Paper Example on Enterprise Implementation Challenge: Technical Issues

Paper Type:  Research paper
Pages:  7
Wordcount:  1728 Words
Date:  2022-08-05


Enterprise resource planning (ERP) is a technological software that permits organizations to use an integrated system of applications to automate management and office practices. The software integrates all facets of operations management such as planning, human resource management, sales, manufacturing, and marketing. Proper implementation of the technology improves an organization's competitiveness and production effectiveness. Implementation of ERP systems faces many challenges such as the need for specialized labor, cost, and technicalities. This report aims at identifying the technical hitches, which harbor successful implementation and evaluation of the systems, thus causing project failure. Notably, the report focuses on Hewlett-Packard Company (HP), one of the leading manufacturer of computers and electronics in the world (Hewlett-Packard Company, 2018). In 2004, the company unsuccessfully implemented the system, which led to huge losses. The project will cover factors that contributed to the firm's failure and those that affect the entire industry. Moreover, it will offer various techniques to maneuver the technical challenges to enable businesses to adopt the systems successfully in the future.

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Literature Review

In the contemporary world of business, technology and automation continue to evolve rapidly. Therefore, organizations strive to adopt the changes to remain competitive and improve their services. ERP is one of the most effective tools in business automation. It allows a company to utilize virtue enterprises for value addition and generation of business opportunities (Harwood, 2017). In the past, the technology targeted large organizations, which had complex operations. Notably, the software has gained popularity among small and medium enterprises in the recent decades. Today, they offer automation of back office functions, which directly affect customers, unlike their previous models.

Notably, the implementation of ERP is faced with many technical issues that pose challenges to its success. According to Akkermans and Helden (2002), the systems require a perfect blend of databases, application software, hardware, graphical user interface, and users working together to add value to the business. Databases are the backbone of the entire system since the software utilizes a huge amount of data to identify the relationship and entities in an organization. The data can be stored in multiple or single databases connected via telecommunication networks. The structure and relationship among the above elements define the system's architecture. For instance, the design comprises of the databases to store information and application software to query and retrieve information. It also defines the accuracy and speed of data acquisition (Akkermans & Helden, 2002). All the components are stored systematically and in singular form. If any of the elements does not obey the rules of design, information acquisition is halted.

Firstly, the need for database management systems poses a major technical challenge in implementation. Databases are sets of combined information stored systematically in a computer, which allow an application, such as ERP, to query and retrieve any desired information (Malhotra & Temponi, 2010). The databases store different information in form of file processing units. Each file stores unique information, such as customer relations and orders. However, the file processing units are not efficient in storing the entire company information, thus leading to ineffectiveness in operations. Therefore, it causes losses, poor customer relations, and hiked product costs to compensate for the problem.

Secondly, Madapusi and D'Souza (2012) state that since file processing units store data in various formats and programming languages, they suffer major challenges. For instance, they are prone to data inconsistency and redundancy. In this case, files may be stored as duplicates in different locations and poor versions. Inconsistency may arise when data is stored in the wrong location, thus causing confusion and errors. The authors claim that the situation is harmful to an organization in the case of duplicated invoices and cash receipts (Madapusi & D'Souza, 2012). Moreover, it is difficult to access data from the units since it may require the user to acquire a new program to retrieve information stored in a unique format.

Thirdly, Candra (2012) claims that databases have various rules, which become hectic to users while maintaining data integrity in case of a system crash. For instance, atomicity requires the user to complete the transaction or rollback in case of system failure. Additionally, transaction obeys isolation rules in such a way that it neither interferes nor is it visible to others. The rules cause technological complexity since they are hard to maneuver. Employees using the systems to serve multiple clients may have to repeat similar computations overtime to maintain consistency.

Fourthly, difficulties in normalization create performance drawbacks. Relational databases are used to reduce abnormalities in computations. However, they require large processing power and competence, which hinder its widespread adoption (Aloini, Dulmin, & Mininno, 2007). Despite advancements in technology that has facilitated its continuous existence, lack of specialized skills while implementing the relational databases causes incorrect normalization of data tables. In such a case, this situation leads to challenges in the processing of corporate information.

Fifthly, SAP ERP possesses security problems that create challenges for users. Users may be only able to access information within their level of authorization (Sheu, Chae, & Yang, 2004). For instance, payroll only handles workers' financial records, and cannot access customer accounts. On the other hand, tellers have access to account data but lack the modify addresses for the clients. Therefore, the security features may slow down business function in an organization.

Additionally, most of the systems require graphical user interfaces (GUIs) on the front user end. The GUIs require data retrieval and sharing across all platforms and programs. However, there lacks modified programs, equipment, and servers that can support the all the functions at once; therefore, customization of the above elements becomes impeccable. The process also causes a time lag and generates backlogs.

Sixthly, if a company decides to install ERP systems, it will need to update a set of its equipment's, network, and workstations to accommodate the change (Candra, 2012). In most cases, computer servers and workstations need to be replaced with updated versions in order to adopt the new systems. The replacement process requires high investment, which may injure a company's profit margin. Noticeably, the internal network allows communication between all connected programs. Most SMEs may choose to retain their current connections in data grids to cut costs of production (Candra, 2012). In such cases, the firms face downtimes and frequent system failures, which reduce efficiency.

Analysis and Discussion

ERP Implementation Failure at HP

In August 2004, HP Company announced having incurred substantial losses due to ERP migration failure. Its quarterly revenue for the year that ended on July 31, 2004, had reduced by 5% in comparison with the previous year's revenues (Chaturvedi & Gupta, 2005). The shortfall was due to system failures at the North American divisions as they implemented ERP systems that would centralize their supply chain operations. Notably, the company' total loss amounted to $160 million, which included backlogs and unaccounted inventories. The firm claimed that the amount was five times the cost of ERP application. To investigate the cause of the failure, the company set up a team to analyze the problem (Chaturvedi & Gupta, 2005). The team discovered that the integration of the ERP and legacy systems was the main elements, which contributed to the crash. The internal investigation proved that the SAP Company was not liable for failure since it was due to technical issues.

According to Chaturvedi and Gupta (2005), HP changed the organization's top leadership in January 2003. Gilles Bouchard became the CEO of global operations and was responsible for the ERP software implementations and the company's supply chain management. In January 2004, he launched a change in the business model that aimed at merging information technology (IT) and business operations at both the country and regional level (Chaturvedi & Gupta, 2005). Additionally, HP migrated its industry-standard server (ISS), the largest HP division with $7.5 billion in annual revenues, into SAP ERP systems. Through the projects, the corporate aimed at decreasing its thirty-five ERP systems into four ERP code bases. The move would also reduce its applications from thirty-five thousand to around fifteen hundred.

Noticeably, HP adopted a new business operation process with IT, which was in line with its business objectives. As a result, the company was able to decrease the number of order management programs, but it focused on attaining optimum efficiency and flexibility through the implementation of other SAP systems such as Fusion Oder Management software (Chaturvedi & Gupta, 2005). Through the FOM platform, the firm aimed at uniting older versions of SAP systems with Compaq platforms. It would also facilitate migration of Compaq legacy SAP R/3, which had more than seventy SCM systems, platforms to new SAP ERP. The new Sap system would allow customers to receive their exact products and actual delivery dates without ordering multiple times. The projects contingency plan took care of technical and business.

Migration problems surfaced once the organization launched the program in June 2004. Chaturvedi and Gupta's (2005) report shows that about twenty per cent of customer orders were unable to move from the previous legacy systems into the SAP ERP platform. The problem was associated with program errors. The firm's IT department tried to fix the problem, but they lacked backup processes to cater for backlogs in order processing. The internal investigation team outlined various technical issues that contributed to the migration failure. Firstly, there were communication failures between the various groups in the data grid (Chaturvedi & Gupta, 2005). For instance, a communication flow between order processing and back-end logistics groups was ineffective. Secondly, data integration challenges arose between the new SAP system and the legacy system under implementation. The situation was due to improper training and database management in such a way that program user was not able to retrieve required order information.

Thirdly, inadequate testing of the system's capacity made it difficult for the new system to acquire all information and specifications from customers. During the implementation process, the marketing team failed to conduct proper customer research, thus creating an information gap. The software was only capable of handling standardized orders and could not accommodate order customization from clients (Chaturvedi & Gupta, 2005). Many clients' orders were unaccounted for due to the malfunction. Moreover, HP's IT team was poorly trained due to lack of time; therefore, once the program was live, the employees made mistakes that caused system crash. Additionally, the failure demotivated HP employees and stakeholders. Customers aired their disappointment with the company online, which led to a fall in the firm's stock value despite its former reputation.

Backlogs and other challenges faced during the implementation were easy to handle and rectify bef...

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