The ERP Purchase Decision: Influential Business and IT Factors
-Most of the European firms choose an ERP purchase with more than three functional areas whereas only 13% decides on single area.
-ERP as we know it is a client server architecture solution rather a mainframe ran one.
-A classification on intention of buyer may be done as; support ERP purchases vs. value-chain purchases which involve production, operations and materials management.
-Business related reasons for purchasing ERP include a perceived need to reengineer business processes, introduce flexibility, access to integrated data, devising a system which is globally compatible i.e. regardless of language / currency.
-IT related reasons include, ERP as a cheaper and faster to develop alternative to in-house development, cost advantages as it replaces large, costly to maintain mainframe computer with more flexible and less costly client server architecture and ERP implementation as a solution to Y2K problems.
-As certain functional applications such as inventory management or supply chain management become more complex, "best of breed" point solutions turn out to be more effective and desirable especially by middle level managers. ERP systems, on the other hand, provide data integrity and cross many applications. They allow for more comprehensive work profit calculation, determining capable to promise dates and asset management within one integrated suite. Therefore, ERP is preferred by executives generally.
-In the midmarket, some ERP vendors capitalize on presenting supply chain management solutions fitted into complete solutions that specialize on vertical industries. SSA is emphasized to bridge between point solution providers and tier1 ERP. In this segment, however, third-party solution providers are stronger due to increased specialty in certain functional areas.
-Some firms prefer to implement point solutions on their centralized ERP system to solve specific problems such as inventory visibility within third parties(contractors).
-ERP deficiencies are discussed as they can not handle certain cases successfully. These include but not limited to; reverse logistics/returns, product lifecycle management.
Buyer's Insider: ERP Software
-Benefit: One single program contains all the information that is needed and the information is traceable.
-Drawback: Data from legacy systems, currently used, need to be converted in order to be integrated with ERP.
Duplication of data
Such large amount of information may turn out to be confusing(only if the information is not given to the right person at the right time) and ERPs do not have any analysis capability.
-Cost depends on scale and customization.
-Strategic business intelligence applications such as those which do what-if analysis are probably next in technology. And ERP forms a platform for these improvements.
Decision Making in the Evaluation, Selection and Implementation of ERP Systems
-A typical initial cost and time for a service company is given approximately which was the greatest benefit for me.
-ERPs originate from MRPs and are consistently evolving to include functionalities as HR, CRM or Professional Service Automation.
-Decisions considerations are not totally financial in selecting and evaluating ERPs because the implementation involves business process re-design and business strategy and stakeholder interests (politics) are practically important.
-Six different decision making processes are explained:
The Classical Model (sequential)
The Administrative Model (cyclical)
The Incremental Model (successive comparison)
The Adaptive Model
The Irrational Model
The Political Model (stakeholder interests)
-Using HSP Ltd. Case, it was discussed which models are used in separate parts of the ESI diagram. Initiation, selection of consultant, involves political model; in vendor short-listing administrative model was used; final voting on vendor is also deemed to be political since the voting starts from project sponsor who is the employer of half of the committee.
-Decision making involves stakeholder interest to a great extent. Decisions during the lifetime of ERP are generally structured/semi-structured and a small number of alternatives were taken into consideration.