Challenges In Implementation Of ERP | Nestle | Upgrading To Cloud-Based ERP System
Nestle’s decision to upgrade its ERP system
Discuss About The Challenges Involved Implementation Of ERP.
The Enterprise Resource Planning (ERP) systems offer the organization the chance to re-engineer its business processes, coordinate work in different geographic locations and empower the employees by allowing them to access the system and data consolidation. The ERP upgrade and management are very expensive, require extensive training and the employees usually resist change (Aberdeen Group 2014). As a head of the team of future digitalization project in the Nestle company where the ERP system requires to be upgraded while the company lacks the required skills and the CRM is aging and not linked to the mobile system or the cloud computing, moreover I have to evaluate the usefulness of the wearables computing within the company and the value they could add to the customer.
Nestle SA is considered the parent company of the candy-making company. The company wants to leverage its size to act as a giant. In order to achieve its goal, it has devoted $200 million to maintain and upgrade its ERP system to the 230 thousand employees in 80 countries. The business needs to standardize to achieve competitiveness. The process of ERP upgrade is expected to last for one year. The upgrade plan will involve financial, planning, accounts payable, accounts receivable, procurement, production management, demand planning, supply chain, business intelligence modules and fulfillment (Dieringer 2004).
Nestle uses a set of clear principles and values to guide it through its business and allows its stakeholders to follow these principles. These principles are represented in the wellness of health, quality assurance, customer communications, human rights, leadership and personal responsibility, rural development, sustainability and water management. The external environment is the world, the company has to be aware of the political, economic, cultural and regulatory differences that exist in each country. The company main competitors are Hershey, Mars and Cadbury (Stevens et al. 2012). Nestle SA has decided to upgrade its ERP system, although the implementation lasted for more than five years and covered 18 UK sites of manufacturing. The plan of upgrading is expected to cover 80 countries to serve the company expansion orientation (Dieringer 2004). The ERP upgrades are planned to provide the company with a wide solution for all business activities from a single application that communicates with the CRM, the cloud ERP and integrates them.
Nestle used to have three ERP systems, the Nestle SA of Switzerland, Nestle UK and Nestle USA. The headquarters of the company has also decided to upgrade the ERP system of the USA to unify the three systems in one system. This upgrade is referred as the One Nestle transforms the separate brands in an integrated system (Dieringer 2004). According to Aberdeen Group (2014), the upgrades of the ERP software leads to more usable, scalable and functional solutions. It is essential to work with the business partners, regulatory bodies and customers. The lack of upgrade leads the company to lose revenues and bear more costs as doing business becomes more difficult. Moreover, using a unified system allows for error elimination, faster and easier access to information and better generation of timely business reports.
ERP upgrade and integration with CRM and Business Intelligence
The future state of the organization is represented in the situation it wants to achieve by upgrading its ERP system and unifying its business operations to leverage the company size and enhance the buying power through the centralization and control of data to introduce a consistent and accurate information (Dieringer 2004). The solutions upgrade facilitates collaboration between the business units. Moreover, scalability is very important to the midmarket organizations that seek the continuous growth. Having the latest ERP software version enables the organization to reflect the business change and utilize the wearable computing. For example, it allows the access of the ERP from the mobile devices. If the organization is unable to upgrade to the whole ERP suite, updates could allow the individual utilities and could also link to the ERP by using the mobile devices that facilitate the access to certain function instead of the system as a whole (Aberdeen Group 2014).
The upgrade decision is identified by the values, contributions and usefulness expected to occur. It is important for the organization to leverage the software full potential and not to delay the upgrade project to avoid problems as last minute and expensive upgrades. The ERP system upgrade provides a good chance for the organization to integrate with the CRM and business intelligence (Ng 2011 ). The desired goal of the company decides the way of moving from the current state to the future state. Integration with the emerging facilities as cloud computing is essential. The emergence of the Internet of Things main aim is to connect all of the physical things with each other. The things include the smartphones, laptops and servers (Advances in Intelligent Systems and Computing 2015). The upgrade of the ERP Nestle should consider not only the latest available upgrades, but the future upgrades that likely to take place in the light of the emergence of the internet of things.
The ERP software upgrades have to consider the existing business process and strategies and be flexible for adding new activities in the future as the process of upgrade takes too much effort and money. A necessary part is the data migration from the existing to the new platform. It has to be planned very well as the organization has to assure the data accuracy and quality. It has to select the required data to be migrated from the old system as not all of them will be useful in the new system. Data selection should be based on the desired view and analysis. By upgrading the ERP system in Nestle, it is more likely to facilitate its business and eliminate the redundancy of work. Also, it enables the company to unify its processes and integrate the systems operating around the world in a unique system that is accessible from everywhere (Ng 2011 ).
Importance of ERP system upgrade
The strategic plan of upgrading the ERP software of Nestle SA is based on fulfilling the expansion goals of the company and increasing the buying behavior of the customers. Strategically, CRM views the relationships with the customers as an investment. The customer relationship design aims at strengthening the company’s competitive position and increasing the customer loyalty. This represents the basis of the ERP software update (Talet, Shawosh & Al-Saeed 2011). In the business case of Nestle SA, the CRM will be integrated with the ERP as a tool for integrating sales, services and marketing strategy and the BI for analysis. As technology allows for integrating the different types of software together, it assists in increasing value to the organization and to the customer as well. Managing the linkages between business activities by using the technology allows for ore benefits represented in building capabilities, enhancing the core competencies and creating a competitive advantage (Finnegan & Currie 2010).
The solution design involves different parties when providing an upgrade to the ERP system. These parties include the cloud service provider, the ERP vendor that developed the software and sells its license and the user company that needs to upgrade its system, it is Nestle SA in our case. The selected model is the hybrid model as it is useful in managing the performance, security and privacy related to the cloud computing. Cloud computing as a new trend will be used in the ERP software upgrade plan as it has a good potential to transform a huge part of the IT industry. Although it results in cost reduction, it is argued for the obstacles that have emerged in the ERP arena (Purohit, Jaiswa & Pandey 2012). The distinctive feature of the new ERP is that it represents a hybrid architecture. This hybrid system is called “TwoTier Model”, it combines the core capabilities of the ERP with the SaaSbased capabilities that enhances the use of the CRM with collaboration with the ERP system (Hofer, Patil & Babu 2015).
The CRM processes support the mobile access in business. The system specifications have to be specified in details to match the system requirements (Stieglitz et al. 2015). Different applications of the CRM could be used, including the Cloud-based CRM services. Data about customers that could be collected from the social media platforms could be used to manage the organization of business events.
Change management is considered among the main reasons of the failure of the ERP system. It refers to the processes, tools, principles and activities that support the employees’ acceptance to the organizational shift from the existing state to the future state. In order to avoid failure, the change management should be measured as a significant aspect. The users should be organized for the introduction of the ERP system upgrade. The action of change management is conducted through the implementation phase (Altamony et al. 2016; Star Garden 2018). The top management support is necessary as it influences the employees towards the importance of the new system. It facilitates the employees’ acceptance of the new system. The new system is expected to increase the customer value in terms of faster response to the market changes and variation in the customer needs. It is expected to increase the customer loyalty. The customer value is integrated into the company business plan of developing the ERP system of Nestle (Dezdar & Ainin 2011).
Pros and cons of using cloud-based ERP system
Conclusion
The ERP system provides Nestle with the required visibility to the decision maker, enables the promotional activities and provides a complete system of record. If the ERP system is not upgraded, new technology will be missed and the company will lose the chance of business improvement. Upgrading the ERP system is better than replacing it with a completely new one.
The cloud ERP is preferred to be applied by Nestle for some reasons as follows:
- Avoid using servers and hiring more IT resources.
- Avoid the complexity of the ERP system and its challenge to the management.
- It requires lower cost compared to the traditional ERP system.
The latest developments of the CRM that could be embedded in the ERP software upgrade of Nestle according to Kumar & Vidhyalakshmi (2012), as follows:
- The Salesforce: Enables the employees to share files and photos on the Facebook by using the ‘Chatterbox’.
- The Dynamics CRM Online software: That includes new users’ experience that could be linked to the social networking software and Skype.
References
Aberdeen Group 2014, ‘The value of upgrading ERP: Maintaining modern technology’, Aberdeen Group, USA.
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Purohit, G, Jaiswa, M & Pandey, S 2012, ‘Challenges involved in implementation of ERP on-demand solution: Cloud computing’, IJCSI International Journal of Computer Science, vol 9, no. 4, pp. 481-489.
Star Garden 2018, The true cost of ERP system, viewed 12 April 2018, <https://cdn2.hubspot.net/hubfs/425286/ebook/stargarden_pain_out_of_upgrading_5.pdf>.
Stevens, A, Fosness, D, Katz, J & Harrison, J 2012, Nestlé, viewed 11 May 2018, <https://robins.richmond.edu/documents/cases/Nestle.pdf>.
Stieglitz, S, Lattemann, C & Brockmann, T 2015, ‘Mobile applications for knowledge workers and Field workers’, 2015, pp. 1-8.
Talet, A, Shawosh, M & Al-Saeed, S 2011, ‘The perception of customer relationship management adoption case of mobile companies in Saudi Arabia’, Journal of Mobile Technologies, Knowledge & Society, pp. 1-13.