IT Governance and Strategy for Business: Failure Evaluation Report

This report examines IT governance and strategy in the context of business system failures, with a focus on Enterprise Resource Planning (ERP) implementation. It begins by outlining common IT system failure scenarios, particularly within ERP environments, and highlights the importance of aligning IT with business strategies to mitigate risks. The report delves into the critical factors contributing to ERP failures, including ineffective knowledge transfer, inadequate IT infrastructure, poor project management, and flawed business process re-engineering. These factors are explored in detail, providing insights into their impact on project outcomes and overall business performance. The analysis further classifies the most critical failure factors, emphasizing the need for robust communication, secure data management, efficient infrastructure, and skilled project management to ensure successful ERP implementation. The report concludes by underscoring the importance of proactive IT governance and strategic planning to prevent system failures and optimize business operations.

Running Head: IT Governance and Strategy for Business
Evaluating IT System Failure
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IT Governance and Strategy for Business
Table of Contents
Introduction...........................................................................................................................................2
Task 1....................................................................................................................................................2
Task 2....................................................................................................................................................3
Task 3....................................................................................................................................................4
Task 4....................................................................................................................................................5
Conclusion.............................................................................................................................................6
References.............................................................................................................................................6
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IT Governance and Strategy for Business
Introduction
In today’s scenario, it is very common for having the system Failure in the organisation. It is
been known that the IT is been fully aligned to all the business strategies and the key role is
to identify the risks and to prevent from the threats occurred. The IT governance covers the
whole scenario and highlights the current corporate failures. The IT governance covers the
main principles of the organisation, policies, procedures etc. It mainly focuses on resolving
the issues regarding to the system failures of the organisation. The main objectives includes
optimising of the resources used in an organisation, business performance implementing
through IT strategies, goals etc. IT mainly aims to empower and deliver the strategic business
value so as to avoid the risks and the failures being affected in an organisation. In today’s
world it is essential to have the quick responses in the business market, globalisation of the
products and services being provided and the cost of an organisation or enterprise that have
the strategies to implement the business initiatives and to meet the challenges so as to avoid
the risks. (Barker and Frolick, 2003).
Task 1
 Drawing the Ideas on the IT System Failures
ERP technology is used for allowing the company for increasing in the productivity for the
business functions. ERP is highly complex and is difficult to implement and most of the time
ERP requires the long process for implementing the operations on time and accessibility to
the significant resources. Regarding to the ERP technologies many company have accessed to
the ERP technology and its applications for the business operations and other companies have
faced the implementation failure using the ERP (Decker et al., 2012).
The organisations mainly focus on having the dynamic interaction between the
implementation factors being made using the ERP applications. The ideas involved in the
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IT Governance and Strategy for Business
system failures associated with the ERP are in different forms regarding to an inappropriate
functioning of the system and trying of the implementation process. In the bitter case scenario
of an ERP system the main thing has affected the most is the software customer a failed
implementation. Most of the ERP software’s has been ended up because of the failed
services. Moreover the failures generally implies on a slowdown of production and services
running expressively over budget, hugely changing to the budget to go live date and making
to the desired return on the investment. It is essential to focus on the failures of the ERP
system failures. It is essential for every organisation to focus on the ERP system failures. It is
necessary to look after the causes of ERP failure.
The four common reasons for the ERP system Failure is:
1. Sacrificing business speed and cost implementation- Every organisation focus on
the cost and speed of ERP implementation, the two important factors should be
focusing on the not more important. These are the important two factors but not more
than the functionality of the system within the organisation.
2. Lacking in Executive Involvement- The management team should be involved
within the every step of implementation. It tends to help in to know the importance of
the events and the latest updates of the organisation. It is necessary for every
organisation to know about the technical aspects and the opportunity in the work,
realize the importance and the amount of the time for performing the operations and
resources used for the main purpose for processing the business operations. Therefore,
management is the core field for all the employees for working on the ERP software
in the first place.
3. Unrealistic Expectations- ERP sellers say that the ERP solutions can be
implemented very fast at a very low cost. Basically the average implementation takes
around 14 months for an organisation but sellers say that it takes around 7 months to
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complete the tasks. For the unrealistic time expectations, generally the time can delay
in the extra costs and the resources for implementing the operations.
4. Training on the new system- It is ultimately the useless without ensuring about the
key resources which is to be used by the users but without seeking any training on the
resources. The organisation generally rely on the ERP sellers for giving the training
options to have the ease in the process by training all the employees of the
organisation or to train the few employees so that the knowledgeable ones can train
thefreshers.
 The types of information System Failure which are been raised are:
1. Correspondence Failure- This type of failure describe regarding when the design
objectives and its ideas are not met when the organisation has been in the
development mode. It generally requires the information system will reject an
information system if the design is not properly implemented and if the design is not
clearly brief they set out has not been met (Hawari and Heeks, 2010).
2. Process Failure- This type of failure appear on the basis of the occurrence of an
information system which is not been delivered in the given time or to the specific
duration is been assigned or the costs is very high according to the amount being
budgeted for this project.
3. Expectation Failure- This type of failure is being derived as the failure views as the
information system failed and the systems which got failed meeting the participant
requirements and expectation or the values. The failure is generally being alleged as
the major differences have been occurred between the actual and desired situation for
getting into the particular group for the participation.
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4. Interaction Failure- This type of failure refers to the end users and the usability of
the information system. The main system is been accessible by the users or not. It is
not been the implementation made through the success and is it worth and the
company investment being made. It arise the queries regarding to if the system is not
being used and would not be classified as an interaction failure (Jones et al., 2005).
Task 2
Critical factors of failures of ERP (Enterprise resource planning)
ERP is basically a system which is built to plan and manage the resource of an entire
organization in a very efficient way in a productive manner which produces profit. It is a
synchronized configuration of software which connects the whole business in a single place
at a fingertip of a user who controls the business. It saves paperwork and resources by
creating and collecting accurate data from business environment.
In this efficient system some failures occur which will be discussed below these failures
factors are assessed are based on information based on information provided by participants
and compiled from the documents containing ERP implementation which includes all
information such as project plans ,meeting schedules as well as email communications and so
on. There are some critical failures listed below:
1. Not effective transfer of knowledge: In ERP systems as we all know communication is
most important factor if knowledge or information is not correctly transferred to the system
this system wouldn’t show the desired results and produce errors between incoming and
outgoing resources from organization. This happens when some poorly trained and
inexperienced consultants are associated with ERP design and they can’t deliver professional
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IT Governance and Strategy for Business
training to the users there training material and user documentation is meaningless to the
users. This happens to the ineffective transfer of knowledge, which leads to not so sufficient
skills to use for project manager and project team members.
2. Less Efficient IT Infrastructure: In business IT infrastructure security and reliability are
2 most important factors and an ERP system is a part of it .so it must be well built to process
the knowledge and update it every time the new resources added or less from the
management as well as this system make sure that this information is secure and accessed
only by authorized personnel’s. This also happens when management are having financial
issues in developing ERP systems and due to low budget, low performance infrastructure
hardware is proposed by consultants and project manager. This leads to slow processing of
ERP systems due to less cost and substandard hardware which is more economic, less
efficient and affects the productivity of company in negative ways.
3. Poor project management effectiveness: During ERP implementation ,due to limited
ERP knowledge or having poor management skills some non-effective management of ERP
is done .This leads to failure of ERP implementation because there is failure in plan, manage
and maybe in leading of the project .An ERP system is complex and it is necessary for project
teams to collaborate with top management ,consulting each and every department ,all kinds
of users which will use this system along with some experienced consultants helps during
implementation process. These projects are challenging and demanding because it involves
all tedious work of managing processes. This work requires human resources which is skilled
and trained in all purposes to attain less error in management of ERP. All activities of
different levels of ERP implementation could not be conducted together that is testing of
system and its configuration after implementation of ERP. Some users would not understand
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easily the process of new implementation due to their over-tight schedules which leads to
poor adaptation of business processes. For healthy management the project manager can
conduct the performance alliance based on communication, training and skills of every
individual and help them to evaluate.
4. Poor quality of BPR (Business process Re-engineering): For resolving problems
associated with business process mismatching BPR is conducted. This Business process Re-
engineering is conducted for correcting system configuration problems created misleading
elements by project team members .It’s a matter of fact that the business processes are not
ready reengineered to fit with ERP systems, as well as project teams are also not ready for
adaptation of new business processes .BPR allows project team to understand that how ERP
system according to business processes and plans. This leads to better adaptation to every
new business process and system usage of ERP process. So before implementation some
analyses are conducted to evaluate the software functionalities for business requirement. If
the analysis would be made on conducting the poor implementation in ERP, mainly leads to
misbalance in business process. BPR is a very divine process of feedbacks within the
organization to develop better ERP systems which leads to help in growth of company
(Aladwani, 2001).
Task 3
Classification of 4 most critical failure factors in ERP
Implementation of ERP is not so easy ,most of the organisations that accomplished this will
give many benefits to their users and workers as well .This improves productivity off
business of both large and small scales will implement ERP systems to attain an good
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position by developing business processes and by developing efficient communication. When
an errorless ERP system is developed it successfully provide advantages to companies. But
to build an accurate ERP system these failures are elements which would be eliminated, are
as follows:
1. Knowledge transfer in ERP: This is most common failure of ERP systems, a common
ERP system must having a good communication network where all data and knowledge
flows easily but in a secure manner. This knowledge must be anything such as stock prices,
resource management, employee working in company and money flowing as capital along
with all the transactions performed by the company in a specific period of time is updated
securely in ERP systems. On technological level, the qualities of servers and network used in
ERP system of large scale industry must be efficient to update and secure all the information
which is kept on ERP servers. On cultural level, all users of this system will update the
knowledge on real time basis in ERP for better monitoring of all commercial activities of
their company. (Imran et al., 2016).
2. Efficient IT Infrastructure: An ERP is designed in such a way so that it can initially
handles all resources and transactions of the company .On managerial basis ,it should
designed in a way so that it must be both secure and reliable system that should update itself
or manually both but in both ways it works perfectly . on technological basis, it must be
secure and automated in a way so that if it may update in improper manner it corrects itself
by learning from old ERP models .on cultural basis, some trained and skilled employees are
required to build the efficient ERP for the company which will further update itself according
to needs (Palaniswamy and Frank, 2002).
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3. Project effectiveness: During implementation of ERP, the poor management skills of the
team leader of project leads to poor project effectiveness of ERP after implementation .So it
is necessary during ERP implementation and planning is done by skilled and trained
employees and most of them having the experience in business strategies .On managerial
basis ,project effectiveness depends on works of employees that how they design the billing
system, the resource log and IT infrastructure of ERP. On technological basis, ERP
implementation is done after consulting the IT employees so that they can ensure the
reliability and security of ERP .On Cultural basis, ERP implementation project is a matter of
teamwork where if each individual makes their effort in building the better, reliable and
secure ERP.
4. Improvement in quality of BPR (Business Process Re-engineering): Improvement in
quality of ERP requires BPR (business process re-engineering) where all problems are
resolved regarding business process mismatching. These problems are generally created by
company fellows itself due to which failures occur in business. To overcome this BPR is
conducted in ERP time to time for identifying the problems. On managerial basis, company
and its employees are always ready to join new business plans concluded during BPR .On
technological basis, BPR is conducted in a proper way to resolve problems of EPR
effectively .On cultural basis, all employees show their interest in adapting new ways of
business strategies that how business plans and processes in a motivated way (Robinson,
2002).
 Two major lessons that can be learned by analysing the ERP failure at the case
company can be viewed according to the major perspectives i.e. Planning and
Implementation.
1. The major lesson which is being learned from the ERP failure i.e. FoxMeyer Case
as it is the largest drug wholesaler with the annual sales approximately 5 million
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IT Governance and Strategy for Business
$. The basic principle of the company is to deal in the healthcare services. It was
not a failure of automation according to the FoxMeyer but it was the failure
occurred from the management side. And management has the unrealistic
expectations. And to overcome from this failure the analysis was made on the
market research and product evaluation which was implemented by the
FoxMeyer. And then he purchased the warehouse automaton from the vendor and
chose a consultant for integrating and implementing the systems in the proper
form. The major lessons which were made on the software selection for the high
level technical and operational expertise, contingency plan for how to survive in
case of system failure and the stakeholder’s involvement which majorly include
the end users and the customers.
2. The second case was made on the ERP implementation failure on the Hershey
Company. As it is the largest chocolate manufacture in the North America. Its
sales are roughly around 80% chocolates and 20% non-chocolate. Hershey
selected SAP’s R/3 ERP software and used other software’s for managing the
integration. And they chose to Big Bang Approach rather than the Phased
Approach. The Failure arises on the order fulfilment, processing and shipment
started to arise. And they were unable to meet the its commitment regarding to the
delivery and hence they just lost their credibility in the market as the distributors
who ordered the product was not able to deliver the supply to the retailers.
Hershey implemented was on the ERP software on the time cost of the company
around 150 $ US million in sales. The main reasons of failure were arise due to
over squeezing implementation schedules, wrong approach, customer activities
etc. The Learning outcomes from the failure were made on the proper ERP
implementation that should not force on the unreasonable timeline. To not have
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IT Governance and Strategy for Business
the fixed schedule on cutover during busy seasons, for this the organisation must
reduce the orders in the cutover period.
Task 4
 Two key actions that you would have taken to avoid the ERP systems
implementation failure in that company
The ERP software can be rollout for a company form the single implementation failed
process. The ERP implementation should efficiently integrated with the both internal
and external information management covering towards the organisational and
implementation of the ERP failure that have occurred recently.
The basic impact that intends on the implementation failure of the ERP system in the
Company
1. No Specified Destination- It is been clearly specified with the clear expectations
is that the organisation must take the appropriate decision for implementing to the
new ERP system. It mainly focus on the initial step focusing on the main
objectives and then to its success. Other problem deals with the lacking in the
consequences on the problems being arise and solved for the desired outcome or
for the specific task which was been made regarding the financial justification of
the projects leading in the challenges and controlling the scope and maintaining
the executive support. It basically define that the business which is important for
the processing to all the business activities, its financial decisions and the
deadlines are being made for moving up the target to reach to the success (Roy
and Sangle, 2016).
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2. Customization- It ensures to make the major aspects on breaking of an ERP tools.
In today’s scenario most of the company have starting using and have customizing
the ERP systems which add risks, time and cost dealing with the projects. It is
the main impact which is being caused in the implementation of the risk failure
because the interfaces, data conversions are the major areas which has a greater
impact of the threat being caused and the technical risks in ERP implementations.
Despite of the risks and the expenses being made in the ERP most of the
companies are unable to control the project and have the scope of turning down to
the customizations. It always begins from the initial part but technically it grown
onto the larger scale (Teltumbde, 2000).
Conclusion
According to the organisational requirements of the system failure generally occurs due to
organisational database is not well maintained on the basis of the identification of the threats
or the failure causes is due to the failing of the techniques or because of untrained teaching
and the operations performed are not properly done and the root causes for resolving the
failures it is essential that the personnel’s should be well trained and expertise in performing
the operations and implementing the ERP using the ERP software’s of an organisation that
should have the continue process in the business operations and the strategies being design
and planned according to the proper implementation of the ERP technologies. It basically
provides the systematic approach for converging the failure causes and implementing the
effective actions for the appropriate usability of the tools and technologies focusing on the
operations being performed to the organisational behaviour.
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References
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Decker, P., Durand, R., Mayfield, C.O., McCormack, C., Skinner, D. and Perdue, G., 2012.
Predicting implementation failure in organization change. Journal of Organizational Culture,
Communications and Conflict, 16(2), p.29.
Hawari, A.A. and Heeks, R., 2010. Explaining ERP failure in a developing country: a
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Imran, M.K., Imran, M.K., Rehman, C.A., Rehman, C.A., Aslam, U., Aslam, U., Bilal, A.R.
and Bilal, A.R., 2016. What’s organization knowledge management strategy for successful
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pp.136-144.
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Teltumbde, A., 2000. A framework for evaluating ERP projects. International journal of
production research, 38(17), pp.4507-4520.
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