Many large organisations have made significant investments of both time and capital to Implement ERP systems, however not all implementations go as well as intended (Bingiet al., 1999; Kumar and van Hillegersberg, 2000). Owing to the complex nature of ERP Systems, many implementations have been difficult, lengthy and over budget, terminated before completion, and/or failed to achieve their business objectives even a year after implementation (Volkoff, 1999). ERP systems are organisation-wide systems their implementation involves multiple stakeholders, often in geographically disperse locations. Therefore, an ERP system requires data standardisation, integration of the system with other information systems and management of consultants and vendors (Soh et al., 2000). Traditional project management challenges are magnified in such environments, making the implementation more difficult, expensive and failure- prone (Holland and Light, 1999). This complexity suggests that results obtained in other simpler technology implementation environments do not automatically apply to ERP environments (Markus et al., 2000). The significance of a new ERP system and the inherent risks in implementing such a system make it essential that organisations focus on ways to improve ERP implementations.
Even though the use of ERP systems is growing and becoming more popular, these systems are still somewhat unfamiliar in the construction industry. Many engineering and construction firms know how beneficial ERP systems are, but they still hesitate to adopt these systems due to their high cost and risk. Without a doubt, a successful ERP implementation is an essential for the benefits from such systems, so this issue is always considered top priority in the ERP related research area. It is obvious that several important factors must be considered for Project work report 2013
FISAT BUSINESS SCHOOL Page 3
successful implementation, but most engineering and construction firms have no idea what factors should be considered most heavily. Therefore, the main goal of this project is to help the firm better understand the critical factors that need to be considered to ensure the success of ERP systems.
Since there have been few studies attempting to validate the factors affecting both ERP implementation and user adoption, this project focused on identifying the factors for the ERP success from both implementation project and user adoption perspectives. Then, identified factors were examined to verify their relationships with success indicators associated with the redefined ERP success. Furthermore, the project suggested recommendations for the ERP success showing how to approach ERP implementation to avoid failure and what we should do considering the significance of each factor to a given dependent variable based on the findings of the study. These recommendations can provide helpful information to construction firms when they consider implementing or upgrading their ERP systems. This information should help companies reduce tremendous ERP implementation risks so that companies can have more chances to improve their business value with the success of EPR systems A successful ERP implementation is an essential for the benefits from such systems, so this issue is always considered top priority in the ERP related research area. It is obvious that several important factors must be considered for successful implementation, but most construction firms have no idea what factors should be considered most heavily. Therefore, the main goal of this study is to help these firms better understand the critical factors that need to be considered to ensure the success of ERP systems. This study formulated the conceptual ERP success model based on theories and knowledge gained from several industry practitioners.
Project work report 2013
FISAT BUSINESS SCHOOL Page 4
Traditionally, the construction industry has been faced with the problem of getting and keeping projects on schedule, under budget, and safe with the quality specified by the owner and/or architect/engineer (A/E). Although the construction industry is one of the largest contributors to the economy, it is considered to be one of the most highly fragmented, inefficient, and geographically dispersed industries in the world. To overcome this inefficiency, a number of solutions have long been offered.
Modern Enterprise Resource Planning (ERP) systems have their roots in Materials Requirement Planning (MRP I) systems, which were introduced in the 1960s. MRP I systems are computer-based systems for inventory control and managing production schedules. As data from the factory floor, warehouse, or distribution center began to affect more areas of the company, the need to distribute these data across the entire enterprise demanded that other business area databases interrelate with the MRP I system. However, MRP I systems had limitations on this functionality leading to the development of Manufacturing Resource Planning (MRP II) systems, which have now given way to ERP. MRP II systems can evaluate the entire production environment and create or adjust master schedules based on feedback from current production and purchase conditions. Finally, companies such as SAP, Oracle, and others are reaping the rewards of dramatic growth as companies move away from legacy MRP II systems and begin the process of ERP implementation. Their solutions are more robust than any host-based MRP system to date (Bedworth and Bailey 1987; Intermec 1999; Januschkowetz 2001). OLeary (2000) defined ERP systems as computer-based systems designed to process an organizations transactions and facilitate integrated and real-time planning, production, and customer response (O'Leary 2000).
Project work report 2013
FISAT BUSINESS SCHOOL Page 5
The process of ERP systems includes data registration, evaluation, and reporting. Data registration is entering data into a database, data evaluation is reviewing data quality and consistency, and data reporting is the process of data output sorted by certain criteria (Januschkowetz 2001). The role of enterprise resource planning (ERP) does not match its name. It is no longer related to planning and resources, but is rather related to the enterprise aspect of the name. ERP attempts to unify all systems of departments together into a single, integrated software program based on a single database so that various departments can more easily share information and communicate with each other. This integrated approach can have a remarkable payback if companies install the software properly. An increasing number of companies want to obtain all relevant information about their business processes to control and guide them in a profitable direction (Koch 2002). Most ERP vendors have suggested that the best way to obtain the full benefits of their software was to implement their software packages with minimal changes
Project work report 2013
FISAT BUSINESS SCHOOL Page 6
1.2 MACRO DIMENSIONS OF THE ISSUE UNDER STUDY, MICRO TRENDS AND CONTEMPORARY DEVELOPMENTS IN THE GIVEN AND RELATED ASPECTS UNDER STUDY.
The study involves the analysis of ERP effectiveness in Synthite Realty. In the study there involved macro dimensions and micro trends. The macro dimensions of the issue include the top management support for the ERP implementation for which they have to provide with the necessary financial resources and they ensure the presence of an expertise in the project team. Another macro dimension is the change management which includes the users resistance to change and their participation for the success of ERP. Another macro dimension includes the interdepartmental cooperation and communication as this software is not meant for any particular department as it is meant for the integration of the entire department. Enterprise Systems (ES), also called Enterprise Resource Planning (ERP) systems, are among the most important business information technologies to emerge in the last decade. While no two industries Enterprise Systems are the same, the basic concept of Enterprise Systems is focused mainly on standardization, synchronization and improved efficiency. ERP is basically the successor to material resource planning (MRP) and integrated accounting systems such as payroll, general ledger, and billing. The benefits of Enterprise Systems are very significant: coordinating processes and information, reducing carrying costs, decreasing cycle time and improving responsiveness to customer needs (Davenport 2000; Elarbi 2001). Traditionally, the construction industry has been faced with the problem of getting and keeping projects on schedule, under budget, and safe with the quality specified by the owner and/or architect/engineer (A/E). Although the
Project work report 2013
FISAT BUSINESS SCHOOL Page 7
construction industry is one of the largest contributors to the economy, it is considered to be one of the most highly fragmented, inefficient, and geographically dispersed industries in the world. To overcome this inefficiency, a number of solutions have long been offered. Recently, a significant number of major construction companies embarked on the implementation of integrated IT solutions such as Enterprise Systems to better integrate their various business functions, particularly those related to accounting procedures and practices. However, these integrated systems in construction present a set of unique challenges, different from those in the manufacturing or other service sector industries. Each construction project is characterized by a unique set of site conditions, a unique performance team, and the temporary nature of the relationships between project participants. This means a construction business organization needs extensive customization of pre-integrated business applications from ERP vendors. Unfortunately, such an extensive customization can lead a construction firm to ERP implementation failure. Based on a number of consultants comments, the best way to achieve the full benefits from ERP systems is to make minimal changes to the software. For these reasons, finding the best implementation strategy of integrated Enterprise Systems is mandatory to maximize the benefits from such integrated IT solutions in construction companies.
Project work report 2013
FISAT BUSINESS SCHOOL Page 8
1.3 OBJECTIVES OF THE STUDY
Usually, ERP vendors show off their successful implementation stories on their websites. However, there are also many failures behind their implementation experiences. ERP projects are notorious for requiring a long time and a lot of money. Large IT projects such as ERP implementations have more chance to be failures than most people expect. In the last decades, many studies have identified that the success rate is approximately 25%, the failure rate is also about 25%, and partial successes and failures exist around 50% (Kozak-Holland 2007). Obviously, it is very important to identify and understand the factors that impact heavily on the success or failure of ERP implementation. The main objective of the completed project is to present guidelines for ensuring successful ERP implementation, providing factors associated with the success of ERP systems in engineering and construction firms. To do so, the project identifies the factors affecting the success or failure of ERP implementation, and analyzes these factors according to the level of significance in affecting the success of ERP systems. To achieve the goal of the study, the following research questions 1) What are the factors affecting the success or failure of ERP implementation? 2) How can we define the success of ERP implementation? 3) How do we approach implementation to avoid failure?
The research objectives are 1) Exploring the factors affecting success or failure of ERP implementation. 2) Studying the conditions necessary for achieving success of ERP implementation. 3) Finding out methods to failsafe ERP implementation.
Project work report 2013
FISAT BUSINESS SCHOOL Page 9
1.4 SCOPE OF THE RESEARCH
The study was conducted in Synthite Realty during the period of June July. These benefits mostly come from the integration of all the necessary business functions across the organization, with which the organization can make its business processes more efficient and effective. However, the complex nature of ERP systems has required many organizations to commit significant organizational and financial resources to their ERP initiatives, which in turn have encountered unexpected challenges associated with system implementation. For this reason, ERP implementation is generally considered a high cost and high risk activity that consumes a significant portion of a companys capital budget and is filled with a high level of risk and uncertainty. There have been many failure cases reported in the literature, which shows mostly abandoned implementation projects with significant financial damage. Many companies have suffered from partial failures which resulted in tenuous adjustment processes for their business functions and created some disruption in their regular operations. To overcome these problems, more extensive studies with respect to the factors affecting ERP success or failure are required to minimize ERP implementation risks.
Project work report 2013
FISAT BUSINESS SCHOOL Page 10
1.5 NEED AND RELEVANCE OF THE STUDY
Traditionally, the construction industry has been faced with the problem of getting and keeping projects on schedule, under budget, and safe with the quality specified by the owner and/or architect/engineer (A/E). Although the construction industry is one of the largest contributors to the economy, it is considered to be one of the most highly fragmented, inefficient, and geographically dispersed industries in the world. To overcome this inefficiency, a number of solutions have long been offered.
There have been few studies attempting to validate empirically the factors affecting both ERP implementation and user adoption, this study focused on identifying the factors for the ERP success from both implementation project and user adoption perspectives. Then, identified factors were examined to verify their relationships with success indicators associated with the redefined ERP success. Furthermore, the research suggested recommendations for the ERP success showing how to approach ERP implementation to avoid failure and what we should do considering the significance of each factor to a given dependent variable based on the findings of the study. These recommendations can provide helpful information to construction firm when they consider implementing or upgrading their ERP systems. This information should help company reduce tremendous ERP implementation risks so that companies can have more chances to improve their business value with the success of EPR systems.
Project work report 2013
FISAT BUSINESS SCHOOL Page 11
Each construction project is characterized by a unique set of site conditions, a unique performance team, and the temporary nature of the relationships between project participants. This means a construction business organization needs extensive customization of pre-integrated business applications from ERP vendors. Unfortunately, such an extensive customization can lead a construction firm to ERP implementation failure. Based on a number of consultants comments, the best way to achieve the full benefits from ERP systems is to make minimal changes to the software. For these reasons, finding the best implementation strategy of integrated Enterprise Systems is mandatory to maximize the benefits from such integrated IT solutions in construction companies.
It is widely accepted from empirical evidence to date that the benefits from ERP systems are very significant (Gefen and Ragowsky 2005; Murphy and Simon 2002; Shang and Seddon 2000; Stensrud and Myrtveit 2003). These benefits mostly come from the integration of all the necessary business functions across the organization, with which the organization can make its business processes more efficient and effective. However, the complex nature of ERP systems has required many organizations to commit significant organizational and financial resources to their ERP initiatives, which in turn have encountered unexpected challenges associated with system implementation. For this reason, ERP implementation is generally considered a high cost and high risk activity that consumes a significant portion of a companys capital budget and is filled with a high level of risk and uncertainty. There have been many failure cases reported in the literature, which shows mostly abandoned implementation projects with significant financial damage. Many companies have suffered from
Project work report 2013
FISAT BUSINESS SCHOOL Page 12
partial failures which resulted in tenuous adjustment processes for their business functions and created some disruption in their regular operations (Gargeya and Brady 2005). To overcome these problems, more extensive studies with respect to the factors affecting ERP success or failure are required to minimize ERP implementation risks.
The results of this research can provide helpful information to engineering and construction firms when they consider implementing or upgrading their Enterprise Systems. Clearly, it is critical to identify and understand the factors that largely determine the success or failure of ERP implementation. This study will identify the causes of failure and analyze them according to their significance. If these causes are addressed properly, the contribution to the knowledge about ERP success will be huge. This is one of the key issues related to Enterprise Systems in the business domain, and can reduce tremendous ERP implementation risks. Furthermore, the research provides holistic understanding about the concept of integrated Enterprise Systems, including structure and representative modules for engineering and construction firms. This approach should allow construction firms considering the implementation of integrated Enterprise Systems to make informed decisions in the early stages of strategic planning in regard to the existing alternatives.
Project work report 2013
FISAT BUSINESS SCHOOL Page 13
1.6 METHODOLOGY
Data collection method The ERP implementation at the organisation saw a variety of change management activities implemented. Various departments were recipients of a range of change management activities according to the assessed impact that the change would have and the readiness of users in those departments. Various forms of data collection were employed.
PRIMARY DATA
Interviews. A range of interviewees was sought, representing a cross-section of the users of the ERP system. The interviews were designed to be semi- structured with open-ended questions covering implementation effectiveness, implementation climate (awareness response, feelings response and adoption intention).the interviewers include selected mangers, workers and the vendors who provide us the technical support .the survey was conducted with a sample size of 40 of which 15nos are managers and 25 are workers.
SECONDARY DATA
Review of organisational documents. Surveys, reports and other documents that were generated as part of the ABC implementation were reviewed.
Surveys. Triangulation was achieved through the collection of survey data from a small set of respondents in the departments. The strength of the respondents agreement with a range of statements (Table I) was measured on a five-point Likert scale, ranging from 1 strongly disagree to 5 strongly agree.
Project work report 2013
FISAT BUSINESS SCHOOL Page 14
FIGURE 1: Implementation effectiveness process cycle
Project work report 2013
FISAT BUSINESS SCHOOL Page 15
1.7 TOOLS OF DATA COLLECTION
The main survey was conducted through a questionnaire distribution among employees, and a total of 40 responses were received of which 70% have three or more than three years of experience in working with ERP. Among the respondents, about 50% of them are managers or higher level. The average of use hours of the ERP system was 11.3 hours per week, and 75% of the employees they spend 10hours or more with ERP/week.
0 TO 20%, 10% 20 TO 40%, 15% 40 TO 60%, 27% 60 TO 80%, 40% 80 TO 100%, 8% HOW MUCH DID ERP FULFILL YOUR BUSINESS STRATEGY 0 TO 20% 20 TO 40% 40 TO 60% 60 TO 80% 80 TO 100% Project work report 2013
FISAT BUSINESS SCHOOL Page 16
1.8 TOOLS AND METHODS OF STATISTICAL ANALYSIS
The main analysis done in this project was a comparison of samples using chi- square tests. Again the use of percentage analysis is also employed.
1.9 HYPOTHESIS
H0: There is a no relationship between motivation behind implementing ERP in the organization and the number of years of working experience in ERP H0: There is no relationship between motivation behind implementing ERP in the organization and the number of hours an employee dealing with ERP/ week.
Project work report 2013
FISAT BUSINESS SCHOOL Page 17
1.10 TECHNICAL TERMS USED IN THE STUDY
Manufacturing resource planning (MRP) Enterprise Resource Planning Systems Critical Success Factors (CSF) Legacy Systems Business Process Re-engineering (BPR)
1.11 LIMITATIONS
1. IT related research in the area of construction business management proposes research models without theories. So these surveys have been developed without sound theoretical models. 2. Lack of knowledge in the civil engineering aspects was a constraint in this project.
3. Lack of availability of adequate data was a constraint for this project.
4. Busy schedule of the top level executives were also a constraint for this project.
5. Employees resistance to change was also a constraint in the project.
Project work report 2013
FISAT BUSINESS SCHOOL Page 18
CHAPTER TWO REVIEW OF LITERATURE
Project work report 2013
FISAT BUSINESS SCHOOL Page 19
2.1 ERP innovation implementation model incorporating change management.
This article provides a preliminary validation of a model for how change management during an ERP implementation affects the effectiveness of that ERP implementation. ERP systems are an example of an innovation a idea, practice, or object that is perceived as new by an individual or other unit of adoption (Rogers, 1995). Implementation of an innovation is described as the process of gaining targeted employees appropriate and committed use of an innovation (Klein and Sorra, 1996).When introducing an innovation such as an ERP system to an organisation, the implementation process needs to be managed so that the expected benefits are achieved. Users require ongoing support from the organisation such as training, maintenance and equipment upgrades in order to achieve effectiveness. It has been suggested that many new systems fail due to implementation failure, rather than innovation failure (Klein et al., 2001). The factors leading to implementation effectiveness can be described using the model proposed by Klein et al. (2001), Figure 1. Change management is not explicitly included in this model, although its effect would be expected to influence implementation climate.
The implemented change management activities also affected different areas of the organisation in different ways. Each department within the organisation received a very different range of change management activities based on the identified needs, and it is evident that the range and types of change management received impact upon the effectiveness of the ERP implementation. The general attitude to the system by those in the department
Project work report 2013
FISAT BUSINESS SCHOOL Page 20
that received less change management was less positive than for those who were the recipients of more targeted activities. This indicates that change management is required throughout an organisation implementing an ERP system, even if the changes in one particular area of the organisation are not particularly great.
Project work report 2013
FISAT BUSINESS SCHOOL Page 21
2.2 A Critical Success Factors Model for Enterprise Resource Planning Implementation.
In this paper we apply the concept of CSFs, those factors that need to be considered and managed to ensure the success of a project, to explain differences in project outcomes. CSF models have been applied to both general project management problems (Slevin andPinto 1987), manufacturing system implementation (Lockett et al 1991) and the area of reengineering (Basheinet al 1994). The approach is particularly suitable for the analysis of ERP projects because it provides a framework for including the influence of tactical factors such as technical software configuration and project management variables together with broader strategic influences such as the overall implementation strategy. The contribution of the paper is twofold. It provides a framework for practising managers to aid their decision making and guide them in the development of an implementation strategy, and it identifies the role and influence of individual factors on each other and on the project outcome.
Organisations need to understand their current business structure and business processes associated with the existing IT system, and relate their existing situation to the business processes contained within the ERP system (Osterle 1995). There are process modelling tools which help organisations to align business processes with the standard package. For every core and support process in their generic business process model there are several alternative processes relating to best practices in different types of operations and business environments.
Project work report 2013
FISAT BUSINESS SCHOOL Page 22
ERP systems are now the most common IT strategy for all organisations, and this paper has presented a CSFs model that can aid management thinking in this difficult and complex problem. In addition to the identification of the role of legacy systems in the implementation of ERP systems, it has also been shown that there are different approaches to ERP strategy ranging from skeleton implementations to full functionality. There are also important differences in how organisations manage the gap between their legacy systems and the ERP business processes. It appears that it is easier to mould the organisation to the ERP software than vice versa. Looking ahead, it is clear that organisations will continue to develop their ERP systems by upgrading their systems and continuing to enhance their business processes. The next stage in the research will be to develop the framework, specifically focussing upon creating a set of quantitative measures for assessing the impact of each factor on their implementation outcome for a large sample of companies.ERP Implementation Process consist of two factors Strategic and Tactical.
Project work report 2013
FISAT BUSINESS SCHOOL Page 23
2.3 An analysis of success and failure factors for erp systems in engineering and construction firms
This research formulated the conceptual ERP success model based on strong background theories and knowledge gained from several industry practitioners. The survey instrument was designed based on the conceptual ERP success model, and was tested before conducting the main survey. The ERP success model and its variables were finally fixed after completing a series of data analyses with the main survey. This research conducted Structural Equation Modeling (SEM) to examine the validity of the proposed research model as a complementary analysis.
In most cases, the cost of a full-scale ERP implementation in a large organization can easily exceed $100 million, and the implementation usually takes at least 2 years to complete. Not only do ERP systems need plenty of time and money to implement, even successful implementations can disrupt a companys culture, create extensive training requirements, and lead to productivity losses. Furthermore, many experts say that over 50 percent of U.S. firms experience some degree of failure when implementing advanced manufacturing or information technology. Unfortunately, many companies have already experienced significant troubles trying to implement ERP systems, and these poorly executed implementations have had serious consequences. One recent survey revealed that 65 percent of executives believe ERP implementation has at least a moderate chance of damaging their business.
Project work report 2013
FISAT BUSINESS SCHOOL Page 24
The main objective of the completed research is to present guidelines for ensuring successful ERP implementation, providing factors associated with the success of ERP systems in engineering and construction firms. To do so, the research identifies the factors affecting the success or failure of ERP implementation, and analyzes these factors according to the level of significance in affecting the success of ERP systems. This study focuses on analyzing the ERP success from the combined point of view of implementation project and user adoption. Based on this concept, new success factors will be postulated with the redefined ERP success, and then will be validated empirically through data analysis. This study will identify the causes of failure and analyze them according to their significance. If these causes are addressed properly, the contribution to the knowledge about ERP success will be huge. Furthermore, the research provides holistic understanding about the concept of integrated Enterprise Systems, including structure and representative modules for engineering and construction firms. This approach should allow construction firms considering the implementation of integrated Enterprise Systems to make informed decisions in the early stages of strategic planning in regard to the existing alternatives.
Project work report 2013
FISAT BUSINESS SCHOOL Page 25
CHAPTER THREE
CONCEPTUAL OVERVIEW OF THE STUDY
Project work report 2013
FISAT BUSINESS SCHOOL Page 26
3.1 CONCEPT INTRODUCTION
Enterprise Resource Planning (ERP) systems are highly integrated enterprise- wide information systems that automate core business processes. The ERP packages of vendors such as SAP, Baan, J.D. Edwards, Peoplesoft and Intentia represent more than a standard business platform; they prescribe information blueprints of how an organisations business processes should operate. In this paper the scale and strategic importance of ERP systems are identified and the problem of ERP implementation is defined. A Critical Success Factors (CSFs) framework is proposed to aid managers develop an ERP implementation strategy. Companies are radically changing their information technology (IT) strategies by moving away from developing IT systems in-house and purchasing standard package software. More specifically, Deloitte and Touche state that ERP systems are now the preferred method by which businesses replace legacy systems. This shift is very clear in the ERP market. AMR Research state that the 1997 market for ERP systems was worth $15.68 billion and that this is likely to increase at a compound rate of 36% to $72.63 billion by the year 2002
Enterprise Systems (ES), also called Enterprise Resource Planning (ERP) systems, are among the most important business information technologies to emerge in the last decade. While no two industries Enterprise Systems are the same, the basic concept of Enterprise Systems is focused mainly on standardization, synchronization and improved efficiency. ERP is basically the successor to material resource planning (MRP) and integrated accounting systems such as payroll, general ledger, and billing. The benefits of Enterprise Systems are very significant: coordinating processes and information, reducing
Project work report 2013
FISAT BUSINESS SCHOOL Page 27
carrying costs, decreasing cycle time and improving responsiveness to customer needs (Davenport 2000; Elarbi 2001). Traditionally, the construction industry has been faced with the problem of getting and keeping projects on schedule, under budget, and safe with the quality specified by the owner and/or architect/engineer (A/E). Although the construction industry is one of the largest contributors to the economy, it is considered to be one of the most highly fragmented, inefficient, and geographically dispersed industries in the world. To overcome this inefficiency, a number of solutions have long been offered. This means a construction business organization needs extensive customization of pre-integrated business applications from ERP vendors. Unfortunately, such an extensive customization can lead a construction firm to ERP implementation failure. Based on a number of consultants comments, the best way to achieve the full benefits from ERP systems is to make minimal changes to the software. For these reasons, finding the best implementation strategy of integrated Enterprise Systems is mandatory to maximize the benefits from such integrated IT solutions in construction companies.
ERP software automates core corporate activities such as manufacturing, human resource, finance and supply chain management. The systems are sold on the basis of incorporating 'best practice' that facilitates rapid decision-making, cost reductions and greater managerial control. The concept of ERP software being integrated makes it complex. Enterprise consensus is required to reengineer an organisation's core business processes and to take advantage of the software (Davenport 1998). If the system is to be implemented globally then global consensus is required (Holland and Light 1999). Software configuration is also
Project work report 2013
FISAT BUSINESS SCHOOL Page 28
more complex and intricate than is typical of a bespoke system. This is because bespoke systems are designed for individual companies leading to an emphasis upon systems analysis and design. With standard software, and especially ERP software, the focus of the development effort shifts from systems analysis and design to software configuration. It is clear that ERP implementation is a complex and difficult process that can potentially reap enormous benefits for successful companies and be disastrous for those organisations that fail to manage the implementation process.
Although the ERP software is standard, there are different strategic approaches to implementation, which differ in terms of the technical and business scope of the project. There are two main technical options the implementation of the standard package with minimum deviation from the standard settings provided by the supplier and the bespoke adaptation of the system to suit particular local requirements. The main business options revolve around the issue of compromise over fitting the system to the organisation or vice versa. ERP implementation therefore involves a mix of BPC and software configuration in order to align the software with the business processes. From a management perspective, the nature of the ERP implementation problem includes strategic, organisation and technical dimensions. In this paper we apply the concept of CSFs, those factors that need to be considered and managed to ensure the success of a project, to explain differences in project outcomes. CSF models have been applied to general project management problems (Slevin and Pinto 1987), manufacturing system implementation (Lockett et al 1991) and the area of reengineering (Basheinet al 1994). The approach is particularly suitable for the analysis of ERP projects because it provides a framework for including the influence of tactical factors such as technical software configuration and project
Project work report 2013
FISAT BUSINESS SCHOOL Page 29
management variables together with broader strategic influences such as the overall implementation strategy. The contribution of the paper is twofold. It provides a framework for practising managers to aid their decision making and guide them in the development of an implementation strategy, and it identifies the role and influence of individual factors on each other and on the project outcome. Based on the review of literature (Grover et. al. 1998, Kotter 1995, Benjamin and Levinson 1993, Hall et. al.1993, Slevin and Pinto 1987) and the experiences of the organisations in the study, a CSF research framework is presented. The structure of the model is based on grouping the CSFs into strategic and tactical factors. Each group of factors is discussed in turn with an emphasis on the factors that are specific to ERP projects.
Figure :2 A Critical Success Factors Model for ERP System Implementation
Project work report 2013
FISAT BUSINESS SCHOOL Page 30
Strategic Factors The strategic factors business vision, top management support and project schedules/plans are based on Slevin and Pinto (1987). In addition, we have identified the importance of ERP strategy, and the role of legacy systems which is similar to what Roberts and Barrar (1992) refer to as antecedents. A brief definition of Slevin and Pintos factors are given before describing the role of legacy systems and ERP strategy in more detail. Business vision is the clarity of the business model behind the implementation of the project. Is there a clear model of how the organisation should work? Are there goals / benefits that can be identified and tracked? Top management support is the level of commitment by the senior management in the organisation to the project in terms of their own involvement and the willingness to allocate valuable organisational resources. Project schedule/plans is the formal definition of the project in terms of milestones, critical paths and a clear view of the boundary of the project.
Legacy Systems Legacy systems are the business and IT systems that encapsulate the existing business processes, organisation structure, culture and information technology (Adolph 1996, Bennett 1994, Roberts and Barrar 1992). It determines the amount of IT and organisational change that is required to successfully implement an ERP system. Business and IT legacy are not separate problems since many components of a business (e.g. work flow and processes) are bound up in the design and operation of the existing IT systems.
Project work report 2013
FISAT BUSINESS SCHOOL Page 31
Tactical Factors Client consultation, personnel, client acceptance, monitoring and feedback and communication are based on Slevin and Pinto (1987). Client consultation is the involvement of the users in the design and implementation of business process that includes formal education and training. Client acceptance is the user acceptance of the system and represents 'buy-in' from the owners of the business processes. Monitoring and feedback is the exchange of information amongst members of the project team and the analysis of feedback from organisation users. Communication is the formal promotion and advertisement of the project's progress from the project management team to the rest of the organisation. Troubleshooting is ability to manage crises and deviations from the plan. The additional factor BPC and software configuration recognises the critical role of aligning business process to the ERP software in implementation. Although the standard project management factors are still important, they play a supporting role to the BPC and software configuration.
Business Process Change and Software Configuration Organisations need to understand their current business structure and business processes associated with the existing IT system, and relate their existing situation to the business processes contained within the ERP system (Osterle 1995). There are process modelling tools which help organisations to align business processes with the standard package. For example, the ERP vendor Intentia offers a tool that models business processes and automatically configures their software. This tool is referred to as the Movex Visual Enterprise (www.intentia.com). The tool has a repository of business processes
Project work report 2013
FISAT BUSINESS SCHOOL Page 32
that can be used as a reference when reengineering current processes and designing new ones. For every core and support process in their generic business process model there are several alternative processes relating to best practices in different types of operations and business environments. These processes can be modified, for example unwanted activities and sub-processes can be deleted online and others can be added from different reference processes. Therefore business processes can be customised to a certain extent without making bespoke changes to the code. This tool can be used at any stage after the initial implementation process to enable continuous business process improvement.
Figure 3: workflow of project implementation
Project work report 2013
FISAT BUSINESS SCHOOL Page 33
3.2 HISTORICAL BACKGROUND
ERP systems are now ubiquitous in large businesses and the current move by vendors is to repackage them for small to medium enterprises (SMEs). This migration has many consequences that have to be addressed through understanding the history and evolution of ERP systems and their current architectures. The advantages and disadvantages of the ERP systems will impact their penetration in this new market. The market position and general strategy of the major systems providers in preparation for this push are described. The chapter concludes that the growth and success of ERP adoption and development in the new millennium will depend on the legacy ERP systems capability of extending to Customer Relationship Management (CRM), Supply Chain Management (SCM) and other extended modules, and integration with the Internet-enabled applications.
The unprecedented growth of information and communication technologies (ICT) driven by microelectronics, computer hardware and software systems has influenced all facets of computing applications across organizations. Simultaneously the business environment is becoming increasingly complex with functional units requiring more and more inter-functional data flow for decision making, timely and efficient procurement of product parts, management of inventory, accounting, human resources and distribution of goods and services. In this context, management of organizations needs efficient information systems to improve competitiveness by cost reduction and better logistics. It is universally recognized by large and small-to medium- size
Project work report 2013
FISAT BUSINESS SCHOOL Page 34
enterprises (SME) that the capability of providing the right information at the right time brings tremendous rewards to organizations in a global competitive world of complex business practices. Starting in the late 1980s and the beginning of the 1990s new software systems known in the industry as enterprise resource planning (ERP) systems have surfaced in the market targeting mainly large complex business organizations. These complex, expensive, powerful, proprietary systems are offthe- shelf solutions requiring consultants to tailor and implement them based on the companys requirements. In many cases they force companies to reengineer their business processes to accommodate the logic of the software modules for streamlining data flow throughout the organization. These software solutions, unlike the old, traditional in-house-designed company specific systems, are integrated multi-module commercial packages suitable for tailoring and adding add-ons as and when required. The phenomenal growth of computing power and the Internet is bringing ever more challenges for the ERP vendors and the customers to redesign ERP products, breaking the barrier of proprietorship and customization, and embracing the collaborative business over the intranet, extranet and the Internet in a seamless manner. The vendors already promise many add-on modules, some of which are already in the market as a sign of acceptance of these challenges by the ERP vendors. It is a never-ending process of reengineering and development bringing new products and solutions to the ERP market. ERP vendors and customers have recognized the need for packages that follow open architecture, provide interchangeable modules and allow easy customization and user interfacing.
Project work report 2013
FISAT BUSINESS SCHOOL Page 35
3.3 EVOLUTION OF ERP SYSTEMS
1960s most organizations designed, developed and implemented centralized computing systems, mostly automating their inventory control systems using inventory control packages (IC). These were legacy systems based on programming languages such as COBOL, ALGOL and FORTRAN. Material requirements planning (MRP) systems were developed in the 1970s which involved mainly planning the product or parts requirements according to the master production schedule. Following this route new software systems called manufacturing resources planning (MRP II) were introduced in the 1980s with an emphasis on optimizing manufacturing processes by synchronizing the materials with production requirements. MRP II included areas such as shop floor and distribution management, project management,finance, human resource and engineering. ERP systems first appeared in the late 1980s and the beginning of the 1990s with the power of enterprise-wide inter-functional coordination and integration. Based on the technological foundations of MRP and MRP II, ERP systems integrate business processes including manufacturing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, and transportation, providing accessibility, visibility and consistency across the enterprise.
Project work report 2013
FISAT BUSINESS SCHOOL Page 36
Figure:4 ERP systems concept
During the 1990s ERP vendors added more modules and functions asadd-ons to the core modules giving birth to the extended ERPs. These ERP extensions include advanced planning and scheduling (APS), e-business solutions such as customer relationship management (CRM) and supply chain management (SCM). Figure 2 summarizes the historical events related with ERP.
Project work report 2013
FISAT BUSINESS SCHOOL Page 37
Figure:5 ERP evolution
Project work report 2013
FISAT BUSINESS SCHOOL Page 38
ADVANTAGES AND DISDAVANTAGES OF ERP SYSYTEM
FIGURE:6 ADVANTGES OF ERP SYSYTEM
Project work report 2013
FISAT BUSINESS SCHOOL Page 39
FIGURE:7 DISADVANTGES OF ERP SYSYTEM
COMMERCIAL ERP SYSTEMS
The five dominating ERP software suppliers are SAP, Oracle, PeopleSoft, Baan and J.D. Edwards. Together they control more than 60% of the multibillion dollar global market. SAP AGFlagship Products R/3, mySAP.COM SAP AG (Systeme, Anwendungen, und Produkte in Datenverarbeitung),or Systems, Applications and Products in Data Processing, was started by five former IBM engineers in Germany in 1972 for producing integrated business
Project work report 2013
FISAT BUSINESS SCHOOL Page 40
application software for the manufacturing enterprise (SAP, 2001). Its first ERP product, R/2, was launched in 1979 using a mainframe-based centralized database that was then redesigned as client/server software R/3 in 1992.
Oracle CorporationFlagship Product Oracle Applications Oracle (Oracle, 2001), founded in 1977 in the USA, is best-known for its database software and related applications and is the second largest software company in the world after Microsoft. Oracles enterprise software applications started to work with its database in 1987. It accounts for $2.5 billion out of the companys $9.3 billion in 1999, which places Oracle second to SAP in the enterprise systems category with over 5,000 customers in 140 countries
PeopleSoft Inc.Flagship Product PeopleSoft8 PeopleSoft is one of the newest ERP software firms started in 1987 in Pleasanton, California, with specialization in human resource management and financial services modules. PeopleSoft quickly managed to offer other corporate functions and attained a revenue of $32 million in 1992. One of the strengths of PeopleSoft is the recognition by its customers that it is flexible and collaborative. The flagship application PeopleSoft8 with scores of applications was developed by PeopleSoft with an expenditure of $500 million and 2,000 developers over 2 years as a pure Internet-based collaborative enterprise system.
The Baan CompanyFlagship Product BaanERP Founded in 1978 in The Netherlands, Baan (Baan, 2001) started with expertise in software for the manufacturing industry and by 1997 claimed an ERP market share of roughly 5%. Banns revenue in 1998 was roughly $750 million and
Project work report 2013
FISAT BUSINESS SCHOOL Page 41
while facing a slight slowdown in 1999 started growing again in 2001 with sales up 12% at 7,231million and operating profit of 926 million.
J.D. Edwards & Co.Flagship Product OneWorld J.D. Edwards was founded in 1977 in Denver (cofounded by Jack Thompson, Dan Gregory and C. Edward McVaney) with long experience of supplying software for the AS/400 market. J.D. Edwards flagship ERP product called OneWorld is capable of running on multiple platforms and with multiple databases and revolutionizes enterprise software by liberating users from inflexible, static technologies (JD Edwards, 2001).
Project work report 2013
FISAT BUSINESS SCHOOL Page 42
3.4 ABOUT US Synthite Realty is the housing division of Synthite Industries Ltd., the worlds largest exporter of spice oleoresins, having diversified interests in bio- ingredients, spices, farm tech, hospitality and wind energy. Synthite Realty made its first foray into real estate in 1992 with Riviera Retreat on the Thevara waterfront in Cochin. This landmark project offering fully air conditioned apartments was the first of its kind in the state, setting new standards in luxury and offering an array of amenities. It is one of the finest properties in Cochin and Synthite Realty has a proven track record as premium builders in Kerala. Spice Villas in Kolenchery, Synthites next offering, was highly acclaimed as a top Kerala property. With the completion of this project, Synthites philosophy of focusing primarily on semi-urban projects took shape. Synthites core values are commitment to quality and keen customer focus. Since its clientele consists of the well-travelled, design conscious elite, Synthite homes reflect their taste and aspirations for luxurious homes in Kerala. Prime importance is given to functionality and ambience, both within the home and its surroundings. Serene and pollution-free locations are preferred. Ongoing Projects
Ginger County
Nestled in the comforting environs of Kolenchery, Ginger County is a residential enclave that blends the comforts of a modern lifestyle with the charms of easy, peaceful living. Ginger County features thoughtfully planned and tastefully designed luxury villas, along with exclusive lifestyle amenities. Project work report 2013
FISAT BUSINESS SCHOOL Page 43
Completed projects
Vanilla Grove
One of the finest properties in Kerala from the finest builder in Kerala, Vanilla Grove is nestled in estate-like environs in the heart of prosperous Kolenchery. easy access to all the amenities this thriving business town offers from your luxury home in verdant Kerala Bustling Cochin and its numerous opportunities
Spice Villla One of Keralas best properties. Upmarket villas in the verdant and peaceful environs of Kolenchery, Kerala; Spice Villa is an ideal retreat. A project offering from Synthite Realty, one of the best builders in Kerala Spice Villa promises all the luxurious features of a classic home.
Riveria suites
A luxury apartment hotel set on the calm waterfront of Cochin city. A novel concept in its time, these waterfront apartments provide a home away from home to visitors in Kerala. It is a landmark and one of the finest properties in Kerala.
Project work report 2013
FISAT BUSINESS SCHOOL Page 44
Synthite Industries Ltd. Synthite Realty is backed by one of Keralas most reputed corporates, Synthite. A food and fragrance ingredient major, the company first made its mark in spice oleoresin extraction, starting with oleoresin black pepper. Today, the Rs. 650 crore Synthite accounts for 40% of the global market share in botanical extracts. Synthite has a portfolio of 500 products, manufactured from its 6 state-of-the-art processing units across South India. It employs over 1500 people directly and has a presence in over 75 countries. Over the years, the company has also given back to the community through its various CSR initiatives under the aegis of the CVJ Foundation. Other than Ingredients, Synthite has strategically diversified into Spices, Hospitality, Wind Energy and Realty. Synthite Realty offers luxurious homes in Kerala, villas and apartments and it one of the best builders in Kerala and Cochin.. In all its ventures, Synthite is distinguished by its single-minded dedication to customer needs. Corporate Information When they need an ingredient, the worlds leading food companies shop at Synthite Industries Ltd (Synthite). They choose from a portfolio of over 500 products, made from the finest raw materials with complete traceability. Innovations at Synthite ensure that customers get the right material, whatever their range of application, however complex the process may be. In short, Synthite sets the benchmark for the industry. Synthite was among the first in India to enter spice oleoresin manufacturing. From that pioneering start in 1972, the company has grown to become the worlds most trusted spice ingredient provider today, with a turnover of over USD 125 million and commanding over Project work report 2013
FISAT BUSINESS SCHOOL Page 45
30 per cent of the global market share. Synthite supplies spices in ground, extracts and value added forms. Synthites quest for quality makes it the preferred choice of its clientele in over 75 countries. Synthite is a diversified group now, with interests in fields as diverse as bio ingredients, spice, natural specialties, farm tech, hospitality, and realty and wind energy.
Vision By consistently delivering the Ingredients of Success for the most exciting Food, Health and Fragrance Solutions, we will be the partner of choice to our clients worldwide.
Mission Sustainable Growth: Grow Smart, Grow Fast, Grow Together. Innovation: Operational Excellence Powered by Innovation. Customer Service: Cultivate Customers, Care More. Enhance Value: For all Stakeholders. Making it a Great Place to Work: Winning People through Collaboration.
Project work report 2013
FISAT BUSINESS SCHOOL Page 46
1972 Year of establishment. 1980 Ministry of Commerce and Industry, Government of India, recognises Synthite as an Export House. 1984 Launches Herbal Isolates (P) Ltd for the manufacture of dehydrated green pepper, pepper in brine, sterilised spices and essential oils. 1986 Launches Fragrance division, at Maradur, Coimbatore for the production of floral concretes and absolutes of jasmine, tuberose and mimosa with technical collaboration with Cal-Pfizer, France. 1991 The Department of Science and Technology, Government of India, recognises the in-house research laboratory. 1992 Acquires Sijmak Oils Ltd., Calicut. It is now Synthite Calicut, an exclusive export-oriented unit, specialising in herbal extracts. 1993 Upgrades the research lab, and rechristens it the CU Varkey Centre for Research and Quality Assurance. 1993 Diversifies into realty, with the launch of Synthite Properties & Investments Ltd and then into hospitality, starting Riviera Suites, Keralas first apartment hotel. 1994 Becomes the first Indian company in the food sector to obtain ISO 9002 certification from BSI UK. 1997 Bags ISO 9001: 1994 from by BSI, UK 2000 Launches Synthite Exports Ltd. 2001 Launches Natural Colour Division at Harihar. 2003 Sets up wind mills at Udumalpettu, Tamil Nadu 2006 Launches the Spice division, AromcoFlavour India (P) Ltd ., a joint venture with Aromco, UK and Symega Savory Technology (P) Ltd ., a joint venture with Omega, Austria Project work report 2013
FISAT BUSINESS SCHOOL Page 47
2007 Sets up CO2 extraction plant. Sets up CVJ Foundation, the corporate social responsibility arm 2008 Bags ISO 22000:2005 certification 2010 Goes global, sets up establishments in the US and in China. Strengthens presence in India, sets up sales offices in Mumbai, Delhi and Bangalore.
Project work report 2013
FISAT BUSINESS SCHOOL Page 48
CHAPTER FOUR Results Discussion (Analysis & Interpretation)
Project work report 2013
FISAT BUSINESS SCHOOL Page 49
I started my survey with the questions about no of hours the employees spend for ERP and the result obtained can be interpreted as almost 35% of the employees spend ten to fifteen in ERP/Week which implies they spend one and a half day per week. Again 75% of the employees they spend 10hours or more with ERP. This can be interpreted as of the total sample size of 40; almost 30 employees spend 10 or more hours with ERP. But there are employees who spend less than 10hours working with ERP they account about 10nos Thus it can be concluded that the majority of the employees they have sufficient exposure in ERP and they spend almost a day working in ERP per week .More employees using ERP implies they have a positive attitude towards the system.
LESS THAN 5 HOUR, 10% FIVE TO TEN HOUR, 15% TEN TO FIFTEEN, 35% FIFTEEN TO TWENTY, 30% MORE THAN TWENTY 10% NO OF HOURS RESPONDENT DEALING WITH ERP/WEEK LESS THAN 5 HOUR FIVE TO TEN HOUR TEN TO FIFTEEN FIFTEEN TO TWENTY MORE THAN 20 Project work report 2013
FISAT BUSINESS SCHOOL Page 50
Employees working experience in ERP is asked to know if there is any relation between the number of hours they spend and the experience they have in ERP. But after the careful analysis of the data I found it is difficult to establish a correlation between experncise and the hours one spend. From this we can analyze majority of the employees they belongs to the category of more than seven years of experiences in construction or three to five years of experiences in construction and together they contribute about 52%. Almost 18% of the employees they have less than one years of experience in ERP, it means either they are new employees of the organizations or they show a lack of interest in ERP.
LESS THAN ONE, 18% ONE TO THREE, 10% THREE TO FIVE, 26% FIVE TO SEVEN, 20% MORE THAN SEVEN, 26% NO OF YEARS OF WORKING EXPERENCISE WITH ERP LESS THAN ONE ONE TO THREE THREE TO FIVE FIVE TO SEVEN MORE THAN SEVEN Project work report 2013
FISAT BUSINESS SCHOOL Page 51
This question is asked to measure the implementation effectiveness directly as respondents who believe ERP fulfill their business strategy can be generally considered as employees who have a positive attitude towards ERP. So 8% of the employees they believed ERP fulfill 80 to 100% of their business strategy. Were as majority they believed ERP helps them to fulfill 60 to 80 % of their business strategy and they account for about 40%. Thus the organization is successful enough to automate more than half of its activity with ERP. Thus on the context of fulfilling the business strategies, we can say the implementation is effective.
0 TO 20%, 10% 20 TO 40%, 15% 40 TO 60%, 27% 60 TO 80%, 40% 80 TO 100%, 8% HOW MUCH DID ERP FULFILL YOUR BUSINESS STRATEGY 0 TO 20% 20 TO 40% 40 TO 60% 60 TO 80% 80 TO 100% Project work report 2013
FISAT BUSINESS SCHOOL Page 52
Every organization while they bring in some change there will be some strong motives behind the changes. For the ERP implementation also there are some reasons which are identified and asked to find out which is predominant The result obtained can be interpreted as employees doesnt feel there is a predominant factor because of which ERP is implemented in the organization or different people , especially people in different they have different reasons for the implementation. As per the survey results the predominant reason was found to be control over the resources. Since the project areas is a construction industry there involved a large amount of resources manually keeping record of all this is practically 5% 13% 30% 17% 35% MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION Project work report 2013
FISAT BUSINESS SCHOOL Page 53
impossible, so 35% of employees felt ERP is needed to keep a track of the items both incoming and outgoing. The cost involved in ERP software is huge
so the top management commitment and support is essential as the process it require time and the success and failure cannot be predicted. 30% of employees felt that its the commitment and support from the top management is the motive for implementation. whereas some felt it is to avoid the data redundancy the ERP has to be implemented. Thus it can be interpreted that respondents believe ERP to avoid data redundancy and they believe for ERP success top management support and commitment is needed and it helps to ensure a control over the resources.
erp software misfit, 12% lack of interdepartmental cooperation and communication, 20% employees resistance to change, 40% project cost over run, 25% use of consultants, 3% PROBLEM YOU FACED DURING ERP IMPLEMNTATION Project work report 2013
FISAT BUSINESS SCHOOL Page 54
When an organization implement a new software there will be some ambiguity related to the software which include the implementation effectiveness and its
success. A question related to the problems employees faced during the implementation period was asked. So that in future the same can be taken care of.Majority of the said its the employees resistance to change was the major problem they observed. 40% of the employees felt so. 25% of the employees felt its the project cost which is a major problem. Thus it can be interpreted that there happened a considerable variation from the estimated cost and actual cost of implementation. the also felt there is a lack of interdepartmental cooperation and communication which may affect the implementation effectiveness.
Project work report 2013
FISAT BUSINESS SCHOOL Page 55
Here we identified factors which employees felt as important to avoid ERP implementation failure and the obtained result can be interpreted as 44% of the employees felt its the presence of expertise in the implementation team as most important. Again 26% of the employees felt there should be standardization in ERP to avoid failure. As fully customized software heavily rely on the support of vendors so there is relation between the implementation expertises in team and avoid customization so there should be a balance between these two factors. 17% of the employees felt there is a functional and technical fit of the software. Thus if the organization taken care of the three prominent factors employees executives buy in and support, 5% functional and technical fit of software, 17% ensure implemntation expertise in project team, 44% avoid ERP customization, 26% implementation should meet expectation, 8% factors most important to avoid ERP implementation failure executives buy in and support functional and technical fit of software ensure implemntation expertise in project team avoid ERP customization implementation should meet expectation Project work report 2013
FISAT BUSINESS SCHOOL Page 56
mentioned then up to an extend we can avoid the ERP implementation failure .
I will recommend ERP for another organization of my type
This question is asked to measure employees satisfaction with respect to the software they are using now. The result came out in such a way that 60% of the employees they somewhat agree to the fact that they will recommend ERP software to another organization. 11% fully satisfied with the present software. Where in 8% of the employees the expressed their dissatisfaction regarding the software.13%of employees told they are neither satisfied nor dissatisfied. The result can be analyzed as majority of the employees they have a likely feeling towards the system.
Question asked was a 5 point likert scale question and the employees perception about ERP was analyzed with regard to completion of project on time. The obtained result can be interpreted as 38% of the employees they felt ERP helps them to complete project on time. These employees they belongs to the purchase and finance department where at present ERP is fully implemented. Whereas 25% of employees felt ERP doesnt make any difference to their work these employees are mainly from the engineering and marketing department where the ERP implementation is not yet effective. 22% of the employees have a neutral opinion regarding the ERPs role in helping the employees to complete their project on time. This may be because they have only limited exposure with ERP . the employees work experiences with ERP may be less.
strongly disagree somewhat disagree neutral somewhat agree fully agree 0 25% 22% 38% 15% ERP helps me to complete my project on time Project work report 2013
FISAT BUSINESS SCHOOL Page 58
DIFFERENT DEPARTMENTS ARE INTEGRATED WITH ERP
Majority of the employees they felt integration of different department has happened with the implementation of ERP. 44 % of the employees somewhat agrees to it. 33% of the employees fully agree that ERP helps in the integration of the department. Thus 77% of the employees have a positive attitude towards ERP in the matter it helps in the integration of the different department. At present with ERP the purchase department can put their purchase order and intends thru system and after approval from the top management this will be automatically available to the finance person at the same time it gives data transparency and avoid data redundancy. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 5% 8% 10% 44% 33% Project work report 2013
FISAT BUSINESS SCHOOL Page 59
This question is asked to know if the employees resistance to change is predominant or not. 35% of the employees stated they have a favorable attitude towards the old ERP 35% of the employees state the new ERP is better and 30% they have neutral attitude which can be interpreted as either both are better or both doesnt able to satisfy their requirement. Among the 35% of the employees who prefer the old system 10% fully agree that old system was better which indicate still there is a resistance from the employees part to adapt to the new technology or they may felt the task as tedious. 25% of the employees even though they are using the new system still they prefer the old one may be resistance to change or easiness or else old system was much more user friendly.
strongly disagree, 12% somewhat disagree, 23% neutral, 30% somewhat agree, 25% fully agree, 10% I PREFER OLD SYSTEM RATER THAN ERP strongly disagree somewhat disagree neutral somewhat agree fully agree Project work report 2013
FISAT BUSINESS SCHOOL Page 60
FOR SUCCESSFUL ERP IMPLEMENTATION TOP MANAGEMENT SUPPORT IS ESSENTIAL
Employees also felt that for the success of ERP the management support is essential. As there is a cost involved in this matter. 77% of the employees felt the management support is essential where in 13% doesnt felt the management support is essential. Top management support doesnt confine only to the investment part of software more than that motivating the employees to use the software, legal aspects of the software authentication and guaranteed consultant after sales support all can be ensured with the management support.
Respondents expressed a mixed emotions for this question 33% supported the view that they should have necessary technical and business knowledge as we are implementing ERP in a sector where in there happen a lot of technical works and technical knowledge is prior requirement. At te same time majority ie 35% of the employees felt technical knowledge is not a prior requirement for ERP as this itself a new software whether you have technical knowledge or not is immaterial what matters is the ones ablity to use the software understand the software and interpret the values as required for the data entry.
0% 10% 20% 30% 40% 50% STRONGLYY DISAGREE SOMEWHAT DISAGREE NEURTAL SOMEWHAT AGREE FULLY AGREE 2% 3% 35% 20% 33% THE PERSON DEALING WITH ERP SHOULD HAVE NECESSARY TECHNICAL AND BUSINESS KNOWLEDGE Project work report 2013
FISAT BUSINESS SCHOOL Page 62
INTEGRATION OF DIFFERENT DEPARTMENT IS ESSENTIAL FOR THE SUCCESS AND EFFECTIVENESS OF ERP
This question has the link to the above asked question whether different department are integrated with the ERP. 44% of the employees felt different departments are integrated with ERP. And for this question 43% of the employees felt integration is an essential factor for the success and effectiveness of the ERP. Thus employees felt there are a need for the integration of the different and consider ERP as one such tool which can integrate different module.Different organization have different requirement and depending upon the requirement one organization have to purchase the ERP module. So the aim of the question is that whether the organization identified the requirement of ERP and to know whether the software is worth for the organization. From the employees response it is found that, 39% of the employees felt the software using is fit for the organizations requirement and 45% of the employees felt 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00% STRONGLYY DISAGREE SOMEWHAT DISAGREE NEURTAL SOMEWHAT AGREE FULLY AGREE 0 7% 25% 43% 25% Project work report 2013
FISAT BUSINESS SCHOOL Page 63
there is some misfit happened between the software and the organizations requirement.
47% of the employees felt that trouble shooting is easy even if an issue is reported. Along with that ERP helps employees to avoid the documentation process which otherwise has to handle manually. Thus there will be minimum loss of data as data can be stored for a period of 10yrs. Along with that the backup support of the consultants helps us in trouble shooting even if an issue has been reported.25% o the employees fully agree that trouble shooting is easy with the presently employed software at the same time 6% disagree on this statement. Which indicates major issues can be solved with or without the help of consultants and their still exsist some problem which are not yet solved.
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% DISAGREE SOMEWHAT DISAGREE NEUTRAL SOMEWHAT AGREE AGREE 3% 3% 22% 47% 25% TROUBLE SHOOTING IS EASY IN CASE OF AN ISSUE Project work report 2013
FISAT BUSINESS SCHOOL Page 64
Whatever work we are into cost management is an important factor which we have to look into. So the question of ERP and effectiveness in cost management is asked the results obtained are as53% felt ERP can do effective cost management. 24% of employees felt that ERP cannot do any cost management. 23% of employees dont have any view regarding this.
Case Processing Summary Cases Valid Missing Total N Percent N Percent N Percent MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION * no of yrs of working exp in ERP 40 100.0% 0 0.0% 40 100.0%
MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION * no of yrs of working exp in ERP Cross tabulation Count MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION no of yrs of working exp in ERP Total Less than 1 1 to 3 3 to 5 5 to 7 more than 7
COMPLEXITY OF THE ORGANIZATION 0 1 1 0 0 2 NEED TO REDESIGN THE PROCESS 1 0 1 3 0 5 COMMITMENT AND SUPPORT FROM TOP MANGEMNT 0 2 0 2 5 9 TO AVOID DATA REDUNDENCY 2 0 3 1 2 8 ENSURE CONTROL OVER THE RESOURCES 4 1 5 2 4 16 Total 7 4 10 8 11 40
Chi-Square Tests Value df Asymp. Sig. (2- sided) Pearson Chi-Square 21.987 a 16 .044
Project work report 2013
FISAT BUSINESS SCHOOL Page 66
The Pearson chi-square value obtained is less than .05 which implies rejects the null hypothesis and accepts the alternate hypothesis. So there is a significant relationship between the motivation behind implementing ERP in the organization and an employees years of working experience in ERP. As the employees work experience increase he will have more idea and clarity regarding the issues the company face. and understand the need to automate system to reduce the work load.
Project work report 2013
FISAT BUSINESS SCHOOL Page 67
Case Processing Summary Cases Valid Missing Total N Percent N Percent N Percent MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION * on an average I am dealing with ERP for about__hr/ week 40 100.0% 0 0.0% 40 100.0%
MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION * on an average I am dealing with ERP for about__hr/ week Cross tabulation Count MOTIVATION BEHIND IMPLEMENTING ERP IN THE ORGANIZATION on an average I am dealing with ERP for about__hr/ week Total less than 5 hours five to ten hours ten to fifteen hours fifteen to twenty hours more than 20 hours
COMPLEXITY OF THE ORGANIZATION 0 0 1 0 1 2 NEED TO REDESIGN THE PROCESS 0 0 3 2 0 5 COMMITMENT AND SUPPORT FROM TOP MANGEMNT 1 1 2 4 1 9 TO AVOID DATA REDUNDENCY 3 2 3 0 0 8 ENSURE CONTROL OVER THE RESOURCES 0 3 5 6 2 16 Total 4 6 14 12 4 40
Project work report 2013
FISAT BUSINESS SCHOOL Page 68
Chi-Square Tests
Value df Asymp. Sig. (2- sided) Pearson Chi- Square 20.409 a 16 .023
One more chi square test was conducted to know if there is any relationship between the motivation behind implementing ERP in the organization and the no of hours a person dealing with ERP. The intention behind this was to know if the implementation was successful or not. From the result we can analyze that their is a significant relationship between the no of hours a person dealing with ERP and motivation behind implementing ERP in an organization.
Project work report 2013
FISAT BUSINESS SCHOOL Page 69
CHAPTER- FIVE FINDINGS, RECOMMENDATIONS & CONCLUSIONS
Project work report 2013
FISAT BUSINESS SCHOOL Page 70
The results obtained from the survey can be interpreted as 35% of employees they are dealing with ERP for about ten to fifteen hours out of the total sample size of 40, 30 employees spend 10hours or more with ERP/week thus the employees they have sufficient exposure regarding the software . 26% of the employees have more than seven years of experience with ERP, thus majority of the employees have more than three years of experiences with ERP. The implementation effectiveness was measured by asking the question how much ERP fulfilled the business strategy 40% of employees felt ERP fulfil 60 to 80% of the business strategy thus the organization is successful in automating its activity with ERP. Thus we can say that the implementation is effective. 35% of the employees felt that the motivation behind implementing ERP is to ensure control over the resources. Employees faced different problems during the implementation period the prominent among it was the employees resistance to change. 40% felt that the find its the resistance to change which is the major problem company faced. Again the employees opinion regarding the factors to avoid ERP implementation failure was asked and 44 % of the employees felt an implementation expert should be there in the team to avoid the failure. 60% of the employees they agree to the fact that they will recommend ERP to another organization of their own type. 38% of the employees is of the opinion that ERP helps them to complete their project on time. 44% of the employees feel integration of different department happened with the ERP implementation.35% of the employees are of the feeling that the old system was better compared to the newly implemented system. 44% of the employees felt for the success of ERP the top management support is essential. 33% of the employees felt the person dealing with ERP should have necessary technical and business knowledge. 43% feel integration of different department is essential for the success and effectiveness of ERP
Project work report 2013
FISAT BUSINESS SCHOOL Page 71
BIBLIOGRAPHY 1. Agarwal, R., and Prasad, J. (1997). "The Role of Innovation Characteristics and Perceived Voluntariness in the Acceptance of Information Technologies." Decision Sciences, the Decision Sciences Institute, 28(3), 557-582. 2. Barker, T., and Frolick, M. N. (2003). "ERP Implementation Failure: A Case Study." Information Systems Management, Auerbach, 20(4), 43-49. 3. Burch, J. G., and Grudnitski, G. (1989). Information Systems Theory and Practice, John Wiley and Sons, NY. 4. Crowley, A. (1999). "Training Treadmill: A Rigorous Plan of End-User Education is Critical to Whipping ERP Systems into Shape." PC Week, Ziff Davis Media, NY, January 4th 1999. 5. DeLone, W. H., and McLean, E. R. (1992). "Information Systems Success: The Quest for the Dependent Variable." Information Systems Research, INFORMS, 3(1), 60-95. 6. Fishbein, M., and Ajzen, I. (1975). Belief, Attitude, Intention, and Behavior: An Introduction to Theory and Research, Addison-Wesley Publishing Company., Reading, MA. 7. Gargeya, V. B., and Brady, C. (2005). "Success and Failure Factors of Adopting SAP in ERP System Implementation." Business Process Management Journal, Emerald Group Publishing, 11(5), 501-516. 8. Hair, J. F., Anderson, R. E., Tatham, R. L., and Black, W. C. (1998). Multivariate Data Analysis with Readings, Prentice Hall, Englewood Cliffs, NJ.
Project work report 2013
FISAT BUSINESS SCHOOL Page 72
9. Gerbing, D. W., and Anderson, J. C. (1988). "An Updated Paradigm for Scale Development Incorporating Unidimensionality and Its Assessment." Journal of Marketing Research (JMR), American Marketing Association, 25(2), 186-192. 10. Keizer, G. (2006). "IRS Gives Away $318 Million Because Of Bungled Software Upgrade " InformationWeek, September 5, 2006.