Many firms implement the EPR and BPR with a vision of gaining a competitive advantage through efficient and effective business processes. However, they fail to meet the expectations due to many reasons including adoption of inappropriate BPR strategies, lack of employees training, keeping the legacy system model out of control, misalignment of the EPR and BPR strategies, inappropriate consultations, and employees more dedicated to old processes.
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Moreover, the firm may lack a long-term commitment to the ERP implementation. In summary, firms do not realize the whole BPR scope and resource needs. In as much as firms depend on information technology to enhance BPR, it can turn an impediment if not properly implemented. For instance, a lack of proper documentation, change control processes and historical measurements can result to poor results. Thus, organizations should put the same effort as designing the organization structure when developing business processes changes.
Vicro Communications Case
Vicro communications is faced with challenges of implementing ERP system that will meet its desires. However, it does not the necessary measures to support the successful implementation of the systems. The management thinks that by channeling more resources towards the system, it will improve its performance. In addition, the top management perceives ERP will improve the business process by itself instead of enhancing the performance of the processes. The company did not carry out a gap analysis to ascertain the business processes that would require reengineering, but relied on the specifications of the vendor’s software promises, name recognition, market share of the software, and endorsement of the CEO. The company did not take steps to consult with its internal and external stakeholders. In addition, it did not consider changing the legacy system to conform to the requirements of ERP.
Vicro communications tried to solve its business processes problems through expensive software without enough support mechanisms, and this resulted to communication breakdown between the desired course of action and the expectations of the stakeholders. That is, the management depended on the software to solve the firm’s problems while the stakeholders wanted it to enhance the business processes. The problems worsened as top managers single handedly implemented the system without involving process employees and other managers. Additionally, the top management failed to align EPR objectives with those of the business processes.
Vicro EPR implementation failure is analyzed through a set of themes including HPT adoption, CEO mandate, and technology usage, resistance to change, process improvement and enterprise integration. These processes are discussed below.
First, the technology usage theme emphasizes on the importance of computers at the workplace. Computers are vital for accomplishing various tasks as well as problem solving. The employees of Vicro believed that computers were significant in achieving their targets. This indicates that if the management would have reinforced the implementation of ERP, the workers would have adopted it without much problems as they are used to computers, and more so, information technology.
Secondly, the process improvement theme covers the relationship between data centric technology and BPR. It evaluates whether EPR usage enhanced or inhibited BPR. With Vicro, the relationship between the two did not exist since the management has not taken any initiative to align business processes with the specification of HPT. EPR did not improve the processes of Vicro as the employees were not willing to abandon their legacy system processes; hence, it is like it was non-existent.
What is more, the management did not mandate internal programmers to modify the EPR software so as to be specific to the operations of Vicro. For the firm to realize and process improvement, the software objectives should have been aligned to the business processes, or reengineer its processes to the objectives of EPR. This will have enhanced synergy and promote information sharing among various departments; hence, process improvement. The ‘best practices’ as provided by HPT software should have been made more specific instead of the generic nature of the system adopted by the management. Generic software do not address the needs of specific business processes as they not keep in mind the best performing companies in the market. Therefore, if the management had tried to improve the relationship between the business processes and EPR through various measure including business process reengineering, it could have realized improved outcomes.
This theme was used to check the employees’ level of HPT adoption, and the issues that facilitated the adoption. The firm adopted HPT so as to streamline its business process as well as standardizing its database on a single platform. The management also desired for the software’s best practices to enhance the existing business processes to be at par or exceed those of industry leaders. However, this did not materialize as the management expected the software to solve problems by itself without its support; hence, the best practices of EPR did not conform to the objectives of the business processes. As a result, the lack of interface forced employees to stick to the legacy system.
Furthermore, the CEO mandate theme involves the adoption of the HPT software after directions from the CEO. The CEO did not take time to analyses the suitability of the software relative to the needs of the company; thus, he endorsed the implementation of the software basing his decision on the promises of the software by its vendors. He saw HPT software as the cure for the business process problems encountered by Vicro. The top management committed a lot of resources towards the software and expected instant results as per the claims of the vendors.
The CEO did not have a knowhow of the implementation of the software, and he endorsed it blindly. Good practice would have seen him consult with the information technology department to base his decision on reliable sources, rather than vendor’s promises as they were fulfilling their business obligations, which was selling EPR software. Consequently, different departments were not willing to change their present processes to adapt to EPR requirements that they did not understand. Further on, the management should ensure that it evaluates the performance of the current business process before the CEO can direct more resources to improving the system.
This theme was set to investigate the efforts made by management to ensure process standardization, information sharing, process improvement and efficiency increase. Vicro communication has failed to achieve through EPR and the only operation that is integrated with various departments is accounting. The failure was largely due to reversed role of the software by the management; that is; it was to be adapted to the processes of the firm instead of relying on it for solutions. Moreover, the software could not be customized to suit the needs of the business processes due to its generic characteristic. Consequently, the system did not integrate the enterprise.
Resistance to Change
The focus of this theme was to analyse the resistance faced by the EPR implementation process. It investigated the level of resistance for from the employees of Vicro because of HPT reengineering process. The software faced a lot of resistance from the employees in different plants as they have had the discretion to employ processes that they deemed appropriate to them. This led to different departments operating under their own designed business processes. This greatly enhanced their resistance levels as they were unwilling to dump their current ‘best practices’ for new ones.
In addition, the lack of support from top management galvanized their resistance as it proved that it was not committed to the project. The management simply endorsed the software, but did not have measures in place to measure and evaluate the post implementation process. Another cause for resistance was the lack of interfaces from the software. The software did not allow employees to export codes that they have used over the years to it, and this would have affected their productivity levels as they would have been forced to come up with new codes, which would have taken more time. As a result, they opted to maintain their operations within the legacy system.
Current Challenges/Problems Facing the Organization
No matter the amount of resources channeled towards EPR, Vicro communications is yet to realize any positive performance outcome relative to the promises made to top management by the vendor. The management more like followed the wind in its advocating for the EPR implementation as portrayed by its intention. Thus, the problem lies with the managements’ perspective of depending on the software to produce results rather than a mere technology to enhance the business processes.
In the same vein, there is a misalignment, or mismatch between the firm’s business process objectives and EPR’s ‘best practice’ provisions. In addition, the people do not understand their role in the EPR implementation process. This is because they were not consulted, or involved in the planning of the change process to get acquainted with the reengineering activities. For instance, Ron was not consulted to provide an overview of the required transformation scope despite being a key stakeholder in the BPR effort.
Moreover, the firm is witnessing increased budget towards EPR implementation despite negative results from the system. The management does review the outcomes of the system to enable it come with appropriate control measures based on the evaluation. Instead, the management directs resources to the system without concrete grounds with the hope of improving its outcomes. Positive results will never be realized unless the firm put in place appropriate evaluation and control procedures. The resources should be determined based on proposed control measures, but no arbitrarily, as this will affect the budget of the company.
What is more, the firm’s EPR implementation lacks top management commitment. This is a significant challenge, as without this support, the subordinates will not have a reason to adhere to the new system. The management has not put in place mechanisms or policies to reinforce their commitment towards the successful implementation of EPR. Some of these mechanisms will be addressed in a sample question below. The firm is pursuing the ERP driven change approach, yet it lacks mutual and close cooperation between its principle stakeholders such as employees; hence, they were bound to stick to their old operations that they considered best practice. Vicro communications ERP project failed due to lack of a defined road map, poor coalition among participants, and worker disdain for towards the top down ERP change effort
Therefore, if the management addresses these challenges, it will be in a position to achieve positive results from EPR and business processes with time.
Vicro’s Case Contributions to BPR Literature
This case study has contributed three super themes towards the study and understanding of BPR namely; fluidity, immersion, and top management support. The immersion theme is evidenced by the adoption of computers, HPT adoption, and technology utilization by Vicro communications. The fluidity theme is evidenced by the desire of Vicro communications to improve its processes through HPT software. For instance, the firm wants information to freely flow to ensure that it is shared across the many different business processes.
On the other hand, management to enhance immersion and fluidity of the firm though reveals the CEO support technology and process improvement respectively. This underlines the fact that change must always be initiated and supported from the top.
Describe why firms implement ERP systems
Firms implement ERP systems to integrate as well as modernize their business processes in an effort to gain competitive advantage. In addition, firms seek to obtain a higher level of efficiency from their processes.
What is the Contrast between ERP and BPR?
The key characteristics of BPR are radical change, cross-functional orientation, customer focus, process innovation, and clean slate in the in the business processes of a firm. The BPR activities are mostly enabled by the utilization of information technology including ERP. Key improvements and process innovations can be difficult to realize without the employment of ERP. The majority of business processes today were development before the advent of computers, and this calls for taking them as one thing. Consequently, firms should use ERP to innovate their processes, as opposed to just automating them. Moreover, ERP can be used to redesign the management system of the work, and to improve coordination and access to information across the organizational structure, which allows for effective task interdependence and management.
What is ERP enabled BPR?
BPR is the radical redesign and fundamental rethinking of business processes so as to achieve considerable performance improvement including quality, cost and service. In short, it involves redesign of business processes, strategies, organization structure and policies to optimize productivity and workflow in a firm. This whole process can be leverage by the utilization of information technology. Thus, an ERP enabled BPR is one that uses information technology to achieve the pre-determined goals.
How BPR serves a crucial role in ERP implementation?
BPR is highly crucial in the success of EPR, and firms can reengineer their business processes before ERP implementation, or they can avoid reengineering by implementing ERP directly. With the first option, the company has to evaluate the present processes so as to identity those processes that are not value adding, and then redesign them to add value for customers. Next, the firm designs tailor made software in line with BPR, or it can make changes to the existing ERP to suite the reengineering requirements. This option enables workers to develop a sense of ownership and process orientation.
Moreover, the customized software will be in tandem with the culture, employees’ needs, and other existing resources; hence, it has a high implementation success probability. However, the implementation of tailor made ERP is not encouraged. In the other option, the firm directly implements ERP without changing anything in the processes settings. As a result, the processes have to adapt to the ERP model. This can be the best option as it offers more superior effective processes and efficiency through the build in controls and measures provided the internal and external business environments support it. This was the option preferred by Vicro communications, and it failed partly due to lack of support.
Employees should have a clear and precise understanding of the new processes and the ERP well documented to obtain process orientation and ownership. Vicro communications did not allow for this, and, as a result, it received difficulty during implementation; hence, failure. Firms also have a third option, which involves the simultaneous implementation of ERP and BPR. However, it is not practical due to the level of disruptions it can cause in the ongoing processes. Therefore, BPR should always be considered during ERP to provide a framework for its implementation.
What comes first? BPR or ERP
This question should be answered using the three approaches in the above question. Each implementation approach has its merits and demerits. BPR, or ERP implementation is an organization revolution process, hence, the decisions to pursue any of them is a strategic decision, and depends on the preset targets together with the available resources.
Describe the ERP Implementation process
The successful implementation of ERP system will depend on the following processes;
First, the firms should short list and evaluate a range of available software that they find relevant, and can improve their processes. After this, the firms have to carry out gap analyses to determine those areas that need improvement through information technology. This is done to ensure that only those processes that are not meeting the goals are addressed so as to save on the implementation costs.
The gap analysis is succeeded by the business process reengineering where the processes are redesigned to be at par with the strategies of the firm. The vendor then designs the system based on the characteristics of the firm while at the same time conducting an in house guidance of the software. The vendor checks the functionality of the software before it is commissioned. The checking period is accompanied by the training of process owners on the operation of the software. Then the ERP system is implemented, which lead to the post implementation process.
The post implementation process of significant as it involves the monitoring and control of the system to ascertain its success. The final stage in the process is the rectification of errors in the whole implementation process to ensure that the ERP system functions as desired.
What is the scope of ERP?
ERP attempts to integrate the business processes of a firm’s functions and departments onto a single information technology system with a capacity to meet their needs. It combines the requirements of the business into mono integrated software that runs off one database to enable the departments to communicate and share information; that is, it replaces the stand alone information systems. For instance, a finance department employee can access information of the sales department to see the level of stock that has been sold through ERP systems as opposed to employees who do not have this advantage.
Why is the implementation of ERP a challenging task?
Firms have to understand the strengths and weakness of a particular package before endorsing its use as well as the nature of significant implementation challenges. In the same vein, it is noteworthy to decipher how the legacy system and ERP metadata can be utilized to simplify implementation and assist the firm to prepare for ERP. The following are the factors challenging the successful implementation of ERP.
First, firms may fail to define their requirements adequately resulting to the implementation of ERP that is constrained to processes that do not meet their needs. Secondly, resistance to change from both the internal and external environment can hinder the success of ERP. This is because it is the business environment that interacts with the system, and if is finds it inappropriate, it will reject its usage; hence, affecting the implementation process. For instance, Vicro communications employees resisted the use of the implemented ERP.
Furthermore, an organization can lack the necessary resources to support the implementation or post implementation process including lack of trained personnel and funds. This was not a challenge for Vicro communications as it had a wide pool of resources as evidenced by the quantity of money it has used so far on ERP. What is more, the process can lack the support of top management, which means lack of reinforcement for it s usage and even less or no funds allocated towards the project.
Another challenge is unrealistic anticipation of benefits on return on investments that sees the management and employees alike lose patience when their expectations are not realized within the time allocated. The loss of patience leads to reduced levels of commitment that will ultimately transform to failure of the system. The software employed and the business processes may be incompatible; thus, rendering the process unfeasible. The poor choice of ERP package may also have negative impacts on the processes.
Lastly, poor communications can affect the success of ERP systems implementation due to lack of clear direction. Vicro communications faced this problem, which served to increase the resistance from employees.
How to Measure the Performance of ERP
There are many ways of evaluating the performance of ERP systems, but an organization must stick to one method applied uniformly. It is recommended the appraisal to be executed midway through the implementation process and the next one near the end of the process. The management should also schedule regular evaluation after post implementation preferably at three months interval and be based on the predetermined criteria. The performance appraisal should be based on the volume of business, employee acceptance level, its characteristics features and its adaptability to change.
Explain ‘Best Practice’ in ERP Context
Best practice in ERP context refers to the maximum usage of fundamental set ups to produce anticipated results in terms of value creation, customer focus and zero waste on all the employed resources. Moreover, it leads to reduction in response time and cost as well as increase in service and quality. In addition, the ERP workflows are maintained to allow the user to follow automatically the best practice; that is, they do not allow the user to modify the preset action course, which may result to negative results.
What is the Relationship between ERP and Business Processes?
Business processes comprise of a series of interlocking operations designed to work together, across the firm, in an effort to accomplish its goals. The design of these processes will mostly be influenced by the utilization of ERP system. ERP represents the business processes perspective captured in or in the form of organizational software. Moreover, the implementation philosophy of ERP is to support and enhance business processes, but not a functional perspective.
Sometimes ERP can direct the design of business processes by the fact that the ERP systems incorporated processes are viewed as ‘best practice.’ therefore, it is advisable for ERP adopting organizations to ensure a successful relationship by aligning their current processes to those encapsulated by the ERP system. In summary, ERP can have strong impacts and influence on the development and design of business processes.
Management Model for ERP Change Approach in the Vicro Case
First, the management should put in place an executive team to serve as a change leadership team together with appropriate substructures to develop, communicate, roll out, and sustain the buy-in and stay-in involvement process. Secondly, it has to establish clear scope of the project, change vision, process changes design, and cascade the elements to the appropriate organization levels.
In addition, the management should have conducted a market place and organizational assessment to develop a system of measurements using the ERP engagement tools and mechanisms addressing the bottom line needs for employees and customers. Further on, it has to obtain the commitment of a considerable number of both the internal and external environment support including IT department, process owners, by allowing their involvement and participation in the process change planning and implementation.
Next, Vicro communications should ensure that it trains those employees that require new skills and knowledge especially through training programs administered by HPT vendors. The aim of this is to accomplish the anticipated change results such as collective management team. What is more, the development of a comprehensive implementation map for periods upto the next 12 months together with appropriate resources including budget to support the map should be carried out. This would help the firm to monitor and control its operation, and, as a result, it cannot incur the huge implementation cost it has currently incurred.
Lastly, the management should redesign performance, recognition, and incentive programs to support the change results. These motivation factors would result to increased levels of employees’ acceptance. Vicro communications lacked such a management model as it did not provide any form of support to reinforce the ERP implementation process. Thus, such a management model would have ensured the successful implementation of the system.
In summary, it is important for stakeholders to realize that ERP may initially experience actual performance worsening as new business processes are debugged and employees go through the start up training. Therefore, continuous feedback flexibility, regular booster shots, and perseverance are necessary for implementation momentum maintenance. There is a need for future annual reviews to ensure that desired results are achieved, employees and management recognize the change as permanent, and are comfortable with the change. Moreover, it has to ensure that the present ERP documentation is available and being adhered. Vicro communication did not ensure this process as it did not follow up to see whether employees are following the ERP implementation plans.
In the event of negative evaluation results, the firm has to modify the initial change plans, and channel more resources to boost the efforts of various change effort stakeholders. This is clearly the opposite of what the Vicro communications management did as they committed more resources towards improving ERP performance without prior evaluation; hence, the increased funds lacked an appropriate platform to produce desirable results.