Implementing ERP at RMH and Its Implications - Essay Example

? Implementing ERP at RMH and its implications The Riyadh Military Hospital (RMH) was established in 1978 with the main objective of providing quality health care to the Saudi Arabia Military officers. The hospital employs approximately 2000 employees and its workforce is immensely diverse involving employees from over 28 countries across the world. In addition to the main hospital, RMH also has several off-site centres such as Community and Family Centres; moreover, an office in London that acts as a facilitator of best education and training. As such, there is an initiative at RMH to have an integrated ERP system that works towards getting all the systems, departments and processes streamlined. This paper will focus on the benefits of ERP to RMH and will explore what are the Critical Success Factors that affect the successful implementation and the approach that RMH needs to follow for ERP transition. RMH’s strategic vision is to provide quality service to all the patients and hence provide patient satisfaction using best processes, skills and attitude of employees. An integrated ERP system is seen as a facilitator of the ultimate patient satisfaction due to the various benefits that it is expected to provide the hospital (Yang & Su, 2009, 722). The most prominent benefit of ERP is that it consolidates all processes, all departments and divisions into a central network (Botta-Genoulaz and Millet, 2006,204-210). This consolidation is manifested in terms of better management and controlling function, better ?nancial ?ows control, information ?ows control, increased IT infrastructure capability; and control of ?ow of goods and services (Saatcioglu, 2008, 690-706). For example, better management, better information flow and better control of services is initiated when there is online and accessible information available simultaneously at all relevant points as and when needed by RMH and its related medical centres. The ERP system would enable better data management for both the employees and the patients. A patient’s name and previous medical history including lab reports and past medication details to be read by the doctor even before the patient is seen. The doctor can also enter the prescription details directlty into the system from where the pharmacy can have a direct access (Hawkings, 2007, 30). In RMH, for example, the pharmacy would enter the sales into the system that will update the purchase department, from where the automated system apprises the suppliers who would release Just in Time (JIT) deliveries to the hospital (Yang & Su, 2009, ). Another benefit for RMH is that ERP implementation creates a real-time sharing of information within RMH and with its patients and suppliers (Gupta & Kohli, 2006, 687). All the relevant departments and people get the information in real time and hence are able to act quickly, reducing wastages due to time delays or duplications – the doctors know first hand the case history, the pharmacies are more efficient with prescription filling and the suppliers operate in real time. Similarly, in case of scheduling people and equipment, ERP enables the hopital adminisration to view the availability and need across different departments, offices and facilities and hence make optimum use of resources (Yang and Su, 2009, 722-752). All the benefits that ERP facilitate can be presumed to be leading to better patient relationship mamagement (Forslund, 2010, 44-56). The patients receive accurate and efficient service and hence they are better satisfied (Huang, Huang, Wu & Lin, 2009, 1085-1100). It shows that there is a direct impact on the financial management, operations and administration of the hospital. The data is complete, accessible and leads to reduced workload, low inventories better quality decision making all across the hospitals (Gattiker and Goodhue, 2005, 561-587). In the case of RMH, the benefits are expected to extend to its external facilities and London office as well. The time different between the two countries makes the traditional postal mail communications inadequate leading to wastage of time and opportunities (Worley et al, 2005, 620-638). Also, the effective number of work days per week is 3 as teh weekends in Britain and Saudi Arabia are on different days. With ERP in place, the London office too can be connected into the live network of data and information at RMH and it can be better equipped to play increasingly active role in recruitment and facilitation of education and training. At the employee level, the ERP leads to better monitoring of performance and better detection of skill gaps and hence enables the organization in developing plans of employee development and training (Nandhakumar, Rossi and Talvinen, 2005, 221–242). The expected benefits of ERP to RMH are vast and will lead to the acheivement of its strategic goals and objectives if ERP is implemented successfully (Muscatello and Chen, 2008, 63-78). However, numerous researches in ERP implementation have pointed out the fact that implementation is often slow, time and resource consuming and may even lead to detrimental effects if not undertaken properly (Wu and Wang, 2006, 882-903). In order to have a successful implementation of ERP, it is therefore essential, as a first step, that the RMH specific requirements be analysed so that a targeted package of ERP be used and applied (Francoise, Bourgault, & Pellerin, 2009, 371-394). The next part of the paper discusses the different methods of determining user requirements prior to implementation of an ERP system, and then presents a case for a suitable method that RMH can employ. There are basically two methods that are used for understanding the user requirements, Enterprise Analysis and analysis of Critical Success Factors. Enterprise analysis is a wide process that requires an exhaustive analysis of all the information and data needs of all the processes and systems across the organization (Bocij et al, 2008, 129). The process of analysis includes segregating the organization in terms of departments, functions, processes and data elements and then analysing the areas where information and data is generated and where the same is used (Curtis and Cobham, 2008, 22). Enterprise analysis therefore requires an exhaustive research into the information network of the organization and a master diagram of each department or unit’s data requirements and data outputs is created (Bocij et al, 2008, 22). This organization wide analysis gives an indepth presentation of what decisions require what type of data and where the data is generated and where it is used (Bocij et al, 2008, 12). The Enterprise Analysis helps to depict the gaps in the information flow as it details out the needs and availability of data for each process and decision undertaken by the organization (Laudon and Laudon, 2006). The process involves all the managers and information users and hence it creates a consensus at the onset for the future implementation of ERP (Avison and Fitzgerald, 2003, 22). However, Enterprise Analysis is a complex and time-consuming process and it brings forth a large amount of data that is diifficult to analyse and segregae in a manner that can give innovative insights (Curtis and Cobham, 2008, 121). Moreover, the Enterprise Analysis is only undertaken using the top management and senior management and so, the ground level employees’ direct inputs are missing (Curtis and Cobham, 2008, 50). Additionally, this process lacks creative inputs or insights as only a recapitulation and critical analysis of the existing data flow and information network is done (Bocij et al, 2008, 129). As such, Enterprise Analysis often leads to a simplification and automation of the existing processes as opposed to analysing the proceses in terms of their contribution to the organization’s strategic needs (Ngai, Law and Wat, 2008, 548–564). Another, more useful method of assessing the initial requirements of the users is the Critical Success Factors. This method is more expansive but less complex than the enterprise analysis method. Critical success factors method is focused on the strategic objectives of the organization and the critical factors that are needed for the attainment of those objectives. These critical factors are first evolved using the inputs from key managers from across the organization (Laudon and Laudon, 2006, 14). These key managers are required to reflect on the industry factors and the overall business environment and then to assess what operational objectives are required for the organization’s success (Laudon and Laudon, 2006, 14). The CSF method requires not only the critcal success factors be understood at the onset but key performance indices be evolved for the achievement of the organization’s strategic vision (Dezdar and Sulaiman, 2009, 1037-1062). The individual key managers in RMH rovide their own set of CSFs that are agragated, analyzed, and prioritize to develop a heirarchy of key success factors for the organization wide (Laudon and Laudon, 2006, 14). Based on the compilation of the CSF for the organization, the information and data needs for supporting the achievement of success on the selected CSFs are assessed (Laudon and Laudon, 2006, 14). The Critical Success Factors method is therefore more targeted in approach; it is focused on the strategic vision of the organization and allows creativity to flourish as it uses an open approach to improving the functional outcomes of internal operations (Curtis and Cobham, 2008, 28). It is also less time and resource comsuming as a lesser number of managers are involved in the process. In addition, the CSFs are the critical factors that are affected by specific functions and processes, and the prioritization of CSFs leads to a better understanding of the depth of data that needs to be gathered regarding the different processes (Rehmati, 2010, 8). As such, CSF is a more resource efficient method of evaluating the user requirement prior to the implementation of ERP. At RMH, a CSF approach is expected to be more beneficial as the scope of operations and processes of the hospital is vast and an Enterprise Analysis may end up taking large anount of time and an excessive amount of data that would be difficult to sort and categorized. A CSF approach on the other hand will align the ERP implementation with the strategic goals of RMH and will also enable the prioritization of critical success factors that can be focused upon during ERP implementation. In the next phase of ERP implementation, it is essential for RMH to chose betwee two different methods -  Business Process Re-engineering (BPR) and Customization. BPR is needed when the hospital may want to use the standard ERP systems and then be ready to develop and train employees on the same (Ponzi and Koenig, 2002, 26-31). It also means that the existing processes at the hospital will need to be studied and assessed for efficiency problems, and then the changes will be initiated at the process level. This is an exhaustive exercise and it will require a large investment in terms of costs and time, as the complex nature of processes that are undertaken at RMH will all need to be evaluated and changed (Ponzi and Koenig, 2002, 31). BPR is more suitable in case the organization has a limited number of activities and also when the management feels that processes can be improved. A more beneficial for RMH method is to use customized ERP, where the vendor develops the ERP system that is suited to facilitating the efficiency of the already existing processes (Light 2001, 415–429). This may be a costly as customized upgrades too may be needed in the future, but it will also have better acceptance due to the minimal changes that may be needed from the employees to adjust to the customized ERP. ERP investment especially in the health care sector is substantial owing to the large scope and complexity of operations as well as the costly Information and Communication Technology that is involved in the implementation across large organizations (Haux, 2006, 268—281). As such, an effective implementation of the process is of significance. There are different approaches and methods proposed in the available literature for ERP implementation in hospitals. One such method is the using the stakeholders’ perspectives in the implementation process (Boonstra and Govers, 2009, 179). According to this method, the different stakeholders, like doctors, administration and management, may have conflicting needs and expectations from ERP, and it is essential that the causes of tensions be analysed and resolved for succesful implementation (Boonstra and Govers, 2009, 177-193). According to Heeks (2006, 16-49), implementation failures are attributed to the design-reality gap in implementation and he suggests that the design-reality gap assessment be used as a risk assessment tool so that loopholes can be filled before the implementation process starts. A more people focused method is proposed by Blake et al (2010, 131—138) who found in an empirical research that a collaboration intensive approach is found to be most suitable where both the internal and external stakeholders work towards a common goal of ERP implementation. However, Subramoniam, Tounsi and Krishnankutty (2009, 653-668) state that each organization should evolve its own unique implementation method based on its own constraints and resources. As such, a more suitable method for RMH would be to develop its own implementation approach and plan of action, though it should keep in mind the available research and literature on the subject of implementation. The basics of ERP implementation require that an initial analysis of the user requirement be made based on the selection of an appropriate method like the CSF method discussed in the earlier sections of the paper. The CSF method will provide RMH with the basic framework about what changes need to be introduced and where and will give guidance to the implementation plan (Ngai, Law and Wat, 2008, 548–564). Implementing ERP is a task that is always accompanied by significant organizational changes, in terms of technology and culture (Boonstra and Govers, 2009, 177-193). As an organization, RMH may face some problems and resistance during the implementation stage, as ERP is a big endeveour and expected to affect different stakeholders differently (Boonstra and Govers, 2009, 177-193).The resistance may be due to the fear of the unknown or due to the people not wanting to learn and adapt to the change way work will be done post implementation (Boonstra and Govers, 2009, 177-193). Also, the doctors may think ERP will effect the efficiency of his work because it takes time away from their patients when the doctors are required to input information in the system. For example when ERP asks the doctors to add their comments and prescription for patient. However, this problem may besolved by asking nurse to do that instead of the doctors. The employees may fear a loss of job or may feel inept to acquire the skills for working with the new system (Xu and Ma, 2008, 529). Patients may have concerns about confidentiality and privacy of their health records, as all the records are online and easy to access (Xu and Ma, 2008, 528-539). The issues related to employee resistance and patient’s insecurities need to be resolved using open communications with both the stakeholders (Bradley, 2008, 175–200). In the case of employees and staff, it is essential that a change management approach be adopted and the ERP implementation is accompanied by a change of oreintation and culture for the people (Bradley, 2008, 175–200). For this, it is recommended that RMH employ change leaders and change managers who could help the employees during the transition period by articulating a vision for the future and motivating them to embrace ERP (Wang et al, 2004, 3932). Another implication of implementation could be due to the presence of a diverse workforce at RMH and the sharp contrast in work culture in its London Office. Owing to the fact that Saudi Arabia has a high power distance index, low individualism and moderately high masculinity, and high uncertainty avoidance culture (Hofstead, 2009, 16-48), means that the work culture in Saudi organizations is rule based and authoritarian. This would indicate that a top down approach would be acceptable for RMH where the management dictates the changes and expects employees to fall in line (Saatcioglu, 2008, 699). However, several researchers have found that implimentation issues can be largely resolved if a bottom-up approach is employed instead (Boonstra and Govers, 2009, 170-90). Further, an aggressive top down approach is counter-productive in the longer run as the employees may find ways to distrupt the new system through their attitudes and actions (Boonstra and Govers, 2009, 179-90). It is essential that honest and clear communications should be established with all the stakeholders - including the management, government, doctors, medical and non-staff, suppliers and patients – to apprise them of the changes and the expected roles they are to play (Nandhakumar, Rossi and Talvinen, 2005, 225). Participation in decision making, even through the provision of givning feedback, goes a long way in making the stakeholders feel committed to the implementation process in the end (Saatcioglu, 2008, 699). Moreover, the London office of RMH, owing to the fact that majority of the staff is non-Saudi and hence not high on Power Distance Index (Hofstead, 2009, 16-49), would be more accepting of the ERP process if they are involved in the process of decision-making or during the need analysis step. Additionally, any new implementation process needs to be followed up using a project management approach that would help in streamlining and scheduling all activities related to the process and help in controlling the progress of the implementation (Yang and Su, 2009, 733-749). However, the technical aspects of ERP can be scheduled and controlled, there is a need to remain focused on the people factor and to keep the people involved and motivated to accept the changes that ERP brings (Xu and Ma, 2008, 530). This means that ERP implementatation should not only be in terms of the software or the hardware installation or skill trainings for the people, but it should try to integrate the organizational culture, work ethics and leadership and power structures with the ERP system (Boonstra and Govers, 2009, 202). In addition, RMH must realize that ERP implementation is not a one-time project and that there is a need for constant vigilance about resistances and deterants and also skill and technology gaps that can turn up with the passage of time (Stefanou and Revanoglou, 2006,120). There is a constant need to upgrade skill levels and systems, as well as to keep the people grounded about what benefits ERP ultimately brings to them and to the organization (Dowlatshahi, 2005, 3748-53) In conclusion, it can be said that RMH should implement ERP, as the associated benefits are immense in terms of efficiency and patient service quality. However, RMH must consider the high cost of the system implementation and upgradation and design an implementation program that is suited for its own specific culture and needs. The hospital needs to consider the cultural differences across its branches and the presence of a diverse workforce and it needs to balance the bottom-up and top-down approaches to change management to provide for a cuccessful ERP implementation. The task of ERP implementation in a hospital like RMH, with mutiple branches and specialities and processes is highly complex, but if implementation is conducted effectively, it will lead to the achievement of the strategic objectives like patient satisfaction and employee retention of the organization. REFERENCES Avison, D.E., and Fitzgerald, G. (2003). Information systems development: methodologies, techniques and tools (3rd ed.). Maidenhead: McGraw-Hill. Blake, R. T., Massey, A. P., Bala, H., Cummings, J. And Zotos, A. (2010). Driving health IT implementation success: Insights from The Christ Hospital. Business Horizons, 53: 131—138 Bocij, P., Chaffey, D., Greasley, A., & Hickie, S. (2008). 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The relationship between benefits of ERP systems implementation and its impacts on firm performance of SCM. Journal of Enterprise Information Management, 22(6):722-752. Appendix A: Figure 1: Critical Success Factors Method for User Requirement Appendix A: Figure 1: Critical Success Factors Method for User Requirement Source: Laudon and Laudon (2006, p.499) Read More