Enterprise Systems for Sales and Production - myassignmenthelp

Questions: 1. What are the key goals IGT wanted to achieve using an ERP system?2.Discuss the pros and cons to customising the system.3. How should IGT handle change management during ERP implementation? Answers: 1. Change an existing information technology system with one that is more unified and efficient For managing different departments like sales, production, orders and finance, IGT had separate systems. Gaining access in to information about a particular order was a cumbersome process.Each system were considered as separate entities and an information had to be obtained from each of this entities separately. This meant that the different operations had to be managed by different applications. If one of the departments had to communicate with another department it required a lot of manual operations and was highly inconvenient. There was no guarantee that the information retrieved was legitimate and would be factual. This prompted IGT to replace the existing system with a more integrated and efficient system that would organize the different departments in a more robust and unified manner. The main intention of this ERP was the linking of the core business operations like marketing, accounts, production and delivery into a more cohesive unit. Remodelling the operations that improve the efficacy of the business By introducing an ERP system, IGT intended to improve the business process itself. A business such that of IGTs requires a step by step gradation that starts from manufacturing till the sales and distribution. Since elaborate process and distinct steps were involved in the business, there are chances of the employees committing certain errors that were deliberate or otherwise. But if an enhanced system like that of an ERP was introduced, the chances for errors could be eliminated. The most important advantage of introducing the ERP system would be orderliness among the employees (Law and Ngai, 2007). Realizing that there would be a systematic way of overseeing things and errors cannot be bypassed makes the employees perform their activities in a more methodical manner. By enabling the ERP system, IGT could implement a more standardized method to process the orders that were to me made urgently. Reducing the errors and better production rates could improve the operations and the busin ess completely. Coordinating the world wide operations and enhancing the business service Being a multinational corporation IGT had operations spanning to most parts of the world. As with the internal business structure, before the implementation of the SAP system, the worldwide operations were insulated with each other. The operations carried out in different locations like Manchester, Las Vegas and Reno had no information interchange between them. The proposed implementation of the SAP system intended to improve the integration between these operations. The main intent was to attain a more standardized approach for integration of the business. This would be especially helpful for the higher authorities to generate useful information to make decisive management policies. 2.Pros: The major advantage of using an ERP System was that it unified all the different systems for the entire business operations. Customizing the system made it necessary to integrate all different departments like orders, production, sales, distribution and accounting. A common information management system could thus be implemented that was distinct and separated from each other. Customizing the system also ensured a more stable and continuous flow of information between the modules (Shang and Seddon, 2000). The major impact of this in IGT was on Accounts. Initially it was decided by IGT management that the accounts module would be maintained separately and would be managed by a separate information management system. But later it was recognized by the IGT management that the accounting department could also be integrated along with the other modules. The SAP ERP package that was chosen by the management had a better financial management system. Since IGT had international operations, i t was mandatory that the financial management system needed a specific module to handle the foreign currency transactions. The initial achievement of IGT in adopting an ERP system was that it could combine three major modules; manufacture, product development and finance. Combining these three modules enabled the front office applications to be closely integrated with the plant based operations. Another advantage was that it helped the workers in the production process to a great extent. The manufacturing techniques could be monitored more closely by the employees at the workstations itself. The process sheets were provided online for the employees. These steps guaranteed that no step during the production process was overlapped or ignored. The systematic way of doing things in an ERP system necessitated the workers to follow the process in the right manner. Cons: The obvious disadvantage of customizing the system is that the cost associated with customization is too pricey. Combined with the customization there are different phases such as planning, configuring, testing and implementation. Another drawback of customizing the system is that the deployment time for a fairly complex system such as the one in IGT may consume a lot of time to be fully operational. The cost of customization is always a factor that has to be taken care of and kept under check (Chen, 2001). The cost that would be incurred in customizing the system may not immediately reap benefits as the initial time would be spent on analyzing the changes made. In case of the IGT system, there was a lot of analysis done to ensure that the customization was made strictly to improve the business operations and not just for improving the technology. An initial migration to an ERP would always be difficult as a revamp would be necessary in the all the operations involved in the business. Another factor that was considered during the customization was deciding which ERP package had to be used. The decision making process had to be justified and a lot of thought had to be done before narrowing down on SAP as it had advantages in financial consolidation and financial reporting. A noted disadvantage was that only three of the major modules were integrated, namely, manufacturing, product development and finance. The remaining modules were to be analyzed more, before all the operations were integrated. The integration of the IGTs own factory control system to the implemented SAP ERP system also required a lot of analysis. The IGT management itself ha d to admit at a later stage that since the proper documentation were not available, combining all the information into the ERP was quite tedious. 3. During ERP implementation, there are a lot of changes that the application undergoes and hence there should be an effective management system for over viewing the changes and enable the resources adjust to the changes that the application undergoes. Certain steps taken by the IGT management could help the resources adjust themselves to the changes that happen. Realizing that the new ERP system is going to affect the normal routine and activities of the organization, would help the management tackle the issues due to the changes more effectively. The pattern of activities that have been carried out is going to change and a lot of learning would be required by the management personnel and the employees to keep up with the daily activities to maintain productivity. The tasks, activities and the processes being carried out are going to change drastically and the employees are going to interact with a lot of new data. There should be a clarity among the departments, as well as the empl oyees and management as to why the ERP system was being adopted. If the employees can relate to the improvements that the application is undergoing, can be motivating and help the resources embrace the changes in a better way. An effective communication channel should be maintained ensuring the flow of information between the resources happens in an uninterrupted manner. Communication would be a key factor for the management to handle the issues that may come up during the migration to the ERP system. There were certain changes that the IGT management did to the business process to adjust itself to the SAP implementation. As an example was the change in the order process of not delivering the sales order until a couple of weeks till the build. More importance was given for getting a better sales before hand itself. The management also took steps to combine few employees from the order group and the engineering section, to customize the system as many of the process were not documented in IGT. Training a few personnel in the ERP system and enabling them to act as intermediates between the employees and the management can help in the smooth transition to the ERP system. Further, documenting the results and the positive impact that the ERP has bought about in the business can enable the employees adjust well to the changes (Brehm et. al, 2001). Better training strategies and demonstrating the application changes giving emphasis to the benefits can be an option for the management to m ake the resources cope up with the changes more effectively. References Brehm, L., Heinzl, A. and Markus, M.L., 2001, January. Tailoring ERP systems: a spectrum of choices and their implications. InSystem Sciences, 2001. Proceedings of the 34th Annual Hawaii International Conference on(pp. 9-pp). IEEE. Chen, I.J., 2001. Planning for ERP systems: analysis and future trend.Business process management journal,7(5), pp.374-386. Law, C.C. and Ngai, E.W., 2007. ERP systems adoption: An exploratory study of the organizational factors and impacts of ERP success.Information Management,44(4), pp.418-432. Shang, S. and Seddon, P.B., 2000. A comprehensive framework for classifying the benefits of ERP systems.AMCIS 2000 proceedings, p.39.