Decision process for going in for ERP

Decision process - Decision process for going in for ERP Managers must consider the fundamental issues of system integration by analyzing the

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Decision process for going in for ERP Managers must consider the fundamental issues of system integration by analyzing the organization’s vision and corporate objectives. For instance, does management fully understand its current business processes, and can it make implementation decisions in a timely manner? Is management ready to undertake drastic business process reengineering efforts to yield dramatic outcomes? Is management ready to make any changes in the structure, operations, and cultural environment to accommodate the options configured in the ERP system? Is the organization financially and economically prepared to invest heavily in an ERP implementation? Next, management needs to decide on the key related implementation and business issues and how to proceed. Certainly, ERP is not suitable for companies that are experiencing rapid growth and change in an unstable environment, are undergoing change in the corporate management and philosophy, or that will be experiencing merger or liquidation in the near future. Understandably, there will be more foreseeable system integration problems if one of the merging companies is in the midst of an ERP upgrade because it must deal with scalability, a new IT infrastructure, and a different corporate culture simultaneously (7). Further, ERP integration is not recommended for companies which require a lot of flexibility to succeed or which manufacture products that are constantly changing (4). Similarly, companies that have very little experience with formal information systems or have constantly changing information systems requirements will not benefit from an ERP implementation. Finally, organizations need to exploit future communication and computing technology to integrate the ERP system with e-business applications. Oftentimes, additional new hardware and specialized professionals are needed to run the powerful software system. Depending on the size of the company and the modules installed, the cost of implementation can range from one million to five hundred million dollars, and will take as long as two years for a mid-size company and seven years for a large, multinational corporation to complete. People People-related issues such as corporate philosophy and leadership style can play an important role in the ERP implementation process. Research has concluded that active top management support and commitment are essential to the success of any system implementation. Frequently, executive councils and steering committees consisting of top managers are developed to plan and manage the IT initiatives (8). Such senior managerial involvement tends to increase the optimization of IT business values. Employees can be quite wary of any kind of change in the business processes, particularly during
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This note was uploaded on 02/10/2011 for the course MBA mba taught by Professor Mba during the Spring '11 term at IIT Bombay.

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Decision process - Decision process for going in for ERP Managers must consider the fundamental issues of system integration by analyzing the

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