ERP Basics
What does "ERP" stand for?
Enterprise Resource Planning
What is one common reason ERP implementations fail?
Poor planning and lack of user training.
Name a company that faced ERP-related financial struggles due to a poor implementation.
FoxMeyer Corp. – ERP failure led to bankruptcy.
What are the three levels of process customisation?
1. No change
2. Incremental change
3. Radical change
Name two well-known ERP vendors mentioned in the documents.
SAP & Oracle
What is the biggest challenge companies face when implementing ERP systems?
Balancing standard ERP processes with unique business needs.
What is a major reason companies regret their ERP investments?
They underestimate the complexity and organizational changes required for success.
What is the difference between ERP configuration and ERP customisation?
Configuration involves adjusting system settings, while customisation involves modifying or adding new code.
Name two primary benefits of ERP systems.
Integration of business functions & improved decision-making through real-time data.
What are the three types of customization companies can make in ERP systems?
Module Selection
Table Configuration
Code Modification
What is the heart of an ERP system?
Central database
What capability level(s) is/are needed for a code customization combined with a radical change?
Expert
What is a major difference between traditional IT systems and ERP systems?
ERP systems integrate multiple business functions into a single system, while traditional IT systems are often siloed.
Why do ERP systems require business process reengineering before implementation?
Because organizations often need to change their existing processes to align with ERP best practices.
What was the major mistake in Dow Chemical’s ERP implementation?
They spent seven years and close to a half of a billion dollars in implementing a mainframe ERP system and then realised that a client-server architecture would be more appropriate.
What is the conflict of interest between ERP-Vendors and their customers?
ERP-Vendors want to minimise customisation whereas their customer want to maximise customisation
How does an ERP system achieve real-time data integration across different business functions?
At its core is a single comprehensive database that collects data from and feeds data into modular applications supporting virtually all of a company's business activities across all units.
How much time did the longest ERP implementation take?
Nearly 10 years (Nestlé)
How does institutional pressure contribute to ERP failures in underperforming firms?
Because struggling companies adopt ERP to "catch up" rather than from a strategic decision, leading to misalignment.
What are two risks associated with ERP customization, and how can companies mitigate them?
1. Higher implementation costs – can be managed by prioritizing only essential changes. 2. Integration issues – can be mitigated by thorough testing and training.