Enterprise resource planning (ERP) in ethio-Telecom

ERP systems were named differently by different authors, some of them are enterprise systems,
enterprise wide-systems, enterprise business-systems, integrated vendor software, and enterprise
application systems, but however with no significantly different definitions (Al-Mashari et al.,
2003). Rosemann (2000) defines ERP system as a ―customizable, standard application software
which includes integrated business solutions for the core processes (e.g. production planning and
control, warehouse management) and the main functions (e.g., accounting, human resource
management) of an enterprise. Slight differently, Gable (2000), however, defines it as a
comprehensive package software solution seek to integrate the complete range of a business
processes and functions in order to present a holistic view of the business from a single information
and IT architecture‖.

Enterprise Resource Planning (ERP) refers to large commercial software packages that promise a
seamless integration of information flow throughout an organization by combining various sources
of information into single software application and a single database. Enterprise resource planning
systems encompassing functional areas such as planning, manufacturing, sales, marketing,
distribution, accounting, financial, human resource management, project management, inventory
management, service maintenance, transportation and e-business or I-procurement. The
architecture of the software facilitates transparent integration of modules, providing flow of
information between all functions within the enterprise in a consistently visible manner.

Apart from the ideas mentioned above the major characteristics of ERP systems are: packaged
software system designed for the client environment, the integration between the modules and
across entire organization, access to data in real time, data storing and retrieving processes in an
enterprise-wide database, and management and analysis functionalities. Moreover, ERP systems
are expected to have additional characteristics such as support for multiple currencies and
languages which is critical for multinational companies, and support for specific industries.

Hence; companies who are implementing the ERP system are benefiting from the single integrated
system by transforming or reengineering their mostly legacy information system. And it is also
defined as a method for the effective planning and controlling of all the resources needed to take,
make, ship and account for customer orders in a manufacturing, distribution or service company.
ERP systems are configurable information systems packages that integrate information and
information-based processes within and across functional areas in an organization.

ERP as the same as with MRP II. However, thanks in large measure to enterprise software, ERP
as a set of business processes is broader in scope, and more effective in dealing with multiple
business units. Financial integration is even stronger. Supply chain tools, supporting business
across company boundaries, are more robust. He also defined Enterprise Resource Planning (ERP)
as business software which predicts and balances demand and supply. It is an enterprise-wide set
of forecasting, planning, and scheduling tools, which: Links customers and suppliers into a
complete supply chain, Employs proven processes for decision-making, and Coordinates sales,
marketing, operations, logistics, purchasing, finance, product development, and human resources.
Its goals include high levels of customer service, productivity, cost reduction, and inventory
turnover, and it provides the foundation for effective supply chain management and ecommerce.
It does this by developing plans and schedules so that the right resources manpower, materials,
machinery, and money—are available in the right amount when needed. Thomas F. (2001:28),
summarizes enterprise resource planning is a direct outgrowth and extension of Manufacturing
Resource Planning and, as such, includes all of MRP II ‘s capabilities. ERP is more powerful in
that it: a) applies a single set of resource planning tools across the entire enterprise, b) provides
real-time integration of sales, operating, and financial data, and c) connects resource planning
approaches to the extended supply chain customers and suppliers. The primary purpose of
implementing Enterprise Resource Planning is to run the business, in a rapidly changing and highly
competitive environment, far better than before.

Enterprise Resource Planning (ERP) is software that centralizes data from multiple departments
into a single platform, thus connecting the entire organization. Here are the top 7 benefits of ERP:

1) Reduced costs

Rather than paying for several different applications, all with costly subscriptions, ERP software
allows businesses to use a single platform and eliminate excess software. Beyond that, companies
can cut costs through the insights they gain from their business data — or, the subject of our next
point, by streamlining their business processes.
2) Streamlined business processes

One effect of centralizing information for the entire business into one system is that different
departments in the enterprise are now connected to each other. As a result, communication between
departments becomes more efficient, and normal sales processes, such as order to cash, etc. are
streamlined. For another example, if a business integrates their ecommerce platform with their
ERP system, data will automatically be transmitted from the front end to the back end of the
business so the order can rapidly be fulfilled. This eliminates the need to manually push data from
one operational department to another, or one software to another.

3) Top-down view of entire business

One of the largest benefits of ERP systems is that it gives decision makers a top-down view of the
entire business. They have complete visibility about what’s going on and can easily see statistics
and graphs, all sourced from accurate, real-time data. C-suite executives, managers, etc. can create
dashboards that highlight information that is important to them in an easy to obtain and read
manner.

4) Powerful business insights

With this visibility, management can make informed business decisions. On top of that, they can
gain advanced insights from analytics tools. ERP software outperforms other business software in
this scenario because ERP integrates data for the whole organization. In contrast, with separate
software, data cannot be pooled together easily, and insights are accordingly less powerful.

5) Reduced errors

Human error is always present in organizations, but it’s important to reduce it as much as possible.
ERP software assists in this because it eliminates contradictions in data between different
departments. Instead, data is transmitted seamlessly from one division to another.
6) Enhanced labor productivity

Sixth on the list of benefits of ERP systems is that they enhance labor productivity — and in
multiple ways. For one thing, employees don’t have to switch between software as often during
their typical work sessions. This sort of behavior involves not only the direct loss of time needed
to switch between programs, but a loss of productivity due to workers switching contexts. (Human
beings are most productive when they can attack the same task in repetition. When they switch
from one task to another, they slow down and take time to pick up speed again.)

7) Easier regulatory compliance

ERP systems give the full who, what, when, where, why regarding all business data. Because it
keeps track of all this information then, it can ease regulatory compliance.

An ERP system is characterized by:

Integral because you can control the different processes of the company understood that all
departments of a company are interrelated.

Adaptable to the idiosyncrasies of the company claiming any company is like another

Modular: The ERP understand that a company is a group of departments that are interrelated by
the information they share and generated from their processes.

Main Advantages and Disadvantages of ERP System

The advantages presented by the ERP are:

 Optimization of business processes.

 Accurate and timely access to reliable information.
 The ability to share information between all components of the organization.
  Elimination of unnecessary operations and data.
 Reduction of time and costs of litigation
 Then, as each module of the ERP system enters the same real-time database, another
advantage is that no duplicate records or playback operations, ie, redundancy is avoided.
 The performance of all work units that make up their business because better use time is
increased. If you previously had to make reports and take them from one place to another,
now the time is spent on other activities.
 To improve performance and save time, optimize the control and analysis of management
decisions there in the long term, reduced costs for the company.
 Another obvious advantage is in terms of customer service, because the response time is
reduced attention to them.
 When a company has an ERP system is more competitive in the environment in which it
operates.

Disadvantages of ERP are:

 The installation of the ERP system is costly. ERP consultants are very expensive take
approximately 60% of the budget.
 The success depends on the skills and experience of the workforce, including education
and how to make the system work properly.
 Resistance in sharing internal information between departments can reduce the efficiency
of the software.
 The systems can be difficult to use.
 Change of staff, companies can employ administrators who are not trained to manage the
ERP system of the employing company, proposing changes in business practices that are
not synchronized with the system.
 Having an ERP system has many advantages but does not guarantee the total success of
the company. Organizational culture, know how to involve staff and anticipate changes
that will suffer the organization using this system of administration, are important elements
for the completion of the implementation.
  The effectiveness of the ERP system may decrease if there is resistance to share
information between business units or departments. Due to strong changes that
implementation of the ERP system brings in the culture of work, there may be poorly
trained or disinterested in making use of the same staff...
 The benefits of having an ERP system are not presented immediately with the
implementation of the software, they will be evident long after the system is running.
 The culmination of the implementation depends on the ability and skill of the workforce,
also involves education and training, to make the system is correctly applied.

Consideration before implementing the ERP system

Before implementing any project, we must consider different parameters since ERP is also a
project several critical issues that managers must consider before making the final decision to
integrate all the business functions in the organization. This also noted by Linda (2003) as before
integrating business functions, managers must consider several important issues that will help them
decide whether an ERP integration is the right choice for their organization or not. These pertinent
issues according to her include: -

1. Fundamental Issued Under this before implementing the ERP system Linda (2003) said we
must consider various things like Frist managers must consider the fundamental (essential) issue
of the system integration of by analyzing the organization’s vision and corporate objectives. Plus
checking whether the organization is financial and economically prepared to invest ERP.

Management needs to decide on the key related implementation and business issues and how to
proceed. Certainly, ERP is not suitable for companies that are experiencing rapid growth and
change in an unstable environment are undergoing change in the corporate management and
philosophy, or that will be experiencing merger or liquidation soon. Finally, organizations need to
exploit future communication and computing technology to integrate the ERP system with e-
business application.

2. People During ERP implementation we must give high focus to people related issue like
corporate philosophy and leadership style. Let’s see people related issue in two separate parts from
management and employees side.Linda as well as other writer said active top management support
and commitment are essential to the success full implantation of the system.Most of the time
employees can quit wary of any kind of changes so to increase the chance of a successful ERP
implementation and reduce users’ resistance to change, end users, especially those who are very
knowledgeable with the operation, must be involved in all stages of the implementation process.
3. The Organizational Change Process

ERP implementation requires organizations to reengineer their key business processes in

fundamental ways, revamping old ways of conducting business, redefining job responsibilities,
and restructuring the organization. The ERP systems must be customized to address global issues
where different countries have different ways of doing business, and to incorporate country-
specific business practices pertaining to accounting, tax requirements, environmental regulations,
human resources, manufacturing, and currency conversion into the integrated system. So those
who implement ERP must know there will be change in the organizational process during ERP
implementation.

Increasing the exchange of information and communication between upstream and downstream
with in the department by using computer hardware and software systems has influenced all facets
of computing applications across organizations. In a highly competitive global business
environment, firms seek to improve or maintain their competitiveness by using information
systems to improve customer service, shorten cycle times, and reduce cost.

The implementation of an ERP system in an organization is a very complex project. The

implementation of such systems is difficult and involves a high cost, as well as considerable time
and resources. Organizations contemplating such a project must be aware of the necessary
commitments. The most important thing is that the implementation of ERP projects is a major
event in the life of an organization. An ERP system is expected to change a lot of business,
processes, and activities within the organization and often initiated with much expectation about
the benefits and the transformation that the project would bring to the organization (Ibrahim, 2010)

As technical knowledge is required, strategic, organizational and people-related factors are

significant in the success of an ERP project. Strong top management commitment is a most
important issue in successful ERP implementation, as it involves of a lot of changes in the
organization. Also, effective communications, effective project management, training and
implementation team are essential throughout an ERP project to bind the various together.

The introduction of telecommunications services in Ethiopia dates to 1894, seventeen years after
the invention of telephone technology in the world. Because of different reason its name changed
many times. Some of them are Imperial Board of Telecommunications of Ethiopia (IBTE),
Ethiopian Telecommunication Services (ETS), Ethiopian Telecommunications Authority (ETA),
and Ethiopian Telecommunications Corporation (ETC). Then on regulation No 197/2010 ethio-
telecom established at November 29, 2010 as Public Enterprise (Ethio-telecom Establishment
council of Ministers Regulation, 2010). The vision of the company is to be a world-class provider
of telecom services and its missions are Connect Ethiopia through state-of-the-art telecom services,
Provide high quality, innovative and affordable telecom products and services that enhance the
development of our nation, Build reputable brand known for its customers’ consideration, Build
its managerial capability and manpower’ talent that enables ethio-telecom to operate at
international level and Support community and environmental development. Thus, ethio-telecom
is born from this ambition to bring about a paradigm shift in the development of the telecom sector
to support the steady growth of our country. Following introduction of the new company, a full-
fledged IT solution named ERP was introduced having an objective of creating an automated work
environment in the company. Since ERP started in developing country in the mid of 1960 it passes
different stages and names According to Rashid, Hossain & Patrick (2002) Starting from 1960
ERP have different names and made additional improvement. In 1960 its name called inventory
control package (ICP), in 1970 martial requirement planning (MRP), 1980 manufacturing resource
planning (MRP) and 1990 it became Enterprise resource planning (ERP).

Ethio Telecom is investing huge amount of money in expanding telecom services. To realize its
Growth and Transformation Plan regarding telecom services, depends on this sole telecom services
provider in Ethiopia. The corporation envisions to be world class telecommunication service
provider. As it goes in its mission statement, Ethio-Telecom has a mission to connect every
Ethiopian through information communication technology, provide telecommunication services
and products that enhance the development of the nation and build reputable known its customers
‘consideration. However, it was very challenging to continue with the existing management style
and technology as a result of the dynamic environment of the sector. Therefore, the government
planned a reengineering project which was undertaken from 2007 to 2010 and that was mainly
designed to introduce world class business processes including the implementation of ―Enterprise
Resource Planning‖ system and to bring in latest telecommunication technologies in to the
organization. Since December 2010, based on the newly introduced organizational objective and
structure, an IT solution named Enterprise Resource Planning has been introduced in a manner
that fits the current work arrangements and expectations.

ERP implementation inevitably causes organizational changes, it requires the engagement of

senior management from across the organization who can resolve conflicts. Without the
commitment of senior management, ERP implementation has a high risk of failure.

Conclusion

- Ethio telecom was the first organization in adapting oracle ERP it was a big challenge for the
organization because the company does not have any bench mark organization in Ethiopia to share
its experience to ethio telecom and the preparation to implement the system is not that much
organized this leads the organization to spent more additional money more than the planned one.

- From non-human factors the loin share covered by Network problem. This problem limited the
company not to use and fully benefit from the system. There is continuous system down in addition
it takes much time to solve the problem. Since the company is Telecom Company the organization
has huge potential regarding network so the challenge for this is that lack of commitment because
when there is system the problem it is not solved quickly even if the problem is easy. So there is
lack of commitment from the concerned body.

- There is no adequate training delivered to the staffs about ERP because still when problem
happens the company was dependent on vendor. In addition, the vendors were not transferred their
knowledge to the staffs at expected level. So, lack of knowledge transfer and adequate training
from vendors to the staffs was also one of the big challenges.
Recommendation

-The human resource department still dependent on the vendors support and IS (information
system department) and most of the time there is delay in solving the problems especially when
there is system down and privilege issue, so the company should assign dedicated specialties to
get on time and urgent support when problem happens. Top management should to continually
follow, monitor and take corrective action when the problem happens.

-Since ERP is more modernized, automated and time save system the company should give high
and urgent focus to overcome all the challenges by using different strategies. Like deliver on time
training, assign adequate resource to solve continuous system down and to work on the attitude of
the staffs. If the challenges solved the company have the chance to use all opportunities the ERP
implementation creates. So, the company must overcome the challenges to use the opportunities

-Implementation of ERP is vital for any organization to manage it resource properly and to know
status of the organization timely and continuously. So Top management support is mandatory to
be a successful company and to achieve its objective at expected level. So top management should
consider implementation of ERP as an investment that the company can get the return in the future.
Successful implementation of ERP can change the company one step to the future so commitment
and support of top management is essential to eliminate the existing problems related to ERP.