Week 5

PART A:

Respond to the following:  Many experienced ERP implementers will say there are two rules you should follow when implementing these systems:

1. Do not customise your ERP.

2. See Rule 1.

Why do you think this is?  What are the risks of customisation?  What does a need to customise say about the willingness or an organisation to effect BPR?

There has been a long debate going on regarding whether an ERP system should be customized or not. There are experts who are with or against customization. Before jumping into the customization it is important to realize why customization is needed? Despite following the best practices in business, ERP customization can become inevitable because:

  • Successful organizations have their competitive advantages which differentiate them from other organizations.
  • Some ERP functions are badly aligned to business requirement
  • People are used to flexible technologies (Kimberling 2012)

However, customizing ERP software can have some ugly effect when it is not done in controlled way. If any organization considers customizing then they must be aware of following risks:

  • Customizing a single functionality of an ERP might have a following effect to other functionalities which might only be identified later, after the system is live. One thing leads to another, and the system can get tangled.
  • Customizing can stretch the date of going-live, which can affect the company in different way.
  • If a company is not taking help from original vendor for customization then it can upset the vendor, which might lead in withdrawing of support.
  • Even if the vendor is still supporting, the new upgrades provided by vendor may now not be applicable after customization. This will only lock the company in old system.
  • If a company customizes on its own with the help of an in-house expert, the company should be aware that the knowledge of that customization goes out with that person. Thus, making it harder to pin down the complexity in that very customization. (Vjeko 2009)

Yet, there can be difference in ERP solution and actual business process which is commonly referred as gap. One of the solutions in reducing this gap is to business process reengineer the business process to suit ERP package. This means changing the established workflow in the company and to tune it line with the workflow given in ERP ware (Subramoniam, S, Tounsi, M, Krishnankutty, KV 2009). However, there should be a good balance of realigning business process and customizing ERP in order to best suit the organizational need.

References

Kimberling, E 2012, Case For and Against ERP Customization, Viewed 4th August 2013, http://www.backbonemag.com/Backblog/case-for-and-against-erp-customization.aspx

Subramoniam, S, Tounsi, M, Krishnankutty, KV 2009, ‘The role of BPR in the implementation of ERP systems’, Ergonomics, Business Process Management Journal, Vol. 15, no. 5, pp.653 – 668.

Vjeko 2009, Top 7 reasons why to avoid (much) customization, Viewed 4th August 2013, http://vjeko.com/blog/top-7-reasons-why-to-avoid-much-customization

PART B:

Examine assessment item 2. The purpose of this assignment is to provide a report responding to a case study. Provide a rough skeleton (dot point form if you wish) of the content and structure of the main body of your report. You should make clear what the problem is and also outline what the options are.

The rough skeleton of the content and structure of the main body of the report is provided below:

Executive Summary

  • Summary of the report outlining the purpose, outcome and recommendations.

Introduction

  • Objective, key ideas and the structure of the report.

Project Analysis

  • Significance of ERP implementation
  • Issues and Problems of ERP system.
  • Analysis of critical factors.

Recommendation

  • Pros and cons of existing system.
  • Pros and cons of legacy system.
  • Recommendation and Illustration.

Conclusion

  • Summarise the findings of analysis and present recommendation.

References

  • List down all the references in Harvard style in alphabetical order.

 

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Week 4: Complexity of cancelling ERP support

Respond to the following:  ERPs usually require frequent application of vendor software patches in order to address minor security/functionality issues and bugs.  Not applying these patches can result in the vendor withdrawing support for the ERP.  This process occurs in Operation stage.  Moreover larger updates, requiring mini ERP implementation projects, can occur as frequently as every three years.  What are the implications for organisations adopting an ERP?  Do you think the text captured the complexity of this? Why/Why not?

Implementing an ERP is like taming a dragon; if done correctly it adds value or else it can burn the company down with huge economic loss followed by other stressful situations. Implementing that first ERP software successfully is a great achievement, but a company must be aware that there is more to it. A life cycle of ERP does not end after the implementation of ERP, but the cycle continues in the form of recurring upgrades and fixes to realign the system to the changing or unmet business needs. Thus, the ERP support becomes inevitable.

Some of the implications of adopting an ERP are as follows:

  • Ease of data access with data integrity
  • Reduces data redundancy
  • Activity monitoring reduces Sabotages
  • Better utilization of time
  • Better inventory management
  • Ease of sales planning
  • Strong organizational process
  • Better customer relationship management (Bhorai, 2013)

However, as mentioned in topic itself, there are lots of complexities that might come up while maintaining the ERP. A company has already invested huge money while implementing ERP but it still needs to spend money for upgrading and maintaining; for this reason, a company might consider cancelling maintenance to reduce the cost. This can impact greatly to the company. Before cancelling maintenance, a company must be aware of following things:

  1. ERP software companies make their money charging their customers maintenance, so they will hardly entertain any bargain regarding the maintenance.
  2. You will no longer receive any upgrades.
  3. Considering cheaper 3rd party provider might seem like a good, but they do not have access to the ERP vendor’s proprietary source code, knowledge base or system architects. Should you find a bug in your ERP system that only the vendor’s developers can fix, you will find yourself deadlocked. (Panorama Consulting Solutions, 2010)

Regarding the text, it concentrates more on implementation of ERP, key indicators of success, but it fails to show the amount complexity that might arise later after implementation. The text does talk about the internal conflicts that might come up during post-implementation process, however it did not mentioned about the complexity that may arise due to cancelling of support.

References

Bhorai 2013, Benefits of ERP (Enterprise Resource Planning), viewed 4 Aug 2013, http://bhorai.com/index.php/17-white-papers/21-benefits-of-erp-enterprise-resource-planning

Panorama Consulting Solutions 2010, Canceling ERP Software Maintenance: When the Corporate Hero Becomes the ERP Fall Guy, viewed 4 Aug 2013, http://panorama-consulting.com/canceling-erp-software-maintenance-when-the-corporate-hero-becomes-the-erp-fall-guy/

Svejvig, P 2011, ‘A Successful Enterprise System Re-Implementation Against All Odds-A Multisourcing Case Study’, Journal Of Information Technology Case & Application Research, vol. 13, no. 4, pp. 3-31.

Week 3

Respond to the following:  ERPs are often touted as providing ‘best practice’ in functionality and business processes.  However, many organizations have their own business processes and often do not want to change.  If an organization is unwilling to change its business processes, can it gain any value from an ERP?  How could this be achieved?  What are the risks?

Enterprise resource planning (ERP) is a cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company (Wikipedia, 2013). ERP applications have been developed after thorough research and effort of best practices in different industries. When an ERP application is released, changes are rarely made before release of any other updates. Thus when applying a new ERP system in any organization, they have to rethink about their business process to match the best practices that the new ERP system has implemented. However, all the businesses might not be willing to do so either to maintain their competitive advantages or because of several other reasons. Later in this article I will be focusing on following issues:

  • Can an organization gain any value from an ERP without changing its business processes?
  • How can that value be achieved?
  • What are the risks in doing so?

Ekran, in 2009, performed a research involving two pharmaceutical organizations who have implemented new ERP system. Firm A implemented ERP after doing BPR (Business Process Re-engineering), whereas Firm B followed big bang theory in ERP implementation. Both the companies have achieved some improvement in

  • Cycle Time
  • Order Fulfillment Time
  • Inventory Level
  • Inventory Turnover
  • Order to Cash Rate

But, it was noticed that Firm A, after suitable changes in their business processes, has achieved greater improvements in all the 5 aspects with compared to Firm B. So it can be said that a company can gain value even without changing their existing business process; but, it is advisable to make suitable changes in business processes if the company wants to gain greater value from an ERP.

Now, in order to achieve value without making changing in business process an organization must still follow good practice of ERP implementation. So, while implementing ERP an organization must have:

  • Clear understanding of strategic goals
  • Commitment by top management
  • Excellent project management
  • Organizational change management
  • A great implementation team
  • Data accuracy
  • Extensive education and training
  • Focused performance measures
  • Multi-site issues (Ekran, 2009)

However, there are risks involved in implementation of ERP without suitable changes in business processes. It might result in:

  • Implementation of ERP which does not meet the business requirement of an organization.
  • Additional heavy costs in modifying ERP.
  • Additional time consumed in modifying ERP.
  • Additional work around paths to make use of ERP.

Conclusively, the direct implementation of ERP may improve the performance of an organization, but it can also introduce many risks. Plus, the organization will not be able to get the value of new system to its fullest. Thus, it is advisable to embrace suitable changes in business processes while implementing ERP.

 

References

Ekran, T E 2009, ‘BPR Effect on ERP Implementation: a Comparative Case Study’, World Academy of Science, Engineering and Technology, viewed 3 October 2013, http://www.waset.org/journals/waset/v30/v30-242.pdf

Wikipedia 2013, Enterprise resource planning, viewed 3 October 2013, http://en.wikipedia.org/wiki/Enterprise_resource_planning

Week 2: Shadow System

Image

A shadow system of an organization is a system or a program which is not a formal part of its centralized information system or ERP system. A shadow system can range from a simple spreadsheet or a database to full-blown system that replicates and manipulates the data of an organization’s central system. There can be various causes why shadow systems are being used despite all the threats it might impose to an organization; these aspects will be further discussed later in this article.

Some characteristics of shadow system are:

  1. Data for shadow system are replicated from centralized information system, taking the data out from the boundary of centralized IS.
  2. The data extracted are used for selected business functions.

Causes

An organization pays good amount of money to implement an ERP system to have an enterprise wide centralized system. Still, why would an organization need a shadow system? There can be various reasons why the need for shadow system arises:

  1. The gap between the requirements of the various stakeholders within an organisation and what the ERP system implementation provides. (Jones, D, Behrens, S, Jamieson, K & Tansley, E 2004)
  2. Complicated interface, lengthy work flow, incomplete features of newly implemented ERP system which makes the job more complex for user.
  3. Lack of proper training of new ERP system to the users.

Threats

However, applying shadow system imposes different threats to an organization. The major threat can be the threat of proper integration. The shadow system is not an integral part of ERP system and thus the shadow system only utilizes portion of the ERP’s data. Also, ERP doesn’t support input from external shadow systems. Thus, there is incomplete data in both the systems. This will cause problem while reporting, monitoring and also while performing other tasks as the complete data doesn’t exist wholly in any of the systems.

Further, shadow system can introduce other threats as well. A shadow system is usually developed by an individual or a small team in an ad-hoc basis, and is not well documented. In case the shadow system team stops their support, new support team or ERP provider will have a hard time finding out how the system actually functions. This will only add more expenses and time for new system. Also, because the shadow systems are poorly designed, it might not comply with the legal requirement exposing the existing data to the security risk. This increases the risk of legal liabilities to the company.

References

The Weblog of (a) David Jones 2004, “The rise and fall of a shadow system: Lessons for Enterprise System Implementation”, blog post, viewed 3 August 2013, http://davidtjones.wordpress.com/publications/the-rise-and-fall-of-a-shadow-system-lessons-for-enterprise-system-implementation/