l An
ERP system is an attempt to integrate all functions across a company to a
single computer system that can serve all those functions’ specific needs.
l “Integration”
is the key word for ERP implementation.
l It
may also integrate key customers and suppliers as part of the enterprise’s
operation.
l It
provides integrated database and custom-designed report systems.
l It
adopts a set of “best practices” for carrying out all business processes.
Major Reasons for
Adopting ERP
l Integrate
financial information
l Integrate
customer order information
l Standardize
and speed up operations processes
l Reduce
inventory
l Standardize
Human Resources information
Potential Benefits of
ERP
l Internal Benefits
•
Integration of a single source of data
•
Common data definition
•
A real-time system
•
Increased productivity
•
Reduced operating costs
•
Improved internal communication
•
Foundation for future improvement
l External Benefits
•
Improved customer service and order fulfillment
•
Improved communication with suppliers and
customers
•
Enhanced competitive position
•
Increased sales and profits
ERP Implementation
Approaches
l The
big bang – install a single ERP system across the entire organization
l Franchising
– Independent ERP systems are installed in different units linked by common
processes, e.g., bookkeeping.
l Slam
dunk – install one or several ERP modules for phased implementation of key
business processes.
PHASES
l Initiation
– develop business case, project scope, and implementation strategy
l Planning
– establish implementation team, determine goals and objectives, establish
metrics
l Analysis
and process design – analyze and improve existing processes, map new processes
to be adopted by the system
l Realization
– install a base system, customization, and test the system
l Transition
– replace the formal system with the new system, data conversion
l Operation
– monitor and improve system performance, provide continued training and
technical support
Major Challenges to
ERP Implementation
l Limitations
of ERP technical capabilities
l Inconsistency
with existing business processes
l Costs
- implementation (hardware, software, training, consulting) and maintenance
l Impact
on organizational structure (front office vs. back office, product lines, etc.)
l Changes
in employee responsibilities
l Flexibility
of software system upgrades
l Implementation
timelines
l Availability
of internal technical knowledge and resources
l Education
and training
l Implementation
strategy and execution
l Resistance
to change
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