Why do ERP Implementations Fail/Succeed?
ERP refers to Enterprise Resources Planning, and it is also called Enterprise system. These are systems which are remarkably vital in Information Technologies especially on business issues. The ERP is one of the many systems that have propped for the last decade, but has highly gained popularity. The ERP is mainly concerned with standardization, efficiency and synchronization of the business enterprise systems. These systems are outgrowth or successors of MRP systems (Material Requirements Planning), which were established in the early 1980s (Varon, 2004). The MRP were mainly referred as computer-based methods that were effective in scheduling and planning inventories and any material required in a business. The MRP system was preferred by many investors because of the time factor. Later the MRP was modified to MRP II then to BRP (Business Requirement Planning) and eventually to ERP. The ERP integrates various accounting systems like general ledger, payroll and billing. These systems are better than the previous systems since they have significant benefits. For instance, they enhance effective process and information coordination. They also decrease cycle time, reduce the carrying costs and have improved the response to customer requirements.
Although industries and other business enterprises play a prominent role in the development of every nation’s economy, it is faced highly faced by challenges that involve fragmentation, inefficiency and demographic factors. To overcome such challenges, a number of industries are currently implementing integrated Information Technology solutions like the ERP systems (Vessey, 1991). These systems are essential in improving business functions especially the ones that involves accounting procedures and activities related to accounting (Shang & Seddon, 2000). However, their application requires the ERP vendors from whom the industry gets various case studies on successful implementation of ERP. Also from the vendors, the industries learn various failures why they have failed as well as what to do to prevent the failures. It is a fact that the ERP systems are beneficial and necessary for business success. Nevertheless, an investor has to be aware that its implementation is not that easy. Its nature is complex and hence requires an investment to commit significant financial resources. This system is not only a high cost activity but also high risk. It involves high portion of the business capital, and it is implemented with risk and uncertainty. Therefore, an industry highly loses when the implementation of ERP fails. From various scholarly works, failing in the ERP implementation is common and eventually lead to business closure because of high cost and hence frustrations. Therefore, it is necessary to understand this reasons that lead to failure of ERP systems and how to avoid them after implementing it. There are also many industries that have succeeded with the ERP system implementation. The industries that succeed enjoy the ERP’s significant benefits like effectiveness and efficiency and hence expand and maximize their profits (Schlag, 2006). Therefore, an investor should also learn from the industries that have previously succeeded to know the reasons behind their success and how he can apply them. This paper aims at analyzing various projects that have failed the ERP implementation and the reasons behind their failure. It will also analyze the projects that have succeeded the ERP system implementation and what made them success. Finally, the paper will define the relativity of success and failure basing on the varying levels.
Projects that have succeeded on ERP Implementation
This paper will analyze three projects that have succeeded in the ERP implementations and explain the reasons behind the success. The three projects include Small Business projects, internet and the supply chain projects. Small businesses are highly applying the ERP with an aim of expanding their businesses. This is also happening to the middle size businesses they are refining their operations to become competitive. Both the small businesses and middle sized investments highly require the ERP system implementations especially in this era of global marketing, which involves high competition. The global economy is also applying the collaborative model and hence no company or industry can succeed on its own. Every company requires the other one and therefore, they regularly share the distributors, suppliers and customers. The small business cannot compare with the large industries since they require different needs, resources and infrastructure. This calls for collaboration with everyone involved for the success of these businesses. The vendors, on the other hand, had to come up with an ERP system that is easy to install and one that entails lower costs for small business investors to afford. A number of small businesses directly relied on vendors. They agree with the vendors on charges for the vendor to supply the ERP systems together with the support team for its maintenance and implementation.
The companies that highly rely on the internet have also benefited from the ERP system implementation. The Web deployed ERP has extended its benefits to the small business investors (Davenport, 2000). The success of the ERP implementation on internet is because the software is never bought or installed in the specific company. The vendors remain with the soft ware in their main computer and the client companies access it from that point. The system reaches the customers through internet connections. Therefore, the Web- deployed ERP enhances centralizing of the system. This reduces the costs that could have been incurred on hardware and the personnel. Using ERP system from a main computer also relieves the small investors from incurring the cost of hiring information technologist professionals. In most cases, such connections are successful to the companies which are in their early stages.
The chain supply has also successfully applied the ERP system. In the supply chain projects, the ERP are essential since they connect the disparate information system. Currently the global markets are highly relying on supply chain projects and hence require the ERP systems. The ERP vendors have enhanced the success of this system in the supply chain projects by involving the ERP systems with other applications like computer networks and e-commerce…”
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