Managing the PLM/ERP Implementation

Possibly the most important issue in ensuring the success of enterprise systems is that of managing change effectively. Such systems introduce massive changes in terms of procedures and practices that the firm’s employees are used to. Large systemic changes pose a threat and raise the levels of anxiety in the firm. Figure depicts some of these issues.

Job roles are changed and redefined, the employees are trained for using the system in a manner that suits the new processes rather than what the employees were comfortable with, and the flexibility that they enjoyed, in many cases, is replaced by a rigid process.

Change management entails training staff in the new procedures, creating new teams, defining new tasks, creating new reporting relationships, and creating a new culture in which employees will work. This requires careful and sensitive handling of involved employees, right from the start of the project. Key employees from departments and groups have to be recruited for guiding the system’s implementation, and they have to be encouraged to participate freely rather than resist the system.

Although change is not easily accepted, it is achieved after employees begin to see the visible benefits of the system through reduced workloads or through the effective use of the system. The management has to tread carefully and nurture this change when it becomes visible.

The second most important criterion for the successful implementation of an enterprise system is that of the top management support. Almost all the successful cases of PLM/ERP deployments show that the top management was deeply committed to the project and supported it all through the implementation steps. The top management has to be involved from the start and stay with the project management team right through the duration of the project. They should openly take responsibility for the success of the system and announce rewards and incentives for its successful operation.

The top management is also the key ingredient for change management. Their acceptance, support, and encouragement of change make possible the creation of new cultural norms and business practices. In several large and successful PLM/ERP roll-outs, the top management spent much time talking about the project to employees, participated in meetings and training workshops, wrote on personal web pages and e-mails to staff, and spoke to news media about the project. They created a positive environment for the new system and celebrated its success.

Controlling costs is the other critical issue in ensuring the success of the enterprise system implementations. The costs of implementing and running an PLM/ERP system , depending on the size of the company.

Of the many items that managers usually underestimate, training of staff and personnel is the most frequent. Since almost all employees of the firm are affected and have to learn the new system, this cost grows as people realize the challenges of entering and using data that affects many others in the firm, and demand more help and training. 

Another area of increased costs is Customization of the package. As the implementation proceeds, many firms realize that the changes in processes being demanded are not possible or difficult and then they resort to customization, which requires extra work from the vendor and hence extra costs. Customization also leads to further demands on testing and integration, which also add to the cost. Other areas that add to increased costs are data conversion and migration (from old formats to the formats required by the system); costs of consultants who are hired to solve specific and hard problems; costs of time lost by the best employees in helping with the new system rather than working on their own tasks; and the loss in productivity immediately after an implementation as employees have to work with an entirely new system.

Project Management and Vendor selection are also key issues for the success of the project. Project management entails that the management and the implementation team have to keep a sharp tab on the deadlines and milestones. If these are missed, it is certain that later milestones will also be missed. Delayed implementations cause loss of morale and a poor image with all stakeholders. Key to the success of the project is the implementation partners. Few firms have internal skills to manage an enterprise system implementation on their own. They invariably rely on the vendor to do the implementation or a third party, who act as consultants. The selection of this partner is very important as the partner needs to have the necessary skills, experience, and a cost structure that matches the expectations of the client firm. There are many examples of lawsuits against implementation consultants by clients as the project went sour or failed totally and wasted millions of dollars.

Reference:  MBA course material

Best Regards,

Anil 

Functional-type Organization Structure

The functional type structure organizes teams of employees based upon the specific jobs within the organization. The employees work in departments based on what they have to do such as marketing department, purchasing department, maintenance department, HR department and finance department. Figure 4.3 depicts the organizational chart of functional-type organization.

A Typical Organizational Chart of Functional-Type Organization

This type of structure is generally used in businesses that are into trading or manufacturing and marketing of standardized products and are usually not inclined towards new products or services unless there is a pressure of competition. For example a standard book publishing company indulges in printing and publishing standard text books for a defined audience either at

the school or college level. School book publishers will not publish college level books unless the economies of scale are focused. Such a publishing house will have different functional departments viz., editing, proof reading, printing, book binding, cover designing, (all in-house jobs), purchasing paper and stationary, marketing, distributing, financing, maintaining payroll to all the staff etc.

In the functional structure, groups consist of employees performing the same function and having the same type of skills, such as software development or software testing. Each group performs its own activities to support the company's business.

Advantages of functional structure

· Specialization: There is a better division of labor resulting in specialization of functions as people are grouped according to capabilities and similarities in positions.

· Economy: Standardization combined with specialization helps in maximizing production.

· Efficiency: Better efficiency is achieved as every employee performs a limited number of specialized functions.

· Up-to-date knowledge: Employees can share and keep up-to-date with the skills and knowledge of their specific discipline.

· Efficient control: Internal control is simplified as manual functions are separated from the mental functions. Checks and control keep the authority within specified limits.

· Expansion: Expert knowledge of functional manager assists in better supervision and control.

Disadvantages of functional structure

· Confusion: This system is quite complex to put into operation, particularly at low levels. There can be delays when one function waits for another function to complete its work. Thus, coordination becomes hard as each function focuses on its own unit and communicates with

the top management.

· Costly: Upkeep of specialist staff at higher hierarchy is costly as varying amount of skills are required at different times.

· No unity of command: Checks and control can become weak as a worker is controlled by a large number of people. Functional authority reduces the line manager’s authority and line workers end up receiving orders from various staff groups. Also operating people receive printed directives from different groups. Hence it destroys the unity of command

and creates problems in discipline.

· Conflicts: There may be disputes between the supervisory staff of different departments as they may not agree on some issues.

· Difficulty in fixing responsibility: As there are multiple authorities, it is hard to fix responsibility.

· Slow process: The hierarchical structure causes problem-resolution and decision-making to be slow.

Let us consider an example of a car manufacturing company. If there is a problem with the clutch system of the car, while the management questions the responsibility of such disqualified output, engineering department blames manufacturing department by considering itself separate from production unit and not directly linked to process cycles. Manufacturing department passes the buck back on engineering department mentioning the flaws in the design that was supplied by engineering branch. In the process, quality control checks gets lost in the riff-Raff and loses control over the whole purpose of assembly line which subsequently slows down the production process.

Examples of functional-type organizations

· Car manufacturing companies

· Electronics manufacturing units

· Brick kilns

· Hospitals

· Hospitality units

Best Regard,

Anil