Advantages of ERP Business Suites
Discuss about the ERP Implementation Dustups and Disappointments.
Enterprise Resource Planning, also known as ERP, is a business process management software that allows business organisations to carry out their business operations in an efficient manner and smoothly by integrating different modules into a single software. Using an ERP business suite, business organisations can perform various functions, such as product planning & development, manufacturing, sales and marketing, human resource management, customer relationship management, supply chain management, process management, accounts and finances, etc. (Anon., n.d.)
ERP software have gained a lot of importance in the past few years because of their ability to assist business organisations in becoming more effective and efficient. ERP business suites also help business organisations in cutting down their operational costs and avoiding duplication of operations and processes to avoid wastage of resources. The application of ERP software in a workplace can allow business organisations to have a central repository for all their information that can be shared across the organisation in an efficient manner.
Implementation of ERP business suites in business organisations is considered to be a difficult task as it is a major change that requires a lot of time and investment of important resources to achieve success. Further, the issues related with the implementation of ERP business suites are also serious and can sometimes cause the implementation program to fail. This report is aimed at discussing some important issues in the implementation of ERP business suites that can result into failure of the program.
According to a Software Advice Survey, 66% of the business organisation that are looking to invest in an ERP business suite are not using one at present (Ciecierski, 2015). Some of the top companies in the world have tried to become more efficient by implementing ERP business suites but have failed miserably in achieving their goals and objectives because of the complexities that are involved in the project. Before discussing the issues or complexities involved in the ERP implementation process, it is important to know about the advantages of an ERP software that motivated business organisations to implement them in their workplace. Some major advantages of ERP business suites are discussed below:
- ERP business suites helps business organisations in increasing their competencies and coping up with the market trends when almost all the competitors are implementing an ERP software.
- ERP business suites help business organisations in avoiding duplication of efforts by combining all operations into a single software, which further helps in increasing organisational efficiency
- ERP software can help business organisations in achieving a better collaboration amongst all of their departments
- An ERP software can make it easier for business organisations to create, share, edit and access important data and information
- ERP business suites can help business organisations in bringing down their operational costs by allowing them to manage their work operations in the most efficient manner
- ERP business suites are highly reliable as they have some of the best security modules involved, which makes it difficult for outside entities to gain access to data and information.
- It can also help business organisations in improving the quality of services that they provide to their customers.
Even though ERP business suites require a lot of investment and time in its initial stages but the advantages of having an ERP business suite running in the workplace can be a huge plus point for any business organisation.
In the world of business, a stakeholder is defined as a person who has an interest or concern in an activity or process of a business organisation (Anon., n.d.). Even in the implementation of an ERP business suite in an organisation, there are a number of stakeholders involved. These stakeholders can be divided into two main groups i.e. the external stakeholders and the internal stakeholders.
External consultant à an external consultant is a person or an organisation who is approached by an organisation to assist it in selection and implementing an ERP business suite. An external consultant is an experienced entity that has complete knowledge about ERP business suites and will help a company in selecting the right business suite that would be tailored according to the business operations of the company. Involving an external consultant can help business organisations in assuring higher chances of success and a better return on investment (MacMillan, 2015).
External vs. Internal Stakeholders
A law officer à a law officer does not have a major role to play in the implementation of ERP business suite but he or she is the one who helps in coming to a general agreement on terms and conditions between a company opting for an ERP business suite and a vendor (Al.Rashid, 2013).
Customers à customers are one of the most important external stakeholders in the implementation of ERP business suites. Business organisations operate to serve their customers and try to become better day-by-day so that their customers can be offered a higher value for their money. Therefore, customers are also an important stakeholder in ERP implementation as the quality of customer service will vary before and after the implementation of an ERP business suite.
Competitors à competitive firms are also a stakeholder in the implementation of an ERP business suite as a successful implementation and better operations will raise the competition in the market and all the competitors, soon or later, will have to invest in an ERP business suite to meet the market demands and trends.
Employees à one of the most important internal stakeholders in the implementation of an ERP business suites are the employees of the company who are going to use the software to carry out different operations of the company. Employees have to be prepared for a shift to ERP business suite and also have to be trained and developed so that they have the skills that are required to operate such a software. Further, employees will also get affected by the implementation of an ERP business suite as their jobs might become easier because of involvement of technology in operations.
Managers à managers are also important internal stakeholders that will be affected by the implementation of ERP business suite. Managers are responsible for the performance of their workforce or their departments and with the implementation of an ERP business suite, which will cost a lot of resources to the company, the managers will have to ensure that the company gets a positive return on investment and the outcomes of the implementation can increase the competencies of the company
Owners à the most important stakeholders in the implementation of an ERP business suite are obviously the owners of the company. Implementing an ERP business suite requires a lot of resources and time and the owners expect to achieve higher productivity and efficiency levels by implementing an ERP business suite in the workplace. They also have to assure that they are able to get the right software at the right price and also that the workforce is ready to make a change to its previous work practices to an ERP business suite. Further, the profitability of the owners also becomes dependent on the success of ERP implementation.
Implementation of an ERP business suite is not an easy task. It requires a lot of planning and execution to successfully switch from old work practices to a new system of ERP business suite but the advantages of an ERP business suite makes the pain totally worth it. Failure of an ERP business suite will not only result in the wastage of resources that were spent or invested in the acquisition and implementation of the software but will also result in loss of productivity and workplace morale to a large extent. Therefore, it is imperative that business organisations are aware about the issues that are related with the implementation of an ERP business suite and are ready to deal with the issues so that they can successfully implement a new software in the workplace and can achieve the benefits associated with it. Some of the issues related with the implementation of an ERP business suite, along with some real word examples where companies failed in implementing ERP in their workplaces, are discussed below:
Key External Stakeholders
Insufficient testingà as discussed above, implementation of ERP business suites require a lot of careful planning and consultation with experts because failure in implementing an ERP business suite can be a huge disaster for large business organisations. Along with proper planning, it is also important that the ERP business suite being planned for implementation in a business organisation is properly tested before putting it to use. If business organisations do not plan and test the software adequately before it is implemented in the workplace, they will not only lose the resources that they had invested in the project but will also have to face some serious consequences in respect to their business and market reputation. One such ERP implementation failure was experienced by one of the leading sports products companies in the world. Nike, back in 2000 and 2001, took a huge step towards updating its supply chain system by implementing an ERP business suite and invested around $400 million in the project. The company was taken by a shock when the company lost $100 million in revenues along with a 20% dip in its market share price. Above all this, the company also had to face a number of lawsuits. The thing that went wrong with the ERP implementation was that the company never tested its software before putting it to use in the workplace. As a result, everything went from good to bad and rather than achieving an improvement in its supply chain, the company collapsed its entire supply chain by narrowing down its sneaker manufacturing cycle and ordering low-selling sneakers in place of those which had a higher demand in the market (Anon., 2016). The failure of ERP implementation at Nike shows the importance of properly planning an ERP project before it is actually put to a full-fledged use in an organisation.
Unplanned implementation à implementation of an ERP business suite is not something which the organisations should think of in order to compete with the competitors unless they are well prepared. An organisation must be aware about the issues that might arise during the implementation of an ERP business suite and should be ready with contingency plans to deal with ERP implementation issues. Failure to plan and implement an ERP business suite can be detrimental to the business activities of a company and can have negative impacts on all internal and external stakeholders. One such ERP implementation failure was experienced by Hewlett-Packard which lead the company into a loss of $160 million in terms or revenues, which was 5 times more than the estimated cost of the ERP business suite implementation. The prime reason behind the failure of ERP implementation at Hewlett-Packard was that the company did not follow a planned approach into the implementation of ERP business suite. The senior level management at HP was aware about the issues that the company would have to face in all probability, during the implementation phase, but the company made no efforts to prepare contingency plans and implemented an ERP business suite just in order to compete with Dell (Wailgum, 2009). The issues faced by the company during implementation were not that major but they piled up and caused the implementation plan to fail. The impact of failure of HP’s ERP implementation strategy was so huge that the company experienced a setback as it was not able to deliver the orders to its customers within the given time and even the orders that were delivered were not according to the specifications that the customers opted for. Apart from the clients, a number of business partners of the company also suffered because the failure of the company in properly implementing its business suite (Anon., n.d.).
Key Internal Stakeholders
Untrained employees and users à as discussed above, one of the major issues that business organisations face while trying to implement an ERP business suite or even after implementation is that the employees sometimes lack the talent or the competencies that are required to operate such heavy softwares. One real life example that can prove the importance of training and development of users or employees for using ERP business suites before implementation is the case study of University of Massachusetts. University of Massachusetts launched a new program, known as Spire, that allowed 24,000 students to register for classes and perform other online activities. The ERP system implemented by the company failed miserably and more than 27,000 students at the University of Massachusetts had to tolerate buggy portals while they were unable to find out their classes or collect their financial aid checks. The staff of University of Massachusetts was disturbed and a lot of damage to the institute and its reputation was already done. The vendor or the company that designed the ERP suite later claimed that for non-profit organisations, it is next to impossible to operate these ERP business suites as they lack talent and financial resources to create and manage it. Thus, the failure of ERP implementation in the case of University of Massachusetts can also be related with the lack in competencies of the employees and no pains taken by the management to arrange training and development programs for its employees, which could have helped them in learning about the software (Wailgum, 2005).
Being over ambitious and poor support from the management à implementation of an ERP business suite is not an easy task and it is not even easy for the employees to adapt to such a major change all of a sudden. It is important for the management or the senior level executives of a business organisations to provide ample amount of support to the employees so that they can feel motivated and can work harder to fulfil the expectations of their seniors. An important point here is that it is also crucial that the management has the right expectations from its software and does not expects too much from it. One such ERP implementation failure occurred due to the management being over ambitious and not providing enough support to the ERP implementation program. FoxMeyer Drugs, a $5 billion company implemented a $100 million ERP system and went completely bankrupt soon after. The company launched its Delta III project in 1993 and implemented it between 1994 and 1995 while it went bankrupt in 1996. The company sued SAP as well as Andersen Consulting company in 1997. One of the prime reasons behind the failure of the project was the the members involved in the implementation of the project as well as the information staff were not well familiar with the R/3 hardware, system software and application software. Further, they even chose to enlarge the scope of the project by investing another $18 million in computerised warehouse, which clearly shows that they had become over ambitious with the project. Even the management was in support of the system in its early days but once the system started experiencing issues, the management started to withdraw its support as it had no idea about the complexities and risks involved in the project. The management agreed upon implementing the software 90 days earlier than planned even though the testing of the software was still not complete. The carelessness of the senior level management along with an over ambitious approach towards the software lead to the failure of the project in the implementation stage and resulted in the company going bankrupt soon after the implementation (Sontakke, 2014).
Implementation approach à the fact that an ERP software is developed by integrating multiple business modules into a single software makes it imperative for the business organisations to follow a planned approach to implement it in the workplace. Using an approach to speed up the implementation process or trying to implement it all of a sudden can also increase the chances of failure of the project. Hershey’s, one of the top multinational companies in the world, fell victim to such an issue and ended up failing its ERP implementation project. The company adopted a big-bang implementation approach to implement the software so that it could quickly implement it in the workplace and start using it as soon as possible. The management of the company implemented a customer-relations package and a logistic package simultaneously even when most of the modules had not even been tested. The approach adopted by the company to implement an ERP business suite ended up increasing the overall complexity and employee learning curve. The desperation of the company to make a switch to an ERP software as quickly as possible rushed it into implementing the software at its busiest time i.e. just before the Halloween season, which also added up to the misery. The result of using a big-bang approach to implement an ERP software in the workplace was that the company failed in fulfilling the orders of its customers during the peak season and lost $100 million in sales.
ERP business suites can have a number of advantages for business organisations but companies with no prior experience with an ERP software should be careful while trying to implement such a software in their workplaces because not only are these software complex, but the issues related with the implementation of these software can actually create a large number of problems for companies and can completely throw them out of the competition in certain cases.
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