What is ERP?

Is an information system that attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments and there particular needs. Software designed for organizing and managing business processes Modules share information across all business functions Can share customer sales data with the supply chain to help with global replenishment All modules are fully integrated and use a common database some PC based

Integration of ERP:

ERP modules consist of following departments: Operations Inventory Planning HRM Service Parts & Repairs Sales Finance

ERP modules 4 Categories:

Implementation of ERP:
1. 2. 3. 4. 5. 6. Vendor Selection Business Strategy Formation Integration Testing and End-user Acceptance Training Rollout

Cost of ERP:
Costs to implement an ERP system are not just a one-time thing. Real costs are in constant training, upgrading, and maintenance. Average Total Cost of Ownership (TCO) is $15 million.

Hidden cost in ERP: Training (Critical, but effort and cost is often underestimated) Integration and Testing (Links between modules and between ERP software and external systems) Customization (Expensive, complex, dangerous) Data Conversion Consultants Staffing (Need best and brightest from business) Implementation team needs to stay in place

How does ERP create value?

It integrates a broad range of business functions It allows diverse enterprises to standardize It stops data redundancy and synchronization Data stored in one place One version of the truth It provides simultaneous access to real-time data It facilitates communication inside and outside the enterprise Increases organizational information flow

Disadvantage of ERP:
ERP implementation is very difficult. There is a change in the way business is done. From a business function approach to a process approach. ERP systems are very expensive to implement. Can take years and cost 15s of millions of dollars. Added costs also include additional people, new computer hardware, and the cost to develop a new, integrated database If the implementation fails, the consequences to the company can be disastrous. Companies have gone out of business as a result of a failed ERP implementation effort.