Introduction
System application program enterprise resource planning is a complete independent user mode program created to specifically perform functions that fit the operations of the user. It is an integrated global software that enables diverse business organizations to solve their automation needs in a variety of functional areas.
SAP ERP is designed to promote international operations by reducing IT complexity in industry specific features for early realization of returns on investment through general reduction of ownership costs.
System application program enterprise resource planning achieves comprehensive business integration and cross functionality, that places emphasis on awareness of information between separate organizational units.
Information is shared across different departments unlike limited cross-functional coordination in the normal departments of an organization. Moreover, the processes and functions are integrated to enable continued operations in a cross functional way (Amrani, Rowe and Maronnat, 2006, pg 81)
ERP refers to a multi-module system that accommodates a wide range of activities that assists entrepreneurs to manage critical functional units of a business. Vendors continually develop updates for the software and persuade organizations to upgrade to newer versions of ERP software.
However, this has caused financial strains and pressures on the organizations (Beatty and Williams, 2006, pg 105). For the vendors to remain competitive, they need to enhance their software; however, it is not possible for them to support a growing number of versions required by their clients.
The legacy systems being used by organizations may take time to be replaced incase of software infusion and diffusion into the roots of the organization. The benefits legacy systems that organizations have become used to cannot be easily “quantify in monetary terms because of the intangible nature of many of the derived benefits, e.g. improved customer service” (Chang, 2006, pg 267).
In case of system replacement, communication systems and details of the chain of users such as the management, operational employees, stakeholders and other staff members participating in implementation should be well defined.
After outlining and defining users of the system with a well understood enterprise goals and activities, the system enterprise architect should design a tailor-made information system that fits the specific business characteristics.
Enterprise resource planning system may be simulated using actual data of the specific business in the existing pre-defined functional processes or pre-defined business processes before the actual setup in the live business environment.
System application program is adapted to improve information control; overcome inefficiencies in legacy systems; pursue business process reengineering; integrate functional areas of information system and support advanced planning and scheduling. The system focuses on improving cross functionality and information processing between business functions to improve customer relations and overall decision-making efficiency.
Enterprise resource planning poses major challenges to organizations due to exposure to risk factors that may lead to failure in implementing enterprise resource plans. The risks factors are generally classified into internal and external risk factors. External risk factors consist of marketing risks, potential regulation and restrictions risks, unpredictable risks and agent risks factors from uncertainties of demand.
However, there are major risks factors faced by almost all organizations outlined by the taxonomy of critical success factors that assist in categorization of an ERP project into technological, organizational and user, external expertise and the ERP system itself.
The taxonomy enables organizations to recognize factors that need to be considered in order for successful implementation of ERP through frequency and comparative analysis prior to implementation (Dezdar and Sulaiman, pg 1047)
Three Major Risk Factors of ERP projects
Implementation of system application program enterprise resource planning faces a wide span of risks of failure that may arise mainly due to three main factors proved by many organizations to have caused project failure. These include internal training, project management, and technology implementation.
Internal Training
Internal training of employees on the new system must be done for efficient operations while educational exposure is done for managers to understand the operations’ required changes and implication of the system.
Users of the system should understand various aspects surrounding the system through organization’s undertakings to communicate to the employees and managers all the relevant information about the goals of a project and strategies to be applied in implementation of the system.
In addition, staff members of the team that is responsible for implementation need to be classified and assigned appropriate roles based on individual skills and experiences. In addition, training strategies should be effected with respect to specific roles to upgrade team members’ skills, and promote productive involvement and commitment.
Apparently, lack of training to stakeholders is the most common cause of project failure, as members are not prepared for required cultural organization change that must accompany the new system being implemented (Gargeya and Brady, 2005, pg 511).
Project management
The way the management establishes, sustains and drives the project of adopting the new system accounts for a significant percentage of the risk of failure.
Managers and leaders of organizations and implementation process must put in place strategies for budget and time allocation control with effective decision-making process in a balanced hierarchical order of an organization. In this case, management commitment is a necessity to continuously track schedules and budgets (Nah and Lau, 2001, pg 292)
Technology Implementation
Technology support and maintenance in co-operation with staff knowledge and experience of a technology is essential for successful implementation, as ineffective use and implementation of technology in ERP project poses a high risk of failure.
The organization must therefore put in place strategies, incorporating more improved and complicated modules that maintain information in a safer manner and enable the transfer and conversion of information from the existing organization system to the new system adopted.
However, apart from the three main factors, there are critical risk factors that influence specific projects at a higher degree unlike those influencing all projects that are rarely affected by the same risk factors that are rampant in particular projects.
Such factors include financial budgets, implementation experience and project strategy link (Soja, 2006, pg 430). More so, there are a wide range of risk factors that may lead to failure of project implementation.
Other Risk Factors
Failure and problems of implementation of systems application and product enterprise resource planning arise from many other factors other than the three main risk factors stated. Statistics have it that approximately 30-40% of ERP projects implemented by organizations succeed while the remaining 60-70% fail with respect to their implementation shortcomings.
Among the wide range of risk factors that may result to enterprise resource failure are those that emanate from incompetence and errors in designing the system. The system design must be competently designed to focus on user objective oriented techniques by the system architect.
Applications need to be partitioned on a variety of computers and fragmentation process put in place to enable transfer of data to the new software version from the existing information system. Object models that do not apply the use of programming language need to be advantageously used to accomplish the desired processes and business plan criteria.
Inadequate planning and integration of technology is also a sensitive factor to consider in ensuring enterprise resource planning success. The capacity of the networks and operating system should be carefully selected to meet the needs and transaction loads of the user.
In addition, the distributed network should have its functional basis on effective information communication and records regarding the new systems technical problems and shortcomings,
Systems are more likely to succeed if the organizations follow the right process of implementing them. Other risk factors with regards to right and successful implementation may include the following.
Effective Communication
This is important because the systems to be adopted and implemented impact on almost all the people in an organization. Communicating and managing expectations of all members of an organization serve the purpose of avoiding disillusionment of new systems.
Indeed, managers, users, and employees need to be communicated on objectives, scope, and expected changes in the existing system to acquire their reactions and comments about the new expected system (Nah and Lau, 2001, pg 291).
Imposing the enterprise resource plan persistently on all stake holders
This applies because enterprise resource plan usually takes long periods and complex procedures in implementation. All stakeholders need to understand the long-term benefits of the system, unlike the short-term issues and resistance to change with regards to the new system replacing the homegrown legacy system.
In addition, members of the organization may have a negative perception that the new system may not meet their needs, as they have been conditioned to do what the functional departments require of them. Therefore, these negative perceptions can only be overcome through selling the new system proactively and persistently to the stakeholders.
Assessment and planning of system implementation
Enterprise resource planning implementation is generally complex and time consuming; therefore, it requires fulltime participation during implementation.
Prior to the system kick-off, a readiness assessment should be carried out by external vendors for identifying potential problems and specific areas that need improvement. In systems implementation, team effectiveness, skills, resources, and Leadership of the project must be reviewed before takeoff of the system.
Management of the implementation process
This is due to the complexity of enterprise resource planning implementation. System application and product enterprise resource plan implementation runs significant risks in time taken, quality achieved and costs incurred during the process of incorporating the system into the organization.
Goals of the organization may not be achieved if managers do not undertake to understand and aggressively manage the process of implementation, which may affect the credibility of the implementation team with the ERP software suffering grossly. Managers of the organization and those of implementation process should also undertake to manage the risks facing the ERP projects.
Sufficient budget for implementation process
This is mainly to enable positive perceptions of personnel to efficiently deal with the complex undertakings of systems application and product enterprise resource plan. Positive perceptions of enough funds enable the implementation personnel to make better decisions on allocation of resources and timing.
During implementation, insufficient funds may fail to support sufficient human resource, thus the existing personnel find themselves working under constant pressure and unrewarding overtime. In the long run, such factors lead to disintegration of team morale and quality of service delivery in implementation of enterprise resource planning.
Collusion of ERP software stakeholders with vendors
In many case, vendor-client relationship is often hostile and unfriendly due to divisions and disagreement of organizations stakeholders concerning the choice of vendor software.
When the system implementation process encounters challenges, the hostile vendor-client relationship evolves into a standoff where no party wants to admit fault. At this point, the implementation process may come to a halt and therefore there is need for a third party system director to serve as a mediator between the client and the vendor.
However, environmental and cultural differences have also been issues of concern in implementation of ERP software as functionalities offered by the package may not fit due to the differently. Analyses were to be performed by international standards organization, software vendor, and final users of the product so as to minimize misfit due to environmental and cultural differences (Willcocks, 2007, pg 61).
Systems Application Program Configuration
System application program is the means by which components of systems are assorted to come up with a mechanism through which programs are configured for variations in the developing environment to avoid the need for system replacement. ERP packages are configured to fit specific structure of enterprises with respect to adaptability to changing business environment.
Business needs need to be adapted appropriately to fit the changing environment with the aid of standard system configurations. Lack of capability of a system to be tailored to fit in to the specific business structure may act as an impediment to successful implementation of ERP (Kim, 2005, pg 160)
System application program configuration involves two processes. First, to develop a baseline configuration using the information provided during the business blueprint phase. The second step is controlling and improving the configuration further using integrated information of outcomes in specific functional units.
System application program customizing implementation guide is a configuration tool used in this step to configure the application and product one at a time.
In the command field, the transaction code SPRO in the customizing screen is used in system application although organizations have additionally implemented ERP extension programs such as advance planning and schedule system, data warehouse, and e-commerce enabled to enhance ERP systems that are being used.
Past information with respect to implementation of ERP were used by firms currently implementing ERP to become sensitive and manage the potential obstacles of implementation of ERP (Duplaga and Astani, 2003, pg 73)
Systems application program is a major producer and supplier of enterprise resource planning software; however, it is facing stiff competition from other suppliers of enterprise resource planning software applications such as PeopleSoft, Oracle, and Microsoft. The competition arises from organizations need to cut costs, improve productivity and generally stay ahead of competition
The systems may not meet the expectations, needs, and changes of business functions if effective compliance by businesses tools and requirements of the system. Enterprises failure to monitor and respond to compliance violations and potential risks may lead to escalation of problems that were not reconfigured.
Complex programming languages may also act as a barrier to the effective understanding and reconfiguration of the system by the enterprise resource planning team to fit the business variation. Policy lifecycle management is also one of the risks faced by system application and product in cases of non-compliance by the implementation staff.
Specific problems, challenges, and risks that are unique to specific business may also pose a risk of failure in the system due to the rigid ability to configure systems to fit in to unique businesses. In addition, highly regulated industries may cause tailored risks to particular enterprises in system application and product.
Conclusion
Systems application program enterprise resource planning software has become part of many successful businesses in the world today. The globally competitive international companies know that strong internal business capabilities and systems are paramount for successful penetration into the global market arena.
The system application enterprise resource planning software enables organizations to support the essential functional units of the operations and activities of an organization. However, organizations need to ensure that they successfully implement the software as required so achieve positive results in the new enterprise resource planning systems they adopt.
Reference List
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