AFM241 Final: Final notes.8
30 May 2018
School
Department
Course
Professor
o Project eventually cost $160M in order backlogs and lost revenue – 5 times the
project’s estimated cost
• SAP AG: German multinational software corporation that makes enterprise software to
manage business operations and customer relations
• Oracle: an American multinational computer technology corporation headquartered in
Redwood City
6.2.2 ES Implementation – Rationale and Scope
• Rationale for implementation varies among companies and reflects specific needs
(industry and economic conditions)
o Main reason is need for a common and integrated IT platform
o Other reasons include opportunity to improve business processes, increase
data visibility, reduce operating cost increase responsiveness to customers and
improve firm’s strategic decision-making
• Justification affects physical scope, business process scope, technical scope, module
implementation strategy and resource allocation of ERP implementation
o Physical scope: determines whether the implementation will cover one or
multiple sites within one geographic region versus multiple sites scattered across
many different national or international regions (In Whirlpool, implementation
encompassed several different divisions across Europe)
Positive correlation between physical scope of an ES implementation
and such attributes as number of users involved the number of regional
offices that will have to implement
As physical scope of project is increasing, complexity, cost and
implementation time are rising
o Business process re-engineering (BPR) scope: ES implementations tend to
be associated with opportunity or challenge of whether to re-engineer the firm’s
business processes (
BPR is first step during which the firm changes its business processes
Approach where firm maps business processes onto the ES is “Vanilla”
implementation
Challenge is to decide which processes will be adopted as they are in
the software (Vanilla implementation) and which are to be customized
(customization of ES to meet firm’
s business needs)
o Technical scope: firm’s management must decide how much the ES software is
to be modified (intertwined with BPR related choice)
ES customization tends to lead to an exponential increase in complexity,
cost and length
o Functional scope: from a module implementation standpoint, firm must decide
which modules and sub-modules to select
o Resource allocation scope: depend on all other scope related choices
• Typical ES has several modules such as inventory management, plant maintenance,
production, project management, sales and distribution, forecasting, asset management,
human resources and financial
o Each module has sub-modules (finance module includes general ledger, A/R,
A/P, etc.)
• Need to consider how to connect each module to existing systems from following three
options:
o Phased roll-out or cascaded roll-out: change occurs in phases over an
extended period of time
Implementation is module-by-module and as each module is
implemented, it is connected to existing system
Site by site implementation of ES
o Big bang: implementation happens at the same time
Vanilla usually chosen when
competing in terms of cost leadership
and has attained economies of scale
through process standardization.
