ERP System Design and Management: Risks, Benefits, Recommendations

This report provides a comprehensive analysis of Enterprise Resource Planning (ERP) system implementation, focusing on the case of Leadtek Corporation. It begins with an introduction to ERP systems, highlighting their function in integrating business processes and automating back-office functions. The report details the key benefits of ERP systems, including focused IT costs, improved planning and reporting, total visibility, enhanced collaboration, improved efficiency, data quality and security, standardized processes, and facilitated regulatory compliance. It then explores the architecture of ERP systems, discussing two-tier and three-tier implementation models. A significant portion of the report is dedicated to the risks associated with ERP implementation, such as a lack of clear vision, selecting the wrong software, customization issues, exposing sensitive data, lack of client buy-in, and poor project planning. The report proposes mitigation strategies for these risks, including securing executive buy-in, setting clear goals, determining a realistic budget, understanding hosting options, understanding the system's capabilities, focusing on data migration, and implementing a change management strategy. Finally, the report offers recommendations for Leadtek Corporation, covering decision-making processes, selecting the appropriate ERP system, and implementation methodologies, concluding that successful ERP implementation hinges on proper planning, clear expectations, and effective project management.

Running head: INFORMATION SYSTEM DESIGN AND MANAGEMENT
Information System Design and Management
Name of the Student
Name of the University
Author’s Note

1INFORMATION SYSTEM DESIGN AND MANAGEMENT
Table of Contents
Executive Summary...................................................................................................................3
Introduction................................................................................................................................4
ERP Management System..........................................................................................................4
Key Benefits of the ERP System...............................................................................................5
Focused Costs of IT...............................................................................................................5
Improved Planning and Reporting.........................................................................................5
Total Visibility.......................................................................................................................5
Improved collaboration..........................................................................................................5
Improved Efficiency...............................................................................................................6
Data Quality and Security......................................................................................................6
Standardized Process..............................................................................................................6
Facilitated Regulatory Compliance........................................................................................6
Architecture of ERP System......................................................................................................6
Two-tier Implementation.......................................................................................................7
Three-tier Server-Client Implementation...............................................................................7
Risks of ERP system Implementation........................................................................................7
No Clear Vision......................................................................................................................7
Selecting Wrong Software.....................................................................................................8
Customization........................................................................................................................8
Exposing Sensitive Data........................................................................................................8

2INFORMATION SYSTEM DESIGN AND MANAGEMENT
Lack of Client Buy-In............................................................................................................8
Poor Project Planning.............................................................................................................8
Mitigation of Risks of ERP system............................................................................................8
Get Buy-In from Start............................................................................................................9
Set Goals for New ERP System.............................................................................................9
Determine the Budget............................................................................................................9
Knowledge about the Hosting Options..................................................................................9
Understanding the Capabilities..............................................................................................9
Focus on Data Migration......................................................................................................10
Change Management Strategy.............................................................................................10
Recommendation......................................................................................................................10
Decision to implement the ERP...........................................................................................10
Selecting ERP system..........................................................................................................10
Implementation Methodology..............................................................................................11
Planning and Implementation..............................................................................................11
Conclusion................................................................................................................................11
References................................................................................................................................13

3INFORMATION SYSTEM DESIGN AND MANAGEMENT
Executive Summary
ERP is a management system of business process and it allows the organizations to
use the system of the integrated system. This paper discusses the risks of th implemenetion of
ERP system in the organation and the techniques in which way the risks can be mitigated.
Ths paper proposed some of the recommendation for the implementation of the new ERP
system in Leadtek Corporation. This paper concludes tha if the organization make the proper
process of the implementation with the proper expectation of the stage of any project, the
ERP system implementation will end as the success. Many organizations are not successful in
realizing the benefits of the ERP system and the implementation. The study formulates the
comprehensive recommendation for Leadtek Corporation for the management of the ERP
system in the project phase.

4INFORMATION SYSTEM DESIGN AND MANAGEMENT
Introduction
ERP stands for Enterprise Resource Planning, which is one of the management
systems of business process and it allows the organizations for using the system of the
integrated application for managing the business and for automating the many function of
back office relegated to the technology, human resources and services.1 The organization
Leadtek Corporation was using the FOXPRO system for the system management. There was
a problem of dissimilar database with the system. The organization switched to the RDMS
(Relational Database Management System) using the INGRES but the problem with that
system was it was exceeding the capacity of the internal DP. As the company is developing
rapidly since its starting, they need a great accounting management system to mitigate the IT
related problem with their system and they planned to go for the ERP system as to make their
organization grow in the market. This study highlights on the benefits of ERP system and the
risks that can come while the implementation of the ERP system. This study provides the
recommendation regarding the ERP implementation in order to mitigate the risks and run the
business successfully.
ERP Management System
ERP is the process to integrate and manage the vital parts of the organizations. ERP
application helps the organization in implementing the resource planning by integrating the
process, which the organization needs to run with the single system.2 The ERP system can
integrate the sales, marketing, human resources, planning, finance, purchasing inventory and
many other things. ERP system allows the various departments for sharing and
1 Nwankpa, Joseph K. "ERP system usage and benefit: A model of antecedents and outcomes." Computers in
Human Behavior 45 (2015): 335-344.
2 Jeng, Don Jyh-Fu, and Nicolas Dunk. "Knowledge management enablers and knowledge creation in ERP
system success." International Journal of Electronic Business Management 11, no. 1 (2013): 49.

5INFORMATION SYSTEM DESIGN AND MANAGEMENT
communicating easily with the other organizations. ERP collects the information or data
about the state of other division and their activities.3 ERP have gained the traction among the
enterprises for both small and big and the centralized approaches for the business process.
When the ERP is optimized properly, the system can drive efficiently and increases the
profitability with lower cost.
Key Benefits of the ERP System
ERP systems are the asset of many organizations. ERP helps the business for running
smoother by protecting and unifying the information, producing the easy trends and
automating process. With these capabilities, the benefits of ERP system re as follow:
Focused Costs of IT
Though ERP is mainly the large investment, the system will unify the costs of IT and
will improve the efficiency.4 Instead of focusing on the multiple resources, Leadtek
Corporation can focus on the costs into the ERP system. This will reduce the overall IT costs.
Improved Planning and Reporting
Implementing the ERP system in the organization that will have the unique reporting
system for each process. ERP is able to generate the essential analytics and reports anytime.
This system is able to analyze the functions across various departments without multiple
emails and spreadsheets.
3 Li-Man, Liao, Huang Ching-Jen, and Lin Xiang-Yu. "Applying Project Management Perspective for ERP
Implementation: A Case Study." Proceedings of Engineering and Technology Innovation 8 (2018): 40.
4 Antoniadis, I., T. Tsiakiris, and S. Tsopogloy. "Business Intelligence during times of crisis: Adoption and
usage of ERP systems by SMEs." Procedia-Social and Behavioral Sciences175 (2015): 299-307.

6INFORMATION SYSTEM DESIGN AND MANAGEMENT
Total Visibility
ERP provides full access to the essential process in a business from various
departments. Inventory level can be monitored daily, the future consignments and the entire
inventory in the transit.
Improved collaboration
ERP system makes the collaboration very easy. ERP streamlines the processes for
collaborating with the other staffs with the access to the required data.5
Improved Efficiency
ERP system minimizes the effort and time that is needed by work force for carrying
the activities. Proper implementation of ERP system can reduce the repetitive manual process
of the organization.
Data Quality and Security
Data security is the main advantage of ERP system.6 Sharing the data across the
functional silos enhances the collaboration. ERP system has the extreme control for ensuring
the security and quality of the data.
Standardized Process
Standardized process of the ERP system allows the business for standardizing the
system and the processes, which enhances the efficiency and productivity.
5 Scholtz, Brenda, and Denis Atukwase. "An analysis of the perceived benefits and drawbacks of cloud ERP
systems: a South African study." In Information Technology in Environmental Engineering, pp. 75-87. Springer,
Cham, 2016.
6 Weng, Fumei, and Ming-Chien Hung. "Competition and challenge on adopting cloud ERP." International
Journal of Innovation, Management and Technology 5, no. 4 (2014): 309.

7INFORMATION SYSTEM DESIGN AND MANAGEMENT
Facilitated Regulatory Compliance
ERP maintains the perfect accuracy of the financial records. ERP system aids in the
regulatory compliance by the virtue of validated and secure data combined in a report.7 This
report can automatically reduce the costs of the audits.
Architecture of ERP System
ERP system is the common deployed system in the distributed and intersperse
manner. When the servers of the system are centralized, the clients are spread to the various
locations in the organizations. There are commonly three functional areas, which are
distributed among the clients and servers. Firstly, a database component if there in the ERP
system, which is the central repository of the entire data and it is shifted to or from the users.
Secondly, the users or clients get the raw data, then they request for the submitted
information and the satisfaction of the requested data. Lastly, the application element acts as
the medium between the database and the clients, where the elements reside and the process
are distributed from system implementation. The mainly implemented architectures are:
Two-tier Implementation
The server in the two-tier implementation of architecture handles the application and
the database duties. The users or the cliens are responsible to present the input of the passing
user and data and gets back to the server.8 There are many servers and the users are
distributed across the wide and local area links. The processing responsibilities of the
distribution remain same.
7 Mundy, Julia, and Carys A. Owen. "The use of an ERP system to facilitate regulatory
compliance." Information Systems Management 30, no. 3 (2013): 182-197.
8 Nawaz, M. Nishad, and K. Channakeshavalu. "The Impact of Enterprise Resource Planning (ERP) Systems
Implementation on Business Performance." Asia Pacific Journal of Research2, no. 4 (2013): 13.

8INFORMATION SYSTEM DESIGN AND MANAGEMENT
Three-tier Server-Client Implementation
The application function and the database are separated in the three-tier architecture.
This is very huge production of the deployement of ERP. In this case, the user requests for
two or more network connections.9 At the starting point, the user creates the communication
with server system. The system server establishes the second connection to thee server of
database
Risks of ERP system Implementation
From many years, organizations have adopted the strategies by using the ERP system
for meeting the requirements. However, the system does come with the REP implementation
risks such as:
No Clear Vision
It is hard to stay in the competition without the ERP system implementation. It takes
much time for analyzing the operations and the processes in the business.10 With the unclear
understanding of the ERP system, it can be difficult for the organization to measure the
project successfully.
Selecting Wrong Software
Not all the ERP systems are created equally. If the chosen system is not tested
thoroughly it will not function properly in the infrastructure.
Customization
When ERP system customization is started with the modules and the other
modifications, the vendors will offer the organization to put the implementation at risk.
9 Bahssas, Dania Mahmoud, Adnan Mustafa AlBar, and Md Rakibul Hoque. "Enterprise resource planning
(ERP) systems: design, trends and deployment." The International Technology Management Review 5, no. 2
(2015): 72-81.
10 Stanciu, Victoria, and Andrei Tinca. "ERP solutions between success and failure." Accounting and
Management Information Systems 12, no. 4 (2013): 626-649.

9INFORMATION SYSTEM DESIGN AND MANAGEMENT
Exposing Sensitive Data
While introducing the ERP system, there will be some large number of information
that is considered as sensitive data and the sensitive information should not be exposed to
wrong person ever.11 This can put the organization at risk.
Lack of Client Buy-In
At the time of ERP system implementation, It takes time for ensuring the functionality
of the software. As the user interface is not conductive for the process there are many people,
who may not buy-in ERP system.
Poor Project Planning
If the planning of the project is not done properly, the project will be likely to fail.
This is one of the major risks of the implementation of ERP.
Mitigation of Risks of ERP system
Many mitigation techniques are there that can handle the risks of the ERP
implementation.
Get Buy-In from Start
Most important step is to ensure the executives of the organization are on-bard
entirely with new system implemenetation of ERP in order to reduce the challnages and risks
of implementation of ERP.12
11 Weng, Fumei, and Ming-Chien Hung. "Competition and challenge on adopting cloud ERP." International
Journal of Innovation, Management and Technology 5, no. 4 (2014): 309.
12 Puri, Rahul. "Best Practices of ERP Implementation." (2014).

10INFORMATION SYSTEM DESIGN AND MANAGEMENT
Set Goals for New ERP System
It is vital to understand the requirements for the new ERP system. This will keep the
business stakeholders on the same page, which will provide well-defined and clear targets
and objectives.
Determine the Budget
From the starting of system purchasing to phase implementation to support budget
allotment needs to be crystal clear. Budget transparency helps in running the process
smoothly. It is needed to ensure that the budget is sensible for work.
Knowledge about the Hosting Options
It needs to identify the location of the data and the access of the users in the system.
These are the main factors while evaluating the On-premises and Cloud hosting option of
ERP.13 It needs to explore the distinction between the both hosting options and the
organization should determine the important features to make the business process secure,
cost effective and productive.
Understanding the Capabilities
If the ERP system is not used it will not provide any value. It is needed to recognize
the functionality and the features of the new system, which will offer the learning of the
work. The organization should understand then distinction between the old and new ERP
systems. Understanding the function of new ERP system will help to learn the process.
13 Ranjan, Shree, Vijay Kumar Jha, and Pralay Pal. "A strategic and sustainable multi-criteria decision making
framework for ERP selection in OEM." International Journal of Applied Engineering Research 11, no. 3
(2016): 1916-1926.

11INFORMATION SYSTEM DESIGN AND MANAGEMENT
Focus on Data Migration
While introducing the new ERP system, it needs to ensure that the process are in the
place in the implementation of ERP. This will facilitate the data transitioning from legacy
application in the ERP system.
Change Management Strategy
New ERP system will improve the process and visibility of the business. It is essential
to ensure that the investment is protected with the strategies of solid change management.
Recommendation
Based on the Leadtek Corporation case study analysis and the ideas gathered from the
ERP consultants, some of the recommendation for the organization can be suggested.
Decision to implement the ERP
There are many factors as the project objective in Leadtek Corporation. While
analyzing the success and the failures of the implementation of ERP system, it is seen that the
requirements of the standardizing process of the business in needed for the reengineering
process in order to gain better result.14
Selecting ERP system
It is highly recommended for implementing the reengineering process with the ERP
system. However, it is not possible because of the valid reason. It is important to select the
flexible system for the customization of the system. Further, it is recommended that the
organization needs to establish the customization costs, which will result in reward, which
justifies the extra costs.
14 Xie, Ying, Colin James Allen, and Mahmood Ali. "An integrated decision support system for ERP
implementation in small and medium sized enterprises." Journal of Enterprise Information Management 27, no.
4 (2014): 358-384.