Enterprise Resource Planning System, Best-of-Breed Software Application - Assignment Example

Enterprise Systems Student name Course name Institution Date of submission Student Number 1a) Differences between an “Enterprise-wide” Enterprise Resource Planning (ERP) system and a “Best-of-Breed” software application The Enterprise Resource Planning (ERP) applications offer a single solution consisting of a range of functionality that supports the businesses processes (Shetty & Mohan 2015). Usually, ERP solutions are sourced from one supplier. An example of a company that uses ERP is Sony Corporation, a multinational electronic company headquartered in Mintao, Japan. Sony uses Microsoft Commerce Server for customer management, customer authentication, data mining, payment management, and product catalogue setup. Quite the reverse, a BOB Solutions refers to an implementation of a range of specialist applications. In isolation, the BOB applications offer the functionality necessary for meeting certain user requirements. They are specific software program for particular requirement or application. An example includes NetSuite, which is used for financial planning. Others include CIS (Customer Information System) and 7NISC’s CapsXL+ financial accounting, which are used by WIN Energy, a rural electric cooperative based in Vincennes, Indiana (Wolven 2015). ERP solutions have a potential to increase efficiency and decrease costs. It also provides consistent information and faster information processing, hence reduces the trouble of paperwork. ERP systems are also adaptable to the changes in the business environment. Still, implementing and replacing the ERP systems lead to increased negotiating power of suppliers. This makes them less customisable. Indeed, this is why Sony Corporation selected ERP over BOB (Dantes & Hasibun 2011). Unlike in using the BOB solutions, businesses that use ERP systems deliver integrated and pattern processes across multiple areas of the value chain. Additionally, because they need a single database, unlike BOB solutions, the cost of data warehousing are relatively low (Sumner 2007). They also offer greater convenience, as data sharing between various modules is easy. Because they are sourced from single vendor, the total cost of ownership is lower. In the case of BOB solutions, businesses have to handle many vendors and databases, which is riskier and more complex. On the other hand, BOB solutions offer the optimal solution for specific business sectors. When the existing applications are popular, they can be retained. This is why WIN Energy adopted BOB over ERP. Additionally, the new applications are implementable along with them. Unlike ERP, a challenge of implementing the BOB solutions is integrating them in order to create solution capable of addressing end-to-end processes (Sumner 2007). This also implies that unlike ERP systems, a business can have the most efficient and feasible solution for each business process. Therefore, Sony Corporation experiences greater flexibility in terms of substituting and altering certain elements by using BOB solutions. 1.b) Discuss the strategy of, and expected benefits for, an organization that have chosen an ‘Enterprise-wide’ Enterprise Resource Planning (ERP) system (300 words) The ERP system has several advantages to an organisation, which implements it. Its key advantages emanate from the idea that it is sourced from a single vendor, as well as its nature of being based on single database for many processes of business operations like accounts, sales, as well as production (Parthasarathy 2010). Organisations that use ERP systems are provided with a capacity to deliver integrated and pattern processes across many areas of the value chain. This also implies that organisations that use URP are provided with a complete visibility in all the significant processes, as well as the multiple departments of an organisation. Since the ERP systems offer better company-wide visibility, they enable fast and efficient collaboration across multiple departments in an organisation. Since ERP systems have a common design of software, the cost of maintaining the system reduces. ERP systems also ensure coherent and automatic workflow across multiple departments in an organisation hence ensuring smooth and more rapid transition of processes. Because of this, they make it easy to track inter-departmental activities effectively (Parthasarathy 2010). Because the ERP systems are used across multiple departments, maintenance of the system is easier as individual department are liberated from the need to purchase and maintain own software systems. Additionally, because the ERP is basically a modular system, implementing any number of modules rooted in the requirements of any organisation is possible. Implementing many modules ensures better integration of various departments. What this also implies is that data sharing across different modules becomes increasingly easy (Parthasarathy 2010). ERP also enables back up of enterprise data or centralised storage of enterprise data, as a database system has to be implemented on the backend. Hence, organisations also benefit from better enterprise data storage. The fact that a single database is used also implies that the cost of data warehousing reduces (Parthasarathy 2010). 1c) Discuss the strategy of, and expected benefits for, an organization that have chosen to implement a ‘best-of-breed’ software application. (300 words) The Best of Breed system uses a detailed software plan for each particular operation or business needs. Organisations implementing BOB systems seek to provide the best functions and features for each specific component within the value chain, such as human resources management, sales, procurement, or accounting (Sumner 2007). Put differently, selecting BOB, for any organisation, means selecting specialised software for each particular business operation. The key advantages of an organisation that would be expected by implementing BOB include: Organisations are provided with a capacity to implement the best software with the most optimal features and unique functions among the various software programs that can be used for any particular operation. Organisations also have the most efficient and practicable features for each single business process. By implementing the Best of Breed solutions, an additional advantage an organisation expects is that they are provided with the optimal software package for each business process since richer functionality is provided (Sumner 2007). In turn, this implies that more users are satisfied when they work in many different teams in the same organisation. At the same time, they are retained although the new application becomes implemented alongside them. This ensures that the earlier return on investment is protected. Additionally, the suppliers of Best of Breed products are more reliable to organisations that look for quality since the vendors tend to be specialists in their selected field. This is reflected in the appeal of the Best of Breed solution (Sumner 2007). What this implies is that suppliers’ development budgets are centred on expanding their specialist functionality, and do not spread across varied features some of which may be redundant. For instance, a specialist supplier of a planning software package may invest 100 percent of his research and development budget in improving the planning functionality. This provides a better potential to have a more reliable BOB system that an ERP system. Q2: Short Answer (1000 words) Identify and discuss the essential elements of each of the main steps of an ERP implementation strategy, giving due consideration to the ‘Scoping’,’Blueprinting’,’Planning’,’Design & Build’,’Testing’,’Implementation’,’Go-live’and ‘Post-Implementation’phases. Introduction In the implementation of ERP, an organisation’s transformation is often designed to align ERP business processes with the business strategy of an organisation. Such a form of transformation is made up of the organisation’s need to improve the business process, reduce the cost of doing business, improve services, as well as minimize the effects on the organisation’s operation. Indeed, a fundamental reason why implementation of ERP fails is since it may not meet specific business needs. Stage 1 - Scoping Scoping entails careful planning to ensure coordination of activities and management of project risks effectively. The specific elements that decide the strategies to be applied at this level include setting objectives, forming a project team and lastly reviewing the current business processes and flow of information (ISACA 2009). The first element includes selection of the ERP implementation team. Cruz-Cunha (2009) advises that organisations need to assign the ERP implementation strategy in line with the organisation’s conditions. A project team is appointed consisting of members of the organisation, including customer service, sales department, senior management, operations and purchasing department. Each team member has to be committed to the project success, as well as be accountable for particular tasks, such as creating a timeline, training schedule, and finalising objectives. The organisation has to make sure it includes the frontline employees and the organisation’s management in the implementation team. Selection of the team should as well be based on enhancing the team’s knowledge rather than the statuses of the employees. The second element entails examination of the business processes. The organisation has to ensure that the team performs an analysis on how the business processes need to be improved. Additionally, the team discusses, consider questions, such whether the business procedures are up to date, whether the business processes are automated, as well as whether members of the implantation team need to perform interviews with other organisational members to determine the areas that need improvement (Cruz-Cunha 2009). The third element is to set objectives. The implementation team has to define the objectives before the ERP solution is implemented. Since the ERP systems are complex, implementing each function is complex and, therefore, requires that the scope be defined first. The focus is, therefore, to make the scope inclusive. The fourth element includes developing a project plan. The implementation team needs to create a project plan that integrates goals and objectives that have been previously defined, the training schedules and the project timeline, in addition to the individual responsibilities of the team. Stage 2: Design/Blueprint At this stage, the functional, informational, and network requirements determined at the planning stage are integrated into design specifications. The key elements include reviewing the capabilities of the software, identification of the manual procedures and lastly, developing standard operating procedures (ISACA 2009). In respect to reviewing the software capabilities, the company should dedicate some days for intensive review of the capabilities of the software. The project team should also be trained on aspects of the software to ensure that they are adequately educated on the software’s capabilities. In case some gaps are identified, the team should decide whether any modifications to the software are needed before employee training. Regarding identification of the manual processes, the ERP implementation team evaluates the manual processes, which need to be automated using the ERP solution. When it comes to developing the standard operating procedures (SOPs), the procedures also need to be documented. The implementation team should make sure that the document are modified, as its standard operating procedures (Cruz-Cunha 2009). Stage 3 - Realization/Build & Test The key elements include converting data, collecting new data, reviewing all data input and lastly, cleaning up data. Regarding converting data, the ERP implementation team determines the kind of information that needs to be converted by analysing the current data (ISACA 2009). When it comes to collecting new data, the ERP implementation team defines new data that should be collected and identifies the where the data needs to be sourced. In reviewing the data input, the ERP implementation team enters the converted data into the ERP database manually before reviewing it for correctness and wholeness. Since data drives the business, it is significant that the team ensures accuracy of the data. Concerning data clean-up, the ERP implementation team reviews, and weeds out unnecessary information (Cruz-Cunha 2009). Stage 4 - Pre Go-live/Deliver Phase The key elements at this stage include pretesting the database, verifying testing, training the trainers, performing final testing and lastly, pre-testing the database (ISACA 2009). The ERP implementation team practices in the test database. The reason for this is to verify that the entire information is precise and works correctly. The team also runs real life scenarios in order to test for their accuracy. Happening at the same time as testing, the team makes sure that all required interfaces are designed. The integration issues are further resolved, which ensures that the ERP functions in consistency with other systems. In regards to the verification testing, the team has to see to it that the actual test reflects the Standard Operating Procedures as previously determined. It also determines the necessity for modifications. Next, the team trains the trainers, where the project team members are trained to run the in-house training. At this stage, the organisation provides the refresher training as required regularly. In the process of final testing, the team performs a final test on the data. Additionally, the team processes after completion of training. It also makes the necessary adjustments (Cruz-Cunha 2009). Stage 5 - Post Go-live/Maintenance Phase The key elements at this stage include developing a final go-live checklist, assessing the solutions, completing the physical inventory process, and starting balance entry procedures for the entire modules. When it comes to evaluation, a structured evaluation plan is structured, which links to the set goals and objectives set during the planning stage (Cruz-Cunha 2009). Stage 6 - Post-implementation A post-implementation audit is also undertaken once the system is launched to run during the first week for purposes of reconciliation and 5 to 6 week later to test determine if the anticipated return on investment business benefits have been attained (ISACA 2009). 4. Reflecting on ‘Innovations in Enterprise Systems’, and given the increasing functionality and technologies around ‘Cloud Computing ’, research, critically analyse, and discuss how a company can transition system to a ‘Cloud-based’ model. Introduction Cloud computing integrates several technologies with a new business model hence creating a new service delivery model. Cloud ERP solutions are delivered through the Software as a Service (SaaS) model. The cloud solutions implement the features of clouds in the traditional ERP. Typically, they are accessible through a browser over an Internet connection. As Duan et al (2012) shows, the number of organisations that rely on ERP systems are increasing each day. The enterprise system is a set of multiple applications designed to automate and support business processes, as well as to control business data. Cloud computing is a new model paradigm that permits users access to computing resources as pay-per-use services. Essentially, transitioning to the cloud has financial, organisational, architectural, operational impacts (Shetty & Mohan 2015). During the transition process, new operational procedures, frameworks, best practices and risk management processes have to be created and implemented to be in line with the anticipated infrastructural flexibility and to prevent inefficiencies linked to having traditional ERP systems. There are several steps involved in transitioning ERP systems to cloud: assessment and analysis, architecture and design, optimization, standardization, automation and implementation. Phase 1 - Assessment and Analysis: The first step involves assessment and analysis. During this stage, the enterprise needs, processes, assets, the ERP systems, and risks are assessed to determine the gaps (Shetty & Mohan 2015). Through this, an appropriate matrix of applications is created that is capable of moving to the cloud along with selecting the right type of cloud. Shetty and Mohan (2015) advise that there have to be a thorough assessment of infrastructure and services, such as security risk assessment, full profiling of assets, Service Level Agreement (SLA), and regulatory compliance. This facilitates organisational readiness to launch into the cloud. Assessing the information enables mapping the most favourable services delivery model and infrastructure in line with enterprise needs. This kind of mapping forms the foundation for a successful cloud strategy (Clohessy and Acton 2013). It also identifies the target architecture and determines the roadmap to achieve it. Analysis of the information enables the organisation to create a matrix of applications that can be migrated to the cloud. Next, risk analysis presents the right choice of deploying cloud, whether Hybrid Cloud, Virtual Private Cloud, Private Cloud, and Public Cloud (Duan et al 2012). Phase 2 - Architecture and Design Evaluation and analysis facilitates the organisation to select right cloud solution for its ERP solution, whether it considers building it in house or consuming it from an external provider. At this level, the architecture team creates a reference architecture and design to be implemented (Clohessy and Acton 2013). It takes into people, processes, and technology into consideration. Implementing the design for a Private Cloud that is to be hosted on premise needs to encompass optimization, standardization, automation to transformation. On the other hand, the virtual private cloud needs to cover standardization and then transformation (Shetty & Mohan 2015). Phase 3 - Optimization At the centre of transitioning to cloud ERP solution is the infrastructure optimization process. Without the optimisation process, the benefits anticipated from the cloud system are likely to be localized and to be deficient. This is principally the case for a cloud strategy that relies on a private cloud component (Clohessy and Acton 2013). Generally, infrastructure optimization implies significant cost reduction and realisation of optimal benefits rather than efficiencies. Essentially, it comprises several components, such as reducing the number of servers at a particular place through a section of more suitable platforms. It may also include optimizing ERP applications by shifting from legacy applications to the next generation ones (Duan et al 2012). Phase 4 - Standardization Standardization is done at the same time as optimization. It involves making sure that the selected architecture for the ERP, as well as other cloud computing resources meet the needs of the ERP solutions (Shetty & Mohan 2015). The standards have to be imposed across the environment to realise an optimal ERP solution hence making it easy to handle infrastructure. The entire acquisition and deployment procedure have to be altered to guarantee consistency in observance of the new standards, as well as to eliminate the possible variance that may develop over years of organic growth (Duan et al 2012). During this process, the standardisation and frontend of the infrastructure is checked to ensure that it matches the backend standardization of the operational processes. Examples of such processes range from everything like service and resources planning, to making reports for resource utilization reporting. Phase 4 - Automation and implementation Once the applications, services, and uniform infrastructure are fine-tuned, as well as clearly mapped to the appropriate resources backed by a combination of standardized operational processes, the organisation is ready to transition its environment to a cloud-based delivery model (Shetty & Mohan 2015). In the last step, the tooling enabling cloud automation is implemented. At this stage, the designers and architects need to choose the best combination of tools that are optimally suitable for the ERP needs of the private cloud (Clohessy and Acton 2013). The challenges that are likely to be faced when choosing the right tools include integrating and providing sustained support in addition to the general costs of implementation and operation. b) The benefits, the limitations, and the risks of transitioning to cloud-based model According to Duan et al (2012), given that the cloud-computing model is increasingly evolving, the need to understand the benefits, challenges and risks linked to the selection of a cloud solution has become significant. Benefits The cloud ERP systems have relatively low upfront costs. According to Duan et al (2012), cloud computing significantly lowers the capital expenses an organisation incurs while implementing the ERP system or when switching to a new cloud-based ERP system. Some of the upfront costs reduced range from expenses for user licenses, hardware, as well as the cost of hiring an implementation team. As Clohessy and Acton (2013) reveals, the cost reduction capability is greatly significant for small-to-medium sized enterprises (SMEs) compared to the larger and more established businesses. Transitioning to cloud-based ERP systems also lowers the operating costs for maintenance, energy, configuring, and upgrades. Such a benefit is essentially perceived to be having greater relevance for small businesses. Additionally, the fact that transition to cloud-based ERP allows rapid implementation also provides added benefits to organisations. The rapid implementation capability leads to convenient change of cloud service providers and lowered time of offering new products in some business types (Clohessy and Acton 2013). Cloud-based ERP systems are also scalable. For instance, the fact that Cloud ERP systems pool resources provides rapid resource elasticity, which makes the infrastructure capacity to be greatly flexible. In turn, it leads to greater competitive advantage for organisations. Transitioning to Cloud-based ERP also allows organisations to concentrate on their core competencies. For instance, organisations are able to focus on resources that can be applied in maintenance of IT department in addition to other important business areas. Additionally, it reduces pressure on the organisation’s IT department, which is allowed to focus on managing the core competencies (Clohessy and Acton 2013). Transitioning to Cloud-based ERP also allows organisations to access advanced technology as organisations are allowed to access specialized technology, which may otherwise have been inaccessible through the traditional ERP systems. They also allow for faster updates and access to upgrades, which allows them to have greater functionality. Limitations According to Clohessy and Acton (2013), while cloud offerings are rapidly acquiring a huge user base, migration of ERP towards the cloud is still in its infancy. Transitioning to the cloud means making significant changes within an organisation’s value-creation logic. Aside from being impelled to deliver fully web-enabled solutions and to substitute the traditional license model with a new model of service fee, organisations also have to create competencies in their employees to efficiently host and manage the business processes. Critically, from a review of research that covered traditional ERP and cloud-based ERP systems, it is established that transition from the on-premise ERP software to cloud fundamentally affects the entire business model components. One other key challenge of transition to Cloud-based ERP systems is the high subscription expenses. The additional costs associated with Cloud-based ERP systems include the periodic subscription fees that may increase over time, compared to the capital investments in traditional ERP systems. On major limitation of cloud-based ERP is its tendency to lead to loss of technical competencies. According to Duan et al (2012), because a significant part of the IT support is outsourced, an organisation potentially loses valuable technical competencies and encounters possible change resistances by the IT department’s staff. Such implications of implementing cloud-based ERP systems are generally seen to be more beneficial for large enterprises than small businesses because of the benefits anticipating with outsourcing. When it comes to functionality limitations, Clohessy and Acton (2013) explain that cloud-based ERP is not anchored in mature systems like the traditional ERP systems. Therefore, they are not necessarily functionally beneficial enough to fulfil an organisation’s back-office needs in each type of industry. Risks An addition key concern is the associated security risks. The security and confidentiality risks are critical challenges facing the cloud-based ERP solutions since they are exposed to unauthorised access since the public cloud platform may be shared with other users. Hence, organisations that use cloud-based ERP solutions are not necessarily secure from the potential for breach of private data. This makes the cloud-based ERP less appealing. Aside from security risks, cloud-based ERP systems face a number of other risks linked to performance, compliance, and integration. According to Duan et al (2012), the performance risks compliance risks, integration and customization risks and strategic risks. According to Clohessy and Acton (2013), the performance risks of cloud-based ERP systems threaten speed and reliability of network, limits on data transfer and outage risks. Regarding limitations on integration and customization, the cloud-based ERP systems have perceptible limitations on interoperability with home-grown applications. Integrating them into the IT infrastructures and existing application portfolios is also a problem. Compared to the on-premise ERP, the cloud-based ERP may disallow widespread customization, as well as multifaceted integration with certain third-party. Concerning strategic risks, Clohessy and Acton (2013) explains that ERP solutions are critical business systems since organisations often have greater strategic risk of high dependability on service providers. When it comes to the compliance risks, Duan et al (2012) suggests that the cloud-based applications often encounter extra difficulties in adhering to environmental standards since these laws and regulations are normally designed with little or no consideration for the uniqueness of cloud computing. Conclusion The Cloud-based ERP provides an adaptable, flexible, efficient, scalable, and affordable solution as software as a service (SaaS) for organisation looking to acquire ERP. By using them, organisations are liberated from the necessity to manage hardware, software, as well as the need upgrade software while experiencing reduced up-front expenses. They lower the operating costs for maintenance. They also allow rapid implementation. Cloud-based ERP systems are also scalable. They also allow organisations to concentrate on their core competencies. Cloud-based ERP also allows organisations to access advanced technology. However, the ERP systems attempt to replicate the existent processes leading to costly modification of programs. This may later lead to unnecessary manual tasks and issues of software maintenance, which neutralize the original benefits of the software. They also have high subscription expenses. They may lead to loss of technical competencies. The security and confidentiality risks are critical challenges facing the cloud-based ERP solutions. Aside from security risks, cloud-based ERP systems face a number of other risks linked to performance, compliance, and integration. They also cloud-based applications often encounter extra difficulties in adhering to environmental standards. Still, the benefits of ERP systems may not be realised to the optimal level by organizations because of the massive investment and implementation requirements. However, moving to the cloud may save organisations from these requirements by eliminating the huge on-premise systems that potentially inhibit growth and creativity. Transitioning to the cloud enables an organisation to prevail over the varied limitations associated with the on-premise enterprise systems. 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