Enterprise Resource Planning (ERP) Essay

The deployment of standard software is an important factor in business process optimization. A major focus of standard software is on Enterprise Resource Planning (ERP) systems. ERP is a computer-based system designed to process an organization’s transactions and facilitate integrated and real time planning, production and customer response.

In addition, it has the following essential features: a packaged software designed for the client’s business environment; integration of the majority of the business processes; processes a large majority of an organization’s transactions; uses an enterprise wide database that typically stores each piece of data once; and allows access to the data in real time. The essential feature of ERP is its ability to integrate the business processes of the organization. Design Concepts In order for people to enjoy working with their computer-based workplace, the system must be designed from a human, rather than a system-architecture perspective.

To accomplish this, system designers have to look at how people perform their activities and tasks and design the software to facilitate these natural work rhythms. The software must also be easy to learn. Navigation complexities are the bane of many ERP and other mainframe-based or client-server corporate systems. Workplace software should be simple to navigate and easy to adapt to people’s needs. Visualization is important. For software to be enjoyable, the screens it generates must be appealing to the eye.

Screen design should direct the eye to important elements and intuitively alert the brain to the navigational flow. The tone of the design should be soft rather than garish, with important elements highlighted. In addition, the screen should include multiple fields so that an individual has to go through fewer steps to access data. In short, a person should know where to go and how to get there without having to puzzle it out. A good design can accomplish this. A well-designed workplace will also affect the way applications are designed and redesigned in the future.

Software designers will have to create applications that are “aware” they are being run in a workplace environment. For example, navigation between applications accessed via the workplace must be easy and intuitive. (Watson, H. J. , R. K. Rainer, C. Koh, 1998). ERP implementation Firms that are considering implementing ERP are referred to as ‘potential implementors’. Strategies that could adopt for implementing ERP are as follows Justify the need for ERP The first step to implementing ERP is to justify its necessity based on costs and benefits to the firm.

There should be a justification for the investment (such as to solve a problem) and any changes must be in tandem with the direction the company is headed. Firms would need to ask themselves: how might an ERP system strengthen our competitive advantages? First, ERPs are expensive. Vendors, such as SAP, PeopleSoft, and Oracle, that supply ERP applications often charge in the millions depending on the number of licenses and users. A single SAP module can cost $20 million. Furthermore, the cost of implementation is separate from the cost of the software itself.

So software integration, with new and existing systems, can add significant expense. Consulting, requirements, training, and changing management are other services that can boost costs. Last, there are maintenance and upgrade costs. Upgrading your software can cost 20 percent of the original cost of the software. In addition, you will most likely need consulting services to help with installation. Another risk is the amount of custom code built into the architecture. The math is simple. The more custom code, the more difficult and costly it is to maintain, operate, and upgrade. Hyong Yi, 2002). Determine the trade-offs If the ERP implementation is justifiable, in Step 2, potential implementors investigate the re-engineering approaches available. For each approach, they should identify the trade-offs that their companies are willing to make. Step 2 also requires potential implementors to determine whether their business processes are unique. If they are, clean slate re-engineering may be necessary. If technology enable reengineering is chosen, it is inevitable then that business processes must be moulded to fit the software. Decide on a re-engineering approach

Listed below are the three most common implementation scenarios and the access issues that need to be resolved: • Scenario 1: Workplace and ERP Implementation with No Business Process Reengineering. A system is being implemented simply to replace one or more other systems without a large scale reengineering of business processes. Job/organizational roles and their links to each job title will already exist within the company. They may not be documented as roles, but they can be identified via job descriptions and discussions with those persons occupying each job title.

In this scenario, the difficult task of identifying “who should do what” is already accomplished. The remaining tasks are to identify the relevant functionality, systems, and supporting information required by each role. (Dan, A. , D. M. Dias, R. Kearney, T. C. Lau, T. N. Nguyen, F. N. Parr, M. W. Sachs, & H. H. Shaikh, 2001) • Scenario 2: Workplace and ERP Implementation with Business Process Reengineering/Organizational Change. In an organization going through a merger or restructuring, or one that is simply reorganizing processes, business processes will be redefined.

Therefore, new organization roles to fit these processes must be identified and defined in terms of the new system and processes. Organizational role definition is dependent on the stabilization of new processes and is a difficult task to achieve in a short time. Once new organizational roles are defined and system functionality is mapped, identification of required systems and supporting information can begin. • Scenario 3: Workplace Only Implementation. In this example, the workplace is perceived as another layer sitting on top of all existing systems, which become transparent to the user.

Job roles and titles do not change; the user is simply given one all-encompassing, user-friendly view of the organization. This view will reflect how individuals need to work and will support them and provide a more flexible way of allowing them to complete their process steps. However, systems relevant to each user, along with Web links and MiniApps, still need to be identified. Scenarios 1 and 2 identify a need to change the way role access (and thus security) is traditionally implemented on ERP projects. Access is usually left until the end of a project and is then rushed through right before go-live.

Given the complicated nature of ERP systems’ security, problems often arise when the company switches over to the new system (not having the correct authorization to fulfill completely the process steps that have been allocated) or usually 6 to 12 months afterward, where segregation of duties arise or user and role maintenance becomes unwieldy. (Hammer, M, 1990). Implementing new systems is always costly. However, when systems are implemented correctly, the benefits can be immense and continuous. Roles play a key part in determining the timing and allocation of resources for such an implementation.

Until the number of generic roles has been agreed upon and identified, the integration requirements, MiniApp development, and drag and relate and single sign-on requirements cannot be accurately estimated. Each new role, therefore, acts as a multiplier to the timing and resource levels of the implementation. Therefore, it is important to approach a workplace implementation understanding the impact role numbers can have and to work toward a solution that accommodates not only the company and its ways of working, but also the implementation budget.

Thus after a detailed analysis, the choice of re-engineering approach should be made (Step 3). Once the reengineering approach is determined, the firm should devote full commitment to the execution of the project. Risks analysis ERP project implementation has five distinct phases: planning, requirements analysis, systems design, systems implementation and maintenance, and systems operations phases. At each of these phases, there are many inherent risk factors. Based on the risks and problems identified, these risks are allocated to different ERP implementation phases.

The likely risks and strategies to minimize them must then be evaluated (Step 4). The people who are responsible for mitigating the risks are identified. Human resource management (HRM) is responsible for the human aspects of the ERP project, including handling user resistance, setting of a specialized task force for the project and involving the top management to support and participate in the project. Information technology, management (ITM) is responsible for the technical aspects of the ERF project.

Each situation requires different combination or type of management. For example, when the firm recruits personnel due to insufficient internal expertise, both HRM and ITM are responsible for the recruitment exercise. This is to ensure that the recruitment exercise is efficient and suitable expertise is recruited. (Salmi, H. , ; V. K. Tuunainen, 2001). Manage change Step 5 is to manage change in the firm, brought about by the ERP through, among others, effective leadership, effective communication and appointment of a project champion.

Studies have shown that firms that are open to change, emphasize quality, have a strong computing ability and a strong willingness to accept new technology, are more likely to have successful ERP. From the case studies, four main methods used to manage change surfaced. Firstly, it is important to have a specialized task force with diverse expertise. The task force should consist of the best people in the organization. Having a team of mixed consultants and internal staff is also critical as the staff can develop the necessary, technical skills for ERP design and implementation.

Members of the task force must work full time on the ERP project. They should also be given compensation and incentives for successfully implementing the system on time and within budget. The task force should be familiar with the business functions and products. (Wouters, M. J. F. , G. J. Sharman, ; H. C. Wortmann, 1999) Secondly, support from top management is important. It needs to publicly and explicitly identify the project as a top priority. Senior management must be committed, by being personally involved and being willing to allocate valuable resources to the implementation effort.

A powerful project champion, who can set goals and legitimize change, must also be identified. Thirdly, employees should be specifically involved in the implementation process. They also need to be reskilled and trained. Employees need training to understand how the ERP will change business processes. There should be extra training and on-site support for staff and managers during implementation. Fourthly, effective communication is an important way to manage change. Expectations at every level need to be communicated. User input should be managed in acquiring their requirements, comments, reactions and approval.

Communication includes the formal promotion of project teams and the reporting of project progress to the rest of the organization. Employees should be told in advance the scope, objectives, activities and updates, and be made to realize that change is inevitable. (Glover, Robert H, 2003) Software development, testing and troubleshooting In Step 6, software development, testing and troubleshooting are undertaken. The overall ERP architecture should be established before deployment, taking into account the most important requirements of the implementation.

This prevents re-configuration at every, stage of implementation. Before actual implementation, the ERP software should be tested on certain projects (preferably those that can be easily controlled by the project champion) by having a dual-track process; one based on existing practice and one based on the ERP. The outputs can then be compared. Vigorous and sophisticated software testing and troubleshooting errors are critical and must be carried out. ERP implementation In Step 7, the firm finally implements the ERP. The firm should work closely with vendors and consultants to resolve software problems.

Quick response, patience, perseverance, problem solving and “fire-fighting” capabilities are important. (Mullin, R, 2001). Continuous monitoring and evaluation After implementation, continuous monitoring and evaluation of performance is necessary-at the shakedown phase (Step 8). Using project management techniques, milestones and targets to keep track of progress must be set, and achievements measured against project goals. Monitoring and feedback include the exchange of information between the project team members and analysis of user feedback. The outputs of the ERP should be presented in the form of reports.

Improvements, such as shorter time to prepare progress payment certificates and reduced time to track variations and design changes, must be highlighted to management and users. Internet Impact The implementation of ERP gives many people their first experience of an IT project that truly changes the way a business works. Companies learn–sometimes the hard way–the need for business leadership of IT initiatives and for operating in project rather than line structures. The ability to execute such business initiatives is a valuable asset at a time when fast and flexible IT deployment has become a major success factor in almost all industries.

The Internet has made it necessary that companies be able quickly to adapt processes to new and ever-changing customer desires and market requirements. Therefore, employees too, must have flexibility in how they carry out their tasks. Such flexibility is impeded if systems underlying a company’s business processes are fixed and rigid. To be poised to respond to new and perhaps unforeseen demands, both companies and the individuals that work within them must be capable of quickly responding to change within the system or even of adding new systems to support new demands upon existing business processes.

Such flexibility is possible partly because of the availability of application service providers (ASPs) who maintain and manage system applications. It is also due in part to the availability of the Internet as a means of gaining quick access to new sources of information, applications, and services. Because of these new tools, if a company finds that it must add a new system in order to respond to new customer, supplier, or business partner requirements, it no longer has to purchase the system and install it on its computers, code all of its company information on the software, and then train users.

Today, a new system can be “rented” from an ASP on a per-transaction, per-desktop, or monthly basis. The ASP is responsible for maintaining both the application and the company-specific data within it. Those who must utilize this application need only learn how to get to it through the ASP’s front-end and the workplace’s Web browser. (Markus, M. L. , C. Tanis, & P. C. V. Fenema, 2000)