The History of ERP - Essay Example

?Q: Briefly Describe the history of ERP. Ans: In 1960’s , as the need for meeting the demand and supply gap increased along with keeping in view the time lag which was created due to these unexpected situation a system was needed which would keep a track of the organizational needs, the intra organizational flow of communication and also the needs of the related stake holders in the demand supply process. The initial solution to these problems came in the form of a MRP (material Resource Planning) in 1975. Majorly the MRP system contributed in enhancing the process of the manufacturing process hence leaving behind the other loop holes in the organizational structure which initially lead to the problems creating the demand supply gaps and other problems mentioned before. Similar was the case when MRP II (Manufacturing Resource planning) came, it also worked on certain functional areas of an organization and other areas could not yield benefit from it. From 1975 till 1990 all the key players (Baan Corporation, Oracle Corporation, SAP, PeopleSoft) which now provide ERP solutions laid their sound foundation in the industry providing business solutions at various levels and each focusing on its core competency area. Though the actual development of ERP started from 1990’s onwards; people still argue that ERP existed in the form of earliest Inventory Control Systems MRP& MRP II only with additional facilities of integrating organizational activities and cross departmental communication. ERP in 90’s decade focused more or integration of business activities across functional departments and introducing of other business functions including CRM,SCM etc. Now the key ERP developers are working towards a web enabled ERP system making it much more user friendly allowing external access to authorized users. As the time passes ERP is now moving towards an ERPII which will further improve and enhance its competency and efficiency. Q:Briefly describe two main players (SAP and Oracle) in ERP market and explain what components are common in the two players’ ERP products Ans: SAP’ the venture was a joint effort of five former IBM employees who in the mid 70’s sat down with a vision of developing a software which would integrate business functions and process while setting certain standard in the market. As of 2009 SAP is the largest enterprise software company in the world best known for its ERP and business solution providing. On the other hand some 35 years ago initially two computer programmers later on joined by the third started working on an already present prototype on which no one was willing to put an effort into. They at that knew that using this prototype they can revolutionize the business computing. Oracle best known for its flagship product and Oracle Databases became the second largest enterprise software provider in the world after acquiring PeopleSoft in 2004 and by 2007 oracles had the largest software revenue. Both SAP and Oracle provide business solution hence they are working on the same line. Modules for business functions like CRM, SCM exist in both their ERP’s. Both are customizable according to the needs, environment and culture of the organization along with pursuing SaaS (software as a service) . Strategy of both have now changed to taking more time in implementation i.e. to satisfying the customer completely but at the same time the cost escalates aswell. SAP & Oracle both have their similarities and weakness but in the end it depends upon the structure of the organization and in the end result can vary for each individual organization. Q:What will ERP fix in a company? Ans: Implementation of ERP in an organization although is costly but in the long run it bears more advantages then initially invested. Mainly organizations choose ERP to integrate and align the business functions and intra organizational as well as inter organization communication. ERP eliminates the risk and threat of manipulation of financial data by introducing data integrity throughout the organization. As all the operations and activities are being carried out on one single system, the chance of manipulation of data becomes nil. Along with that ERP also fixes segmented manufacturing procedures in the organizations by providing standard manufacturing processes which are of great help for firms with an interest in mergers and acquisitions. By standardizing these procedures and working with a single system a firm can save time , increase productivity and reduce costs. Also for organizations with multiple business units and a lot of employees , ERP fixes the problem of unorganized HR information by managing all the HR information and providing a unified platform for communicating of information throughout and also eases the process of tracking an employee. Q: Why does an ERP project usually take longer than what ERP vendors claim? Ans: ERP projects and their implementation is not like any other software or system implementation in an organization , it’s a process which is far more complex and requires a lot of effort along with keeping in mind that projects dealing with technology are far more risky and they fail more often then they succeed. Usually the delay comes in implementation because of the following reasons: Project’s objective and scope is not clearly defined with respect to the organization. Employees are not trained enough as well as lack of appropriate change management. Organizational structure is not capable enough to manage and distribute work load on two simultaneous IS’s in case of an already present information system beforehand. The managerial staff in some cases are not able themselves to manage the troublesome situations that are faced during the implementation’ meetings and brainstorming sessions are organized for their resolution with the developers which wastes time. Application at times are completely customized to the organization need and are made from scratch. Q: What does ERP usually cost? What are the hidden costs of ERP? Ans: Based on a survey conducted by Meta Group in 2002 the cost of an ERP could range anywhere between $15 million to $300 million. These are the front end costs of ERP which include the software, hardware, implementation costs. The price varies according the number of ERP modules the organization wants , what hardware support will be required to support those modules and what level of expertise will be required in implementing these modules. Apart from these direct costs various hidden costs have been identified which significantly increase the actual cost and at time remain there throughout. Hidden costs include the cost for training of end users, testing and integration with various ERP modules and e- business applications, customization of applications and modules, Conversion of data, Data analysis, Consultants fees and Continuous maintenance. Q:Why do ERP projects fail so often? Ans: Throughout this essay we have studied ERP from various aspects and we have learnt that much experienced and experts organizations have been there for decades but still ERP projects fail miserably during implementation phases or they fail to deliver what they were expected to. First and foremost reason for this is that the management of the organization in itself has to be convinced and should know the exacts reasons and benefits that the ERP system will bring to organization. If the management is motivated and welcomes the changed, they then can control the resistance faced from other factors in the organization and work towards a smooth transition. Also the customization of the Standard ERP modules according to organization’s structure. There is always a certain gap between the organization’s business procedures and the industry’s best practices and for that ERP vendors have to study the business in-depth so as to result in a successful implementation of the system. Also lack of training of the end users or under qualified staff for operating the system is one of the major reason. At times organization cannot understand the right kind of ERP tool for its business which has resulted in many failures in the past. REFERENCES: David R. Laube, R. F. (2003). Business-driven information technology: answers to 100 critical questions for every manager. Erp History. (2007, February 7th Wednesday). Retrieved from Erp and More: http://www.erpandmore.com/erp-reference/erp-history/, ERP History in Depth. (n.d.). Retrieved from ERP Wire: http://www.erpwire.com/erp-articles/erp-evolution.htm George W. Anderson, C. D. (2009). SAP Implementation Unleashed: A Business and Technical Roadmap to Deploying SAP. History of Oracle. (n.d.). Retrieved from Funding Universe: http://www.fundinguniverse.com/company-histories/Oracle-Corporation-Company-History.html Konstantinos K. Senior IS Consultant, E. (n.d.). Retrieved from LinkedIn: http://www.linkedin.com/answers/technology/information-technology/databases/TCH_ITS_DBS/613529-58176932 Leon, A. (2007). Enterprise Resource Planning . Rasham, A. (2009). Oracle 11i - The Complete Reference . Reddy, C. M. ( 2007). Industrial Engineering and Management. Saphist. (n.d.). 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