ERP system in Automobile sector

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ANALYSIS OF CRITICAL SUCCESS AND FAILURE FACTORS IN IMPLEMENTATION OF ERP IN AUTOMOBILE SECTOR

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ANALYSIS OF CRITICAL SUCCESS AND FAILURE FACTORS IN IMPLEMENTATION OF ERP IN AUTOMOBILE SECTOR
LITERATURE REVIEW

BY PRABHAVA NANDIVADA Roll. No. 35 PGDM BD (2012-14)

INTRODUCTION

Implementing an ERP software system not only involves a great deal of expenditure, efforts and time, it also involves change in some of the complex business processes. Such changes are often disliked by the employees and are a big risk. In order to ensure success, everyone in the company, from the leadership to back-office workers should cooperate. The motivation for an ERP implementation falls into two broad categories: a solution of technological problems and a vehicle for solving operational problems such as uncompetitive business performance and ineffective business processes. A basic general process followed when implementing ERP is as given below. Planning and Requirements Analysis This is the initial phase where the company takes a decision on implementing ERP. The decision could base on their need to comply with legal requirements, replace their legacy applications, for benefits of integration, reduction of inventory, reduction of operational costs, risk management, additional functionality or speeding up processes. The team chooses an ERP system. Typically a niche player in resource planning software developement is chosen instead of developing from scratch. Some of the leading vendors are: SAP, PeopleSoft, Oracle,Sage Group, MS Business Solutions, SSA Global, Lawson and Intentia. Design This is the phase where the ERP team re-engineers the business processes around the Best Practices wherever feasible and identifies the processes that will result in customizing the ERP software application. The IT infrastructure requirements based on ERP system architecture and vendor are prepared. Detailed Design

In this phase, the ERP team uses the identified business processes as the basis for implementation to build prototypes by choosing standard models, processes, inputs and outputs. This phase involves business super-users in determining the system elements. Implementation This phase involves installation of the ERP software, migration of data from the old applications to the ERP system, configuring the ERP system for reporting, implementing security, interfaces etc. The end users are involved at this stage to test the system after being trained. The implementation consultants seek feedback, identify software bugs/corrections, performance bottlenecks and apply the fixes. A decision on switching to the new ERP system is taken. Maintenance This is an ongoing phase which involves patching/upgrading the software, enhancing the functionality of the applications, changes in reports etc. This is either taken care of by inhouse IT department or outsourced to consulting firms.

Literature Review
The study has grouped the critical success factors of implementation into two criteria i.e. strategic and tactical factors. One of the strategic factor is legacy systems. It determines the amount of IT and organisational change that is required to successfully implement an ERP system. Business and IT legacy are not separate problems since many components of a business (e.g. work flow and processes) are bound up in the design and operation of the existing IT systems. Another factor is ERP strategy. The amount of bespoke development depends on whether an organisation is willing to change their business to fit the software, or whether they prefer to change the software to fit their business. Tactical factors- Client consultation, personnel, client acceptance, monitoring and feedback and communication are based on Slevin and Pinto (1987). Organisations need to understand their current business structure and business processes associated with the existing IT system, and relate their existing situation to the business processes contained within the ERP system IEEE The study has identified many factors like organization environment, people characteristics, technical problems, ERP vendor support, cultural impact which is critical to implementation of ERP. ERP being a highly integrated information system, its design, implementation, and operation require the complete cooperation of line and staff members from all segments of the business. Organizations simply underestimate the extent to which they have to change and re-engineering the existing business processes in order to accommodate their purchase. Suitability of software and hardware, data accuracy, education and training are also very critical to the success of ERP implementation. ISSN Economics and Management The study is from the perspective of project management and has analysed the factors with it in view point. Some factors are - Completion of a project within the specified time limits, budget, Ensuring quality, Continuity of the functional activities of an organisation, Preservation of the production culture and values of an organisation. ERP implementation project could be considered as unsuccessful both for technical (exceeded time and financial budgets) and functional (failure to meet the needs of an organisation) reasons. This study studies the experience of specialist and normal users to compare the variation of factors which influence success or failure for a user. INTERNATIONAL JOURNAL OF BUSINESS MANAGEMENT This paper argues that ERP implementation at Indian SMEs should extend its scope beyond the configuration to the process, enterprise, technology, vendor, end-user, human resource, performance, quality, strategy and project related issues. A model is developed with the help of quantitative survey based method to identify and rank the thirty critical success factors and then a framework has been proposed in terms of recommendations for managing these CSFs. 30 success factors were identified in this study.   Top Management Commitment & Support Change Management Process

                           

BPR & Software Configuration Project Champion Business Plan, Vision Effective Communication Plan Post Implementation Evolution Risk Management Focused performance Measure Quality Improvement Measure Organization/Corporate Culture Implementation Cost Software development, testing, troubleshooting & crises management IT Infrastructure Selection of ERP Package Data Conversion & Integrity Legacy System Consideration Vanilla ERP System Documentation Project Team Implementation Strategy & Timeframe Consultant Selection Vendor/Customer Relationships Project Management Client Consultations User Involvement User Education & training Personnel/Staff Employee Attitude & Morale Empowered Decision Makers

ECONOMICS AND MANAGEMENT This study has analysed issues like identification and definition of a comprehensive list of CSF, the relevance of CSF along the typical ERP implementation phases, the definition of Key Performance Indicators (KPI) for CSF, the analysis of CSF management in some organizational contexts. Most important factors according to this study        Top management support Competent management of a project. Detailed analysis of an organisation’s vision and needs Appropriate and timely training and education of employees Reorganisation of business processes Management of organisational changes Clear and measurable goals of a project (or management of expectations) Open and continuous co-operation within the entire organisation.

Conclusion
The implementation of ERP systems in organizations is an enormously complex undertaking. It is a high-risk project that needs to be managed and planned properly because it can affect nearly every aspect of organizational performance and functioning. The future of successful ERP implementation does not rely on further improvements of technology, but on bringing people and business up to speed on the appropriate use of ERP technology to fit their defined business needs and objectives. One of the very key factor is education and training. It is of very high importance. Three aspects concerning the contents of training are: (1) logic and concepts of ERP; (2) Features of the ERP system software; and (3) hands-on training. Concept training shows the people why the ERP system is implemented and why changes to the ERP system are necessary, while functional training (hands-on training) helps overcome the fear for computer systems since managerial people would fear that they are computer illiterate and they would lose power if manpower is reduced due to computerization, and the education can help overcome such fear. Another important factor is vendor support. Three dimensions of vendor support are classified: (1) Service response time of the software vendor; (2) Qualified consultants with knowledgeable in both enterprises’ business processes and information technology including vendors’ ERP systems; and (3) Participation of vendor in ERP implementation. It’s important for the vendor’s staffs to be knowledgeable in both business processes and ERP system functions. Also, the consultants should possess good interpersonal skills and be able to work with people. Software vendors should be carefully selected since they play a crucial part in shaping the ultimate outcome of the implementation. It suggests that organizational and project management factors have more relevance along the SAP implementation project phases. Once again, there is the need to focus more on people and process than technology itself.

Action Plan
1. Conduct interviews in automobile companies (Fiat, Tata Motors, Maruti) to understand implications of ERP implementation. 2. Analyse the system before the SAP module was implemented and identify areas of improvement on which it was focused and analyse the system after the implementation and highlight major areas of improvement or otherwise. Analyse the critical success and failure factors in each case. 3. Map the change in the company before and after implementation of the system. 4. Conduct comparative analysis of before and after data and draw inferences and conclusions

Bibliography
http://www.christopherholland.co.uk/resources/papers/ieeev4.pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.103.6410&rep=rep1&type=pdf www.researchgate.net http://www.ktu.lt/lt/mokslas/zurnalai/ekovad/15/1822-6515-2010-691.pdf http://jesteves.com/Tesis_phd_jesteves.pdf http://www.student.oulu.fi/~jolahti/accinfo/9%20ERP%20Implementation%20procedures.pdf

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