discussion on implementation of ERP (Enterprise Resource Planning) in the environment of SMEs (Small and Medium Size Enterprises)
The present study contributes to the discussion on implementation of ERP (Enterprise Resource Planning) in the environment of SMEs (Small and Medium Size Enterprises). The yield of an enterprise can be accumulation of integration system for creating a competitive advantage in present times. The integration of enterprise systems is achieved by project management and risk management is the respective organizations.
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With such compilation, often the risk management and project management helps to supervise the management of firms to assess the occurring deadlines and problems. Once the risks are identified and handled properly then the project can be even more implemented smoothly. The theoretical section entailing the literature and research methods offers a better understanding of the enterprise resource planning along with risk management and project management. The theoretical section helps to analyze how they meet the objectives stating the various techniques used in project management to lessen the risks and even the implementation of successful ERP systems in the SMEs. They help the researcher to choose an appropriate research method to obtain the accurate results from the observed data which is collected from the secondary research. The results from the obtained study show the successful and unsuccessful enterprises which adopts the suitable project management techniques to diminish the risks.
Chapter 1: Introduction
Evaluating the present Enterprise System and highlighting the significant issues with suggesting and implementing different ways for improvement in terms of risk management and project management. This also tries to meet the business objectives and also in assessing the small and medium enterprises risk’s. It is very common for the organizations to move to an ERP (Enterprise Resource Planning) proposal without initially conducting the required planning and due attentiveness to make successful project. For every organization it is important to get the complete information through which they can analyze exactly what is their role in the organization and in what role they want to be in future and this also helps in getting the information of weaknesses and strengths, the areas that need to be improved and the core competencies. This process helps in creating the community plan of effective business and this helps in developing the management of business continuity. For the making the business process successful some steps need to be followed such as, developing the strategy, rehearsing the plan, analyzing the business, assessing the risk.
There are various risks that can be identified and can be learned in those below there are six risks that can be learned.
ERP and its related software: what kind of omissions and errors happen in the development and configuration of the software suite of ERP?
Business Fit: This checks if there is an alignment among the abilities that the system of ERP is expected for providing the abilities that is probably ends up providing?
Quality of data: What kind of problems will be run into the process with the timeliness, extent or structure, accuracy of the primary information that is loaded into the system of ERP?
Project management: In this the issues that are steaming from the schedule, contracts, staffing or budget of the program which has to be managed.
Organizational Readiness: This checks whether the organization is sufficiently prepared for the people those who use the novel system of ERP for which they have to experience?
The holistic approach to the risk management of ERP includes:
Developing the plans of risk management for those, which has a high priority and this deepens the understanding of likelihood, causes, and the potential impact.
Developing a company plan of learning that includes learning of novel skills and the different way of working and mastering of novel software and hardware and for the people on the program of ERP team and managing of the large magnitude changes.
Articulating of a clear vision of the organizations success and this provides an encouragement that helps the program to keep on track, this happens during the implementation time and a typical for moderating the achievement at the end.
The programs of Enterprise resource planning are very disreputable level to the execution of difficulties. Most of the organizations overrun their schedules or slip their budgets, or dissatisfy their sponsors or all the above. The failure rates of program are differently estimated to be at least 60%. The reason for understanding the ERP program risks and significant to mitigate them have to be a basic concern for any kind of program manager. There are six learned risks that can be implemented in the implementation of ERP.
This project gives the reason of why the project is significant and why increasing success and reducing the risk is significant in the Enterprise systems involvement in the enterprises of small and medium size.
1.3 Problem Definition
The main reason of increasing success and reducing risk in the integration of enterprise system with the organizations of small and medium sized is to either take advantage of the required risks or to either prevent risk from issue development. This helps in converting the opportunities, the concerned risks can build up into issues and similarly few issues or risks can be turned to opportunities. The techniques and tools that are used in the process of risk management and this play a significant role in the project’s success.
This is very interesting to keep a well track that defines process of risk management which exists in almost every organization, in regard to that, failures still occur.
Why the processes of Research Methodology fail with the existent process
Are the correct techniques and tools are being used in the correct process of PRM
1.4 Aims and Objectives of Project
The significant aim of this concerned project is to develop a novel model of project management and this is to assist the integration and implementation of the technologies of enterprise system successfully in to the small and medium enterprises.
For the completion of this project the author has to follow the below objectives:
Conducting a literature review on the implementation of enterprise systems, project management techniques that include PMBOK, PRINCE2 and SCRUM and the methodologies of IT based risk management.
Conducting a review of the unsuccessful enterprise system and successful enterprise system integration of the projects inside the UK based small and medium enterprise and has to compare it as the best in the whole world.
To develop a model that is theoretical to help the integration of successful enterprise system by evaluating the present techniques and technologies of the risk management.
To conduct a review into the issues and requirements that small and medium enterprises face when the enterprise system integrate into the concerned organizations.
Chapter 2: Literature Review
2.1 Project management
A project is considered as any work which occurs only once, that has a lucid initiation and ending. It is mainly intended to produce a unique knowledge or product. A project entails single or thousands of individuals and it may take days or years to get completed. At the same time project management is considered as the usage of skills, knowledge, techniques and tools to plan the activities so as to exceed or meet the requirements of stakeholder and anticipations of a project. Sometimes, a project manager is considered as a project leader or coordinator who controls the details of given project as per the daily basis. It is referred as an ongoing challenge that needs an appreciative contextual project environment and the capability to balance the inconsistent demands among existing expectations and resources, different priorities of stakeholders; recognized requirements and scope of project; quantity and quality.
Auspiciously, different varieties of tools and techniques for project management are being enhanced for the above purpose that is described in below sections.
2.2 Project Management Techniques
The PMBOK is the Project Management Body of Knowledge and this is recognized internationally and this mainly deals with the application of the tools, skills, techniques and meets the requirements of the project. The PMBOK usually defines the life cycle of the project, 9 areas of knowledge and 5 process groups. For any kind of projects in small and medium enterprises there has to be a flow in which the process has to go. PMBOK is one of the project management techniques and this can be followed in any organization.
To start with the work the employees has to divide into teams and for every project the team has to operate in 9 different areas of knowledge and also with few basic process and this is summarized below:
Integration: Initially a charter has to be developed and with this plan and scope of the statement is also essential and even managing, monitoring and controlling of change in project.
Scope: Definition, control, verification and WBS (Work Breakdown Structure) creation.
Cost: Control, planning of resource, estimating of cost and budgeting.
Time: Sequencing, Development of Scheduling, estimating duration, and sequencing.
Human Resources: Hiring of project members, planning of human resources, managing and developing of the project team.
Quality: Controlling of quality, Assurance of quality, and quality planning.
Communications: Managing of stakeholders, performance reporting, distribution of information, communications planning.
Risks: Risk controlling and monitoring, Identification, planning of risk, Risk analysis which is quantitative or qualitative and risk response.
Response: Contracting and acquisition plan, selection, contract closure, contract administration, seller’s response.
The technique of PMBOK is mainly used in the applications of General management programs, Product development in marketing department, Processes that are specific to industry, Government programs, Development programs in the international firms, and this mainly can be used in the applications of small and medium enterprises (Duncan Haughey, 2011).
The methodology of SCRUM is some kind of distinctive representative of responsive methods. This approach can be used as an alternative process for the project management and the reasons for this are discussed below:
The SCRUM is one of the kinds of Meta model project and this allows for deciding how the process of design, analysis, testing and implementation are carried out. All these processes are not specific to any kind method or process. This process can be applicable to any kind of techniques. The process of SCRUM mainly consists of three kinds of major phases they are the development phase, post game phase and pre game phase.
These are developed in a sequence process and discussed below in that sequence process.
Pre game process: In the process of pre game phase majorly two activities can be taken place that is planning of activities can be carried out in such that they can define the developed systems. This process can be achieved by backlog list creating and this list usually contains all the requirements which are well known. In the complete process of software development the backlog list is changed. The present backlog list will be improved according to the requirements when the novel knowledge is available and this reflects according to the requirements of the novel product. The process of backlog list is the instrument of central planning this is because it serves as the part of standard for updating the assessments and establishment of the priorities regarding the requirements that has to be implemented and this can be does in the next increment.
This phase of pre game also integrates the phase of architecture and in this process the system architecture of high level is changed and developed. This means that the changes in the backlog list are completely reviewed from perspective of design. The main importance here is on how clarified or additional requirement that can make changes if required in the part of design.
Development Phase: The phase of development is carried out in the sprints and these are the iterative cycles through which the functionality is enhanced or developed and this process is done to produce novel increments. In this each sprint comprises of the conventional phases of the development of projects which is implementation, design, testing, analysis, delivery and requirements elicitation. Usually the sprints last for only 30 days. It is to put into practice for which the increments functionality is only determined in the planning meeting of the Sprint, where management, customers and users decide which functionality and goals has to be implemented in the next sprint. At the time of execution of the process of sprint, there are few meetings of Scrum and these are organized in well manner for keeping track of the Scrum team progress continuously. This process is done for deciding the next process and discussing the reviewed problems. The Scrum results will be held on the sprint’s last day and this can be concluded with the review meeting of Sprint to the users, management and customers. The review is used for assessing the increment of the product and also helps in making decisions regarding the activities that are subsequent. This can also happen when the changes are mainly made to the way of the system that is being built.
Post Game Phase: The phase of post game is only entered at the time of agreement arrival and this is given only among the stakeholders and to those who doesn’t have kind of requirements are left or these must be incorporated in the release. The phase of post game typical activities of deployment like system testing documentation and integration are taken place.
These phases are very much important for project management and this also helps in managing of risk (Reinhold Plosch, 2004).
The technique of Prince2 mainly deals with the project management and this does not insist on specifically any kind of technical approach which usually varies from project to project. The method Prince2 can be used in the amalgamation with the other development technology or design technology and this can be used even if the management association to the defined technology has taken a different form of the technology of design. Prince2 doesn’t involve in purchasing or outsourcing of the project management techniques. The method of Prince2 mainly assumes that the concerned project will only proceed in the limits of the contract. This process of contracting is not completely a part of the Prince2 but this is the part of the activities that are technical and which can be controlled by using the method. The data established in different managing documents and those that are within PRINCE2 usually provide an intrinsic source, excellent for monitoring and for the preparation of the required contracts.
The main theme of the Prince2 is the process of managing the project, the connection and interaction among the projects environment and project, deployment of resources and staff. For all kinds of project management Prince2 cannot be used. Communicative and social skills and techniques like Gantt charting, supporting of software projects and network planning are not from this part of the method. This also proves to be a advantage for the method. This method can be used in all kinds of the projects as this Prince2 method is not bound to any kind of the project. This method can be used in any kind of organization and with every combination and with all the various other types of techniques and this also supports various packages of software. The complete project management is for people and this cannot be used as a recipe book but has to be used in the various combinations of the common sense and with the correct social and technical skills. Even though the prince2 doesn’t respond and involve to the social skills, and this support the preferred social behavior that is required to manage the projects effectively. This shows that a perfect structure only support the required behavior.
The main significant aspect of the method prince2 is the Interaction and this is much secured in terms of responsibilities, authorities and tasks in the roles of the project. This process can be controlled more effectively and efficiently and colleagues can relate and understand everyone’s responsibilities and these roles can be easily established.
The method Prince2 distinguishes eight components and eight different processes and only three different techniques that are change of control technique, review of quality and product based planning. Consider if any organization is having efficient change technique in controlling or/and a process for checking the project documents quality after this they can be used in terms of relevant techniques of PRINCE2. On the other hand the technique of product based planning is recommended strongly. The reason for this is, it supports most of the good features of the project, the other techniques and procedures are kept completely outside the process of method. There are four different theories in the Prince2 which form a foundation for the complete method and they are
The project will be successful only if all the required stakeholders are completely satisfied with the outcome of the project: Stakeholders are none other than users, the suppliers, executives and the staff of the concerned project. Every time it will be not possible to satisfy all the stakeholders and not possible to supply the terms on time which were discussed before and even within the budget. This was not an opinion was from the executive who play as a role of stakeholder but all the stakeholder experience the same. The important part of the project management is to satisfy all the parties of stakeholders and managing their expectations.
The projects that are successful are business driven: For every project there will be a basic need and this particular basic business need must be consider as the initial part of the project. As a part of the project progress, there has to be regular checkups of the basic requirement and is very important. If the staff found that the basic requirements are not clear then this will form as an obstacle for sustaining the management’s involvements and generating the required funds and they try to promote the project in the environment. There will be a framework by the business case and this will be within the user’s requirements and will be based on the support and use of the results that has to be delivered.
All the projects must be carried out in the environment that is changing: The changes in the internal organization, market changes, increasing of user’s insight etc. initiation of project changes and these particular changes may again affect the requirements of the project. The projects have to be setup in such a way that they can easily change in a manner that is completely controlled.
For a project to be successful the corporation is important: For implementing the change all the projects must be setup in particular order. In this process corporation is a very significant factor. When all the required stakeholders are involved in the management and the setup of the project then the outcome acceptance will always be higher.
These four are the main points which affect the management and setup of the project and are responsible for translating the project into organization.
188.8.131.52 Characteristics of Prince2
The method Prince2 always differentiates in different number of ways when compared with the other methods of project management. They are
At the project management level creation of stakeholder involvement: In every project the main involvement has to be from suppliers and users and apart from that the suppliers and users have to represent the project management level. There has to be a good communication level among all the stakeholders and it is essential that there has to be a commitment among these parties. The method Prince2 understands this process by including the suppliers and users as the project board representatives and in the role of senior supplier and senior user.
Focus of Justification: While undertaking the project business case forms the justification and this forms the foundation for carrying and starting out a new project. The business case helps the project in starting and carrying out the complete project. After the delivery of the project an evaluation process is undertaken and this determines if the project outcome has really delivered the actual benefits of the customer.
The management of the risk is completely included into the projects lifecycle: The risk of management of the method Prince2 is not an independent approach but this is an integral part of the management process of Prince2. This indicates the process of how the risks can be managed during the complete process of project and also indicates who is responsible for what.
Stages of Management: The method Prince2 differentiates among technical stages and management stages. The stages of management are driven by time coupled with a clear no go decision or go decision regarding the projects progress. The stages of the management setups are very significant in putting the concerned management by exception into practice (Bert Hedeman, Gabor Vis van Heemst and Hans Fredriksz, 2006).
2.3 Small and Medium Enterprises
For reducing poverty and accelerating growth, some of the international agencies and World Bank Group are provided some of the targeted help to the SME’s (Small and Medium Enterprises) and this is done in the economies that are developed. The process of this kind of policy is completely based on the three basic arguments, initially the advocates of Small and medium enterprises advocates have argued that the enhancement competition of Small and Medium Enterprises and the entrepreneurship and based on this they have few external profits on innovation, growth of comprehensive production and efficiency that is economy wide. Based on this the support from direct government for small and medium enterprises mainly helps various countries that exploit the social profits from greater entrepreneurship and competition. Secondly, the small and medium enterprises proponents usually support the SME’s which are usually with the huge productive than some of the large firms but in the market of finance and in some of the institutional failures impede the development of small and medium enterprises. Therefore pending institutional and financial improvements and direct financial support from government to the small and medium enterprises as this can boost the economic development and growth. Lastly some of them argue that the expansion of Small and Medium Enterprises boost the growth of employment in large scale when compared with the large firms, this is because the small and medium enterprises have intense labor. According to this perspective subsidizing of SME’s might represent a tool of poverty improvement. There are four unconvinced questions that has a great value for this policy (Biggs and Tyler, 2002). Initially some of the authors have stresses the benefits of the large organizations and challenges the hypothesis that are underlying the view of pro-SME. Particularly it is said that large firms can exploit the easily take the costs that are fixed and make use of economies of scale that are associated with the department of Research and Development with the positive effects of production (pagano, patrizio and schivardi, 2001). Furthermore few of them say that huge organizations provide more constant and hence they provide jobs that are high quality when compared with the smaller firms with the positive consequence for the improvement of poverty (Brown et al, 1990).
The other view usually challenges the required assumptions that are underlying the arguments of pro-SME. Particularly few researchers found that small and medium enterprises are neither have a perfect option for job nor have more labor intensive. In addition to that some of the recent works have found that under developed legal and a financial institution doesn’t hurt small and medium enterprises. Indeed these researches have found that institutions that are under developed constraint organizations from increasing to their sizes effectively.(Beck, et. Al, 2002). The next set of views mainly questions the legality of size of the firm which has to be considered as the part of exogenous determinant of the growth of economic.
2.4 Risk Management
Risk is generally considered uncertainty of an obtained outcome which is omnipresent as well as present in every walk of life. Risk is mainly present in business sectors, in particular the SMEs (Small and Medium Enterprises). Risk management is considered as an ongoing process which assists to enhance the operations, making sure of regulatory compliance, prioritizes resources, enhances the financial stability, attains performance targets and eventually prevents damage or loss to the entity.
2.4.1 Planning Risk Management:
The intention of planning risk management process is to create a plan for risk management; but it is different from risk planning. The plan of risk management is how to deal with the risks that are related to a project. It illustrates how it is defined, monitored and controlled all the way through the project. Such plan also explains how knowledge is implemented, observes and managed throughout the project area (Kim, 2005).
2.4.2 Risk Identification:
This process entails the identification and documentation of all risks that are entailed and which may impact the performance of a project. It entails categorizing risks, reviewing documents of project, reviewing the checklists, utilizing methods like brainstorming in order to recognize risks and eventually creating the list of project entailing risks.
2.4.3 Risk Analysis:
It is the process of entailing the activities like verifying the impacts of risk, probability of occurrence as well as prioritizing according to the significance of risk. The most effectual way is to plan such risks is by explaining them by risk impact and probability in an easy way by high, medium and low scales. Such probabilities are followed by confidence levels which are typically worked out with the help of internal experts; however the impact is a problematic issue. At times the external experts and directors are entailed.
2.4.4 Risk control and monitoring:
The intension of process of risk control and monitoring is to react to the risks that take place, track and observe recognized risks, asses the plans for risk response for gaining effectiveness, determine new risks and make sure of appropriate procedures for risk management which are being considered and defined in the plan of risk management.
Risk monitoring is considered as the last level in the process of risk management. The organization must give importance for continuous updating and reviewing its processes of risk management since the industry atmosphere shows it with an ever changing and dynamic atmosphere particularly when considering the single projects as well as their several requirements. Regular monitoring offers directors and management with a guarantee that the system of risk management is working appropriately to lessen the risks and assisting to maintain a track of the determined risks, entailing the list of observation. Main purpose of risk monitoring is a traditional view to allow proactive corrective activities. Risk monitoring helps the company to review and monitor risk process in a better place and to deal with unexpected events causing the failure of project behind the plan. An environmental change in the company may impact available risks and even result in new risks, therefore the companies must follow the steps in the process of risk management in order to determine the risks occurring in a while (Desheng, 2010).
2.5 Strategy of Risk Management
The initial step is to produce a plan for risk response in order to determine the risks that may influence the project. Managers, partners and staff of a project must brainstorm which refers to the charter, budget, and calendar of actions to recognize the probable risks. Individuals involved in the project can identify risks often according their experience. Information from published resources is even accessible to determine risks in different areas of application.
The different risk types as per the common sources are mentioned below:
Technical risks – like unverified technology
Risks in project management – like poor allocation of resources or time
External risks – like changing precedence in partner organizations
Organizational risks – like resource problems with different activities
2.6 Developing the strategies for risk response
One cannot mitigate or prepare the probable risks; however risks with high impact and high priority are expected to worth immediate action. The successful planning identifies whether the risk decreases or increases for the objectives of a project. Following are the available strategies for risk responses;
Avoidance: modifying the plan of project in order to reduce risk or safeguard the objectives from its influence. Utilizing a recognizable technology in spite of an innovative one is example of avoidance.
Transference – changing the risk management and its consequence to the third party. The transfer of risk always entails premium payment to the party enchanting on risk. Contract for services of consultants who are offered with fixed price is considered as an example for transference.
Mitigation – diminishing the consequence and/or probability of an undesirable risk event to a satisfactory threshold. Considering the early actions is more successful than attempting to repair the results after the happening of risk. To augment the financial resources of a provided project by means of searching for additional partners in project is an example of mitigation.
Acceptance – coming to a decision that project plan will not be changed to deal with the occurred risk. No action is required by the passive acceptance. An active acceptance can entail enhancing the contingency plans for taking plan of action. Producing a list of qualified instructors and who can be called up for replacing them in last minute for the requirement of project is considered as an example of active acceptance (HRDC, 2003).
2.7 Features of an effective project
In support to the application process, it is clear to define objects of any project, require partnerships with companies of same objectives as well as a thorough plan for the project. Such an accomplishment will lay a basis for its success, following traits must be considered as the features for an effective project (HRDC, 2003).
Clear objective: An effective project requires clearly mentioned objectives
Project plan: A cautiously studied plan will serve two main purposes. Initially, it enables everybody to involve understanding and carrying out their work part of project. It represents the responsibility of people involved and anticipates how much equipment, people, time and money will be needed for the competition of project. Secondly, it acts as a tool for monitoring, enabling the individuals to take appropriate actions to face the upcoming problems.
Communication: Generally, a project is considered as a combined effort among organization and individuals involved. It is essential for them to work together so as to sustain a continuous and effective communication among different parties.
Managed scope: Several issues can take place in the project and many of them may not add to the on the whole objectives. To stay focused is a significant priority with some amount of time or attention wasted.
Support of stakeholder: typically, projects entail different stakeholders who invest resources and time in the project. Maintaining support from stakeholder all the way through project is significant so that the team of project can meet the proposed objectives.
2.8 Implementation of ERP in Business
For this the examples of successful and failed ERP projects are considered.
Organization with successful ERP: The successful stories of ERP will expose that they were made potential by means of planned and hard work. The evaluation of defense enterprise planning and enterprise planning resources are the significant tasks in present context. The success stories of ERP do not essentially means that a company requires to be competed with what they have attained. They should think of enlarging the capacity of enterprise functions so that several and by this means maintain a role model for achieving the success stories of ERP. Generally, the success stories illustrate how the organizations are being facilitated by ERP to attain their milestones. It can be explained in different ways. They say that the existing steps are needed to be considered in an organization to reach utmost ERP benefits.
WinManp controlling the Athena, this organization is a good example as well as an existing proof to validate the fact considering the steps that an organization requires to acquire and is not supposing that a more ERP implementation will offer essential impetus for organizational success.
The main factor for organizational success of WinMan is supported since it is believed that software is considered as a means and not regarded as a solution for the problems raised in enterprise. This is supported by the information that the organization effectively merged the business practices with the software nuances. Such a process took place when the organization faced crucial time that s when they experienced a unexpected depreciation of profits.
This organization had an effective partnership with the Win Map software in order to set free the solutions of the organization. The affable work environment between the two existed over any disasters. These organizations experienced an augment in the profit levels as well as different business aspects like cost reduction, inventory management etc. The figures and facts were astonishing and would not have occurred when the organization had not utilized the result like a dais for exploiting their greatest and understanding the main mistake of not bring into line with software by means of business process (ERP, 2008).
2.9 Organization with unsuccessful ERP Implementation
Enterprise Resource Planning (ERP) is a process utilized globally by several organizations. Such system can assist and organize the organization that requires determining novel solutions in order to meet all the necessities. Even though, the organizational process utilized effectively for the successful implementation of ERP. At the same time, an unsuccessful implementation of ERP can occur because of various reasons and can happen too any sort of organization. One of the reasons is that minimum sixty percent of all ineffective implementation of ERP is because of inadequate planning. Also the best organizational plans can go off track and such condition can be accepted by most of them. The ineffective implementation of ERP is mainly due to lack of willingness, lack of plan to become flexible with particular plans associated. Flexibility is mainly the significant key to an important program to work with the necessities of an organization and to meet their necessities.
From the initiation of a project, often the organization creates a timetable and budget. One may staunchly adopt such plans and do not compensate them from the occurring problems. There are several problems which may happen during accomplishment of a project and these should possess a flexible budget and schedule hence determining the implementation of ERP.
When the resources are provided to deploy ERP this may rigidly result in project failure. In initial stages of a project, an organization may not invest adequate money as well as decline to make some changes. Also a small project of ERP can be completed in twenty five thousand dollars, and an organization not interested to spend such money must avoid the process of searching. It generates a pressure in the consultants who try to set up the software and employees who try to maintain all smoothly moving.
For the successful and unsuccessful implementation of ERP one main reason is flexibility. An ineffective implementation of ERP is mainly due to firm, inflexible and rigidity in their plan or timeline. For controlling an organization many questions rise and such are not anticipated in principle nor can they be planned. Think that a programmer who enhances a mononucleosis case and cannot work longer on that. Such project is considered as default. The organization struggling from bit flexibility in programming the difficulty can be removed and hence can avoid the successful implementation of ERP. There exist several reasons for successful implementation of ERP; however the main reasons are combined to a rigid attitude of budget and planning. The organizations possessing successful ERP have flexible planning (Matt D Murren, 2011).
Chapter 3: Research Methodology
This chapter examines the principles of methods, rules and postulates for research methodology. Basically, people think that research is the process of gathering the information but according to Wayne, G. and Stuart, M. (2007), research is just about answering the unanswered questions which are not answered earlier. In this particular researcher, researcher makes use of huge amount of secondary information and this study is mostly carried out depending on the secondary data. Mostly the research is limited with various constraints such as time, flexibility, etc. Thus, it can be said that this section guides the reader about the way researcher identifies the information for the research project.
3.2. Types of Data
In general, data is defined as the raw information where this information can be gathered through various methods known as data types. Mostly the structure for a research can be predictable based on the type of data. Research can be successfully completed only when the information collected for the study is accurate. So to carry out the research, the researcher needs to depend more on the data that exists from different sources. Further it enlightens that for any research, first and foremost aspect that needs to be considered is the different types of the information which are helpful in assessing and further understanding the business activities. Basically, researcher can collect the data in different ways and mostly these types are categorized into two types, which are (Fredrick G. Crane, 2009):
Primary data type
Secondary data type
3.2.1. Primary Research
Primary data basically concentrates more on the research objectives and focus mostly on solving the research aim and objectives. The information collected through this type is gathered only for the present study by interacting with the various respondents and takes their opinions, motivations, etc. based on the goals of the research. Information through this type can be collected through various methods like personal interview, observation method, telephone interview, executive interview, self administrative questionnaires, etc. (Panneerselvam, R., 2004). Some of the benefits that are provided by the primary data type are (Blurt, n.d):
There are numerous ways for gathering the information.
It includes a large population and wide geographical coverage.
It’s cheap and doesn’t require any prior arrangements.
Thus, it can be said that primary data is referred as the better way as it provides a realistic view to the researcher about the research and also the topics under consideration. However, even this type has some drawbacks such as (Blurt, n.d):
Includes some design problems like in what way the surveys need to be designed, etc.
Questions must be prepared simple.
Some participants fail to provide responses within the time period.
There is chance that the data send by respondents are fake or it may cover the fact.
Hence, primary research is useful for the researchers in gathering the information for the research but researchers need to takes some steps to eradicate the problems that are faced through this method.
3.2.2. Secondary Research
Information gathered through this type is considered as the backup data since it is collected through various secondary resources such as research study, journals, online books, etc. Simply this data is defined as the information that is collected for some other purposes. Mostly, this type is used in study to understand the basic necessities for conducting the research. Some of the advantages that are offered by this research type are (Slideshare, 2011):
Easy to gather the data when compare to primary data.
Consumes less time.
Longitudinal study may be possible.
Mostly the secondary research linked with the convergent and divergent methods. So within these two methods, researcher makes use of only one method among these two methods for the current study. These two methods are just the thinking skills where both include the important aspects such as intelligence, problem solving and critical thinking.
184.108.40.206. Convergent method
Here, this method enables the researcher to bring both facts and data together from different resources. Once the data is gathered these were applied logically and with that knowledge the problems were solved and can easily achieves the research objectives by making informed decisions. The main benefit of selecting this method is that it comes up with a correct answer that is the information that is provided will be in a clear and precise way and also encourages the people in learning the research in a direct path (Sarah Lipoff, 2011). Thus, from this context it can be stated that it is an approach which allows the researcher to think in a wider way in selecting the resources. Even though this process consumes more time yet the results obtained through this method are accurate.
220.127.116.11. Divergent method
Another method is divergent method where it allows the researcher to just think outwards instead of thinking inward while gathering the information for the research. It’s just an ability which develops the original and unique thoughts of a researcher and then comes up with a solution for a particular problem or else attains the research objectives (Problem Solving Techniques, 2011). This method permits the researcher to learn the research through their creative ideas so it indirectly encourages the researcher to take risks, learn how to be flexible and also to make use of their imagination. Thus, it can be stated that this method allows the researcher to think in a creative way for solving a particular problem in the research.
Hence, secondary research mainly enables the researcher to gather the data from various secondary resources. Collecting the information from these resources can be achieved through either a convergent method or divergent method.
3.3. Type of Research chosen for current study
For the present study, secondary research has been selected as the suitable data type for the research as this study more concentrates on the risks faced within the small to medium sized enterprises and also the increasing success in these enterprise system integration within these enterprises. Primary research is not suitable for this research since researcher may fail to identify the accurate data on the risks that are faced by the enterprises as mostly these were kept more confidential in order to compete with the other organizations. Within this secondary research, it’s better to prefer the convergent method for gathering the data from various secondary resources. Since this convergent method allows the researcher to first identify the research problem and then gathers the information accordingly and further it was applied to that particular problem. Mainly the researcher converge all the related resources onto solving the problem at hand. This way mainly preferred by the scientists and mathematicians. This convergent process permits the researcher to narrow down the search and recognizes the best chances for success (Sheena, 2010). So, in this manner the information is gathered for the present research and in order to clearly analyze the research in an effective manner, two organizations were being considered in current study where in which one organization selected is a successful enterprise systems and other is an unsuccessful enterprise systems. Two firms are being selected in order to analyze the risks that are being faced by the organization and how effectively each of the firm attained their stability in the real time environment. Two firms selected for the present study belongs to a UK IT Small and Medium Enterprise systems are illustrated below:
Richlyn Systems Limited
BIW Technologies is generally a privately held British company offering supply chain integration services to its consumer’s right from its establishment. The management of these technologies deploy, host and manage the access to SaaS applications from centrally managed facilities. The core services of this organization were developed in partnership with the UK universities, government and various other construction industry clients, contractors and professionals. Right from its establishment, the growth of the firm has been increasing rapidly and became the accepted market leader during the year 2003 and further strengthened its position over next two years. In 2006, it even won the prestigious Building Entrepreneur of the Year award for its achievements and also due to its adoption of systems continued it’s accelerate into a period of sustained profitability (BIW technologies, n.d). As of every organization, even this firm has been facing some risks due to uncertainties in project failures, financial market, disasters and natural causes. However, this firm stabilized all the risks that are mostly occurred in the firm through the implementation of project management techniques. Presently, there are various project management techniques but mostly PRINCE2 technique is being used by this firm as it is a process driven method of project management that contrasts with all the reactive or adaptive methods developed by Office of Government Commerce. Basically this project management includes various steps such as planning, initiating the project, directing the project, controlling the stage, managing the product delivery, managing stage boundaries, and finally closing the project. Thus, with this project management BIW Technologies manages the risks before its occurrence and also to further improve its growth globally. Because of all these reasons, BIW Technologies is considered as the successful enterprise systems in the present study.
Richlyn Systems Limited
It is a UK based software and website development company. This organization was introduced during the year 1983 and has being providing website solutions and bespoke systems to its client base. Richlyn systems have made superb reputation for the software it has developed and its close working relationships with its clients. This firm developed and introduced a Property Integrated Management and Accounting System (PIMS), and now-a-days it is regarded as one of the best in the industry by most of its clients. Right from its establishment, this organization continuing its development in innovative systems and further improves its growth gradually. For instance, some of the latest additions that were integrated to its bespoke software portfolio are Integrated Paint Manufacturing System, Stock Control and Order Processing and Accounting System. Based on the requests of numerous clients, this firm formed a website development team during the year 2003 in order to provide quality data driven websites for operating client’s data in a real time environment (Richlyn systems, n.d). As this firm expanding its team of developers for providing a wide range of products and services for their clients, Richlyn systems improving its growth but the management failed to stabilize their growth level because of various risks that that are mostly occurred in the organization. Although this company has taken various steps to reduce the risks, the risk management fails to identify their risks before its occurrence and even unable to categorize the risks based on the probability of its occurrence. It’s very necessary for every firm to know the potential threats that mostly occur during the project apart from reaching its objectives since these risks may reduce their growth and even its stability in maintaining its value in the market. Due to this reason, this firm is referred as the unsuccessful enterprise system integration projects.
This section is considered as the main part in the research as the total research can be absolute only if the selected methodology is proper to execute the functionalities in a right direction. Mostly this methodology deals with the critical justification of the chosen approach since there are numerous methods involved in the current market. In this research, secondary data type has been selected in which further convergent method has been chosen for collecting and accurate information for the research by reviewing numerous secondary resources. The method selected in this research is very helpful for the researcher as it enables them to obtain the accurate result for the research with proper facts.
Chapter 4: Results
This section illustrates the facts that are gathered through the convergent method and produces the precious information for the readers. Examiner first analyzes the result of the research by clearly examining the gathered data from various resources on the two organizations. Later, the performances of both the firms were compared and highlight the importance of implementation of PRINCE2 project management techniques in their firms.
Researcher selected the convergent method in current study in order to identify the importance of PRINCE2 project management technique in an IT industry. Here, the researcher selects two UK Small and Medium Enterprises related to IT firms. These organizations are chosen based on the implementation and lack of PRINCE2 project management techniques. Two UK firms selected in this research are BIW Technologies and Richlyn Systems limited where BIW Technologies implements the PRINCE2 project management technique where as the other firm that is Richlyn Systems doesn’t implement any type of project management techniques and just concentrates on providing services to their clients and leads to creation of various risks within the firm. Performances of both the firms are being discussed below:
4.2.1. BIW Technologies
BIW Technologies is one of the UK’s leading providers of web-based construction collaboration systems and have won the Entrepreneur of the Year award in the industry during the year 2006 Oscars, the building awards. It was being awarded in front of a 1500 audience for a wide spread adoption of its technologies across the UK construction businesses. Over past five years, this firm has been improving from its strength to strength. During the past five years, the turnover of this organization is raised to 33% by not content with concerning 25% share of a market for an internet-based information exchange within the construction industries. This raise is due to long back of relationship with the great and good of clients’ world. Colin Smith (BIW chief executive) has said that “we believe collaboration technologies are increasingly a key element in the delivery of today’s construction projects, and we are delighted that our achievements since 2000 have been recognized by this major award” (Entrepreneur, n.d, p.1). BIW is considered as the market leaders based on the independent research carried out by e-business consultancy Compagnia. These specialists said that from their research, it has been proven that this firm has a share of 26.4% in the UK market for construction collaboration systems. This enterprise even had the largest user group (that is 23000) of nine providers, this was revealed when surveyed during the year 2003 in March and even this firm received a higher user rating (that is out of 10, it scored 8.5) between the pure collaboration providers (Market, n.d, p.1). Right from its establishment, this company has been improving its firm gradually in a step by step manner by concentrating on both its mission and vision and along with that it also concentrates on the risks that may occur due to the introduction of new policy in their firm. These organizations faced various risks while introducing the new methodology in their firm yet in these situations also it standardized its level in the market by maintaining a long-term relationship with their clients. All this improvement in the organization is being carried out successfully through the implementation of project management techniques mainly these firm implements a PRINCE2 technique for stabilizing the firm by eliminating all the risks within their limited period. In some cases, the management people even eradicate the risks before its occurrence.
Figure 4.2: Shows the raise of profit during the period of 2007 and 2008 (Profit, n.d, p.1).
From the latest financial figures, it can be seen that BIW Technologies attained the revenues of ?7.3m that covers the 12 months to 30the September 2008. In the year 2007, there was a ?560,000 pre-tax profit on turnover of ?5.7m whereas the latest turnover is higher that is ?8.4m. Thus, BIW Technologies sees a profit double to ?1.1m (Profit, n.d, p.1). Hence, from this analysis on BIW Technologies it can be stated that this organization is improving its growth rapidly through the implementation of project management techniques by reducing the risks and also further improve its share in the market.
4.2.2. Richlyn Systems Limited
It is a UK based website development and software company which developed a Property Integrated Management and Accounting System (PIMS). This developed system was being widely used by most of the companies like HBOS, Valad Property Group, Wykeland property Group, Evan Easyspace and Even Property Group. This company has been enlarging its firm by developing other systems like Integrated Paint Manufacturing System (IPMS) and Integrated Stock Control order Processing and Accounting System (SCOPAC) where these two are the latest additions to its portfolio. Based on the client’s request, the management introduced a website development team in 2003 for operating the client’s information and in 2007 the management developed and maintained the NOGG and FRAX websites based on the requests of Sheffield University. Based on the requests of various clients, different websites are being developed and to maintain these sites a separate team has been formed in this organization. The demand for this firm is more in the present market but the management fails to utilize the opportunity as the introduction of every new scheme evolves some risks and just disturbs all the fields of management and thus in turn reduces its growth. This was mainly due to the lack of handling the risks in a right manner.
Figure 4.1 : Shows the shareholders funds during the year 2009 and 2010 (Annual Accounts, 2010, p.3).
If 2010 balance sheet of Richlyn Systems Limited has been considered for the present research then one can seen the reduce in the growth during the year 2009 and 2010. The net asset during the year 2009 is ?53,385 whereas in the year 2010 its value is reduced to ?33,728. During the year 2009 and 2010, even the share holder funds have been reduced to ?19,657 (Annual Accounts, 2010, p.3). Thus, from this analysis it can be stated that due to lack of implementing the correct project management techniques in the organization, Richlyn systems fails to improve its growth and further even decreasing its share in the market.
This section summarizes that implementation of project management techniques like PRINCE2 improves the growth of the firm and even helps the organizations in managing the risks efficiently. Thus, those organizations are referred as the successful enterprise systems integration projects within the UK SME’s. Here, in this research BIW Technologies is considered as the successful organization when compare to other firm (like Richlyn system) as it successfully implements the PRINCE2 technique and improves its growth rapidly.
Chapter 5: Discussion of results
From the above results it can be said that a project management is enhanced by means of successful implementation of project management and risk management that is the integration of enterprise system with various tools and technologies into the Small and medium Enterprises. There are set of questions which are required to be addressed in critical analysis of risk management techniques: what are the different ways to reduce risk for attaining a successful organization; how they can be dealt; what are the different methodologies adopted in risk management; how to deal with the provided confined data;
At the same time there are other issues to be addressed they are: How the project management techniques are utilized in the present project; how the risks are reduced by the integration of enterprise systems; how the successful implementation of ERP is achieved in the organization.
These above questions are well illustrated in the literature and how well they are useful for achieving the objectives of the project. On the other hand, some research methods are being followed in the present project. As the research is confined with several constraints like flexibility and time, the researcher adopted secondary research since it enables them to gather data for various purposes. The project management techniques and risk management techniques are being obtained from the research study, books or journals etc. At the same time unsuccessful and successful implementation of ERP is being obtained from the same. From this it is clear that secondary research helps the researcher to gather data easily which is not even time consuming. Divergent and convergent are the two methods associated with secondary research where one among them is considered. From the obtained results it is assessed that convergent method is adaptable as it helps to identify and search data for effective analysis.
Generally research methods are being adopted to gather data. The research method chosen for this study is secondary research as it focuses on the risks that are faced by SMEs as well as the integration of enterprise systems effectively by the chosen enterprises. It is analyzed that primary research is not applicable for the present research as it is found that researcher may not be successful to recognize the correct information regarding the risks that are being faced by the enterprises. Most of the enterprise data is kept secret so it is not possible to collect data by means of primary research. But with the help of secondary research, it is observed that the convergent method has been selected to gather information from various sources. From the above research methods we observe that the convergent method enables us to recognize the research problem and hence according to that the information is gathered to apply it for the specific problem. All the associated data are converged to solve the problem. From this discussion it is clear that primary research may not be adopted as the secondary research helps to gather data for current study so as to lucidly evaluate the research in a proper way. Therefore, the research methods are considered as the significant part in the process of conducting the research the entire research is found to be accurate when the opted research method is appropriate to carry out the operations. A critical evaluation is made in the research methods for choosing an appropriate approach as there are several methods entailed in present market. A clear analysis of the results is made so as to justify that appropriate research methods are opted for further continuation of research. From the above discussion a critical reflection of the research methods area being shown and the effect of appropriate research method had on the obtained results.
To attain the appropriate results we have taken the help of research methods. For analysing the present research two organizations are considered one among them is an effective enterprise system and other is an ineffective is enterprise system. For evaluating the risks two organizations are being selected and it is assessed that how effectively every organization achieved their firmness in environment of real time. For the present study, two UK organizations which are IT related SMEs are observed they are Richlyn Systems Limited and BIW Technologies. In the results the performances of these two technologies are being compared and emphasized regarding the importance and implementation of project management technique PRINCE2 in the respective organizations. From the research methods, it is clear that a convergent method has been opted for the research so as to determine the significance of project management technique PRINCE2 in the IT based SMEs. These firms are selected as per the lack of implementation of project management technique PRINCE2. This technique is utilized by them to face the risks in an appropriate manner. From the chosen two SMEs the Richyln Systems limited implements the project management technique PRINCE2 and the other firm BIW Technologies does not apply any of the project management techniques but it just focuses on offering different services to its customers and hence leading to generation of numerous risks itself in the firm. For improving its growth rapidly BIW Technologies has successfully implemented the PRINCE2 technique which helps to risks as the organization suffered from handling the risks in appropriate manner. On the other hand, Richyln Systems Limited has enhanced various accounting systems as the request of clients. It even introduced several management websites as per their requests. But it could not reach the client’s demand as it failed to use the chance of all schemes entailing the risks that disturbed the various management fields. Hence lack of project management and lack of project management techniques has let this firm to an unsuccessful implementation of ERP.
Chapter 6: Conclusions
In this dissertation, a clear evaluation is made on the Enterprise systems which highlight the key issues in SMEs. The different ways for enhancing the risk management as well as the project management are being discussed. The present study tries to meet the proposed aims and objectives by evaluating appropriate tools and techniques of both project management and risk management. The conclusions from each chapter are drawn to evaluate whether the aims and objectives of the present study are met.
Firstly, the introduction focuses on briefing the entire project with sufficient data gathered for illustrating and meeting the aims and objectives. It offers a reason for choosing the project which is significant stating the reason for augmenting the success and lessening the risks entailed in the enterprise systems including enterprises SMEs. It articulates a clear idea of the organizational success and it even offers an encouragement helping the researcher to carry on the program on a smooth tract. It is achieved by implementing and scheduling time for moderately achieving the success at the end.
Secondly, the chapter literature review illustrates the various focused areas for completion of the study. Initially, the SMEs (Small and Medium Enterprises) are mainly intended for achieving the profits, growth of comprehensive production, innovation and efficiency of the enterprise economy. They help to increase and exploit the social profits as well as facing the greater competition and entrepreneurship. In this chapter the SMEs are compared with the larger organization regarding how they differ from each other to achieve success in their specific markets. The enterprise system integration is achieved by considering the risk management and project management tools and techniques. Next is regarding the risk management which arise in firms whether it could be SMEs or other larger organizations. Risks are mainly considered as the uncertainty that is mainly found in SMEs. For this the stated solution is the risk management which helps to develop the functionalities, ensuring the regulatory compliances, improving the financial stability, prioritizing the resources, and so on. The risk management methodologies are helpful for any organization which entails the planning of risk management, risk identification, analysis of risk, monitoring and controlling of risk. Strategies of risk management help the individuals to identify the risks easily in different types of risks like technical risks, organizational risks, external risks and project management risks. The strategies for risk response are enhanced to reduce the evolving risks in the organization. The available strategies for the risk management are avoidance, transference, mitigation and acceptance. At the same time, project management is being discussed in this chapter which presents an illustration of project management and its technologies. Project management is considered as an ongoing process that requires an appropriate and appreciative environment for contextual project and which balances the inconsistent demands from the available resources and anticipated results. The project management gives a clear vision on the project objective, project plan, communication among the members, scope of project and support from the stakeholders. The different project management techniques are PRINCE2, SCRUM and PMBOK. These techniques are helpful for the SMEs to other larger organizations as they help to achieve in the successful implementation of ERP that is they make easier for the organizations to reduce risks. From these techniques PRINCE2 is chosen in the next chapter.
Thirdly, the chapter of research methods helps to examine different rules, postulates and methods for the continuation of the study. As this research requires confined constraints like flexibility and time, hence it helps to chose suitable research method. Secondary research method is considered as it helps to gather data easily from the resources like books, journals, articles etc. With the help of secondary resources a convergent method is preferred as it helps to easily identify the research aim and search the resources to reach the best opportunities of success. This way the data is gathering for clearly analyzing the research where two firms are considered for evaluating the successful and unsuccessful implementation of ERP. They are chosen to analyze the risks which are being faced and how efficiently managed with the help of project management techniques.
Next is the chapter of results, which is derived from the research methods chapter i.e. two firms are being selected which belongs to UK Information Technology based SMEs. They are BIW Technologies and Richyln Systems Limited which are shown as examples one for successful enterprise system and other for unsuccessful enterprise system. The PRINCE2 project management techniques are adopted by the BIM Technologies which helped the organization to achieve effective profits by lessening the risks. On the other hand, the Richyln Systems Limited has not implemented any of the project management techniques to reduce the risks. It just followed the business as per the request of the clients for better services, as the demands increased it could achieve them at the same time it could not diminish the risks entailed in the organization thus inefficient and less profit margins are obtained.
Next is the discussion of the obtained results, it helps to draw the critical analysis from the results that are derived from the literature and other research methods like secondary research including the convergent method. It helps how the results supported to achieve the objects and it even presents a critical reflection of the research methods influencing that had on the attained results. Following this section, the appropriate recommendations are provided for the study.
In the small and medium enterprises the issues have been increased in the present time. This research has discussed the risks and which project management techniques can be used for increasing the success in the small and medium enterprises. There are various methods which can be used as those are very significant for any kind of organizations. In this every risk has to be identified and the risk has to be described so that can be solved. The overall risk has to be established by the department and there are some vital risks that has to be identified they are the actions and strategies of the risk management treatment, there has to be deadline for the accomplishment of the treatment actions and strategies and for this the department head has to be answerable for the implementation. The organizations have to be prepared for the risks and have to be planned in an aligned manner and have to make sure of the resources that can be allotted. A formal process has to be granted for every key and this is to monitor and review the concerned risks and its management treatments and the organizations have to be ensured that the strategies are effective. In the small and medium enterprises the risks assessments have to be presented so that this will be useful in next time. Before undertaking any kind of project it is very much recommended that the audit in the internal part of the organization must be discussed in terms of purpose of the criteria. In the organization it is very significant that staff has to report to the department head regarding the fraud of the audit, department, evaluation committee in concern with the progress of the implementation of the treatment actions and strategies and the risks that are emerging. These must also be reported to the higher officials and the concerned managers. These risks have to be monitored and have to be planned and managed so that all the required obligations can be cleared. For monitoring the risk management a score card has to be maintained and developed for the progress of the grants.
For some kind of significant risks the department has to identify some steps they are
There has to be a time limit for the accomplishment treatment actions and strategies, the departments head has to be responsible for the accomplishment.
In spite of improving the issues of implementation some issues are still address and these follow after defining the ERP:
The market players ability so that they stay in alter with the ERP
Its services and usages
The requisite for innovating the applications of software
The means and ways in implementing the business applications
To get profit from the same so that it can gain a competitive edge
Well-liked information systems
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