Question Why do firms find it difficult to implement an ERP

Question - Why do firms find it difficult to implement an ERP System. List all the reasons you can think of , and indicate which reasons you thin are the most important ?

Solution

Firms find it difficult to implement an ERP System because :

Implementation Cost
The price of prewritten software is economical as compared to in house development.The total cost of implementation might be three to five time high as compare to theapplication purchase price. The implementation cost depends on the customizationcost. If system customization is increase as per company requirements thenimplementation cost also rise. The 30% of, the total implementation budget is onlyconsume on the consultants cost. For example as per Gartner Group, the total cost isof an external SAP consultant is around $1600 per day. If we consider in-housedevelopment, SAP trained technologist creates its own problem. Huge amount isrequired to train the selected employees. After training the employee it’s also achallenge to retain them in this competitive environment, which is hungry of skilled SAPconsultant. Due to competitive market, employees could demand salaries double or triple of their current salaries and also requires extra bonus programs, company perks,salary increase, frequent training and education. For the purpose of workers loyalty theorganization also put some other intangible strategic such as flexible working hours,telecommuting options and also some opportunities to work with leading technologiesthat are also provides.

ERP Vendors
Approximately 500 ERP applications are exists in the market and some companies aremore working on it and try to make more secure and strong. Selection of appropriateproducts is particularly important in the competitive environment. For example Gartner Group has purchase smart program, which has more than 1700 questions to help acompany to choose an appropriate ERP package. The role of the top management isimportant when they selecting a vender.Management need to focus on the company requirements, for this purpose they need toask various questions about the vendor. For instance market focus, track record, visionetc. At global level implementation the design of the ERP is more important, because itwork in different countries. Top management also ensures that the ERP vendor has the same version of the software available in all the counties, that company want toimplement.

Selecting the right employees
Those companies that they want to implement an ERP system. They needs to beallocate some of their best employees for the successful implementation of the project.Some companies assign this task of their internal employees and some companies’ hiresome outsources employees for monitoring of project. The general phenomenon isthat, internal company’s employees are more dedicated as compare to external people.Internal employees are more willing in organization success. Mainly organizations justprovide inclusive guideline for selecting internal resources of the project. Companiesneed to take work out seriously and select the right people of project implementation.Some time lack of good understanding of the project need, Lack of ability, lack of appropriates guideline regarding project. The company internal resources are a major cause of failure of ERP system.

Training Employees
Continuously Training and updating the employees on ERP is a most importantchallenge. People are hidden cost of ERP implementation. Without appropriate trainingalmost 30 % to 40% of frontline workers will not capable to handle the needs of newsystem.According to Koch, C (1996). “The people at the keyboard are now making importantdecisions about buying and selling on the behalf of company .They need to understandhow their data affects the rest of company”.Mostly earlier manager has responsible to the decision of front line staff. It need to themanager to understand the changes and encourage their front staff in self decisionprocess. ERP employees training is not simple as such as excel training. For exampleCompany gives only some week training and then put into job. In this way it is totallywrong. ERP system is much more complex as compare to other computer application.ERP system demands appropriate training.

Employee Morale
ERP implementation takes long time. Mostly employees put long working on thesystem, sometime 20 hours in a day and seven days in a week and even holidays. Thisworking style valuable for their career growth. Long hours working some time createstress in their jobs and could decrease their moral gradually. Upper managementshould needs to boost up employees morale of the project trough different ways. For example Employees taking on field trip, give some extra bonus etc.

According to me Training Employees is the most important reason because there is lot of employee and training each employee to use the system can be tiring sometimes. and when new employee is hired first he need to be trained for the ERP then he can do the actual work.