Technology Adoption Issues and Challenges for ERP Systems Analysis

This report delves into the multifaceted challenges and issues surrounding the adoption of Enterprise Resource Planning (ERP) systems. It begins with an introduction to ERP, highlighting its importance in modern business operations and the increasing trend of its implementation across various organizational sizes. The report then meticulously outlines the steps involved in ERP implementation, emphasizing the significance of strategic planning, infrastructure analysis, customization, change management, and employee training. It further explores the impacts of ERP implementation, including data integration, improved efficiency, and enhanced customer relationship management. The report also examines the acceptance model, cost factors, and factors affecting ERP adoption, with a focus on the challenges businesses face. Finally, the report provides insights on avoiding common pitfalls and concludes with a comprehensive overview of the key takeaways.

Technology Adoption Issues and Challenges for ERP Systems

Abstract
In today’s world of information technology, every business organization wants to show its presence on
Internet. Business operations are becoming more complex and need advanced technology for fast and
reliable processing. ERP (Enterprise resource planning) is one of them. It is considered a complete
business solution tool and mostly used in all the type of businesses worldwide. ERP is being used by most
of the small and medium scale organizations to enhance the quality of business operations. It is the most
common topic right now for research and scholarly articles. There are number of online literatures and
blogs available for the implementation of ERP in business. When implementing ERP there might be
chances of some technical issues and problems which may be faced by companies. In our research
project, the main focus is on the importance and impact of ERP is developed and developing countries
and the issues which might occur while adopting the ERP in business organization.
Keywords
Enterprise resource planning, ERP, Adoption of ERP, acceptance model, Impact of enterprise
resource planning, pitfalls of ERP adoption, cost factors of ERP implementation.
Table of Contents
Abstract.......................................................................................................................................................1
Keywords.....................................................................................................................................................1
Introduction.................................................................................................................................................1
ERP implementation....................................................................................................................................3
Strategic planning....................................................................................................................................4
Review the plan.......................................................................................................................................4
Analyzing the infrastructure....................................................................................................................4
Customization..........................................................................................................................................5
Change management...............................................................................................................................5
Training...................................................................................................................................................5
Final evaluation and living the system.....................................................................................................5
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Impacts of ERP implementation..................................................................................................................6
Acceptance model.......................................................................................................................................8
Cost factors in ERP adoption.....................................................................................................................11
Architecture of system...........................................................................................................................12
Number of users involved......................................................................................................................12
In or out house ERP implementation.....................................................................................................12
Customization level...............................................................................................................................12
Migrating data.......................................................................................................................................13
Deployment...........................................................................................................................................13
Factors affecting the ERP adoption...........................................................................................................13
Challenges in the ERP adoption in business..............................................................................................14
Avoiding the pitfalls..................................................................................................................................18
Conclusion.................................................................................................................................................22
References.................................................................................................................................................23
Introduction
ERP stands for Enterprise Resource planning. It is an application software used to integrate
various functions of a business into a single well managed system. This consolidated system is a
shared system within a business organization (RupashreeBaral, 2017). Basically ERP was
originated from manufacturing or production division of any business and was mainly used in
businesses related with manufacturing but later on in 1990, the ERP systems were expanded into
other functional units of businesses also such as finance, sales, human resources etc. At present
we can see the importance of ERP in almost every field of business included supply chain
management and customer relationship management.
The main objective of ERP system in business is to improve the efficiency of business operations
on a reduced cost. ERP makes it possible to communicate in an integrated way all the
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departments of business organization and all the business operations can be performed in a
cooperated manner to share the information (Rawani, 2016). ERP is best suited for streamlining
the flow of data among diverse operations of a business and create a single transaction system.
According to the Hitt, Wu and Zhou, “The standardized and integrated ERP software
environment provides a degree of interoperability that was difficult and expensive to achieve
with stand-alone, custom-built systems.” If the operations of any business organization is
standardized and integrated, all the activities regarding managing and controlling the business
operations will be centralized and improves the functionality of information system on a reduced
cost (Seo, 2013). ERP can be used to enhance the customer relationship management and get
connected with suppliers all the time. The response time for almost all the basic needs of
business operations is decreased in a great extent.
In this way ERP is now proved to be the most important tool is business Intelligence for all the
business organizations let it be small scale, medium or large scale businesses. Day by day the
new technologies are integrating with ERP to make it more powerful and efficient to support the
business operations (Smedley, 2014). This continuous advancement of technological integration
is a very complex procedure and requires regular updates in system. Most of the ERP vendors
are now practicing to grab the opportunity to enhance the ERP software to meet with changing
needs of business.
Although there are enormous benefits of ERP systems but more of the systems result in a big
failure while implementing the technological enhancements in ERP system. As per the research
done it is proved that there are not just the technical issues but behavior aspects are also
responsible for the same. Business organizations must plan accordingly prior the adoption of new
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system from the employees and customers point of view. There must a clear strategy for the
employees to face any challenge which might occur and can be resolve to achieve the target.
In this research report, we will analyze various problems and technical issues which might occur
in the technological adoption process of ERP. It will focus on three main aspects: firstly what
may be the issues in the adoption of ERP. Second which types of resources are available for the
same topic and third what are the reviews of peer researchers about the same topic (Erturk,
2010). There are so many research papers, journals, white papers, articles and conference papers
available which are already published on the adoption issues of ERP and it is difficult to discuss
each and every one in this research report. So we will try to provide a consolidated summarized
form to describe the problem.
ERP implementation
The tough competition in the business markets leads to the requirement of implementing ERP in
business to get the optimal use of resources and improve the efficiency and reliability of business
operations. The selection of best ERP software for business is the foundation of success, as it is
said that the war can be won if the first step is right. If the chosen ERP software fulfills all the
basic needs of specific business, there is no need of customizing it otherwise it will be a time
consuming process and will add extra overhead of cost (Sean W. O’Donnell, 2013). The
successful implementation of ERP software needs a step by step process:
Strategic planning
Before planning to implement ERP, the objective must be identified. The KPI (key performance
indicators) must be identified in accordance to analyze the requirements of ERP. These
requirements must focus on present as well as on future. Proper strategy allows scalability and
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any changes or modification in the current business. After the objective is defined, the team
which will handle the business operations from various departments of organization must be
created. The goal of team must be accommodated for a specific task (Light. Zaglago, 2013). The
role of team is to analyze the issues in current system and how the problems may be resolved.
The outcome is the project plan what to do and how to do? As per the survey done in 93% cases,
the business organizations customize their ERP software as per their need. It increased the
chances of failure of ERP system.
Review the plan
The project plan is reviewed through intensive review procedure of the system. Whether the
changes are necessary or not? Once the solution is identified, data migration is to be done with
extensive care. It must be decided which data must be migrated (Almeida, 2016).
Analyzing the infrastructure
Preparing the infrastructure for the implementation of ERP is at the core and is very crucial step.
In most of the cases, the ERP system fails because of the wrong decision about the infrastructure.
The data which is migrated on new infrastructure is verified about accuracy (Shang, 2005). To
test the accuracy of data real test cases must be run. In this phase the integration of ERP system
with other systems is also verified and the issues must be resolved if any.
Customization
In most of the cases the vendors of ERP, design the software as per the basic needs of
organization but in some cases the customization is necessary therefore the management team
has to analyze the ERP software and evaluate the requirement of changes.
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Change management
It is the human tendency that they feel comfort in their daily routine activities, any changes in it
is not acceptable easily. It is called the change management. ERP is a system and it will
definitely change the working environment and culture of the company. Here is the role of
management to encourage their employees and prepare them for all these steps. The employees
must be trained about why the changes are important and what would be the benefits of adopting
this new culture? To boost the confidence level of employees, continuous sessions must be
planned (tom, 2011).
Training
ERP system fails in 21% cases in lack of proper training and improper customization of software
due to insufficient knowledge of information technology. Training of ERP system is the most
important aspect in the adoption phase of ERP. The management team of organization must
ensure the technological training of employees and the supporting staff regarding this.
Final evaluation and living the system
This is the final stage, before making system live, it is recommended that a final checklist must be
prepared. This checklist must contain all the points which must be reviewed before implementing the
system. Some points may be (Thuraisingham, 2007):
1. Whether the inventory or resources needed are available or not?
2. While the system is migrated from traditional old system to new system, some transition issues
might be occurred. If so, whether the required solutions will be available on time or not?
3. The data which is to be migrated is checked or not?
4. The employee may require training to use the system efficiently. Whether the training resources
for employees are available or not?
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Once all the above aspects are verified and ensured then the system can be live. Experts’ advice
one last functional test to minimize the chances of failure. ERP adoption is a continuous process
and it will keep all the tabs of ERP system busy. Software updates must be checked on regular
basis and maintenance if required must be done periodically (Carpenter, 2016). Ongoing support
is the key for successful adoption of ERP system.
ERP Implementation
Impacts of ERP implementation
The major impact of ERP system is to manage the information sharing and processing among various
departments of business. It includes maintain good relationship among business partners, fulfilling
customer requirements and improve the business operations. ERP systems are application software
which are generally used for business operations such as: planning about production, supply chain
management, handling inventory and distribution department for managing accounts and customer
services etc. These all operations will be surely improved by implementing the ERP system.
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The integration among all the departments of an organization is possible due to the use of Internet
nowadays (Ince, 2016). The main purpose of ERP implementation is to gain the advantages of business
processing like:
1. Data Integration
2. Computerized business processing
3. Enhanced flexibility
4. Less manpower needed
5. Improves the globalization
6. Centralized information system
According to DeLone and McClean, there are many factors available which may influence the ERP
adoption process. These factors are categorized in following types (R., 2012):
1. Quality of system
2. Quality of information
3. The usage amount of system
4. The level of customer’s satisfaction
5. Effects of individual type
6. Impacts related with organization
Acceptance model
The Acceptance Model Specifies the basic relationships between systems and their designs or features,
perceived of each case, usefulness and the attitude towards using. The base of this model is that the more
acceptance the new systems get from users, the more they get willing to make suitable changes in their
working process and techniques. This also help them to use their time and efforts in a very effective and
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efficient manner. This model consists of two major determinants just to analyze the key reasons for the
acceptance and the rejections in IT as “Perceived Usefulness” and “Perceived Ease of Use”.
Acceptance model of ERP system
Perceived Usefulness
It can be defined as the significant key to which a person might think that by using a particular system
would bring a sudden enhancements in his job performance or skills in doing right things. This can also
be defined as the degree of point that is just to make the person think that it would fulfill all his gaps in
his working efficiency and will improve his overall skills.
Perceived Ease of Use
It represents the capability to analyze between the two situations:
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The first situation is to compare that whether any product or process if adopted will results in diminishing
the efforts or not?
The second situation is if the efforts will not decrease then whether the same efforts will result in better
result or not?
This addresses the major issues that how the user accepts start to use such system or technology.
Numerous significant ways have been found and made over the last decades in explaining and making
predictions over the acceptance of IT. Theoretical as well as empirical supports has been build up in the
favor of the acceptance model and this also compares in a favorable manner with the alternative models
like “Theory of Reasoned Action” and “Theory of Planned Behavior”. Over such a long period of time
this acceptance methodology has been used to predict the acceptance of the technology by the user. Some
of the studies also found that both the project communication and training somehow influences the beliefs
of such technology. The influence of top management support, communications, cooperation and
technical complexity during ERPs acceptance has been considered as the most significant than any others,
as they make the best impact over this IT system and its acceptance by the users. Acceptance model
arouse form the theory that a technology observed by the people that would be easier to use and would
have higher usefulness will be more likely to have a better acceptance. It also affects the attitude towards
usage of systems in a much effective manner.
The critical success factors are also helpful in explaining all the aspects of initial failure and the
eventual success of implementing the ERP. However making the ERP system to work in an effective way
is more than an issue of social accommodation. Furthermore, it has been tested primarily on the systems
that are relatively working in a simple manner. It has been recommended that Acceptance Model should
be revised so as to address the user attitude, intent and behavior when it is being applied to complex
systems in an organization. As ERP users have an effective impact over the others, they are left with no
choices to avoid the system, without any respect of the attitudes about the ERP systems. Thus it is being
observed that ERP has a feedback that refers to the user’s mental acceptance for the working system. That
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is the main reason why the Acceptance Model is being considered very much useful for explaining or
predicting the attitude of the customers towards the ERP systems or working organizations.
To complete the whole advanced proposed model, there is a requirement to include three external
variables somehow that relates with the cultural factors and can be stated relevant for health care to
initiate the use of ERP. Such variables might influence the attitude towards the behavior through any
indirect way by making a deep effect over the beliefs of the people:
Resistance to Change
The aligning of the standard ERP with the organization’s business processes is surely for a long duration
that is considered to be as a critical step of implementing the process. The implementation of ERP is
always having a requirement of business process reengineering, as the need to adapt the organizational
processes to match the business objectives or goals. There are many examples where people are not ready
to accept the sudden changes as:
● The purpose is not made clear.
● Participants are not that active in planning things.
● Ignorance to some of the basic key points.
● Exceeding work pressure over the team.
Thus this external factor was being introduced so that it could cause some resistances to change by the
users and somehow also affects the attitude towards the efficient use of ERP.
Perceived Risks
Some major organizations make regular efforts to lower the risks due to the serious barriers involved.
Legal and economic barriers as well as gaining the customer’s trust among the market also gets affected.
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