Q1
With a perspective study, the top-of-the-line ERP system should be upgrade. And James, the CEO the vendor, have offered a 3% discount only if the project is finalized within this week. So if we do, the FSE can save $19500. In addition, the top-of-the-line ERP is frequently used by top managers such like CEO, CFO, and CIO. So the efficiency of the ERP system is closely linked to the performance of the company. Moreover, the ERP system haves big influence on the finance department due to it have large implication of ERP system. Like most of employees in the company, we also concern the efficiency that may influence by the defects of the ERP system. We strongly recommend the upgrade as soon as possible.
The most dangerous problems may caused by the current ERP system is the efficiency concerns. And the issues can be in each 5 stages of a traditional systems development life cycle. If some problems exist in Systems Planning and Investigation, the entire ERP system may not match the strategic objective very well. Consequently, the propose changes priority may be mess listed. And the most important changes may not undertaken by the company.
A System Analysis is also an important stage in ERP system development. To improve a system, we need first have a good understanding of the detail of the system like transaction volumes, processes. And the data should be collected via different methods, such as interviews, surveys, observation, and document analysis. If anything goes wrong in System analysis, the vendor may send unsatisfied proposal to FSE. Consequently, the ERP system may not efficient, and waste of money.
The company need to prepare conceptual design whether in case of in-house design or purchasing. This is about indentifying the alternative options to satisfy the needs found in system analysis. The problems may occurs if there is no conceptual design or not adequate. For example, employees find the current system is less efficient, and suggest to change it. However, there is only option for them, people have to adopt it.
The project team must choose one of several proposals that resend by the vendors. To do so, the project team usually assess the feasibility. If the manager have assessed wrong, such as wrong hardware, network, and input interface. A good ERP system may run a low speed, and reduced the efficiency.
However, when the new ERP system implement, it probably will raise some issues, epically in conversion. Although there are several methods to convert old system to new one, the project team may struggle to make a choice. If they use direct conversion method, employees may get confused by the changed system. This will slow down the system and efficiency. For example, compared with old system the employed one night before, employee are pushed to use the system they’ve never seen before.
In brief, as mentioned above, a current low efficiency ERP system will obstruct the company’s management, especially it used largely by top managers. And every stage in traditional SDLC can result an efficiency problems. For example, wrong IT changes list, less satisfied proposal, inadequate conceptual design, mistaken assessment of feasibility, and less prospered system conversion plan.
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Q2
There is a common dilemma for senior executives to make a decision about whether or not upgrade a current ERP system.
It seems senior executives often underestimate how important ERP is. Deloitte & Touche (2002) found organisations often lack of clear priorities about IT. “Most business executives measure the value of their business in terms such as market share, debt-to-equity ratio and inventory turns, but in IT today that isn’t the case,” Nelson says. Deloitte & Touche believes the IT Value Management Framework can help CIOs develop the capabilities that are essential if they expect to play a key role in their enterprise�understanding strategy; performance visibility; IT alignment; value-oriented metrics; and effective communication skills. CIOs can learn to apply their skills to pinpoint the value gaps in their organization, and then help move from a tactical�keeping the lights on�focus to a strategic focus that applies business-centered competencies to the IS organization. To establish the frame work, Deloitte & Touche had developed a 7-STEP PROCESS. 1. Survey the business. 2. Evaluate the budget and priorities. 3. Initiate portfolio management. 4. Analyze IT operations. 5. Measure performance using appropriate metrics. 6. Communicate performance and value. 7. Benchmark against peers.
At present time, the executives realized the importance of ERP system, but they are also get into trouble about the upgrade. Upgrade looks like a small step, sometime; the version number has just changed a bit. However, Nextel Senior Vice President and CIO Dick LeFave find himself about to step off a precipice with his Oracle ERP software upgrade. And LeFave think “It’s a whole different set of solutions; it’s a whole different way of doing business.” Upgrade is not an easy step, it can take up 30% original software installation price, according to Gartner, and take more than a year to complete and require companies to revamp their technology infrastructures and business practices. And there has 3 factors make the upgrade more complicate. First of all, Upgrades are unforgiving when it comes to customization. You have to redo your customization after you upgrade your system. And it will use Internet architecture to changes everything for the IT staff and end users. Since all application is run based the network, stuffs only can access software through the public Internet and a Web browser. Additionally, the vendor’s “desupport date” frustrates a CIO’s best-laid plans. Vendors often make a date to stop supporting the old system unless you upgrade it.
We can’t eliminate all side effects brought by upgrade, but we can do all our effort to minimize it. Beatty and Williams (2006) found some useful proven recommendations and practice implied by those firms that has already completing an ERP system upgrade. The first finding is to build your business case on new functionality. To do so, the business has to switch their old mind of cost saving to gain more benefits by adding enhanced functionality. The second finding is treating the upgrade like a new project. Organisations that fail to do are often result many avoidable mistakes. The third finding is keeping the team together. New project teams have to take time to get acquaint with the initial ERP system, and this time can be reduced by using original project team members. The fourth finding is about treating the upgrade as business project rather than IT project. The IT consulting firm Reilly and Associates found the manufacturing systems staff absorbed 43% of the project time and the finance department accounted for an additional 12% of project hours. The fifth finding is watching for hidden infrastructure costs. Many upgrades may require other infrastructure costs, like more CPU speed, and memory. So, organisations need work closely with vendors to uncover any costs. The Other finding is that don’t make over-customize. It cost too much internal resources. Before organizations implement the system, it also needs testing, and enough training for employees.