ERP Implementation Difficulties and Successes at ABS
The global economy is causing significant shifts in business patterns. The opening of international trade avenues is producing a new set of pressures for business leaders, who are increasingly conceding to such change imperatives as production outsourcing, operation downsizing, industry consolidation and Information Technology reformation. The discussion here examines the importance of adopting an Information Technology (IT) strategy which effectively coordinates the increasingly complex strands of modern business while simultaneously fitting the needs, resources and capabilities of the implementing firm. In particular, we consider the Enterprise Resource Planning (ERP) IT strategy as a direct response to the need for such network coordination across a broad range of departments, facilities, operations and geographical contexts. Today, the changes which are sought on an organizational level will frequently reflect the interest of improving the technological efficiency, knowledge economy and data management which are conducted there within. These ambitions are clearly in play for the Canadian-based insurance firm Aux Bon Soins (ABS) in its decision to adopt and implement an ERP driven strategy. The case study on ABS reveals though that such adoption and implementation strategies are not without their pitfalls and drawbacks. The investigation of conditions at ABS before, during and after ERP implementation will provide some insight into the broader determinants of implementation difficulty and success on a more general level.
In present day organizational management, change will frequently revolve on the planned adoption of IT-based solutions. Where organizations have a certain degree of operational complexity requiring the coordinated interaction of multiple functions and appendages, the ERP system will often be an appropriate fit. As reported by the Management Development Center at DePaul University (2010), "Enterprise Resource Planning (ERP) encompasses the broad set of activities that integrate data over multiple functions within the organization. ERP systems provide the linkages among manufacturing, material management, engineering, customer order management, purchasing, shop floor control and planning activities." (MDC, p. 2) This is particularly necessary today, in a business context where and precision manifest as real dollars saved and profited. However, as evidenced in the case of ABS, there are myriad factors which enter into the success or failure of such implementation and which must be considered by organizational decision-makers in shaping implementation objectives, strategies and end goals.
As we proceed to a discussion on the difficulties faced by the company, it is with consideration of some basic presumptions which entered the company into its initial phase of transformation. From the outset, the need for change was precipitated by encompassing organizational factors. ABS, as it is presently situated, would be forged on the merger of three separate firms under a single corporate umbrella. The result was a need to implement an IT system that could help to streamline the operational integration of the three distinct entities. Thus, the adoption of the ERP-based system, identified in the case study as the ABC software package, would be prompted by a sense of necessity. And as the Background section of the case study denotes, this sense of necessity would drive a particularly aggressive commitment to the conditions prefigured by the software package itself. This may well have been one of the first and most predictive errors in judgment on the part of the project manager and the firm. According to Bernier et al., "the total cost of the project is evaluated at $50 million spread out over the duration of the project, estimated at 24 months. A vanilla implementation strategy is planned, which means minimum changes to the software package (if possible, no changes at all) and standardization of the processes of the new ABS entity, based on the processes inspired by best practices and proposed by ABC. Moreover, the system would be delivered in three phases: 12 months for the finance, accounting and auditing module; 18 months for the human resource module; and 24 months for the sales and distribution module." (Bernier et al., p. 4)
In many ways, it may have been the decision to adhere with almost no flexibility or adjustment to the conditions set forth by the ERP software package. Such is to say that success or failure of implementation is frequently tied to the implementing firm's willingness or capacity to tailor the system to the firm's particular needs. Every implementing organization is different and it is thus a questionable method to initiate the process without first making decisions that will promote a 'best fit'…