Challenges of ERP Adoptions and Critical Success Factors - Essay Example

Challenges of ERP adoptions and critical success factors Introduction The IT innovation is improving the overall performance of organizations and is the platform of enterprise resource planning (ERP) which is facilitating connectivity across the system. This new software tool that integrates various functions of multiple departments in the organization is one of the major segments in the technology industry which is rapidly growing and in the last few years it is one of the major developments in the field of information technology. The demand of ERP applications that is rapidly increasing can be associated with a large number of factors such as enhancing the ability so as to compete on the global platform, excessive pressure from increased competition so as to become the low cost producer and increasing expectations in terms of revenue growth. In today’s scenario of implementation as well as management of enterprise resource planning the most important aspect is that of critical success factors or CSF. There lies a strong correlation between the challenges or issues that are witnessed with the adoption of ERP technology with these critical success factors. Discussion Critical success factors and challenges in adoption of ERP framework The critical success factors can be stated as exemplars that enable the process improvement boundaries to be extended and even can be considered to be valuable if it is taken into consideration in each of the stages of the overall implementation process. The adoption of ERP into the system is dependent upon various critical success factors that are grouped into two major parts that are strategic and tactical factor. The support from the top management is very essential when the issue about the implementation of ERP system is taken into account. In any organization the rules and regulation are set forth by the top management of the system and the software adoption as well as execution is majorly dependent on the extended support that is provided by the top management. The critical success factors that are strategic by nature is related to the mission of the project, support given by the top management and in case of project scheduling it can be associated with outlining various action steps for individual in order to implement the project (Ziemba & Obłąk, 2013, pp. 4-9). The tactical issues are needed to be considered when the next phase of project implementation takes place that is related to communicating with different users, adopting the necessary technology so as to support the system and hiring of business and technical professionals who would carry forward the implementation process. The critical success factors of ERP implementation into the organization can be of various forms such as setting of clear specifications and requirements, setting of goals and objectives, developing a more realistic schedule, the project manager should possess the most effective managerial skills, effective support from the members of top management, more of involvement between the client and user, effective feedback and communication, adopting realistic budget, sufficient and skilled staff base, familiarity with the development and technology methods, proper planning, appropriate development mechanism, progress reporting, effective control and monitoring, adequate resources, skills of risk management, good leadership, involvement of total number of organizations, complexity and size of the project, motivated team, quality management, good infrastructure, clear assignment of responsibilities and roles, good performance by contractors or vendors and appropriate training provision for all the end users. These critical success factors govern the overall execution of the ERP implementation but all of the success factors cannot be addressed appropriately by firms majorly because of various challenges that are witnessed during the implementation process (Nasir & Sahibuddin, 2011, pp. 2178-2180). The first major challenge that is witnessed by the firm while integrating the ERP system is that of unclear requirements. This challenge can be closely related to the critical success factor of clear specifications and requirements. These requirements play a major role in the implementation process of the new technology. In today’s scenario there are many organizations who wish to adopt the new system but the knowledge about the new system is not possessed by the business managers which makes it impossible for them to state the appropriate requirements to the vendors. On the other hand the vendors may not solicit the requirements in the most comprehensive manner which would result into failure in the ERP adoption process. The other challenge that is witnessed is untrained workforce which restricts the success of the ERP adoption process (Anwar & Mohsin, 2011, pp. 12-15).This can be very briefly classified in the form of survey that was conducted in Saudi Arabia where ERP system is a vital factor in the institutions of higher education. The respondents were majorly part of these higher education institutions and stated that success of the adoption process of ERP system is largely dependent on proper training of the workforce and active participation from all the stakeholders. This challenge is majorly faced by organizations because it fails to meet the critical success factor that is of sufficient and skilled staff base, and training provision to the end users. In such a scenario where a new technology is been adopted there is lack of skill sets in team members. The ERP system do possess a significant learning curve which is essential for every organization to follow and because of this reason the employees or team members are not able to perform above the standards from day one of the adoption process (Shaul & Tauber, 2013, pp. 23-29).This lack of training in employee base is considered to be the major challenge faced by firms as much of the time is devoted by the top management and the project head to proper functioning of ERP package then to provide training to the staff. The other challenge that is faced by organization in adoption of ERP tool is that of improper testing. The adoption process is not considered to be successful until the solution that is to be delivered by the integrated package is not tested in real time situations. This challenge is closely knitted with the CSF that is effective controlling and monitoring. The monitoring technique would comprise of investigating the failures during the testing phase of the software so as to incorporate the necessary changes. These changes are often not successfully implemented by firms which results into failure of the overall process. These issues if considered properly results into implementation of better solutions. The other major challenge witnessed is that of challenges in the critical management aspect of the organization. This factor comprises of various issues such as training, project management, proper infrastructure, and stabilization of the entire process. These challenges can be linked with the critical success factors of quality management, adequate resources and effective managerial skills which are essential for the implementation of ERP software. A research study that was conducted in Canada in majority of the public administration agencies stated that the main challenges that was faced by these agencies in the adoption of ERP tool was not technical challenges but more of behavioral challenges of the management (Alaskari, Ahmad, Dhafr and Pinedo-Cuenca, 2012, pp. 5-6).The research study even highlighted that the major challenge in the adoption process was presence of unskilled persons in the project development team and group of incompetent consultants who were not able to meet the objectives and requirements of the project. This is majorly due to the fact that one of the main critical success factors that are possessing effective management skills is not present in the project head or in the top management whose support is essential for the development of the project. In certain cases it is also noticed that organizations simply ignores the factor of hidden cost which pose a challenge in the adoption process of the new technology into the system. The type of solution that is provided by these integrated packages is at times dependent on the factor of hidden costs. The implementation process is associated with certain additional costs and hence it becomes necessary for the firms to keep marginal cost into account so as to increase the project budget as and when required majorly for process up gradation, data conversion, etc. This challenge is majorly faced by firms as they are not able to keep critical success factors for the adoption process in mind which relates to encompassing realistic budget. This budget that is allocated for the project should also take into account the various hidden costs (Somers & Nelson, 2001, pp. 3-6).Apart from the infrastructural issues that takes into consideration the software and hardware security these challenges limit the success of the implementation of ERP framework in the system. Conclusion The challenges that have been highlighted in the adoption process have a direct association with the various critical success factors. The success factors state the various aspects that are needed to be properly focused on by the organization so as to encounter the strategic and tactical issues of the business operations. The incorporation of success factors varies from one organization to another and along with that there is even variance in the challenges noticed by the firms. The proper infrastructural development so as to support such data integration system is essential but there is even requirement of proper behavioral skills majorly in the top management and the team members of the project. This in turn leads to successful adoption of ERP systems so as to provide enhanced solutions to the business operations. References Alaskari, O., Ahmad, M.M., Dhafr, N., and Pinedo-Cuenca, R. (2012). Critical Successful Factors (CSFs) for Successful Implementation of Lean Tools and ERP Systems, Proceedings of the World Congress on Engineering. Vol. 3, 4-6. Anwar, S., & Mohsin, R. (2011). ERP Project Management in Public Sector – Key Issues and Strategies. Proceedings of the 44th Hawaii International Conference on System Sciences. Nasir, M. H. N., & Sahibuddin, S. (2011). Critical success factors for software projects: A comparative study, Scientific Research and Essays. Vol. 6(10), 2174-2186. Shaul, L., & Tauber, D. (2013). Critical Success Factors in Enterprise Resource Planning Systems: Review of the Last Decade, ACM Computing Surveys. Vol. 45(4), 1-40. Somers, T. M., & Nelson, K. (2001). The Impact of Critical Success Factors across the Stages of Enterprise Resource Planning Implementations. Proceedings of the 34th Hawaii International Conference on System Sciences. Ziemba, E., & Obłąk, I. (2013). Critical Success Factors for ERP Systems Implementation in Public Administration, Interdisciplinary Journal of Information, Knowledge, and Management. Vol. 8, 1-20. Read More