Enterprise Resource Planning Recommendations Essay

Question:

Discuss about the Enterprise Resource Planning Recommendations.

Answer:

Introduction

The enterprise resource planning software is a type of business enterprise application software which is used regularly by the large organizations. This is specialized software which is used by the professionals so that they are able to customize as well as analyze data needed for their day to day functioning (Leon 2014). The ERP systems also help in the development of product as well as marketing. There are several ERP systems used by the organizations such as material purchasing, product planning, inventory control, marketing, accounting, HR, finance and others (Leon 2014). ERP is being referred to as one of the most popular business management software which comprises of integrated software applications (Chandrakumar and Parthasarathy 2016). The organization would be able to store, collect and interpret the data from the main business activities. The tracking of the business resources such as production capacity, raw materials and cash can be controlled by the ERP system (Leon 2014). This report would discuss the concept of ERP and the journey of ERP from an organizational point of view. The organizational benefits from the ERP system would be explored and the variations in the benefits of the ERP are also discussed. The case examples would also be provided which would demonstrate the actual experiences of the companies regarding the adoption of ERP. The report aims to discover the different stages of the ERP journey and the different levels of benefits obtained. It also aims to discuss the concerned topic- “Going Live Is Not the End of the ERP Journey” in a detailed manner.

The ERP solutions are one of the most vital tools for an organization which helps them to increase the visibility of the organization and important key intelligence can be obtained from the value chain (Bhati and Trivedi 2016). It is important for providing management the requiredinformation so that they would be able to make appropriate decisions. The ERP solutions are scalable, adaptable, affordable, rapid deployment and easily customizable within the enterprise limits. The different companies have different needs for ERP and must ensure that the ERP solutions would be highly customizable (Bhati and Trivedi 2016). The maximization of the business productivity would rely on customizing some tasks and customize the tasks so that they meet the standard business practices (Hair 2015). The correct mixture of the tasks is dependent on the individual businesses, maturity of business processes and the regulatory environment. However, the cloud ERP solutions lack the so called “complete flexibility”. There is an increased implementation of the cloud ERP solutions which are cost effective as well as convenient in terms of maintenance as well as upgrades (Gupta Seetharaman and Raj 2013). They can also be adaptable across several geographical locations. The selection of the best ERP solution is the first and foremost step for ensuring the successful implementation of the ERP software (Bhati and Trivedi 2016). The company can either create custom made software or make purchases for “on premise ERP software” (Bradford 2014). The custom-made software would involve great degree of detail and depend on the in-house expertise of the IT team. The on premise “ERP software” can be installed on the servers of the computers (Bhati and Trivedi 2016). There are past incidents when outdated premise software was updated. It is very important to install the latest versions of the ERP systems and it is important to implement a system deployment option which would be easy to update. It must also have some custom featureswhich would make the software a successful one. A cloud based ERP system is also being increasingly adopted by the organizations which subsequently reduce the investments in servers and IT hardware (Bhati and Trivedi 2016). The cloud based ERP solutions such as NetSuite are faster and they are convenient to deploy than the traditional ERP packages (Romanov and Varfolomeeva 2013). The maintenance of these types of software is easy since they get updated once connected to the online network. The integrations and the customizations go through automatic upgrades in these kinds of ERP systems.

Stages in ERP systems implementation

The ERP system and its implementation in an organizational scenario is a complex entity. There can be a great degree of confusion, frustration and cost factor involved in the implementation of the ERP system (Bhati and Trivedi 2016). The stages of the ERP system are enumerated as below-

  • Understanding the system- It is important to understand the sole purpose of an ERP system which would make the process of implementation more successful. It is not correct to expect that the ERP system is the ultimate solution for solving the business problems (Bhati and Trivedi 2016). On the other hand, ERP is a tool which is meant for improving the business scenario and it depends on the applicability of the tool (Lohrmann and Reichert 2016). The setting of the ERP goals is one of the foremost steps. It is also essential for determining the product as well as the concerned vendor. It is also important to understand the current processes and devise suitable goal for the ERP project (Bhati and Trivedi 2016).
  • Collaboration- The next step in the process is determining the correct vendor and the right ERP product that would be suitable for the organization (May Dhillon and Caldeira 2013). This step must be done after market survey of the vendors, customers and competitors. The vendor should be selected based on the suitability in fulfilling the ERP goals. The relationship between the vendor and the customer also needs to be determined.
  • Budget control- The real cost identification of the ERP system is important as it would lead to smooth implementation of the ERP process. The various costs may include the hardware costs, training costs, organizational change management costs and the software costs (Kilic Zaim and Delen 2014). The additional costs may also include third party software costs as well as other ERP software costs.
  • Resource allocation- The resource allocation team is responsible for the implementation of the ERP project. It is important to recruit dedicated project manager so that the project is under track and the budget as well as resources in the right direction (Bhati and Trivedi 2016). The key members of the team should take ownership of their respective projects with the help of involving several departments (Becker Kugeler and Rosemann 2013). The employees must display a positive change towards the change management process and there should be sufficient strategies for resistance of change.
  • Training and understanding- The user acceptance is an important criteria of the training as well as understanding of the ERP process. There should be sufficient methods of training during the implementation phase (Bhati and Trivedi 2016). The redundant system based processes should be integrated with business as well as software viewpoints. These things should be incorporated in the training module of the ERP software (Bhati and Trivedi 2016). It can be done in different formats such as train the trainer, classroom training and the initial user trainings. There should be individual access to the test systems so that the users are able to follow the individual test scenarios.
  • Data migration-This process is concerned with the decision of the concerned business areas that needs to be implemented while formulating the ERP systems. There can be separate SQL database or software for cross analysis (Harris and Schultz 2016). The data conversions should be done carefully especially for the sensitive data that needs to be taken care of (Harris and Schultz 2016). These projects can run simultaneously with the ERP implementation process so that the user acceptance training can be done on the migrated data.
  • Go Live- This is the usually considered as the final stage of the ERP implementation project in which the users actually start using the implemented ERP system (Harris and Schultz 2016).

Never ending nature of ERP journey (Beyond Go-Live period)

The process of ERP implementation is a never ending journey in which the business should take constant initiative to improve the business process. The go live period is not the end of the ERP process journey (Powell et al. 2013). The go live period is actually the start of the next phase of the project journey. There would have issues, requirements, modifications, suggestions and other requirements for the assessing the critical business paths (Powell et al. 2013). The original business goals are assessed in this stage and the level of fulfillment of the goals by using the ERP system is being established. The primary reasons of change and the good sides of the new software should be enumerated well. The implementation of the new system and the way the business uses the software to fulfill the business needs need to be worked on. The cost of implementation of the new ERP system and the related benefits needs to be assessed (Powell et al. 2013). The business should evaluate if it has shown sufficient progress during the entire life cycle of the ERP project (Monk and Wagner 2012). It is very important to move forward in the go live phase. The belief that the go live phase is the end of the ERP journey is a misconception, which should be avoided at any cost. The lack of learning as well as initiatives in the go live phase may cause the business to become stagnant (Monk and Wagner 2012). It is important for the system to be constantly modified, reviewed and the processes should be constantly assessed for purpose and suitability. The possible gains from necessary changes should be identified and implemented well (Monk and Wagner 2012). If the business stops all the effort of instilling necessary changes, then it would be stagnant in a couple of years (Monk and Wagner 2012). This is so the incumbent system would not fulfill the business purposes. The business would need new software as the old software would not conceive its full potential (Monk and Wagner 2012). It is said that there are no easy solution for the success of the ERP implementation. The go live phase should be used as a platform for the future growth of the business.

Potential benefits of each stage

There are potential benefits of each step in the ERP software implementation. The benefits of the ERP steps would include-

Understanding the system- This would help the IT person to determine the system requirements and incorporate necessary components in the ERP software (Monk and Wagner 2012).

Collaboration- This step would foster the inter dependency of the various components of the ERP system and would also allow the selection of the right vendor (Monk and Wagner 2012).

Budget control- It is essential to control the cost components of the ERP software so that the overall software implementation cost is being controlled to a certain extent (Monk and Wagner 2012).

Resource allocation- It is important to allocate required resources in the ERP stages of implementation so that each step has access to the required resources (Chang et al. 2015).

Training and understanding- The training of the users who would actually use the system is important which is important for the real success of the ERP system.

Data migration- It is an important component of the ERP implementation process as it would lead to the savings as well as retrieval of the crucial organizational data (Csordas et al. 2013). It is also an important step in the integration of the different software components of the business.

Go live- This step is the final step of the ERP implementation model in which the users would actually start to use the new system (Bloch Blumberg and Laartz 2012). It would increase the operation efficiency, present integrated information, increased reporting services, enhanced security components and others.

The potential benefits of the ERP software implementation include an increase in the efficiency of the systems which implies that there is no need to manually enter the information in the system. The software is able to perform integrated information base in which all the information is located in a single location. The ERP software makes it easier to report important information and make customization possible. The users would be able to perform their own reports without the need to rely on IT. The ERP system would also provide a high degree of security to the information of the organization as well as information of the organization.

Barriers for ERP implementation

The companies face several challenges when passing through the each stages of the ERP implementation model (Kosalge and Ritz 2015). Some of the challenges faced by the companies in their ERP implementation process are described below-

  • Poor project management skills- The project is a complex process which requires supervision at step by step level (Kosalge and Ritz 2015). The inability to address the challenges faced at the project level may hinder the overall success of the ERP software.
  • Lack of integration- The IT personnel are confused regarding the required components that should be incorporated in the ERP process (Kosalge and Ritz 2015). The IT specialist is often confused regarding the actual purpose of the ERP software- gain competitive advantage and how it may hinder the workflow of the organization. In large organizations, it may become more complicated (Kosalge and Ritz 2015).
  • Customization- This is the most possible challenge when the company is outsourcing an ERP solution. The solution may not be a packages solution and it may be merely a framework in which a certain degree of customization is needed (Mijac Picek and Stapic 2013). The order workflows are not clear and hence it is difficult to reach the next step.
  • Flexibility challenges- There are instances when the business is forced to change their processes in order to accommodate the ERP model (Teittinen Pellinen and Jarvenpaa 2013). This is the reason when it becomes difficult to accommodate necessary or optional changes in each step of the implementation framework (Kosalge and Ritz 2015).

Case study examples

The multinational organizations engage in the implementation of the ERP software so as to improve the business efficiency. Kraft has implemented the SAP ERP system so that the company has reduced operational costs (Ward and Peppard 2016). The companies benefited from the ERP system and reduce the daily expenses successfully. Cadbury has been associated with the savings and the company witnessed fast paced growth due to the installation of the software (Cadbury.co.uk (2016). The ERP system added efficiency to the business system as well as increase in the organizational productivity (Zaheer and Arslan 2016). The ERP system was integrated with the warehouse management system and the company has strategically used the company strengths in formulating the new ERP product (Kosalge and Ritz 2015). It is true that the initial implementation took time however, the subsequent implementation were done in less time. This caused the company a huge cost savings concerning the ERP implementation. The ERP change was an internal process change which was required for a long period of time (Kosalge and Ritz 2015). The employees displayed minimal resistance to change and this process was not advertised in the open market. Cadbury built a robust feedback system which was implemented to evaluate the changes in the system and the implementation process was cross functional in nature.

LG Electronics

LG Electronics which is considered to be one of the largest companies in the mobile and electronics communication has implemented the “Oracle E-Business suite” (Lg.com 2016). It has implemented innovation in areas such as home appliances, mobile communications, digital media and others. The primary purpose of this system is to integrate the business units of the company under a single “Global Single Instance ERP system” (Lg.com 2016). The company gained benefits from the new system; however, they were different from that of Cadbury’s. The company was able to reduce the time taken to perform the core operational activities. They were also able to exchange information with the key business units. The company has also found it easier to do the global operations as their earlier systems were replaced by a single ERP system and single database (Lg.com 2016). The company was able to increase the business productivity and the make the business process more flexible. They were able to track the global inventory, marketing and sales cost. The benefits of ERP for one company may be different with that of other company (Lg.com 2016).

Comparison of Cadbury and LG Electronics

The comparison of the ERP system of LG Electronics and Cadbury are being illustrated in the below table-

Benefits

Cadbury

LG Electronics

Reduce the daily expenses

Present

Absent

Operational efficiency

Present

Absent

Huge cost savings

Present

Absent

Robust feedback system

Present

Absent

Integrate the business units

Absent

Present

Global operations efficiency

Absent

Present

Time efficiency

Absent

Present

Fig: Comparison of Cadbury and LG Electronics

Source: Created by author

Conclusion

The enterprise resource planning software is one of the most commonly used software in the modern business scenarios in which the organizations derive great degree of varying benefits. The same ERP software has certain benefits for one organization and another organization can derive a different set of benefits from it. This report discussed the ERP journey which is observed in a majority of the organizations. The different stages of the ERP implementation are discussed in which emphasis being laid on the actual tasks is carried out in each step. The focus has been given on the phases beyond the go-live period and the never ending journey of the ERP journey. The potential benefits of the stages of the ERP implementation phases are carried out. The potential barriers of the companies after the implementation of the ERP software system are discussed. The case study examples are used for understanding the actual ERP process followed by the real organizations. The examples of Cadbury and LG Electronics are being used for demonstrating the real implementation of the ERP processes. A comparison has been done on the benefits associated with both the companies. This report would give an in-depth idea regarding the benefits associated with the ERP process and the ERP journey concerning the organizations.

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