Change Management of People and Technology in an ERP Implementation - Case Study Example

Case Study of “Change Management of People and Technology in an ERP Implementation Company Portfolio PowerIT is based in north of England. It has around 200 employees and has an annual turnover of approximately 40 million pounds. It is a regional office of a Taiwan-based PowerIT group that has over 40,000 employees around the world. PowerIT is in the business of producing and repairing power conversion equipments. 2. Transition to ERP System Edward and Humphires stated that the CEO of the company decided to change their materials resource planning system to a modern system that would cater to their organizational needs and procedures (144). They opted to implement ERP system in their organization and chose the “third-party modified off-the-shelf solution” option for their respective transition. The management considered this option to be the most suitable one for them for the following reasons: Their internal IT department did not have the required technical expertise to develop such a large scale project. The internal IT department did not have the application domain knowledge of the ERP. The IT department was however fully equipped with the knowledge of the needs of the company therefore they could modify the system according to the internal requirements. Edward and Humphires asserted this choice to be “High” in software development expertise and application domain expertise since the vendors would have the required expertise in both of these areas (147). However this option is considered to be “Low” in the area of local company knowledge because the vendors would not have knowledge about the company’s internal procedures to modify the solution. This task can only be done by the internal IT department of the company. 3. Problems in the Selection and Implementation Phase There are some matters that need to be considered in the selection and implementation phase of the ERP systems in organizations. One of the aspects is to consider the most suitable ERP system that caters to the unique requirements of the organization. Usually, companies opt for ERP system that might be coupled with latest technologies and features but might not fulfill the demands of their business. The gap between the needs of the company and the features of the ERP creates a scenario of discontent. Another aspect that involves analysis is the selection of the modules and the mode of implementation of the ERP. There are number of modules in the market; the modules should be chosen for implementation on the basis of company’s needs. The most appropriate combination of modules needs to be selected and their impacts need to be analyzed. There are several options available even for the implementation of the ERP system; ranging from internal development to third-party off the shelf solution. This choice highly depends on the budget of the project and the expertise of the technical staff in the company. 4. Problems after Implementation Even after 18 months of the implementation of the ERP system, it was felt that the system was not able to cater to the needs of the company and employees in an efficient manner. The modifications that were supposed to be done by the IT department were being performed with the guidance of the vendors but it was leaving an impact on the budget of the project. The technical staff was also facing problems regarding the incompetent support service of the suppliers. The CEO of the company felt that an environment of resistance was developing in the company due to the lack of compliance of the features with the demands and technological transition to the new system. 5. Classification of the ERP Success The success of the ERP system at PowerIT can be classified as ‘Class C’. The reason for this classification is that the system is not able to provide the expected benefits to the company. The system is being utilized by the employees but at a minimal level. The reason for the minimal adoption is lack of formal training for the usage of the features of the system. Inaccurate data was found even after 18 months of the implementation of the system which also denotes ‘Class C’ level of success of the ERP system implementation. 6. Technical vs. Organizational Changes Some investigators were hired by the top management of the organization to evaluate the success or failure of the ERP system. The investigators concluded their analysis of the acceptance and integration level of the system and reported that the technical side of the system was very close to what the management wanted alongside some modifications. These desired modifications were not very difficult to implement neither did they require major changes in the current system. Most of them required fine-tuning of the system with respect to the screen displays or navigations. Some of the changes were even doable by the internal technical staff. However, the organizational changes were more difficult to be brought about in the company. The investigators divided the areas under “Communications and Relationships” and “Understanding the Business”. There were many aspects that needed to be changed in the organization; ranging from better training for the employees to development of better relations with the vendors. Relationship development between the different departments will also prove to be difficult and the time span for such an objective thing cannot be given. Some employees did not have clarity about the business processes therefore their individual job descriptions and concerned business processes need to be identified so that they can make use of the ERP system in an effective manner. Therefore technical changes can be brought about more easily than organizational changes. 7. Factors for Success Some of the top factors (discussed in the case study) that account for success of an ERP system are support of the top management, expertise level of the project team, competent project leader, coordination among different departments of the company, clear aims and expectations from the system and support from the supplier. The top management at PowerIT initiated the project in the company with the vision to automate tasks and structure their systems and procedures. However, the investigators interviewed the employees and concluded that there was minimal involvement and acknowledgement by the CEO and other top managers of the company. The technical staff at the company was not technically very sound because of which they faced some difficulties in the modifications of the third-party off the shelf solution. These problems were aggravated with the inefficient support service of the vendor, which is also one of the attributes that are required for the success of the ERP system. It can be judged from the case study that there was no productive or amiable environment present in the workplace of PowerIT. There was lack of coordination between different departments for example there were personal clashes between the business development manager and the other managers. This lack of support within the departments played an important role in the failure of the system. Overall, the technical aspect of the system was not very unsatisfactory since the system offered most of the features that were expected by the top management. However, the impact of some of the required changes from the employees was not judged and that resulted in the inaccessibility of some other related functions. All of these factors directed the ERP system towards resistance and failure in the company. 8. Recommended Actions PowerIT should re-implement the system but adapt a different approach in this endeavor. The choice of ‘third-party off the shelf solution with modifications’ was correct since their internal IT department is not experienced enough to develop a software of such a large scale. But they need to maintain good and cordial relations with the vendor so that he provides good service in the process of modifications. This is one of the aspects that affected the implementation of the system. The technical staff will be more experienced now in terms of the task of modifying the system therefore this attempt will bear better results. Another factor that needs consideration in this attempt is to identify the respective business processes that each employee will be concerned with. The job description of every employee should be documented to avoid any confusion about his usage of the system. The usage of the system can be judged for the respective employees when their concerned business processes have been identified. Then, formal training should be conducted to facilitate the transition for the employees. Changes are hard for employees and they tend to show resistance therefore a motivating approach should be used rather than a dictating one. Works Cited Edwards, Helen. Humphires, Lynne. “Change Management of People and Technology in an ERP Implementation”, Journal of Cases on Information Technology, Vol 7, No. 4, (2005): 143-159. Read More