ERP Implementation Success Factors

This assignment delves into the essential factors contributing to successful Enterprise Resource Planning (ERP) implementation within organizations. It emphasizes the significance of effective change management and positions Information Technology as a vital support function. The document stresses the importance of early focus on IT and ERP to mitigate potential problems and challenges during implementation.

IT FAILED PROJECT: CASE STUDY OF MCDONALD
IT failed project: case study of mcdonald
Student’s name
Name of the Institute

IT FAILED PROJECT: CASE STUDY OF MCDONALD
Table of Contents
1.0 Introduction.................................................................................................................................... 3
1.1 Case Background...................................................................................................................................... 3
2.0 Analysis & Drivers of implementation................................................................................... 4
2.1 Key drivers of ERP implementation...................................................................................................4
3.0 Reasons of failure:........................................................................................................................ 5
3.1 Lack of clear destination........................................................................................................................ 6
3.2 Clear reasons of doing it in the first phase.......................................................................................6
3.3 Part time project management............................................................................................................ 6
3.4 Under estimation of resource requirement....................................................................................7
3.5 Over customization.................................................................................................................................. 7
3.6 Lack of training requirements............................................................................................................. 7
3.7 Lack of quality expectation with ERP project.................................................................................8
3.8 Ineffective change management..........................................................................................................8
3.9 Lack of user training................................................................................................................................ 8
3.10 Wrong approach selection: Big Bang vs. Phased approach.....................................................9
4.0 Key Recommendations to avoid failure in future...............................................................9
5.0 Conclusion..................................................................................................................................... 10
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IT FAILED PROJECT: CASE STUDY OF MCDONALD
1.0 Introduction
In recent times, Information Technology has emerged as a critical organizational
function. Today, IT is not only a support function that enables the organizations. The large and
small-scale organizations have started to use Information Technology as a core business
function. There are various cases of successful and failed examples of IT implementation. The
large organizations have realized that the complete benefits of Information Technology could be
achieved with the large scale IT systems like ERP. This is the reason that the adaptation of ERP
has particularly increased in last decade. It is expected that the use of ERP system would
increase exponentially (Alrashid & Alshawi, 2012). At the same time, it is important that
organizations should be careful while implementing the ERP systems. One of the objectives of
IT systems or ERP systems is quality management and continuous quality improvement. Also, if
the customers lay stresses on adopting the quality policy of their organisation, then management
has to accommodate that request also but project must ensure that customer quality policy can be
adopted in a given time and cost otherwise project manger could request for a change request
document to revise the cost of the contract (Dezdar & Ainin, 2011). There are various cases of
successful and failed implementation of IT projects. The objective of this paper is to discuss one
such case. The paper would discuss the case study of McDonald. A brief background of the case
can be highlighted as:
1.1 Case Background
McDonald is a known organization in different parts of the world. The company operates
in a franchise model and it has large number of branches in Australia and other parts of the
world. The management of McDonald realized that Information Technology is a powerful asset
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IT FAILED PROJECT: CASE STUDY OF MCDONALD
that can help the organization to bring efficiency and effectiveness in the system. This is the
reason that McDonald started to IT project of establishing ERP system across its stores. The
direct benefit of this approach was the fact that all of the stores would be connected and different
stakeholders would be able to share the information on real time basis. Typically, there are two
approaches of ERP implementation. The first approach of the big bang implementation and the
second approach is the phased implementation approach. McDonald started the project with Big
Bang approach as the company wanted to implement ERP across its stores in one go (Ravasan &
Rouhani, 2014). However, this was a failed project for the company as it was not able to
implement ERP across all its stores. This paper would discuss the key reasons for the failure and
the paper would also discuss the key recommendations that should be used by organizations to
avoid these kinds of mistakes in future.
2.0 Analysis & Drivers of implementation
It is interesting to study and analyze the key reasons of failure for McDonald. However,
before that, it would be interesting to analyze the key drivers of ERP implementation. The
analysis of key drivers of ERP implementation would help to understand the reasons of failure in
better way. The key drivers of ERP implementation for McDonald can be discussed as:
2.1 Key drivers of ERP implementation
There were four ley reasons or drivers of ERP implementation of McDonald. These
drivers can be discussed as:
2.1.1 Real time information sharing
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IT FAILED PROJECT: CASE STUDY OF MCDONALD
The company wanted to have a system in place where different stakeholders can interact
on real time basis.
Efficiency improvement: The management of McDonald realized that there is scope of efficiency
improvement in the coming system and it can be done with the implementation of ERP system.
2.1.2 Quality improvement:
In this era of competition, it becomes important for all the organization to deliver quality
ERP projects to their customers due to increased competition. For instance, quality control will
increase the customer satisfaction and building reputation and thus increases the changes of
company getting more business from the clients (HassabElnaby & Hwang, 2012). Also, quality
management is also about preparing for quality, planning for quality and implementing quality
control. Also, there are numerous considerations while providing quality.
2.1.3 Reducing operational cost in long term
It is correct that the implementation of ERP is costly affair in short term. However the
management of McDonald realized that it would be able to save the operational cost in long
term.
3.0 Reasons of failure:
It is a common saying that technology should work for human and not the other way
round. In similar way a company’s Enterprise Resource Planning (ERP) system is like its central
nervous system of the body. If it is healthy, it provides the sensory input to management so they
can understand what is happening with customers, suppliers, and employees. There were various
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reasons for the failure of this IT project. The key reasons can be discussed under following
heads:
3.1 Lack of clear destination
It can be said that the success of ERP project would be successful only when the end state
or vision is clear. In the case of McDonald, the company started with the Big-Bang
implementation. However, the company did not have a vision in mind.
3.2 Clear reasons of doing it in the first phase
Ravasan & Rouhani (2014) argued that the stakeholders are often confused if they want
to implement the ERP in the first place. The decision to implementation the ERP across
McDonald was the result of an analysis happened across the organization. However, there were
certain apprehensions within the leadership team. The management realized that ERP
implementation is the thing for the future. However, leaders and managers were not very sure
about the success of the project. Often large ERP implementation projects fail before they even
start. Companies unhappy with their current system become convinced their reporting,
integration, or efficiency problems lie in the software they are using.
3.3 Part time project management
One of the mistakes for McDonald was that it considered ERP implementation like any
other IT project implementation. It can be said that the implementation of ERP is a
transformational project for organizations that bring fundamental changes in the existing
business processes. However, McDonald was not able to analyze this. The company considered
it as a normal IT project management and the required focus was not given with respect to
project management (Ahmad & Cuenca, 2013).
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IT FAILED PROJECT: CASE STUDY OF MCDONALD
3.4 Under estimation of resource requirement
Oghazi (2014) argued that the implementation of ERP project requires a large number of
resources. In fact, it is never easy to anticipate the resource requirements for ERP
implementation. McDonald was not able to do the correct resource planning and as a result the
project failed. For the successful implementation of ERP projects, the companies should take
help from external consultants also. McDonald also took help from external consultants.
However, it appears that the support of external consultants were not adequate (Parr & Shanks,
2013).
3.5 Over customization
One of the reasons for ERP failure is the customization that the organizations would want
to have. In fact, customizations, along with interfaces and data conversion, are the main areas of
technical risk in ERP implementations (Turban & Sharda, 2011). McDonald wanted a
customized ERP for its stores. However, the organization was not able to get the desired
customization in place.
3.6 Lack of training requirements
The implementation of ERP across any organization required proper training to different
internal and external stakeholders. However, McDonald was not able to provide a training
platform to its stakeholders. Moreover, the organization arranged for the training sessions after
the implementation phase was over (Wixom & Ariyachandra, 2014). The true benefits of ERP
implementation is realized when the management conducts the training sessions along the ERP
implementation phase.
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IT FAILED PROJECT: CASE STUDY OF MCDONALD
3.7 Lack of quality expectation with ERP project
McDonald was keen to implement the ERP project. However, the company did not
establish the quality objectives with the project. Quality is providing the right product to the
customer aligned to their requirements and also fit for their use (Corona-Suarez & AbouRizk,
2014). During such times, no organization can afford to miss the quality in delivering their
projects as clients have very high bargaining power due to increased competition. While in
earlier days, Quality was all about inspecting the results and recommending rework if the
expectations were not met, today the concept of quality management also has transformed with
the evolution of numerous tools for controlling and ensuring the quality. Today, the focus is on
preventing the issues before hand and thus building the quality in the project or the product.
3.8 Ineffective change management
Authors argued that most of the ERP projects fail due to ineffective change management.
The implementation of ERP is a big change for any organization that brings a massive amount of
change. It is important that the organizations should be willing to handle the change. McDonald
faced certain resistance from its employees, as it was not able to manage the change.
3.9 Lack of user training
The implementation of any large IT project requires investment in user training. It is
important that the employees should be educated and trained about the new system and
processes. The provision of training and development activities is an investment from the side of
company. However, McDonald was not able to invest a lot on training and development of
people. Therefore, its employees were not clear about the ways to use ERP system.
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3.10 Wrong approach selection: Big Bang vs. Phased approach
McDonald decided to go ahead with the ERP implementation with a big bang approach.
Under this approach the implementation happens at a same time. The benefit of this approach is
the timesaving. However, in this approach there is no fall back option. There was no way for
McDonald to learn from its mistakes.
4.0 Key Recommendations to avoid failure in future
It can be said that the organizations have a lot to learn from the case study of McDonald.
In addition to the ten reasons listed above, the organizations must also focus to manage the
threats from malware and ransomware. In recent times, there has been an increase in the number
of malware attacks that happens in the world on ERP systems (Isik & Jones, 2013). It is
important that different stakeholders must join hands so that the ransom ware attacks can be
managed. It can be said that one of the major threat to the large IT systems is the threat from
malware. The large IT systems like ERP systems should be protected from any external attack.
This paper would discuss the background of ransomware and the strategies that should be used to
manage the attack of ransomware. It would be correct to say that the proactive ways of
protection is better than the reactive way of protection in case of ransomware.
Another key recommendation for organizations is to have basic checklist in place for
ERP implementation. Checklists are another important to approach to ensure that team members
must follow the basic things as part of their task. For example, there can be checklist for
developers about the guidelines they have to follow while check in their code. Checklist can have
components like if all the comments and documentation correct, if code is easy to understand by
another person and so on. Checklist should be customized for various roles like testing team,
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development team and also for various phases like requirement gathering and also on regular
basis what are the checks that team has to ensure like switching off their monitor while leaving
for the day, switching off lights etc.
It is also recommended that management should use a strong change management model.
The implementation of ERP system is a radical and drastic change for any organization. Under
any circumstances, the management should not take this change lightly. Therefore, it is important
that management should have a strong change management strategy in place. The first thing for
organizations would be picks the change agents that would be responsible to bring the change in
the organization (Chang, 2014).
5.0 Conclusion
If ERP systems are the nervous system of a company, then doing an ERP implementation
is like brain surgery: only to be attempted if there is a really good reason and not to soon be
repeated. The above paper discusses the failed project of ERP implementation for McDonald.
With the above discussion it can be said that ERP projects should be implemented with high
quality standards. At the same time, the organization should also focus on effective change
management within the organization. In addition to the implementation, organizations have to
ensure that the business can get the real value from ERP implementation. It can happen when
Information Technology is not considered as the support function in the organization. It can also
be said that the early focus on Information Technology and ERP would also help the
organizations to overcome the problems and challenges that could occur in the implementation
of ERP and IT project management.
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