ERP is utilising the power of modern day computer systems to integrate all of the different areas of a business to provide real time information as a decision support tool for effective management.
The integration of all of the functions within an organisation generates a global, real-time view of data that can enable companies to address concerns proactively and drive improvements such as financial compliance with regulatory standards, risk reduction, automation of core business operations such as quote to cash, order-to-fulfillment, procurement and inventory processes, manufacturing and cost tracking, planning and execution, capacity planning, improved customer service and inventory reduction.
The advantage of an effective ERP system puts an organisation in an excellent competitive position to compete in a global market place and be able to react to changes smoothly and at minimum cost. When you add up these advantages, employees have access to accurate information that enables them to make better decisions faster. Not only that, but ERP systems provide the platform to eliminate redundant processes and legacy systems, dramatically lowering the cost of doing business overall.
ERP is seen as the basic platform for organisations for the management and control of their business.
ERP comes with a warning! Most organisations struggle to effectively implement ERP due to a number of factors including but not limited to:
1. It is complex and much broader than just a computer system! ERP has been shown to be 80% people and 20% software!
2. Fact; repeated studies have shown that ERP projects have a high failure failure rate and few deliver the benefits expected!
3. A poorly managed ERP project can be a very exhausting and moral sapping venture for any organisation and can result in the syndrome known as "ERP Fatique" resulting in partly implemented ERP.
4. A poorly executed ERP project can operationally damage the supply chain, financially injure a company and can send organisations bankrupt!
5. Constant surveys show ERP project costs exceed budgeted costs by an average of 25% across all organisations. The reality is many ERP projects can run into hundreds of thousands if not millions of dollars of unbudgeted costs and still underperform!
6. The need for ongoing assessment of risk is poorly carried out, or not at all, resulting in problems occurring that could have been avoided.
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