AID17570: Over the past decade, large companies have
invested billions of dollars and a lot of time trying to simplify the business
processes and technologies they use to keep their organizations running. When
everything goes smoothly with these so-called ERP projects, the ratio of
savings to dollars invested typically increases over time. When plotted on a
graph, the return on investment looks something like Nike’s trademark
"swoosh," plunging as the firm spends more than it saves early on, but
then moving upward as the company becomes a leaner, more efficient entity.
Unfortunately, the return on investment for many organizations looks more like
a "W," as the streamlining effort starts and stalls and starts again,
resulting in disastrous detours and cost overruns. Savings, if they come at
all, occur many millions of dollars and many months later than planned.
Why does enterprise resource planning, or ERP, work so well
for some companies and not for others?
After studying dozens of these projects over six years, we
concluded that executives need to think more broadly if they want enterprise
resource planning to pay off. Too many executives see ERP solely as a
technology project, believing that if they buy a new software system,
inefficiencies will magically disappear. It’s no surprise that it doesn’t work
that way. Instead, they need to treat ERP as a transformation effort involving
three areas of their business: processes, technology and spending.
(Source: TECHNOLOGY; Diets That Don’t Work: Where Enterprise
Resource Planning Goes Wrong; Where Enterprise Resource Planning Goes Wrong
Wall Street Journal (Online); New York, N.Y. [New York, N.Y]22 Aug 2010)
a. Give an example of a failed ERP project and the lessons
b. What are the factors organizations need to consider to
for a successful ERP implementation?