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In recent years, there are more enterprises that
use Enterprise Resource Planning (ERP) to gain significant
advantages through allowing for An organization to control
its business processes and gaining benefits of enhanced
process flow, improved data analysis, better profit margins ,
reduced inventories, and better customer service. ERP
considers strong tool for getting competitive advantage for
any organization. Although many enterprises chose ERP
system, the ratio of the success was low. In this paper, the
authors analysis some critical success factors and
challenges which influence the implementation of ERP
system to contribute in increasing the ERP implementation
success rate. The most significant issues during ERP
implementation process is employees' resistance to accept
the new system and dealing with it. Therefore, this paper
mainly focuses on how to use change management
approaches and strategies to improve the individuals'
acceptance rate which lead to successful ERP
implementation.
Titolo originale
Change Management for Human in Enterprise Resource Planning
System
In recent years, there are more enterprises that
use Enterprise Resource Planning (ERP) to gain significant
advantages through allowing for An organization to control
its business processes and gaining benefits of enhanced
process flow, improved data analysis, better profit margins ,
reduced inventories, and better customer service. ERP
considers strong tool for getting competitive advantage for
any organization. Although many enterprises chose ERP
system, the ratio of the success was low. In this paper, the
authors analysis some critical success factors and
challenges which influence the implementation of ERP
system to contribute in increasing the ERP implementation
success rate. The most significant issues during ERP
implementation process is employees' resistance to accept
the new system and dealing with it. Therefore, this paper
mainly focuses on how to use change management
approaches and strategies to improve the individuals'
acceptance rate which lead to successful ERP
implementation.
In recent years, there are more enterprises that
use Enterprise Resource Planning (ERP) to gain significant
advantages through allowing for An organization to control
its business processes and gaining benefits of enhanced
process flow, improved data analysis, better profit margins ,
reduced inventories, and better customer service. ERP
considers strong tool for getting competitive advantage for
any organization. Although many enterprises chose ERP
system, the ratio of the success was low. In this paper, the
authors analysis some critical success factors and
challenges which influence the implementation of ERP
system to contribute in increasing the ERP implementation
success rate. The most significant issues during ERP
implementation process is employees' resistance to accept
the new system and dealing with it. Therefore, this paper
mainly focuses on how to use change management
approaches and strategies to improve the individuals'
acceptance rate which lead to successful ERP
implementation.
Change Management for Human in Enterprise Resource Planning System
Abdullah AL-Malaise AL-Ghamdi 1 , Khulood Salem Albeladi 2 , Afnan Atiah Alsolamy 3
Department of Information Systems Faculty of Computing and Information Technology King Abdulaziz University, Jeddah Kingdom of Saudi Arabia
Abstract - In recent years, there are more enterprises that use Enterprise Resource Planning (ERP) to gain significant advantages through allowing for An organization to control its business processes and gaining benefits of enhanced process flow, improved data analysis, better profit margins , reduced inventories, and better customer service. ERP considers strong tool for getting competitive advantage for any organization. Although many enterprises chose ERP system, the ratio of the success was low. In this paper, the authors analysis some critical success factors and challenges which influence the implementation of ERP system to contribute in increasing the ERP implementation success rate. The most significant issues during ERP implementation process is employees' resistance to accept the new system and dealing with it. Therefore, this paper mainly focuses on how to use change management approaches and strategies to improve the individuals' acceptance rate which lead to successful ERP implementation.
Index Terms - ERP, change, management, resistance. I. INTRODUCTION In today competitive and complex world there is a huge need for enterprise system to manage business effectively. ERP is a cross-functional information system with modular design and one centralized database. It integrates organization internal core business processes like manufacturing, production, accounting, financial, human resource, sales and etc. In addition, it manages outside relationship of the organization. It administrates company relationship and partnership with supply chain management. In addition, customer's relationship management is big module of any ERP system. It provides seamless data flow information within entire organization through ERP modular integration [1] [2]. One of most important parts of a successful ERP implementation is managing the changes which help employees to smoothly transition from the way that they do different business processes before ERP implementation to the way that they will do them under the new ERP system. ERP change management is the process for the first time new system implementation or changing from one system to another which can be internally or externally. Internal change management is done through shifting particular employees from their daily job activities to be members of change management team. Business managers will select employees who have particular experience of the ERP system or business processes of departments that will receive the new system. External change management means an organization requires hiring a management consultant or other change management team who have a special expertise with the change management process [3]. This paper is organized into six sections. Next section presents some benefits of ERP. Second section shows a summary of CSFs of ERP implementation. Third section explains the challenges that face most enterprises during implementation process. In fourth and fifth sections, change management approaches and strategies are explained. In the Final part, a conclusion and future work is proposed.
II. BENEFITS OF ERP A successful implemented ERP system integrates both external and internal flow of information which used by the organization within a central, comprehensive solution. One of the most useful benefits of implementing ERP is easier daily management of an organization. With ability to real time access to information, employees are better able to make decisions accurately and quickly. Benefits of ERP can be classified into operational, managerial, and strategic[4][5][6].Operational benefits include automating business processes which offer benefits in term of productivity improvement , improved customer service, cost reduction, and quality improvement. ERP can help organization to achieve managerial benefits by providing one central database and effective data analysis process which helps an enterprise to improve decision making and planning, achieve better resource management, and performance improvement. Through large scale business involvement and integration capabilities, organization will get strategic benefits which mean ability of assist business growth, innovation ,alliance, cost, and differentiation [4] [6].
International Journal of Computer Trends and Technology (IJCTT) volume 6 number 2 Dec 2013 ISSN: 2231-2803 http://www.ijcttjournal.org Page100
III. ERP CRITICAL SUCCESS FACTORS ERP is an a integrated IT system which combine both of enterprise's strategy and structure to achieve organization objectives and goals through doing well designed business processes. Due to many approaches of ERP implementation, there are a lot of failure and success implementation stories. The enterprises that successfully implemented ERP system will get the benefits because it became have an ability of built in data processing which lead to qualified decision making process. Most of research papers defined critical success factors as the guide lines where processes should done right to achieve an effective implementation. Below, there are the most popularized CSFs that have a big contribution in successful ERP considered implementation.
a. Top Management Support The support of top management during implementing ERP system considered as the most significant and vital success factor [7].There are two main key functions that must be take into account of top management support. First, providing leadership; second, providing the necessary resources. These resources include time, money and personnel necessary for the ERP implementation.
b. Business Process Reengineering Business Process Reengineering (BPR) is powerfully associated with how the ERP modules are selected to improve current business process [4]. It defined as radical redesign and rethinking of business processes, structure, and work flow within enterprise to achieve improvements in critical areas such as quality, cost, speed and response time [5]. Enterprises must have a capability to change its business process to make the new ERP system ability to serve the company as it expected , managers should kept in their mind that the new software could not be changed after implemented successfully.
c. Change Management Change management going to contribute to make sure that the readiness and acceptance of the new implemented ERP software; it is allowing the company to gain the advantages of using software [8]. An effective change into organization environment includes change of employees' behavior, using latest useful technology and redesign of business processes. This paper will explain in detail the concept of change managements, its importance, its strategies and approaches
d. Consultant and Vendor Support According to the difficulty of ERP implementation process, there is a strongly need to get benefits of consultants who have a special knowledge regarding how to implement ERP system successfully. Those consultants either can be external or internal [7] who can help organization employees to overcome all obstacles that facing them while they are using new ERP system. Experts can be included during multiple steps of ERP project implementation, although consultants teams have a lot of experience regarding ERP installation, But still the employee of an organization know more and more about how their business process integrated and combined and how exactly the result should be, therefore the managers must be both carefully and accurately while the form the consultants team [4].
e. Management of Risk The ERP implementation process is not easy activity; there is a big a possibility of occurrence of unfortunate events [5]. Therefore, management of risk is needed to control as much as possible the occurrence of unexpected events. Risk management must be applied for operational and strategic contexts of organization [6]. Risk management can be defined as an iterative process that focuses on minimizing risks and their impact.
f. User Involvement User involvement means users contribution during the process of ERP implementation. Users participation in the implementation process can be classified into two main key areas: First, user involvement in the early stage of specifying of the organization requirements. Second, user involvement in the stage of testing new ERP software [6].
g. Organizational Culture Enterprise should have a powerful ability to accept the change in its environment. ERP system involving a creative ways of performing different business processes to create a competitive advantage. Therefore, it requires that the culture of organization must be open and has ability to adapt with rapid change in business environment to facilitate the implementation process and make it successful [5].
h. User Training and Education The main goal of training course for implementing ERP system is to improve employee ability for dealing with new software and create a comfortable and creative business environment which enhance employee productivity and efficiency [4].the training program should not ignored the specific employees' needs such as how to fix some problem that may facing them during doing their routine daily work [6].
International Journal of Computer Trends and Technology (IJCTT) volume 6 number 2 Dec 2013 ISSN: 2231-2803 http://www.ijcttjournal.org Page101
IV. ERP CHALLENGES Challenges through ERP implementation are quite normal. Prior planning for receiving new system is very important to overcome the challenges. These challenges include: lack of clear requirements, users resistance to change, customization, and improper testing. a. Lack of Clear Requirements If the requirements of new ERP system are not defined clearly and accurately, that will lead to non availability of particular important functionalities. The implementation team will face a lot of obstacles during installation process if the requirements not clear enough[6].
Top management should make sure that the requirements are carefully defined because one of the critical customization drivers is missing of clear and accurate business requirements. In case that the business requirements are not correctly defined and controlled, that will produce more likely probability of creating unnecessary system customizations[6] [9].
b. User Resistance to Change If the users are not realized the benefits of ERP system they will resist it. Employees' resistance is the normal reaction of human in times of change this resistance increase the importance of effective change management which can control and mitigate much of this resistance [9].
c. Customization Customization is the process of fitting the selected ERP module to the needs of an organization. Nowadays, most companies understand that customizing their ERP system adds time, cost, and risk to the project. This will suggest that the business may need to invest more in organizational change management to help both employees and key stakeholders adapt to new ways of doing business processes[6][9].
There is a little difference between ERP system configuration and customization which may create some confuse to managers. Configuration process does not need any modification into source code, it is normal set up of the system while customization process requires modifications into both source code and into technical aspects of software [4].
d. Improper Testing The main goal of testing in an ERP implementation process is not to ensure whether the system works or not. But, to make sure that the new system meets organization business requirements and produces the expected results. Testing process must be serious and regularly repeated to remove possibility occurrence of problem at ERP go live stage [9].
V. CHANGE MANAGEMENT Change management is type of management that deals with how to adopt and control the effect change inside the organization. It ensures smooth transformation from existing current status of system and processes to new and different ones that affect organization business process, individuals and groups. Change management is the planning process to assist organization in managing people and their way of doing jobs, business processes that may need to altered, in a way that reach the goals of technological change. It involves effective communication with end users of a system and stakeholders about impact of expected range of change of implement new system. It includes formulae and develops special techniques and mechanisms to prepare the whole parties in organization to be ready to adapt new technology. In a way is that will achieve goals of changing and take advantages of proposed ERP [10] [11]. In [12] said that change managing people emotional and passionate that happen during and after huge change in organization. As mentioned in [13] that the percentage of failure ERP implementation is very high. It can be estimated between 60- 90%. In other hand, 90% of successful implementation companies report that change management has significant effect on their effective ERP implementation [10]. To reach an effective and successful change management, there are many prerequisites. First of all, develop clear vision and mission for the reasons of change. It means to characterize how the organization future shapes after change and setting goals to reach it. In addition, ensure that change vision is distributed from top to down through structure hierarchy of organization. Moreover, a third prerequisite is preparing culture and environment of organization to accept expected change. Also, strong leadership of top management that committed to success change management is a great factor to success of change management [10]. Resistances of employees to any new system as ERP come from many reasons. In [8] said that risk and habit are the main cause their resistance and rejection. Risk related to as human being neutral to fear from any new innovation as implement ERP. The second reason is routine activities and daily habit in their doing work. They fear that if new system adapted, they may lose their control of work and disrupt them. Moreover, in [1] state four reasons for employees' resistance for ERP. First one is employee self-interest which may adopt ERP system lead to threaten their current position and interest. Secondly, lack of trust and misunderstanding of how could ERP will improve business. Also, different assessment and views to ERP is a third reason. The final reason is that with implement ERP will increase the effort and stress. International Journal of Computer Trends and Technology (IJCTT) volume 6 number 2 Dec 2013 ISSN: 2231-2803 http://www.ijcttjournal.org Page102
VI. CHANGE MANAGEMENT APPROACHES Aladwani in [8] suggest an integrated, process- oriented approach to limit employee resistance to ERP. It consists from three phases based on time of ERP life cycle implementation. The first phase is knowledge formulation, then strategy formulation, and finally status evaluation. In first phase, top management has to prepare and measure employee acceptance to ERP. They have to answer many questions like what are needs and interests of resisting employees, which their beliefs and values, and why they resistance. From these answers can build start point to successful change management. Some user may say that they doing excellent jobs for many years without ERP. Also, other may say that new system will threaten her/his work position in the organization. Second phase is to implement real strategy of change management. The first strategy is communication. The effective communication with employees will reduce resistance because they will be aware of ERP benefits. Knowing about how ERP improve their work can build anticipation to system. Also, they are more acceptable if they know how ERP work. The second strategy in this phase is cost minimization strategy. It means that when employees believe that ERP system will improve their work and decrease cost and effort in doing job, thus lead to build their interest in ERP. Also, differentiation strategy is related to quality of implemented ERP. If it is high quality with functional and friendly user interface will help in acceptance. In addition, training has a great impact on reducing resistance. Third phase is status evaluation phase. It is concluded to check if change management strategies are implemented in an effective way. These results and feedback are presented to top management in dynamic and timely manner. Another model proposed by Kerimoglu and BaUogluI in [14] about optimizing change management to implementing ERP successfully. This approach based on minimizing gaps between three necessary parties to successfully implement ERP. The first goal is to minimizing the gap between the technology and human. Also, minimizing gab between human and organization and between technology and organization. Reducing the distance between them will guarantee success of change management. In addition, reaching optimal point will maximize ERP system. ERP best fit with business process, customization, and business process reengineering (BPR) all of them used to reduce the range between technology and organization to reach the optimal point for both. As known no ERP system fit exactly with certain business process. However, chosen one that is most compatible with them will reduce employees' resistance and enhance change management. Admittedly, even most compatible need either BPR of business process to match ERP standards or customization it to acceptable level that improve change management. On the other hand, proper training, effective communication, hire consultants and fire very aggressive resistance employees will help to enhance both technology- human compatibility and organization-human compatibility.
VII. CHANGE MANAGEMENT STRATEGIES To make changes in organization in effective and dynamic way, managers have to get advantages of change management strategies. Then, apply them in organization environment to reach all goals of this change in most smoothly ways and with minimal risks. In [15] authors studies twelve case studies of companies that have been implement ERP successfully. The aim of that is to investigate most functional change management strategies to implement them in most efficient way and with less user resistance. They are top management support, project champion, dynamic communication, clear planning to all stages, and training that enable knowledge transfer. Top management mention early as one of success factors of ERP, it also 91.6% of successful strategies for change management for surveyed project. In addition, the presence of project champion has a great influence as 58.3% of successful case studies of change management. In addition, symmetric planning strategy is with 50%, communication with 100%, effective training strategy with 75% of successful projects implement change management strategies successfully. VIII. CONCLUSION ERP implementation is influenced by set of challenges and this could partially explain a large failure rate of implementation. As this paper has presented, a resistance to change is considered to be the most important challenge of successful ERP implementation. While employees' resistance is the normal reaction of human in times of change, effective change management can control and mitigate much of this resistance. Change management is not just an approach for managing resistance in case it occurs, but it is most effective as a tool for activating and engaging employees in a change. This will reduce the probability of employees' resistance that which improve the likelihood of a implementing ERP system successfully.
IX. FUTURE WORK Further research should use a quantitative method to find which factor is most essential in ERP system successful and failure. X. ACKNOWLEDGMENT First and foremost, all thanks to Allah for help us to complete this research. Special thankful is to our supervisor Dr. Abdullah. He supported us until completion of this paper.
International Journal of Computer Trends and Technology (IJCTT) volume 6 number 2 Dec 2013 ISSN: 2231-2803 http://www.ijcttjournal.org Page103
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