Tuesday, June 17, 2008


What is ERP? Why do we need ERP? How can we implement ERP?

First day of this course was interesting. Although I have one year experience on SAP development, topics we talked was interesting. We talked about what is MRP, MRP-II and ERP. their differences and What is the main killing point of ERP systems? Such as single db, modular structure, similar interfaces, etc.
"Why do companies try to fit their business processes to to the ERP software?" was very interesting and may be the most important topic/question. After reading the book Why ERP? Some picture of the problem can be realized and also paper called "Decision Making in the Evaluation, Selection and Implementation of ERP Systems" puts 6 decision making models and their natural conclusion is "selection of a product that was about 95 percent off-the-shelf with very little customization" which said by Marlene Orton in Summit magazine.

In addition to this, comparison of open source ERP softwares with Big Players is another point that draws the cost and need side of the big picture. As I understood from the talks, SMEs especially small ones can choose the open source or application service provider approach until they earn more money to be able to pay licence and support costs of the big ERP solutions. In fact, the main point is does the ERP investment makes a fast return in the business? Companies should consider this point while evaluating the solutions.

Moreover, implementing the solution is another problem and we talked about the core implementation team. After the full support of the top management, we need a champion, very knowledgeable technical people from different departments, functional consultants and a project manager from IT department. In the following phases different end users can be used in the group for detailed analysis.

And the conclusion with failure causes. Another most important point in day one. Is it works? Is it on time and on budget and may be the tricky one, is it used (properly or resistance to use). Why ERP book a little bit touches this usage side and the papers do not talk on this since may be this is the last point if everything goes OK:) In fact, the last point says that without considering the end user in the beginning the a big mistake was made by the top management/core team. Especially it can be lived in situations that top management wants the ERP system to monitor every people and to minimize the labour cost by firing redundant people. Although top management does not think firing, it should be stated clearly at the beginning of the project by showing how people will be effected in the end.

Summaries of papers:
ERP Software: It talks about what is ERP and its benefits. It says three drawbacks, first one is entering legacy paperwork data to the system, second one is while entering data there might be some typos (misaligned data?), third one is ERP does not say what to do with a lot of data. According to me, these are not drawbacks of the ERP system. These problems are already there. ERP is not a solution, it is a tool to solve the problems, like screwdriver. And his advice is to find an ERP system that fits 95% to the current business with minimal customization in order to be successful especially for easy upgrade. Business Intelligence is the next step of the ERP solutions is the concluding thought.

Decision making in the ESI of ERP Systems: It gives six models of decision making. It says ERP projects are great projects that effects the strategic positions of the firm. It gives information about some cost numbers and the numbers about the ERP sector. After giving six decision making model (Adaptive model seems better because of rationality and flexibility), it talks about the ESI process of an Health Service Provider. It compares the project phases of six models. It concludes with adequate resource assignment is important, getting insights from academics, can be helpful.

Assessing ERP Software: It is generally about the players in the market, their products and approach to the sector. Vertical solutions of some suppliers. In the end it talks about the weaknesses of ERP systems, such as reverse logistics scenario. As in the ERP Software article it says that functional assessment is the key decision point .

ERP Purchase Decision: It talks about why firms choose an ERP solution. As we talked in day one it says because of 2K, some of them use only specific modules such as accounting, some of them choose for integrated solution. It tries to find an anwser for "What ERP package capabilities are associated with the purchase of an ERP?" There are three business capabilities that effects the decisions: ability to better meet various competitive goals, the desire to reengineer business processes, and access to integrated data. And also it says "Current wisdom suggest that companies should design their "to be" processes with the target package in mind" as we talked in the class. Another interesting decision is buy vs build. Companies think that buy is cheaper because of maintenance and upgrade cost of buid.

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