1 / 17

Comprehensive ERP System Options and Selection Methods Overview

Explore alternative ERP project forms, budgeting methods, IS/IT project risks, and financial techniques for capital budgeting. Learn about changing IT landscapes, ERP project risks, and survey insights on installation time, costs, and ROI expectations.

waltersf
Télécharger la présentation

Comprehensive ERP System Options and Selection Methods Overview

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 3: ERP System Options & Selection Methods Alternative ERP project forms Budgeting methods

  2. IS/IT Projects • Typically • Late • Over budget • Fail to satisfy design specifications • ERP projects • Are larger than normal • Can be expedited (if you do it vendor’s way) • Cost range $5 million to over $100 million (+)

  3. Alternative ERP Options

  4. Changing Nature of IT • Technology is highly dynamic • ERP projects often take years to install • Vendors are responding by expediting • As long as you do it their way • Improved versions may be on market by the time you install your system • This is one advantage of an ASP

  5. IT Selection Practice • Hinton & Kaye [1996]: • IT tends to be viewed as capital budgeting • Implication is that clear financial return is expected • Sound thinking, but benefits often intangible (yet real) • Some strategic investments require bold judgment • Conversely, companies have gone broke buying IT

  6. IS/IT Project Risk FactorsSimms [1997] • Project manager ability • Experience with this application type • Experience with programming environment • Experience with language or system • Familiarity with modern programming practices • Availability of equipment, software, language tools • Completeness of project team • Personnel turnover • Project team size • Relative control of project manager over project team

  7. Financial techniques for Capital Budgeting • Payback • Discounted cash flow • Cost-benefit analysis These are the more formal mechanisms implied by Hinton & Kaye as capital budgeting Anything with as great an impact as ERP needs to have some estimate of cost, benefits • Need to recognize that precise numbers not worth obtaining

  8. Bacon [1992] survey of IT project selection methods • Financial Criteria • NPV, IRR, payback • profitability index • budgetary constraint • Management Criteria • Requirements, respond to competition, etc. • Development Criteria • Technical/ learning new technology, probability

  9. Bacon findings • More formal methods often not used • Why waste effort if know you will do it? • Many numbers used inaccurate anyway • More formal methods reserved for larger project (like ERP) • Management criteria focus on intangible • Technical a matter of maintaining state-of-the-art systems

  10. Survey of ManufacturersMabert et al. (2000); Olhager & Selldin (2003)

  11. Expected Installation TimeMabert et al. (2000); Olhager & Selldin (2003)

  12. Estimated Installation CostMabert et al. (2000); Olhager & Selldin (2003)

  13. Cost ProportionsMabert et al. (2000); Olhager & Selldin (2003)

  14. Mabert et al. [2000]Survey of 400+ manufacturers

  15. Expected ROIMabert et al. (2000); Olhager & Selldin (2003)

  16. Mabert et al. [2000]Survey of 400+ manufacturers • Even for ERP systems, only 53% used formal methods • For smaller IT projects, payback most popular • Most systems expected to take years to install • Trend is to make much faster • Cost varies widely • You have a choice as to where you spend • Training tends to be underbudgeted • Not all expect big return

  17. Points • A variety of evaluation techniques available • Pure monetary analysis hard, expensive, inaccurate • Payback a commonly used shortcut • Other methods exist • Value analysis • Multicriteria analysis

More Related