Enterprise Resource Planning: Famous System Management Essay

Question:

Discuss about the Report for Enterprise Resource Planning of Famous System Management.

Answer:

Introduction

Systems of Enterprise Resource Planning are considered as one of the most famous systems of business management. It provides benefits on seamless communications and real-time capabilities for many companies. ERP is a type of business management software that is suited to many integrated applications. Different types of business activities are covered by the implementation of ERP software in companies such as marketing & sales, purchased & product planning, inventory management, finance, manufacturing or service delivery, and shipping & payment. The software of ERP works with the integration of separate systems together into a holistic approach of resources and information. It allows executives for optimizing systems, identifying trends, and taking decisions. ERP software has many uses in many sectors of businesses such as e-commerce, business intelligence, and enterprise asset management. Apart from that, many factors affect the working procedure of the enterprise resource planning software in companies. Implementation of ERP projects affects people, process, and culture in the entire organization. However, a number of challenges are faced by enterprises that can stumble on the execution of the systems in the organizational levels. Most of the organizations face the issue in selecting the proper type of software for implementation. Senior level managers must have a clear understanding of the type, scope and size of the ERP system. They do not have any clear idea about the proper method of selection of the best solution and the need of the system in a particular field of operations. the executives of the enterprises lack in decision-making procedure of selecting best ERP system for their agencies amongst the existing multitude of ERP systems available in the market. Most of the organizations faced this situation due to inappropriate strategic management. The report focuses on different people issues faced by different agencies around the world while implementation of ERP systems.

Discussion

Organizational Changes

ERP systems implementation is responsible for organizational changes. It can produce significant changes in the field of a conventional business model of enterprises and its daily practices. Implementation of ERP software in various fields of operations requires firms in order to re-engineer various business processes in a vital way, restricting of agencies, and redefining responsibilities of the position. Companies sometimes are not ready for accepting the organizational changes (Ahmad and Cuenca 2013). Strategic management department of the company should align with the IT department in order to formulate a strategy for the new software application in a particular project. Bolt-on solutions are a form of ERP software that are considered as afterthought. This system is not much expensive that is considered as a plus point for the small medium enterprise. The system helped the functionality of the existing software. Not only big companies use ERP software, small medium enterprises also use ERP systems in marketing and sales and other operations of businesses. There are many issues both in multinational and in local companies of different countries of the world. It is the responsibility of every company to change its goals of the projects accordingly with the passage of time (Al-Ghofaili and Al-Mashari 2014). Old methods of business operations will not result in increased and efficient result of the marketing and other required business operations. Unsuccessful implementation can result in blunder in the results of the project. A case study of a Chinese company is explained below.

ANC Electronics is a China based electronics company that is an independent manufacturer, developer and seller of various equipment of the uninterruptable power supply. the company belongs to small medium enterprises. In the year of 2000, ANC Electronics has improved its information management tool in its few computers. In the operations of inventory management, the company is moving forward to use ERP systems that are developed by two IT companies of China namely Kingdee and Vanward (Amid et al. 2012). The ERP systems initially turned out to be very fruitful in the beginning. It reflects a growth of the business. However, another department of ANC Electronics like marketing and still did not have adopted the benefits of the ERP systems. The company is a leading in its field of industries. Implementation of ERP software in the inventory management leads in improved production as well as the supply of its products into distribution points. The marketing goals of the company are not up to date with the organizational goals (Aslan et al. 2015). Hence, there is a drastic fall of sale if the products of ANC Electronics in the market. The company is clueless in finding the reason of the drastic fall in sales at initial level due to lack of organizational changes.

ERP Implementation goals

Application of ERP system in organizations can lead to both positive impacts and negative impacts. Goals and objectives of ERP implementation can be a major hindrance in the growth of revenue and performance of the enterprise as a whole. Enterprises witness failure in application of ERP software due to lack of well-defined objectives in the projects. Project management is mainly practiced in companies of construction, software, telecommunication and much more (Bhati and Trivedi 2016). Nowadays traditional ERP solutions are getting older in the market. It is replaced by cloud ERP systems. Companies are investing in Cloud ERP solutions rather than traditional ERP. For instance, SAP Business ByDesign is a popular cloud ERP solutions used by many companies. However, cloud ERP is still limited in certain places. The changed goals of the new project must be aligned with the other related departments of the project. One project is dependent on many other operational fields. IT project can depend on marketing department of the company. Goals of the ERP software application should be communicated in both the departments. However, application of ERP systems is not only limited to the project management sector, but also in the general work of the day-to-day operations of businesses. Improper goals in projects lead to failure of projects in a stipulated time. Extensive customization is also a cause of failure of ERP implementation. It can lead to many misinterpretations of issues. In many cases, organizations are not provided with the actually packaged solution of the ERP system (Bradford 2014). Decision makers of enterprises often fail to take the right decision in choosing companies that are associated with selling ERP software to the companies.

Nestle USA initially faced few challenges in the implementation of ERP software. The company is lacked unity. It did not act as a single company. The ERP implementation goal of Nestle USA is to increase the brand awareness and transforming the separate brands into a single brand. The parent company of Nestle has a strategy of implementing ERP systems to unify the company. The ERP project is started by Nestle that is known as Business Excellence through Systems Technology (Choi et al. 2013). Unification is the main motive behind the technological application. However, the USA subsidiary of Nestle is not aware of the fact about the goals of new software implementation. Each Nestle branch in the United States used to work independently. They did not align themselves with the main strategic goals of the parent company of Nestle. In terms of the software application, all locations of USA are reluctant about it. They did not a response to the orders of the headquarters (Chou et al. 2014). It results in difficulty in ERP implementation in the respective offices of Nestle in USA locations. The results forecasted by the headquarter does not match with the actual result.

Resistance to change

Cultural resistance is a vital challenge in the starting of a new process, policies in a certain company. The employees of organizations are considered as assets of the firm. Firms must focus on the needs and benefits of the people associated with the company. Cultural resistance along with organizational resistance causes hindrance in the productivity of the particular project or organization as a whole. Members of a certain project or workers in a particular department of operations are accustomed to the old format of working procedures (Galliers and Leidner 2014). Few employees are comfortable in working with old ERP systems. They feel very odd in adopting new changes in the new systems of technology in the project. Some strategic business units are irresistible to adopt changes in the field of technology and other employee’s perspectives. Transfer of employees from one branch to another due to new technological implementation sometimes not acceptable by them. It can lead to the lower performance of the individual and enterprise as a whole. Some SBUs faced difficulties in switching new ERP systems in a particular project (Galy and Sauceda 2014). They may feel comfortable in using old ERP systems. In this scenario, two types of threats are included such as replacement of known process with an unknown technological process, taken away authority from decision-making activities regarding the project.

However, there are cultural aspects that hinder people in the adaptation of new system in the organization. The mindsets of some employees in many countries are not so much open to accept new things. Many societies are indulgent and restrained in nature. Restrained societies are characterized by more reluctant in adopting new technologies and policies in their life. However, countries that have weak uncertainty avoidance are more comfortable with new ideas and ambiguity (Helo et al. 2014). On the other hand, strong uncertainty avoidance societies are not ready for new challenges in the operations.

Manufacturers of different parts of the world, especially in China face resistance to change in ERP implementation. For instance, Dongfeng Motor Corporation is an automobile parts and automobile manufacturing company that faces cultural resistances in the manufacturing sites of the company. The workers in the manufacturing facilities are comfortable in the old ERP systems. Hence, they are unwilling to accept any type of new systems in the technological aspects. The new system is focused on the fast production level on the automobile parts in the factory sites (Kanellou and Spathis 2013). On the contrary, the old systems are characterized by a low rate of production when compared to the new ERP systems. In this situation, Hosted ERP solutions can be used. It is an outsource model where companies can outsource their cloud computing to others but they can manage their systems from their own offices. for instance, SAP Hana is an Adobe Systems that belong to the category of Hosted ERP.

Improper communication

Due to the presence of different stakeholders, organizations cannot follow a single most effective mechanism in order to communicate with the employees and suppliers. For instance, email is a great mode of communication of passing messages and information to every worker of the company. Nevertheless, when it comes to pass the information to a certain group in a detailed manner then email is not a good option (Sun et al. 2015). It is the responsibility of the supervisor to maintain the effective mode of communication to its team or subordinates. Apart from email, there are a number of modes such as face-to-face meeting, conference calls, intranet portals, standard training, and country-specific portals (Katerattanakul et al. 2014). Stakeholders are responsible for the selection of different measures of ERP implementation that sometimes create a confusion among the IT department and the other departments. It occurs due to lack of communication.

Apart from the communication process, sometimes organizations do not recruit right candidates for a particular project in the starting phase. ERP implementation in a project can bring immense benefits to the results of it. Nevertheless, if they are not properly handled then they can bring negative results too. For instance, in many organizations, executives are focused on getting approval from the senior for a change in the technological aspects of a project. They are not focused on gathering feedbacks from the other team members of the project (Kilic et al. 2014). It results in a delay of the delivery of the project within the predefined deadline.

NetApp Australia, an Australian IT company faced some issues in the communication of its ERP implementation in a project. Initiatives of ERP systems require developed tailored communications for some people involved in it. These persons usually are not aware of the culture of the organization as well as the goals of the new systems of ERP in the running project. There is a necessity of gaining an understanding of the culture and client’s requirement related to the project. As the company deals with companies in different countries, hence the lack of research in ERP systems and its implementation will lead to less productivity (Kilic et al. 2015). The supervisor or the project manager must communicate with the team workers. Any slip of technical jargon will deviate the team from the actual motives of the project. Lack of communication in the group will not only lead to lower productivity but also it is responsible for the bad relationship with the clients of NetApp. In future, it will result in loss of business.

Lack of proper training approach

Flexibility is an issue that is considered as a most vital people issue in the application of various systems of ERP in the company. If the ERP system is not flexible in nature, then it will be more difficult for the members of the project to adapt to the new changes in the project. Flexibility will help in formulating proper training module to the employees associated with the project. It is required to re-engineer steps that are required to perform several business tasks and providing retraining to the business partners and employees (Mamoghli et al. 2015). Reluctant people will face the severe issue in adapting change with the new processes of ERP systems. Resistance is the cause of delay in the project and lower productivity of the organization as a whole.

The Proper training approach is considered as the most vital strategic tool for engaging the workers into the new systems of technology. To implement a new system of ERP in the organization, initially, a lot of time is required for mapping up the current situation with the future changes of the work. It helps in understanding the technical goals along with the organizational goals. It can be frustrating to an end user at the beginning. However, it is required to provide an updated training to the project members and different people associated with it. Training indeed provided an opportunity to enhance the skills of the team members while performing the dearth of training will lead to mistakes of people of the company (Marsh et al. 2014). Resistant employees are prone to occur more mistakes in their work as they are more comfortable to work in the old patterns of ERP software. Infotech Private Limited is a small medium enterprise that uses various ERP in the customer relation management of the company. Apart from these departments, the company has previously used many ERP systems in the different operational department of the company (McKinney and Kroenke 2015). It is noticed that the company has faced many issues in terms of training and development. Due to lack of communication, the training module of the new system of ERP is formulated in a different way that does not match the exact requirements of the technology. In the initial phase, the company has not recognized the wrong training method. However, when the project member participated in the new form of ERP systems then they face severe issues in handling machinery and technologies of the project (Monk and Wagner 2012).

Technical issues and custom development

There is wide range of technical problems that are anticipated by many researchers while implementation of ERP systems in different areas of business operations and in projects. The risks related to the technology can cause a delay in the progress of work. It undermines the success of a project in the field of ERP implementation. Issues of technological infrastructures in the field of ERP system are:

Insufficient and inappropriate transfer of knowledge from the integrator of the system to the long-term group.

Service related and network related issues that are related to outsourcing and upgrading data centers (Parr et al. 2013).

Resources allocated for the wrong technologies in ERP may lead to blunder in the productivity of the project. Wrong technology is the result of lack of extensive market research and lack of decision-making of the senior executives of the company.

Insufficient bandwidth or stressed network in the remote areas is the result of inadequate stress and volume of the infrastructure. Remote areas sometimes do not have access to technological developments. But companies do have to run some of their projects in the rural area to accomplish their work (Powell et al. 2013).

Change management problems can occur due to technical reasons also. Ineffective technical implementation rises to miscommunication between the employees as well as the project managers.

Unproven or inadequate business continuity and lack of recovery plan can cause failure in application of the software in the ERP systems of a company. Project managers and IT managers must formulate a strong backup plan for the risks associated with the technologies of ERP systems. Inefficient risk mitigation plan hinders the effectiveness of performance of the systems of ERP in the different operations department (Saleh Shatat. and Mohamed Udin 2012).

Regardless of best efforts of various companies while implementing ERP manually with negligible customization. Business always requires customized version of various software including ERP systems. There are many instances of customization of business operations such as conversion programs, interface, forms, code extension, etc. Usually, delays in the project are the result of the delay in completion of custom development. For instance, mostly construction companies and software companies face these issues. This leads to the bad relation with the clients. People associated with the companies also suffer bad impression from foreign clients. Delay in documentation requirements is the cause failure of technical aspects. However, consultants sometimes may not understand the problems of these outsourcing companies as they are focused only on the work or the result (Stair and Reynolds 2013).

Conclusion

The report describes various problems and issues that are faced by companies regardless of the sector. Apart from that, there are issues that are related to people in the implementation of ERP systems in the companies. Issues related to change management and organizational changes; technological dearth, improper training, improper communication, etc. are explained in a detailed manner. There are many instances of companies that are explained in the report describing their issues of people in the implementation of ERP software in their companies. Implementation of ERP in firms must be treated as business driven initiatives. It will have a long-lasting impact on the working procedure of agencies. The proper decision-making of executives associated with IT and software application is considered as the integral of the success of companies. Cloud computing along with other technologies that increase production efficiency is in demand in the market. ERP systems come under this category. However, there is much mitigation of the problems of the ERP system implementation in agencies. The statement present in the case study is focused on people issues of ERP systems in information and technology. Projects of Enterprise Resource Planning are time-consuming, difficult and potentially perilous to organizations. Failure of ERP implementation incurs a huge loss to companies. In many cases, these situation leads to huge losses for firms. There are many entrepreneurs that support ERP in their business firms despite having chances of failure in different phases.

References

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