Benefits of ERP implementation

Discuss about the Strategies and Processes for Successful ERP Implementation.
 

Today, most organizations in private sector are profit oriented. If that is not the case, they are focusing on utilizing available resources efficiently in delivering services to clients and/or customers. This can only be achieved through streamlining the organization processes to improve workflow and flow of information between departments as well as with clients/customers and other external stakeholders. Luckily for them, innovation in technology has made achieving efficiency in business processes and realizing profits an easy task, if the technology is used well. The introduction of Enterprise Resource Planning (ERP) systems has been hugely welcomed by organizations. ERP system is management software used in collecting, processing, reporting, storage, and management of information from various departments/sources. The system simplifies business processes, integrate different departments, and ensure real-time information can be shared by all for informed and timely decision-making. Even though this has proved to be useful, implementation of ERP has become a challenge for both private sector and public administration. This report in form of answers to questions highlights some of the critical success factors in implementation of ERP systems. Both private and public institutions stand a chance to benefit from the ERP systems if well implemented.

From the case study, Ziemba and Oblak (2013) point out that when it comes to use of ERP system in public administration, most government agencies aim to use it in centralizing, automating, and supporting human resource, inventory, accounting, fixed assets, and payroll management processes. Besides, use of ERP system is meant to bring about efficiency and transparency in services provided by the government in addition to increasing access to information and public participation. This is a right move in public administration given that most governments are rated in terms of efficiency in provision of services, transparency, and access to information besides other development activities that improves the economy and living standards of the people. Aside from that, there are more benefits that can be realized from using ERP in management of business processes in government departments or private institutions. In reference to efficiency, it is common that in public administration there are a lot of bureaucracies and processes which stretches the time of decision making as most personnel are involved in the entire process. But with the implementation of the ERP system, according to Cordella and Bonina (2012), these processes are shortened as information are provided in real time to facilitate decision making.

Critical success factors in ERP implementation for public administration

Cordella and Bonina further notes that with easy access to relevant, timely, and accurate information for all decision makers, there is assured quality of decision-making process with the adoption of information systems like ERPs. This in turn will go a long way in cost saving. It is also of importance to note that ERP systems can help or make it easy for public administration to redesign, integrate, and standardize its processes in line with the regulations or laws set out. The benefit with this standardization is that the different organization units from human resource, finance and accounting, to inventory management among others can share information easily with standardized formats that can be interpreted by all concerned parties. This can as well reduce redundancy in processes and personnel responsibilities from one department to another. Bhuiyan (2011) also notes that with transparency in government services and easy access of information and increased public participation in the decisions making processes, the adoption of electronic communication or systems can as well reduce cases of corruption and improve management of public resources.

In conclusion, as Ziemba and Oblak point out in the case study, process management in public administration translates to the development and establishment of transparency and accountability in services. ERP system implementation and e-government services or processes are one way of achieving this. This is highlighted in the case study conducted by Bhuiyan on the modernization of public administration in the Bangladesh government through e-government services that has gone a long way in reducing incidences of corruption while uplifting the living standards of the people through poverty reduction. With efficiency brought about by ERP systems, costs saved and efficient use of resources contribute to development, thus it is right to have these objectives in use of ERP system in public administration.

Ziemba and Oblak (2013) have categorized critical success factors for implementation of ERP systems in public administration into four groups namely, public procurement related factors, factors related to management of government processes, the competence of the project, and project management related factors. When it comes to procurement, the manner and factors considered during the procurement will determine the success of the implementation of ERP. The procurement team must ensure that all the functional requirements among other requirements must be met by the vendor. The procurement procedure should also set realistic implementation deadlines, goals, and objectives. However, this will be determined by the experience and knowledge of the team on ERP systems. Government processes should be re-engineered and all information requirements defined to fit it with the ERP system. Ziemba and Oblak further notes that for successful ERP system implementation, project team members from both the ERP vendor and government should constitute of experienced, knowledgeable, and competent members in ERP systems implementation. The technical knowledge and understanding of government processes can help in establishing the ERP components that meet all the functional requirements.

ERP implementation in private sector

Motiwalla and Thompson add that this team needs to work together from the start during the identification of implementation components, defining project scope, and requirements to the end in order to succeed. The fourth category of factors identified by Ziemba and Oblak relates to the project management practices and essential support during the implementation of the ERP system. The roles and responsibilities of each project member should be well defined. In addition, the support from top management is vital in implementing the system. Furthermore, use of a proven project management methodology is recommended. Motiwalla and Thompson (2011) are in support of this by asserting that with a well-defined methodology, we can bale to meet the implementation timeline, set budget, and the functionality required to realize system stabilization. End user involvement is recommended to start as soon as possible during and post implementation through organizing user training (Frimpon, 2012). Having end users familiarize themselves with the systems and how to use will significantly contribute to the effectiveness of the ERP system.

In comparison to the implementation in a private sector, according to Ziemba and Oblak, all though the critical success factors are almost the same, public procurement related factors and process management practices in governments do not apply with private sector. This has been contributed by differences in procurement and business processes. The private sectors have more experience and expertise in procurement of ERP systems which makes the process short thus not infringing on implementation timeline. Besides, more ERP systems are more aligned with the business process management in private sectors which calls for little or no process engineering at all.

Implementation of an ERP system in public administration requires a high level of commitment from the management and responsible departments or personnel for successful implementation. The call for this high level commitment can be attributed to various reasons or factors which make the adoption of an ERP in public administration a complex and long-term process in some instances. Besides, public projects are always under scrutiny from a lot of people, media, and private institutions on how the public resources are utilized. Cost overruns and late delivery of projects without measurable or concrete benefits will always attract a lot of criticism. As a result, the institution management has to exercise and show a lot of commitment to ensure successful implementation of a project.

As seen from the case study by Ziemba and Oblak (2013), public administration processes are more complex based on the organizational structure and formalized processes which make decision-making process slow. When an action is initiated, the chain or number of personnel who are going to oversee, handle, and authorize certain actions is high which elongates the processes. That aside, most departments have independent decision making structures and goals which are likely to slows down or bring about conflicts during the implementation of an ERP system. As already mentioned, business processes in private sectors are more streamlined to most ERP systems than government processes. Standardization of processes in public administration to suit the ERP will therefore take long. The focus of the management in public administration will be directed in process re-engineering to ease the adoption of the ERP systems. In such an instance, it will take a lot of effort, meetings, and commitment from head of each department in order to come up with a neutral ground and team that can be used in establishing requirements and functionalities to be incorporated in the system to be introduced.  This commitment should not be avoided as Motiwalla and Thompson points that besides the program manager and project manager, executive management support and commitment of the entire organization is essential through the project in order to achieve the desired success. This is one of the critical success factors in the implementation of ERP systems.

High-level commitment required for successful ERP implementation in public administration

Furthermore, management in public institutions are governed by laws which are not that flexible and whenever a change is initiated in order to accommodate new systems or features, the  procedure and time for changing the law usually takes longs. You’ll find that in order to avoid violation of setup laws or regulations, the management must work with legal department to check that all legal requirements are met, and where possible find a way to streamline the activity with existing laws if not changing them. Zouine and Fenies (2014) advices that top management, information managers as well as ERP system end users should be aware of their commitment and implication on the success of implementation of ERP systems. This can help guarantee the execution of the project within the set timeline for project delivery, budget, and resources allocated to the project.

According to Motiwalla and Thompson(2011), an organization that lacks a proper implementation strategy of the ERP systems can lead to failure to meet implementation deadlines, cost overrun, and failure to meet all the functionality requirements. It is therefore vital to choose an implementation strategy that fits an organization to avoid such risks. In the case study, Ziemba and Oblak notes that business processes and organizational structure in public and private sector varies thus there is likely to be a difference on the implementation strategy. According to Mabert, Soni, and Venkataramanan (2003), a phased implementation strategy involves rolling out modules of an ERP system unit by unit for a considerable period of time. Given the complex processes, organizational structure with multiple departments, and elongated decision-making process along with legal requirements in public administration or sector, a phased out implementation strategy is more suitable for the public sector.  This will ensure that the project team has more time for business process re-engineering in line with the ERP systems. On the hand, private sectors which are more profit oriented and have more experience with business process management can adopt the big bang implementation strategy. In a big bang strategy, all ERP modules are rolled out in an organization at once (Mabert, Soni and Venkataramanan, 2003). With this strategy, the private sector can save a lot from the resources required to implement the project. However, the success of this strategy requires extensive planning as well as the fall back plan or contingency plan in case the system encounters failures. The management should take adequate time, analyze all the organization requirements, and set up a competent project team with required skills to implement the ERP system.

From the case study, Ziemba and Oblak points out that change management is equally an important critical success factor besides other project management activities. This view is also expressed by Motiwalla and Thompson (2011) who recommend that an ERP implementation team should as well have a change management team. According to Motiwalla and Thompson, change management is critical success factor and the project manager is responsible for communicating the importance of this change throughout the organization. Normally, it is the responsibility of the project manager to set up this change management team. In the implementation of ERP systems, change management is considered as those processes, methodologies, and activities that prepare the organization and the employees in accepting, supporting, and use of the introduced system. It should be noted that most organization processes have over a long period of time developed into a culture. Changing or convincing the employees to shift to the new system and modifying the business processes is therefore likely to be a difficult task. Besides, the change management team can help in establishing potential obstacles during the implementation and the possible ways of dealing with them. According to Al-Shamlan and Al-Mudimigh (2011), leadership roles, effective communication, plan, and end user training are critical tools in change management. Frequent communication and training in advance prepares the employees to accept the system and learn how to use it. Furthermore, communication should involve outlining to the employees the benefits that can be realized by adopting the new system. In general, a change management can incorporate risk management to help prepare the organization and ensure smooth transition of new system.

Conclusion

ERP implementation remains a challenge in both private and public institutions. For successful implementation, organizations’ project managers must first understand critical success factors that will determine the success and benefits to be realized from the ERP systems. Even though these factors may vary from private to public sectors, most of them are the same. From procurement of systems that meets all requirements, business process reengineering, management support, competent project team members to change management plan, the project manger must first address these issues before kicking off ERP implementation. The choice of implementation strategy has to be done careful after analyzing the above factors. It would be recommended to adopt the phased strategy instead of rushing the implementation. In the end, with a well implemented ERP system, there are more benefits to be realized than sticking with the manual way of conducting business activities.

References

Al-Shamlan, H. and Al-Mudimigh, A. (2011). The Change Management Strategies and Processes for Successful ERP Implementation: A Case Study of MADAR. IJCSI International Journal of Computer Science Issues,, 8(2), pp.399-407.

Bhuiyan, S. (2011). Modernizing Bangladesh public administration through e-governance: Benefits and challenges. Government Information Quarterly, 28(1), pp.54-65.

Cordella, A. and Bonina, C. (2012). A public value perspective for ICT enabled public sector reforms: A theoretical reflection. Government Information Quarterly, 29(4), pp.512-520.

Frimpon, M. (2012). A RE-STRUCTURING OF THE ENTERPRISE RESOURCE PLANNING IMPLEMENTATION PROCESS. International Journal of Business and Social Science, 3(1), pp.231-243.

Mabert, V., Soni, A. and Venkataramanan, M. (2003). Enterprise resource planning: Managing the implementation process. European Journal of Operational Research, 146(2), pp.302-314.

Motiwalla, L. and Thompson, J. (2011). Enterprise Systems for Management. 2nd ed. Pearson Education.

Ziemba, E. and Ob?ak, I. (2013). Critical Success Factors for ERP Systems Implementation in Public Administration. Interdisciplinary Journal of Information, Knowledge, and Management, 8, pp.1-19.

Zouine, A. and Fenies, P. (2014). The Critical Success Factors Of The ERP System Project: A Meta-Analysis Methodology. JABR, 30(5), pp.1407-1448.