Issues posed to ERP Implementation Projects in Manufacturing or Public Sector Organisations Vinoraj Selvaraj School of Computer and Information Science University of South Australia Mawson Lakes, Australia Email: [email protected] unisa. edu. au Abstract ERP (Enterprise Resource Planning) implementation is regarded as complex, cumbersome and costly, and, very often, it exceeds the initial estimated resources.
The process involves a thorough examination of the business processes in the organisation; selection of the best available software solution that matches the requirements of the enterprise; configuration of the selected systems;, training of staff; and customisation of the selected software solutions including development of required interfaces. Finally, the existing MIS of the organisation is replaced totally or partially by the new system. All the implementation processes should be carried out without affecting the daily operations across the whole enterprise.
Due to the fact that this implementation contains a large number of processes, there are bound to be several issues regarding the implementation. This study examines the issues posed to ERP implementation projects in either manufacturing or public sector organisations. Keywords Enterprise Resource Planning, Issues, Case Study. Introduction Enterprise Resource Planning (ERP) is identified as the essential platform upon which companies are building their competitive business process upgrades (Caruso 2003).
An ERP system is an integrated software solution that spans the range of business processes that enables companies to gain a holistic view of the business enterprise. It promises one database, one application, and a unified interface across the entire enterprise (Bingi, Sharma & Godla 1999). Due to the fact that ERP systems provide companies with a means to have an integrated and unified business process, companies have not been swayed from investing large amounts of money on the ERP systems despite the highly publicized failure rates of these ERP implementations.
The more enterprise-based systems that are implemented in a company, the higher the need for integration of these systems becomes. Expanding from the functional areas of accounting, human resources, and shop floor control to an enterprise-wide system has become a format for producing full organization integration. When properly integrated, ERP supports process-oriented businesses effectively (Al-Mashari, Al-Mudimigh & Zairi 2003). Typically, ERP system software are very expensive, takes a long time to implement, has a risk associated with implementation and affects the job profile of many employees.
Thus it has three major dimensions, namely cost, time and people involvement (Livermore, Rippa 2011). In the case of ERP systems software, the business processes need to change to conform to the best practices modelled in the software as opposed to the home frown software implementation which normally entails in tailoring the software to business needs (Hughes, 1999). Due to the fact that people play a big part in the success of an ERP implementation project, this research paper has been conducted to investigate and examine the issues that are posed to ERP implementation projects that are related to “people”.
People in this research relates to the management of a company that is implementing an ERP system and also the employees who will be using the system. Management The management are one of the most important people that are involved in an ERP system implementation. The management has to understand the big change that comes after an ERP system implementation due to the fact that the system brings integration into an organization. The management has to understand the nature of integration and how it affects the entire business.
Before integration due to ERP system implementation, the departments of a certain organization used work in silos and were slow to experience the effects of mistakes that were committed in other departments. This was due to the fact that the information flow was quite slow, giving time for the mistakes to be corrected before it affects other departments. This is not possible with an ERP system due to the fact that it is tightly integrated.
The effect of mistakes that are made in one department passes onto other departments too fast for it to be corrected and thus the original mistakes will also get magnified as they flow through the company causing a ripple effect (Hongjiang, Rondeau & Mahenthiran 2011) . The impact of errors that are made could be detrimental to a company. The management who approve the ERP implementation must be aware of the potential risk of error and take proper steps, such as monitoring each department and taking immediate steps to rectify the problems should they occur.
This can be done by having a response team whose only task is to monitor and look out for mistakes within each department (Hoch, Dulebohn 2013). A formal plan of action which provides detailed steps explaining what should be done if there is an error has to be created. A proper means to communicate to all the parties who are victims of the errors as soon as the errors are detected is also extremely important. The management has to be aware of the changes they have to make after implementing an ERP system. This is crucial due to the fact that without the management’s guidance, the employees would not know what to do and the system will fail.
Implementing an ERP system is not a matter of changing software systems, rather it is a matter of repositioning the company and transforming the business practices. Due to enormous impact on the competitive advantage of the company, top management must consider the strategic implications of implementing an ERP solution (Davenport, 1998). Cutting corners in planning and implementation is detrimental to a company undergoing ERP implementation. A review of successful ERP implementations has shown that the key to a smooth rollout is the effective change management from top (Bingi, Sharma & Godla 1999).
The progress of the project also has to be constantly monitored by the management in order to provide direction to the implementation teams. This is important to ensure that the system can be used for the business that the company does. An issue that often comes about due to ERP implementation is the commitment of the management. Often, the management if not committed enough to see out the implementation of the ERP which can be a long and drawn out process. The success of an ERP implementation completely hinges on strong and sustained commitment of the management.
Employees Selecting the Right Employees Employees are seen as an essential part of an ERP implementation. They are the main people who will be using the system to undergo everyday work. As such, the right employees should be selected to handle processes regarding the ERP. Often companies do not realize the impact of choosing the internal employees with the right skill set. Internal resources of a company should not only be experts in the company’s processes but also be aware of the best business practices in the industry.
Internal resources on the project should exhibit the ability to understand the overall needs of the company and should play an important role in guiding the project efforts in the right direction ( ). If the employees selected are unable to understand how the ERP system works, this will without a doubt lead to the implementation being a failure. Many departments are unwilling to sacrifice their best employees towards ERP project needs due to the fact that these employees are highly involved in the day-to-day running of the company.
However, due to the fact that an ERP system implementation is an important step in the company’s future, the best employees should be dedicated to the project. Training Employees One of the major issues that arise during an ERP implementation project is that the employees using the system do not receive adequate training. This is a massive risk to the implementation process and will without a doubt cause the implementation to be a failure. Without proper training, about 30 percent to 40 percent of front-line workers will not be able to handle the demands of the new system (Koch, 1996).
ERP systems are extremely complex and demand rigorous training which cannot be done in a short period of time. In addition to being taught ERP technology, the employees now have to be taught their new responsibilities. The employees need to understand how their data and the way they use the ERP system affects the rest of the company. Some of the decisions that the employees have to make when using an ERP system might have been the responsibility of a manager earlier. However, with an ERP system, it is imperative that managers help the employees to understand that they now hold more responsibility and encourage them to make ore of those decisions themselves. Employee Morale Employees that are working on an ERP implementation project usually have to put in very long hours which can be up to 20 hours a day and may include weekends and public holidays( ). Due to this and added to the fact that the implementation will be a stressful phase, employee morale may drop. This will be an issue to the ERP implementation because an employee who does not have the motivation to learn and to help implement the system will cause the implementation to be a slow and drawn out process.
This in turn will cause a drop in morale in other employees and may lead to the implementation of the system to be a failure ( ). It is up to upper management and the project leaders to ensure that the morale of the employees working on the ERP implementation does not drop. . References D. Caruso The world class challenge: six critical issues midmarket manufacturers must address SVP Research, AMR Research Inc (2003) ? P. Bingi, M. K. Sharma, J. K. Godla ? Critical issues affecting an ERP implementation ? Information Systems Management, 16 (Summer (3)) (1999), pp. 7–14 Ike C.
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