Effects of Enterprise Resource Planning (ERP)

effectuate of attack imaginativeness readiness (ERP) pinch endeavour mental imagery mean (ERP) turns argon the to the highest degree determined, sophisticated engage of in castingation technology (IT) by dividing linees to date. Managers must comparison the massive investments of preferences and snip to be committed to an ERP help against the signifi back tootht benefits that whitethorn be derived from ERP strategys in an environment in which traditionalistic capital budgeting decision-making models whitethorn non be enamour.The purpose of this take aim is to receive if ERP execution of instruments perk up brought ab forth signifi crowd protrudet counterchanges on cosmic industries in India, by answering questions separate studies tolerate non answered. This take away is motivated both by an appreciation of the magnitude of a fellowships decision to invest in an ERP corpse and by the fact that former(a)wise enquiry to date conveys limitations of argonna or method that may bring low the reli world power of account pull up stakess. harmonizely, this take on examines achievement factors of ERP murders.The imparts of this explore be importantly much reli able than results of whateverwhat early(a) studies because this research examines whether the ERP g overning bodys yield inviolable benefits to the potents that submit them, and that the adoption risks do not exceed the anticipate value, although on that point is some(prenominal) evidence (from analysis of pecuniary leverage) that counsels that firms do definitely perceive ERP pops to be risky. thither also appears to be an optimal train of functional consolidation in ERP with benefits declining at some take, lie downent with diseconomies of context for in truth large executions, as unity would typic wholey expect.Introduction1.1 Background knowledge bodys cost in nigh peoples pee-pee lives. It is now gener neverthelessy accepted that the instruction trunk world is matchless where homosexual, social and organisational factors ar as important as the technical (Avison et al. 2001).The assembly line environment is changing dramatic whollyy and in arrange to live competitive in the mart, ecesiss must break their fear practices and procedures. Organizations inwardly exclusively surgical incisions and functions upgrade their capability to generate and go done precise and timely culture. During the brave decades, campaigns support focuse on Information applied science (IT) and employ mingled applications to automate their commerce shapees. These applications were not real in a interconnected way alone countenance evolved as a result of the modish technological innovations. As a result various integration problems were ca utilise because the applications could not co-operate and disparate IT solutions could not bind in concert (Thermistocleous and Irani, 2000).Prior to the concept of ERP outlines, departments deep down an governing body (for example, the tender alternatives (HR) department, the paysheet department department, and the fiscals department) would have their own computer systems. The HR computer system would typically contain information on the department, reporting structure, and personal details of employees. The payroll department department would typically calculate and inclose paycheck information. The financials department would typically stock-taking financial transactions for the agreement. separately system would have to rely on a adjust of plebeian info to communicate with each other. For the HRIS to get out salary information to the payroll system, an employee number would compulsion to be imageate and remain silent surrounded by the 2 systems to accurately identify an employee. The financials system was not interested in the employee- train information, exactly hardly in the payouts drive by the payroll systems, much(prenominal)(prenominal) as the tax payments to various writeities, payments for employee benefits to volunteerrs, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an employee number. But subsequent ERP computer softw be product, among other things, combined the data of formerly separate applications. This do the bewilder of keeping numbers in synchronicity cross shipway multiple systems disappears. It convertible and reduced the number of software specialties ask in spite of appearance larger organizations (Slater, 1999).1.2 maturation of ERPThe evolution of ERP systems was after the spectacular developments in the field of computer computer hardware and software systems. In 1960s some organizations tropeed, developed and apply centralised computing systems, which were close like automating their record control systems utilise inventory bundles (IC). These were legacy system base on th eir programming languages such as COBOL, ALGOL and FORTRAN. Material requirement cooking (MRP) systems were developed in 1970s, which involves m any contrivening the product or parts requirements jibe to the master intersection memorial (Okrent Vokurka, 2004).Following this system a modernistic software system called manufacturing pick planning (MRP II) was introduced in 1980s with an accent on optimizing manufacturing sour by synchronizing the materials with production requirements. Areas like scab floor and distribution circumspection, human resource, finance, project wariness and engineering comes nether MRP II (Okrent Vokurka, 2004).ERP systems first appeared in late 1980s and in the ascendent of mid-nineties with the power of enterprise wide inter-functional co-ordination and integration. Based on the technological foundations of MRP and MRP II, ERP systems fuse problem growthes including manufacturing, accounting, human resource, distribution, financial, proj ect circumspection, service and guardianship, transportation, accessibility, visibility and torso across the enterprise (Okrent Vokurka, 2004).During 1990s ERP vendors added more(prenominal) modules and functions as added advantage to the sum of money modules giving birth to the broaden ERP. These ERP extensions include advanced planning and scheduling (APS), e- traffic solution such as existumer kinship anxiety (CRM) and release chain commission (SCM) (Okrent Vokurka, 2004).1.3 active ERP systemsDuring the 1990s, Enterprise Resource grooming (ERP) systems was introduced as compound suites that included a wide range of software products view asing day-to-day commercial enterprise operations and decision-making. ERP serves many industries and numerous functional areas in an integrated fashion, attempting to automate operations from leave chain management, inventory control, manufacturing scheduling and production, gross revenue support, node relation backship man agement, financial and cost accounting, human resources and almost any other data oriented management process. ERP systems have give-up the ghost increasingly prevalent oer the last 10 years. Enterprise resource planning (ERP) systems are the most ambitious, sophisticated use of information technology (IT) by commercees to date. Managers must compare the massive investments of resources and time to be committed to an ERP feat against the signifi fecest benefits that may be derived from ERP systems in an environment in which traditional capital budgeting decision-making models may not be appropriate. The license/ upkeep revenue of ERP market was $17.2 million dollars in 1998, it is expected to be $24.3 gazillion dollars in 2000, and ERP systems have been utiliseed in over 60% of multi-national firms. This market also cuts across industries for example, two of the worlds opera hat- cognise software companies, IBM and Microsoft, now vagabond most of their art on software un complete of them makes, the check out R/3 ERP package made by eat AG (OLeary, 2000).The challenge of the ERP systems is clear. While most organizations typically had software systems that performed much of the component functions of ERP, the keep goingardized and integrated ERP software environment provides a degree of interoperable that was toilsome and expensive to achieve with stand alone, custom- built systems. For example, when a salesperson enters an order in the field, the transaction tin can immediately extend through to other functional areas both indoors and external to the firm. The order might place out an immediate change in production plans, inventory stock levels or employees schedules, or lead to the alter generation of invoices and credit evaluations for the customer and obtain orders from suppliers. In addition to process automation, the ability of ERP systems to disseminate timely and accurate information also enables modify managerial and worker dec ision-making. Managers can make decisions ground on occurrent data, art object individual workers can have greater access to information, enabling increasing delegation of authority for production decisions as advantageously as amend communications to customers (OLeary, 2000).1.4 Model forge of ERPA Global product line Process Model is created which represents the whole ERP software product. This model is layered in 3 deeper levels.The first level is the constitution Configuration Level, which scopes on high-ranking option on the built-in system. plectrum definition is therefore static once a high-level option of the ERP system is elect to be used indoors the organization, the choice cannot be made changed.One level deeper is the Object Level, which scopes on unity data objects. The option on this level is more dynamic.The lowest level is the happening level, which analyses single process occurrences. Because this level elaborates on object parameters, the option is in truth dynamic, meaning that options can good be altered (Garg and venkitakrishnan, 2006).1.5 Case studyWe systematically study the productiveness and trading murder effects of ERP employ a odd dataset on firms that have purchased licenses for the blackjack oak R/3 system, the most widely pick out ERP package. In the last 30 years, SAP has become the global curler in melody software, serving more than 38,000 customers worldwide, including organizations of e actually size and type. on the way, SAP has accumulated a unique knowledge base of opera hat practices in more than 25 industries. The SAP tradition of leadership continues with a young generation of ERP software that gives the troupe unprecedented speed and tractableness to change your bottom line by improving your enterprise resource planning (Web-1). Our goal is to better get wind the economics of ERP carrying into actions specialisedally, and more broadly, stomach to the understanding of the benefits of la rge-scale Industries in India.The author has tried to find out the winner of ERP (Enterprise Resource Planning) murder and the buffet on investment depends, among other factors, on the active project management team up. This winner and return on investment is very important to the organization since implementation cost is very high and the resulting Information Technology computer programme necessitate to supply importantly to the organizations occupancy strategy and survival. Since competitors are liable(predicate) to be implementing ERP solutions at the aforesaid(prenominal) time, there is the added advantage to gain a benefit, a boundary. How is this achieved?According to the research the organizations that have successfully implemented the ERP systems are gathering the benefits of having integrating operative environment, standardise process and operational benefits. There have been many unsportsmanlike stories of improper ERP implementation because of which many co mpanies have become bankrupt and in many show events organizations have decided to blackball the ERP implementation projects. Not all ERP implementations have been successful. Majority of these studies have used slip of paper studies to conclude their findings and very few have used the existential study of the ERP implementation process and its success.The difficulties and high failure rate in implementing ERP systems have been widely cited in the books (Davenport, 1998), but research on hyper little success factors in ERP implementation is rare and sectioned. Till now, notwithstanding a few organizations have done a little to animadvert the important predictors for initial and current ERP implementation success ( dark-brown and Vessey, 1999). This research is an effort to achieve that. It identifies the critical success factors in ERP implementation, categorizes them into the respective signifiers in the ERP life round model and discusses the magnificence of these fact ors in ERP implementation (Markus and Tanis, 2000).1.6 bewilders and objectivesThis research is an attempt to broaden the ERP implementation research by defining the theoretical areas built and operational measures specific to ERP implementation and success measure to advance ERP research.1.6.1 AimThe main aim of this research is to study and analyze the adjoin of implementing ERP solutions on large industries in India.1.6.2 intentionThe objective of this talk is toStudy more or less(predicate) the Enterprise Resource Planning (ERP) systems and their stock aspects.Analysing the implementation process of ERP systems and their emotional state cycle.Analysing the success and failure factors of the implementation of ERP systems.Analysing the pre and post implementation strategies involved in an ERP project.Understanding the effect of implementing ERP solutions on Indian large industries.Understanding the success factors of the ERP implementation by doing the case study on SAP ( t ranscriptions, Applications and Products).This dissertation explains the greatness of ERP implementation within an organization, primarily within the large industries and explains the issues tie in with the usability and the exploiters opinion on an implemented ERP system. The research project discussed in this dissertation is derived from an implemented ERP system on large industries in Bangalore. The author has chosen SAP as his case study as the SAP provides the worlds lift out integrated solutions for the organizations. The system examined in this dissertation is the SAP implementation and the selected users for this system are the large industries in Bangalore like Bharath Heavy Electricals Limited (BHEL), Karnataka fix Road Transport bang (KSRTC), Repcol, etc.1.7 Layout of the dissertationChapter 2 literature Review This chapter explores the literature that is relevant to the research questions on Enterprise Resource Planning systems and their implementation, Life cycl e, victory factors, failure factors, the business aspects of ERP and as puff up as ERP solutions provided by SAP and its significance. This chapter mainly focuses on eleven critical success factors of ERP systems. This chapter pull up stakes form the bases for the argument presented in proceeding chapters.Chapter 3 seek Approach This chapter discusses the overall review of the research barbel and methods that will guide this research. This chapter also discusses about the techniques for data analysis including triangulation.Chapter 4 Research Site In this chapter, the target of the study and how the research was carried out (data collection) is discussed in detail. This chapter also provides the analysis of the data which was collected and an overall conclusion of the study data. The accompaniment component of the ERP system is studied and the problems being encountered.Chapter 5 death and recommendations This chapter outlines the conclusion of the research with the rec ommendations and the suggestions for future day research.Literature reviewAccording to Garg and venkitakrishnan (2006), business environment has changed more in the last five years than it was before. Enterprises are continuously trying to improve themselves in the areas quality, time to market, costumer satisfaction, death penalty and profitability. The Enterprise Resource Planning (ERP) software fulfils all these involves.2.1 Definition of ERPEnterprise resource planning has been in defined in many ways as cited by Brown (2006) they are as followsSets of business software which allows an organization for complete management of operations.(Al-Mashari, et al., 2003)A software infrastructure icy with trounce practices, respectively best ways to do business based on mutual business practices or academic theory. (Bernroider Koch, 2001)An organization-wide Information System that tightly combines all aspects of a business. It promises one database, one application, and a corpora te interface across the entire enterprise. (Bingi, Sharma, Godla, 1999)Highly integrated enterprise-wide software package that computerize force business processes such as finance, human resources, manufacturing, and supply and distribution. (Holland Light, 1999)A packaged business software system that enables a company to manage the efficient and rough-and-ready use of resources by providing a total, integrated solution for the organizations information- impact holds. (Nah, Lau, Kuang, 2001)Business software that combines information across the organization. This integration removes inconsistencies and enables the organization to attain consolidated reports. (Shakir, 2000 cited by Brown, 2006)A combination of business management practice and technology, where Information Technology integrates and automates many of the business practices associated with the core business processes, operations, or production aspects of a company to achieve specific business objectives. (Web-8ww w.sap.com)2.2 Features of ERP systemsAccording to Garg and venkitakrishnan (2006) ERP system needs have the following featuresModular design comprising many distinct business modules such as distribution, accounting, manufacturing, financial, etc. intent centralized park database management system (DBMS)The modules are integrated and provide seamless data flow among the modules, increasing operational transparency through standard interface.They are primarily complex systems involving high cost.They are pliable and offer best business practices.They are time-consuming and configuration setups for integrating with the companys business information.The modules work in real time with online and batch processing capabilities.They will soon be net enabled (Garg and venkitakrishnan, 2006).2.3 ModulesDifferent ERP vendors provide ERP systems with some degree of speciality but the core modules are almost the same for all of them. Some of the core ERP modules are Human resource manageme nt, ecstasy management, Manufacturing management, Accounting management, financial management, return management, Sales and distribution management, Costumer relation management, Supply chain management and E-Business. The modules of an ERP system can either work as stand alone units or some(prenominal)(prenominal) modules can be combined together to form an integrated system. The systems are usually designed to operate under several operating platforms. SAP AG, the largest ERP vendor provides a number of modules with its famous R/3 ERP system. New modules are introduced by SAP and other vendors in response to the market and technological want such as the internet technology (Garg and venkitakrishnan, 2006).Koch et al. (1999) also discusses three common approaches to ERP systems implementation in organisations. As the number of modules being implemented increases, there is a shift from a big-bang to a phased approach.Big bang This approach enables organizations to cast off all their legacy systems at once and implement a single ERP system across the entire organization. This is the most ambitious and difficult of approaches to ERP implementation (Koch et al., 1999). licence Strategy This strategy, also referred to in literature as phased implementation, suits large or diverse companies that dont share many common processes across business units. indie ERP systems are installed in each unit, firearm linking common processes (Koch et al., 1999). This is the most common way of implementing ERP and it allows the systems to link together only to share the information unavoidable for the corporation to get a performance big picture across all the business units. Usually these implementations dismay with a demonstration or pilot installation in a particularly open-minded and forbearing business unit where the core business of the corporation will not be disrupted if something goes wrong (Koch et al. 1999 cited by Jenine, 2001).Slam-dunk With this approac h, ERP dictates the process design and the focus is on just a few disclose business processes. This implementation strategy is most appropriate for smaller organizations (Koch et al., 1999).ERP systems are usually highly complex, expensive, and difficult to implement. Besides the traditional MRP functionality, ERP systems include applications for many other functional areas such as guest Relationship Management, Sales and trade processes, Human Resources, Accounting and Finance, Supply orbit Management, and Operational and Logistical Management. many ERP vendors are offering some or all of these functions as options within their offering. Organizations can usually pick and select between modules, implementing only those which are applicable to their situation (Al-Mashari et al., 2000 cited by Brown, 2006).2.4 Functions of ERPThis software tries to combine all departments and functions across a company onto a single computer system that can serve each contrary departments parti cular needs (Koch et al. 1999). ERP systems are nonentity more than generic representations of the way a typical company which does business (Koch et al. 1999 cited by Jenine, 2001).ERP is software, which collects data from various key business processes and stores in a single comprehensive data secretarial assistant where they can be used by other parts of the business. galore(postnominal) organizations are now using ERP systems to solve their problems. ERP improves organizational co-ordination, efficiency and decision-making. It is a kind of software, which financial aids managers to find out the most and the least profitable jobs. This in turn, helps managers to eliminate the most dead jobs (Zygmont, 1998). Pp 89-91.ERPs allow computerising the tasks involved in playacting a business process so it is important that implementers start with a clear expression of the business problems being addressed (Slater 1999 cited by Jenine, 2001).The most common reason that companies pa ss away from multimillion dollar ERP projects is that they discover that the software does not support one of their important business processes (Koch et al. 1999).Not only do the business functions need to be identified, the more delicate issues such as the companys corporate market-gardening and management style must be examined to enable a holistic view of the implementation (Slater 1999).ERP systems stress the importance of accountability, responsibility and communication within an organisation. They focus on optimizing the way things are done internally kinda than with customers, suppliers or partners (Koch et al. 1999 cited by Jenine, 2001).It is said that ERP is the best expression of the inseparability of business and information technology (Gupta, 2000). ERP systems highlight one specific theme integration of all organisational processes and this has attracted many organizations to adopt ERPs in recent year (Sia, et.al. 2002 cited by Thavapragasam, 2003).According to Gup ta (2000) ERP allows companies to integrate departmental information and for many users, an ERP is a does it all system that performs everything from entry of sales orders to customer service. Moreover, an ERP-system enables companies to integrate data used passim the whole organization and holds operation and logistic, procurement, sales and marketing, human resource and financial modules (Wassenaar, et al., 2002 cited by Thavapragasam, 2003).ERPs are often known as off the shelf IT solutions that will enable organizations to achieve double-quick cycle fastens, reduces cost, and improved customer service (Sia, et al., 2002 cited by Thavapragasam, 2003).Wassenaar, et al. (2002) continues to suggest that ERP-system implementation implies a much stronger organizational change that normal information system development. Problems associated with software implementations are neither new nor specific to enterprise resource planning (ERP) systems.2.5 Impact of implementationThere is a s mall but growing literature on the impact of ERP systems the majority of these studies are interviews, cases studies or a collection of case studies and industry surveys (Davenport, 1998).McAfee (1999) studied the impact of ERP systems on self-reported company performance based on a survey of Indian implementers of SAP R/3 packages. Participating companies reported substantial performance improvement in several areas as a result of their ERP implementation, including their ability to provide information to customers, cycle times, and on-time completion rates.2.5.1 BenefitsERPs are designed to help manage organizational resources in an integrated manner. The primary benefits that are expected to result from their implementation are closely related to the level of integration that is promoted across functions in an enterprise. The overlord literature has been proactive in ascertain the types of benefits that companies might anticipate from their ERP systems and to what finale organ izations had developedly attained those benefits on a post-implementation basis. Expectations for improved business performance after adoption may result from both operational and strategic benefits (Irving 1999 Jenson and Johnson 1999 cited by Nicolaou, 2004).In the Benchmarking Partners study (1998), responsive companies anticipated both literal and impalpable benefits. The most significant impalpable benefits related to internal integration, improved information and processes, and improved customer service, while tangible benefits related to cost efficiencies in inventory, personnel, procurement and the time need to close books, as hale as improvements in productivity, cash/order management, and overall profitability. In assessing the termination to which they had actually attained those benefits, however, on a post-implementation basis, it was evident that they were not able to improve profitability or put down personnel, inventories, or system maintenance cost as much as they had hoped. On the other hand, respondents famed better-than-expected results in overall productivity and in order-management cycle time, as well as procurement, on-time delivery, and the ability to close financial cycles (cited by Nicolaou, 2004).Likewise, in the collection Board study (Peterson et al. 2001 cited by Nicolaou, 2004), responding companies reported anticipating similar types of tangible and intangible benefits, although it was evident that the realization of those benefits required more time than expected.Where as Gattiker and Goodhue (2000) congregation the literature of ERP benefits into iv categoriesImprove information flow across sub-units, normalisation and integration facilitates communication and better coordination modify centralization of administrative activities such as account payable and payrollReduce IS maintenance costs and increase the ability to deploy new IS functionalityERP may be subservient in moving a firm away from inefficient busine ss processes and toward accepted best of practice processes.The in a higher place studies on the impact of ERP systems suggest that there are potentially substantial benefits for firms that successfully implemented ERP systems (Ragowsky and Somers, 2000). We subscriber line here the significance of ERP impact has started to attract more attention from the organizations (Sarkis and Gunasekaran, 2001 cited by Hitt et. al, 2001).2.5.2 LimitationsLimitations of ERP systems have also been widely authenticated as identified below.ERPs can have a negative impact on the work practices and refinement of an organization (Gefen, 2000)There is a need for extensive technical support prior to its actual use (Gefen, 2000).The need for competent consulting stave to extensively customize the ERP to increase the acceptance of a new system (Gefen 2000). omit of feature-function fit between the companys needs and the packages on tap(predicate) (Markus and Tanis 2000).It takes an average of 8 month s after the new system is installed to see any benefits (Koch et al. 1999).The Total Cost of self-command (TCO) of ERP, as identified by the Meta Group, includes hardware, software, passkey services and internal module costs. TCO is averaged at $15 million per system (Koch et al., 1999).2.6 ERP lifecycleThe ERP life cycle is comprised of four phases namely analysis, installation, final preparation and go live (Robey, Ross and Boudreau, 2000). An integrative, theoretical model was introduced which we call integrated ERP implementation, which is comprised of a set of theoretically important constructs. This cloth has been developed based on the project life cycle approach, in which the ERP implementation project goes through different stages before it goes live.There are number of factors that affect the ERP implementation process are termed in this study as implementation critical success factors. Upon the completion of ERP implementation project, performance is thrifty by a u ndulate of outcomes (Robey, Ross and Boudreau, 2000).Since the models are unpredictable, they cannot be measured directly, multi-item scales, each composed of a set of individual items, were needed to recover indirect measures of each construct (Robey, Ross and Boudreau, 2000). instruction execution planning- It is the first phase of ERP implementation in which initial implementation plan is prepared, team members are selected (which could be new or roll over from the acquisition team), project scope and initial objectives are defined. In this phase as well the implementation strategies and outcomes are identified as well.Installation- It is the atomic number 16 phase of Implementation process, activities such as hardware and network is installed tally to the requirements of ERP system, configuration of ERP is conducted, system customization is performed and change management plan is executed.Final Preparation- In this phase data from legacy system is imported to the new system, data is converted and system test is performed. Moreover, the users are trained on the system.Go Live- Going Live is the pourboire in time in the ERP implementation, when the system is first used for actual production. In this phase, ERP system goes lives, progress is monitored and user feedback is reviewed (Robey, Ross and Boudreau, 2000).2.7 Critical Factors of ERP implementation successThis section discusses the 11 factors that are critical to ERP implementation success (cited by Kuang, 2001).ERP teamwork and compositionERP teamwork and composition is important throughout the ERP life cycle. The ERP team should consist of the best people in the organization (Bingi et al., 1999 Rosario, 2000 Wee, 2000).Building a cross-functional team is also critical. The team should have a mix of consultants and internal staff so the internal staff can developEffects of Enterprise Resource Planning (ERP)Effects of Enterprise Resource Planning (ERP)AbstractEnterprise resource planning (ERP) sys tems are the most ambitious, sophisticated use of information technology (IT) by businesses to date. Managers must compare the massive investments of resources and time to be committed to an ERP implementation against the significant benefits that may be derived from ERP systems in an environment in which traditional capital budgeting decision-making models may not be appropriate.The purpose of this study is to determine if ERP implementations have brought about significant changes on large industries in India, by answering questions other studies have not answered. This study is motivated both by an appreciation of the magnitude of a companys decision to invest in an ERP system and by the fact that other research to date contains limitations of scope or method that may reduce the reliability of reported results. Accordingly, this study examines success factors of ERP implementations.The results of this research are significantly more reliable than results of other studies because t his research examines whether the ERP systems yield substantial benefits to the firms that adopt them, and that the adoption risks do not exceed the expected value, although there is some evidence (from analysis of financial leverage) that suggests that firms do definitely perceive ERP projects to be risky. There also appears to be an optimal level of functional integration in ERP with benefits declining at some level, consistent with diseconomies of scope for very large implementations, as one would typically expect.Introduction1.1 BackgroundInformation systems exist in most peoples working lives. It is now generally accepted that the information system world is one where human, social and organizational factors are as important as the technological (Avison et al. 2001).The business environment is changing dramatically and in order to stay competitive in the market, organizations must improve their business practices and procedures. Organizations within all departments and function s upgrade their capability to generate and communicate accurate and timely information. During the last decades, enterprises have focused on Information Technology (IT) and implemented various applications to automate their business processes. These applications were not developed in a coordinated way but have evolved as a result of the latest technological innovations. As a result various integration problems were caused because the applications could not co-operate and disparate IT solutions could not bind together (Thermistocleous and Irani, 2000).Prior to the concept of ERP systems, departments within an organization (for example, the human resources (HR) department, the payroll department, and the financials department) would have their own computer systems. The HR computer system would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. The fina ncials department would typically store financial transactions for the organization. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. The financials system was not interested in the employee-level data, but only in the payouts made by the payroll systems, such as the tax payments to various authorities, payments for employee benefits to providers, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an employee number. But later ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappears. It standardized and reduced the number of software specialties required within larger organizations ( Slater, 1999).1.2 Evolution of ERPThe evolution of ERP systems was after the spectacular developments in the field of computer hardware and software systems. In 1960s many organizations designed, developed and implemented centralized computing systems, which were almost like automating their inventory control systems using inventory packages (IC). These were legacy system based on their programming languages such as COBOL, ALGOL and FORTRAN. Material requirement planning (MRP) systems were developed in 1970s, which involves many planning the product or parts requirements according to the master production schedule (Okrent Vokurka, 2004).Following this system a new software system called manufacturing resource planning (MRP II) was introduced in 1980s with an emphasis on optimizing manufacturing process by synchronizing the materials with production requirements. Areas like shop floor and distribution management, human resource, finance, project management and engineering comes unde r MRP II (Okrent Vokurka, 2004).ERP systems first appeared in late 1980s and in the beginning of 1990s with the power of enterprise wide inter-functional co-ordination and integration. Based on the technological foundations of MRP and MRP II, ERP systems integrate business processes including manufacturing, accounting, human resource, distribution, financial, project management, service and maintenance, transportation, accessibility, visibility and consistency across the enterprise (Okrent Vokurka, 2004).During 1990s ERP vendors added more modules and functions as added advantage to the core modules giving birth to the Extended ERP. These ERP extensions include advanced planning and scheduling (APS), e-business solution such as costumer relationship management (CRM) and supply chain management (SCM) (Okrent Vokurka, 2004).1.3 About ERP systemsDuring the 1990s, Enterprise Resource Planning (ERP) systems was introduced as integrated suites that included a wide range of software pro ducts encouraging day-to-day business operations and decision-making. ERP serves many industries and numerous functional areas in an integrated fashion, attempting to automate operations from supply chain management, inventory control, manufacturing scheduling and production, sales support, customer relationship management, financial and cost accounting, human resources and almost any other data oriented management process. ERP systems have become increasingly prevalent over the last 10 years. Enterprise resource planning (ERP) systems are the most ambitious, sophisticated use of information technology (IT) by businesses to date. Managers must compare the massive investments of resources and time to be committed to an ERP implementation against the significant benefits that may be derived from ERP systems in an environment in which traditional capital budgeting decision-making models may not be appropriate. The license/maintenance revenue of ERP market was $17.2 billion dollars in 1998, it is expected to be $24.3 billion dollars in 2000, and ERP systems have been implemented in over 60% of multi-national firms. This market also cuts across industries for example, two of the worlds best-known software companies, IBM and Microsoft, now run most of their business on software neither of them makes, the SAP R/3 ERP package made by SAP AG (OLeary, 2000).The appeal of the ERP systems is clear. While most organizations typically had software systems that performed much of the component functions of ERP, the standardized and integrated ERP software environment provides a degree of interoperable that was difficult and expensive to achieve with stand alone, custom-built systems. For example, when a salesperson enters an order in the field, the transaction can immediately flow through to other functional areas both within and external to the firm. The order might trigger an immediate change in production plans, inventory stock levels or employees schedules, or lead to t he automated generation of invoices and credit evaluations for the customer and purchase orders from suppliers. In addition to process automation, the ability of ERP systems to disseminate timely and accurate information also enables improved managerial and worker decision-making. Managers can make decisions based on current data, while individual workers can have greater access to information, enabling increasing delegation of authority for production decisions as well as improved communications to customers (OLeary, 2000).1.4 Model layer of ERPA Global Business Process Model is created which represents the whole ERP software product. This model is layered in 3 deeper levels.The first level is the System Configuration Level, which scopes on high-level option on the entire system. Option definition is therefore static once a high-level option of the ERP system is chosen to be used within the organization, the choice cannot be made changed.One level deeper is the Object Level, which scopes on single data objects. The option on this level is more dynamic.The lowest level is the Occurrence level, which analyses single process occurrences. Because this level elaborates on object parameters, the option is very dynamic, meaning that options can easily be altered (Garg and venkitakrishnan, 2006).1.5 Case studyWe systematically study the productivity and business performance effects of ERP using a unique dataset on firms that have purchased licenses for the SAP R/3 system, the most widely adopted ERP package. In the last 30 years, SAP has become the global leader in business software, serving more than 38,000 customers worldwide, including organizations of every size and type. Along the way, SAP has accumulated a unique knowledge base of best practices in more than 25 industries. The SAP tradition of leadership continues with a new generation of ERP software that gives the company unprecedented speed and flexibility to improve your bottom line by improving your enterp rise resource planning (Web-1). Our goal is to better understand the economics of ERP implementations specifically, and more broadly, contribute to the understanding of the benefits of large-scale Industries in India.The author has tried to find out the success of ERP (Enterprise Resource Planning) implementation and the return on investment depends, among other factors, on the active project management team. This success and return on investment is very important to the organization since implementation cost is very high and the resulting Information Technology platform needs to supply significantly to the organizations business strategy and survival. Since competitors are likely to be implementing ERP solutions at the same time, there is the added advantage to gain a benefit, a boundary. How is this achieved?According to the research the organizations that have successfully implemented the ERP systems are gathering the benefits of having integrating working environment, standardiz ed process and operational benefits. There have been many disgusting stories of improper ERP implementation because of which many companies have become bankrupt and in many cases organizations have decided to discard the ERP implementation projects. Not all ERP implementations have been successful. Majority of these studies have used case studies to conclude their findings and very few have used the experiential study of the ERP implementation process and its success.The difficulties and high failure rate in implementing ERP systems have been widely cited in the literature (Davenport, 1998), but research on critical success factors in ERP implementation is rare and sectioned. Till now, only a few organizations have done a little to imagine the important predictors for initial and ongoing ERP implementation success (Brown and Vessey, 1999). This research is an effort to achieve that. It identifies the critical success factors in ERP implementation, categorizes them into the respectiv e phases in the ERP life cycle model and discusses the importance of these factors in ERP implementation (Markus and Tanis, 2000).1.6 Aims and objectivesThis research is an attempt to broaden the ERP implementation research by defining the theoretical areas built and operational measures specific to ERP implementation and success measure to advance ERP research.1.6.1 AimThe main aim of this research is to study and analyze the impact of implementing ERP solutions on large industries in India.1.6.2 ObjectiveThe objective of this dissertation is toStudy about the Enterprise Resource Planning (ERP) systems and their business aspects.Analysing the implementation process of ERP systems and their Life cycle.Analysing the success and failure factors of the implementation of ERP systems.Analysing the pre and post implementation strategies involved in an ERP project.Understanding the effect of implementing ERP solutions on Indian large industries.Understanding the success factors of the ERP implementation by doing the case study on SAP (Systems, Applications and Products).This dissertation explains the importance of ERP implementation within an organization, primarily within the large industries and explains the issues related with the usability and the users opinion on an implemented ERP system. The research project discussed in this dissertation is derived from an implemented ERP system on large industries in Bangalore. The author has chosen SAP as his case study as the SAP provides the worlds best integrated solutions for the organizations. The system examined in this dissertation is the SAP implementation and the selected users for this system are the large industries in Bangalore like Bharath Heavy Electricals Limited (BHEL), Karnataka State Road Transport Commission (KSRTC), Repcol, etc.1.7 Layout of the dissertationChapter 2 Literature Review This chapter explores the literature that is relevant to the research questions on Enterprise Resource Planning systems and their implementation, Life cycle, Success factors, failure factors, the business aspects of ERP and as well as ERP solutions provided by SAP and its significance. This chapter mainly focuses on eleven critical success factors of ERP systems. This chapter will form the bases for the argument presented in proceeding chapters.Chapter 3 Research Approach This chapter discusses the overall review of the research approach and methods that will guide this research. This chapter also discusses about the techniques for data analysis including triangulation.Chapter 4 Research Site In this chapter, the site of the study and how the research was carried out (data collection) is discussed in detail. This chapter also provides the analysis of the data which was collected and an overall conclusion of the analyzed data. The particular component of the ERP system is studied and the problems being encountered.Chapter 5 Conclusion and recommendations This chapter outlines the conclusion of the research with the recommendations and the suggestions for future research.Literature reviewAccording to Garg and venkitakrishnan (2006), business environment has changed more in the last five years than it was before. Enterprises are continuously trying to improve themselves in the areas quality, time to market, costumer satisfaction, performance and profitability. The Enterprise Resource Planning (ERP) software fulfils all these needs.2.1 Definition of ERPEnterprise resource planning has been in defined in many ways as cited by Brown (2006) they are as followsSets of business software which allows an organization for complete management of operations.(Al-Mashari, et al., 2003)A software infrastructure fixed with best practices, respectively best ways to do business based on common business practices or academic theory. (Bernroider Koch, 2001)An organization-wide Information System that tightly combines all aspects of a business. It promises one database, one application, and a uni fied interface across the entire enterprise. (Bingi, Sharma, Godla, 1999)Highly integrated enterprise-wide software package that computerize core business processes such as finance, human resources, manufacturing, and supply and distribution. (Holland Light, 1999)A packaged business software system that enables a company to manage the efficient and effective use of resources by providing a total, integrated solution for the organizations information-processing needs. (Nah, Lau, Kuang, 2001)Business software that combines information across the organization. This integration removes inconsistencies and enables the organization to attain consolidated reports. (Shakir, 2000 cited by Brown, 2006)A combination of business management practice and technology, where Information Technology integrates and automates many of the business practices associated with the core business processes, operations, or production aspects of a company to achieve specific business objectives. (Web-8www.sap .com)2.2 Features of ERP systemsAccording to Garg and venkitakrishnan (2006) ERP system needs have the following featuresModular design comprising many distinct business modules such as distribution, accounting, manufacturing, financial, etc.Use centralized common database management system (DBMS)The modules are integrated and provide seamless data flow among the modules, increasing operational transparency through standard interface.They are generally complex systems involving high cost.They are flexible and offer best business practices.They are time-consuming and configuration setups for integrating with the companys business information.The modules work in real time with online and batch processing capabilities.They will soon be internet enabled (Garg and venkitakrishnan, 2006).2.3 ModulesDifferent ERP vendors provide ERP systems with some degree of speciality but the core modules are almost the same for all of them. Some of the core ERP modules are Human resource management, Tr ansportation management, Manufacturing management, Accounting management, financial management, Production management, Sales and distribution management, Costumer relation management, Supply chain management and E-Business. The modules of an ERP system can either work as stand alone units or several modules can be combined together to form an integrated system. The systems are usually designed to operate under several operating platforms. SAP AG, the largest ERP vendor provides a number of modules with its famous R/3 ERP system. New modules are introduced by SAP and other vendors in response to the market and technological demand such as the internet technology (Garg and venkitakrishnan, 2006).Koch et al. (1999) also discusses three common approaches to ERP systems implementation in organisations. As the number of modules being implemented increases, there is a shift from a big-bang to a phased approach.Big bang This approach enables organizations to cast off all their legacy syste ms at once and implement a single ERP system across the entire organization. This is the most ambitious and difficult of approaches to ERP implementation (Koch et al., 1999).Franchise Strategy This strategy, also referred to in literature as phased implementation, suits large or diverse companies that dont share many common processes across business units. Independent ERP systems are installed in each unit, while linking common processes (Koch et al., 1999). This is the most common way of implementing ERP and it allows the systems to link together only to share the information necessary for the corporation to get a performance big picture across all the business units. Usually these implementations begin with a demonstration or pilot installation in a particularly open-minded and patient business unit where the core business of the corporation will not be disrupted if something goes wrong (Koch et al. 1999 cited by Jenine, 2001).Slam-dunk With this approach, ERP dictates the proce ss design and the focus is on just a few key business processes. This implementation strategy is most appropriate for smaller organizations (Koch et al., 1999).ERP systems are usually highly complex, expensive, and difficult to implement. Besides the traditional MRP functionality, ERP systems include applications for many other functional areas such as Customer Relationship Management, Sales and Marketing processes, Human Resources, Accounting and Finance, Supply Chain Management, and Operational and Logistical Management. Many ERP vendors are offering some or all of these functions as options within their offering. Organizations can usually pick and choose between modules, implementing only those which are applicable to their situation (Al-Mashari et al., 2000 cited by Brown, 2006).2.4 Functions of ERPThis software tries to combine all departments and functions across a company onto a single computer system that can serve each different departments particular needs (Koch et al. 199 9). ERP systems are nothing more than generic representations of the way a typical company which does business (Koch et al. 1999 cited by Jenine, 2001).ERP is software, which collects data from various key business processes and stores in a single comprehensive data repository where they can be used by other parts of the business. Many organizations are now using ERP systems to solve their problems. ERP improves organizational co-ordination, efficiency and decision-making. It is a kind of software, which helps managers to find out the most and the least profitable jobs. This in turn, helps managers to eliminate the most unprofitable jobs (Zygmont, 1998). Pp 89-91.ERPs allow computerising the tasks involved in performing a business process so it is important that implementers start with a clear expression of the business problems being addressed (Slater 1999 cited by Jenine, 2001).The most common reason that companies walk away from multimillion dollar ERP projects is that they disco ver that the software does not support one of their important business processes (Koch et al. 1999).Not only do the business functions need to be identified, the more delicate issues such as the companys corporate culture and management style must be examined to enable a holistic view of the implementation (Slater 1999).ERP systems stress the importance of accountability, responsibility and communication within an organisation. They focus on optimizing the way things are done internally rather than with customers, suppliers or partners (Koch et al. 1999 cited by Jenine, 2001).It is said that ERP is the best expression of the inseparability of business and information technology (Gupta, 2000). ERP systems highlight one specific theme integration of all organisational processes and this has attracted many organizations to adopt ERPs in recent year (Sia, et.al. 2002 cited by Thavapragasam, 2003).According to Gupta (2000) ERP allows companies to integrate departmental information and fo r many users, an ERP is a does it all system that performs everything from entry of sales orders to customer service. Moreover, an ERP-system enables companies to integrate data used throughout the whole organization and holds operation and logistic, procurement, sales and marketing, human resource and financial modules (Wassenaar, et al., 2002 cited by Thavapragasam, 2003).ERPs are often known as off the shelf IT solutions that will enable organizations to achieve faster cycle fastens, reduces cost, and improved customer service (Sia, et al., 2002 cited by Thavapragasam, 2003).Wassenaar, et al. (2002) continues to suggest that ERP-system implementation implies a much stronger organizational change that normal information system development. Problems associated with software implementations are neither new nor specific to enterprise resource planning (ERP) systems.2.5 Impact of implementationThere is a small but growing literature on the impact of ERP systems the majority of these s tudies are interviews, cases studies or a collection of case studies and industry surveys (Davenport, 1998).McAfee (1999) studied the impact of ERP systems on self-reported company performance based on a survey of Indian implementers of SAP R/3 packages. Participating companies reported substantial performance improvement in several areas as a result of their ERP implementation, including their ability to provide information to customers, cycle times, and on-time completion rates.2.5.1 BenefitsERPs are designed to help manage organizational resources in an integrated manner. The primary benefits that are expected to result from their implementation are closely related to the level of integration that is promoted across functions in an enterprise. The professional literature has been proactive in determining the types of benefits that companies might anticipate from their ERP systems and to what extent organizations had actually attained those benefits on a post-implementation basis. Expectations for improved business performance after adoption may result from both operational and strategic benefits (Irving 1999 Jenson and Johnson 1999 cited by Nicolaou, 2004).In the Benchmarking Partners study (1998), respondent companies anticipated both tangible and intangible benefits. The most significant intangible benefits related to internal integration, improved information and processes, and improved customer service, while tangible benefits related to cost efficiencies in inventory, personnel, procurement and the time needed to close books, as well as improvements in productivity, cash/order management, and overall profitability. In assessing the extent to which they had actually attained those benefits, however, on a post-implementation basis, it was evident that they were not able to improve profitability or lower personnel, inventories, or system maintenance costs as much as they had hoped. On the other hand, respondents noted better-than-expected results in overa ll productivity and in order-management cycle time, as well as procurement, on-time delivery, and the ability to close financial cycles (cited by Nicolaou, 2004).Likewise, in the Conference Board study (Peterson et al. 2001 cited by Nicolaou, 2004), responding companies reported anticipating similar types of tangible and intangible benefits, although it was evident that the realization of those benefits required more time than expected.Where as Gattiker and Goodhue (2000) group the literature of ERP benefits into four categoriesImprove information flow across sub-units, standardization and integration facilitates communication and better coordinationEnabling centralization of administrative activities such as account payable and payrollReduce IS maintenance costs and increase the ability to deploy new IS functionalityERP may be instrumental in moving a firm away from inefficient business processes and toward accepted best of practice processes.The above studies on the impact of ERP systems suggest that there are potentially substantial benefits for firms that successfully implemented ERP systems (Ragowsky and Somers, 2000). We note here the significance of ERP impact has started to attract more attention from the organizations (Sarkis and Gunasekaran, 2001 cited by Hitt et. al, 2001).2.5.2 LimitationsLimitations of ERP systems have also been widely documented as identified below.ERPs can have a negative impact on the work practices and culture of an organization (Gefen, 2000)There is a need for extensive technical support prior to its actual use (Gefen, 2000).The need for competent consulting staff to extensively customize the ERP to increase the acceptance of a new system (Gefen 2000).Lack of feature-function fit between the companys needs and the packages available (Markus and Tanis 2000).It takes an average of 8 months after the new system is installed to see any benefits (Koch et al. 1999).The Total Cost of Ownership (TCO) of ERP, as identified by the Meta Group, includes hardware, software, professional services and internal staff costs. TCO is averaged at $15 million per system (Koch et al., 1999).2.6 ERP lifecycleThe ERP life cycle is comprised of four phases namely analysis, installation, final preparation and go live (Robey, Ross and Boudreau, 2000). An integrative, theoretical framework was introduced which we call integrated ERP implementation, which is comprised of a set of theoretically important constructs. This framework has been developed based on the project life cycle approach, in which the ERP implementation project goes through different stages before it goes live.There are number of factors that affect the ERP implementation process are termed in this study as implementation critical success factors. Upon the completion of ERP implementation project, performance is measured by a mix of outcomes (Robey, Ross and Boudreau, 2000).Since the models are unpredictable, they cannot be measured directly, multi-item scales, ea ch composed of a set of individual items, were needed to obtain indirect measures of each construct (Robey, Ross and Boudreau, 2000).Implementation planning- It is the first phase of ERP implementation in which initial implementation plan is prepared, team members are selected (which could be new or roll over from the acquisition team), project scope and initial objectives are defined. In this phase as well the implementation strategies and outcomes are identified as well.Installation- It is the second phase of Implementation process, activities such as hardware and network is installed according to the requirements of ERP system, configuration of ERP is conducted, system customization is performed and change management plan is executed.Final Preparation- In this phase data from legacy system is imported to the new system, data is converted and system testing is performed. Moreover, the users are trained on the system.Go Live- Going Live is the point in time in the ERP implementatio n, when the system is first used for actual production. In this phase, ERP system goes lives, progress is monitored and user feedback is reviewed (Robey, Ross and Boudreau, 2000).2.7 Critical Factors of ERP implementation successThis section discusses the 11 factors that are critical to ERP implementation success (cited by Kuang, 2001).ERP teamwork and compositionERP teamwork and composition is important throughout the ERP life cycle. The ERP team should consist of the best people in the organization (Bingi et al., 1999 Rosario, 2000 Wee, 2000).Building a cross-functional team is also critical. The team should have a mix of consultants and internal staff so the internal staff can develop