This report highlights the value and importance of ERP system for the organization. The report focuses on that how ERP systems help the organization in gaining competitive advantage and success in the market. Small Entrepreneurial firms and different organizations have to deal with managing the tasks of the organizations on a daily basis; therefore the need of professional and expert project managers arises to manage the projects from inception to the completion.
This report covers the costs and benefit analysis for the implementation of ERP system in the organization, that shows that benefits outweigh the costs. The steps for the implementation of the ERP systems have also been covered that can ensure the successful results for the organization. Critical analysis has also been done that covers the application of the several Project Management theories in the regard of ERP. Recommendations have also been given that can improve the working of the ERP solution in the organization.
Recommendations for the implementation of ERP include:
• Hire an experienced consulting firm that has the same organization approach
• Strong project management team
• Focus on test, test and test
Project management is a growing field that has lots of benefits for the businesses. It is used by businesses of all sizes. Expert project management team in the organization helps to understand the needs of the projects, and to use different tools to successfully run the project (Munns & Bjeirmi, 1996). The team helps in carrying out large scale projects in a time and cost efficient way that would help the organization in a long term success.
Online project management tools are also important for the organizations to managing and organizing different projects at a time. Different types of online project management tools like ERP, CRM, SRM, and SCM are used to assist the business in performing the functions. Implementing project management tools can help the businesses in creating a value chain that at the end can help in achieving competitive advantage. The technology is moving so fast, therefore the organizations to keep pace with it, have to do businesses in the way that can earn them superior value and edge over the competitors and hence the online project management tools like ERP play an import part in this regard.
Enterprise Resource Planning (ERP) helps in integrating all the information and data into single system that supports the core business areas locally and globally. It enables the project managers to have eye on all the operations like financials, supply chain, human resources etc. It is being implemented in different an organization that has become the core factor in the success of information management and the planning and managing of the projects.
Terms of Reference
The purpose of this report is to evaluate the importance and success of an ERP in the organizations when it is implemented globally.
Overview of the Project
Implementing ERP project management tool is highly important in bringing success to any project running in the organization. Following benefits are attached to ERP management tool in the organization (Hicks, 2013).
Tasks Delegation: ERP management tool helps in the delegation of the tasks to the most appropriate person for the job.
Projects Tracking: ERP helps in tracking the progress of the tasks. It can update the concerned management of the organization that what has been completed, what is still left and who is doing this particular task.
Communication Ease: ERP also helps in easing the communication between the employees, managers, clients and the vendors. It connects the every department involved in the project that at the end helps in getting the best output for everyone.
Transparency: It also brings transparency in the back office and front office operations. Concerned members can easily access to the files and documents and the overall accomplishment of the project.
According to the PMBOK guide and standards, the project management is based on product oriented processes and project management processes. When implementing the ERP in the organization, one needs to do the cost benefit analysis for it.
Costs benefit Analysis
Cost benefit analysis tool can be used to determine the quantitative costs associated with the implementation of ERP in the organization. Costs benefit analysis helps in making the decision that whether the particular decision has more benefits for the organization or whether the alternatives of the particular decision should be considered (Shelton & Kendry, 1976).
The basic costs that are associated with the implementation of ERP are development costs and operational costs. The development costs would include the overall cost of the development and implementation of the tool, the costs of the personnel, the training costs and the overall time that it would take from the inception to the implementation. The operational costs of the project management tool would be the costs for the personnel, upgrades or renewals, maintenance costs, training of the staff. Other recurring and non recurring costs might also be involved like the capital investment cost, overhead costs, and security and privacy costs. These costs will vary depending on the type and size of the tool an organization is implementing. The costs will also depend on the purpose of the tool and the number of people who would be using the specific tool.
These costs might not be much for the big organization who is operating globally as they mainly involve the first time implementation cost. Training costs can also be minimized by using an efficient training method.
A decisions or tool would be implemented that gives the required benefits to the organization. The benefits of ERP would be the reduced costs from improved operations. Costs will be reduced because the requirements of the resources will be reduced and error rates will also be reduced as the tool will bring transparency in the organization. Labor costs and overhead costs will also be reduced because now most of the work will be done by the online rather than the staff. Costs for the support services will also be reduced because of an easily accessible tool. Other benefits like improved privacy and security would also be achieved.
Hence the above costs and benefit analysis show that there are different costs but then the benefits show that they can outweigh those costs. The costs analysis shows that they can be minimized depending on the organization capabilities and benefits can be achieved if they successfully implement it.
ERP Implementation Process
Different consulting organizations are providing the ERP softwares that should be chosen according to the needs by the organization. Some organizations fail in the implementation process but if they plan it according to the business requirements; it can bring a success to the organization. Since we are doing globally, we need to consider the following factors.
This would involve assigning a project team from different departments like marketing, sales, supply chain, human resources, IT to formulate a plan for it. They should be assigned to examine the current business practices and according to the needs of the project set objectives and plan for it.
This step would involve them to review the software capabilities. Identify where the training is needed and which manual processes in the organization should be automated in the ERP system. It will also involve developing certain standard operating procedures for the organization.
Data Collection and Clean Up
This would involve the team to examine the system data that should be linked with the ERP system as some data can be outdated. They will also need to collect new data according to the requirements and then reviewing and cleaning all the data.
Testing and Training
The organization would need to pre test the data if the system is working properly and has the accurate data. They would need to train the users and can be done effectively and cheaply if they train the trainer.
Once the system has been implemented and has gone live, they need to evaluate if it has given solution to the problem. It would be evaluated according to the objectives that were set in the planning phase. The system might need continuous evaluation to increase the return on the investment.
Turner (1993) says that the project management is related to do the required or sufficient work without being involved in the unnecessary work. He also says that the work is delivered according to the stated purpose of the project (Turner, 1993). This actually relates with ERP that it meets the purpose of the project. It helps the businesses in being agile and lean in their processes. The definition of Turner is related towards saving the costs and time by not involving in the unnecessary tasks. ERP helps in doing the tasks that are only required for the particular job and only involves the required resources.
According to the PMBOK, the processes of project management are related towards each other and form a closed loop. The planning processes help in making plans that are realized and implemented by the execution processes. The execution stage helps in reviewing the performance and see if there are any errors that are controlled by the controlling processes like the financial performance (“PMBOK Guide and Standards | Project Management Institute”, 2016). These three core elements stated by the PMBOK are observed in the ERP. All the projects running in the companies pass through these stages. The project managers in the companies and their teams plan the projects, execute them and the control the factors that may affect the project. ERP helps the company to pass the project through these effective stages and is run successfully at the end.
B.M. Boehm and R. Roses in their research explain the principles of software project management that is commonly known as Theory W. Theory W. works on the principle that software project managers can only succeed in their projects if they try to make all the participants “winners” in the process. The participants include subordinates, users, customers, superiors, maintainers etc. The theory focuses that it is the role of project manager is as a negotiator and he has to find the solutions that bring the satisfaction and winning condition for all the participants of the project (Boehm & Ross, 1989). According to this theory the project manager role is very broad as he has to set the goals and plan the project. Project manager can only be effective when he has the effective tools like ERP that can help him in planning and integrating the sources.
Though there are different obvious benefits attached to ERP but the following points should be addressed in order to gain the maximum benefits from it.
• Organization need to hire an experienced consulting firm that matches with the organization’s approach
• Organization need to test, test and retest the solution that it is working effectively.
• Project management team should be strong and has the understanding the scope of the project being implemented.
Since the environment is dynamic and it is forcing to businesses to change, so the enterprise systems are evolving. Technology is overtaking the businesses and one needs to focus on the tools like ERP to keep pace with it. ERP lets the businesses to meet the changing needs and to meet the increasingly inter-organizational and global challenges.
It can be concluded that ERP has different benefits that can help the organization in bringing efficiency and effectiveness in the operations. The costs and benefit analysis suggest that when the organization is operating globally, they need to have an implemented ERP solution that can bring integration and transparency in the organization. The benefits outweigh the costs for the ERP solution in the organization. Theories also suggest that if an organization wants to be agile and lean in the processes, they need to have an ERP solution in the organization. All the theories suggest that when the project manager has to assign the tasks and plan the project then an ERP solution helps him in getting the project done effectively.
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