In-house implementation refers to the process of implementing ERP in an organisation by carrying out certain activities within the organisation, such as research and development. In this, the organisation does not outsource the services, and the employees are assigned the job for maintaining flexibility in the business.
ERP implementation is a complex process, which requires a large amount of capital. If the ERP package is implemented successfully, it helps in generating profits for the organisation. However, in case of implementation failure, the organisation either faces a loss of revenue or may even go out of business.
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When carrying out the ERP implementation process, it is important to complete it accurately within the defined time frame. For this, the employees performing the implementation should be knowledgeable and possess the necessary skills to perform the job effectively. They should be familiar with the technical issues and the ERP package.
Some of the important skills that are required by the employees participating in the implementation process are listed as follows:
- Organising and managing the project: The employees should possess certain skills that help in the smooth running of the project. These skills include organisational skills, team management and project management skills.
- Handling problems related to the implementation process: Employees come across several problems and issues during the implementation process. Thus, it becomes really important to handle all such issues for ensuring the success of the project.
- Interpersonal skills: Implementation of an ERP system always creates a sense of job insecurity among the employees working on it. Thus, it is important that the implementation team is able to build trust among the employees and seek their cooperation for a successful implementation.
- Leadership skills: The implementation process calls for an interaction with many people across departments. Thus, it is important for the implementation team to have good communication and leadership skills.
- Training skills: ERP project involves training at various levels. For instance, executive programmes for top management and functional training for team members and end users are required for familiarising the individuals with the system.
Organisations or individuals who customise ERP packages according to the requirements of different organisations are called vendors. In other words, vendors are known for developing ERP packages that are customised according to the needs and requirements of the clients.
In developing customised solutions for the clients, vendors consume their invaluable resources, skills and knowledge. It is the responsibility of the vendors to provide an adaptable, efficient and simple solution. Before developing ERP packages, both the vendor and the client decide the price with mutual agreement. The cost generally depends on the complexity involved in developing an ERP package.
Earlier, there were a limited number of ERP vendors in the market. However, now, most of the organisations know the benefits of the ERP system, and many have implemented the same. This has certainly increased the demand for ERP vendors. Today, many vendors offer ERP packages that comprise various new and innovative features, providing a competitive edge over competiting products. Moreover, for keeping up with the competition, vendors also upgrade their ERP packages with the latest technologies.
The intensive competition in the market makes it difficult for organisations to select the right vendor who would provide the best ERP package according to their needs. Vendors manage the overall installation of ERP systems in organisations and provide a proper training to employees so that they can work efficiently with the newly implemented system. Although vendors are completely responsible for the ERP installation, the success or failure of the system depends on the organisation.
Role of Vendor
The vendor agrees to provide a customised solution to the client on the mutually agreed price. Before providing the service, both the client and vendor sign a contractual agreement for agreeing on some common terms that are related to the price, time, quality, requirements of the client, performance, etc.
Once an organisation purchases the ERP system, it becomes the responsibility of the vendor to send a team of experts who would help in installing the system in the organisation. This team is also responsible for ensuring the efficiency and effectiveness of the operations.
Liaison officers are hired by the vendors to help in tracking the activities and operations performed by the implementation team. Vendors usually provide training for using the ERP system, its components and features.
Consultants are system experts who are a part of the implementation process, apart from the vendors. They are responsible for tackling and monitoring all the issues related to ERP implementation. They have a sound knowledge of the ERP system and can help in monitoring the performance of the system or with any issues related to it. In addition to this, they possess expertise in different fields, such as the administration, management and control of ERP implementation projects.
The major functions performed by consultants in ERP implementation are as follows:
- To maintain documents used during the ERP implementation project
- To examine the existing market conditions and business processes of the organisation
- To perform time study and gap analysis during the implementation process
- To customise the system and review its operations
Consultants form an integral part of the implementation process as their role begins right from the evaluation process and remains until the training is imparted to the employees. In an organisation, a consultant may be in the role of a project manager, team leader or representative of the vendor.
Mostly, the consultants possess technical expertise that makes them fit for handling technical issues faced while implementing ERP. In addition, they possess a thorough knowledge of the current market situation and various software applications necessary for integrating ERP.
They also possess problem-solving and relationship-building skills and effective communication. All these qualities and skills make them indispensable for the job. However, the fee charged by consultants is considerably high and not every organisation finds it easy to afford it.
ERP Implementation Process
The different types of consultants that may be engaged in the ERP implementation process are as follows:
- Management consultants: The main focus of these consultants is on performing the basic managerial functions that include planning, organising, directing and controlling. All these functions are performed keeping in mind the ERP implementation process. Throughout the implementation and usage process, it is the responsibility of the management consultants to guide and direct the organisation.
- Application consultants: They are mainly concerned with the configuration of the system as per the needs and requirements mentioned by the organisation. They are also responsible for guiding the organisation regarding the functions of the organisational systems.
- Technical consultants: These people are mainly concerned with sorting out any technical issues related to ERP implementation. These issues may be related to database conversion, communication protocols, operating system management and programme integration.
Role of Consultant
Consultants carry out an extensive research to understand the requirements of the organisation or the client. This helps in defining the functionality of the system required.
We have already studied that the vendors impart the training, while the consultants determine whether the training objectives have been achieved in a proper manner or not.
Some of the major responsibilities of ERP consultants are given as follows:
- To handle the ERP implementation process
- To decide the activities to be performed and ensure that all these activities are performed properly
- To ensure equal participation from all members who are a part of the ERP implementation process
- To add value to the ERP implementation project through their expertise and knowledge
- To ensure cost-effectiveness by a proper utilisation of the resources within a specific time frame
- To provide necessary support to the organisation in such a manner that the benefits of the ERP system can be brought to use
- To customise the ERP package by carrying out a detailed research
Individuals who use the ERP system after its implementation are known as end users. These can be the employees or clients of the organisation. The end users or the employees are given training so that they can adapt to the new system and gain confidence. These users take pilot training from vendors so that the ERP system could become successful. End users play an important role in supporting the proper and successful implementation of the ERP package.
It requires trust, loyalty and cooperation of the end users/employees to derive benefits for the organisation with the help of a new ERP package. ERP implementation changes the roles and responsibilities of the employees, which further creates a sense of job insecurity and makes them resistant to change.
In today’s business environment, change is an inevitable aspect that has to be accepted. When employees become resistant to change, it becomes the responsibility of the management to build trust among them.
Some of the main reasons for employee resistance are as follows:
- Fear of being dismissed: An ERP system automates all the business functions of an organisation. Thus, an ERP system introduces several changes in the existing job profile of the employees in the organisation. In such a case, the employees may feel redundant and develop job insecurity.
- Fear of getting failed: Sometimes, the employees develop a feeling that ERP implementation would make things more complex than ever. This further makes the employees develop a mindset that they would fail to learn the skills required for operating the new system.
- Passive attitude towards change: Some employees also feel that changes affect the existing way of life. Employees with such an attitude always resist change as they fail to look at the brighter side of the change.
Some of the steps that the management should take for overcoming resistance by the employees are given as follows:
- Address employee issues: Employees show resistance towards change when they are not properly informed about the benefits offered by the new system. Thus, it is very important to educate the employees about the benefits that would be derived from the ERP package.
- Provide proper training and knowledge: Imparting a proper training to employees will boost their confidence as it would give them on-the-job training.
- Conduct pilot programme: In this type of project, a specific number of competent employees are picked. These employees are imparted with training that boosts the confidence of others to become a part of the project.
- Encourage employee participation: Equal and fair participation from both the employees and the management plays a key role in the successful implementation of an ERP package.
Contracts with Vendors, Consultants and Users
According to Webster’s dictionary, a contract is defined as, “an agreement between two or more people to do something, especially one formally set forth in writing and enforceable by law”.
A contract clearly establishes the boundaries as well as the extent of the rights and responsibilities of the parties. Examples of a contract include loan agreements, sales agreements, service agreements, etc. Contracts play an important role in the ERP implementation process. It is important to draft an unambiguous contract for the successful ERP implementation.
The contracts with vendors, consultants and end users are explained as follows:
Contract with vendors
Generally, software vendors have legal departments that facilitate the development of a standard format for a contract. These formats consist of all the legal requirements and clauses that help to safeguard their own interests. The contracting company’s legal department must check and ensure the authenticity of the documents and should proceed by signing the documents.
Contract with consultants
Consultants form part of the group that plays a key role in the implementation process. Consulting services are subjective in nature; thus, it becomes difficult for the organisation to analyse whether it is realising the real value for money on the consulting services being provided. Therefore, contracts are necessary for setting the terms and conditions.
Contract with end users
End users are the most important resource of an organisation. These are the people who would be working on the project after training is provided by the organisation on its expense. When they receive training on a particular project, their market value increases, and they get lucrative offers. If these employees leave the organisation for some other lucrative offer, the company would have to bear the loss. Thus, it is in the interest of the organisation to sign a contract with the employees.