Academic journal article Journal of Information Systems Education

The Challenge of Implementing an ERP System in a Small and Medium Enterprise-A Teaching Case of ERP Project Management

Academic journal article Journal of Information Systems Education

The Challenge of Implementing an ERP System in a Small and Medium Enterprise-A Teaching Case of ERP Project Management

Article excerpt

1. INTRODUCTION

Enterprise Resource Planning (ERP) system implementation projects are notoriously risky. Failure rates for ERP projects have consistently been reported as very high (Aloini, Dulmin, Mininno, 2007; Kwahk and Lee, 2008). About 90% of ERP implementations are late or over budget (Martin, 1998), and the success rate of ERP systems implementation is only about 33% (Zhang et al., 2003). In response, today's IS curriculum has expanded to emphasize the need for improved ERP technical skills, the integration of ERP team knowledge, and the acquisition of greater overall business knowledge (Boyle and Strong, 2006). However, serious deficiencies remain in ERP related project management, procurement, human resource, and top management education (Chen, Law, and Yang, 2009; Davis and Comeau, 2004; Du, Johnson, and Keil, 2004; Smith, Sarkusky, and Corrigall, 2008). In addition, a renewed emphasis on top management involvement in ERP implementation has been identified as an important topic for IS education (Liang, Saraf, Hu, and Xue, 2007; Ifinedo, 2008).

The impact of firm size on ERP implementation success clearly requires greater study. Our review of ERP case research indicates that prior studies have traditionally focused on major ERP vendors targeting sales efforts toward large firms. Examples for such research are: the case study of implementation of ERP to reengineer the business processes of a major manufacturer (Al-Mashari and Al-Mudimigh, 2003); discussion of the factors that lead to the success or failure of ERP on large construction firms (Voordijk et al., 2003). At many universities this has led to the development of an IS curricula that is biased toward large-scale vendors, such as SAP. As the large-scale ERP market has matured, vendors have increasingly retargeted their sale of ERP software toward medium and small size firms. While large-scale ERP cases continue to be developed, relatively few new ERP cases have been published that further ERP implementation education in small to medium size firms (Winkelmann and Leyh, 2010).

This case is about the implementation of a new ERP system in a medium sized manufacturing firm. As students explore the case they will be required to address the many ERP related project management, procurement, human resource, and management involvement issues raised by it. This case highlights the ERP implementation problems experienced by Custom Engineering Solutions (CES), including senior management's role, in its Electronic Control Systems (ECS) division. The firm is considering whether or not to implement this same ERP system in its Electromechanical Motors & Equipment (EME) division. Before proceeding, CES' board of directors has concluded that a review of the ECS ERP implementation is needed. They believe that such an assessment could provide valuable insight and lessons learned that could improve EME's implementation outcome.

2. COMPANY BACKGROUND

Custom Engineering Solutions (CES) is an engineering services company specializing in custom electronic industrial controls and the remanufacture of heavy, electro-mechanical industrial equipment. It was initially formed after World War II to repair and rewire large electric motors used in a wide range of sophisticated applications, including industrial machinery, generators, and aircraft engines for example. The founder, who was a mechanical engineer, grew their business by delivering custom engineering services to local companies of various sizes. In the past decade, global companies have come to demand CES' products and services, especially its electronic industrial controls. As it has grown, it has begun to source assemblies required for production from Ireland and China.

Currently, CES produces approximately 1,500 different active products, with a mix of around 300 of these products and on average 3,600 units shipped to its customers every month. Their sales are distributed through 8-10 wholesalers, and a few of them are large national distributors with significant bargaining power. …

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