An ERP Implementation Case – Ekin Project

This entry is related with an ERP implementation project within an International construction sub-contractor company. In the study Ekin Project`s ERP experience will be shared and analysed. Firstly brief summary of the project decision stage will be held and afterwards implementation process will be analysed in detail.

Ekin Project is a company which usually does mechanic sub-contracting jobs in large scare construction project such as airports, commercial centres and skyscrapers. They work internationally and employ staff different nations. They use project based organisation structure and they suffers from not being able to keep the intellectual property within the company. There was not an integrated IS tool they use. Data capturing and stored was done by spreadsheets stored in company`s databases. This disintegrated structure causes some problems in information sharing and results in duplications in data. Every staff use their own way of keeping and tracing the information and when they leave, their system cannot be continued by the new comer.

The owner of the company foresees the need of and integrated IT program and forces the management board to have an ERP program. The owner has a name in his mind, MS Dynamics Axapta. The program decision was not given rationally. The owner of the company gathered some information from his friends and contacts who he has in construction company. In the decision process the needs of the company and best candidates were not selected by going through a logical process. Even IT department`s manager`s decisions were not taken into consideration. The patron took a pushy role and forced the company implement the change as soon as possible. However middle level and lower level managers were not happy to have such a large scale change in the current process. Ekin is an old company and employs old fashion people as well. Excitement of the boss did not shared by his employers, however nobody sounded any disagreement in the board meeting or any an official meetings organised by the boss. They did not resist and comment on the issue until they realised they have to change.

In the company a new organisational unit was formed. ERP implementation and integration team was formed with 2 personnel and one manager. These two personnel are experienced in their subjects and had work for the company at least 7 years. Even though the manager is new in the company, he is loved and respected by the other personnel. Although they work willingly in the project, they were not happy not to be asked their opinion in the program`s selection process. The duty of this team is acting like a bridge between the program developer consultant company and the site staff.

Probably, MS Dynamics was not the most ideal alternative. Microsoft is well known and has god reputation in the global market as a software supplier but developing and selling an ERP program was totally new to them. They got in ERP sector by requiring acquiring an European software company and their ERP product. Especially first few versions create lots of problems and did not do well in the market. However version 4 and especially 5 do a good job with a reasonable price. They aim at SMEs by implementing a cheap price.

Obviously Axapta was not ready to be used within construction sector. While the biggest player in the market SAP providing the sector with different editions of the ERP program, Microsoft uses developers and solution partners to tailor the general version of the program to a specific company. In general, there are a handful of construction companies which utilise an ERP module with all modules. Construction sector requires a totally different product because their processes are different from a production company. Therefore alternating the current modules and making them suitable for a construction job made the project last longer than it was planned initially.

The process of the implementation process was like; the consultation company gives training for an ERP module and describes the capability of the module. Ekin ERP team analyses the current system and process and comes up with a requirements list. By using these two, ERP team decides on amendments which are necessary for the implementation. This process generally involves floor personnel who actually use the system. They are consulted while analysing the system and creating a process flow with satisfies the company`s needs and adapts ERP program`s capabilities. Change demands are shared with developers after they are agreed by the ERP team. Developers estimates a duration for the change asked for and at the end of this period new part of the program is tested by ERP team. Tested and approved modules are explained and trials are done with the floor personnel. A user manual for the each module and sometime for the small add-on are prepared in two languages and disseminated to the concerned personal.

Floor staff and even middle level are not usually willing to change. They persist to keep the status quo. During the training phase, their awareness of the benefits of the new program is tried to be increased. When this does not work, the boss publishes an ordinance to force the change to personnel. The huge support from the boss accelerates the implementation process. However the need to keeping the new and old processes until the ERP module becomes fully functional. As an experience, staff should be allowed to work in the two systems simultaneously during a specific period of time. After it is understood that the ERP module is fully functional the old way of doing the job is abandoned. In this way any unexpected problem can be dealt with.

Accounting module is the most crucial one in an ERP program. Nearly every sub-module has a relation with this module. Purchase module transfers the details of purchase bills, project module transfers the direct and indirect costs of the progress done in that period. Therefore the manager of the ERP team decided on implementing the accounting modules last after all others are done.

As a conclusion, like every change project, an ERP implementation process confronts challenges and resistance from staff. Resistance can be overcome by educating the personal and showing them the benefits of the new system from their point of view. High level managements support and encourage are crucial in the success of such projects. Such a large scale project requires commitment from everyone within the business.

: 23 May 2011 03:09 |  Tags: Construction Contractor Entegration Erp Implementation |  Comments (0) |  Close comments |  Report a problem

Integration of ERP and social networking

With the booming emerging and growth of online social networks, it goes without saying that the capabilities of social networking and collaboration play a vibrant role in modern business operational and managerial issues. Meanwhile, the adaption of ERP which is the widely-applied advanced Information System in business also enters its 3^rdgeneration, integrated with cloud computing as existence of SaaS (Software-as-a-Service). As to those two critical components of business, combining them together to serve for business in order to achieve better performance seems an inevitable trend. However, from personal point of view, it should be true, but it might be slow.

Embracing social capabilities for ERP is not merely embedding a Facebook icon in the system and facilitating employees to maintain their interpersonal networks without leaving the transaction. The integration of ERP and social networking is more systematic and comprehensive, related to utilization of information and effective collaboration.

For instance, CRM application of ERP is a relatively rational field to integrate social networking. Greco and White (2009) refine an idea, called Sales 2.1 which is a combination of CRM, ERP, Web 2.0 and Sales 2.0 for improving purchasing experience. With the efforts of Sales 2.1, buyers and sellers can be better connected with the mediation of IT and ERP. By adopting ERP systems and CRM apps, firms can actively capture expectations, ideas and feedback of customers posted on social networks and those data are automatically re-organised and analysed for the use of overall decision-making process (ERP.com, 2010). Moreover, HR application of ERP also can make better use of social networks to facilitate internal or external recruiting and management.

Nevertheless, idealised imagination and design may be hard to meet practical realisation. Integrators confront two tricky things: the agile, feasible and social nature of social networking and the complex and strict structure and process of ERP. The one is the difficulty of mining and utilising sentimental data in online social networks in the application of ERP. The main feature of ERP is ensuring high-quality data provided for overall corporation systems and departments and whether the quality of data extracted from online social networks reaches the standard is hard to judge by machines, even manipulating individuals. On the other hand, huge architecture and standardised process of ERP makes the adoption of social capabilities less responsive, thereby losing inherent feasibility of social tools. As a result, in spite of idealised configuration there still exist several critical obstacles for the integration of ERP and social networking, and actually it is indeed hard to find a few social elements in various existing ERP systems.

However, ERP vendors and designers still make their efforts on it. For instance, SAP StreamWork labels itself as the ¡¡ãfirst and only solution that brings together people, information, and business methods to drive fast, meaningful results¡¡À (SAP StreamWork, 2011). It is a collaborative decision-making solution of SAP ERP system which can bring people together on the same page, share documents and data in plain view, and provide structure and tools for brainstorming and decision-making. Although it is not pure integration of ERP and social networks, social and collaborative aspects can be detected from this solution. In addition, Oracle Fusion Human Capital Management application also features social capabilities with cloud in HRM (Oracle Fusion Human Capital Management, 2011).

As concluded, it is sure that future ERP systems will be integrated with more and more social capabilities for business needs; yet, inherent complexity of ERP systems will make integrated process slow and hard to achieve.

References:

ERP.com, 2010. ERP, CRM and social networking. [online] Available at: < http://www.erp.com/section-layout/325-crm-software/5657-erp-crm-and-social-networking.html> [Accessed 8^th May 2011].

Greco, D. and White, B., 2009. Alphabet soup: How CRM, ERP, Web 2.0 & Sales 2.0 is creating a superior sales experience: A case study. In: Proc ISECON Proceeding of the Information System Education Conference. Washington DC, USA.

Oracle Fusion Human Capital Management, 2011. Oracle Fusion Human Capital Management: New cloud applications from the leader in HCM. [online] Available at: < http://www.oracle.com/us/products/applications/fusion/hcm/index.html?origref=http://www.oracle.com/us/products/applications/index.html> [Accessed 8^th May 2011].

SAP StreamWork, 2011. What is SAP StreamWork?[online] Available at: < http://www.sapstreamwork.com/> [Accessed 8^th May 2011].

: 10 May 2011 00:26 |  Tags: Erp Networking Social |  Comments (3) |  Close comments |  Report a problem

ERP project risk assessment

One reason often cited for any software project failure is that managers do not properly assess and manage the risks involved in their projects. Most project managers perceive risk management processes as extra work and expense; thus, risk management processes are often expunged if a project schedule slips.

In the past, several ways were proposed in order to improve the success rate of ERP introduction, unfortunately without great effect. The nature of IT project risk is determined by the risk factors and by the strategic need for the project, innovation, repetition of failed experience, etc. Many processes have been developed in recent years to address the need for a more effective risk management, though they are often too general for ERP application, models including PMI 2001, Standards Australia 1999, SAFE methodology, and Risk Diagnosing Methodology are typical iterative approaches to risk management problems . Main phases are: 1. context analysis; 2. risk identification; 3. risk analysis; 4. risk evaluation; 5. risk treatment; 6. monitoring and review; 7. communication and consulting.

However, ERP projects are interdisciplinary; they affect interdependencies between business processes, software and process reengineering. Critical factors include technological and management aspects, both psychological and sociological. To be effective a risk assessment method should consider several potential aspects (technology, market, financial, operational, organizational, and business) and link them to the project life cycle. This ensures the selection of the most appropriate risk treatment strategy.

Risk management strategy consists of two approaches. The first aims at reducing risky circumstances, while the second deals with risk treatment after a risk appears.

: 01 May 2011 19:01 |  Tags: Erp Risk |  Comments (1) |  Close comments |  Report a problem

Challenges of ERP implementation in manufacturing

ERP is integrated software application system used to control different aspects of enterprise management. The final aim of ERP is reducing cost and enhancing efficient. The early ERP is developed on the base of MRP, MRP II and CIM. Thus, the modern ERP software tools are powerful in the supply chain mangement and customer management.  

It cannot conceal the great advantages of ERP application in manufacturing industry. However, manufacturing is totally different from service and merchandising business. There are several challenges stopped the expanding of ERP software during manufactors.

1. Bottleneck of software tools

The information system in manufacturing is based on the CAD technology. With several years development, manufacturers already have CAD, CAM, PDM, PLM, Virtual factory and so on. However, it is difficult to integrate these technologies within ERP system. 

For example, there is a need of a process to deal with the order change. Because manufacturing is based on the customer requirements and the customers would change their mind during the production. Thus, the modification process is one of the most important workflow in manufacturing arena. But there is not a good ERP software can handle the order change in different departments quickly and perfectly. 

Another example is CAD drawing and BOM. We can build and link the CAD drawing and BOM in CAD system now. But the bill of materials used in ERP is different. And there is no tool can change the information of CAD drawing into the BOM used in ERP software automatically. Even a manufacturer implemented the ERP system, they need lots of people and time to do the work between the different systems. 

2. Industry complex

Compared with service and merchandising business, manufacturing has more complicated workflow. For example, the material purchase planning is quite different with that in merchandising business. In a merchandising company, a purchaser can easily get the information of purchase quanlity and time from the suppliers and customers. However, the purchase planning in manufacturing needs to consider the production schedule and factory capacity which have relationship with many other departments. The information collection and analysis would be a challenge work for ERP implementation team.

3. Repetitive investment

Most of modern manufactors already have more than one information systmes, not only CAD/CAM, but also OA, HR, CRM system. But these systems are rather separated. They cannot share or exchange information with each other automatically. So they need update regularly by operators. If there is something change in one link of the business, it would take a long time to make the change reach every department of the enterprise. For the head of the enterprise, implementation a new ERP integrated system means giving up the previous information systems and waste a lot money. However, there is not a formal solution for manufacturers to created a integrated platform with existing information systems.

4. Background of staff

Manufaturing is a very old industry and has developed for centuries. ERP is a mixture of industury and computer science and only has developed decades. There are lots of new concept and technologies in ERP which are different from traditional manufacturing. So it takes long time and a great sums of money to let the staff of manufacturing understand the new concept and apply the new systems.  

Basically, ERP system is a kind of software. So the most of the system developers and consultants have the background of computer science or IT. It is a hard work to make these IT workers to understand the processes and requirements during the production without engineering background knowledge. In the implementation, there always be a lot of time wasted on the communication between the two backgrounds. Thus, there is a need of someone have both knowledge of engineering and experience of the information systems. 

5. High cost

No matter the ERP system or other information systems have a rather high price. It would take a lot of money to implement, operate and maintain the systems, especially in manufacturing industry. For SMEs, they cannot offer these expenses. So they need a simple and cheaper solution for their business which would not be so powerful but fix their current problems and keep the potential of development in the future. 

All in all, it is a greater challenge to implement ERP system in manufacturing than in other business. 

: 27 Apr 2011 11:43 |  Tags: Challenge Erp Manufacturing |  Comments (3) |  Close comments |  Report a problem

ERP Simulation Game

Writing about web page http://www.youtube.com/watch?v=aAdmO7tGWTc

when I was doing my first degree, I have the opportunity to get involved in the competition of ERP simulation. there's no much difference between the simulation we have experienced in WMG course except it's based on software. everyone has been assigned a job role as part of the team, motivatively, each of us was entitled as one department manager which including financial,purchasing,storage,CRM,manufacturing and marketing, which covered all the major taches of the operation of a company. In one decade time, every company has to optimize the allocation of  resources and strain company strategies by forcasting the market trend and the movement of competitors.Its not quite a win-win game but a win-or-die combat. as an interactive,experienced and artificial tutoring system,is featured comprehensive,practicable,simulating and interesting. From this game, ive realized the importance of the information flow and taking a broader view in terms of the integeration of the whole company.

• Gain These Benefits from SAP ERP Simulation by Baton Simulations:

• Significantly increased user acceptance and adoption of SAP.
• Improved understanding of the integrated nature of SAP and the power of collaboration.
• Increased knowledge of basic navigation and operation of SAP.
• Enhanced business acumen and sharper decision making skills.

you can download it from here http://www.filestube.com/s/sap+simulator

if you cant find enough team members you can role play it all by yourself.it gonna be fun and also let you learn better as a whole of SAP.

hope you enjoy the game and wish all good with your PMA

: 24 Apr 2011 13:52 |  Tags: Erp Sandtable |  Comments (0) |  Close comments |  Report a problem

Critical Success Factors to make your ERP Project Successful

Eric Kimberling (2006) mentioned some of the critical success factors to make an ERP project successful. The basis on which Eric presented success factors was that many of the companies filed lawsuits against ERP software vendors because of their failed implementation. He also said that many companies assume success or failure is the fault of the software you purchase, but in reality, 95% of a project's success or failure is in the hands of the company implementing the software, not the software vendor. Following are the critical success factors that Eric mentioned:

1. Focus on business processes and requirements first. Too often, companies get tied up in the technical capabilities or platforms that particular software supports. None of this really matters. What really matters is how you want your business operations to run and what your key business requirements are. Once you have this defined, you can engage in a more effective ERP software selection process.

2. Focus on achieving a healthy ERP ROI (Return on Investment).This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to maximize the business benefits of ERP.

3. Strong project management and resource commitment. At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project.

4. Commitment from company executives. Any project without support from it's top-management will fail. Support from a CIO or IT Director is fine, but it's not enough. Briefing should be given to CEO regarding the project so that problems and issues should not arise in the future.

5. Take time to plan up front. An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

6. Ensure adequate training and change management. ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

7. Make sure you understand why you're implementing ERP. This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on which route to take, which may or may not involve ERP.

By ensuring you have these 7 critical success factors in place; your organization will be much more likely to maximize the business benefits of ERP.

: 16 Apr 2011 00:04 |  Comments (0) |  Close comments |  Report a problem

Are cloud–based ERP systems the future for SMEs?

The first ERP systems were highly expensive and often demanded major business process changes or costly customizations. Although this characteristic of ERPs was acceptable for large enterprises it was inappropriate for SMEs (Johansson and Bjørn-Andersen 2007).

SMEs are generally limited in financial resources and also in IT skills making them highly dependable on the characteristics of their owner/manager (Levy 2009). Due to their small number of employees they often end up with non-structured organizations, were one employee can fit many hats (Deep et al. 2008). Thus cost was not the only reason why ERP systems were not adopted by SMEs, other major reasons were the required organizational changes and the ease/speed of implementation (Johansson and Sudzina 2009).

Following the change from mainframe systems to client-server ERPs, some think that we are now entering a 3^rd generation of ERPs based on cloud computing, in particular SaaS (Software-as-a-Service) (Johansson and Bjørn-Andersen 2007; Hofmann 2008). After the Y2K period the high-end market is saturating, and major ERP vendors such as SAP and Oracle are now looking into the SME sector which make over 90% of all enterprises (Deep et al. 2008; Carvalho and Johansson 2010).

New ERP vendors are also providing ERP solutions based on cloud. An example is Manu Online who are providing a SaaS ERP solution for the manufacturing and material supply markets (Manu 2011). They say that “As a Saas (software as a service) package Manu Online immediately saves you money because we have removed the need to buy and maintain an expensive IT infrastructure”.

In fact SaaS has a very valid advantage over other technologies because it does not involve any upfront costs, which makes it highly attracting to SMEs. SaaS solutions normally offer a pay-as-you-go payment service; hence an SME would not require any expenditure in hardware (servers), licensing, or any other equipment except for a pay-per-use fee (Barot et al. 2010).

This might all sound very simple and an obvious solution for SMEs. However, as Buonanno et al. (2005) pointed out ERP implementation is not just about technical effort, the business aspect of the implementation is also highly critical. Therefore the question is how can SaaS ERPs fit the business requirements of an SME?

SaaS solutions generally offer a one-size-fits-all solution (Barot et al. 2010), which means that all of its clients will be using the same system with maybe a few configurable parameters. But SMEs are very different from each other, and often they want to take a competitive advantage by customizing their IT system (Taylor and Murphy 2004).

So, to conclude, in my opinion, yes SaaS can solve the technical problems by reducing up-front capital investments in IT, but how will they address the business aspects required for the successful implementation of an ERP system? How will they adapt to different SMEs needs? Will SaaS ERP vendors end up customizing their system for all their customers? If yes, what effect will this have on the performance of their system?

References

Barot, P. et al. (2010). The future of Cloud Computing: Opportunities for European Cloud Computing Beyond 2010 (Expert Group Report for European Commission). In Jeffery, K. and Neidecker-Lutz, B. (Eds). Retrieved March 25^th, 2011 from the European Commission CORDIS website: http://cordis.europa.eu/fp7/ict/ssai/docs/cloud-report-final.pdf

Buonanno, G., Faverio, P., Pigni, F., Ravarini, A., Sciuto, D., & Tagliavini, M. (2005). Factors affecting ERP system adoption: A comparative analysis between SMEs and large companies. Journal of Enterprise Information Management, 18 (4), 384 – 426.

Carvalho, R. & Johansson, B. (2010). Enterprise Resource Planning Systems for Small and Medium-sized Enterprises. Handbook of Research on Software Engineering and Productivity Technologies: Implications of Globalization. Retrieved March 22^nd, 2011 from the 3gerp website: http://3gerp.iwvi.uni-koblenz.de/docs/HSEDeCarvalho-Johansson.pdf

Deep, A., Guttridge, P., Dani, S. & Burns, N. (2008). Investigating factors affecting ERP selection in made-to-order SME sector. Journal of Manufacturing Technology Management, 19 (4), 430-446.

Johansson, B. & Bjørn-Andersen, N. (2007). Identifying Requirements for Future ERP system. Proceedings of the 30th Information Systems Research Seminar in Scandinavia - IRIS 30 (Ed.: Tiainen), 467-480. Retrieved March 22^nd, 2011 from the 3gerp website: http://3gerp.iwvi.uni-koblenz.de/docs/Identifying%20Requirements%20for%20Future%20ERPs_IRIS%202007%20paper.pdf

Johansson, B. & Sudzina, F. (2009). Choosing Open Source ERP Systems: What Reasons Are There For Doing So? IFIP Advances in Information and Communication Technology, 299 (2009), 143-155.

Hofmann, P. (2008). ERP is Dead, Long Live ERP. IEEE Internet Computing, 12 (4), 84-88.

Levy, M. (2009). An Exploration of the Role of Information Systems in Developing Strategic Growth in Small and Medium-sized Enterprises. Unpublished doctoral thesis, University of Warwick, Coventry.

Manu (2011). Online ERP for companies in material supply or manufacturing. Retrieved April 4^th, 2011: http://www.manuonline.com

Taylor, M. & Murphy, A. (2004). SMEs and e-business. Journal of Small Business and Enterprise Development, 11 (3), 280-289.

: 04 Apr 2011 18:13 |  Tags: Erp Saas Sme |  Comments (2) |  Close comments |  Report a problem

Reflections on ERP

I have read a lot of blogs from various people who have completed the ERP module and it seems everyone is here to define the meaning of ERP and its technical attributes. I feel as if I am still reading textbooks when reading most of the blogs. However, there are also some useful information contained within some of them. Many literature sources describe the significance of ERP systems with regards to its ability to coordinate company information and data from all areas within an organisation and integrate it with the business processes.  This apparently allows for easy circulation of information and data sharing.  From my practical experience of using the SAP software during the ERPI module, I could confidently say that it is a very rigid software package for an application that is supposed to enhance business processes.  Also, a look at both the Oracle and SAP websites reveal so many solutions and applications - some having repetitive functions embedded within different packages. The first question that actually springs to mind is; how does an organisation determine the most useful applications or functions especially with the lurking realization that the implementation is going to be considerably costly? Secondly with the constant updates in technology, how would an organisation benefit without spending large sums of money trying to update already expensive systems? These are the questions that I shall be pondering on when researching further on ERP and its implementation.

: 12 Jul 2010 03:03 |  Comments (4) |  Close comments |  Report a problem

Stages in the implementation of an ERP System

Today, ERP systems play a major role in many global organisations, multinational to SMEs. These were implemented in order to save operating costs, integrate multiple incompatible systems, improve performance of business functions, access real-time information and at the turn of the century, in order to achieve Y2K compliance. Advocates of these systems are quick to highlight these benefits. Yet, apart from the hefty price tag, there are many not so obvious hurdles to the successful execution of ERP systems.

During her research in conjunction with Benchmarking Partners, Jeanne Ross from the Sloan School of Management at the Massachusetts Institute of Technology surveyed executives from a number of manufacturing organisations. Of importance was the varied perspective gained by interviewing executives at three levels of each organisation: senior managers who sponsored the implementation, project managers responsible for the implementation and managers of business units affected by the system.

The first stage in the implementation of an ERP system is the Design stage. Of importance during this period is understanding the general assumptions made by system developers, which is unlike traditional systems development where systems are built in support of processes, and not matching processes to systems. Management decisions on the level of standardisation also plays a key role in this stage.

The Implementation stage which typically lasts upto a year, sees performance drop drastically across the organisation. The integration with or replacement of legacy systems requires training of staff and sees the disruption of normal operations. Methods to continuously monitor the impact of the ERP system need to be put in place.

The Stabilization stage which follows is an opportunity to get familiarized with the new system, verify and if required modify business processes and iron out irregularities. Like in all the stages, resistance to the system is common to be encountered. Apart from training, incentives to successful implementation can be offered.

The next Continuous Improvement stage is one of consolidation. Being expensive and disruptive to implement, many organisations do so in modules. By first trialling the system in across a business unit or geographical region, difficulties are identified and addressed before the system is expanded further.

The Transformation stage of an ERP system implementation is when organisations see a marked improvement in key performance indicators. These vary between organisations but can often be quantified in monetary terms.

Ross, J. W. (1999). Surprising Facts About Implementing ERP. IT Professional , 1 (4), 65-68.

: 09 Jul 2010 23:51 |  Tags: Erp Systems Implementation Stages |  Comments (0) |  Close comments |  Report a problem

Why Enterprise Resource Planning Projects Fail?

Writing about web page http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VCT-47G3XP2-3&_user=7195183&_coverDate=04%2F16%2F2003&_alid=1395772318&_rdoc=4&_fmt=high&_orig=search&_cdi=5963&_sort=r&_st=4&_docanchor=&_ct=7&_acct=C000029838&_version=1&_urlVersion=0&_userid=7195183&md5=d0a8e50a1cd8858ad08ccb253eea100b

Why Enterprise Resource Planning (ERP) Projects Fail?

Adopting an ERP system has become a norm in most multinational industries in today’s competitive market. Organisations have recognized the potential benefits of implementing an ERP system so as to gain competitive advantage and improve their business strategy. Nevertheless ERP project has an infamous reputation of failure as most projects become over budget and delayed.

Umble et al (2003) based on their research identified various reasons why ERP implementation project fail. They argued that the main reasons for failure can be grouped into ten categories as listed below:

1.     Obscure Strategic goals

2.     Top management is not committed to the system

3.     Implementation project management is poor

4.     Lack of organisations commitment to change

5.     Incompetent implementation team not selected

6.     Inadequate education and training

7.     Data validation is inaccurate

8.     No performance measures

9.     Improper resolution of Multi-site issues

10.  Technical difficulties

Umble et al (2003) further reviewed the case of an ERP implementation at Huck International Inc, a design and manufacturing company. They identified that though the company successfully implementation an ERP system and achieved some of their benefits, they underwent various challenges such as; lack of complete top management and implementation team involvement during the implementation phase of the project. This resulted in the company going over budget during the course of the project and exceeding their initial time plan.

An organisation that plans to implement an ERP system needs to understand its complexity and consider all possible factors that determines its successful implementation. Careful analysis and planning must be carried out at all the different implementation phases (before, during and after implementation) so as to avoid a project failure.

Various other real life case studies of ERP implementation  that shows that factors above influence the success and failure of ERP projecthas been reviewed in Motiwalla & Thompson's book referenced below.

Book: Motiwalla, L. and Thompson J. (2009). Enterprise Systems For Management. New Jersey: Pearson Prentice Hall.

Article: Umble, E., Haft, R., and Umble, M. (2003). Enterprise resource Planning: Implementation procedure and critical succes factors. European Journal of Operation Research, 241-257.

Further Comments are welcomed!

: 09 Jul 2010 18:13 |  Tags: Book Review |  Comments (5) |  Close comments |  Report a problem