Wednesday, June 5, 2019
The Challenges In Implementing Erp Systems
The Ch allenges In Implementing Erp SystemsERP is the process of integrating all the fear functions and processes in an organization to achieve numerous benefits.First, a single point of selective information entry helps to regulate down data redundancy while saving employees time in entering data, thereby reducing labour and overhead woos.Second, the centralization of in bodation, decision-making, and control leads to increases in efficiencies of operations and productivity, as advantageously as coordination between departments, divisions, regions, and even countries. This is specially true for multinational corporations (MNC), in which global integration could result in better communications and coordination around the world. The global sourcing and distribution of parts and services could withal provide appropriate benchmarks for operations around the world.Third, the sharing of a centralized database provides personal line of credit managers with accurate and up-to-date information to make well informed business decisions. Further, it reduces data redundancy while improving data integrity at the same time.Fourth, functional integration will consolidate all sorts of data, such(prenominal) as financial, manufacturing, and sales, to take advantage of bulk discounts. ERP is especially important for companies who argon intimately connected to their vendors and customers, and who apply electronic data interchange (EDI) to process sales minutes electronically. Therefore, the effectuation of ERP is exceptionally beneficial to businesses such as manufacturing plants that mass-produce products with little changes. Nevertheless, the revolutionary and innovative ERP software corpse quickly expands into other business areas such as finance and retailing. ERP as well provides companies with a hawkish advantage over their competitors.But despite these several benefits, there are also certain challenges set about by ERP, especially during the instruction execution physical body. Some of the challenges faced during the implementation of an ERP system are explained in the near sections.Typically ERP systems are very followly, take a lot of time to implement and bear a risk associated with implementation, and also affect the hypothecate profiles of many employees. Thus the three major dimensions involved are money, time and people involvement. In addition, there is also a requirement to re-engineer quick business practices to match the wants of the new ERP system.AN ERP IMPLEMENTATION PLANThe following flowchart depicts several activities that must be performed before implementing an ERP system.Step 1 Managers must conduct a feasibility study of the current point to measure out the organizations needs by analyzing the availability of hardware, software, databases, and in-house computer expertise, and make the decision to implement ERP where integration is essential. They must also set goals for improvement and establish objec tives for the implementation, and calculate the break-even points and benefits to be received from this expensive IT investment.Step 2 The second major activity involves educating and recruiting end drug users to be involved throughout the implementation process.Step 3 Managers form a project team or steering committee that consists of experts from all functional areas to lead the project.Step 4 After a decision is do to implement ERP, a team of system consultants will be hired to evaluate the appropriateness of implementing an ERP system, and to help select the best enterprise software provider and the best approach to implementing ERP. In most situations, the consultant team also recommends the modules that are best suited to the companys operations (manufacturing, financial, human resources, logistics, forecasting, etc.), system configurations, and Business-to-Business applications such as supply-chain care, customer relationship management, e-procurement, and e-marketplace.S tep 5 Adequate employee and manager prep must be provided to all business, stakeh erstwhile(a)s, including managers, end users, customers, and vendors, before the system is implemented. Such training is usually customized and can be provided by either inwrought or outside trainers.Step 6 The system installation process will place write outs such as software configuration, hardware acquisition, and software testing.Step 7 Data and information in the databases must be converted to the format used in the new ERP system and servers and networks need to be upgraded. A post implementation review is recommended to ensure that all business objectives established during the planning phase are achieved. Needed modifications are tackled during this phase too.Issues Faced while Implementing an ERPAlthough issues faced while implementing an ERP are numerous, but this report classifies them majorly into option related issues, practiced issues, mental issues, organisational change related i ssues and time and cost related problems.Selecting an appropriate ERPThe first and foremost challenge faced by many organisations is deciding what sort of an ERP system they should select to implement. The managers must decide on the size, type and scope of the ERP system they actually require and how to choose the best solution amongst the existing hundreds of systems in the market. This selection problem arises for all businesses without exception and should be considered as seriously as possible for the reason that ERP system choice defines a companys strategy for at least(prenominal) the following 6 to 10 years and, no doubt, has a major impact on the future success of the entire business.To decide on the implementation of a successful ERP program, the managers should have an in-depth understanding of the organisations current business processes, organisational structure, culture, work environment and financial and economic strength.Due to enormous impact on the competitive adv antage of the company, top management must consider the strategic implications of implementing an ERP solution keeping in mind the size of the company and the modules installed. Management must formulate about several topics like- Does the ERP system strengthen the companys competitive position? How does ERP affect the organizational structure and the culture? What is the scope of the ERP implementation only a few functional units or the entire organization? Are there any alternatives that meet the companys needs better than an ERP system? If it is a multinational corporation, the management should be concerned about whether it would be better to roll the system out globally or restrict it to certain regional units?Only when all these points have been taken care of, can an ERP system be selected for further implementation.Technical IssuesOnce the appropriate ERP is selected, the arduous task of implementation has only begun. The next part of implementation issues are related to th e practiced aspects of the project both hardware and software. These issues include the existing servers and workstations to be updated and new and modern ones to be ordered, purchased, and replaced. The internal network also has to be analyzed and modernized if required the speed and bandwidth of the existing Internet access should be taken into consideration, along with possible technical concerns about the mobile devices being used.If these headers are underestimated, they can dramatically impact the overall result of the project and easily result in slow movement in the first few weeks, or in some cases months of ERP implementation hence resulting in a slackening of the existing pace of business.However the situation has been changed during the last few years, and plenty of software-as-a-service (SaaS) applications that have shown up on the market now allow the cost and headache of hardware problems to be minimized.More specifically, ERP systems need a Graphical User Interfa ce at the front end, and are based on a client-server technology. They require the ability to access and share data across all applications across different platforms. Some servers and equipment baron have a need to be custom built, and that can also cause a time lag in ERP implementation.In short, it can be said that the unique hardware and software needs of an ERP system, along with the continued use of pre existing applications in an organisation can prove to be tricky and are a major consideration while implementing an ERP.Data quality and consistency issuesThis issue is common in companies that are implementing ERP for the first time and transferring their legacy data into the new system from Excel spreadsheets, manual records, or old disparate applications. Basically, the question is that old data that have been used and stored for years can for many reasons appear approximate or even incorrect in the new ERP system.integration of data from other older systems with the new ER P system is a major concern while implementing the system. A particular company might have method of accounting and finance systems operating on different mainframes (say IBM 370 architecture), MRP systems on a high end VAX, and a logistics system on an AS 400. The legacy systems of this company might be coded in COBOL. Thus, the implementation of a new ERP system for such a company needs to be done very carefully and requires technical judgement for the implementation of this new system.People related Psychological IssuesThis is the most difficult type of issue to resolve. These are the questions and issues that originate from the aspect of human nature that never accepts any change without seeing the visible advantages of it.People-related issues such as corporate philosophy and leadership style can play an important determination in the ERP implementation process. Research has concluded that active top management support and commitment are essential to the success of any syste m implementation. Frequently, administrator councils and steering committees consisting of top managers are developed to plan and manage the IT initiatives.Employees can be quite wary of any kind of change in the business processes, particularly during periods of economic downturn. Ill-trained employees who fight the changes in the business process tend to be poor performers. Therefore, to increase the chance of a successful ERP implementation and to reduce users resistance to change, employees, especially those who are very knowledgeable with the operations, must be involved in all stages of the implementation process. Employees must also be enlightened about the ERP installation. Such educational endeavours should include a concise introduction to the basic concepts and architecture of ERP systems, including actual screen shots of the function modules. During these training sessions, it is important to establish the managerial issues involved and to build a basic understanding o f the integration concepts prior to the actual installation of the ERP system. Further, any Business-to- Business initiatives, reengineering projects, alliances, and the introduction of new technologies should also be addressed.Project managers must take charge of the implementation process at all times. They must oversee the reengineering of the key business processes, reassign job responsibilities, restructure the organizations chart, and redefine work relationships. Further, they must also learn how to manage the software vendors and any outside consultants.Employees working on an ERP implementation project put in long hours (as much as 20 hours per day) including seven-day weeks and even holidays. Even though the experience is valuable for their career growth, the stress of implementation coupled with first-string job duties could decrease their morale rapidly. Leadership from upper management and support and caring acts of project leaders would certainly boost the morale of th e team members. early(a) strategies, such as taking the employees on field trips, could help reduce the stress and improve the morale.Organisational ChangesERP implementation brings significant changes into a companys conventional business personate and the day-to day practices it has been using for years or even decades.ERP implementation requires organizations to reengineer their key business processes in fundamental ways, revamping old ways of conducting business, redefining job responsibilities, and restructuring the organization. For major multinational corporations (MNC), the ERP systems must be customized to address global issues where different countries have different ways of doing business, and to incorporate country-specific business practices pertaining to accounting, tax requirements, environmental regulations, human resources, manufacturing, and currency mutation into the integrated systems.While integrating the information systems across various countries, three ty pes of misfits (relating to data, process, and output) can occur due to incompatibilities between software functionality and organizational requirements as well as differences in cultural and regulatory environments. The unique context of each country in which an organization operates must be carefully included into the traditionally Western-biased business practices inherent in the ERP systems.Implementation Cost and TimeImplementation Cost Even though the price of prewritten software is cheap compared with in-house development, the total cost of implementation could be three to five times the purchase price of the software. The implementation costs would increase as the degree of customization increases. After training the selected employees, strategies such as bonus programs, company perks, salary increases, continual training and education, and appeals to company loyalty work to retain them. Other intangible strategies such as limber work hours, telecommuting options, and oppor tunities to work with leading-edge technologies are also being used.Implementation Time ERP systems come in modular fashion and do not have to be implemented entirely at once. ERP packages are very general and need to be configured to a specific type of business and whitethorn follow a phase-in approach with one module implemented at a time. Some of the most commonly installed modules are sales and distribution (SD), materials management (MM), production and planning, (PP), and finance and controlling (FI) modules. The length of implementation is affected by the total of modules being implemented, the scope of the implementation, the extent of customization, and the number of interfaces with other applications. The more the number of units, the longer the implementation time. Further as the scope of implementation grows from a single business unit to multiple units spread out globally, the duration of implementation increases.ConclusionAn ERP implementation is a huge commitment fro m the organization, causing millions of dollars and can take up to several years to complete. However, when it is integrated successfully, the benefits can be enormous. A well-designed and properly integrated ERP system allows the most updated information to be shared among various business functions, thereby resulting in tremendous cost savings and increase efficiency. When making the implementation decision, management must considered fundamental issues such as the organizations readiness for a dramatic change, the degree of integration, key business processes to be implemented, older applications to be included, and whether or not new hardware needs to be acquired. In order to increase the chance of user acceptance, employees must be consulted and be involved in all stages of the implementation process. Providing proper education and appropriate training are also two important strategies to increase the end user acceptance rate. The organization is also going through a drastic ch ange, with changes in the way businesses are conducted, the organization being restructured, and job responsibilities being redefined. And finally, the cost and time of implementation of an ERP system also are a major challenge faced during the implementation process.
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