Enterprise Resource Planning (ERP) system cost:
Enterprise Resource Planning (ERP) systems is framed for companies to make more efficient decision by improving data access. Unfortunately sometimes due to wrong decision of company about the maintenance cost of ERP leads them to huge financial loss (Fryling, & Adviser-Richardson 2010). ERP is an ongoing process so proper estimation is required for its implementation cost as well as recurring maintenance cost.
According to a research the success rate of implementing ERP is thirty three percent and it is also researched that around ninety percent of ERP implementation are over-budget (Martin, 1998). Apart from all this it is also marked that there are many hidden cost in implementing ERP (Lindley, Topping & Lindley, 2008 ). The expense of implementing ERP system is about ninety percent of system’s overall expense (Francalanci, 2001 and Patrick, 1995). Chen (2001) researched that few companies frame the implementation cost of their Enterprise Resource Planning system as sixteen percent software thirty two percent hardware, thirty eight percent systems integration and fourteen percent of personnel (Malhotra & Temponi, 2010).
Following are main point of cost in details:
• Design Implementation: ERP system integrates all the divisions of company by one database and one software which in turn results into makes the system more flexible and perfect for competing market (Bingi, Sharma & Godla, 1999). Thus the analysis of various business prospects and making business blueprint will give the idea of selecting right system and all will further provide insight to go for new process design (Ehie & Madsen, 2005).
• Software: The ERP system software from third party are many times custo...
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...w ERP system had many positive changes in the company. The service to customer was improved and Omantel made a new mark in Oman in the telecommunication industry. Beside all these benefits there was only one element which was not done properly and it was training of employees (Maguire, Ojiako and Said, 2010).
Conclusion:
Summing all the above elements and case study we can say that ERP implementation cost is affected by many elements. Any company thinking to update their company with the ERP system should be taking all segments into consideration before implementing it. While these the technology has developed a lot and so it is not that expensive as it was in earlier days. Moreover in this globalized world where more and more multinational companies are increasing it is must for company to have system which can integrate all data and give a common platform.
Enterprise is an internationally known car rental, with more than “7,000 neighboring and airport locations throughout North America and Europe. Enterprise is the largest car rental brand in North America, well-known for its great rates, award-winning customer service and picking up local car rental customers at no extra cost” (About). Enterprise offers great leadership opportunities to its employees and helps them become entrepreneurs. They provide over 1 million job opportunities worldwide, this private company thrives its self in customer service because they thrive on being personable by creating relationships not just transactions
The company must make sure the benefits will outweigh the costs and a serious commitment must be made to successfully implement the system. Per a study by the Meta Group, among 63 companies surveyed implementing an ERP system, the average cost was $15 million with a high of $300 million and a low of $400,000. The study also showed that it took 8 months after the system was incorporated (31 months in total) to see any benefits (Stevenson, pg.
ERP stands for Enterprise Resources Planning. ERP is a term used for software that controls whole organizations different departments. SAP is the world leader in ERP systems followed by Oracle.
Ziff Davis, an American publisher and internet company, wrote a small document on the top 5 reasons ERP systems fail and how to fix those reasons. The document makes an interesting point of “failure is often a perception, rather than a quantifiable measure of outcomes (Ziff Davis 2),” meaning companies may think they have failed by their perception, when in actuality they didn’t proper measure their outcomes or potential outcomes. The first reason the document goes over is “setting unrealistic expectations at the outset. (3)” The document claims that a company is eager and excited to implement the system without fully defining business requirements and goals (3). This ties back with that perception and measurement dilemma. The company perceived everything was going to be well with the implementation, but failed to measure out goals and requirements. Ziff Davis goes into the fact that companies fail to realize “the level of resource commitment the project will take (5)” and that “Done properly ERP can and will transform your business by automating and re-engineering its beating heart: its business processes. (4)” Again these point out to that perception and measurement factor. Another reason the document goes over is “Not involving key stakeholders (6)”. Ziff...
Adam, F. and O'Doherty, P. 2000. 'Lessons from Enterprise Resource Planning Implementations in Ireland - Towards Smaller and Shorter ERP Projects', Journal of Information Technology,14(4): 305-316
An ERP Story : Background (A) and An ERP Story : Choosing a Project Leader (B)
This essay will discuss Enterprise Resources Planning (ERP) implementation, specifically in the factors which can leads that ERP implementation to successful and unsuccessful ERP implementation.
With ERP, it gives the company the ability to pull out a list of good clients that have not bought for six months of the company’s products for example, so in order to make them come back and purchase, the company can send them an email through the ERP system offering a discount.
An ERP system is a tool with a goal of improving the company 's competitiveness within a variable global market. An ERP system gives the organization a robust software solution that can deliver immediate, useful results. Automatic accounting, integration of external systems, higher security, better operational efficiency, improved visibility, and have access to real-time information are some of the reasons for implementing an ERP system.
ERP systems are packaged software designed for a client server environment, whether traditional or web-based.
The ERP system allows a strategic flow of information between all areas within an enterprise in a consistently productive manner. The purpose of implementing an ERP system in a company is when the company isn’t operating efficiently. Look at it like this, when your body is sick, you know you need to take medicine, you just can’t stand the taste. And in the same way, when your company isn’t operating efficiently, you’ve got to take steps to correct it. Most companies just fear the disruption, the learning, and the cost, and the inconvenience of it all.
Change management is the key issue, and so for ERP systems. And change takes time, training and good managerial cooperation and understanding. And according to the article Ms. Dunn CIO of Nestle U.S.A. said the following "If you weren’t concerned with how the business ran, you could probably install the ERP software in 18 to 24 months," she says. Then "you would probably be in the unemployment line in 19 to 25 months. " She being the person that lobbied for getting the ERP system in the U.S. knew it would take more than just the software to make this operation
Many organization have developed and adopted ERP system and most of them do not have the exact idea of the total cost, everytime when a new organization has to be setup the question arises “How much is the total cost of ERP system ? “ this question can only be answered by careful assessment of the requirements because the cost of ERP system depends on the complexity of implementation and demand and needs of the organistion.Furthermore it also depends on whether new ERP system has to be purchased as a whole with hardware or the organsation will continue to use the old infrastructure.ERP systems are charged on a user basis depending on how many users are going to use the system which can be somewhere around $ 1500 to 4000$ per member.The number of user relates directly with the cost for instance if we talk about small to medium business they sometimes do not require Master Production Scheduling Module or some different complex tools which is at the same time required by big multinational company for more accuracy and flexibility It is said that as the number of users increases it results in the decreasing the total cost furthermore the implementation costs would increase as the degree of customization increases
In conclusion, the analysis and discussion of this study shows the effects of enterprise resource planning implementation in an organization and in particular IKEA Dubai, it shows that the organizations which implements ERP to experience large benefits. It is essential to implement the ERP which would become effective and end up being the backbone of any organization functions in future and new economy.
Identify the potential risks which affect the company and manage these risks within its risk appetite;