ERP Systems Management Assignment 2 Report Clarinet Chien Sajuela S0279192 8 April 2017 Unit Coordinator: Srimannarayana Grandhi Executive Summary Modern businesses, irrespective of size needs to be responsive, agile and streamlined, due to the intense competition faced in local and global markets. In particular, SMEs can improve their operations by adopting ERP systems. The ERP system entails the adoption of an accountability framework across all business areas, and such a system can help Book World Australia (BWA) to increase its sales and improve operational efficiency. The ERP system is useful in streamlining operations, for example, the record keeping of books, the management of customer information, and also the effectiveness of service delivery. The current (as-is) and to-be business process models showed the changes to take place in the activities of the business, enabling it to tailor service delivery to the needs of every customer. The benefits of adopting ERP depicted its importance to the management of BWA, and the feasibility showed that it is possible to make the change. The administration of the organization needs to check for the risks and the issues arising from the adoption of EPR systems. The adoption process for the ERP program will help the management to make the process efficient and successful. The recommendations offered should be taken into account, during the adoption of the EPR program, so as to make it successful and productive. Table of Contents Introduction 4 Discussion 5 Argument to Persuade Management that BWA Needs an ERP system 6 BWA Business processes Redesign following adoption of ERP 7 Feasibility Analysis of ERP Solution for BWA 9 Issues Arising From Incomplete Elicitation of Requirements and Misalignment between Business Processes and Organizational Strategy 10 Risks Associated with BPR and ERP Customization 12 Adoption Process for the ERP Project 13 Conclusion 13 Recommendations to improve the Adoption of ERP 14 References 15 Introduction The modern business needs to be responsive, agile and streamlined to the level that they can define precisely, what the organization needs to become and do, so as to become profitable. The changing business environment calls for Business Process Reengineering (BPR), particularly from SMES, so that they can increase their levels of sustainability in the global business environment (Evangelista, 2014, p. 63 ). One of the systems that companies can use is Enterprise Resource Planning (ERP) that has become very crucial to businesses, following the advancements in IT over the past few years. The ERP shift entails the integration of technology in every part of the business, including customer care, portfolio, and stock management, and operations management, making the systems a key enabler of business transformations (Eden, Sedera, & Tan, 2014, p. 40). In the world of business, both SMEs and large companies acknowledge that getting access to the right information and at the ideal time results in returns to the businesses operating in the modern competitive market (Haddar& Zach, 2012, p. 107). The operational effectiveness and efficiency that firms draw from ERP systems enable them to compete more successfully in the complex, and fast-changing market (Ranky, 2015, p. 28). In an attempt to streamline and improve the operations of Book World Australia (BWA), it has become clear that it is important to adopt ERP, which will improve the management of customers, portfolio, and operations. Unfortunately, SMEs such as BWA face a variety of challenges when integrating ERP into their activities, so as to draw solutions from the change of approach (Bazhair& Sandhu, 2015, p. 2). This paper will explore business perspectives to the deployment of ERP in Book World Australia, highlighting the benefits of the systems, the challenges resulting from adoption, and the outcomes arising from the adoption and integration. Discussion Implementing an ERP system is a crucial strategic change that a business can make to improve the robustness of the accounting practices that are crucial to improving the competitiveness of the organization (Parveen&Maimani, 2014, p. 14). The Book World Australia (BWA), a bookseller that sells books, magazines, novels, academic, and trade journals among other publications has reported a drastic drop in sales, primarily due to the lack of a stable framework for streamlining operations. As an example, the company does not have a reliable information base showing the most loyal customers, the books and publications that are bought the most, and also an ideal operational model that will increase effectiveness (Parveen&Maimani, 2014, p. 15). Unfortunately, the adoption of ERP will not necessarily be easy due to the barriers involved in both global and domestic markets, which need to be explored from the perspective of the effects the ERP system will have on the business. To justify the adoption of ERP by BWA, the current report will focus on the benefits of adoption, the barriers to the adoption, and also the changes that should accompany the new framework. Argument to Persuade Management that BWA Needs an ERP system The first and most important justification for adopting ERP is that it will offer BWA pre-configured business solutions because ERP software will provide the business with the system needed to operate integrated processes (Parveen&Maimani, 2014, p. 45). The integration is based on the specific needs of the bookselling sector. The ERP package will include pre-configured software menus, data, testing catalogs, functions for documentation, and support for the book selling industry, based on the best practice methodology, reducing the risks that the usage of the system will fail (Alshamaila, Papagiannidis& Li, 2013, p. 250). The second justification for adopting the ERP system is that it will offer BWA access to flexible pricing policies. This benefit draws from the fact that ERP products are designed to accommodate flexible pricing, for example, where BWA is offering discounts to loyal customers and not all customers (Missbach, et al., 2013, p. 65). Most importantly, BWA can buy the core ERP software package needed at the moment, and then buy further add-on components later, in response to the changing needs and functions of the business (Pinjala, Roy &Seetharaman, 2015, p. 2). The ERP pricing framework will be more useful to the firm, especially if they are hosted on the cloud computing platform, which makes it accessible from different locations and on demand. The adoption of ERP should be flexible to allow BWA to buy the software based on the current numbers of clients and operational scale. The flexibility of ERP systems indicates that the investment will be in line with the budget of the business (Pinjala, Roy &Seetharaman, 2015, p. 2). The third justification for purchasing ERP is that the system can be executed in the shortest time possible, so as to reduce the associated time, costs, and efforts that BWA will have to channel towards the change. The implementation methods for ERP include modular adoption, workshop-driven adoption, continuous training for staffs, and post-implementation support (Alshamaila, Papagiannidis& Li, 2013, p. 250). The flexibility of the adoption approach makes it easy for the business to change to the new system smoothly, as the staffs are prepared and all necessary changes are cultivated (Wang & Wang, 2014, p. 7). The fourth justification for ERP adoption is the availability of open source ERP, which is not as complex and intricate as many of the systems used by an experienced business. Concerning cost, the business can access these ERP systems at a very low cost, and the less complexity of the system will make it easier for BWA to implement the change. Further, the less complex change can help during the training of the staffs, before the business adopts a fully-fledged commercially-available ERP system (Wang & Wang, 2014, p. 7). BWA Business Processes Redesign following adoption of ERP Currently, the process of purchasing books is problematic for BWA, due to the lack of information on publications, for example, books that are commonly bought by different groups such as history or science students or practicing professionals. However, in the current market where BWA is competing with online stores such as Amazon and other online databases, it has to adapt to the new pressure and increase its competitiveness (Grover &Marku, 2015, p. 34). As a book seller that has been in the business for years, BWA has developed a database on customers, which shows loyal clients and the types of books that different groups purchase. The business process redesign process will capture this information to personalize service delivery, where loyal customers will get discounts (Grover &Marku, 2015, p. 143). Further, depending on customer preferences, even new customers will receive a list of publications and books purchases by similar customers, for example the list of books purchased by new MBA students. For example, based on the newly gathered information students customers can purchase eBooks or other publications in soft copies, or receive the deliveries for print publications. Current (As-is) Business Processes of BWA Source: Compiled by writer To-beBusiness Processes of BWA Source: Compiled by writer Feasibility Analysis of ERP Solution for BWA A cloud-based ERP system is not the best option for BWA, considering that some important ERP functionality that is important to the business is not supported by the cloud platform currently (Nguyen, Nguyen &Misra, 2014, p. 235). These functions include portfolio and assets management, billing, and project management, which are core to the changes that the BWA business is trying to make. Further, as a starter in the adoption of ERP, the business will benefit from less customization when using the cloud-based ERP system. The case of BWA is particularly this, noting that it will need to make many changes with the aim of suiting the needs and the requirements of its customers and the business (Alshamaila, Papagiannidis& Li, 2013, p. 260). Adopting a cloud-based ERP may also be disadvantageous, noting that it will reduce the potential of integrating the system with others that may be useful to the business, due to compatibility issues in the system. Nguyen, Nguyen, and Misra (2014, p. 236) noted that the objectives of a business are the best justification for implementing an ERP system and whether it will lead to the success intended from the adoption of the ERP system. The major objectives for implementing the ERP system for BWA are to create a sustainable business platform that will support service delivery to customers, across the various platforms, including the web platform. The cost of adopting the ERP is low, yet it will increase the operational efficiency of the business, and also improve the sales strategies in place (Cruz-Cunha, Moreira &Varajao, 2014, 676). The success factors that will be improved through the adoption of the ERP includes improving data access, increasing customer numbers, software alignment with BWA’s business activities, increasing revenues, reducing recurrent expenses, and reducing maintenance costs (Nguyen, Nguyen &Misra, 2014, p. 237). From the BWA case, the ERP will facilitate the flow of information across the business, and therefore, will affect the various target success areas. Issues Arising From Incomplete Elicitation of Requirements and Misalignment between Business Processes and Organizational Strategy From the discussion made in the previous sections, it is clear that ERP systems are developed to address time, resources, and cost constraints of businesses such as BWA. In the recent past, the reduction in sales that BWA has reported is likely the result of the changes taking place both in the internal and the external environments. The important factors affecting the business include customer preferences, technological developments, government institutions, and price dynamics, among others (Ahmad, Ibrahim &Garba, 2015, p. 30). However, as an SME, the flexibility of the organization arises from the fact that it has fewer employees, and therefore, can train them in a short time; it deals with fewer orders and has a smaller customer base. The challenge is less for bigger organizations, for example, multinational corporations. So as to succeed in adopting the ERP framework, it is important for BWA to maintain its flexibility, despite that the shift may make the organizational system more rigid (Zhang, 2014, p. 169). The identification of the issues that may arise from the incomplete production of requirements for the system or the misalignment between business processes and organizational strategy will point out some of the issues that BWA’s management needs to address. The first issue is the lack of commitment from the top management. In many instances, as the process of implanting the ERP system continues the commitment of the management declines due to the lack of complete alignment between business processes and the new strategy (Alshamaila, Papagiannidis& Li, 2013, p. 252). The problem is caused by the fact that, in the case of BWA, the management may lack an adequate understanding of ERP implementation; including scope, various aspects, and the technical problems they encounter (Alshamaila, Papagiannidis& Li, 2013, p. 251). Further, the lack of commitment from the top management may impair the management’s willingness to successfully implement the program. The inadequate alignment between the various aspects of the implementation will be the inability to identify the talent in various technical and business areas needed to spearhead the process to completion (Zhang, 2014, p. 168). The lack of clarity about the necessary talent will impair the recruitment of new talent, as well as the adequate training and preparation of the available staffs, and that will impair the effectiveness of the ERP program. The adoption of ERP programs calls for BPR (Business Process Reengineering) and the change reduce the competitiveness of business, as well as the levels of flexibility (Zhang, 2014, p. 168). For SMEs such as BWA, the main focus is usually on the daily operations and survival of the business, and not the long-term strategic model to put in place. In particular, BWA works in the dynamic sector that has been dominated by newer industry entrants such as Amazon, and therefore, it is crucial that retains flexibility while adopting ERP (Alshamaila, Papagiannidis& Li, 2013, p. 251). In fact, the adoption of ERP may change the business logic of BWA, and create areas of conflict in its business practices, and that may reduce its competitiveness in the market. Typically, competitiveness results from the experience and knowledge of workers, and business operations, and the introduction of the ERP systems may introduce perspectives that are contrary to established ways (Nguyen, Nguyen &Misra, 2014, p. 235). Risks Associated with BPR and ERP Customization The risk that may arise from the changes of business process and the customization of the ERP plan adopted include the lack of top management support, due to the changes arising from the change. As an example, the managerial oversight role will expand, and that may subject the managers to more work than they can reliably handle. The result is the loss of support, which may curtail the success of the ERP program (Eden, Sedera& Tan, 2014, p. 40). The customization of the ERP program and the change processes may lead to ineffective communication between users and that will reduce the likelihood that they will work as a team towards realizing the desired changes (Matende&Ogao, 2013, p. 526). The customization of the ERP and process changes will require adequate and ongoing training of workers and end-users. That leads to the risk that customization will result in training demands that cannot be realized, and that will affect the outcomes of the organization. Process customization will trigger the risk of conflicts between different user departments, and that can affect the organization’s ability to make the changes effectively (Haddara& Zach, 2012, p. 106). The failure to redesign the process and operations of the business is another risk arising from the customization of the ERP process and the changes associated with BPR. The various risks point out that it is important for the management of BWA to control for the risks arising from the adoption of the ERP program and the associated changes. Adoption Process for the ERP Project The BWA should follow the best practices highlighted in this section, during the process of transitioning to the integrated ERP system as explained in this section. The first step is evaluating the needs of the organization. The comprehensive analysis of the organization will generate the information needed to align the ERP implementation process with the goals of the organization (Haddara& Zach, 2012, p. 106). As an example, the step will identify that managing customer and portfolio information will help move it towards the realization of its goals. The second step in the process is Configuring the ERP system, based on the requirements of the organization, as identified during the 1st stage (Eden, Sedera& Tan, 2014, p. 40). The build phase entails the configuration of the ERP system’s working, the necessary training, the solutions it will offer, and the documentation style for the system. The third step of the process is to migrate the existing business data to the ERP system, and then testing to ensure that the process works accurately. The validation of the system ensures that the issues and the potential constraints that affect ERP systems are avoided or fully addressed. The fourth stage in the adoption process is launching the ERP system, and that entails the testing and the deployment of the system (Eden, Sedera& Tan, 2014, p. 40). The step is crucial in ensuring that the ERP system works as intended, through resolving the issues and the testing of the process to ensure that it works well. Following the adoption of the process, training is crucial in ensuring that the workers develop the necessary prerequisite skills, core training and that they develop the capacity to support the new system. Conclusion Now more than ever before, businesses need to streamline their processes towards enhancing productivity, while at the same time increasing effectiveness and reducing the costs of operations. The changes are necessitated by the current business environment, where companies are facing more competition than ever before. To address the issues arising from the competitiveness of the new business environment, ERP systems are adopted to centralize the operations of the organization, and to improve organizational effectiveness. Unfortunately, the adoption of ERP comes with changes in business processes, and that calls for the adoption of mitigation strategies for addressing the challenges arising from the change, and the risks associated with ERP adoption. The discussion highlighted the various aspects and issues related to ERP adoption for BWA, and it pointed out the importance of adopting the process systematically. Recommendations to improve the Adoption of ERP The management should ensure that the upper management of the organization is in support of the adoption of ERP, and the various changes that come with it, including business processes, reengineering (Grover &Marku, 2015, p. 34). It is important to formulate an extensive list of the requirements of the ERP adoption project before the program is initiated. Doing that makes the work of identifying the ideal ERP system/ software easier. Due to the differences in the outcomes of adopting ERP systems, it is important to receive recommendations about the adoption of the system from other businesses or business experts that have successfully implemented an ERP system (Grover &Marku, 2015, p. 143). ERP customization is crucial to the successful adoption of the ERP program, but it is important to explore the effects of customization, before it is initiated, noting that it can upset the usefulness of ERP systems. 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