Date: 14th April, 2008
Week 1
Q.2 ERPs are often touted as providing ‘best practice’ in functionality and business processes. However, many organizations have their own business processes and often do not want to change. If an organization is unwilling to change its business processes, can it gain any value from an ERP? How could this be achieved? What are the risks?
My response:
The term “best practice” simply means the best way to perform a process. Implementation of ERP can provide both tangible and intangible benefits to a business. One of the most important tangible benefits that ERP can provide to a business is inventory reduction. On the other hand intangible benefits can include the availability of information which can be proven very useful to the managers to make their decisions about allocation of resources. However, as data can be shared amongst various groups and individuals in the business it can improve customer response, process integration and flexibility. The availability of information can be intangible benefit to a business but has chances of providing tangible benefits to a business afterwards. An organization may decide not to change its business process thinking that ERP will not provide it with competitive advantages but will still find itself at a competitive disadvantage as the other companies might have been using ERP in the same industry type. Companies can use ERP and take advantage of best practices in terms of running the business, reducing cycle time and might also improve its level of accuracy in information availability and access. All together ERP can provide a better financial management to an organization. Finally, together with the benefits of ERP, there are some risks involved when it comes to the implementation of it. Such as, redesigning a new system to work in the old environment can be vital especially in manufacturing process.
Q.6 In recent times, there has been a trend away from total (or vanilla) ERP implementations towards ‘best of breed’ systems. Research this trend and describe how it differs from standard ERP implementations. Contrast the approaches and describe advantages and disadvantages. What are some of the considerations that would affect the decision to use the ERP or best of breed approach?
My response:
The “best of breed” method is an alternative design option where several design options are combined together while each option has its own price, advantages and disadvantages. On the other “vanilla” implementation is a complete implementation of a vendor ERP system. Complete implementation is costly and time consuming but provides the benefit of total integration and re-engineering of the business process. Deciding to implement selected modules together or individually like financial, accounting or production modules is not as costly as complete implementation but as the total integration of information across multiple functional areas will go missing. The benefits will be not as great as the implementation of the counter part “vanilla”. Organizations may choose to implement an “in house” design option with various modules as, financial accounting, production planning and material management to suit their existing business process and to avoid sharing the software with its competitors but it may be very expensive and most time consuming lacking the competitive advantage.
