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Q8-1. What problem does an ERP system solve?
ERP systems address the information silo problem, where data is isolated in separate systems. EPR consolidates data for real-time sharing across departments and integrates processes, which enables seamless collaboration. For instance, at Chuck’s Bikes, pre-ERP systems had disconnected databases for sales and inventory, and post-ERP there was a unified system that streamlined operations.
Q8-2. What are the elements of an ERP system?
An ERP system consists of 5 components: software, hardware, data, procedures, and people. Software includes applications that integrate functions like SCM, manufacturing, CRM, HR, and accounting. Hardware supports system operations and is often cloud-based. Data includes transactional, master, and organizational data for consistency. Procedures define standardized workflows, while people—users, analysts, and consultants—implement and operate the system.
Q8-3. How are ERP implementations accomplished?
ERP implementations follow a structured approach, often guided by frameworks like the Five Forces Model to assess industry structure. Key steps include vendor selection, gap analysis to identify process gaps, configuration of identifiers and workflows, data migration, and choosing a cutover method (phased or big-bang). Agile methodologies like SAP Activate or SAFe enhance implementation through iterative planning and cross-functional collaboration.
Q8-4. What are the benefits of an ERP system?
ERP systems offer many benefits, such as real-time data sharing, implementation of industry-best processes, and improved oversight through broader data access. They solve information silos, enhance supply chain integration, and enable economies of scale post-mergers. For instance, SAP’s S/4HANA integrates processes, reducing delays and boosting operational efficiency across organizations.
Q8-5. What are the challenges of implementing an ERP system?
Implementing an ERP system involves making a lot of decisions. Also, ERP implementation may have issues with people-related challenges, such as training employees to use the ERP system. Also, management may oversell benefits or fail to address resistance from employees. Also, users may find software difficult.
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