Sunday, June 22, 2008

Day 2 Articles

Assessing ERP Software
· ERP vendors’ biggest advantage against companies specialized in supply chain planning is the integration they provide with all business units.
· However, as the need for supply chain management software becomes more complex or industry specific, ERP vendors are less likely to be chosen by the customers.
· The lower managerial level we go, the more people votes for point solutions instead of large ERP systems. Executives are interested in ERP solutions as these systems make it easy to analysis cross departmental processes such as sales-purchases-profits and on the contrary, especially operations managers are demanding more functionality and therefore choose supply chain planning vendors.
· To be competitive in some specialized functionalities such as CRM, SCM, etc., ERP vendors increase their functional module numbers day by day and even specialized in some narrow segments of these functions.
· By the integration they provide within business units, ERP systems increase the visibility across operations.
· Small ERP vendors are taking the advantage of having products for niche markets and high customization. They offer more and more specialized functions and modules.
· In some areas such as returns or reverse logistics, ERP system is insufficient.
· Although their biggest advantage is integration within business units, still there is road to go for ERP vendors about integration. Moreover, ERP software usually necessitates additional software for full integration such as a data mart.
ERP Software
· ERP software provides collection of information from each business unit.
· All data is stored in a single database and by this way this data can easily be used for record keeping and reporting purposes.
· Data is collected from different functions and this data integration makes it easy to tie multi-departmental applications. E.g.: Purchase decisions- Budget Constraints
· Integrated data is stored in a single database and it is easy to analysis relevant data for more efficient operations.
· Implementation of ERP system takes long time.
· Duplication of data is a problem that will continue if exists before ERP implementation.
· ERP is only a tool, it does not conduct analysis. Therefore, important thing is to be able to analysis this data in a right way and to make this data relevant to our operations.
· Customization of ERP system is the main reason for budget and time problems. As there is very little modification to ERP system, Winnipeg succeeds in fitting in with planned budget and time constraints.
· To improve operations, ERP constitutes the basic of the enterprise. Business intelligence software is the next step for further improvements.
Decision Making in the Evaluation, Selection and Implementation of ERP Systems
· ERP is application software that integrates information across the entire organization.
· The origins of ERP is the MRP systems (MRP1- Material Requirement Planning and MRP2-Manufacturing Resource Planning). Availability of other functionalities such as supply chain management (SCM), customer relationship management (CRM) and others are increasing day by day.
· Business strategy, business processes and different stakeholders are all involved in the decision process of the ERP project.
· There are six decision making models for ERP projects and they are explained briefly in Table 1 of the article.
1. The classical model
2. The administrative model
3. The incremental model
4. The adaptive model
5. The irrational model
6. The political model

HSP organization case demonstrates us a typical ERP decision process. A selection committee which is headed by an external consultant is formed. The committee members are unit managers of some basic operations. Selection committee makes the first round elimination with the briefings and reports demonstrated by the consultant about ERP systems, its capabilities, cost analysis and so on. For the evaluation of remaining alternatives, selection committee is expanded so that from all departments, a representative participation is provided for the committee. By this way, all business processes throughout the organization can be understood properly by the committee. Moreover, demonstrations of the vendors about the case studies of each function of the software can be evaluated by the committee member from the related department. At the final decision between two alternatives, all the committee members have similar power in voting. The six main decision making models listed above are mapped to the different phases of this ERP project decision. We can conclude that decisions during ERP project are structured or semi-structured, objectives for the project are well-defined and effective in decision making process, personal and group politics influence decision making process a lot.
The ERP Purchase Decision: Influential Business and IT Factors
· Two type of ERP purchases are described by Porter Millar : Support ERP Purchases which involve human resources and/or financial/accounting modules and Value Chain ERP Purchases which involve materials management, production and operations and may include purchase of one or more support modules.
· Companies have both business and technical reasons for ERP purchase decision.
· There are three business capabilities that influence ERP purchase decision: the ability to better meet various competitive goals, the desire to reengineer business processes, and access to integrated data.
· There are three IT capabilities that influence ERP purchase decision: the desire to replace aging mainframe systems with more modern, enterprise-wide client-server architectures, replacement of legacy systems that no longer meet the firm’s needs, and the desire to reduce information systems costs by buying rather than building software.
· Y2K problem was one of the most powerful reasons that influence the ERP purchase decisions in 1990s. By ERP implementation, along with improving their information systems capabilities, companies can also get rid of Y2K problem as ERP systems use four digit notation for year data.

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