AMBO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

Department Of Accounting and Finance

Regular Program (MSc)

1st year 2nd semester

Individual Assignment II of Accounting Information System

Title: Entrepreneur Resources Planning (ERP) Implementation and It’s

Challenge for Organization

PREPERD BY: ID.NO.

GETACHEW MEKONNE.PGR/ 69254/15

SUMMITTED TO: KOKOBE S. (PHD)

JUN 14, 2023

AMBO UNIVERSITY
Contents
1. INTRODUCTION...................................................................................................................................1
2. Concepts and Definitions.........................................................................................................................2
3. The advantages of ERP systems...............................................................................................................3
4. ERP Implementation and Constraints.....................................................................................................5
4.1. Step wise ERP Implementation.........................................................................................................6
4.2. Top Management Support................................................................................................................6
4.3. Compatibility with ERP Module........................................................................................................7
5. Common Challenges................................................................................................................................7
6. Constraints Peculiar to Ethio-telecom.....................................................................................................8
7. Conclusion...............................................................................................................................................9
8. Recommendations.................................................................................................................................10
REFERENCE................................................................................................................................................12

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 1. INTRODUCTION

Enterprise resource planning (ERP) system has been one of the most popular business
management systems, providing benefits of real-time capabilities and seamless
communication for business in large organizations. However, not all ERP implementations
have been successful. Since ERP implementation affects entire organizations such as process,
people, and culture, there are a number of challenges that companies may encounter in
implementing ERP systems. Currently in Ethiopia, not a good deal of business in large
organizations have been implemented the enterprise resource planning system. Ethio-
Telecom, Ethiopia airline Commercial bank of Ethiopia and Miderock Ethiopia are among a
few to implement ERP system in Ethiopia.

Telecommunications services in Ethiopia date back to 1894 and by the time it was named as
Telecommunications Corporation. Since then various re-organizations have been made due to
the change in regime and responsibilities vested to the company. Notably, after the end of the
war with Italy it was re-organized as Telephone, Telegraph and Postal Services but shortly
after it was re-named as The Imperial Board of Telecommunications of Ethiopia (IBTE) by
proclamation no.

The company, which is the sole telecom provider, is delivering telecommunication services all
over the country with diversified products and services including fixed line telephony,
wireless (mobile) telephone service, data and internet service, rural connectivity service and
General packet radio service (GPRS).Currently, the company is expanding its network
coverage in the capital city and all over the country aiming to provide the latest telecom
services including the Fourth Generation (4G) service.

According to 2014annual report of the company, the number of customer base reached over
30 million, gross revenue in excess of 15 billion and number of permanent employees reached
over 9 thousand dispersed all over the country under the 14 regional offices and over 200
shops, (Ethio Telecom, 2014).

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 Throughout in most of these changes, the company continued to use the accounting software
known as AS400, which was developed by IBM long time ago to process and store customer,
supplier, employee and financial data. However, the recent increase in product and service
line, revenue, expenditure and customer base due to the mass telecom expansion makes
evident that the legacy system will not be capable enough to process and store such bigger
information. Therefore, due to such changes the company recently replaced AS400 with
modern enterprise software known as Enterprise Resource Planning (ERP), (Ethio Telecom,
2014).

An enterprise resource planning (ERP) is an enterprise-wide application software package that

integrates all necessary business functions into a single system with a common database. The
system basically integrates and streamlines the business processes of an organization across
departmental and geographical borders. According to Nah and Lau (2001) ERP is a packaged
business software system that enables a company to manage the efficient and effective use of
resources (materials, human resources, finance, etc.) by providing a total integrated solution
for the organization information-processing needs(Nah and Lau,2001).

Specifically, ERP is the process of integrating all the business functions and processes in an
organization to achieve numerous benefits first, a single point of data entry helps to reduce
data redundancy while saving employees time in entering data, thereby reducing labor and
overhead costs. Secondly, the centralization of information, decision-making, and control
leads to increases in efficiencies of operations and productivity, as well as coordination
between departments, divisions, regions, and even countries Thirdly, the sharing of a
centralized database provides business managers with accurate and up-to-date information to
make well-informed business decisions Fourthly, functional integration will consolidate all
sorts of data, such as financial, manufacturing, and sales, There By Providing competitive
advantage over competitors.

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 2. Concepts and Definitions

Enterprise Resource Planning (ERP) systems provide integration and optimization of various
business processes, which can lead to improved planning and decision quality, and a smoother
coordination between business units, resulting in higher efficiency and a quicker response
time to customer demands and inquiries. It is also a software solution that integrates business
functions and data into a single system to be shared within a company. In the past two
decades, companies around the world have implemented ERP Systems. ERP systems are
software packages that enable companies to integrate their business processes and all the
information relevant to their organization. With ERP systems, firms are able to manage all
their resources (i.e. physical or intangible assets, finances, human resources, production, etc.)
more effectively. The ERP system not only aids in standardizing business processes across an
enterprise but also helps management increase their visibility of the business by providing
real-time financial and production information

An ERP system is a packaged business software system that allows a company to automat end
integrate the majority of its business processes, and share common data and practices across
the entire Enterprise. ERP also accesses information in a real-time environment. Many
companies use ERP software to integrate the enterprise-wide information and process for
example their financial, human resources, manufacturing, logistics, sales and marketing
functions.

3. The advantages of ERP systems

 Integrate financial information of different sources such as revenues, sales and cost.

 Standardize Human Resources information for simple tracking of employees time and
benefits data.
 Standardize and speed up operating processes

 Reduce inventory and lower costs

 Integrated, on-line, secure, self-service processes for business

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  Eliminate costly mainframe / fragmented technologies

 Empower and enable employees, partners, customers and suppliers as clearly

demonstrated in figure

Figure2.2.5 Architecture of ERP system (Source:

http://www.maturski.org/EN-Management/Enterprise-Resource-Planning.html)

After investigating critical success factors in ERP implementation in Malaysia, Jafari, Osman
& Tang concluded that there are 10 critical factors that contributed for successful ERP
implementation. These are top management support, clear goals and objectives,
communication, effective project management, business process reengineering, data accuracy
and integrity, suitability of software and hardware, vendor support, education and training, and
user involvement are critical in Malaysia (Jafari, Osman, & Tang, 2006).

The success or failure of ERP implementation is closely related to how the companies handle
the process. The ERP implementation process could differ in every company. The differences
might concern to the implementation goals, the scope, or the available resources. But among
all the differences in every implementation process there are some general points that are
important in the process and would strongly result in the success or failure in the
implementation of ERP. Those important points were identified as critical success factors (Li
& Sylvia 2005).

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 CSFs are classified in to seven categories; Business plan and vision, Change management,
Communication, ERP team composition, skills and compensation, Project management, Top
management support and championship, Systems analysis, selection und technical
implementation(Fiona & Santiago, 2006)

ERP systems implementation is a set of complex activities, involving all business functions
and often requiring between one and two years of effort, thus companies should have an
effective project management strategy to control the implementation process, avoiding
overrun of budget and ensuring the implementation within schedule. Having a realistic time
frame is very important. If the target completion time schedule were unrealistically short, the
pressure to rush through would result in the implementation being carried out in a haphazard
manner. On the other hand, if the implementation delayed for too long, people would tend to
lose faith and/or patience, which also will result in low morale and resistance. Conducting
periodic project status meetings in which each team member reports progress and problems is
an invaluable means for evaluating the progress of the ERP implementation. Selecting the
right project leader is also important for the project implementation success. (Zhang et al,
2002). Another decisive element of ERP implementation success or failure is related to the
knowledge, skills, abilities, and experience of the project manager as well as selection of the
right team members, which should not only be technologically competent but also understand
the company and its business requirements (Somers & Nelson, 2001).

ERP implementation teams should be composed of top-notch people who are chosen for their
skills, past accomplishments, reputation, and flexibility. It has also been repeatedly mentioned
throughout the literature that there is a critical need to put in place a solid, core
implementation team that is comprised of the organization’s best and brightest individuals
(Umble et al, 2003). This factor is about the combination of member and skill in ERP team.
The practitioners that organization should practices are, ensure that in the ERP team includes
people both business and technical knowledge. The selection of the implementation, vendors
and consultant is important to the project. Ensure that team leader possess the authority that is
recognized throughout the organization. Team should be balance and cross functional. The
representative should include both internal staff and consultant.

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 4. ERP Implementation and Constraints

Challenges and constraints in implementing ERP solutions are quite normal. Though it is not
completely a technical job, a lot of planning and proper communication is very much essential
to implement ERP across the organization. In line with Ethio-telecom was not thought an
exception. The next section is dedicated to analyze matters related to the challenges and
constraints in implementing and exercising enterprise resource planning in Ethio-telecom.

4.1. Step wise ERP Implementation

From the theoretical perspective it is very important, that ERP implementation is done in
stages; because trying to implement everything at once will lead to a lot of confusion and
chaos. Therefore, while implementing ERP in a given organization it is worth going through
with in steps so as to avoid any kind of complication and complexity that might come from the
very nature of the solution itself or the context in which it is deployed.

To test or check whether ERP solution is implemented in stepwise manner or not (adapted at
once), respondents were asked to rate the process of implementation of ERP in their
organization as king them as “the current deployed ERP system meets stepwise achieving the
goal of making the working process automat”. The respondents from their experience of ERP
implementation rated as very low, low, neutral, high or very high. Accordingly, majority of
ERP users (78.9 per cent) rated the ERP solution was adapted and done in stages. From this
fact, hence it could be concluded that the priori criteria “stepwise implementation” was not
considered as putting the challenge and constraint in the implementation of ERP in Ethio
telecom.

4.2. Top Management Support

Obviously lack of support from senior or top management in implementing solutions like ERP
will lead to unnecessary frustrations in work place. Also, it will cause delay in operations and
ineffective decisions. So, it is essential to ensure that the senior management supports the
transformation in a company to a higher level of technology. And this issue of management

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 support can be checked through functional and technical support, level of dependency or
training.

This study most preferably used three measures – functional and technical support of
integrators, level of dependency on integrates and user training – to test whether top
management support is available in place and time in the company or not; by asking the
respondents to rate each of the criteria in a Likert scale.

4.3. Compatibility with ERP Module

Compatibility issues with ERP modules usually lead to issues in integration of modules.
Companies associate different vendors to implement different ERP modules, based on their
competency. Therefore, it is very essential that there is a way to handle compatibility issues in
dealing with implementation of technologies such as ERP solutions. In this study to deal with
the issues of compatibility, user friendliness, ease of understandability and ease of
understandability of the reporting formats were used as yardsticks.

5. Common Challenges

Generally, ERP implementation in a given organization is a function of many factors where the
factors put problematic situation in assuming a desired benefits from the solution. In
developing countries like Ethiopia, where backwardness in business infrastructural setups
prevailing, are constrained by multifaceted problems, which in turn adversely affect the success
that they would likely to achieve from the adopted technologies. Among the problems
constraining healthy running of ERP solutions in Ethio-telecom, ERP system implementation
challenges/constraints which distinguishable to Ethio-telecom accordingly, the following were
raised in the discussion:

 Newness to the country

 Poor internet network
 Lack of equipment or facilities required for proper functioning of the system
 Inadequate proper training

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  Lack of pilot data
 Timetable for the implementation
 Lack of skilled/trained manpower
 Accessibility and poor speed
 Late implementation after training
 Integrators reluctance for knowledge transfer
 Lack of management support,
 Ineffective communications with users,
 Insufficient training of end users,
 Failure to get user support,
 Lack of effective project management methodology,
 Attempt to build to the legacy application,
 Conflict between user departments, composition of project team members,
 Failure to re-designing business process and Misunderstanding of change
requirement.

6. Constraints Peculiar to Ethio-telecom

This sub-section is dealing with some constraints which are peculiar to Ethio-telecom from its
very nature. Obviously the business environment in which Ethio-telecom is working is
different from those working in other countries. Business infrastructures like electricity and
internet networking are basic requirements needed for ERP solution implementation, but to
mention only few.

For the underlying problems constraining ERP system implementation and there by affecting
success, the remedy is in the hands of the company, as the sampled respondents replied. The
sole responsible body to alleviate the problems is the company.

Continuous and sustainable training

- Providing materials and facilities adequately

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 - Immediate implementation after training

- Upgrading the system continually

- Proper planning

- Clear communication to end users - Less dependence on integrators.

From all these, it emerges that employees in the side of the implementation of the ERP in the
Ethio telecom need proper training so that they work with it in a friendly manner. Therefore,
employees responsible for technical support and problem-solving for an organization’s
electronic systems need necessary technical training that includes hardware management and
database input. Likewise, management divisions who are responsible for selecting and
overseeing an ERP system need special training as for instance functional area training.
Finally, end-user training would cover the general staff of an organization who are using the
new system day-to-day. General information, fostering new skills, and evaluation progress
reports are vital components of end-user staff training so that they can plan, communicate and
implement the system as standard required by the organization.

7. Conclusion

The study is conducted in the Ethio-telecom head office in Addis Ababa. It focused mainly on
the challenges affecting proper implementation of ERP in the company. For the purpose,
primary data were gathered through structured questionnaire and focus group discussion using
structured check list, respectively.

As per the results of the study major challenges to ERP implementation were identified.
Accordingly, lack of top management support, the rate of training, documentation and
knowledge transfer, compatibility issues with ERP module were found major challenges in
ERP implementation in Ethio-telecom. However, the priori criteria “stepwise implementation”
was not considered as putting the challenge and constraint in the implementation of ERP in
Ethio-telecom.

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 With regard to the support of top management in assisting successful implementation of ERP in
Ethio-telecom, an observable gap is evident implying that proper support is urgent. Again, the
study indicates that Ethio- telecom didn’t deploy an intensive training program in order to
equip those employees who are expected to work on the system as main tool. From this the
study concludes that lack of training was observed as one common constraint for ERP
implementation in Ethio telecom. Besides, compatibility is recognized as one major challenge
and constraining successful ERP implementation in the company.

Moreover, the analysis results showed that misunderstanding of change requirements,

ineffective communications with users, lack of management support, lack of effective project
management methodology, insufficient training of end users, failure to get user support,
conflict between user departments, failure to re-designing business process, composition of
project team members and attempt to build to the legacy application were computed to be 1 st to
10th major challenges determining the success of the implementation of ERP.

In this study it was also tried to conduct focus group discussion so as to identify ERP system
implementation challenges/constraints which are distinguishable to Ethio-telecom.
Accordingly, the following were raised in the discussion: Newness to the country, Poor internet
network, Lack of equipment or facilities required for proper functioning of the system,
Inadequate proper training, Lack of pilot data, Timetable for the implementation, Lack of
skilled/trained manpower, Accessibility and poor speed, Late implementation after training,
Integrators reactance for knowledge transfer. Finally, for the underlying problems constraining
ERP system implementation and there by affecting success, the remedy is in the hands of the
company, as the sampled respondents replied. The sole responsible body to alleviate the
problems is the company. Hence, the focused group discussion with different experts of the
company indicated that the following remedial measures are urgent: Continuous and
sustainable training, Providing materials and facilities adequately, immediate implementation
after training, upgrading the system continually, proper planning, Clear communication to end
users, less dependence on integrators.

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 8. Recommendations

Based on the results and findings of the study, to improve ERP system implementation, some
recommendations are suggested to be addressed by the Ethio-telecom. Those variables which
are most important challenges of ERP implementation as per the analysis result are lack of top
management support, the rate of training, documentation and knowledge transfer, compatibility
issues with ERP module were found major challenges in ERP implementation in Ethiotelecom.

Sticking to the major challenges described above the following has been suggested as a
remedy.

- Training – with regard to the support of top management in assisting successful

implementation of ERP in Ethio-telecom, an observable gap is evident implying that
proper support on training is urgent
- Compatibility issues – the compatibility issue with ERP module from the above
discussion, compatibility is recognized as one major challenge and constraining
successful ERP implementation in the company. Therefore, user interface of the system
should easily be understandable, there should be mechanism so that users can work on the
system without any challenge and the reporting formats should be easily understandable
- In sum, the focused group discussion with different experts of the company indicated that
the following remedial measures are recommended for urgency: Continuous and
sustainable training, Providing materials and facilities adequately, immediate
implementation after training, upgrading the system continually, proper planning, Clear
communication to end users, less dependence on integrators

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 REFERENCE

1. Ethio telecom. Annual report 2013, Addis Ababa.

2. Ethiopian Telecommunication Corporation 2009,

Available at http://WWW.ethionet.et/aboutus/historybackground.html[Accessed on 15 May

2014]

3. Ethio telecom corporate Communication. Annual corporate communication report 2013 Addis
Ababa.
4. Esteves-Sousa, J., & Pastor-Collado, J. (2000). Towards the unification of critical success
factors for ERP implementations. Proceedings of the 10th Annual Business Information
Technology (BIT) Conference, (pp.5-19), Manchester, UK.

5. Fionia Fui-Hoon Nah &Santiago Delegado (2006). Critical success factors of Enterprise
resource planning implementation and upgrade, Journal of Computer information systems
Special Issue 2006, Vol. 47, p99
6. Herwig Ostermann , Roland Staudinger & Stephan A. Kronbichler, (2009). A Review of
Critical Success Factors for ERP-Projects. The Open Information Systems Journal, 3, 14-25.

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