FUTURE DIRECTIVES IN ERP, ERP AND INTERNET, CRITICAL SUCCESS AND FAILURE FACTORS

By : Varun Luthra

New MarketNew ChannelsFaster Implementation MethodologiesBusiness Models and BAPIsMore Features: WEB ENABLING

Future Directives- in ERP

New Market

Supplementing direct sales with reseller channels.

Software offerings to appeal on the basis of reduced functionality.

Improving the implementation methodology for faster development.

Removing the entry price to make it financially viable.

Using the platforms such as MS Windows NT.

New Channels

As all the vendors are being forced to market their product in the world of small business, they made their software products more affordable by lowering the prices for each module and by ramping up the total costs by basing price on user licenses.

Example: Oracle offers the lower price software

from companies such as platinum software and great plains software.

Faster Implementation Methodologies

As to implement the whole business it has to go through reengineering process. This may cause a complete change in the business model working previously and thus also find it difficult to implement.

Some times only 10-15% of the implementation takes years to complete and by that time implementation cost may increase.

To make the implementation of packages more convenient the ERP vendors are searching for faster implementation methodologies e.g. Accelerated SAP (ASAP) is a program introduced by SAP.

Methodologies (cont…)

Oracle also introduced a faster implementation methodology called fast-forward.

This program speed up implementation of Oracle application suites and nail down the costs up front.

As there is dearth of skilled consultants, ERP systems implementation often become a difficult task.

Require highly skilled consulting teams. Example: Oracle’s OracleOne or SAP’s Platinum Consulting Services with highly skilled consulting teams provide their services along with new channel partners and implementation methodologies.

Business Models and BAPIs

To review and simulate changes to a business model, implementation team needs special type of business model tools.

The product such as Intel Corp Inc’s live model provides the views of R/3 process, data models and functions.

Live model is OLE complaint; the R/3 model can be manipulated and documented through OLE application such as Microsoft World.

Business Application Programming Interfaces(BAPI) are sets of methods that allow the external application to collaborate with R/3 business objects such as accounts, employees or customers.

With the help of this collaborate method, BAPIs gives the third party application vendors a lot of flexibility to build supporting applications for R/3 system.

Similarly, Baan offers Orgware, business modeling tool which combine with business specific templates that help to automatically configure the software to suit specific operational needs.

More Features

ERP vendors are also focusing on providing improved decision support applications. ERP vendors teamed up with various software providers

Example: JD Edwards teamed up with Information Builders Inc to deliver a data mart i.e. Smart Mart Suit with data base access, data transformation, reporting and OLAP Tools.

WEB ENABLING

To deliver the self-services and e-commerce capabilities, ERP vendors are being forced to move from client/server to browser/server architecture to web-enable their software.

Vendors deliver java based application for web enabling software.Example: Baan is working to deliver a java based web interface to all its products and also focusing on the automation of supply chain relationship via internet, on e-commerce via Microsoft merchant server (Site Server) and on using Hyperion Software Corp.’s Spider-Man technology for report and alert distribution across the web.

Framework for integrating the Internet and ERP systemsResearch methodology

ERP and Internet

Framework for integrating the Internet and ERP systems

Integration of information systems The role of information systems in organizations has

shifted from enabling transactions to supporting strategic and competitive objectives with a customer focus approach. Information systems are being set up to service customers by providing offerings that will allow customers to perform basic query functions.Benefits include:

replacing paper-based systems with shared resource computer systems;

capturing data once; storing a single copy of data in a manner which can

be accessed by all authorized users.

Internet use in organizations The Internet can be defined as the use of

electronic networks for communication between information technology systems of organizations or as a network of networks with excellent throughput capabilities, for example e-mail, file transfer, World-Wide Web (WWW).

Research methodology

The nature of this research required a qualitative approach where interviewing and document sources were used to gather data.

This research can also be described as exploratory qualitative research because the problem it investigates is not well understood.

This is due to the newness of the area and a lack of focused previous research on the subject.

Further exploration using qualitative methods was necessary:

SamplingThe respondents were selected using a purposive convenient sampling

Data gathering methodsThe primary data collection methods for this research were semi-structured interviews and a documentary search.

Data analysisIt analysis consists of examining, categorizing, tabulating, or otherwise recombining the evidence to address the initial prepositions of a study'.

Critical success and failure factors

Critical Factors

Focus on business processes and requirements first

Too often, companies get tied up in the technical capabilities or platforms that a particular software supports. None of this really matters. What really matters is how you want your business operations to run and what your key business requirements are.

Focus on achieving a healthy ERP ROI (Return on Investment), including post-implementation performance measurement

This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live.

Critical Factors (cont…)

Strong project management and resource commitment 

At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project.

Commitment from company executives

Any project without support from it's top-management will fail. Support from a CIO or IT Director is fine, but it's not enough. No matter how well-run a project is, problems arise (such as conflicting business needs), so the CEO and your entire C-level staff needs to be on board to drive some of these.

Critical Factors (cont…)

Take time to plan up front 

An ERP vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. Too often, companies jump right in to a project without validating the software vendor's understanding of business requirements or their project plan. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

 Ensure adequate training and change management

 ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

Critical Factors (cont…)

Understanding why you're implementing ERP (imp.)

This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. Perhaps process improvement, organizational redesign, or targeted best-of-breed technology will meet your business objectives at a lower cost.

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