Question:
What are the different issues can emerge in post-implementation phase of ERP implementation? How these issues can be rectified and avoided in future implementations?
ERP system is one of the improved versions of technology which helps the contemporary company to manage their resources well. It is technology based system which helps the organization to integrate business management system covering the areas of enterprise like human resources, finance, logistics and operations (Breznitz, 2008). Enterprise resources planning promises to maintain the one data base, one applications and own user interface which customized the solution for the current enterprise. With the rise in demand of ERP system various companies like Microsoft, SAP and Oracle has made their version of ERP system in order to give proper solution to the problems. Implementation of ERP cost is higher therefore it is afforded by the big business houses (Grabski, Leech & Sangster, 2009). However, the study deals with the post implementation of ERP issues. Along with that study will also highlight the various types of issues and how the issues can be rectified.
Enterprise resource planning has been evolved from the system known as MRPII (Manufacturing requirements Planning) system helps to integrate with the suppliers, customers, and manufacturer using the network such as LAN, Wan and internet etc (Grant, 2003). Since MRP II was creating number of problems like not been able to integrate different functional areas and traditional form of application system which why ERP is being modified version of MRPII. ERP has certain characteristics which qualify for the true solutions. It is quite flexible system that response to the changes, it is modular and open and it performs of various multi-facility woks at once. ERP provides the multi platform which would increases the facility for the company that would again helps in gaining the higher productivity within the limited amount of time. ERP performs the core activities and increase the customer service which would bridge a information gap across organizations (Gupta, 2008). ERP also helps the organization top cater large market share by reducing the time limit of services and the set the benchmarking for every job. Implementation of ERP is one of the costly affairs. It cannot be sued by small or the SME for their business venture. ERP solution opt the better project management. It allows automatic introduction of the latest technologies like EFT and EDI which will help to eliminate the problems like materials storages, efficiency improvement, customer services, inventory problems and delivery timings (Musaji, 2002).
The success ratio of the implementation of ERP is based on the consultants and the consulting company along with user and vendors in order to achieve the overall objectives. The implementation consultation has to understand the need of the users, understand the business needs and design the solution as per the needs. It also helps in the managing and enabling the all the tool which will help to make the work much better which is helpful in adding the efforts (Peterson, Gelman & Cooke, 2001). During the implementation, the packaging of the ERP can be changes as per the business and made into customised form so that it becomes the user friendly. Along that role and responsibilities of the employees have to be clearly identified, understood and the employees will have to accept new processes.
Figure 1: ERP life cycle framework
(Source: Reuven Karni, 2009, pp-233)
Implementation of the ERP needs package such as formation plan, preparation of plan, mapping the business process and analyzing the gap. However, there are certain risk associated with ERP will have cost the governance issues in an ERP (Sheldon, 2005). After the implementation of ERP critical success factors must be achieved by the company in the long run along with company also is able to classify its KPI (Key performance indicators).
i) Technical issues:
Post implementation of ERP, company faces technical aspects within the ERP system which could be common phenomenon. ERP systems success rests on the integrations of data across the institutions (Sommer, 2006). ERP system success factors are based on the integrations of data across the institutions. An ERP helps the organisations with the individual data resources, duplicate resources and coordinating between the data sources. It is disorganized data base structure that can give the inaccurate data. Another major technical difficult would be reporting and sharing of the wrong information because of poor implementation of the ERP (Stahl, 2007). The next issues with the implementation of the ERP should be to maintain the data and strong properly which would be very difficult in future if the implementation of data is very much poor and the maintained separately.
Figure 2: ERP Technical support
(Source: Suki & Suki, 2010, pp-432)
On the other hand, another major problem is its complexity in use. The people who are basically technologically handicapped will be able to cope with the problem of user friendliness technology (Marinos et al. 2001). for instance, Nike faced problem of with its i2 system of ERP in June 2000 which may be reflect software problems which has been close tied with the core business. The functional way of implementation of ERP system would creates poor performance of ERP system failures which would lead to great cause of ERP implementations failures (MK, 2012). This is because of the poor product selections, poor packages selection and inadequate developed functional requirements definition by the vendors.
Accurate data is absolute information which is required to maintain the system functions properly. If the accurate data is not provided by the vendor company the implementation of the job redundancy (Musaji, 2002). Technical problem that is faced by the EROP after the implementation of ERP are given below:
Non-robust and incomplete ERP packages: The ERP packages vendor promises that its products are the next versions. However, ERP packages needed to robust and must be some of standard which would upgraded every time own his own rather than to invest every times for the part of customization for which a vendor upgraded the base ERP packages (Shields, 2001).
Poor custom code: The poor custom code is another technical issue which could be raise within the technical aspect of the job. Since the poor custom code create problem for the company in near future as the coding of the software is very much relates the business process and resources integrated (Parr and Shanks, 2000). The custom code leads to data errors summarizing the data and converting the data and unifying the data which would increase the version of data stores. ETL (extractions transformation loading) tools are pieces of software’s for the extractions of data from the several sources, filtering the data, the data and insertion into a data warehouse (Baggio, 2008).
Data integration problem: Apart from the above, another major problem of ERP system is the conflicts with business strategy. The problem of data integration causes severe discrepancies for the business after the installation is not made as per the requirement of the functional resources (Beatty & Williams, 2006). Data ERP integration problem start with the packages are not designed to tie up other autonomous applications is major default in integration problems.
|
Type of problems |
Percentage |
|
Cost of the project overruns |
66% |
|
Project delays |
54% |
|
Conflicts with company goals |
40% |
|
Change management resistance from the employees |
32% |
|
Conflicts with consultants |
34% |
|
Internal conflicts |
30% |
|
Conflict with vendors |
28% |
Cost of the project overruns: Implementing ERP system within the existing system create million or rather multimillion affair of the company. Cost of the project after the implementation must be reviewed by the manager which will help the manager to understand the project cost has overruns or has work as per the demand of the customers (Chen, Razi & Rienzo, 2011). After the implementation of the ERP system as per the required integration , manager needs to assess whether the reason for the overrun of the cost and how its should be compensate after the completion. Cost of ERP is very much overruns the company existing budget which would also lead to increase in higher debt and affect in the operation system which is one of the major problem for the manager (Elbertsen & Reekum, 2008).
The typical cost of the ERP for the large organizations starts from the $400,000-300,000. It has been estimated that the total cost of ownership would be US $54,320 per user. There has been significant hidden cost which with ERP implementation includes training , integrations and testing of data conversion. The manager is also concern about the ROI which return on invest on the invested project (Elragal & Haddara, 2013). If the project in not been used as per expected return then the company has to face huge loss and the manager may get fired for instance FoxMeyer managerial failure increases the cost.
Employee resistance to change: Besides that cost, manager also faces strong employee resistance issues that require retraining and re-orientations on the part of the employees. Employees are very much apprehensive about the technological changes within the company because of the fear of job security within their mind. ERP often requires more data collection screen that legacy systems which may increase the employee workload (Gordon, 1996). Another major key issues holds here is the employee retentions.
The manager could face the resignation from the employee and retire early in order to save themselves from the pain of learning of new technology (Hagoort & Brown, 2000). Another major problem would employee who are directly involved with the ERP may exit the organizations due to high demand for the experienced ERP programmers and installers (Johansson, 2012). Apart from that, manager need to also invest in the change management which may take huge time and cost in order to make changes as per change is been made with the customer base.
Employee’s resistance to change is one of the tougher approaches for the manager as the employees are habituated with the existing of way of working. Some of the major ERP managerial failure in the private sector are Hershey Foods whose sales has been dropped by the 24% which is because of the incompetency of the ERP system that caused the distribution problems within the organisations (Cowderoy & Powell, 2002). Other major examples of ERP failure system is for the FoxMeyer drugs which was latter went for bankruptcy after the unsuccessful ERP implementation. As the change in this company is not able to cope with the technologies because of which the company faces tough time to manage the company manpower asset (Dantes & Hasibuan, 2010). Lack of senior level management commitment was reveals that some of users were not accommodated with the changed technology. Lack of communication within the management could also be one of the major steps which have made the change within the management harder which an indirect of affect of ERP on manager (Khanna, 2012).
There are many effectiveness issues which has been identified after the installation of the ERP within the company. As the companies are befitting with the efficiency of the SAP built company also faces tough to survive because of poor effectiveness of the ERP within their company (Sommer, 2011). Some of the major companies which lacks the proper effectiveness are Whirlpool who has been facing crippled in it shipping system which is leaving appliances’ stacked on load of the docks and paying customers for full eight weeks. It has been found that half of the ERP problem is because of the people and work culture not the technical within the company (Supramaniam, Abdullah & Ponnan, 2014). Apart from that other major examples is given from the company called Volkswagen delays in shipment delays that cost the inventory charges higher than the expected , this is because of the proper inefficiency of the ERP (Haynes, 2009).
As the ERP efficiency is based on the integrated functional system which can be delayed in the ship because of the lack of updating of the system (Verma, 2011). There are other major various problems which could also lead to poor efficiency of the ERP systems such as:
Increase in procurement lead time: Increase in the procurement lead time may decrease the efficiency of the manufacturing unit which would to create again problems within the company. Apart from that, failure of DEV network also may lower efficiency of the company which would increase the procurement lead time
Apart from that, efficiency is totally depended upon how fast the data storage passes the filter information to the required apartment (Yakovlev & Anderson, 2001). If the data is not passed at right time then the problems of customer response time would increase. This could decrease the customer base of the company which will lead the company to lose its customer base face of poor efficiency of the IT system. ERP is chosen because of its efficiency level is higher than human being (Musaji, 2002). Lack of proper efficiency would decrease the company efficiency which would hurt the company profitability in the near future.
One of the major aspects of the ERP is that, owners and the managers can actually keep their eye on the investment.
Updation difficulty: On the other hand, the ERP may face the updating difficulty in updation of the information once to be entered. This problem also can be create in delay in the project of the company (Peterson, Gelman & Cooke, 2001).
Time constraints: Time limitation in sending of the information is less which would also make it next efficient way of handling things. This would restrict the time access of internet which delays in the project shipment to customer updating (Reuven Karni, 2009). Although there has time given for data entry but most of the times as the access to the intent would be unavailable, therefore, submitting the total job within the time given will be next to impossible for the company (Ferraro, 2007). This would cause because of the poor internet service or rather inefficiency of ERP.
Moreover, time consuming in ERP system will can be increased because sometime company need to feed the same information several times which will take time consuming because of the format for the entering data was found to be boring and formats kept changing demand the same information’s in different format again and again (Sheldon, 2005).
The issues can be tacked in various ways in order to manage the ERP system within the company. Since the company has implemented the ETP system and after that the problem has been arises the solution will as per the given in this phase of the job.
For technical issues:
Figure 3: Norms for better success ratio of efficient ERP implementations
(Source: Sommer, 2006, pp-443)
From the above, it has been found that, technical defaults can be manage via choosing the best packages’ and given enough and adequate documentation for the company which would lead the ERP system less faulty (DeCarlo, 2010). Apart from that, given chooses eth best companies like SAP and Oracle who are known for their ERP system globally. The EREP system of the SAP is very much mitigate the risk of the robust packages which contain the specific form of functionality which comprises of accounts , HRM , finance and corporate governance along with sales and marketing. Apart from that, the company also specifically manage the data integration via using DEV network-PRD landscapes customers would give ample amount to the solution to the company for the large and medium size company (Marinos et al. 2001).
Apart from that, all other systems (DEV, ACC, PREPROD, and PRD) should get connected to SAP solution manager PRD in order to benefit from all that data in one place (Losey et.al.2007). The major disadvantage of DEV SAP would help the manager to support the packages which would make it easier to minimize the impact on the error and the efficient custom code which would reduce the data integration problem for the company.
For managerial issues:
Figure 4: Ideal ERP system in large organizations
(Source: Baggio, 2008, pp-55)
With proper training and the making of Gantt chart for the project, the overrun cost and the managerial problem will be solved (Gido & Clements, 2012). Gantt chart will given enough scope to understand the managers to analyse the cost and time of the project which is ERP. In order to reduce cost overrun, manager can creates schedule and proper planning which would give him the enough scope to complete the project and analyses the reason for time consuming (Beatty & Williams, 2006).
Apart from that by using the lewins change model of the managing the HRM would decreases the problem of the hiring and firing (Klussmann, 2009). Most of the employees are fear of the job security which would be eradicated if the change model phases would be used which is Unfreeze, change and Refreeze. This model will give enough scope to handle the pressure of being the change within the management (Konrad, 2009).
With help of proper training and development, manager would able to achieve the employee retention and employee engagement process for the technological advancement (Lockwood, 2007). Manager need to choose the proper vendors which understand the company requirement and provide the solutions accordingly.
For Efficiency issues
With proper planning and implementation
|
ERP Vendors |
|
|
SAP |
33% |
|
Oracle |
10% |
|
JD Edwards |
7% |
|
People Soft |
6% |
|
Baan |
5% |
|
Others |
39% |
Graph 1: market share of ERP software
(Source: Elragal & Haddara, 2013, pp-215)
Market share of the ERP vendor list SAP is higher because it is very efficient technologies which assemble and fits as per the company requirements (Gordon, 1996). As the company large companies are looking for the facing data updating problem because of business of the company is expanded in international circuit. Therefore the company should look to use SAP form of ERPs which would enable the integrating best practices as per the organizations standard. The data updating would be updated as per the data mining process of the ERP which would given enough scope to manage the time and the cost of ERP system for the company (Elragal & Haddara, 2013). Apart from that ERP drivers must be able to satisfy the customer satisfaction, more efficient processes and meeting the business re engineering’s requirements.
The time consuming of the data interfaces would be solved by the use of the software which more of customized and fits with these process.
Te efficiency of the ERP can be managed and control by security measures like CAPACHA and biometric measures to enhance the scalability of the ERP software’s (Johansson, 2012). With CAPCHA the efficiency to restrict the data and access to control data confidentiality which was leased the lines to control internet failure chances.
Conclusion
ERP software solution is used for the better management of the activities, data and information across the institution. In order to successful implementation of ERP system need to be more of high capability and the customised as per the given documentations. After the implementation of ERP, There have been numerous issues such as technical issues, managerial issues and efficiency issues. Technical issues are data integration which is caused by due to poor choosing of packages and lack of expertise. Apart from that managerial issues like cost overruns and employee resistance to change are some of the major changes which is needed to be handled by the managers after the implementation of ERP systems. Lastly, efficiency issues like time constraints in data updating can be resolved via the use of CAPATH security which increase the internet efficiency that would again the increase the efficiency of the company.
Reference List
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