It has been observed that history of organizations has been very subtle in establishing the process to improve the business functions. Initially, the use of the computer was devised to monitor the business process within the organization. Several initiatives have been taken thereafter in order to improve the efficiency and functioning of business processes where the processes are continuously automated in order to develop and design better and efficient methods of business operations.
In the early 1990 enterprise resource planning systems were introduced in order to electrolyze the entire business operations of the organization. if we define from the organizational perspective ERP was a process to integrate several other processes into 1 main business process however from system developer's perspective implementation of enterprise resource planning system was a change which needs to be implemented in the organization.
As we know that every new process in the organization bring the new challenges to the organization same was the case with enterprise resource planning system because the implementation of enterprise resource planning system requires integration of several subsystems into one main system.
Every organization generally has three main information systems the first system handle the manufacturing aspect of the organization. If we are observing from the generalized perspective we can say that enterprise resource planning system integrates all these three subsystems into the one main system which handle all three operations simultaneously. Apart from integration enterprise resource planning system helps in sharing the data across the functions. The major objective of enterprise resource planning system is to improve the efficiency of the organization by better monitoring of resources within the organization.Traditional enterprise resource planning system is also defined as back office system where the employee of an organization feed the data into the system in order for internal monitoring purposes and the data is not accessible to the external stakeholders like customers or the suppliers. The main goal of these traditional enterprise resource planning system is to help in preparation of management information system along with monitoring of resources.
While as we know that now the time has advanced and Enterprise resource planning system has broken the boundaries of the back office and it has also involved the external stakeholders like suppliers and the customers. We have CRM (customer relationship module) module which is embedded in the enterprise resource planning system which helps in direct interaction with the customers. We also have supplier relationship module which helps in the direct interaction with the suppliers of the firm.
There are several leading multinational companies who provide the enterprise resource planning system to various organizations these companies provide support as well as implementation services to the clients. The various vendors for enterprise resource planning systems are Microsoft Oracle, SAP systems, and PeopleSoft.
Above table classifies different types of benefits provided by ERP to organizations.
Implementation of enterprise resource planning is usually done by the forms in order to improve the efficiency but it is very important for us to know that if the enterprise resource planning systems are not properly implemented then they would prove a disaster for the organization.
The critical point here is to analyze the various impact of the enterprise resource planning systems before their implementation. On a broad level, there are three types of impact which are created by the implementation of ERP systems. The first impact is on the individual level, the second impact is on work group level and the third impact is on the organizational level. All three impacts in the organization can be characterized into two type of effects which are operational effects and managerial effects.
As we know that the management of the organization continuously works to increase the profit of the organization and to increase the shareholder's value in the long term. Implementation of enterprise resource planning systems initially required investment and there are several operational costs associated with it. ERP implementation is considered by the form because they believe that initially, the implementation might reduce their profit but once the system is in place it will help in improving the efficiency and will reduce the cost of operations. the important thing here to consider is that is there is no proper planning for the implementation of ERP systems then the system implementation can prove to be disastrous for the firms. does in order to successfully implement the enterprise resource planning systems 8th phase approach should be followed.
In the first phase, the top management of the organization should create a Consulting team within the organization and their team should have various experts who have prior experience of ERP systems, information systems, and business processes. That team can also include from outside the organization who is considered as an expert on the ERP products.
In the second phase, the Consulting team should design a plan for ERP implementation.The plan should include various phases which organization should adopt in the implementation project. The major phases which are defined in the implementation plan are specifying the issues with the current systems, setting up the goals for the implementation of new systems, reviewing the proposals and selecting the ERP product. After that integration partner should be selected who will carry out the implementation testing and training part of the ERP systems.
The third phase is the most critical phase of the Year pay implementation where announcement regarding the change of information system should be communicated to the entire organization. this page is critical because participation of each and every employee in the implementation of change is important for the successful implementation.
The fourth phase of the implementation program involved the participation of all the employees in change implementation because if the employees are directly involved in the change implementation of to the new system they will know the integrities of the new system and hence the resistance to the new system will naturally decrease.
5th phase of implementation is the business process mapping where integration partner is selected and the integration partner then should meet and discuss with every department with the help of the consultant team and they should understand in detail the process of every department and how that process can be mapped into the ERP systems.
6th phase is the implementation phase where the integration partners will develop the integration plan and then they will discuss the integration plan with the team of consultants in order to get their approval.
7th phase is the tracking phase where the implementation will be carried out by the integration partner, the progress of the implementation so that the unnecessarily delays in the implementation of the project can be eliminated.
In the 8th phase the consultant to finally evaluate whether the initial goal which was set for the ERP implementation are being met they prepare their evaluation report and then submit it to the management.
There are several key parameters which are important for the evaluation of the successful implementation of enterprise resource planning systems first criteria to evaluate the successful implementation of ERP systems is the user performance as we know that user and management are two different stake holders involved in the implementation process. The satisfaction of the user is generally considered as the success of the ear piece systems. Several studies has been carried out in the context of satisfaction of the user and the perceived usefulness of the system. There are 6 different characteristics where the user performance is measured they are system capability compatibility flexibility learning ability, user guidance and ease of use. These 6 factors should impact the performance of the user in a positive manner, it should improve the system quality, it should standardize the process of documentation and it should also create a defined sequence for authorization and utilization.
There are majorly five components which are considered important for the success of enterprise resource planning they are hardware systems, software systems, people, data and procedure resources.
Hardware system involves the infrastructure for the enterprise resource planning system it is evaluated if the entire software has enough infrastructure available to accommodate all users within the company. If the hardware of the ERP system is not up to the mark it can lead to the frequent system crash which can result in the loss of productivity will stop in order to improve the hardware of the enterprise resource planning system advocate infrastructure and it architecture should be dedicated to the enterprise resource planning system so that their functioning can remain smooth in the coming future. The important aspect to note here is that majority of the vendors provide advocate infrastructure to support the current information system of the organization, but it is also important for the vendors to accommodate the future needs of the organization because as the organization grows the information data and the number of users increases exponentially, therefore, enterprise resource planning systems should be prepared in such a manner that they can handle the increasing load of data information and user for at least 3 to 5 years.
The second component where the performance and success of the ERP implementation are analyzed is the software systems. As we know that the entire process of the enterprise resource planning is based on a software therefore it is very important for ERP software to be robust and easy to use for the users. If the software is complicated and users are not able to comprehend the software then we use the resistance in the implementation of enterprise resource planning will increase. A software system should be designed in such a manner that if a proper training is given to the user he can improve his efficiency and can reduce his time in the processing of the information. Another important point which is relevant to the software success is the successful integration of the data and validation of the data. The software system should also provide the uniform data from the various functions and should be able to interlink the data in order to maintain the flow of the information.
The third aspect of successful implementation of enterprise resource planning system is the people aspect. In this aspect, the system should support all individuals in improving the efficiency and uniform information and knowledge can be made accessible to all the employees in the organization.
The fourth aspect of successful and implementation of enterprise resource planning system is the management of the data. The major reason for the implementation of enterprise resource planning system is the integration of the data and monitoring of real-time data.Therefore it is very important for enterprise resource planning systems to generate several information reports in the desired format so that data can be converted into the information which can be used to create the value within the organization.
The management of the organization should be able to monitor its resources by looking at the information generated from the reports which are based on the data which is entered into the enterprise resource planning system.
V aspect of successful implementation is the procedures enterprise resource planning system is implemented in order to simplify the procedures and make the process more efficient in the organization. As we know that in an organization there are various levels of hierarchy and sometime these levels of Hierarchy acts as barrier to the smooth flow of the process. The enterprise resource planning system is expected to remove these barriers of Hierarchy by simplifying the process flow and managing a balance between the established procedures and the swift flow of the process. for example if any organization there are so many approvals which have to be taken from the various departments for taking any decision regarding the marketing campaign hear the enterprise resource planning system can create an automated process where all the steps which are defined in standard operating procedures will be executed automatically in the system by the various stakeholders. In the simple words for the approval of the marketing campaign the initial plan would be made by the marketing team and then all the supporting documents would be collected and uploaded into the office system then that request will automatically be sent to the department head, operations head, finance head and the IT security head, the notification to all the concerned person so that required approval process time can be reduced.
Meta Data Resource which will offer process maps and would act as smart repository to rule out incongruity between business systems may seem utopia concept to us. This is because of different kinds of semantics used in different business itself. Innovations in IT systems have attempted to generate a system which will solve this inconsistency in interaction of processes of different companies.Three systems which have played an important role in solving this discrepancy in business process are, Enterprise Resource Planning (ERP), Enterprise Application Integration (EAI) and Business Process Management (BPM).
ERP tried to solve this problem by using relational data base management systems with the expansion of businesses it tended to reinforce the lines between different business silos rather than integrating them. EAI then attempted to fill the gaps created by ERP. EAI was aided by emergence of Internet it allowed extraction, translation, mapping along with conversion and consolidation but was unable to demolish business applications-ilos. It made the problem even more complicated by enabling huge number of unfettered web services that not only used enterprise applications but also compromised them. BPM on the other hand started focusing on improvement of business process by enabling organization to set specific governing policies and within particular function of the organization. Problem with BPM was that while it focused on improving functional performance but was unable to over-come horizontal silos created. As BPM projects were implemented in different areas they were not able to benefit of central governing policies.
Prior to the implementation of enterprise resource planning system the Rolls Royce which is one of the most famous brands in the automobile industry was relying on more than 1500 Legacy systems including Marilyn. As these were The Legacy systems they had very less level of automation and it was difficult for the management to rely on the system in order to take a rigid decision regarding the performance evaluation of resources. The entire Information Technology department in the Rolls-Royce was outsourced to another company called Electronic Data Services, this company was entirely responsible for development and management of Rolls-Royce Information Technology system. Implementation of enterprise resource planning systems in the company was not an easy task because there were several obstacles associated with the implementation of the enterprise resource planning system in the Rolls Royce. There were problems associated with implementations and they have mainly divided into three categories the first problem was the financial problem which involved evaluation of the cost which is involved in the implementation of new enterprise resource planning system and the benefit which would be received after the implementation of the new system. The second problem was the cultural problem which was mainly due to the requirement of training of the entire employees in the organization on the new enterprise resource planning system which also required a huge cost for the organization. The third problem which was involved in the implementation was regarding the Migration of the data because 1800 Legacy systems and it was very difficult to migrate the entire data and integrate it into the single system.Implementation of enterprise resource planning system at the Rolls Royce was based on three suits which were based on different levels of implementation.When the enterprise resource planning system was implemented on all three levels the ERP pilot was initiated in the Rolls Royce in order to display principles, procedures and the business framework to the users which will allow them to detect the problems that are related to transaction accuracy and authorization of data from the older systems.
As we have already discussed that enterprise resource planning system is a software-based system which is capable of integrating human resources, tangible assets materials, and financial resources. Enterprise resource planning system is based on the relational database management system which is embedded in the network architecture of the client in order to generate the critical data for the management. Enterprise resource planning system is capable of providing live access to the data of all the resources in an organization. It is based on several models which are integrated into single enterprise resource planning system. This system enables the organization to manage a Swift flow of information among all the stakeholders which are involved in the business process of the organization. The major stakeholders involved in the business process are suppliers who provide the raw material and other supplies employees who are the internal stakeholders involved in managing the business and the customers who ultimately the end users of the company's product. The enterprise resource planning system also helps in automating the business process in the entire organization and helps the organization to improve its value chain. In this section, the author has not provided any substance of financial aspect or the financial Persuasion which will supplement the implementation of enterprise resource planning systems in the power.