Challenges for ERP Implementation
Content
Challenges for ERP Implementation
Top Management Commitment Management of the multinational firms concern about the system, should this system improve the efficiency of the organization in term business performance. They should concerns about they operate this system globally or regionally? Top management need to follow up every activities concern about implementation. Some organization IT departments sometime make some big mistakes of handing the proper implementation of ERP system. This might be a risk to the entire organizational for their more survival, because ERP systems carry all the business implications. Implementation of ERP is on people, not processes or technology. Organization needs to go among transformation, and the management needs careful planned and thru implementation of this change. Top management not only funding the project, but also take an active role in their implementation. Successful ERP implementation is a complete turning point of the organizations; continuous commitment of the top management is required. In fact result of the management commitment is the overall commitment of the organization and overall commitment is ensure way of successful implementation. Reengineering Accomplishment of an ERP system engages reengineering the existing business practices to the best business process standard. Purpose of ERP system to built on best performances that are followed in the industry. The major benefits of ERP system appear from reengineering the organization existing way of doing business. All process of the organization should appear to the ERP model. The cost and benefits of ERP model might be high. In an organization it’s very difficult, everyone agrees with the same process, when an organization has a plan to go globally. For a while the business process so unique that they need to be preserved and appropriate steps need to be taken to customized the business process Integration Several companies realize that having a single vendor means a “common view” that is important to server their customer competently and took less effort to maintaining the system in future. Unfortunately there is no single application that meets the customer requirements. Companies might be needs any other product applications to meet the unique requirement of their customers. Other specific applications are totally integrated with the ERP system and are completely compatible. In this situation, in an organization ERP serves as a backbone and all others systems working as a bolted on the ERP software. In this context ERP working as a server and all other application working as bolted on the ERP system. And other third party applications work as middleware, which integrate the other product software with the ERP system. Sometime middle ware application does not compatible with the others product software. Vendor of them idle ware application need to more concentrate and focus on the technical aspect of the application and on the inter-operability rather than connecting business process. Inappropriate integration might be effect the ERP system and as a result company maybe lost their customer. ERP Consultant
ERP market has growing festally and the available competent consultant does not meet the requirement of the ERP market. It’s impossible to fill this gap in the specific field immediately. Major challenge is that, in current situation it too much hard to find the right people from the market and them to achieve the desire goal. ERP implementation requires multi skills functional, technical and interpersonal skills. It’s very difficult to find number of consultants that have specific industry knowledge, multi industry knowledge. The available consultant demands more money. It’s very hard to a firm to hire a number of consultants for ERP implementation. For example in USA there are few consultants that have approximately five year experience. Only few consultants that have three or more years experience. SAP one year experience consultant demand $ 70,000 to$80,000 annually, three to five year experience consultant demand up to $ 200,000annually.According to Schwartz (1998) employees and it firm even more difficult. The success or failure of the project is determined on how well management meets these challenges. Implementation Time It’s impossible to implement complete ERP system at once, because ERP system comes in modular fashion and its implement phase by phase. A number of companies follow phase by phase implementation process and move towards to complete one module at a time. For Example SAP R/A is composed of number of components. The implementation of complete modules depending on the organizations needs. Mainly install modules are sales and distribution, materials management, production and planning module, and finance and controlling module. The time requirement of one ERP system is normally 14 month and more than 150 consultants are required. Normally the roll out ERP plans its required ten of its specialized separate manufacturing divisions and approximately five to eight years to rollout system. Implementation Cost The price of prewritten software is economical as compared to in house development. The total cost of implementation might be three to five time high as compare to the application purchase price. The implementation cost depends on the customization cost. If system customization is increase as per company requirements then implementation cost also rise. The 30% of, the total implementation budget is only consume on the consultants cost. For example as per Gartner Group, the total cost is of an external SAP consultant is around $1600 per day. If we consider inhouse development, SAP trained technologist creates its own problem. Huge amount is required to train the selected employees. After training the employee it’s also a challenge to retain them in this competitive environment, which is hungry of skilled SAP consultant. Due to competitive market, employees could demand salaries double or triple of their current salaries and also requires extra bonus programs, company perks, salary increase, frequent training and education. For the purpose of workers loyalty the organization also put some other intangible strategic such as flexible working hours, telecommuting options and also some opportunities to work with leading technologies that are also provides. ERP Vendors Approximately 500 ERP applications are exists in the market and some companies are more working on it and try to make more secure and strong. Selection of appropriate products is
particularly important in the competitive environment. For example Gartner Group has purchase smart program, which has more than 1700 questions to help a company to choose an appropriate ERP package. The role of the top management is important when they selecting a vender. Selecting the Right Employees Those companies that they want to implement an ERP system. They needs to be allocate some of their best employees for the successful implementation of the project. Some companies assign this task of their internal employees and some companies’ hire some outsources employees for monitoring of project. The general phenomenon is that, internal company’s employees are more dedicated as compare to external people. Internal employees are more willing in organization success. Mainly organizations just provide inclusive guideline for selecting internal resources of the project. Companies need to take work out seriously and select the right people of project implementation. Some time lack of good understanding of the project need, Lack of ability, lack of appropriates guideline regarding project. The company internal resources are a major cause of failure of ERP system. Training Employees Continuously Training and updating the employees on ERP is a most important challenge. People are hidden cost of ERP implementation. Without appropriate training almost 30 % to 40% of frontline workers will not capable to handle the needs of new system. Employee Morale ERP implementation takes long time. Mostly employees put long working on the system, sometime 20 hours in a day and seven days in a week and even holidays. This working style is valuable for their career growth. Long hours working some time create stress in their jobs and could decrease their moral gradually. Upper management should needs to boost up employees morale of the project trough different ways. For example Employees taking on field trip, give some extra bonus etc.
Issues for ERP Implementation
Top Management Commitment Management of the multinational firms concern about the system, should this system improve the efficiency of the organization in term business performance. They should concerns about they operate this system globally or regionally? Top management need to follow up every activities concern about implementation. Some organization IT departments sometime make some big mistakes of handing the proper implementation of ERP system. This might be a risk to the entire organizational for their more survival, because ERP systems carry all the business implications. Implementation of ERP is on people, not processes or technology. Organization needs to go among transformation, and the management needs careful planned and thru implementation of this change. Top management not only funding the project, but also take an active role in their implementation. Successful ERP implementation is a complete turning point of the organizations; continuous commitment of the top management is required. In fact result of the management commitment is the overall commitment of the organization and overall commitment is ensure way of successful implementation. Reengineering Accomplishment of an ERP system engages reengineering the existing business practices to the best business process standard. Purpose of ERP system to built on best performances that are followed in the industry. The major benefits of ERP system appear from reengineering the organization existing way of doing business. All process of the organization should appear to the ERP model. The cost and benefits of ERP model might be high. In an organization it’s very difficult, everyone agrees with the same process, when an organization has a plan to go globally. For a while the business process so unique that they need to be preserved and appropriate steps need to be taken to customized the business process Integration Several companies realize that having a single vendor means a “common view” that is important to server their customer competently and took less effort to maintaining the system in future. Unfortunately there is no single application that meets the customer requirements. Companies might be needs any other product applications to meet the unique requirement of their customers. Other specific applications are totally integrated with the ERP system and are completely compatible. In this situation, in an organization ERP serves as a backbone and all others systems working as a bolted on the ERP software. In this context ERP working as a server and all other application working as bolted on the ERP system. And other third party applications work as middleware, which integrate the other product software with the ERP system. Sometime middle ware application does not compatible with the others product software. Vendor of them idle ware application need to more concentrate and focus on the technical aspect of the application and on the inter-operability rather than connecting business process. Inappropriate integration might be effect the ERP system and as a result company maybe lost their customer. ERP Consultant
ERP market has growing festally and the available competent consultant does not meet the requirement of the ERP market. It’s impossible to fill this gap in the specific field immediately. Major challenge is that, in current situation it too much hard to find the right people from the market and them to achieve the desire goal. ERP implementation requires multi skills functional, technical and interpersonal skills. It’s very difficult to find number of consultants that have specific industry knowledge, multi industry knowledge. The available consultant demands more money. It’s very hard to a firm to hire a number of consultants for ERP implementation. For example in USA there are few consultants that have approximately five year experience. Only few consultants that have three or more years experience. SAP one year experience consultant demand $ 70,000 to$80,000 annually, three to five year experience consultant demand up to $ 200,000annually.According to Schwartz (1998) employees and it firm even more difficult. The success or failure of the project is determined on how well management meets these challenges. Implementation Time It’s impossible to implement complete ERP system at once, because ERP system comes in modular fashion and its implement phase by phase. A number of companies follow phase by phase implementation process and move towards to complete one module at a time. For Example SAP R/A is composed of number of components. The implementation of complete modules depending on the organizations needs. Mainly install modules are sales and distribution, materials management, production and planning module, and finance and controlling module. The time requirement of one ERP system is normally 14 month and more than 150 consultants are required. Normally the roll out ERP plans its required ten of its specialized separate manufacturing divisions and approximately five to eight years to rollout system. Implementation Cost The price of prewritten software is economical as compared to in house development. The total cost of implementation might be three to five time high as compare to the application purchase price. The implementation cost depends on the customization cost. If system customization is increase as per company requirements then implementation cost also rise. The 30% of, the total implementation budget is only consume on the consultants cost. For example as per Gartner Group, the total cost is of an external SAP consultant is around $1600 per day. If we consider inhouse development, SAP trained technologist creates its own problem. Huge amount is required to train the selected employees. After training the employee it’s also a challenge to retain them in this competitive environment, which is hungry of skilled SAP consultant. Due to competitive market, employees could demand salaries double or triple of their current salaries and also requires extra bonus programs, company perks, salary increase, frequent training and education. For the purpose of workers loyalty the organization also put some other intangible strategic such as flexible working hours, telecommuting options and also some opportunities to work with leading technologies that are also provides. ERP Vendors Approximately 500 ERP applications are exists in the market and some companies are more working on it and try to make more secure and strong. Selection of appropriate products is
particularly important in the competitive environment. For example Gartner Group has purchase smart program, which has more than 1700 questions to help a company to choose an appropriate ERP package. The role of the top management is important when they selecting a vender. Selecting the Right Employees Those companies that they want to implement an ERP system. They needs to be allocate some of their best employees for the successful implementation of the project. Some companies assign this task of their internal employees and some companies’ hire some outsources employees for monitoring of project. The general phenomenon is that, internal company’s employees are more dedicated as compare to external people. Internal employees are more willing in organization success. Mainly organizations just provide inclusive guideline for selecting internal resources of the project. Companies need to take work out seriously and select the right people of project implementation. Some time lack of good understanding of the project need, Lack of ability, lack of appropriates guideline regarding project. The company internal resources are a major cause of failure of ERP system. Training Employees Continuously Training and updating the employees on ERP is a most important challenge. People are hidden cost of ERP implementation. Without appropriate training almost 30 % to 40% of frontline workers will not capable to handle the needs of new system. Employee Morale ERP implementation takes long time. Mostly employees put long working on the system, sometime 20 hours in a day and seven days in a week and even holidays. This working style is valuable for their career growth. Long hours working some time create stress in their jobs and could decrease their moral gradually. Upper management should needs to boost up employees morale of the project trough different ways. For example Employees taking on field trip, give some extra bonus etc.
Issues for ERP Implementation
