Pros and cons of customizing the system
Discuss About The International Computer Science Engineering.
The key goals that any company want to achieve through ERP systems is increased efficiency of the business processes, cost reduction, improved collaboration among the departments, competitive advantage and key functionalities. There is no dearth of companies like IBM, General Motors, Emerson Electric, Cummins that have achieved many benefits by implementing ERP in a successful manner but at the same time there are numerous examples of ERP failures also. Hershey was using a traditional legacy systems that do not provide much collaboration among the business processes. For example, each department was purchasing their own software based on their requirement that result in huge communication gap between the departments as well as result in the redundant data entry in multiple systems. On the other hand, ERP systems consists of different modules like Purchasing and sourcing, Order and quote management, Customer relationship management, Accounts Payables, General ledger, Human resource, Supply Chain planning and these systems are based on the flow of the data from 1 system to another which encourages collaboration as well as provide the visibility of upstream and downstream processes (Ranjan, Jha, & Pal, 2017). In ERP systems, as soon as the order management tem ships the customer orders, account receivables will become active and accounts were informed to invoice the customer. This will automatically create the process flow and thus streamline the entire business process. Apart from it, ERP systems were also consisting of workflows to effectively manage the business approvals. Hershey was also looking to improve its inventory turnover rations, better supply and demand planning, accurate forecasts, and better accuracy in customer fill rate and accurately promising dates to the customer so as to increase the customer satisfaction (Aloini, et al., 2016). Apart from this, the business climate has become very competitive and cost reduction is one of the areas to improve margins. ERPs often streamline the business processes, reduce manual efforts of entering data again and again in different systems and also speeds up the order processing cycles, purchasing cycles, automate the various activities and thus reduce the costs (Conteh, & Akhtar, 2015). Apart from it, ERP systems captures the huge data and can also provide the key performance indicators by taking data from various modules. This will help in decision making as well as identifying the areas of improvement. Further, ERP systems automatically creates the income statement and many other reports by directly taking data from the system.
How Hershey should have handled change management during ERP implementation
Customization means changing the standard ERP package to suit to your needs. Generally, ERP packages consists of industry best practices ingrained in standard business processes and thus it is not recommended to change the standard way of doing things however there are some cases when customizations are absolutely necessary. For example, if any organization is having very unique business process or the business process is a source of competitive advantage for the organizations and it is not supported by the ERP packages, it makes sense to customize the ERP systems however for every single case, it is not advisable to customize the ERP but instead change the business process and align it to the standard ERP way (Narayanamurthy, & Gurumurthy, 2017).
The pros of customizations is that organizations can continue to use their existing business processes if they are not supported by the ERP systems and sometimes it is possible that custom process is even better than the standard process flow configured in ERP system. Apart from it, customization of the process will lead to easy acceptance among the people because they are comfortable in that manner and not much training is needed.
However, there are also large number of issues associated with the ERP systems. For instance, customization means changing the package and thus require technical expertise and are expensive to build and maintain. Apart from it, ERP systems releases their upgraded versions time to time and customizations are not supported during the upgrades. They need to be redesigned every time during upgrade (Fryling, 2015). Apart from it, custom process also impacts the performance and processing speed of the ERP systems. Thus, it is recommended that organizations should go for customizations only in extreme cases where there is no other alternative. The better approach is to change the business process and align it to ERP way. In case of Hershey, it decided to implement SAP ERP systems, Seibel Customer relationship system and Manugistic’ supply chain management systems. Though each of the software is best in class but integrating them requires customization that have led to many problems because different software have different formats and also needs changes in all the software to accommodate input and output from each other. This has increased the complexity and any upgrade in any of the software may require rebuilding the integration. Thus, maintenance of such systems is quite a difficult task even after a Go live. Also, in case of any issues, different vendors will blame each other’s products and will not accept the bug in their systems.
Hershey should have defined the entire change management team headed by the project champion like in six sigma projects. It is because ERP projects are also very complex projects that requires huge changes. ERP implementation project require huge changes in the way user works and users often resists the new systems because it is the human tendency to resist change that challenge their existing way of doing things. Thus, Hershey should first of all have identified that the change management is one of the critical success factors of ERP implementation project.
Change management team should have identified the key stakeholders of the project and must have involved them in the decision making. For instance, Hershey management was so much in a hurry that although consultants emphasis that it will be a 4 year project, it still decide to complete the project much before that. Also, In order to do so, testing and training needs of the employee is neglected.
Change management team should have include all the stakeholders like employees, consultants and management and tries to bridge the gap among all of them. Employees are the end users of the ERP systems and unless they accept the new product, it is going to be a disastrous. Change Management team should have also bring the top management on the board to explain to the employees about the benefits of the ERP systems and why they are needed and also ensure the employees that their job is not threatened by ERP in any way (Chaushi, & Dika, 2016). Change management team should also have published the training and testing calendar so that the employees should be ensured of the organization’s support in learning the new technology. Communication is one of the most important pillar of the successful organization and thus it should been handled in an effective way with the full support from the top management. Employees have to be ensured that they are the ultimate drivers of the project and this project will only go live once they will be satisfied and familiar with the new software. They should also be given ample time to test the new systems before it will go live (Malinowska, & Rzeczycki, 2017). Apart from it, instead of taxing existing employees with extra work load, new team should be identified consisting of experienced people that will work on the ERP project along with the consultants in a full time basis. If that would not have been possible, incentive should be given to the people for undertaking extra work to keep them motivated.
References
Aloini, D., Dulmin, R., Mininno, V., & Spagnesi, A. (2016). Benefits and barriers of social/collaborative ERP systems: a state of the art and research agenda. In Strengthening Information and Control Systems (pp. 171-184). Springer, Cham.
Chaushi, B. A., Chaushi, A., & Dika, Z. (2016). Critical success factors in ERP implementation. Academic Journal of Business, 2(3), 19-30.
Conteh, N. Y., & Akhtar, M. J. (2015). Implementation challenges of an enterprise system and its advantages over legacy systems. International Journal on Computer Science and Engineering, 7(11), 120.
Fryling, M. (2015). Investigating the effect of customization on rework in a higher education enterprise resource planning (erp) post-implementation environment: A system dynamics approach. Journal of Information Technology Case and Application Research, 17(1), 8-40.
Malinowska, M., & Rzeczycki, A. (2017). IMPLEMENTATION OF THE ENTERPRISE RESOURCE PLANNING SYSTEMS: CASE STUDIES OF FAILURES AND THEIR IMPACT ON THE ENTERPRISE OPERATION. Value of Failure: The Spectrum of Challenges for the Economy, 75.
Narayanamurthy, G., & Gurumurthy, A. (2017). Revisiting the critical failure factors of ERP to explore their relationships-an ISM based approach. International Journal of Manufacturing Technology and Management, 31(6), 554-580.
Ranjan, S., Jha, V. K., & Pal, P. (2017). Application of emerging technologies in ERP implementation in Indian manufacturing enterprises: an exploratory analysis of strategic benefits. The International Journal of Advanced Manufacturing Technology, 88(1-4), 369-380.
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