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Business Analysis: Erp Case Study

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In order to keep advantage in the competitive environment, organisations are seeking methods to improve their distinctive competencies. Business information systems (BIS) play a significant role in developing the competitive merits among other competitors. Through the contribution on the five competitive forces described by Porter (1980), information systems could assist an organization to achieve the strategic advantage (Greasley, Bocij, & Hickie, 2008). BIS is a complex process of converting data to information which facilitates the planning, operational activities and decision making (Hardcastle, 2008). People, computers, processes and communication interact in BIS, and thus it is more than technology. Llett (2006) claimed that the value of the system should be led by business need rather than technology. Facing the challenges from business change, managers are expecting the BIS could satisfy the desired purposes such as increasing revenue and reducing cost. As one of the BIS, enterprise resource planning (ERP) attracts the managers’ attention by standardized firm-wide transactions and central data management. By replacing the complex interfaces between the different systems, ERP provides a ‘standardized, cross- functional transaction automation’ and enables the organisation to collect data once through the initial transaction, data storage and process (Hendricks, Singhal, & Stratman, 2007, p. 68). However, whether these benefits could be realised is determined by the alignment between the system and organisational objectives, the feasibility of the system implementation, and the flexibility to be linked to business changes. By analyzing the development, implementation and review of ERP system in my company, this essay will attempt to review the problems in this process and provide the possible solutions.

Introduction to Bohi
Bohi group owns five subsidiary businesses which are located in different provinces in China, all of which are focused on cereal and oil processing. As one of the leading manufactures in China, it has to take the challenges of dealing with massive data and information from internal and external environments efficiently and accurately.

Purchasing

Production

Sale

Supply Market
Sale Market
Internal: Bohi
External: Upstream
External: Downstream
Diagram1: External and internal information flow in Bohi

As can be seen in diagram 1, Bohi needs to gain the material from the supply market to support the production. This demand is usually submitted as the plan by the production department and achieved by the purchasing department. The sellers sell the processed products to the customers and transform the information about market reflections which determine whether the production department should increase or reduce the yield. In addition, there are many factors that are essential to be considered. For example, in upstream, the supply market affects the time, quantity and price of the raw material, and it would influence the cost of the company. Similarly, the changing market in downstream would affect the sale strategies at all times. In order to maximise the revenue, the sales department would guide the production to match their selling plan. The different sectors would attempt to meet the requirements by transforming the information, but there might be limits in operations to react the external factors. Therefore, the multidirectional and changing information raises the complexity to make the correct decisions in time.

Objectives of the organisational and ERP system
It appears that only depending on the manual work to record and transport data could not simplify the complexity mentioned above. A large number of paper documents were used to record the original data and transported to the different departments to sustain the information could be carried out. However, although the data is filled in the specific forms, it is still needed to be processed to the information which becomes meaningful to the managers. This work normally would be finished by the office staffs as the last task of the day, and information would be generated in an electronic document such as excel. Managers could receive the e-documents by emails and provide the strategic adjustments the next day. There is no doubt that inefficient information delivery would make the firm lose the opportunities or even fall in crisis. Because of numerous data happening per day, office staff complained that there was the shortage of employees and heavy work stress. But in reality, about two third of the office staff are those responsible to input data. Even so, the high rate of mistakes caused by manual work would also cause the firm to struggle. Therefore, it is the priority for the organisation to speed up the delivery of information, increase the accuracy and reduce the high labour cost.
ERP is the system which could integrate the separate data across the value chain such as supplement, production, finance and sales (Greasley, Bocij, & Hickie, 2008). Due to the integration of modules within the organisation, the information sharing in ERP system could speed the delivery and increase the accuracy for decision makers. For example, during the process of achieving the requirement plan, the production department is concerned with the schedule of goods delivery to match their production plans, while the finance department prefers to pay attention to the cost to control the budget. As diagram 2 shows, information is transformed to different e-documents in different modules, and the system helps to generate the documents in the following sectors automatically after inputting the original data.
Diagram 2: The information transformation in different modules

The decision makers in different departments could supervise the procession in the same platform immediately by the permission setting. The results analyzed by computers would be more reliable than the manual calculation because of the fewer mistakes. Beyond increasing the speed and accuracy, ERP helps the organisation to define the job responsibilities by the different restriction of authorisation setting.

Development and implementation of ERP system in Bohi
Diagram 3: System development lifecycle

The diagram 3 describes the system development lifecycle. The details how Bohi developed its ERP system will be discussed in four different parts. * Requirements
As mentioned earlier, the inefficient information delivery and low accuracy caused by manual work led the organisation to lose competitiveness. The stimulus arose from the desire internally to develop an information system that better supported the business needs of the organisation. The CFO (chief financial officer) is the managing director that initiated the project. This might be because it is difficult to assemble, analyze and transform the massive amount of data to reflect the organisational performance for the financial department, while its responsibility is to provide objective information to aid in decision making.
Table 1 lists the possible costs and benefits which were considered before the system implementation. In feasibility analysis, the intangible costs and benefits result in the difficulty to measure the figures accurately, and although some tangible costs and benefits could be quantifiable, it still needs a long period to figure out the accurate data. For example, the strategies are carried out to motivate the employees who are resistant to change. How much work and money are invested depends on the degree of the resistance. Moreover, it would be persuadable to get the result if the inventory level reduces until the time when the data has comparability. Normally, it needs at least one accounting period. COSTS | BENEFITS | Tangible | Intangible | Tangible | Intangible | software cost | user resistance | improved decision making | reduction in customer complaints | reduction in working hour | disruption during implementation | sales increase | better data integration | hardware purchase cost | | better data quality | increasing the span of management | training cost | | reduction in inventory levels | improved management level | | | better cash flow | | Table 1: Costs and benefits in feasibility analysis
Bohi mainly focused on the evaluation of the economic and technical costs and benefits of the ERP system. However, the organisational and operational feasibility were underestimated in this analysis. Besides the alignment of BIS with business strategy, to some extent, the users’ skills and attitudes will determine the destiny of the system (Greasley, Bocij, & Hickie, 2008). Because of the ignorance about the two sectors, the company did not take proper steps to prevent failure from happening. There is not enough motivations to drive the users out from the comfortable zone; limited education and training could not make users realise the importance for the whole organisation. What is worse, as the following sector, operational feasibility would be affected by the demerits of the ignorance of organisation feasibility. The potential resistance would hinder the working practices of the system on a day-to-day basis. * Analysis, design & build
The ERP system supplier had a meeting, observing and collecting the existing paper documents to capture the detailed business requirements. The meeting was carried out in different departments separately. The line managers and office staff attended the meeting to introduce the daily work. The office staff as the primary participants offered the information which was recorded on paper and in electronic documents. The separated meetings could supply the sufficient detailed original data, but how to make sure the information flow could be operated fluidly through the different department would be a challenge. In addition, over concentration on the existing procedures provided by office staff could lead to reducing the realisation of management innovation. It appears that office staff tended to be eager to solve their own problems rather than offering the suggestions which had a manageable view for the company as a whole.
ERP system was purchased as an off-the-shelf package which has been designed and will offer a range of features to satisfy the real requirements. Also, in the building phase, the vendor has already built the system which is one characteristic of an off-the-shelf package system. It would save the time for the process of the ERP system to develop in the company, but the disadvantage is that the system needs business to change its way of working in order to fit the way of the software operation. The employees took the passive solution to face this problem. Basically, they gave up the part in ERP system which could not be suitable to the business processes and turned back to the original ways. No effective intervention resulted in the ERP system not achieving the maximum level of utilisation. Psychologically, users became suspicious of the effort of the system and may abandon the whole thing subjectively. * Implementation
This step covers the practical issue to utilise the ERP system in the real work. Information department in Bohi helped the computers to scale up memory to get ready for the system installation. The service company gave the test to make sure the ERP system could operate technically. It seems to be very close to achieving the goals the company was eager to.
However, the system did not fulfil its potential in Bohi. The gap appeared in the lack of the proper training and education for the staff who would use or would be affected by the new system. As the purchaser, Bohi neglected the importance of the training and education and thought the fact of operating online was the end of importing the BIS. On the other hand, the service company did not provide the systematic training, which was necessary to maximise the efforts of the system. Only a few engineers came to the work place to guide the staff how to operate. The employees who did not attend the early investigation but still would be involved in the system did not even know how to operate it. What’s more, the decision makers (executives) were almost completely separated from this process. Although they showed their expectation on the BIS, they gave few contributions on the development and implementation of the system. It also led to the failure to motivate their staff to be full involved in this process. * Maintenance
As diagram 3 showed, maintenance should include the ‘unproductive maintenance’ which is the review to correct the errors for conforming to the original requirements, and the adjustment that is provided to fit the changing business requirement.
The maintenance was offered by the service company after the 6 months, and our system was updated to ERP-U8, which provided the stable operating environment for the users. Since then, the maintenance work is carried out by the information department in Bohi. In spite of the few technical errors about the system, it still could not meet all the business requirements, especially when the company changed its market strategy frequently and complexly. All the factors such as distribution channel, sale network, customer level and brand level should be considered together. Because of the characteristic of off- the-shelf software, the programmes in ERP do not have enough flexibility to satisfy the new needs in business, with the exception of the company importing other IS such as BPM (business process management) or SOA (service-oriented architecture).

Conclusions
It is predictable that the ERP system failed to achieve the business requirement in Bohi. The managers did not get enough support from the system because the staff did not use the system efficiently. They tended to go back to the original, so the work pressure did not reduce obviously. The company was still dissatisfied about the high cost in office workers. The problems were caused by more than the system itself. There are no BIS which is able to solve all the problems in business. The benefits brought by BIS could be achieved by linking to business process change (Llett, 2006). Actually, the change requests not only exist after the maintenance, it has been arising during the each stage of the ERP system development. The ERP system is more restricted than the bespoke system, but those change requests that are not managed carefully are the most important reasons that lead to failure. All the changed requirements should be realised internally and externally. Both managers and the service company ought to identify the responsibility of each employee or department until the requirement could be met.
Other reasons for the system failure are still focused on human issues. There was not a proper way to deal with employees’ resistance and ignorance from the high level which leads to the worse situation. Therefore, after realising the alignment between the system and organisational objectives, the aim should go through every member’s mind especially the managers’ not only the initiative department. Also the active participation of the managers could inspire the employees’ motivation. It is highly possible that proper training and education could correct the employees’ attitude and develop the skills necessary for importing the information system. Thus, to build up a successful system serving for the business, users’ involvement is crucial to be considered during the process of the development and implementation.

References
Greasley, A., Bocij, P., & Hickie, S. (2008). Business Information Systems. Essex: Pearson Education Limited.
Hardcastle, E. (2008). Business Information System. Retrieved January 2,
2015, from Bookboon: http://www.promeng.eu/downloads/training- materials/ebooks/business-information-systems.pdf
Hendricks, K. B., Singhal, V. R., & Stratman, J. K. (2007). The impact of enterprise systems on corporate performance:A study of ERP, SCM, and
CRM system implementations. Journal of Operations Management , 25, 65-
82.
Llett, D. (2006, July 11). Financial Time. Retrieved January 2, 2015, from Financial Time: http://www.ft.com/home/uk
Porter, M. (1980). Competitive Strategy. NewYork: Free Press.

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