Enterprise Resource Planning - Assignment Example

ERP Failures and Lessons Learned Enterprise Resource Planning (ERP) Systems are information systems, which enable an organization to have a synchronized configuration that can connect various business aspects strategically. A business can have some form of competitive business advantage as it saves on resources. The technology reduces any inefficiency that are associated with data entry and management of information. A successful deployment of the ERP system enhances the employee satisfaction and productivity. The ERP has several challenges resulting in failure due to various reasons leaving some lessons to be learned. One of the major lessons from ERP implementation is employee involvement that requires the company wishing to use ERP to put a lot of effort during implementation in assessing the ability of the employees to use the software (Ghosh, 2012). Evaluation of their current staff is important as they cannot do their daily work and implement the plan at the same time. A companys employees can lead to the success or failure of the implementation of the ERP project depending on their commitment and skills necessary to implement the project. For the ERP project to succeed, the company can employ temporary staff for daily maintenance. Another lesson learned from the ERP implementation is recognition and retention of the employees. Employers, who offer incentives to their employees engaged in the long-term implementation of the system, face few challenges as Ghosh (2012) reports. Employees get satisfaction and can remain with the employer for a long time for various reasons such as the feeling that their employer values them and allows them time to spend with their families and to appreciate the time spent in the implementation. Employees struggle to work on the project that takes too much time, and energy, yet the rewards are low. Giving employees some incentives facilitates the success of the project and a smooth implementation. Communication is very important in the management of a company as many issues that hinder the implementation of the project results from the lack of good communication between the management and the employees. Ghosh argues that Sharing the good aspects of the implementation process across all departments is very important for its success (12). Many ERP projects fail because important details on the working of the system are not revealed problems arise. Sometimes the problems are blamed on individuals but it is normally too late for action. Communication across all management levels is very important for ERP systems to function. Management support of the employees by the management is another important lesson learned from the implementation of the ERP project. Employers should have creative ways of rewarding he employees involved in such tasking projects. Money should not be the only reward for the hard working employees, and the employer should engage with them and collect their views on what make them happy. Some practices like retaining the employees for a long time are better and cheaper than employing new ones (Ghosh, 2012). One reason for the failure of the ERP system is underestimation of the resources required by the project as many companies do not have an understanding of the external and internal resources required for the project. For internal resources time commitment is needed from parties such as such as in the finance, accounting, or the HRM departments as asserted by Ghosh (2012). Many companies that fail in ERP project bring in temporary employees to carry out the project instead of involving the company’s workforce. The company needs to consult external resources such as consultants, contractors, and advisors to enquire about the resources and skills needed for the project. An example of a company that experienced this challenge is the Bottlers Company in which most of its employees were inexperienced in terms of information technology (Ghosh, 2012). The company assigned a lot of implementation work to employees without the ERP knowledge and expertise. Furthermore, the employee held their normal positions and performed their regular job without additional assistance. Inadequate resources for implementation led to the challenges experienced by the company. The other reason for the failures of the ERP system project is inadequate on-the-job training during the typical lifespan of the ERP system, which is 10 to 12 years. The duration is enough to train the majority of the employees in ERP technology and implementation Ghosh, 2012). The leaders concerned with the ERP project whether internal or external should have experience in implementing the system for sometimes to avoid failures. In addition to training the internal resources, a company should make use of the external consultants. A company that encountered failure due to inadequate training of its staff is the Fox Meyer Pharmaceutical Company as the project execution lacked skilled and knowledgeable personnel. In fact, the company did not have the in-house skills and relied on Andersen Consulting for the implementation and integration of the ERP, which had automated warehouse system. Insufficient testing is another reason for the failure of the ERP project in various organizations especially when the company’s schedules become too tight. The number and the depth of test cycles are reduced, which affects the effectiveness of the system as testing is necessary to see whether it meets the business needs according to Ghosh (2012). Testing will also measure the output that the user requires after implementation of the system. Reducing testing leaves, many defects undiscovered and increases the risks associated with the ability of the ERP system to perform the desired functions. Dow Chemical Company, Hershey Chocolate, and FBI ERP projects failed because of inadequate testing of the system before its implementation. Other companies simply fail in their implementation due to the adoption of bad plans that are not detailed to enable successful implementation. Some of the plans are not realistic and fail to have all the required skills leading to underestimation of the change to be involved. A good plan identifies all the requirements for the project and the workforce required to implement the project (Ghosh, 2012). Tasks must have a logical sequence to enable the implementers have a smooth process of implementation and reduce confusion. Cloud computing is a model involved in the delivery of information technology services by retrieving resources from the internet via the web-based applications allowing the remote working of the employees. Cloud computing reduces the cost of managing their information, and it is easy to upgrade it. Enterprise Resource Planning ERP incorporates cloud technology making it easier for those who want to implement it has access to the application via the internet (Ghosh, 2012). Cloud ERP solution for instance, Acumatica, runs on many windows making it easier for all large, medium, and small businesses to unlock their potentials. Cloud technology has reduced ERP cost and offered a good support for companies using the ERP technology as they can install and upgrade the system at low cost from the internet. Adopting cloud solutions reduces the initial cost of p implementation and the maintenance and be done by the Cloud vendors. The cost of IT training and employing of new ones is also greatly reduced making it possible for several companies to implement the project. There is also an enhanced speed and performance of the system, which enables high data processing increasing the user’s efficiency (Ghosh, 2012). More effective upgrade of the system and its enhancement is facilitated by the use of cloud ERP as the systems can be centrally upgraded from the system provider without involving the staff. There is also enhanced ERP mobility as the cloud solutions are accessible anywhere via the web browsers by the use of the PCs and Mobile phones and tablets. Location of the company does not matter, and the managers can update their data immediately it occurs. The main barriers to the use of cloud ERP are issues with cloud transparency and privacy of data (Ghosh, 2012). Companies find it difficult to trust cloud vendors with their sensitive data as they may leak the information to the public. Some companies are therefore shying away from using cloud technology due to the privacy issues. Another barrier is data security, which deals with protecting the company’s data from unauthorized access, use, or disclosure. However, research has shown that data is leaked due to human error and not technology (Ghosh, 2012). Some cloud technology provided by some vendors may be inferior and affect the effectiveness of ERP technology. There are also other technical challenges especially when incorporating the ERP with other Information systems due to compatibility reasons. All these barriers can result in the failure of the ERP system leading to great losses to the companies. ERP systems are now applicable in several companies that require increasing their productivity and enhancing effectiveness in their daily operations. Some lessons can be learned from ERP technology such as the employee involvement and retention. Some reasons contribute to the failure of the system such as inadequate training and motivation through incentives. Cloud technology is very important in the implementation of ERP as it helps in reducing the costs, upgrading, and updating the system. However, the cloud technology can pose challenges such as transparency, privacy, and security issues relating to company’s data. Reference Ghosh, R. (2012). A Comprehensive Study on ERP Failures Stressing on Reluctance to Change as a Cause of Failure. Journal of Marketing and Management, 3(1), 123-134. Read More