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Impact of organization readiness on the outcome of ERP implementation

Report on Impact of organization readiness on the outcome of ERP implementation for effective management systems

Impact of organization readiness on the outcome of ERP implementation

INTRODUCTION

Enterprise Resource Planning is a process for monitoring and planning every resource of business organizations. It is considered effective management systems that provide excellent planning or scheduling capabilities as well as importantly increases the productivity. It greatly increases consumer service and also improves a resource performance, for example, high inventory turnover moreover greater material cost reductions (Ahmadi, Yeh, Papageorgiou & Martin, 2015). However, articles in commercial media describe the failure of Enterprise Resource Planning implementation and the consequent company's reluctance to invest in Enterprise Resource Planning. Significant improvements in the likelihood of ERP, coupled with high degree of uncertainty surrounding the failure of implementation efforts, require important new observations on the company's decision to adopt the ERP determinants and impacts (Babu & Bezawada, 2012).

This study reacts by emphasizing the importance of an in-depth analysis of the company's ERP program preparation. This study examines the correlation between Tesco's organizational readiness as well as key success elements in ERP implementation. The study also considered a number of recommendations to improve Tesco’s ERP system and self-development strategy roadmap and reduce supplier dependence. ERP surveys were conducted for end users, experts and developers of Tesco organizations. Findings of this study confirm the outcomes of the existing works. Four key success elements are recommended: project management, system integration, company process reengineering, education, and training to ensure the even adoption of the ERP at Tesco.

DISCUSSION OF TOPICS

As Weiner (2009) defines the Organizational Preparation for readiness (ORGD) is “a multi-level and a multi-faceted structure (Weiner, 2009). As an organizational structure, the preparation for change refers to the common determination and commonality of organizational members to achieve change (change commitment). The higher the readiness of organizational change, the more likely it is that members of the organization will initiate change, make more effort, show greater persistence, and demonstrate more cooperative behavior. Conversely, enterprise resource planning is the utilization of the software suites to integrate and systematize data at various organizational levels to judge the Key Performance Indicators. ERP has a wide range of achievements that can help organizations handle their business. In a typical deployment, ERP must be incorporated with some other software systems to optimize the entire system. Therefore, deploying a new internal ERP system may involve large-scale business procedure reengineering furthermore employee retraining. However, the ERP concept in organization’s operation management is not at all new. Tesco has implemented the ERP systems to advance their programs and make them better organized and transparent.

The literature on the execution or implementation of the ERP system is full of stories of the unsuccessful project results. Defining an ERP system is critical before considering the role of organizational elements in ERP implementation and probable impact of the change management intervention. The ERP system needs to be defined as integrated enterprises computing a system that includes applications for example manufacturing, logistics, accounting, distribution, finance, marketing, as well as human resources. There are differences between the two types of ERP research methods - process and variance approach. Variance approach that dominates ERP literature over a past decade has focused on the variables that affect and are affected by the ERP projects, while the procedure approach involves the way the Enterprise Resource Planning implementation procedure develops through the project lifecycle. Today's highly competitive marketing settings or environment motivates producers and consumers to get faster (Beheshti & Beheshti, 2010). This means that the customers must meet the needs of the customers and listen to their appeal, and the suppliers and customers must be together to create goods and services based on the customer demands and needs. Therefore, the makers and service makers need effectual planning as well as a control system to coordinate in all phases of the organization (process, etc.).  Implementing and using efficient planning or control systems in the organization can increase productivity and distribution performance as reducing wait times? Enterprise resource planning systems are the best examples of the strategic tools that provide powerful tools for planning, coordinating, and controlling processes in an organization. The main issues faced by companies dealing with paper stocks or separate software solutions that are not integrated with manufacturing and sales. If you don't use ERP, it's hard to solve this pain in a perfect way (Candra, 2016). Insufficient reporting is associated with a lack of complete cross-sectoral data reporting and real-time visibility into all process status from decision maker quotations to cash. If the company does not use ERP, they may use accounting applications, spreadsheets, desktop applications, self-developed applications, and different applications. All of these systems increase the likelihood of data conflicts because they are difficult to maintain and update, and the total cost of doing so is higher. The benefits of using ERP outweigh the amount of work and cost required to implement and adopt ERP. Companies using ERP systems have seen lower operating costs, lower management costs, improved on-time delivery, and improved inventory turnout (Dantes & Hasibuan, 2010).

An ERP system is defined and describes as the system that may control all the resources required to perform industry functions. Resources can also be divided into three essential areas: financial resources, material resources, and human resources. The compelling success stories and business case persist to attract the business interest moreover investment in the ERP. The traditional view is that the ERP plan accounts for an average of 178% of the budget, which is 2.5 times the expected, and only delivers 3000. In addition, 75% of ERP projects are considered to be unsuccessful furthermore not be accepted (Hoch & Dulebohn, 2013). The seemingly numerous challenges, circumstances, and conditions have contributed to the ultimate success and failure of the ERP program. Before the investing scarce resource in this high-risk technological innovation, corporate leaders are calling for measures to reduce uncertainty around Enterprise Resource Planning. At the beginning of the project, the related problems and shortcomings at this stage are multiplied and may have toxic effects on the success of subsequent Enterprise Resource Planning innovation procedure. Although the decisions made at this stage are very critical to ultimate success and failure of the ERP program, there are few studies that have developed a structured approach to modeling or exploring problems in adoption phase (Koch & Mitlöhner, 2010).

CASE STUDY

Company Background

We select Tesco organization for this study. Tesco is a food retail giant and UK's largest food retailers, with more than 470,000 revenues in 2009 and revenues of more than £54 billion. There are approximately 4,331 Tesco stores in 14 countries around the world. The well-known food retailer Tesco was founded in the year 1919 and Tesco opened its first food retailing store in Edgware state, London in 1929. It has grown rapidly over the last few years and has taken an outstanding position among UK food retail giants. Tesco's core business is headquartered in the United Kingdom and its operations are primarily in the US, Europe as well as in Asia. As it expands to other nations, Tesco must regulate its business processes and IT systems to maintain its overseas operations, thereby promoting a unique and homogeneous approach to its 3,263 stores in almost 14 countries. The project involves standardizing the daily operations of the customer's business processes and IT systems as well as store, financial moreover in-store system warehouses, distribution systems and payroll systems. The execution of this business process and procedures was initiated several years after the Tesco-in-the-Box system launched Oracle's ERP system for every region of the enterprise. Tesco provides and services through online retail sites tesco.com plus Tesco Direct, furthermore provides financial services all through the Tesco Personal Finance as well as Broadband Internet Connection Services (Williams, 2008).

This study effort focuses on the Tesco's readiness for ERP implementation success and considers the four key critical success factors such as Project Management (PM), System Integration (SI), as well as Training & Education (TED). Research work has been carried out in the ERP implementation, such as the benefits of the two Enterprise Resource Planning packages (Oracle and SAP). The current state of adoption of ERP in enterprises has shown tremendous growth regardless of the size of the company. Some organizations have successfully implemented ERP in the supply chain management systems and customer relationship management as an integrated system for implementing the changing function of IT in engineering consulting firms after ERP. The many recommendations of ERP implementation are a big mission full of risks. There are many practical suggestions for reducing risk. There is a need to also consider the operational, legal, and technical factors that warrant acceptable for the ERP implementation (Niu, Jin & Cheng, 2011). The required software must be used within a shortened time frame, with very less risk and the potential to be the most advanced technology that reflects the company's common practices before implementing the ERP system. The readiness of an organization's internal ERP deployment is very critical to understanding the organization's readiness before the project begins and identifying possible problems as early as possible. These issues might affect the ERP implementation results ("Improving the planning process at Tesco", 2007). Hence, the organization's readiness will help the success of ERP implementation, so the following assumptions are built.

The impact of ORGD on PM: Organizational readiness is very critical to the achievement or success of the project as it provides appropriate planning as well as controls the through regular meetings along with reasonable deadlines. Tesco IT management must evaluate a variety of factors such as organizational risk assets for risk management, data collection for change management processes, and HR to understand Tesco’s organizational readiness for the project management. In addition, it is suggested that Tesco IT management use appropriate staff and PM software and tools to enhance the project management unit.

Effect of ORGD on BPR: The results of the study indicate that BPR movement significantly affects tissue preparation. This exercise requires expert and manpower, which can cost the organization more. It is recommended that Tesco management must utilize the skills and expertise within the organization for BPR exercises (Niu, Jin & Cheng, 2011).

The impact of ORGD on System Integration: Indirectly, considering internal skills as well as resources is significant to make sure that SI activities are easy to run. Therefore, Tesco should focus on providing a skilled labor force to support the integrated interface. Tesco may still rely on external assistance to maintain its integrated system. Tesco IT management must evaluate a variety of the factors, including IT staff experience and skills, especially SI; availability of traditional internal systems; and third-party data or information systems that require to be connected/integrated with the ERP; regulations and procedures for checking the data integrity.

The impact of ORGD on the TED: Tesco must consider implementing a sustainable professional development program for its employees. Organizational management should effectively manage training programs in order to promote learning as well as sharing culture among employees. It is also recommended to achieve the success of ERP projects in internal skills development to meet the needs of the special training. Additionally, Tesco management should consider some of the factors associated with TED moreover allocate an appropriate budget for the training program (Olson & Staley, 2012).

Use the developed model to calculate the ERP preparation level and the current situation of each company before the ERP implementation. Two tools were used to analyze the results of the pilot study, ERP prepared fish bones (Figure 1) and ERP preparation level comparison chart (Figure 2), and these tools are part of this study.

A. ERP preparation situation fishbone

ERP Readiness Fishbone shows the level of preparation for every factor, every dimension of the company and the overall preparation level, which is the weighted almost average of approximately all factors. It is the most valuable tool for management in order to recognize weak parts of the firm and also improve them. Figure 1 illustrates the utilization of the tool. It particularly shows the level of readiness of TESCO's current situation. The overall enterprise resource planning preparation level is 84% combined with failure: TECHNOWARE 99%, HUMANWARE 70%, ORGAWARE 75% and IN FORWARD 80%.

B. ERP preparation level comparison chart

The ERP Readiness Level Comparison chart is utilized to contrast the preparation levels at about 2 given times (Orougi, 2015). A comparison of the status of each preparation factor before and after the ERP implementation depicts the company Tesco in Figure 2. The manager can view the chart as the progress report. As shown in the figure and can divide the preparation factors into approximately three different categories.

i.              The preparation factors did not change the factors of the preparation level preparation factors (RF) 5, 7, 11, 12, 22, 28, 29, 33 and 34 without changing their state during this period. The RF 28, as well as 29 (the business plans and visions and business scale), are at their highest level.

ii.             Preparation factors reduced the level of preparation just RF 8 moreover 10 (commitment of project leader and also top management of the company) were rejected during this period. Surprisingly, the level of preparation for both factors was at its highest level before ERP implementation.

iii.            In addition to the above two categories, the preparation factors for all the preparation factors that have improved the preparation level have improved their preparation level. Most of these RFs have reached the 100% readiness level (RL). According to this figure, RF 6, 18, 19, 20, 27 and 37 are at 0% O RL, where RF 18, 19 as well as 27 have now reached approximately 100% RL.

Implementing ERP in the organization has a potential to increase customer satisfaction by increasing productivity, value, quality, and customer services while decreasing costs and reducing wait times. Prior to ERP implementation, an ERP preparation assessment of the organization is required to make sure maximum benefit. To assess the organization, ERP requires a specific preparation evaluation model because such models do not exist in the ERP literature. 4-dimensional ERP preparation evaluation model developed particularly for ERP preparation assessment will help to develop an effective ERP implementation strategy. Prioritize the preparation factors based on a weight given by experts and managers, taking into account the impact of a national plus organizational culture. This model is the tool for assessing factors related to a particular culture.

ERP implementation benefits Tesco

Since its adoption, ERP implementation at Tesco's has been a new success story, and providing Tesco with a complete range of profits in terms of the good and service quality, efficiency, customer satisfaction in addition to value for the money, moreover noteworthy savings in different areas of the business functionality and some are as follows:

ERP implementation at Tesco increases their productivity by using versatile and homogeneous sales applications and financial as well as HR systems across Tesco's all operations worldwide (Pavel & Evelyn, 2017). The entire network uses Oracle Finance evenly in the core business along with global operations, and financial applications in addition to processes are centralized properly and integrated across the Tesco Group worldwide.

Isotrak is one of the greatest hosting services that provide real-time vehicle tracking and a world-class data center with precise high service levels. ERP provides a single transport fleet and transportation management perspective for all Tesco's 26 UK distribution centers. Improve driver safety by providing keychain panic alarms that operate inside or outside the vehicle, as well as the ability to guide rapid safety response through vehicle tracking. By using the Isotrak system, the Tesco distribution system increased the number of products used per liter of fuel by 8%, which is better than its 2.5% increase, equivalent to more than 54,000 annual savings.

Learning & recommendations from ERP Implementation at Tesco

While implementation is the most important, it is important to communicate clearly with employees about the needs and benefits of implementation to understand, evaluate and support them. It is essential to create energy in a team and create ownership within the organization. It is also noteworthy to have a top-level implementation, particularly for the firm that focuses on growth by 25-40% (Wickramasinghe & Gunawardena, 2010). It is also important to measure and make a decision whether the organization wants to buy an ERP or create firms own system within the organization and specify a timeframe for implementation. Responsibility and accountability must be clearly identified during the implementation phase and a dedicated team for regular monitoring and control must be set up (Wickramasinghe & Gunawardena, 2010). Starting to integrate with a money module is a time-proven and proven execution strategy that completely works almost always. Employees must be properly trained during the implementation phase and must be monitored to ensure that implementation provides the desired results and that user acceptance is ensured by easy access and more efficient processes. Determine the correct implementation of the system to prevent judgments and requirements and failures in business needs and scope. Putting into operation is very important. Each organization must have an appropriate reporting along with the documentation system. And this will be simply achieved by implementing ERP, as it automates the reporting and can be obtained in the electronic media. For Tesco, it is significant to understand the total ownership cost and see if the outcomes are achieved. The most important thing in ERP is to ensure system transparency, promote overall growth, empower people and motivate them, knowing what is happening in the organization (Clark, 2013).

CONCLUSION

This study concludes that the ORGD influenced the success of the ERP implementation. Tesco's management must study the organizational readiness of the organization to measure technical, human and infrastructure capabilities in the design and implementation of the ERP system. Four key success factors are recommended: PM, BPR, SI, and TED to ensure seamless adoption of ERP in Tesco. Implementation and innovation of ERP and IT implementation have always been a steady process in Tesco. It is always the core of improving business processes. Whether it's part of the Tesco system or collaboration, it's a story of success and success. ERP and BRP as well as IT not only contribute to the growth, automation moreover the efficiency of business functions, however also save time, quality, money, security and worldwide growth and global expansion and branding of Tesco.

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