Tuesday, June 17, 2008

June 16, 2008 - Lecture Notes

ERP means Enterprise Resource Planning and in practice it is a kind of software that links all business units and processes. It has a modular structure; therefore it enables companies to implement just a single module. ERP allow real time updates so it does not require nightly updates.
When we look to the historical development of ERP, it is the extension of MRP and MRP-II. MRP is Materials Requirement Planning and it is helpful in deciding when to buy what based on the manufacturing activity of the Company. MRP-II is Manufacturing Resource Planning and it is an extended version of MRP since it also brought Human Resources and Financial aspects. ERP is the broadest one and it includes all of the functions of the Company.
The most important feature of ERP systems is the database since all of the data are stored in a database. All ERP systems come with some best practice business processes in mind but in general they enable customization in line with the needs of the related Company.
We can classify ERP providers into 3 groups which are major players such as Oracle, SAP, SSA Global; small ones and finally the open source communities and firms such as Compiere, OFBiz, WebERP.
There is also one more type of ERP provider which is called On Demand ERP (SAAS) which provides this service over internet. On Demand ERP has lower initial costs but on the other hand it has some security issues since companies should share all of the private information with an outside company. Moreover, it might slow down the transaction due to internet and network problems.
Advantages and Disadvantages of Each Type of ERP Providers
Advantages of Major Players:
-Strong support
-High availability of consultants
-International know-how
-High variety of applications
-Better products due to the increased competition in the sector
Disadvantages of Major Players:
-High cost
-More functions than needed
-Less flexibility
Advantages of Small Ones
-Lower cost
-More flexible
Disadvantages of Small Ones
-Lower quality
-Less availability of consultants
-Going concern of existing firms for future updates, maintenance and consultancy
Advantages of Open Source
-It is free
-Support is cheaper when it is available
-Easy to customize
Disadvantages of Open Source
-Weak documentation
-Less availability of consultants

ERP Implementation
ERP implementation is an important strategic decision for a company so for the implementation companies should form a core team which will analyze the main business processes of company in order to identify the suitable modules. The most important issue is the determination of the team since companies should not treat ERP implementation projects as simple IT projects.
Core team should involve people from strategic departments who know the whole process, top management, consultants, IT manager and a Champion. Support of the top management is very important in order to reflect the importance of the project to all layers of the Company. Champion is like a project leader who has the authority to affect both the staff and the top management of the Company by forming a bridge between them.
In general, each manager within the company would be paired with a consultant in order to increase the effectiveness of the project since insiders know the business processes and the company in detail whereas consultants know the capabilities of software in detail. Moreover, after the implementations managers become new inside consultants since they have the chance to learn the software more than the others. Matching IT managers with consultants would also increase the involvement of the IT department which in turn increase the benefits of ERP system usage.
IT Implementation
Approximately 70% of all IT implementation projects are failed. We can define failure in 4 bullets which are as follows:
· It might not work in terms of meeting the requirements
· It might not meet budget requirements
· It might not meet time requirements-deadlines
· It might not be used – there can be failure to use

1 comment:

Tani said...

This post has lecture notes which are very nicely defined on the topics like ERP introduction and ERP implementation. One can use this article as a good source of information about ERP.

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