Abstract
When an organization decides that it is time to invest in a digital transformation journey or even in an enterprise resource planning (ERP) software, it is going to make a big decision. This will significantly impact most elements that contribute to its success and growth. Organized and structured planning and preparation will be required from different aspects. This chapter describes the key success—or failure—factors in implementation focusing on small and medium enterprises (SMEs). SMEs usually have limited time, resources, skills, and budget compared to large firms. Throughout the journey of transformation, they need to focus on scoping and contracting phases distinguishing between digital transformation and regular information technology contracts. This chapter defines the building blocks to have a successful transformation. Contracting and scoping are considered at the heart of managing the complete digital transformation journey.
TopBackground
Technology is moving today from “complicated” bulk acting units into “complex” system behaviors comprising multiple independent units. Complex systems are like bird flocks and fish schools that are separate units having a leader to orchestrate their joint behavior (Shalan, 2017)”. These separated and integrated units are generally acquired from different providers, generating several risks and complications. According to (Robertson & Langlois, 1995), a central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and those of networks of small specialized producers on the other.
A major element of digital transformation is “Change Management”. To better picture what change management means just imagine the 1st industrial revolution in the late 18th century in Britain with the mechanization of the textile industry, where labor force were required to learn how to operate machines instead of hand work, managers were required to change their management style to make sure machines uptime is high and production capacity is optimal (Berg, 2005). Bottom line, whomever adapted were very valuable employees for their factories, and whomever failed to adapt, were not suitable to continue in the job (Harris, 2003). Predicting such a change and managing it from the start of transformation, is what is called “change management”. (McBeath, 2017) explaining how the structured, strategic, and agile methodologies at the same time are needed to avoid disruption and affecting the organization performance in a negative way. (Loonam & Donagh, 2005) argues for the need for greater inquiry into the field of top management support for the introduction of enterprise information systems.
(Andal-Ancion, Cartwright, & Yip, 2003) discuss the digital transformation for traditional business. According to (Barki, Oktamis, & Pinsonneault, 2005) any ERP implementations fail to achieve their hoped-for benefits and require investments that are often much larger than originally estimated. There is also a need to progress toward more theoretically grounded ERP implementation that rests on the dimensions of breadth, depth, and magnitude. (Ranganathan & Brown, 2006) find that ERP projects with greater functional scope or greater physical scope result in positive, higher shareholder returns. (de Silva & de Oliveira, 2015) argue that eliminating the manual processes is the main tangible benefit wished with the ERP acquisition and that the acquisition plan must preview the discontinuation of the existent systems, replacing all of them for the new management tool to be acquired.
According to (Soffer, Golany, & Dori, 2003), in order to support the ERP implementation process, the model should describe the entire scope of the ERP system's functionality and the alternative business processes it supports, as well as the interdependencies among them. (Soja, 2006) proves the influence of particular factors on the ERP project’s success in certain circumstances.
Key Terms in this Chapter
Business Solution: Technology based solutions designed to integrate multiple facets of a company’s business through the interchange of information from various business process areas and related databases. Business solutions are replacing the ERP concept that is usually based on single vendor.
Scooping: An effective ERP scoping process need to build a clear vision and expectation in the mind of the project team and business stakeholders. The strategic objective is to define focus, tactical objectives are to define the statement of work, supporting change control processes and define what should be out of scope.
Blueprint: Models and patterns that describe generic processes for the implementation and support the stepwise integration of business processes into the knowledge life cycle. It includes detailed plans that are required to build something in accordance with the designer’s intentions.
Small and Medium Enterprises (SME): Are businesses whose personnel numbers fall below certain limits, or its revenues or turnover are below a defined threshold.
Scope: Defining what is the project overall, when will the project be complete, how much will it cost, and most importantly, how does it meet the company’s strategic goals.
As-Is Processes: Current state analysis representing a process management strategy that identifies and evaluates a business’s current processes. It can focus on an entire business organization or on one or more specific processes within a department or team.
Enterprise Resource Planning (ERP): An integrated suite of modules that are comprehensively devised to digitally sequence and streamline the business functions that include financial management, supply chain management, human resources, customer relations management, cost management and other industry specific modules.
To-Be Processes: The future state of an organizational or business process. It is the ideal state of how you want your business processes to work and mapping the To-Be processes will structurally clarify how you can get there.