Lessons Learnt - Week 2

To ERP or not to ERP

Why does a company need ERP?

The need for ERP can be driven by several factors. Some of these reasons include:

• Company growth
• Current systems are inadequate
• Changes in competitive environment
• Company needs better internal controls
• The need to share information

Why shouldn't a company implement ERP?

• Costs – upfront, ongoing and hidden costs.
• ERP is no aligned with company strategy
• Company’s needs can be met with a cheaper or easier solutions (can the same task be performed with Excel?)

Tools to help help decide whether to implement ERP:

• SWOT: Strengths, weaknesses, opportunities, threats. This analysis will help a company to better understand its internal and external environment; from this, the need for ERP may be identified.
• GAP Analysis: Current performance vs. desired performance. By using this tool, companies my first identify the current situation of the business vs. the desired position of the business, and then undertake and assessment of options and strategies to get from one to the other. Companies should ask: is ERP the answer to get the company to where we want it to be?

In deciding whether to implement ERP, the final decision criteria should be: is there a strategic need?

What defines a successful implementation?

And implementation is successful when the customer’s expectations are met or exceeded:

• System meets requirements
• Is on time
• Is on budget

Enterprise Architecture

What’s the difference between EA and ERP?

EA is a framework; a tool for strategic planning

ERP is a system; a tool for integration

Both are business initiatives and not IT initiatives. It is unwise to allow IT to oversee the implementation of these projects as IT often does not fully understand the business processes, the project may not get the proper support it needs, and many levels of the organisation may not see the strategic value of the project.

Selecting an EA framework:

A company should pick a framework that...

• It understands
• Suits the business type
• Has an appropriate level of detail

Change management:

In both ERP and EA, change management is essential. This critical section of the project requires approx 20% of the overall budget.

ERP change management includes:

• Training (staff need to know how to use the new system)
• Business process procedures (development and management of the migration from old to new processes)
• Communications (making sure everyone knows the systems, how it works, why it is being implemented, and the strategic value of the new system)
• Security and role development (ensuring the protection of sensitive data)
• Super user development (training key employees who will be champions of their functional areas. they will serve as internal trainers themselves, and as go-to help for others that need assistance with the system)

In EA, excluding the need for security and super users, the areas of change management are similar.

Both EA and ERP requite support from the top levels for change management to be effective.