During the second week of the class, we discussed the reasons why companies need an ERP system, and when they should not implement the system. In addition, we talked about the potential analyses to be done before a company decides whether to implement an ERP system or not. Moreover, we learned about the concept of enterprise architecture.
A company may need to implement ERP system because of the below reasons:
· Current systems are not enough to handle the load
· Higher complexity
· Opportunities for higher efficiency such as improving the process and reducing costs
· Competitive environment that requires your company to have an ERP system (Supplier/client requirements)
On the other hand, a company should not implement ERP system if:
· the strategy of the company is not in line with the ERP,
· there is a resistance to change in the company,
· the company needs will not be met with the existing offer and implementing the system will lead to incur high development and integration costs,
· there are cheaper and easier alternatives that address the needs of the company.
“Success” in ERP means that the system meets the customer expectations. This includes meeting the functionality needs and requirements, the budget, and the timeline of the project.
A company needs to apply below potential analyses to decide on whether to implement an ERP system or not:
· SWOT analysis- Strengths, Weaknesses, Opportunities and Threats. This analysis should be done to understand general situation of the company. Also note that strengths and weaknesses are internal company features whereas opportunities and threats address external issues.
· GAP analysis- It is recommended that companies should use this analysis to identify the technological needs of the company. Basically, this analysis shows where the company is and where it is desired to be. Then the companies may assess how to address those needs to fill the gap.
Moreover, Enterprise Architecture (EA) allows companies to determine the way to achieve future objectives by examining processes. There are two big names that brought EA- Zachman and Spevach.
ERP is a system but EA is a process, methodology, and a framework. ERP is an end result of a strategic planning. However, both of them require strategy management, integration, maintenance, change management, insider information from the people who use it, and top management support and commitment. In addition, EA should be implemented by business people, Process Owners, who have the authority to change managerial decisions, rather than IT personnel because of several reasons:
· IT personnel may miss the strategy and only focus on the technological aspect.
· IT personnel may not know the business processes and the problems.
Also, it is important that the consultants and process owners work together to enhance the knowledge transfer. Moreover, teams should have someone from the executives ie. VP, since they work as an intermediary between the team and the top management, are helpful in getting resources, and a way to show that the company supports the project.
Change Management both in EA and ERP is important and 20% of the total budget should be allocated. It should involve training the staff, business process procedures, communicating the reasons of the implementation, security/role development, and super user development. (Super users are the staff that you train before everybody to use them later during the change management period as a trainer and as an internal consultant.)