Enterprise Resources Planning (ERP)

The definition of Enterprise resources planning (ERP) is a packaged business software system that lets an organization automate and integrate the majority of its business process, share common data and practice across the enterprise, produce and access information in a real-time environment. The ultimate goal of an ERP system is that information must only be entered once. When numbers are increasing of organizations across the globe have chosen to develop their IT infrastructure around this class of off-the-shelf application, there has been a greater appreciation for the challenges involved in implementing these complex technologies. Moreover, ERP system can bring competitive advantage to organizations the high failure rate in implementing such system is the main attention.

A Conceptual Model for Enterprise Resource Planning (ERP)

          

The ERP model has four components that are implemented through a methodology. Methodology encircles all four of the components to illustrate that each component is addressed and implemented in an integrated manner. The four components consists the software component, process flow, customer mindset, and change management.

The software component of the ERP model is the component that is most visible to the users. It consists of several generic modules such as human resources (HR), supply chain management (SCM), supplier relationship management (SRM), and customer relationship management (CRM). Human resources forms an integral part of an ERP system. It focuses on the automation of HR tasks from the employer’s viewpoint. Besides that, SCM involves coordinating and integrating these flows both within and among companies. 

SCM flows can be divided into three main flows which is the product flow, the information flow and the financial flow. SRM with an increasing reliance on contractors and suppliers for material, logistic and manufacturing capacity, the ability to manage these relationships has become critical. CRM is a term methodologies, software and usually internal capabilities that help an enterprise manage customer relationship in an organized and efficient manner (Lalakota and Robinson, 1999).

Furthermore, the second component in the conceptual model is the process flow within an ERP system. Process flow deals with the way in which the information flows among the different modules within an ERP systems. This forms a very important part of understanding ERP system. Before an ERP system can be implemented in organization, the business process must be modeled and, if need be, reengineered to allow smooth integration. 

Next, the third component of the ERP model is the customer’s mindset. In the customer’s mindset have three influences which are user influence, team influence and organizational influence. The user influence is to ensure that the users fully understanding the necessity of using the system correctly all the time, a needs analysis should be done to evaluate the users’ technical skills, their existing job processes and the impact the system will have on their job. Besides that, the team influence is a primary reason for unsuccessful ERP implementations is the inability of this disparate group to come together in a focused, team-oriented manner. 

Lastly, organization influence is the culture within an organization plays a major role and influences the individual user. ERP systems break down all functional barriers within an organization and the culture of the organization must first be changed for the ERP system to be successful. 

The fourth component in the ERP model is change management that plays a major role in the successful implementation of an ERP system. Change needs to be managed at several levels such as user attitude, business process changes and system changes. In user attitude, the organization needs is people to understand what it is all about, to take part in making it a success and to have confidence in the project team. Besides that, the business process changes must happen for three reasons such as stringent business conditions accentuated by channel and brand proliferation, the pressures of managing globally and the intense service demands by customers. The system changes an effective change management strategy will improve an organization’s change analysis capabilities and provide more fluid and efficient change implementation or migration process.

Success Factors in ERP Systems Implementation

ERP system implementation is a process of great complexity, with a great many conditions and factors potentially influencing the implementation. These conditions could have a positive effect on the outcome of ERP project, while their absence could generate problems during implementation.

The identification of ERP implementation success factor is about critical success factor in ERP implementation. In this part, it must be dividing potential factor into environmental and methodological. Environment factor include, apart from those describing enterprise activity, the product technology level and the organisation willingness to change. While, the methodological factor are connected with the implementation approach incorporated.

Besides that, Holland and Light (1990) presented a number of potential success factors in ERP implementation and suggested their division into strategic and tactical factors. The authors highlighted the critical impact of legacy systems upon the implementation process and the importance of selecting an appropriate ERP strategy.

Moreover, the success factor in ERP systems implementation is based on the analysis of considerable research regarding implementation success factors. The factor must be divided into two parts which is strategic and tactical factors from organisational and technological perspectives. Besides that, the important of business process management is the evaluation and performance monitoring of ERP system’s implementation can lead to the achievement of all desired business goals and objectives.

The results of the above-mentioned research on ERP implementation success factors illustrate the problem is very complexity. For general agreement regarding the necessity of management support for implementation, it is rather difficult to compare the outcomes achieved by the research. This difficulty is deepened by the difference in research samples, which ranged from hundreds of manufacturing enterprises, through a group of experts, up to a set of only a few implementation cases.