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Enterprise Resource Planning: Integrating Applications and Business Processes across the Enterprise

ISBN: 1-56607-068-6
Pages: 210
Published: April 1999

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About the report

What Is Enterprise Resource Planning?

Enterprise resource planning (ERP) systems integrate primary business applications; all the applications in an ERP suite share a common set of data that is stored in a central database. A typical ERP system provides applications for accounting and controlling, production and materials management, quality management, plant maintenance, sales and distribution, human resources, and project management.

Industry analysts expect the worldwide ERP systems market to reach $50 billion by 2002. The mainframe-based, legacy systems of the past are being rapidly replaced with ERP software, which runs on client/server (C/S) technology.

Why Make the Transition?

Companies must carefully select ERP systems and plan their projects to implement the systems on schedule and within budget. Enterprise Resource Planning: Integrating Applications and Business Processes Across the Enterprise, a new report from CTR, examines the benefits of implementing ERP systems:

  • Inventory Reduction
  • Improved Cash Management
  • Increased Revenue and Profits
  • Reduced Transportation and Logistics Costs
  • Reduced Information Technology (IT) Costs

Intangible benefits include unanticipated cost reductions, improved responsiveness to customers, more flexibility, and more effective management of the supply chain.

Assessing the Benefits and Challenges

Although implementing ERP suites can improve and update corporate resource management, managers must also be aware of the challenges involved in an ERP project.

Enterprise Resource Planning: Integrating Applications and Business Processes Across the Enterprise helps implementers realize the magnitude of such a project, the need for both executive and third-party support, the expenses, and the difficulty of training end users, for example. This report enables managers to anticipate the difficulties involved and minimize the negative effects.

Companies integrate systems for many reasons, including year 2000 (Y2K) compliance, the need to replace obsolete systems, poor quality and visibility of information, and the need for scalable systems that can support business growth. Companies also transition to ERP systems for operational motivations: to improve unacceptable business performance, to simplify ineffective and complex business processes, to support new business strategies, or to expand globally, for example.

Enterprise Resource Planning: Integrating Applications and Business Processes Across the Enterprise explores these and other factors that affect ERP implementation and discusses available tools and services to support and extend systems.

The report also discusses common mistakes made when selecting a provider and criteria companies should consider when searching for an ERP provider.

Implementing Enterprise Resource Planning

ERP software is complex and expensive. Companies must devote significant human resources to ERP projects and often hire consultants or systems integrators to help implement the systems. As a result, the company can spend millions of dollars and several years on ERP projects. This report outlines the challenges companies should expect for ERP implementation and outlines the six main steps of an ERP project:

  • Vendor Selection
  • Business Strategy Formation
  • Application Configuration
  • Testing and End-user Acceptance
  • Training
  • Rollout

Return on Investment

Even small ERP projects can cost millions of dollars. Nevertheless, the payback is high: ERP systems can provide companies the reliable, integrated data infrastructure they need to more easily access corporate data and, consequently, manage their business more effectively. Companies must plan their ERP implementations carefully and devote adequate resources to the projects to gain the most benefits from their investments and ensure the systems are installed within their planned schedule and budget.

CTR's Enterprise Resource Planning: Integrating Applications and Business Processes Across the Enterprise report provides managers with both the foundation and the tools to successfully transition to ERP systems.

Report contents

A Brief History of ERP

  • How Long Has ERP Been Used?
  • Evolution of ERP Software
  • Materials Resource Planning (MRP) Software -- The Root of ERP
  • Reasons for the ERP Market Explosion

Philosophy and Functions of ERP

  • Unification of Business Processes through Integrated Enterprise Applications and Centralized Data
  • Examples of Cross-functional Processes
  • Common Functions of ERP Systems: Accounting, Sales and Distribution, Order Entry, and Materials Management

Implementing ERP

  • The Six Major Steps of an ERP Implementation Plan:

1. Vendor Selection
2. Business Strategy Formation
3. Application Configuration
4. Testing and End-user Acceptance
5. Training
6. Rollout

How Do ERP Vendors Segment Their Customers?

  • By Customer Size
  • By Vertical Industry

The Benefits of ERP

  • Y2K Compliant Systems without Rewriting Legacy Code
  • Consolidation and Centralization of Corporate Data
  • Ability of the Company to Optimize Newer Technologies
  • Support and Upgrades from Vendors
  • Abundance of Tools and Services

ERP Challenges

  • Calculating Return on Investment (ROI)
  • Obtaining Support from Major Executives and Third Parties
  • Commitment of Valuable Human Resources
  • Major Business Process Reengineering (BPR)
  • ERP Is Cost Prohibitive
  • Scope Creep
  • Difficulty of Training End Users
  • Implementations Undertaken for Y2K Compliance Are Running Out of Time

How ERP Is Evolving

  • Extended ERP
  • Inclusion of Sales-force Automation Applications and Supply Chain Management Software
  • Outsourcing ERP

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