Question 2 (50%) 2. ERP system become a common mainstream practice in a business

Question

Question 2 (50%) 2. ERP system become a common mainstream practice in a business organization Its role and functionality in the organization, how different business core function integrated under a single management system is will described in Unit 4. You are required to present a case study of the company that implement ERP system in the following aspect: A company that successful implement ERP system, a) Company background and the company challenges faces before implement ERP system. b) The impact of ERP and its benefits towards the company. Marks 20 [Marks 30] A company that fail to implement ERP system, c) Company background and the company challenges faces before implement ERP system. d) Impact of ERP failure e) Reasons of failure Marks 20 Marks 15] [Marks 151

Explanation / Answer

A company that successful to implement ERP system,

a) Company background - Reliance Infocomm is the outcome of the late visionary Dhirubhai Ambani's (1932-2002) dream to herald a digital revolution in India by bringing affordable means of information and communication to the doorsteps of India's vast population.

Working at breakneck speed, from late 1999 to 2002 Reliance Infocomm built the backbone for a digital India - 60,000 kilometres of fibre optic backbone, crisscrossing the entire country. The Reliance Infocomm pan-India network was commissioned on December 28, 2002.

Reliance Infocomm network is a pan India, high capacity, integrated (wireless and wireline) and convergent (voice, data and video) digital network, designed to offer services that span the entire Infocomm value chain - infrastructure, services for enterprises and individuals, applications and consulting. The network is designed to deliver services that will foster a new way of life for India.

Challenges faced before implement ERP system-

There was a time when even large-scale businesses were dependent on manual operations, especially documentation, record keeping, inventory tracking and maintaining books of accounts. Neither was there any need of a proactive sales and marketing team nor did the thought of data analysis for market trends had ever come to the mind of manufacturers; probably because the competition was not as fierce as it is now. You can still run your process manufacturing business on such primitive methods, if you do not co-relate to terms like instant innovation, fast decision-making, real-time visibility, instant traceability, etc. But, if you do, then trust me any business in today’s rat race for capturing market cannot afford to ignore an Enterprise Resource Planning (ERP) solution.

b) Impact of ERP-

1) ERP implementation has a positive impact when a firm employs a prospector business strategy. A prospector business strategy enhances the firm's ability to achieve organizational capabilities and enables the firm to achieve higher levels of financial performance.

2) ERP implementation encourages and supports a prospector strategy. ERP not only supports cost control, but also supports new product development and introductions. The prospector firm seeks better information to support decision making, develop new and innovative products that drive revenue growth, and build efficient and effective operations that enhance return on assets.

Benefits of ERP towards the company,

1) Efficiency - An ERP solution eliminates repetitive processes and greatly reduces the need to manually enter information. The system will also streamline business processes and make it easier and more efficient for companies to collect data, no matter what department they’re working in.

2) Forecasting - Enterprise resource planning software gives your users, and especially managers, the tools they need to create more accurate forecasts. Since the information within ERP is as accurate as possible, businesses can make realistic estimates and more effective forecasts.

3) Scalability - Did you know? Structured ERP systems allow the addition of new users and functions to grow the initially implemented solution over time. When your business is ready to grow or needs more resources, enterprise resource planning software should be able to facilitate that growth.

4) Cost Savings - With one source of accurate, real-time information, ERP software reduces administrative and operations costs. It allows manufacturers to proactively manage operations, prevents disruptions and delays, breaks up information logjams and helps users make decisions more quickly. If you’ve chosen the right solution for your business, and the right vendor who meets your needs, you’re bound to see a powerful ROI.

5) Productivity - Save time and increase productivity levels. Sound too good to be true? It’s not with ERP software. By having redundant processes automated, users have more time to work on other pressing projects and tasks. They’ll also be able to work easier since the solution was designed for ease-of-use.

6) Customer Service - It’s easier to provide high-quality customer service using an enterprise solution, especially when you’re using one as well-equipped as WorkWise ERP. Sales and customer service people can interact with customers better and improve relationships with them through faster, more accurate access to customers’ information and history. You’ll also have access to marketing automation and contact center software, ensuring your customers are being interacted with consistently.

A company that fail to implement ERP system,

C) Company background - The Hershey Company, known until April 2005 as the Hershey Foods Corporation and commonly called Hershey's, is an American company and one of the Largest chocolatemanufacturers in the world. Its headquarters are in Hershey, Pennsylvania, which is also home to Hershey's Chocolate World. It was founded by Milton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey's chocolate is available across the United States, due to their wide network of distribution.

Challenges faced before implement of ERP,

Even before implementation, the company is the dilemma whether they really require it or not. 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. Convinced the grass is greener on the other side of the fence, they embark on a large, risky, and expensive ERP replacement project, when a simple tune-up of their current system, or a small add-on application, such as a better reporting system or employee portal, would address the problem at a fraction of the cost. Even a reimplementation of the same software is usually less costly than switching to another software vendor.

Once an organization makes the decision to implement a new ERP system, the first step is to have a clear definition of success. Often, lack of consensus on the problems being solved, the outcome desired, or the specific financial justification of the project leads to challenges later controlling the scope and maintaining executive sponsorship. Having a clear destination means defining the important business processes, financial benefits, and deadlines up front and making certain stakeholders agree how to address them. Without a strong definition of success, the end point becomes a moving target.

d) Impact of ERP faliure,

ERP literature mainly focused on issues like trust in ERP vendor and vendor competence as critical success factors. However, very limited research indulged into the relationship between vendors and their

implementation partners. Not only the relationship is important, but also the process of how ERP vendors

acknowledge and certify partners is equally important. In this research, we have studied the impact of vendor-partner formation-regulations on the failure of ERP implementations.

The case of SAP terms and conditions

was analyzed and case of project implementation failure was investigated. Results showed that easy partnership

conditions set by ERP vendors is a main factor why ERP projects failed in our target cases.

There has been a conflict of interest between the desires by the vendor to authenticate more partners at the expense of quality, and the interest of customers to only deal with qualified partners.

Results call for more restrictive policy needed from the vendor side in order to authorize only qualified partners. Also, the assumption based on the belief that ERP vendors only certify competent partners, might not be supported in some cases. Thus, thorough analysis of partner credentials and history is required from the

customer side. ERP customers should not rely on recommendations or lists made by ERP vendors, as those lists are usually maintained and administered by sales organizations, which lack competencies and have other objectives.

Example - increase number of partners in the region, to achieve new leads rather than carefully inspecting partners’ qualifications.

d) Reasons of faliure,

1) Planning - A detailed plan is very necessary for successful implementation. All projects of this size start with some kind of plan. However, more times than not, the plan are not realistic, detailed, or specific enough. Companies build a high-level plan with broad assumptions or underestimate the amount of business change involved. Despite how obvious this sounds, it remains the most common mistake companies make. To be a good plan, it needs to identify all the requirements and the people who are going to work on them. It needs to be at a level of detail where a knowledgeable person can visualize the work, usually in work blocks of a few days. It needs to have a logical sequence of tasks, like leaving time in the schedule to fix bugs found in test cycles. Until you have a good plan, you really do not know when the project will end or how much it will cost.

2) Resource management - Most common blunder to happen is with resources projected. Having a solid understanding of the internal and external resources needed to complete the project is critical. For internal resources, understanding the time commitment needed from business users, typically in the Finance, Accounting, or Human Resources departments, is one of the most commonly underestimated areas. During critical phases of the project, it is often necessary to backfill the majority of transactional employees by bringing in temporary resources. This frees up the users of the new system so they have time for implementation and training. For external resources, having an agreement up-front with your consultants and contractors about the specific duration, skills, and quantity of resources needed is critical.

3) over Consultants - Too much dependability on consultant can make the team more redundant. Most ERP implementation projects involve consultants, for the expertise, best practices, and additional resources they bring. While their outside experience is definitely helpful for a project, there is a risk that the company can become over-reliant on the consultants. The company needs to maintain control over the key business decisions, hold the consultants accountable, and have an explicit plan to transfer the knowledge from the consultants to the internal employees when the project is winding down.

4) Training - Experience makes a lot of difference. The typical lifespan an ERP system within an organization is 10 to 12 years. With that in mind, most employees in a company have been through one or two ERP implementations in their career. Just as you would not be comfortable with a surgeon as their first or second patient, the leaders of your ERP project, both internal and external, need to have experience implementing your specific chosen system several times. This is one of the major benefits to working closely with an outside consultant or directly with the software vendor.

5) Testing - It should be treated as rectifying stage. When schedules get tight, reducing the number and depth of test cycles is one of the first areas that often get cut. The purpose of testing in an ERP project is not to see if the software works. The purpose is to see if the system meets your business needs and produces the output you need. Reducing testing may not leave defects undiscovered, but it certainly increases the risk the ERP system will be missing important functions or not be well accepted by end users.

6) Project management - A person experienced in project management makes a lot of difference. There is some debate whether project management is a skill all good managers should have or whether the field will eventually develop into its own professional discipline, just like there are registered engineers, nurses, and lawyers. Putting that debate aside, it is clear software projects of this size need their own dedicated, experienced project managers. Asking the executive sponsor or the business owner to also manage the project as a part-time adjunct to their main role means neither job will be done well. Not just a scorekeeper, the project manager needs to be an active leader pushing for accountability, transparency, and decisiveness.

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