Implementation Enterprise resource planning

1 implementation

1.1 process preparation
1.2 configuration
1.3 2 tier enterprise resource planning
1.4 customization
1.5 extensions
1.6 data migration
1.7 advantages
1.8 benefits
1.9 disadvantages

implementation

erp s scope implies significant changes staff work processes , practices. generally, 3 types of services available implement such changes—consulting, customization, , support. implementation time depends on business size, number of modules, customization, scope of process changes, , readiness of customer take ownership project. modular erp systems can implemented in stages. typical project large enterprise takes 14 months , requires around 150 consultants. small projects can require months; multinational , other large implementations can take years. customization can substantially increase implementation times.

besides that, information processing influences various business functions e.g. large corporations wal-mart use in time inventory system. reduces inventory storage , increases delivery efficiency, , requires up-to-date data. before 2014, walmart used system called inforem developed ibm manage replenishment.

process preparation

implementing erp typically requires changes in existing business processes. poor understanding of needed process changes prior starting implementation main reason project failure. difficulties related system, business process, infrastructure, training, or lack of motivation.

it therefore crucial organizations thoroughly analyze business processes before implement erp software. analysis can identify opportunities process modernization. enables assessment of alignment of current processes provided erp system. research indicates risk of business process mismatch decreased by:

linking current processes organization s strategy
analyzing effectiveness of each process
understanding existing automated solutions

erp implementation considerably more difficult (and politically charged) in decentralized organizations, because have different processes, business rules, data semantics, authorization hierarchies, , decision centers. may require migrating business units before others, delaying implementation work through necessary changes each unit, possibly reducing integration (e.g., linking via master data management) or customizing system meet specific needs.

a potential disadvantage adopting standard processes can lead loss of competitive advantage. while has happened, losses in 1 area offset gains in other areas, increasing overall competitive advantage.

configuration

configuring erp system largely matter of balancing way organization wants system work way designed work. erp systems typically include many settings modify system operations. example, organization can select type of inventory accounting—fifo or lifo—to use; whether recognize revenue geographical unit, product line, or distribution channel; , whether pay shipping costs on customer returns.

two tier enterprise resource planning

two-tier erp software , hardware lets companies run equivalent of 2 erp systems @ once: 1 @ corporate level , 1 @ division or subsidiary level. example, manufacturing company uses erp system manage across organization. company uses independent global or regional distribution, production or sales centers, , service providers support main company’s customers. each independent center or subsidiary may have own business models, workflows, , business processes.

given realities of globalization, enterprises continuously evaluate how optimize regional, divisional, , product or manufacturing strategies support strategic goals , reduce time-to-market while increasing profitability , delivering value. two-tier erp, regional distribution, production, or sales centers , service providers continue operating under own business model—separate main company, using own erp systems. since these smaller companies processes , workflows not tied main company s processes , workflows, can respond local business requirements in multiple locations.

factors affect enterprises adoption of two-tier erp systems include:

manufacturing globalization, economics of sourcing in emerging economies
potential quicker, less costly erp implementations @ subsidiaries, based on selecting software more suited smaller companies
extra effort, (often involving use of enterprise application integration) required data must pass between 2 erp systems two-tier erp strategies give enterprises agility in responding market demands , in aligning systems @ corporate level while inevitably resulting in more systems compared 1 erp system used throughout organization.

customization

erp systems theoretically based on industry best practices, , makers intend organizations deploy them is. erp vendors offer customers configuration options let organizations incorporate own business rules, gaps in features remain after configuration complete.

erp customers have several options reconcile feature gaps, each own pros/cons. technical solutions include rewriting part of delivered software, writing homegrown module work within erp system, or interfacing external system. these 3 options constitute varying degrees of system customization—with first being invasive , costly maintain. alternatively, there non-technical options such changing business practices or organizational policies better match delivered erp feature set. key differences between customization , configuration include:

customization optional, whereas software must configured before use (e.g., setting cost/profit center structures, organizational trees, purchase approval rules, etc.).
the software designed handle various configurations, , behaves predictably in allowed configuration.
the effect of configuration changes on system behavior , performance predictable , responsibility of erp vendor. effect of customization less predictable. customer s responsibility, , increases testing activities.
configuration changes survive upgrades new software versions. customizations (e.g., code uses pre–defined hooks called before/after displaying data screens) survive upgrades, though require retesting. other customizations (e.g., involving changes fundamental data structures) overwritten during upgrades , must re-implemented.

customization advantages include it:

improves user acceptance
offers potential obtain competitive advantage vis-à-vis companies using standard features

customization disadvantages include it:

increases time , resources required implement , maintain
inhibits seamless communication between suppliers , customers use same erp system uncustomized
can create on reliance on customization, undermining principles of erp standardizing software platform

extensions

erp systems can extended third–party software. erp vendors typically provide access data , features through published interfaces. extensions offer features such as:

reporting, , republishing
capturing transactional data, e.g., using scanners, tills or rfid
access specialized data , capabilities, such syndicated marketing data , associated trend analytics
advanced planning , scheduling (aps)
managing facilities, , transmission in real-time

data migration

data migration process of moving, copying, , restructuring data existing system erp system. migration critical implementation success , requires significant planning. unfortunately, since migration 1 of final activities before production phase, receives insufficient attention. following steps can structure migration planning:

identify data migrate
determine migration timing
generate data templates
freeze toolset
decide on migration-related setups
define data archiving policies , procedures

advantages

the fundamental advantage of erp integration of myriad business processes saves time , expense. management can make decisions faster , fewer errors. data becomes visible across organization. tasks benefit integration include:

sales forecasting, allows inventory optimization.
chronological history of every transaction through relevant data compilation in every area of operation.
order tracking, acceptance through fulfillment
revenue tracking, invoice through cash receipt
matching purchase orders (what ordered), inventory receipts (what arrived), , costing (what vendor invoiced)

erp systems centralize business data, which:

eliminates need synchronize changes between multiple systems—consolidation of finance, marketing, sales, human resource, , manufacturing applications
brings legitimacy , transparency each bit of statistical data
facilitates standard product naming/coding
provides comprehensive enterprise view (no islands of information ), making real–time information available management anywhere, anytime make proper decisions
protects sensitive data consolidating multiple security systems single structure

benefits

erp can improve quality , efficiency of business. keeping company s internal business processes running smoothly, erp can lead better outputs may benefit company, such in customer service , manufacturing.
erp supports upper level management providing information decision making.
erp creates more agile company adapts better change. makes company more flexible , less rigidly structured organization components operate more cohesively, enhancing business—internally , externally.
erp can improve data security. common control system, such kind offered erp systems, allows organizations ability more ensure key company data not compromised.
erp provides increased opportunities collaboration. data takes many forms in modern enterprise. documents, files, forms, audio , video, emails. often, each data medium has own mechanism allowing collaboration. erp provides collaborative platform lets employees spend more time collaborating on content rather mastering learning curve of communicating in various formats across distributed systems.

disadvantages

customization can problematic. compared best-of-breed approach, erp can seen meeting organization’s lowest common denominator needs, forcing organization find workarounds meet unique demands.
re-engineering business processes fit erp system may damage competitiveness or divert focus other critical activities.
erp can cost more less integrated or less comprehensive solutions.
high erp switching costs can increase erp vendor s negotiating power, can increase support, maintenance, , upgrade expenses.
overcoming resistance sharing sensitive information between departments can divert management attention.
integration of independent businesses can create unnecessary dependencies.
extensive training requirements take resources daily operations.
harmonization of erp systems can mammoth task (especially big companies) , requires lot of time, planning, , money.




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