Pál Michelberger * SOME PROBLEMS OF INTRODUCING INTEGRATED BUSINESS MANAGEMENT INFORMATION SYSTEMS

Pál Michelberger * SOME PROBLEMS OF INTRODUCING INTEGRATED BUSINESS MANAGEMENT INFORMATION SYSTEMS 1. INTRODUCING THE INTEGRATED INFORMATION SYSTEM AS A PROJECT Introduction of the information system can be done within a project, since a project has a goal, an estimated implementation period and an accounted resource requirement. The goal is to establish an operating information system or to develop the existent solutions further. 1.1. Implementation methodologies IBM created a subsidiary material for the implementation of COPICS (Communication Oriented Production Information Control System) in the 70 s of the past century [2]. The project stages described there can be used even today following modernisation (Illustration 1.); Illustration 1. Resource requirement of each project stage * Gábor Dénes Főiskola, Informatikai Rendszerek Intézete, főiskolai docens. 47

KÜLKERESKEDELMI FŐ ISKOLAI FÜZETEK, 12. a. Determining business actions The system developers determine the requirements of the different business levels, examine the databases and the operation of the existent information system. They also select and order, based on the order of introduction, the business processes to be supported respectively the actions. A feasibility study to be created which includes the stages of the project. The costs are calculated beforehand and the figures are compared with the expected profit. b. Identification of applications Adequate functional subsystems, modules and the necessary hardware environment of the given solution are to be selected according to the objectives of the informatics business strategy. c. Determining application requirements Assembly of solution and business processes. Defining activities of users. Correcting the order of introduction according to the information requirement of the different managerial levels. d. System design A detailed description is being made on the operation of the system. In- and output are designed (who provides or receives what kind of information and when ). At this stage deadlines of testing and putting into operation of the subsystems are determined. e. System implementation Testing of the program and documentation starts with the help of a test file smaller than the real database (so called Green House Project). Training of the users and loading the "real" database are both carried out on the basis of the test results. Initial performance of the system is closely watched. Hidden errors can still be eliminated, though on increasing costs. f. System operation and assessment Evaluation of the project can take place following implementation. Were the deadlines and resource demand kept? Have the predetermined goals been met? Various other companies, which distribute integrated business information systems, have worked out legally protected implementation methodologies. (eg. SAP Accelerated Systems Applications and Products, J.D. Edwards-One World Rapidly, Economically and Predictably Methodology, Scala Signature Implementation Methodology, Intentia Ab-Movex Implex, Infor:corvexinfor:Com infor:solution Concept, proalpha golive) These are similar to the COPICS recommended implementation, discussed above, but also take into consideration the features of the given business solution. The goal is the same with all methodologies: the subtasks of the implementation project to be comprehensible, the costs and expenses be able to be estimated, and a detailed implementation schedule be made. There are both advantages and disadvantages of accepting the implementation methodology recommended by the solution provider. There is no need for an independent project management but the business wishing to implement the integrated information system may become exposed. There are project methodologies dealing with the implementation of independent information systems. Prince (PRojects IN Controlled Environments) is a standardised set of stages, which embraces the whole of managing a project in informatics, beginning with the project formation up to the project result's start of operation. The method was created by (CCTA), a centre dealing with information systems operated by the British government, at the end of the 1980 s. During the 90 s it became capable of managing other projects due to enhancements. [1,3,10]. Often the organisations financing 48

MICHELBERGER, P.: SOME PROBLEMS OF INTRODUCING and initiating the project do not have professional knowledge of project management. The adversity that the solution provider carries out the process of project formation as well, and practically sets the conditions for itself to act what is necessary, can be avoided by applying the method. PRINCE contains detailed recommendation of the project organisation to be formed, the project designs to be created and the supervising actions to be taken. Questions of quality policy have a highly important role in the course of the process: Providing the quality standards and regulations, the pattern of quality control, selection of quality supervisors. Euromethod is a methodology dealing with the acquisition [5], development and adaptation of information systems [8,9]. Virtually, it is a common language, which supports communication between the customer and the supplier. The method can be used during the course of the implementation project, too, primarily, at monitoring the progress and close the contract, since it clearly formulates the concepts and requirements. Formation and development of the method is supported by the European Union from the beginning of the 1990 s. It was brought to Hungary by the Hungarian Academy of Sciences, Foundation of Information Technology. Composition of the methodology is the following: Overview (introduction to the application of the methodology), Customer Guide, Supplier Guide, Delivery Planning Guide (for detailed description of the initial and final state of the information), Method Bridging Guide (for surmounting of differences between the adapting methods used at the customer and the supplier), Case Studies, Euromethod Concepts Manuals (models for the customer-provider relationship, determination of the information system and managing the risk of the adaptation project), Euromethod Dictionary (standard (ISO) interpretation of used expressions). 1.2. Difficulties and faults of the implementation project Several difficulties can arise in connection with the implementation of an integrated business information system: Some people in lower managerial position may lose the right and advantages of owning information. Opposition may be expected on their side. The organisation applying the system, does not have the exact knowledge to make the kind of decisions in the course of executing business actions and the kind of information necessary to do this. The organisation applying the system has a thorough knowledge of the information it demands but is not able to pass it on to the system developer or the solution provider. The modularly structured but integrated information system requires the thorough co-operation of some people and organisational units. There is a great risk of the implementation project since it involves the operation of the whole organisation. Numerous risk factors may arise: Exceeding the permitted costs, the installation period is protracted, wrong choice, inadequate solution, uncertainty of the expected profit (otherwise difficult to quantify ) 49

KÜLKERESKEDELMI FŐ ISKOLAI FÜZETEK, 12. The Hungarian informatics system implementations cannot always be regarded as projects. Many times, the initially determined resource and time interval, the controllable solid goal of the project are missing [6]. 2. ADAPTATION OF THE ORGANISATION Implementing the new system and operating the old solution both lay a great burden on the business organisation. With producing and/or servicing businesses, maintaining daily operation is of a higher priority. Business partners should not be affected by the installation of the new information system. 2.1. Installation in team-work Different tasks emerge as the installation project proceeds on. Composition of the group of experts, co-operating in the team-work, may change in accordance with these changes. Team members are expected to execute tasks arising from not only the installation. Business management shall determine clear priorities to avoid conflicts on both the level of hierarchical organisational leaders and the project management. It is a basic regulation to appoint a supervisor, work force and time interval to all activities. Very important that the people working in the teams shall bear the technical knowledge necessary for the given task and be able to work in a team environment. In the course of installing the business information system three new positions emerge: System administrators (hardware- and software maintenance), system organiser (bring to start the information system, training), user (data entry, testing). In case of greater and more complex organisations and systems, a more structured group of experts is needed for the implementation and later the operation. The following positions shall be added to the list above. Independent consultant or advisor on behalf of the solution provider, Module hosts, who are experts in each functional field (eg. purchasing) of the given integrated information system and the given business process, Key users, who know the processes of a narrower field and are able to handle these with making use of the given solution (eg. invoicing within sales), they shall also have a serious role in training the simple users. This extended organisation is cost saving, since the problems occurring are transmitted and documented respectively solved according to this structure. The goal is to employ expensive consultants as few as possible. 2.2. The change-over Starting the new system can be done step by step (by each module) or at once. This is determined by the load-bearing capacity of the given enterprise. Stopping the old system is problematic. Sudden change means a great risk, as the new system may have faults in spite of the elaborate testing. Therefore, most of the enterprises adopt parallel operation of both the new and the old systems for the sake of safety. Custom and sometimes the double burden caused by groundless safety demands, wear the users down. Results of implementing the new information system do not always manifest themselves on the level of users. Unusual or extra work may emerge at different workstations. 50

MICHELBERGER, P.: SOME PROBLEMS OF INTRODUCING Business managers, future key users, often have an aversion towards the new system. The older generation can not accept the new work environment easily (screens, receipts, reports, changed business processes). A well operating on-line and integrated business management information system many times harm the interests of the managers on lower levels. They can maintain their favourable positions arising from owning the information by inadequate support of new system s implementation and pressing the isolated solutions of the old information system. 2.3. Business Process Reengineering (BPR) Business Process Reengineering is of an anglo-saxon origin and means the intervention into the life of the business structure. It is a reengineering the purpose of which is to achieve a dramatic improvement in its operation by rethinking the business processes fundamentally and coming from higher quarters. BPR as an abbreviation can mean else according the technical literature [7]: Business Process Redesign narrow ranging but process restructuring intervention, Business Process Restructuring narrow ranging but it restructures not the process but the method, its actors or the order of these. Features of the reengineered processes are the following; United scope of activities, the workers shall have the right to decide, stages of the process shall be carried out according to the natural order with time overlapping wherever it is possible, work shall be carried out at the most reasonable place, supervision and control is reduced, minimal comparison (checking the accordance of the data). It shall be noted that 50-70 percent of BPR projects do not achieve the aimed dramatic improvement. Organisational opposition is expected to be great at the start of the project. BPR abbreviation is understood differently by the affected persons: Big People Reduction. Success of BPR is influenced by several factors: Project oriented approach, commitment of the senior managerial level, existent business culture, the cause of action or reengineering, fast and too early project results, business information systems, utilisation of experiences of others. In many cases prior to installing the integrated business management information system or the business intelligence, the provideör recommends also a version of the BPR in order to achieve a better result (Illustration 2.). There are some restructuring processes, which put more burden on the business organisation than BPR. Business Network Redesign and Business Scope Redesign promise greater profit than the original BPR. Contention can be improved not only by the improvement of the inner organisation's operation but also by the redesign of the outer relationships or by the business network redesign. The development of informatics (e-business, SCM, CRM) opens new perspectives in this field also [4]. 51

KÜLKERESKEDELMI FŐ ISKOLAI FÜZETEK, 12. Illustration 2. Relation between the installation of the business information system and BPR 3. INTRODUCING A THIRD PARTY Enterprises interested in production and/or service usually do not have a group of experts or the knowledge of project methodology necessary for the installation of an integrated business information system. Therefore, introducing an independent third party can accelerate the installation process of the specific system. There are several opportunities for co-operation; The advisor could help the business in selecting the solution to avoid buying a simpler but less useful solution pressed forward by the provider. The project manager could ensure project-like-execution, and could help a great deal in the composition of the application not dealt with in the present contribution and also in selecting the system [5]. He provides a framework for the installation by observing and having observed the methodological theorems and with continuous supervision of the project. An independent quality supervisor different than the project manager He shall regularly examine project-like-execution, help the professional negotiations as an expert and call attention to the risks, but shall not appoint the people responsible, intervene into the installation process and the execution of the tasks. He shall not represent the interests of the employer or the employed but the goals of the project. He shall help the communication and co-operation among the parties, examine and evaluate the documents (contracts, designs, reports etc.) by quality measures and shall report to the project management and the senior managers of the employer. The Application Service Providers (ASP) provide full range informatics service within the scope of a lease-contract (operation of hardware- and system software, designing information systems, telecommunication services, system installation and change-over management, training etc.). Practically they hand over a pre-configured business solution - in most cases cost saving - to the user. However, due to the strategic alliance the user could become exposed. 52

MICHELBERGER, P.: SOME PROBLEMS OF INTRODUCING Opponents of involving a third party can be found both at the organisation initiating the implementation and at the informatics solution provider. Their motives are the following: The application of different project methodologies may lead to conflict. The independent experts know neither the system nor the receptive organisation. It is costly to employ an independent expert or group of experts along with the solution provider. These motives could mean real danger. Therefore, roles, tasks and authorities of the people taking part in the project have to be clarified in the early stages of project formation, but most importantly the expenses of the installation stage have to be cleared. 4. SUMMARY Greater part of the Hungarian producing and service provider businesses requires the operation of integrated business management information system in order to keep up competitiveness. Unfortunately most enterprises are not ready for the acceptance of such a solution. These do not always have professionals experienced in managing informatics projects. Drawing in outer resources mean significant financial problem for buying or in some cases leasing the integrated information systems, alongside with employing application providers. In many cases the selected system does not perform adequately due to the lack of the knowledge of project methodology, inaccurate and incomplete survey of the organisation's pretensions wishing to use the information system. The installation could drag on and the resources secured beforehand could run out. Risks could be lowered, even in case of scarce resources, by elaborating upon the possibilities mentioned in the present article, and by thoroughly preparing the installation project. LITERATURE [1] Bentley, C.: PRINCE, A Practical Handbook, Butterworth-Heinemann, 1999 [2] Jánoki, L. Kocsis, J.: Számítógépes termelésirányítás (Computer Based Production Management), Műszaki Könyvkiadó, Budapest, 1986 [3] Görög, M. Ternyik, L.: Informatikai projektek vezetése (Management of Informatics Projects), Kossuth Kiadó, Budapest, 2001 [4] Michelberger, P.: Vállalati információs rendszerek jövője (The Future of Business Information Systems), Informatika, Dennis Gabor College Bulletin, year 4., issue 3., 2001. November, p.34-41.) [5] Michelberger, P.: Vállasszunk ERP rendszert A kiválasztás támogatási lehetőségei (Choosing an ERP System Expert Advice in System Selection), Vezetéstudomány, year 33., issue 3., 2002, p.24-28.) [6] Uliscsák, B.: Projektmenedzsment értéke az informatikai projektek estében, VIII. Vállalati Informatikai Konferencia (Value of Project Management in the Event of IT Project, 8-th Conference of Business Information Technology, p.166-178.) Balatonfüred, Hungary, 2001. November [7] Tenner, A. R. Irving J. D. T.: Process Redesign (The Implementation Guide for Managers), Addision-Wesley, 1997 [8] Turner, P. Jenkins, T.: Euromethod and Beyond (Open Frameworks for European Information Systems), International Thomson Computer Press, 1995 [9] www.esi.es/euromethod (Euromethod Documentation, European Software Institute, last update 02.04.2002) [10] www.soc.soton.ac.uk/ncs/prince (Introduction to the Methodology of PRINCE Project Management, University of Southampton and Southampton Oceanography Centre, last update 26.04.2001) 53