a better platform for planning, future forecasting and control being provided to the administrative and management staff (Waters, 1996). ERP provides cross-operational integration of data through embedded business workflow. ERP systems became very popular during the 1990s when major companies used them as replacements to their legacy systems. However, despite the growing interest in ERP systems, some industries like health care industry have been late in considering ERP solutions (Merode et al., 2004). ERP applications can be implemented and deployed moduleby-module. Organizations often selectively implement the ERP modules that match their business needs. ERP can either be tailored to fit the business processes of an organization or organization can tailor their processes to fit the ERP structure. The degree of customization affects the complexity and the cost of the implementation process. ERP systems share the following characteristics (O'Leary, 2000; Umble et al., 2003): •
Modular design comprising many modules. Centralized database. Integrated modules with real-time data flow among modules. • Complex and costly. • Time consuming. • •
2.2. ERP critical success factors (CSFs) In spite of the great benefits, promised by ERP system, some ERP projects failed. ERP system implementation is a difficult and challenging task and it involves a high degree of organization transformation processes (Tsai et al., 2011). Therefore it is important for organizations to be aware of certain CSFs before implementing ERP solutions. Careful consideration of these factors will ensure higher success chance and will ensure the realization of most benefits of the ERP systems. In 2003, F. Nah et al. conducted a survey of Chief Information Officers (CIOs) from Fortune 1000 companies on their perceptions of the CSFs in ERP System's implementation (Nah and Lau, 2001; Nah et al., 2003). The degrees of criticality of each of these factors were assessed in a survey administered to the CIOs. The five most critical factors identified by the CIOs were top management support, project champion, ERP teamwork and composition, project management, and change management program and culture. In addition to the internal factors for ERP success, the ERP system implementation involves external entities such as System vendors and implementation consultants. External entities are usually required to provide expertise not found within the organization (Tsai et al., 2011). Very few researchers considered measures beyond the boundaries of the organization, in spite of the fact that few organizations can implement ERP successfully without external help. There is a shortage in the literature of an integrated model that deals with internal and external factors for ERP success. Very few studies give
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attention to previous IT projects executed in the organization. Moreover, the assessment of post-implementation success of ERP systems in organizations is another area that is not sufficiently researched (Ifinedo et al., 2010). A number of authors have commented on the importance of preparedness for embarking on an enterprise-wide IS project. However, few attempted to examine the impact of these factors on the outcome of the project (Sammon and Adam, 2010). 2.3. IS success model DeLone and McLean conducted a comprehensive review of IS success literature and proposed a model of IS success (Delone and McLean, 1992). This model suggested that the success can be represented by the system quality, the output information quality, consumption (use) of the output, the user's response (user satisfaction), the effect of the IS on the behavior of the user (individual impact), and the effect of the IS on organizational performance (organizational impact). DeLone and McLean proposed an updated model that differs from previous one in more than one aspect (Delone and McLean, 2003): •
The addition of service quality category to reflect the importance of service and support in successful e-commerce systems. • The addition of “intention to use” to measure user attitude, and • The merging of individual impact and organization impact into one category concerned with net benefits. 2.4. Knowledge barriers Various study researches highlighted several barriers to innovation (Attewell, 1992; Rogers, 1995; Tanriverdi and Iacono, 1999). The adoption and implementation of complex IT solution is influenced by the organization's ability to lower or remove the various knowledge barriers. Knowledge barriers associated with the adoption of larger-scale IT solutions can be categorized into four categories: project/economic barrier, technical barriers, organization barriers, and behavior barriers (Rogers, 1995). 1. Project/economic barriers: This category is concerned with the financing and project management issues faced when acquiring innovation. 2. Technological barriers: This category is concerned with the lack of knowledge required to carry out technical tasks needed to adopt new innovations. 3. Organizational barriers: This category is concerned with the difficulties of deploying a new technology into existing practices and processes. 4. Behavior barriers: This group is concerned with the resistance to change among individuals affected by the implementation. It is also concerned with organizational power dynamics.
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3. The proposed model Fig. 1 shows the proposed model for successful implementation. InnoDiff model consists of three main components; the first component is concerned with the stages taken by organization to deploy a new technology innovation which is in turn composed of four stages: visioning, matching vision, deployment, and evaluation and improvement. In visioning phase, institutions define the corporate mission, objectives, and strategy. This phase is mainly concerned with identifying and prioritizing the organizational problems and opportunities that form the basis of the need to acquire innovation. The second phase is concerned with the fit between a need identified in the first phase and the innovation proposed. In this stage we should determine whether the innovation will solve one of the problems identified in the first phase. At the end of this phase, the organization decides whether or not to approve the innovation project. In the event of the project approval, the third phase of the process, deployment, begins. This phase includes all decisions and actions related to the deployment of the innovation. It includes also the assimilation and the integration of the innovation within the organization. At the end of this phase, the IT innovation solution is deployed within the organization. Evaluating performance is an important step for ensuring the quality of the innovation deployment. This phase emphasizes process flow optimization and continuous expansion of the system to gain competitive advantage. After the successful deployment of innovation, the list of benefits and lessons learned feeds a knowledge base which in turn feeds all three components described in the model. The second component deals with the main knowledge barriers to IT innovation diffusion. The third component is concerned with the CSFs of IT innovation deployment as suggested by various literatures. The proposed model calls for the establishment of a PMO to implement corporate strategy for project management. The main goal of this office is to translate the organization's strategic plan into projects and programs. In this context, we adopt the PMO's definition proposed by the Project Management Institute (Bolles, 2004; PMI, 2004): “An organizational body or entity assigned various responsibilities related to the centralized and coordinated management of those projects under its domain. The responsibilities of the PMO can range from providing project management support functions to actually being responsible for the direct management of a project”. The PMO will be accountable for enterprise-wide distribution of project management best practices. The main advantages of InnoDiff is the strategic alignment of projects which bears on the synergy created by the management of relations between projects, and the ability to develop a better understanding of the challenges faced in carrying out information systems projects, the factors for success, and the strategies required to take advantage of IT. Knowledge sharing behavior facilitates learning among the project team members and enable them to resolve problems similar to situations encountered by others in the past, thus
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Fig. 1. InnoDiff: a proposed model for IT innovation diffusion.
enabling more successful projects. The acts of sharing are very important since a project's knowledge will not have much impact on the organization unless it is made available to other projects. Such learning organizations would be aware of the repeated knowledge barriers to innovation adoption and a welldefined plan to address these barriers would be developed. Moreover, the knowledge base will help these organizations refine their strategies and prioritized plans. This allows for focusing on preparation for future projects which is rarely covered in literature. It is very important to mention that this model is not restricted to ERP projects but it is applicable to other IS projects. Therefore, more efforts in this paper are exerted to present the model with its integrated components. Normally, an organization adopts a set of CSFs from the literature and then along the course of the project this set is fine-tuned accordingly to accommodate various issues within the environment. In this paper we used the list of CSFs included in the study conducted by Nah et al. (2003) in order to illustrate how the model can benefit from the literature especially when it is first put in use. Therefore, it is important for organizations which want to apply this model to review the literature and agree on the list of CSFs that is more appropriate for the IS to be implemented.
4. Applying the model for ERP deployment Fig. 2 shows the detailed model for ERP implementation which will be explained in the following sections. 4.1. Visioning As mentioned in the previous section, in this phase, institutions define the corporate mission, objectives, and strategy. As shown in Fig. 2, organizations develop their strategic plan during this phase. This task is usually continuously done by the governing board of the organization. Institutions should align the strategic vision process with the budgeting process to produce a realistic prioritized strategic plan. The strategic plan will be used as an input to the IT strategic plan in order to ensure that the IT plan is closely integrated with the organization's strategic initiatives and business directions and provides the opportunity to use IT as a tool to enable systems integration as well as deliver information as a strategic resource. The visioning phase should address the economic barrier which is concerned with the financing and project management issues faced when acquiring innovation. Moreover, there are some strategic CSFs related to this phase such as top management support, business plan and
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Fig. 2. The ERP implementation model using InnoDiff.
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vision, and cost/benefit analysis. Top management support factor also affect the subsequent phases. 4.1.1. Addressing the economic/project barrier When acquiring an ERP solution, organizations must address two factors: the financing issues related to deploying the solution and the benefit/cost analysis of the project. Moreover, multi-site implementation of ERP presents special concerns. Firstly, each site had its own processes which may not be consistent with other sites. Secondly, multi-site organizations need to choose whether the implementation is done simultaneously in all facilities or in one facility at a time. 4.1.2. Some CSFs for the visioning phase • Top management support: Successful deployment of IT innovation requires strong leadership, commitment, and continuous support by top management (Nah and Lau, 2001; Somers and Nelson, 2000). • Business plan and vision: The IT strategic plan along with the organization's strategies should provide a clear communicated business plan and vision to steer the direction of the ERP project and other IT projects (Nah and Lau, 2001; Somers and Nelson, 2000). • Cost/benefit analysis: This analysis is instrumental for organizations in order to secure fund. This analysis would act as the basis for defining the success criteria for the ERP project (Nah and Lau, 2001). 4.2. Matching the vision This phase is concerned with the fit between a need identified in the first phase and the innovation proposed. As shown in Fig. 2, the PMO plays an important role in matching the fit between projects proposed by departments and the organization vision and strategies. In this phase the organization should decide if the projects proposed match the vision or not. In case there is a match, a decision is made to invest on the proposed solution. If there is no match, the PMO should update the organizational knowledge base and explain the reasons. In some cases, the project proposals need further research before a decision is made. This phase is affected by the same barrier and CSFs as in the previous phase. 4.3. ERP deployment 4.3.1. ERP package selection Organization should make an extensive review of available ERP System in the market to select the package that has the best match of the organization's vision and strategies. The decision should be based on several factors including price, supplier support, ease of implementation, closeness to fit to the organization business, technological risks, and local experience (Al-Mashari et al., 2003). 4.3.2. ERP project life cycle (PLC) Organizations implementing ERP systems usually modify business processes (as reasonably required) to conform to “best
practices” discovered during the implementation of the Oracle ERP project. These opportunities for process improvements would be identified during Business Process Analysis workshops, consulting visits and by the project team members as they become familiar and comfortable with the system. Process change proposals would be considered and approved by the Project Management, Steering and Policy Committees as part of the governance of the project. This phase is concluded when the ERP solution is deployed and is running within the organization. 4.3.3. Addressing knowledge barriers • Technical barriers: These include the technical infrastructure readiness. Organizations might need to upgrade their network infrastructure, upgrade the data center's servers, and recruit technical and functional analysts to support the project. Data migration from legacy IT systems to the new ERP is an essential task in this project. Finally, a maintenance contract is required to ensure the availability of the ERP solution. • Organizational barriers: These include change management processes to align the ERP with existing practices and processes. One of the main issues might be to comply with the governmental rules with regard to purchasing and tendering and unified catalog manual system. This issue is more obvious in government organization. • Behavior barriers: These include end-users resistance to new innovations. Organizations should conduct sufficient training sessions to introduce the new innovation. It must be stressed to all end-users that this project is not meant to lay off some of the staff rather to improve the quality. However, for those who would remain resistant to the whole project, organizations might have to make difficult decisions to move them. 4.3.4. Some CSFs for this phase • Package selection: Organizations should make careful ERP package selections as explained in Section 4.3.1 above (Al-Mashari et al., 2003). • Project champion: The existence of a project champion who also might be the project sponsor is very crucial to the success of the project. The project champion should have excellent leadership skills to resolve conflicts and manage resistance (Nah and Lau, 2001). • Teamwork and composition: Organizations should create a project team to implement the ERP. This team should ideally be composed of three groups; functional consultants, technical consultants and IT specialists. Organizations should consider external help if they lack skilled employees. The team members should be working full-time for the project (Nah and Lau, 2001). • Communication: Organizations should have a detailed communication plan. This plan includes meetings' minutes, project newsletter, and a project homepage on the intranet (Nah and Lau, 2001). • Project management: Organizations should appoint a dedicated full-time project manager. The management of the project covers the technical and functional aspects. A
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•
•
•
•
•
•
qualified project manager manages five main functions; managing scope, managing project team, managing quality, managing cost, and managing time (Nah and Lau, 2001). IT legacy system: Organizations should have a clear plan for migrating data from the legacy systems and the ERP. Moreover, when ERP is implemented in phased approach interim interfaces should be developed to ensure the continuity of the existing workflow cycle (Nah and Lau, 2001). Process management: Organizations should be willing to make a decision to use the ERP project as a vehicle for change. Organizations should have a clear change management strategy which includes analysis of the current business processes to identify the areas for improvement (Nah and Lau, 2001). System testing: Organizations should have a comprehensive system testing plan to test the functionality of each module alone and in conjunction with other modules. Additionally, there should be a parallel run for the new modules installed and only after a successful run the old system would be shut down (Nah and Lau, 2001). Training: This is probably the most recognized CSF for ERP implementation. Organizations should have a comprehensive training plan. The plan should include functional and technical aspects of the project. In large organizations, “train the trainer” approach is usually considered (Nah and Lau, 2001). Culture change: There is sometimes a need to process data in different languages for external use. This is true in the Chinese and Arabic countries (Yusuf et al., 2006). Vendor support: During the “go-live” period it is essential to have the maximum possible support by the vendor. Organizations should also have maintenance and support contracts for the ERP. It is essential to keep the ERP package up-to-date with the latest version of the package (Somers and Nelson, 2000).
It is also important that the PMO assembles a list of lessons learned from this project. The list of project benefits and lessons learned are then fed into the organization knowledge base. The knowledge base will provide projects information back to the organization visioning process and will be used to refine the list of CSFs and knowledge barriers for future projects. The feedback loop will transform the organization to becoming a learning one. 5. HRMS case study The National Guard Health Affairs (NGHA) is a large health organization providing modern medical care to National Guard employees and their dependents. NGHA has four hospitals and sixty primary and secondary health centers around the Kingdom having 2000 in-patient beds in total. NGHA serves more than 2.5 million out-patients and around 60,000 in-patients annually. NGHA is organized in three regions as shown in Fig. 3 with the Eastern Region having two hospitals. 5.1. Visioning NGHA developed its first IT strategic plan in 1999 and it was revised in 2005 and 2009. The main strategic goals of the IT strategic plan included the following: •
Develop a flexible, integrated, enterprise-wide IT infrastructure (which includes technologies, processes, and people) that will support the full continuum of care. • Assure that IT applications are enterprise wide and are fully utilized through effective deployment and comprehensive user training.
4.4. Evaluation and improvement Finally, evaluation and improvement phase come into action after the ERP system is already deployed within an organization. It is important that organizations define the success criteria of the ERP project and use it to monitor the project. ERP system should be monitored forever and should receive continuous improvement (Al-Mashari et al., 2003). Organizations usually assume that their operational performance will be improved immediately after the “go-live”. Instead, due to the complexity of ERP systems, organizations should expect an initial decline in their performance. Once the system is stable and users are more aware of its capabilities, improvements will take place. It is recommended that organization establish a multi-disciplinary taskforce to monitor and evaluate the system and recommend areas of improvement. 4.5. ERP benefits, lessons learned, and updating the knowledge base After the ERP system is already deployed, the PMO should measure the benefits realized by the project and tie them to the organizational strategic goals.
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Fig. 3. The Application Service Provider (ASP) model used in NGHA.
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•
Allocate the financial and human resources necessary to accomplish IT goals, objectives, and actions outlined in this Plan. • Assure that IT investments are made only when they provide significant value to the organization and are made in the most cost/effective manner possible. NGHA, in its effort to standardize processes and systems across all its hospitals, adopted the Application Service Provider (ASP) Model as a primary concept in the infrastructure design of its IT Strategic Plan; ASP Model requires that Applications such as ERPs are hosted in a central location. However, they can be accessed remotely through the web (Internet) or Intranet from any NGHA facility as shown in Fig. 3. 5.2. Matching the vision Prior to implementing the new Human Resource and Management System (HRMS), NGHA had implemented an ERP solution based on Oracle platform except for the HR component which was acquired from a third party. Consequently, NGHA had faced several integration issues between the financial component of the ERP and the external HR module. Moreover, NGHA could not achieve a single workflow that cross several departments and auditing was difficult to achieve. As a result, a new project proposal was presented to the NGHA executive board in January 2007. The project was found to have a great match with the organization vision to have an integrated ERP solution to manage its resources. The proper management of Human Resource is crucial, as 70% of the NGHA budget is HR budget. Moreover, NGHA strategic plan called for the implementation of a centralized ERP System to support all NGHA facilities located in the country. The HRMS solution was intended to automate most of the HR procedures and provides the staff with all the knowledge needed for better service, control, planning and forecasting the future needs of the organization.
Phase 1 – Definition Establish the business objectives and related requirements. Develop a high-level conceptual architecture. Define the project work plan. Phase 2 – OperationAnalysis: Analyze the operations and map organizational requirements to . standard application functionality Phase 3 – Solution Design: Develop detailed designs for the optimal solutions to meet the future business requirements. Phase 4 – Build: Prepare development environment. Develop, test, and accept custom software. Phase 5 - Transition Convert and verify converted data. Deploy the finished solution into the production system. Phase 6 - Production: Go Live Audit and maintain Production system.
Fig. 4. A sample Project Life Cycle of an ERP project (Attewell, 1992).
to effectively and efficiently plan, conduct, and control project phases and steps. The PLC consisted of six phases. Within each phase, there are various processes with each process consisting of a number of tasks. Table 1 illustrates five CSFs and the corresponding measures taken by NGHA to ensure a high degree of project success.
5.3. HRMS deployment The implementation of this project started in March 2008. NGHA had parallel run trials during the period of December 2009 till June 2010. The system went live in July 2010 with 8 months behind schedule. The key components of this project include: • •
HRMS with manpower management support. HRMS payroll system. • Internet procurement • Self service support. • Seamless integration with accounts payable and receivables and general ledger. Fig. 4 shows a sample Project Life Cycle (PLC) for the ERP implementation based on the Application Implementation Methodology (AIM) (Oracle Corporation, 2003). AIM is used
5.4. Project benefits The project benefits can be classified into five groups as follows (Shang and Seddon, 2000): 1. Operational: cost reduction, cycle time reduction, productivity improvement, quality improvement, and customer services improvement. 2. Managerial: better resource management, improved decision making and planning, and performance improvement. 3. Strategic: supporting business growth, supporting business alliance, building business innovations, building cost leadership, generating product differentiation, and building external linkages. 4. IT infrastructure: involving building business flexibility, IT cost reduction, and increased IT infrastructure capability.
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Table 1 The top FIVE CSFs for the HRMS and the actions taken by NGHA to address those factors. Topic
Description
F1: Top management support ❖ Approval and support from top management of NGHA, CEO, COO, CIO, HR, Executive & Finance Executive (CFO), in addition to Internal Audit Executive. ❖ NGHA management set the priority of the project as top priority. ❖ Allocate resources ❖ Steering committee composed of high management have given highest support for the project committee and pushed the implementation forward to completion. ❖ Incentives raised by the project committee for the different teams participating were approved. F2 Project champion ❖ Existence of champion ❖ High level executives sponsor the project champion ❖ Project sponsor committee F3: Team work and composition ❖ Best people on team were selected for the project functional, IT and application consultants (specialists) ❖ Full time members ❖ Empowered decision makers
A kick off meeting was hold and started the project, the project team and the contractor submitted the final project plan and the project charter. The importance of the project was emphasized by the COO, CFO & HR Executive expressed highest importance for this project. Project charter was distributed to all members of the committees indicating the official start date. Project committee was formed with Executives from all concerned department in this project. HR, Finance, Internal Audit & ISID (IT) chaired by IT reporting to high level steering committee headed by COO. Moreover, proper resources were identified and allocated to the project combining functional and technical professional skills.
F4: PM ❖ Assign responsibilities ❖ Identify project scope ❖ Control project scope ❖ Evaluate process change requests ❖ Control scope change and assess change requests ❖ Define project milestones and end dates ❖ Enforce project timelines ❖ Coordinate project activities
F5: Change management ❖ Recognizing the need for change ❖ Enterprise culture and structure management ❖ Users education and training ❖ IT workforce—enhancing their skills ❖ Commitment to change perseverance and determination
The COO of NGHA was the project sponsor. The champion of the HRMS project was identified from the HR Dept. He was assigned as the chairman of the project committee. The champion was influential enough to introduce new process and change old practice and obtain approval on new business processes. ERP department in Information systems and informatics division in NGHA has a team dedicated for the HR project, and this team combine both functional and technical skills they perform support tasks for the legacy HRMS, and they helped in the implementation on the new HRMS especially data migration and training, and most important business process changes and incorporation in the new system. IT project managers to facilitate all IT support services needed were named and lead the IT team in the project. Also the contractor has allocated his team with a strong project manager, both PMs were reporting to the project committee. The HRMS project scope was defines in a PM template used for all IT projects in the IT division, the Template in addition to the scope clearly identify Deliverables, Boundaries, stakeholders, requirements, and project dependencies, and Risks. The project Scope was enhanced and additional requirements were added to the project due to the fast expansion and growth in NGHA, for that there was an immediate need to change business processes to accommodate the high level of expansions and growth. Project plan and phases where identified according to Oracle AIM new methodology of implementation which is more suitable for fast changing environment like ours. Project implementation supervision from Oracle was maintained due to the strong agreements between NGHA and Oracle. Project timelines where shifted due to the changes introduced to the project and the implementation was delayed for some time. Emphasis on project committee to be lead by the champion was an excellent approach that gave the project extra momentum in implementation and support from end users. NGHA had a suffering from the legacy HR system, it was independent of other ERP modules, and integration was hard, in addition there were so many discrepancies and tally never matched between finance modules and the HR-Payroll. Enterprise use and depend heavily on ERP modules in procurement and all financial functions, and most of NGHA budget is for Salaries almost 70%. IT understands the importance of the project and allocated the right resources in addition to outsourced consultants. User's group's needs for training were identified and assessed with a training plan for all sites of NGHA.
5. Organizational: supporting organizational changes, facilitating business learning, empowering, and building common visions.
Cause analysis for the project with the help of an international consultant. The reasons of this delay were: •
5.5. Project challenges and lessons learned In spite of the benefits realized as a result of this project, it is important to also discuss the challenges faced by the project which resulted in 8 months of delay. NGHA conducted a Root–
The change key members of the project in the middle of the project: There have been several critical team changes over the duration of the project including the change of the project committee chairman and the project manager from the vendor. These changes resulted in considerable changes in the project requirements and scope. However, when reviewing the project documentations, it was found that
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some of these decisions were not reflected in the project risk plan. • It was found that the training was not sufficiently provided to all end users. There is a need to develop a comprehensive and continues training plan whereby employees can get trained regularly on the system. It is important that all new employees undergo mandatory training to familiarize them with both the system and process. • Legacy data migration issues. Even though the data were migrated correctly, some issues regarding the rounding of digits appeared during the Go-live. As a result of these lessons learned from this project and other projects, NGHA established an enterprise PMO in January 2011. The PMO will enforce all foundational project management activities.
The acts of sharing are very important since a project's knowledge will not have much impact on the organization unless it is made available to other projects. Although knowledge exists at different levels of an organization, for instance, at the individual, team, and organization levels, sharing of knowledge at the individual level is critical to an organization. It is expected as organizations use this model for several projects; more knowledge would be gained and used towards more successful project in the future. CSFs would be refined more and be closely tied with organization culture. Such learning organizations would be aware of the repeated knowledge barriers to innovation adoption and a well-defined plan to address these barriers would be developed. Moreover, the knowledge base will help these organizations refine their strategies and prioritized plans. Finally, the authors would like to suggest the following guidelines to help those organizations considering using our model:
6. Conclusion Enterprise-wide daily transactions are difficult to manage due to their complexity and scope in terms of rendering services to their clients. As a result, many organizations employ IT to manage their enterprise-wide transactions and to ensure quality of services. IT, when properly selected and implemented, helps organizations increase their efficiency and capabilities which improves the organization's competitive advantages. In spite of the importance of IT, IT project failure rates still remain high. This suggests continued exploration of new process model and organization structure to nurture strong project performance. In spite of the large number of articles in the literature addressing information system project failures, the majority of these studies concentrated on identifying sets of CSFs. While providing a useful checklist for the planners, this approach is too static. It fails to account for the dynamics of the social and organizational aspects that surrounds IS projects. Unfortunately, there is no general agreement on which set of factors are the key to success for a specific IS such as ERP. Moreover, most of the previous studies focused on the information system implementation after the selection process is already made. This approach does not find solutions to a key problem which is tied to the fact that many organizations lack the methods, skills, tools required for selecting the right IT projects that match the organization vision. In light of the above issues, this paper proposes a new model for successful implementation of IT projects (InnoDiff). The model consists of three main components; the first component is concerned with the stages taken by organization to deploy new technology innovations. The second component deals with the main knowledge barriers to IT innovation diffusion as suggested in literatures. The third component is concerned with the CSFs of IT innovation implementation as suggested in various literatures. InnoDiff model calls for the establishment of a program management office to implement corporate strategy for project management and to transform the organization into a learning one. The model is explained in details thru an example of ERP implementation.
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