Examining The Important Business Of ERP Implementation Information Technology Essay

Examining The Important rail line Of ERP effectuation Information Technology EssayEnterprise pick planning ashess, also called enterprise schemas (ES) are among the most authorised business information technologies that emerged during the last decade. While no two industries ERP systems are the same, the basic conception of ERP systems is foc customd on standardization and synchronization of information, and as a result, improved efficiency.The benefits of ERP systems include Coordinating processes and informationReducing carrying personifysDecreasing cycle time, and up(a) responsiveness to customer needsThe decision to implement an ERP system is not made lightly. It is expensive, and it ordinarily takes eighteen to twenty-quartette months to implement from the start of the process to when the beginning function goes live. A complete suite of functions going live can take three to four years, or more.ERP ImplementationWithout successful slaying of the ERP system, the com municate benefits of improved productivity and competitive advantage would not be forthcoming. This creates trade off for decision makers to find ca purposes and to manage the consequences. Literature suggests that adoption and carrying out depends upon confused factors during the course of initiation to benefits realization. These factors are influential and hence their sagacity is critical to success.Critical Success FactorsThe spare-time activity table presents 19 CSFs extracted from the literature and their dominant billets that are identified as imperative for successful ERP adoption and murder. For example, backsheesh guidance factor is related to the stakeholders therefore, it should be implemented by focusing on the Stakeholders perspective of ERP. These factors claim been arranged in order of their importance in relation to each of the perspectives.ERP Implementation Critical Success FactorsERP PerspectivesCritical Success FactorsImportanceStakeholdersTop watchfu lness commitmentHigh control ChampionHighExecution TeamHighExternal advisory supportMediumVendor confederation scurvyTotal end- drug user involvement ruggedProcessBusiness Process contriveHighCustomization approachMediumPerformance measurement and controlLowTechnologyPackage requirements and selectionMediumSystem TestingLowOrganisationChange ManagementHighEffective CommunicationHighBusiness vision goals and objectivesHighTraining and educationMediumOrganisational structure and cultureLowProjectProject ManagementHighBudget- price parametersLowTimeLowCritical Failure FactorsERP has been implemented all over the world by umpteen companies but their high failure rates suggest that understanding and implementing ERP is a challenging task. The following nine factors are effectuate to be critical in the failure of ERP capital punishments (A. Momoh, R. Roy, E. Shehab, 2010) Excessive customizationDilemma of internal integrationPoor understanding of business implications and requirement sLack of change managementPoor data noteMisalignment of IT with businessHidden costsLimited trainingLack of top management supportChallenges in ERP Implementation in that respect whitethorn be various reasons for such rejection or unsuccessful conclusion to ERP adoption as discussed below Management may not be clear about the needs and requirement of IT system such as ERP that why and how they are adopting it or whether such a capital investment is unavoidable or not.A mismatch is created because most of the times managers do not understand the integration between their core business, IT processes, and firms post they may not know about the role that IT can play to their organisations.Management of the firm may not know that these unused IT systems can admit multiple synergies or benefits to their play along.Firms may not have resources like access, skills, capabilities or dynamic capabilities to generate any tangible proceeds from these systems.Globally in operation(p) orga nisations legion(predicate) times use single ERP solution for all its subsidiaries. This can lead to problems in local subsidiaries such as over budget and time resources spending, drop of technical expertise and compromises in business process.Many firms are not able to leverage already implemented ERP systems for exploiting juvenile business opportunities arising with latest grocery developments. This creates falsehood of ERP being not successful especially to the top management.Primary focus on adoption and implementation often neglects post-implementation maintenance and support from an wee stage after roll out in the life cycle.ERP IntegrationThe benefits of an ERP application are limited unless it is seamlessly unified with other information systems. Organizations face many a(prenominal) challenges in ERP integration The challenges of integrating various functional ERP facultysThe challenge of integration with other e-business packet applicationsThe challenge of inte gration with bequest systems.The success of ERP implementation is the success of ERP integration.Integration of ERP ModulesPackaged ERP software consists of many functional modules (production planning, inventory control, financial and HR). Organizations tend to install modules from the same ERP vendors in the initial ERP implementation. Not all companies entrust purchase all ERP modules from a single ERP vendor (SAP, Oracle, PeopleSoft etc.). The implementation of ERP systems could last many years. The integration of ERP modules could be either the integration of modules from polar vendors, or the different versions of the modules from the same vendor.Integration of E-Business ApplicationsE-business practice is the combination of strategies, technologies and processes to electronically coordinate both internal and external business processes, and manage enterprise-wide resources. E-business software systems generally fall into four categories Enterprise Resource Planning (ERP), C ustomer Relationship Management (CRM), Supply Chain Management (SCM) and Knowledge Management (KM). To get the most out of ERP systems, ERP should be tightly integrated with other e-business software Supply Chain systems, CRM, familiarity management, B2B exchange and ecommerce storefront on the Internet.Integration with Legacy SystemsOver the years, legacy systems have accumulated vast amount of data vital to the survival, operations, and expansion of corporations and non-profit cheeks. Integration of ERP systems with legacy systems is more complex than the integration of ERP modules and Integration of e-business Applications. It routinely requires the installation of third-party larboard software for the communication between ERP software systems and legacy systems. Second generation ERP systems use relational database management systems (RDBMS) to store enterprise data. Data conversion from legacy systems to RDBMS is a often a time-consuming and tedious process. While most int erface software provides API for ERP to access legacy systems, some vendors offer integration module that automates or accelerates the transformation of legacy application logic and data into reusable components with XML, SOAP, J2EE and .NET interfaces.Cost of ERP ImplementationAccording to any accounting method, ERP investments are among the largest single severe investments in dollars and human resources in most industrial organisations. An ERP implementation generally has three cost phases AcquisitionImplementation, andPost-implementationAcquisition CostsInitial planning and learnedness costs are a real part of ERP implementation costs. Most of these initial costs fall in the area of human resource expenses (people) payable to the amount of time key mental faculty must dedicate to carefully analyzing the need for an ERP system, making a decision to pursue the implementation, and then planning for it.Implementation CostsOnce the decision is made to implement an ERP system, the development of the implementation budget can begin in earnest. A realistically developed and funded implementation budget that covers all components and aspects of the project suss outs as smooth a process as possible and lessens to some degree the stress an ERP implementation places on staff. An allow for budget will minimize the surprises of unexpected costs and the abrupt search for funds to cover these costs.The following are the major cost components of an ERP system implementation Cost of new computer computer hardware One major cost, usually, is the cost of new hardware, including net tap infrastructure, database servers, application servers, Web servers, disks, load-balancing switch, and storage and disaster recovery devices.Cost of excess hardware The more people there are who use the system on a daily basis, the more application servers will be needed. A quick response time requires more application servers, more memory, and a faster processor speed, among other compone nts. To avoid system downtime, redundant database servers are needed to provide automatic backup when one server malfunctions. The cost of additional hardware must be balanced with how much the organization wants the new system to improve client services and business processes.Software licensing costs Software licensing costs include the ERP vendor software package and any third-party software the organization decides to include as part of the initial implementation. The ERP vendor software includes the functional software for human resources and student records as well as all the software components required to run the new system, including the database, system tools, operating systems, compilers, and network and integration software. Third party software is often purchased to enhance the functionality of the system.Software maintenance cost The majority of ERP vendors include a software maintenance cost component in their contracts. These maintenance costs generally vary between 1 8 and 24 percent of the initial licensing cost, depending on the level of maintenance the organisation requires. Software maintenance fees typically cover software patches, new releases, vendor help-desk support, user send list servers, and the right to attend a vendors user conference.Hardware maintenance fees Hardware maintenance fees are similar to software maintenance fees and cover many of the same support services that software maintenance fees cover, for example, vendor help desk, user mailing list servers, and patches and upgrades to operating systems. In addition, organisations should build in hardware replacement costs as part of the ongoing budget. The life cycle for most hardware is three years.Staffing costs A third significant cost associated with implementing an ERP system is staffing. To fully staff a project an organisation must consider internal staff assigned to the project (some think of internal staff as an indirect budget cost), backfill for these staff positi ons, and vendor or other outside consultants. The staffing needs of the implementation must be fully understood and proactive approaches to potential staffing problems must be taken.Training Costs Training project implementation staff on a new system is vital if the new system is to meet the institutions implementation objectives. Vendor consultants usually provide hands-on training for key functional users and technical support staff. The cost of this training is usually included under consultant costs in the budget.Customisation Costs Customization of vendor software generally adds significant cost to an ERP implementation, and it is a cost that will retroflex itself every time there is a new release of the software. Organisations must carefully consider the implications of customizing vendor software.Post Implementation CostsStaffing costs are associated with every patch, fix, new release, or new version of the system. If any modification was made to the underlying code, the cod e has to be recreated every time a new release or version is installed. As mentioned previously, there are ongoing software costs (such as when a new database is released, upgrades are made to operating systems and networking systems, or new third-party software is installed). Additionally, there are ongoing hardware costs as hardware is upgraded or replaced, and there are yearly hardware and software maintenance fees. Consulting fees continue as new releases and new versions of the software are implemented.Knowledge Management IssuesThe following table outlines the Main KM issues found in various stages of ERP adoption.Life-cycleStageKM IssuesAgenda formationWhen the original idea to adopt ERP is accepted, preparations were made to facilitate adoption.Team members with different fellowship backgrounds and expertise faced a challenge to externalize the embrained knowledge within the team.Developing strong internal team bonds during the early phase appeared critical in facilitating knowledge sharing and creation in later phases.Broader awareness was advances as the wider community needed to be more actively involved during the design and adoption phases.DesignInvolves understanding ERP and organizational processes and fashioning a mutual fit.Team focused on accessing the embodied and engraft knowledge distributed in the wider organization to capture knowledge.There was a need to build relationships between the team and other BU members to understand the processes and improve chances that the various stakeholders would view the new ERP systems positively.The project team accessed knowledge through developing a more open network structure that facilitated wider information flow.Accessing distributed knowledge that was embodied and embedded across the organization relied on a human body of social networking activities that involved bridging with others across the organization.ImplementationInvolves configuring the IT system and introducing changes to organiza tional systems and processes.Main challenge stemmed from need to change users knowledge and encourage them to share knowledge with each other.The team managed to surface and change some of the deeply embedded and encultured collective knowledge through social interactions to remove boundaries between functions.Team integrated knowledge through mapping of information, processes and routines of the legacy systems into the ERP modules with the use of conversion templates.Team managed to encourage users, using a participative policy, to identify tacit knowledge within their work processes through informal discussions and numerous brainstorming sessions.Fostering social relationships among users was found to be crucial to the success of ERP implementationAppropriationERP system is fully embedded within the organization so that it is accepted as a routine.A knowledge-based hub (CSC) was formed to codify some of the knowledge about ERP system use and encourage the sharing of knowledge and experiences in facilitating the ERP process.Knowledge-enabling structures contributed to the ERP systems in facilitating the development of organization memory and improving structural integration across the organization.The integration of internal and external ERP processes may create new barriers that could hinder future cross-functional knowledge integration unless prior personal relationships are established.Overcoming ERP Implementation ChallengesIn order to overcome the challenges and objections to ERP implementation, first and foremost, the following aspects of the system need to be carefully considered during implementation Function The functions of the ERP system should be well defined to cover the companys necessary business functions. It is also important to choose the right software considering whether or not it can support the defined functions as well as its functionality.Subjective norm All the members in the company should be encouraged to use the ERP system because their use can increase the companys business value and productivity.Output To make the ERP system more useful, the company should focus more on enhancing the quality of output during its implementation, especially in management and measurement reports. perceive ease of use The ERP system should be smooth to use. A complex system decreases usefulness, which also make users reluctant to work with. To make the system easier, many researchers recommended that it should be carefully designed to be user friendly, considering screen design, user interface, page layout, help facilities, menus, etc.Result demonstrability The company should clearly define what positive results can be expected from the use of the ERP system before or during ERP implementation. This action can make the system more useful, and help employers understand why they should use the ERP system.In order to ensure a successful implementation of the ERP system, the following model is proposed Description of Variables in ERP Success ModelVariableExplanationOutputQuality of the system output including management and performance reportJob relevanceAn individuals perception regarding the degree to which the target system is applicable to his or her jobImageThe degree to which use of the system is perceived to enhance ones image or status in ones social systemResult demonstrabilityThe tangibility of the results of using the system, including their observability and communicabilityCompatibilityQuality of the system in exchanging data with other systemsSystem reliabilityThe degree to which the system ensures the delivery of data to the usersInternal supportThe degree of the companys internal support for the ERP implementation project (top management support, training, and project planning)FunctionThe functionality of the ERP software and its matching with the companys necessary business functionsConsultant supportThe degree to which consultant support helps to make ERP implementation successfulSubjective normThe persons perception that most people who are important to him think he should or should not perform the behavior in questionPerceived usefulnessThe degree to which a person believes that using a particular system would enhance his or her job performancePerceived ease of useThe degree to which a person believes that using a particular system would be free of effortIntention to usesubstance abuser behavior in intention to use and actual system useERP benefitsThe degree of user satisfaction with the ERP system and Individual and organizational impacts from the ERP systemProject success/progressThe degree to which the implementation project was completed on time, and within the budget as initially plannedProject success/qualityThe degree of the quality of the ERP system and matching the scope of the ERP system with the companys needs