Question:
Discuss About The Information Technologies In Organizational?
In recent times, Information Technology has emerged as a critical organizational function. Today, IT is not only a support function that enables the organizations. The large and small-scale organizations have started to use Information Technology as a core business function. There are various cases of successful and failed examples of IT implementation. The large organizations have realized that the complete benefits of Information Technology could be achieved with the large scale IT systems like ERP. This is the reason that the adaptation of ERP has particularly increased in last decade. It is expected that the use of ERP system would increase exponentially (Alrashid & Alshawi, 2012). At the same time, it is important that organizations should be careful while implementing the ERP systems. One of the objectives of IT systems or ERP systems is quality management and continuous quality improvement. Also, if the customers lay stresses on adopting the quality policy of their organisation, then management has to accommodate that request also but project must ensure that customer quality policy can be adopted in a given time and cost otherwise project manger could request for a change request document to revise the cost of the contract (Dezdar & Ainin, 2011). There are various cases of successful and failed implementation of IT projects. The objective of this paper is to discuss one such case. The paper would discuss the case study of McDonald. A brief background of the case can be highlighted as:
McDonald is a known organization in different parts of the world. The company operates in a franchise model and it has large number of branches in Australia and other parts of the world. The management of McDonald realized that Information Technology is a powerful asset that can help the organization to bring efficiency and effectiveness in the system. This is the reason that McDonald started to IT project of establishing ERP system across its stores. The direct benefit of this approach was the fact that all of the stores would be connected and different stakeholders would be able to share the information on real time basis. Typically, there are two approaches of ERP implementation. The first approach of the big bang implementation and the second approach is the phased implementation approach. McDonald started the project with Big Bang approach as the company wanted to implement ERP across its stores in one go (Ravasan & Rouhani, 2014). However, this was a failed project for the company as it was not able to implement ERP across all its stores. This paper would discuss the key reasons for the failure and the paper would also discuss the key recommendations that should be used by organizations to avoid these kinds of mistakes in future.
It is interesting to study and analyze the key reasons of failure for McDonald. However, before that, it would be interesting to analyze the key drivers of ERP implementation. The analysis of key drivers of ERP implementation would help to understand the reasons of failure in better way. The key drivers of ERP implementation for McDonald can be discussed as:
There were four ley reasons or drivers of ERP implementation of McDonald. These drivers can be discussed as:
2.1.1 Real time information sharing
The company wanted to have a system in place where different stakeholders can interact on real time basis.
Efficiency improvement: The management of McDonald realized that there is scope of efficiency improvement in the coming system and it can be done with the implementation of ERP system.
2.1.2 Quality improvement:
In this era of competition, it becomes important for all the organization to deliver quality ERP projects to their customers due to increased competition. For instance, quality control will increase the customer satisfaction and building reputation and thus increases the changes of company getting more business from the clients (HassabElnaby & Hwang, 2012). Also, quality management is also about preparing for quality, planning for quality and implementing quality control. Also, there are numerous considerations while providing quality.
2.1.3 Reducing operational cost in long term
It is correct that the implementation of ERP is costly affair in short term. However the management of McDonald realized that it would be able to save the operational cost in long term.
It is a common saying that technology should work for human and not the other way round. In similar way a company’s Enterprise Resource Planning (ERP) system is like its central nervous system of the body. If it is healthy, it provides the sensory input to management so they can understand what is happening with customers, suppliers, and employees. There were various reasons for the failure of this IT project. The key reasons can be discussed under following heads:
It can be said that the success of ERP project would be successful only when the end state or vision is clear. In the case of McDonald, the company started with the Big-Bang implementation. However, the company did not have a vision in mind.
Ravasan & Rouhani (2014) argued that the stakeholders are often confused if they want to implement the ERP in the first place. The decision to implementation the ERP across McDonald was the result of an analysis happened across the organization. However, there were certain apprehensions within the leadership team. The management realized that ERP implementation is the thing for the future. However, leaders and managers were not very sure about the success of the project. Often large ERP implementation projects fail before they even start. Companies unhappy with their current system become convinced their reporting, integration, or efficiency problems lie in the software they are using.
One of the mistakes for McDonald was that it considered ERP implementation like any other IT project implementation. It can be said that the implementation of ERP is a transformational project for organizations that bring fundamental changes in the existing business processes. However, McDonald was not able to analyze this. The company considered it as a normal IT project management and the required focus was not given with respect to project management (Ahmad & Cuenca, 2013).
Oghazi (2014) argued that the implementation of ERP project requires a large number of resources. In fact, it is never easy to anticipate the resource requirements for ERP implementation. McDonald was not able to do the correct resource planning and as a result the project failed. For the successful implementation of ERP projects, the companies should take help from external consultants also. McDonald also took help from external consultants. However, it appears that the support of external consultants were not adequate (Parr & Shanks, 2013).
One of the reasons for ERP failure is the customization that the organizations would want to have. In fact, customizations, along with interfaces and data conversion, are the main areas of technical risk in ERP implementations (Turban & Sharda, 2011). McDonald wanted a customized ERP for its stores. However, the organization was not able to get the desired customization in place.
The implementation of ERP across any organization required proper training to different internal and external stakeholders. However, McDonald was not able to provide a training platform to its stakeholders. Moreover, the organization arranged for the training sessions after the implementation phase was over (Wixom & Ariyachandra, 2014). The true benefits of ERP implementation is realized when the management conducts the training sessions along the ERP implementation phase.
McDonald was keen to implement the ERP project. However, the company did not establish the quality objectives with the project. Quality is providing the right product to the customer aligned to their requirements and also fit for their use (Corona-Suarez & AbouRizk, 2014). During such times, no organization can afford to miss the quality in delivering their projects as clients have very high bargaining power due to increased competition. While in earlier days, Quality was all about inspecting the results and recommending rework if the expectations were not met, today the concept of quality management also has transformed with the evolution of numerous tools for controlling and ensuring the quality. Today, the focus is on preventing the issues before hand and thus building the quality in the project or the product.
Authors argued that most of the ERP projects fail due to ineffective change management. The implementation of ERP is a big change for any organization that brings a massive amount of change. It is important that the organizations should be willing to handle the change. McDonald faced certain resistance from its employees, as it was not able to manage the change.
The implementation of any large IT project requires investment in user training. It is important that the employees should be educated and trained about the new system and processes. The provision of training and development activities is an investment from the side of company. However, McDonald was not able to invest a lot on training and development of people. Therefore, its employees were not clear about the ways to use ERP system.
McDonald decided to go ahead with the ERP implementation with a big bang approach. Under this approach the implementation happens at a same time. The benefit of this approach is the timesaving. However, in this approach there is no fall back option. There was no way for McDonald to learn from its mistakes.
It can be said that the organizations have a lot to learn from the case study of McDonald. In addition to the ten reasons listed above, the organizations must also focus to manage the threats from malware and ransomware. In recent times, there has been an increase in the number of malware attacks that happens in the world on ERP systems (Isik & Jones, 2013). It is important that different stakeholders must join hands so that the ransom ware attacks can be managed. It can be said that one of the major threat to the large IT systems is the threat from malware. The large IT systems like ERP systems should be protected from any external attack. This paper would discuss the background of ransomware and the strategies that should be used to manage the attack of ransomware. It would be correct to say that the proactive ways of protection is better than the reactive way of protection in case of ransomware.
Another key recommendation for organizations is to have basic checklist in place for ERP implementation. Checklists are another important to approach to ensure that team members must follow the basic things as part of their task. For example, there can be checklist for developers about the guidelines they have to follow while check in their code. Checklist can have components like if all the comments and documentation correct, if code is easy to understand by another person and so on. Checklist should be customized for various roles like testing team, development team and also for various phases like requirement gathering and also on regular basis what are the checks that team has to ensure like switching off their monitor while leaving for the day, switching off lights etc.
It is also recommended that management should use a strong change management model. The implementation of ERP system is a radical and drastic change for any organization. Under any circumstances, the management should not take this change lightly. Therefore, it is important that management should have a strong change management strategy in place. The first thing for organizations would be picks the change agents that would be responsible to bring the change in the organization (Chang, 2014).
Conclusion
If ERP systems are the nervous system of a company, then doing an ERP implementation is like brain surgery: only to be attempted if there is a really good reason and not to soon be repeated. The above paper discusses the failed project of ERP implementation for McDonald. With the above discussion it can be said that ERP projects should be implemented with high quality standards. At the same time, the organization should also focus on effective change management within the organization. In addition to the implementation, organizations have to ensure that the business can get the real value from ERP implementation. It can happen when Information Technology is not considered as the support function in the organization. It can also be said that the early focus on Information Technology and ERP would also help the organizations to overcome the problems and challenges that could occur in the implementation of ERP and IT project management.
References
Ahmad, M. M., & Cuenca, R. P. (2013). Critical success factors for ERP implementation in SMEs. Robotics and Computer-Integrated Manufacturing,29(3), 104-111.
Alrashid, W., Alshawi, M., & Al-Mashari, M. (2012). Exploring enterprise resource planning (erp) implementation from stake-holder perspective. In 5th International Conference on Communications, Computers and Applications (MIC-CCA 2012) (Vol. 5, No. 1, pp. 125-124). Mosharaka for Research and Studies.
Chang, V. (2014). The business intelligence as a service in the cloud. Future Generation Computer Systems, 37, 512-534.
Corona-Suarez, G. A., AbouRizk, S. M., & Karapetrovic, S. (2014). Simulation-Based Fuzzy Logic Approach to Assessing the Effect of Project Quality Management on Construction Performance. Journal of Quality and Reliability Engineering, 2014.
Dezdar, S., & Ainin, S. (2011). The influence of organizational factors on successful ERP implementation. Management Decision, 49(6), 911-926.
HassabElnaby, H. R., Hwang, W., & Vonderembse, M. A. (2012). The impact of ERP implementation on organizational capabilities and firm performance.Benchmarking: An International Journal, 19(4/5), 618-633.
Isik, O., Jones, M. C., & Sidorova, A. (2013). Business intelligence success: The roles of BI capabilities and decision environments. Information & Management, 50(1), 13-23.
Oghazi, P., 2014. Antecedents of ERP in service firms. Journal of Promotion Management, 20(2), pp.148-163.
Parr, A. N., Shanks, G., & Darke, P. (2013). 8 IDENTIFICATION OF NECESSARY FACTORS FOR SUCCESSFUL IMPLEMENTATION OF ERP SYSTEMS. New Information Technologies in Organizational Processes: Field Studies and Theoretical Reflections on the Future of Work, 20, 99.
Ravasan, A.Z. and Rouhani, S., 2014. An Expert System for Predicting ERP Post-Implementation Benefits Using Artificial Neural Network. International Journal of Enterprise Information Systems (IJEIS), 10(3), pp.24-45.
Turban, E., Sharda, R., & Delen, D. (2011). Decision support and business intelligence systems. Pearson Education India.
Wixom, B., Ariyachandra, T., Douglas, D. E., Goul, M., Gupta, B., Iyer, L. S., … & Turetken, O. (2014). The current state of business intelligence in academia: The arrival of big data. CAIS, 34, 1.
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