It is a challenging endeavor to implement an ERP system since the process involves external and internal entities. Thus, the implementation of an ERP system necessitates change management and business process reengineering.
Business process reengineering (BPR)
The successful implementation of an ERP requires the involvement of certain level of business process reengineering. This is to ensure that the packaged software is fully compatible with the business process and needs of an organization. In fact, to improve the software functionality according to organizations’ needs, organizations must reengineer their business courses to suit the ERP software rather than trying to change the software to suit the present organizations business procedures.
Besides, the likelihood of an error occurring and the costs increasing will be higher if an organization undertakes further ERP software customization (Bingi et al. 1999, p.8). Therefore, the magnitude and complexity of efforts needed might deter an organization from the ERP customization approach. Mabert et al. (2003, p.304) hinted this in their study finding where most respondents just testified slight customization.
Empirical studies conducted on the implementation of ERP projects found that, for a successful implementation of an ERP, there must be changes in the undertaken processes. Therefore, there ought to be tolerable degrees of reciprocated fits amid the ERP package and the organization to successfully implement the ERP software (Robey et al. 2002, p.18).
Change management programme
Change has become a significant component in the current business environment. When employees resist change, an organization’s operations may be crippled. Sumner (1999, p.298) claims that workforces do not really resist change, but only resist loosing comfort, pay or status. Since the implementation of an ERP directly influences the users and organizations business functions, proper change management strategies must be adopted (Somers & Nelson 2004, p.261).
During ERP system implementation, change management should entail effective balance of resistant forces over those acting for the desired change (Hong & Kim 2002, p.26). To achieve this, the change management process should be based on educating and training the entire workforce and users of the ERP system.
This will allow them to fully comprehend the general ERP system concepts and warrant their willingness as well as acceptance to use the innovative system. The workforce and user training and education are deemed operational only if they incorporate the organization business processes and practices as components of the ERP content (Legare 2002, p.21).
Basically, the existing business processes and organizational structures might not be compatible with the new ERP system as the system may introduce certain levels of organizational change. This implies that change management should be effectively carried out at various ERP implementation stages and this necessitates education, training and acceptance of the system by the top personnel.
The first two critical change management elements provide users with practical experiences and tools required to integrate the new responsibilities, roles and processes (Nah et al. 2003, p.7). The elements may be in form of online user manuals, direct training or the institution of help desk.
If stakeholders and top management acknowledge and support the need for change, there are chances that the implementation of ERP will be successful. Studies showed that early involvement of users in designing and implementing new business processes alongside the cross functional and extensive top down communication might generate ERP enthusiasm (Mabert et al. 2000, p.56).
Different phases of the ERP implementation life cycle
Similar to any other new project, the implementation of an ERP system undergoes through eleven different stages. However, there are no clear demarcations amid the assumed phases. Often, one phase is expected to instigate prior to the completion of the preceding phase. The logical order must nevertheless be followed.
Provided an organization has opted to adopt an ERP system, it should commence searching for a flawless package. Since there are many vendors offering package solutions of all shapes and sizes, it might not be a viable solution to analyze each package before a decision is reached.
The process might be time consuming and the organization should limit the quantity of packages to be evaluated to a maximum of five. This is because a detailed and thorough evaluation can be done to few packages as opposed to superficially analyzing lots of packages (Leon, 2007). The pre-evaluation screening process is done to exclude any package that is not appropriate for an organization business processes.
To choose the best package, the vendor product literature might be looked at, help might be sought from external experts or consequently by learning packages that your competitors use. Find out the way diverse packages perform under backgrounds considered to be identical to that of your organization.
Despite the fact that ERP packages evolve, it might be as a result of; an opportunity that emerged, the users’ feedbacks, the gained implementation experience, product functionality, pressure from market competitors or even the scope to expand and redefine. While all these can be apparent, it is important to look at the origin of each ERP package. Above all, look for a ERP package that caters for your business and that which is particularly good in an area you would wish to implement it.
The selection or evaluation process is regarded to be the most imperative ERP implementation phases. This is because the selected ERP package determines the failure or success of the undertaken project. After a packaged has been purchased, it becomes difficult to shift to an alternative one because the ERP systems entail enormous capital investments. There is absolutely petite room for mistakes. It is worth noting that, when different ERP packages are being analyzed, none of them is usually flawless.
Within the ERP decision making teams, everyone must clearly understand that there is no perfect ERP package (Mabert et al., 2003). This selection process does not aim at identifying packages which cover all the requirements (perfect fits) but the objective is to get a flexible package that satisfies the organization needs. That is, a software package which might be modified to get a good fit.
After identifying the package that needs to be evaluated, a selection criterion has to be developed by the organization to allow all the accessible packages to be evaluated on similar scales. The organization must identify an ERP package that satisfies all the business requirements, identifies with business processes and matches the organization business profile.
This will ensure that the best system is chosen. Getting an ERP system which performs exactly how an organization conducts its business is impossible, but the chosen system needs to have the minimum number of variations.
When evaluating ERP software, it is worth noting that: Its user friendliness, scalability and flexibility, quick implementation, operational fit with organizational business process, complexity, existing regular upgrades, accessible reference sites; the level of integration amid various ERP system components, local infrastructural support as well as the total costs incurred.
The phase designs and details how the ERP implementation process should be done. It entails developing project plan, deadlines, resource schedules, selecting team members while identifying and assigning responsibilities. It is at this stage that the project commencement period is decided, when and how the project should be completed (Mabert et al., 2003).
Besides, the phase details all the contingency measures, monitors the implementation progress, the corrective actions and control measure to be undertaken when the project goes out of hand.
At this phase, an organization creates a complete model showing its current position and the direction it wants to assume in the future. A model is designed to cover and anticipate the operational gaps. An organization may decide to adopt the annoying inexpensive solutions, but custom programs may be designed, ERP source code could be altered or upgrading the system.
Human factors are accounted for in this phase. The first reengineering connotation relates to the utilization of ERP to help trim efforts (downsize). The implementation stage helps highlight alterations in tasks since processes become more efficient and automated. The two closely linked but separate ERP implementations namely business process implementation and technical implementation are made apparent in this stage.
All business processes of an organization are understood and mapped through synchronizing the current processes with the new ERP package. The prototype of the real business procedures are used as ERP expert configures and tests the prototypes by attempting to resolve the inherent logistical problems.
Training of the implementation team
The implementation team is trained on how ERP system needs to be implemented and not on how it should be used. This take place as configuration continues. The end users and employees are also trained on how the system should be implemented and later on run. An organization puts in place and trains individuals opting for change to manage and ensure that the system is self-sufficiently run.
An organization tries to break the system at this phase. The system is fully configured and the organization comes up with real scenarios to test for instance many users logging in at the similar period, hackers try to access areas of restrictions while other users enter invalid data. Test cases are meant to identify weak links within the system to help fix the bugs prior to going live.
Training of the end user
The real ERP system users are identified and trained in this phase. Their present skills become noted before being put into groups for training. The overall system overview is presented to the participants and practical sessions are also offered. This is to ensure that end users are well acquainted with newly implemented system.
The ERP implementation work is nearly complete since database is up and runs, data conversion is complete, prototypes are completely aligned, confirmed and set to function. It becomes officially proclaimed that the ERP system is operational although the testing and running is still underway. The old system has however been removed and the new ERP system is live to conduct business.
The implementation process is bound to find significance when proper instruction flows follow regular follow-ups throughout the ERP lifetime. This includes all steps and efforts assumed to apprise and realize better benefits after the implementation of the ERP system. Thus, organizations must correctly and safely perform the ERP implementation.
Business modeling (BM) incorporates activities that represent enterprise processes in order to allow the existing procedures to be evaluated and upgraded. BM is usually conducted by business managers and analysts who seek to improve the efficiency and quality of the assumed processes (Ryan et al., 2009). Although the recognized process upgrading might or might not need the immersion of IT, IT is considered as the sole driver of BM as it creates master processes.
ERP systems vs. normal legacy
Since inter organizational integration requires interactions between stakeholders, suppliers and clients, ERP systems have emerged to provide the needed mechanisms requisite when exchanging information or data (Wangler & Paheerathan n.d., p.9). Unlike legacy systems which are directed towards meeting or solving a particular individual goal or objective, ERP system electronically integrates the transmission and exchange of information among people who needs to negotiate and work together.
The role of ERP systems in the UK banking sector
After increasing the business processes complexities, ERP systems have become famous amongst the UK banking sectors. In fact, ERP has maintained its market reputation as it integrates and organizes the functions of the banking institutions and supports the finance, e-commerce, accounting and human resource by creating graphical user interfaces and relational databases which unify the banking institutions tasks (Madani 2009, p.516).
The ERP systems eliminate any human interactions with information or data flow. As a result, they enhance the integrity, security and organizational accuracy by increasing business processes transparency.
Before the UK banks such as Bank of Ireland (BI), The Royal Bank of Scotland (RBS) and Tesco Bank adopted ERP systems, most of their business processes were done using other software. This made businessmen and clients to feel a lot of tension as regards to business process coordination. The implementation of this scientific technique in these UK banks has fostered all requisite information to be coordinated under shared databases.
ERP is thus deemed important in Tesco Bank, BI and RBS due to its ability to control over the banks billings to receivables and clients. The system automates all the accounting, financial and operational processes of these banks (Veryard 2011, p.150). The implemented ERP systems have enabled UK banks to successfully accomplish tasks as they integrate the information systems and allow seamless flow of pertinent data and information across various banking units.
Furthermore, the ERP systems in the UK banks work on the basic IT input-process-output rules and treat each banking institution as a sole business entity by catering for the basic information needs. In fact, in Tesco Bank, BI and RBS, ERP systems offer timeliness, relevant and accurate information to every unit under one codified software system.
The ERP systems in these financial institutions further offer real-time updated information besides managing and fulfilling tax, import and export legal requirements. When RBS implemented an ERP system, it was able recruit workforce, keep employees data in the same database and centralize the cash management issues for corporations that wanted to adopt SEPA (RBS 2011, p.1). This enabled this bank to acquire higher levels of productivity and efficiency concerning information exchange.
Despite the ensuing benefits of implementing ERP system namely centralized cash management, regular communication with stakeholders and operational efficiencies, RBS, BI and Tesco Bank faced numerous challenges during the ERP implementation phases. The switch to implement an ERP system led to inevitable IT implementation cost, higher cost of training the end users and managing the operational changes.
It required standardized XML payment formats to be created and the setting up of an accurate security and connectivity between the clients and the banks. The process was time consuming since it required the payees International bank account numbers and bank identifier codes to be collected and constructed (Veryard 2011, p.151).
Therefore, to realize the full benefits of the implemented ERP systems, the RBS, BI and Tesco bank have managed this technology by constantly upgrading it and acquiring updated versions. New and old employees are also constantly being trained and educated on how to use the ERP systems. Finally, these banks have tried to adequately handle issues such as mismanaged expectations, poor change management expectations and insufficient clarity that surround banks business requirements and processes.
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