The Research On Critical Success Factors of ERP Implementation

Transcription

1 The Research On Critical Success Factors of ERP Implementation CHEN Hongming, MING Fa School of management,changsha University of Science&Technology, Changsha Hunan , China Abstract: ERP which means a kind of advance idea and method has been widely spread and applied in China. However, the effect of implementation is not ideal and there are a lot of reasons for failure By reviewing the practice of successful enterprises, the article generalizes the factors for successful ERP implementation with an empirical study. Keywords: ERP, Success factors, LG PHILIPS SHUGUANG As the coming of knowledge-based economy and information age, enterprises will be confront with severe challenge and the capability of enterprise resource's integrated management has been a distinguishing mark of the capability of market competition. Enterprise Resource Planning which is face to supply chain integration represents the trend towards which enterprise develop in the management revolution of the information era and by means of integrating and balancing the manufacturing resources, the enterprise possesses, optimizing management as well as coordinating each link in manufacturing, operation and doing business in a market-oriented way, it integrates the needs of the customers,the interior operation of the enterprise and the resources of the supplier, which demonstrates the concept of modern enterprise operation and management centering the customers. ERP(Enterprise Resource Planning) is not simply means the using and renovation of information technology. It is renovation of management of higher levels. However, the implement of ERP in our country is not optimistic. According to the statistics, since we introduced the thinking of ERP abroad 30 years ago, enterprises in our country have invested capital of more than 80 million later or earlier. It is a fact that the investment is large while the success rate is low and it is not satisfied totally. The conditions can be divided into about 3 kinds: Only 10 percent to 20 percent have successfully implemented the system integration according to the schedule or to the budget; only 30 percent to 40 percent have partly or wholly failed in system integration; the failure rate is to 50 percent. Meanwhile, the 10 percent to 20 percent enterprises have successfully implemented are foreign companies. The effectiveness and profit of the enterprises is comparatively low with the cost on ERP. Any of these may let us think over that what leads to such low rate of success and how to implement ERP successfully and whether there are some things we can learn from successful examples? Therefore, how to implement ERP successfully in our country and makes it becomes the sharp weapon of improving business management truly and enhancing the enterprise's competition, is an important topic in front of us. 1 How to Implement Erp successfully The thing which enterprises pay attention to is how to implement ERP successfully. The slang said the defeat is mother of the success. We may summarize the success rule from the innumerable defeats and in the success case, thus understood key questions in the ERP implementation process, which we should pay attention to. The following has operational some, which were found by Western scholar through the long time fundamental research and the implementation ends in detail, to suggest that: (1)The actualization of the clear ERP strategy and planning The actualization of the ERP requires a company make a certain idea of the task in the future strategy which should be clearly defined. Integrative and communicational planning, framing-describing and blueprinting according to the planned and current situation of the long term strategy of a company make a company have an integrative understanding of the ERP system, define the core competitive advantage as well as the function and status of the ERP system in the whole planning and choose a suitable 151

2 technical strategy and implementary strategy for a company. Company should decide the extent and depth of the ERP system base on the strategic disposer. (2) Choosing an operation system Although ERP products of different brands are basically the same on a software level, different sorts of software is suited towards companies and enterprises of various sizes. When choosing software, the company should look at exiting working conditions within its company and other factors should also be taken into consideration. The company should choose software that suits its need instead of choosing one which is the biggest and cheapest and has the most functions. (3) Participation of management Bringing enterprises into the information age is not an easy task; it is a task that can not be realized without heads of company management. ERP is the revolution of the management. ERP will reorganize a company in a way, in which the hierarchy and power ladder will be reshuffled and the responsibility of each individual will be changed. This will require support from company heads and without support from company leaders, the realization of ERP will not be smooth. (4)Sound mechanism of project management ERP project, which has characteristics such as it is a complicated system; it has more difficult in implementing and it is so long for application and so on, is a systemic system of enterprise s management. So enterprises must proceed from the angles of system engineering and scientific management while ERP employs, set up and amplify the management system of the project and operation mechanism, guarantee ERP project success. It is more important to the enterprises which are short of implement experience of the large-scale administrative system. Through the mechanism of management of the project, enterprises can implement plan and goal which can be checked on ERP, supervise and control the resources which were put into and the goal wanted to reach, pay close attention to the progress of project implementation and question presented constantly, coordinate the resources of various fields and solve the problem, thus advance the smooth implementation of the project. (5)Superior Execute Team Superior execute team faces the project directly. The character of this team determines whether the company resource project can be applied or not. As the direct driving power of this project, company must make a strict selection and training in order to make him/her possess some technique and skills. In that, we can make sure that this project has a powerful organization to push this project quickly and effectively. At the same time, the management should keep a close touch with execute team and give them some rights to use resource solemnity. Also they should not only take charge to the target and process, but also to the result. (6) The accuracy of data ERP, the successful implementation can be said to be 2 rely on technology, 7 on management, 12 on data. So, norms, timely, standardized data ERP system is the operation of a good basic protection. The data here includes two main aspects: First, the data which was prepared before the applications of ERP systems. The data, which was prepared before the applications of ERP systems in majority of our enterprises, is incomplete, inaccurate and regulations, Therefore, we need to do a lot of research when we analysis, resulting in the implementation of the bad effect; Second, the data after the ERP system is on the line. Previous management, many of the data is estimates and qualitative judgment. In the application of ERP, it often require quantitative data input and mare sure of the accurate of the data. The data, which is produced by BOM, work centers, process line, will spread to the entire organization and the wrong data leads to paralyzed system and causes huge losses. (7)The lasting training of the staffs 152

3 The training of staffs is an essential link of the success of ERP implement. ERP uses a kind of new management mode to transform the old management mode of former enterprise. It is advanced, effectual management thought and method. ERP is not just the use of the system but rather a change in philosophy. If not training, the majorities of enterprise's employees are lack of how to solve business problems by using ERP systems and are lack of ownership of the spiritual and emotional. This is bound to affect the implementation of ERP and the ERP, which took huge investment, will be unable to play its full role, resulting in tremendous waste. Furthermore, the training is not just operating system training, but the implementation of the project from inception to the late corresponding training throughout all the stages. 2 Case Research Pass the true case of a business enterprise implementing ERP below to analyze, certificate top speak of various factor. LG PHILIPS SHUGUANG Electric Ltd. Inc. is a large electric joint venture established in 1994 by Hunan SHUGUANG Electric Group, Hunan Electric Information Industry Group Ltd. Inc. and LG PHILIPS DISPLAYS, which is built by Korea LG Electrics and Holland Royal Philips. It is an important manufacturing base for components of color display tube and color display machine. Now, as one of the top 100 national electric companies and the biggest one in Hunan Province, LG PHILIPS SHUGUANG Electric Ltd. Inc. has become a strong foundation of Hunan Province and Changsha City's Information Industry. For occupying the predominant position in the competition of the vehemence, the LG PHILIPS SHUGUANG's information-based construction has been walk at the precedent. From the MPR Ⅱ, which is the first system, to the recent implement, it carries out the successful step that accelerates the development of the enterprise by making use of the enterprise s informationization. In February, 2006, company's ERP system was checked and accepted by one step. At present, company's ERP system operates as well and the company is actively planning and preparing for the second step. Overall, the implementation of ERP system of LG PHILIPS SHUGUANG is successful, the cost of raw material, which is the main component of the cost, has reduced 10%; meanwhile, while achieving synergies office, maximizing the sharing of resources, it has improved the enterprise management level and has made the enterprise be more competitive. Take a wide view at its whole implement process, its successful experience can be induced for the following: (1)Develop a clear strategy for the implementation of ERP According to company's macro-position, practical situation and the appeal of it's development, LG PHILIPS SHUGUANG found that ERPⅡ couldn't adapt to the needs of the management of enterprise, So the management of the company made a great foresight decision which lift promoting informationization to develop-strategy height. They carefully considered the environment of markets, characteristic of the occupation, enterprise scale, application degree of informationization and some other practical situations, and then they made scientific analysis about this ERP item and chose a right chance to enter. According to the policies of total programming, cent tread an implement, performance to drive, point break, concentrating time, funds and human resource, they had initiative consideration on those steps which have obvious performances in increasing key value activity. And those which are not very important at once such as funds, budget etc, will be set aside until next time. (2) Chose software properly LG PHILIPS SHUGUANG, owing to its enterprise's specificity, chose to buy systems from its parent enterprise-south Korea LG Electric Co. Ltd. This has brought direct advantages to the enterprise: for their similarities in processing technologies, This has meet the enterprise's need to a large extent and has a strong pertinence; Besides, this system was brought in by the parent enterprise from ORACLE, through years of practice, this system has been improved gradually. E.g. the capital fund modules basically haven't been revised when brought in. 153

4 (3)The strong support from the leaders ERP is the top leader's project, the implementation of ERP in LG PHILIPS SHUGUANG not only embodies the organizational form of top leaders, but also embodies in essence. The company concerned about the entire process and participated in the ERP implementation. In essence, the project reflected the top leaders. First, the company's leadership and the unity of the leadership considered the integration of its own strategic and ERP system and transformed the old thoughts of the management; Secondly, in the process, the leadership coordinated all sorts of relations and the various obstacles which are in relation to the re-distribution of rights and responsibilities of staff realignment; Finally, in critical and difficult period of the project, the organizations personally stood in the front line to solve problems. (4)Strict monitoring of projects During the process of the implementing of ERP, LG PHILIPS SHUGUANG made a strict system of the project management and examined detailed rules and regulations: combined the reality of the work, discussed together and dealt with the questions which were met in the course on the same day, guaranteed the thought of ERP and management fulfill in time. According to these work, it had established the foundation for success of the project. (5)The outstanding team In order to guarantee a smooth project, supported by top leader, LG PHILIPS SHUGUANG establish the project group specially, the members of the he group, except personnel of training and computer department, all came from the business segments of the company and the project group was equipped whit the consultants, this was compensated for the IT staff of business background and decision-making abilities, it helped enterprises to implement ERP (Enterprise Resource Planning)and got ready for the change of management. (6)Value the training of system LG PHILIPS SHUGUANG compares to value the training of employee. From prepare to try out to implement stage, the company organized training for each layer of employee and combined the reform of skill and the training, reaching a good effect. Meanwhile, the program team who undertakes system implement and maintenance, is higher qualified. Having an overall technique training to acquaint with ERP system-structure and requirement of running, they're able to independently process the problems of system-running; while having an training of the ERP basic knowledge and computer knowledge to the management, they are able to change their old operating ability and raise the level of their business management and the operation of system. (7)Fine data The ERP system implementation is not impossible to succeed if it left fine data. LG PHILIPS SHUGUANG uses the company's advanced labor control equipment as PLC, the sensor and the counter and so on and unifies with the computer. The company has realized the production and product data real-time gathering. At the same time, the company also strengthened the logarithm according to two controls: the foundational data s gathering for establishing certificate and the inputting data. The company is clear about each responsibility person's responsibility; prevent some people from concealing some data and even reporting wrong. 3 Conclusions Under the terms of economic integration of the whole world,in fast changing cyber times, the informationization is concerning the question that enterprises survive and develop. It is not the only way of informationization, but the feasible way which has been proven to have ERP by practice. However, though the implementation of ERP system is a huge system which involves management and technology, it is not an easy thing that enterprises want to succeed. So, enterprises should consider the factors of 154

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