Day 3 Articles

Introducing Best Practices or Hampering Flexibility

- The company sells 1000 different raw items and they are repackaged into over 12000 different end products each they 300 to 500 orders are shipped in the same day.

- The company’s pricing strategy is different. They apply different discount strategies for different users. They had an 10 year old ERP system that is highly customized and that system could not meet their requirements.

- They were implementing one module at a time and there was problem in Order management. While implementing order management they expect that ERP system will calculate the prices automatically for different customers.

- When billing their customers, the firm did not use objective approach. In the article it can be seen that there is no organizational standards applied, and they want to implement ERP to that company. In order to implement ERP into pricing module there should be some standards. If there is no control, no discipline, and no organizational standard it would not be beneficial to implement ERP.

A Framework for Evaluating ERP Implementation Choices

ERP sector is one of the fastest growing sectors. While implementing ERP, companies fail most of the time. Reasons of failure is spending more money then the company can afford, being incompatible with strategic partners, conflicting with its management partners, style and structure.

Any successful ERP implementation requires a fit between ERP system and organizational processes.

Customization in ERP Implementation:

a) Technical Customization
1. Module Selection: Companies use the modules using the default configuration set by ERP vendors.
2. Table Configuration:
3. Code Modification: Source code of the ERP is changed for organizational needs.

b) Process Customization
Fit can be achieved by changing the process. Process customization is the degree which business process is changed to fit the system.

It has 3 categories: No change, incremental change, radical change.

c) ERP Customization Choices
Mutual adaptation, process adaptation, System conversion, process adaptation



Capability Requirements for ERP Customization

a) Technical Change Capability
Technical change capability is an organization’s ability to customize ERP systems. Companies can develop and modify large-scale software in a networked database environment. Other thing is an organization’s ability to manage large-scale systems development projects.

b) Process Change Capability
Organization’s overall ability to customize business processes.