Customisation – A Necessary Aspect for ERP’s Realisation of Benefits

Question:

Discuss about the Installation and Configuration of ERP.

The organisations made heavy investments on the ERP based systems for their betterment. Some organisations have realised the power of the ERP while some others completely failed to understand the potential use of the software ERP. ERP method can be enhanced with the help of package customisation and only then the potential benefits of ERP can be understood or better say the realisation of benefits of ERP can be understood (Al-Mashari 2013). The customisation technique is another necessary aspect that affects the realisation of benefits of ERP. Strategies should be made to acquire more benefits from the realisation of benefits associated with ERP. However, few pieces of research have been made on the topic. This report will highlight the ERP projects customisation procedures to detect the benefit of realisation. This report will highlight case studies as well (Al-Sehali 2012). There are several aspects which affect an enterprise’s performance while an enterprise adopts the ERP systems and this report those aspects elaborately.

All the companies have started to implement the ERP system in their office premises and this ERP system is known as SAP. These organisations work similar to the organisations that have adopted the ERP systems. The organisations adopting ERP can enjoy both the benefits and the adverse effects of ERP. This report will showcase the important characteristics of ERP along with the benefits it offers that can embellish the realisation of benefit. This report will compare and contrast on several aspects of ERP and will also show lights on some case studied based on ERP model.

There are numerous advantages that are residing within ERP systems and the organisations are implementing ERP in their office premises to mitigate the issue, one of that issue is Y2K. However, by enhancing the design of the system by reducing the inventories, reducing the deadline, cutting the heavy expenses and strengthening the management the business operations can be embellished (Bajwa 2014). These organisations have migrated to more complex methods that can give the more optimised computerised solutions. The installation and configuration of ERP based system have failed due to the variation of the expected benefits and the acquired benefits. The issues associated with people also affect the benefit of realisation. The problems correlated with hardware and software and problems associated with the configuration and integration of both hardware and software are of little significance compared to the effect of the people (Al-Sehali 2012). The other factors that must be considered are in the disciplinary act, lack of expertise and the poor performance as a team. The organisations have faced numerous challenges but still, that affect them most is the change management.

ERP System and Its Importance

ERP should be properly used to gain the positive impact. Therefore, ERP can be implemented in business organisations to improve the decision-making process, it also assists in planning for future, it minimises the duplication of the records. ERP systems work as per organisations’ choice (Bajwa 2014). They prepare an ERP model and based on that model they have to work upon. The company management team should implement the ERP model based on the benefits it can bring in the company premises. ERP gives better control and it also helps in case of traceability. ERP cut down the barriers thus embellish the internal communication. It also helps to automatize the vital tasks. It provides profitable and services along with competitive exposure (Al-Sehali 2012). It also helps to improve the performance and return on investment on long term basis. ERP also helps to retrieve the user information from the database in agile and effective manner, also helps in gaining consistency, it also helps in avoiding the data redundancy, ERP also helps in reducing the cost of the products, also offers better adaptability and scalability. ERP also keep the information system well maintained and provide the facility to update the database and provide the security as well (Ash and Burn 2013).

ERP offers a competitive edge over rivals, ERP focus on providing effective services, it offers scalable operations, it offers integrity, ERP, as mentioned, offers profitable services. The other benefits that offer are mobility that the applications of ERP can be accessed from anywhere anytime (Al-Mashari 2013). Their applications are easy to use, it also provides agile and effective business solutions along with that enhanced security solutions and excellent security solutions. ERP applications have the capability to secure systems from virus threats and the intruders’ attacks (Ash and Burn 2013). It also provides excellent customer service. An ERP solution removes the duplication of processes, ERP also reduces the manual work as ERP works automatically without the intervention of manual needs. Thus one can get error free service, in case of manual entry, there are chances of errors, where as in case of ERP there are no chances of errors. Also one can get agile effective service, but I case of manual entry, there is no chance one can get fast service. The ERP tools give the administers or the managers to forecast on the vital aspects of the industry like share market and also help to showcase their company market size and position. The departments located in dispersed regions can collaborate and connect with each other with the help of ERP and thus can share business activities among themselves (Al-Mashari 2013). ERP also helps in scalability, structured ERP helps in when any business organisations want to grow and prosper. ERP facilitates the growth. ERP offers cost effective profitable service, it prevents any disruptions inside. ERP can help to communicate with the clients, the clients’ history can be accessed with the help of ERP, thus sales people can communicate with the clients faster, this improves the relationship between the clients’ and the company’s representatives. ERP is famous for providing security, accuracy and consistency of information via built-in hardware and software resources along with the firewall. The managers can restrict data flow thus can assure the security of the enterprise. ERP is now available in the form of Cloud ERP (Ash and Burn 2013). The tech giants Amazon and Microsoft offer cloud hosting like Amazon AWS Cloud platform and Microsoft Azure platform respectively. The organisations deploy Cloud ERP apps on these cloud platforms. Thus it maximises the productivity of any company.

Advantages of Implementing ERP

Though the beneficial aspects of ERP have been discussed it can be stated that the installation and configuration of ERP cannot be beneficial at all. There are factors which can restrict the use of ERP (Balderston 2015). The employees of the organisations can offer resistance due to some issues. Also, the installation and configuration of ERP take a hell lot of time, and also a load of money that needs to be addressed, due to this there can be a delay in installation. Other than the workers even the top management team can offer resistance, this kind of misunderstanding can be fatal as the whole system can fail.

The organisations need to clarify all the details before proceeding further, they should consider the skills, expertise, the ERP software design and workings. Based on these factors the organisations must have the mitigation procedures to counter attack the issues related to ERP (Beheshti 2016). The primary issues must be analysed and should be detected at first and then the deep analysis should be made on the case study (Balderston 2015). Several initiatives and approach must be made to make valid and strong proposals otherwise the project will fail miserably causing a negative impact on the benefit of realisation.

The ERP industry is divided into three categories the organisations that offer the ERP application program, the professional who is expert in installing and configuring the software. The third ones are the customers of the organisations (Beheshti 2016). A huge amount of money investment is required to install the ERP and to get the benefits.

There are several procedures and methods that can facilitate the ERP model, and one such procedure is the Benefits realisation from the Cranfield procedures, and the others are an active model (Bingi and Godla 2013). Though there are various tools however despite all these tools, the organisations fail to deliver the full potency to their respective organisation premises. The best application of the software is that it actually helps to manage the advantages of IS and IT. Realisation benefits become the gap between the theories and the practices.

Cranfield model is used to identify the benefits. The model is designed to find the objective of the investment and the benefits associated with it under ERP (Birnbaum and Edelson 2012). There are numerous restrictions associated and they can be obtained by the Benefits Management model. The restrictions are-change management, poor reporting, lack of expertise, poor prioritization, inadequate support, poor performance as a team, malfunctioning of software, poor management of the applications and the modifications performed in a poor manner (Bingi and Godla 2013).

Barriers to ERP Benefits Realisation and Mitigation Procedures

The companies who have installed and configured ERP can acquire arrange of tangible and non-tangible benefits (Birnbaum and Edelson 2012). The companies expect to achieve the benefit is by the method of lessening in finance cycle closure. The discrepancies are showing clearly in between the companies that want to acquire something from the ERP and the companies which are receiving benefits from the ERP (Bruce 2016). The enterprises have identified multiple benefits associated that are correlated with performance.

The restrictions or the barriers faced include the malfunctioning of software. However, the issues addressed are somewhat related to people in any way. Change management is the most critical barrier to Benefit Realisation that needs to be addressed and appropriate steps must be taken to mitigate and control it (Chaudhuri & Ganti 2015). Appropriate information systems must be implemented and must be used to get successful results and all the enterprises must be aware of this fact. That is why the enterprises are more focused on the methodologies associated with change management and correct usage of the information systems. The vital aspect of any enterprise is to consider the strategy associated with the change management is the cultural change and that must be considered by all the organisations (Dillard and Yuthas 2016). The procedures of ASAP implementation of SAP are mainly focussed on the methodologies associated with change management and the inclusion of numerous resources supporting the procedures (AMR Research. 2012). The advanced research is required for any complex issues that may arise correlated with the change management and if any modification is required, that change must be done for the betterment.

The Massachusetts Institute of technology in the 20^th century had initially about 8000 faculties and about 10000 students (Brynjolfsson 2013). The students had to face immense pressure from the outsiders and the Institute had to face a critical challenge associated with the budget. The federal growth and the expenditure of the US seriously affect the Institute (Carlino 2014). The budget for the research significantly got lowered and suffered severely. On the other hand, the tuition fee of the students significantly got aroused. Many students faced difficulties as they could not get admission to one of the most prestigious institutes of the world (Davenport 2013). These problems ultimately made the increment gap and eventually, MIT faced hurdles to attract the then stakeholders.

That is why MIT decided to convert their prevalent financial system into main-time financial information (Davenport 2016). MIT thus considered two approaches –the first strategy is to develop a single improved system for the institute while the other approach is to purchase a similar system for the Institute. MIT decided to buy an ERP system for their institute as there are multiple complications regarding the building of such ERP systems from scratch and MIT was not ready to handle those complications (Deloitte Consulting 2015). The ERP which was purchased simply works on the practices carried out in the industry.

Cranfield Model for Benefits Realisation

The profit for the institute can only come following certain strategies (Gartner 2014). The research showed that the organisations that have performed well over the years have effectively used their own strategies and own data mining procedures. A review was made of 1500 chief information officers and there they said that the business intelligence is the business solution for the business organisations that follow the methodologies of ERP design model or the ERP framework (Gefen and Ridings 2012). While about 142 organisations were reviewed, about 70% of the respondents of those organisations were found to utilise the activities associated with Business Intelligence.

MIT started the installation and configuration of ERP system called SAP and they started it in the year 1995. The primary objective was to correlate SAP central finances with the estate management at the MIT premise (Kalling 2013). The second approach was to enhance the DLCS all over the institute and then the application of ERP system over there step by step. Inside MIT there is a professional skilled IT team and this team is developed by MIT and their duty was to measure the ERP system inside the organisation and predict the best product for MIT among all the products available in the market for sale (O’Leary 2012).

After all the discussions MIT finally came to the conclusion that the Oracle and SAP were two best solutions for the ERP systems, they found that these were the two vendors MIT could rely upon to mitigate and solve the issues they were undergoing (Olson 2014). MIT already grabbed a large amount of market share, MIT also had expertise on SAP and was ready to adopt with the new features and was ready to learn new things related to SAP (Rayner and Woods 2014). Therefore, they choose SAP more precisely SAP R/3 after considering all the reviews applicable among all the vendors chosen with respect to installation and configuration of ERP system.

Many organisation shaves faced several issues related to ERP system while installing and configuring the ERP system at their premises and some of the organisations have successfully implemented the ERP system at their premises to enhance their financial activities (Sarkis and Sundarraj 2013). MIT inspired by the success of the ERP system implemented the same in their premises too. They too had an urge to adopt corporate culture within their premises and they want to embellish the operational efficiency by cutting down the heavy expenses. Hence they took the decision to adopt the ERP system for their premises as this could assist them to face and overcome the financial crisis. Massachusetts Institute of Technology has taken the significant approach to enhance the business activities within the institute (Stewart et al 2015). They have invested a lot of money; they invested around $5 billion for the ERP system. They tried to overcome the financial crisis they were facing (Weil 2015).

Tangible and Non-Tangible Benefits of ERP

According to the modern trends and keeping in mind the modern demand of the market the ERP vendors are taking initiatives to increase their market share, SAP and Oracle being the dominant market shareholder. However, despite their best efforts Massachusetts Institute of Technology could not apply the software successfully in their premises, about 60 to 80 % educational institutes failed to execute the application and Massachusetts Institute of Technology was no exception (Wilderman 2014). ERP was built keeping in mind the business organisation and for the success of their organisations. ERP has the capabilities to offer varied customisation solutions, however, these customisation options are responsible for failure too if not properly optimised. Therefore, there are risks associated with it. To mitigate those risks, the project scope must be analysed, the installation cost and the budget associated with it must be taken into consideration. These parameters if not followed, then the project may fail miserably or the project can get delayed (Colombatto and McCarthy 2017). Thus ERP in this case study created a lot of tensions and panic for Massachusetts Institute of Technology and affected them in many ways, they lost all the money they invested.

Conclusion

It can be concluded from the above discourse that the educational institutes are adopting ERP in their premises to integrate the business activities and manage complicated activities with ease. The colleges, the universities and all the educational institutes are competing among each other to provide best educational facilities to students at minimal costs for the decrement of the investment from the government and increment of stakeholder. This is the reason all the institutes are now more focussed on ERP systems and similarly, ERP system is becoming more and more attractive to the educational institutes. The ERP has the capability to offer standards to the institutes.

The ERP system can be beneficial to the organisations and the educational institutes all over the world. In case of educational institutes, the ERP can help to re-engineer their business activities as well as it can embellish the quality of education in the college university arena. In enterprises, it is quite easy to adapt the ERP system and reengineering of business activities is simple to configure, however, in case of universities and college and all educational institutes it is quite hectic to adopt the new ERP system. The college universities or other similar higher educational institutes get a very short span of time and the capital they earn is great comparable to time they get. Moreover, the revenues the college or the universities receive is almost fully utilised for the educational purposes whereas the money or the revenues the business organisations earn gets distributed in other sectors to earn more profits and to generate more revenues. The corporate bodies have risks management plan they have a management team who is expert in handling those failure and critical issues, they have the knowledge on project management, the management team is not as professional as those of the corporate bodies. This lack of expertise is the reason why they fail. The structure and the environment of the organisation have a greater impact on the installation and configuration of ERP system. The project methodologies and the hierarchical structure help enterprise like ENGCO to implement ERP and perform business activities smoothly but in case of MIT, the college environment was not suitable for conducting high-level business activities. The change management plays a vital role in the implementation of ERP in both institutes and business organisations.

Change Management – Critical Barrier to ERP Benefit Realisation

The report highlighted all the aspects of ERP installation and configuration of ERP, the challenges that the business organisations and corporate enterprise can face have been showcased in details. The reasons why MIT failed to implement ERP have been grandstand as well. The reasons why it is difficult to implement ERP in the educational institutes have been highlighted in details.

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