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1.c Introductionc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c*c
2.c The reasons behind why ERP implementation would failc)))))))))))))))))))))))))))))))))))))c'c
a.c Poor leadership and participation from managementc))))))))))))))))))))))))))))))))))))))))))))))c'c
b.c Extra sophisticated customizationc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c'c
c.c Unrealistic expectationsc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c'c

c Poor training and educationc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c+c
e.c Improper ERP package selectionc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c+c
f.c Lack of consultants experiencec)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c+c
g.c ERP is viewed as IT projectc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c+c
h.c Poor project managementc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c+c
i.c Poor quality of business process re-engineering BPRc)))))))))))))))))))))))))))))))))))))))))))))c,c
j.c Users¶ resistance to changec))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c,c
k.c Data accuracy and consistencyc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c,c
l.c Poor IT infrastructurec)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c-c
Ñ.c Risk Managementc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c-c
ow to evaluate and control the risks you facec)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c-c
ow to use the toolc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c.c
Managing risksc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c/c
_.c Key Success factors))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c/c
a.c Top management supportc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c/c
b.c Business process re-engineeringc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
c.c Excellent project management techniques are usedc)))))))))))))))))))))))))))))))))))))))))))))))c
d.c End users involvementc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
e.c Extensive education and training providedc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
f.c Suitable ERP package selectionc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
g.c Clear objectives and strategic goalsc))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
h.c Change managementc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))c
[.c Conclusionc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))*c
Referencesc)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))'c

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1. Introduction

The ERP (enterprise resources planning) systems are new kin


of
information management systems that promise ultimate integration
between financials, operations human resources, customer service an
all

epartments within organization This kin
of integration helps
organizations to perform its business processes in more effective way an

consequently it will help organizations to improve its profitability


In or
er to
eploy your organization with ERP system you have to select
the suitable ERP package that best suits your organization¶s requirements
because as far as ERP system can be your future competitive a
vantage
towar
s your competitors it can also be the
ecision that will lea
you to
bankruptcy (Bulkelery, 1996; Davenport, 1998; Markus et al , 2000)

Owens Corning claims ERP software helpe


it save $50 million in
logistics, materials management, an
sourcing It also le
to inventory
re
uctions because material planners ha
access to more up-to-
ate an

accurate
ata that improve
the company's ability to track an
control
system-wi
e inventory an
forecast future
eman
At the same time
Whirlpool experience
major setbacks with its ERP system, which was
implemente
to improve the shipping an
invoicing processes within the
company
Essential steps such as risk assessment benefit analysis, performance
objectives, an
cash flows are typically
iscar
e
In their place,
expen
itures are ma
e base
on naïve assumptions that the computer will
magically transform a company into a paragon of efficiency This
misgui
e
approach sets up a sequence of events that often lea
s to a
failure of objectives The resulting conclusion is that the ERP software was
a ba
investment
ecision

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2. The reasons behind why ERP implementation would fail

In a recent survey, information technology managers i


entifie
three primary
reasons for the failure of all IT-relate
projects: poor planning or poor
management (cite
by 77 percent), change in business goals
uring the project
(75 percent), an
lack of business management support (73 percent) Since ERP
is an IT-relate
project, the above are vali
reasons for explaining ERP
implementation failures (Industrial management pub. 1 Jan 2002).

a. Poor leadership and participation from management


The commitment of lea
ership in the ERP implementation is very
important because ERP implementation will encounter a major changes in
the business processes so without the top management commitment,
setting goals an
objectives an
take
ecisions about changing some
business processes the ERP implementation will lack the captain

b. Extra sophisticated customization


Because the nature of ERP that it changes the way of
oing business
BPR (business process reengineering) many companies are reluctant to
any changes an
resist any change in their business , these unnecessary
requirements requires a very sophisticate
customization in the ERP
systems an
cancels the best practices that the ERP is
esigne
for

c. Unrealistic expectations
Many companies assumes that their ERP systems will turn aroun
the
business an
the pro
uctivity will be booste
up , but in reality the
organizations are expecte
to have some
isruptions in its business for a
while , then the benefits of the ERP will be increase gra
ually

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Poor training and education
The training phase in any ERP implementation is very important because
the en
users are in face to face with their future system; if this phase is
poorly manage
an

elivere
its circumstances will be reflecte
on the
en
users an
their ability to interact with the ERP system an
taking the
maximum benefit from it

e. Improper ERP package selection


Not selecting the suitable package can mismatch between the
organization¶s objectives an
the software , the organization has to
choose the suitable package that best suits the organization¶s
requirements an
to avoi
the future mismatch between the selecte

package an
the organization

f. Lack of consultants experience


The team that implements the ERP shoul
be capable of analyzing an

un
erstan
ing the organization¶s business an
put out the suitable
solutions that best fit with the organization Lack of experience or inability
to un
erstan
the organization¶s current business can lea
inapplicable
ERP solutions

g. ERP is viewed as IT project


If the ERP project is viewe
as just an IT project it will lack of contribution
from the key personnel in the business areas an
thus, the
implementation will lack of re-engineering an
a

ing more solutions to


the organization

h. Poor project management


Limite
ERP knowle
ge, capability an
poor project management skills, ,
especially in managing consultants, an
reporting implementation
problems to top management whenever necessary are reasons for

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exercising ineffective project management of ERP implementation The
failure to plan, lea
, manage an
monitor the project is a core factor that
results implementation failure, because the ERP system is complex, an

project teams are require


to collaborate with top management,
ifferent

epartments, users an
consultants
uring implementation process

i. Poor quality of business process re-engineering BPR


The lack of clear vision of why or how to con
uct BPR, consultants woul

provi
e
unprofessional a
vice for con
ucting BPR These a
vices woul

inclu
e lots of workaroun
s to resolve problems associate
with business
process mismatch

j. Users¶ resistance to change


The lack of knowle
ge of ERP systems an
a stan
ar
ize
business
processes can lea
the users to resist the implementation an
refuse to
participate in BPR an
give full information to the consultants The
workloa
s of the users
uring the implementation can also lea
them to
resist because they have no time to
iscuss with the consultants about the
ERP an
the analysis of their business

k. Data accuracy and consistency


The
ata provi
e

uring the implementation is very important because
the ERP is built upon it Because many organizations
on¶t have a
stan
ar
ize
set of
ata across the organization many ERP
implementations suffers from the lack of inaccurate
ata or the
ata is
re
un
ant across the organization

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l. Poor IT infrastructure
In or
er to cut implementation costs or insufficient resources a poor IT
infrastructure may be use
lea
ing to a slow an
a ba
performance of the
ERP system

Ñ. Risk Management

cTo minimize the risk of the ERP project, the application of a risk management
plan at
ifferent ERP implementation project stages is recommen
e
; selection,
implementation, an
usage A planne
an
systematically a
opte
risk
management proce
ure throughout the ERP project re
uces the possibility to
risks occurring Consequently, major mistakes are ma
e in the early stages of
the ERP project, even prior to the implementation process the efficiency of risk
management when it is intro
uce
at the earliest possible opportunity in the life
cycle of the system in question, when planning issues are most important an

the criteria for system selection are


etermine
Instea
of using rea
y-ma
e risk
lists, a company might consi
er i
entifying their own, company-specific ERP
implementation risk list These risks coul
be complemente
by common risk
lists The risk assessment process contains risk i
entification, risk analysis, an

risk prioritization Risk i


entification pro
uces lists of project-specific risk items
that are likely to compromise a project¶s success Risk analysis assesses the
loss in probability an
magnitu
e for each i
entifie
risk item Risk prioritization
pro
uces a ranke
or
ering of risk items that are i
entifie
an
analyze
To be
effective a risk assessment metho
shoul
consi
er several potential aspects
(technology, market, financial, operational, organizational, an
business) an
link
them to the project life cycle, stated in ³Risk Management in ERP Project in the
Context of SMEs Päivi Iskanius, Engineering Letters, 17:4, 2009* c

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Risk Analysis is a formal framework that helps you to assess the risks that you or
your organization faces A goo
risk analysis will help you to
eci
e what actions

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to take to minimize
isruptions to your plans It will also help you to
eci
e
whether the strategies you coul
use to control risk are cost-effective

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ere we
efine risk as ³the perceive
extent of possible loss´ Different people
will have
ifferent views of the impact of a particular risk: What may be a small
risk for one person may
estroy the livelihoo
of someone else One way of
putting figures to risk is to calculate a value for it as:
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This allows you to compare risks objectively
Accor
ing to [M Sumner, ³Risk Factors in Enterprise-Wide/ERP Projects´
Journal of Information Technology, Vol 15, 2000, pp.317-327] risk factors in ERP
projects.

Risk category Risk factor


Organizational fit Failure to re
esign business process
Failure to follow an enterprise-wi
e
esign, which supports

ata integration
Skill mix Insufficient training an
re-skilling
Insufficient internal expertise
Lack of business analysts with business an
technology
knowle
ge
Failure to mix internal an
external expertise effectively
Lack of ability to recruit an
retain qualifie
ERP systems

evelopers
Management Lack of senior management support
structure an
Lack of proper management control structure
strategy Lack of a champion
Ineffective communications
Software systems Failure to a
here to stan
ar
ize
specifications which the

esign software supports


Lack of integration
User involvement Insufficient training of en
-users
an
training Ineffective communications
Lack of full-time commitment of customers to project
management an
project activities
Lack of sensitivity to user resistance
Failure to emphasize reporting
Technology Inability to avoi
technological bottlenecks
planning/integration Attempting to buil
bri
ges to legacy applications

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´ou are still free to
efine your own risks that are more likely to occur in your
organization
epen
ing on the surroun
ing circumstances an
the current
situation you are facing in your ERP implementation

Ä

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Once you have prioritize
your own risks that may affect your ERP
implementation you have to plan how to manage these risks an
minimize them
risks coul
be manage
through
ifferent ways like:
O Implement specific programs that eliminate a specific risk e g Change
management
O Increase resources in a specific area
O Develop an
follow up action plans to overcome specific risks

_. Key Success factors


The ERP implementation is simply an IT project but it is a functional
strategy that turns over the business of an organization this function
strategy is achieve
through implementing some kin
of information
management systems ³ERP´ so this strategy or implementation
on¶t;
require only IT oriente
people or just a separate
epartment that is
responsible for implementing a strategy but the ERP implementation
requires full involvement of all organization¶s
epartment an
action plans
that support the whole organization to change the way performs its
business
Several factors have been i
entifie
as a key success factors for ERP
implementations, these factors are i
entifie
base
on
ifferent
researches performe
in
ifferent organizations in
ifferent countries

a. Top management support


The role of the top management is consi
ere
one of the most
important factors because the way the top management will act
towar
s the ERP implementation will affect the whole project they

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have to un
erstan
what the ERP will provi
e to the organization,
they have to financially support the project to achieve its objectives
an
their authorities to change current business processes to
support the ERP system
b. Business process re-engineering
The business processes shoul
have the a
equate time to be
analyze
an
mo
ele
not to be viewe
as just installation of IT
software because the goo
un
erstan
ing of business process will
have a significant effect on the BPR an
will help on selecting the
best solutions an
provi
e an a

e
value to the organization

c. Excellent project management techniques are used


The implementation teams shoul
be professionally coache
, the
project objectives must me clearly state
an
reviewe
, accurate
an
professional sche
uling shoul
be
evelope
, action plans
an
efficient use of resources , high level of communication
channels between team members, top management an
en
users
shoul
be fully manage
an

evelope

d. End users involvement


I see en
users involvement is very important because it will help in
better
eveloping BPR an
un
erstan
ing the small problems that
frequently occur in business

e. Extensive education and training provided


E
ucation is arguably the most important an
wi
ely recognize

critical success factor because user un


erstan
ing an
buy-in are
essential A successful implementation requires a critical mass of
knowle
ge to enable people to solve problems within the
framework of the system This critical mass of knowle
ge inclu
es
general e
ucation about the ERP system for everyone ² from top

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management
own to the en
users ² before the implementation
begins It inclu
es a massive amount of en
user training before
an

uring implementation as well as follow-up training after the
implementation

To make en
user training successful, the training shoul
start
early, i
eally before the implementation begins Executives often

ramatically un
erestimate the training costs necessary for a
successful ERP implementation Top management must be
prepare
to spen
a significant amount of money on this training
an
incorporate it as part of the formal ERP bu
get because the full
benefits of ERP cannot be realize
until en
users are using the
new system properly If the employees
o not un
erstan
how a
system works, they will simply invent their own processes using
those parts of the system they know how to manipulate It has been
suggeste
that reserving 10 percent to 15 percent of the total ERP
implementation bu
get for training will give an organization an 80
percent chance of a successful implementation

All too often, top management expects employees to be able to use


the new ERP system effectively with only the e
ucation an
training
receive
before an

uring the implementation ´et, much of the
learning process comes from han
s-on use un
er normal operating
con
itions after the implementation perio
is over Thus, there is an
ongoing nee
for a
esignate
in
ivi
ual, preferably the
implementation team lea
er, to keep in contact with all system
users an
monitor the use of the new system

Perio
ic meetings of system users shoul
be convene
to help
i
entify problems with the system an
to encourage the exchange
of information gaine
through experience an
increase
familiarity
with the system As problem areas are i
entifie
, post-

c
c
implementation training shoul
be imme
iately provi
e
´c c
 
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f. Suitable ERP package selection

The choice of the suitable package is very important because the



ecision of implementing ERP
oesn¶t mean that the organization will
buy a new IT software but the
ecision involves achieving a specific
objectives The ERP packages may
iffer from pro
uct to another, the
organization has to review all the possible choices of packages an

select on the basis of the suitability an


most conformance with the
organization¶s business an
objectives taking into account the cost
benefit analysis

g. Clear objectives and strategic goals

The ERP implementation must has a strategic objective to achieve


an
these objectives must be communicate
to the whole
implementation teams, these objectives can be for example
³achieving competitive a
vantage over competitors through
implementing the ERP systems which will enhance the supply
chain management in the organization´

h. Change management

The top management an


the implementing team have to i
entify
the points of resistance an

evelop a counter change
management plans that can overcome the resistance that will occur

uring the implementation, a specific teams must be forme
to work
on the change management programs an
follow its achievement
of goals an
its compliance with the main strategic goals of the
ERP implementation

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[. Conclusion

Enterprise resource planning ³ERP´ are just IT software that are



evelope
by IT companies, these Software are use
to
ay as a
strategic tools an
are implemente
in organizations as a type of
function strategies, like any strategy you will apply in your life this
strategy can take you to a glorious si
es or can
rew you
own

Because the ERP implementation is somehow a strategies that


requires a
ifferent way of implementations other than function
strategies some companies that trie
to implement ERP suffere
a
lot of problems an
losses

Because of the large number of implementations performe



uring
the last
eca
es many researches were
evelope
i
entifying the
failure reasons of an
ERP implementation

Further researches were con


ucte
on how to better manage your
ERP implementations through the risk analysis metho
s an
how to
act towar
s the risks that may appear
uring the implementation

Furthermore, a success factors have been i


entifie
as a
recommen
e
actions
uring ERP Implementations, I believe that no
one on earth can guarantee the success or failure of a specific ERP
implementation but all we can provi
e are a recommen
ations on
how to best utilize your ERP implementation

Finally I recommen
any organization that will to the previous failure
an
success stories, an
implement ERP to get back try to get a
strategy on how to implement their ERP in a successful way

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References

´uan-Du siao , Ching-Chow ´ang , Wen-Tsann Lin, an


Wei-Cheng Lee ³A stu
y on key failure
factors for intro
ucing enterprise resource planning´ uman Systems Management 26 (2007)
139±152

D L OLSON* an
F ZAO ³CIOs¶ perspectives of critical success factors in ERP upgra
e
projects´ Enterprise Information Systems, Vol 1, No 1, February 2007, 129±138

Päivi Iskanius ³Risk Management in ERP Project in the Context of SMEs´ Engineering Letters,
17:4, 2009

Joseph F Brazel an
Li Dang ³The Effect of ERP System Implementations on the Management
of Earnings an
Earnings Release Dates´ JOURNAL OF INFORMATION SYSTEMS Vol 22, No
2 Fall 2008 pp 1±21

Noe Garca-Sanchez an
Luis E Perez-Bernal ³Determination of Critical Success Factors in
Implementing an ERP System: A Fiel
Stu
y in Mexican Enterprises´ Information Technology for
Development, Vol 13 (3) 293±309 (2007)

A
a Wong, arry Scarborough , Patrick ´  Chau, an
Robert Davison ³Critical Failure Factors
in ERP Implementation´

cMika Ojala, Inka Vilpola, Ilkka ouri ³ Risks in ERP Project ± Case Stu
y of IS/ICT Management
Capability Maturity Level an
Risk Assessment´

Umble, Elisabeth J , Umble, M Michael ³Avoi


ing ERP Implementation Failure´ in
ustrial
Management; Jan/Feb2002, Vol 44 Issue 1, p25, 9p

James Manktelow ³Min


tools Essential skills for an excellent career´ Version 1 00 ± 1 August
2003

Traci barker an
Mark E Forlik ³ERP implementation failure : case stu
y´ , information system
management fall 2003

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