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CHAPTER 1 INTRODUCTION TO ENTER PRISE SYSTEM S FOR MANAGEM ENT

24 CHAPTER 1 INT RODUCTION TO ENTERPRISE SYSTEMS FOR MANAGEMENT

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organizational capability, with level one being the least capable and level five the most capable. If an organization's assessment criterion is on the lower end of the model, the organization should look seriously at hiring a consulting company as an implementation partner to assist and possibly lead the organization through the implementation.

As stated, i t is often the case for organizations without much ERP implementation experience to use implementation partners. The use of consultants may appear to increase the project cost, but in most cases it does not. In the case where an organiza­

tion does have the experience, the need for consulting should only be considered to address gaps i n skills.

C H A N G E M A N A G E M E N T

For major system implementations the change management role i s essential because i t prepares an organization for changes to how i t s business i s done. In implementing any new system, communicating, preparing, and setting expectations is just as important as t raining and supporting the implementation. Effective communication of expectat ions \

will reduce risk and better insure that the system is accepted once it is implemented.

Change management was historically always thought of as important , but it was rarely funded or staffed appropriately. Today that is changing and there is an increased aware­

ness that the success of a project is the result of a well planned and thorough change man­

agement process. Research has shown that many projects fail due to lack of communication between technical staff and customers, and this one factor is often cited as a component overlooked in implementations. It is essential to develop, understand, and communicate the return on investment, business processes, and the need for change.

CHAPTER 1 INT RODUCTION TO ENTERPRISE SYSTEMS FOR MANAGEM ENT 25 It is rare that an E RP system implementation failure is based hardware or software not working appropriately.

B U S I N E S S P R O C E S S R E E N G I N E E R I N G

While the phrase business process reengineering i s overused, i t is often the case that current business processes will need to be changed t o use the functionality of an ERP system fully. It is best to make i t clear to clients and users that processes will need to be changed, adjusted, or adapted as the ERP system is implemented. A business process is a group of activities or tasks that are coordinated for achieving a business goal. A busi­

ness process can be ordering supplies or designing a new product for the market. Most organizations have defined policies or procedures for a business process. For example, in order t o buy office supplies the administrative assistant has to collect order requests from the department members, consolidate them into one order, find prices from the vendor manuals, fil l out purchase order forms, get manager's approval, and so on.

The business process task for ordering supplies may not work in the same way after the ERP system is installed. The way decisions on ordering supplies are made may also change after the installation of the system; therefore, an organization has to prepare its employees, IT staff, suppliers, managers, and other affected parties for the arrival of the new system.

G LO B A L , E T H I CA L , A N D S E C U R I T Y M A N A G E M E N T

Between t h e years 1 997 t o 2007, the I T industry has experienced massive globalization of its services. Outsourcing and offshoring have become common themes across all industries when it comes to IT development, maintenance, and support. Whereas large companies have been outsourcing for a number of years, small and medium size com­

panies have only recently come to rely on outsourcing partners for a majority of their IT support. G lobalization has impacted ERP systems in many ways. First, a majority of ERP vendors are global. SAP, Oracle, Microsoft, and others have support offices and development teams spread around the globe. Second, large ERP implementation con­

sultants have global offices and staffs to help clients in ERP implementation projects all over the world, and several consultants are emerging from countries like India. Finally, software leasing or Software as a Service (SaaS) is an emerging model for outsourcing for many companies that do not want t o invest large amounts of money on in-house ERP implementations.

Ethics and security are other areas that have attracted a lot of attention. There has been a widespread increase in corporat e white-collar crimes such as unscrupulous accounting and marketing practices, privacy violations, unauthorized data sharing, spam mail, viruses, snooping, phishing, and identit

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theft. All these unethical practices have indirectly impacted ERP systems due to their centrality in organization and direct inte­

gration with the database. Compliance management due to such regulations as the Sarbanes-Oxley (SOX) Act and the Health I nsurance Portability and Accountability Act (HIPPA ) are fast-growing software support areas, and several E RP vendors have started providing software modules or tools to support compliance management.

Along with additional modules, organizations are implementing security services to manage access and con t ro l in ERP systems, and they are developing awareness programs across their organizations t o help s taff and management understand the

26 CHAPTER 1 INTRODUCfION TO ENTERPRISE SYSTEMS FOR MANAGEMENT

seriousness of security breaches within an ERP; however, security unfortunately remains an afterthought. The seamless int egration of ERP software only i ncreases the risk of both hackers who break through perimeter security and insiders who abuse system privileges to misappropriate asset s through acts of fraud. The ERP world requires a new way of thinking about security, namely about business transactions that inflict financial losses from systems-based fraud, abuse, and errors, and not j ust the bits and bytes of network t raffic.