ERP System Benefits and Cost-Benefit Analysis

This assignment delves into the advantages of implementing Enterprise Resource Planning (ERP) systems within organizations. It examines the positive impacts of ERP on logistics efficiency, as well as potential challenges related to software customization and its influence on overall system quality. The core focus is on conducting a comprehensive cost-benefit analysis to assess the financial viability and long-term return on investment associated with ERP implementation.

[Management Information System]

SLDC 1
Covering letter to sponsor
Lily Li Qian
General manager OCC Apparel
Australia garment house
8 January 2018
Dear Andrew Quinn and Nick Barclay,
Re: proposal for sponsorship – implementation of software that can solve the problem
of inefficient production system, high cost of labours and human errors.
I am pleasured to enclose all the details regarding the implementation of enterprise
resource planning software which is highly efficient to solve all the problems faced by the
employees as well as the mangers of the organisation. Some of these problems may include
high cost of production due to increase in human errors, inefficiency in production of the firm
due to the absence of availability of accurate accounting data and many more.
Decision has been taken to implement this system because of many internal problems
of the organisation. Apart from this discussion is carried on within the company and its
different departments to know their views regarding the ERP implementation. Some common
reviews obtained from the people may include –
Financial department of the company face many problems because of the human
errors in the collection and recording of the data. Considering the fact the accounting and
financial department is the backbone of the organisation so, it’s important to keep and
maintain all the records in the systematic manner. This will help the organisation in attain all
its goals well on time.
Production department face problems because of lack of efficient utilisation of
resources within the organisation this happens because of the lack of proper planning of
resources. Apart from this this department face many issues in the term of irregular
production as well as conflicts in the members working within the production department.
Considering the fact that employees are an important asset of the company so steps
must be taken fulfil all their need by providing them ease of working methods and this can be

SLDC 2
done by introduction of enterprise resource planning system commonly known as ERP
software.
I proposed that if this software is implemented within the firm then its initial cost will
be $50,000 which will include all the expenses that will cost $10,000. Top management of
the company will be able to cover up its amount within 8-9 years which is not the long time.
Successful implementation of this system in OCC will not only be able to overcome
all their problems but they will also be able to grasp new opportunities available in the
external environment. This will at the end help the firm in attaining higher position in the
market than its competitors. If you required any information or face any doubts related to the
implementation of this system then fell comfortable to contact me.
Yours sincerely
Research and development manager

SLDC 3
Contents
Covering letter to sponsor......................................................................................................................1
Executive summary...............................................................................................................................4
Introduction...........................................................................................................................................5
Organisational description (swot analysis)............................................................................................6
Internal environment – strength and weakness..................................................................................6
External environment – opportunities and threats..............................................................................6
Ways in which system can help the sponsor..........................................................................................7
Planning.................................................................................................................................................7
Problem faced by the OCC apparel.......................................................................................................8
Analysing the system and its major requirements..................................................................................8
Improvement in existing manual information system............................................................................8
System design and development of system............................................................................................9
Introducing a new information system.............................................................................................10
Cost benefit analysis........................................................................................................................10
Final implementation and evolution....................................................................................................11
Providing training............................................................................................................................11
Data Migration................................................................................................................................12
Creating a new business opportunity...............................................................................................12
Proper risk management and product diversification.......................................................................12
Evolution.............................................................................................................................................13
Improving organisational productivity.................................................................................................13
Conclusion...........................................................................................................................................13
References...........................................................................................................................................14
Appendix.............................................................................................................................................16

SLDC 4
Executive summary
This report includes different areas which tells that how the organisation overcome its
problems by implementing enterprise resource planning system within their organisation with
the major motive to improve their overall productivity. Complete discussion will be carried
on new information system adopted by the organisations, ways in which it will create new
opportunities and productivity of the business, choose of investors in order to execute new
plan overall improvement and change in existing manual information system.
Introduction provides general view of the overall report such as definition of ERP,
along with some limitation of the system and system development life cycle. Further the
project describes complete description about organisational internal and external
environment. Different elements present in the environment and ways in which it effect the
organisation.
After this all the stages of SDLC are discuss broadly. Starting with the planning stage
which focus on developing an appropriate plan that can help the company to identify the
areas where it is lacking behind after that complete analysis of the problem faced by the firm
is done along and on the basis of this analysis system that have enough capability to
overcome the issues are implemented. At the end conclusion along with the list of references
and appendix are given which clearly shows the ways in which company was able to use its
resources efficiently and the places where there is need of improvement.

SLDC 5
Introduction
ERP stands for enterprise resource planning. It basically refers to management
software widely used to conduct business activities with the help of integrated applications.
Apart from this it also help in development an automatic system in many other functions such
as, technological, management and human resources (Piazolo et.al. 2017). This system is
widely used by the organisation in order to improve their productivity, profitability,
performing business task in most economical manner they can, increasing overall
organisational efficiency and many more.
Considering the fact that implementation of the ERP system is involves high cost and
due to the increase of the competition in the market every firm wants to be on the top to win
over their competitors but the task is not easy till the time they are able to raise their overall
production in order to attract and fulfil demands of more and more customers (Kraljic et.al
2014) for this my organisation require funds which has been sponsored by the top
management of my company.
There are many units working within the organisation and all of them are dependent
on each other so, in such cases they may requirement information of other department which
they can obtain with the help of ERP system. However, this system is beneficial for the
employees working within the organisation as it help them to overcome come all the hurdles
that comes in between their work.
On the other hand SDLC stands for system development life cycle. It basically refers
to a conceptual model which broadly defines all the stages that are involved in various
projects of information system (Verma, 2014). There are many methodologies of the same
that have been developed in order to bring better understanding like- waterfall model, rapid
and joint development models and many more (Merhout and Kovach, 2017).
However the implementation of ERP lifecycle is not an easy task. Many a times
companies experience failure due to complexity as well as risk factors involved in ERP
implementation system. But the firm prefer to adopt this system because it enables the
organisation to enhance their overall performance and experience high profitability by

SLDC 6
reduction in overall expenses as well as cost that they have to pay to the worker within the
company (Coronel and Morris, 2018).
In this report complete discussion will be carried on discussion on new information
system adopted by the organisations, ways in which it will create new opportunities and
productivity of the business, choose of investors in order to execute new plan overall
improvement and change in existing manual information system.
Organisational description (swot analysis)
Nick Barclay & Andrew Quinn are the founders of OCC apparel an Australian
organisation which deals in ethnic wear and t-shirts. Due to the giant size of the company its
department started facing many problems such as difficulty in maintaining warehouses,
conducting appropriate production activities and many more because scarcity of resources
used for the production of material.
Internal environment – strength and weakness
OCC apparel is the t-shirt manufacturing which has multiple departments such as,
finance, human resource, and marketing. The organisation takes all the measures in order to
ensure that all the workers working in Sydney face clean and enjoyable working climate
considering the fact that whatever profit they are able to earn is only because of their
workers. This organisation consists of 38 employees actively engaged in production activities
so that the company can fulfil its mission to provide best quality ethnic wear and t-shirts in
the world (Wheelen and Hunger, 2017).
External environment – opportunities and threats
It basically refers to the type of environment which has many components that are
outside the business but still have an impact over the business (Adegbite, Simintiras,
Dwivedi, and Ifie, 2018). Some of the external components are controllable le and some are
not. OCC apparel external environment consist includes customers, and financiers.
Certain elements of the external environment that are not under the control and affect
the firm are socio-cultural environment and political environment. Sometimes change in laws
related to export prove dangerous for the company. If the firm is able forecast all the changes
then with the help of appropriate strategy they can grasp opportunities (Wheelen and Hunger,
2017).

SLDC 7
Ways in which system can help the sponsor
There is a requirement of huge financial resources especially at the time whenever
some innovative system or changes are to be introduced within the organisation for the
purpose of increasing its efficiency. Due to big size of the organisation and multiple
departments manual information system is not sufficient to manage all the activities.
Therefore top managements of the company are now willing to invest in order to introduce
ERP system with an appropriate Systems Development Life Cycle. (Appendix 4)
After the long discussion all the members of top management of the company were
willing to make huge investment because they know that this investment will help them in
increasing their overall productivity and increase efficacy in accounting records. Overall
these things will help the company in attaining prime image in the eyes of society and win
over their competitors by expanding their existing customer base.
Figure 1 SDLC model (Sengupta, Das and Khan, 2014)
Planning
It is considered as primary stage of system development life cycle. Main aim of this
stage is to determine all the problems faced by the enterprise and different solutions in order

SLDC 8
to overcome them. It’s important to take all the resources, cost involved and many other
items that are important for the organisation into consideration (Abdullah, 2017).
Problem faced by the OCC apparel
Dealing in manufacturing and sale t-shirts company face many problems in managing
its production due to limitation of availability of resources such as financial and human
resource. Apart from this organisation find it difficult to maintain all the accounting records
in the systematic many only with the use of information system.
All these issues need to addressed on time therefore it’s important for the firm to
introduce enterprise resource planning system within its organisation so that they can
overcome all these issues and able to use their resource in planned way
Analysing the system and its major requirements
This is the second phase of SDLC. In this phase proper analysis is done by the
organisation to know all the points where there is the need of improvement so, that the
company can match all the expectations well on time (Coronel and Morris, 2016).
Improvement in existing manual information system
There is a need to improve existing information system because of many problem
faced by the organisation. MIS can broadly be defined as a system in which all the work
performed within the organisation without the use of computers (Fischer et. at. 2017) They
prefer to maintain all the records on the papers. Companies prefer to use them as they involve
low cost and no investment in the form of employee development is needed as everything is
done manually (Procter and Cook, 2017).
There are many operations conducted within the organisation that are manually
performed but the organisation will never be able to attain accuracy because of the element of
human error. Among all the activities maximum work in the warehouse are performed
manually by this it can said that human being plays important role.
If the company wish to upgrade its warehouse performance then they have to fulfil all
the basic need of their employees taking them as an important asset of the organisation.

SLDC 9
Improvement of overall workflow - with the introduction of these system
employees will be able to accrue more relevant information which will increase their working
capacity as well as overall productivity of the company (Becker et.al.2018).
Maintaining of records in systematic way- due to the large size of the organisation
it’s not an easy task to maintain all the records on the papers moreover managers may find it
difficult in finding information from the books so, in such cases ERP system will facilitate
the firm in analysis of data which lead to improvement task that were earlier been performed
manually (Panigrahi, 2017).
Improvement in system of recording and planning – through the implementation
of proper ERP system different departments within the organisation such as- HRM, finance,
production, supply chain and many more will be able to attain information from one place.
This will save their time and help the financial department to prepare fund flow as well as
cash flow statements without and human and information technology help (Panigrahi, 2017)..
Enhancement in data security- ERP system will help in establishing security of data
which was collecting manually at the initial stage because this system involves entering
individual data at a time. Whereas, there are chances of conflicts under manually information
system as in this multiple data is recorded at a time but with the help of ERP within the same
information consistency and accuracy can be establish (Sharma and Srivastava, 2017).
Customisation- ERP can provide multiple platforms that can be used by different
departments as per their needs. This will help the organisation in picking up the best among
all and attain efficacy in their work. Along with it this systems also provide opportunities to
customize the software as per the need. All these facilities help in better use of manually
collected data (Parthasarathy and Sharma, 2017).
System design and development of system
It is one of the most important stages where it’s important font the organisation to
identify all the features as well the operations that will help the company to solve all its
problems (Kazim, 2017). Once all the things are been clarified then strong decisions are taken
by the company the company to install the system that will help in increment of overall
productivity of the organisation.

SLDC 10
Introducing a new information system
OCC apparel will be able to enjoy all overcome all major problems after the
installation of enterprise resource planning system. This system will enable the company to
collect the data in uniform manner which in the future will help the managers of the firm in
taking appropriate decisions.
Cost benefit analysis
Table given below clearly shows that although initial investment in the project is quite
high but within the short time period enterprise will be able be realise all its benefits. Apart
from the increase in profits and productivity, company will also be able to increase job
satisfaction among its employees. Appendix 1(Mishan, 2015)
Figure 2 cost benefit analysis table (Nas, 2016)
Some of the major benefits that will be enjoyed by the company after the installation
of new information system are –
Better decision making process – ERP system will help the OCC apparel company to
display high quality data on the screen so, that each and every department could use the
information as per their needs. This will help the company in taking better decision which
will result in better productivity and profitability (Parker, Van and Choudary, 2016).
Good plans for the future – organisation will be able to make better future plans so,
that they can grasp the opportunities and overcome all the risk that are going to arise in near
future. Apart from this good planning schedule will also help the employees working within
the organisation to work without any confusion (Yücesan, 2016).
Reduction of duplicity – in the absence of this system OCC apparel face the problem
of wastage of resources due the duplicity of data special in the manufacturing department but

SLDC 11
with the introduction of ERP in the system enable the company to reduce the duplicity in
reports as well as in records maintain by different departments.
Exercising more control and establishing traceability with the system – ERP system
enable the firm in establishing good network of tracking in all the departments of the
organisation staring from the point where the raw material enters in the company to the point
of final product been delivered to the consumers (Yücesan, 2016).
Helps to establish better communication system with the organisation as, ERP system
enables the firm to overcome all the barriers that exists between the departments. Its essential
fort the company to build suitable communication channels so, that all the changes can easily
be establish with any confusion.
High profits – due to the reduction of overall cost that earlier firm has to pay to the
labours despite of many errors in the work will no longer exist as the result the organisation
will be able to earn high profits.
Implementation of this new information system will be beneficial not only for the
organisation but also for the employees working within it and this will result in development
of favourable working condition for the workers.
Final implementation and evolution
At this stage all the majors are taken by the research and development department in
order to ensure that no loop holes are solved so that the company can easily attain all its goals
(Amalnik and Ravasan, 2018). As soon as the message is received from the department
change are introduced in in the company so that the business can grasp new opportunities
which arises after the introduction of this new information system.
Providing training
In order to introduce new system it’s important for the firm to train all this workers so
that they can work efficiently on the new software. Proper training will enable the employees
to perform the work more efficiently. Training can be provided by the firm in the form of
classroom lectures so, that everyone can learn with a competitive spirit.
There are many steps that are involved in SLDC ERP system (Appendix 2)
(Muscatello, Parente, and Swinarski, 2017). Total there are eight stages starting from the

SLDC 12
planning and ending at overall management of the system. However in-between stages may
involve analysis, designing, development along with deployment and operation of the system.
Each and every stage is important so, every stage must be developed under the supervision of
the experts.
Data Migration
Many a times it happens that all those organisations who take an initiative to
implement ERP software have lots of information collected in the form of accounting facts as
they are running the firm from the longer period. Therefore it’s essential for them to run both
the old as well as new system parallel in order to identify all the areas where they have
missed the data at the time recording the same (Alruwaili and Gulliver, 2018).
For this OCC Apparel has to follow one core process of data migration. This process
ensures that all the information whether it is qualitative or quantitative are to be recorded in a
systematic manner within the new system. Appendix 3 (Alruwaili and Gulliver, 2018).
After proper implementation of this system organisation becomes capable enough to
grasp all the opportunities that available in the market.
Creating a new business opportunity
Proper risk management and product diversification
It can be said that implementation of this system will help the OCC apparel to manage
all the risk factors that exist in internal as well as in external environment with the help of
proper accounting records maintained under ERP system. Further once they overcome all the
risk elements they will be able to expand their business.
There are many new business opportunities that will arise after the adoption of ERP
system. As under this system company have to accrue many software’s so in the later stage
OCC apparel can use all these software’s to expand its business with the tension to recruit
suitable employees for the same (Jansen, 2017). This system will help the company to
efficient utilization of resources which in return will reduce unnecessary wastage of material
further this material can be used for some other purpose.

SLDC 13
Evolution
Improving organisational productivity
Implementation of enterprise resource planning will help the company to increase its
productivity as well as overall profitability of the company. This software will help the
company to establish coordination between different departments which will result in
establishment of streamline with the business processes (Alhassan, Alzahrani and AbdulAziz,
2017).
The production of the firm is totally based on availability of the resources as well as
on the accuracy with which the data is been collected by the firm and ERP system ensure
both the things within the firm this will enable the firm to know how much resources they
have and what’s the actual demand of the product in the market. ERP ensure clarification of
both the factors which enable OCC apparel to enjoy high productivity. Apart from this web-
native platform provided by the software also help the firm to build well connection with the
business partners (Huang and Yasuda, 2014).
Conclusion
From the above report it can be concluded that, enterprise resource planning has
become essential for all the organisations who are dealing in the business with limited
resources. In such cases companies like OCC apparel have to implement systems such as
ERP in order to ensure that all the records are not only maintained but also been recorded in
an accurate and systematic manner so that by taking appropriate decision entrepreneurs can
expand their business (Mohamad, 2017).
Apart from this there are some limitations of this system due to which many
companies carried a long discussion before implementing it. Some of the major limitations of
this software may involve- the cost of introducing this system is involved in planning, testing,
implementation which is quite higher.
This system also provide opportunity to customization but sometimes it happens that
the firm is unable to adopt changes which results in reduction in up gradation. Many a times
it’s also difficult for the employees working within the company to change their way of
working within the short time period and this may also lead to frustration in them.

SLDC 14
However ERP implementation is quite complex but if SDLC cycle of ERP (Tiwari
and Mishra, 2014) is used then it will become easy for the organisation to implement the
system and enjoy all its benefits. This system involves stages like- planning, design,
development testing deployment and on-going support. Considering all the benefits that the
organisation can avail after installation of this software top management of the firm is will to
make their investment in this system (Nwankpa, J.K., 2018).
References
Abdullah, M.A.M.A., 2017. Evolution of Enterprise Resource Planning. Evolution, 1(11).
Alhassan, A., Alzahrani, W. and AbdulAziz, A., 2017. Total Quality Management for
Software Development. Total Quality Management, 158(5).
Alruwaili, F.F. and Gulliver, T.A., 2018. Secure migration to compliant cloud services: A
case study. Journal of Information Security and Applications, 38, pp.50-64.
Becker, J., Clever, N., Holler, J. and Neumann, M., 2018. Business process management in
the manufacturing industry: ERP replacement and ISO 9001 recertification supported by the
icebricks method. In Business Process Management Cases (pp. 413-429). Springer, Cham.
Coronel, C. and Morris, S., 2016. Database systems: design, implementation, &
management. Cengage Learning.
Coronel, C. and Morris, S., 2018. Database systems: design, implementation, &
management. Cengage Learning.
Fischer, C., Lušić, M., Faltus, F., Hornfeck, R. and Franke, J., 2016. Enabling live data
controlled manual assembly processes by worker information system and nearfield
localization system. Procedia CIRP, 55, pp.242-247.

SLDC 15
Huang, T. and Yasuda, K., 2014, October. ERP life cycle models: an annotated
bibliographic review. In Proceedings of the 15th Asia Pacific Industrial Engineering and
Management Systems Conference, October (pp. 12-15).
Jansen, W., 2017. New business models for the knowledge economy. Routledge.
Kazim, A., 2017. A Study of Software Development Life Cycle Process
Models. International Journal of Advanced Research in Computer Science, 8(1).
Kraljic, A., Kraljic, T., Poels, G. and Devos, J., 2014. ERP implementation methodologies
and frameworks: a literature review. In 8th European Conference on IS Management and
Evaluation (ECIME) (pp. 309-316). Academic Conferences and Publishing International
Limited.
Merhout, J. and Kovach, M., 2017. Governance Practices over Agile Systems Development
Projects: A Research Agenda.
Mishan, E.J., 2015. Elements of Cost-Benefit Analysis (Routledge Revivals). Routledge.
Mohamad, M.R.A., 2017. ERP Benefits Capability Framework: an orchestration theory
perspective. Management Science, 52(9), pp.1359-1376.
Muscatello, J.R., Parente, D.H. and Swinarski, M., 2017. Improving Logistics Costs
Through ERP Alignment. In Enterprise Information Systems and the Digitalization of
Business Functions (pp. 47-65). IGI Global.
Nas, T.F., 2016. Cost-benefit analysis: Theory and application. Lexington Books.
Nwankpa, J.K., 2018. ERP Systems Benefit Realization and the Role of ERP-Enabled
Application Integration. In Encyclopedia of Information Science and Technology, Fourth
Edition (pp. 2953-2964). IGI Global.
Panigrahi, S., 2017. Development of an android application for sample tracking in garment
manufacturing factories.
Parker, G.G., Van Alstyne, M.W. and Choudary, S.P., 2016. Platform revolution: How
networked markets are transforming the economy--and how to make them work for you.
WW Norton & Company.

SLDC 16
Parthasarathy, S. and Sharma, S., 2017. Impact of customization over software quality in
ERP projects: an empirical study. Software Quality Journal, 25(2), pp.581-598.
Piazolo, F., Geist, V., Brehm, L. and Schmidt, R. eds., 2017. Innovations in Enterprise
Information Systems Management and Engineering: 5th International Conference, ERP
Future 2016-Research, Hagenberg, Austria, November 14, 2016, Revised Papers (Vol.
285). Springer.
Procter, M. and Cook, M., 2017. Manual of archival description. Routledge.
Sengupta, S., Das, K. and Khan, G. eds., 2014. Emerging Trends in Computing and
Communication: ETCC 2014, March 22-23, 2014 (Vol. 298). Springer Science & Business
Media.
Sharma, L. and Srivastava, V., 2017. Performance Enhancement of Information Retrieval
via Artificial Intelligence.
Tiwari, R. and Mishra, A.K., 2014, January. Study of data transfer from wind farm
substation to SLDC & case study. In Electrical Energy Systems (ICEES), 2014 IEEE 2nd
International Conference on (pp. 106-109). IEEE.
Verma, S., 2014. Analysis of Strengths and Weakness of SDLC Models. International
Journal, 2(3).
Wheelen, T.L. and Hunger, J.D., 2017. Strategic management and business policy. pearson.
Yücesan, E., 2016. Competitive supply chains: a value-based management perspective.
Springer.
Appendix
Appendix1

SLDC 17
Appendix2 SLDC ERP system
Appendix 3

SLDC 18
Appendix 4