Sunday, June 22, 2008

Day2 - Article Key Points by Basak Tektemur

Buyers' Inside ERP Software by Marlene Orton

ERP => Enterprise resource planning software allows the collection and consolidation of information across the “enterprise”, allows for tracking and running of basic reporting.

Capturing business information
All data from various sources; such as HR, finance, marketing department, is collected at a central location.
Giving reports
* It may take time to convert all legacy-paper based data and legacy computer systems into a single program.
* Duplication of data is a common problem.
* An ERP program is not analysis or management software, it is just a tool.

Vendor: Oracle, PeopleSoft, SAP

Cost depends on size of the organization, its database and number of users; implementation costs such as consultancy and building infrastructure; and customization.

Decision Making in the Evaluation, Selection and Implementation of ERP Systems by Maha Shakir

The evaluation, selection and implementation (ESI) of ERP system involve multiple decisions which can be categorized in 6 models.
ERP implementation costs exceed $100000 but decision is not just financial.
ERPs are application software that integrate information across the entire organization as we mentioned several times. Systems remove the inconsistencies and help to have consolidated reports.

Decision Making Models:
The classical model: best alternative to maximize goal achievements
The administrative model: alternatives that meet minimum standards
The incremental model: incremental changes by making successive limited comparisons starting from the present situation with no set of clear objectives
The adaptive model: mix of administrative and incremental model
The irrational model: decisions are product of organizational events
The political model: policies replace organizational goals

Classical model is based on the economic theory and is difficult to implement since it is difficult to evaluate all possible alternatives. The administrative model is more practical and depends on the principle to find the alternative that meets the minimum standards. Incremental model is used for complex and uncertain problems. The adaptive model is mix of administrative and incremental model where objectives are defined in advance but decisions are made incrementally. The irrational model is used where the uncertainty levels are high. The political model depends on personal objectives rather than organizational ones.

Initiation => The political modelRequirement Analyses (RA)/ definition of KBP => The adaptive modelRA/ inviting vendors to bid => The political modelRA/ vendor shortlisting => The administrative and political modelDesign & implementation => The adaptive modelPost implementation => The administrative and political model

The ERP Purchase Decision: Influential Business and IT Factors by Carol V. Brown, Iris Vessey, Anne Powell

IS professionals started to implement large-scale, cross-functionally integrated, packaged systems known as ERP rather than specific solutions for a single enterprise.
Support ERP purchases => involve HR and/or finance/accounting modules, alone.
Value-chain ERP purchases => involve materials management, production and operations, and/or sales modules, but may also include purchase of one or more support ERP purchases.
Three business capabilities that influence ERP purchases => the ability to better meet various goals, the desire to reengineer business processes, and access to integrated data.
Three IT capabilities that influence ERP purchases => 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 desire to reduce information systems costs by buying rather than building software.
As a result, the authors identified four business factors: data integration, new ways of doing business, global capabilities, and flexibility/aging; and four IT factors: IT purchasing, IT cost reduction, IT expertise, IT architecture as decision inputs.

Assessing ERP Software by Brian Albright

The ERP vendors such as SAP, Oracle and PeopleSoft developed and improved supply chain management modules that became better than services of companies that are specialized in supply chain management, warehouse management and so on. And therefore they have higher market share and better functionality.
Enterprise software vendors offer a greater degree of integration with back-office applications.
ERP systems provide solutions for more complex and industry-specific problems. However they fail to integrate the back-office applications with supply chain management applications which is a big problem for the customers.
In mid-market with lower IT budgets small vendors have the advantage of serving to a niche by specialization in that industry or vertical industries and ability to integrate their supply chain offerings.
ERP systems lack the ability to handle returns or reverse logistics. Also, there are still integration problems even within an ERP suite which is supposed to be complete as we defined in class. However, ERP vendor are good at identifying their gaps and problems and most of them have partners to help them to complete implementations. For customers, it is unavoidable to work with a third-party if their ERP vendor cannot meet the requirements of your complex functions and do not have a partner to solve this problem.

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