Organizational Background of PowerIT Ltd - Case Study Example

Case Study Table of Contents Case Study Table of Contents 2 Organizational Background: PowerIT Ltd. 3 Third -party modified off-the-shelf solution3 Major problems encountered during the selection and implementation phases of the project 4 Major problems encountered after implementation 5 The "Class" of this project 6 Technical and Organizational Changes: Difficult to Achieve 7 The Attributes for ERP success 7 The Three Key Project Management Areas 7 Options Available to PowerIT 8 Conclusion 9 Reference 10 Organizational Background: PowerIT Ltd. The company, Power IT, based in north England, has a workforce of around 200 people. The Organization has an annual turnover of around £40 millions. The Organization is a part of the Taiwanese based PowerIT Group, a global company having more than 40000 people on board. The Organization is an autonomous decision making company where consumers’ requirements are the major drivers that frame up the business strategy declared by the management. The company, now, wants to replace its existing system with the new one. This report talks about these changes and the employees’ receptiveness towards the same. Third -party modified off-the-shelf solution There are a number of products and approaches for acquiring systems, starting from ‘in house development’ to ‘commercial off-the-shelf’ packages. At Power IT, the chief executive officer and finance director decided to purchase an ‘Enterprise Resource Solution’ to replace the ‘Material Resource Planning (MRPII). The Organization has its own internal IT system; however, the staffs are not capable enough to develop software at a large scale. The employees lack sufficient application domain knowledge which will enable them to develop such a system within the required timescale. Therefore, the company has decided to ‘buy in’ expertise, rather than putting large scale development into risk. After evaluating the level of required knowledge within the employees, the Organization has opted for ‘3rd party modified off-the shelf solution’ system. In this system, the software expertise and the application domain expertise are quite high. As the whole software includes large and complicated application; so surely, the ‘Third party modified off the shelf solution’ system is required to enjoy higher end of expertise in software development and in application domain of the same. A ‘Modified off the shelf’ product typically refers to a product or system whose source code can be modified by the purchaser to meet the requirements of the consumers (Information Leader, “Introduction”). “Many of these products feature modifiable or modular designs which increase flexibility, facilitate rapid prototyping of proof-of-concept designs, and are easy to install to insure quick start-up” (Cyber Research, “MOTS/ROTS Products”). By minimizing the requirement to develop new products from its scratch, the Organization can save on huge information technology expenses. However, to modify the codes as per the requirements of the consumers, demands some amount of expertise in this arena. This is why the employees of the Organization are required to have a little knowledge on the arena of software development. So, the required level of ‘Local Company Knowledge’ in this ‘3rd party modified off the shelf solution’ is low. That is why the case writers assert that the "areas of relative strength" of this option rank as "High", "High", and "Low". Major problems encountered during the selection and implementation phases of the project Two Organizational issues, such as ‘Communication and Relationships’ and ‘Understanding the Business’ are really important when an Organization is selecting and implementing certain new processes. During the implementation process, the original earlier vendors were replaced by larger software house. So the close relationship between the Organization and the earlier set of vendors was lost. PowerIT found the new system difficult to deal with. The Organization was unable to re-establish the trust that existed earlier between the partners. The deterioration process was evident from the letters which were exchanged between the two parties of the senior management. The letters were exchanged with heated terms, claims and counter claims about unfulfilled commitments, unsuccessful delivery and impractical expectations. At the project level, when the Organization requested the vendors for training and consultancy, the respond was nonchalant. Whenever any issue was raised by the consultants, the response was subjected to serious delays. Such lackadaisical attitude led the staff of the PowerIT to believe that the new consultants do not have the required expertise in the ERP package. The company staffs were not getting effective advice from the consultants. As a consequence, their faith on the system and the consultants were getting adversely affected. Apart from Organizational impacts, these processes have adverse functional affects on the system. As the staff did not receive necessary training on the software, there were specific instances where the system was used improperly. A major portion of the required elementary training, such as how to log on, which functions to chose, was not in the systems. No training was given to make effective use of the system that offers a support to the existing work practices. However, investors have found that there were experts to provide the required ‘on the job’ training to the employees. So, it seemed to be an issue of confidence building rather than a problem related to the understanding of the system itself. Major problems encountered after implementation After some eighteen months from the initial acceptance of the system, it was quite apparent that the system was unable to satisfy some of the significant requirements. The system was still undergoing various modifications with the support from the suppliers. However, the Organization was experiencing unexpected budgetary effect on the Organizational budget. A number of modifications were identified, some of which are required to be provided by the vendors. The introduction of these modifications affected the scope and related costs. Ten items were identified where the system modification were required. The modification of these ten items was expected to incur a cost of amount of £1,500. Five items which were identified to have additional functionalities. The functionalities were acknowledged in the existing ERP package; however those were not ready for usage. There were three such technical problems which were identified within the system. It has been noticed that even after the implementation, there was lack of clarity among the employees regarding the business process. It was quite disappointing to notice that the employees were working with the processes and still they were not able to name the relevant processes and tasks. The "Class" of this project As per the report of the investigators, the perception that the project was a sheer failure was far from the real picture. An analysis of the current usage of the system has been compared with the expectation of the senior management regarding where and how the system would be used. It has been noticed that the expectation has been fulfilled; the project has been more extensively used than was expected by the management. The real time data usage has been compared against the original expected usage to do the required analysis. From this analysis, it is apparent that the system was used more extensively in many areas whereas in few others, the usage of this system was less than that was anticipated. There is a requirement of some system dedications. Apart from that, there are certain processes in the ERP package which are not still enabled for usage. Analyzing all these features, the project seems to belong to the class ‘B’. The characteristic of these kinds of projects is that they have some informal and non-integrated systems. Most of the data are complete and accurate. However, the management team was not fully using the enterprise resource planning system. As a consequence, the organization was gaining partial benefits from the enterprise resource planning. Technical and Organizational Changes: Difficult to Achieve Organizational changes are more difficult to achieve as compared to the technological changes. PowerIT can incorporate the technological changes; however, the success cannot be achieved if the company does not align its resources along with the technological changes. “Managers can no longer be successful if they are unaware of the need for adaptation and unable to bring about changes in their organizations and their method of management” (Bharijoo, “Organizational Change: An Emerging Need for Survival and Success”). Organizational changes demand a considerable amount of change in the attitude and values of the people within the organization, which is quite tough to achieve. As long as the company is not able to instill confidence in their employees regarding the technological changes, the company cannot taste success in its arena. The Attributes for ERP success It has been mentioned in the case that people factor can influence the efficiency and eventually the success of the ERP system. However, people in the company were not much happy with the ERP implementation process. They had certain issues regarding the delayed service of the vendors. The employees lacked the required training; as a consequence, they were unable to make use of the system appropriately. The employees were not confident enough as they did not know when and how to use the ERP processes. So, it seems that in the implementation of ERP system, the human factors were somewhat neglected. In the investors’ report, they have reported that each and every department has experts on the required ERP processes; still the company failed to inject the required confidence within the employees. The Three Key Project Management Areas The following are the three process management areas. Identification of Need for Project Develop Invitation to Tender, Shortlist Potential Vendors & Choose Vendor’s System. Produce Detailed Specification and Roll Out System In the first level of initialization of the system, the company has introduced ‘Business Development Manager’ within the system. However, the introduction has created conflicts between the new business development manager and other managers. At the second stage the business development manager has identified the potential stakeholders and has arranged meetings to gather the initial requirements. Three product vendors were selected and were invited to give detailed presentation on the product. However, only one of them presented the product details taking reference from the PowerIT environment. In the last stage, the system was rolled on; however, some difficulties were found within the system. Despite the existing problems, the investigators have reported the system to be a success as it was able to surpass the expectations of the senior management of PowerIT. Options Available to PowerIT Three options are available to the PowerIT: re-implementation and modification; upgrade; or scrap and replace. PowerIT is required to opt for the first option. The investors’ report has revealed that the system was not a failure; however the business processes were not aligned with the system. Apart from that, there had been certain systems which required training for the employees. So, re-implementation of the ERP package along with modification of the business processes can solve the issues for PowerIT. Conclusion There are difficulties which can be encountered by the company while Implementing ERP system with the existing business processes. However, before implementation of the new package, the organization must align with its business process, human resource and other significant resources according to the new system. An appropriate use of the resources can bring in success for the company. Reference Bharijoo, B. S. Organizational Change: An Emerging Need for Survival and Success. 2005. The Journal of Nepalese Business Studies. October 08, 2010. < http://www.nepjol.info/index.php/JNBS/article/viewFile/58/487>. Cyber Research. MOTS/ROTS Products. 2010. COTS (Commercial Off-the-Shelf Technology). October 08, 2010. . Information Leader. Introduction. No Date. Off-the-Shelf vs. Custom Designed Software. October 08, 2010. < http://www.informationleader.com/Web/LinkClick.aspx?fileticket=9osDXVZc85k%3D&tabid=91 >. Read More