Essay About Erp Market And Erp Implementations

Erp Case
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FROM THE TRENCHES:Wolfgang B. Strigel, editor * [email protected]
ompanies are radically changing their information technology strategies
by purchasing prepackaged software instead of developing IT systems
in-house. Price Waterhouse predicts that by 2000, two-thirds of
all business software will be bought off the shelf. More specifically,
Deloitte and Touche states that businesses prefer to replace legacy systems with
enterprise resource planning systems. According to AMR Research, the ERP systems
market was $15.68 billion in 1997 and is likely to increase at a compound rate of 36
percent, to $72.63 billion, by 2002. The associated consultancy market is approximately
$30 billion. These statistics clearly indicate a shift in the ERP market.
There are mixed reports concerning the outcome of ERP projects. Successful ERP
implementations are certainly publicized, such as Pioneer New Media Technologies
(see
projects have led to bankruptcy proceedings and litigation against IT suppliers.
2 Approximately 90 percent of ERP implementations are late or over budget,3
which may be due to poor cost and schedule estimations or changes in project
scope rather than project management failure.4
Christopher P. Holland and Ben Light, Manchester Business School
An effective IT infrastructure can suppor t a business vision
and strategy; a poor, decentralized one can break a company.
More and more companies are turning to off-the-shelf ERP
solutions for IT planning and legac y systems management.
The authors have developed a framework to help managers
successfully plan and implement an ERP projec t.
3 0 IEEE Software May/ June 1999 0 7 4 0 – 7 4 5 9 / 9 9 / $ 1 0 . 0 0 © 1 9 9 9 I E E E
A Critical Success
Factors Model For
ERP Implementation
ERP software automates core corporate activities,
such as manufacturing, human resource, finance,
and supply chain management, by incorporating
best practices to facilitate rapid decision-making,
cost reductions, and greater managerial control.
These factors make ERP software integration complex,
because consensus is required from an entire
enterprise to reengineer a core business process and
take advantage of the software.5
ERP implementation can reap enormous bene-
fits for successful companies–or it can be disastrous
for organizations that fail to manage the implementation
process. We must ask ourselves two critical
questions, “How can ERP systems be implemented
successfully?”and “What are the critical success factors
for ERP implementation?”
CRITICAL SUCCESS FACTORS
FRAMEWORK
There are different strategic approaches to ERP
software implementation. The two main technical
options are the implementation of a standard package
with minimum deviation from the standard settings,
and the customization of a system to suit local
requirements. From a management perspective, the
nature of the ERP implementation problem includes
strategic, organization, and technical dimensions.
Therefore, ERP implementation involves a mix of
business process change, or BPC, and software configuration
to align the software with the business
processes.
We developed a CSF research framework based
on a review of literature6-9 and the experiences of
the organizations in the study. The model, shown in
Figure 1, groups the CSFs into strategic and tactical
factors. Each has factors specific to ERP projects.
CSF models have been applied to general project
management problems,9 manufacturing system
implementation,10 and reengineering.11 We
have identified the factors needed to ensure a successful
ERP project and to explain different project
outcomes. Our approach is particularly suitable for
the analysis of ERP projects because it includes the
influence of tactical factors, such as technical software
configuration and project management variables,
together with broader strategic influences,
such as the overall implementation strategy. Our
framework will guide managers in the development
of an implementation strategy and will help them
make decisions by identifying the role and influence
of individual factors