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Research Questions

  1. What are the key early planning issues associated with enterprise resource planning ERP? How can the Air Force improve this process?
  2. What issues might manifest during ERP program execution? How can the Air Force improve its early assessments of ERP programs?

Enterprise Resource Planning (ERP) systems are prime examples of IT systems being pursued by the Department of Defense to enable transformation and improve efficiency and effectiveness. Successful implementation generally entails significant business change because ERP systems typically affect a large number of organizational departments and processes. RAND Project AIR FORCE identified the key conditions that must be achieved to facilitate the success of ERP-enabled business transformation, the challenges the Air Force must address to achieve those conditions, and some options for overcoming these challenges. Recommendations include, among other things, fully developing and articulating the business case, analyzing and documenting both the AS-IS and TO-BE environments, establishing clear governance of the project, developing criteria to determine whether changing the updated business processes or customizing the system is more appropriate, and delivering transformation, via increased capability, in manageable increments. The report clarifies how the decisions and activities inform each other and must be jointly orchestrated to ensure successful transformation.

Key Findings

Conditions for Success

  • The existence of an Air Force enterprise business strategy is a key condition for successful business transformation. Other conditions for success are summarized below.

Business Case

  • There must be a clear understanding of AS-IS environment and of how the desired TO-BE environment achieves enterprise goals.
  • The business case should articulate desired benefits and eventually include all associated costs, risks, and a realistic schedule.

Governance

  • The governance structure and related decisionmaking criteria should be grounded in the business case, ideally led by a single person and visibly supported by senior leadership.
  • Governance should be as simple and responsive as possible with clearly defined authority and roles and responsibilities.

Business Process Reengineering

  • BPR activities should be planned and performed prior to any technology implementation, and should drive the enterprise's processes toward achieving the benefits articulated in the business case.
  • BPR participants should seek to achieve the desired benefits through process changes and avoid unnecessary customization of the technology solution.
  • Decisionmakers and participants should have sufficient understanding and expectations regarding BPR and what it can accomplish.

Organizational Change Management

  • OCM should be well planned, appropriately coordinated, and provided with adequate resources. It is the communications, education, and training avenue for the transformation.

IT Acquisition

  • If an IT acquisition is required, the full range of potential alternatives should be evaluated against their ability to achieve desired benefits.
  • Specific technological expertise should be assigned to the program.
  • Careful attention should be paid to tailoring contractor incentives.

Recommendations

  • Establish an Air Force-wide business strategy that is the foundation for the business enterprise architecture.
  • Document an integrated AS-IS environment at the Air Force enterprise level.
  • Develop metrics to measure progress toward the TO-BE environment. Benchmarking, simulation, and even small pilot programs can help develop these metrics.
  • Link benefits with specific changes to business processes, organizations, and IT to improve the business case's foundation.
  • Establish accountability to the Air Force Corporate Structure for benefits realization.
  • Simplify governance structure to the maximum extent possible.
  • Use the decisionmaking criteria grounded in the business case to objectively decide between changing processes or customizing technology.
  • Use the business strategy to focus stakeholder priorities.
  • Explore various forms of incentives to improve implementation.
  • Fund organizational change management activities and ensure they cover functional and cross-functional activities.
  • A stakeholder analysis is necessary to identify potential organizational pitfalls and the feasibility of achieving desired benefits within a proposed timeline. The analysis should be updated as the effort evolves.
  • Conduct a realistic analysis of achieving enterprise objectives specified in the business case. The analyses should address appropriate system scope, functional complexity, required interfaces, data quality, and key constraints.
  • Organizational objectives and processes should be balanced with best practices of software design, development, testing, and deployment.
  • Ensure qualified personnel are involved with the program either through assignment or contracting arrangements.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Business Case

  • Chapter Three

    Governance

  • Chapter Four

    Business Process Reengineering

  • Chapter Five

    Organizational Change Management

  • Chapter Six

    IT Acquisition

  • Chapter Seven

    Summary and Recommendations

  • Appendix A

    Planning Activities

  • Appendix B

    Implications for Program Assessment

Research conducted by

The research described in this report was sponsored by the United States Air Force and conducted by RAND Project AIR FORCE.

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