Companies have to use their resources efficiently to remain competitive and offer a unique product or service to their customers. The modern developments within the information technology industry allow organizations to use computers and cloud-based sources for many of their daily tasks. Enterprise resource planning (ERP) systems help these establishments to plan their operations adequately, however, many struggle with implementing this software. This paper aims to examine the challenges and obstacles that obstruct ERP from being adopted globally.
Challenges in Adoption
The implementation of ERP can change the strategies applied to daily operations within a company and therefore, these systems imply a significant alteration within an organization. Kasemsap (2015) states that ERP is the most significant breakthrough in information technology that will change approaches to operations of many small and medium-sized companies. It will affect their ability to grow and compete in a particular industry, and thus, it is crucial to identify specific issues that prevent enterprises from adopting this system globally.
In general, ERP can be applied in the following elements of a company – “manufacturing, supply chain, sales, finance, human resources, budgeting, and customer service activities” (Kasemsap, 2015, p. 789). While this is an excellent approach to automating the mentioned processes, the social, cultural, and organizational components that affect a particular company may detract from the proper implementation of ERP.
It is crucial to understand that the employees of an organization will be using these ERP systems; thus, it is necessary to assess the readiness and attitudes towards change within a particular company. According to Costa, Ferreira, Bento, and Aparicio (2016), the primary issue that companies have to resolve is ensuring that the staff members use ERPs in their work. The authors refer to this problem as productivity paradox, because to adopt the new ERP system executives have to ensure that people within the company are ready to use it. Additionally, Costa et al. (2016) state that the Technology Acceptance Model is the primary approach used by many organizations to integrate ERPs into their operations.
The model implies that the attitudes of individuals and subjective norms within an establishment predetermine the outcomes of implementation. Thus, a crucial component that affects the failure of ERP systems is the attitudes of personnel and their ability to use this software.
It is necessary to determine whether the complex nature of ERP systems affects the implementation outcomes. Rajan and Baral (2015) state that the primary issue obstructing ERPs from being adopted globally is the different nature of the end user who will be applied the software in his or her daily work. While ERP systems are complex form the technical point of view and require a team of professionals for installation, the number of failed ERP projects suggests that other factors should be considered as well.
Approximately two-thirds of ERP projects do not have a successful outcome, and the following components should be considered when planning the implementation of an ERP – “self-efficacy, organizational support, training, and compatibility” (Rajan & Baral, 2015, p. 105). Therefore, the particular ERP system and its complexity do not have a significant impact on the outcomes of implementation.
Based on the previously discussed information it can be concluded that information technology literacy and readiness to adopt the system does not affect the decision making process and implementation within companies. However, the process of educating end users proves to be challenging for executives and ERP developers. For instance, one of the companies examined by Seethamraju (2015) dedicated six months to ensure that its employees are capable of utilizing at least fifty to seventy percent of the capabilities that the chosen ERP had. Therefore, an important issue that a company’s management should consider is the time and resources required for improving the knowledge of staff members regarding information systems, and its impact on the overall benefit of the ERP.
While ERP’s are implemented within the existing structures of organizations, the nature of the solution may require alterations in approaches to some daily operations. Seethamraju (2015) states that the implementation of ERP requires changes in some of the existing processes, which may be a significant challenge for companies. Therefore, it is crucial to have a sufficient understanding of the current processes and the effect of ERP-facilitated changes to ensure successful outcomes because lack of process understanding and knowledge about the strategy of applying ERP to resolve organizational issues is another factor contributing to the failure of implementation.
According to Altamony, Tarhini, Al-Salti, Gharaibeh, and Elyas (2016) and Das and Dayal (2016), to implement ERPs globally, executives have to prepare for the change, create an implementation plan, and measure the impact on the end user. This approach can help ensure that ERP is appropriately implemented and all possible obstacles are considered.
Overall, ERP systems are necessary for small and medium-sized companies because they enable growth and efficient management of operations. However, most of the initiatives regarding the implementation of these systems fail. The primary factors affecting the outcomes of ERP adoption are the attitude towards change within a company, existing knowledge of information technology, and organizational culture and processes. Proper planning and assessment of feedback from end users is crucial and enables successful implementation of ERP systems.
Altamony, H., Tarhini, A., Al-Salti, Z., Gharaibeh, A. H., & Elyas, T. (2016). The relationship between change management strategy and successful enterprise resource planning (ERP) implementations: A theoretical perspective. International Journal of Business Management and Economic Research, 7(4), 690-703.
Costa, C., Ferreira, E., Bento, F., & Aparicio, M. (2016). Enterprise resource planning adoption and satisfaction determinants. Computers in Human Behavior, 63, 659-671. Web.
Das, S., & Dayal, M. (2016). Exploring determinants of cloud-based enterprise resource planning (ERP) selection and adoption: A qualitative study in the Indian education sector. Journal of Information Technology Case and Application Research, 18(1), 11-36. Web.
Kasemsap, K. (2015). Implementing enterprise resource planning. In M. Khosrow-Pour (Ed.), Encyclopedia of information science and technology (3rd ed.; pp. 789-807). Hershey, PA: IGI Global.
Rajan, C., & Baral, R. (2015). Adoption of ERP system: An empirical study of factors influencing the usage of ERP and its impact on end user. IIMB Management Review, 27(2), 105-117. Web.
Seethamraju, R. (2015). Adoption of software as a service (SaaS) enterprise resource planning (ERP) systems in small and medium sized enterprises (SMEs). Information Systems Frontiers, 17(3), 475-492. Web.