Success and Failures of ERP Implementation
ABSTRACT
This paper will discuss will discuss how to be successful and avoid failure when implementing an ERP system. I will define ERP, present the significant benefits of implementation, and identify the missteps (which may lead to failure)/steps to success in implementing an ERP system.
THE ERP SYSTEM DEFINED Enterprise resource planning (ERP) is an enterprise-wide information system that integrates and controls all the business processes in the entire organization. According to Muscatello and Chen, “a typical ERP system integrates all of a company’s functions by allowing the modules to share and transfer information freely.” The information is centralized in a single relational
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Operational problems at Hershey Foods, Whirlpool, and FoxMeyer Drugs have been blamed on poor implementation. ERP projects fail for a number of reasons: poor strategic planning, no review of current business processes, inaccurate data collection, inadequate education/training, and insufficient testing. Management may also fail to assess risk associated with implementing an ERP system. There are many risk factors associated with ERP projects: inadequate ERP selection, poor project team skills, low top management team involvement, and inadequate training to name a few. (Iskanius, 2009) All projects begin with a plan; but sometimes the plan is not realistic, detailed or specific enough. Management may have high-level plans with broad assumptions or underestimate the actual change involved. A good plan will identify all the requirements, be detailed including a logical sequence of tasks. A risk management plan should be adopted at different ERP implementation stages; selection, implementation, and usage. (Iskanius, 2009) Managers may not be prepared for the scope, size or complexity of an ERP implementation; so they may not maintain the necessary level of detailed project management planning and control. Managers should be fully dedicated to the project. Existing business processes should be reengineered; this aids in identifying and
The University of Massachusetts’s ERP project would include the student modules, financials, and human resources. Early in the system development life cycle, the separate campuses had conflicting issues concerning the details of the ERP. Too much time was wasted on minute details and not enough time was spent developing the work plan / project framework for the upcoming project (Solis, 2003).
The problem presented by Joseph-Armand Bombardier is the upcoming third round of ERP implementation in his organization. Even though a big improvement over the efficiency and success of execution between the first ERP round (Mirabel plant) and second round (Saint-Laurent plant), there is still room for improvement.
In order to survive in this competitive business world, every business must produce or provide not only a better product or service, they must also provide better customer service, minimize their production costs and overhead costs, have a more efficient management system, a highly reliable infrastructure…the list is endless. Many of these can be achieved through a customized enterprise resource planning system (ERP). ERPs serve as “one comprehensive database to house all of [the company’s] corporate information” so that “when you enter new information in one place, the system automatically updates related information.” However, if these systems are not implemented correctly with the necessary change in management of people and technology
Too much time-consuming and technical work was assigned to employees who did not have ERP expertise or proper training.
The object of this research paper is to describe the implementation challenges of an enterprise system, then to analyze the changes required in its implementation and discuss the advantages of ERP over legacy systems. Some of the informational background will be discussed in this paper regarding enterprise resource planning systems. This paper will construct some examples from my research findings to show why ERP has advantages over legacy systems. This paper will also not only provide strengths of having an enterprise system, but will show weaknesses as well. And to conclude, this paper will explain why and how enterprise systems will be of benefit for organizations and business with decision-making processes.
Enterprise Resources Planning (ERP) is the core system of any company. In order to facilitate all departments in a manner to improve issues, there are a few things that must be meet to successfully utilize a software system such as ERP. This allows any member within the company to access a single and centralized data source with information regarding products, services, customers and suppliers (Sadrzadehrafiei, Chofreh, Hosseini, & Sulaiman, 2013). The ability to share and access one software benefits the company to improve in areas such as sales and marketing, customer satisfaction, human resources, operations, and more. In addition, business intelligence tools such as ERP systems provide the techniques and solutions managers need to analyze and understand complex business situations, and simplify decision making processes that is of crucial importance during times of financial and economic crisis (Antoniadis, Tsiakiris, & Tsopogloy, S. 2015). This paper explores the definition and functions of an ERP system and the successes and costs of implementation.
This report is the analysis and commendation of Pete’s business and how and where ERP system can be implemented to reduce the business complications. The company with 113 outlets and multiple sales channels, supplies both homegrown and off-the-shelf system to its customers. With 1,500 grocery stores, corporate offices, a website, and delivery trucks, the company was able to increase its revenue by 23% over a year which is remarkable. However, the outdated system which used to handle core business functions such as financial, order management, inventory management, fulfillment procurement and manufacturing was unable to cope with the ever growing business demand, which in result was effecting both the sales and
Enterprise Resource Planning (ERP) is an enterprise system that serves as the technological backbone of many businesses today. Through a framework of integrated software modules, ERP provides employees and managers with real-time data across business units. For businesses that have successfully implemented ERP, the benefits can be amazing. Significant improvements in quality, efficiency, decision support, along with decreased costs and enterprise agility, are all tremendous benefits to any business. Those benefits don’t come without a price. The implementation of an ERP system is an enormous undertaking that can be extremely expensive. Maybe this is the reason IT managers are reluctant to move
However, each and every system in the organisation has its own risks and the risk comes with its advantages and disadvantages. According to (Esteve and Pastor, 2001), the following are the advantages and disadvantages of ERP system:
Enterprise resource planning is a balanced software solution which is used to manage a company’s resources. It includes various modules for the numerous departments in a company. These include HR, Marketing, Sales and Distribution, Material Management, Production Planning and Finance and Controlling. The ERP system provides transaction codes which perform predefined operations on the entered data set. A large number of different operations can be executed using the ERP transaction codes. Thus, this saves time spent in calculations and assimilation of data.
Disadvantages of ERP - One of the main disadvantages of ERP is the high price of the software packages which are added. Particularly the cost of additional hardware and software, the training required and execution support. Another important factor is that ERP implementations are prone to fails rather
For the second phase the project team must gather risk information via interviews, questionnaires and sessions with key personnel and link to strategic objectives and key business process. The third phase is determining how risk should be mitigated through quantitative and quality considerations. The final two phases requires project teams to evaluate the organizations capabilities, infrastructure, develop internal audit programs, execute, identify key performance indicators, and implement monitoring mechanisms. Weiser has successfully implemented fully functioned ERM systems to companies. They have been responsible for assuring that business objectives were accomplishes and share holder value maximized.
Ifinedo (2007) comes up with that the size, culture, structure of the company are all positively related to the success of ERP implementation. A correct selection of ERP vendors is also another factor contributing to the success of ERP implementation (Ngai et al., 2008).
Anderson (2014) said “ERP implementations rarely fail in formulation; however, they frequently fail in implementation.” It does not in with just purchasing an ERP system. A well designed implementation plan is the company’s ticket to success. A well designed implementation plan addresses all potential bottlenecks like execution problems such as lack of training, attitude and participation of the entire workforce from leaders to staff, and member selection for the whole ERP project implementation team. An ERP project is
According to Snider et. al. (2009), ERP is a system where it stores various department data in central repository. ERP – Enterprise Resource Planning is integrated information system software where the different core business processes are processed in real-time environment. Mabert et. al. (2003) ERP systems gives access to real time data based on seamless integration of cross functional data with improved business practices, better workflow and standardization of various day to day business processes. ERP software can be best described as set of integrated business modules or applications used to perform various business functions including finance, sales, purchase, inventory, general ledger, production, human resources and many other business related processing. ERP main core competence is to integrate all the independent & dependent business process into information systems into a streamlined manner to get an optimized system performance. ERP system shares common data information to the different departments and users with department specific & user specific information to run their business function in a controlled way. ERP system is designed to manage different enterprise process, workflow and activities through independent software modules while regularly updating the central database repository (Quiescenti et. al. 2006). An ERP is not only business integration software where as an approach of running successful business during changing and challenging