Dissertation on "Challenges of Enterprise Resource Planning ERP Implementation"

Dissertation 81 pages (22297 words) Sources: 50

[EXCERPT] . . . .

ERP Systems

CHALLENGES of ENTERPRISE SOFTWARE IMPLEMENTATIONS

The contributions of Enterprise Resource Planning (ERP) systems continue to be problematic for many organizations globally. Continually challenged across industries to get the greatest potential value from their significant investment in ERP systems, many organizations continually add on incremental applications and processes. This continual addition of modules, or as they are often called, ERP extensions, only serves to create a far greater level of system, prices and integration complexity. Ironically organizations choose to expand their use of ERP systems to reduce process, system and integration complexity, yet ironically the opposite often occurs. The role of ERP system as central catalyst and coordination point of information throughout an organization is going through a fundamental change today. No longer siloed and historical in its focus, ERP systems are now increasingly being relied on as part of demand-driven networks. Given the severe economic conditions of the last three years, organizations are relying on their ERP systems to be more of their business models, less of just a reporting or coordination platform. ERP systems are being called upon to contribute to the performance of business models not just report back information. The growth of the Demand Driven Supply Network (DDSN) and the concepts of Distributed Order Management Systems (OMS) are both a case in point. The evolution of ERP systems to encompass DOM-based functionality is evaluated in this dissertation, specifically from the standpoint of how the tailoring of information to specific roles within an organization leads to greater productivity and profitability.

The critical link of ERP systems supporting greater role-based information and the resulting increase in efficiency, productivity, and profitability is the focus of the research objectives, methodology and analysis in this dissertation. As ERP systems are being more integrated into the core business models of the organizations who have often invested millions of dollars and thousands of man-hours to get them delivering valuable information. With ERP systems taking on such a critically important business value, the need for them to become more focused on role-based contributions has emerged. The impact of role-based data and information workflows continues to be seen across manufacturing and service sectors of the global economy. This dissertation captures the key criteria that organizations are using for choosing to augment and enhance the performance of their existing ERP systems to attain greater levels of performance over time.

Inherent in any ERP system redefinition is the aligning of its most critical components, systems and reporting to the unmet needs of the organizations these systems are originally designed to meet. What has been happening in the last decade is that the objectives and business models of organizations have change significantly, with major impacts on the roles, responsibilities, and tasks of employees. ERP systems in general have not kept up with this shift. The development of role-based ERP systems has been the primary strategy organizations have relied on to get greater value from their investments in these systems over time. Coincident with this transition to role-based ERP systems has been an en masse adoption of analytics, business intelligence (BI) and Enterprise Performance Management (EPM). All of these areas are being integrated into role-based ERP systems so that performance can be better monitored, evaluated, and corrected over time.

Organizations that are taking this approach to redesigning their ERP systems are also integrating more transaction-based processes and workflows into their distributed order management (DOM) systems as well. This dissertation shows that those who have gone to the greatest extent of this process integration and process-centric view of their organizations are creating Service Oriented Architectures (SOA) that integrate distributed order management (DOM) systems as a key component. Early adopters are seeking to tightly integrate ordering, order management, supply chain management, pricing, and financial management all into a cohesive and highly integrated SOA platform. As a result of early adopters choosing to redefine their organizational structures using this approach, SOA platforms and their underlying architectures are also quickly becoming critically important to the future of ERP systems. This dynamic will be evaluated in greater depth throughout the analysis of role-based ERP adoption, Business Process Management (BPM), Business Process Reengineering (BPR), distributed order management (DOM) and SOA platform and architecture definition. The role of Extensible Markup Language (XML) is also included in this analysis as it is a critical integration technology for unifying disparate, legacy systems to form a common system of record. XML has emerged as the de facto standard and today is accelerating in acceptance and use as a complimentary technology in role-based ERP systems.

Chapter 1

Why Role-Based ERP Systems Are Critically Important to Organizational Productivity and Profitability

a. Background of the problem

Enterprise Resource Planning (ERP) systems have grown in adoption and use as a result of organizations needing to re-align their business models to rapidly changing and often turbulent market conditions, the rapid growth of the Internet as a viable distribution channel, and the inherent cost reductions possible from greater automation. These three factors, in addition to a myriad of company-specific forces, are in the process of redefining what an ERP system is, what its functionally components are, and how its information and intelligence is used to support decision-making processes.

Organizations struggle to keep their ERP systems synchronized to their businesses. Studies indicate that organizations on average use only 30% of the functionality in their ERP systems over the long-term. As a result the majority fail to gain the operating efficiencies necessary for ensuring the entire value chains of their corporations stays at a performance level sufficiently high enough to generate a positive Return on Investment (ROI) in the ERP system and related technologies.

ERP systems are gradually losing step with the needs of the companies and organizations they were initially designed to serve. The business value of ERP systems therefore is dropping as they lack the ability to stay aligned with revised and often expanded roles and responsibilities of those that use these systems most in organizations. The problem is one of redefining the methods, techniques and taxonomies ERP systems use to deliver data, insights and intelligence that is more relevant to the rapidly changing roles in organizations. Studies indicate that just adding in more components to cover a broader range of any given organizations' value chain is ineffective in delivering greater value to the enterprise. While heavily promoted by ERP vendors and consultants, this "bigger is better" approach is one that is fraught with failure. The fact that there is even more data chasing even fewer hours of those relying on the system to do their jobs significantly reduces the chances of success of this strategy. Instead the tailoring of an ERP system to the unique and often rapidly changing needs of an organization is critical. This forces recognition of the problem that the business value of ERP systems is decelerating much more rapidly than anyone has anticipated before, as enterprises seek to find the critical information they need through alternative processes and systems to support the roles they rely on for their strategies to be implemented and business plans realized.

Extensible Markup Language (XML) as the

b. Statement of the problem

ERP systems are failing to deliver on the promise of greater efficiency, cost reductions, and the ability to deliver greater customer satisfaction through more effective company-wide performance. Further, ERP systems' core information processing functions are not staying consistent to the needs of the changing roles of organizations, which is leading to a significant level of dissatisfaction with their performance. Studies indicate that nearly 70% of ERP implementations fail to deliver on the initial objectives they are designed to accomplish, leading to widespread dissatisfaction. Studies of customer and user satisfaction indicate that 68% are dissatisfied with their ERP systems. One study of manufacturers using ERP systems indicates that 45% are reverting to manual processes to accomplish their business strategies. A study of organizations that rely heavily on channel management-centric systems to integrate their selling, pricing, sales and product configuration strategies to attain greater sales effectiveness are constrained from the lack of accurate data provided by ERP systems as well. The greater the complexity of the product configurations being resold through channels the greater the need for integration to the process and system level. User satisfaction with ERP systems is proportional to the levels of continual re-alignment of analytics, business intelligence, financial and operating data to their specific roles. In the long-term the extent to which an ERP system aligns to the roles of the organization it serves is the extent to which it also contributes greater financial performance. Not planning for, implementing, and staying vigilant to the need to keep ERP systems to strengthen the roles in enterprises they serve has significant impacts on financial performance, customer satisfaction and the long-term ability to stay competitive in new markets.

The problem of how to keep ERP systems continually in alignment to the information needs of enterprises is encapsulated in the challenges of creating and sustaining role-based information systems. Yet to keep ERP systems in… READ MORE

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