Information Systems - ERP

part one
INTRODUCTION AND BACKGROUND

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Introduction

This chapter initiates our dialogue into enterprise resource planning (ERP) systems, focusing on the following questions.
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Why investigate ERP systems?
How does ERP create value?
What is the purpose and scope of this book?
What is the outline of this book?
Why Investigate Enterprise Resource Planning Systems?

Enterprise resource planning systems are a corporate marvel, with a huge impact on both the business and information technology worlds, including each of the following dimensions:
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ERP affects most major corporations in the world;
ERP affects many SMEs (small and medium enterprises);
ERP affects competitors’ behavior;
ERP affects business partner requirements;
ERP has changed the nature of consulting firms;
ERP provides one of the primary tools for reengineering;
ERP has diffused many “best practices”;
ERP gave client server computing its first enterprise product;
ERP has changed the nature of the information systems function;
ERP has changed the nature of jobs in all functional areas;
ERP cost is high;
ERP has experienced huge market growth.

ERP Affects Most Major Corporations in the World (Bowley 1998). A single ERP system (SAP’s R /3) is used by more than 60% of the multinational
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Enterprise Resource Planning Systems

firms. Further, according to Arthur D. Little’s global strategy leader, an ERP company (SAP) “is conquering the world. Almost every important company is more or less in its hands.”
ERP Affects Many SMEs (Foley and Stein 1997). The impact of ERP is not limited to large firms. In 1995, SAP generated 90% of their revenues from large global companies, but by 1997 SAP expected 50% of its revenues to come from SMEs (small and medium enterprises). Roughly 35% of SAP’s 1997 customers had revenues of under $200 million.
ERP Affects Competitors’ Behavior. On June 24, 1996, Oracle’s Application Division

References: CSC Index (1994). State of Reengineering Report. Boston: CSC Index. Gemini Consulting (1996). “Business Leader’s Experience with SAP Implementation.” Gemini Consulting, Hamburg, Germany. Gendron, M. (1996). “Learning to Live with the Electronic Embodiment of Reengineering.” Harvard Management Update, November, pp. 3–4. Hammer, M. (1990). “Reengineering Work: Don’t Automate, Obliterate.” Harvard Business Review, July/August, pp. 104–12. Hammer, M. (1997). “Reengineering, SAP and Business Processes.” Unpublished presentation given at SAPphire (Orlando, FL), August. Koch, C. (1996). “Flipping the Switch.” CIO Magazine, June 15. McKenney, J., and Clark, T. (1995). “Procter & Gamble: Improving Consumer Value through Process Redesign.” Report no. 9-195-126, Harvard Business School, Cambridge, MA.