Factors in the Implementation of a Successful Enterprise Resource Planning System - Literature review Example

Evaluate, using relevant theory (and case studies), the stakeholder or technology factors that often affect the implementation of new information systems. Indicate which of these issues are critically important to the success of a new system in a department or organisation of your choice. Introduction The implementation of a new information system in an organization always brings about changes in the basic work processes, which is met with resistance, almost always. This is coupled with reengineering in the communication channels, timing of the decision making, the decision maker (in some cases). The global business environment is now making this change more certain as the environment is becoming more volatile; the need for operational excellence because of variety of forces including technology, economy, society, regulatory forces, competition, individually and collectively. The changes in the business environment has become too constant that it has become imperative for the going concern nature of the organization to adopt the change in all the ways possible – but this changes is easier said than done. Since it involves affecting all dimensions of the organization including the most important recourse i.e. the stakeholders. This change brings in different meanings for and different reactions from these stakeholders – the human resource of the company. Organizational areas to be addressed with Implementation of New Information System – Literature Review The implementation of new information systems revamps the entire operating environment of the organization; therefore, there is a need for organizational development, managing resistance throughout the company, managing the fear that prevails in people because of changing technology, building and reinforcing trust amongst all members and participants, and managing the stress – mental and physical (Suzzana & David, 2008). Organizational Development – the process of implementing the new system, does not involve an abrupt or an overnight replacement of the system; careful and full-fledged planning with effective communication with stakeholders is needed for the proper and effective implementation of the system. The rapid change adaptation is very much a function of the extent to which the employees are involved in the selection and implementation of the new system. This acceptance of change is also affected by the cultural factors, some cultures are risk takers and are more inclined towards easy adoption of change; others are risk averse and thus prone to follow the status quo to avoid any potential mishap. Tackling Resistance throughout the organization – As mentioned cultural factors come into play, the ease and familiarity with long standing traditional organizational work processes brings a level of resistance, when the newly implemented systems require stepping out of those traditionally established boundaries; adding to the fact is the fear of losing something that is important to the people – such as designation, authority etc. This resistance has to be effectively managed by encouraging team work and cooperation and coordination amongst the employee groups and ensuring. This is usual of cultures where there is distrust, fear of failure, threat to values and moreover, where people are afraid of interference and transparency to the systems and processes that they are responsible for. Technology fear – the implementation of a new technology based information system brings fear, especially in older and experienced employees who have lessened ability to learn and adopt new system, and higher comfort built up with the existing system. The new systems bring in stress because of the level of complexity associated with the new technology. Other Critical Success Factors In 2000, Esteves and Pastor identified several critical success factors in the implementation of a successful enterprise resource planning system – the system aimed at bringing transparency, operational excellence and organization wide integration of all processes and systems being run on real time basis. On a matrix, the two dimensions can be categorized into one into strategic and tactical and the other into organizational and technological. The strategic factors are long term and deals with giving direction to the organization, whereas, tactical are shorter and day to day in nature. The organizational factors are more related to the business processes and the people involved in the process; whereas technological factors are simply technical in nature. The organizational and strategic factors include top management commitment and support, building a business case, setting out the vision and plan, nourishing the project champion, project management, managing the change throughout the organization and the cultural change, and especially the management of expectations of all the stakeholders. With organizational management, on the technological side selection of an ERP (for example, Oracle e-Business Suite, SAP Business One and MS GP, etc.) and how the legacy system is taken into consideration, the love and association with the system also determines how easily and practically the older system can be let go off. The tactical, organizational issues involve maintaining the project team balance, developing competence and motivating and empowering the people associated with the project and throughout the organization, developing the communication plan, business process restructuring (BPR), consultant selection and partnership when selecting the implementation partner, educating and training the business processes on continuous basis, post implementation evaluation, vendor support, partnership and tools. The technological and tactical issues involve making and developing the IT infrastructure and architectural choices, data conversion and integrity, systems testing and trouble shooting, and the total package configuration. Background of organization and issues Kingston Smith is a fast-growing top 20 accountancy firm. It has 60 partners spanning seven offices across London and the South East, the Kingston Smith Group supports entrepreneurial businesses, private individuals and not-for-profit organisations across a number of sectors. It serves the need for its clients, access to the right professional advice at the right time can make the difference between success and failure. Kingston Smith promises all clients a fundamental knowledge of their business and their marketplace. Coupled with promise of a team of dedicated professionals with the commercial sense needed to help meet client goals, capitalizing on technology it promise to keep an eye on the bigger picture, watching out with you for industry developments, legislation and new opportunities for the clients. An example to be quoted in the light of all the above discussion can be that of an audit organization; where the process of implementing a new technology is a complicated process, even though it results in greater efficiency and effectiveness. But the problem is that, it is not only the outcome but the path to achieve that destination which is more painful and distrustful. Multiple sources of risks and implementation costs are associated which have pressures faced from the budgeted costs. The contextual factors such as budget length and influence, individual factors such as risk preference and budget pressure affects the decision of even adopting a certain technology (Chetcuti, 2008). Some of the technologies supporting the business include Computer Aided Audit Techniques. The nature of audit business is such that, objectives evaluation is based on short term targets; whereas, the implementation of technology has its potential benefits and rewards paying off in the long term objectives of the company. Experiments and practical conducted suggest that use of computer aided evaluation techniques have been possible and successful in longer term budget and evaluation periods combined with the attitude of the top management (Leonard-Barton & Deschamps, 1988), especially when the top management and the supervisors are more risk taking individuals. Even when one of these factors is present, there is a high chance of the project reaching the ends. Venkatesh, et. al in 2003 gave the Unified Theory of Acceptance and Use of Technology (UTAUT), which gave three factors that are fundamental to the usage or adoption of technology by the organizational representatives. The predictors are defined as follows (Venkatesh et al. 2003, 447-453): Performance expectancy - "…the degree to which an individual believes that using the system will help him or her to attain gains in job performance." Effort expectancy - "…the degree of ease associated with use of the system." Social influence - "…the degree to which an individual perceives that important others believe he or she should use the new system." In reference to the performance expectancy theory, the gains in job performance are strongly influenced by the intention to use technological factors – in the example discussed; budget attainment is one form of gain in the job performance. In terms of social influence, risk perceptions affect the implementation process of the new system. Some of the formally identified methods that help determine the training needs of the organization include the task analysis. The method involves analyzing what do employees do to perform their job. It reflects how employees are performing the task and what is the more suitable way if any of doing it. Any gaps in the actual and the best is identified through this task analysis and is beneficial in assessing the training needs of the employees. Task analysis results in the development of the task statements, on the basis of task statements, homogenous task clusters are defined, further key success and the critical factors in performing the job well are found out. The task statements and these factors then determine the needs of the organization and design any training required. Easing the implementation process For the successful and easing the difficult and troublesome part of the implementation stage of the implementation of a new system, it is imperative to involve the stakeholder in the technology assessment process i.e. the selection stage of the technology such as earlier mentioned ERP systems such as Oracle e-Business Suite, SAP Business One and MS GP. These stakeholders not only include the stakeholders internal to the organization, i.e. users of the technology but also the suppliers of the technology, in order to, develop strong bonded relationship to smooth the flow of technology, to bring interaction amongst the power users and the consultants to be on the same mental level and frequency. This can be encouraged by information sharing and making information available to all across the board. Forming a project committee For the best planning, a committee of stakeholders should be formed, which should act as a platform to interact with each other; this has an added advantage of finding out the stakeholders’ interests, to check who are supportive of the idea and who are not receptive to the situation. Consultation with each other can bring in a level of comfort to handle the situation well enough by bringing in new ideas, bringing flexibility, letting out negative energy and driving with the positive. Encouraging the consultation process There might be a standstill position, where the plan making by own people may reach a fix and in this situation it is better to hire a consultation and get input from the stakeholders. But before this chalking out own strategy is important. The plan should be developed and used. Leading by example Executive buy in at earlier stages and being completely sold is important for the whole program. The executives should realize that the new software solution is to improve the productivity and gain advantage over the competitors. Selection of a dedicated and intelligent launch team The team sets the example which has to be followed; it is therefore necessary that the team be motivated and taken forward together (Crider). Training and development Today competition in business environment is getting stiffer and stiffer; to stay up with the competition organizations need to be flexible and adaptable to the changing environment. Thus, they strive to become the learning organization – where employees learn to develop new skills, capabilities, gain knowledge and keep themselves updated with the trends facing. Even companies have realized that the investment into the development of employees and training for all purposes is necessary and this investment really pays in the long run, provided efforts are made to keep the employees motivated and are treated as investment assets rather than simply, the machines to work with. The training and development function in the organizations has resulted in important contributions to the success of many corporations. The training so given should assist employee to be more responsive to customer demands and interests, it must participate in and contribute directly to competitive corporate strategies. The firms must find ways to measure concretely its performance and its contribution to the corporate bottom line. Conclusion Moving step by step by constructing technology development roadmaps, promoting technology transfer within and outside the organization, identifying and mediating partnerships with academia, government and commercial firms, developing new technology deployment strategies, allocating R&D resources, examining the financial implications of technology decisions, ensuring that technology and marketing strategies match, obtaining outside review of plans and forecasts and defining new knowledge assets (and ways of obtaining them) that are needed to stay technologically adroit. References Chetcuti, H.R. (2003). ERP Implementation: A multi-stakeholder analysis of critical success factors. WICT Proceedings. Crider, R. Secrets of technology adoption Leonard-Barton, D., Deschamps, I. (1988). Managerial influence in the implementation of new technology. Management Science 34 (10) Suzzana, L., David, S.G. (2008). Motivation and stakeholder acceptance in technology-driven Change management: Implications for the engineering manager. Engineering Management Journal Venkatesh, V., M. G. Morris, G. B. Davis, and F. D. Davis. (2003). User acceptance of information technology: toward a unified view. MIS Quarterly 27 (3): 425-478. Read More