Implementasi Sistem Informasi dari

Sudut Pandang Organisasi

Kuliah ke- 11 dan 12

Rajesri Govindaraju

1
 Enterprise Resource Planning
• Sebelum ERP, kebanyakan perusahaan bekerja dalam lingkungan
dengan fragmented Information System setup (sebelum 90’s)

• Tiap-tiap Legacy system mempunya database sendiri (tidak bisa

diakses oleh pihak luar).

• Kurangnya level integrasi yang menyebabkan:

– Time inefficiencies - Inter-dependant departments need to wait for
long to get information from any existing system.
– Data inconsistencies – Information mismatch is possible among inter-
related departments.
– Low quality Decisions– Due to the lack of a global view over existing
business data (customers, suppliers etc.)

2
 … Contoh dari “Fragmented System Environment”

Human
Sales Resource Supply
Department Department Department

Sales Employees Suppliers

Database Database Database

Drawbacks:
Poor customer relationship management (CRM):
* Without having a global view of all previous transactions, (a) Quality
of service is not optimal & (b) better customer relationships can not be
achieved
* Results in missing sales opportunities & loosing existing customers).
3
 Evolving Application Infrastructure
Pre 1995: Functional Silos
(Spaghetti System)

o o o o

Order Inventory Financial

o o o o
Processing System System

Data Data o o o o Data

4
 Solusi: mengintegrasikan sistem-sistem Legacy
yang ada

• Integrasikan semua aktivitas sebagai sebuah sistem informasi yang

terintegrasi akan menyelesaikan semua persoalan yang disampaikan
sebelumnya

• Pendekatan yang bisa dipakai:

– Bangun ulang semua sistem dalam satu kesatuan yang baru
• Very expensive in terms of time, effort & costs.
• Sangat tidak praktis karena struktur organisasi selalu berubah-ubah

– Enterprise Resource Planning (ERP) Software

• Paket ERP adalah kumpulan dari program-program standar pre-built
(customizable) [modules] yang bekerja dengan satu common, shared
database
• Men-support basic business functions (spt. purchasing, billing, ordering,
HR activities etc.)

5
 Evolving Application Infrastructure
1996+: ERP Based System

o o o o
Internal Users

Order ERP
Finance
Processing
Single Integrated
Data Warehouse

Inventory Sales and

Distribution
HR
6
 Implementasi Solusi ERP
• Implementasi ERP mencakup:
– Pembuatan common database. [Semua information seperti customers,
suppliers, employees, transactions dsb. Dapat disimpan di satu tempat.]
– Customization modul ERP atau proses bisnis untuk mencapai perfect
match.

• Manfaat: ERP Vendors:

– Efisiensi proses bisnis, proses penambilan keputusan -Baan
yang lebih cepat dan akurat, dsb.
-J.D.Edwards
-Oracle
• Kelemahan:
-PeopleSoft
– Costs and efforts bisa sangat melelahkan.
-SAP
– Peran managers, users, analysts, technical specialist, programmers andAG
consultants yang sangat menentukan
– Kadangkala membutuhkan redesigning yang cukup signifikan dari setup
yang ada

7
Custom and Standard Software

Program S1 – Teknik Industri

Custom Software

• Individually developed applications for a specific

companies purpose: they perform specific tasks for
the company.
• Historically, built used & maintained in-house
• Increasingly outsourced
• Development risks & costs covered by one
organisation
• Software matched organisational needs
• Transaction processing easily supported
• Integrated systems difficult to develop

9
Standard Software

• Software designed for anonymous market:

– Packages meet common business needs.
– Transaction systems are similar across businesses, traditionally
focus on isolated business function(s).
– Developed by third parties.
– Packaged applications may be based on best practice.

• Includes other goods & services:

– Installation & support Documentation
– Maintenance Training

• Characterised by:
– Deliver known functions or solution
– General useability (across platforms & organisations)
– Clear definition: reduced system adaptation required
– Fixed price can be determined.

10
Advantages of Standard Software:

• Lower cost for functionality

• Migration is more predictable
• Reduced maintenance costs
• In-house IS focuses on other non-standard problems
• Time saving because solution is ready
• Data and Function are integrated
• Consistent user interface
• Modern software technology used:
– (in house can not keep up)
• Imports skills and knowledge from a wide range of
experience

11
Disadvantages of Standard Software:

• Possible mismatch between software solution

and user requirements
• Limited user privileges to modify software
• Poor performance because of high resource
demands
• Required interfaces between products may be
difficult
• Dependency on software manufacturer

12
The Changing Business Environment

• Mergers
• Government deregulation
• Globalization
• Business process reengineering
• IT Trends
• Client-server technology
• Internet
• Can an organisation maintain staff that are expert in so
many areas?

The adoption of ERP products appears to resolve these

problems.

13
 ERP Responses to the
Changing Business Environment

• Reduces workforce in core transaction processing systems by

eliminating manual tasks and duplication.
• Supports global business operations.
• Economies of scale achieved by replacing division level
systems with corporate level systems
• Reduction of information systems development staff
• Improves customer service through better logistics based on
more complete & accessible information.
• Data integrity is improved through a common database.
• Decision support is improved through more timely reports
and better drill down capabilities.

14
Key characteristics of modern standard software.
• From Kirchmer p 25

Integration Decentralization
 Data integration  Distributed data processing
 Data structrure integration (client/server architectures)
 Function integration
 Module integration
 Standardized interfaces
Function Orientation:
-Across product lines
-Across various markets
Dynamics Employee Orientation
 Modularization
 Adjusting parameters User friendly interface
 User Exits  Standardized interface
 Standardizations of system  On-line mode
environment  On-line documentation
 System updates
15
ERP Implementation
Strategies:

Comprehensive Package
• Fully integrated
• Some particular needs may
not be supported
• Lack flexibility to rapid
change

16
ERP Implementation Strategies:

Best-of-breed
• Best software chosen for each
application
• Integrate all the applications
• Often the packages don’t
integrate well
• Middleware (and a skilled
systems integrator) used to
reduce integration problems

17
ERP Implementation Strategies:

Hybrid
• Some packages purchased due to
desirable functions
• Comprehensive system provides
‘backbone’ for rest of the system.
• Reduces problems of integration
yet allows customisation in key
areas.

18
Issues relating to purchase:

• Does the package match the user requirements?

• How reliable is the supplier?
• Is the developer a stable organisation?
• Is the package stable or is it under constant revision?
• How well does it integrate with other applications?
• What support is available?
• Are operations staff available?

19
Issues relating to Implementation and
Support:
• Customisation
− Changes necessary to meet organisational
requirements.

− Integration
− How well can they package share information
with other systems.

• Upgrades
− How often is the software upgraded?
− How is the upgrade affected by customisation
and integration issues?
20
Customisation includes:

• Configuration
• Modification
• Enhancement

21
Configuration:

• Assembling the purchased modules into a

system.
• Setting parameters in the package.
• Adjusting user interfaces.
• Integrating with other packages or systems.

22
Modification

Changing the package code to alter

existing processing.
This can cause serious problems when
upgrading.
The vendor may not support modification.
Original code may be unavailable.

23
Enhancement

• Adding functionality to a package.

• Does not alter the original package.

24
Upgrading

•Upgrading can be a serious problem if extensive work

was required for customisation or integration.

Integrating Packages

•Packages tend to work separately from one-another,

but they need to either use, supply or share data with
other systems.

•Organisations try to set up data so that it is accessed

in a standardised form in real time.

25
Selecting a Comprehensive ERP package

Preliminary evaluation:
• Is critical functionality available?
• The fit between the business model of the
package and the current processes of the
organisation.
• The up-front costs of the package.
• The cost of ongoing support, upgrades and add
ons
• The reputation of the vendor.
• Proven success in the business environment
• Availability of customisation tools.

26
Implementation of Standard Software

• Defined as the sum of all activities necessary to

effectively utilize software in the business environment
of a user company. From Kirchmer

• Types of implementation:

– Technology centric
– User centric
– Organization centric

27
Technology centric implementation:

• The implementation is viewed as a technological task. The

organization & user requirements are those of the software.

User centric implementation:

• Assumes software only gains its desired effect when accepted
by the users. Only modules requested by users are
implementged.

Organization centric implementation:

• Software used as a coordinating mechanism for modifying the
organizational framework of the enterprise.
• In this case it must be decided whether to focus on the
structures in the software or on the planned organisational
structures of the enterprise.

28
 Implementation takes Standard Software into Account

Function 1 Function 2 Function 3 Function 4

Object 1 Object 1 Object 1 Object 1

Function 1 Function 3 Function 4

Object 2 Object 2 Object 2

Function 1 Function 4
Object 3 Object 3

Stand Stand Stand

Software Software Software
Module 1 Module 2 Module 3
29
Business Process Oriented Implementation of Standard Software

Business Process Oriented Organizational Structure

Function 1 Function 2 Function 3 Function 4

Object 1 Object 1 Object 1 Object 1

Function 1 Function 3 Function 4

Object 2 Object 2 Object 2

Function 1 Function 4
Object 3 Object 3

Function Oriented Integrated Standard Software

COMBINED
WITH Function 1 Function 2 Function 3 Function 4
Object 1,2,3 Object 1,2,3 Object 1,2,3 Object 1,2,3

Module 1 Module 2 Module 3

Yields:30
Business Process Oriented Implementation of Standard Software
Implementation

Function 1 Function 2 Function 3 Function 4

Object 1 Object 1 Object 1 Object 1

Module 1 Module 2 Module 3

Implementation

Function 1 Function 3 Function 4

Object 2 Object 2 Object 2

Module 1 Module 3
Implementation

Function 1 Function 4
Object 3 Object 3

Module 1 Module 3
31
Business Process Implementation of Standard Software

• Views implementation as Organisational Development

• Implementation is business driven
• Main goal is to meet the strategic objectives of the company.
• Each successive implementation represents the implementation
of a business process.
• To achieve a process oriented implementation:
– Appropriate business processes must be defined.
– Support of these processes must be enabled through the
software
– Users must be capable of executing the processes by means
of the software in a way that ensures meeting objectives.

32
 Systems Development in an ERP Environment
• Large projects need to be well organised to be successful
• Organisational Structure for ERP projects:

Oversight
Committee
Administrative
Support
Project
Team

Work Group Work Group Work Group

Logistics Overall development Human Resources

Work Group
Accounting
33
• Oversight committee:
– Monitor project
– Make key recommendations
– Representative of all users

• Project Teams & workgroups formed:

– Teams assigned to different development areas
– Vendor representatives

• Administrative support provided

34
Phases of development

• Two key factors affect development

• The scope is very large
• Packaged software is used extensively
• Planning
– Oversight committee is formed
– Project team formed
– General purpose and scope determined
– Alternative approaches to ERP evaluated
– Initial selection made
– Determine how the project is to proceed
• Budgets, feasibility, project schedule

35
Analysis

• Work Groups formed, Requirements determined

• Vendors evaluated, selected, but not finalised
• Business process engineering requirements identified
• Prototypes developed to demonstrate integration
• Alternatives reconsidered & re-evaluated
• Recommendations presented to Oversight Committee

36
Question:

Will the analysis phase be longer or shorter than

that for the custom development approach?

37
Design

• Varies considerably depending on approach

taken
• Interface design varies according to the
amount of customisation required
• Hardware and networks must support
packages
• Training of end-users
• BPR performed, new procedures and job
descriptions prepared
38
Adaptation
• Configuration of modules
• Integration of packages
• Prototype created and evaluated until production ready
• System is verified, tested & tuned
• System documentation completed
• User training completed
• New system installed with rollout plan developed during
design
• Organisational structures changed, personnel placed in new
positions
• New procedures implemented

39
Support

• Continued training & support

• Well managed Help Desk
• Adaptive & corrective maintenance

40
 Standardization vs. Flexibility
Support for
Innovation
Experimentation
Flexibility

Flexible
High Infrastructure

ERP
Legacy
Low Systems
Support for
Efficiency
Standardization
Low High
41
ERP Implementation Process

Enterprise Systems

“Content” “Container”
Business Practices ES Application

ES Implementation

“Context”
Organisation: Structure
and Culture

42
 Implementation as learning and
knowledge transfer

 Learning
 Implementasi sebagai episode dari learning: IT dapat

menyimpan pengetahuan untuk diakses oleh banyak

pihak
 Studying lack in current organization memory

 Implementation as double loop learning

 Knowledge transfer
 Knowledge transfer among internal people

 Knowledge transfer between source and

implementing organization
43
Best practices transfer process

ES vendor User organisation

Best Best Adopted

practices practices best-
adoption practices
Develop Implement

Best business process Organisation business process

44
Implementation process as IT-enabled
change and transition process

Present System Plan- Imple Insti New System

ning men tutio
Technology ting nali Technology
Business Process sing Business Process
Organisation Organisation

 IT enabled change is a mutually adaptation of technology,

organisation and business processes (Benjamin and
Levinson, 1993)
 A transition process must not only done through planning
and implementing, but also institutionalising stage
(Levinson, 1988)

45
 Implementation as change process

Adaptation Acceptance, Routinisation, Infusion

Conversion Usage
Unfreezing Change

I M P L E M E N T A T I O N

46
 Implementasi ERP

Effectiveness of performing critical activities

Implementation Process

ERP Planning Inter - Usage and Improved

Adoption and mediate Institutiona Organisational
Decision Adaptation Outcome lisation Effectiveness

47
 Keputusan mengadopsi ERP

Adoption of any package should be:

• it fits the organisation’s mission and strategic plan
(compatibility)
• it is considered not too complex to be
implemented (complexity)

48
 Intermediate outcome: lingkungan
sistem informasi yang baru

1. New IS environment
• Technical and functional system quality
• Information quality
• Organisational processes
• Accompanying organisational arrangements

2. Related knowledge
• knowledge to use, maintain and modify
• Belongs to users, key users and IT spec.

49
 Intermediate outcome: lingkungan
sistem informasi yang baru

3. IS and business ownerships

• Ownership of business people towards IS
• Ownership of IS people towards business

50
 IS and business ownerships

Partnership
Organisation IT Function
members Members

IT professional
Users’ IT business
ownership ownership

Functional
Functional
responsibility
responsibility
Business Information
Processes Systems

51
 Impact on organisation’s effectiveness

 Impact on individual
 Impact on organisation
 Organisational and managerial processes
 Impact on improvement efforts

52
 Impact on organisation’s effectiveness

Based on time horizon

 Short term
• Improved communication and co-ordination within and among
departments (Davis, 1989)
• More eficient tasks performance (Stelzer et al., 1998)
• Better decision making environment (Thong et al., 1996
adapted from DeLone, 1990)
• Better learning environment
• Better supervision
• Improved planning and control of resources

53
Impact on organisation’s effectiveness

 Long term

• Profitability
• Competitiveness

54
 Issues in the project phase

 Alignment (adaptation) efforts

 Awareness creation and change

mobilisation

 Knowledge development

55
 Issues in post-project phase

 Institutionalisation effort

 Facilitating improvement efforts

• System improvement facilitation
• Learning facilitation

56
 Other important issues

 Adoption of decision making best practices

Low influence on data-based decision making
 Influence of culture in implementation process
High power distance and culture of following the
leader
 Sophistication effect
 Trend to broaden application instead of improve
already exist systems

57
Other important issues …

Linkage

Pre Adoption Conversion Usage and

Process (PL) (IMP) Institutionalise

Adoption Intermediate Improved

Decision outcome Effectiveness

: Feed back arrow

: Process sequence
: Process results

58