Risks and challenges faced by organization in ERP implementation

Executive Summary:

This is an individual task where in a report required to be prepared making focus on how an ERP system can play an effective role in improving the business efficiency of a medium sized firm. Simultaneously it is also required to be seen how an ERP implementation process is a risky, complex and costly activity. Starting from the analyzing the benefits of an ERP system for the medium-sized firm; the risks and challenges associated with the implementation of the ERP system have been analyzed in this report. The organization selected to make the evaluation of the concept is an Australian Travel Agency. Therefore, issues and factors related to ERP implementation in a travel agency firm being the main focusing area in this report.

Introduction:

This report has been prepared in order to represents the role of an ERP system in improving the business efficiency of a medium sized travel agency. The report also makes focus on what are the risks and challenges are associated with the implementation of the ERP system. The success and failure of any ERP system is totally based on its implementation process; means how well the factors associated with the implementation process being analyzed and strategy for implementation has been prepared and executed at all the levels of business organization. ERP framework has been a standout amongst the most well known business administration frameworks, giving advantages of continuous capacities and consistent correspondence for business in vast associations. Then again, not all ERP usage has been fruitful. Subsequent to ERP usage influences whole associations, for example, process, individuals, and society, there are various difficulties that organizations might experience in executing ERP frameworks. The report includes the issues and factors related to ERP implementation in a travel agency firm being the main focusing area in this report.

Use of ERP system in improving business efficiency:

Use of technology in a business organization is definitely improves the business efficiency and make capable the organization to cope-up with the market competency. The successful implementation of an information technology system into the organization will provide a great level of boost to the efficiency of business process and management able to take the effective decisions with the availability of timely and sufficient information. Enterprise Resource Planning is a product arrangement that incorporates business capacities and information into a solitary framework to be shared inside of a company. ERP along these lines expands participation and communication between all specialty units in an association on this premise. Likewise, ERP institutionalizes forms and information inside of an association with best practices. The organization likewise streamlines information stream between various parts of a business by making a one-exchange framework. As an aftereffect of its advantages, ERP has turned into the foundation of business insight for associations by giving chiefs an incorporated perspective of business procedures. The constant innovative progression and the expanding many-sided quality of ERP oblige organizations to routinely redesign their frameworks. Most ERP sellers give a chance to upgrade techniques and adjust to saw best practices to meet changing business needs all the more rapidly.

In today's surroundings of dynamic rivalry it's significant for a travel organization to utilize each favorable position and apparatus in order to be on top. ERP programming framework could be one of those points of interest. With ERP framework one can be at leeway on account of the accompanying advantages: 

• Incorporated data: ERP framework lessens the requirement for purchasing and keeping up numerous product frameworks, empowers every one of the divisions in the business to perform different capacities all the while.
• Expanded productivity in procedures: ERP framework annihilates work escalated manual procedures, makes information gathering more effective and exact.
• Compelling administration: ERP makes control of agreements with inns to examine ideal conditions, of vouchers for reservations and receipts.
• Access to information: brisk and simple access to data is given, the association with the customer progressively.

Risks and challenges associated with the ERP implementation:

Various organizations experience issues when attempting to actualize the ERP framework in light of the fact that the distinctive divisions inside of them have their own particular projects and objectives that conflict with one another and the organizations are not arranged for digestion. ERP activities might demonstrate new boundaries and exhibit new hazard figures that must be taken care of differently. These disappointments can be clarified by the way that ERP execution constrained organizations to take after the rule of 'best practices' in best associations and structure proper reference models. Not at all like other data frameworks, the real issues of ERP usage are not mechanically related issues, for example, innovative unpredictability, similarity, institutionalization, and so forth however for the most part association and human related issues like imperviousness to change, authoritative society, incongruent business forms, venture bungle, top administration responsibility, and so forth.

• Commitment from top management fails:

  Actualizing an ERP framework is not a matter of changing programming frameworks, rather it is a matter of repositioning the organization and changing the business rehearses. Because of gigantic effect on the upper hand of the organization, top administration must consider the key ramifications of executing an ERP arrangement. It is regularly said that ERP usage is in regards to individuals, not forms or innovation. An association experiences a noteworthy change, and the administration of this change must be precisely arranged and fastidiously executed. The top administration must reserve the undertaking as well as play a dynamic part in driving the change. An audit of fruitful ERP executions has demonstrated that the way to a smooth rollout is the powerful change administration from top. Intercession from administration is frequently important to determine clashes and convey everyone to the same considering, and to construct collaboration among the differing bunches in the association, intermittently over the national fringes.

• Reengineering process:

  Executing an ERP framework includes reengineering the current business procedures to the best business process standard. ERP frameworks are based on best practices that are followed in the business. One noteworthy advantage of ERP originates from reengineering the organization's current method for working together. Every one of the procedures in an organization must comply with the ERP model. The expense and advantages of adjusting to an ERP model could be high. This is particularly genuine if the organization arrangements to reveal the framework around the world. It is not simple to get everybody to consent to the same procedure. Now and again business procedures are unique to the point that they should be saved, and proper steps should be taken to alter those business forms.

• Fail to integrate with the business process:

  Most organizations feel that having a solitary seller implies a typical perspective important to serve their clients productively and the simplicity of keeping up the framework in future. Lamentably, no single application can do everything an organization needs. Organizations might need to utilize other specific programming items that best meet their exceptional needs. These items must be coordinated alongside all the homegrown frameworks with the ERP suite. For this situation, ERP serves as a spine, and all the distinctive programming are darted on to the ERP programming. There are outsider programming, called middleware, which can be utilized to incorporate programming applications from a few sellers to the ERP spine. Keeping up the mix interwoven requires an excessive and continuous consumption of assets. Associations spend up to 50 percent of their IT spending plans on application mix. 

• Absence of ERP consultants:

  Since the ERP market has developed so quickly, there has been a lack of equipped consultants. The expertise deficiency is deep to the point that it can't be filled promptly. Finding the right individuals and keeping them through the execution is a noteworthy test. ERP execution requests various abilities, for example, utilitarian, specialized, and interpersonal aptitudes. Once more, consultants with particular industry learning are less in number. There are relatively few consultants with all the required aptitudes.

• Unexpected implementation time:

  ERP frameworks come in measured manner and don't need to be actualized altogether on the double. A few organizations take after a stage in methodology in which one module is executed at once. The length of execution is influenced, as it were, by the quantity of modules being actualized, the extent of the usage, the degree of customization, and the quantity of interfaces with different applications.

• Unnecessary cost of implementation and maintenance:

  Despite the fact that the cost of pre-composed programming is shabby contrasted and in-house advancement, the aggregate expense of usage could be three to five times the price tag of the product. The usage expenses would increment as the level of customization increments. The expense of contracting consultants and every one of that runs with it can expend up to 30 percent of the general spending plan for the execution. And sometimes the costs of maintenance of ERP systems also become hard for a medium-sized organization.

• Lack of proper selection and training of employees:

  Organizations planning to actualize an ERP framework must will to devote some of their best employees to the venture for an effective usage. Regularly organizations don't understand the effect of picking the interior employees with the right expertise set. The significance of this angle can't be overemphasized. Preparing and redesigning employees on ERP is a noteworthy test.

Individuals are one of the concealed expenses of ERP usage.

Suggestions for minimizing the risks and overcoming the challenges:

1. Get upper administration support.
2. Make a reasonable and broad rundown of prerequisites before you begin taking a gander at sellers.
3. Keep in mind versatile clients.
4. Deliberately assess your choices before selecting your ERP framework.
5. Think before you modify.
6. Element in change administration.
7. Choose an inside ERP item champion and encompass him or her with great individuals.
8. Give the important time and assets for preparing on the ERP framework.

Conclusion:

The reason for this study was to distinguish the dangers and controls identified with the usage of ERP frameworks in medium-sized travel organization. The assessment execution of ERP frameworks and the hypothesis on frameworks advancement dangers were utilized to examine the dangers and controls identified with the effective execution of an ERP framework for a situation investigation of an association. The contextual analysis gave backing to hazards and controls distinguished in the study.

References:

Bingi, P. (2016). CRITICAL ISSUES AFFECTING AN ERP IMPLEMENTATION. Carl.sandiego.edu. Retrieved 22

January 2016, from http://carl.sandiego.edu/gba573/critical_issues_affecting_an_erp.htm

Elinext.com,. (2016). ERP for Tourism and Hospitality - Elinext Group. Retrieved 22 January 2016, from http://www.elinext.com/erp-for-tourism-and-hospitality

Grabski, S. (2016). Risks and Controls in the Implementation of ERP Systems. Retrieved 22 January 2016, from http://www.uhu.es/ijdar/10.4192/1577-8517-v1_3.pdf

Sadat Safavi, N. (2016). An Effective Model for Evaluating Organizational Risk and Cost in ERP Implementation by SME.

Schiff, J. (2016). 9 Tips for Selecting and Implementing an ERP System. CIO. Retrieved 22 January 2016, from http://www.cio.com/article/2458889/enterprise-resource-planning/9-tips-for-selecting-andimplementing-an-erp-system.html

Seo, G. (2016). Challenges in Implementing Enterprise Resource Planning (ERP) System in Large Organizations. http://ic3.mit.edu/. Retrieved 22 January 2016, from http://ic3.mit.edu/ResearchSamples/2013-07.pdf