Major Corporations switching to an ERP system

Abstract

ERP at its very threshold was accessible only by large corporations, because of its high implementation and running costs, but with the development of World Wide Web, the ERP methods have become the ideal of small business as well. With the growing technologies and the interest of small business men in implementing ERP has made the ERP system vendors to come up with flexibility in the systems.

Table of Contents

ERP – An Introduction

Implementation of ERP in Corporation

Importance of ERP in Corporations

ERP software

How it affects end users when a corporate switch to ERP

Conclusion

Appendix A

Appendix B

References

ERP an Introduction:

The technological progress of man in the contemporary times is the ultimate result of the restless human nature. The human history is marked with remarkable achievements from cave to modern business enterprise. Innovation has always been the counterpart of invention in this regard. Being in the contemporary times, when we explore the surroundings, it’s found that the modern setups, i.e. business and societal, are composed of very complex phenomenon. Considering the business setups most influencing part, let’s explore the business world. The history of modern business is not very far away, instead it dates back somewhere in the last decade of the 20^th century.

The most effective tool been introduced at that time was ERP, which didn’t only stimulated the business activities at a greater extent but also became the base of automated business management. Wikipedia, the online Encyclopedia defines ERP systems as “Enterprise Resource Planning systems (ERPs) integrate (or attempt to integrate) all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules”. (Wikipedia)

ERP is actually a method of using computer technology to integrate various parts of the organization, i.e. finance, sales, marketing, inventory, purchases, payroll, customer relations etc. The emergence of ERP on the business arena is not old, it was initially incorporated in the early 1990s, where by mainframe computers were used by large business setups in order to stimulate their organizational productivity by saving time and cost. The concept of ERP took a great deal of fame during mid 1990s.

Throughout the 1990s, most large industrial companies installed enterprise resource planning systems—that is, massive computer applications allowing a business to manage all of its operations (finance, requirements planning, human resources, and order fulfillment) on the basis of a single, integrated set of corporate data (Dorien James and Malcolm L. Wolf, The McKinsey Quarterly).

ERP in its originality, aiming to integrate all the aspects of organization, works on a single database instance with multiple software modules in accordance with the organizational requirements. These multiple modules may include Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), Human Resources, and Warehouse Management.

Implementation of ERP in Corporations

Enterprise Resource Planning (ERP) is implementing computer system in all the functions and departments of an organization. This way the entire view of company and its departmental functions can be managed on the computer system. Single software will be employed in every department and for different tasks including manufacturing, sales, finance, HR and warehouse. In addition, to coordinate functioning of the departments via networks bring all the tasks to the one platform. Software program works from a single database to connect all the single units in individual departments to one system. The implementing of ERP in an organization has huge benefits if executed correctly.

“It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs.” (CIO.com)

Cisco System, Inc, has been very successful in implementing ERP in their organization. Main product of company is a router. It is the software combined with hardware to control traffic from Internet and intranet users. The company has been ranked among top five in 1997 and the most successful.

How ERP has been successfully implemented in Cisco is revealed by the fact that all of its functions from manufacturing to the sales are centralized. Departments including manufacturing, finance, human resource, customer support, information technology and sales are well coordinated and functionally linked with each other. Though, two of its departments kept at the ‘lines of business’ are Product marketing and R&D.  It reached market capital of $531 billion in 2000 competing well with Microsoft and Intel.

The key factors in implementing ERP are to standardize the customer order so that the system can easily track all the way from order placement to the final sales. It was considered important to have all the information in one software system instead of having it in different programs. This way the company would be able to track orders and coordinating different business processes from manufacturing to shipping.

Cisco embarked on ERP projects to standardize their business processes. It successfully launched Oracle ERP system with investment of $15 million in January 30, 1995. ERP enabled Cisco to view overall performance at one place in an integrated environment including finance figures and functionality of all departments. Oracle based ERP system was implemented because of its emphasis on manufacturing, assurance of long-term functionality and the flexibility of work it provides.

It includes following

• Manufacturing
• Supply chain management
• Financial
• Projects
• Human Resource
• Customer relation management
• Data warehouse

Importance of ERP in Corporations and its effect:

As ERP has become the hot issue of present day business world, it’s crucial to understand what exactly the importance of ERP in corporations is. The answer to this question is, none too difficult, however, none too easy. As contemporary corporations operate not only in a particular part of the world, but they have the world wide exposure, by using the latest modes of communications, the time management becomes the most important factor responsible for the quality management of the product, deadlines, and good customer relations etc. The importance of ERP stands very sound in the business environment, as it provides the corporations with not only the integration, but also with the flexibility, efficiency, and low cost of operations.

Initially, the ERP systems used by corporations were aimed to integrate the internal affairs of the organization only, but later the fact was realized that no organization can work in isolation, even if its internal structure is much more stream lined and is in equilibrium. Simon Bragg and Jim Fulcher in Manufacturing Systems wrote, “For example, to get MRP [material requirements planning] to really work, a manufacturer needs decent forecast information. The best way to improve forecast accuracy is to work closely with customers and suppliers.”

Though the internal integration is still the top most priority of the corporations, but the expanding horizons of business, globalization, development of web based business setups, changing trends in the societies, varying life style of consumers etc are the factors determining the future of a corporation. So in order to meet the challenges raised by all these factors, corporations need to have strong bonding with all of them as well. Since it’s not less than a pain to have a close eye on all these factors at a single go, the need and incorporation of ERP systems automatically becomes the basic need here.

Importance of ERP with reference to corporations can also be analyzed from the fact that, it helps the organization to lessen the number of employees, so that the operational cost can also be reduced. Automated systems and training to the employees to operate the systems when needed can help the organization to keep the number of employees in budget.

ERP systems not only benefit the organization by streamlining the internal processes but also provide the clients with the maximum support, which in general may not be as effective as it’s being in integration with all other parts of the organization. Such effective external affairs give the corporations the customers’ trust and loyalty, which keep the corporations’ clientele in an effective manner.

ERP in fact works on system optimization with in the organization and results as increased organizational productivity. Corporations work with a variety of softwares for their organizational needs, and it’s ERP providing an interface among all of them, in absence of ERP all those softwares may not work as efficiently as they do in coordination.

Though ERP ensures the success of a business, but there are some limitations as well. First of all, ERP alone is not responsible for the success, as the most important thing is the working capacity and skill development of the employees; if employees are not up to the mark and ERP has been incorporated for them, then the system cannot give the desired successful results. Another important fact that ERP systems may also be quite expensive to install, so in order to have the competitive advantage, the corporation will need to increase the output.

How it affects end users when a corporate switch to ERP

ERP has affected end-users in a number of ways. The most important factors are

• Efficiency in work output
• Improved quality of product
• Reduced time of delivery
• Reduced cost

The most important thing that a customer is concerned about is the quality. With ERP properly implemented can remarkably improve product quality. Customer satisfaction is the most important thing in an organization. Quality must be according to what customer needs. ERP can enhance quality of production.

With ERP system properly implemented overall work output is efficient. Customer can get services and products in lesser time. ERP also helps to reduce cost of the products and services. Hence, ERP proves to be beneficial to end-users in a number of ways reaching their satisfaction and ultimately increasing profitability of a business.

“Online commerce is drawing a greater share of customers and markets. Although automated back-end systems and user-friendly Web interfaces are improving customer relationships, this is only the earliest step in an online revolution.” (Moakley)

ERP Software:

Adempiere, Compiere, ERP5, OFBIZ and openbravo are few names which are highly demanded by corporations. ERP softwares are basically not only the integrating softwares but also provide a wide range of monitoring services as well. The choice of right software, however, becomes a sixty thousand dollar question for corporation, as it may be very expensive to install the whole system. In this regard the ERP vendors provide a wide range of consultancy services as well.

“That is why ERP is often referred to as back-office software. It doesn’t handle the up-front selling process (although most ERP vendors have recently developed CRM software to do this); rather, ERP takes a customer order and provides a software road map for automating the different steps along the path to fulfilling it.” (CIO.com)

The emergence of World Wide Web, as stated earlier has given a boost to ERP methods, where by it provides assistance at a longer distance. This works in such a way that, the corporation doesn’t need to install the system physically in the domain of the organization, instead the system is installed at the vendors end, and the corporation users access the system through internet. This helps a lot to reduce the operating cost of the system and further it’s not less than a blessing for small businesses.

The expansion of virtual networks, increased speed and enhanced storage capacities have led the ERP become the most prominent feature of contemporary business environment. This enhanced capacity of business environments has made the business men much efficient on one hand and have brought a revolutionary change in the fulfillment of requisites of end user on other hand. The concept of supply chain management which has emerged on the horizons of ERP in late 1990s has come up with the development in softwares and management strategies working on target markets.

The ultimate effect of the use of ERP softwares by corporations on the end user is very effective, as it has eradicated the geographical barrier for them, especially while accessing the ERP systems virtually, they feel much convenient. The presence of ERP systems on web networks also increases the clientele, by having a wide range of influence.

ERP is now web enabled, “Internet allows linking of the websites to back-end systems like ERP and providing connections to host of external parties. The benefits of such a system are that customers have direct access to the supplier’s ERP system and the vendors in turn can provide real-time information about inventory, pricing, order and shipping status.” (ERP and SCM)

[Source: Chunhe Min. The Market Breakdown. Enterprise resource Planning. Retrieved from http://people.clarkson.edu/~minc/html/ERP.htm]

Conclusion:

World has always been on constant variation towards development, and this consistency has brought dramatic changes on the face of the world in different situation. Emergence of ERP systems in corporations is one of the developments of last decade resulting as increased productive capacity of organizations, but this is not the end. A lot of challenges are still ahead. Though the ERP systems are super efficient, but the success is not sure till the system and the user meet the requirements of each other, i.e. the user who’s going to work with the ERP system must be skilled enough to understand the flaws which may be the hurdle.

The issue of security also arises when we talk about the web based ERPs. Along with some other challenges, it’s of the utmost importance to be private in the web public. And above all, the use of ERP in Human Recourses Department should be limited to data collection, organization and statistical analysis. Though it’s an effective tool of managing departments together, but the above mentioned department needs intensive manual care as well.

The need of any system in a particular establishment is subjected to the economic and social requisites, and so is the need of ERP. In this context, while intending to incorporate an ERP in an organization, all these factors need to be considered.

Introduction

This progress report covers the development of a technical paper begun on March 19, 2007, that must be completed by May 13, 2007. It addresses how the end user is affected when a major corporation switches to an ERP system. This paper is defined as understanding how the end user is affected by its company switching to an ERP system. An ERP system is defined as an ERP system is an Enterprise Resource Planning. This system is an information system that integrates all manufacturing and related applications for an entire enterprise. When a company switches systems end users are the ones that are affected and usually have very little in deciding how and why the new system is the way it is.

Work Completed

I have completed all the secondary research needed for this project. The secondary resources have been a very big help throughout this paper. The secondary research lays the foundation for what it is I am discussing and how past companies have either prepared inadequately or adequately in switching ERP systems.

The organizational change management team has a readiness change program for the end users. The program is separated by three categories. The first is to understand why the company is moving to a new system. The second phase of the readiness change is moving the end users to acceptance.

The third category is having the end users feel comfortable and accepting of their new system. We are in phase three of the readiness change and on paper the OCM has stated that the end users are really comfortable and very accepting of the system. I have interviewed several end users that are fearful of the new system and afraid that they aren’t going to be able to do their new job.

Work Remaining

To finish this project there are still a couple of things that I need to do. First, I need to warp up the interviews with end users and organizational change management team. I need to analyze and graph the information produced from the end users and the organizational change management (OCM) team.

Adjustments:

I planned on focusing on training when I first started this project. Training isn’t the answer or the solution to the problems that the end users face.

Conclusions

This project is on schedule with approximately 75% of all work completed. The schedule for completion demonstrates that the project will be completed on time. I am more than confident in its effectiveness and that the end users voice will be heard and the organizational change management can take some of the ideas and critiques and incorporate them on there next ERP system switch.

Purpose

The purpose of this proposal is to convince this class to let me write my final paper for this course on the subject of the effects of major corporations switching to an ERP system with a focus on the end user. An ERP system is an Enterprise Resource Planning. This system is an information system that integrates all manufacturing and related applications for an entire enterprise.

Introduction

SAP implementations process is made up of four main phases. The first phase is

the project preparation where a vision of SAP solution is being created. The second phase of the preparation is blueprinting and sizing where the solution stack is created and training starts developing. The third and fourth phase is functional development and final preparation. For each phase there are vital decisions that need to be made and the product and deliverables are explained to the entire company.

The organizational change management role on this project is to:

Define and instill new values, attitudes, norms, and behaviors within the Teleflex organization that support new ways of doing work and overcome resistance to change

Building consensus among customers and stakeholders on specific changes designed to better meet their needs

Planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another

Problem

The operation team’s is being heavily staffed by temporary help and turnover is a major concern for the site leadership team. Most of the turnover is in areas that will not directly interact with SAP. However the full benefits from the project may not be fully realized if the site is continuously replacing lost staff

The end user is not involved in any four of the phases, but they are the ones that will be using this system on a daily basis to do their job function. Classes are not designed by job roles but job functions.

Employees’ resistance to change factor can lead to work slowdowns, poor employee morale, high maintenance cost, and even sabotage.

The solution 

Incorporate the whole company’s voice through the process of implementing the new system

Implementation is more likely to be successful when the technology, organization, and people issues have been designed to complement and integrate with each other and that such integrative planning is rarely done successfully

Conclusion 

This topic is very hands on with the project that I am currently working on.

Working with the organizational change management team I was able to understand what it takes for a company as a whole get ready for system switch. I will work closely with the end users to find out how to make this an easier transition. I will start interviewing them next week. I have already started the research needed for this project and within three weeks will have all the data I need to write this paper. Switching ERP systems is not uncommon for a business to do now days. As employees get used to the new system their acceptance rate improves and their attitudes towards the new system become more positive.

References

An introduction to ERP. CIO.com Business technology leadership. Retrieved from http://www.cio.com/article/40323/The_ABCs_of_ERP

Chunhe Min. The cost of ERP. Enterprise resource Planning. Retrieved from http://people.clarkson.edu/~minc/html/ERP.htm

Definition of ERP. Retrieved from http://www.erpfans.com/erpfans/erpdefinition/erp008.html

Enterprise Resource Planning. Retrieved from http://en.wikipedia.org/wiki/Enterprise_resource_planning

ERP resource planning and Supply chain management. Retrieved from http://projects.bus.lsu.edu/independent_study/vdhing1/erp/

ERP Software. Retrieved from http://www.bitpipe.com/data/rlist?t=987097376_90970701&src=integb_ewk_ros

Moakley, George. Third Generation E-Business and the Supply Lattice,(4/1/00) Ascet Volume 2, By George Moakley, Aperian,  http://www.ascet.com/documents.asp?grID=138&d_ID=270

Why ERP? Retrieved from  http://www.erpfans.com/erpfans/erpdefinition/erp012.html