ERP - Unit 5
ERP - Unit 5
RESOURCE PLANNING
ABINAYA S
9919014035
Unit-5
ERP Procurement Issues.
Content:
Market trends,
Outsorcing ERP,
Case study,
Hidden cost issues,
ROI.
ERP Implementation issues:
Revenue growth occurred for ERP in all areas in 2019, with strong
growth for administrative ERP with financial management software
(FMS) growth at 7% and human capital management (HCM) growth at
10%(opens in a new tab).
TheERP market size in North America is worth over $10 billion.Asia-
Pacific is an emerging ERP market expected to achieve a CAGR of
13.2% through 2026(opens in a new tab).
Market statistics:
Outsourcing
the entire ERP functionality provide a solution in a faster
means and overhauls and major hurdles and allow more attention to
company’s core competence.
Several factors are Contributing to the interest in ERP outsourcing.
ERP system mostly find its existence in large Corporations thereby
Hardly providing any kind of Competitive edge in the buisness arena .
Outsourcing ERP:
N&N was able to: Reduce payroll processing time by 84%.Balance accounts faster.Improve
the accuracy of hours and vacation time counts.See labor-cost trends across its three
locations.
N&N’s case study nods to another major implementation success factor: managing
employee morale. ERP projects often fail when execs and other employees don’t feel a
sense of buy-in.
By providing personalized dashboards—and ideally explaining their benefits to employees
before the implementation—N&N avoided this pitfall.The case study also shows that a
third-party partner can be helpful in tailoring the ERP system to precisely fit your
company’s needs.
Case study 3:
The warehouse was often waiting on help from the IT team, too.Green Rabbit
chose NetSuite ERP, and the NetSuite professional services team got the
company up and running on the system in three months.
Delivers tens of thousands of orders per day, without delays.Gets guaranteed
error-free data from its ERP system, instead of risking errors from manually
entered data.
When implemented correctly, ERP makes it easier to manage a complicated
supply chain.
HIDDEN COST ISSUE:
Hidden cost Issue:
Testing:
Testing is an important phase of an ERP
implementation process. Before it goes live, it needs to be
thoroughly tested. This is bound to take much time as the
connection is created between the ERP system and other systems
on a case-by-case basis. This cost can be reduced if your team
run actual purchase orders through the system instead of using
fake data.
Hidden cost issue:
Data conversion:
The business data in your old systems need to be transferred to
the ERP system. This is not going to happen or import itself.
Import of company data will require you to spend some money
on it. Moreover, a lot of time will also be engrossed in
removing outdated data records and modifying them in order
to match the processes of the ERP solution
Hidden cost issue:
Training:
There is common misconstrue by companies when it comes to the
cost of training their employees for using the new ERP software
system.
Your staff doesn’t only have to understand and get skilled in a new
set of processes but also be comfortable using a new software
interface. So, bear in mind, on-going training and improvement
procedures may exceed your implementation budget.
Hidden cost issue:
Customization:
While
buying an ERP system is considered to be the most cost-effective
solution, the reality is beyond this.
Every company has their own unique needs that are expected to meet by
the software. No matter you have the best system to achieve your goals,
there will be some chances where you need to fulfill those specific needs.
So, customization adds up to expense. To tackle this, communicate with
your ERP vendor and look out for any obvious or possible customizations
that you might need. This can save you from unexpected expenses
Hidden cost issue:
Travel:
Other potential hidden costs come from travel. The ERP
implementation process requires a person to go to all company sites
and branches for setting up the software solution.
So, when the locations are distant, you have to spend bucks on
traveling.Last, being prepared in advance for these hidden costs
behind ERP implementation might help you to reduce the overall
expenses.
ROI:
ROI:
ERP ROI StatisticsOrganizations use ERP to become more efficient and save
costs. Statistics on ERP return on investment (ROI) highlight the benefits of the
technology.
ERP implementation led to business process improvement for 95% of
businesses(opens in a new tab).In a study of companies implementing ERP, 85%
had a projected timeline for ROI.
Of that group, 82% achieved ROI in their expected time(opens in a new
tab).The top three benefits(opens in a new tab) businesses said they gained from
an ERP system are reduced process time, increased collaboration and a
centralized data system.
ROI
An average for ROI time in a group of companies that implemented ERP was
just over 2.5 years.
The top three business cited for implementation are achieving cost savings
(46%), improving performance metrics (46%) and improved efficiencies in
business transactions (40%).
When asked to select areas where ERP produced the top three answers were
reduced IT costs (40%), reduced inventory levels (38%) and reduced cycle
time (35%)
ROI: