ERP Implementation Approach the Study Collects Data

ERP Implementation Approach

The study collects data from 5 business units of the company. The data collection method is through both qualitative and quantitative data analysis, and the study collects data to enhance greater understanding of the ERP implementation approach carried out by the company. As being discussed previously, the methodology used to collect data is through qualitative and quantitative approach, and the study collects data from the following business units:

Accounting Department

Human Resources Department

Purchasing and Supply Department

Manufacturing and Product Development Department

IT (Information Technology) Department.

The study selects these business units because they are the most important business departments that focus on the core business activities of the company. The selected company represents a cross section of the major companies engaging in the ERP implementation. Typically, the information collected from the company is treated with high confidentiality, and the company chooses to implement ERP system to facilitate better financial position and efficient human resources.

The study selects departmental managers of these business units to collect data using qualitative in-dept interview. The study selects the participants for the in-dept interview because they have a deep knowledge of the ERP implementation procedures within their various departments. Added to the qualitative in-dept interview for data collection, the study also collects data through the quantitative survey method. The study carries qualitative and quantitative data analysis to enhance data validity and data reliability. (Coffey et al. 1996).

This study combines both quantitative and qualitative data analysis to enhance reliability and validity of the research findings.

The Table 1 reveals the different strategies that both quantitative and qualitative research carries out the analysis.

Table 1: Quantitative and Qualitative Data Analysis

QUANTITATIVE

QUALITATIVE

Reliability

Quantitative analysis uses reliability to measure the instrument to ensure that the results of the research are reliable.

On the other hand, the qualitative data analysis ensures that data collected makes sense and consistence with the research findings.

Sampling strategies

Sampling strategies for quantitative analysis include random, large, representative, and use of control groups.

Qualitative data analysis uses the sampling strategies to collect data from small non-random samples, and purposeful sample population to collect rich data and information.

External Validity

Quantitative analysis uses external validity to ensure that sampling is correct and the random sampling is reflective of general population.

However, qualitative data analysis uses external validity to ensure the research is applicable to rich and phenomenon. (Gibbs, 2002).

Data collection method

The data collection method is through survey and/or questionnaires

The data collection method is through interviews.

Benefits

Data collected is relatively easy to analyze and cost efficient.

Data collected are rich and are collected within the natural environment.

Disadvantages

Data may not be rich enough to provide answers to the complex issues.( Mertens, 2005).

Data collection method is usually costly and time consuming. (Ettlie, 2000).

3.1: Qualitative Data Analysis

QDA (Qualitative data analysis) is the process and procedures of moving data into some form of interpretation, and understanding. Qualitative data analysis is also the process of removing the errors and interpreting the data collected during the course of qualitative research. The researcher uses the in-dept interview to collect qualitative data from participants, and the interview process took approximately 30 minutes. Typically, the answers from interviewees are recorded in a small voice recorder. Apart from this recording procedure, the researcher also writes all the answers from the interviewees on a small writing pad. The interview protocol was easy to read and was written with a simple English to make them easy to understand for participants. The interviewer selected respondents based on their positions within the company and the interviewees were selected based on their knowledge on ERP. There is different process that the study employs to carry out the qualitative data analysis:

First, a researcher goes through texts written on the note pad and highlights the important answers relevant to the questions. Moreover, an interviewer plays the voice recorders three times and crosscheck whether the contents written in the writing pad are similar to the contents in the voice recorder. The study uses writing procedure to put down all the data collected from interviewee, and the researcher uses the analytical procedures to put down the content of the interview. Typically, the researcher put down the summary of the data in an analytical procedure. (Merriam, 1998).

To enhance further analysis, the researcher cross checks the data to identify the bias from the response of the interviewees. One of the techniques that a researcher used to identify the bias during the interview process is by asking some questions twice. The questions are twisted in such a way that respondents could not notice that they were answering two similar questions. From the response from the respondents, an interviewer has been able to identify the suspected bias from the answers given by the respondents. To enhance the validity and reliability of the data collected, a researcher removed all the suspected bias identified within the answer given by the respondents. More importantly, the interviewer highlighted the themes relevant to the research study. By extracting the themes and contents relevant to the research study, the researcher has been able to identify the research results from the themes. (Seidel, 1998).

Further process used to carry out the data analysis is through coding. (Seidel, et al. 1995). The study identifies some texts that could assist in achieving the research objectives and applies label to the texts. The strategy is to facilitate the retrieval of important data that could assist in arriving at meaningful research findings. After coding, the researcher interprets the data in a way to understand the phenomenon. Since the data collected is very lengthy and voluminous, the researcher uses the analytical writing to organize the data collected. (Bogdan et al. 2003).Typically, the researcher uses computer-based system to organize the data. To facilitate easy retrieval of data, the researcher uses computer-based directories and the word processing software to write and annotate the texts.

3.2: Quantitative Data Analysis

Since data were collected through both quantitative and qualitative research, the study also carries out the quantitative data analysis. The quantitative data analysis is the process of using the statistical tools to summarize the mass of data collected using tables, and graphs. There are different strategies that the study employs to carry out the quantitative data analysis.

First, the study uses the descriptive statistics to summarize the raw data collected. The summary of data facilitates the presentation of data through graphs and charts which enhances visual presentations of the research findings. The study also presents the data through inferential statistics. The inferential statistics is the outcome of the statistical tests carried out, and the inferential statistics is used to carry out the research findings. Part of the data analysis carried out is by implementing reliability analysis on the descriptive statistical data before it is transferred into the graphical form. Reliability analysis is the process of checking whether the results are consistence with the data collected. Typically, the researcher sought for additional document and research paper to enhance the reliability of the results.

4: Results

The results of the data collected through qualitative and quantitative technique reveal that the company considers the strategic factors before the implementation of ERP. Typically, it does not make sense to implement the ERP if the ERP implementation is unable to meet the strategy values of the company. The study presents the results of both qualitative and quantitative data.

4.1: Results of Qualitative Data Collected

This section presents the results of the qualitative data collected. The qualitative data reveal that the company implements ERP based on the following criteria:

Cost of the ERP Implementation,

ROI Issues and Implementation Time

ERP Employee Training

Effective use of ERP Applications

4.1.1: Cost of the ERP Implementation

The findings from the interview and the quantitative data collected reveal that the company considers the cost of ERP implementation before embarking on the ERP implementation plan. Management of the company interviewed reveals that it costs the company roughly $2 millions to achieve the ERP implementation. The cost is large because the company is a medium size organization. The total cost of ownership and implementation of ERP include the cost of software design and the cost of training of personnel. Other costs calculated are the opportunity cost of the waiting time before the company starts to realize the ROI (Return on Investment) from the ERP. The management also confirms that the company incurs consultancy fees. Typically, the company engages the service of ERP consultant before embarking on the ERP implementation. The major objective to achieve from ERP consultant is to enhance the greater understanding on the cost of ERP implementation and the strategic benefits that the company stands to gain from the ERRP implementation.

From the results of the qualitative research, the company includes the participation of all departments to determine the effectiveness of ERP for the organization. Typically, the management interviewed revealed that they took into consideration ERP system costs, potential needs of ERP and the costs of upgrade. However, the company also revealed that the vendor costs were also taken into consideration during the ERP implementation. Typically, the selection of vendors is based on the decision to have the ERP installed as quickly as possible. The company affirms that they upgrade their computer system in order to be compatible with the ERP requirements. The previous computer system was not compatible with the ERP requirements, and the company needed to upgrade their information systems to meet the ERP requirements.

The company also confirmed that they incurred the ERP system costs before they could realize the benefits from the ERP system. The cost of ERP system includes cost of hardware, and cost of software as well as the overall installation costs. The company calculates the ERP costs based on the number of ERP users. The company implements the ERP within the 5 business units, which are the core of the company business operations. The 5 business units are:

Accounting Department

Human Resources Department

Purchasing and Supply Department

Manufacturing and Product Development Department

IT (Information Technology) Department

While the company implement the ERP to reach the above named business units because they have greatest impact on the business, however, the company also implements the ERP within other departments within the organization.

Apart from the ERP costs, the company also incurs the costs of ERP customization. In the contemporary business environment, an organization considering implementing the ERP should consider the costs of ERP customization to improve their business operations. Typically, ERP customization improves the business versatility and business performances. The company implements the graphical interface of the computer system to make the daily tasks easier for employees. The company also allows system administrators to make changes in the entry field within ERP system. A system administrator in conjunction with consultant, the company has been able to implement the software customization. Thus, the ability of the company to customize the ERP software system to meet the company unique requirements increases the ERP functionality.

The cost of testing and data transferring is another cost incurred by the company during the implementation process. The cost of data transfer has impact on the company since the company has many years of data and record, which need to be transferred to the ERP system. Typically, the company used its employee to implement the data transfer operations. Moreover, the cost of testing is another costs incurred by the company. The vendor performed the testing of ERP to ensure that the system functions as required.

4.1.2: ROI Issues and Implementation Time

The length of time to implement the ERP system is very critical for the ERP implementation. The major factor affecting the ERP implementation is the identification of the equipment to operate the system. Typically, ERP implementation depends on the nature of ERP System and the number of ERP modules to be implemented. The length of ERP implementation time may range between 6 months and 2 years and the length of time may be long if there are many changes that need to be implemented within the organization to achieve successful implementation of the system.

The ROI is another factor considered with the ERP implementation. During the qualitative data collection, the study confirms that the company spends approximately 12 months for the ERP implementation. Typically, the company converted its old system into the new system and the management interviewed confirmed that they met some difficulties in putting the ERP in place because the company had to convert the components of the old system and link them with ERP system to enhance the functionality of the new system. Due to the difficulties they met with the ERP implementation, the ERP implementation time took approximately 12 months. The company took longer time to achieve the ERP implementation because of the conversion process and barriers encountered during the implementation process.

Another factor leading to the delay in the implementation of ERP was the resistance of workers to the ERP implementation. Many workers believed that ERP implementation would make them redundant. Thus, the company needs to educate employees that ERP will be a greater and invaluable asset for the company, and the ERP implementation will make the company to achieve greater efficiency. Rather than leading employees to be redundant, the implementation of ERP will make employees to be efficient which will lead the company to employ more employees. Typically, it took management 2 months to convince overall employees about the importance of ERP system.

The company confirmed that they did not conduct ROI (Return on investment) analysis before the ERP implementation. Part of the ERP implementation that the company put in place is the integration of ERP system to track the performances of employees after the ERP implementation. It is assumed that one of the ERP benefits is to enhance the efficiency of company employees and financial performances. However, the management confirmed that they were satisfied with the results of the ERP implementation. The company uses the following performances criteria to monitor the performances from ERP implementation:

First, the company has been able to increase the net profit by more than 80% since the ERP implementation.

Employee performances and productivity has increase by more than 200% with the ERP implementation

The company records more than 75% decline in the cost of operations with the ERP implementation.

The company confirms that the ERP has been able to save great deal of workforce time, which leads to the saving of costs of workforce. The ERP system has also been able to save the company a great deal of labor time. Qualitatively, the ERP implementation has been able to prevent the workers redundant making the company to carry out many tasks efficiently. Thus, the company has been able to enjoy a decline in the labor cost, elimination of redundancy as well as increase in the operational efficiency.

4.1.3: ERP Employee Training

ERP is a new technology that requires employee training to assist them using the system effectively and correctly. Employee training has been identified as an effective tool for the successful ERP implementation. Typically, ERP has been considered as the most important elements of ERP implementation. Without doubt, employee training has become a necessity for the successful ERP implementation. The interview results from management reveals that basic computer training for employee is critical for the success of ERP and lack of computer skills for employee may be detrimental to the success of ERP. Typically, employees need to be proficiency in the computer operations to operate the ERP effectively. Apart from the basic computer training that employee underwent, the management also confirmed that the company provided the specialized training to make employees more proficient. Since the company implemented different ERP modules, the company carried out employees training to make them possess the skills to operate the specialized modules.

4.1.4: Effective use of ERP Applications

A successful application of ERP involves potential integration of the system into all the departments within the organizations. The company integrated the system in all the departments, and the management confirmed that the major problem that the company encountered during the implementation process is the inability of employees to implement the ERP system to their fullest potential. To facilitate the efficiency of employees, the company implements training for all employees. After the training, the company uses the ERP to facilitate the following functions: