ERP Systems Discussion Questions

1. Which module is most commonly customized in an ERP system, and why?

2. Compare the benefits of implementing an ERP system that larger companies typically see
compared to those of smaller companies?

Many issues, activities, approaches and strategies were common to all our case study companies, there are
many differences across these implementations. One key difference is that companies of different sizes tend
to do different things in their implementations across a range of issues. For example, smaller companies are
more likely to change their processes to fit the system whereas larger companies are more likely to customize
the system. Any changes to the system can have major implications.
Generally, modifications lead to higher costs, longer implementation time and more complicated
implementations.

Other differences across smaller and larger include the motivation to go with an ERP system, the
implementation strategies, type of systems adopted, the extent of modifications to the base system, and the
benefits the companies get from ERP.

Organization size can be defined in two waysby number of employees or by revenues. Several studies have
used number of employees as a measure of company size while others have used annual revenues. We
chose to use annual revenues as a convenient measure of organization size classifying the companies in both
the case studies and the survey as follows: companies with annual revenues
of less than $200 million are classified as small, those between $200 million and $1 billion are classified as
medium, and those with more than$1 billion are classified as large.

These breakdowns were developed in consultation with the case study companies and the consultants. With
this classification scheme, the key differences across companies of different sizes in the case studies are
stated in the form of the following propositions:

Proposition 1. Adoption of ERP systems by large companies is motivated more by strategic needs whereas
tactical considerations are more important for smaller companies.

Proposition 2. Larger companies employ more ERP functionality than small companies.

Proposition 3. Large companies customize ERP software more while small companies adopt business
processes within ERP systems more.

Proposition 4. Large companies use an incremental implementation approach by phasing in the systems while
smaller companies adopt more radical implementation approaches such as implementing the entire system or
several major modules at the same time (The Big-Bang or the Mini Big-Bang approach).

Proposition 5. Large companies report greater benefits in the financial areas, while small companies report
more benefits from their ERP implementations in manufacturing and logistics.

These differences were also reflected in such measures as the cost to implement, the cost breakdowns by
category, and the implementation time. The cost of implementation among the case study companies ranged
between 1.5% and 6% of annual revenues. Measuring the implementation cost
as a percent of revenue provides a convenient way to determine if size of the organization has any impact on
ERP costs. Data show that small companies spent between 3.5% and 6% of revenues to implement ERP, with
an average of 5.53%. Medium-sized companies reported an average of 3.08% while large companies had an
average cost to revenue ratio of 2.23%. The breakdowns of costs into various categories also showed key
differences. Smaller companies spent a higher proportion of their budgets on the cost of software.
Larger companies, on the other hand, spent a higher percentage on their ERP implementation teams. The
implementation times also varied by the size of the companies.

3. When implementing an ERP system how important is return on investment?

Most companies expected positive returns from their ERP implementation. The bene4ts and returns expected
variedsigni4cantly across companies.

4. What are the benefits that most companies expect when implementing an ERP system?

Centrally managed a single system with minimal maintenance costs

 Transparency in the recruitment and employee appraisal processes which enabled hiring,
engaging and rewarding performance based on the right competencies and proven
performance
Real time reporting for higher management and tracking of set goals and objectives
Informed decision making due to readily available real time reports
Centralized control over all processes, with region level flexibility to implement
localized changes
Efficiency improvement for all functions and processes
Cost savings due to not having to maintain multiple systems
Easy sharing of best practices across the various centers
Easy access self-service function made available for employee self-help
Easy learning facilitated for common tasks through document sharing and online
tutorials, resulting in time and cost savings
Increased employee morale, productivity and engagement
We have a non-standard business model
Not only do companies have retail stores, but they also have licensees.
There are many other intricacies to the way we do business.
Being able to work directly with Servicesand as a result, have a direct line to the solution
product team is critical.
It allows the company to pull in experts as we need them and weigh options so they can
quickly make decisions on how to build this solution

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5. What is your opinion on a company implementing two ERP systems?

When most people think of ERP systems, they think of a single system. The common thinking
behind enterprise software is that executives are generally looking for a single solution to
integrate their entire business operations, processes and technologies. They want their entire
employee base on a single system, the reality, however, is that a single system isnt always the
most pragmatic way to address an organizations business, technological and organizational
needs. Businesses are becoming more complex, are evolving more quickly than ever, and are
working hard to carve out unique niches to differentiate themselves from competitors. These
competing priorities are often not conducive to a single ERP system from a single ERP vendor. In
addition, best-of-breed solutions provide systems that are built with the depth to address one
specific functional area, delivering potentially stronger functionality in that area than a single ERP
system that addresses the breadth of an entire organization. In these cases, a best-of-breed
enterprise software solution may make more sense. There are a number of solutions that fit this
category: Salesforce for CRM, Workday for HR, Plex Systems for manufacturing, and Kinaxis for
Supply Chain Management are just a few common examples of best-of-breed ERP systems.
Multiple ERP systems across a global enterprise can lead to fragmentation of enterprise-wide
information. Each of the well-established suppliers of mature and stable ERP systems continue to
enhance their products by providing better enterprise-wide access and performance of the
infrastructure. If multiple systems are implemented, great care is required to normalize the
configurations and prevent contradictory transaction processing effects. Decentralized
implementations often ignore the requirements of other entities in the global enterprise-wide
environment.
https://www.panorama-consulting.com/the-case-for-and-against-using-multiple-erp-systems-
across-your-organization/