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Operations Management: Case Analysis – ERP System Implementation Decisions at T40 Enterprises

ERP System Implementation Decisions at T40 Enterprises
 
This was the project Bill had been waiting for since he graduated with his BA in supply chain management and a minor in information technology: the management of an ERP system implementation. He knew from his coursework that a number of crucial decisions had to be made in the planning stages, and he was considering how to proceed. He was staring at a to-do list of some of the key decisions that he had to make.
 
Bill had started to map out the information flows at T40 Enterprises – an important step prior to any system implementation. It was critical to understand what information was exchanged with which processes and between which functions. It had been a while since such a process mapping exercise was done, so Bill was proud to uncover significant process improvements and efficiencies.
 
With these optimized processes in place, Bill was looking for an appropriate ERP system vendor that would be able to represent T40 s processes in its system. Unfortunately, however, there was no perfect match out there. He therefore had to either modify T40’s internal processes to match how the ERP system was handling these processes, or he had to modify the vendor’s standard ERP solution to match T40’s processes. Both approaches had advantages and disadvantages, and the decision was not an easy one to make. He thus jotted on his to-do list to brainstorm and note down pros and cons for either approach.
 
Another dilemma he faced as he researched the different system vendors was that all of them had their pluses and minuses. For example, while one ERP system vendor had great expertise, and therefore had sophisticated processes in warehouse management, it was not very advanced in supply management, Bill was therefore considering whether to pick and choose the best application from each provider, and then integrate them. He heard that some companies had been quite successful with this “best-of-breed” approach, but he also wanted to be sure to brainstorm some of the potential disadvantages for T40. This became another task on his to-do list.
 
A further consideration in Bill’s choice for an ERP system vendor was whether one of the big and established ERP system vendors would be better, or whether a smaller-niche player may be more advantageous for T40. He noted this down as an additional point on his to-do-list.
 
These were quite a lot of important decisions that Bill had to make. However, he did not want to stop here. He also already wanted to think about the next steps in the ERP system implementation, once a vendor had been chosen. One issue that he had to decide on was whether to implement the system with a so-called “big bang” or with a phased-in approach. The “big bang” approach would entail implementing all components and modules of the ERP system, and then going live with all of them at the same time. This would mean that all departments and functions would have the new system at the same time, The Phased-in approach would mean that the going live would commence with one function-for example, accounting. After accounting had been working with the new system for a while, the second function would follow, and so on. The choice was not straightforward, so he noted this issue on his to-do list as well.
 
One last issue Bill wanted to think about was how to go about introducing the new system to the users. He knew that the success of an ERP system not only depended on a successful implementation from an information systems perspective, but also on the users’ satisfaction with the ERP system. If users were not satisfied with the system, they potentially would try avoiding it, or their productivity would suffer. Bill was therefore trying to come up with strategies of how to ensure users would be happy with the system, and actually use it to be more productive. This formed the last task on his to-do list for now. Obviously there were many more issues to consider, but Bill thought this was a good start.
 
CASE QUESTIONS:

  1. Why was Bill able to uncover significant process improvements and efficiencies whenmapping out the company’s processes as a preparatory step to the ERP system implementation?
  2. Think about Bill’s decision whether to modify T40’s internal processes to match how the ERP system was handling these processes or to modify the vendor’s standard ERP solution to match T40’s processes. What are some advantages and disadvantages of these approaches?
  3. What are disadvantages of a “best-of-breed” approach?
  4. What are advantages and disadvantages of contracting with a big and established ERP system vendor?
  5. What should Bill consider when making the decision whether to implement the ERP system with a “big bang” or with a phased-in approach?
  6. What are strategies to ensure users are happy with the system and actually use it to be more productive?

 

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