Week 4 : ERP’s Maintenance Overhead

ERPs usually require frequent application of vendor software patches in order to address minor security/functionality issues and bugs.  Not applying these patches can result in the vendor withdrawing support for the ERP.  This process occurs in Operation stage.  Moreover larger updates, requiring mini ERP implementation projects, can occur as frequently as every three years.

1. What are the implications for organisations adopting an ERP?
2. Do you think the text captured the complexity of this?
3. Why/Why not?

The ERP vendor uses various techniques in approaching ERP development, which is called traditional ERP life cycle (as known as ERPLC or Rapid ERPLC). It is as same as Traditional Software Life Cycle. An organisation needs to consider some steps before changing their system (which called Change management), such as:

1. Define a scope and initialization.
   • At this stage, the management need to make some clear objectives in their implementation plan to their SMEs (Subject Matter Experts). It means they provide a clear knowledge about the business regulation. Additionally, there are critical activities in this stage, such as giving a clear input about UI (User Interface); and assessing, reviewing and choosing a suitable ERP vendor from some option in their plan.
2. Analysis design.
   • The main activities in this stage are:
     1. Deciding a ERP vendors, consultant and SMEs.
     2. Portrayal business processes in the gap analysis for a long term.
     3. Customisation on ERP.
     4. Preparing some trainings and transformations.
     5. Installing sandbox of ERP system into local enterprise’s server.
3. Acquisition and Development Stage.
   • After an organisation ensures the new ERP works properly and meet their system requirements, they need to invest for their system development. Additionally, they need to create some configuration, authorisation, and modification in their regulation.
4. Implementation. 
   • The main activities in this stage are:
     • 
   • Every organisation uses one of four fundamental system conversion approaches, such as:
     1. Phased
     2. Pilot
     3. Parallel
     4. Big-bang (direct cutover).
   • The best practice in implementing system conversion is Big-bang, because it makes organisation cost saving and assists in overcoming directly and clearly to the issue. It will create the highest risk when applying Big-bang approach, but it is the most effective from others.
5. Operation.

• The management launches the new software; installs the software patches; upgrade from old to new system; and governs ERP vendor agreement. Additionally, a change management will provide training program for their organisation.  

    

One of division in an organisation, who modifies, supervises, and performs ErpLC, is Change Management (CM). see Fig 1. A failure of applying ERP software patches will rise when a CM does not have sufficient understanding on how to change the processes need, customise the ERP implementation, and deliver their business plans to the end-users. For those reason, a critical success factor for implementing an ERPLC, a CM needs some consultants and SMEs from the ERP software vendor. Wong & Tein (2003) argued that “the skills and competence of the project team are also a key factor influencing the success of ERP implementation”. Generally, there is an organisation’s objective of leveraging ERP system. They expect that they can implement ERP system in the long-term as their long-term strategies and perspectives.

Fig 1. CM takes role in the Traditional ErpLC.

What are the implications for organisations adopting an ERP? 

As the writer explained before, every ERP vendor and software consultants provide variety methodology of ERP implementation for an organisation. If the organisation had some mistake in choosing ERP vendor, it will make more costly, more time consuming, waste some recent resources and will not meet the deadlines in the business processes. On the other hand, a successful organisation may consider one of the main choices plan before adopting a new ERP system implementation. The writer will give some guidelines of best practice of choosing the implementation plan :

1. Comprehensive                →the most expensive, because it involves a high-level business processes to perform full functionality in the system.
2. Vanilla implementation   → cost saving, because it uses the bottom line of ERP features to meet the simplicity of the organisation’s business processes.
3. Middle-of-the-road            → in the middle between comprehensive and vanilla implementation.

There are some positive implications in the  implementing an ERP:

1. Senior management has an intense commitment :
   • Senior management involved in the project to determine, monitor, and give responsible the business processes through adopting ERP system to the ITD (IT Department). Besides, they will deliver their vision (commitment) to all multi-functional level.
2. A management has potential and experienced in project management :
   • A successful organisation will inform to all cross-functionality about their business plan in their business regulation, including a plan about implementing from their existing business systems into new systems by utilising ERP software. A successful ERP system is very crucial for an organisation. If the manager in an organisation recognised their system is fail, their business processes could have delayed. On the contrary, if they provide their definitions; their objectives; some guidelines clearly during process and resource plan development; and competent leadership training to all team members in their project, their business processes will run very effectively and efficiently
3. Minimizing Business Process Re-engineering (BPR) and system customisations.
   • A process of Business re-engineering expected by organizations to meet the functionality in the ERP system. Customization an ERP software can make a system become  vulnerable and will be difficult for organisation to overcome it. The writer will give some guidelines in his blog in week 5 more deeply, about why customization in ERP should be avoided
4. A management maintains a training program and concerns at the CM :
   • Jarrar, Al-Mudimigh, and Zairi (2010, p.6) argue that “Change management has to be structured within an overall Business Process Management methodology to achieve its goals.

Do you think the text captured the complexity of this? Why/Why not?

The writer discuss this week about the package of ERP software which contains vendor software patches to handle some bugs and issues in less security/functionality. Additionally, it often happens, especially in mini ERP implementation project, during Operation stage. That patches does not work properly at the same software. It can frequently occur every three years. According to writer’s objectives, the measurement of the complexity of an ERP implementation project can be assess using several approaches:

1. Look at the type of ERP infrastructure. If the organisation uses Three-tier infrastructure (which works independently at single layer), especially three-tier client-server model, it produces the complex business processing on different computer. As a result, those infrastructures have some drawbacks, such as economics, and complexity during developing an environment.
2. Assess from the ERP software vendor. Each ERP vendor has their market targeted. Some ERP software vendor can handle the complexity of an organisation, might be creates some difficulties to others. Scavo (2010) shows that two big ERP vendors, like SAP and Oracle, they can perform and support the most complex system, business objectives, a massive amount of functionality in various enterprises, and deal with the regional regulation. Additionally, he asserted that “those vendors are highly configurable”.
3. Can be assessed from the price of the ERP software. Every implementation activity will increase the organisation’s expenses.

References

European Centre for Best Practice Management, viewed 15^th August 2013, http://zairi.com/wp…/ERP-Implementation-Critical-Success-Factors-–.pdf‎.

Jarrar, Y.F. Dr. Al-Mudimigh, A. & Zairi, M. Prof. 2010, “ERP Implementation Critcal Success Factors – The Role And Impact Of Business Process Management”,

Motiwalla, L.F. & Thompson, J. 2009, Enterprise Systems for Management, Upper Saddle River, New Jersey.

Rabaa’i, A.A. 2009, “Identifying critical success factors of ERP Systems at the higher education sector”. ISIICT 2009 : Third International Symposium on Innovation in Information & Communication Technology, pp. 133–147.

Scavo, F. 2010, Factors that affect ERP implementation cost, viewed 15^th August 2013, http://fscavo.blogspot.com.au/2010/08/factors-that-affect-erp-implementation.html.

Wong, B. & Tein, D 2003, “Critical Success Factors for ERP projects”, viewed 14^th August 2013, http://cms.3rdgen.info/3rdgen_sites/107/resource/orwongandtein.pdf.