Contracting for implementation of standard software
| Published date | 01 April 2006 |
| Date | 01 April 2006 |
| DOI | https://doi.org/10.1108/02635570610661624 |
| Pages | 562-580 |
| Author | Michael Robey,Donald Coney,Rainer A. Sommer |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Contracting for implementation of
standard software
Michael Robey, Donald Coney and Rainer A. Sommer
Enterprise Engineering and Policy Laboratory, George Mason University,
Fairfax, Virginia, USA
Abstract
Purpose – Traditional contract vehicles do not align well with enterprise resource planning (ERP)
implementation methodologies. The purpose of this paper is to identify different contract vehicles and
how they map to ERP implementation methodologies. Traditional contract vehicles are more
process-oriented than outcome-focused. Successful standard software implementations are dependent
on the outcome. The misalignment of process-oriented contract vehicles and results-oriented
implementation methodologies leads to many implementation problems with respect to scope creep
and ill-defined interfaces.
Design/methodology/approach – The study is based on research from public and private sector
contracting documents, interviews and a review of case studies to show that there is a misalignment
between contract vehicles, implementation methods and the eventual project plan.
Findings – The research concluded that phased or life-cycle contracting is the best approach when
implementing standard (off the shelf) software in an ERP solution. This approach mimics the
recognized life-cycle approach to product/project management where a large project is broken up into
several smaller stages.
Research limitations/implications – The data analyzed are from primary and secondary sources
such as direct interviews, case study and contract reviews. The primary focus is based on US Federal
Agency acquisition and planning policies.
Originality/value – Identifies different contract vehicles and how they map to ERP implementation
methodologies.
Keywords Resource management,Contracts, Method study
Paper type Conceptual paper
1. Introduction
It is the authors’ contention that phased or life-cycle contracting is the best approach
when implementing standard (off the shelf) software in an enterprise resource and
planning (ERP) solution. This approach mimics the recognized life-cycle approach to
product/project management where a large project is broken up into several smaller
stages. A typical life-cycle approach would include such stages as conception and
feasibility, planning and design, implementation, ongoing support, and sun setting.
Figure 1 is a graphic representation of the relationship among implementation
methodologies, project management, and contracting surrounded by a life-cycle. This
paper will concentrate on the implementation stage of the life-cycle.
Even “small” ERP implementations are complex and expensive endeavors. It makes
sense that implementation efforts of all sizes be contracted out to experts who are
familiar with the software and how the application’s capabilities map to an
organization’s business needs and processes. These skill sets are not typically found in
internal information technology (IT) departments. Leveraging the expertise of external
experts is a standard approach used in ERP implementation projects. Simply put, it
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IMDS
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562
Industrial Management & Data
Systems
Vol. 106 No. 4, 2006
pp. 562-580
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570610661624
makes much more sense to hire someone who has previously completed ERP
implementations than to take internal staff away from their regular duties and train
them on how to implement a software solution they will probably only do once (or a
handful of times at best) during their career.
After recognizing that contractors are needed to achieve “the best bang for the
buck”, an organization has to ensure the contractor is not given carte blanche. The
project’s desired outcome has to be the effort’s focus. In order to be successful and
achieve the desired results, implementation methodology and life-cycle project
management skills must be aligned with the appropriate performance-based contract
(PBC). This means that the project’s risk has to be shared between the owner and
contractor in order to ensure delivery of the desired results. An approach balancing the
risks between the owner and contract needs to include:
.shared responsibility for project evolution and change;
.a project scope and definition that details the desired end result but is also
flexible enough to adapt to/for unforeseen developments while minimizing
“scope creep”;
.an approach that recognizes that the overall project consists of several “stages”
and natural breakpoints;
.incentives for optimal contractor performance and/or work product; and
.alignment of the owner’s strategic goals/objectives with a solution’s
capabilities/functionality.
This paper explains in depth the relationship and balance among ERP
implementations, life-cycle project management, and performance-based contracting
to ensure the owner achieves the desired outcome. Much of the available literature
surrounds one of these three areas. What we attempt to do in this paper is align
implementation methodologies, life-cycle project management, and PBCs into a
cohesive union, giving the reader a natural progression of how these areas fit together
so that the reader can take away an understanding of how to map an implementation
effort with solid project management skills and successfully contract for services.
Figure 1.
Implementation
of standard
software
563
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