Enterprise Resource Planning
Group Project I Evaluation of an Enterprise Application : ERP Systems of Volkswagen and Nestle
Executive Summary
Enterprise resource planning integrates internal and external management information across an entire organization, coupling finance/accounting, manufacturing, sales and service. ERP systems automate this activity with an integrated software application, facilitating the flow of information between all business functions inside the boundaries of the organization and managing the connection to outside stakeholders. Although ERP systems offer a bird’s eye view in the working of the company and allow users to cross-reference business functions, implementing an enterprise resource system (ERP) project in the estimated time, for the estimated cost, and with satisfying results is a rare occurrence.
Most organizations do not understand the costs associated with ERP implementation when they first embark on the project. While the benefits are usually well understood, the costs do not surface until well into the implementation. When everything goes smoothly with ERP resource planning projects, the ratio of savings to dollars invested typically increases over time. As the streamlining efforts start and stall and start again, however, resulting in disastrous detours and cost overruns, savings if they come at all, occur many millions of dollars and many months later than planned. Too many executives see ERP solely as a technology project, believing that if they buy a new software system, inefficiencies will magically disappear. Unfortunately, for companies such as Volkswagen and Nestle, a hiccup in ERP implementation in the pursuit to gain a competitive advantage over their rivals can be disastrous in the short and long term. 1. Case Study 1: Volkswagen
The Volkswagen Group is Europe’s largest car maker and one of the world’s leading manufacturers of automobiles. In 2009, according to data published by all three companies, Volkswagen
Executive Summary
Enterprise resource planning integrates internal and external management information across an entire organization, coupling finance/accounting, manufacturing, sales and service. ERP systems automate this activity with an integrated software application, facilitating the flow of information between all business functions inside the boundaries of the organization and managing the connection to outside stakeholders. Although ERP systems offer a bird’s eye view in the working of the company and allow users to cross-reference business functions, implementing an enterprise resource system (ERP) project in the estimated time, for the estimated cost, and with satisfying results is a rare occurrence.
Most organizations do not understand the costs associated with ERP implementation when they first embark on the project. While the benefits are usually well understood, the costs do not surface until well into the implementation. When everything goes smoothly with ERP resource planning projects, the ratio of savings to dollars invested typically increases over time. As the streamlining efforts start and stall and start again, however, resulting in disastrous detours and cost overruns, savings if they come at all, occur many millions of dollars and many months later than planned. Too many executives see ERP solely as a technology project, believing that if they buy a new software system, inefficiencies will magically disappear. Unfortunately, for companies such as Volkswagen and Nestle, a hiccup in ERP implementation in the pursuit to gain a competitive advantage over their rivals can be disastrous in the short and long term. 1. Case Study 1: Volkswagen
The Volkswagen Group is Europe’s largest car maker and one of the world’s leading manufacturers of automobiles. In 2009, according to data published by all three companies, Volkswagen
References: Cruz, Amy, “ERP Software Companies – Five of the Biggest Players You Should Know,” May 30, 2011, http://www.erp.com/section-layout/337-erp-software/10076-erp-software-companies-five-of-the-biggest-players-you-should-know.html May 30, 2011 Kamath, John-Paul, “Volkswagen gives IT staff bigger say in ERP system.” June 2007. http://www.computerweekly.com/Articles/2007/06/18/224849/Volkswagen-gives-IT-staff-bigger-say-in-ERP-system.htm May 30, 2011 Kanaracas, Kris, “Top ERP Predictions for 2011.” December 21, 2010. http://www.cio.com/article/648524/Top_ERP_Predictions_for_2011?page=1&taxonomyId=3000 March 30, 2011. “Nestlé Struggles with Enterprise Systems.” http://wps.prenhall.com/bp_laudon_mis_9/32/8212/2102272.cw/content/index.html May 30, 2011 [ 1 ]. "World Ranking of manufacturers year 2009.” OICA. 2010-07-27. http://oica.net/wp-content/uploads/ranking-2009.pdf. Retrieved 2011-05-20. [ 2 ] [ 12 ]. “Nestlé Struggles with Enterprise Systems.” http://wps.prenhall.com/bp_laudon_mis_9/32/8212/2102272.cw/content/index.html May 30, 2011 [ 13 ] [ 21 ]. Cruz, Amy, “ERP Software Companies – Five of the Biggest Players You Should Know,” May 30, 2011, http://www.erp.com/section-layout/337-erp-software/10076-erp-software-companies-five-of-the-biggest-players-you-should-know.html. [ 27 ]. Kanaracas, Kris, “Top ERP Predictions for 2011.” December 21, 2010. http://www.cio.com/article/648524/Top_ERP_Predictions_for_2011?page=1&taxonomyId=3000 March 30, 2011.