ERP Aux ERP Implementation Difficulties and Successes

ERP Aux

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.

Difficulties:

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' strategy for a company such as ABS.

Evidence suggests that a failure to do this is likely to lead to the kinds of obstacles that can be disruptive or even downright destructive to the pursuit of the implementation project's eventual compatibility with company needs. And even beyond the company's needs, it is essential to acknowledge the roles that personnel will play in ensuring the long-term success of such implementation. A poor fit and a failure to make adjustments in either the software package or the parameters by which it is implemented can lead directly to a breakdown in morale and personnel commitment. Difficulties experiences in adjusting to project timelines and user responsibilities must be managed if resistance is to be prevented. Indeed, personnel resistance represents one of the single greatest determinants of implementation failure. And all evidence suggests that this was a factor directly in play for the project management team at ABS. According to the Troubles Ahead section of the case study, "several of the managers responsible for functions affected by the project feel that the project manager is focusing his efforts on ensuring that the tasks of the project plan are executed as quickly as possible, without showing any real concern for business processes. Moreover, team members do not appreciate the project management style. "I'm discouraged and I feel paralyzed in my work because I am constantly writing progress reports," explains one member of the team. After three months, the managers responsible for the functions affected by the project confirm that the project manager has gotten swept up in political games that have prompted him to favour ABS's IT group." (Bernier et al1, p. 1-2)

This denotes that in addition to the preemptive failure of the project manager to manage expectations and use input from different departments in order to intuitively shape the implementation process, his ultimate favoritism toward those departments that did demonstrate support would create exactly the opposite of the desired effect of the IT implementation project. That is, while the ERP system was designed to streamline and unify operations company-side, it would lead to a sense of greater departmental segmenting and a magnification of inappropriate lines of hierarchy within the scope of the new system.

Elements of Success: