Erp Implementation Failure Essay

5343 words - 22 pages

In this highly automated, IT-led business environment, companies are forced to keep up-to-date with the new technologies to remain competitive (Siriginidi, 2000a). ERP systems provide distinct advantages to companies adopting them as they can integrate business applications using real-time information. Therefore, ERP systems provide the means for management to respond to the increasing business needs in more effective and efficient ways. The main benefits of ERP systems are seen as the production of real-time data shared across the organization and consequently the integration and automation of business processes. This is particularly important in this new business environment where ...view middle of the document...

EDI systems and e-commerce might also be additional dimensions of an ERP system. Nicolaou (2002) reports on the effectiveness in cost management systems of JIT and EDI systems' use. Overall, the application of ERP systems leads to increased efficiency and effectiveness in business processes permeating management decision-making at all levels. Although ERP system benefits have been examined in the past, their impact on management process per se has not been considered. Further, the motives for adopting ERP systems including users' evaluation of ERP systems are issues that remain unexplored.In terms of the problems encountered in ERP implementations, researchers report on technical factors (Siriginidi, 2000a). Others report softer factors for ERP system success such as organizational culture. Substantial cost and time overruns, organizational problems including employee resistance to change also appear important barriers for ERP system success. Business process re-engineering (BPR), the appropriateness of business and IT legacy systems, management culture, top management support and communication are thought of as critical success factors in implementing ERP systems. Spathis and Ananiadis (2002) examined the impact of ERP systems on management accounting information systems at the Aristotle's University of Thessaloniki. Evidence shows that, users' perceptions in descending order of importance are focused on the following factors:· managerial;· IT infrastructure; and· operational.In brief, researchers have identified a number of problems associated with ERP applications as well as critical success factors in ERP implementations.ERP implementation problemsExamining the problems encountered in implementing ERP systems may explain why ERP system benefits have not been fully achieved by the companies concerned. It may also provide an insight of the potential of ERP systems. However, respondents rated implementation problems at a low or average degree not raising any issues of concern. The two major problems arising relate to delays in implementation and employee resistance to change both of which are in accord with the literature findings.It is also evident that, personnel training, increased costs, adaptation and integration problems are the most prevalent ones.Problems in ERP implementations may be classified as technical, financial and organizational. Therefore, a close co-operation both within the organization and between the organization and the ERP provider is essential in achieving a smooth ERP implementation (Gupta, 2000).Facing up to the risksFive steps can help mitigate the risks of ERP deployment, ensure that business units take ownership of the project, and guarantee that project managers are accountable to business units:Ensure backing by appointing a business unit leader (and not an IT department head) to take charge of the rollout. This individual should be offered incentives tied to the project's successю. All...

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