ITEC871 Individual Assignment 2: ERP System Implementation Analysis

This report analyzes the ERP system implementation at Leadtek Corporation, a Taiwan-based computer components company. The report examines the failure of the Oracle ERP system implementation, delving into the causes such as lack of senior management commitment, inadequate user training, resistance to change, and poor project management. It explores the team composition, the role of consultants, and communication issues. The discussion identifies the need for a change in management approach, improved project management, business process re-engineering, comprehensive user training, and a revised team structure. The report recommends Leadtek consider Oracle ERP Cloud for its newer versions and easy customization to integrate all the operational areas and enhance growth. The report highlights the importance of effective communication, addressing resistance to change, and proper training to ensure the success of future ERP implementations. The report aims to provide insights and recommendations for Leadtek's senior management team.

Running head: ERP SYSTEM IMPLEMENTATION AND ANALYSIS
ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Name of the Student
Name of the university
Author note

1ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Executive Summary
In recent times, Enterprise Resource Planning (ERP) system has achieved a lot of prominence
in the literature of IS and is considered to be an effective phenomenon when referring to its
sphere of application. ERP is a comprehensive as well as packaged solution of software that
is responsible in integrating the whole range of the processes related to business. The system
provides a holistic viewpoint relating the business processes from single available
information and architecture of information technology. In this report, a case study will be
referred, to analyze the ERP system implementation, reasons behind its failure, possible ways
in which problems could have been avoided and better alternatives. Lastly the paper will be
suggesting some recommendations on some steps that could have been taken to make ERP
system implementation process a successful one.

2ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................4
Team behind the process of implementation.........................................................................4
Causes of the problems encountered during the project........................................................4
Ways in which these problems could have been avoided......................................................6
Recommendations......................................................................................................................8
References..................................................................................................................................9

3ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Introduction
As per the research done by Ali, Mahmood, and Lloyd Miller (2017, 666-692), ERP
system has been implemented in the majority of the small and medium sized enterprises
owing to its cost effective nature. It has become popular and been used widely since its
development in the year 1970s. The process of implementation of ERP system to a business
depends on the nature of the business and mainly its IT infrastructure (Shatat 2015). The
report will be discussing on the problems faced while implementing the ERP system in case
of Leadtek Corporation. The company deals in computer components and is based in Taiwan.
Its workforce includes more than 2,000 employees along with 100 industrial customers as
well as a supplier base that is widely spread around the country. The company had been
aligning itself towards technology by revising its systems. In the year 1990, Leadtek
Corporation was working with a FOXPRO-based system to handle its accounts. Later on the
system got replaced by relational data base management system (RDMS) making use of
INGRES to overcome problems being faced for disparate databases. Gradually with the
growth of business the legacy system was being unable to handle the excessive demands of
the users and thus the company thought of changing their system. To analyze the prevalent IT
infrastructure, an international consultant was hired and the consultant recommended ERP
system. Amongst all the available choices of the ERP system, Oracle Applications Version
11i was selected as it could support the requirements of the firm. The project of implementing
ERP failed as the company still uses its legacy system and no such changes were seen. The
report will be focussing on the problems encountered during the ERP project, the probable
ways that could have been adopted to overcome these problems and recommendations to
make the next project a success. Here above an overview of the previous systems have been
provided and as it is important to get a better understanding of the reasons behind the failure
of the ERP project.

4ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Discussion
Leadtek Corporation sole purpose to implement the ERP system was to meet the
increasing demands of the users which the legacy system was not being able to handle
properly. The ERP system was to increase the efficiency of operation of the various business
processes of the company but the project failed to provide desirable outcomes and the reasons
can be attributed to the project teams and the workforce associated with the same. The
evidence of failure of the project can be understood from the fact that the legacy system was
still in use and some even commented that there was no need for the ERP system.
Team behind the process of implementation
The team behind the process of implementation consisted of the international
consultant with its consultant team, the IT head (leading the team), three members of the IT
department and five user members. The user members were engaged in the project in a part
time basis. A senior manager was appointed as well serving the role of project champion. A
steering committee was also set up as the part of the project which included the IT head as the
chairperson and the departmental heads.
Causes of the problems encountered during the project
As per the research done by Jagoda, Kalinga, and Premaratne (2017, 91-109), the
main cause of failures of ERP systems is due to the complexity of the changes that the system
brings with it. Here in Leadtek Corporation the employees were not well informed of the
ERP system and its complexities. The failure of the project cannot be attributed to the
technological complexity alone because researches suggest that in majority of the cases
organization and human generated issues such as resistance to the change, culture of the
organization, irreconcilable business processes, project mishandling are the main causes. The
main reasons why the ERP system failed in Leadtek are as follows:

5ERP SYSTEM IMPLEMENTATION AND ANALYSIS
1) Lack of commitment of the senior management- The top management is responsible to
carry on a business project but in case of Leadtek, the senior management showed interest in
the project at its initial stage but gradually got disconnected from the project owing to their
already busy schedules (Harwood 2017).
2) Lack of regular updates- The steering committee was to meet every month in order to
keep updates of the project. The committee met only two times after the project started and in
third meeting very few of the members turned up (Kim, Kyung and Ji 2016, 1-9). After that
the steering committee did not meet at all.
3) Lack of human resources- The user team members were the part of the project on part
time basis thus the ERP project was been considered to be just an additional burden. They
had their daily work and handling the ERP project seemed extra work to them.
4) Lack of knowledge of ERP system- The user members were not that active in the project
and being juniors they did not even have the appropriate knowledge about the ERP system.
They neither had the knowledge nor the authority to take certain process change decisions
which was required to configure the ERP system.
5) ERP was acting as hindrance to unauthorized practices- In some of the operational
areas the users made use of informal practices such as in case of purchasing; the suppliers
were often asked to send the materials without any formal order. These later on got
regularized at the time of passing the bill (Nwankpa 2015, 335-344). ERP would stop this
informal practice thus the people doing so were resistant to the project implementation.
6) Incompatibility of the workforce- ERP system resulted in changes in the work flow
resulting in shifting of power within the departments. This change was resisted by teams such

6ERP SYSTEM IMPLEMENTATION AND ANALYSIS
as accounts department as they were of the opinion that their power was being given to some
other teams.
7) Lack of effective project management methodology- The project management team was
inefficient to provide clear guidance in the process. They could not align themselves to the
objective of the ERP project and resource allocation plan was also a big failure. The changes
in the organizational structure were to be studied by them but they failed in this as well.
Ways in which these problems could have been avoided
As per the research done by Bintoro et al. (2015, 222-249), successful implementation
of the ERP project relies on the management and the preparations of the management to face
the upcoming challenges. The senior management involved in the project must be well
informed of the ERP system. Some of the ways which can be adopted to solve the problems
are as follows:
1) Change in management- Implementation of ERP project is more than just change in the
software or the hardware systems. The ERP system reengineers the business process
therefore the management must be well efficient to handle the resistances coming its ways by
setting a balance in between the staffs and the technology. Leadtek needs to revise its
management system to be successful in incorporating ERP.
2) Management of the project- Behind every successful project there is an effective project
management. As per the research done by Ann (2015), ERP implementation fails due to lack
in understanding the requirements of the ERP system and improper leadership. In Leadtek
both these causes are apparent as the complexities of the ERP system were not understood
and the leaders lacked in interest. Leadtek needs to look into the management process of the
ERP system.

7ERP SYSTEM IMPLEMENTATION AND ANALYSIS
3) Business Process Re-engineering and system’s customization- Among the two
approaches to implement ERP system, Leadtek opted for the re-engineering process which is
responsible for creating deep changes in the processes of the organization so that they fit into
the functions of the ERP system (Panayiotou et al. 2015, 628-664). But the changes are huge
and the management needed to be prepared for this change. To make the project successful a
detailed analysis of the project would have been done prior to its initiation.
4) Training- Training of the end users is considered to be an essential factor in case of ERP
implementation. Leadtek lagged in this as well thus could not satisfy its users and instead was
resisted. To tackle the resistance proper training must be deployed by Leadtek.
5) Team composition for ERP implementation- ERP covers wide range of functional areas
in an organization thus team composition play a vital factor in this case (Abu et al 2015, 25-
40). Leadtek needs to revise the team composition and include full time members
representing all the functional units related to ERP.
6) Consultant selection and relationship- Consultant have an important part to play in ERP
implementation process and choosing a good consultant is necessary (Tarhini et al. 2015, 25-
40). The project at Leadtek failed as the consultant could not transfer the required knowledge
to the staffs which made them feel disconnected from the project.
7) Communication Plan- Effective and regular communications within the organization is
essential while implementing any project. Leadtek need to focus on the communication
process because lack of communication creates gap which affects the project. Regular
updates should be taken and the feedbacks of the end users are equally important (Abdinnou
and Khawaja 2015, 243-259). Sessions of the higher officials with the staffs regarding ERP
implementation can keep them connected to the project.

8ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Recommendations
Leadtek chose Oracle 11i as their ERP system but there are newer versions available
in the market. The company can go for Oracle ERP Cloud that comprises of collection of
enterprise resource planning, supply chain management and CRM that is customer
relationship management. The company deals in computer components and requires
supplying of products to target customers, buying the same from wholesalers thus Oracle E-
Business Suite can be a whole package to their different problems in handling the day to day
chores. The suite gives the same feeling to work upon irrespective of which component is
bought. Oracle ERP Cloud is leading the market and the market indications for this are
positive and have been popular in the prevalent scenario. Leadtek requires integrating all the
operational areas thus Oracle ERP Cloud is appropriate for the work requirement. All the
version of Oracle holds a good record to its name in case of supporting products. Thus the
company can go for Oracle ERP Cloud owing to its easy installation and customizations as
per the requirements of the business. The systems’ cloud solution can benefit the organization
to revive its technology thereby enhancing the growth along with the scalability. The cloud
platform has all the required and essential features that provide reliability and security to the
organization. The advantage of Oracle ERP Cloud is that it has significant lower total cost of
ownership as well as lower maintenance cost. Oracle ERP Cloud provide the client with ease
to access it from anywhere through the medium of internet. This can help Leadtek to provide
their employees with flexibility in the working hours. Oracle ERP Cloud has a feature of
complete redesign that makes all the applications streamlined as well as user friendly. Oracle
Cloud Marketplace refers to an online store and is dedicated to applications related to
business. This marketplace can be made use of by Leadtek to expand its market and step in
the online platform.

9ERP SYSTEM IMPLEMENTATION AND ANALYSIS
References
Abdinnour, Sue, and Khawaja Saeed. "User perceptions towards an ERP system: Comparing
the post-implementation phase to the pre-implementation phase." Journal of Enterprise
Information Management 28, no. 2 (2015): 243-259.
Abu-Shanab, Emad, Rasha Abu-Shehab, and Mousa Khairallah. "Critical success factors for
ERP implementation: The case of Jordan." The International Arab Journal of e-
Technology 4, no. 1 (2015): 1-7.
Ali, Mahmood, and Lloyd Miller. "ERP system implementation in large enterprises–a
systematic literature review." Journal of Enterprise Information Management 30, no. 4
(2017): 666-692.
Ann Sykes, Tracy. "Support structures and their impacts on employee outcomes: A
longitudinal field study of an enterprise system implementation." MIS quarterly 39, no. 2
(2015).
Bintoro, Bambang Purwoko Kusumo, Togar Mangihut Simatupang, Utomo Sarjono Putro,
and Pri Hermawan. "Actors’ interaction in the ERP implementation literature." Business
Process Management Journal 21, no. 2 (2015): 222-249.
Harwood, Stephen. ERP: The implementation cycle. Routledge, 2017.
Jagoda, Kalinga, and Premaratne Samaranayake. "An integrated framework for ERP system
Implementation." International Journal of Accounting & Information Management 25, no. 1
(2017): 91-109.
Kim, Kyung-Ihl, and Ji-Young Park. "Cultural differences impact on the ERP system
implementation." 중중중중중중중중중중중 6, no. 2 (2016): 1-9.

10ERP SYSTEM IMPLEMENTATION AND ANALYSIS
Nwankpa, Joseph K. "ERP system usage and benefit: A model of antecedents and
outcomes." Computers in Human Behavior 45 (2015): 335-344.
Panayiotou, Nikolaos A., Sotiris P. Gayialis, Nikolaos P. Evangelopoulos, and Petros K.
Katimertzoglou. "A business process modeling-enabled requirements engineering framework
for ERP implementation." Business Process Management Journal 21, no. 3 (2015): 628-664.
Shatat, Ahmad Saleh. "Critical success factors in enterprise resource planning (ERP) system
implementation: An exploratory study in Oman." Electronic Journal of Information Systems
Evaluation 18, no. 1 (2015): 36.
Tarhini, Ali, Hussain Ammar, Takwa Tarhini, and Ra'ed Masa’deh. "Analysis of the critical
success factors for enterprise resource planning implementation from stakeholders’
perspective: A systematic review." International Business Research 8, no. 4 (2015): 25-40.