Outsourcing ERP: Challenges and Solutions


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Outsourcing ERP: Challenges and Solutions

  1. 1. Outsourcing ERP: Challenges and Solutions Teja Phanidhar Kunju
  2. 2. Enterprise Resource Planning(ERP) <ul><li>Enterprise resource planning is defined as a set of applications that automate finance and human resource departments and help manufacturers handle jobs. </li></ul><ul><li>Enterprise Resource Planning (ERP) systems are capable of integrating the data and processes of an organization into a unified system. </li></ul><ul><li>The word &quot;Enterprise&quot; in ERP means that whatever happens in one area has a ripple effect in other areas. </li></ul>
  3. 3. Enterprise Resource Planning(ERP) <ul><li>Enterprise resource planning has been growing at a fast pace over the last few years and is expected to grow similarly in the long term. </li></ul><ul><li>With evolving technology everyday, numerous business processes with the global enterprise should be integrated throughout the entire business and with ERP systems. </li></ul><ul><li>The ERP technology boom in the 90’s gave organizations a means to start obtaining much needed operational visibility. </li></ul>
  4. 4. Outsourcing ERP <ul><li>Outsourcing the entire ERP functionality provides a solution in a faster means and overhauls major hurdles and allows more attention to company's core competence. </li></ul><ul><li>Several factors are contributing to the interest in ERP outsourcing. </li></ul><ul><li>ERP systems mostly find its existence in larger corporations thereby hardly providing any kind of competitive edge in the business arena. </li></ul>
  5. 5. Outsourcing ERP <ul><li>ERP systems require setting up of new server system and purchasing new software pertaining to that ERP system . </li></ul><ul><li>Outsourcing the software ownership and other maintenance costs pertaining to ERP simplifies the traditional difficulties in implementation. </li></ul><ul><li>It helped in avoiding problems arising out of hiring and retaining IT staff. </li></ul>
  6. 6. Positives in ERP Outsourcing <ul><li>Outsourcing ERP helps a company to concentrate on its core mission. </li></ul><ul><li>Companies that outsource ERP have a more simplistic operational part and also manage the budget at a decent level. </li></ul><ul><li>Managing day to day operations and long training periods will remain with the vendor to whom the implementation is outsourced. </li></ul>
  7. 7. Positives in ERP Outsourcing <ul><li>Moreover the vendors have the option of pricing their services on a monthly basis thereby allowing the customers to manage the cash flows in a better way and preventing the large expenditures that are usually associated with up gradation and rollouts in ERP. </li></ul>
  8. 8. ERP Outsourcing Challenges <ul><li>The main challenge for ERP implementation is the preparedness of the organization for a new system of functioning. </li></ul><ul><li>Selecting ERP service provider. Analyzing the capabilities of ERP service provider and making sure the provider has the required expertise. </li></ul><ul><li>Optimum utilization of ERP software solution can bring dramatic changes to the business performance. </li></ul>
  9. 9. ERP Outsourcing Drawbacks <ul><li>The cost of outsourcing ERP related to the leasing and offering other services can increase with time. </li></ul><ul><li>ERP Outsourcers may not offer complete support to modifications and that might not be helpful when the modifications are actually required. </li></ul><ul><li>Proper planning and more caution are needed when it is being initially accepted. </li></ul>
  10. 10. Conclusion <ul><li>State examples where different scenarios arising out of ERP outsourcing are explained with the company’s example. </li></ul><ul><li>Different aspects of outsourcing ERP. </li></ul><ul><li>Suggest some possible solutions to some of the challenges in outsourcing ERP. </li></ul>