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ERP System Implementation Journey

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Question:

Why an ERP Systems Journey May Never End.
 
 

Answer:

Introduction

This report is based on ERP systems, its usage and its benefits that are gained by business organizations while using these systems for different purposes. The benefits of ERP systems occur over a period of time rather than occurring immediately. It is also believed by some business organizations that the journey of ERP systems is ongoing and benefits of all ERP systems is not same for all. Some companies may gain more benefits than others. According to researchers that differing benefits are result of usage of ERP systems at different stages by business organizations. Now the purpose of making this report is to discuss about the journey of company’s ERP systems and how benefits may vary that are provided by ERP systems. Besides this, we will also emphasize on experiences of different companies that are using this system. Some other essential concepts such as why a journey of ERP may never ends, different stages in an ERP systems journey, potential benefits of each stage and identification of drivers and barriers for companies to move from one stage to the next.

Main Body

Now in this segment of report we will discuss above mentioned concepts and arguments about these topics in detail.

Journey of Company’s ERP Systems and How Benefits may vary

The journey of ERP system in a company is related to implementation of ERP system. The implementation of ERP systems in a business organization is a wise and effective decision that helps to control cost. There are various benefits of ERP systems that are invaluable. But according to statistics and major headlines, it has been proven over and over again that implementations of ERP projects are failing to meet more than 50% requirements and expectations. There are many companies exist that have already passed through this. Besides this, it is also my experience that several clients and cost form attendees got disappointed by implementing system that was going to solve their problems. In this way, only implementation of ERP cannot consider as journey of ERP, it is actually related to successful implementation of ERP. To have a successful implementation of ERP, an organization must dedicate to adequate resources of business projects (Jennifer Kinzel, 2017). The beginning of ERP journey is from software that is selected by business organization and definition of processes that will be implemented. It will be better to define needs of business processes before selecting software (Klöckner and Nayum, 2017). Besides this, it is essential that all business processes should be planned out to finest detail. But it cannot be done with external parties or consultants because they don’t have knowledge about internal transactions of your business and intricacies of the internal business processes. In this case, it is responsibility of a business organization to confirm standard of ERP system and what possibilities of customizations of this system and cost are. It will be a blunder if we think that a fancy ERP system can do everything that we require. Sometimes, special business processes are adapted to fit in ERP systems and it cannot be done at individual basis. So fancy look of ERP cannot defines its capabilities, way of working and effectiveness. There is no doubt to say that ERP is an ongoing activity. From its pre-installation steps journey begins and end of this journey cannot be defined because after successful installations, staff members training to work with ERP system, continuous modifications in ERP according to changing needs of users and management of data huge amount of data for business successes according to current circumstances of business organizations. So these processes can’t stop or predefine. Therefore, in above ways journey of ERP system continues in a company.

 

Case Study to exhibit different companies’ experience of using ERP

As we have already discussed above that how some business organizations are getting different experiences in usage of ERP systems. Now in this segment of report, we will emphasize on companies’ experiences by using case study examples to highlight different benefits and weaknesses of ERP systems for them (Blogs.infor.com, 2017). As we know that ERP is Enterprise Resource Planning software solution which is an integrated suite of applications that can be used by business organizations to store and manage data at every stage of business. Due to this reason, every business organization prefer to use ERP systems (Searchsap.techtarget.com, 2017). But it is not ensured that for every business, the journey of ERP implementation is successful. To identify this thing, we have analyzed some case studies and two cases have come into our notice that shows how one of two different companies has got benefits from ERP system and another got drawbacks. These two companies and Cadbury and Hershey’s (guide, 2017).

Case Study of Cadbury

Cadbury is a British Multinational confectionary company. It is the second largest confectionary brand in the world and big competitor of Wrigley’s company (SearchCIO, 2017). There are various brands of Cadbury in India and in other countries like 5 Star, Oreo, Bournvita and Dairy Milk. Cadbury turns out towards implementation of SAP ERP 6.0 i.e. System Analysis and Program Development. The company preferred to use this system because SAP is considered largest global ERP implementation. The ERP was implemented with reduced operational cost in company. More than 10,000 employees were sending data to the SAP solution of company. Besides this, master data management solution of SAP is also added. After implementing ERP system by Cadbury following benefits are found:

  1. This company was on rapid paced growth and it could not continue any more with the existing systems. These existing systems were too slow due to some inefficiencies in it. But ERP added efficiency and also guided to enhance growth of business.
  2. The implementation of ERP provided a new way to manage warehouse, branches and offices of Cadbury (Bansal, 2013).
  3. With implementation of ERP, company enhanced its strength and now competing successfully in competitive market (Hong and Kim, 2002).
  4. The initial implementation of ERP was a time-consuming process but after this successive implementations was completed in lesser time and cost. The main advantage of ERP was saving cost in implementation phase of company’s projects.
  5. The successful results of ERP was an internal process of restructuring and here reaction from competitors does not matter.
  6. With the help of ERP system, Cadbury has built-in robust regular feedback system and it is used to monitor the changes and to check that these are working according to predefined plan or not. The whole implementation is cross-functional and it is necessary to have increase in the efficiency.

The above discussed are some effective benefits of ERP software solution that has gained by
Cadbury Company after making decision to implement ERP. In this way, for Cadbury ERP was proved successful to handle its business issues and to increase growth of business at rapid pace. While selecting vendors for ERP, Cadbury selected best in class vendors and they helped the process in modernized fashion. Due to this, in initial phase of ERP implementation all possible hiccups were avoided. The ERP system eventually set low cost and high result implementation that highlights the success and benefits.

Another company that has implemented ERP system was Hershey’s, but unfortunately, it did not get benefits like Cadbury.

Case Study of Hershey’s

The largest manufacturer of chocolate in North America is Hershey’s. Headquarter of this company is in Pennsylvania. This company was established in 1894 and there are near about sixty countries worldwide where Hershey’s is selling its products. The 80% sale of Hershey’s business is from chocolate and 20% is non-chocolate. Like Cadbury, Hershey’s also decided to implement ERP solution in its organization. The main reason to implement ERP system is to enhance competitiveness of company and customer service. So during late 1996, the management of this company gave approval to use ERP system for handling Enterprise21 project. Therefore, SAP’s R/3 ERP software were selected to manage integration among three systems such as Manugistics SCM software, Siebel’s CRM software and IBM Global Service. The overall cost of project was US$10 Million and recommended time for implementing project was four years. It was also decided by Hershey that Big Bang approach will be used for project implementation rather than phased approach. Unfortunately, this strategy of implementing ERP system in Hershey’s was not right decision and ERP failure occurred. Following ERP failure was encountered by Hershey’s Company.

  1. The main problems were found in fulfillment of orders, processing and shipping of orders. Hershey’s was not able to meet its committed date of delivery.
  2. There were many distributors of Hershey’s, who had ordered the products, were not able to supply those products to retailers on time. Due to this credibility of ERP was lost in market.
  3. Due to announcement of Hershey’s in market that delay issues occurred due to malfunctioning of newly installed ERP system, the charged by 8% was encountered in stock price of company in one day.

These crucial failures were encountered by Hershey’s Company due to implementation of ERP system for handling its business activities and projects. To more elaborate this issue of Hershey’s journey of ERP implementation, we would like to discuss about reasons of failure of ERP.

 

Reasons of Failure of ERP in Hershey’s

Following reasons are brought into notice by Hershey’s Company regarding failure of ERP system implementation.

  1. The first reason of failure of ERP implementation is over-squeezing in schedules implementation.
  2. The selection of Big Bang approach rather than phased approach was not a right decision.
  3. For the sake of convenience, sacrificing of testing of systems was a big mistake.
  4. In busiest business periods of Hershey’s, cutover activities and Go Live was scheduled which was also a main reason of failure of ERP in Hershey’s Company.

This failure was so much critical for Hershey’s Company and this company has learnt a lot from this failure. The main learnings of Hershey’s company from this failure are listed as below:

  1. The first lesson was that an ERP implementation project should not be forced into an unreasonable timeline. The over-squeezing implementation of schedules is a way to overlook critical issues. In this case, testing phases are considered safety nets that should never be compromised (Ram, 2017).
  2. Other essential lesson was that no scheduling should be done during busy seasons. Whether there is best-case implementation scenario in an organization but still companies should learn curves and operational performances tips.

From above discussed case studies it is cleared that implementation of ERP systems may successful or unsuccessful for business organizations according to circumstances and strategies of company. The reason of success of ERP in Cadbury is its strategic plans and approaches to run ERP according to business circumstances. But in Hershey’s it was not implemented properly, so there ERP was a failure.

Now in next segment of report, we will discuss about some other essential concepts regarding ERP systems and its implementation in business organizations (NetSuite.com, 2017).

Why an ERP systems journey may never End?

In above segments of report, we have already discussed the concept of journey of ERP systems in an organization. On the behalf of above discussion, we can say that it is right journey of ERP may never ends because after completing all installation steps of ERP, the steps of staff training, periodic custom modifications according to business needs never end. That is why ERP systems’ journey is an on-going activity (Roy, 2017).

What are potential stages of ERP Systems journey?

The ERP i.e. Enterprise Resource Planning is an important system that is used to handle business activities. This system is powerful enough to store, manage and modify huge amount of company’s data in it. It is a user-friendly software but its proper training is required by its users. Otherwise heavy losses can occur like Hershey’s company. But there is no need disappoint because Cadbury is also an example of good results of ERP implementation (Venkatraman and Fahd, 2016). There are some essential stages of ERP systems journey that are considered while implementing ERP systems into business organizations. Here in this segment of report we will discuss about these stages of ERP system journey (Managementstudyguide.com, 2017).

  • Pre-Evaluation Screening
  • Evaluation
  • Gap Analysis
  • Training
  • Testing

Pre-Evaluation Screening

It is necessary for an organization that before looking for an ERP solution, pre-evaluation of business needs and requirements should be done. In this first stage, companies conduct a careful inventory of their needs. The participants from multiple disciplines are included, who will use ERP systems, in this stage of ERP system journey. The main goal of this stage is to gain a clear and comprehensive understanding of the needs, tools, resources and challenges of organization (marketing, 2017).

 

 

Evaluation Stage

Under this stage of ERP system journey, different vendors are found out by companies to get best offers by evaluating pros and cons of their products. If a company gets a product according to its requirements and at best cost then that is considered an appropriate match (Workwise LLC, 2017).

Gap Analysis

Under this stage of ERP system journey, an analysis of gap between the desired solutions and what is available in market takes place. It is a better idea to back to the vendors that is considered by company and to that vendor it can be asking that how these gaps can be addressed (Skyward Techno Blog, 2017).

Training

Every person in an organization that will use ERP system, he/she needs training. The training program should be created to know about needs, schedules and scope of training (Ganesh and Mehta, n.d.). In some companies, training process may be of one day and in another companies it can be of two-three days (Pcbennett.com, 2017).

Testing

This is also an important stage of ERP systems. At this stage alignment of system’s functionality with the set of requirements for the project are tested. The overlapping among testing and development phases is often seen. But after implementing this step, it becomes easier to identify bugs and errors in a system that can cause issues in overall functionality of an ERP. At the end of this phase, the members of project team can do their jobs with comfort on new systems. It is final step before start using new ERP system in business organization.

Besides above discussed stages of ERP system, deployment and ongoing support stages of ERP system can also be considered. Under deployment stage of ERP system journey, organization and vendor will evaluate the whole situation and will make final decision that system is ready to implement or not. Prior to go live, the final data is also validated and loaded. Under this stage, project team also starts training stage for employees who will work on new system. In deployment stage of ERP system journey, all preparations are done to make a product live without any error or fault in it. Once ERP system has gone live in organization, it is essential for vendor to provide ongoing support. Over a period of time with the evolvement, the way of users work within the system also evolves and according to this evolvement different adjustments and changes to the configuration of system are done. This ongoing support never ends and also ERP journey.

Potential Benefits of each Stage

As we have discussed above some main stages of ERP system journey. Now there are different benefits of each stage that are listed as below:

Benefits of Pre-Evaluation Stage

The main benefit of this stage is that, an organization is cleared about its all needs and purchase ERP system according to its needs or requirements without any doubt. The ERP system is purchased according to requirements of employees who will work on this system (SearchCIO, 2017).

 

Benefits of Evaluation Stage

Under this stage, best vendor can be selected among multiple vendors and best solution can be found (Columbus & SC24/7 Staff, 2017).

Benefits of Gap Analysis

The main benefit of gap analysis is that an organization can aware about the market trends for ERP systems and then can purchase accordingly (Memoire Online, 2017).

Benefits of Training

By providing training to employees, they can learn best way to implement ERP solution to perform various business activities in secure and reliable ways.

Benefits of Testing

Through testing stage of ERP system, an error-free system can be used by organization which is necessary to maintain long term security and sustainability of ERP system.

Drivers and Barriers for Companies to move from one stage to next

The main drivers for companies, those want to implement ERP systems, to move from one stage to next include reviews of overall project scope and planning , review of driving principles for developing project, evaluation of misfit resolution strategies, evaluation regarding attaining benefits and evaluation regarding users and organizational learning (Seo, 2013).

On other side we talk about barriers for companies to move from one stage to other is lack in fulfillment of requirements of previous stage that will leave that stage incomplete. So if previous stage will be incomplete then company will not move to other stage (Chiodo, 2017).

Conclusion

After this whole discussion about ERP system journey we can say that it is an interesting concept to discuss about overall journey of ERP system implementation in an organization and to know about essential things included in it. ERP systems are very popular among business organizations and it is hard for its users to think that ERP systems can be failed. But in this report, we have discussed case study about failure of ERP system. In that case study, it is clearly defined that improper use of ERP systems in organizations lead to failure of projects. On another side, this report also represents the benefits of ERP systems for an organization that has understood its value. Therefore, these essential aspects regarding ERP systems should be taken into account by business organizations those want to implement ERP systems.

 

References

Chiodo, T. (2017). The Five Stages of ERP Implementation. [online] Baass.com. Available at: https://www.baass.com/blog/the-five-stages-of-erp-implementation [Accessed 31 Mar. 2017].

Managementstudyguide.com. (2017). Phases of ERP Implementation. [online] Available at: https://www.managementstudyguide.com/erp-implementation-phases.htm [Accessed 31 Mar. 2017].

Columbus & SC24/7 Staff, S. (2017). 7 Steps to Enterprise Resource Planning (ERP) Systems Implementation Success - Supply Chain 24/7. [online] Supplychain247.com. Available at: https://www.supplychain247.com/article/7_steps_to_enterprise_resource_planning_erp_systems_implementation_success [Accessed 31 Mar. 2017].

marketing, e. (2017). 12 Phases of a Successful ERP Implementation Project. [online] e2benterprise Blog. Available at: https://blog.e2benterprise.com/12-phases-of-a-successful-erp-implementation-project-part-1-of-2/ [Accessed 31 Mar. 2017].

Workwise LLC. (2017). 3 Stages of ERP History | WorkWise ERP Blog. [online] Available at: https://www.workwisellc.com/stages-erp-history/ [Accessed 31 Mar. 2017].

Skyward Techno Blog. (2017). 10 Steps to Successful ERP Implementation - Skyward Techno Blog. [online] Available at: https://www.skywardtechno.com/blog/erp-implementation-steps/ [Accessed 31 Mar. 2017].

Pcbennett.com. (2017). 6 Phases of an ERP Implementation Plan | PC Bennett Solutions. [online] Available at: https://pcbennett.com/blog/6-phases-erp-implementation-plan [Accessed 31 Mar. 2017].

Roy, (2017). case study on ERP success(cadbury) and failure(hershey's). [online] Slideshare.net. Available at: https://www.slideshare.net/ChitrangadaRoy1/case-study-on-erp-successcadbury-and-failurehersheys [Accessed 31 Mar. 2017].

Jennifer Kinzel, C. (2017). Implementing A New ERP System: Its About The Journey. [online] William Vaughan Company Costing for Profitability. Available at: https://costingblog.wordpress.com/2013/05/13/implementing-a-new-erp-system-its-about-the-journey/ [Accessed 31 Mar. 2017].

Ram, J. (2017). Competitive advantage from ERP projects : examining the role of key implementation drivers. 1st ed. Pergamon.

SearchCIO. (2017). ERP Project Journey Kicks Off for One CIO - CIO Magazine. [online] Available at: https://searchcio.techtarget.com/magazineContent/ERP-Project-Journey-Kicks-Off-for-One-CIO [Accessed 31 Mar. 2017].

guide, I. (2017). Implementing an ERP system: a step-by-step guide - South Florida | WhiteOwl. [online] WhiteOwl. Available at: https://www.gowhiteowl.com/2017/01/implementing-erp-system-step-step-guide/ [Accessed 31 Mar. 2017].

Blogs.infor.com. (2017). Why is a modern ERP system so crucial? — One company’s journey - From the Source. [online] Available at: https://blogs.infor.com/fromthesource/2016/05/modern-erp-system-crucial-one-companys-journey/ [Accessed 31 Mar. 2017].

SearchCIO. (2017). ERP Project Journey Kicks Off for One CIO - CIO Magazine. [online] Available at: https://searchcio.techtarget.com/magazineContent/ERP-Project-Journey-Kicks-Off-for-One-CIO [Accessed 31 Mar. 2017].

Memoire Online. (2017). Memoire Online - Influence of an ERP system on the value chain process of multinational enterprises (mnes) - Bosombo Folo Ralph. [online] Available at: https://www.memoireonline.com/01/10/3095/m_Influence-of-an-ERP-system-on-the-value-chain-process-of-multinational-enterprises-mnes8.html [Accessed 31 Mar. 2017].

Seo, G. (2013). Challenges in implementing enterprise resource planning (ERP) system in large organizations. 1st ed.

NetSuite.com. (2017). Do you know what ERP is? Learn how ERP can help your business with this informative article. [online] Available at: https://www.netsuite.com/portal/resource/articles/erp/what-is-erp.shtml [Accessed 31 Mar. 2017].

Wailgum, T. (2017). ERP Definition and Solutions. [online] CIO. Available at: https://www.cio.com/article/2439502/enterprise-resource-planning/erp-definition-and-solutions.html [Accessed 31 Mar. 2017].

Searchsap.techtarget.com. (2017). Cite a Website - Cite This For Me. [online] Available at: https://searchsap.techtarget.com/definition/ERP [Accessed 31 Mar. 2017].

Klöckner, C. and Nayum, A. (2017). Specific Barriers and Drivers in Different Stages of Decision-Making about Energy Efficiency Upgrades in Private Homes.

Venkatraman, S. and Fahd, K. (2016). Challenges and Success Factors of ERP Systems in Australian SMEs. Systems, 4(2), p.20.

Bansal, V. (2013). Identifying Critical Success Factors for ERP in SMEs through a Case Study. International Journal of Future Computer and Communication, pp.471-475.

Ganesh, L. and Mehta, A. (n.d.). Understanding Cloud Based ERP Implementation in Light of Conventional ERP Implementation at Indian SMEs: A Case Study. SSRN Electronic Journal.

Hong, K. and Kim, Y. (2002). The critical success factors for ERP implementation: an organizational fit perspective. Information & Management, 40(1), pp.25-40.

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