Enterprise Resource Planning (ERP) System - PDF

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ERPIntroductionWith the increasing complexity of the business climate, ERPs systems have becomethe need of the hour for the large multinational companies that are having suppliers,NAME OF STUDENTCOURSE NAME
ERPcustomers and manufacturing plants globally. ERPs packages are complex integrated suitewhose implementation involves significant cost and time. Therefore, this is the reason thatsmall and large scale enterprises do not prefer to implement ERP systems but prefer to havebest of breeds solutions or commercial software. Examples of ERPs systems are Oracle Apps,SAP, Microsoft dynamics while examples of commercial software suitable for small andmedium scale enterprises are MYOB, XERO, QuickBooks to name a few. ERPs vendorswere also very much familiar with the complexity of their product and its cost implications.In order to expand their market and in current challenging business environment, they alsostarted offering cloud ERP system. These systems are significantly cheaper as compared totheir traditional model, implementation timeline is also few months and thus they becomeattractive for the small and medium enterprises (Weng, & Hung, 2014). However, there isdownside also as Cloud systems do not allow the business organizations to customize theERP packages and organizations has to change their business processes to align with the ERPstandard processes even if their processes are source of competitive advantage for thecompany (Nori, et al., 2016). Apart from no customization option, there are also commonfunctionalities but not specific business requirements that are found in ERP suites(Ramasamy, & Singh, 2017). This makes the cloud options better for the small and mediumenterprises. Apart from this, there are lot of case studies available for different deploymentoptions. There are success stories of on-premise application, success stories of cloud ERPsystem, success stories of Hosted ERP system, there were also examples of organizationsmoving from traditional on-premise model to hosted or cloud system. Apart from this, therewere also numerous examples of failures of ERP implementation by big organizations.The purpose of this report is compare the different ERP deployment options in details alongwith their benefits and risks and also discusses which organizations should choose whichoption and why. Apart from this, the report also uses examples of Oracle and SAP ERPs and
ERPdifferent organizations using different deployment options so as to give a clear perspective ofeach option with real life examples. It also talks about the organizations that are changingtheir deployment options along with the rationale.Comparison of different ERP deployment optionsFor any organization that has decided to use ERP system, there are various options.For example, organization can have on premise installation of ERP, or organization can usecloud services. This is always a tough decision for organization to make. Therefore, it isimportant that organization should be aware of the benefits and risks of different approachesof ERP implementation. These approaches can be discussed in detail as:Approach 1: On-Premise ERP implementationOn-premise ERP implementation is the traditional way of deployment ERP. It is alsoone of the expensive option where an organization buys the licenses from the ERP vendorand then take the service of implementation consultant Like Accenture and IBM to deploythose licenses on the server which is owned by an organization and is also located in theorganization promises. The ownership of managing that server in terms of downtime, securityand backup lies with the IT department of the organization.There are large number of companies that have implemented on-premise ERPapplications. General Electric, Philips, Siemens, Emerson electric, Cisco are examples ofcompanies running ERP on –premise successfully. All these are global players and thusneeded the comprehensive integrated suite of modules that can fulfil their needs. Air Liquidand Cummins have also achieved greater benefits by implementing Oracle ERP on-premisesolutions (Oracle.com, 2018) but at the same time there are case studies that demonstrated thefailure of ERP implementation projects. There are reputed companies like Hershey, Nestle,Waste Management Inc, FoxMeyer Drug that have very bad experienced in implementing
ERPERP and incur huge losses. FoxMeyer drug failed because the ERP systems were not capableof handling their high order processing volume compared to traditional solutions (Chung, etal., 2015). Other organizations have issues due to improper change management and lack oftesting and training issue. Thus, It can be said that each organization has its own needs andhas to analyse which deployment option will be most suitable for that organization.Organization has to consider cost and benefit analysis, analyse if its business requirementsare standard and common or unique and required customization, internal IT capabilities totake decision of selecting appropriate deployment options (Nowak, & Kurbel, 2016).Pros of On-Premise systemsAlthough, these systems are expensive and it take significant time for break-even butonce the breakeven is achieved, these applications have lower long term cost because it don’thave to pay the usage charges on monthly basis. Apart from this, On-premise systems allowsthe organization to customize the ERP packages to suit their requirements thoughcustomizations are not recommended and should be as minimal as possible (Caratasu, &Caratasu, 2016). There is also total control over software changes and updates and internal ITdepartment has to manage the security. Organization provides accesses to various offices,plants the access to ERP applications only if they are part of IT network. Thus, these systemscannot be accessible from anywhere and thus are secure.Cons of On-premise systemsThere are higher upfront costs consisting of hardware, licensing cost andimplementation partner fees. Due to the complexity of such projects, consulting partnerservices are utilized which is quite expensive (Erturk, & Arora, 2017). Internal team must becompetent to manage the security, regular backup, Database administrator activities for aserver. Also, Sometimes ERP vendors stops the support of their existing products and asks
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