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The importance of top management support for better implementation of ERP

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ivana stojkova

on 25 October 2012

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Transcript of The importance of top management support for better implementation of ERP

photo (cc) Malte Sörensen @ flickr The Importance of the top management support for better implementation of ERP Critical Success Factor for ERP implementation:

Top management support
Business plan and vision
Re-engineering business process
Effective project management and project champion
Teamwork and composition
ERP system selection
User involvement
Education and training Top management support - the most important success factor in ERP system implementation projects According to Zhang et al. (2002) top management support in ERP implementation has two main aspects:
providing leadership
providing the necessary resources The roles of top management in ERP implementation comprise developing:
understanding of the capabilities and limitations
establishing reasonable objectives for ERP system
exhibiting commitment
communicating the corporate strategy to all employees Top management support should provide direction to the implementation teams monitoring the progress of the project. As a result of the invested efforts by the top management in the process of planning the ERP systems , companies gain big advantages Top companies more recently, implement some of these ERP systems :
- SAP
- People soft
- ABB automation
- Oracle
- Invensys
- i2
- Epicor
- Deltek Because of low involvement and low commitment of the top management , and weak implementation of the ERP plans , ERP systems are facing failures . It has happened to some well known companies such as HP in 2004,when HP project managers knew all of the things that could go wrong with their ERP rollout. But they just didn't plan for so many of them to happen at once . The project eventually cost HP $160 million in order backlogs and lost revenue - more than five times the project's estimated cost As of 17 January 2011 Alkaloid CONS DOOLEL Skopje, a daughter company of Alkaloid AD commences operating in the state-of-the-art data information system SAP, the world leader in ERP (Enterprise Resource Planning) systems. This implementation makes Alkaloid AD Skopje the only Macedonian company to have conducted a RollOut of SAP ERP (brand name AlkaSAP), the best and most complex world solution for an integrated system of data management in a subsidiary. The RollOut in Alkaloid Cons comprises four functional modules:
- Finances
- Controlling
- Warehouse and material management
- Sales and distribution The implementation was accomplished by a project team consisting of 40 experts from different areas, employees of Alkaloid AD and the Croatian software company b4b. This project is expected to increase the efficiency of the operations of Alkaloid CONS DOOEL Skopje and the parent company with its subsidiaries as well as optimization, standardization, integration and unification of the overall business processes. The National Shipping Company of Saudi Arabia (NSCSA) is the first company in the Middle East that successfully implemented the unified system of the Enterprise Resource Planning (Oracle ERP). The company before the implementation of these systems, had restructured the business processes for the purpose of improving them to ensure bridging the gaps between the current practice and the new systems needs and in a way that is consistent with the nature of the company activities, furthermore train the users of these systems so as to ensure optimum use of this new technology applied. Mr. Saleh Al-Jasser, the CEO of NSCSA, expressed his pride for having successful implementation of Manarah project. This comes as a confirmation of the leadership the company has taken, as the first company in the Middle East to implement an information system for corporate governance and risk management that enhance the quality of disclosure and in the process contributing to the company commitment to the standards and laws governing its activity This project represented a quantum leap in the company business and march, noting that the initiatives of the company strategy in the Information Technology revolved around developing the IT Infrastructure, enhancing the security of information and communications, ensuring continuity of IT services, developing human resources to be capable of providing the necessary support with high quality for all users, and managing the entire systems professionally in a way that meets the current and future requirements of the company. Bharat Petroleum Corporation Limited (BPCL), a leading player in the Indian petroleum industry in November 2001, successfully implemented an Enterprise Resource Planning (ERP). As part of the organizational restructuring exercise, the company was revamped, by the top management into six Strategic Business Units (SBUs): Retail, Aviation, Lubricants, Liquefied Petroleum Gas (LPG),Industrial & Commercial (I&C), and Refinery
These SBUs were integrated with support entities like
Information Systems,
Finance,
Human Resources,
Strategy and
Brand Management.

This restructuring was designed to help the organization focus on specific customer segments and address their individual needs. The company also realized that it needed to streamline its processes and integrate the organization as a whole. It is when the company decided to implement ERP Implementation began in April 2000 after the company decided to integrate all its activities
through the ERP package SAP R/3 Bharat Petroleum Corporation Limited (BPCL)-India NSCSA -Saudi Arabia Four things need to happen to ensure that senior management supports the project manager and provides the necessary human resources:
1.Senior management need to understand their role in driving the project, and in selling it to the wider organization.
2.Senior management need to support the project by providing the necessary resources.
3.Plan realistically and incorporate planned disruptions and unavailability into the project plan.
4.Have a mechanism to deal with unexpected difficulties Issues on ERP Implementation
Implementing an ERP causes massive change that needs to be carefully managed to reap the benefits of an ERP solution.
Critical issues that must be carefully considered to ensure successful implementation include:
fundamental issues
organizational change process
people
implementation cost and time
employee morale. Alkaloid CONS -Makedonia Al-Mashari et al. (2003) argued that top management support does not end with initiation and facilitation, but must extend to the FULL IMPLEMENTATION of an ERP system. The implementation of an ERP system must be viewed as a high priority project by top management (Shanks et al. 2000), as the system will change how the organization does its business
Top management commitment to the project is necessary to ensure the success of the system, otherwise the project is most likely to fail or fail to deliver the full range of the forecasted benefits Thank You : ) Management needs to exploit future communication and computing technology issues in order to integrate the ERP
systems with e-business applications in their organization to decide on the key related implementation and business issues. Due to enormous impact on the competitive advantage of the company , top management must consider the strategic implications of implementing an ERP solutions keeping in mind the size of the company and the modules installed. Nikola Dimovski - IT Direktor na Alkaloid

Alkaloid e eden vid pioner na SAP vo Makedonija, bidejki kompanijata go vovede ERP sistemot na SAP, odnosno aplikacijata za rakovodenje so resursi uste vo 2007 godina. IT direktorot na Alkaloid, Nikola Dimovski, raskazuva kako Centarot za informaticka tehnologija Alkaloid ja zapocna prikaznata so voveduvanje ERP sistemi uste vo 1975 godina, koga ostanatite kompanii vo Makedonija seuste se cudele zasto kompanijata "frla" tolku mnogu pari za nekakov sistem koj moze i da ne se koristi.

"Dolgo vreme koristevme "in haus" resenija, no na kraj procenivme deka ni treba nesto poefikasno, koe za desetina godini ke ni donese komparativna prednost, so koe ke moze da rabotime pobrzo i poefikasno" , veli Dimovski
Toj objasni deka celata implementacija ja cinese kompanijata 2 milioni evra, vklucuvajki ja opremata, licencite, i pomosta od partnerite, a traese 10 meseci, sto e relativno brzo za eden takov poteg, vo koj ucestvuvaa okolu 100 luge.

"Koga stanuva zbor za vakvi sistemi, najgolem problem e ako premnogu cekate so implemetacijata. Togas ke se soocite so situacija vo koja sto biznisot premnogu ke trpi, bidejki ERP sistemot ne moze preku nok da se vovede, zasto za implemetacija e potrebna minimum edna godina. " veli Dimovski
Poradi brzoto implementiranje, Alkaloid bese rangirana pomegu trite kompanii koi najbrzo i najdovro implemetirale SAP aplikacija, poradi sto megunarodno bese pretstavena na poveke kongresi.

"ERP resenijata se kompleksi za implementiranje, no se korisni za kompaniite. Treba samo da odlucite i da zapocnete so implementacija, a potoa dolgorocno ke se vrati investicijata, Nie ne gi frlivme samo parite, toa bese edna dobra investicija," naglasi Dimovski. Interview
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