Executive summary enterprise resource planning



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EXECUTIVE SUMMARY


ENTERPRISE RESOURCE PLANNING
By:

Jun Han


Rongbi Liu

Brandon Swanner

Shicheng Yang

Advances in information technology, expansion of the Internet and electronic business as well as an ever-growing global competition have made running a successful business more difficult than ever before. Currently, a popular approach to the development of an integrated enterprise-wide system is the implementation of an enterprise resource planning system.



What is ERP?


Enterprise Resource Planning (ERP) is software that attempts to integrate all departments and functions across a company onto a single computer system that can serve all those departments’ particular needs. ERP allows a company to automate and integrate the majority of its business processes, including product planning, purchasing, production control, inventory control, interaction with suppliers and customer, delivery of customer service and keeping track of orders, to share common data and practices across the entire enterprise, and to produce and access information in a real-time environment. ERP enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion. ERP applications market grew to $25.4 billion in 2005, and will reach $29 billion in 2006. Over the next five years, the market will grow at an average of 10%.

Advantages of ERP

With ERP to automate processes, the benefits are as follows:


  • Increase inventory turns

  • Increase inventory accuracy rate

  • Reduce inventory costs

  • Improve customer service

  • Reduce setup times

  • Reduce paper work.

  • Provide a unified customer database usable by all applications

  • Provide greater and effective control on account.

  • Faster response and follow ups to customers

  • Improves supply demand linkage with remote locations and branches in different locations

  • Higher quality, less re-work

  • Timely revenue collection, improved cash flow



Risks of ERP


There was 70% percent of all ERP projects fail to be fully implemented, even after three years. Few companies are making full use of their ERP systems, despite the high cost of the software and the length of time an implementation can take. Once installed, more than 50% of companies said it was hard to make changes to ERP software in order to meet any changes in business processes or requirements. More than 50% of the companies did not measure their return on investment from business applications. The failure rates for ERP projects are relatively high and could lead to the bankruptcy of the corporation.

Challenges of ERP Implementation


  • Customization Related Challenges

  • Redesigning Business Processes

  • Cost of upgrades/updates

  • Training

  • Little flexibility in adapting to business processes

  • High integration costs
  • High maintenance costs


  • Lengthy or incomplete integrations



Critical Success Factors of Implementing ERP


Critical factors to ERP implementation success:

  • ERP teamwork and composition;

  • Change management program and culture;

  • Top management support;

  • Business plan and vision; '

  • Business process re-engineering and minimum customization;

  • Effective communication;

  • Project management;

  • Software development, testing, and trouble shooting;

  • Monitoring and evaluation of performance;

  • Project champion; and

  • Appropriate business and information technology legacy systems.


ENTERPRISE RESOURCE PLANNING

CONTENTS

EXECUTIVE SUMMARY 1

What is ERP? 1

Advantages of ERP 1

Risks of ERP 2

Challenges of ERP Implementation 2

Critical Success Factors of Implementing ERP 2

INTRODUCTION 4

WHAT IS ERP? 4

Definition of ERP 4

Understanding ERP 4

Core Components of ERP 6

Evolution of ERP 6

Interface of Modules 7

WHY IS ERP? 8

Key Motivating Factors 8

Tangible and intangible Benefits 9

The Percentage and Age of ERP Implementations 9

The Number of ERP Packages Implemented 9

Factors Affecting Upgrade Decisions. 10

Factors Impacting ERP Strategies 11

Plan of Action 11

HOW TO IMPLEMENT ERP? 12

Buy or Make ERP Software 12

In house development 12

ERP Implementation Challenges and Responses 12

ERP Implementation - Considerations 13

Critical Success Factors of Implementing ERP 14

Measuring Success 14

ERP Software 15

ORACLE 17

mySAP ERP 18

Comparison of ERP Software 19

CASE STUDIES 20

Case 1 - Failed ERP Gamble Haunts Hershey 21

Case 2 - KV 23

Case 3 - Business Transformation Through ERP 25

Comparisons of the Three Cases 33

THE FUTURE OF ERP 34

REFERENCES 35




INTRODUCTION


Advances in information technology, expansion of the Internet and electronic business as well as an ever-growing global competition have made running a successful business more difficult than ever before [1]. To remain successful and to be competitive, managers of manufacturing and service organizations must use technology to improve information flow, reduce costs, streamline business processes, offer product variety, establish linkage with suppliers, and to reduce response time to customer needs and expectations [1]. Corporate-wide technology integration allows information users of the company to have access to the needed information in a timely fashion and make intelligent decisions. Currently, a popular approach to the development of an integrated enterprise-wide system is the implementation of an enterprise resource planning (ERP) system, also called enterprise system [1].




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