Benefits of Implementing ERP software
28
-
Upload
national-institute-of-technology-surathkal -
Category
Business
-
view
389 -
download
2
description
comprehensive description and baisc benefits of ERP at mid-scale companies
Transcript of Benefits of Implementing ERP software
What is ERP?
o 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.
o “Integration” is the key word for ERP
implementation.
What is ERP?
o It may also integrate key customers and
suppliers as part of the enterprise’s
operation.
o It provides integrated database and
custom-designed report systems.
o It adopts a set of “best practices” for
carrying out all business processes.
Major Reasons for Adopting ERP
o Integrate financial informationo Integrate customer order informationo Standardize and speed up operations
processeso Reduce inventoryo Standardize Human Resources
information
Potential Benefits of ERP
Internal Benefitso Integration of a single source of dataoCommon data definitiono A real-time systemo Increased productivity oReduced operating costso Improved internal communicationo Foundation for future improvement
Potential Benefits of ERP
External Benefitso Improved customer service and order
fulfillment
o Improved communication with suppliers and
customers
o Enhanced competitive position
o Increased sales and profits
ERP Implementation Approaches
o The big bang – install a single ERP system across the entire organization
o Franchising – Independent ERP systems are installed in different units linked by common processes, e.g., bookkeeping.
o Slam dunk – install one or several ERP modules for phased implementation of key business processes.
Major Phases of ERP Implementation
o Initiation – develop business case, project scope, and implementation strategy
o Planning – establish implementation team, determine goals and objectives, establish metrics
o Analysis and process design – analyze and improve existing processes, map new processes to be adopted by the system
Major Phases of ERP Implementation
o Realization – install a base system, customization, and test the system
o Transition – replace the formal system with the new system, data conversion
o Operation – monitor and improve system performance, provide continued training and technical support
Major Challenges to ERP Implementation
o Limitations of ERP technical capabilitieso Inconsistency with existing business
processeso Costs - implementation (hardware, software,
training, consulting) and maintenanceo Impact on organizational structure (front
office vs. back office, product lines, etc.)o Changes in employee responsibilities
Major Challenges to ERP Implementation
o Flexibility of software system upgradeso Implementation timelineso Availability of internal technical knowledge
and resourceso Education and trainingo Implementation strategy and executiono Resistance to change
Benefits of ERP Implementation
o Benefits are mostly in terms of cost containment rather than revenue increase.
o 53 companies (out of 63) reported annual savings of over $5 millions with the median annual saving of $1.6 million. Nine companies account for 73.4% of the reported savings.
o The study found that much of the ERP value is in indirect, non-quantifiable benefits.
o A number of companies surveyed had a negative net present value.
ERP Implementation - Key Enablers
o The organization is prepared for the change.o The executive leaders are active and visible in their
support.o The initiative is seen as a business imperative by
the organization.o The resources are available to conduct the project
completely.o A good packaged system is used and not
customized.o The user group is trained to use the software before
it is implemented.
ERP Implementation Practices
Project Managemento Organizations link implementation teams to both the
technical (IS) and functional departments.
o They tightly control implementation processes
o They appropriately use consultants throughout the implementation process
o They manage turnover of key implementation employees
o They have basic business reasons for implementation
o They align implementation with organizational strategies
ERP Implementation Practices
Change Managemento Redesigned jobs call for higher levels of skills and
accountabilityo Change management is viewed as more than just
increased training and communicationo Enterprise-wide systems drive redesigned changes.o The executive sponsor is the change agent.o Resistance from the work force (including
management) is the most significant obstacle.
ERP Implementation Practices
• Technology ExcellenceoOrganizations rely heavily on the ERP
package as the majority of their application configuration.
oOrganizations implement ERP packages on time and within budget
oOrganizations centralize support groups within their IT departments
New Developments In ERP
o Availability of web-based and wireless
ERP systems
o Adoption of easy-to-install ERP systems
o Linkage to other software systems, e.g.,
supply chain management system, e-
commerce, customer relationship
management system
