ABC Telecom Company limited, a leading Information Communication Technologies service provider in Nepal, is introducing Enterprises Resource Planning system from 2011. After getting employment in ABC Telecom Company, how can you use ERP for the improvement of the overall systems of company? What are the challenges for the implementation of this project? Explain.

A Management Information System ICT Revision Questions and Answers

ERP is a cross functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of ABC Telecom. The major applications of ERP at the Telecom company are shown in the following diagram:

ERP gives a company an integrated real time view of its core business processes such as service delivery to its customers, inventory management, tied together by the ERP application software and a common database maintained by a database management system. ERP systems track business resources such as cash, payrolls, HR and stock of SIM/RIM and the status of customer‘s commitments and accounting, no matter which department has entered the data into the system. ERP software suites typically consist of integrated modules of customer supports, sales and distribution of the services, accounting and HR applications. The distribution of the telecommunications services to its customers depends upon the planning, procurement planning, capacity planning, sales and marketing planning, logistic planning etc. ERP system support many vital human resource processes, from personnel requirements planning to salary and benefits administration and accomplish most required financial record keeping and managerial account keeping and managerial accounting applications.
ABC Telecom can get following improvements after implementations of the ERP:
a) Improvement in Quality and Efficiency
b) Decreased cost
c) Decision supports
d) Enterprise agility
e) Timely auditing
f) Up to date database preparation of the company
g) Centralized database
h) No duplication on purchasing of goods
i) Proper use of resources within the company
j) Fraud management
k) Improves the accountability
l) Reduced manpower
m) Centralized payroll
n) Improves on decision making process

Challenges on Implementations:
ERP systems vary widely in their functionality, scope, price and ease of use. Many companies do not perform thorough due diligence before selecting an ERP system. Key things to consider when selecting an ERP system include system scalability, supplier management, service and availability, system reliability, system functionality and vendor customer support. Companies that fail to address these issues during the ERP selection process may face multiple challenges before, during and after system purchase.

ERP implementations typically last longer than initially expected and end up costing more than budgeted. Companies that fail to create a proper project plan prior to implementation run into numerous obstacles during implementation, including underestimating project resources, under evaluation of the software prior to implementation and not creating new business processes that suit the ERP system. Other implementation challenges include not managing the changes that occur during the implementation time frame and understanding the full impact implementation has on the company.

Information Overload
ERP systems manage millions of bits of information. Companies often fall into two data management traps using the ERP system to extract more data than required simply because it is available or not venturing past the system’s standard reports for fear of messing up the system. The challenge for ERP users comes in optimizing the system to generate the data that give management the best view of the company’s operations. Many ERP users get overwhelmed by the size of their company’s data warehouse and often avoid using the ERP system to generate data. Once that happens, management can no longer rely on the accuracy of the data received.

A majority of ERP errors result from improper user training. Many companies consider training in hindsight and thus begin late in the ERP implementation cycle or do not provide adequate time to thoroughly train users. Companies that do not plan ERP training often find themselves struggling to get satisfactory instructors, an adequate training budget or proper training materials. Typically, ERP users need to relearn processes and tasks they may have performed for many years. The required amount of time needed to properly train an ERP user largely depends on the user’s skill set, how critical a role the user plays in the system and the training program itself.

The cost of ERP software is very expensive till this date.

Human Resource:
Finding a trained manpower is another challenge for the implementation and operation of the ERP in a telecom company.

Integration of ERP Modules
Packaged ERP software consists of many functional modules (production planning, inventory control, financial and HR). Organizations tend to install modules from the same ERP vendors in the initial ERP implementation. Not all companies will purchase all ERP modules from a single ERP vendor (SAP, Oracle, PeopleSoft etc.). The implementation of ERP systems could last many years. The integration of ERP modules could be either the integration of modules from different vendors, or the different versions of the modules from the same vendor.

Integration of E-Business Applications
E-business practice is the combination of strategies, technologies and processes to electronically coordinate both internal and external business processes, and manage enterprise-wide resources. E-business software systems generally fall into four categories: Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Supply Chain Management (SCM) and Knowledge Management (KM). To get the most out of ERP systems, ERP should be tightly integrated with other e-business software – Supply Chain systems, CRM, knowledge management, B2B exchange and ecommerce storefront on the Internet.

Integration with Legacy Systems
Over the years, legacy systems have accumulated vast amount of data vital to the survival, operations, and expansion of corporations and non-profit organizations. Integration of ERP systems with legacy systems is more complex than the integration of ERP modules and Integration of e-business Applications. It routinely requires the installation of third-party interface software for the communication between ERP software systems and legacy systems. Second generation ERP systems use relational database management systems (RDBMS) to store enterprise data. Data conversion from legacy systems to RDBMS is a often a time-consuming and tedious process. While most interface software provides API for ERP to access legacy systems, some vendors offer integration module that automates or accelerates the transformation of legacy application logic and data into reusable components with XML, SOAP, J2EE and .NET interfaces.
Project Planning
ERP implementation starts with project planning – setting project goals, identifying high level business requirements, establishing project teams and estimating the project costs. The project planning offers the opportunity to re-evaluate the project at great details. If the ERP project is not justified at the planning phase, organizations shouldn’t hesitate to cancel the project. For every successful ERP projects, there’re projects that are canceled before implementation.

Architectural Design
While high level architectural decision is made in the process of ERP vendor selection, it remains a critical successful factor in integrating ERP with other e-business applications, ecommerce applications or legacy systems. Choice of middleware, interface software or programming languages drastically impact the implementation cost and release date.

Data Requirements
Unlike in-house e-business applications, much of the packaged ERP implementation involves the integration of ERP systems with existing e-business software and legacy information systems. Appropriate level of data requirements is critical for an ERP to interact with other applications. Data requirements usually reflect details of business requirements. It costs ten times to correct a mistake at later phase of ERP implementation than the effort to correctly define requirements at analysis and design phase.

Phased Approach
It is important to break an ERP project down to manageable pieces by setting up pilot programs and short-term milestones. Dependent on the IT experience, some organizations choose the easiest piece as the pilot project, while others may implement a mission-critical application first. The pilot project can both demonstrate the benefits of ERP and help gain hands-on ERP implementation experience.

Data Conversion
Second generation ERP systems use relational database management systems (RDBMS) to store enterprise data. If large amounts of data are stored in other database systems or in different data formats, data conversion is a daunting task which is often underestimated in ERP implementations. A two-hour data conversion task could be turned into to two-month efforts as the result of DBA group’s lack of technical experience and management’s incompetency or ignorance.

Organization Commitments
The involvement of ERP implementation goes far beyond IT department to many other functional departments. The commitment and smooth coordination from all parties is the key to the success of ERP project. The commitments come from the understanding of how ERP can benefit each functional department. For example, if the warehouse staff isn’t completely sold on the inventory control module’s benefits, they may not input the kind of usage data that is essential to the project’s success.

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