Implementation Issues In ERP Package Essay

Question:

Discuss about the Implementation Issues in ERP Package.

Answer:

Introduction

An ERP system can be defined as an information system which integrates all departments or aspects of a company or business. An ERP program can be considered to be a companywide information and facts program that integrates all facets of the enterprise. It claims one data bank, one particular application, plus a unified user interface over the overall organization. A complete firm under one roof top means from human, product, sales, accounting, production, distribution are securely built-in. These integration benefits organizations often: swift response to competitive challenges and industry prospects, more flexible product designs, decreased stock, and tightened supply chain back links. ERP systems including SAP/R3 consist of not simply the efficient components that "crunch" the numbers but the most innovative technology and methods. Implementing, such a program results in integration of the business to the reengineering of your organization practices as well as the overall "culture" in the business, all simultaneously (Abugabah and Sanzogni, 2010).

Implementation issues in ERP package

It is usually said that ERP application is all about people, not processes or technologies. A corporation goes through a major transformation, and the handling of this change needs to be well planned (coming from a tactical viewpoint) and diligently implemented. A lot of aspects of the company that utilized separately now really need to be securely integrated for ERP to be effective properly (Hanafizadeh and Ravasan 2011).

The top management should not only focus on funding of the project but also should involve in leading the change. An overview of effective ERP implementations indicates that effective change management is the most important factor. The top management’s intervention is required to make everybody come together and cooperate with each other and resolve the conflicts. Sometimes, the top management needs to manage cross -border issues also. The top management also has the responsibility of monitoring the projects and providing right direction to the team which is involved in implementation. The implementation of an ERP project is successful only when top management is committed to active support.

Reengineering of existing business processes

An ERP implementation means converting of the current business practices or process into the best business practices standards. The ERP programs are made on best standard practices of the industry. The first requirement of ERP implementation is reengineering the company’s current business practices. The company’s every practice should get converted into ERP standard. The ERP system can result in very high benefits and the high cost of a project depending on its implementation. Many times, a company’s business processes are so unique that it is difficult to reengineer them according to ERP standards. Since 1994 Hydro Agri faced the same issue of integrating the existing process with the ERP practices. Research evidence shows that none of the ERP packages can full fill hundred percent needs of the organization (Maditinos ,Chatzoudes and Tsairidis 2012). The best ERP package can also meet only up to seventy per cent needs of the organization. To conform to the ERP package if a company customizes its package, and then the implementation cost rises. The more the customization, the higher the implementation cost. Hence, it is advised to change the existing process as much as possible rather than customizing the ERP package.

Integration of whole organization units

Firms are applying ERP face kinds of issues with integration of knowledge throughout the companies. The key struggle is definitely the affect automation has in the company procedure. Automation alters the way in which businesses cope with the other person, from intending to buy to having to pay. Revealing and control over information and facts are major problems. Firms are concerned regarding how many details they should share with their buyers and providers and the ways to control the information. Suppliers will not want their rivals to see their rates or purchase volumes. Expressing excessive information and facts hurts their business. That is the standard worry. Regarding handling details, companies understand that it is sometimes complicated to manage anything. Businesses have to believe in their companions and must organize with one another within the chain. If someone hyperlink is gradual to provide information or access, the full chain suffers (Murphy 2012). The management should be concerned about the anxiety or stress an ERP system brings in an organization. For example, a product sales division could be unsatisfied that digital buying has work from the loop, when manufacturing may have to accommodate buying one week's notice to buy alterations and cater to those changes into its production orders.

Hiring and retaining Consultants

As the ERP market is growing fast, hence it is creating a shortage of skilled consultants who are competent enough. This shortage has widened so large that it is difficult to fill this gap of demand and supply in short period. The very first challenge is finding the right people and then maintaining these people in the system is another challenge. ERP implementation requires consultants with multiple skills and industry specific skills (Nash 2010). As the ERP market has started not long before, hence it is difficult to find the experienced people in different industries. The success of an ERP project depends on hiring and maintaining consultants in the system.

Time of Implementation

ERP packages are implemented in a modular way and not necessarily they need to be implemented at once. Hence, companies generally, follow phase-in implementation. Usually, implementation takes a longer time and large number of consultants. The implementation time depends on several factors. The main factor is customization. As the ERP systems are very general, hence they need to be customized. The more the customization, the more the implementation time and expertise are required (Rabaa'i, , Bandara and Gable 2009).

Costs of implementation

Although the price of standard ERP package is less than the in-house development of a package, the implementation cost can be more than five times of its package price. The implementation cost increased with the increase in customization. Also, the hiring cost also increases with customization. After hiring of the employees, they need to be trained which requires a huge amount of money. After training, it is challenging to retain them as the market demand is very high for trained and skilled consultants. To retain these employees, the company needs to spend a huge amount on extra benefits to them.

Picking Vendors

Picking out an ideal product or service is really important. Gartner Class has BuySmart system which has a lot more than 1700 inquiries to aid a business to go with a perfect ERP bundle. Best administration enter is essential when deciding on the right merchant. The top management must make inquiries regarding the vendor, for example, its market concentration (as an example, midsize or sizeable business), track record with clients, eyesight of the future, and with whom the owner is purposefully aligned. When the ERP software is made to function in diverse places, for the worldwide ERP rollout, companies should be worried about. Also, the control needs to be sure the ERP dealer has got the identical version of your software offered in the nations the corporation is implementing the device. Providers also might not have significant appearance inside the subsidiary places (Sabau et al. 2009). You should assess in the event the dealer staffers during these places are accessible and well-informed. Getting individuals from the outside could remedy the issue; nevertheless it would raise the costs of implementation if you find a scarcity of skilled staff.

Choosing the right employees

Organizations aiming to implement an ERP process must be happy to commit some of their greatest employees on the task for the profitable application. Frequently companies tend not to recognize the influence of deciding on the internal workers together with the proper ability set up. The importance of this factor should not be overemphasized. Internal resources of any firm should never just be professionals inside the company's procedures but also be aware of the best enterprise techniques in the market. Inner resources need to display the capability to be aware of the total requirement of your organization and really should play a huge role in leading the task initiatives within the proper route.

Training of Employees

Coaching and changing workers on ERP is a significant problem. People are probably the hidden costs of ERP implementation. Without correct education, about 30 pct to 40 % of top-series staff will struggle to take care of the requirements of your new system. The individuals at the key pad are actually creating crucial decisions about buying and selling -- crucial agreements from the organization. They must know the way their details influences most of the organization. Some of the selections front side-series men and women make by having an ERP system had been the responsibility of an administrator earlier. It is important for executives to know this transformation inside their job and encourage the front side-series people to be able to make those judgments their selves. Coaching workers on ERP are not really as easy as Stand out instruction in which you provide them with several weeks of training, place them on the job, plus they blunder their using of ERP techniques are extremely complicated and require rigorous coaching. It is sometimes complicated for instructors or consultants to pass on the understanding of the staff in the short time. Businesses should provide possibilities to increase the expertise of your employees by supplying instruction opportunities on the steady schedule to fulfill the transforming requirements of the business and employees (Zornada and Velkavrh 2010).

Boosting Morale of Personnel

The staff members concentrating on an ERP setup and devoting extended hours which include 7-day several weeks and in many cases holiday seasons. While the practical experience is useful for occupation growth, the strain of implementation along with regular job obligations could lower their morale speedily. Support and care from top management can boost the morale of the employees. Other methods, for example getting the workers on field trips, will help lessen the pressure and increase the morale (Shehab et al. 2011)

Similarities between the implementation of OilCO and ExploreCO

Both the companies understood the importance of planning phase. ERP implementation requires the lot of planning regarding resources, top management's commitment, and change adoption. They understood that planning phase is the major champion for the implementation phase.

Management support was the major CSF for installation in both the companies. Top management's commitment and having best personnel and retaining them were considered most crucial and challenging in both the organisations.

Least importance to the Enhancement phase in both the organizations. There was no look-back after implementation phase.

Differences between the implementation of OilCO and ExploreCO

CSFs were considered most important in the Exploreco case and were distributed all phases while for Olico only one CSF management support was considered important.

CSFs were considered very important in Exploreco than in Oilco. Exploreco thought 9 CSFs were important while Oilco considered four CSFs as important.

There was the difference in their importance of personnel and dates of the deliverable in the planning phase. Exploreco added two more CSFs by learning from parent company's experience. While Oilco adopted training of the employees in implementation.

Success of the project: I think the Oilco’s ERP implementation was a failure and Exploreco was a success.

Articulation of the CSFs: Yes, more or less it was an articulation of CSFs, particularly in a case of Exploreco.

The strategy of minimal customization: Yes, both the organizations adopted minimum customization. The implementation cost increased with the increase in customization. Also, the hiring cost also increases with customization. After hiring of the employees, they need to be trained which requires a huge amount of money. After training, it is challenging to retain them as the market demand is very high for trained and skilled consultants. To retain these employees, the company needs to spend a huge amount on extra benefits to them.

Recommendation

Implementation is the most crucial stage of ERP package. Hence, it should be well planned.

Strong support of the top management is the basic requirement of an ERP system’s implementation.

Reengineering of the existing processes should be done as much as possible to avoid huge customization cost of implementation

Integration should take place as much as possible

The top management should hire, train and retain the highly competent consultants.

The employee morale should be increased by care and concern for them,

The internal resources of the company should be used to get the right direction of implementation.

Conclusion

ERP systems are bringing a great change in the way companies produce goods and services. It has become a dream for the companies to successfully implement ERP packages. ERP system can result in several benefits for the companies. ERP packages are very huge and complicated. Their implementation requires a lot of planning and cost. This software affects the way business is conducted. Its implementation decides that it will result in benefits or a headache for a company. The main contribution is the top management in the successful implementation of an ERP package. Its implementation requires several changes in existing business processes as well as a huge outlay of capital. The other crucial factor is reengineering of the existing business practices. Once it is implemented it is very expensive and difficult to undo its implementation. The integration of all processes is also one of the most crucial and expensive factors to implement.

References

Abugabah, A., & Sanzogni, L. (2010). Enterprise resource planning (ERP) system in higher education: A literature review and implications. World Academy of Science, Engineering and Technology, 71

Hanafizadeh, P., & Ravasan, A. Z. (2011). A McKinsey 7S model-based framework for ERP readiness assessment. International Journal of Enterprise Information Systems, 7(4), 23.

Maditinos, D., Chatzoudes, D., & Tsairidis, C. (2012). Factors affecting ERP system implementation effectiveness. Journal of Enterprise Information Management, 25(1), 60-78.

Massachusetts Institute of Technology (MIT). (2009). Institute wide?Planning?Task?Force? IT?@?MIT?Working?Group? final report . Massachusetts Institute of Technology

Murphy, C. (2012). ERP: The once and future king of campus computing. Syllabus-Sunnyvale then Chatsworth-, 17(7), 29-30.

Nash, K. S. (2010). Companies don’t learn from previous IT snafus. Computerworld, 16(21), 32-33.

Rabaa'i, A. A., Bandara, W., & Gable, G. (2009). ERP systems in the higher education sector: A descriptive study. Proceedings of the 20th Australasian Conference on Information Systems, 456- 470.

Sabau, G., Munten, M., Bologa, A., Bologa, R., & Surcel, T. (2009). An evaluation framework for higher education ERP systems. WSEAS Transactions on Computers, 8(11), 1790-1799.

Shehab, E., Sharp, M., Supramaniam, L., & Spedding, T. A. (2011). Enterprise resource planning: Anintegrative review. Business Process Management Journal, 10(4), 359-386.

Zornada, L., & Velkavrh, T. B. (2010). Implementing ERP systems in higher education institutions. Information Technology Interfaces, 27th International Conference on, 307-313.

How to cite this essay: