Sunday, August 31, 2008

How do the changing market environment and customer needs force enterprise to implement ERP?


If you are new with this web log we request you to read preface first.


This part is about the messages on how the market environment and customer needs force enterprises to implement ERP. As we have mentioned before you have to disseminate the messages to all of the Inventory people.



A_1-5 how do the changing market environment and customer needs force enterprise to implement ERP?

  1. In current competitive world, organizations should be so flexible and dynamic which can respond to market needs as soon as possible.
  2. Organizations should be able to monitor customers' behaviour and have good connection with their suppliers.
  3. Organizations' success is a result of unique and integrated operations in and between departments overall the enterprise.
  4. ERP systems, because of strong support of best practices that have been gained in small and big organizations, can deliver required flexibility to companies for adapting to market.

Saturday, August 23, 2008

What are the risks of NOT implementing ERP / IT system?

If you are new with this web log we request you to read preface first.


This part is about the messages on the risks of not implementing integrated systems such as ERP. As we have mentioned before you have to disseminate the messages to all of the Inventory people.

A_1-4 what are the risks of NOT implementing this system?

  • We are not be able to achieve our objectives in business and organization
  • Increasing decision-making costs
  • Reducing capability to compete in the market
  • Low flexibility in market and customers' requirements changing
  • Weak management and control on enterprise resources (Man, Machine, Money and Material)

A_1-5 how do the changing market environment and customer needs force enterprise to implement ERP?

  • In current competitive world, organizations should be so flexible and dynamic which can respond to market needs as soon as possible.
  • Organizations should be able to monitor customers' behaviour and have good connection with their suppliers.
  • Organizations' success is a result of unique and integrated operations in and between departments overall the enterprise.
  • ERP systems, because of strong support of best practices that have been gained in small and big organizations, can deliver required flexibility to companies for adapting to market.

Why ERP is required, it is important and should be done at this time?

A_1-3 why ERP is required, it is important and should be done at this time?

  1. We need an infrastructure that offers high availability and redundancy in order to provide 24x7 supports for our operations.
  2. Business managers and boards demanding better returns from IT investments. So we have to have a well known system.
  3. There is concern over the generally increasing level of IT expenditure. We have to implement such a system with the lowest total cost of ownership.
  4. The need for organizations to assess how they are performing against generally accepted standards and against their peers is essential.
  5. We have no more time and money to re-invent the wheels.
  6. We can control costs by reducing dependency on technology experts
  7. We can increase the potential to utilize less-experienced staff if properly trained
  8. We have to make it easier to leverage external assistance
  9. There is a chance to overcome vertical silos and nonconforming behaviour
  10. Reducing risks and errors could save our survival
  11. This system could help us to improve quality
  12. Integrated systems help us to improving the ability to manage and monitor the enterprise
  13. Costs reduction could be achieved by increasing standardization
  14. We have to used of IT to optimize management of work and resources
  15. There is a potential to reduce or eliminate non-value added work by reducing interfaces and hand offs
  16. Jobs and roles can be enhanced via expanded information access. Integrated systems expand information access
  17. This system focuses on processes. So functional boundaries dissolve as processes become the focus
  18. Authority and responsibility move to the front line along with information. This system brings your information in hands
  19. Changes to business needs and additional technologies/capabilities can be embraced in an accelerated fashion
  20. The entire enterprise shares the same set of database information (parts in stock, material masters, production plans, maintenance costs, customers, vendors, etc.)
  21. We have to replace legacy systems with new systems because of low effectiveness and maintenance costs
  22. Processes' standardization and simplification instead of personal approach to processes
  23. By implementing ERP we can benefit from companies best practices
  24. With this system we adopt ourselves with global systems and can compete in the market
  25. We have to reorganize our structures because of survival
  26. Because there is a central database of information, the need to re-enter duplicate information into separate systems is eliminated
Help reduce operating costs

  1. ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system.
  2. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business.
  3. The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.

Facilitate Day-to-Day Management

  • ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision-making and managerial control.
  • ERP software helps track actual costs of activities and perform activity based costing.

Support Strategic Planning

  • Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes."
  • Part of ERP software systems is designed to support resource-planning portion of strategic planning.

The Competitive Business Environment and the Emerging Digital Firm

  • Four powerful worldwide changes have altered the business environment.

Emergence of the Global Economy

  • Today, information systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale. Globalization and information technology also bring new threats to domestic business firms.

Transformation of Industrial Economies

  • In a knowledge and information, based economy; knowledge and information are key ingredients in creating wealth. Knowledge and information are becoming the foundation for many new services and products.

Transformation of the Business Enterprise

  • The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialist that typically relied on a fixed set of standard operating procedures to deliver a mass-produced product.

The Emerging Digital Firm

  • The intensive use of information technology in business firms since the mid 1990s, coupled with equally significant organizational redesign, created the condition for a new phenomenon in industrial society. The digital firm is organization where nearly all significant business processes and relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. Business processes refer to the unique ways in which organizations coordinate and organization work activities, information, and knowledge to produce a product or service.

Friday, August 22, 2008

How does ERP conformance with enterprise's business and strategy?

A_1-2 how does ERP conformance with enterprise's business and strategy?

In the following, there are strategies and business objectives in different areas and benefits of integrated systems, which could help us in each area:












Strategic benefits from integrated system

Strategic Perspective

· Improved customer responsiveness

· Improved decision-making capabilities

· Enhanced organizational flexibility

· Strengthened supply chain

· Supports future initiatives and building full fledged management information system

· Improve customer orientation and service

· Offer competitive products and services

· Service availability

· Agility in responding to changing business requirements (time to market)

· Cost optimization of service delivery

· Obtain reliable and useful information for strategic decision making






















Operational benefits from integrated system

Operational Perspective

· Up-to-date Financial and Operational Information

· Short-closing cycle for Books of Accounts

· Reduction in inventories

· Effective utilization of employee time

· Reduction in total logistics costs

· Reduction in procurement costs

· Improved maintenance life cycle time/cost

· Total visibility of the complete maintenance activity

· Lower process costs

· Compliance with external laws and regulations

· Transparency

· Compliance with inter policies

· Improve and maintain operational and staff productivity
















Financial benefits from integrated system

Financial perspective

· Minimized operating cost

· Reduced assets deployed

· Increased return on investments

· Improved cash flow

· Better control over resources and their deployment

· Expand market share

· Increase revenue

· Return on investment

· Optimize asset utilization

· Manage Business risks












Technical benefits from integrated system

Technical Perspective

· Integrated package forces a process-focused approach during implementation

· Internet-ready and web-enabled applications provide faster and secure access to the corporate information across the globe

· Integrated package reduces the level of training necessary to manage the business

· Seamless Integration of IT systems

· Automate and integrate the enterprise chain

· Improve and maintain business process functionality

· Product/Service innovation

· Acquire and maintain skilled and motivated personnel








A-Awareness of the need for change

Today we will tell you the first step which starts with general training and messages. As we have told you before these are the messages which should be disseminate to all employees in different level of company.

This section which is Awareness of the need for change has general messages which should be understood by all employees.

A_1- General training and messages which declare the need of ERP

A_1-1 Main concepts about ERP

  • ERP systems use shared databases and control all related business data such as Manufacturing, Finance, Purchasing, Sales, Inventory, Human resources etc.
  • ERP systems can be used as a solution for expediting and automating processes from order entry to order management, finance and manufacturing.
  • ERP systems are as an information backbone for decision support systems.
  • ERP systems not only integrate internal agents but also connect with external agents, customers, suppliers and co-workers. They can use the systems over internet which this reduces costs and increases external agents satisfactions.
  • Those enterprises which have felt organizational changes, ERP systems can help them as facilitator. This is with integrating processes within the organization and changing functional-oriented to process-oriented approach in managing the enterprise.
  • All companies and branches of an enterprise (Holding company) work coordinately using ERP.
  • All processes within organization have to use Best Practices with using ERP. It's no matter it Build To Order or Build To Stock.
  • Using ERP means applying and Best Practices from succeeded companies.
  • ERP's Flexibility, scalability and supporting most of the business processes could be as a basis for progress and improvement in organization.
  • ERP attributes deliver a proper atmosphere for customer servicing, profit improvement, increasing productivity and efficiency. It can cause cost reduction, revenue growth, control improvement, better managerial reports preparation and better information accessibility.
  • Information optimization, better market forecasting, proper production scheduling and inventory reduction are ERP using consequences.
  • Work flow management technology and e-commerce can reduce operational costs. ERP can help you in this area.
  • Removing island systems with high maintaining costs and replacing with integrated world class systems can facilitate receiving WTO preconditions.
  • ERP makes enterprise to talk with one common language across the departments.

Disseminate following messages to different levels of organization:

  • ERP means creating systematic intuition in organization
  • ERP means speed and accuracy in operations
  • ERP means emphasize on information within organization
  • ERP means total integration between systems in the organization
  • ERP means better service to customer
  • ERP means restarting and one more opportunity for redesigning the processes
  • ERP means radical thinking of processes for achieving better quality and servicing
  • ERP means change in legacy processes
  • ERP means deleting non active processes and maintaining and developing active ones
  • ERP means new sight to organization and optimizing it
  • ERP means deleting barriers to restructuring in organization
  • ERP means transferring from traditional management to effective management
  • ERP means availability to accurate, on time and related information to the concerned people
  • ERP means using from global best practices
  • ERP means planning on organization resources: Man, Machine, Money and Material

Important Notes

Important notes:

  • Because in communications we have to send our purposes in short and meaningful messages, thus in this document messages are prepared in separate small ones.
  • In some cases for more clarifications, some more details are given, especially for clarifying procedures and processes.
  • Messages and detailed information should be first be understood by project team and then be scattered to the concerned people as mentioned in the text and be used in your communications.
  • According to your company existing facilities, messages should be disseminated via office automation system capabilities, billboards etc.
  • We have tried to put most important and common messages in each area, but it is clear you can add more messages to each group.
  • Questions are extracted from the ADKAR model for each step and as mentioned previously answers are given in short messages. Thus if you need to know much more detail about the questions you should read ADKAR book.
  • You may see some messages with the same meaning and concept but in different sentences. It is done so deliberately because different audiences need their own languages.

Because each integrated system has its own strengths and weaknesses, and we wanted to cover all integrated systems, therefore we have focused on ERP systems as the target system. That means because ERP systems have a well-known principles and are on a best practices approach, we can use ERP change management activities' for our non-ERP systems too. In other word, you can you this document almost for every integrated system. Of course, as we have mentioned in this document, you need a few manipulations regarding to your system capabilities.

Thursday, August 21, 2008

Preface

wet want to share our experiences with you in ERP change management field. If you continue reading these articles surely you will find them useful.


This document is prepared for those companies, which need to improve or implement any integrated system such as ERP, MIS, etc and want to manage the project from the people side point of view.

If you see change management books, all of them say good guidelines how to communicate, to build awareness, to foster desire, to make knowledge and so on. These principles are essential and should be followed by change management team and they should be aware of change management skills, supervising skills and so forth.

We can divide guidelines in these books to two main tasks, which should be done and followed by change management team and change stakeholders:

  • Behavioral tasks
  • Practical tasks

Behavioral tasks are those tasks that project team members, functional mangers and supervisors should follow them in connecting with people, in meetings, speaking etc. That means managerial and supervisory skills are absolutely required for these people and they have to use these skills when they want to communicate with their employees, pairs and colleagues.

Until now, everything goes smoothly. However, there arises one question: "we know every thing about communications, techniques and approaches, we are skilled in managerial and supervisory aspects, and we know how to handle meetings but actually what should we say in our meetings? If we want to make the awareness of the need for change, what should we say? If we have to tell employees the benefits, risks, objectives of making that change, what are these topics actually?"

That means beside the behavioral tasks, we have to do some practical tasks too. In other word, we, as project team members and change stakeholders, should know the answers to the previous sample questions and after that announce them to others.

In these document sets, we have chosen ADKAR, Prosci registered model for change management framework activities, and extracted questions in different phases of this model. Then these questions are answered regarding to the system you are implementing or improving in your organization.

Phases of this model, as mentioned by Prosci, are:

  • Awareness of the need for change
  • Desire to participate in the change
  • Knowledge about how to change
  • Ability to implement the change
  • Reinforcement to sustain the change

Therefore, we have tried to prepare a document, which helps companies facilitate and expedite their change management activities. This document is about inventory system and we can deliver in other systems such as:

  • Purchasing
  • Sales
  • Human Resource
  • Manufacturing
  • Maintenance etc


Important Notes