Tuesday, June 17, 2008

Key Points of Why ERP?

Why ERP?
ERP systems cannot be used to manage the organizations. They just make management easier and more in line with strategies, if implemented efficiently.
ERP has a unique database for everybody to use. Since the data is unique, the reports or the information produced using this data would be reliable and consistent with each other. The similar things that different departments use can be reconciled easily as they use a common data base. This means “integration”.
One of the advantages of having integration is to eliminate duplication of information and the time spent for the duplicated efforts. However, savings in quality is more significant. In addition to these, errors are minimized by having a common database.
Without a management making the decisions, ERP cannot solve anything by itself.
Matching the system to the organization is called as “configuration”.
Best practices approach is used in designing the business processes within SAP R/3. These are mostly too general and common business processes or practices.
For firms (usually small scaled firms) that do not prefer reengineering their business processes before the implementation of ERP, SAP provides a special system called ASAP (Accelerated SAP). Roadmap to ASAP include five phases: Project Preparation, Business Blueprint, Realization, Final Preparation, Go Live & Support. It is better to have representatives from each major function in the company within the Project preparation phase (in the implementation team). Also, you should ensure that you have consultants are expertise in the specific program you are implementing. However, you cannot leave decision making to consultants! Realization phase consists of testing; it is better to have daily users within testing phase. Final preparation phase is about end-user training.
Hardware of SAP includes three parts: (1) Database Server, (2) Application Server, (3) Presentation Server. This is called three-tier client-server system.
Figure 26 in page 69 explains how SAP really works in detail. It helps to understand how everything is kept in line during business flows.
Companies should assess their business processes and their businesses itself very well before giving a decision whether to implement an ERP system or not; or before deciding which ERP system to implement. Two important aspects are needed to be understood well in this process: (1) Flexibility of the work and the level of the flexibility needed in the system, (2) the level of centralization within the company. Systems applying best practices like SAP are mostly appropriate where flexibility is low and centralization is high.
The importance of understanding and analyzing your business processes and evaluating how a system your company actually needs has become very significant in the Ohio vs. Carolina example in the book. The fact that one system has been so beneficial to one plant does not necessarily mean that it will work so well in another plant, even if the sectors are same. As important as the specific sector, the way the business is done and the production strategy are important elements. The fact that Ohio plant has a just-in-time production strategy made SAP R/3 more beneficial for them, since everything was more standardized relative to Carolina plant. Ohio plant had high volume efficiency with having a few customers with standardized demands while Carolina had a much more flexible production system with many different customers with many different design needs. All these differences should have been evaluated by Mr. McDougal before giving the implementation decision.
Implementation project of ERP has failed in the Carolina plant due to the reasons mentioned above. As also discussed in the class, the major reason for failure was the fact that Mr. McDougal has treated R/3 as solely an IT technology. He hasn’t evaluated the consistency of this system with his company’s strategy. As Billy mentions, R/3 is only capable to provide information for making decisions, but without making decisions, it would not bring a competitive advantage to the company by itself.
The importance of communicating the implementation project through the whole organization is very clear. Without informing people and including them into the change, resistance to the new system and de-motivation would be high; which are among the reasons for failure of implementation.

1 comment:

oracle ebs said...

Do you people know that ERP has a unique database for everybody to use. Since the data is unique, the reports or the information produced using this data would be reliable and consistent with each other.