1. BCIS 401 - Information Systems Enterprise Resource Planning

4. Some ERP Statistics As of 1998 businesses worldwide spent $10 billion on enterprise systems. This figure doubles when associated consulting expenditures are added in. While the Internet has received most of the media attention, the business world’s embrace of enterprise systems may be the most important development of the corporate use of IT in the 1990s.

5. Rationale for ERP Systems They are designed to solve the problem of fragmentation of information in large business organizations Information is typically spread across many separate computer systems, each housed in an individual function, business unit, region,factory, or office. Legacy systems may provide invaluable support for a particular business activity, but in combination they are a drag on productivity and performance.

6. Rationale for ERP Systems Direct costs –High costs of maintaining so many legacy systems such as storing and rationalizing redundant data, re-keying and reformatting data from one system to another, maintaining and updating software, programming communication links, etc. Indirect Costs –Incompatibility of legacy systems leads to poor decision making due to inconsistency of information. If a company’s systems are fragmented, its business is fragmented!

7. 7 Anatomy of an ERP System Its core is a single comprehensive database –Collects data from and feeds data to modular applications supporting all of a company’s business activities. –Does so across functions, across business units, across the world. –When new information is entered in one place, related information is automatically updated.

8. Configuring an ERP System Balancing the way you want to work with the way the system wants you to work. Select the modules that best fit your business –Service company’s omit the manufacturing module. Configuration tables are used to achieve the best fit with your company’s processes. More modules means greater integration benefits but also greater risks, costs, and changes involved

9. 9 The Reality of ERP Systems Businesses must be modified to fit the system. Most companies installing enterprise systems will need to adapt or even rework their processes to fit the requirements of the system. ERPs aren’t software packages; they are a way of doing business.

10. CISCO Case Study

11. 11 Was the Project a Complete Success Let’s Look at the Numbers! Did the Project Come in at Budget?

12. 12 Project Costs Core Costs –$ 15 Million for the 20 Cisco people that made up core team. Additional Personnel Costs –80 people to make up team –80 * 8 months * 160 hrs/month * $100/hr = $10.24 Million

13. 13 Project Costs Decommitting of IT Group –100 It personnel * 80% committed * 4.5 months * 160 hrs/month * $100/hr = $5.76 million Hardware Costs - Avoided due to contract –$15 million * 32% hardware expenditure [Exhibit 3] * 50% 0f hardware buy = $2.4 million

14. 14 Project Costs Therefore, Cisco’s implementation ran over budget by $18.4 million, or 122%. Would you consider this a success? How many companies would? Let’s Revisit Budgeted Cost –$15 million for a $500M to $1B company –$150M for a $5B company

15. 15 A Success Cisco believes the project was a success –Finished on time –Replaced antiquated system –Contributed to rapid growth of Cisco