Week 10

Q.2 Using Sumner (2005), read the article on pages 149 – 150. Answer the following: a. What aspects of BI have been employed in this case example? b. What would you expect to be the challenges facing the development of a BI approach for such a large organisation? c. Would Dow Corning be a suitable candidate for a shared services approach using an ASP? Justify and argue your answer

a) In the case example aspects of BI have been employed by Dow Corning Corp when they integrated their global business processes by implementing a basic ERP backbone, SAP R/3 AG. This improved business intelligence by replacing a multiplicity of legacy systems running on mainframes, allowing capabilities of managerial information to be extended.

b) Challenges being faced by this large organization in regards to BI would be attaining a strong implementation plan and team in addition to adequate software support. The case study states that an important lesson learned was the value of going into the software-evaluation phase with all the details decided about the specific business reports that would need to be created. Also not utilizing the software-evaluation process, they would not have been able to draw on the wisdom on the entire development team, which helped them to visualize future potential for BI in the post-ERP implementation phase.

c) As Dow Corning Corp are a global organization with more than 60% of their business originating outside the U.S., the use of shared services approach using an ASP could prove to be beneficial. Netsourcing which is one of the strategies of using shared services, provides infrastructure, services, applications and support over the web. However, there are certain risks involved. Risk may arise from contracts, risks may occur during migration to the ERP system, and risks may occur during post-contract operations. Some main concerns from potential customers include, service and business stability, security and reliability (Sumner 2005).

On the other hand shared services using ASP offer cost efficiency, accelerated application development and access to the latest technology and support. Given that Dow Corning is an international company and has various sites around the world, with the appropriate precautions taken, Dow Corning Corp could benefit greatly from the convenience that shared services using ASP provides.

References

Sumner, M 2005, Enterprise Resource Planning, Pearson Prentice Hall, Upper Saddle River, New Jersey.

Week 9

Question 3

What external factors (non-implementation project related) could affect how and when an ERP goes live? Explain and Justify.

Go-live is a very nervous time for many companies. All the hard work and planning finally becomes a reality. However, there are many internal and external factors that can delay an ERP go-live. External factors such as clients, suppliers and governments will not stop so that the company can change systems calmly. Consequently, if a government decides on new tax rates or new legislations which were not taken into account in the planning stages, will delay the go-live until these changes are implemented into the ERP system. These types of changes may only take a day or two. Available skilled consultants is also a major external factor, as if there is no expert ERP system support for go-live, it will delay go-live until a professional is available, this could be days or even weeks. However, most ERP software suppliers provide this support, but confirming these details does not hurt.

Another external factor which is inevitable is politics. What users read in the paper or hear in the media about the success or failure of the ERP software provider may mold their attitude towards the implementation and go-live. This can have a heavy impact on users, and it can take time for users to come around and see the benefits of their new system. As, if users are not grasping the concepts and procedures, users may have to be re-trained, which again could take days or even weeks. Most of these factors are hard to control, however it is best to plan for as much as possible to ensure a smooth and successful go-live.

References

Lozinsky, S. 1988, Enterprise-wide software solutions: integration strategies and practices, Addison-Wesley, Reading Massachusetts.

Week 8

Question 1

What manufacturing data is used by the managerial accounting module within ERP?

ERP integrates production planning, material management, and cost and management accounting which is very useful to managerial accounting. In cost and management accounting, activity-based costing is used to increase the accuracy of the product-cost information and to develop activity-based budgets.

The system links production planning’s bill of materials with material movement information that is available in the material management portion of the system. It permits the establishment of standards for material handling. The manufacturing data used by the managerial accounting module are direct material part numbers, production orders, number of units that will fit on a pallet, which in turn calculates standard direct cost and material handling costs.

 

 

Question 3

How does this data integration support managerial decision making?

Linking planning, materials handling and accounting gives additional support to managerial decision making, especially budgeting. Activity-based budgeting attempts to anticipate the demands on a process, such as materials handling, given the estimated production of various products in standard batch sizes. The system is able to estimate the quantity of the various direct materials and the number of pallet moves required to support the total budgeted production. This support results in process improvements, streamlined processes and increased efficiency in relation to managerial decision making.

References

Sumner, M 2005, Enterprise Resource Planning, Pearson Prentice Hall, Upper Saddle River, New Jersey.

Week 7

Question 3

Imagine that in the ERP implementation you are involved with, uses are reluctant to get involved with phase 2. What issues, problems and risks, both short and long term, does this present?

Phase 2 is where ideas and theories are transformed into practice and results, this is where the planning of how the package is going to work for the company take place. This phase is usually where the most obstacles arise. One obstacle in particular that is generally prominent in most implementations of new ERP systems, is relucant users. User acceptance and resistance may always be an issue, however this is more prevalent when the company is installing an ERP system for the first time.

This may seem like a small issue to those outside the business world, but in spite of their benefits many ERP systems fail because of users resistance. Reluctant users can bring all sorts of issues to an organisation’s ERP implementation;

• Negative attitude, can bring an implementation down, this attitude that users have will rub off on customers, fellow collegues, not good for morale at all.
• Users may believe that they are given unrealistic expectations to complete their normal duties aswell as assist in user testing and implementation. If users are overloaded with work they are not inclined to be very keen to participate in the implementation.
• Unaccepting users are also are not likely to pay attention in training sessions as for one reason or another they are against the new ERP implementaion. If these users are not aware of proper procedures, they are not preforming transactions correctly and accurately, this could cause all sorts of problems for management and analysis teams. As if financials prove to be incorrectly costed or allocated this could have short and long term damaging effects on the business.

The most major long term effect from relucant users was if the ERP was to fail because of this unaccepting attitude, this would cost the company thousands of dollars, resources and most likely customers. This is a big price to pay for not having workers accepting new business procedures.

It is inevitable that things won’t change without some uneasiness, this is why many company’s spend the time and money, training and testing their new systems with their employees, to encourage them to believe that the system will be working for them, to help streamline their processes and re-engineering outdated procedures, so overall the company will remain competitive and proporous organisation.

References

Lozinsky, S. 1988, Enterprise-wide software solutions: integration strategies and practices, Addison-Wesley, Reading Massachusetts.

Week 6

Question 3

Can an informed ERP adoption and selection decision be made without fully understanding the problem? Why or why no – justify your answer.

Every organisation is different with different problems. Each problem must be fully understood and related back to the ERP, so that decision makers can define how the ERP package will operate for certain functions. Problems must be explored so that project managers can identify how to maximise the operation of software selected by the company.

In order for companies to fulfil their corporate visions, their ERP system must be operating efficiently and effectively. This is only likely to be achieved if all problems are initially clearly understood and addressed. If problems are misunderstood, even bigger problems may arise down the track, therefore it is best practice to recognise problems in the selection process. The whole objective of the selection process is to analyse the current situation in detail, to discover problems and inefficiencies and get a full understanding of them so the company can progress further economically and competitively.

References

Lozinsky, S. 1988, Enterprise-wide software solutions: integration strategies and practices, Addison-Wesley, Reading Massachusetts.

Week 5

Q.2 Provide examples of events that you think may trigger alterations in a work plan. What would the consequences of such events be?

Initial assumptions that have failed to be met can cause major alterations in a project work plan. A work plan is vital to the success of an ERP implementation, it plans for stages, dates, hours of labour and foreseeable problems. Even with a detailed work plan, particular events may not go to plan which can set the whole project back. Events such as;

• Defective equipment
• Unexpected system performance, requiring additional hardware and space
• Certain key staff members falls sick or become unavailable
• Testing raised certain problems with future business processes
• Testing takes longer then anticipated due to bugs or programming errors

These examples would all trigger alternations and perhaps even a review of the whole work plan. Which consumes more time, resources and money. Management is never impressed by this, as it places more pressure on the project and on management. There is great dependencies on the fulfilment of these tasks, hence careful preparation is needed when preparing the work plan. However sometimes, there is just no way of anticipating such occurrences, consequently many work plans are altered.

References

Sumner, M 2005, Enterprise Resource Planning, Pearson Prentice Hall, Upper Saddle River, New Jersey.

Week 4

Q.2 Read the Sumner (2005) case study on pages 52 – 56. Address the following questions: b. What advantages would an ERP provide to Wingate Electric? What other options does Wingate Electric have instead of adopting an ERP?

There are many advantages available to businesses when implementing an ERP, these include inventory reduction, operating cost reductions, overdue accounts collection, process improvement and reduction cycle times. However most of these advantages can only be achieved if the system selected will fit the organisation’s goals and competitive strategies. Successful implementation will occur if proper planning and analysis is completed during pre-implementation to scope the businesses requirements. Dedication to the cause is also necessary, if there are employee that aren’t on board, this could cause hiccups along the way.

A significant advantage for Wingate Electric would be the added functionality in relation to Manufacturing modules. Being a manufacturing company, they could benefit greatly from an integrated production and manufacturing module, not to mention all the standard functionality that comes with an ERP. Total integration and automated processes would be major benefits, no longer will Wingate Electric have to update multiple files and refer to outdated and insufficient documentation.

Since many of Wingate Electric’s competitors are adopting ERP systems, Wingate Electric may forgo an competitive advantage by not adopting an ERP. There are very few options that will prove beneficial if Wingate Electric’s does not choose to implement an ERP system. One option is to perhaps, re-engineer or re-design business processes, perhaps there are inefficiencies in some areas that can be resolved, by creating new electronic forms, new procedures, or an employing additional staff. However, these will just seem like ‘bandaids’, and prolonging the inevitable.

Most likely only partial benefits will be achieved through these alternative options, Wingate Electric’s will have to seriously consider a full-scale ERP implementation. They do not have to get all the bell’s and whistles straight away, perhaps they can slowly add ERP modules to support specific functions, such as Financial Accounting and or Customer Relationship Management. Either way the panel should seriously consider the Request For Proposal, as there are many benefits to be gained.

Week 3

Q.3 If an organisation has business processes that do not match any commercially available ERP, should the organisation adopt an ERP? Provide factors for and against and suggest other possible considerations that would factor in your reasoning.Sumner, M. (2005). Chapter 2, Re-engineering and Enterprise Resource Planning Systems. Enterprise-wide software solutions: integration strategies and practices, Addison-Wesley, Reading Massachusetts, 17-35.>

In many cases within this chapter the author implies that the whole idea of moving to an ERP system is to re-engineer business processes and to ‘break away from out dated rules’. Company’s that cannot match their business processes with a commercially available ERP are living back in the dark ages. Matching every business process to an ERP is not going to add any benefits to a company. ERP is implemented to improve and stream line business processes not to maintain the current ones. Without changing business processes when adopting an ERP company’s will miss out on gaining a valuable competitive edge in their market.

This chapter illustrates that ERP not only provides a competitive edge, but ERP also;

• reduces multi-step processes
• reduces product lead time
• reduces overall costs
• integrates databases
• allows management to provide timely decision making
• eliminates delays
• offers better inventory management

These are just some of the advantages an ERP offers to a business that re-engineers their business processes. Re-engineering is the key to improved productivity and reduced costs.

There are some challenges when a company decides to re-engineer their business processes. This is a timely and costly exercise, however the benefits far out way the costs. Re-designing jobs will also be a challenge, many employees will have extra workloads and be pulled away by management to help re-engineer particular business processes. This causes strain on employees and in turn could effect customer relations.

Some possible considerations that factor into reasoning for complying with re-engineering of business processes, is the consideration of IT. ERP systems relies heavily on Information Technology. A company implementing an ERP system should ensure their IT department is able to support the system and its processes. Thus if a company is trying to match business processes and is having doubts, they can always look to IT to see if the company has the IT capabilities to take on an ERP system. Then if they can, this should build managements confidence that a effective iimplementation can occur. The only in-decision they have then is purely a business process matching decision, and honestly, changing some business processes most of the time proves to be very beneficial.

The chapter explains that re-engineering in itself, the majority of the time it is successful, most reasons for failure is because management does not approve of software and company’s have failed to take a ‘clean slate approach’ and persistently held on to old processes. This stubborn mind set of not implementing ERP systems based on the fact that their business processes don’t match, will only cause the company to continually fall behind competitively in their industry’s, and end up spending more money to improve other components of their business to make up for lacking in a supportive ERP system.

Week 2

Q.4 Stuff-Up.Org (fictitious organisation at the time or writing) has an ailing set of in-house developed legacy systems (if you don’t know what a legacy system is – look up the term on the web). It has been decided that the IT department will be tasked to investigate the possibility of adopting an ES. If they recommend ES adoption, then it has also been decided that they will be tasked with evaluating products and recommending a product to the CEO. What might be wrong with this situation? What problems do you see arising?Stuff-up Org has an ailing set of in-house developed legacy systems. It has been decided that the IT department will be tasked to investigate the possibility of adopting an ES. If they recommend ES adoption, then it has also been decided that they will be tasked with evaluating products and recommending a product to the CEO. What might be wrong with this situation? What problems do you see arising?

Lozinsky, S. (1988). Chapter 1, “Making the Decision to Acquire a Software Package.” Planning the Selection Process. Enterprise-wide software solutions: integration strategies and practices, Addison-Wesley, Reading Massachusetts, 12-14.>

This section of the chapter explains the options a company has in investigating and selecting a possible ES. It specifically outlines the option of hiring a consultant to assist the evaluation team in the selection process. Hiring consultants have a number of advantages, one being that their input is a way of bringing proven methodology to the decision-making process and guaranteeing a degree of technical impartiality.

In relation to the above question, the problems arising with IT department solely evaluating products and recommending an ES, is that it will be a narrow investigation. As the IT department will not know of other departments requirements, and vital information may be overlooked. Thus a company needs to either form a Decision-making team, made up of individuals from all departments and managements within the company, or hire consultants with experience in the decision-making process in selecting an appropriate ES.

Meeting the business requirements should take preference when selecting an ES, and the IT department will not be able to meet these when only being able to consider their own department and preferred technical infrastructure. Obviously, contracting with consultants at this stage of an ES project means additional expense, but the investment will be money well spent in the long run, compared to that of the problems arising by ONLY having the IT department to run the selecting process.

Week 1

Q.2 ERPs are often touted as providing ‘best practice’ in functionality and business processes. However, many organisations have their own business processes and often do not want to change. If an organisation is unwilling to change its business processes, can it gain any value from an ERP? How could this be achieved? What are the risks?

ERP’s do provide ‘best practice’ in functionality and business processes. By implementing ERP systems it gives companies an opportunity to re-align their business processes with best practice. ‘Best practice’ is needed in order to remain competitive (Sumner 2005).

The most challenging issues associated with ERP systems is that the software imposes processes on an organisation to implement it, the issues of whether to make modifications or not, is a significant challenge for management. However, if companies can overcome these challenges, a successful ERP implementation will result. A successful implementation of ERP generally requires the re-engineering of business processes to better align with the ERP software. This re-engineering is critical and will only result in long term cost benefits (Sumner 2005).

Companies unwilling to re-engineer or change their business processes when implementing ERP, will lack the benefits of total integration and will ultimately suffer the consequences, i.e wasted time, money and a competitive disadvantage. Such companies will forgo advantages such as total integration, cost reduction, inventory reduction and improved operating performance (Sumner 2005).

An alternative for companies wishing to keep their current business processes, is to build an in-house ERP system, however this can be time consuming, expensive and posses considerable risks. Risking competitive disadvantage and mistakes in customisation is a big price to pay for not wanting to change old business processes. Those companies that partially implement ‘new’ ERP modules and keep some ‘old’ business process also struggle, as consistency and total integration is the key to efficient business practice. There is one advantage to using in-house ERP’s, which is that it is built on its own unique processes and software and will not be shared with it’s competitors. However, most of the time the substantial investment of customising an ERP cannot be justified by those unwilling to change their business processes, and thus proving little value by implementing an ERP (Sumner 2005).

The majority of the time most companies will find re-aligning business processes will ensure a successful ERP implementation which will result in ‘best practice’, a competitive advantage and long term benefits.

Q.6 In recent times, there has been a trend away from total (or vanilla) ERP implementations towards ‘best of breed’ systems. Research this trend and describe how it differs from standard ERP implementations. Contrast the approaches and describe advantages and disadvantages. What are some of the considerations that would affect the decision to use the ERP or best of breed approach?

The ‘best of breed’ option usually provides richer functionality, satisfying more users. But dollar savings, convenience and efficient data sharing can make the standard (vanilla) integrated approach very appealing (On-Line Consultant Software 2003).

A major advantage of the ERP (vanilla) implementation is that it is a complete standardisation of business processes based upon the company’s ‘best practices’ (Sumner 2005). Having a common database and a consistent user interface gives all modules a similar look and feel, simplifying usage and functionality. On the downside, with the ERP (vanilla) implementation, competitors have access to the same system and implementation can cause disruptions of operations for up to 2-3 years (Sumner 2005).

Best of breed systems are designed specifically to excel in just one or a few applications, however they can also pose challenges, such as increased training and support, complex interfaces with other systems, duplicate data entry and redundant data storage.

There are many factors to consider when deciding between ERP and best of breed approaches;

• Costs and time – higher costs must be weighed against increased revenue. Integrated systems do not require costly interfaces, thus are usually less expensive. On the other hand, best of breed systems with specialised features can create competitive advantage, which may also serve to cut costs or increase revenue. However best of breed will always have higher upfront costs and ongoing costs (On-Line Consultant Software 2003).

• Human Resources and Support – In a best of breed environment, IT staff must be trained to use and support multiple systems with potentially different hardware platforms, operating systems and databases. The shortage of IT people who can integrate and maintain disparate systems is a big advantage to the integrated approach (On-Line Consultant Software 2003).

• Functionality – While the best of breed option is richer in functionality, integrated systems still have a wide range of functionality. Obviously some company’s will be very dynamic and competitive and may need specific requirements, therefore in this circumstance, best of breed approach will always be able to provide over ERP standard implementation. However, these sorts of specialised systems take a long time to create whole suite applications and can also be quite costly (On-Line Consultant Software 2003).

In considering the above factors, alot may also depend on the size of the company, culture, management style, data integration and competitive environments. If the company is large and complex, they may require advanced functionality that only a best of breed approach can provide. On the other hand, if the company is a highly centralised decision making organisation with shared data as a priority, the ERP (vanilla) implementation is best. In choosing between the two, consideration of all aspects of the business is critical, as, if a system is selected incorrectly the effects could be disastrous.