All entries for Sunday 05 May 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.


Managing Risk using ERP

Can implementation of enterprise resource planning (ERP) ever be acknowledged as the ultimate risk managing strategy with in a business? There are numerous literatures surrounding the challenges of ERP implementation. However it must be recognised by CEO’s or senior management that ERP has the potential of performing beyond their expectation levels. ERP can enable business to manage risk in a collective perspective. There is interconnectedness amongst risks and the joined-up risks requires to be mitigated or managed considering the consequence on others. ERP can support businesses to managed risk in holistic manners, where the most crucial information of the business processes is held.

Lack of control due to consistent outsourcing is seen as a major risk to supply chains, ERP can help companies integrated in a modern manner. Where information can flow through numerous different levels between the customer and the outsourced party. ‘Information is power’ which means more information makes one competitive. However the increase in information sharing across supply chain make the supply chains even stronger (Christopher & Lee 2004).

ERP will further help reduce risk such as information distortion, which is caused because of exaggerated figures due to numerous reasons such as, promotional schemes causing forward buying from customers (Sunil & Sodhi 2004).

Supply risk and demand risks are managed using strategies such as, increase integration, building relationships amongst supplier and customers. Customer relationship management (CRM) has been included in the workings of ERP; it would be beneficial to investigate what results are achieved in terms of handling risk by managing the customer.

ERP systems are situated centrally with the elements of functional integration to improve business performance. One can argue that the challenges of implementing and operating ERP, undermines the benefits one can achieve from the system.

ERP has the potential of being used as an initial, essential tool for supporting the adopted risk managing strategies. If looked closely ERP is constantly managing risk for the business, by streamlining and automating the processes to make it less vulnerable to uncertainties, ERP constantly reduces mistakes and fraudulent activities, however one must understand the complete use of such systems in terms of handling risk.

Sources

Chopra, S. & Sodhi, M.S., 2004. Managing Risk To Avoid Supply-Chain Breakdown. MIT Sloan Management Review, 46(1), pp.53-62.

Christopher, M. & Lee, H., 2004. Mitigating Supply Chain Risk Through Improved Confidence. International Journal of Physical Distribution & Logistics Management, 34(5), pp.388-96.


The Role Of Enterprise Resource Planning

Enterprise Resource Planning is the process of implementing an Enterprise Resource Planning system and ensuring that it synthesises effectively with existing systems and software architecture within the business. Since the original development of ERP's in the early 1990s the sophistication of these systems has increased exponentially and with the complexity of organisational software and Management Information Systems (MIS's). Organisations have come to rely on ERP's to help them achieve their strategic goals and objectives which has increased reliance on management data and effective interface between various different management systems within the business. The role of an ERP is to bring together all of this information in a central repository so that managers within the business can be confident that they have the most accurate and timely information on which to base their decisions.

However it is unrealistic to think that a full organisational-wide ERP can be implemented in one attempt. Normally, it is necessary to adopt a modular approach to ERP implementation at various stages in the process. It is necessary to integrate the ERP with existing systems such as accounts packages and Materials Resource Planning (MRP) packages. One very popular ERP has been developed by the company known as SAP. This is a modular ERP which helps to improve and ensures that organisations gain return on their investment and information flows within the business remain accurate and timely. The reason for this is SAP has worked with many organisations to create a software solution which can be adapted to suit the needs of the business.


Sources:

- Kallunki, J. P., Laitinen, E. K., and Silvola, H. (2011) Impact of enterprise resource planning systems on management control systems and firm performance. International Journal of Accounting Information Systems, 12(1), 20-39.

- Su, Y. F., and Yang, C. (2010) Why are enterprise resource planning systems indispensable to supply chain management. European Journal of Operational Research, 203(1), 81-94.


- Momoh, A., Roy, R., and Shehab, E. (2010) Challenges in enterprise resource planning implementation: state-of-the-art. Business Process Management Journal, 16(4), 537-565.


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