Issues Posed to ERP Implementation Projects in Public Sector Organizations - Essay Example

Issues Posed to ERP (Enterprise Resource Planning) Implementation Projects in Public Sector Organizations Name Institutional Affiliation Abstract Enterprise resource planning popularly known by the acronym ERP is a business management software. It provides organizations with immense benefits such as real time management of processes and integration of all business facets in a single platform whereby communication is made easy and timely. The 21st century has experienced a rapid rise In usage of ERP software in public organizations. While this scenario is synonymous with developed countries, developing countries are slowly catching up. Developing countries are experiencing burgeoning economies; hence, they are increasingly becoming business targets for ERP vendors. Due to the lack of technological skills, economic and cultural challenges in these countries, there is an urgent need for understanding issues about ERP systems especially in the public sector. Moreover, there is a need for the public organization in developing countries to understand that ERP implementation influences the whole organization implementing. For example, the performance of roles by all the people in the organization is affected, as well as their organizational culture. ERP implementation thus presents a myriad of challenges to public organizations. How these hurdles are tackled defines the success or failure of the implementation process. This study investigates technological challenges that face public organizations in their bid to adopt ERP systems and integrate their organizational performances. This study provides insight into the implementation procedure and the usage of ERP software in public organizations. Moreover, it provides the public organizations' management with a better understanding of key obstacles they may expect to face in their ERP implementation process and recommendations for achieving successful ERP implementation. Keywords: Enterprise resource planning, public organizations, implementation, technology Issues Posed to ERP (Enterprise Resource Planning) Implementation Projects in Public Sector Organizations Introduction The business environment is dynamic. Public organizations are constantly facing increased competition from the private sector. Besides, public institutions have the challenge of expanding their markets and meeting the ever-changing customer expectations. Moreover, there is an increased management pressure to lower costs in the procurement process, reduce time for business transactions, reduce inventory costs, and diversify on the organization's products to meet various clients’ needs, increase reliability, improve the quality of service delivery and coordinate various business processes smoothly (Kumar, Maheshwari & Kumar, 2003). As private sector adopts advanced competitive strategies, so must public organizations. In addition, public organizations must share what was previously thought to be confidential information with their stakeholders such as suppliers and customers. With all these in place, public organizations must also upgrade their systems to generate and pass information that is accurate and timely. Public organizations are accomplishing these objectives by adopting enterprise resource planning (ERP) management systems (Duplaga & Astani, 2003). ERP software applications enable public organizations to integrate the flow of information and business operations. The existence of many departments characterizes public organizations. As such, ERP management software aids different department by providing a single database platform where information is collected and stored in real time (Mandal & Gunasekaran, 2003). Successful implementation of the ERP software enhances public organizations reduce the time wasted in tracking business processes, increase performance of business transactions, enhance sound financial management, provide a good foundation for adoption of electronic commerce and make implicit information explicit. Due to the benefits reaped after implementing ERP systems, many public organizations are ready to transform from their old management versions into ERP management systems. Old management systems are specific in their functioning. Information in such systems is found in many computer systems, thereby increasing costs both direct and indirect. Examples of direct costs include maintenance of different systems and entering the same data over different systems. Indirect costs consist of costs suffered because of communication breakdown. Such costs are incurred when different facets of the public organizations such as the sales, accounting and procurement cannot communicate (Markus, Tanis & Fenema, 2000). Evolution of Management Software Towards ERP The evolution of management software dates back in the 1960s when manufacturing companies were more oriented in controlling inventory levels. By then, companies kept idle inventory to manage unpredictable customer demands and remain competitive. Most management software that was, therefore, developed was tailor made to handle inventory. By the next decade, companies could no longer afford the costs of maintaining large amounts of idle stock. This prompted the introduction of materials requirement planning (MRP) management systems. MRP systems proved to be a huge breakthrough in managing inventory. Through these systems, it was easier to identify the exact materials required to produce an item (Chang et al., 2000). The system also enabled accurate inventory management as the available materials and on those expected by an organization could be used to determine accurately materials requirements. With MRP, activities such as order placement, order cancellation and time modification of existing orders was made possible. This system proved advantageous in managing priorities in a dynamic manufacturing environment consequently leading to increased quality production. Capacity planning was another hindrance in manufacturing, which necessitated the integration of capacity planning in the MRP systems. Tools were, therefore, developed to enhance sales, operations, production, as well as forecasting and demand management. This development led to the invention of a closed MRP. With technological advancements, the management of inventory was integrated with financial activities. This integration led to the development of manufacturing resource planning (MRP II). MRP II enabled companies to translate material and capacity requirements into the financial information, allowing redress into those items that did not meet the company’s financial expectations. By 1990s, MRP II was further advanced to incorporate all needs of a company such as product design, warehousing, finance, human resource and project management. From this development, ERP found its way. The best thing about ERP was its universality. It could not only be used by manufacturing companies, but also could be used by other organizations that wanted to gain competitive advantage over their rivals by effective information asset management (Chen, Law & Yang, 2009). ERP Pitfalls Besides the numerous advantages presented by ERP systems, its implementation is often flawed (Singla, 2008). Several factors have to be considered before implementing the ERP systems. According to past researches, it is evident that it is important to study the demographic aspects of a public organization before the implementation process. Demographic analysis enhances the assessment of employees’ attitudes toward the systems implementation. It has been found out that, a public organization with a relatively large number of new employees is easier to adopt new technological changes than organizations characterized by high levels of older employees. Organizations with large numbers of older employees need to be innovative in finding ways that can change attitudes associated with previous technological systems (Liang & Xue, 2004). It is also evident that through studying the demographic aspects of the employees, it is easier for organizations to convince top managers about the benefits of adopting ERP systems in the organizations than it is to convince the operational level staff. It is therefore conclusive to say that organizations which have cultivated an environment that allows trust and collaboration experience efficient implementation process as compared to organizations that have adversarial relationships between top management and lower level employees (Bingi, Sharma &Godla, 1999). Secondly, urgency in the implementation process of ERP may not provide sufficient time to enable all employees to learn about the new systems and acknowledge its benefits. If such concerns are not addressed in time, they can lead to dissatisfaction among employees; hence, enough time should be allowed for employees to adapt well and appreciate change (Shah et al., 2011). Thirdly, such changes in technology are met with resistance to change. What ERP consultants call a rational approach cannot necessarily overcome resistance to change. Resistance to change comes in twofold. One, some employees may find it disadvantageous to use new systems than benefits that old systems provided. Two, the older employees may resist change due to preserve the legacy they have for the older systems. Though training and convincing that is done before implementation is necessary, it is not fully effective in eliminating employees stubbornness. In such case, pubic organizations need to adopt other mechanisms of wooing their employees to accept the new technological change such as reward systems and changing roles and duties of the employees (Hong & Kim, 2002). Factors to Consider for Success in ERP Implementation Various researchers have identified critical factors to consider for successful implementation of ERP systems. The most common factors are: Clarity of Organizational Goals For successful ERP implementation, the management must come up with clear and convincing objectives of how the organization will operate. Goals and deliverables must be made clear. The management must also explain the reasons for changing the management systems and the benefits that come with such change (Beatty &Williams, 2006). Dedication by the Top Management For any successful change to take place, it must be accompanied by strong control, dedication and involvement from the top management. The top management's input in the process of implementing new technology is important. Therefore, a project committee to oversee budgeting and planning of time requirements should spearhead such implementation of ERP systems (Bhatti, 2003). Pre-implementation Training The committee spearheading the implementation of new technology should carry out extensive training and education to other employees to eliminate cases of resistance (Beheshti, 2006). Evaluation Once the system is implemented, assessments must be carried to determine the changes that have taken place. Loopholes are determined at this stage and are addressed well to achieve organizational objectives. Ethical Considerations in Implementing ERP ERP systems are valuable in assisting public organizations comply with international standards of organizations (ISO) 26000. ERP enables employment of best managerial practices through standardization and centralization of information. This in turn helps in good reporting, investigation and elimination of fraud. These systems are also beneficial in preserving labor laws and protecting the rights of employees (Ehie & Madsen, 2005). Recommendations According to the researchers’ review of ERP implementation literature, four critical factors for successful implementation of ERP are recommendable. These include top management loyalty, pre-implementation education, and clarification of objectives by the top management, and continuous review of the implemented systems. List of References Beatty, R.C. & Williams, C.D., 2006. ERP II: Best Practices for Successfully Implementing An ERP Upgrade. Communications of the ACM, 49(3), p.105-109. Available at: http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=20181575&site=ehost-live. Beheshti , H.M., 2006. What managers should know about ERP/ERP II. Management Research News, 29(4), p.184-193. Bhatti, T.R., 2003. Critical success factors for the implementation of enterprise resource planning ( ERP ): Empirical validation. The Second International Conference on Innovation in Information Technology (IIT’05), p.1-10. Available at: https://blog.associatie.kuleuven.be/kwintenjoly/files/2010/05/ERP_implementation_succes_factors.pdf Bingi, P., Sharma, M.K. & Godla, J.K., 1999. Critical issues affecting an ERP implementation. Information systems management, 16(3), p.7–14. Available at: http://www.tandfonline.com/doi/abs/10.1201/1078/43197.16.3.19990601/31310.2. Chang, S. et al., 2000. A Delphi examination of public sector ERP implementation issues. Proceedings of the twenty …, p.494-500. Available at: http://dl.acm.org/citation.cfm?id=359793. Chen, C.C., Law, C. & Yang, S.C., 2009. Managing ERP Implementation Failure: A Project Management Perspective. IEEE Transactions on Engineering Management, 56(1). Duplaga, E.A. & Astani, M., 2003. Implementing ERP in Manufacturing. Information Systems Management, 20(3), p.68-75. Ehie, I. & Madsen, M., 2005. Identifying critical issues in enterprise resource planning (ERP) implementation. Computers in Industry, 56(6), p.545-557. Available at: http://linkinghub.elsevier.com/retrieve/pii/S0166361505000709. Hong, K.K. & Kim, Y.G., 2002. The critical success factors for ERP implementation: An organizational fit perspective. Information and Management, 40(1), p.25-40. Kumar, V., Maheshwari, B. & Kumar, U., 2003. An investigation of critical management issues in ERP implementation: Emperical evidence from Canadian organizations. Technovation, 23(10), p.793-807. Liang, H. & Xue, Y., 2004. Coping with ERP-related contextual issues in SMEs: A vendorʼs perspective. Journal of Strategic Information Systems, 13(4 SPEC. ISS.), p.399-415. Mandal, P. & Gunasekaran, A., 2003. Issues in implementing ERP: A case study. European Journal of Operational Research, 146(2), p.274-283. Markus, M.L., Tanis, C. & Fenema, P.C. van, 2000. Enterprise resource planning: multisite ERP implementations. Communications of the ACM, 43(4), p.42-46. Singla, A.R., 2008. Impact of Erp Systems on Small and Mid-Sized Public Sector Enterprises. Journal of Theoretical and Applied Information Technology, 4(2), p.119- 131. Available at: www.jatit.org. Shah, S.I.H. et al., 2011. Exploring the Impediments of Successful ERP Implementation: A Case Study in a Public Organization. International Journal of Business and Social Science (IJBSSNET), 2(22), p.289-296. Available at: http://www.ijbssnet.com/journals/Vol_2_No_22_December_2011/33.pdf. Read More