Enterprise Resource Planning: Common Myths vs. Evolving Reality Harvard Case Solution & Analysis

Many firms have implemented a company-wide system called Enterprise Resource Planning (ERP) systems designed to integrate and optimize various business processes such as order entry and production planning across the business. Such systems are complex, and implementing one can be difficult, time consuming and expensive. Limited reports in the popular press suggest that the system is achieved with mixed success at best, some suggest that the rejection of the implementation threatens the existence of the company. Here we present an objective picture of ERP-systems, based on interviews with operational managers, IT professionals and consultants. The dominant reason for taking ERP was to simplify and standardize IT systems, and the second most common reason was to have access to accurate information. The cost of implementing a whole ranged from 1.5% to 6% of annual income, the software portion of the costs to be only the tip of the iceberg. Implementation of the time ranged from 12 months to 4 years. Return on investment in ERP was mixed - from 5% to 20%. For all the negative press ERP-systems have received our interviews showed that all the firms represented in our sample, it was nice to them, despite some problems. Successful implementation was characterized by meticulous senior management involvement, cross-functional implementation team, clear guidelines for measuring performance, as well as detailed plans for user training. It is important to note that not a single ERP system provides end-to-end solution, as most companies use different systems for specialized functions. In general, however, the future of ERP is very promising. "Hide
by Vincent A. Mabert, Ashok Soni, MA Venkataramanan, Michael Ewing Source: Business Horizons 8 pages. Publication Date: May 15, 2001. Prod. #: BH060-PDF-ENG

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