Disparate Information Systems - Essay Example

for Admin: The format of the paper is as per the instructions of the and the assignment Two Issues in Disparate Information Systems There are two main issues or problems in legacy / disparate Information Systems that have been identified in the paper named “ERP implementation failures in China: Case studies with implications for ERP vendors” by Xue Y., Liang H., Boulton W. R. and Snyder C. A. in 2004; these problems include: intricate communication / information flow between the independent or incompatible information systems and the maintenance cost of autonomous and/or irreconcilable information systems is too high. Disparate Independent Systems – Communication Problem In the past, the organizations used the independent information systems to automate the business process of separate departments in the organization. For example, an organization has a number of departments include: sales & marketing, procurement & inventory, finance & accounting and human resources. In order to automate the organization develops independent or separate information system for each department and these individual systems might not be integrated because of incompatibility. Therefore, the information or data available in one system might not be accessible to the other independent information system. In this regards, it can be stated that the organization could not be benefited from the main purpose/advantages of the information systems including the information must be shared easily, correctly, and on time among business units. Disparate Independent Systems – High Maintenance Cost Problem The second problem of disparate information that has been identified in the paper is the huge cost of their maintenance. There are two types of maintenance costs, the first is the direct maintenance costs and the other is indirect maintenance costs. The direct cost includes: the cost of storage capacity for storing and rationalizing the redundant data, the cost of the transforming the information from one format to another so that the information can be used to some extent in other information systems, the cost for updating and debugging the software code written in obsolete computer programming languages. Moreover, keeping in view the above given the information or communication flow problem in the independent information systems, the organization’s management has to bear indirect costs by taking wrong decisions by their own instinct rather than the decisions based on the information / reports provided by the group of independent information systems. Precisely, it can be stated that if an organization has the fragmented or autonomous information systems, the operations of the organization is fragmented (Davenport, 1998). Identification of Two Issues in each Organization in China Implementing ERP CosmeticCo Company There are total five (5) problems have been identified in the case study for implementation of ERP in CosmeticCo company by Sweden’s Intentia AB – the software package provider (ERP vendor). The five problems include: the language, Business Process Reengineering (BPR), Partnership, human resource, report and table. From these I have chosen the language, and report and table problems and it is pertinent to mention here that according to the authors of the paper, both chosen problems are categorized as cultural problems. Language In the words of Davison in 2002, the culture is “A collective programming of the mind which distinguishes one group from another”. Particularly the Chinese are strict to their language and the only way to make the Chinese understand is to write in their own language rather than the Western language. However, the MOVEX ERP software did contain English words by which the human resources got confused and unable to use the software effectively. The Davison identified three cultural reasons of failure in ERP in China from which one is “miscommunication due to homonyms in the Chinese language”. It is one of the important factors to be considered while deployment of software applications in China (Davison, 2002). Report and Table It is vital to have uniform reports and table formats for successful implementation of ERP and to avoid discrepancy between the information generated by the ERP systems and the real world information. According to Soh et al. in 2000, three (3) main cultural problems have been identified from the two problems pertains to the incompatibilities between the ERP information and the organizational requirements in terms of format and reports. It is one of the main reasons of the ERP failure, as the formats and reports are not accepted by the other systems or government if they are not according to their prescribed manner (Soh et al., 2000). PharmaCo Enterprise Three (3) out of the eight (8) generic problems have been identified and categorized by the authors in the case of PharmaCo and Oracle – the ERP vendor. These issues include: BPR, HR problems and the partnership. These problems have been categorized by the authors as the cultural problems and from the three (3) problems I have chosen the Business Process Reengineering and human resource problems for further explanation. Business Process Reengineering It has been observed from the case study that Business Process Reengineering is one of the major issues faced by the Western vendors in implementation of ERP in China. The reason has been explained by the Robey D., Ross J.W. and Boudreau, M.C. in 2002 that the fundamental modifications related to the Business Process Reengineering have perceived in a different way in Chinese culture as compared to the Western. Moreover, the Soh et al in 2000 and Davison in 2002 have identified in total six (6) cultural reasons of failure from which two (2) are related to the incompatibilities of diverse business processes. Human Resource Problems Human Resource (HR) is one of the eight (8) problems identified by the authors that create difficulties in successful implementation of ERP in China. There is a misconception between the top management of the companies based in China and the companies need to understand that the incomplete ERP project teams and unrealistic expectations from the human resources and the projects lead to the failure. The management of the companies based in China believes and tend to rely on professional experience and instinct to assess situations and make decisions rather than changing their business process as the result of BPR. ElectricCo Company The SAP ERP implementation vendor for the ElectricCo faced one common BPR and two unique problems include: the economic reform impact and price problems while deployment of the ERP solution. These issues have diversely been categorized in the paper and recognized the economic reform impact and price problems as the environmental problems; on the other hand I have already mentioned that the writers have identified BPR as a cultural problem. The following paragraphs describe the BPR and price problems faced by the company and the vendor. BPR As I have previously explained the importance of business process reengineering in flourishing development and deployment of ERP in a company. However, this paragraph presents specifically in terms of the ElectricCo Company. In this particular case I believe that the project of ERP failed not because of the vendor cultural problems, however, the company had changed their entire business processes which were not adapted by the system under development. Therefore, it can be stated that the failure of the ERP implementation was based on the feeble situation that was created because of complete change in the processes of the company rather it was a cultural failure. Price Problems The price is interpreted as an environmental factor because it is related to the external environment of the companies. The economic reform of China, there is a huge competition in the relevant companies; therefore, the companies need to change the prices of the items weekly or even in some cases daily. Moreover, Chinese companies transform their procuring tactics recurrently; therefore, the costs of the raw materials need to be updated as per the market prices. Whereas, in the Western countries acquiring plans are developed monthly or yearly, therefore, the product costs become stable for long periods. Keeping in view the Western environment the vendors’ ERP does facilitate the frequent cost update causing failure of ERP deployment in China. FurnitureCo The FurnitureCo selected SAP R/3 ERP system for implementation in the company. Two problems became hindrance for the successful implementation of the ERP that include: the cost-control module and price issue. Both problems are interpreted as the environmental issues in the paper under discussion and their explanation has been given below. Cost-control Module It is always significant to cater all the requirements of all the departments/modules of an organization while implementing any software application to avoid discrepancies. But, unfortunately this has not been done in the case of FurnitureCo, where the cost-control module of the SAP R / 3 systems did not fulfil the requirements of the company. The company had more than ten thousand products whose costs needed to be updated more frequently but the SAP ERP system did allow and manage those frequent changes in the system. It is one of the pure technical issues faced by the SAP to implement ERP in China. Price Issue The ElectricCo had the same problem of price and the FurnitureCo faced it as well while implementing ERP of the same vendor – SAP. It has been observed by the company that the maintenance cost of the ERP charged by the vendor is too high, as the vendor need to change and customize their ERP software to the data management level. Many authors along with the chairman of the ElectricCo recommended taking advantage of the local industry in China rather purchasing something really efficient in other countries. It might not be able to be effective in China because of diverse environment and culture. StoneCo The StoneCo had precisely faced the almost the same problems faced by the CosmeticCo company because both had the same ERP vendor – Sweden’s Intentia AB. The problems countenanced by the StoneCo include: the language barrier, divergence in the reports and tables used in China and provided by the vendor’s ERP, cost-control module could not be able to accomplish the company’s requirements, the diverse human resource problems and the partnership. From the two categories – the cultural and environmental, all the above mentioned problems falls in the cultural factors except the cost-control module which belongs to the environmental factors. It is pertinent to mention here that all the arisen problems more or less belong to the technical problems of the ERP implementation. Reports and Tables The financial reports and tables used in China are entirely different from the reports and tables generated by the ERP implemented by the Sweden’s Intentia AB – the ERP vendor. The reporting and table structure not only frustrated the end-users but the government of China also did not accept the reports generated by the ERP system implemented in the StoneCo. The problem fits in the cultural factors of ERP failure as well as it is more relevant to the technical issues. While implementing the software applications it should be kept in mind that the language, reports and tables should be the same as previously and these should not be changed as the result of business process reengineering or any other reasons. It might be possible that the new format may not be accepted by the other relevant departments or systems. Language The Chinese are strict to follow their national language and it poses a cultural challenge in the implementation of ERP. The language used in China is based on pictographic with the usage of figures and shapes to represent a word. Therefore, it was quite difficult for Chinese to translate English words and terms into Chinese. It frustrated the end-user to use the system and once the users are not comfortable with any system. It becomes very difficult for the success of IT system when the end-users are not willing to use the system (Kastneer, 2010). Common Issue among all the Five (5) Cases Total eight (8) ERP failure factors has been identified in the paper which are categorized into the two broad categories include: the cultural and environmental. Five (5) out of eight (8) factors belongs to cultural problems, whereas, the remaining three (3) factors falls into environmental problems. As more failure factors are the cultural therefore, I will select the cultural factors to identify with all the companies as given in the following table. S # Company Factor 1. CosmeticCo Company Cultural – Language, Report and Table, Business Process Reengineering, Partnership, Human Resource problem 2. PharmaCo Enterprise Cultural – Business Process Reengineering, Partnership, Human Resource problem 3. ElectricCo Company Cultural – Business Process Reengineering, 4. FurnitureCo Cultural – Human Resource problem 5. StoneCo Cultural – Language, Report and Table, Partnership, Human Resource problem Issue Resolution – One Issue per Company CosmeticCo Company – Resolution of Language Issue In order to avoid the one of the cultural failure factors that was the language, I would translate all the modules of the ERP into the Chinese Language thoroughly and correctly before implementing the ERP. The language to which the Chinese companies’ end-user had interacted/viewed and the language used in the reports, user interface and help files ought to be in the native language. Moreover, I would advise the ERP vendors that they should develop flexible and general purpose systems in a way that the changes and customization should be made into the system easily to avoid language barriers. In order to avoid language problems, I would engage some professionals from the local market of the China to get knowledge of the language and trends in China. Moreover, ERP trainings would be provided to some local professionals before starting implementation. These steps are vital to avoid language barriers and successful implementation of ERP in China. StoneCo Report and Table The technical issue of incompatible reports and table can be solved by developing modifiable system which has ability of adopting rapid changes. The reports and tables generated by the ERP can only be used if these are according to the requirements of the company and prescribed format that are accepted by the local government. This is more a technical issue rather a cultural or environmental problem which can be resolved by changing the source code. However, it is always recommended that the reports and formats should be dynamic and generic so that these can be modified according to the requirements of the company. PharmaCo Enterprise – Human Resource problem The customization of the ERP product is not the only issue, however, there exist human resource problems to promote the product and the after sale services provided to the customer. In order to resolve the issue as already mentioned, there is a desperate need of involving a middleman from the local industry of the China. These resources would be utilized to overcome the cultural differences of the China and Western by providing them through trainings so that they can facilitate to build custom ERP modules for China. Moreover, a close relationship has to be established so that the difficulties related to the culture and environment may be encountered by these resources. FurnitureCo – Cost-Control Module The cost-control module is yet another technical problem of the foreigner’s ERP vendor which needs to be resolved by developing robust systems keeping in view the business environment of China. The problem should be catered during the requirement gathering phase of the ERP implementation and transforming them into desirable software artifacts. The design of the database should be accurate enough to store rapid changes in the cost of the items and it should be supported by the ERP system. ElectricCo Economic Reform Impact The impact of economic reforms in China is related to the cost-control module of the ERP. The reform’s impact cannot be handled as it is external factor, however, the situation can be managed by the ERP system. Due to the economic reforms in China, there is no stability in the costs of the items/materials; therefore, the system should be robust enough to cater these cost changes in the cost module of the ERP. Business Process Reengineering – Importance Enterprise Resource Planning is not just an information system but it can be stated that it is modified way of doing business with advanced business processes. The organizations undertake the business process reengineering to not only implement ERP but also to modify their existing outdated processes for effectiveness and productivity. In the case of the ERP implementation, the success is directly proportional to the BPR. On the other hand, it can be stated that either to perform BPR or modify the ERP to fit into the existing processes. From the two, one must be done for successful implementation of the ERP (eresource, 2010). In case of China, the second choice of modifying ERP is more viable as the Chinese are more focused on the past; they are more traditional and oppose to change. This was one of the main reasons for ERP implementation failure, moreover, it has been found in three (3) out of the five (5) cases. Importance of Considering Specific Social and Cultural Contexts in ERP System The significance of the culture and social environment can be realized from the case study in which all the foreign ERP vendors failed to implement ERP in China just because of diverse culture and environment. Moreover, according to the Sapna Poti, there is the direct impact of social and cultural factors on change management processes and ERP implementation. The ERP systems that have been developed in European countries, USA and Canada have a lot of challenges and difficulties for implementing ERP in Asia (India) due to the differences in culture and environment. There is increasing indication of social and cultural dissimilarities that are not being addressed by international ERP vendors while implementing ERP systems. The fact guides to the impediments that lead to failures in ERP implementation or adaptation. There is a desperate need to change the practices for ERP customization, keeping in view that the cultural challenges should be tackled with adequate planning and precautions (Poti, 2011). According to Kees Boersma and Sytze Kingma in 2005, the ERP is one of the demanding technologies that take into account the cultural considerations. It can be stated that the matter of effectiveness of the ERP can only be achieved by the mutual shaping of technology and organization, the research into ERP essentially deals with the economic-technological lucidity of ERP. As the ERP is not just a technology, a number of factors related to the culture, environment, social and organization, therefore, Alemayehu Molla, Loukis I. and Licker stated that “we conceptualize ERP systems as socio-technical systems”. Event-Driven Process Chain – Order Process References Boersma, K. & Kingma, S. (2005). Developing a cultural perspective on ERP. Department of Culture, Organization and Management, Free University Amsterdam, Amsterdam, the Netherlands. Davenport, T. H. (1998). Putting the enterprise into the enterprise system. Harvard Business Review 76 (4), 121–131. Davison, R. (2002). Cultural complications of ERP valuable lessons learned from implementation experiences in parts of the world with different cultural heritages. Communications of the ACM 45 (7), 109–111. Eresource. (2010). How BPR plays a critical role in ERP implementation? Retrieved from: http://www.eresourceerp.com/How-BPR-plays-critical-role-in-ERP-implementation.html Kastneer, R. (2010). Why Projects Succeed: Customer Involvement. Retrieved from: http://blog.slalom.com/2010/12/08/why-projects-succeed-customer-involvement/ Molla, A., Loukis, I. & Licker, P. S. (n.d). Implementation in Organizations: Institutions, Agents and their Cultural Dispositions. IDPM. The University of Manchester. Poti, S. (2011). Social and Cultural Challenges in ERP Implementation: A Comparative Study Across Countries and Cultures. International Journal of Information Systems and Social Change Robey, D., Ross, J.W. & Boudreau, M.C. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems 19 (1), 17–46. Soh, C., & Kien, S.S. (2000). Cultural fits and misfits: Is ERP a universal solution? Communications of the ACM 43 (4), 47–51. Xue, Y., Liang, H., Boulton, W. R. & Snyder, C. A. (2004). ERP implementation failures in China: Case studies with implications for ERP vendors. International Journal of Production Economics, 279 – 295. Read More