Intro – Best practice
Best practice is a technique or a well-defined methodology which has been proven in research and experience (theory and empirical) (Rouse, 2007).
Implementing best practices in business operations is one of the main benefits of an ERP system for organization; General goal of best practice is to reduce any chance of failure during ERP implementation process, in fact success of an ERP system depends on how effectively an organization can use best practices. ERP vendors offer their successful experiences as best practices to the organizations to use them for effective and efficient implementation.
1- If an organization is unwilling to change its business processes, can it gain any value from an ERP? How could this be achieved?
The main reason of implementing an ERP system is to improve and maintain the information flow between different departments of the organization, and in order to implementing it successfully organizations face two choices (Zach and Munkvold, 2012):
- Organizational adaption – Adapt their business processes to the ERP best practices provided by the vendor (business process reengineering)
- ERP Customization – Configure the ERP system to meet their desired functionality
Many authors in their researches debate the fact that low ERP system customization is the key success element in an ERP implementation project (Zach and Munkvold, 2012).
But here the situation is the second option; it means the company is unwilling to change its business process, so it has to do some customization and modifications in the ERP system at some level depends on its needs in order to get the most out of the system. Here are few reasons why organization may do so (Sharma et al., 2012) such as:
- Required functionalities are not provided by the vendor in the package
- To improve the efficiency
- To implement the business process (best practice) required by the organization in the ERP system
- Lack of power in the implementation team to avoid customization
- To improve the acceptance level of the new system among users
- To simplify and facilitate the transition
- Cost reduction by decreasing the number of staff in the organization
So the organizations which believe the vendor best practices cannot full fill their needs and they require to adapt the system to their business process can do this via implementing only some parts/modules of the ERP system; by this the organization prevent the implementation of the unnecessary modules with keeping the original structure of the ERP system, or they can modify the code in order to align the ERP functionalities with their business process. This method can be done in three different ways (Rothenberger and Srite, 2009):
I. By choosing suitable system components and modify them within the boundaries allowed by the developers
II. Implementing third-party software (bolt-on) which is developed to work with the ERP system and supplement its functionality.
III. Developing custom features on top of the ERP platform/code using standard programming languages
2- What are the risks?
“ERP customization is problematic and may increase the cost and limit maintainability” (Zach and Munkvold, 2012)
There are two kinds of motivation for organizations in order to implementing an ERP system, technical and strategic (Zach and Munkvold, 2012). Some organizations only want to replace their old unsatisfactory legacy systems with a modern integrated one but without changing their business processes (technical motivation), this is quite common among small or medium size companies.
There are certain risks associated with that (adapting ERP to the business process) such as:
- Problem with maintenance/upgrade for the to the current and future system needs
- High risk of failure because of adopting unproven methodology/technique (not using proven ERP best practices)
- Unable to get the desired/expected functionality from the system
- Cross the time/budget limits
References:
ROTHENBERGER, M. A. & SRITE, M. 2009. An Investigation of Customization in ERP System Implementations. IEEE Transactions on Engineering Management, 56, 663-676.
ROUSE, M. 2007. Best Practice [Online]. TechTarget. Available: http://searchsoftwarequality.techtarget.com/definition/best-practice 2012].
SHARMA, R. R. K., PATIL, S. M. & TANDON, A. 2012. CUSTOMIZATION AND BEST PRACTICES MODEL FOR ADOPTING ERP SYSTEM: AN ANALYSIS. International Journal of Business Strategy, 12, 1-9.
ZACH, O. & MUNKVOLD, B. E. 2012. Identifying reasons for ERP system customization in SMEs: a multiple case study. Journal of Enterprise Information Management, 25, 462-478.
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