ERP system assignment: Implementation Journey of Nestle

Question

Task: “Going Live Is Not The End Of The ERP Journey”
The benefits companies expect from their ERP systems often occur over a period of time rather than occurring immediately. Accordingly many companies believe that their ERP journey is on going. While ERP systems provide some benefits to all companies, some companies achieve more benefits than others. Researchers and analysts explain these differing benefits as a result of companies being at different stages of their ERP system journey or ERP maturity.
Discuss this concept a company’s ERP systems journey and how benefits may vary.
Discuss the statement using case study examples (from literature searches) to demonstrate different company’s experiences.
Your paper should include the following areas:
1. Why an ERP systems journey may never end
2. What are the possible stages in an ERP systems journey.
3. What are the potential benefits of each stage.
4. Identify the drivers and barriers for companies to move from one stage to the next.
In the discussion you should use case study examples (from literature searches) to demonstrate different company’s experiences in reinforcing the different benefits and weaknesses.
Your task is to produce a 3000 word research paper which discusses the issues relating to the above. The paper should demonstrate a depth and breadth of reading and should be appropriately referenced. The paper should be referenced using the Harvard referencing standards and formatted according to the approved style guide.

Answer

Introduction
The current ERP system assignment showcases the concept that a successful implementation of ERP (Enterprise Resource Planning) provides a company with visibility to the in-depth business process that helps in the optimisation of the business system using powerful resource tracking and reporting. ERP system enable the business to expand without having any additional IT and staffing costs. This study will mainly focus on the ERP system journey of a well-known company, Nestle UK whose parent location is in Switzerland. The study will further discuss about other business case studies such as Cadbury, PE&G and others for illustrating the key points of experiences of the companies. The purpose of the ERP system assignment is to highlight the benefits and weakness that different company has undergone while moving from one stage to another stage in implementation of ERP system.

Discussion
Never ending journey of an ERP system: As mentioned by Shata and Dana(2016), ERP system is the integrated software solution that provides support to the flow of information in the organisation strongly. Previously, many companies felt that information system has to be developed for supporting the business process. However, now many of the systems are replaced with ERP system for leveraging efficiency of business process. For example, SAP R/3 has been implemented since from 1999 in about 18 manufacturing units of UK. This implementation of ERP system is been considered as largest ERP system in UK as this has connected about 6,000 users (uwosh.edu, 2019). This indicates that journey of ERP system would never end as it helps in the tightening of the supply chain of the business strongly. On the other hand, Ali and Miller(2017) signify that ERP market is growing at a fastest rate and this will help in the creation of the change in the process of information system. ERP system is important for improving the effectiveness of the business operations and it use in the organisation would grow more in future as the company’s desire is to handle information safely.

Nestle has implemented this system in its different subsidiaries for leveraging its size all over globe. In this firm, ERP has been implemented for enabling the supply chain management with IT system of the company. This system has helped in strengthening the bonds with the customers and suppliers. These systems are developed small and large sized organisations for giving support to the functional process and data integration system. In context of Nestle, it has been found that the company has adopted SAP as its ERP provider. This system has helped the company in gaining support in the business decision. The company is now able to provide standard functionality by covering all the areas such as Finance, factories, supply chain, HR, sales and marketing and payrolls (Shatat, 2015). Therefore, it can be assumed that demand for using ERP system would never ends as it is constantly providing success for having better growth in the organisation.

Possible stages in the ERP system journey
Journey of ERP system involves six different stages such as discovery and planning, design, development, testing, deployment and training. This is termed as iterative process that has the tendency to enhance the business process in an effective manner. Hence, these stages of ERP journey are mentioned below with proper details:

Figure 1: Stages of ERP system journey
(Source: Created by learner)

Discovery and planning: Companies that are functioning at sales process such as Nestleneed to undergo this stage (Rajan and Baral, 2015). According to this stage mentioned in ERP system assignment, initial meetings along with documentation are developed for identifying the current issues along with potential solutions. This phase is important for constructing the project plan that would help the company to get a guide for rest of the project. Here, the client contacts with the vendors for gaining idea about the prototype. Nestle is found to meet the specifications of this stage by involving the right individual to redesign the work process. On the other hand, planning of company such as PG&E of implementing ERP using Oracle software became failure as it involves high costs.

Design: In this stage of ERP system assignment, A?ao?lu et al., (2015) mentioned that ERP design stage need to be checked out by the project and implementation team for analysing different configuration by identifying roles and other documenting standard process. Gap analysis is conducted here for analysing the current state of business. In the case study of Hershey Candies, it is found that gap analysis was conducted where it is found that there is business challenge and hence using iterative approach by involving SAP in ERP system would help in mitigating the process. Ultimately, BRD (business requirement document) is formed at the end of this stage.

Development: The purpose of the developmental stage is to prepare the entire system for involving necessary customisation, development of user training, importing of data and others. This stage helps in developing the software customisation of the business. In Nestle, the development team has prepared the final product for the company based on the presented options in the software. The company has developed products such as Concur and Ariba for integrating SAP portfolio with the business (uwosh.edu, 2019). Hence, it can be said that this stage is important for bringing effectiveness in the business interventions.

Testing: After the customisation of the software takes place, implementation partners are found to check the codes in order to figure out its working procedures effectively. Testing process such as unit testing along with other internal testing are performed for checking the ERP system. In the business case of PG&E, it has been found that implementation of Oracle ERP did not had any defect until the stage of testing came (erpfocus.com, 2019). During testing stage, managers has chosen live information database for testing the system. However, it reveals the sensitive information of the company that created a major loss for the company.

Deployment: It is mentioned in this ERP system assignment that this stage is performed by project and implementation team for assessing the situation and develops the final decision. Here, the client is allowed to data migration by taking the data from the existing system and then putting it to the new system. Integrity check is done in this stage for making sure, if the data has been successfully transferred with zero error or not (Pillai, 2015). In the business case of Nestle, it has been found that all the existing system and data are converted in ERP system for being connected with potential clients and suppliers of the business. Before going live, the project team load and validate the final data in the new system in order to enhance the effectiveness of the system.  

Training: While using the new ERP system, training is the most important thing that is required for using the system effectively. In this stage, employees those who are going to use the ERP system are provided training (Alcivar and Abad, 2016). For example, Nestle, in training stage has shown the employees about using the system manually with training videos along with additional training with the help of vendor. Training has been mainly done in the department of sales, marketing, accounting and others. Moreover, based on the request of the client, it can also occur on-site or offline as well.

Potential benefits of each stage discussed in ERP system assignment
Implementation of the system needs potential knowledge otherwise the ERP system might fail. In case of Nestle discussed in ERP system assignment, it has been observed that initially employee did not understand about the new implemented system and related work process due to lack of training. Moreover, divisional executives of the company were confused as the staffs were not present during the planning and development stage of the new system. Hence, the initial result of this was very poor and turnover skyrocketed. In this section, the major benefits of the stages of ERP system have been explained along with different company’s experiences below:

Planning is the most important phase in ERP system that helps the company in estimating the costs and getting an overview of the management system. Deshmukh and Kumar (2016) commented that planning enable the business to gain a proper structure, which is important to precede the project in an effective manner. A detailed discussion takes place in this stage, which is beneficial for implementing the best design in the company. Hence, this helps the company to carry out the business procedures in effective manner. Without applying this phase, the company would not be able to contact with the business client that can bring a drawback in ERP implementation. In the case of Nestle ERP implementation, it has been found that due to breakdown in the planning phase, the company has faced many difficulties such as establishing strong connection with the clients and vendors (uwosh.edu, 2019). There is a requirement of conducting team meeting with the Human resource and CRM for discussion about the employee engagement and other factors effectively.

In the next stage of design, it has been found that the major benefit is that it helps the managers to understand the system properly. With a well-design ERP platform, the supply chain is found to become better and more responsive (Huber et al., 2016). Hence, it can be said that design is helpful for improving the inventory management, forecasting, and procurement and so on. In the business case of Cadbury, it has been observed that the confectioner organisation is able to analyse the difficulties in business with traditional system. For this reason, the company implemented SAP for developing multi-nodes resource management for extending its supply chain strongly. In this regard, it can be said that the company got successful results as the design of the SAP ERP was developed by meeting the distribution requirements and production costs (erpfocus.com, 2019). However, on the other hand, the company such as Hershey Candies did not get proper result with ERP implementation as the planning and design of ERP was not done in a proper manner. For example, rather than focusing on the business challenge, it developed holistic plan to improve the operating centre of the company. Therefore, the problem occurred with the management system just after the implementation of the system up-gradation of $10 million (erpfocus.com, 2019). Hence, this shows that analysis of gap should be done minutely for figuring out the exact requirements of ERP implementation.

The next is development or customisation stage mentioned in this ERP system assignment that is important to configure the product design for the company successfully. As opined by Abu-Shanab et al. (2015),development team of the business combines with the finance department for discussing the costs, budget, forecasts and payable amounts of the ERP implementation in the business. This helps the business in analysing the expense amount and accelerates the approach of ERP system strongly. In context of Nestle UK, it has been found the company hired that process development manager (cio.com, 2019). This role of this member was to act as a bridge among the Information Technology department and business. This helped the company to increase the focus of the employees towards the continuous improvement process of ERP system rather than only giving focus on maintenance of existing system.

Testing stage is very important as it helps in analysing the efficiency of the system. Major benefit of testing the ERP system is that it helps in gaining real time data that is required for understanding the potentiality of the system. In Nestle, end-users are involved in the testing of the new system in business (cio.com, 2019). For this purpose, they are provided training so that they can test the system with proper specification. Nagpal et al.(2015) identified that ERP testing are done for verifying the functionality of the ERP software in the implementation process. This is a process of quality assurance that is done for operating the system correctly. ERP system helps in bringing better understanding of the system. For example, it helps in decreasing the number of bugs that can bring adverse effect in the operation. Based on the testing of the ERP system discussed in this ERP system assignment, changes in the codes are made for satisfying the needs of the users. Apart from this, Kocaoglu and Acar (2015) mentioned that without having testing stage, the risk of failure of ERP system might increases. The management team are found to use various testing method such as functionality testing, performance testing and integration testing. During testing of the system, it is required to enhance the knowledge of using the system.

Stage of deployment defined in this ERP system assignment benefits the organisation to meet the goals of business strongly. In Nestle, deployment has helps to leverage the size of the organisation by tightening up the supply chain along with re-engineering the working processes and practices. On the other hand, training phase enable the project team to provide on-going support to the project team (Alcivar and Abad, 2016). This helps them to recognise the required adjustments and changes in the system configuration. Training is one of the essential elements that are provided by Company Nestle UK to its employees on a daily basis for handing the software effectively. Furthermore, if the training is not arranged in proper time, the implementation of ERP might become unsuccessful and the company would suffer from huge loss. Every locations of Nestle UK are following SAP ERP system; hence, it is found that training materials are similar in every unit. This helps the employees of the company to relocate in any factory of Nestle without having much difficulty in using the software process. 

Identification of drivers and barriers for companies moving from one stage to another
Several barriers and drivers in the organisations are found while moving from one stage to another. Stoneet al.(2018) has stated that the main reasons and pitfalls of failure of ERP implementation in several companies are undefined strategic goals, discrepancies in top management, poor project management team, non-commitment of organisation and inadequate training and education. In organisation such as PG&E, it has been found that the ERP implementation using Oracle failed due to improper planning. Research indicates that the company did not had cleared strategic goals that has reduces the chances of failing more. On the other hand, it has been found after analysing the above content within this ERP system assignment that management system was not proper due to which the lack of collaboration occurs in operating the device effectively. Staffing is not proper in the company due to which brand name of the company was hampered largely. In moving from planning stage to design, it has been found that operating team faces issues in understanding the working procedure that ultimately result in the creation of barrier. On the contrary, due to poor management system in company named as Hershey Candies, development of the ERP platform did not occurred successfully. This has resulted in the loss of $150 million in sales and revenue that is equal to 19% loss in the share price and 12% loss in the international market share (erpfocus.com, 2019).

Hence, it can be depicted that poor management is the significant barrier in developmental stage of ERP system. On the contrary, inadequate training and education results in the inability to use the ERP system for long time due to unsatisfied results. In the case of Nestle, it has been found that technical faults occur in the operating system due to improper training at the beginning. This is the reason responsible for ineffective results in the business. However, later, the project team realises the importance of the providing training and education, which has finally helped in resolving the issues. From another point of view, it is found that for moving from design stage to development stage, the main drivers that encouraged the implementation of ERP system are change management, business process improvement and others (Lopez, 2018).

These drivers are responsible for encouraging the organisation such as Nestle and others in moving forward in ERP implementation. On the other hand, barriers responsible for creating negative impact on the planning of ERP journey are poor framework and project management team that weakens the strategies of development. Since the ERP implementation is a complex business transformation, it is important to acquire right people, governance and control at the time of beginning of implementation. As per the ERP report of 2018, it is observed that issues of organisation and people are the main reason for taking more time and money for fulfilling various stage of ERP system (Stentoft et al., 2019). Hence, this barrier reduces the chances of gaining success in getting result in business.

Undergoing through each stage of ERP is not risk free. In fact, about 65% of marketing executives believe that ERP system has the moderate chance of winning due to the potential problems in its implementation (Li et al., 2017). Hence, it is important to examine the factors minutely for making the journey of implementation successful. Different authors have identified the drivers and success factors in performing every stage effectively. These are clear understanding of the goals, excellent top and project management, data accuracy, extensive training, effective performance measures and so on. Thus, the companies need to focus on both drivers and barriers while implementing each stage starting from planning to final product development of ERP system effectively.

Conclusion
From this ERP system assignment, it has been found that ERP journey is a never-ending journey if it is developed by the organisation in proper manner. In this study, different business cases are discussed related to ERP implementation where both success and failures occurred. The barriers that have occurred in the organisation can be controlled by developing proper management and project team. The ERP systems that are adopted by today’s organisations are robust and flexible that minimises the staffing costs and other additional costs. This signifies that each stage of ERP system should be performed with proper knowledge and structure. In Nestle UK, it has been observed that ERP implementation gained success and there were able to bring back the money that is spent on the ERP system within only two years. This ERP system has benefitted the company with lowered inventory levels, tightened control and enhanced discipline behaviour towards the business process. Hence, in conclusion, it can be said that management system needs to be effective in order to undergo every stage of ERP journey in an effective way.

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