Enterprise Resource Planning (ERP) systems

Introduction and Brief Purpose

According to O'Leary, Enterprise Resource Planning (ERP) systems are "computer-based systems designed to process an organization's transactions and facilitate integrated and real-time planning, production, and customer response" (O'Leary, 2000).

The sound foundation to launch this project is made for the purpose of making new production system as a part of ERP system for Ratanveer Stainless Steel Products Pvt Ltd.

ERP serves as an information honorable fiber for a company's core business processes Given the significance of such a system, more and other companies have been implementing ERP software system products of one type or another, by making them one of the quickest growing segments of the software industry related to business .ERP software now stand up as the major portion of commercial information technology (IT) budget. Looking to the lead, AMR Research anticipate composite annual growth rate of 32% for ERP software suites, with annual sales topping $66 billion by 2003 (Forger, 2000).

By going through the all sources, it claimed that ERP applications stood as largest factor of corporate IT budgets, by citing other research media figures. While trying to confirm these statements, I discovered that, the figures came from research firms, which would not discharge the original research without a fee.

Therefore i was unable to authenticate the figures. However, since three of them cited proper comparable claims, I decided to include the reference because it indicates the significance of ERP in the commercial IT arena.

There are many other kind of software's but purchasing ERP is only the beginning to put it in proper place. ERP system are very complicated in nature, they are often built on thousand of database tables, dozens of modules contain hundreds of data, if not more, than the configuration decision are made before implementing the ERP system, because its implementation process may take long and painful process.

The proper and precise purpose of this study is to examine essentials for successful implementations of Enterprise Resource Planning (ERP) system from the view of project management perspective. A literature review presented in credentials of selected documents , such as books, journal papers, research papers and surveys those which are published from Jan 1995 to May 2001, each of these which examines the factor needed and which are critical for the success in ERP implementation of system.

Literature used in it is analyzed using grounded theory analysis with constant comparison. Data analysis results in different tables used in the report and the literature used in it are categorized and are of specified project management problem areas. Conclusion and recommendation are presented for the lecturers as a detailed list of recommendation and the fundamentals related to project aspiration and scope and also for Quality, Time, Scope, Cost and expectation.

Full Purpose

Main aim of the report is to know the consequences when creating an ERP system and implementing it on enterprise

The ERP implementation success can be defined into two ways, First, implementation is considered successful only if it has proper developments to meet the project requirements for going in live, such examples as co-operating with budget, meeting deadlines before the actual work finishing time and by this process achieving newer heights and by providing proper system performance as planned.

The second and eventual definition of a ERP implementation which is successful is by managing proper cost effective integration of complete business processes using information technologies systems. Companies which is pleased with their ERP software often list dozens of productivity enhancements, including process automation, improved efficiency, tighter integration, as well as elimination of bottlenecks and duplicative procedures (Plotkin, 1999).

However, the realism is that the most ERP projects do not come into view to be delivering their promises. One of survey done over 50 European companies exposed that an irresistible 92% were displeased with results achieved to date from their ERP implementations. Other research statistics show that more than 70% of ERP implementations fail to meet stated objectives (Brown, 2001; Buckhout, Frey and Nemec, 1999).

The cost of implementing an ERP system is very high to make things worse. And alas, money is not all, which is lost when implementation fails. A company's well-being is often adversely exaggerated by a failed ERP implementation.

ERP implementation has the primary cause because the ERP system had crippled the business.

The most commonly-cited reasons for failure are poor project management during implementation.

The British Computer Society reports that survey over 1027 IT projects, including ERP, only 130 i.e. (12.7%) were successful. Main causes for the failure was reported in order of importance of poor management scope, poor change management and poor project management. (The British Computer Society, 2000). The symptoms of ERP implementation problems include falling short of expectation, over budget and behind schedule, specifically (Forger, 2000). These are the parallel problem areas that project management principles address.

In order to cope up with these problems, the purpose of this research paper is to relate aspects of project management to selected prerequisites for ERP implementation success.

According to Kulik, an attempt made to understand why projects are succeed, it is a worthwhile effort because it helps to increase a chance of success over future tasks (Kulik, 1997).

To accomplish this goal, I made research on literature review as the research method to identify existing publications in areas "collateral to" the area of this study. The research papers selected in it is such as follows, book, journal articles and survey results published from January 1995 to May 2001 are analyzed using theory analysis. Most of the resources selected are located online because they are timelier and much more easy to get to, as well as it is not very convenient to get details and books and as well research papers does not show efficient details on the topic of ERP implementations.

Database searched during the research includes, internet search engines such as www.google.com and www.ask.com. And others such as www.elibrary.com. Are used to find relevant data on ERP implementation and other aspects.

In addition, have also searched specialized ERP resource web sites such as ERPSupersite, ERPAssist, ERPCentral and ERPWorld. Above references are used in making many research papers. The Books used during research are found using library catalog and online bookseller www.amazon.com.

During the process of data collection, terms such as enterprise resource planning, ERP implementation, ERP project management, ERP implementation and project management.

The initial search produced over 60 sources. A closer review identified around 20 that directly discuss the relationship between ERP implementations and project management.

Data collected are subjected to analysis as part of grounded theory. Using grounded theory, literature is initially reviewed to identify a list of prerequisites for successful ERP implementations.

Afterwards, this list is grouped into specific project management problems areas - scope, time, cost, quality and expectations according to the definition of project management by the Project Management Institute. Finally, the results of categorization are summarized and the role of project management behind these success factors is analyzed.

Data collection and analysis are discussed in detail in the Method section of the study.

The result of the study includes: (1) a table listing prerequisites elements for successful ERP implementations identified by the literature, which are then (2) categorize into project management problem areas, and (3) an annotated list of recommendations to ERP implementation project managers.

The general target audience for this research paper includes IT and business lecturers. The specific audience is supervisors of ERP implementation projects.

These managers can be from both inbound and outbound of the organization, such as consultants hired to put into practice the ERP system. The recommendations produced as a result of this study are predictable to provide guidance to these managers as they plan to implement an ERP system and to help them succeed in the implementations.

Field Work:

Telephonic interview

The research was made by contacting Ratanveer stainless steel Manager by telephone.

During telephonic interview he said us "that all procedures in the manufacturing unit is done manually, which creates many problems, such as overstocking the raw material-which adversely affects the cost of warehousing, and he added also, that company's manual book keeping system creates loss of time and also affects the data manipulation. So after doing groundwork on the company's problem areas, later on suggested him to go with an ERP system. And budget given by him was 40,000 Rs(INR) per part and later on he agreed with the negotiable price i.e. 45,000Rs(INR)per packages According to me Ratanveer stainless steel should get into with two ERP packages. One for the inventory purpose and another for accounting system. The problems arised for the company was poor inventory system and poor production unit. And company also was luring with accounting system. Because of not getting proper information through data channels, company cannot take proper managerial decision, and due to lack of decision company gets into loss. And also I noticed that book keeping system is very old and to solve this problem, we have to make an ERP system.

Question Dicussed

Below are the question discussed during the telephonic interview with the manager.

Questions are asked by me for the research and data collection.

  1. What is your company's employee strength and what are their duties?.
  2. Ans: 18-20

    Such as

    • Production manager: Production manager supervises the production unit and also has to take control of day to day activities
    • Quality control manager: Quality manager duties is to supervise the products which are manufactured from the production unit and to see that products get better quality so that it can get better revenues overall
    • Sales manager : Sales manager duties is to achieve the targets given by the company's executive in the given quarters and also control and perform the sales person duties
    • 11 labors in production department : These labors looks over the mal-functioning of the production unit.
    • 4 into packing department.: Packaging workers looks over the duties like shifting the steels and stacking properly into the warehouse.

  3. How is stocking procedure done for the raw material?
  4. Ans. Raw material is purchased from the wholesaler and are bought in higher quantity. And he also added that company does not have appropriate statistics of stocking done in the warehouse.

  5. What is maximum number of goods manufactured in a day?
  6. Ans: min 750 units and can produce maximum of 1500 units.

  7. Do you purchase raw material from one particular dealer or buys according to the market quotation?
  8. Ans. We have a particular dealer and does not look forward for market quotation.

    Suggested: it is better to get quotes from the market because these things effects on your balance sheets. So, I suggest you to use a ERP package for it so you can keep records of different quotes and when you are in need to buy raw materials at that time ERP system will compare and give you the best output quotes.

  9. Is any standard procedure set for the goods produced?
  10. Ans: yes

  11. Do you meet deadlines for Deliveries?
  12. Ans: sometimes

    Why?

    Ans: lack of raw material

    Suggested: we can use just-in-time inventory package. So that, you can get proper alerts when raw materials is going to be finished.

  13. How do you take orders and fulfill it?
  14. Ans: By Phone

    Suggested: By using B2B intranet you can get your orders 24x7 online.

  15. How is production details recorded?
  16. Ans: details are recorded on paper and are therefore viewed as needed.

    Suggest: you can use database or DSS system so that you can retrieve information when needed and this system also helps you in keeping accounts.

  17. Are you interested in making technological changes in your company?
  18. Ans: yes

    Suggested: We can use different ERP packages for your company to cope up with your problems. Because according to me, company will enjoy minimum of 10% growth by using the ERP system.

  19. Which is the best time to call you for further information?
  20. Ans: During the office hours i.e. 9:00 am to 5:00 pm Mon to Friday.

Limitations to the Research

In view of the fact that ERP systems are cross-functional in nature, their impacts on the organizations implementing them can be quite extensive. There are lots of study material is available on the topic of ERP software and implementation. Perspectives include project management, change management, knowledge management, communication, risk management, training, data conversion, etc. (Krammergaard and Moller, 2000; Welti, 1999).This study focuses on the perspective of project management, because of its important role in achieving overall success in an ERP project (O'Leary, 2000; Welti, 1999; Desai, 1997).

Before discussing project management theories, it's necessary to define the term project the Managerial Process that a project is "a complex, nonroutine, one-time effort limited by time, budget, resources and performance specifications designed to meet customer needs" (Gray and Larson, 2000)

This definition of project is important because it helps to identify the part of an ERP Implementation that is the focus of the study.

As Project management is defined in A Guide to Project Management Body of Language (Project Management Institute Inc., 1996, p. 6) as the "application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project. Meeting or exceeding stakeholder needs and expectations invariably involves balancing competing demands among:

  1. Time, cost, quality and scope.
  2. Stakeholders demanding differing expectation and needs.
  3. Unidentified requirements (expectations), and Identified requirements (needs).

The viewpoint of this whole study is based on this particular definition of project management, which serves as the hypothetical structure for this researcher's analysis of ERP implementation achievement factors.

Accomplishment of ERP implementations can be stated in two ways. According to Plotkin, the final measure of accomplishment for an ERP implementation is the value that the system adds to the company (Plotkin, 1999). However, before this final accomplishment can be achieved, the ERP system has to be prepared. Therefore, another definition of ERP implementation success is the fulfillment of the original project necessities for going live, such as meeting deadlines, being within budget and gaining system performance as predictable (Robey, Ross and Boudreau, 2000). This researcher adopts the next definition for the point of this study. The reason for this control is two-fold:

  1. It's questionable when an ERP implementation actually finishes (Deloitte Consulting, 1998; PA Consulting Group, 2000), and, given this reality, whether or not it should be measured a project. Yet, since the implementation period before the ERP system goes live is a finite stage of moment, the definition of project is meeting.
  2. As uncovered in the literature, project necessities in this phase more straightforwardly associate to the difficult areas that project management is set out to tackle, most particularly, the triple limitation of projects - scope, schedule and resources (Gray and Larson, 2000).

Based on the above limitations on the reach of this study, the selection of literature referenced is guided by its relevance to ERP implementation process with project management importance. Under this principle, around 20 research papers, books and journal articles are chosen.

Problem Area and Significance

Information Technology project failures have been broadly acknowledged in the media. early in 1995, The Standish Group has been working on ongoing research studies on IT application improvement projects, titled "CHAOS". Project achievement was defined as "finished on-time and on-budget, with all features and functions as originally specified".

A more fresh study conducted by the British Computer Society reported similar results. In this study, "achievement was defined as delivering to the sponsor the whole thing specified to the quality fixed on or within the time and costs laid out at the start" (The British Computer Society). Out of 1,023 projects, only 130 were successful according to survey respondents, which amounted to an 87.3% failure rate (The British Computer Society).

Though ERP projects were not the only center of the studies cited over, they are at risk to problems because they play a major role in the corporate IT ground, according to these figures:

  1. "ERP applications make up the major piece of IT budgets: 39 percent of huge companies and 60 percent of minor companies are deploying ERP systems. (Cissna, 1998, online1)
  2. "Focusing on AMR Research, almost half (43%) of all application expenditure at corporate IT departments is for ERP implementations." (Artner, 1999, online1) In reality, problems with initial implementation of ERP have been broadly reported (Buckhout, Frey and Nemec, 1999). Since the objective of installing an ERP system is to convert and put together a company's overall business processes, complete successes are hard to reach, while failures are enormously costly (Macvittie, 2001). The next news report is a case of what can happen when an ERP implementation does not distribute as promised.

"Managers at many organization list dozens of productivity enhancements from ERPs, including the capacity to calculate new prices instantly when a single section in a product is changed; more precise manufacturing-cost comparisons among different amenities; better electronic data interchange (EDI) with vendors and suppliers; more comprehensive forecasting; fast delivery of routine quotes for unusual orders; and the removal of bottlenecks and duplicative measures." (Plotkin, 1999, online) Such gap between failure and success, as well as the high costs connected with ERP systems has encouraged managers to search for factors causal to ERP implementation success (Mendel, 1999). In the meantime, people who have been through ERP implementations have been writing about their leanings.

Although a fair amount of literature is available on the topic of ERP implementations, very little research has been done to predict initial and ongoing ERP implementation success from any theoretical perspective (Brown, Carol and Vessey, 1999). This researcher seeks to identify ERP implementation success factors from the project management perspective, subject to the limitations outlined in the Limitation to the Research section. Significant benefits can result from analyzing ERP implementation from this theoretical perspective because of the close alignment between symptoms of ERP implementation failures and the problem areas that project management discipline addresses. According to Gray and Larson, "Quality and ultimate success of a project are traditionally defined as meeting and/or exceeding the expectations of the customer and/or upper management in terms of cost (budget), time (schedule), and performance (scope) of the project "(Gray and Larson, 2000, p. 63).

ERP implementation failures often demonstrate the inability to meet these expectations.

Another study by The Standish Group on ERP projects implemented in companies with over $500 million in annual revenue found that many of them had failed to achieve their goals. What was used to define failure coincides with the problems that project management is supposed to solve. Table 1-1 demonstrates this relationship as well as the outcome of The Standish Group study.

Method

The research method of literature review (Leedy, 1997) is employed to assist the researcher in addressing the purpose of this study, which is to relate prerequisites for a successful implementation of ERP system to project management problem areas. Since the purpose is to extract and examine existing points of view, a grounded theory analysis of literature on the subject is the most feasible approach.

Data Collection

Literature searches are conducted using the following channels:

UO electronic journal databases, such as Business Source Elite;

Association of Computing Machinery (ACM) library (www.acm.org);

Electric Library (www.elibrary.com);

Internet search engine Google (www.google.com)

ERP resource web sites (www.ERPSupersite.com, www.ERPAssist.com, www.ERPCentral.com and www.ERPWorld.com).

Online bookstores (www.amazon.com)

Data collection focuses on research papers, journal articles, books, surveys and white papers. To be included for review, items must pass the initial steps of content analysis, which is a process to ensure that the data are related to the problem area of this research (Krippendorff, 1980).

Candidates of relevant materials are uncovered first by a search for key word and phrases, including the following list. These are used to produce a broader list of references. Several of these key words are added during the search process, by virtue of being the subjects or keywords of articles pertinent to the study.

  1. Software implementation
  2. Software projects
    1. ERP implementation
    2. Enterprise resource planning
  3. ERP projects
  4. ERP project management

After the initial search, the reviews each candidate article to determine whether and how to use it in the paper, by testing it against the following criteria:

Q. Does the article discuss implementation of ERP systems and either the requirements for success or the factors that may lead to failure?

Q. Is the focus of the article on the project management aspect?

If the answers are affirmative to both questions, then the article is presented in the Review of References section of the research paper. Otherwise, either the relevant content is cited in the study to provide background or no content is used at all.

Data Analysis

Literature review is qualitative in nature. According to McMillan & Schumacher (1993), "qualitative data analysis tends to be primarily an inductive process to organizing data into categories and identifying patterns (relationships) among the categories" (Leedy, 1997, p. 165).

Within this qualitative research framework, this study uses a data analysis method based on grounded theory design, including the process known as constant comparison. In general, Strauss & Corbin describe grounded theory design as "a way of thinking about and conceptualizing data" (as cited in Leedy, 1997, p. 163). More specifically, Leedy defines grounded theory as "qualitative research studies aimed at deriving theory through the use of multiple stages of data collection and interpretation" (Leedy, 1997, p. 111).

However, it is not the goal of this paper to derive theory. In fact, this researcher utilizes only the coding types, which are the preliminary steps, of grounded theory method to analyze data collected.

According to Struss & Corbin (as cited in Leedy, 1997, p. 164), grounded theory analysis consists of three major coding steps:

  1. Open Coding - ". . . breaking down, examining, comparing, conceptualizing, and categorizing data". In this study, this is the step of combing through the data and compiling, an emergent list of prerequisites for successful ERP implementations.
  2. Axial Coding - Putting data back "in new ways after open coding by making connections between categories". Once compiled, the list of grouped prerequisites into specific project management problems areas - scope, time, cost, quality and expectations. In this study, this step also includes summarizing the categorization results and analyzing the role of project management principles at the back of the success factors. However, since much of the axial coding process is rather exploratory, this study presents only the initial phase of this step.
  3. Selective Coding - "Selecting the core category, systematically relating it to other categories, validating those relationships, and filling in categories that need further refinement and development". Since this step heads towards the goal of building theory, the researchers adopt only the very beginning of this coding in the form of the development of recommendations.

While going through these coding steps, a constant comparative approach to analysis is used. According to Leedy, this method is the "continual process of comparing data segments and data codes within and across categories" (Leedy, 1997, p. 164). This researcher constantly compares each piece of literature read with a piece that has been previously reviewed to attempt to find the common ground between the ERP success prerequisites mentioned.

Data Presentation

Results analyzed are presented in two tables. The first lists outs the prerequisite elements and their sources identified in the selected literature. The second shows the categorizations of these prerequisites identified into project management problem areas of scope, schedule, quality, cost and expectations. After summarizing the data analysis, this study explains the role of project management in each of the prerequisite identified elements. Final conclusions of the study are presented as an annotated list of recommendations for ERP implementation project managers, grouped by project management problem areas.

Review of References

This section contains an annotated bibliography of the primary references examined during the research. Each entry below includes a discussion on:

  • Key aspects of the reference related to the purpose and problem of this paper.
  • The role that the reference plays in the content of the paper.
  • The criteria used to select the reference.

References published are in various formats, including research papers, books, journal articles and surveys. Based on the content, these documents presented listed below are divided in two categories. Within each category, the entries are organized alphabetically.

  • ERP Implementation and Project Management
  • Research Methodology

Risk Definition

Technical "arise largely because of information processing technology"

Business "derived from models, artifacts, and processes that are chosen and adopted as part of the ERP implementation"

Organizational "derived from the environment - including personnel and organizational structure - in which the system is chosen and implemented" Source: O'Leary, 2000

Within each risk category, O'Leary proceeds to explain its effects on the ERP life cycle. With the purpose of this study in mind, this researcher focuses on the implementation stage of the life cycle. This article identifies a list of 22 critical success factors in ERP implementations based on the literature reviewed by the authors. Using a survey approach, the importance of each factor is assessed. Factors are coupled with various implementation stages. The criticality of these factors is ranked based on survey responses by stage.

The authors conclude that the most important part of an ERP implementation project is the beginning. These factors include conducting a detailed software selection process and securing commitment from all levels. Throughout the implementation, training, education and communication are key.

The ERP success factors outlined by Somers and Nelson help this researcher formulate the list of prerequisites in the Analysis of Data section of this paper. In addition, this article is cited in the Introduction and Brief Purpose section. Welti, Norbert (1999). Successful SAP R/3 Implementation - Practical Management of ERP Projects. Harlow, Essex, England: Addison Wesley Longman Limited.

Using the case study method, Welti thoroughly documents the entire project management process of an ERP implementation that he uses to manage. Project approaches, such as scope definition, work breakdown structures, resource and risk management, as well as reporting are strictly followed from the beginning to the end. The project is broken into phases, which includes:

  • Planning: "In this phase, the project scope is defined, the organization enrolled, the resources allocated, the implementation schedule created, the as-is and to-be concepts established, and the technical environment set up" (p. 17).
  • Realization: The project team sets up and customizes the ERP system according to business requirements, resulting in a prototype system.
  • Preparation: The project team converts data, completes system setup, tests processes and integration, trains users and finishes documentation.
  • Productive: End users process live data on the system. Project team adjusts and fine-tunes the system.

Underlying these distinct phases, "training, project control, risk management, and change management are issues that affect all phases of the project" (p. 102).

Research Methodology

Krippendorff, Klaus (1980). Content Analysis: An Introduction to Its Methodology. Beverly Hills, CA: Sage Publications.

In addition to providing a theoretical framework on the content analysis research methodology, Krippendorff's book contains a practical guide to content analysis procedures. This book has helped this researcher maintain the approach and focus of the research process. This work is cited in the Method section of this study. Leedy, Paul (1997). Practical Research Planning and Design. Upper Saddle River, NJ: Prentice Hall.

This book presents a general guide to research, including discussions of various research methodologies. Leedy's discussions of literature review and qualitative research are cited in the Full Purpose and Method sections of this study. In addition, this researcher's data analysis approaches are based on the section on grounded theory research design from page 162 to 164.

Five problem areas.

  1. Scope - Top management's participation in defining the ERP project scope ensures that the objectives are aligned with company strategic priorities (Bonerjee, 2001).
  2. Quality - By linking performance measures and incentives to ERP project success, top management can positively affect quality (Buckhout, Frey and Nemec, 1999).
  3. Time - Top management participation boosts perceived priority and inspires project teams to work harder (Scavo, 1998). In addition, having executives easily assessible speeds up decision-making processes for the project (Scavo, 1998).
  4. Cost - Project costs can be reduced as a result of effective control on scope and schedule (Gray and Larson, 2000).
  5. Expectations - By getting involved, top management, as some of the most important stakeholders, can ascertain that their expectations are clearly communicated. Meanwhile, the presence of top management in the ERP project team invariably encourages employee involvement and cooperation (Mendel, 1999; Bucker, Inc., n.d.). Employees can make their expectations known by participating in the project and communicating with their managers.

Strong and multi-talented project management

According to Mousseau, "the (ERP) project manager is the individual who acts as a leader to communicate and manage a clear vision of the goals and objectives, and manages the process so that that appropriate timing, resources and sequencing tasks produce agreed-on deliverables within scope and budget" (Mousseau, 1998, online).

From this explanation, it's evident that a capable ERP project manager addresses all of the five problem areas:

  1. Scope - A clear vision and good communication ensure everyone on the team knows exactly what the project is to accomplish.
  2. Quality - Producing deliverables as agreed means a working ERP system.
  3. Time - Completing tasks with appropriate timing leads to finishing the entire project in time.
  4. Cost - Adhering to budget constraint is meeting the demand of cost.
  5. Expectations - Strong communication helps project team manage expectations and better understand stakeholder needs.

Proper balance of IT and business emphasis

Balancing IT and business emphasis in an ERP implementation helps to ensure the system meets business requirements, while adapting a sound, long-term technological platform (Campbell, 2000). To achieve this balance, both sides have to cooperate and have input into the ERP project (Sweat, 1999). Part of this cooperation reflects in both sides having a clear sense of responsibility in the ERP project, which helps to clarify scope. Meanwhile, the integration of IT and business efforts improves the quality of the ERP implementation (Brown, 1999).

User involvement

If the employees who are not on the project team are excluded from the entire ERP implementation process, they may resist or fear the new system (Mendel, 1999). On the other hand, involved users are not only more motivated to adopt the new system, but they can also help identify and resolve potential issues early, thereby improving implementation quality (Brown, 2001). As system is tried, expectations of user can be better gauged and met during implementation.

Appropriate and timely training

According to McAlary, "successful ERP implementation depends on successful training" (McAlary, 1999). Training teaches new skills, which makes employees feel more confident and more enthusiastic about the possibilities with the new system (Plotkin, 1999). Appropriate timing for training varies by company. The key is to balance the needs of current work and the new system (O'Leary, 2000).User involvement like, quality of ERP gets improved with proper training.

Clear and measurable project objectives

Having clear project objectives is critical to the entire project, especially at the beginning (Somers and Nelson, 2001). These objectives are referred to as scope in project management (Gray and Larson, 2000). This prerequisite is listed in the following

Contexts:

  1. Helps the project team maintain focus by minimizing scope creep, which means going beyond the defined tasks of the project (Scavo, 1995).
  2. The measurable attribute of this clear project scope makes analyzing the level of success easier and employees more motivated because they know exactly how their work will be evaluated (Welti, 1999).

Conclusion and Recommendations

By using literature analysis as the general research methods and low level theory coding steps with steady comparison to carry out data analysis, this study has measured a list of fifteen fundamentals for successful ERP implementation.

The purpose of this study is to examine and measure this list of fundamentals from the project management point of view and present recommendations meant at helping project managers succeed in ERP implementations. The list of fundamentals and the measures are completed in the Analysis of Data section. This section presents the recommendations resulting from the analysis.

Each of the project management problem areas starting from -- cost, time, scope, quality and expectations, Managers should use following recommendation for successful implementation of ERP. Every recommendation is explained with examples selected from the literature, which are presented as exact action items below each entry of recommendation.

  1. Scope - Recommendations to define objectives and maintain focus
    1. Make sure that the top management of the company takes the ownership of the project
      • In addition to getting involved, lead the implementation and take responsibility for the results (Buckhout, Frey and Nemec, 1999; Donovan, 1999).
      • Ensure that the objectives of the project are linked with company strategic priorities (Bonerjee, 2001; Forger, 2000).
      • Be champions for the implementation at all times and motivate employees from all levels of the company to get involved (Mendel, 1999; Taylor, 2000).
    2. Develop a set of clear and measurable objectives for the ERP project
      • Keep the following criteria in mind when defining ERP project objectives: clear, measurable, and controllable and the savings quantifiable (Welti, 1999).
      • Plan for the end of the project before the beginning, i.e., knows exactly the boundaries or scope of the project (Donovan, 1999).
    3. Plan thoroughly before starting the project
      • Define the exact business value to derive from the ERP project (Sweat, 1999; Jeffery, 2001).
      • Plan to implement the ERP system in short, focus phases with many milestones (Forger, 2000; Mendel, 1999).
      • "Create an ERP implementation road map or critical path document" that identifies milestones and task relationships (Plotkin, 1999, online).
      • Know what to do every step of the way - make sure the plan covers mission, operations, system implementation and education (Bucker, Inc., n.d.).
  2. Quality - Recommendations to achieve desired results
    1. Put capable people into the project team
      • Include the best managers of the company in the project team if possible. If not, at least maintain close communication with them (Campbell, 2000).
      • Recruit technologically competent people who understand the company business into the project team (Mendel, 1999).
      • Use consultants strategically - don't focus just on costs and sacrifice quality and time (Macvittie, 2001). On the other hand, avoid over-reliance on the consultants - learn from them (Sweat, 1999).
      • Foster teamwork and the culture that is oriented to solve problems (Savin and Silberg, 2001).
    2. Involve the end-users in the implementation
      • Ask the end-users to perform daily functions on the new system and use feedback to improve the implementation (Martin and Sara, 2001).
      • Organize a team of "super-users", who will be the internal experts of the ERP system. They should learn the system thoroughly and actively participate in the implementation process (Plotkin, 1999)
    3. Emphasize employee education
      • Integrate business process discussions into training and pilot testing, encourage them reflect on daily tasks (Schultz, 2000).
      • Include managers in the training because they need to see first-hand the functionalities of the new system in addition to offering special insights (Plotkin, 1999).
      • Train the top managers on the "big pictures" - concepts and applications of ERP (Bucker, Inc., n.d.).
    4. Properly balance IT and business requirements
      • Involve IT early in the project to validate ERP sustainability and consult their expertise during implementation (Spangenberg, 1999).
      • Make sure to reflect business needs in the application - avoid making decisions based on IT recommendations alone (Sweat, 1999; Savin and Silberg, 2001).
  3. Time - Recommendations to complete the implementation on Schedule
    1. Maintain a simple project organizational structure
      • Minimize levels of reporting within the project team (Bucker, Inc., n.d.).
      • Empower project team and support rapid decision-making relating to ERP implementation (Forger, 2000).
      • Streamline project team communications (Scavo, 1995).
    2. Implement and maintain project controls diligently
      • Track project deliverables and milestones rigorously (Jeffery, 2001).
      • Manage tasks along the critical path with top priority to prevent delays (Kulik, 1997).
      • Create an efficient work culture that treats deadlines seriously (Forger, 2000).
    3. Manage transitions effectively
      • Implement in phases if possible to avoid setbacks in both management support and time (Sweat, 1999).
      • Test program and processes thoroughly to minimize problems when going live (Martin and Sara, 2001).
      • If necessary, develop temporary solutions to bridge the old processes to the new system (Plotkin, 1999).
      • Employ change management techniques to cope with rejections (Forger, 2000).
      • Ensure sufficient implementation support from the vendors and consultants during the initial days of going live (McAlary, 1999).
  4. Cost - Recommendations to stay within budget
    1. Plan and manage risks proactively
      • Identify potential ERP project risks, and come up with plans to prevent them from becoming problems (Kulik, 1997).
      • Know how to respond to risk occurrences ahead of time (Welti, 1999).
    2. Stick to the project plan and minimize scope creeps
      • Have proactive measures in place to deal with scope creeps (Desai, 1997).
      • Obtain management support to minimize demands for unimportant functionality changes to the ERP system (Buckhout, Frey and Nemec, 1999; Wagle, 1998).
      • Minimize customizations to the ERP software (Scavo, 1998; McAlary, 1999).
    3. Stay on top of the project budget
      • Establish a realistic project budget with contingency reserves to cover unforeseeable costs (Bowen, 1998).
      • Regularly monitor project implementation costs and schedule (Jeffery, 2001).
      • Stick to the project schedule and planned resource usage (Welti, 1999).
  5. Expectations - Recommendations to manage and meet stakeholder needs
    1. Communicate the project goals clearly
      • Help employees understand the impact of ERP on their work and the critical nature of the project (Taylor, 2000; Plotkin, 1999).
      • Sell the project to all employees using various marketing activities involving project team members and top management (Welti, 1999).
    2. Include the employees in the implementation process
      • Gain user buy-in early on by reviewing business processes before starting the project (Savin and Silberg, 2001).
      • Turn the ownership of the project over to the end users (Scavo, 1995)
      • Make them feel like they are part of the ERP implementation process (Mendel, 1999).

Appendix A - Terms and Definitions

ERP Systems

ERP is the short form for Enterprise Resource Planning. ERP systems are "Computer-based systems designed to process an organization's transactions and facilitate integrated and real-time planning, production, and customer response" (O'Leary, 2000). ERP is widely considered as an information backbone for a company (Forger, 2000; Campbell, 2000).

Going Live

Going live is the point in ERP life cycle where the system is first used for real production (O'Leary, 2000). For examples, real orders are executed, real invoices are prepared, and vendor check is done genuine which are issued from the new ERP system.

Implementation

In the context of ERP, implementation wuidely means keeping the ERP system in place and start live making on it (Robey, Ross and Boudreau, 2000). Any way, it can also be ample to beyond the "go live" point (PA Consulting Group, 2000; Davenport, 1998). Typically such comprehensive outlook includes the change in business process that accompanies the new ERP system.

Prerequisite

According to www.dictionary.com, prerequisite means "Required or necessary as a prior condition". In this case, this refers to the circumstances that exist before the outcome of an implementation is determined (Robey, Ross and Boudreau, 2000).

Project

A project is "a complex, no routine, one-time effort limited by time, budget, resources and performance specifications designed to meet customer needs" (Gray and Larson, 2000, p. 4).

Project Management

Project management is the application of facts, tools, skills, and techniques to project actions in order to meet stakeholder requirements and expectations from a project. Meeting or stakeholder requirements and expectations invariably involves balancing competing demands among:

  • time scope quality and cost.
  • Stakeholders having differing expectations and needs.
  • Unidentified requirements (expectations) and identified requirements (needs) (Scope Creep)

Several small changes to project scope which result in scope changes in the end deemed to have major impacts to project results (Gray and Larson, 2000).

Successful ERP implementation

Success of ERP implementations can be stated in two different ways. According to Plotkin, the final way of success for an ERP implementation is the value that the organization gains from system. (Plotkin, 1999). Another definition of ERP implementation success is the fulfillment of the initial project requirements for going live, such as getting deadlines, staying under budget and system performing as predicted (Robey, Ross and Boudreau, 2000). The second definition applies to the shorter-term definition of implementation and is adopted for the reason of this study.

Survey Questionnaire

  1. What is your company's employee strength and what are their duties?.
  2. How is stocking procedure done for the raw material?
  3. What is maximum number of goods manufactured in a day?
  4. Do you purchase raw material from one particular dealer or buys according to the market quotation?
  5. Is any standard procedure set for the goods produced?
  6. Do you meet deadlines for Deliveries?
  7. How do you take orders and fulfill it?
  8. How is production details recorded?
  9. Are you interested in making technological changes in your company?

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