Complexities of Measuring ROI in an Inter-Organizational Systems Implementation
Decision making in an inter-organizational systems implementation is a continuous process that involves many stakeholders. Since the decision makers possess different experiences, measuring ROI becomes a complex process. It becomes difficult in choosing the most effective methods for measuring ROI and risks involved in the system are more due to lack of certainty (Gable, 2003).
When decision makers are many, they are likely to have different opinions, which have to be considered. The problem of diversity also arises because varied loyalties from organizations that collaborate with each other have to be respected, which adds complexity to the system implementation.
In addition, some partners may not be willing to present essential information and when they avail it, it lacks credibility in measurement of ROI making the implementation process more complex (Parr & Shanks, 2000). These challenges affect inter-organizational systems with returns that are not easy to quantify. Some organizations rely on human resource that has little or no competency in data collection.
Lack of such data or use of substandard data presents complexities in measuring ROI. Even when partner organizations are willing to avail reliable data for the measurement of ROI, the data for various organizations are not consistent, which presents a major drawback in the whole process (Gable, 2003).
Analysis of data sometimes involves complex models and formulas that human resource may not be competent with in measuring ROI. Therefore, wrong results arise that misguide the financial managers. Projections in future performance for inter-organizational systems become difficult when such results have to be used (Parr & Shanks, 2000).
Lack of perfect results due to complex models can be resolved by ensuring user-friendly methods are used by the human resource in measuring ROI.
An example of the organization that has been affected by complexities in measurement of ROI is Garware polyester Ltd. For this organization, information systems provide both tangible and intangible returns where it is challenging to obtain or analyze data involving intangible benefits (YIN, 2003).
Common Issues in Inter-Organizational ERP Implementation
ERP systems implementation is effective to multinational organizations because of its associated benefits. However, there are international issues challenging implementation of ERP projects for inter-organizations that require fast intervention. For instance, development of software is an ongoing process that faces ever-increasing challenges for current and future implementation of ERP projects.
Whenever new software is developed, the old ones must be phased out and human resource concerned must be equipped with competencies to use the new software. Therefore, it is paramount to determine the effects of introducing new software to inter-organizations to ensure the performance is not adversely affected (Leyh & Winkelmann, 2010).
A major challenge is encountered in phasing out the old software because some software may be efficient but not compatible with the system. Inter-organizations should therefore be less rigid to allow easy adoption of new technology. When ERP are implemented, the process of acquiring new skills is painful, as the human resource has to unlearn the old skills first.
ERP projects currently in use are likely to be inefficient in future for the inter-organizational systems (Hawking, McCarthy & Stein, 2004). For instance, Sun Java Enterprise system is experiencing challenges in introducing new software and facing out the old ones.
Adoption and change of ERP system must be accompanied with integration of data, which tends to centralize ownership thus distancing the multinational subsidiaries. The gap created in the implementation of ERP makes organizational powers less stable at the advantage of central administration, which disadvantages the subsidiaries.
The cost of implementing current IT is usually high and concerned management is likely to centralize the system while the entry of data is left at the subsidiary organizations. Such data is expected to be accurate and whenever there is an error, reference has to be made at the point of entry thus increasing the volume of work for the subsidiary organizations (Venkatesh, 2008).
ROI sometimes declines because of the problems that arise in implementation of ERP when the process has already started. The failure arises when the human resource implementing the transfer lacks the required competency and process cannot be reversed as the organization want to move ahead in adopting new technology.
Most organizations usually encounter challenges due to weak understanding about the outcomes in the project phase (Leyh & Winkelmann, 2010). These challenges result to a crisis in implementation of inter-organizational ERP especially when the work force entrusted with the task lacks enough experience regarding system application.
In addition, many organizations, which are partner to inter-organizational systems are resistant to implementing ERP because they perceive the benefits of the implementation as taking too long to be realized due to lack of enough information (Venkatesh, 2008).
Subsidiaries of inter-organizational systems face problems of having changes imposed on them from the central management instead of being provided with changes that are designed for them, which results to disinterest of the subsidiary organizations in implementing them (Hawking, McCarthy & Stein, 2004).
References
Gable, G. (2003). Consultants and knowledge management. Journal of Global Information Management, 11(3), 1-4.
Hawking, P. McCarthy, B. & Stein, A. (2004). Second wave ERP education, Journal of Information Systems Education, 15 (3), 327-332.
Leyh, C. & Winkelmann, A. (2010). Teaching ERP systems: A multi-perspective view on the ERP system market, Journal of Information Systems Education, 22 (2), 233-240.
Parr, A. & Shanks, G. (2000). A model of ERP project implementation. Journal of Information Technology, 15(2), 289-303.
Venkatesh, V. (2008). One-Size-Does-Not-Fit-All: Teaching MBA students different ERP implementation strategies. Journal of Information Systems Education, 19 (2), 141-146.
YIN, R. (2003). Case study research: Design and methods. London: Sage