Select an organization, national or international, that has implemented an ERP system. Then, address the following components i

Suggested Answers:

1. Enterprise Resource Planning (ERP) is the software infrastructure that integrates an enterprise’s internal applications, supports its external business processes, and links to its external business partners. ERP systems are commercial software packages that integrate business processes, including supply chains, manufacturing, financial, human resources, budgeting, sales, and customer service. ERPs have migrated from early client-server architectures to a Web-based architecture.

ERPs were devised to help managers run a business, whether a manufacturing, distribution, retail, or service organization. Ideally, each business function would access a centralized database instead of data silos. Departments stay informed about what is ongoing in other departments that impact its operations or performance.

2. Legacy systems (older business systems that may be still in use) are difficult and expensive to maintain, update, and interface securely with leading-edge business apps.

3. Answers may vary.

Legacy architectures were not designed for flexibility. Integrating information systems is necessary so that data can flow seamlessly among departments and business partners. ERP solutions can have enough flexibility and versatility to manage different lines of business as well as changing business requirements. A full ERP offers a longer-term solution that is agile to respond to changing business needs.

4. Answers may vary.

The text shows the results of a survey to identify what ERP experts had found to be most important to successful ERP projects. These ERP experts were given the following six options and asked to select only one of them as “most important”:

Strong program management: 6 percent

Executive support and buy-in: 19 percent

Organizational change management and training: 13 percent

Realistic expectations: 8 percent

Focus on business processes: 5 percent

Interaction of all five factors: 49 percent

Nearly half of the experts indicated that the failure of any one of the five factors significantly increases the risk of ERP failure.

The text also lists the following recommendations to explain why ERP success depends on several key factors being met:

Focus on business processes and requirements. Too often, companies get caught up in technical capabilities or platforms on which the ERP runs. But compared to business processes, none of this really matters. What matters is how managers want business operations to run and what the key business requirements are. Once management and IT have defined them, they can intelligently choose the software, modules, and vendor that fits their unique business needs.

Focus on achieving a measurable ROI. Developing a business case to get approval from upper management or the board of directors is essential, but not sufficient. Establish key performance measures, set baselines and targets for those measures, and then track performance after going live. The performance results are proof of how well the ERP meets the expectations that had been listed in the business case.

Use a strong project management approach and secure commitment of resources. An ERP project depends on how it is managed. Responsibility for the management of the ERP implementation project cannot be transferred to vendors or consulting fi rms. Because of the business disruption and cost involved, ERP projects require the full-time attention and support of high-profile champions on the key functions for a long period of time, from 6 to 12 months on average. It is also known that ERP projects cannot be managed by people who can be spared. They must be managed by people who are indispensable personnel. Without powerful champions and an adequate budget, expect the ERP to fail.

Obtain strong and continuing commitment from senior executives. Any project without support from top management will fail. No matter how well run a project is, there will be problems such as conflicting business needs or business disruptions that can only be resolved by someone with the power and authority to cut through the politics and personal agendas.

Take sufficient time to plan and prepare up-front. An ERP vendor’s motive is to close the deal as fast as possible. The company needs to make sure it correctly defines its needs and what it can afford to achieve in order to intelligently evaluate and select the best vendor. Do not be rushed into a decision. Too often, companies jump right into a project without validating the vendor’s understanding of business requirements or their project plan. The principle of “measure twice, cut once” applies to vendor selection. The more time the company spends ensuring these things are done right at the start, the lower the risk of failure and the less time spent fixing problems later. Filing a lawsuit against a vendor (see Table 10.4) is not a fi x. Lawsuits are both expensive and risky, and contribute nothing to the company’s performance.

Provide thorough training and change management. Another key principle to understand is that when you design an ERP, you redesign the organization. ERP systems involve dramatic change for workers. ERPs lose value if people do not understand how to use them effectively. Investing in training, change management, and job design are crucial to the outcome of any large-scale IT project.

5. Answers may vary.

Students may give the inverse of success factors; i.e., failure to have strong program management, executive support, and buy-in, sufficient change management and training, realistic expectations, focus on business processes.

The success of an ERP depends on organizational and technological factors that occur prior to, during, and after its implementation. Knowing what to do and what not to do are important.

ERP implementations are complex—and risky. Planning, deploying, or fine-tuning these complex business software systems for your company is such a large undertaking that such projects fail more than 50 to 70 percent of the time. You need to conduct your own research rather than depend upon vendor data for the full story of enterprise system implementations.

Many times seemingly well-planned projects fail and require extensive reworking because integration issues had not been properly planned.

ERPs are expensive and such an investment needs to be justified. This includes the total cost of ownership, not simply the cost of the ERP or monthly SaaS fee.

Processes need to be redesigned so that they can be automated, either totally or partially. Tasks that are no longer necessary are removed from the processes. Jobs and how they are performed will change to accommodate the new processes. Enterprise systems require retraining users whose productivity will drop initially as they adjust to a new way of doing their jobs.

Applications must be tightly aligned with well-defined and well-designed business processes – a standard which few enterprises are able to achieve.

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