Decoding the IT Value Problem: An Executive Guide for Achieving Optimal ROI on Critical IT Investments

CHAPTER 9

Enterprise Resource Planning

One Size Fits Most

EXECUTIVE SUMMARY

ERP systems require enormous investments of time and money, but the rationale for ERP implementations is often misunderstood. When such large sums of money are at stake, it is absolutely critical for executives to fully understand the pros and cons of ERP systems, as well as the available alternatives.

ERP Basics

Any discussion about IT systems would be incomplete without a corresponding discussion of Enterprise Resource Planning (ERP) software. ERP systems are important because they support the entire business. The precursors of ERP systems were Manufacturing Resource Planning (MRP) systems. MRP systems arose from the need to manage manufacturing facilities and improve the alignment between financial, purchasing, and the plant floor scheduling systems. ERP systems are the next evolutionary step beyond MRP systems. In addition to connecting more systems than MRP implementations, ERP systems were designed to address a growing awareness that data from one part of the enterprise can be useful in other parts of the enterprise.

Modern ERP systems encompass nearly every area of the enterprise and often include wide-ranging functions such as customer relationship management (CRM), human resources (HR), and supply chain resource management. Suffice it to say that since ERP systems were introduced two decades ago, their scope has broadened dramatically.

The two biggest players in the enterprise software business ...