ERP Implementation – A Road Towards Successful Organizational Performance

There has been increasing rivalry among different companies to sell products and services in a global market during the last several years. Enterprise Resource Planning Systems (ERP) is one of the most essential tools for businesses to integrate information and communication technology (ICT) to compete in the global market. These systems can not only plan resources, but they can also combine all units and corporate operations into a single computer system to satisfy all requirements.

ERP systems are commonly utilized to harvest and process data throughout the organization from various functional areas. Because ERP systems link business activities across multiple functional areas of a company, they are referred to as "cross-functional" systems. These solutions are desired to increase information visibility throughout the company and to provide greater access to information in a broader environment.

These ERP systems provide several advantages, including –

1.??????Enterprise integration

2.??????Business process reengineering

3.??????Standardizing systems and processes across the organization

4.??????Transparency in Business networking for gaining cost saving benefits.

5.??????Best worldwide management practices, and global information systems infrastructure.

Fig 1: The concept and role of enterprise resource planning systems

ERP's main goal is to bring all of a company's departments and operations together on a single computer system that can fulfill all of those departments' needs. The ERP integrates them all into a single, integrated software package that operates on a single database, making it easier for departments to exchange information and communicate with one another.

Functions supported by an ERP System:-

• Finance - Accounts receivable and payable, Asset accounting, Cash management and forecasting, Cost-element and cost-center accounting, General ledger, Product –cost accounting, Profitability analysis, Profit-center accounting, Standard and period-related costing
• Human Resources - Human-resource time accounting, Payroll, Personnel planning, Travel expenses.
• Operations and Logistics - Inventory management, Materials management, Plant maintenance, Production planning, Project management, Purchasing, Quality management, Routing management, Shipping, Vendor evaluation.
• Sales and Marketing - Order management, Pricing, Sales management, Sales planning.

The scope of the ERP Systems is –

1. Manufacturing, sales and distribution, accounts payables & receivables, inventories, human resources, customer relationship management, knowledge management, and talent management, among other functional areas, are all covered by ERP.
2. ERP combines and automates most company operations while also sharing information in real time across the firm, resulting in improved customer service and corporate branding.
3. ERP allows for comprehensive system integration not only between departments, but also across firms managed by the same person.
4. ERP focuses on important concerns such as productivity development, customer service, cash management, inventory, quality control, and quick delivery by bridging information gaps throughout a firm.
5. ERP is the solution for better project management.
6. Decision support systems, executive information systems, reporting, data mining, and early-warning systems are examples of business intelligence technologies that enable individuals to make better decisions and enhance business processes.
7. ERP not only meets the company's present needs, but it also allows for ongoing improvement and refinement of business operations.

Fig: Two-Tier Client Server; Source: Zubair H. Shaikh, ERP : The Future of Business Automation 01 Edition,Atlantic,2009

Fig: Three-Tier Client Server; Source: Zubair H. Shaikh, ERP : The Future of Business Automation 01, Edition, Atlantic,2009.

Fig: ERP with OLTP and OLAP Client Server using Data Warehouse; Source: Stephen Harwood, ERP: The Implementation Cycle, Butterworth-Heinemann,2003.

Traditionally, in a sequential implementation, main steps followed for ERP Project implementations are enumerated below. Each phase is distinct, but they are all interconnected.

1)?????Pre-Implementation:

• The organization doing Business Process Reengineering (BPR) in which analysis current business process to achieve dramatic improvement, in critical, contemporary measures of performance such as cost, quality, service and speed.
• After getting an idea from BPR, the organization must do Business Engineering (BE), which involves the application of two concepts: information technology and business process engineering, to help maintain total quality management in their current working system, and then business management and modeling, which provides an overview of the various modules of the organization.

2)?????In-implementation:

• ERP implementation is a unique and delicate procedure for a company that follows the Software Development Life Cycle (SDLC). It brings together various organizational departments, personalities, procedures, and ideologies on a single platform with the goal of pooling information in order to efficiently integrate and make valuable and positive changes throughout the firm.
• The assessment of the existing state and working environment, information, need, resources, organizational aim and goals is the first and most essential activity in the implementation phase. Following the analysis, the design phase begins, in which all of the various functional and modular data is systematically gathered. The software is then developed according to its concept using relevant software tools.
• The most important and time-consuming step is testing, which involves determining if the ERP is being implemented in accordance with its goals from many perspectives such as functional, managerial, and operational. If all goes according to plan, the software package will be deployed in the company for practical usage. Finally, the technical team on the organizational side will use the ERP that has been installed.

?3)?????Post-implementation:

• This phase reviews the ERP tool and monitor regularly, if any technical issue may arise then according to its nature the suitable resolving get done for maintaining continuous control over the ERP system.

Fig: A framework for examining ERP implementation ; Source: Huang and Palvia, 2001

Factors influencing the successful deployment of ERP:

• Full coverage of current actions by the application of ERP;
• High flexibility of ERP Software;
• Strong project management during implementation;
• Improving organizational processes in the implementations of ERP;
• Successful product validation and implementation;

Limitations of ERP technical capabilities:

• Inconsistency with existing business processes
• Costs - implementation (hardware, software, training, consulting) and maintenance
• Impact on organizational structure (front office vs. back office, product lines, etc.)
• Changes in employee responsibilities
• Flexibility of software system upgrades
• Implementation timelines
• Availability of internal technical knowledge and resources
• Education and training
• Implementation strategy and execution
• Resistance to change

Agile methodology and ERP:

Agile approach differs from typical sequential ERP installations, and its ideas have been integrated by manufacturers' recommended implementation techniques. It is highly influenced by Kanban and Lean manufacturing ideas. The primary difference between conventional and Agile development is that in the former, the team would release a single increment of software at the conclusion of the project, but in Agile, the team will deploy very minor changes of software more often. With conventional approach, a process begins after the conclusion of the previous one, but in Agile, the team plans continuously. Agile methodology into the ERP selection process consists of three phases:

• Envision – Establishing a preliminary understanding of the goals and scope of using the system. It consists of two activities i.e. Value Statement and Project Modeling.
• Iterate – To identify the ERP solution that best satisfies the user organization’s requirements. It consists of three activities i.e. Define Requirements, Analyze system capabilities, and Test Driven Evaluation.
• Decide – To choose any of the evaluated ERP solutions or not. It consists of two activities i.e. Apply Exit Criteria, and Go/No Go.

?Conclusion:

ERP implementation is a difficult and costly process that needs not only diligent efforts but also a thorough examination of the elements that are important to the adoption or implementation. It was found that with ERP architecture make better smooth functioning of operational level activities can be achieved. As a result of the relevance and effect of ERP systems and their deployment in companies, ERP purchasers, management thinkers, corporate giants, and a slew of others are putting ERP systems in place to gain a competitive edge and improve performance across the board. By eliminating all communication obstacles, a strong ERP system also makes a company run smoothly. Thus, the ultimate goal of ERP systems is to offer profitability and associated data to assist managers and employees better understand business performance and plan for the future, as well as to allow businesses to swiftly remedy unfavorable circumstances and reduce financial losses. ERP systems are used to help businesses function internationally and profitably.