Enterprise Resource Planning: Cromwell Hospital - Case Study Example

Enterprise Resource Planning (ERP) Cover page Name: Course: Tutor: Date: Topic: Enterprise Resource Planning (ERP) Table of Contents Cover page 1 Table of Contents 2 Introduction 3 Case study 3 Organization profile: 4 Current System 5 Selection of ERP vendor: 7 Challenges of ERP System Implementation 10 Success and failure Factors 12 Implemented System modules 14 Conclusion 15 Bibliography 16 Appendices 17 Appendices A 17 A list of tasks for each member 17 Appendices B 17 A list of interviews 17 Appendices C: 17 List of emails and correspondence with the company 17 Introduction This report will define the concept of the Enterprise Resource Planning (ERP), and explain its relevance to Cromwell Hospital. The report will focus on the ERP implementation and selection of vendors to demonstrate how the functionality of Enterprise Resource Planning in organizations is capable solving institutional challenges. An analytical review of ERP modules and how these modules are use in Cromwell Hospital to solve operational and management roles is presented. The report explains the challenges, success ad failures of ERP system implementation. Case study Cromwell Hospital is an institution that is specialized in providing medical services for women and children. The hospital is dedicated to provide care to patients that are of high standard and ensuring that their physical, emotional and spiritual wants are guided by their clients. The institution is also concerned with the staff training, continuing professionals and their general development. They are continuously improving the quality and variety of services and care of patients using international safety standards. According to Thomas and Davenport (1998), the Enterprise Resource Planning system is expected to ensure that communication is effective hence delivery of health care services without failure. When information and communication technology is used well, operational performance improves and cost of operation reduces. This technology also widens the scope of client base hence providing competitive advantage. Through the use of modern software such as Enterprise Resource Planning software, the Hospital is able to operate in a more authoritative position above the competitors while providing the best services to their clients that none can match up with. Once the processes of the institution are integrated, the costs involved with maintenance and transfer of information will be low. Thomas and Davenport (1998) The hospital is also making sure that the staff works together under the mission of high quality provision through inter-disciplinary and teamwork. Organization profile: Mission Cromwell Hospital strives to provide sustainable and accessible quality health care through efficient utilization of available resources in order to meet and even exceed customer’s needs and expectations. The hospital is committed to complying with the medical regulations and approved healthcare standards. The institution will embrace quality assurance and adopts new healthcare technologies in its quest for continuous quality health service improvement. Vision The Cromwell Hospital’s vision is to maintain the market leadership in quality health service provision in order to consistently meet and even exceed clients needs and expectations. Strategy Enterprise Resource Planning is great software that integrates all processes and information of an institution into one system. ERP can be used in any type of institution, large or small, and it covers all important functions of the institution. Thomas and Davenport (1998) Cromwell Hospital has put in strategies to extensively analyze and study ERP before implementation. Prior to implementing ERP system, Cromwell Hospital has recognized that careful planning is very important. The better the hospital plans for this technology, the faster it can be implemented. Speed of implementation offers advantages to the Cromwell Hospital. Strategic Goals Cromwell Hospital like any institution has goals and objectives that need to be met; the goals are unique to Cromwell Hospital. The hospital strives to implement 100% of ERP System operations in all departments of the hospital. There also must be 100% of staff training on use of ERP System to ensure effective use. The hospital executives are committed to the implementation of the s ERP system. Their commitment and support is evident in the institution because they are the policy makers and their support ensures the project succeeds. As affirmed by Sumner, M. (2004), The Hospital will ensure there is proper planning before the software is implemented, the planning will establish key performance measure, software requirements, expected output and projected cost to be incurred. Objectives Cromwell Hospital will concentrate on exactly what it wants to do. The requirements need to be mapped out correctly; these requirements will then determine the required software that can give a solution to the problem. ERP will be rolled out in phases; drastic implementation of the software in all departments is a bad idea. The implementation will be done in one department after the other till the whole institution is covered. The information given by the system is a result of an input; the hospital will therefore ensure there is accuracy in data capture to ensure data integrity is maintained. This will be enabled by providing enough control mechanism in every step a user takes. The management has allocated enough time this exercise, the vendor will have ample time to do the installation, and the hospital will ensure the system is working right before the vendor leaves. The project will be validated and checked whether all the requirements are met. The more time spent in ensuring the system meets the standards, the lesser time will be required to fix the problems later in the course of operation. Current System The hospital is currently using manual system in drug administrations and other major clinical operations. manual system are tedious and bulky with a lot of paper based operations, searching for records and location of patients date is a rigorous process that leaves every medical practitioner tired and with a negative attitude towards work. This needs to change if the clinicians are to be released to concentrate on their core business. Reception Problems When patients visit Cromwell Hospital, the hospital receptionist first recorded by hand, on paper the client’s details. Here data entry errors are possible. This is a time when a patient may be in for an emergency and needs immediate attention, recording by hand is slow and tedious. Client’s medical record is at a risk here. ERP System Solution ERP system receive clients records which is then handled electronically, the clients records are then stored in a database where it is appropriately sorted, analyzed and stored for easy searching and retrieval. The data capturing process can be speed up by use of bar code readers to enable a patient get fast registration and immediate medical attention. Coordination problem There is no proper coordination between the finance department, pharmacy and laboratory. Patients are sent up and down the hospital to make payments, collect drugs or even get laboratory test, sometimes a patient is even turned back from one point to the other for lack of coordination. A pharmacist asking a patient whether payment has been made is common here. ERP System Solution The ERP system is an integrated system where all the clients records are kept, updating a record in one module will automatically update in the other entire related module without human intervention. In this case therefore, once a patient makes payment in the ERP system, all the employees in the pharmacy, laboratory and reception are able to access the data. Therefore the patient will be freed from many questions but instead given service as fast as possible. This means the hospital will work in an effective and coordinated manner. Selection of ERP vendor: The selection of ERP to use in Cromwell Hospital is a complex process, this is because it involves serious economic consequences, the process should therefore adopt a multi-criterion approach. ERP vendor selection will be determined by a series of selection criteria, the vendor to be selected will be that which will be able to provide the software with the best specifications the institution has provided. Sumner, M., (2004) The vendors to be considered include Oracle, SAP, Epicor and Microsoft Dynamics. These are the major vendors currently in the market offering to customers ERP implementation services. The selection of the software will start with the analysis of institutional objectives. Cromwell Hospital will consider the institutional objectives and user requirements to ensure individual employee performance is not affected. All the stakeholders will also be involved; they need to understand the system profile. To determining the best vendor, Cromwell Hospital evaluated the selected vendor’s functionality whether it will fit with the Hospitals business process. Similarly the degree of integration between the various components of the ERP system and the Hospitals operation goals was determined. Cromwell Hospital has therefore narrowed down to SAP and Oracle's, these products have been in the market for decades on product development. The vendors have a great deal of experience and knowledge in this field of ERP supply and implementation. Cromwell Hospital further evaluated the two vendor’s products on flexibility, scalability, Complexity, User friendliness, Quick implementation and cost incurred. SAP ERP was finally selected for the hospital. Oracle ERP vs. SAP ERP Both SAP and Oracle have clearly demonstrated their ability to adapt to the rapidly changing economic environment. However SAP is positioning its main operation in large organizations running core ERP system, it also offers software suit to midsized companies. SAP is the world's third-largest independent software vendor. The product is flexible and flexible and can be run with many different database products. Why SAP ERP System Was Chosen Cost of the SAP ERP System implementation is estimated to cost $250, this is the cost for software purchase, installation, maintenance and staff training; SAP ERP System experts will avail all the software and hardware required and provide consultancy services. SAP ERP System experts will provide a two years license for the product which shall be renewed annually. Professional services such as integration, Data conversion and Testing will be conducted by the consultant from the SAP ERP System experts; however this will be paid by the institution separately. Market share SAP ERP Oracle ERP Microsoft Others Market Share 32% 23% 14% 30% Comparing SAP, Oracle, and Microsoft Leon, A., (2009) The diagram below clearly indicates that SAP is leading the other vendors’ products on market share. SAP holds a largest market share compared to the other two. The difference between SAP and others is large. Market Share Leon, A., (2009) The time taken to implement SAP ERP is relatively lower compare to Oracle. Implementation time Leon, A., (2009) Challenges of ERP System Implementation The hospital SAP ERP implementation will be faced by challenges ranging from technical, financial or functional. The challenges that will accompany the implementation of SAP ERP system are many, these include cost, time, resistance to change, data conversion among others. Time EPR takes over sixteen months to be fully implemented in an institution. this is a very long time to wait for an effective system. Cost SAP ERP implementation is costly; it requires adequate resources including human resource, software, hardware and even money. During the implementation process, many of the items may many miss due to budgetary constraints. Since SAP ERP implementation period is long, the same will escalate many costs. Similar people as a resource may be a factor that is limited especially the short supply of skilled personnel. The supplied ERP would be affordable, most ERP systems are costly to purchase, implement and maintain. The vendor that supplies a system that is cost effective will be selected. Here the institution is balancing cost and quality, none of the two should be compromised. Inadequate Requirements definition The requirements definition should clearly spell what the SAP ERP system will handle and that which it will not. If this is not done well, implementation becomes challenging, requirements definitions makes SAP ERP selection easy. Resistance and change management. Change is one of the organizational challenges; people tend to be comfortable where they are currently. SAP ERP implementation is a change and human beings are resistant to change especially when the change involve is directly affecting their day to day operations. If the employees are not well convinced and inducted on the importance of SAP ERP, then implementation will be a problem. The hospital management will educate users on the success of SAP ERP in order to mitigate the resistance to change and create champions, the champions that will spearhead full implementation of the system. Business process reengineering SAP ERP implementation involves change of current business arrangement to come up with new best business practice. The hospital having invested much in business procedures and processes will find it very challenging changing everything to SAP ERP Integration The hospital will face many integration challenges during SAP ERP implementation. These integration challenges concerns the hospital current system, electronic telemedicine software and SAP ERP modules. There is need to integration the SAP ERP in to the hospital system to ensure all the modules are modified to match the hospital processes and structures. Data conversion Data conversion and migration in to SAP ERP will pose a challenge to the hospital SAP ERP implementation process. Poor data conversion will delay the SAP ERP from going live in the shortest time possible. There are challenges in organizing the data conversion process especially the extraction of data from the old system and loading to the new SAP ERP system. The hospital will strive to get the right data at the right time to the right place. Post-Implementation ERP is a complex system, in addition to that, they are hard to utilize. SAP ERP has a six month learning curve once it is implemented. All the employees using the system need to be trained on how to work on the system early in the implementation stage. Combining this with the cost incurred on maintenance and time taken to train staff, the hospital will put strategies in place to ensure the institutions withstand the challenge of continuous use of this system. Success and failure Factors Success factors: Factors that led to the successful implementation of SAP ERP System According to Lee Jinyoul, (2001), the system implementation brings change to operations procedures; this therefore needs proper training for staff to enable them work smoothly. There is need for change management, training, job re-design and even live demonstration. The hospital needs to know the reason why SAP ERP System is implemented, once the institution understands the hospital objectives and what need to be accomplished, then an appropriate decision can easily be made on the merits of an ERP system SAP ERP System enable institution processes to be streamlined into a single cohesive unit, the operation of the hospital will be of higher level. This will lead to a higher level of productivity; hence the institution will realize more profit. There is also a greater level of information flow; information is shared faster and effectively. Once a module is updated, all the other modules are equally updated. This reduces chances of data entry duplication. SAP ERP System is consolidated software of various modules, institutions using other software rather than ERP end up using several programs that may not be compatible. This poses a great risk to smooth running of the hospital core activities. SAP ERP System has been used by large institutions to solve great problems. SAP ERP System is very useful in product design; the software can give design options and best designing process for a hospital especially when it is integrating processes through design engineering. SAP ERP System is capable of tracking an order from one stage to the other, this information is very crucial for healthcare strategies and clients profiling. Order tracking could be very hard if different software were used rather than ERP. SAP ERP System accounting application is one of the best things in ERP. The module can integrate hospital purchases, profit, and cost information and present it in a granular way. Enterprise Resource Planning can also act as a reminder where dating structure is set up to inform the institution when a product needs to be updated. Lee Jinyoul, (2001), this enables the hospital to keep track of its products hence improving and maintaining high quality of healthcare services. Industrial espionage and embezzlements are becoming a threat in most of the institutions. ERP can protect the hospital against such crimes. SAP ERP System is adaptable, it is capable of adapting to different contexts, and there is an appropriate system for every institution whether small or big. ERP specialist is in a position to design what best suits to the hospital operations by looking at the volume. This software is actually a tool designed for every situation. Failure factors: ERP acquisition, installation and maintenance is costly. It is only the large institutions that can fully take advantage of the many opportunities offered by this software technology. This therefore discriminates against the small and medium companies who may not need all the modules but just a few. The success of the ERP system highly depends on how the employees use it. This therefore means that the employees must be well trained to use this system. This may be costly for institutions trying to cut on operating cost through training reduction. Implemented System modules HRM module Mc Kinsey (1998) pointed out that productive human resource is a dream for any institution, due to large information handled in this department, ERP becomes useful. The software has a capability to add value. The staff levels change from time to time, centralized control is therefore necessary. This gives the human resource function time to look into the strategic functions for staff development while the operative function is handled by ERP system. This is an additional value to the hospital. Human resources are crucial areas in every institution, the introduction of ERP human resource module solves some of the major challenges faced by the hospital. ERP has enabled many hr departments to work seamlessly, and the large piles of paper previously seen are no longer there. . Finance Modules Accounting helps to capture and integrate the transactions made inside the module, allowing you to see the influence in financial terms over the enterprise as a joint system. The system allows the use of measure units in accountable motions. This function permits that two users work in different entries in the same accounting package. The information of several years can be maintained online without affecting the performance. The systems could be integrated with other modules for the automatic reception of accounting entries and it allows the accounting consolidation of an unlimited number of enterprises, in an unlimited number of levels, which constitute a hierarchical pyramid that could be represented as a tree. Sales Module The module has integrated database that enable the health provider to give response to client inquiries within seconds. The module is useful in generating quotes for any product a patient wants to know about. It gives access to medical fee, consultation fee, medicine price list, orders, client information and other health care related matters. Given that all the employees access the same information, there is no case of contradicting information to client. Inventory Module The module is able to organize stock levels, this will enable the hospital to avoid supplier inconveniences while checking historical data. The inventory control employees will be relieved of the task of manual health records keeping. Their task is only to enter the medical supplies data into the system and the system runs the other entire task. Purchases Modules The purchasing employees do not need to check thousands of record to get relevant information. The system is able to give them the client’s details immediately. At the same time invoicing employees do not need to check thousands of files to collect. Invoicing and delivery process and conducted with a press of a button. The health care provider is in a position to see the clients’ status at any given stage. This makes it very easy to give the right information to a patient. The hospital is able to make accurate financial decision using ERP. The reports generated provides accurate financial position of the institution, cash flows and any other payment made; here only one report is able to show any contrast need. Conclusion While implementing an EPR system, careful planning and analysis is required. Implementation strategies differ in institutions. In this case Cromwell Hospital will adopt phase-based implementation strategy. Here, SAP ERP system will be implemented in phases; one department after the other. Cromwell Hospital was facing a lot of problems due to paper duplication, errors and delayed service; this will be solved if the hospital implements the ERP system. Bibliography Escalle C. , M. Cotteleer, and R. Austin, (1999), Enterprise Resource Planning (ERP), Report No 9-699-020, Harvard Business School, Cambridge, MA, USA,. Davenport T. (1999) Putting the Enterprise into the Enterprise system, Harvard Business School Press. http://www.erp.com Lee Jinyoul, (2001), Integration and internalization in ERP adoption and use, University of Nebraska, lincoln Leon, A., (2009), Enterprise Resource Planning, Tata McGraw-Hill, INDIA. Mc Kinsey (1998), The case for ERP systems, London Michael E. Porter. ERP a savior or slayer of enterprise competitiveness SAP, David Norton SAP (1999) Strategic Enterprise Management: Translating strategy into Actions Germany Sumner, M., (2004), Enterprise Resource Planning, Prentice Hall, Thomas H. Davenport, (1998), Putting the Enterprise into the Enterprise system, Harvard Business Review, 121-131. Thomas H. Davenport and Harris, (2000), Mission Critical - Realizing the Promise of Enterprise Systems, Harvard Business school publishing, Appendices Appendices A A list of tasks for each member S/NO Member Task 1. A Organizational background research Research on EPR implementation challenges 2. B Choice of EPR System research Report compilation 3. C Interview schedule development Research on EPR modules 4. D Correspondence management Research on ORACLE and SAP and Epicor Appendices B A list of interviews S/NO Date Location Team Members Person met. 1. April 10, 2014 Pharmacy A B Chief pharmacist Purchasing Manager 2. April 11, 2014 Administration C D B Chief nurse Hospital administrator ICT manager 3. April 14, 2014 HR and Finance A D HR Manager Finance Manager Appendices C: List of emails and correspondence with the company S/NO Date Details Nature 1. March 26, 2014 Request for a meetings Outgoing mail 2. April 6, 2014 Invitation for a meeting Incoming mail 3. April 7, 2014 Research Notification Outgoing mail 4. April 8, 2014 Research permission granted Incoming mail 5. May 2, 2014 Thank you letters Outgoing mail 6. May 3, 2014 Research findings Outgoing mail 7. May 4, 2014 Acknowledgement Incoming mail Read More