Question

Enterprise Resource Planning (ERP) Systems" Please respond to the following: Give your opinion on which is the greatest risk of failure for an ERP system for an organization: selecting the wrong system ERP model or the wrong consultant not familiar with the company's business operations. Justify your answer. Give your opinion on whether or not the client should just be able to use whatever applications the ERP system provides, given that ERP systems use the best-practices approach in designing their applications, yet appropriateness of fit is considered to be an important issue when selecting an ERP. Explain your opinion.

Answer 1

Solution:-

Because ERP systems are prefabricated systems, users need to determine whether a particular ERP fits their organization’s culture and its business processes. A common reason for system failure is when the ERP does not support one or more important business processes. In one example, a textile manufacturer in India implemented an ERP only to discover afterward that it did not accommodate a basic need.

The textile company had a policy of maintaining two prices for each item of inventory that it sold. One price was used for the domestic market, and a second price, which was four times higher, was for export sales. The ERP that the user implemented was not designed to allow two different prices for the same inventory item. The changes needed to make the ERP work were both extensive and expensive. Serious system disruptions resulted from this oversight. Furthermore, modifying an ERP program and database can introduce potential processing errors and can make updating the system to later versions difficult.

The fourth section examined common risks associated with ERP implementation. Among these are the risks associated with the big bang approach, internal opposition to changing the way a company does its business, choosing the wrong ERP model, choosing the wrong consultant, cost overrun issues, and disruptions to operations. Also presented were a number of issues to consider when implementing an ERP. These include selecting a system that is a good fit for the organization, understanding that the term scalability can mean different things to different people, potential problems associated with customizing the software, the need for assigning performance measures, and the need to control outside consultants.