IRCL Information Management System - Report Example

Title: IRCL Information Management System Student Name Tutor Table of Contents Introduction 3 IRCL Company Current Deficiencies………………………………………............………3 ERP Justification………………………………………………………………..……………4 Project Recommendations-current conditions………………………………………….….5 Traditional Systems Development Life Cycle methodology…………………………….…6 Outsourcing Recommendations………………………………………………………..……7 Conclusion…………………………………………………………………………….………8 Reference………………………………………………………………………………...……9 Introduction The contemporary business projects recognize effective interplay of information between a buyer and a seller. This calls for new technological elements (skills and systems) which play an important role in modern business environment (Gibbs, 1997). Like many other companies, International Retail Corporation Limited (IRCL) depends on the computers and software particularly when it comes to accurate management of information. It is a concern to many businesses especially those with poor information systems to incorporate information technology as part of the solutions to the information movement in order to operate successfully. Installation of Enterprise Resource Planning (ERP) system within IRCL perhaps will change the outlook of business transactions as well as data management. IRCL company transactions and data processing procedures are managed by a local software package developed by a low skilled accounting manager. The software package lacks consistency and accuracy as well as limiting storage volumes. As far as enterprise growth is concern (of course in the current competitive market), information system in the IRCL company needs to be in a better place to serve the fast needs of the consumers in the market. As a result, this report provides a preliminary situation of IRCL Company in regard to the management of its transactions and data management and the implications of this situation. The purpose of this report is to provide an impression that will reflect the importance of implementation of ERP software in IRCL Company at the same time focusing on technological and accounting concerns. This will guide actual recommendations to retrieve the problem in IRCL Company. 1. IRCL Company Current Deficiencies First, the accounting software package used currently is not up to date. As stated by the examples, the software package used at the moment limits storage capacity, is inaccurate and provides inconsistent figures. Definitely this will compromise the productivity of the company as far as growth is concern. Secondly, the software package was developed locally by a manager with low information technology skills. This means the software package does not effectively meet the needs of the changing market. In this regard it lowers the reliability and data processing efficiency. This normally affects the direction of the company especially when exploring new target groups in the market. Appropriate information is required to marge the needs of the consumers in the market. However, with the current software package, new markets perhaps may not be explored. 2. ERP Justification Reason 1: ERP software package uses rational/coherent database technology that integrates all the units within the organization (Scapens and Jazayeri, 1998). This can be managed by one skilled IT individual without a lot of effort invested on it. For example, unit volumes of particular products sold by sales team are checked from the central point. This enhances effective management of stock within the enterprise. Form the case, management of inventory is a problem which can be effectively addressed by ERP system package. Reason 2: ERP improves information reliability and data management efficiency (…………..). IRCL Company has lacked corporate strategy due to defective information from the current system. The company has not relied on this since the current system provides inconsistent and inaccurate data. Unlike the current software package in IRCL Company, ERP generates simplicity of data with consistency in which the corporate strategy of the enterprise relies on it during growth and expansion. According to Gibbs (1997), improving customer service means giving the business an outstanding popularity and opportunity in the market. Therefore, the customers will be subjected to the reliability of the ERP package. Reason 3: Implementation of ERP system will compress the legacy systems in IRCL Company thus eliminating those work titles with low value. For example, ERP software system can reduce the obsolete units to a ration of 1:10. This means the units that were controlled by ten legacy systems will be control by only one if ERP system package is implemented (Scapens and Jazayeri, 1998: 58). From the case, IRCL Company has marketing, financial and supply chain legacy systems separated. There are teams at respective legacy that will be omitted by the implementation of ERP system. At the end of the day operation costs will be reduced by a large figure regardless of the ERP system implementation costs. Reason 4: ERP system package manage four important areas of the enterprise at the same time-human resource department, financial, marketing and supply chain. These are the most essential departments when it comes to defining business success in the market. The current system has been managing data at different platforms. For example, the case only reflects on the poor management of the financial department by the current system. However, ERP software package will manage various data on one platform ensuring effective integration of information from major departments. This will ease making of recommendations essential for corporate strategy of IRCL business. 3. Project Recommendations-current conditions There are two different conditions realized from the case; One, IRCL Company needs an immediate intervention on transactions and data management process, Two, the largest shareholder of IRCL (Uncle Ken) is under financial crisis. But the good thing is he is able to contribute $200, 000 to the project. After carefully examining these aspects and the demand of project implementation, Jenny should not proceed to implement ERP system at this time. These are the three reasons behind taking this option; a) Implementation of ERP system is a strategic component that does not need only two months. According to Hellens et al (2005), effective ERP system that last for long often take eight to fifteen months to be installed in an organization. From the case, a time frame of two months perhaps is not enough to implement the software package. b) Implementation process of ERP is expensive and needs readily available cash. Ken is able to give not a substantial figure for implementing ERP system package. This means he will not be able to contribute towards the project in the future. Also, the economy is not optimistic at all to the business therefore, Louis should not depend on future expected profit from the business. c) Implementation of ERP system package will involve process re-engineering. This will involve restructuring of four major business units (departments-marketing, human resource, supply chain and financial). It is a process that needs a lot of consultation and investment on time all together. The three players (Louis, Ken and Jenny) should invest more on time and rush situations. 4. Conditions that Recommend the Traditional Systems Development Life Cycle methodology while internally developing a potential ERP System Package for the company-IRCL. a) Define the functionality of the system: Jenny outlines the features of the new system and how it should be put into operation. This is a clinical method of addressing the failures of the current system and time must be invested on it (Ahituv et al 2002). Feasibility study must be conducted such that the definition of the problem is clearly stated. Otherwise, the validity of the system in the long run perhaps may not be reflected and yet funds have been invested. b) Price: Compared to the direct implementation of ERP System, implementation of it through traditional system development life circle is cheaper. The owner of IRCL Company has no enough cash for complete integration of the ERP system software. Therefore, traditional system perhaps would fit creation of ERP in the long run. c) Definition of Platforms Since the company has not used any of the ERP software package before, the traditional system will have to define the platforms though human involvement. This is a process that needs training of individuals along the lines of programming in order to operate the system in the right way (Ahituv et al, 2002: 55). Without definition of platform, potential ERP system may not be developed. d) Financial Strength of the Company Implementation of ERP in future would need a company to have a significant financial capability in order to improve the efficiency of operations. A strong financial capability will help the enterprise during the process of recovery since a lot of resources had been invested during the development and implementation of ERP system through traditional system development life circle methodology. e) Development of appropriate system design Jenny with her project team should design appropriate procedures and specifications for managing data by the new system. This will need detailed specifications from the programmers in order to proceed in building a compatible ERP system through a traditional system life circle methodology (Ahituv et al, 2002: 57). 5. Outsourcing Recommendations According to Grover et al (1996), the decision on whether to outsource depends on the management of the business and those affected directly by the decision. Outsourcing therefore is recommended for this purpose because; i) Acquiring an existing package is cheaper and saves time. From the case, Louis needs the problem to be settled within two months with the available cash from Ken. Outsourcing therefore will be an appropriate option considering the fact that the software package acquired should support business processes (Putrus, 1992: 135). ii) Critical success factors of the IRCL Company: Information on marketing activities, financial accounting and supply chain management is essential to the company. This is where success lies and therefore incorrect information from either of the departments will compromise the needs of the corporate strategy. For example, storing of limited data by the existing system would limit the meaning of information presented by the marketing team. iii) Outsourcing service provider’s contract is flexible: The current situation in IRCL Company needs flexibility of service. From the case, the whole line item services may not be required but rather, service items like backup and application management are basically needed. Therefore, the operating cost will be low since the company will only outsource specific services to intervene the problem (Grover, 1996). iv) Outsourcing have better risk management The workload of IRCL Company at the moment is large. Other than the usual operations, the company needs to implement ERP system within a confined time of two months. Therefore, outsourcing will reduce workload to the company which will help the owner to focus on other core business activities. Contractors will bear the risk associated with the intervention of the problem in IRCL Company. Conclusion Implementation of ERP system software package is costly and complex especially to the small enterprises. In considering the implementation of an effective ERP system, IRCl Company should mind huge time commitment as well as substantial monetary costs. Use of traditional system life circle methodology may be appropriate. However, the concern on poor performance of the current accounting package may compromise business processes. Outsourcing is seen as the appropriate option to remedy the problem facing IRCL Company. Generally, the capabilities of effective ERP system in the long run would modify the appearance of major departments of IRCL Company (marketing, financial and supply chain management). Reference Ahituv, N., Neumann, S. and Zviran, M. (2002) A System Development Methodology for ERP Systems. Journal of Computer Information Systems, vol. 2, pp. 55-60. Gibbs, J. (1997) The power of enterprise computing. Internal Auditor. Grover, V. (1996) The effect of service quality and partnership on the outsourcing of information systems functions. Columbia, S. Ca.: Division of Research, College of Business Administration, University of South Carolina. Hellens, L. v., Nielsen, S., & Beekhuyzen, J. (2005) Qualitative case studies on implementation of enterprise wide systems. Hershey, PA: Idea Group Pub.. Putrus R. (1992) Outsourcing Analysis and Justification Using AHP. Information Strategy: The Executive's Journal. vol 9, p130-137. Scapens, R. and Jazayeri, M. (1998) SAP : Integrated information systems and the implications for management accountants. London: Routledge. Read More