The Challenges In Implementing Erp Systems

The Challenges In Implementing Erp SystemsERP is the process of integrating all the air functions and processes in an brass to achieve numerous benefits.First, a single point of in yearation entry helps to reduce selective information redundancy while saving employees magazine in entering data, thereby reducing labour and overhead exists.Second, the centralization of information, decision-making, and control leads to ontogenesiss in efficiencies of operations and productivity, as wellhead as coordination between departments, divisions, regions, and rase countries. This is curiously true for multinational corporations (MNC), in which global desegregation could result in better communications and coordination most(prenominal) the world. The global sourcing and distribution of parts and services could in like manner provide appropriate benchmarks for operations around the world.Third, the manduction of a centralized database provides demarcation managers with accurate a nd up-to-date information to make well informed avocation decisions. Further, it reduces data redundancy while improving data integrity at the same time.Fourth, functional integration will consolidate all sorts of data, such as financial, manufacturing, and sales, to take advantage of bulk discounts. ERP is especially measurable for companies who argon intimately connected to their vendors and customers, and who apply electronic data interchange (EDI) to process sales proceedings electronically. Therefore, the carrying out of ERP is exceptionally beneficial to businesses such as manufacturing stick outts that mass-produce products with little changes. Nevertheless, the revolutionary and innovative ERP softw be product constitution quickly expands into other business beas such as finance and retailing. ERP as well provides companies with a militant advantage over their competitors.But despite these several benefits, there argon similarly certain challenges face by ERP, e specially during the murder phase. Some of the challenges face during the capital punishment of an ERP establishment are explained in the chase sections.Typically ERP formations are very salutely, take a lot of time to implement and have a risk associated with implementation, and also affect the job profiles of many employees. Thus the three major dimensions involved are money, time and people involvement. In addition, there is also a requirement to re-engineer animate business practices to break the needs of the tonic ERP governance.AN ERP IMPLEMENTATION PLANThe following flowchart depicts several activities that must be performed ahead implementing an ERP system. spirit 1 Managers must conduct a feasibility study of the current place to mensurate the organizations needs by analyzing the availability of hardware, software, databases, and in-house com deputeer expertise, and make the decision to implement ERP where integration is essential. They must also set goals fo r improvement and establish objectives for the implementation, and calculate the break-even points and benefits to be received from this expensive IT investment.Step 2 The instant major activity involves educating and recruiting end users to be involved throughout the implementation process.Step 3 Managers form a see to it team or steering committee that consists of experts from all functional areas to lead the project.Step 4 After a decision is made to implement ERP, a team of system consultants will be hired to evaluate the appropriateness of implementing an ERP system, and to help select the best enterprise software provider and the best approach to implementing ERP. In most situations, the consultant team also recommends the modules that are best desirable to the companys operations (manufacturing, financial, human resources, logistics, forecasting, etc.), system configurations, and Business-to-Business applications such as supply-chain centering, customer relationship mana gement, e-procurement, and e-marketplace.Step 5 equal employee and manager train must be provided to all business, stakeh aged(a)s, including managers, end users, customers, and vendors, before the system is implemented. Such training is usually customized and roll in the hay be provided by either internal or outside trainers.Step 6 The system installation process will address burdens such as software configuration, hardware acquisition, and software testing.Step 7 Data and information in the databases must be converted to the format used in the new ERP system and servers and networks need to be upgraded. A post implementation review is recommended to check off that all business objectives established during the planning phase are achieved. Needed modifications are tackled during this phase too.Issues set about while Implementing an ERPAlthough issues faced while implementing an ERP are numerous, but this report classifies them majorly into weft related issues, technologica l issues, psychological issues, organisational change related issues and time and cost related problems.Selecting an appropriate ERPThe first and foremost challenge faced by many organisations is deciding what sort of an ERP system they should select to implement. The managers must decide on the size, face and scope of the ERP system they really require and how to choose the best solution amongst the existing hundreds of systems in the market. This selection problem arises for all businesses without exception and should be computeed as seriously as possible for the reason that ERP system choice defines a companys strategy for at least the following 6 to 10 years and, no doubt, has a major impact on the future success of the entire business.To decide on the implementation of a successful ERP program, the managers should have an in-depth understanding of the organisations current business processes, organisational social organization, culture, work environment and financial and frugal strength.Due to enormous impact on the competitive advantage of the company, top management must consider the strategic implications of implementing an ERP solution keeping in mind the size of the company and the modules installed. Management must devise about several topics like- Does the ERP system strengthen the companys competitive position? How does ERP affect the organizational structure and the culture? What is the scope of the ERP implementation only a few functional building blocks or the entire organization? Are there any alternatives that meet the companys needs better than an ERP system? If it is a multinational corporation, the management should be concerned about whether it would be better to roll the system out globally or restrict it to certain regional units?Only when all these points have been taken care of, can an ERP system be selected for further implementation.Technical IssuesOnce the appropriate ERP is selected, the arduous task of implementation has only begun. The beside part of implementation issues are related to the technical aspects of the project both hardware and software. These issues include the existing servers and workstations to be updated and new and modern ones to be ordered, purchased, and replaced. The internal network also has to be analyzed and modernize if required the speed and bandwidth of the existing Internet access should be taken into comity, along with possible technical concerns about the mobile devices being used.If these oppugns are underestimated, they can dramatically impact the overall result of the project and easily result in slow performance in the first few weeks, or in some cases months of ERP implementation hence resulting in a slackening of the existing pace of business.However the situation has been changed during the last few years, and plenty of software-as-a-service (SaaS) applications that have shown up on the market now allow the cost and headache of hardware problems to be min imized.More specifically, ERP systems need a Graphical User Interface at the front end, and are based on a client-server technology. They require the ability to access and share data crossways all applications across different platforms. Some servers and equipment might have a need to be custom built, and that can also cause a time lag in ERP implementation.In short, it can be said that the unique hardware and software needs of an ERP system, along with the continued use of pre existing applications in an organisation can prove to be tricky and are a major consideration while implementing an ERP.Data quality and consistency issuesThis issue is common in companies that are implementing ERP for the first time and transferring their legacy data into the new system from Excel spreadsheets, manual records, or old disparate applications. Basically, the question is that old data that have been used and stored for years can for many reasons appear approximate or even incorrect in the new E RP system.Integration of data from other older systems with the new ERP system is a major concern while implementing the system. A particular company might have score and finance systems operating on different mainframes (say IBM 370 architecture), MRP systems on a high end VAX, and a logistics system on an AS 400. The legacy systems of this company might be coded in COBOL. Thus, the implementation of a new ERP system for such a company needs to be done very carefully and requires technical judgement for the implementation of this new system.People related Psychological IssuesThis is the most difficult type of issue to resolve. These are the questions and issues that originate from the aspect of human nature that never accepts any change without seeing the megascopic advantages of it.People-related issues such as corporate philosophy and leadership style can play an important portion in the ERP implementation process. Research has concluded that active top management support and dedication are essential to the success of any system implementation. Frequently, executive councils and steering committees consisting of top managers are developed to plan and manage the IT initiatives.Employees can be quite wary of any kind of change in the business processes, particularly during periods of economic downturn. Ill-trained employees who fight the changes in the business process tend to be poor performers. Therefore, to addition the chance of a successful ERP implementation and to reduce users resistance to change, employees, especially those who are very well-enlightened with the operations, must be involved in all stages of the implementation process. Employees must also be educated about the ERP installation. Such educational endeavours should include a concise introduction to the radical concepts and architecture of ERP systems, including actual screen shots of the function modules. During these training sessions, it is important to discuss the managerial is sues involved and to build a basic understanding of the integration concepts prior to the actual installation of the ERP system. Further, any Business-to- Business initiatives, reengineering projects, alliances, and the introduction of new technologies should also be addressed.Project managers must take charge of the implementation process at all times. They must oversee the reengineering of the key business processes, reassign job responsibilities, restructure the organizations chart, and redefine work relationships. Further, they must also learn how to manage the software vendors and any outside consultants.Employees working on an ERP implementation project put in long hours (as much as 20 hours per day) including seven-day weeks and even holidays. Even though the experience is worthful for their career growth, the stress of implementation coupled with regular job duties could decrease their morale rapidly. Leadership from fastness management and support and caring acts of projec t leaders would certainly boost the morale of the team members. early(a) strategies, such as taking the employees on field trips, could help reduce the stress and improve the morale.Organisational ChangesERP implementation brings significant changes into a companys conventional business model and the day-to day practices it has been using for years or even decades.ERP implementation requires organizations to reengineer their key business processes in cardinal ways, revamping old ways of conducting business, redefining job responsibilities, and restructuring the organization. For major multinational corporations (MNC), the ERP systems must be customized to address global issues where different countries have different ways of doing business, and to incorporate country-specific business practices pertaining to accounting, tax requirements, environmental regulations, human resources, manufacturing, and currency conversion into the integrated systems.While integrating the information systems across various countries, three types of misfits (relating to data, process, and output) can occur due to incompatibilities between software functionality and organizational requirements as well as differences in cultural and regulatory environments. The unique context of each country in which an organization operates must be carefully included into the traditionally Western-biased business practices inherent in the ERP systems.Implementation make up and TimeImplementation Cost Even though the price of prewritten software is cheap compared with in-house development, the total cost of implementation could be three to five times the purchase price of the software. The implementation costs would maturation as the degree of customization increases. After training the selected employees, strategies such as bonus programs, company perks, salary increases, invariable training and education, and appeals to company loyalty work to retain them. Other intangible strategies such as elastic work hours, telecommuting options, and opportunities to work with leading-edge technologies are also being used.Implementation Time ERP systems come in modular fashion and do not have to be implemented entirely at once. ERP packages are very general and need to be configured to a specific type of business and whitethorn follow a phase-in approach with one module implemented at a time. Some of the most commonly installed modules are sales and distribution (SD), materials management (MM), production and planning, (PP), and finance and controlling (FI) modules. The length of implementation is affected by the snatch of modules being implemented, the scope of the implementation, the extent of customization, and the number of interfaces with other applications. The more the number of units, the longer the implementation time. Further as the scope of implementation grows from a single business unit to multiple units spread out globally, the duration of implementation increases.Con clusionAn ERP implementation is a huge commitment from the organization, causing millions of dollars and can take up to several years to complete. However, when it is integrated successfully, the benefits can be enormous. A well-designed and properly integrated ERP system allows the most updated information to be shared among various business functions, thereby resulting in tremendous cost savings and increased efficiency. When making the implementation decision, management must considered fundamental issues such as the organizations readiness for a dramatic change, the degree of integration, key business processes to be implemented, older applications to be included, and whether or not new hardware needs to be acquired. In order to increase the chance of user acceptance, employees must be consulted and be involved in all stages of the implementation process. Providing proper education and appropriate training are also two important strategies to increase the end user acceptance ra te. The organization is also going through a drastic change, with changes in the way businesses are conducted, the organization being restructured, and job responsibilities being redefined. And finally, the cost and time of implementation of an ERP system also are a major challenge faced during the implementation process.