Digital Transformation: ERP II a Platform for Digital Delivery

By Andrew Norton

By reading this book you will learn how to plan for and implement a digital transformation project for the delivery of successful digital services.

 

This book introduces a new approach to the delivery of digital services based on the prioritisation of resources and of addressing critical success factors (CSF) at identified stag

• Language: English
• Publisher: Upfront
• Release date: Jun 19, 2018
• ISBN: 9781784569877

Book preview

Section 1 – Digital Transformation Readiness

Chapter 1: Digital transformation is upon us… is your organisation ready?

Many organisations are looking for cost effective ways of delivering digital services but unfortunately there is an endemic failure to realise the desired benefits. Increasingly we are hearing of the serious issue of ‘E-Pretence’, which occurs when an organisation puts a new digital delivery interface on an outdated information architecture. The consequence of having a mismanaged digital service implementations can be costly. Organisational reputation can be severely damaged if digital services do not live up to today’s digitally savvy consumers, who are looking for a seamless customer experience. The financial cost of retrospectively fixing a poorly implemented digital service can be high and in many instances retrospective corrective measures cannot be facilitated.

Why are organisations looking to develop digitally driven extended enterprise opportunities? Organisations operate in a digitally connected world and consequently internal, connected and external stakeholders expect seamless and personalised digital services that serve their needs. The issue of E-Pretence is real and awaits any organisation that attempt to undertake an efficiency saving digital transformation project that does not serve the needs of key stakeholders. One way to ensure success is to ensure that the digital service is fully integrated with the organisational database. Organisations that run their operations through an ERP system can deliver significant and long term benefits to each of its stakeholders that are using digital services.

In order to realise the desired benefits that employees, customers and suppliers now expect in our digitally connected society, and improve the effectiveness of their customer-facing digital services, organisations are looking to upgrade their technological capabilities and develop digitally driven, extended enterprise opportunities. To achieve this, organisations must either upgrade their existing ERP system, or implement an ERP II system outright. However, it is notoriously difficult to establish an effective platform to facilitate digital transformation.

There are key questions you need to be asking prior to digital transformation:

•  What benefits do you hope to realise from your new digital delivery platform?

•  What new digital capabilities does your organisation need to develop?

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What new digital benefits does organisation hope to realise?

The biggest driver of ERP II has been to improve e-business [6], which provides improved customer interaction, as it helps to drive customer relationship management programmes [7]. Historically, organisations turned to ERP systems to improve efficiency in the supply chain. However, the new digital world in which we now live has changed customer expectations, and consequently organisations have needed to become far more customer centric in the way that they operate. In such circumstances it is important to consider the driving and restraining forces influencing any digital transformation project as this can help prioritisation. Mapping the affected customer-facing processes is the best way to realise the desired benefits as this sheds light on the customer-facing activities and highlights any potential collaborative capabilities.

It is not an easy process to integrate ERP II with the customer-facing stakeholders involved in digital transformation project across the business, but it can help to have early design plans prepared [8]. Furthermore, ERP II provides improved support for customer-facing knowledge workers as this type of implementation facilitates knowledge sharing and involves the optimisation of customer-facing processes to accommodate different types of usage [9, 10].

For an ERP II implementation to be a success, each organisation must have a good understanding of its customer needs and capabilities to serve these needs (Figure 1).

Figure 1 Mapping internal digital capabilities to customer needs

Extended enterprise initiatives traditionally had a lack of flexibility from early ERP software solutions [11], but system flexibility is now a prerequisite in ERP II implementation success, which delivers unique customer-facing benefits to each organisation.

Organisations that understand customer-facing benefits have greater success, and this enables the desired benefits to be tackled appropriately. For those organisations that have successfully achieved extended enterprise opportunities through ERP II implementation, the improved customer experience has been shown to have a direct effect on achieving greater financial gain [12]. Unsurprisingly, the demand for ERP II has been strong, with 25% of European and Asian organisations having invested in their existing ERP systems [13] and consequently the global ERP market has seen continual growth over the last decade, despite a prolonged period of global austerity [14].

EXERCISE

The following self-assessment exercise is designed to help you link desired benefits of your digital transformation project to customer-facing processes.

•  Identify ONE benefit you desire from your new digital delivery platform.

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•  Identify any associated customer-facing processes related to the benefit.

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•  What stakeholders are involved in the fulfilment of these processes?

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What forces influence digital transformation projects?

Having a clear understanding of the forces influencing the decision to embrace an ERP II implementation to facilitate digital transformation is essential. We can describe the forces acting upon change and these can be seen in the two forces of change scenario outlined below in Figure 2.

Figure 2 Digital transformation forces of change

The restraining forces

There has been a great deal of research undertaken regarding the effect of implementation failure [15-17]. The consequences of failure are severe, yet many organisations choose to embark on this perilous journey. Cost implications are often overlooked during such implementations [11], as firms often change plans as their implementation progresses and the implications of digital transformation transpire. Implementing the right project at the right time is also imperative, but a lack of understanding of data regarding consumer needs has led to some systems to not operate effectively. In fact it has been suggested that existing project portfolio management methods have failed to take firms’ long-term strategies into account [18 p.39].

Cultural differences can inhibit the flow of information and knowledge in an organisation [19], which highlights that the use of the organisational databases can be used to overcome such cultural barriers. In order to overcome corporate culture, cross disciplinary teams have been found to improve strategic orientation [20] and cross cultural social intelligence can be achieved. ERP software systems are not restricted by organisational size, or industry sector and as such, it has been suggested that having a cross cultural perspective is the most effective route to success [21].

Diffusion of Innovation (DoI) is a theory which can help us understand IT adoption and this theory has successfully been used to highlight that adoption and implementation are of most concern to practitioners [22]. In fact DoI can be turned into an opportunity where uncertainty exists[23], and an example of this is the evolution of the on-line market place [24], which is often referred to as ERP III, as having a seamless business interaction between internal, connected and external stakeholders operating within a single market reduces many barriers to trade.

The main resistance to early management information systems (MIS) was those imputing data and those asked to improve processes [25]. Top down driven initiatives have been shown to improve change management considerably; a number of key recommendations to avoid resistance are to get top management support, use technically sound systems, employ user friendly interfaces, train staff and undertake cost based analysis.

When linking investment objectives to digital drivers, it is important to avoid the project simply becoming a software replacement project [26], therefore utilising the skills of the project team members to achieve the outlined benefits is essential. Even so, the realisation of customer-facing benefits can take anything up to 5 years to materialise in large implementations.

The driving forces

There is little doubt that most organisations in all sectors of industry, commerce and government are fundamentally dependant on their information systems as managing stakeholder interactions have become essential in delivering customer-facing digital services. Offering joined up services is an expectant part of delivering services in modern organisations; increasingly customers are expecting a 24/7 online service.

The financial value of organisations post ERP implementation varies [27], with the greatest benefits going to those who have greater functional and physical scope to their systems. In fact, time and money are critical issues to any implementation [28] and the areas which provide the most added value are regeneration of information, synthesis, and analytical capabilities.

Revenue generation is an important driving force, in fact, with the mainstream adoption of the internet and computer enterprise software, competition has accelerated to unprecedented levels [29 p.99]. However, this is not always the case, as One-fifth of agencies that are using e-Government have enabled constituents to make payments online but only 12% consider increasing revenue a goal of their e-Government solution [30 p.18].

Enforced legislation is another key driving force in digital transformation and one prominent place where this is evident is in local government. Recent years have seen developments occur in the delivery of government services, and the UK has taken a leading role in ensuring this commitment. For example, the UK established the ‘Modernising Government’ initiative, to ensure public services are available 24 hours a day, seven days a week.

Reputation can be positively influenced through CRM [31]. In fact, this has been realised significantly in key public sector ERP II initiatives to generate improved partnerships. In fact, where strategy is integrated into implementation, it has clearly been shown that reputation of the organisation improves [32]. Organisations that fail to deliver digital transformation appropriately face the real risk of E-Pretence and should customers see that the digital service has the same old architecture, service quality will be a serious issue and customer complaints will need to be dealt with.

EXERCISE

The following self-assessment exercise is designed to help you evaluate the driving and restraining forces affecting your digital transformation project.

•  List the key driving forces in your digital transformation project

________________________________________________________________________

________________________________________________________________________

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•  List the key restraining forces in your digital transformation project

________________________________________________________________________

________________________________________________________________________

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REFERENCES

[1]   A. L. Norton, Enterprise resource planning II – A review of critical success factors, International Journal of Computer Science and Information Security, vol. 13, pp. 5 – 14, 2015.

[2]   A. L. Norton, Y. M. Coulson-Thomas, C. J. Coulson-Thomas, and C. Ashurst, Establishing a critical ERP II implementation pathway for customer-facing organisations, in Proceedings of UK Academy for Information Systems (UKAIS) Oxford, UK, available (CD ROM), 2011.

[3]   A. L. Norton, Y. M. Coulson-Thomas, C. J. Coulson-Thomas, and C. Ashurst, Delivering training for highly demanding information systems, European Journal of Training and Development, vol. 36, pp. 646-662, 2012b.

[4]   A. L. Norton, Y. M. Coulson-Thomas, C. J. Coulson-Thomas, and C. Ashurst, Evaluating the training requirements of ERP II implementations, in Proceedings of UK Academy for Information Systems (UKAIS) Oxford, UK, 2012a.

[5]   A. L. Norton, Y. M. Coulson-Thomas, C. J. Coulson-Thomas, and C. Ashurst, Ensuring benefits realisation from ERP II: the CSF phasing model, Journal of Enterprise Information Management, vol. 26, pp. 218-234, 2013.

[6]   A. A. Ndede-Amadi, What strategic alignment, process redesign, enterprise resource planning, and e-commerce have in common: enterprise-wide computing, Business Process Management Journal, vol. 10, pp. 184 - 199, 2004.

[7]   B. S. Sahay and J. Ranjan, Real time business intelligence in supply chain analytics, Information Management & Computer Security, vol. 16, pp. 28-48, 2008.

[8]   R. Batenburg, J. Benders, and H. Blonk, van der, Technical isomorphism at work: ERP-embedded similarity-enhancing mechanisms, Industrial Management & Data Systems, vol. 108, pp. 60-69, 2008.

[9]   A. Ragowsky and T. M. Somers, Special Section: Enterprise Resource Planning, Journal of Management Information Systems, vol. 19, pp. 11-15, 2002.

[10]   A. Utagikar, Customer-facing Processes and Customer Experience: A Structured Approach to Developing and Delivering Consistently Superior Customer Experience. West Conshohocken, PA: Infinity Publishing.Com, 2009.

[11]   J. T. Lindley and S. Topping, The hidden financial costs of ERP software, Managerial Finance, vol. 34, pp. 78-90, 2008.

[12]   V. Tsamantanis and H. Kogetsidis, Implementation of enterprise resource planning systems in the Cypriot brewing industry, British Food Journal, vol. 108, pp. 118-126, 2006.

[13]   P. D. Hamerman, C. Moore, and A. Margarie, Trends 2011: ERP Customers Demand Better Flexibility, Cost Transparency, And Mobility. vol. 2011: Forrester Research, 2011.

[14]   Gartner, Forecast Overview: ERP Software, Worldwide, 2014. vol. 2014: Gartner, Inc., 2014.

[15]   N. E. Boudette, Europe’s SAP scrambles to stem big glitches, The Wall Street Journal, 1999.

[16]   V. A. Mabert, A. Soni, and M. A. Venkataramanan, Enterprise resource planning: common myths versus evolving reality, Business Horizons, vol. 44, pp. 69 - 76, 2001.

[17]   S. Trimi, S. M. Lee, D. L. Olson, and J. Erickson, Alternative means to implement ERP: internal and ASP, Industrial Management & Data Systems, vol. 105, pp. 184 - 192, 2005.

[18]   S. Lee, S. Kang, E. Park, and Y. Park, Applying technology road-maps in project selection and planning, International Journal of Quality & Reliability Management, vol. 25, pp. 39-51, 2008.

[19]   P. Brewer, Cross-cultural transfer of knowledge: a special case anomaly, Cross Cultural Management, vol. 15, pp. 131-143, 2008.

[20]   N. Hynes, Corporate culture, strategic orientation, and business performance: New approaches to modeling complex relationships, Technological Forcasting& Social Change, pp. 1-8, 2008.

[21]   M. Ascalon, D. Schleicher, and M. Born, Cross-cultural social intelligence. An assessment for employees working in cross-national contexts, Cross Cultural Management, vol. 15, pp. 109-130, 2008.

[22]   M. B. Prescott and S. A. Conger, Information Technology Innovations: A Classification By IT Locus Of Impact And Research Approach, Data Base Advances, vol. 26, pp. 20-41, 1995.

[23]   K. Oikawa, Acceleration effect of uncertainty on technological diffusion, Economics Letters, vol. 101, pp. 234-36, 2008.

[24]   A. J. Rohm, V. Kashyap, T. G. B. and, and G. R. Milne, The use of online marketplaces for competitive advantage: a Latin American perspective Journal of Business & Industrial Marketing, vol. 19, pp. 372-385, 2004.

[25]   L. M. Markus, Power, Politics, and MIS Implementation, Communications of the ACM, vol. 26, pp. 430-444, 1983.

[26]   J. Peppard and J. Ward, Unlocking Sustained Business Value from IT Investments, California Management Review, vol. 48, pp. 52-70, 2005.

[27]   C. Ranganathan and C. V. Brown, ERP Investments and the Market Value of Firms: Toward an Understanding of Influential ERP Project Variables, Information Systems Research, vol. 17, pp. 145-161, 2006.

[28]   R. Fattahi and E. Afshar, Added value of information and information systems: a conceptual approach, Library Review, vol. 55, pp. 132-147, 2006.

[29]   A. MacAfee and E. Brynjolfsson, Investing in the IT that makes a competitive difference, Harvard Business Review, vol. 86, pp. 99-107, 2008.

[30]   G. Eastwood, Future Online Strategies and Technologies Creating value, improving communications and driving online business in the verticals, Business Insights Ltd2007.

[31]   R. Silva and L. Batista, Boosting government reputation through CRM, International Journal of Public Sector Management, vol. 20, pp. 588-607, 2007.

[32]   K. Wong, C. Fearon, and G. Philip, Understanding egovernment and egovernance: stakeholders, partnerships and CSR, International Journal of Quality & Reliability Management, vol. 24, pp. 927-943, 2007.

Chapter 2: Understanding different philosophical approaches for effective digital delivery

An important aspect of understanding change programmes in the context of digital delivery requires insights into evolutionary and behavioural psychology. This is vital for successful change management in digital transformation projects.

The key question you need to ask prior to embarking on any digital transformation project is:

•  How effectively does your organisation manage its customer information?

Watch the following podcast to learn more http://youtu.be/E-IOb7iEN50

What behavioural factors influence digital delivery?

In the context of change intervention, CSF are utilised to correct behavioural patterns. Here, training is key in shaping end-user behaviour; to re-instil lessons learnt transition champions and super users are essential. Additional measures also include establishing helpdesks and having visual cues on notice boards.