Unit 3 Lecture: 2
What is (ERP) Enterprise resource planning systems and how can it help improve business.
ERP replaced legacy systems that did not integrate with each other with modular, fully distributed systems. Each module performing a separate departmental function yet all integrating with each other into a common database.
With a standard system like SAP or Oracle, the theoretical improvements to the business are:
- Should be faster and standardized allowing consistency in technology and common interfaces.
- Better control and better customer services using the best practices built into the system.
- Database sharing so there is consistency in data across all departments.
- Fewer personnel requirements as there is streamlining of tasks.
- Better communications as all personnel are on the same system.
- The system ‘as is’ may not fit the company.
- If modifications to the standard system are made, new releases cannot be installed without incorporating those changes in the new release.
- Expensive to make changes, the more changes that are made, the higher the costs. Hidden costs.
- Use the system ‘as is’ and make the company fit the system.
- Resentment of personnel as they have to change procedures without good reason resulting in a lack of ‘buy-in’.
- Competitive advantage may be tied into differences to the ‘standard best practices’.
- Only finding out how inflexible the system actually is after having made the capital investment.
A successful ERP installation requires that the company employ the best consultants prior to deciding, consultants without a vested interest in any one product. Once the decision has been made and management, as well as staff, are 100% behind the venture, the company should employ the best experts in the system chosen to thoroughly train users.
The company could employ in house or external system developers to assess requirements and develop a bespoke system. Usually, this is more expensive and takes more time than a standard modular system, however, if the strategic advantage of the company depends on something that a standard system would not cater for, there are few alternatives.
What are the most significant things I have learned during this session?
The rate of failure of ERP systems and the risk that companies take in investing in the wrong system.