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An Analysis On ERP IT Solutions Information Technology Essay

In this competitive market, world needs new business opportunities to increase competitiveness. The Education system is on a verge of a rational change. The requirement of manpower is also increasing with the growth in the Education system, and a huge demand supply gap is expected in the education space. IT solutions are required to overcome these challenges arising from demand- supply as the IT solutions will help to manage its resources with optimal efficiency.

To improve the quality of performance, universities are keen to implement ERP solution for the functional areas such as student database, human resource, payroll, fees management etc. The focus through an ERP is to coordinate all the activities by facilitating communication and information exchange across departments and improve the quality of the activities. There is a growing awareness in most of the industries that IT could be used as a changing source of business functions. It is a planning philosophy enabled with software that attempts to integrate all the business processes. Before the ERP concept, each department had its own computer system optimized for the requirements that a department needed. This would result in local optima but could not ensure global optima across any organization. ERP combines all the business requirements of the organization together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other.

Enterprise Resource Planning (ERP) systems include several configurable modules that integrate core business activities into a single environment based on an integrated, shared database. These systems have been recognized as the most important development in the corporate use of information technology in the promising seamless integration of all the information flows throughout an organization. This applies to applications, which are promising in supporting business processes in many organizations. It involves the seamless integration of processes across functional areas such as finance, HR, manufacturing and logistics. It supports improved workflow and standardization of business practices. However, implementing an ERP system is costly and time-consuming. The costs are mainly due to the short supply of professionals with requisite skills.

According to a NASSCOM-McKinsey report, annual revenue projections for India’s IT industry in 2009 were US $ 118 billion and market openings were emerging in ERP solutions. ERP solutions came to be known as an evolution of their functional scope. Report indicates that originally ERP solutions concentrates on the integration of an organization’s functions of student database, attendance, finance, human resource, logistics and manufacturing with improved quality. The paper presented below will mainly concentrate on the concepts of ERP: definitions, ERP process to its implementation, a case evidence and finally a SWOT analysis of using an ERP in educational institutions.

Review of Literature

Previous studies reveal that many organizations had implemented integrated systems or ERP solutions in the functional areas, student’s management, ‘financial management’, Human Resource Management, which are also considered to the most important areas of cross functional integration [Ref. no 11].

ERP systems are organized around the basic economic rationale of the enterprise value chain. They are designed around a process view of the business, and they contain data useful in the value accumulation sequence. It is widely reported in the literature that institution-wide applications promise seamless integration of all information flowing through an organization: fees information, library information, accounting and financial information, human resource information, and student information (Davenport 1998; Kumar and Van Hillegersberg 2000). Several studies on ERP implementation (Murray and Coffin 2001; Ross and Vitale 2000; Scott and Vessey 2000; Soh, Kieh and Tay-Yap 2000; Stephanou 2000) have identified such issues as top management support, an effective implementation team, organizational-wide commitment to the system, and the effective resolution of misalignments between organizational needs and the ERP package functionality, as critical factors for the success of an ERP implementation project.

By accessing institution wide information from databases, IS integration is providing numerous opportunities to coordinate organizational activities by facilitating communication and information exchange across departments without the need to go up and down the vertical chain of command [Ref. no 3]. It is not possible to think of an ERP-system without sophisticated information technology infrastructure. It is said that, ERP is the finest expression of the inseparability of business and information technology [Ref. no 4].

While reviewing the literature we understood that, ERP Implementation follows the six stage model, as given below:

Stage 1: Initiation- Top Management Vision and Need to Change

Stage 2: Adoption – Cost/benefit analysis and suitability

Stage 3: Adaptation – Implementation and availability of the system

Stage 4: Acceptance – Enhancing compatibility and Integration of functional units

Stage 5: Reutilizations – Acceptance of the system, using system through routine activity and enhancing performance

Stage 6: Infusion – Looking for the innovation to become more competitive

Since ERP implementation is a change management strategy, the full support of Top Management is needed. Mainly the decision needs to be made in the functional areas for the implementation like Human Resource, Finance, Student’s database, fees management etc [Ref. no 8]. Implementing ERP should have full knowledge of the organization where it is implementing, not only the theoretical knowledge about the ERP system/functions but should know about the integration about each activity and process of the organization. Training also needs to be imparted to the team members who are involved in ERP implementation to understand its activities and configure the same in ERP system.

Three major processes seem to be followed for finalizing the system specifications in any organization. They are:

Studying the existing system

Mapping the existing system with ERP system

Analyzing the GAP and rectifying the GAP with Functional Team Members

Once this has been complete, the ERP system is configured as per the finalized specifications and tested out. Subsequent to this, the entire system is then tested to see its effective functioning. This completes the testing features. Data migration is one of the most important activities in determining the success of an ERP Implementation. Since many decisions have to be made before migration, a considerable amount of planning is required [Ref. no 9].

Usually the following steps are followed for data migration the process of ERP Implementation:

Identifying the data to be migrated

Determining the timing of data migration

Generating the data templates

Freezing the tools for data migration

Deciding on migration related setups

Deciding on data archiving

Tata Power is the first utility company in India to implement an industry specific ERP solution and benefits were evident in four major areas - cycle time reduction, inventory reduction and manpower reduction. This made people available for redeployment, and most importantly it helped to provide better quality information [5]. It also enabled better scalability and reliability. Other advantages were better speed, better realization of information value, extended enterprise boundaries; better focus on distribution and improved project management and execution skills [Ref. no 6].

Expected Benefits from ERP Systems Implementation

ERPs are designed to help manage organizational resources in an integrated manner. The primary benefits that are expected to result from their implementation are closely related to the level of integration that is promoted across functions in an organization. The professional literature has been proactive in determining the types of benefits that organizations might anticipate from their ERP systems and to what extent organizations had actually attained those benefits on a post-implementation basis. Expectations for improved business performance after adoption may result from both operational and strategic benefits (Irving 1999; Jenson and Johnson 1999). In the Benchmarking Partners study (1998); respondent companies anticipated both tangible and intangible benefits. The most significant intangible benefits related to internal integration, improved information and processes, and improved customer service, while tangible benefits related to cost efficiencies , personnel, procurement and the time needed to close books, as well as improvements in productivity, cash flow management, and overall profitability. In assessing the extent to which they had actually attained those benefits, however, on a post-implementation basis, it was evident that they were not able to improve profitability or lower personnel, inventories, or system maintenance costs as much as they had hoped, although it was evident that the realization of these benefits required more time than expected.

Factors of Failure in ERP Systems Implementation

An AMR research study (Carlino, Nelson and Smith 2000) has projected that the enterprise applications market will reach $79 billion by 2004. Despite such huge investments in ERP systems, many implementations have been plagued with failure. In a survey of 63 large Fortune 500 companies, META Group (1999) reports that over a five to six year period, the average company incurred a negative return of $1.5 million from the ERP system implementation. In addition, the average implementation time for a full-blown ERP system was twenty-three months, at a cost of $10.6 million for the implementation and another $2.1 million for maintenance over a two-year period (Meta Group 1999). In addition, several case studies exist of organizations that were led into severe financial distress because of system integration problems after the implementation of ERP systems. For example, Unisource Worldwide, Inc., wrote off $168 million in costs related to an abandoned implementation of SAP software (Stein 1998). The computer integration problems that FoxMeyer Health Corp. has faced after the implementation of SAP software, have led the company to a bankruptcy filing, instead of realizing the expected benefits of cost reduction, improved inventory turnover and increased availability of useful information (Hyde 1996). Several other high profile ERP projects such as Dell Computer Corp., Dow Chemical, Hershey Food Cooperation, Whirlpool and Gore-text have also failed to implement an ERP package as intended (Davenport 1998). In some cases, companies lost not only the capital invested in ERP, but also a portion of their business. As a result, there is some skepticism associated with the ability of ERP projects to deliver anticipated benefits (Bingi et al. 1999; Gable 1998; Mabert et al. 2001). An important reason for these failures is that the implemented ERP systems suffer from system integration problems; the lack of alignment between people, processes, and the new technology, preclude an organization from realizing anticipated benefits or even to recover the cost of the implementation effort (e.g., Davenport 1998).

Moreover, the initial justification that drives the development of an ERP system also is considered an important reason for success or failure (Peterson et al. 2001). System-led implementations have a higher incidence of failure compared to those that are business-led. Yet, many ERP initiatives are still systems-driven, with the great majority of non-quantifiable business cases being focused on system issues, such as replacing legacy systems and attaining systems integration (Peterson et al. 2001). Likewise, the Meta Group survey reports that system implementation is most often justified on the need to improve internal integration, to support growth, and to support new processes or a changed business model in a firm’s supply chain (Meta Group 1999). Furthermore, it is also widely recognized that lack of user training and failure to completely understand how organization applications change business processes are important factors of failure (Wilder and Davis 1998). According to the Benchmarking Partners (1998) report, major “go-live” surprises that organizations experienced related to the fact that it was difficult for people to grasp the degree of discipline that was required on a daily basis due to the degree of integration imposed by the ERP system. Users could not fully realize that their actions now had an immediate impact on downstream operations. Companies were also surprised by the knowledge gap between the training employed and what people needed to work effectively with the new ERP system. Training might have been provided too early, or there was not enough, or the wrong training was provided. The sheer volume of training overwhelmed some users, while others were further confused by the lack of training about the context of the new capability from a business standpoint. Despite its risks, ERP implementation is pervasive in many different types of industries (Kumar and Van Hillegersberg 2000; Mabert et al. 2000). The goals of ERP systems implementation extend beyond internal business process integration to external connectivity and support of a firm’s value chain activities. ERP vendors are changing their business model as they move toward a component strategy, often web-based, that separates ERP systems into modules that can be adopted individually, thus permitting small and medium sized businesses to adopt such systems and improve their operations (Sprott 2000). McCarthy et al. (1996) also support this argument by suggesting that ERP systems must retain their organization objective but must adopt a much simpler and flexible implementation. There seems to be consensus on the need for interoperable components that can be customized to model a particular organization as close as possible to its actual way of doing business.

ERP

ERP: Defined by Various Authors

An ERP system can be thought of as a company-wide Information System that tightly integrates all aspects of a business. It promises one database, one application, and a unified interface across the entire enterprise. “Bingi et al., 1999, p. 8”.

ERP systems are highly integrated enterprise-wide standard Information Systems (software packages) that automate core corporate activities (business processes) such as finance, human resources, manufacturing, and supply and distribution. “Holland et al., 1999a, p. 289; Holland et al., 1999b, p. 273”.

ERP is an integrated package of software applications designed to automate and integrate a company’s business processes throughout its entire supply chain and to provide immediate access to business information. ERP systems can be thought of as wide-ranging, general-purpose management information systems (MIS) for business. “Maher, 1999, p. 36”.

ERP systems, a form of Enterprise-Wide Information System (EWIS), represent sets of business applications that allow for an organization -wide management of operations. ERP systems are seen as optimization and integration tools of business processes across the supply chain (within and beyond organizational boundaries) implemented through modern information management systems. “Al-Mashari, 2000, p. 3”.

ERP is known as a large-scale, cross-functionally integrated, packaged system. “Brown et al., 2000, p. 1029”.

ERP systems are software packages that integrate information across the entire organization. This integration removes inconsistencies and enables the organization to attain consolidated reports. “Shakir, 2000, p. 1033”.

ERP: Simplistic Definition

ERP - Enterprise Resource Planning

Detailed Definition

“ERP software is multi-module application software that integrates activities across functional departments, from product planning, need assessment, software selection, tracking etc. ERP software may include application modules for the finance, accounting and human resources aspects of an organization.”

Basic ERP Process:

ERP Implementation Process:

Strategic

Legacy systems

Business vision

ERP strategy

Top management support

Project schedule and plans

Tactical

Client consultation

Personnel

Business Process Change and software configuration

Monitoring and feedback

Communication

Trouble shooting

Once a ERP is implemented in an organization its give sure fire results within a short span of time because all the department become automated and customers are better served because the concern department will have access to every bit of information regarding each relevant process. Therefore there are many factors why a company should choose an ERP Implementation. ERP system integrates the information and speed up the internal processes as a result; it also reduces the need to carry large inventories. In the end if implemented correctly an ERP system surely give a competitive edge to an organization.

Given the significance and risk of ERP projects, it is essential that research examines methods to improve ERP implementation. A well-planned and executed post-implementation review of the ERP system implementation should assist organizations to effect needed changes in organizational plans and processes, avoid implementation risks, and realize potential operational and strategic benefits. Table 1 summarizes few success factors of the ERP process: The first table presents the critical implementation factors as they have been presented in the academic and professional literature that was reviewed here. The second table presents the corresponding post-implementation review dimensions that an ERP adopting organization should be expected to evaluate in order to ensure a successful implementation of an ERP system.

Table 1: Critical Factors of ERP Implementation and Corresponding Dimensions of Post-implementation Success Factor

Top management support and commitment to project; fit to business strategy Dimensions of

Success

Evaluation of fit with strategic vision

Review of project planning effectiveness

Evaluation of infrastructure development Factor

Alignment of people, process, technology Dimensions of Success

Review of fit resolution strategies

Evaluation of system integration attainment and reporting flexibility Factor

Anticipated Benefits from ERP implementation project Dimension of Success

Evaluation of level of attainment of expected system benefits

Factor

Motivation behind ERP implementation (business- VS system led) Dimensions of Success

Review of driving principles for project

Review of project justification practices Factor

Scope of user training

Table 2: Dimensions of Success

Review of user learning

Evaluation of effective knowledge transfer (among project team members and other users)

Educational Institutions Challenges

Educational Institutes face common challenges such as:

Accessing information from paper files is a difficult task

Improper means of exchanging information between various departments

Lack of interconnection between departments

No quick or easy way to keep the records of students and staff error free and up-to-date

Wastage of hundreds of hours by staff each month manually entering information or performing administrative tasks that could be handled automatically such as evaluation and generating results

Lack of accuracy in maintaining the financial records such as Fees, Salary and Expenses

Lack of automation in calculating Fee balances or to find Fee defaulters

Lack of automation for computing the staff's salary

Lack of easy means or quick way to access old records

Administrators spend too much time in creating Time-Table and in daily assigning the substitutes for free periods

Lack of means to provide parents and guardians the fast access to student records

Why implement an ERP System?

To support organization goals

Integrate online, secure, self-service processes for business

Eliminate costly mainframe/fragmented technologies

Improved Integration of Systems and Processes

Lower Costs

Empower Employees Enable Partners, Customers and Suppliers

Benefits that come along with an ERP

Quantitative Benefits

Savings from phased-out legacy systems

Streamlines Education Processes

Automates Important Functions

Increases Productivity and Efficiency

Big Savings in Person-hours

Increases Revenue

Qualitative Benefits

Improves data and process integrity

Enhances operational security

Reinforces accountability and transparency

Case Evidence: Chitkara University ERP Success Story

Introduction

Chitkara University is a leading university of North India and is a part of Chitkara Educational Trust (CET) established in the year 1998. CET has been set up with clear mission to pursue excellence in all fields of education and to adhere to the highest standards of academic rigour in all its work. Chitkara University is one of the most technologically advanced University campuses in the country. Over 1000 computers on-campus are connected to the internet through broadband connections with the network of over 20 high end servers that power the on-campus network. Chitkara has collaborated with top International Universities and Education providers across the world such as San Jose State University, George Brown College, University of Cambridge, University of Sunderland, Cisco Systems and CA International to get access to latest teaching methodology and research techniques. All institutions in the Chitkara Universe have been in the forefront of developing great industry-academia interface and have successfully achieved 100% campus recruitment across major companies in respective sectors.

Chitkara University provides the most advanced online Student Information System for complete transparency and hassle free campus management. Chitkara implemented UnivPad as a complete web-based campus management solution. With this solution, Chitkara University automated their critical functions like pre admission application forms, attendance, time-tabling, complex examination grading, Student fee, accommodation, messaging (email/sms), printing of transcripts and student ID Cards, and analytical reporting through a single centralized relational database to accommodate the unique requirements of the university. This integrated approach provided Management of Chitkara University with a higher return on investment by minimizing training, maintenance and future expenditures.

Challenges

Chitkara University is a leading university of North India and is a part of Chitkara Educational Trust (CET) established in the year 1998. CET has been set up with clear mission to pursue excellence in all fields of education and to adhere to the highest standards of academic rigour in all its work. Chitkara University is one of the most technologically advanced University campuses in the country.

The university faces some of the following key challenges –

Over 1000 computers on-campus are connected to the internet through broadband connections with the network of over 20 high end servers that power the on-campus network

Manually managing all University functions with limited resources

Chitkara university realized the need to utilize the services of digitized campus management solution to sustain a lead in this information economy but was unable to manage it manually

University’s Management and teachers workload is constantly increasing as a result of greater expectations from the students, parents and governing authorities.

Solution

Chitkara University established a deciding panel of key stakeholders within the university to preview and review number of campus management solution options available within the educational technology marketplace. Finally, the panel narrowed down the decision to Chalk Pad’s Campus Management Solution – UnivPad, which provided all the student lifecycle management features, Chitkara University’s management had long been searching for. 

Benefits

Chitkara University implemented UnivPad as a complete web-based campus management solution. With this solution, Chitkara University automated their critical functions like pre admission application forms, attendance, time-tabling, complex examination grading, Student fee, accommodation, messaging (email/sms), printing of transcripts and student ID Cards, and analytical reporting through a single centralized relational database to accommodate the unique requirements of the university. This integrated approach provided Management of Chitkara University with a higher return on investment by minimizing training, maintenance and future expenditures. Over a period of last one year of smooth operation, Chitkara University’s management has analyzed that out of 1100 students enrolled, all the staff members and 80 % of students access their UnivPad on a daily basis through the Internet. At any given point of time someone in the University accesses UnivPad, and some students even access on holidays as well. By implementing UnivPad, Chitkara University’s management has experienced increased efficiencies and cost-savings all across the university, while simultaneously allowing faculties and administrators to make more informed decisions aimed at helping students increase their learning potential. On top of that, UnivPad has also given increased peace of mind. 

Strengths

Significant reduction in paperwork thus enabling you to save time and costs

Streamlined flow of information makes work more efficient and error free

Quick access to information from anywhere and anytime

High level views of information through information analytics lets one see the big picture and trends , thus significantly helping in making informed strategic decisions

Greatly increased productivity

Built in communication system of alerts , emails and executive dashboard greatly speeds up work

Weaknesses

Training of ERP to employees consumes lot of time and money

It’s an investment cost high at start

Long process of implementation

The knowledge gap between the training employed and what people needed to work effectively with the new ERP system

Threats

Implementation effort could be bigger then ever talked about or even imagined

Because of the richness of functionality, the scope can grow out of control

The computer integration problems might arise

There is always some skepticism associated with ERP projects to deliver anticipated benefits

Users need to become more computer literate. Many see this as personally challenging - even beyond their ability - and will not cope, or leave the organization

Data integrity could get critical at times

Opportunities

Formerly ERP was purely restricted to fortune 500 companies, in the sense only they could afford to invest on them. This put the small and Medium Industries at a large disadvantage. They were not able to make use of the application to gain the necessary benefits

ERP has thrown open opportunities for many companies to trade with foreign counter parts in the name of outsourcing, implementation and deployment of the existing ones. It has contributed lot to the economy .Academics also boast its own share of ERP relations. It has promoted lot of employment and educational opportunities. India happens to be a key beneficiary in this aspect.

Conclusion

ERP System implementation in an organization will be successful only through the support of top management and functional managers. Due to lack of ERP professional's availability, the cost of ERP implementation is high. Most Institutions should come forwarded to teach all ERP modules along with their professional courses. Students should be given a live project to implement ERP in their Institutes/colleges/University. ERP implementing companies are increasing because of improved performance. ERP System is suitable for all type of companies. ERP brings transparency, effective service and efficiency in production. It reduces the business process and cycle cost. We have successfully completed the implementation of HR with Payroll modules through ERP. Other modules i.e. FI/CO, MM and PS will complete soon. Since most companies are coming forward to implement ERP System, productivity, quality and service increases which leads to reduce the cost and hence develop the economy of the nation.

ERP System implementation in an organization will be successful only through the support of top management and functional managers. Due to lack of ERP professional's availability, the cost of ERP implementation is high. Most Institutions should come forwarded to teach all ERP modules along with their professional courses. Students should be given a live project to implement ERP in their Institutes/colleges/University. ERP implementing companies are increasing because of improved performance. ERP System is suitable for all type of companies. ERP brings transparency, effective service and efficiency in production. It reduces the business process and cycle cost. We have successfully completed the implementation of HR with Payroll modules through ERP. Other modules i.e. FI/CO, MM and PS will complete soon. Since most companies are coming forward to implement ERP System, productivity, quality and service increases which leads to reduce the cost and hence develop the economy of the nation.

ERP systems provide a mechanism for implementing systems where a high degree of integration between applications is required The Business Case or Value Proposition for implementation must be outlined to successfully implement - a proper mix of people, processes and technology should be maintained.

A curricular ERP implementation is both difficult and costly. Both organizational and educational ERP implementation projects are difficult because of the complexity and detail of the software applications. Faculty training is very time consuming and expensive too. Implementation is also difficult because of the knowledge requirements of the personnel who will support the software. Competent personnel are both expensive and very much in demand. Hardware requirements are also quite expensive. For most educational institutions, use of a host ASP may prove to be the best solution. ERP trends reflect positive signals for the ERP vendors and companies availing their service. It is important to remember the fact that both the vendor and the company will be able to make use of any advantage (including the modern facilities) only through proper coordination, teamwork and nurturing a cordial atmosphere. Mere IT ERP trends will not help in this aspect.

In conclusion, this study has attempted to explore the issue of post-implementation success in ERP systems, conceptualize and empirically validate critical dimensions that contribute to post-implementation success, and offer implications that could be useful for both the practice and research on ERP implementation effectiveness. The lack of prior empirical findings in this area lends additional importance to such a research effort that explores potentially significant constructs and defines conceptual boundaries that could contribute to future empirical investigations.

Scope of Further Research

The authors are of the view that there is a scope for in-depth studies to be conducted to better understand the functioning of an educational institution through a questionnaire and areas where an ERP could be of help. The authors felt that there is a scope for further research on ERP usage in educational institutions and studying deeply the strengths, weaknesses, threats and opportunities of using an ERP in an educational institution. Due to limitation of time, the paper presented here is conceptual which can be further extended into an empirical value base research.

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