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Critical Issues of ERP Systems: A Practitioner

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Critical Issues of ERP Systems: A Practitioner s Perspective By Chuck C. H. Law Department of Information Management, Chaoyang University of Technology – PowerPoint PPT presentation

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Title: Critical Issues of ERP Systems: A Practitioner


1
Critical Issues of ERP Systems A Practitioners
Perspective
By Chuck C. H. Law Department of Information
Management, Chaoyang University of Technology
2
Table of Content
  • Objectives
  • Literature Review
  • Frequently Encountered Problems
  • Case Study Tradeco
  • Professional Practice
  • Conclusion

3
Introduction
  • Objectives
  • What are the critical issues related to ERP
    system adoption and management?
  • What are the problems encountered in ERP adoption
    in the business world?
  • What are considered sound professional practice
    in addressing these problems ?

4
Literature Review Critical Issues Academic
Perspective
5
Literature Review Critical Issues Academic
Perspective
6
Literature Review Critical Issues Academic
Perspective
7
A Summary of Critical Issues
  • impact of ERP, intangible tangible benefits,
    justification
  • business process improvement / re-engineering
  • business process ERP fit
  • process adaptation versus ERP adaptation
  • senior management support of IT BPI projects
  • reporting relationship between CEO/CIO,
    organizational structure
  • strategic intent
  • process re-engineering approach
  • revolutionary versus evolutionary

8
Practical Problems
  • Justification of investment
  • Management support
  • User involvement
  • Business process-ERP fit
  • Business process re-engineering
  • Cultural Issues, for instance,
  • Data ownership
  • Territorialism

9
Practical Problems
  • Organizational issues, for instance,
  • Organizational structure
  • Seniority of IT leader / reporting relationship

10
Case Study - Tradeco
  • A Hong Kong-listed firm
  • Established by Hong Kong/Singaporean families in
    mid-1960s
  • Listed in late 1990s
  • American conglomerate acquired 60 of ownership
    in 2000.
  • Attempted to replace legacy system by ERP

11
Case Study TradecoProblems/Mistakes
  • Lack of Management Support
  • Package evaluation and selection was poorly
    executed.
  • Managing director ignored recommendation of MIS
    Manager and selected an ERP package (X) which did
    not fit business practice and process
  • Steering Committee was not attended by MD and
    other directors
  • MD carried no leadership role in the project.
  • Lack of User Involvement/support
  • Participation in analysis/design sessions is low
  • Divisions and teams were represented only by
    junior staff (such as sales assistants and
    secretaries)
  • Resistance to BPR

12
Case Study TradecoProblems/Mistakes
  • Lack of fit between Tradeco and ERP Package
    Selected
  • Actual costing not supported by ERP package
  • Business process not re-engineered to fit ERP,
    but instead the ERP was customized
  • Cultural-organizational factors
  • Territorialism
  • fierce competition among teams
  • Data ownership
  • Each team and staff (including senior management)
    believe that they owned the data resulted from
    business transactions.
  • Such concept precluded any co-operation and
    information sharing along ERP processes an
    obstacle to BPR.
  • Misuse of ERP security features.

13
Case Study TradecoProblems/Mistakes
  • Cultural-organizational factors (contd)
  • Company and MIS have no exposure to ERP adoption.
  • Consultant Management
  • Mistakes in recruiting qualified consultants
  • Mistakes in managing consultants activities and
    time.
  • Skills and Training
  • Poorly defined and managed training plan
  • MIS and users were offered only standard training
    courses, which did not cover Tradecos processes.

14
Case Study TradecoProblems/Mistakes
  • Methodology QA
  • Milestones, deliverables, and responsibilities
    not clearly defined and enforced.
  • Control measures were not enforced at milestones
    such as review of specification, testing
  • GAP analysis not conducted
  • BPR not conducted
  • Lacks overall strategy and planning from
    selection to implementation

15
Professional Practice
  • Cultural-Organizational Factors
  • Senior management support/leadership
  • Steering committee chaired by CEO, and attended
    by senior staff
  • Promote and manage project as a company
    initiative, but not an IT/MIS project
  • IT leadership must be positioned high in the
    committee and in the organization structure

16
Professional Practice
  • ERP-Business Process Fit and Process Management
  • Gap analysis
  • Business process re-engineering
  • Always strive to improve and simplify process
  • Process-oriented approach, rather than
    function-oriented approach
  • Responsibilities of process owners

17
Professional Practice
  • Methodology and QA
  • well defined project plan
  • Milestones, deliverables, and responsibilities
    specified.
  • Gap analysis fit between ERP and process
  • Business process re-engineering
  • Project organization structure must be defined
    and members empowered.

18
Professional Practice
  • Human Resources Consultants Management
  • Must staff project team with internal skills in
  • project management
  • systems/process analysis
  • ERP skills
  • (do not rely totally on consultants)
  • Must screen consultants carefully
  • Review resume and references
  • Must clearly define tasks and deliverables
    assigned to consultants
  • Time report approval consultant time must be
    reviewed according to estimates

19
Professional Practice
  • Training Management
  • Needs a long-term perspective in training beyond
    the project development period
  • Appropriate training should be offered to various
    categories of stakeholders in the project
  • Training must address companys business
    processes
  • Vendors standard training courses were
    insufficient/inadequate
  • Joint efforts between vendor users in training
    development
  • Train the trainer approach

20
Conclusion
  • ERP is challenging to most organizations
  • Critical issues/factors must be managed properly
    to achieve satisfactory outcomes.

21
  • Thank you!
  • Any Question ?
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