INVESTMENT IN ERP

1. ERP INVESTMENT

2. ERP (ENTERPRICE RESOURCE PLANNING)
“An accounting-oriented information system
for identifying and planning the enterprise-wide
resources needed to take, make, ship, and account for
customer orders”

3. BENEFITS OF ERP
 ERP eliminates redundant efforts and duplicated data;
can generate savings in operations expense
 ERP system can help produce goods and services
more quickly
 Company that doesn’t implement an ERP system
might be forced out of business by competitors that
have an ERP system
 Smoothly running ERP system can save a company’s
personnel, suppliers, distributors, and customers much
frustration
 ERP systems provide real-time data
Improve external customer communications

4. REASONS FOR IMPLEMENTING ERP
 Achieve economies of scale
 Support global business operations
 Reduce extraneous workforce
 Improve data integrity
 $60MM over 5 years

5. DIFFERENT PHASES OF ERP
 Pre Evaluation Screening
 Evaluation Package
 Project Planning
 GAP analysis
 Reengineering
 Team training
 Testing
 Post implementation

6. 1.PRE EVALUATION SCREENING
Decision for perfect package
 Number of ERP vendor
 Screening eliminates the packages that are not at all
suitable for the company’s business processes.
 Selection is done on best few package available.

7. 2.EVALUATION PACKAGE
 Package is selected on the basis of different parameter.
 Test and certify the package and also check the
coordination with different department
 Selected package will determine the success or failure
of the project.
 Package must be user friendly.
 Regular up gradation should available.
 Cost

8. 3.PROJECT PLANNING
 Designs the implementation process.
 Resources are identified.
 Implementation team is selected and task allocated.
 Special arrangement for contingencies.

9. 4. GAPANALYSIS
 Most crucial phase.
 Process through which company can create a model of
where they are standing now and where they want to
go.
 Model help the company to cover the functional gap

10. 5.REENGINEERING
 Implementation is going to involve a significant
change in number of employees and their job
responsibilities.
 Process become more automated and efficient.

11. 6.TEAM TRAINING
Takes place along with the process of
implementation.
 Company trains its employees to implement
and later, run the system.
Employee become self sufficient to
implement the software after the vendors and
consultant have left.

12. 7.TESTING
 This phase is performed to find the weak link so that
it can be rectified before its implementation.

13. 8.POST IMPLEMENTATION
 The work is complete, data conversion is done,
databases are up and running, the configuration is
complete & testing is done.
 The system is officially proclaimed.
 Once the system is live the old system is removed

14. IS ERP FOR EVERYONE..
 A business must analyse its own business strategy,
organization, culture and operations before choosing an
ERP approach.
 A company may be ready to implement ERP.
 The company’s business processes may not be well
defined or managed.
 If a company is not prepared to make its processes more
efficient, then it will not gain the benefits an ERP system
can provide.

15. Pre-selection Process
Package Evaluation
Project Planning
Gap Analysis Reengineering Configuration
ImplementationTeam
Training
Testing End- userTraining
Going Live
Post – implementation
Phase
ERP Implementation Life
Cycle:
15

16. ERP INVESTMENT

17. “The decision to implement an ERP system is a business
investment decision, similar to the decision to build a new
warehouse, hire a new executive, or invest in a training
program. As such, the ERP investment decision must
create measurable business benefits that justify the
acquisition costs and the costs of system implementation”

18. IT INVESTMENT IN ERP
Business Process Re-engineering (BPR), Data
Warehousing, Enterprise Resource Planning
(ERP),has elevated the importance of investing
strategically in IT. Numerous reports have highlighted
that ERP projects have occupied a dominant space in IT
investment over the last decade. Traditional approaches’
to IT investment evaluation are limited and inadequate.

19. Investing in an ERP application is a long-term
investment for the whole business. Today's buyer
understands that this is an investment not only for the
present, but also for the next 15 to 20 years.
Here are a few items to consider when selecting a Vendor:
 Vendor financial viability.
 Product upgrade cycles and maintenance .
 Out-of-box functionality of the product versus
customization or personalization .
 Support for industry-specific business requirements.
 Ease of use to drive organizational buy-in and promote
usage of the application.

20. A FRAMEWORK FOR IT INVESTMENT
 According to Ross and Beath (2002, p.53)
“To address both dimensions companies need to
make four distinct types of investment:
 Transformation,
 Renewal,
 Process Improvement,
 Experiments”.

22. 1. TRANSFORMATION
A core infrastructure that is currently Inadequate for
desired business model.
Sample Initiatives:
ERP implementations.
Building Data Warehouses.
Standardizing Desktop technologies.
Middleware for Web environments.

23. 2.RENEWAL
Opportunity to reduce cost of maintenance of existing
IT, or raise quality of IT services in general. Renewal
initiatives may be driven by a vendor’s decision to
withdraw support for older products.
Sample Initiatives:
Facilitating access to existing data.
Upgrading technology standards.
Retiring outdated systems and technologies.

24. 3.PROCESS IMPROVEMENT
Opportunity to improve operational performance.
These investments should be low-risk, unlike
transformation initiatives; the focus is on operational
outcomes of existing processes. Process Improvements
must build on existing IT infrastructure to ensure a level
of predictability.
Sample Initiatives:
Shifting customer services to lower cost channel.
Shifting data capture to customers.
Eliminating costs of printing and mailing paper reports
or bills.

25. 4.EXPERIMENTS
New technologies, new ideas for products or
processes, new business models. Successful
experiments can lead to major organizational change
with accompanying infrastructure changes or to more
incremental process improvement initiatives.
Sample Initiatives:
 Testing demand for new product.
 Learning if customers can self-serve.
 Testing new pricing strategy.
 Assessing cost of new channels

26. COST OF ERPIMPLEMENTATION
The following costs are to be considered:
ERP package cost
Consultant cost
Cost of Data conversion
Cost of training
Cost of testing
Cost of Post-Implementation support

27. P
Presented
By:
RAMESH
SANAL
DHANYA