April 12, 2015

ERP system is a preserve for the established enterprises

An ERP system enables businesses to harness different departmental information systems and databases with programs that harmoniously work together and utilize a single database. ERP application is available for key business functions such as order processing, production control and finance. By using a common technology platform and database throughout the company, businesses can integrate departmental activities and achieve a range of cost, operational and productivity benefits. Implementing an ERP system requires careful planning to achieve the target benefits and minimize the risk of project failure.

However, the requirements for the ERP are not favorable for most SME’s for the following reasons:

• Expensive. The common and available ERP systems are expensive for most of the SME’s
• The Design of the ERP systems are complex. Most SME’s process are simple and may not need complex application
ERP system delivers more than what users need, normally this results from the lack of user participation and effective communication between the developers and users hence hard to align with their current business processes.
ERP requires more than one skilled personnel for the management and implementation of the ERP system, this is an additional overhead for the SME’s
ERP systems envisages to provide solutions to a complex process which is only available for the large and established companies.
• Functions are dependent – Processes are required to be initiated to see through the workflow, many SME’s have limited processes to warrant the need for the ERP
• It’s a common assumption that the organization focuses on technological change aspects rather than considering social ones for the deployment and implementation of ERP

However, Although the core SAP solution is especially built for a large enterprise, the majority of SAP’s customer base is composed of more than 77% of small businesses. That is why SAP started to develop their solution suitable for those small and midsized businesses, which are SAP Business one and SAP ByDesign.

REFERENCES
• Al-Mashari, M., Ghani, S.K. and Rashid, W., 2006, A Study of the Critical Success Factors of ERP Implementation in Developing, Countries. International Journal of Internet and Enterprise Management
• Huang, Z. and Palvia, P., 2001, ERP Implementation Issues in Advanced and Developing Countries, Business Process Management Journal,

By: Waqo Shuke Galma
ID Number: 1461443


April 09, 2015

The intendancy of executive team toward ERP implementation and The failures in ERP implementation.

The intendancy of executive team toward ERP implementation and The failures in ERP implementation.

The intendancy of executive team toward ERP implementation

1. The executive team is a leader to reform individual’s conscious.

Before starting to implement the ERP within the organisation, the executive team must not overlook the current situation and take role as a leader to instil in the importance of reforming the organisation. Moreover, the executive ought to persuade this matter to overall organisation structure. The executive is responsible to announce and explain to employees about ERP implementation. It is a wise idea to go around the organisation from one department to another department to have direct communication to individuals and convince them to take action.

2. The executive team should involve in designing and decision making processes.

There is a big difference between ERP implementation and create new project. In order to build ERP system, a new information centre must be created. And those new information will have direct result in reformation of work, management, culture of organisation. As a result, the overall organisation gets effectively improved.

3. The executive team continuously lead the ERP implementation.

The executive team is not only an initiator but also the persons who follow up to monitor the processes and results. The employees are not responsible to push forward the implementation but altogether with the executive team otherwise the implementation will not be succeeded and effective. Therefore, the executive team must continuously lead the ERP implementation within the organisation.

The failures in ERP implementation

1. The executive team is not able to lead the reformation. The target of ERP implementation is to reform working condition such as reducing capital costs, maximising processes, or increasing efficiency. But on the other hand, in practical aspect, the organisation is continuously using the same business processes as previous.

2. The ERP implementation takes time to develop and it is quite costly. If it is not being used as plan, the time is waste as well as the cost of development is increasing and then higher than organisation budget. Therefore, ERP will become an expensive tool.

3. The cost of ERP maintenance is quite high. The ERP implementation creates new organisational information system by using ERP package which is ease to maintenance and increase the capital costs.

4. It is quite complicated to upgrade ERP package. The ERP package provider has to inform about the cancellation of old ERP version maintenance. But when the provider attempt to upgrade new version, there are some errors occur. Therefore, the costs of upgrading new version of ERP is as equal as implement new version of ERP.


Article by: Jiratha Thiradanon (1431453)


April 04, 2015

Vendors perspective on a Cloud–based ERP

Several vendors are endorsing that their Cloud based ERP is the best option to be purseud; thus introducing their own version of terminologies and gathering requirements which eventually dispute with the true cloud based ERP.

1>MULTIPLE TENANCY:

From the vendors perspective in order to qualify for a cloud application, multiple useers are requuired must utlise the same software application. This is, however, can be productive in terms of future cost of upgrades and product updates through running similar infastructure.

Furthermore, multi tenancy occur at infrastructure level, platform levels and application levels. Optioning for multi-tenant infastructure and multi-tenant platform can be a trade off between achieving cost and flexibility. Depending on the company demand Multi-tenancy makes sense to option for application level only if the cost of software is low. Whereas, flexibility comes secondary.


2>INERNAL CLOUDS:

Also depending on the size of an organisation cloud server can be hosted internally. However, it can be argue that no matter the size of the company is, still difficult to hold the the cloud internally. Further limitation being company only consist of signle server making it impossible to add more capacity will be a major drawback.


3>PERSONAL HOSTING SERVER VS CLOUD:

The amount of data a company produces and hosted on personal server is a kind of an outsourcing its ERP operations. But if the company grows its operation adding more data, it is certainly make sense to host it on an external cloud because of capacity limitation. But major question of concerning whether the intellectual (data) is protected properly.


Article by; Noor Butt - 1466360


Reference: (Acumatica, 2015) Cloud Base ERP from vendors perspective


March 31, 2015

Different Types of Cloud ERP

Writing about web page http://erpcloudnews.com/2010/05/different-types-of-cloud-erp/

Cloud Infrastructure and it’s impact on Hosting and SaaS

Cloud technology enables SaaS and powerful new forms of hosting that can reduce the cost of service delivery. Note that cloud does not equal SaaS and cloud is not mutually exclusive from hosting.

How much cloud do you need?

Customers can purchase services with different amounts of “cloud” in the service delivery stack. Assume that we have four distinct layers of delivery: cloud infrastructure (hardware resources for the cloud), cloud platform (operating system resources for the cloud), cloud applications (application resources built for the cloud), and client resources (user interface to the cloud). This distinction helps us illustrate the way cloud services are offered in the diagram below.

The Cloud Stack

Cloud Delivery Options

In this simplified diagram, we show three types of cloud services:

  • Cloud Infrastructure (for example: Amazon, GoGrid) delivers an cloud infrastructure where you install and maintain a platform and an application.
  • Cloud Platform (for example: Windows Azure) delivers a cloud platform where you install and maintain your applications without worrying about the operating environment.
  • Cloud Application (for example: Salesforce.com) delivers a complete application, all you maintain is your client access program which is frequently a browser.

SaaS ERP and Cloud Models

Even legacy ERP vendors are moving to cloud technologies to offer software as a service to their customers. When vendors offer SaaS, the customer is only responsible for maintaining their client device (usually just a browser).

Vendors can offer SaaS utilizing all three cloud infrastructures above. Some vendors such as Acumatica offer all three types of services.

  • Offering SaaS using a cloud application is straightforward. In this case the vendor builds an application which is tightly integrated with infrastructure and hardware so that the three components cannot be separated.
  • Offering SaaS using a cloud platform means that the vendor must manage the application layer separately from the platform layer. This architecture gives the vendor the flexibility to move the application to a separate cloud platform provider.
  • Offering SaaS using a cloud infrastructure is similar to a managed hosting scenario. In this case the vendor installs and manages both an operating system and their application on top of a multi-tenant hardware infrastructure. This technique provides maximum flexibility, but may increase overhead slightly.

Comparing SaaS Offering Options

Offering Advantages Challenges
SaaS using a Cloud Application
 
Maximizes efficiencies for “cookie cutter” applications Vendor lock-in, customer does not have option to move application to a different provider
SaaS using a Cloud Platform
 
Mix of flexibility and savings Coordination challenges – vendor manages the application while a service provider manages infrastructure
SaaS using a Cloud Infrastructure
 
Maximizes flexibility to switch providers or move on-premise Some would argue this is nothing more than a hosted service with a slightly lower pricing structure

Multi-tenant applications

Multi-tenant applications can be deployed in any scenario to reduce overhead associated with upgrading multiple customers and maintaining different versions of software. This implies that multi-tenancy reduces the flexibility to run an old version of software and limits customization and integration potential. Multi-tenant options should be priced lower to offset the loss of flexibility.


March 29, 2015

The Silo Effect (Information Silo)

This article will discuss about The Silo Effect, its drawback in a functional organization and how ERP systems like SAP helps to manage it.

Employees in the different functional areas have tendency to perform their steps in the process in isolation, without fully understanding which steps happened before and which steps will happen after. They are just focused on their specific tasks which lose the sight of the “big picture” of the larger process. This is known as the Silo Effect or Information Silo.

To make it simpler to understand, let’s take an example of our batch where we have completed GBI simulation exercise on SAP system. By using this ERP System, We (ERPI-Module Students) performed a series of tasks for Sales and Distribution (SD) Case Study, taking on roles of various people involved to perform an integrated order-to-cash cycle. This gave us the “big picture” of the larger process however in real life without the support of ERP system, Mr. Mathias Dosch was using the new information to create a customer inquiry. While, Mr. David Lopez was responsible for creating a customer quotation and sales order, unaware and not concerned with customer inquiry generation process. This continues further where he is not concerned with the new details being used by Mr. Sandeep Das to check the stock in warehouse to fulfil new sales order.

Moving on, this silo nature of the functional organizational structure can be a drawback. The employees are completing their specific tasks without regards to the consequences for the other components in the process. This is simply reducing the co-ordination amongst them. Companies nowadays require “think side-ways” attitude from their employees. Therefore, ERP systems are helpful in managing business processes efficiently and we have already experienced this advantage by using them during our simulation exercise.

The learning outcome from this article is that to view a business process from end to end is essential in understanding how enterprise systems help businesses manage their processes efficiently and this understanding has become a critical skill that companies have come to demand from their employees.

Article by Muhammad Umer Noonari (1461606)


Reference: Magal, Simha, and Jeffrey Word. Integrated Business Processes With ERP Systems. Hoboken, NJ: Wiley, 2012. Print.


March 18, 2015

Benefits and challenges of ERP in management control

Title:
ERP in actionóChallenges and benefits for management control in SME context.
Rating:
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This article is about benefits and challenges for management control when implementing an ERP system.


Benefits:


1. Top management:

(1) Enabling the vision: ERP makes it possible to implement new strategy. Growing and globalizing business needs new kind of control systems.

(2) Transparency: ERP system is a good control tool. In particular it makes business transactions transparent.

(3) Routine tasks: Top management perceives that ERP system works well in routine tasks, but only negative things will be discussed openly.


2. Administration:

(1) Transparency/bookkeeping: Accounting and book keeping work well. Monthly profit and loss statements will be gathered very quickly.

(2) Possibilities: In ERP systems are numerous functions (some not utilized).

(3) One system: Only one system. Knowledge and support will be focused on the ERP system. There is no need to support other systems.


3. Production:

(1) Transparency/bookkeeping: Accounting and book keeping work well. Monthly profit and loss statements will be gathered very quickly.

(2)Routine tasks: Basic and simple things can be done by ERP. ERP works if things happen as predefined in the system.


Challenges:


1.Top management:

Making entries: ERP is based on processes, but employees do not know what the processes are. Employees do not understand why it is required to make entries in processes. Too many steps included in the entry process. It takes time and generates incorrect entries. Employees perceive that making entries is not part of their job. If supervisors use the ERP reluctantly, shop floor workers follow their lead.


2. Administration:

(1) Making entries: It is not possible to make correct entries. Such problems occur when there are different kinds of

machines or production lines than predefined in ERP system. Employees will take a short cut and in this way speed up their tasks.

(2) Personnel resources: Key person leaves the company. In that situation knowledge is lost away from the company. There is time to utilize only the basic functions of the ERP, even if people perceive that there are a lot of other utilizing possibilities. There are no experienced people to use ERP. There is a lot of data for different kind of management control purposes, but there are no people to do that.

(3) Technical problems: ERP system breaks down or it is very slow.


3. Production:

(1) Making entries: Employees do not know what processes are and how they relate to the whole. Employees do not understand why it is required to make entries. Rapid changes in production. Production lines are required to changes (by the customers), but there is no time and no personnel resources to make these changes into ERP system. Too many phases included in the entry process. It takes time and generates incorrect entries. The ERP system is very complex. Making entries is required to be done in many different screens. Complex system takes time away from physical production, which cause that people do not want to use the system. Mistakes occur (incorrect entries) and it takes lot of time to find and correct these incorrect entries. People who have only basic skills to use ERP, cannot solve this kind of problems.

(2) Technical problems: ERP system breaks down. Data which is required in production cannot be obtained from the ERP system.

(3) Standard nature of ERP: There are predefined processes in ERP system, but production is many times unpredictable: machines will break down, production lines will be changed, and the output of the machines is many times not known.

(4) Lost focus: ERP will attract all the focus away from development of production. Resources will be used to develop the ERP system and ERP processes, which is time away from the development of production.


Reference: Teittinen, H., Pellinen, J., & Järvenpää, M. (2013). ERP in action—Challenges and benefits for management control in SME context.International Journal of Accounting Information Systems, 14(4), 278-296.


April 15, 2014

Corporate & Change Strategy for ERP System Implementation

corporate_strategy.jpg re-engineering_change.jpg


In addition to some of the very informative comments on the crucial role of project sponsorship, I would like to add that there must be a comprehensive Project and Change Management Plan in place to ensure the successful implementation of an ERP system. Organisational Change is about navigating ‘people issues’ rather than technology; if the buy-in of the end-users of the system is not sought, the project will fail at the very start.

Furthermore, the decision to invest limited capital resources into an ERP system must be underpinned by a clear commercial proposal - that is, the business/commercial value of the initial capital expenditure, and the subsequent cost of maintaining and upgrading it, must contribute to the bottom-line profit of the company.

As rightly pointed out in some of the entries below, senior management or sponsors of the ERP project should link the overarching corporate strategy of the company to the decision to invest in the system. As attractive as an ERP system is to the reputation of any organisation which adopts it, ‘because everyone else is doing it’ is not enough justification to embark on such a huge project. Current studies have shown that the level of success or satisfaction with these systems is still below average (about 32%).


April 05, 2014

Enterprise Resource Planning Integration (ERPI) for Project Management

project_management_system.jpg

Enterprise Resource Planning (ERP) systems are designed to reduce data inconsistency and redundancy, via the creation and maintenance of a central database of corporate information. In addition to the reduction of errors or omissions during data entry, ERP systems also provide stakeholders with real-time information which facilitates decision-making, and integrates multiple business processes without the need for manual intervention (Ehie & Madsen, 2005:545). In the same vein, Williams & Parr (2006: 115-129) define a Project Management System (PMS) as an enterprise application that facilitates the delivery of projects by providing several functions, including:

  • Documentation and dissemination of progress reports
  • Provision of organisational templates, policies and procedures
  • Building up of a repository of information on all aspects of the project
  • Automation of workflow processes
  • Serving as a platform for reporting and enterprise-wide communication

Furthermore, one of the Critical Success Factors (CSFs) for the selection and implementation of a viable PMS within an organisation is that it should be capable of being integrated with other existing enterprise applications (Williams & Parr, op.cit.:115). In recognition of this necessity, the major ERP vendors (Baan, J.D Edwards, Oracle, PeopleSoft and SAP) have developed a project management application within their ERP tools (Kabanis, 1999:30).

Prior to this innovation, project managers used ‘best-of-breed’ project management solutions in carrying out their activities; however, they had trouble communicating project status and performance with the central system, or, they had to make duplicate entries into both the PMS and ERP systems, which wasted time and created opportunities for error. Therefore, the added project functionality of ERP systems means that project managers can plan, execute, monitor and control projects in a familiar environment, using familiar tools, which receive and store information within a central database (Kabanis, op.cit.).

Thus, the integration of an ERP system for project management provides enterprise-wide access to real-time data regarding resource utilisation, cost, and schedule performance. It also enhances reporting, documentation and information management, as well as facilitates communication among stakeholders. Moreover, the ERP system endows project managers with visibility within an organisation, as their activities can be directly seen to impact both top-line revenue growth and bottom-line profits (Kabanis, op.cit.:32).

REFERENCES

Ehie, Ike & Madsen, Mogens. (2005). ‘Identifying Critical Issues in Enterprise Resource Planning (ERP) Implementation’, Computers In Industry, 56(6), pp. 545-557.

Kabanis, Jeanette. (1999). ‘ERP: Integrating Project Management into the Enterprise’, PM Network, February 1999, pp. 29-32.

Raymond, Louis & Bergeron, Francis. (2008). ‘Project Management Information Systems: An Empirical Study of their Impact on Project Managers and Project Success’, International Journal of Project Management, 26(2), pp. 213-220.

Williams, David & Parr, Tim. (2006). Enterprise Programme Management. London: Palgrave Macmillan.


June 22, 2013

The Business Network to Supplement ERP

Writing about web page http://info.e2open.com/rs/e2open/images/WP-E2open-ERP-Business-Network.pdf

The evolution of the manufacturing industry is one that portrays the development of the supply chain and all the elements based on it over the past few decades. Some time ago, the manufacturing industry used to rely on vertical processes, where materials would enter the plant from one side and come out as saleable products from the other. Nowadays however, companies rely upon partners, suppliers, and even customers in the design, manufacturing, and delivery of their products. This change in the type of relationships between the different parties involved in the processes of given products over the years, required and inspired the creation of the business network to supplement the ERP systems already in use.

ERP systems are best used when dealing with internal business processes within a given enterprise. Its main objective is to harmonize business processes by providing cross-departmental visibility into their statuses. This is done by automating “manual, paper-based processes (from order entry on one end, to invoice and payment collection on the other)”. ERP systems also allow the collection and storage of data needed for managing the business, as all transactions occurring between a given enterprise and other parties are recorded.

ERP systems have been around for quite some time now, pushing many to try and optimize it in order to make use of it in modern supply chains. And that’s where the problem lies. ERP systems were never meant to deal with the modern network-like supply chains (it was meant to deal with straight line supply chains). No matter how much we try to optimize ERP systems, they will still lack efficiency, be prone to error, and be slow to react in a dynamic and fluid networked world, where “customer demand pulls production in its wake, meaning that companies must be able to respond quickly to volatile demand”. For all the positives of the ERP systems, they will still be retrospective, as they rely on the data in store; still be rigid, as they rely on push production and management of inventory instead of pull; and will still provide a narrow picture of any given process within an enterprise, instead of putting it in perspective vis-à-vis the entire supply chain network (which includes partners, supplier, etc.). And that’s where the business network’s role comes.

The business network was created in order to solve the problems that the ERP systems were not meant to address. As a result of the interdependence of the different parties involved in a given operation, the business network provides a shared space, facilitating the communication and collaboration between different parties during the execution of shared processes. The architecture of a business network seems optimal as a cloud-based network, where the common objective is more easily set at the center of the value chain, with all trading partners forming the network represented by nodes interconnected in many different ways. Three points are essential for the business network to be effective. First, the trading partners are to be connected by exchanging related data in near-real time. Second, the data exchanged needs to be understandable to all parties involved. And third, all parties need to have access to the flow of data in order to make decisions based on the latest information available. In general, the business network allows the different parties to be leaner, by being able to respond quickly to the ever changing market demands, and gets them closer to being proactive by giving them access to fresh, instead if old stored data.

In conclusion, the business network was never meant to overtake ERP systems. It was meant to supplement it by providing more flexibility in one to many or many to many interactions that characterize the modern supply chain. So whilst ERP systems allow cross departmental visibility for processes within a given company, the business network enhances cross enterprises visibility for all parties involved in a given operation, which prompts us to realize that in order to optimize the processes, one ought to use the right tool for the job at hand.


E2open. 2013. Beyond The Four Walls: ERP and The Business Network. [online] Available at: http://info.e2open.com/rs/e2open/images/WP-E2open-ERP-Business-Network.pdf [Accessed: 20 Jun 2013].


May 05, 2013

The Multinational Dimension of ERP….Reality or Illusion?


Organizations thought the world are sacrificing big capital investments for the implementation of ERP systems. Implementation has been proved to have a level of difficulty and this is mainly because of business problems and not technical obstacles. The technical part which is mainly related with the installation and the existing systems integration is considered to be a critical phase, but the management aspect of ERP system could have an even greater impact on the success of the system or use.


C. Sheu et al. (2004) attempted to investigate the dimensions of natural differences. Some of those which play a vital role in the ERP Implementation are language, culture, politics, government regulations, management style, and labor skills


Based on what was mentioned above, it can be supported the view that no universal ERP system can be implemented in different counties successfully without resolving obstacles that are driven from national differences. The business models, including operating processes underlying most ERP software packages, reflect European and US industry practices. Such operating processes are likely to be different in Asian countries, having evolved in a different cultural, economic, and regulatory environment.


Both European cases suggest that ERP implementation in Europe is a very challenging task due to national differences between countries in Europe. Specifically, ERP implementation in Europe is more complex because companies have diverse national cultures that influence corporate culture, thereby making the implementation of multinational ERP solutions difficult. This study supports previous evidence that ERP implementation in the US has been more effective that in Europe because of the more complex European corporate and national cultures (Krumbholz & Maiden 2000), (Vernon M., 1999).

The analysis is focusing on the cultural diversity which is considered to be a factor which may affect the implementation of ERP. However, this fact standing itself does not help very much on resolving the problem. It needs to be addressed which are the impacts on the implementation strategy per national difference.

Initially, it can be considered the factor which is related with the culture of language which might cause problems like; technical problems in entering data, cultural resistance, communication barriers between facilities due to different languages, localized implementations and alteration of training programs in different site. We can also consider the Management Style factor which is more related with problems like; differences in priority settings, implementation style: either “big bang” or “piecemeal” approach to the implementation and project duration.

There are many more national differences which might be analyzed and a lot of research has been done for that topic as it considers being one of the most critical issues which need to be resolved for the successful implementation of ERP.

References

Chwen Sheu, Bongsug Chae, Chen-Lung Yang, (2004), National differences and ERP implementation: issues and Challenges, The International Journal of Management Science Omega 32, pp 361 – 371

Krumbholz M, Maiden NA. (2000,) How culture might impact on the implementation of enterprise resource planning packages. CAiSE pp 279–93.

Vernon M. (1999), ERP endangered species? Computer Weekly, pp 32–35.


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