Abstract

Information technology/systems play a major role in improving the competitiveness of organizations. There are numerous enterprise information software packages available in the market. One of them is enterprise resource planning (ERP). ERP can provide significant improvements in efficiency across a company, but only when implemented correctly. Otherwise, an ERP system could be a curse and drag the whole enterprise into spiraling inefficiency. Planning for ERP systems and their implementations requires an integrated approach to meet the requirements of various functional areas. With a brief overview of ERP implementations, this paper describes some experiences of an ERP implementation in a water corporation. The case study reveals some of the intricacies during the planning and implementation stages that may occur in any company in any part of the world. Suggestions are offered in resolving the issues of implementing ERP.

Introduction

Information technology and systems have tremendous impact on the productivity of both manufacturing and service organizations. Companies have implemented systems such as enterprise resource planning (ERP), MRP, EDI, etc. over time for improving their productivity. However, ERP systems have received much attention lately for their potential in more effective decision-making. Many companies are implementing ERP packages as a means to reducing operating costs, increasing productivity and improving customer services (Martin, 1998; Pliskin and Zarotski, 2000). Ironically, this very ERP system can cripple a company, if not implemented properly. There are horror stories concerning implementations gone astray (Laughlin, 1999; Bancroft et al., 1998).

Implementing ERP systems successfully calls for strong leadership, a clear implementation plan, and a constant watch on the budget (Wagle, 1998). From a project managers’ point of view, the most important consideration is a clear implementation plan and a strategy to implement that plan. The plan and strategy, however, should evolve through systematic consideration of the company’s requirements and its ability to manage changes that would be required under the new situation. Some of the questions to be considered in the planning stage are:

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  What are the specific information needs at the operational and managerial levels for various functional areas?

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  How will the proposed ERP system integrate with the existing information systems?

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  What is the schedule for adaptation of the new system?

Questions such as the above should be considered seriously for successful implementation of an ERP system. An organization would also need to develop an implementation strategy. Such a strategy, either step-by-step or ‘Big Bang’, will determine how the related changes can be successfully absorbed at various parts of the organization. Cooke and Peterson (1998) found that the organizations that had no SAP implementation strategic plan performed poorly 90% of the time compared to those who had a plan. ERP implementation cases from countries around the world demonstrate that success is essentially conditional on adequately managing the complex context of the implementation, which necessitates change management across various key areas related to business processes, IT structure, and management systems (Al-Mashari and Zairi, 2000). This paper highlights some of the practical issues associated with the implementation of ERP systems. As an example, the case of a water company (referred here as the Water Corporation) is presented. The Water Corporation started implementing SAP in 1997, and it is believed it has been a success story. This paper focuses on the chronological developments, particularly in its project management branch (PMB).

Section snippets

Implementation of ERP systems

ERP has grown as an integration tool where the aim is to integrate all enterprise applications to a central data repository with easy and discrete access to all relevant parties (Black, 1999). SAP R/3 has been installed in over 20,000 locations in over 107 countries (Bhattacherjee, 2000). Companies such as Geneva Pharmaceuticals (Bhattacherjee, 2000), Eastman Kodak (Stevens, 1997), Lucent Technologies (Francesconi, 1998), Farmland Industries (Jesitus, 1998), Du Pont (Stevens, 1998), Digital

The case study

It is important first to look at the Water Corporation and its function, size and operations as a whole in order to appreciate the significance of an implemented ERP system. The Water Corporation is a wholly owned government organization. Its function is to provide water, wastewater, drainage, and irrigation services across an entire state in Australia. In 1999, it had an annual revenue of over AUS$900 million and capital expenditure over AUS$465 million.

In 1997 the Water Corporation decided to

The system in general

Table 1 shows how SAP was configured to replace the entirety of the Corporation’s operating systems.

The PS module

While from the above table it appears that the overall system seems to meet the corporate needs, the question was whether the SAP-PS module had the project planning, budgeting, scheduling, monitoring, and reporting functionality, which were vital for PMB.

SAP in operation

An overall implementation timetable was set out, which provided guidance on the tasks required, the preferred order of tasks, and likely durations. Over 1400 people were trained over a six-week period, the training being tailored to a person’s specific role and priority. Enormous amounts of data were converted over to SAP, both master data (primarily for reference purposes) and transactional data (day to day operations of the Corporation).

The changeover itself had its own project plan and

Summary of findings

In summary, as part of the new ERP implementation process a review of the legacy systems were carried out. It was found that repair was not cost effective and replacement was the only option. The SAP package was chosen because it provided the best option to replace the GL, WORKS, and the SMISs. These were the primary legacy systems, which were vital to the operation of the Water Corporation.

SAP’s PS module was also adopted, as there appeared to be considerable benefits in doing so, despite

Conclusions

Introducing a new ERP system poses a great challenge to an organization’s leadership. It seems the Water Corporation successfully faced that challenge. The SAP package was implemented with out any major disruption. Particularly, the SAP-PS module, which is the focus in this paper, was configured and implemented on time. Apart from initial teething problems, modifications were made to increase its effectiveness. All contracts and project details have been loaded onto SAP-PS and to date no

Acknowledgements

The authors are most grateful to two anonymous referees for their constructive and helpful comments that helped to improve the presentation of the earlier version of the manuscript considerably.

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