Erp Implementation - Prospector

1. Introduction

Worldwide organizations are going for ERP (Enterprise Resource Planning) systems for information integration and aligning & streamlining their processes for delivering high value to the customers. ERP systems have their roots in MRP II systems which provided support to the production function. Shortcomings of MRP lead to an integrated solution as ERP. These systems seek to integrate of information across all functional areas (i.e., marketing, finance, HR, logistics etc.) and hopes to provide increased flexibility to organization in serving its customers.

Enterprise resource planning systems can provide a wide array of benefits that are both tangible like reduced personnel, inventory, IT and procurement, transportation, and logistic costs; improved cash flow management, revenue, and profits, and intangible like increased visibility of corporate data, speed of decision making, and control over global business operations; improved customer responsiveness and business processes. But many ERP installations achieve only partial implementation.

“Nearly one in five are scrapped as total failures (Soh, Tien, & Tay-Yap, 2000; Trunick, 1999). Prior research has found that only 10% of new information systems failures can be attributed to technological problems (Bikson & Gutek, 1984). Many ERP projects fail to achieve anticipated benefits because managers underestimate the efforts involved in managing change (Appleton, 1997). Thus the human element has become the critical determinant of information system success (Martinsons & Chong, 1999). Users play a pivotal role in achieving ERP system success and affecting the perceived benefits arising from its use (Mahmood, Burn, Gemoets, & Jacquez, 2000). Assessing the degree to which key organizational members and all potential users agree on how the technology is to be applied in their particular situation within the organization (Sarker & Lee, 2000) is critical for organizations to achieve success with ERP systems.”

2. Literature Review

2.1. ERP

ERP is a combination of business management practices and technology, where IT integrates with your company’s core business processes to enable the achievement of specific business objectives. ERP systems are integrated information systems for the company, the enterprise. By using this, all the systems are connected and so talk directly to each other. i.e., the sales system talks to the production system, finance system, customer system and so on. When the systems are integrated, not only do they communicate with each other but also the information that everybody uses is common. i.e., instead of different responses from the various departments, there will be a single value for inventory level, sales, single production schedule etc. Also the data is updated as and the chances occur so the new status is available to everybody. In essence, ERP systems provide a common and unique database for everybody.

ERP Implementation is not an easy task. In “Why ERP? A Primer on SAP Implementation” it is explained that companies opt for ERP implementation for three main reasons.

1. They realize that their legacy systems are not integrated. But it is difficult to integrate the organization and the functions using software. Such issues have to be tackled by the management themselves otherwise the implementation and the system are bound to fail.

2. They have a large number of facilities scattered around the globe. They will need to integrate the systems so that there is a better communication among the different units. But here also the people problems cannot be catered to by any software.

3. They recognize that the organization does not need to change to be positioned to exploit future communication and computing technology for e-business and other applications. Such companies will look into the organization issues, will assess their needs and will implement the ERP only on legacy systems where integration is necessary. These companies are most likely to have a greater success rate.

If the various processes of an organization are integrated and all the information is common, then the organization integration is possible in such cases. Here the chances of duplication of information are avoided, thereby saving time and also improving the efficiency of operations. For instance, if the marketing and production department consolidate and follow the same method for forecasting, the chances of incongruent forecast can be avoided.

ERP provides efficiency and increased productivity through the process of integrating the various processes across the entire organization. In this case, information will be entered into the system once and will