1. EDUCAUSE Center for Applied Research The Promise and Performance of Enterprise Systems May 22, 2003 Robert B. Kvavik Senior ECAR Fellow The Promise and Performance of Enterprise Systems May 22, 2003 Robert B. Kvavik Senior ECAR Fellow

2. Page 2 Presentation Agenda Industry Overview – current snapshot of higher education’s experience with “enterprise systems”

3. Page 3 Background Findings based on study of nearly 500 colleges and universities conducted in mid-late 2002 CIO/IT organization perspective (dominantly) Study conducted by ECAR, authored by Kvavik and Katz, with a significant research team Quantitative, qualitative, and case study methodologies employed *New = implemented 7/1995 – 7/2002

4. Page 4 Caveats Sample is not random – sample bias (acceptable) Small N in sub populations (Carnegie, vendor …)

5. Page 5 The study addressed four questions: What is ERP and why should universities invest in it – the business case? What is the current status of ERP implementation nationally? What were the perceived benefits and costs? What lessons were learned? And lastly, what is next?

6. Page 6 The survey respondents were mostly CIOs and other IT professionals 43% of respondents have been in their positions for five or more years 62% of respondents have been with their institution for five or more years N=480

7. Page 7 The majority of respondents participated in the entire ERP project in a significant role When Did Respondents Join the Project? 78% of respondents indicated that they played a significant role on the project, either as an executive sponsor, project leader, management team member, or functional / technical specialist N=257

8. Page 8 Identifying who implemented ERP for purposes of this study Gartner described ERP systems as having the following attributes. This definition was adopted for purposes of this study. ­Multiple in scope, tracking a range of activities including Human Resources Systems (HR), Student Information Systems, and Financial Systems ­Integrated, meaning when data is added in one area, information in all areas and related functions, also change ­Modular in structure ­Industry specific solutions that enhance standard systems by providing best practices for key business processes In addition, this study bounded survey responses with the following criteria: ­Institutions had to have implemented at least one vendor-supplied Finance, HR, or Student module ­Implementations must have been completed after July 1, 1995 256 of 480 (54%) institutions responding to the survey implemented ERP, according to these criteria

9. Page 9 The largest number of implementations were reported in the 1998 – 2000 timeframe N= 646 total implementations

10. Page 10 SCT (30%), PeopleSoft (25%) and Datatel (19%) installed the most modules for our respondents N= 646 total implementations

11. Page 11 Distinctive purchasing patterns were evident in each Carnegie Class Carnegie Class/ERP module FinancialHRStudent Doctoral Intensive SCT/PeopleSoft Doctoral Extensive PeopleSoft SCT/PeopleSoft MASCT/PeopleSoft SCT/Datatel BAJenzabar/SCTSCT/DatatelJenzabar/Datatel AASCT/PeopleSoft CanadaSCT/Datatel Top two vendors, by number of reported implementations, for each Carnegie Class group

12. Page 12 What combination of modules were installed? Module combinationsNumberPercent Financial only176% HR only41% Student only6824% Financial and HR7125% Financial and Student2810% HR and Student52% All three9633% Of those who have not implemented all three modules but planned to install additional modules in the future, 56% say they are following a phased implementation plan, and haven’t finished yet

13. Page 13 Six primary reasons emerged for package selection decisions Why did institutions pick a particular vendor? Respondents were asked to “pick all that apply” Note that this does not necessarily mean that these were the most important reasons packages were selected – just that they played a role in the decision

14. Page 14 The primary reason institutions implemented ERP was to replace aging legacy systems Mean of Factors Identified Respondents were asked to gauge the importance of each of these factors, with “1” being “most important” Frequencies of factor identified as “most important” Respondents were asked to select one of these as the primary reason they implemented an ERP system The pattern of responses was similar across Carnegie Classes

15. Page 15 Cost of ERP and viability of legacy systems are the most important factors preventing wider adoption of packaged software Respondents were asked to “select all that apply”

16. Page 16 ERP implementations were more difficult than other large technology projects, particularly around process change Difficulty compared to other large technology projects Respondents were asked to assess overall difficulty on a 1-5 scale, with 1 being “Very Easy”, 3 being “About the Same”, and 5 being “Very Difficult”

17. Page 17 The largest obstacles to ERP implementations were internal to the institutions Respondents were asked to select the three largest obstacles to implementing each system. Responses are ranked by weighted means

18. Page 18 CIOs and business officers were most involved with ERP implementations Respondents were asked to assess overall difficulty on a 1-4 scale, with 1 being “Not At All”, and 4 being “Active Involvement”. Figures represent weighted means

19. Page 19 Consultants played a role in a significant number of implementations Project Activity FinancialHRStudent Training112 Upgrades264 Project management338 Ongoing support423 System selection541 System design676 Project planning755 Technical implementation887 Process redesign999 Consultant Support For Implementation Activities Figures represent rank order of percentage of project team comprised of consultants 2/3 of respondents used consultants for at least one aspect of their implementation Consultants were used more frequently for Student implementations 90% of respondents agreed or strongly agreed that consultants helped the institution achieve its implementation objectives 2/3 of respondents felt their consulting dollars were well spent. However, 50% indicated concern with prices that exceeded estimates, or fees that were not tied to achieving milestones

20. Page 20 Most implementations were reported to be finished on their original timeline and budget Budget/SystemFinancialHRStudent On or under budget68%73%68% Over budget by up to 50%28%24%27% Over budget by more than 50%4%3%5% 60% of respondents indicated their modules went live within 1-2 years after planning Planning and purchasing took under 1 year at 80% of institutions On average, Financial systems went in the quickest, and Student the slowest

21. Page 21 “Plain vanilla” was the preferred implementation strategy, and most institutions came close Customization was found to be the most statistically significant variable affecting project outcomes Doctoral institutions were the most likely to customize, across all modules Overall, Student systems were the most heavily customized HR Systems in private institutions showed by far the least degree of customization

22. Page 22 No major project management issues were apparent, although the responses show room for improvement Responses represent a 1-4 scale, with 1 being “Strongly Disagree”, and 4 being “Strongly Agree”. Figures represent weighted means Full-time project managers were assigned at 55% of institutions 75% of project managers were internal, 10% external, and 15% joint internal and external 54% of the project managers had no previous experience implementing ERP, and 75% had not implemented the chosen package before

23. Page 23 For the majority of institutions, desired project outcomes were mostly achieved We asked our respondents whether they achieved their intended project outcomes. 124 or 51% answered yes, 112 or 46% partially, and only 6 or 3% answered no

24. Page 24 However, the benefits of ERP are not immediate in many cases, and may require institutional change to achieve How long to achieve desired outcomes? FrequencyPercent Immediately4821% Within three months3415% Within three to six months3918% Within six months to one year5524% Over one year4922% 54% of respondents indicated that their institutional productivity dropped immediately after the implementation 70% indicated that their productivity has improved today 69% indicated that the workload at both the central and departmental level has increased 66% believe the nature of the work performed by the institution’s employees has changed significantly

25. Page 25 The majority of respondents indicated their institutions received major benefits from ERP The respondents were asked to assess the impact the ERP had on management, students, staff, and faculty 87% perceived significant benefit for management, 85% for staff, 78% for students, and 68% for faculty 85% of respondents indicated that their implementation was worth the cost

26. Page 26 The majority of respondents indicated they would take a similar approach again, with some improvements The respondents were asked whether they would build or buy if they were to do it again. 88% would buy, 7% would build, and 5% had no opinion. Two-thirds of the respondents would use a similar approach if they were to do an ERP project again. 46%, of the non-ERP schools would continue with their current approach.

27. Page 27 Support costs went up in many instances Responses represent a 1-7 scale, with 1 being “Increased Significantly”, 5 being “Did not Change”, and 7 being “Decreased Significantly” Responses are ordered by weighted means

28. Page 28 ERP implementations are ongoing, with new components being added at many institutions

29. Page 29 A Word About Non-Implementers (n=203)