The Issues In Implementation

Published Date: 02 Nov 2017

ABSTRACT

This section will comprise of the issues pertaining to implementation of ERP. Further in the same section, we will refer to the published articles in the same domain, being done over the years. We will also come up the ERP software which is currently implemented in Fortune 500, why is it implemented and broadly explain issues while implementing solution.

The intention to work on the paper is to highlight issues in contemporary implementation practices of Enterprise Resource Planning, while proposing best practices to adopt in order to address highlighted issues. The best practice will be as per PMO methodology for effective project management.

Organizations hire implementation consultants before going after realization, however, the best practice may or may not differ. For the reason, we will look into the methodology deeply and propose new ways for effective and in-time implementation.

In the research, we will address top issues that let these projects span in a relatively shorter period, while propose the best practice that should be followed in order to effective deployment of an ERP system.

INTRODUCTION

We will introduce the concept of ERP in the paragraph, will refer top software being implemented in different industries, and will provide in-depth analysis of which software suits most.

In our digital age, information systems are a core part of almost any organization of any size. Nowadays all the corporation’s business process from daily operations to long term strategies is related some type of information technology. These systems are each day more and more important since they can strength the competitive position of organizations and add decisive value to the companies. (Zeng et al., 2003).

The first time that the ERP term was used was in the early 90s by Gartner Group. This was used just as an as an addition of MRP (material requirements planning). Around 1995 ERP solutions represent all main tasks of an enterprise. During this decade, not only big corporations use ERP also governmental agencies, international organizations and large NGOs started to use ERP systems.

ERP SYSTEMS

In this sub-section, we will introduce the concept of ERP, will refer to leading ERP system which are implemented in different organizations in detail while provide its pros and cons broadly.

Enterprise resource planning (ERP) is basically a system for integrate all the information related to an entire corporation. This system integrates inside and outside information related to the entire corporation’s process. The goal of an ERP is to drive the information flow between all key business tasks involved in the daily processes and also manage the relations with external stakeholders. In few words thanks to a classical definition of IBM the purpose of an ERP is "Integrating the enterprise through the internet. Extending the enterprise to the Internet"

CHARACTERSTICS

In this section, characteristics will be highlighted of ERP that should exist in the software, that should be considered while implementing the system. We will make it stronger by referencing published papers.

According to Chen, 2001 Enterprise Resource Planning (ERP) systems are some of the most complicated information systems in use by the companies. Inside the organization an ERP should be able and support the daily operations of every section of the company. It should drive the information from suppliers finishing at stakeholders and customers. In resume all related to accounting, human resources, payroll, production, sales, client’s management and so on. Another main characteristic and core strength of an ERP system is the real time management of data.

Companies are spending millions of dollars for their ERP investments hoping to achieve the claimed benefits. Although these benefits are not so easy to achieve, firms continue to invest on these systems and it is a still a big market. Several researches done on ERP show that ERP systems are mostly known by their transactional capabilities. They are supposed to support daily operations of every department in a company.

IMPLEMENTATION METHODOLOGY

In this section, we will be discussion of what methodologies currently exist when an organization plans to implement end-to-end business processes

The core ERP software is supplied by an external party, a specialist supplier of OTS ERP applications. It is possible for part or all of an ERP application to be developed in-house by a user organization, but this does rather undermine the business case for the business change and carries with it a number of risks, as we will see shortly.

SAP ERP recommends following Accelerated SAP methodology to implement the business processes, automating them and interconnect these modules to have data consistency within the entire system. It consists of the following process steps:

Figure : ASAP Methodology

CURRENT PRACTICES

In this sub-section, we will discuss what current practices are being followed in order to successfully implement the ERP system in different functions/departments of the organization.

ACCENTURE, AN INSIGHTS

Here, we will discuss the implementation methodology being practiced in the leading consulting company around the globe, Accenture.

Accenture ERP Integration and Support Services Capabilities

Accenture is the world’s largest business integrator and is uniquely qualified in the enterprise resource planning (ERP) implementations marketplace. Our ERP integration teams typically consist of industry experts, ERP system specialists and consultants with activity mission area knowledge.

Our ERP implementation delivery centers complement our client teams and allow us to capture reusable components of methodologies and technologies and use them to create tailored solutions for our clients quickly and cost-effectively.

http://www.accenture.com/SiteCollectionImages/Health_and_Public_Service/Services/Accenture-Corporate-ERP-Integration-Implementation-Experience-Large.jpg

CRITICAL SUCCESS FACTOR

In this sub-section, critical success factors which are the key factors to either make the implementation effective, OR make it a total failure.

The first key factor for the success is determined by the characteristics of the software itself and the extended capabilities that it should bring to the company. Firstly the software must be flexible and modular, must support a high variety of functions. For be successful the software must bring to the company better analysis and planning capabilities filling the information gaps in the organization. Only with the ERP follow the characteristics is considered by the managers and the users an added value to the company and will be a success.

On the contrary, functional business information systems isolate one department from the other leading duplicate, inconsistent, erroneous and costly data entries.

Following are few of the risks which may impact timely delivery of the dissertation within the defined scope:

Sample organization may not give time to interview

White papers may not be accessible with its technical details

Unavailability of related Resources

SOFTWARE BEST PRACTICES

Here, we will discuss the practices which are embedded within the software package

IMPLEMENTATION THEORIES

We will further discuss implementation theories, including Big Bang, which is the most successful theory so far.

The next slide forms a discussion on the 2 main implementation

approaches:

– Roll-out versus Roll-in

– Implementation at one location OR one area of functionality

– Followed by subsequent implementation of other sites and / or

Both cover:

functional areas

The key difference being

– Roll-out : inclusion of subsequent releases and / or locations in

separate systems

– Roll-in : inclusion of subsequent releases and / or locations in the

same system

The alternative to roll-out or roll-in is Big Bang

– Generally only considered for small (<200 user) implementations

Different industries may install the same ERP software in totally different processes [6]Leon. The same industry may implement different software in the same approach.

There are several transition strategies but most of them are variants of the five basic types:

a) Big Bang b) Phased c) Parallel d) Process Line e) Hybrid

Big Bang Transition Strategy: In this strategy industries layout a magnificent map for their ERP implementation. The

installation of ERP systems of all modules happens across the entire organization at once. The big bang approach

promised to reduce the integration cost in the condition of thorough and careful execution. This method dominated early

ERP implementations and it partially contributed to the higher rate of failure in ERP implementation. All the business

functions performed in the inheritance system across the entire enterprise are concurrently transferred to the new legacy

system during a period of one day or a weekend. But now a day’s industries are wavering to use big bang approach as it

consumes too many resources to support the go-live of the ERP system. Success in using the big bang approach comes

with careful preparation and planning prior to using big bang. But many industries struggle to decide whether the big bang

approach is the right selection or not for their endeavor.

Phased Transition Strategy: The phased approach, implements one practical element at a time, in chronological order as

shown in fig. Autonomous modules of ERP systems are installed in each unit, while integration of ERP modules is done at

later stage of the project. This has been the most commonly used method of ERP implementation. Each business unit may

have its own "instances" of ERP and database. Modular (phased) implementation reduces the risk of the installation,

customization and operation of ERP systems by reducing the scope of the implementation. The unbeaten implementation

of one module can help the overall success of an ERP project. The interface programs that are used in this strategy bridge

the gap between the inheritance ERP system and the new ERP system until the new ERP system becomes fully

purposeful. This strategy is often used in situations that not have strong centralized synchronization in the ERP project.

Parallel Transition Strategy: The parallel approach keeps both the inheritance system and the new ERP system active

concurrently for a length of time as shown in fig. The amount of time for which both the systems are in operation ranges

from one day to several months and may be to years. Portions of the same functional business areas (including software)

such as finance, manufacturing, marketing etc. are operating at the same time for both the legacy and ERP systems. An

advantage to the parallel strategy is that it has good improvement options in case something goes off beam. Because both

the inheritance ERP system and the new ERP system are in function at the same time for a particular module, the

industry’s business processes will not be broken up if the new ERP system breakdowns. The parallel approach also

provides the most sensible number-to-number comparisons to authenticate that the new ERP system is performing the

necessary business process flows. This strategy is ideally suited for mission critical situations that cannot survive a major

break down of an ERP system

Process Line Transition Strategy: The process line transition strategy breaks the implementation strategy to handle similar

business process flows or product lines. Using the process line strategy, the first product line and related assets go first in

making the transition from the inheritance system to the new ERP system. Once this transition is achieved successfully,

the second product line is moved from the inheritance system to the new system. This initial success helps to build

industrial faith in the new ERP system, increasing its overall prospect of success. Upon achievement of the first process

line, resources are loaned to the more complicated and challenging process lines.

Hybrid Transition Strategy: It is the combination of any of the implementation strategy like process line, phasing and

parallel implementation strategy. Hybrid strategies tend to evolve into the needed agreement as ERP team members study

and consider information. The complexity of a hybrid strategy varies tremendously depending upon the state. Small

single-site ERP implementations tend to have simpler hybrid strategies than those used by large conglomerate

corporations with many dissimilar environmental locations. Many implementations use hybrid strategies because they are

flexible in adapting to the specific needs of the situation. With the hybrid strategy, industries can exclusively adjust

implementations for their needs

ISSUES IN IMPLEMENTATION

This is the most important section being addressing the title issue

Why Companies undertake ERP?: Companies should undertake ERP

because of the following points: Integrate Financial information, Integrate

customer order information, Standardize and speed up manufacturing

processes, Reduce Inventory, Standardize HR Information.

The challenges involved in ERP implementation are:

(i) Consultants, vendors and users have to work together to achieve the overall objectives

of the organization. The consultants have to clearly understand the user needs and the

prevailing business realities and design the business solutions keeping in mind all

these factors.

(ii) Proper customization of package to the organization has to be in tune with the users

needs and business objectives.

(iii) Roles and responsibilities of the employees have to be clearly identified, understood

and configured in the system.

(iv) Acceptance by employees for the new processes and procedures is critical for the

success of the package.

(v) Package to be implemented in totality to achieve the maximum benefit.

(vi) Defining the implementation methodology to be followed – identifying needs, evaluation

of the current situation, predicting the future situation, reengineering the business

process, selection of correct package.

(vii) Installation of hardware, software required for the package.

(viii) Selection of right kind of consultants.

(ix) Preparing the implementation guidelines – training users, effective leadership, adapting

the new systems and making changes in the working environment etc.

(x) Post implementation monitoring of Key Performance indicators, Critical success factors etc.

Question 5

Analysis indicates that only 30 to 40 per cent of the ERP implementations are able to achieve their envisioned goals. There have been many stories of various ERP implementations leading to revenue losses in the company. According to a survey conducted by CIO Magazine, a large number of company executives around the globe believe that ERP’s actual benefits are failing to meet expectations because of the inflexibility of the systems

REQUIREMENT GATHERING

The main failure is because of the incorrect requirements of the business processes, which we will be discussion of what factors make this step failure and how we are going to tackle it.

SOFTWARE SELECTION

This section will highlight different ERP vendors, while provide selection factors that should be considered while finalizing ERP software

The importance of the software selection process must not be underestimated. Given the rapid development of new technology, there are numerous options for ERP systems. Each organisation should select and implement a system that accentuates its distinctive competitive strengths while overcoming its competitive weaknesses.

He suggests: "One of the most important things everybody should do before considering implementing ERP is to figure out if they really need it. Some firms require complex ERP applications like SAP, Oracle, PeopleSoft, JD Edwards, Navision, Ofbiz and Opentaps. At the same time, for many companies, software packages like MS Office and online applications effectively perform the role of an ERP."

TECHNICAL ISSUES

This section will address technical issues in detail

ORGANIZATION CHANGE MANAGEMENT

This mass level change through ERP will be discussed in detail, which is the main concerning area while implementing ERP

TEAM, IMPLEMENTING ERP

This will highlight competency within team, who are implementing ERP

Successful ERP implementation is achieved when the people, processes and technology work in synchronization to achieve the goals of the organization. Here are a few tips that will help you in the smooth transition from your legacy systems.

Even can be a good opportunity to review and improve groups’ dynamics.

"Involving all the users frequently is probably the best insurance against failure. If the ERP is dropped on users’ laps suddenly, the shock could negate the advantages of using the ERP

UNALIGNED PERPECTIVES OF IT AND BUSINESS

This will highlight the implementation perspective issues, which are not common in IT and Business people

PEOPLE AND PROCESS

This will help analyzing how people will be impacted, and how the processes will either get optimized or more complex, which may only be for processor, while in big picture, it would be optimizing entire process

On the contrary, functional business information systems isolate one department from the other leading duplicate, inconsistent, erroneous and costly data entries.

TRANSITION

This will provide transition related issues from existing system to newly implemented system

The key decision in the transition process is the cutoff time, it will determine what is consider past data and new data and will involve manual entry data since ERP is a ‘go live’ system. Normally companies are choosing the end of an accounting year.

The transition from existing system to ERP system can take from minimum 6 months to maximum 5 years. While, for migrating from Manual system to ERP system, the tenure could be around a year to 2 years. This is because of the different issues pertaining to the deployment strategy of an ERP system.

Technical Infrastructure

Make sure all users have connectivity and access to the system. Ensure you have the right bandwidth to handle peak usage periods. Be sure you have disaster recovery and fail over procedures in place and working.

Application Software

The software has been tested to user satisfaction and has the ability to process all business transactions without defects.

Data

Data from legacy systems has been converted and validated by functional process owners.

Organization

The organization must be ready for the new system. This means all policy decisions must be finalized. It also means that new processes and procedures have been communicated to all parts of the organization. All groups must be aware of and prepared for the change in systems.

Operational

The organization must be ready to operate the new system on a daily basis. This means all processing schedules are in place, tested, and documented. Help desk and technical support is available to respond to problems.

Third Party

Third party refers to those outside the organization that might be impacted by the changes. Customers, vendors, regulators, and suppliers are among the possible groups that need to know you have a new system and must be prepared to deal with information flow changes. Interfaces to external organizations must have been tested to the satisfaction of that group.

User

Every system user must be ready to utilize new procedures and technology. This means training, documentation and acceptance have been attained. User security has been granted and tested.

MAINTENANCE OF PAST DATA

This will address the Issues pertaining past data, that how it should be maintained and in which system it should be made available.

We will be going through the white papers, published earlier in different journals related to the subject "Issues in Implementing ERP systems", as well as "Challenges and Risks", so as to come up with what the research has been done, what other researchers concluded and recommended and finally will propose our solution. We will focus on Oil & Gas industry to implement ERP system, and would be focusing on reducing the cost and implementation time while equally the process for effective utilization of the ERP system. We have selected SAP ERP as our system, which is being at the top in the current market, while being deployed in major fortune 500 companies.

Loading previous data is one of the key issues in an ERP implementation. All the companies involved in a migration are willing to load the historical data in the new infrastructure, but this can generate many problems. Firstly we have to question the importance of the past data and if the befits derived from it can balance the cost and problems that this will involve. Generally past data may do not have any transactional or reporting significance because all the report related to this data are already done and closed. Another aspect is the bugs that this data can introduce in the current data, corrupting it in some cases. Also the past data can represent the majority of the data present in the ERP system, reducing its performance. In this case is really useful the example of make a move from an old house to a new one. We want to fill the new house with all the old furniture having no space for the new one?. Witch belongings are mandatory to move? These are the main questions that a company moving to an ERP should ask.

Normally companies are migrating as much data as possible without compromising the operability of the new one. This process is different from one system to another, SAP and Oracle will have much more flexibility compared to PeopleSoft but implicates also a more complicated implementation.

PROPOSED METHODOLOGY

METHOD

This will provide in-depth analysis of proposed methodology to implement business processes through ERP system

With ASAP methodology, there exist many issues which is why most of the strategies to implement ERP ends to failure after huge investments. Though, there have been done many researches on the topic, however we will work over the different methodology, optimize it and propose the new methodology to make the transition as smooth as possible for the clients. We will discuss more in the fourth chapter of the dissertation after critically analyzing ASAP methodology, as the proposed method will be optimizing few of the process steps, while adding more steps to it, so as to come up with the BEST PRACTICE.

BENEFITS

This will provide detailed analysis of anticipated benefits to make a project successful

IMPLICATIONS

This will provide what implications there could be by following our proposed methodology

The company, ABC Limited may face several new business risks when they migrate to real-

time, integrated ERP systems. These risks include the following:

1. Single point of failure – All input data of an organization and transaction processing is

within one application system.

2. Structural Changes - Significant personnel and organizational structural changes

associate with reengineering or redesigning business processes.

3. Job Role Changes - Traditional roles of users are changed to empowered-based role.

They have more chances to access enterprise information in real-time. This point of

control shifts from the back-end financial processes to the front-end point of creation.

4. Online Real-Time – This environment requires a continuous business interaction. This

warrants the capabilities of utilizing the ERP application and responds quickly to any

problem that requires a re-entry of information (e.g., if field personnel are unable to

transmit orders from handheld terminals, customer service staff may need the skills to

enter orders into the ERP system correctly so the production and distribution operations

will not be adversely impacted).

5. Change Management - It is challenging to bring together a highly integrated

environment when different business processes have existed among business units for

long. The level of user acceptance of the system has a significant influence on its

success. Training and awareness of users is mandatory, to understand that their

actions or inaction have a direct impact upon other users and in the performance of

their day-to-day duties.

6. Distributed Computing Experience - Inexperience with implementing and managing this

kind of environment may pose significant challenges.

7. Broad System Accessibility – Increased remote access by users and outsiders and high

integration among application functions allow increased access to the application and

data.

8. Dependency on External Assistance – Organization accustomed to in-house legacy

systems may find that they have to rely on external help. Unless such external

assistance is properly managed, it could introduce an element of security and resource

management risk that may expose the organizations to a greater risk.

9. Program Interfaces and Data Conversions–Extensive interfaces and data conversions

COMMON FACTORS

This section will have common factors in already followed methodology and our own devised methodology

CONCLUSION

With our topic, we think that the most important factor that either laid down the deployment of an ERP system or can boost up the production through the implemented technology by making the business processes optimized as well as equally connected to inter-organization for effective and fast processing, we therefore would request you to review our proposal to work over the issues related to the deployment of an ERP System and coming up with the solution to address it in an efficient manner in order to streamline implementation as per industry’s best practice. Further, we would seek your advice for addition to incorporate the same in to make it more effective so as to utilize it in the ERP industry.