Is skill in implementing coordinated information technology really a competitive advantage for a firm? Why?
Enterprise resource planning (ERP) is whereby an organization’s departments are integrated into one system and also automating services hence improving overall performance.
There are different ERP implementation strategies which different organizations’ can use to get an effective working system. We have the Big Bang implementation which happens in a single phase and user move to the new system on a specific date at once. Modules for a certain application are installed all at once. This implementation strategy requires a lot of planning before the planned kick off though there should always be a space for system fail over as implementation may fail at some stages. Big bang as its advantages like the implementation time is shorter hence less expensive than an implementation strategy which goes in stages a longer period of time. This strategy happens on a specific date so all the users are prepared and so trained only on the new system in advance so as to ensure a smooth run. Implementation difficulties are also minimized as the changeover is only for a short time hence the problems are sorted faster (Ram, Wu, & Tagg, 2013).
Big bang has got its own challenges hence a lot of precautions need to be taken to avoid a total fail. When one part of the module fails during implementation, it may affect the whole system implementation process as everything is done on a rush. An organization’s performance and profits may decrease since most of the employees are not conversant with the new system in place. This requires a thorough training for the users which may be a challenge as some employees take time to adapt to the new system. Programmers also find it hard to a full system testing due the limited amount of time allocated. Systems implemented using this strategy will be prone to failures. System users have very little time for training and learning about the new system. This implementation strategy is risky and can lead to more losses for an organization.
Phased rollout implementation strategy is whereby small changes occur over a period of time. Technical staffs implement the new system in phases as users are being trained on the system. Phased rollout can be implemented by module, this is whereby the ERP modules are implemented on their usage i.e. core modules are implemented first. Phased rollout can also be implemented by business unit; this is whereby the technical staffs implement the ERP system according to organization departments for example, implementing finance department fully then move to another department like the human resource until they cover all the departments. Phased rollout can also be implemented by geography; this is whereby a large company has multiple locations. Technical staff implements one location and when it’s fully operational they move to another location.
Phased rollout has many advantages as the companies’ gain more experience as the ERP system is being implemented in phases. The company will be able to overcome difficulties experienced in one phase hence a smooth running in other phases. There is also more time to train the system users and also more time to learn on the new system hence a better performance as compared to the big bang strategy. Employees can also learn on the new system as its being implemented so there is no ‘shocks’ to adapt to the system. Programmers can also introduce new modules during implementation so as to cover on areas which had not been captured on the new ERP system. Technical staffs also learn on the best techniques to implement the system as they discover better ways while implementing modules and training users (Katerattanakul, Lee, & Hong, 2013).
Phased rollout seems to a slower implementation strategy and time consuming as compared to the Big Bang. Since new modules can be introduced by programmers in future modules, the implemented system requires a lot of adjustments and continuous changeover is experienced. In case of a total failure of the ERP system being implemented, fail-over mechanism to the old system becomes a challenge as some modules are already working in various departments hence it would be difficult. This strategy requires that users can be able to access the old system and also the new system which poses a challenge to the programmers to create modules linking the system. This system may be operating in different platforms so compatibility issues arise posing a threat to system implementation. Companies need to carry out a thorough planning on how they will implement the ERP system using this strategy with minimal or no challenges (Betz, 2011).
Parallel adoption is another strategy whereby the old system and the new ERP system all run at the same time. System users operate the old and new system at the same time hence implementation is slower than the big bang strategy. Users adapt to the new system faster than Big Bang and also it’s much slower as employees enter data in two systems hence increasing the cost of operation (De Wit, & Meyer, 2010).
Since every company has its own goals, they should plan in advance on the strategy they would like to use in the implementation of the ERP system as this is major task. They should analyze and audit fully the ERP system to be implemented; the functionalities of the system should be meeting all the user requirements and also the technical staff should be well conversant with the ERP system so as to ensure maximum performance. ERP system being implemented should have all the modules working correctly and all the errors having been fully debugged. System should have error capturing mechanisms in place in all modules and it should be tested. Implementing a new system is an expensive affair hence enough money should be allocated for the system implementation. System users should be also be trained in advance so as to have a ‘know-how’ of the new system to be implemented (Earl, 2012).
A company should ensure that the technical staffs in the IT department have the right skills to handle the ERP system and they have a well planned maintenance strategy for the new system. They should also have a third-party support alternative in case of system failure as IT skills are diversified from one individual to another.
Organizations should all the advantages and disadvantages of the ERP systems to avoid withdrawals after implementation.
References
Betz, F. (2011). Managing technological innovation: competitive advantage from change. Wiley. com.
De Wit, B., & Meyer, R. (2010). Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage: Text and Readings. CengageBrain. com.
Earl, M. J. (2012). The risks of outsourcing IT. Sloan management review, 37(3).
Katerattanakul, P., Lee, J. J., & Hong, S. (2013). Effect of Business Characteristics and ERP Implementation on Business Outcomes: An Exploratory Study of Korean Manufacturing Firms. Management Research Review, 37(2), 5-5.
Ram, J., Wu, M. L., & Tagg, R. (2013). Competitive advantage from ERP projects: Examining the role of key implementation drivers. International Journal of Project Management.
