Enterprise Resource Planning (ERP), is a computerized inventory control and production

planning system that was born from material requirements planning (MRP) systems. ERP is a
system that organizes functions of an institution; supporting, for example, accounting, finance,
human resources and e-commerce applications through the creation of relational databases and
graphical user interfaces that unify the tasks of institutions like corporations, government
agencies, non-profit organizations, powerful institutions, industries and business establishments.

Circumstances under which ERP may be relevant in a business environment today include;

ERP is a rising need of Enterprises. It is a strategic tool helping an organization to gain an edge
over its competitors by helping in successfully integrating its key business operations,
synchronizing, planning and optimizing the resources available in the existing extremely
competitive environment.

Its use has much broader scope in today’s world rather than of just planning the use of the
enterprise resources. Organizations (especially those which are borderless) face many difficulties
in quickly making out the information required. The integration of the business processes
improves coordination between bodies, streamlines workflows and processes and benefits them
in terms of retaining and satisfying customers by delivering their orders just in time and keeping
them well informed about their orders’ current status rather than keeping them waiting for just a
small piece of information.

Different ERP systems have been made to facilitate organizations in Enterprise Resource
Planning. Leading ERP giants making ERP systems are Microsoft, Oracle, PeopleSoft and JD
Edwards, SAP AG etc. These systems link the order, inventory, sales, purchase, manufacturing,
supply chain and warehouse management modules in an enterprise for better, fast and accurate
information availability to every single person which is its primary objective because every
single operation and action taken at any place by any person depends on consistent and updated
information availability. Whatever a person needs can be immediately accessed by him or her
subject to the delegated authority hence helped individuals.

They also enhance management decisions making future projections about sales during a certain
period of a certain product. Management would then be able to make decisions whether to
increase or decrease production of that particular product which in turn would help save
resources from being wasted which could be used for other purposes for example making other
products.

Furthermore they also help managers make decisions about introducing some new value added
features to an existing ‘hot-demand’ product to enhance sales further. This is how product
quality is also enhanced.
Computer security is included within an ERP to protect against both outsider crime, such as
industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might
involve a terrorist altering a bill of material so as to put poison in food products, or other
sabotage. ERP security helps to prevent abuse as well.

In the absence of an ERP system, a large manufacturer may itself with many software
applications that do not talk to each other and do not effectively interface. Tasks that need to
interface with one another may involve: order tracking from acceptance through fulfillment,
design engineering (how to best make the product), managing interdependencies of complex bill
of materials, the revenue cycle from invoice through cash receipt and the accounting for all of
these tasks, tracking the revenue, cost and profit on a granular level.

ERP has helped to increase the efficiency and quality of the manufacturing process. The
manufacturing process experienced slumps quiet often because of improper communication,
miscommunication, wrong communication and even lack of communication. ERP provided
solutions to those troubles by coordinating the actions of supply chains, warehouse and logistics.

Besides that, it also helps greatly in functions like tracking down the status of the product.
Formerly customers were made to run from pillar to post to enquire the status of the product or
for enquiring a technical problem. The customer service representative would not be in a position
to directly reply to these queries. On the contrary he would ask the person from the concerned
department. The person would check the details and get back to him be it the status of a product
or technical issue. The longer the chains of communication, the greater are the chances of
mistakes.

The manufacturing sector has been rated as the largest beneficiary. This sector can be rated as
the one who uses ERP easily because it is a product from their species. This does not undermine
ERP’S use in software sector because it becomes easy to manage projects with acute deadlines.
ERP industry paper will also reveal that it is easy to train and make people work in this sector
than anywhere else.

In Insurance sector, Enterprise Resource Planning has played a vital role in business by covering
three vital areas. Firstly, it has provided a common platform for insurers and his agents. This has
helped in easing the transactions and keeping an eye on the performance of the agent. This has
addresses the difficulties of both the agents and insurers and thus facilitated coordination in the
better interests of the business. Secondly, it has helped in curbing procedural delays and
inefficiencies for which the sector is famous for. This statement can turn out to be truer if the
sector is owned and controlled by the government either fully or partially. And thirdly , the
bureaucracy and redtapism are inborn features in state’s set up but their presence in an insurance
industry can do more harm because it calls for dispensing immediate information during lawsuits
and pending claims. IBM ERP Insurance is a famous player in this sector.
In healthcare sector, the sharing of databases among hospitals seemed to be a great advantage for
doctors and patients. This even makes one to exaggerate that a person need not maintain a
collection of his medical problems provided that his/ her choice of hospital has a database of
patient records (or commonly shares them by any other means). Even though it is not practical to
follow those practices ERP has been a lifesaving measure to patients who are admitted in a
hospital in an emergency condition irrespective of the fact that the doctor in charge is aware of
his medical history as ERP provides everything. ERP industry analysis here will reveal that
confidentiality is affected but the life of a person is to be given the utmost priority.

In addition, ERP has helped a lot in bringing down the operational costs and coordinating the
acts of the individual departments. Hotels are well known for the segregation of functions. One
can find many small departments like house- keeping beverages supply room services etc. Even
though these segregations sound small they have large impact on the organizational structure.
ERP offers a common medium to coordinate their actions. The entire actions can be controlled in
the reception desk. ERP industry paper points the exact benefits as per ERP industry analysis.

To summarize, ERP has a great importance and ERP systems have become the biggest need of
today’s organizations to survive. They provide tremendous benefits provided the critical success
factors of ERP system implementation are kept in mind.

b)

A case study, as a strategy attempts to examine a contemporary phenomenon in its real-life

context, especially when the boundaries between phenomenon and context are not clearly
evident (Yin, 2003). Thus, the case study method can help to acquire rich data for exploring how
critical failure factors in different ERP implementation phases affect ERP implementation
failure.

The number of recognized categories of problems and issues experienced by companies adopting
ERP system varies from two (Themistocleous et.al., 2001) through three (Grossman and Wash,
2004; O’ Leary, 2000) to five (Kim et.al., 2005). The identified groups cover issues of various
nature and scope, for example technical, operational, legal, business/economic, organizational,
and managerial. The respondents opinion regarding the problems observed in ERP system are
listed together with a short description.

Organizational problems

Project goals. Lack of clearly defined goals of the implementation project, incorrectly defined
goals and lack of priorities.

Company’s condition like poor company organization, unclear organizational procedures and
unclear strategy.
Communication. Problems with communication and information flow, different understanding of
same ideas by different companies

Problem with decisions making for example regarding personnel, indecisiveness of company
representatives

Personnel availability. Key employees unavailable, workers lack of time.

Conflicts between a company’s departments and conflicts during organizational change.

Implementation management for example mistakes in project management, lack of risk

management and lack of implementation tasks’ coordination.

Changes in a company for example organizational and ownership changes during the project,
changes in requirements and changes in company organizational structure imposed by the
introduced system.

Training. Inadequate training phase of a project and cutting training.

Social problems

Employee’s knowledge and education for example lack of management competence; lack of
personnel computer literacy; lack of knowledge about company operations, enterprise systems
and their implementation.

Lack of top management support and involvement and also lack of project understanding by top
management.

Lack of implementation team members’ commitment, inadequate composition of implementation

team for example few people, and people not empowered to make decisions.

Lack of employees’ motivation to perform implementation tasks and learn new skills.

Resistance to new system for example resistance of middle management, Information

Technology staff and system users.

Project manager. There is a shortage of a project manager, inadequate person appointed as a

project manager, necessity of sharing time between implementation tasks and organizational
duties.

System provider’s competence. Consultants lack competence and experience.

Personnel’s fear. Fear about possible consequences of implementation of project, loss of job,
position and status.
Users’ responsibility. Lack of responsibility and care among people entering data into the
system.

Technical problems

Problems with completing and organizing system data and also problem with transferring data
from legacy systems to ERP systems.

System efficiency whereby users are unable to enter data on-line, problems with customer and
provider order handling.

System drawbacks where implementers are unaware of program errors and short-comings and
inefficient application testing.

Economic problems

High costs. Inadequate financial budget for the project, loss of financial resources, lack of
flexibility and resource allocation.
NAME : RWANDARUGALI PAUL

REGNO : SO7B13/743

COURSE : BSIT 3

COURSE UNIT : RESOURCE PLANNING

LECTURE : Mr. Opio Peter

QUESTION

a) By example, identify and explain circumstances under which ERP may be relevant in business
environment today.

b) Identify at least four major case studies on problems associated with ERP hence provide four
reasons for the debacles.