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ERP - Managing an ERP Project Objectives 1 Recognize the...

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Managing an ERP Project Objectives 1. Recognize the importance of project management and control in minimizing the risk factors associated with implementing ERP systems. 2. Understand the process of organizational change and its application to enterprise system development, implementation, and operations. ERP projects often represent the single largest investment in an information systems project for many companies and, in many cases, the largest single investment in any corporate-wide project. The magnitude and complexity of these projects poses considerable risk, which explains the “war stories” connected with implementing ERP systems (see Table 8-1). What Research Shows About ERP Implementation Success In their study of firms that have implemented ERP systems, Mabert, Soni, and Venkataramanan, 2001, described the firms’ implementation experiences, determined the business returns from ERP, and determined what factors influenced these experiences and returns (Mabert et al., 2001).Their sample included firms ranging from large firms with annual revenues of more than $5 billion with more than 20,000 employees to smaller firms with revenues of less than $500 million per year and fewer than 20,000 employees. SAP/R3 was the most frequently reported ERP, representing 65.3% of the sample. J.D. Edwards followed at 12.9%, and Oracle with 8.9%.
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The overall data suggest that the firms felt they achieved more than 65% of the expected business case targets. The firms which were able to implement ERP either under-budget or on-budget attained a greater proportion (i.e., by 11%) of the planned business case than the over-budget firms (Mabert et al., 2001). Although the response data indicated that 70% of the firms felt their ERP system was a successful project, the majority of firms (55.5%) indicated the actual ERP system implementation cost exceeded the original estimated budget by an average of 60.6%. The range of experiences included a low of 10% to a high of 200% (Mabert et al., 2001). Certain factors influence whether firms are under/on budget or over-budget for implementation. First, under-budget or on-budget firms make fewer modifications than the over-budget firms, According to their survey data, these modifications contribute to a 50% increase in project duration. In addition, under-budget or on-budget firms establish greater authority for project implementation and implement more effective communications. Finally, the under-budget and on-budget firms manage their ERP implementations better, and they manage their businesses better. This enables them to generate additional revenues to cover the cost of ERP implementation (Mabert et al., 2001). In general, ERP systems projects bring about a host of new questions. Some of these questions and issues are the following: • What technology challenges (e.g., hardware, software, and networking) are encountered in implementing an enterprise-wide information management system?
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