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CS507 - Information Systems - Lecture Handout 44

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ERP & E-commerce

Organizations do accept that when we talk of E-commerce in real terms, not just having a website for online information but actually to be able to execute transactions, there has to be an integrated software up and running. Especially when Consumerism is the prime focus, being integrated and online will help in better implementation of CRM.

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This is known as the business to business B2B and business to consumer B2C.They have become buzz words but they are very real. What most ERP’s are heading towards are internet portals. The front end becomes the internet portal and the other businesses and customers can come in through that.

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Now consumers and business use the gateway of internet to walk into the business and make transactions. So Websites with online buying options have become the virtual selling locations for the business.

ERP & CRM

Customer has become of critical importance in the modern day business. Early on, organizations used to focus more on how much has been sold what has been produced. But now the focus is quite different. Focus has been placed on the requirements of the customer, providing quality service and quickness of response to customer queries. Analysis of the customer data from their personal habits to spending one’s have become a crucial element of doing a successful business. ERP has this unique potential to improve the quality of customer handling.

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Our larger customers who drive most of our business, they conduct budgeting activity for most of their products, for which they need semi finished or raw materials from us. These requirements are incorporated in our system even before a purchase order is received from our customer. So we know well ahead of time what the requirements of our customer will be on a periodic basis. This gives us time to plan what kinds of raw materials and production capacities we would require in a given period keeping other orders in view. This makes us well equipped in our supply chain, the materials to be imported, the delivery times being built into the system for reordering.

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Thus inventory management becomes more efficient and production bottlenecks are preempted.
But as coming back to the customer and starting from the sales forecast, when we move on the purchase order which is first converted by the system into the sales order. As soon as the process starts the production planning department can have a look at it and plan a production order based on that that information is available to the sales people as well. So whatever process that job has gone through can be accessed by the sales person, whether the
stock is available or not.

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We all want to know what is receivable from all the customers. Initially we had a system of having receivables report and analysis of all the customers every ten days. Now with the ERP system the moment you make any entry in the ERP system, every thing instantaneously gets updated. Hence sales officer has relevant information available at any point of time. The all other information about the purchases, supply chain, inventory levels, production process,
delivery times, status of dispatch, etc is available up to date as soon as the data is input. Hence our current lag time is approximately 3 hours which is much better than the earlier of four weeks.

Gist of above clips

Customer is of supreme importance. Every thing for a business and starts, revolves around and ends at the customer. The business processes, the production, the inventory, the after sales service all should be built and monitored in accordance with the requirements of the customer. In the modern day world the ERP system helps us to achieve this object the most optimizing way and eliminates time lags to a substantial level.

Change management

Change management means to plan, initiate, realize, control, and finally stabilize change processes on both, corporate and personal level. Implementation of ERP or any other integration software needs commitment and proper management. Managing change in implementation projects has become a serious concern for the management.

Types of Change

  • Organizational Development: This is the more gradual and evolutionary approach to change. It bases on the assumption that it is possible to align corporate objectives with the individual employees’ objectives. In practice, however, this will rarely be possible.
  • Reengineering: This is known as corporate transformation or business transformation. It is the more radical form of change management, since it challenges all elements of processes or structures that have evolved over time.

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Recruitment of specialized personnel is a very important element. Skills of people should complement in a way to remove deficiencies of each other and to become a fruitful combination

Is a change inevitable?

A further classification of change can be seen as internal to organization, and external to organization. Since implementation of ERP is an organization wide activity both in terms of processes and skill levels required, it can be seen as an Internal Change. Of course external development like market demands, up-gradation of technology and other similar matters also necessitates change.

Change has to be planned, monitored and managed before we can get successful and fruitful results. Where management is deciding to bring in change, it has to ask itself certain questions and consider issues emerging from the change.

Factor to consider:

Following factors should be considered in order for change to be successful:

  • Have we got the right leadership and "buy-in" support for the proposed change?
  • Is the proposed change aligned with the strategic plan?
  • What current/future issues/concerns will performance measurement / management address?
  • What are the implications and barriers to successful implementation?
  • What are the inherent risks/costs of not embracing the change?
  • Who should we target as the key drivers for the "new way we are going to do things round here?"
  • What processes will we need to change/introduce?
  • How will success be measured and what value will success have for the business and individual?
  • How do we change people's behavior?
  • Who will feel threatened by the change?

Phases of Change Management

Change management should not be seen as a one off event. Rather it is a process which is spread over a period of time and divided into various phases. Various management models define and segregate change management into various set of phases. However the phases which we will discuss below shall give a general understanding of what happens in a change management process. The terms and phases may vary according to management models and
various studies conducted.

  • Shock and Surprise – Confrontation with unexpected situation mostly
    1. by accident e.g. loss in a business unit or
    2. planned e.g. workshops for personal development
  • Denial & Refusal – people express their conviction that change is not necessary
  • Rational Understanding – People realize tha need for change and find short term solutions
  • Emotional Acceptance – if management succeeds in creating willingness for change, people change their beliefs and behaviour, otherwise change process stops or slows down.
  • Exercising & Learning – People start to try new behaviours and processes, as a result will experience success and failures. Change managers should create easier tasks at start to create early wins
  • Realization – the knowledge gained in previous phase has feed-back effect.
  • Integration – LAST PHASE: total link-up is created between newly acquired patterns of thinking and acting. New behaviors become routine.

Another view of phases

Change management phases can be classified in an alternative way:

  • Unfreezing -- Preparing a situation for change by disconfirming existing attitudes and behaviors.
  • Changing -- Taking action to modify a situation by altering the targets of change.
  • Refreezing -- Maintaining and eventually institutionalizing the change.

Why people resist change?

There are various reasons why people feel afraid of the change. The change may act as a favorable agent for many at the organization. However it is merely the fear of the unknown that in most cases creates hurdle.

  • Fear of the unknown—mostly the reaction is “God knows what’s going to happen!”.
  • Lack of good information – involvement from the lower levels is not taken by the management and they are not fully aware of the future happenings.
  • Fear for loss of security – Mostly changes lead to down sizing which is termed mostly by organizations as right sizing.
  • No reason to change – no reason sounds convincing to people to accept a change.
  • Fear for the loss of power – Mostly changes make organizational structures more horizontal, flexible resulting into delegation of authority and handing over powers to lower levels.
  • Lack of resources
  • Bad timing – Employees sometimes are approached with a proposal of change when they are already feeling.
  • Habit – people with closed mind are not innovative to learn new things and this may prove to be a major hurdle in bringing in change.

What can be done about resistance to change?

  • Education and communication – Changes bring new things for learning. The employees should be informed of these and given an opportunity to learn to enhance awareness.
  • Participation and involvement – in every step of bringing change, those affected should be involved and their concerns and views should be given value.
  • Facilitation and support – As minds start getting adjusted, those affected should be facilitated and given time to properly assimilate the newly emerging aspects.
  • Negotiation and agreement – in case where resistance is high, terms of agreement may be settled with dialogue.
  • Manipulation and cooptation – Twisting and distorting facts for the sake of seeking acceptance is becoming a normal practice. If corporate management threatens to close down a particular manufacturing plant if that plant's employees fail to accept an acrossthe- board pay cut, and if the threat is actually untrue, management is using manipulation.
  • Explicit and implicit coercion – As a last resort, the application of direct threats or force upon the resisters. Examples of coercion are threats of transfer, loss of promotions, negative performance evaluations, and a poor letter of recommendation.

Change agents

Successful changes and their management are backed by presence of a change agent. A person or a team who leads a change project or business-wide initiative by defining, researching, planning, building business support and carefully selecting volunteers to be part of a change team. Change Agents must have the conviction to state the facts based on data, even if the consequences are associated with unpleasantness. Change Agent consciously challenges the status quo, is comfortable with leading change initiatives with uncertain outcomes and systematically considers new and better ways of doing things. ERP is such a large scale project that sponsorship from the senior management is an immediate must. Unless the project itself and the consequential change is sponsored from the senior level, the chances of success are quite bleak.

ERP– Ownership and sponsor ship:

Implementation need the right mix of people – both from the business and from the IT side.
Those who think that it’s a pure computerization of organization which can be taken solely by the IT people are wrong. Nor is it a project to be handled solely by the business people. Hence a balanced mixture of people from IT and business background is required for a successful implementation.