Faced with mounting planetary competition, companies have to better how they coordinate activity across the company so as to maximize the value they deliver to clients and minimise costs. Competitive force per unit areas have forced the companies to see assorted public presentation aims such as flexibleness, dependability, reactivity, client satisfaction etc.
ERP can be defined “as anintegrated, multi-dimensional system for all maps, based on a concern theoretical account for planning, control, and planetary ( resource ) optimization of the full supply concatenation, by utilizing province if the art IS/IT engineering that supplies value added services to all internal and external parties” ( Jarrar, et al. , 2000 ) . Despite the fact ERP have been successfully implemented in the yesteryear, careful planning and executing becomes really of import factors given their size and complexness.
Much has been written about the success of enterprise information systems. But, this success depends on several critical success factors ( CSF ) . The most common critical success factors that are identified in the academic literature are discussed below ( Bhatti, 2005 ) .
1. Undertaking Management
Project Management involves the usage of accomplishments and cognition used to organize, schedule the defined activities so that the declared aims of execution undertakings are achieved ( Bhatti, 2005 ) . A stage wise planning of the undertaking with effectual undertaking direction accomplishments will decidedly assist in get the better ofing such a state of affairs ( Soliman & A ; Youssef, 1998 ) .
2. Business Process Reengineering
It is defined as “the changing the concern procedure through redesigning so as to accomplish dramatic betterments in cost, quality, service and speed” ( Bhatti, 2005 ) . The success of ERP system execution is characterised by altering the present concern procedures in conformity to the criterions of best concern procedure available ( Gibson, et al. , 1999 ) . Examination of many concern procedures is considered as the key for the execution of ERP system.
3. User preparation and instruction
Lack of proper technically competent staff leads to the failure of many ERP execution undertakings. The preparation plan of ERP execution include facets like the constructs behind ERP, the broad scope of characteristics and deductions of ERP system, and custodies on preparation ( Bhatti, 2005 ) . Therefore developing the employees plays a major function in successfully implementing the ERP undertakings.
4. Technological substructure
ERP execution involves a complex passage from bequest information systems to a common concern procedure throughout the organisation ( Bhatti, 2005 ) . Therefore taking the right ERP bundle based on the size of the house is really indispensable. It is really of import that the hardware constellations that should be used to run the ERP system are certified by the seller of ERP ( Bhatti, 2005 ) . This in bend is based on the pick of the company.
5. Change direction
Bhatti, ( 2005 ) emphasizes on this facet and says that “in order to implement ERP systems successfully, the manner organisations do concern will necessitate to alter and ways people do their occupations will necessitate to alter as well” . Change Management is the really indispensable for success of execution undertaking and it is necessary that it starts in the early phases and continues throughout the full undertaking life rhythm ( Bhatti, 2005 ) .
6. Management of Hazard
Managing unexpected crises and guaranting that the undertaking does non divert from the initial program is risk direction ( Bhatti, 2005 ) . There is ever a possibility that ERP undertaking might divert from the chief aim which can perchance take to unexpected events. Therefore, an appropriate hazard direction scheme helps in well cut downing the hazards of undertaking failure.
7. Top Management Support
Management must be a portion of ERP executions and it is true chiefly with package undertakings and their success chiefly depends on top direction support [ Bhatti, 2005 ] . “Only the top direction is equipped to move as the go-between between the jussive moods of the engineering and the jussive moods of the business” ( Bhatti, 2005 ) . Every measure of the execution procedure demands the top direction ‘s engagement to supply a way for the undertaking and to guarantee that the undertaking is successful which can be really disputing at times ( Bhatti, 2005 ) .
8. Effective Communication
Communication, “one of most indispensable and hard undertakings in any ERP execution undertaking provides the base for understanding and sharing information between the members of the undertaking squad and helps in pass oning the ends in each execution phase to the full organisation” ( Bhatti, 2005 ) . Hence ; uninterrupted communicating flow should be maintained throughout all the sections at a really early phase.
9. Team work and composing
Since an ERP involves all the sections in an administration, it is really indispensable for these sections to work together. “An ERP execution squad comprises of, functional forces and direction, IT personnel and direction, top direction, IT consultants, ERP seller, parent company employees, direction advisers, hardware vendor” ( Bhatti, 2005 ) . A mix of hired advisers with company ‘s internal staff is indispensable in an ERP squad so that the necessary proficient accomplishments required for the design and execution can be developed by the internal staff ( Bhatti, 2005 ) .
10. User Engagement
User engagement is a really of import facet as the maps of an ERP system are designed as per the users ‘ demand. When a company decides to implement an ERP system, “user engagement is required at the phase of definition of the company ‘s ERP system demands and besides during the execution of the ERP system” ( Bhatti, 2005 ) .
11. Use of advisers
There is a possibility that the company might miss the experts who have sound cognition about the package. Hence the usage of external advisers is really much required who can assist the internal staff in put ining the package. “These advisers may be involved in different phases of the ERP undertaking implementation” ( Bhatti, 2005 ) .
12. Goals and Aims
The ends, outlooks, and deliverables should be clearly defined so to turn to the inquiries sing the demand for the execution of the ERP system and the critical concern the system would provide ( Bhatti, 2005 ) .
In this essay a instance survey based attack is used in order to discourse the benefits that companies have reaped by the usage of endeavor broad information systems and besides the troubles that may originate in regard to the debut and execution of such systems.
Case study 1 discusses the benefits of the endeavor broad information system. At the same clip Case study 2 throws a visible radiation on the troubles faced by the companies in regard to the debut and execution of such systems.
Case survey: 1- Case survey of Pratt and Whitney Canada ( Tchokogue, A. , Bareilb, C. , Claude, R. D. , 2005 )
Scope of the undertaking:
The chief aim of implementing an ERP system at P & A ; WC was to set up an ent erprise broad information system ( TES ) such that its clients have a greater transparence and legerity ( Tchokogue, et al. , 2005 ) . The direction wanted this information system in topographic point as they were interested in increasing stock list turnover, cut down work in advancement, better on client response clip and increase stock list and operation cost visibleness ( Tchokogue, et al. , 2005 ) . Hence they decided that SAP/R3 was optimum after sing the chief endeavor systems such as Oracle, BAAN, SAP, etc. ( Tchokogue, et al. , 2005 )
Highlights of TES execution:
The undertaking was unevenly divided into 5 major stages over the continuance of 32 months.
- Scoping and be aftering
- Determining the degree of old reengineering
- Procedure redesign
- Testing and bringing
The early phases ( phases 1 and 2 ) of execution took about 10 months. During this stage accent was “on specifying the range of activities and be aftering their implementation” ( Tchokogue, et al. , 2005 ) . Strategic aims and demands of P & A ; WC clients were taken into consideration while the bing procedures were accessed in order to concentrate on those which needed betterment in line with the marks set ( Tchokogue, et al. , 2005 ) .
The in-between phases ( stage 3 and phase 4 ) which took 17 months of execution chiefly focussed on redesigning the procedures where efforts to minimise re- technology of procedures were made ( Tchokogue, et al. , 2005 ) . Furthermore during the stage 4 ; “the constellation of the new system i.e. the chief parametric quantities of each SAP faculty and that the pick of parametric quantity options related to the new system was determined” ( Tchokogue, et al. , 2005 ) . Care was taken to take the right constellation based on the companies demands.
Risk direction was efficaciously handled to forestall the uncertainnesss that prevail during the execution stages to guarantee that there was no divergence from the chief ends and aims. The top executives invariably monitored the advancement of the execution procedure and helped giving the undertaking a proper way. The undertaking squad “followed the Deloitte & A ; Touche Consulting Group- ICS FastTrack 4 SAP methodology” ( Tchokogue, et al. , 2005 ) for the execution of TES. “In this methodological analysis five cardinal factors were considered throughout the undertaking: Project Management, Technology Architecture, Process and Systems Integrity, Change Management, and Knowledge Transfer” ( Tchokogue, et al. , 2005 ) .
The last phase ( phase 5 ) “included three integrating trial rhythms: An initial rhythm related to master file informations, a 2nd to inactive informations and a 3rd to dynamic informations. The successful trial consequences were so officially accepted by the procedure managers” ( Tchokogue, et al. , 2005 ) .
An impressive undertaking squad of 345 employees from the most of import sections of the company were divided into seven groups and were included in the undertaking which ensured that parts were made from all the sections straight impacting the new system ( Tchokogue, et al. , 2005 ) . This enabled the undertaking to hold an effectual cognition transportation and expertness ( Tchokogue, et al. , 2005 ) .
“Approximately 110 employees from the six most affected sections were trained to go internal trainers” ( Tchokogue, et al. , 2005 ) . The engagement of both the internal and external advisers with effectual communicating between the sections and preparation procedures proved highly good for the execution procedure ( Tchokogue, et al. , 2005 )
After its execution the stock list turnover rate remained stable ( Tchokogue, et al. , 2005 ) .
An addition in the stock list costs was really seeable ( Tchokogue, et al. , 2005 ) .
The TES established an information anchor back uping the on-going concern procedures and alteration ( Tchokogue, et al. , 2005 ) .
Telluriums increased the productiveness by 11 % more than what was anticipated ( Tchokogue, et al. , 2005 ) .
It reduced the receivable yearss outstanding by 6 % ( Tchokogue, et al. , 2005 ) .
30-40 % return on investing was achieved ( Tchokogue, et al. , 2005 ) .
The TES gave the organisation entree to existent clip information ( Tchokogue, et al. , 2005 ) .
This provided fruitful for stock list direction and buying. The production start holds were reduced drastically ( Tchokogue, et al. , 2005 ) .
REASONS FOR ERP PROJECT FAILURES:
“Poor proficient methods are merely one of the causes, and this cause is comparatively minor in comparing to larger issues, such as failures in communications and uneffective leadership” ( Sumner, 1999 ) . Table 1 summarises the possible grounds for undertaking failures.
Increasing the efficiency was the chief aim behind get downing the Delta III undertaking which took 18 months for completion ( Scott, 1999 ) . “Along with SAP/R3, FoxMeyer besides purchased warehouse-automation from a seller called Pinnacle, and chose Andersen Consulting to incorporate and implement the two systems” ( Scott, 1999 ) .
Delta III was at hazard for several grounds:
- The warehouse employees sensed that their occupations would be under menace if the warehouse mechanization package was integrated with SAP/R3 ( Scott, 1999 ) . This posed a immense menace for the execution of SAP despite the support from top direction as the warehouse employees opposed its execution ( Scott, 1999 ) .
- The rise in the figure of R/3 minutess to be processed after the start of the undertaking put the range of the undertaking at great hazard ( Scott, 1999 ) . This increased load on the system is chiefly because “FoxMeyer signed a big contract to provide University Health System Consortium ( UHC ) ” ( Scott, 1999 ) .
- Another hazard faced by FoxMeyer in the execution procedure of SAP/R3 is the deficiency of skilled workers ( Scott, 1999 ) . “This forced the direction of FoxMeyer to trust on Andersen Consulting which proved to be a greater hazard as the external advisers were besides inexperienced” ( Scott, 1999 ) .
FoxMeyer failed to estimate the hazards involved in following SAP/R3 in the early phases of the execution and ended up sharing the hazards with the external adviser – Andersen Consulting ( Scott, 1999 ) . It ended up sharing the losingss as they did non hold any contract which strongly stated that merely experient advisers were t be used ( Scott, 1999 ) . No efforts were made in developing the in house workers which ended up in trusting to a great extent on external advisers who hampered the cognition transportation procedure within the company ( Scott, 1999 ) . The direction allowed the undertaking to deviate from its range on a regular basis which in-turn affected the alteration direction procedure at the ulterior stages of execution ( Scott, 1999 ) .
Discussion and Decision:
The two above mentioned instance surveies are representations of successful execution of SAP R/3 ERP system in one company and a failure in execution which caused immense losingss in the other company. In the first instance the success of the execution procedure is chiefly due to the changeless and shared attempt of all the parties involved with the undertaking. Several factors such as their capacity to accept alteration, elaborate planning, equal fiscal resources and clip frames contributed to the organizational transmutation of P & A ; WC.