Implementation of Enterprise Resource Planning at NIBCO - Case Study Example

Analysis Implementation of EPR at NIBCO Name Date Course Implementation of EPR at NIBCO Introduction Enterprise Resource Planning is business software that plays an essential role in improving the productivity of an organization. This is through the collection, storage, management and interpretation of the business data. Enterprise Resource Planning plays an important role in ensuring that an integrated view of the business practices is put in place. The process of sharing data within different departments is usually enhanced through the use of Enterprise Resource Planning. This has the potential of impacting positively on the management and control of activities with an organization. The software that is usually use during the process varies due to the availability of different vendors in the market. The system is important to an organization as it also facilitates error free transactions when carrying out different business operations (Dezdar& Ainin, 2011). It is also important to note that the process of production to distribution is enhanced through the use of the system. NIBCO is one of the companies that implement a SAP ERP for the purpose of ensuring that it improves on its performance. The implementation process required both the human as well as financial resources. The company was able to successfully implement the system due to the effective implementation strategy that it adopted. On the other hand, the election of the vendor was carried out carefully. Different teams were put in place for the purposes of aiding the implementation process. The paper thus discusses the implementation of the system at NIBCO with a view of advising OCBIN which is a competitor of the company. Objectives of adopting an ERP system NIBCO is a mid sized manufacturing company that generates an annual revenue of a bout $460 million. The company was engaged Boston Consulting group with regards to its operations. The company then decided to cut loose its existing legacy system and replace it with a common integrated system. SAP ERP was identified for the purposes of replacing the existing system of the company. The company was information poor and it required an efficient system that will improve on the information system of the company. One of the main objectives of adopting the system was to improve on the integrated information capability of the company. The system was also for the purposes of developing a common system with a common communication across the enterprise of the company. The new system was also for the purposes of improving on different operations within the company through the use of an information system. On the other hand, the company also intended to link all its operations in one system for the purposes of ensuring that it can be controlled effectively. There was a lot of dissatisfaction with the functionality of the legacy system with the company. The problem was associated with the data handling process and hence the need for making changes on the system of the company. This had a negative impact on the operations of the company and hence the need for managing changes to the system. Errors within the system have a negative impact on the operations as it may affect the entire operations of the company leading to losses (Velcu, 2010). The use of the ERP system was los for the purposes of increasing efficiency within the company. Linking the operations of the different plants of the company was also an important for the purposes of improving on the ability of the company to monitor its operations effectively. The company also intended to use the new technology that was in the market at the time in order to improve on its operations. It is important to note that the technological changes may render a certain system less relevant as it may be unable to meet some of the demands of the company. The staff members of the company also had to spend a lot of time building customer interface between the systems in order to resolve disconnect problems. It was therefore important to put in place a new system that would solve the problem facing the company. The company was also using different systems for the purposes of carrying out its functions. The company therefore intended to put in place a single system that will run all the operations of the company. Implementation Strategies The company had been advised by the consultant to implement the system on a step by step basis for a period of 3 to 5 years. However, the company did not heed the advice and instead chose to implement the system for a period of 15 months at a cost of $17 million. A cross functional team was put in place for the purposes of ensuring that the implementation plan is successful. The consulting group was also involved in assisting the company to identify the most appropriate system. The SAP R/3 was purchased after it was recommended by the executive team. The company found it necessary to put in place teams that were involved in different aspects of the implementation process. A project team was also put in place and it was named TIGER which stands for Total information generating exceptional results. The team had experts from different departments within the organization. The different teams had different responsibilities but they operated with close consultations with each other. On the other hand, the teams were mainly composed of the employees and experienced managers. The company was fully committed to the success of the system and hence the dedication of the team members. A timeframe for the activities to be carried out was put in place for guiding the different teams. Some of the daily activities of the company had to be put on hold in order to allow the employees to focus on the implementation process. The success of implementing an ERP System is dependant on the level of cooperation among the team members and availability of a proper framework and resource (Al-Mashari, et al, 2010). The system was implemented without much customization for the purposes of ensuring that it reflects the needs of the organization and it is not similar to the existing system. Tactical teams were also formed for the purposes of ensuring that it deals with risks associated with the implementation process. Risks and uncertainties are usually common during the project implementation and it may lead to losses for the company incase of lack of preparedness. Master data teams were formed for the purposes of carrying out the data cleanup process. A customization team was also put in place for the purposes of determining the customermization needs at the different plants of the company. This is considering that the level of customization in the company was low. An implementation infrastructure team was also put in place during the implementation process. The main function of the team was to respond to the outstanding hardware issues. The team was also responsible for the transition from the plan transition to the new system. A help-desk was also put in place for the purposes of developing post-live support. The help desk was also useful in ensuring that the different teams were linked together. The problems solving process was also simplified due to the presence of the help-desk. The response of the teams to problems was also fast which played an important role in ensuring that the teams were successful during the implementation process. Some senior members of the management of the company were also involved in every single step during the implementation process. Vendor selection Vendor selection is an important process during the implementation of the ERP as different vendors are available in the market (HassabElnaby, et al, 2012). Different firms were considered during the process but the company came up with a final list of two companies which involved SAP, IBM and Capo Gemini. The vendors would also form a partnership with the company for the purposes of ensuring that the implementation process is successful. SAP was selected as it had not worked with the company before and its products were of high quality. IBM was also selected as a partner for the implementation of the R/3 software of the company. However, it is also important to note that some of the personnel from IBM did not believe that the project will be successful considering that the company intended to complete the project within a short period of time as opposed to the step by step process that would have taken much longer. The team from IBM was required to work with the various teams that had been put in place by the company for the purposes of ensuring that the project is successful. A contact with SAP was signed by the company in August 1996. Knowledge Transfer Knowledge transfer is an important aspect in the implementation of an ERP (Gallagher, et al, 2012). This is because it enables the employees to fully understand how to operate the system after it ha been put in place. A part from IBM, six functional consultants were required to work with the company throughout the process. Consultants with ABAP were also involved during the projected whenever they were needed. Their main function was to carry out training and development in order to facilitate the knowledge transfer process. The consultants had a lot of expertise with regards to the use of the system and hence their ability to train the employees to fully understand the concepts and operations of the system. It is also important to note that none of the employees or members of the management team had ever heard about ERP or SAP. The change management team that had been put in place also had no knowledge of ERP or SAP and hence the importance of training and development. The knowledge transfer was also part of the contract for the associates that were working with the company during the implementation process. The knowledge transfer played an important role in ensuring that the employees were knowledgeable by the Go live date. Critical Success Factors The success of the plan was due to various factors that impacted positively on all the aspects of the project. The TIGER team that was put in place was well organized and this played an important role in ensuring that different tasks were accomplished successfully. Finance and controlling team was also put in place for the purposes of ensuring that the funds are well spend. This played an important role in ensuring that the project was within the budget. High level members of the management were also involved in the implementation process and hence contributing to its success. The company was fully committed to the project and it had to put on hold some of its operations and hence contributing to its success. Personnel with more than twenty years of experience were also involved in the process of implementing the system and hence contributing to its success. A technical team with 6 Information Systems specialists was in place for the purposes of dealing with all the technical issues and was also involved in training and development. An internal communication plan was also put in place for handling the challenges with regards to the project. It is also important to note that the company was successful due to the determination of the team members and management staff members. Partnership with companies like IBM also played an important role in contributing to the success of the company. Organizational Commitment The level of organizational commitment was also high throughout the project. The organization committed a lot of funds for the purposes of implementing the project. The company allocated $ 17 million for the project which is an indication that it was fully committed to the success of the project. The Chief Financial officer of the company was involved in the project together with 8 other director level managers. This was an indication that the management of the company was in full support of the project. It is important to note that the organization also had to put on hold some of its activities in order to focus on the project and hence an indication that it was fully committed to the projects. On the other hand, it is also important to note that the company involved high profile organizations during the implementation process. This is also a n indication that the organization was fully committed to the project. The organization provided a laptop to every team member for the purposes of enabling them to continue working towards the success of the project at any location and at any time. The high level of organizational commitment therefore played an important role in contributing to the success of the project. Recommendations It is recommended that OCBIN should learn from the success of NIBCO during the implementation of an ERP. NIBCO should ensure that it allocates adequate funds to the project and a team should also be put in place for the purposes of monitoring the use of the funds. On the other hand, it is recommended that company should carry out extensive consultations by engaging consultancy firms in the field of ERP Systems. This is for the purposes of ensuring that adequate information is obtained with regards to the system. Experts should also be involved in all the processes for the purposes of ensuring that any issues or problems are solved immediately. When selecting a vendor, it is recommended that the company should ensure that it is aware of its needs. Highly qualified vendors who are known for producing quality software should be considered during the process. It is also important to note that the organization should be fully committed to the process. This will play an important role in ensuring that all the efforts are devoted towards the success of the project. Teams with qualified members should also be put in place for the purposes of carrying out different activities during the project. A master plan should also be developed for the purposes of implementing the plan. It is recommended that the company should also provide adequate resources to the teams working in the project. Conclusion In conclusion, it is evident that the adoption of the ERP system was implemented successfully due to the measures that were put in place. It is evident that NIBCO intended to increase the efficiency of its operations and hence the adoption of the system. A high level of commitment by the company impacted positively on the implementation of the project. A profile members if staff were involved in the projects and hence its success. Partnership with other organizations was also carried out and hence contributing to the success of the organization. The consultations between different teams also played an essential role in ensuring that the implementation was successful. List of References Dezdar, S, & Ainin, S, 2011, The influence of organizational factors on successful ERP implementation, Management Decision, 49(6), 911-926. Velcu, O, 2010, Strategic alignment of ERP implementation stages: An empirical investigation, Information & Management, 47(3), 158-166. Al-Mashari, M, et al, 2010, ERP implementation: An integrative methodology, In I3E 01 Proceedings of the IFIP Conference on Towards The E-Society: E-Commerce, E-Business and E-Government. HassabElnaby, H, et al, 2012, The impact of ERP implementation on organizational capabilities and firm performance, Benchmarking: An International Journal, 19(4/5), 618-633. Gallagher, K, et al, 2012, The negotiation and selection of horizontal mechanisms to support post-implementation ERP organizations, Information Technology & People, 25(1), 4-30. Read More