Information System

1. Introduction

According to Hsin Hsin Chang (2006), as the importance of enterprise information systems rises, enterprise resource planning (ERP) systems now provide the information technology (IT) capability to achieve the high-tech function within the organisations, Supply Chain Management (SCM) and Customer Relationship Management (CRM) systems to extend it beyond the advanced organisations. Chang (2006) puts forward a range of explanation  that ERP systems are that exploit the integrative and iterative ability of the corporate communications operational network to connect traditional business operation systems like finance, production, warehousing and sales into a single and combined system, creating a shared database, reducing multiple data entry and ensuring the current inventory and customer account details are available when processing an new order.

For most of the companies, once a decision, for example, has been made to replace an legacy existing system with a new ERP systems, the next crucial activity is certainly to implement it.

According to Effy Oz & Andy Jones (2006), although the system might have been thoroughly planned and tested before, when operators begin to get familiar to new ERP systems, implementation still can expose some unpleasant surprises and bugs that have not been found earlier. For instance, services to other departments and to customers might be delayed, and data might be lost.

Khanna & Arnja (2012) claims that when implementing a ERP information system, the cost of the software and the expense of the software installation and application, is the main cost of a project. Furthermore, implementation costs can easily surpass the cost of the ERP software application many times over, so the methods of implementation probably have profound cost saving impacts on the investment of the project.

From previous research, the specific issues can be viewed as: management process issues, organisational environment issues, leadership issues, technical issues, and personnel issues (Khanna & Arnja, 2012). In this essay, these issues will be discussed when a new ERP system is determined to implement.

This essay will compare and analyse different methods of ERP system implementation within organisations. Then it will consider the context of organisation and technology for ERP systems. Finally, it will provide recommendations for organisations choosing implementation of information system, especially for the ERP systems.

2. Implementation Approaches of  ERP Information System

2.1 Four basic implementation approaches of ERP

Effy Oz et al. (2006) points out that, in terms of the System Life Cycle framework, the implementation of information system (IS) will include following typical activities:

• Install new hardware

• Install software across the company

• Set up data sets ready for use

• Train the staff on the new systems

• Back up existing data in case of a problem

There are several conversion approaches and most of the organisations choose the following four basic approaches to manage the implementation process:

• Parallel

• Phased

• Pilot

• Cut-over

The choice of the implementation approaches that is best suited for the business situation is crucial because a wrong strategy may result in high expense and failure of implementation. Recognising the relationship of ERP conversion between the business process, users, and technology could help the executives to better consider what type or combination of ERP conversion method is most suitable for the organisation.

a. Parallel Conversion

Houston Neal (2010) offers an explanation that parallel conversion is considered as the least risky implementation process. In Parallel running, both the old and new ERP system run at the same time. After the new system meets the requirements from the designing and planning,  the old system start to end up. The amount of time when the old system can stop is likely to be uncertain, which may vary from a month to a year. By means of the parallel approach, the operators seem to be able to make sure that the the new system is performing as expected when compared to the legacy one. On the one hand, if a serious bug is found, then the operators can choose to use the existing system until the problem is solved. On the other hand, the parallel approach provides the accurate comparisons as the organisations can contrast data under same condition to certify that the new ERP system is performing well. This strategy is ideally suited for mission which is under crucial situation that can not afford a break down or a disruption.

Effy Oz et al. (2006) shows a success case study about implementation approach of the Moscow Narodny Bank (MNB) , which handles finance for the import and export of a wide range of products, involved a large amount of documents. The executives of MNB turned to the electronic document management systems, which enabled the bank integrate the textual information. Implementation first was undertaken outside normal working hours hence minimised disruption. So both the old and new systems were running at that time. The DataStore system is now in regular use since it is convenient and efficient.

b. Phased Conversion

Houston Neal (2010) mentions that organisations transit the new ERP system step by step by running the phased conversion which is a useful strategy for systems that are made up of smaller sub-systems. Alexis Leon (2008) indicates that each business unit in a phased approach may has its own “instance” of ERP and database. Phased implementation could reduce the risk of the installation due to the reduction of scope of the implementation. It seems that an efficient implementation of one module can contribute to the overall success of an ERP project.  In addition, as Alexis Leon (2008) claims, phased implementation is often applied in situations that do not have strong centralised synchronisation in ERP systems.

c. Pilot Conversion

Oz et al. (2006) addresses that a pilot conversion is a method that involves running out the system in several single-site group of users for testing and evaluation, where problems can be found and the system could be polished before implementing it in the other business units. Kamal Khanna (2012) agrees that small group of ERP implementation tends to have simpler and easier approach than those used by large conglomerate corporations with many different environmental locations. Many organisations use pilot method due to the flexibility in adapting to the specific needs of the business situation, especially when they need the evaluation feedback about the performance and qualities of the system before committing it throughout the organisation.