Wednesday, 22 May 2013
Implementing a New Major IT System – The Likely Difficulties and How Best to Overcome Them
Authored by Sara Omer
In the last post we discussed how difficulties may arise when implementing a new major IT system and in this post we identify what those likely difficulties are and how best to overcome them.
A major concern identified in process technology implementation in a study undertaken by Wen-Hsien, was the consistency between business processes and the selected Enterprise Resource Planning (ERP) system. Their survey findings - with the aid of ANOVA analysis - pinpointed the direct impact of the degree of correlation between the ERP systems and the business processes on organizational performance and user’s satisfaction. Moreover, considering the generic nature of most pre-packaged ERP systems, customization is critical in any implementation in order to suite the running business process, the writers further highlighted the need for a degree of business process re-engineering as a pre-requisite with any new ERP system implementation to bridge any possible gap between the information systems parameters and business process information flow. The second major concern is resource related.
ERP systems are always extremely high cost products. It’s a typical practice that the high initial cost of purchasing and installing the system is confused with the higher cost of implanting the system. Oversight of the integration cost is a main factor of ERP failure, studies evaluated that the system based cost up to 40% of total implantation cost, out of which only 15% is attributed to ERP software acquisition, the remaining 60% coincides with professional services required to deploy integration, that is to say consultancy and system integrators fees, data cleansing and migration. Hence ERP implementation should never be underestimated in terms of financial impact and operational significance; it should be addressed on strategic level as a critical factor for the success of a company’s business process.
Business success is a factor of accuracy and consistency of viable information to enable robust assessments and sound decisions to achieve business goals. Considering the massive amount of data to be compiled, processed and transmitted, information systems, in the form of ERP systems, are inevitable for any type of business. Strategists stigmatize ERP systems as the platform for business integration, enabling superior competitive advantage through improved proximity, satisfied customer demands, 'pull' response capabilities, reduced cycle time, improved efficiency and accurate financial information yield, in general ERP helps control business processes and facilitates decision making.
Researchers have further identified a number of elements with momentous influence on the success of an ERP system; Project management, higher management involvement, business process re-engineering, professional support services, and financial controls.
These factors are all profound assessments of any information system requirement, and if taken into consideration can most certainly aid in overcoming difficulties that may arise along the way.