Topic: Going Live is not the End of the

ERP Journey
Introduction
An information system is the overall name for system that handle, store and distribute information.
Today, development is turning to information and communication systems. Processing data and using
information effectively is essential for all types of organizations. In their day-to-day operations,
organizations use information for functions such as planning, controlling, organizing, and decision-
making. Information is unquestionable a critical resource in the operation of all organizations. Speed and
vast quantities of information are key issues. Many companies today choose to implement ERP
(Enterprise Resource Planning) system not only to support the daily operations but also to handle
information, buiding services to customers etc. This leads to organizational change for example,
implementing new ways to process and disseminate information between different departments and
between individuals. The need for information in organizations today is vital for their survival and the
need for speedy access to the “right” information in a timely, accurate and easy manner is growing. In
order to provide this, many organizations implement ERP systems to support various functional areas.

ERP packages are integrated software packages that support these ERP concepts. In the beginning, they
were targeted at the manufacturing industry, and consisted mainly of functions for planning and
managing core businesses such as sales management, production management, accounting and
financial affairs, etc. However, in recent years, adaptation not only to the manufacturing industry, but
also to diverse types of industry has become possible and the expansion of implementation and use has
been progressing on a global level.

ERP software standardizes an enterprise's business processes and data. The software converts
transactional data into useful information and collates the data so that they can be analyzed. In this way,
all of the collected transactional data become information that companies can use to support business
decisions. The perspective that ERP software is simply a means of cutting cost is still prevalent. As a
result, organizational resistance to ERP implementation has often been high, and not all ERP
implementation programs delivered the promised enterprise improvements.

The purpose of this report is to discuss the concept that “Going Live is not the End of the ERP Journey”
and also demonstrate the different company’s experiences about the ERP systems and how benefits
may vary.

The report structure comprises the introduction of the topic while the main body of the
report includes comparison of various perspectives and arguments of different company’s
experiences. At the end conclusion can be drawn on the basis of various perspectives and
arguments.
Body
An ERP system is an integrated software solution that supports the integration of all the information
flowing through an organization (Wong & Scarbrough, 2005). Before the millenium, several companies
felt that new information systems had to be implemented in order to support their business processes.
Now, many of these systems are replaced by ERP systems with the purpose of increasing the efficency in
their business processes. According to Sumner (2005), the ERP market is one of the fastest growing
markets in the software industry and this development will create changes in the information systems
development process. Davenport (2000) discusses the future of Enterprise Systems where there is a gap
between the capabilities which will be valuable in the future and the capabilities currently available for
ES. As this was stated five years ago, we can today assume that this was a correct statement. From the
informations systems development perspective there are both human and organizational aspects of
information systems e.g. ERP systems (Avison & Fitzgerald, 2003). Avison and Fitzgerald also express
that information systems are useful, usually improving the effectiveness in the way that the
organizations operate and that information systems do not exist for their own sake. This can be applied
to ERP systems as well, and we believe that the implementation and use of ERP systems in organizations
should be considered in new perspectives as it effects every individual in the organization and most of
all the organisation itself.

Today’s ERP systems can cover a wide range of functions and integrate them into one unified database.
For instance, functions such as Human Resources, Supply Chain Management, Customer Relations
Management, Financials, Manufacturing functions and Warehouse Management functions were all once
stand alone software applications, usually housed with their own database and network, today, they can
all fit under one umbrella – the ERP system.

Benefits of an ERP software care varying from company to company but there are many direct and indirect
benefits of installing an ERP system. The direct advantages include improved efficiency, information
integration for better decision making, faster response time to customer queries, etc. The indirect benefits
include a better corporate image, improved customer goodwill, customer satisfaction, and so on. The following
are some of the direct benefits of an ERP system:
• Business Integration
• Flexibility
• Better Analysis and Planning Capabilities
• Use of Latest Technology
Integration is the first and most important advantage of implementing ERP. The reason why ERP
packages are considered to be integrated is the automatic data updation that is possible among the
related business components. Since conventional company information systems were aimed at the
optimization of independent business functions in business units, almost all of them were weak in terms
of the communication and integration of information that transcended the different business functions.
In the case of large companies in particular, the timing of system construction and directives differs for
each product and department/function and sometimes, they are disconnected. For this reason, it has
become an obstacle in the shift to new product and business classification. In the case of ERP packages,
the data of related business functions are also automatically updated at the time a transaction occurs.
For this reason, one is able to grasp business details in real time, and carry out various types of
management decisions in a timely manner, based on that information.
The second advantage of ERP packages is their flexibility within the business functions. Different
languages, currencies, accounting standards and so on can be covered in one system, and functions that
comprehensively manage multiple locations of a company can be packaged and implemented
automatically. To cope with company globalization and system unification, this flexibility is essential, and
one can say that it has major advantages, not simply for development and maintenance, but also in
terms of management.

Another advantage is the boost to the planning functions. By enabling the comprehensive and unified
management of related business and its data, it becomes possible to fully utilize many types of decision
support systems and simulation functions. Furthermore, since it becomes possible to carry out, flexibly
and in real time, the filing and analysis of data from a variety of dimensions, one is able to give the
decision makers the information they want, thus enabling them to make better and informed decisions.

Other benefits of an ERP system include reduction of lead-time, on-time shipment, reduction in cycle
time, better customer satisfaction, improved supplier performance, increased flexibility, reduction in
quality costs, improved resource utility, improved information accuracy and enhanced decision-making
capability.

ERP systems journey may never end

In the world of ERP the term implementation is often used to describe a well-defined project, spanning from the
choice of the system, through its configuration and training of users, to going life (Bancroft et al. 1998). In reality,
however, ‘pushing the button’ is a first step that leads to many subsequentst eps (Eriksen et al. 1999) which,
together, form an ongoing, often infinite process of correcting software errors, adding new functionalities and new
modules, and even implementing updated versions (Kræmmergaard 2000a, 2000b).
Up until now ERP has grown its functional footprint more in the transactional realm than on the shop
floor. Until recently, most multi-national companies that wanted a large corporate-wide ERP platform
either had robust MES systems to manage the plant floor in real time or, deployed a two-tier ERP
approach with a more limited functionality ERP deployed at the facility level which then fed the larger
corporate-level ERP at headquarters. While some ERP providers have been deployed in the Cloud for a
while, LNS Research sees the move by the major ERP providers like SAP, Oracle, Infor, and Microsoft to
deploy on Cloud-based platforms as beginning the next evolutionary step. Most of the providers are
moving functionality incrementally, to maintain support for their installed base, yet are offering
incentives to move to Cloud-based future systems; such as new functionality, better support and
upgrade paths, and in doing so are showing the evolutionary path forward.

One of the key new functional capabilities that the ERP provider community is adding is analytics that
can be applied to addressing a host of manufacturing challenges ranging from predictive maintenance to
productivity enhancement. As added data about what is happening on the plant floor becomes widely
available through the growth of the Industrial Internet of Things (IIoT), the ability to analyze and solve
manufacturing problems will drive many companies to rethink their entire operational architecture.
However, for all this to work users will need to migrate to an architecture that provides not only the
tools and capacity to use the predictive power and the data IIoT will make available, but a whole new
data model. This new data model must embraces unstructured data as fully as the structured data that
exists in ERP today. Additionally, the ability to use the unstructured and semi-structured data, such as
that in data historians, will drive the winners in the race to become the foundation of a next generation
ERP environment.

Markus and Tanis (2000) describe this reality as an iterative four-stage process:

(1) Project chartering, making the decisions leading up to project approval and funding.
(2) The project, the stage aimed at getting the system up and running in one or more organizational units.
(3) Shakedown, the period of time from ‘going life’ until ‘normal operation’ or ‘routine use’ has been achieved.
(4) Onward and upward, during which the business benefits from the system are realized.

The activities associated with these stages are summarized in table 1. According to Markus and Tanis (2000), the
implementation of an ERP system is an on-going process of organizational learning and change with no particular
outcome. Upgrades or replacement systems may prompt the cycle of change to begin again.

In this first phase of the ERP journey the managerial activities undertaken were primarily identifying and
coordinating the company’s IT need, identification of the ideal IT-system, making a project plan and
communicating the project to the rest of the organization. At the end of the first phase everything
seemed to have been planned and the only thing perceived to be missing before going live was the
configuration of the system.

The implementation of ERP systems in organizations new information architectures have emerged
without being planned for. And new functions within these architectures have emerged. When we use
the term emergent we refer to tasks and positions in the expressed environment that occurs without
any considerations during and after the implementation process. The need for information in
organizations today is vital for their survival and the need for access to the “right” information fast is
growing (Castells, 1996).

Information systems today are moving towards ERP systems where every process in the organization is
integrated. Small and large organizations integrate all processess such as communication, business
operations, administration and so on into ERP systems. ERP systems are on-line, interactive systems that
support crossfunctionally processes and data integration (Brown, Vessey, Powell, 2005). This creates
changes in Information systems development according to Hedman (2003). Hedman presents a
framework with key characteristics as an enterprise system life cycle supporting our suggestions that a
holistic perspective should be addressed to the implementation and use of ERP systems.
From a similar perspective Wong, Scarbrough, Chau and Davison (2005) presents critical failure factors
identified in their study concerning ERP implementation problems and ERP implementation failures. The
fourteen critical failure factors were analyzed and three common failure factors were examined. The
three common factors were poor consultant effectiveness, project management effectiveness and poor
quality of business process re-engineering (Wong, Scarborugh, Chau and Davison, 2005). The result
stresses the importance of the consultants role in the implementation and maintainance of the ERP
system. The consultant should not only have knowledge concerning the system but also have
communication skills, good language capability, industrial knowledge and business analytical skills
according to the results from Wong, Scarborugh, Chau and Davisons study. Their results suggests that
the role performed by consultants is important to fill the knowledge gap within the different phases of
ERP implementation.

Another issue stressed by performed research is that the success of ERP systems implementation
depends on its use by the end-users (Nah, Tan & Beethe, 2005). Therefore they stress that it is
important to understand the phenomena underlying the end-users acceptance of ERP systems. A lot of
research concerning users adoption of new technology has stated and confirmed that end-users
acceptance is one of the most important issues if a information system development is going to be
successful (Davis, 1989; Davis, Bagozzi & Warshaw, 1989). Evaluation research in the information
technology area concerns often the efficiency and the effectiveness. In the efficiency perspective, the
focus is on the operations of the system itself, while in the effectiveness perspective; the focus is on how
well the use of the technology serves the need of the organization and its employees according to
George (2000). According to this, the ERP system has to fulfill both the efficiency and the effectiveness
perspective in order to serve the organization as it was intended when the ERP system was
implemented.

The ERP post implementation phase starts as soon as the system goes live into the hands of the users
and lasts until the system is replaced with a new one (Markus and Tanis, 2000). After an ERP system is
implemented in an organization, practices such as review, evaluation, support, performance evaluation,
and maintenance take place in order to ensure benefit realization (Nicolaou, 2004; Ng, 2001).
Infrastructure management support, business process reengineering, upgrading systems and network
resource planning are also very crucial in this phase (Esteves and Pastor, 1999). Ng (2001) pointed out
that, apart from maintaining the system for the purpose of realizing maximum benefits, organizations
also update their systems in order to keep up with the support from the vendors, who sometimes
support a certain version for a certain period, after which a client has to maintain it themselves (Ng,
2001).

Several studies have reported that the main reason why ERP post-implementation failure occurs is
mainly due to inadequate training, lack of top management engagement, issues regarding external
consultancy, change management, and alignment of the ERP system with the business objectives
(Davenport, 1998; Chang et al., 2008; Ruivo et al., 2012; Peng and Nunes, 2010; El Sayed et al., 2013;
Kiriwandeniya et al., 2013). Hustad & Olsen (2011) in their study found training to be a must after
implementation, as some users avoid using the system due to reasons such as anxiety and lack of
confidence. Similarly, Soja (2006) identified user resistance, lack of skills and interdepartmental
communication as constraints that can hinder ERP post implementation success. Mantakas & Doukas
(2011) did a study on ERP use practices in Greek SMEs, particularly analyzing business processes use
practices and deficiencies. They found ERP system use deficiencies to be related to the sizes of the
companies. The smaller the company, the more lack of know-how and insufficient manpower (Mantakas
and Doukas, 2011).

Conclusion
Companies go through different phases during their ERP journey, which require differentmanager ial competencies.
The second stage can be understood as an activity that will end when the system is going into operation, which
creates a new order in the organization. The second and also the first, preparatory stage can best be understood and
managed relying on positivist logic. However, going live with an ERP system is only the first step leading to many
others. During the use and further development of the system the organization reinvents itself and the result is much
less predictable with the context affecting the process and the process producing context and so on and so forth. This
process can best be understood and ‘managed’ using constructivist insights.

The implementation of an ERP system is a radical logistical innovation for a company and the result of both
exploitative and explorative learning. The degree of organizational change is related to the implementation strategy
and the extent of customization of the system.
If the ERP system is customized to fit the organization and the basic logic of the organization is left unchanged,
explorative learning will take place but only lead to incremental changes. If the organization is adapted to fit to the
standard within the system, the existing organizational logic will (have to) change. Depending obviously on the gap
between the ERP-imposed logic and the present one, the outcome may vary from incremental to, more likely, radical
change. In any case, the third and fourth stage changes will be mostly incremental.
Managers need to have this in mind, but they also have to be conscious about the potentially powerful role of ERP to
the extent that such systems can even become a disabler for exploitative learning in the sense that it represents its
own logic and imposes that upon the organization. With this logic explorative learning is possible whenever new
functionalities and/or modules are added to the system. Managers have to keep that in mind, to be able to keep and
maintain an appropriate balance between explorative and exploitative learning.