Integration Of Different Business Processes Essay

Question:

Discuss About The Integration Of Different Business Processes?

Answer:

Introduction

ERP (Enterprise Resource Planning) is a system management methodology which involves the integration of different business processes with the help of software and technology. The business activities encompassed in ERP system are product planning, production management, manufacturing, marketing and raw material management. ERP system refers to the category of business management software which includes a combination of application for the collection, storage, management and interpretation of data (Mahdavian, Wingreen & Ghiichlee, 2016).

In the present times, it is almost necessary to implement ERP system within an organization. It is useful in providing integrated and updated information to the users with the help of different databases which are managed by the database management system of a business enterprise. The ERP system must be used for the integration of different information related processes such as collection, storage and interpretation of business activities. It supports different categories of business functions and investment. It also facilitates error-free transactions, production and is targeted at increasing the overall organizational efficiency. It uses different hardware and network configurations ad use information and database repository. The ERP system is characterized by different factors, namely, an integrated system, operation in real time, common database to support all the applications (Al-Mashari & Al-Mudimigh, 2003). It also involves different functional areas, such as financial accounting, human resources, management accounting and order processing and supply chain management. However, there are significant challenges in the application of ERP system. The technological infrastructure of the company must be capable of incorporating the system smoothly within the organization. Other than that, there are also several people issues as employees of the organization resist any major change within the organization. The current report will examine the major costs and issues associated with ERP implementation in a business organization. The primary focus of the report will be to examine the issues related to human resources, which includes issues pertaining to gathering business requirements, assuring the availability of skilled resources, acceptance of the project by the team and obtaining support from different team members (Beatty & Williams, 2006). The report will also discuss the requirement of information literacy for the managers and different challenges in the employment of ERP system with the help of different case studies.

People Requirement in Implementation of ERP system

Enterprise Resource Planning (ERP) is a common business management and integration system which provides immediate capabilities and communication possibilities to the employees in large business organizations. It allows different sections of an organization which have different needs to communicate with each other by accumulating information in the same system. It organizes information flow between different departments of the organization by creating a single transaction system. It can create interoperability within the organization which is difficult and expensive to establish with a standalone single system. It is an integral part of business intelligence system of an organization wherein the managers have an integrated view of different business processes. There has been a continuous technological development in the field of ERP system which has made it possible to integrate best practices with the changing business needs of the organization. Although, ERP systems have been widely accepted and there has been significant growth, several challenges are yet encountered by the organizations while implementing the system. The primary challenge is the perceived benefit of ERP system. The multinational companies have successfully implemented ERP system; however, there are a number of small or middle level companies wherein ERP implementation has not been successful. It is common that they have delayed their schedule and exceeded their initial budget. The ERP system implementation has also failed initial targets and outcomes of the organization. However, research regarding the failure of ERP system has stated that most of the failures were not caused by the software, but by the complexity of the software and the inability of the employees to adapt to the changes caused by software. According to Seo (2013), unlike other information system, the major challenge with ERP system is not technology related but people related such as resistance to change issues in organization culture, business processes and project mismanagement. These issues arise due to different factors such as inappropriate skill mix, project handling, user involvement, and technology planning and design of the system (Berchet & Habchi, 2005).

The ERP implementation causes major operation changes within the organization; therefore, it requires involvement of management of different people within the organization who may resolve conflicts which may occur with the implementation of the system. The management staff should be committed to assist in bringing change within the organization. They should equip the employees using different functions of ERP with clear communication channels. Another major human resource challenge is the absence of user training which intensifies the risk of confusion, inaccuracy and eventually reducing the credibility of the system. It is also important that the organization should have excellent project handling system so that ERP system can be successfully implemented within the organization. The project should be developed with the help of clear guidelines and project objectives. A work plan should be developed for the resource allocation in the ERP system implementation. Team composition is also crucial in ERP implementation as it integrates different business functions in a single system which leads to the development of a complex structure. If the project team is unable to comprehend the changes in the organization structure, strategy and processes of ERP implementation, it will negatively impact on the competitive advantage of the organization(Pollock & Cornford, 2004).

Case Study analysis for Challenges in System Implementation

There are several cases in which ERP implementation has failed to succeed or encountered different human resource challenges. The ERP implementation is considered a failure if it fails to realize its implementation cost or its initial objectives. Several higher education institutions have also implemented ERP system in their management and to improve institutional business processes. Higher Education Institutions spend more than 5 billion USD in ERP investment. The ERP vendors have also made significant changes in ERP system so that it can address the market needs of the new customers. The examples of this product are ORACLE and SAP. Although in spite of significant changes introduced in the ERP system, the implementation has failed to meet the expected outcomes for the organization. In universities and higher level institutions, it can raise new organization issues related to identity or perceived uniqueness of the university (Chang, Cheung, Cheng & Yeung, 2008). It is suggested that Universities have unique structures and decision-making process which makes ERP system inappropriate for them. The organization culture is also crucial in implementation of ERP system (Yusuf, Gunasekaran & Abthorpe, 2004). The ERP system forces an organization to take a business perspective towards education which includes changes in managerial language and methods. Therefore, implementation of ERP system indicates a major challenge for the organization as it does not include the implementation of a new management system but change in the overall organization culture. In universities, two types of authorities are present, namely, administrative authority and academic authority. With ERP implementation, administrative authority is reinforced as the model of governance which may impact adversely on the operations of the organization (Hong & Kim, 2002).

It can be critiqued that ERP system is generic solution of the corporate organizations which create risks for universities. The higher education institutions limit their choice and thee adoption of generic solution within the organization. The ERP system has dynamic complexity which makes them difficult to integrate with the management and staff in Universities. It is also possible that at times, the university dos not possess the management or staff members who are familiar with different tasks of ERP system (Mandal & Gunasekaran, 2003).

The primary characteristics of ERP system is standardization and integration which may limit the flexibility of the University operations. If a business organization is losing its flexibility it can result in staff resistance. Eventually, it will lead the staff members to carry out their previous processes and increase information gap and create hindrance in the adoption of new system. Massachusetts Institute of Technology (MIT) also implemented ERP system in 1990s. The organization has a total staff of 8,000 students and has 10,000 students in various streams. The organization has significant operating budget problems as the government allocation to research and development has declined. It has increased the tuition fees and enrollment barriers for a large number of students. The administrative process is also complex in the organization which results in numerous errors, repetitive work and wastage of efforts. As a result, the company tries to implement ERP system to increase the efficiency of organization management (Buonanno, Faverio, Pigni, Ravarini, Sciuto & Tagliavini, 2005). There were several issues in the management of the organization such as there was lack of experience in leadership. Although the leadership was committed to the success of system, there was no second plan if the implementation of the system fails. The leaders do not have experience in data system design and the implementation of new system which resulted in setbacks and delay in the overall project. Lack of experience also caused delay in decision-making regarding the project. Another concern with the employment of the system was the customization of the system according to the requirements of the university. There was significant mismatch between the processes of the University and the offerings of the vendor. In the University, there are different departments and each of them has its own organization policies and processes which have an autonomous way of managing themselves (Akkermans, & van Helden, 2002). Therefore, it was difficult to implement a single standardized process in which it is accepted by all the departments of the organization. There was also a fundamental challenge of the lack of understanding regarding different business operations of the organization. The ERP system also requires increasing the acceptance of new system and training staff members for the new project. It is important for the organization to customize the software so that it can become suitable for unique needs of the organization. As a result of these challenges, there were significant issues in the project outcome such as delay in the completion of the project, increased workload and limited benefits of the system for the University (Gargeya & Brady, 2005).

Another case study of Global Engineering Company (ENGCO) has been taken to examine the issues related to ERP implementation in engineering organizations. ENGCO is engineering company related to engineering, procurement and construction services. The business operations of EPC are different as the manufacturing is conducted according to orders placed beforehand. Therefore, the proper implementation of the project is dependent upon the ability of the project managers to manage each order of the organization efficiently (Yusuf, Gunasekaran, & Abthorpe, 2004).

The ERP initiative was implemented in the organization with the recruitment of new CEO. It was realized that the organization can improve its capabilities by increasing its IT capabilities. The organization should be committed to the development of a business system which can support different business functions such as sales, finance, cost control and other related processes. The ERP system will result in standardization of processes and increase the business capacity of the organization (Somers & Nelson, 2001).

In the implementation of ERP system, the company planned to use Work Breakdown Structure wherein the project is broken down according to its cost structure. In the ERP system, work breakdown structure will be used for both implementation and scheduling of the task. However, it is difficult to integrate the principles of ERP with work breakdown structure (Seo, 2013).

It was planned that the whole system will be implemented within the period of six months. However, in this tight schedule, the project managers were not having the time to prepare the employees to operate the new system. Once system designing was completed, the organization should made detailed online manuals and distributed them in the employee internet system. The system also offered to develop training sessions for the employees to make them familiar with the system (Mandal & Gunasekaran, 2003).

The implementation of ERP system within the organization resulted in positive outcomes for the organization. Therefore, it can be critiqued that efficient project management practices resulted in the successful implementation of ERP system within the organization. ENGCO has established a work breakdown structure in various departments ranging from sales and distribution, to material management and cost structure. This method assisted the project managers of the organization to build the system capability and complete all the projects within the specified time limit. It also improved the system capability regarding the risk management and enhanced accuracy of the project estimate system (Al-Mashari & Al-Mudimigh, 2003). The ERP system should also focus on the development of improved communication process. The organization can benefit a lot with improved communication process. An electronic approval system can be implemented in the organization which can improve the communication system in the organization.

Information Literacy for Management and Success of Implementation

The application of ERP system is dependent upon the information literacy of the managers and the success of implementing SAP system. The success of the implementation is directly correlated with the human resource, their commitment, skills and training. It can also build competitive advantage of the organization. The human resource management is a strategic business function of the organization and it is important to learning opportunities to them for the success of ERP implementation. According to Mahdavian, Wingreen & Ghlichlee (2016), the competency of the team is an important factor in proper ERP implementation. Diversified teams are commonly used by the business organizations to increase their efficiency and effectiveness. They are important in creating competency, skills, team and team managers. A high-performance team has interchangeable and complementary skills, a sense of purpose, ambition and goals. In ERP implementation, the success of the project is dependent upon the knowledge and the skills of the users. A cross-functional team should be developed which draws upon the knowledge and skills in variety of areas which can enhance the implementation and the use of the system (Sheu,Chae, & Yang, 2004).

Other than that, the key users also impact on the success of ERP system. In ERP implementation, different people play different roles such as consultants, project sponsor, project manager and IT expert. The key users are the most significant aspect in the success of the system application. There are two active participants in ERP implementation, internal consultants and the external consultants (Sheu, Chae & Yang, 2004). The internal consultants comprises of management, MIS staff and the key users. The key users have a significant role in the success of a project. The external consultants identify the needs of the system and adapt it according to peculiar needs of the organization. The end users, also called key users have a crucial role in support activities related to business application (Pollock & Cornford, 2004).

Knowledge transfer is another significant aspect in ERP system. The implementation professionals and different employees implement the ERP knowledge and business operations knowledge and these employees can communicate with each other to increase their efficiency and boost knowledge transfer. Moreover, they are responsible to share knowledge with the end users to share their knowledge regarding the ERP implementation process. The key users should work as trainers, help-desk, advisors and educators.

Conclusion

Summing up the essay, it can be concluded that the ERP system are vital for the growth and productivity of the organization. It is a software methodology which integrates the communication and the operations of different departments so that higher efficiency and productivity can be achieved. In the present times, ERP systems are vital for the growth and progress of the organization. It streamlines the information obtained from different departments of the organization. As a result, the information users can access and utilize all the information from a single platform in a transparent manner. The overall aim of ERP system is that the organization can access its productivity and efficiency with a single information system. There are several benefits of ERP system for an organization. However, the successful implementation of the system is critical for the organization. The success of ERP system implementation is dependent upon whether it is implemented within the initial budget and timeline and whether it is capable to realize its initial objectives. In market, ERP system is available in both standardized and customized forms. Most of the business organizations use standardized ERP system as they have similar departments and functionality. Other than that, the system can also be customized according to the requirements of the organization. In the present essay, two case studies of ERP implementation in a University and in an Engineering organization have been taken. It is depicted that the success of ERP implementation is dependent upon several factors. The role of management and the information sharing is also critical in the success of the system implementation.

References

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