STRATEGIC FACTORSIt serves no purpose to proceed to operational factors if the ERPsystem does not meet the strategic factors or values of a firm.• ERP Implementation Cost• Implementation Time & ROI• Training• Effective Use of ERP Features
ERP IMPLEMENTATION COSTISSUE UNDERESTIMATE COSTThe total cost of ownership associated with an ERP system includes alarge initial cost followed by costs to maintain and upgrade the ERPsystem.The average Total Cost of ownership (TCO) in a medium –largeorganization could be $15 million and could be around $300 million forlarger companies.
ERP IMPLEMENTATION COSTFACTORS • Size of the Organization • Number of Users in Organization • Software Customization • Hardware Upgrade • Transfer of data to new ERP • Maintenance
IMPLEMENTATION TIME & ROIISSUES UNDERESTIMATE IMPLEMENTATION TIME OVERESTIMATE RETURN ON INVESTMENT (ROI)Source: http://www.rms.net/lc_faq_other_roi.htm
IMPLEMENTATION TIME & ROIMany times organization under estimate theimplementation time and overestimate the systemsreturn on investment. After implementation is completed,the expected ROI may not come as soon as desiredThe time associated with an ERP implementationvaries. It may be as long as 2 years. It may be as longas 5 years before a return on investment is realizedAfter the first 5 years of use, a company can begin toexpect steady returns but not in the traditional form ofrevenue.
ERP EMPLOYEE TRAININGThe most important element in the success of ERPimplementationHighly Paid Consultants :Large companies have beencreated to do nothing but trainemployees how to use theERP system
ERP EMPLOYEE TRAININGType of training depends on the size of organization • Using Training Modules • Classroom Style Training • Internet Based Training Programs E-learning costs could be as little as 2.5% of the equivalent traditional training costs.
EFFECTIVE USE OF ERP FEATURESThe range of ERP applications is nearlyunlimited.Since every organization is different,hence ERP plays different role indifferent organizations.ERP users should be aware of theseapplications and features, and usethem properly and to their advantage.
During the initial years of ERPimplementation emphasis should be on:• Qualitative factors• Ease of daily operations• Use of new applications and featuresERP implementation is not a one-time process.• Upgrading• Addition of new features• Training