DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBpr Ma COod ss 4uc re 1tio lean seorderDBRm RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 2Prodor uctde ior nCRCRInvch enDB an torge yChristian Leyh (Technische Universität Dresden)Mprod Re D0luc e a 7tio seDBCCRoDB raw ns.DBFipr nisod heuc dtChapter 2 : Why do Companies Implement ERP Systems ?The Goals and Reasons behind ERP Implementation Projects1results stemming from the research case studies and those fromthe CSS will be given, and the differences between the reasonsand goals of large-scale enterprises and S&MEs will be analyzed.Finally, the chapter concludes with a summary on the results, aswell as a critical acclaim of the conducted reviews.41CRDBFigure 1 - Data Collection Methodology - OverviewResearch MethodologyPo Ms IGre t go Oce oip dstsDatabase : BusinessSource Complete6Goodsreceip40mCRReasons and goals of ERPimplementation projectsPo Mst IROinvoiceCR/IRReview and AnalysisDBGRCustomers Success StoriestPublished Cases of ERPimplementationHomepages of ERP VendorsRAcc.Pay.Ct p F-53aymenEvaluation and ComparisonDBPosConclusion and UpshotCRBCRCaspututnnuesPreliminary Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBGR/IRInveso ntold rypr chod anuc getRco awns mum atept riaio lnsa Dole mre esve ticnuesDBRaw5Academic Literature40Puror chade serMpu Co E5rc nv 9Nha erse t toorderTo derive and evaluate the different reasons and goals for ERPimplementation projects, we selected secondary data analysisas the data collection method. We used a subset of case studiesand case descriptions which are published in scientific andacademic literature, as well as so-called customer success stories(CSS), which were published on the homepages of eight ERPvendors as a basis. Figure 1 gives a short overview of our datacollection methodology which is explained in the following.atThe chapter is structured as follows : having described the motivation for the research, our data collection methodology willnext be presented and described. The third section will focuson the reasons and goals in detail to provide an understanding of these aspects before presenting our results. Within thefourth and fifth sections the results of the conducted reviewswill be explained, and the most important reasons and goalswill be pointed out. Additionally, a comparison between the302.2 Data Collection MethodologyInre depqu eire ndm enen ttDespite the comprehensive functionality of ERP systems and theobvious benefits these systems can provide for an enterprise,the reasons to implement an ERP system, as well as the goals tobe achieved by adopting these systems, will presumably differmore strongly the more heterogeneous ERP adopters become.In order to identify these reasons and goals, with a focus onthe differences between large-scaled enterprises and S&MEs,we conducted reviews among 36 research cases published inthe academic literature, as well as reviews from 201 customersuccess stories (CSS) published on the homepages of eight ERPmanufacturers. The results of these reviews will be presented inthis chapter.5Cpr Con O15od fiuc r mtionCREx Mec Dut 01eMRPCrea VLte 01de NliveryInvestDBments413After decades of implementing MRP I and MRP II and their“successors,” ERP systems, the ERP market targeting large-scaleenterprises became saturated. Thus, ERP vendors were forced toidentify new customers. A new target group/new group of usersfor their systems’ small and medium-sized enterprises (S&MEs)was identified. In the beginning of the year 2000 ERP systems stillhad low penetration rates among S&MEs because such systemswere considered to be too complex and much too expensive(Deep, Guttridge, Dani & Burns 2008; Koh & Simpson 2005). Notonly did the saturation of the traditional ERP market encourageERP vendors to expand into the S&ME market, but also sometechnological developments at the end of the millennium,which enabled a high scalability for rapidly growing S&MEs.This eventually led to the dismantling of resistances and doubtagainst ERP systems from an S&ME perspective (Buonanno etal. 2005; Deep et al. 2008; Gable & Stewart 1999). Today, ERPsystems are implemented throughout enterprises of every sizeand industry. For example, according to a study conducted inGermany in 2009, more than 92 percent of all German industrialenterprises use ERP systems (Konradin 2009).40Cash2.1 Motivation16
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBProdor uctde ior n411Mprod Re D0luc e a 7tio sepr Ma COod ss 4uc re 1tio lean seorderRCCRCpr Con O15od fiuc r mtion Case studies that covered the implementation of anintegrated ERP system rather than solely single moduleswere preferred.530CashDBentsCRInvestDBmThe ERP projects analyzed were conducted within the years1999 to 2009, are distributed over 30 different countries, andbelong to five different industries. About 48% of the enterpriseswithin the CSS are small and medium-sized companies. In theAppendix an overview of several vendors and some informationabout the identified customer success stories are provided. The ERP implementations described should have resultedin success.2.3 Goals and Reasons of ERPImplementation ProjectsWithin some of the papers, surveys were conducted and/or theinformation about the companies was presented as a combinedsummarization, so we attempted to aggregate the informationand handle these documents as one case. If this was not possible(e.g., due to less information, no reasonable aggregation of thecompanies), we did not include these papers as a data source.Within these restrictions, 18 selected papers remained (listed inthe Appendix). Within these papers, 36 cases (six of them areaggregated information of different companies) were identifiedand analyzed in depth to identify the reasons and goals of thedescribed ERP projects (cp. Appendix). The cases were evaluatedregarding the company size, industry sector, and factors whichled to the ERP implementation. From these cases we derived aninitial framework of reasons and goals.Based on the review and analysis of the case studies in theacademic literature, and of the CSS we identified several goalsand reasons for the initiation of ERP projects. As it is sometimesdifficult to distinguish between reason and goal, we will describeand explain the different aspects within this section.Mpu Co E5rc nv 9Nha erse t toorderEx Mec Dut 01eMRPCRoDB raw ns.CRDBCR2.3.1 Goals of ERP Projects540t406GoodsreceipPo Mst IROinvoiceCR/IRGR40CRt p y Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBGR/IRDBInveso ntold rypr chod anuc getRco awns mum atept riaio lnsa Dole mre esve ticnuesDBRawmatAs the second main data source we used the CSS from severalERP vendors, since CSS also provide details about the enterpriseenvironment, the background of an enterprise, about problemsand challenges during the implementation of the ERP project,the corporate strategy, and the motivations/goals of the ERPproject. The CSS are summarized and published by the ERPvendors themselves. Often they use experienced authors towrite the stories to gain a certain consistent text structure forall published CSS. Therefore, almost every ERP vendor providesinformation about successful ERP implementation projects ontheir web page. For customers, this can be seen as a startingpoint to gain a first understanding of the advantages of ERPsystems. For us, the CSS are a relevant source of informationregarding the reasons and goals of ERP projects. We visited thePo Ms IGre t go Oce oip dstsInre depqu eire ndm enen ttPuror chade serWe determined 20 different goals which are named andexplained in the literature. Table 1 gives a short overview ofthese goals.DBInvch enDB an torge y413 A case description should be provided. The descriptionshould not only focus on the technical implementationprocess itself, but should also describe the background ofthe enterprise and the issues which led to the initiation ofthe implementation project.Crea VLte 01de Nliveryhomepages of eight ERP vendors to identify “qualified” CSS.To be “qualified” for our research we considered only CSS fromcompanies which had (in analogy to the cases from the literature) implemented an integrated ERP system and not only singlemodules. Furthermore, the CSS had to clearly point out whatthe company was aiming at, or had to provide an appropriatedescription of its goals and reasons. If some cases could not beclearly verified or lacked clarity, we contacted the ERP vendor viaemail. Using this procedure, we collected 201 suitable CSS fromeight different vendors.DBFipr nisod heuc dtTo identify several case studies in the academic literature, thedatabase “Business Source Complete” was used. This databasecontains currently appearing and published international literature. With different combinations of the search terms “ERP,”“Enterprise Resource Planning,” “Goals,” and “Reasons,” several papers were found. To confirm the appropriateness of thediscovered papers, their content was read in depth and theywere evaluated according to the following three criteria :m RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 217
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBpr Ma COod ss 4uc re 1tio lean seorderRm RawateriaC lG2Reduction of IT costsG3Supervision improvement for managementG4Achieving price/cost leadershipG5Improvement of customer servicesG6Increasing the ability to respond / reactG7Improvement of product differentiationG8Customer loyalty strengtheningG9Quality improvementsG10Reduction of cycle timesG11Standardization of the IT landscapeG12Resource management improvementG13Information management improvementG14Decision support improvementG15Standardization throughout the whole affiliated corporate groupG16Increasing employee productivityG17IT upgrade for facing future changesG18Increasing the satisfaction and skills of employeesG19Supporting the company’s growthG20Improvement of competitiveness305Cpr Con O15od fiuc r mtionCRDBCR411Prodor uctde ior nCost reduction in generalCashG1entsMprod Re D0luc e a 7tio seCRCGOAL40Po Ms IGre t go Oce oip dstst p F-53aymenDBPosRAcc.Pay.C40Po Mst IROinvoiceCRBCRCaspututnnuesPreliminary Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBCR/IRCRDBGR/IR406GoodsreceiptG3 – Supervision improvement for management :The implementation of an ERP system can lead to improvementson the senior management level in various ways. An ERP systemenables control and monitoring throughout all levels of theorganization and throughout all departments. Therefore, seniormanagement can get “real-time” information on all businessaspects. For example, with the use of a financial module, controlling is possible regarding different combinations of products,regions, customers, and sections. Manufacturing modules canalso be used for production supervision, forecasts, and for quickadjustments. In sum, effective and efficient management of theentire enterprise can effectively be supported by an ERP system.Example for this goal : Water Corporation (Mandal & Gunasekaran2003).GRInveso ntold rypr chod anuc getRco awns mum atept riaio lnsa Dole mre esve ticnuesDBRawmatG2 – Reduction of IT costs :Regarding IT infrastructure, the implementation can lead to areduction of IT costs. An ERP system is an integrated system thatcan fulfil many tasks performed by legacy systems. Thus, theseolder systems can be replaced. This replacement reduces thecosts associated with running the legacy systems, of providingand developing interfaces between systems, and improves themaintainability of the overall IT infrastructure, since only onesystem remains to be updated regularly.5Additionally, sometimes the IT architecture (especially thehardware) can be downsized/modernized and fewer IT staffmight be needed to handle the remaining systems. Examplesfor this goal : This goal was not cited in the cases.Inre depqu eire ndm enen ttG1 – Cost reduction in general :Cost reduction is one of the most cited goals for initiating anERP implementation project. With the implementation of ERPsystems, companies aim for process automation and the removal of redundant processes. For example, it can lead to a decreasein manual tasks to be performed in different departments ;therefore less staff is needed, and expenditure for wages andsalaries can be reduced. ERP systems can also cause storage costreductions, and lower administrative expenses. Examples forthis goal : Company C (Motwani, Subramanian & Gopalakrishna2005) and DefenseCo (Bradley 2008).Puror chade serMpu Co E5rc nv 9Nha erse t toorderEx Mec Dut 01eMRPIDInvestDBmDBCRInvch enDB an torge y413Crea VLte 01de NliveryoDB raw ns.DBTable 1 - Overview of ERP Project GoalsCRFipr nisod heuc dtCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 218
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBMprod Re D0luc e a 7tio sepr Ma COod ss 4uc re 1tio lean seorderProdor uctde ior n41CR305Cpr Con O15od fiuc r mtionG12 – Resource management improvement / G13 –Information management improvement / G14 – Decisionsupport improvement :Important goals of ERP system implementation are improvements in resource management, information management, anddecision support. With the help of an ERP system, the enterprisecan increase its productivity, flexibility, and efficiency at thebusiness process level in the field of resource management Thisenables better budgeting and stock management, improvesthe production output, and assists in employee management. One of the main tasks of information management isthe timely provisioning of relevant data. Examples of this datamay include customers, sales, and financial information. Thisagain is supported by the central database of the ERP system.Additionally, optimized reports that improve analysis due tomore precise and more reliable data can be generated throughERP system functionality. With this data at hand the decisionmaking process is supported as well. Example for G12 : CompanyA (Motwani et al. 2002). Examples for G13 : Water Corporation(Mandal & Gunasekaran 2003) and Elf Atochem (Davenport1998). Examples for G14 : Company A (Motwani et al. 2005) andGlobalEnergy (Bradley 2008).G6 – Increasing the ability to respond / react :As mentioned within G5, the ERP system enables easy access toall of the company’s data. Reaction times for customer requestsand to changing market conditions or unexpected incidents canbe improved and enhanced. Example for this goal : Company B(Motwani et al. 2002).540t406Goodsreceipt p F-53aymenPosRAcc.Pay.C40Po Mst IROinvoiceCRDBCRDBGR/IRG15 – Standardization throughout the whole affiliatedcorporate group :By implementing an integrated ERP system throughout affiliated groups, communication between several companies isenhanced. Interfaces are no longer needed between eachcompany’s legacy systems. Media breaks (e.g., from electronicto paper-based formats and back) can be minimized as well. Thisalso reduces mistakes caused by employees during these steps.CRBCRCaspututnnuesPreliminary Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBGR/IRInveso ntold rypr chod anuc getRco awns mum atept riaio lnsa Dole mre esve ticnuesDBRawmatG9 – Quality improvements / G10 – Reduction of cycle times :Quality improvements are enabled through the enhancedmeasurement of performance and monitoring which can bedone using the ERP system. This is because the system providesall necessary information in “real-time.” Therefore, a reductionof cycle times can also be achieved. It may affect three different activities : those for customers (handling of orders, invoicing, production, and customer support), employee activitiesPo Ms IGre t go Oce oip dstsInre depqu eire ndm enen ttG7 – Improvement of product differentiation / G8 – Customerloyalty strengthening :A well based strategy for product differentiation can be necessary to “survive” market challenges. Since an ERP systemintegrates all functions and departments of the enterprise,companies can offer customer specific products or solutions(e.g., different lot or product sizes up to an individually manufactured product), or they can offer specific and unique servicesavailable only to their customers/ available only to each customer individually, e.g., individual project services concerningspecific customer requirements, as well as different service levelbenefits depending on his/her relationship to the company.These special offers will also strengthen a customer’s loyalty.Example for G7 : CompGroup (Al-Mashari & Al-Mudimigh 2003).Example for G8 : Threads (Holland & Light 1999).Puror chade serMpu Co E5rc nv 9Nha erse t toorderEx Mec Dut 01eMRPRC1CashDBCRInvestDBments413CRoDB raw ns.CRDBInvch enDB an torge yCRG11 – Standardization of the IT landscape :As mentioned in G2, an ERP system integrates many functionsoften performed by different legacy systems. Therefore, thesesystems can be replaced along with their hardware. In a bestcase scenario, only the ERP system hardware and the systemitself remain. This can lead to standardization of the IT landscape.Examples for this goal : Statco (Holland & Light 1999) and PAE(Bradley 2008).G5 – Improvement of customer services :Through one consistent database comprising all relevant data,customer service representatives have easy and complete accessto customer data within one system. Representatives can accessall relevant data quickly without switching between severallegacy systems. Therefore, they can coordinate with customerneeds more efficiently and react or reply to customer requestsmore smoothly. An ERP system can lead to an improvement ofcustomer services. Example for this goal : Company A (Motwani,Mirchandani, Madan & Gunasekaran 2002).Crea VLte 01de Nlivery(reporting, salary statements, business learning, and deployment) and activities for and with suppliers (payments or collective orders with discount). ERP systems can support all of theseand can thus enable a reduction of cycle times. Examples forG9 : Manco (Sarker & Lee 2003) and Company X (Akkermans & vanHelden 2002). Examples for G10 : Manco (Sarker & Lee 2003) andCompany B (Motwani et al. 2005).DBFipr nisod heuc dtG4 – Achieving price/cost leadership :If the company operates in a low price market and aims at costor price leadership in this market, ERP systems can support thisstrategy. Through cost reductions and rationalized processes, product prices can be decreased and therefore cost/priceleadership can be achieved. Examples for this goal : This goalwas not cited in the cases.m RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 219
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBProdor uctde ior n141Solution to the Y2K-problemR2System upgrade to obtain new functionsR3Adjustment to company’s growthR4IT support for multiple currencies and languagesR6Puror chade serR15Adjustment to changed business processes40R5Adjustment to changed laws and regulations40PosCRBCRCaspututnnuesPreliminary Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBGR/IRDBInveso ntold rypr chod anuc getRAcc.Pay.Ct p F-53aymenDBPo Mst IROinvoiceCRCR/IR406GoodsreceiptPo Ms IGre t go Oce oip dstsR1 – Solution to the Y2K-problem :The Y2K-problem is mentioned as one of the main reasons forthe initiation of ERP implementation projects before the year2000. Many software systems (including ERP systems) were onlyusing a two digit number for referencing years. Therefore, “00”was the reference number for the year 2000. This had the potential to cause problems because most of the software systemscould not handle this two digit number and thus, were notable to process the years after 2000. Replacing the old systemswith new ERP systems made it possible to solve this problem.Examples for this reason : Rolls Royce (Yusuf, Gunasekaran &Abthorpe 2004) and GlobalEnergy (Bradley 2008).GRatmRawDBREASONRco awns mum atept riaio lnsa Dole mre esve ticnues30IDInre depqu eire ndm enen ttG19 – Supporting the company’s growth/G20 – Improvementof competitiveness :Since ERP systems are highly scalable, they can support thecompany even if its growth is exploding. Therefore, it is vital tochoose a system that fits the company very well and can easilybe adapted.5Cpr Con O15od fiuc r mtionTable 2 - Overview of ERP Project ReasonsMpu Co E5rc nv 9Nha erse t toorderEx Mec Dut 01eMRPG17 – IT upgrade for facing future changes :As mentioned before, an ERP system implementation canlead to a standardization of the IT landscape. Often, hardwareis modernized to be used with the new ERP system as well.Therefore, these new hardware and software systems are betterprepared for future changes. Since continuous improvement ofprocesses and systems is mandatory, the ERP system provides astandardized, optimized, state of the art technological platformsuited for future changes. Examples for this goal : Company D(Motwani et al. 2005) and Manco (Sarker & Lee 2003).G18 – Increasing the satisfaction and skills of employees :The implementation of an ERP system always requires extensivetraining and education of employees. Thus, their technological skills are improved. As the employees’ skill level is analyzedthroughout the implementation process, the need for additional training can be determined. Usually, new software systemsdo not increase employee satisfaction in the beginning. Almostevery implementation project is confronted with resistance andunwillingness to use the system, as it often causes extensivechanges in processes and daily routines. An ERP system makesprocesses quicker and can support employees in their work (e.g.,reduce entering redundant data in different systems, providenecessary data within one database ), so they become moresatisfied after working with the new ERP system for quite a while.Examples for this goal : Company A and Company B (Motwani etal. 2005) and Manco (Sarker & Lee 2003).Mprod Re D0luc e a 7tio sepr Ma COod ss 4uc re 1tio lean seorderRCCRParallel to the identification of ERP implementation goals, weidentified the reasons for initiating such projects. We encountered difficulties when attempting to clearly distinguishbetween reasons and goals. Sometimes goals can be viewed asreasons and vice versa. For example, the reduction of IT costscan be described as a goal for an ERP project. It may be necessary for the company to cut IT costs, so this apparent “goal” ofcost reduction could be identified as a reason for the ERP project,too. Thus, to avoid duplication, in this subsection we will onlyconsider and describe those reasons that may not also be interpreted as goals. Table 2 shows an overview of the reasons forERP projects.DBCash2.3.2 Reasons for ERP ProjectsCRInvestDBments413CRoDB raw ns.CRDBCRInvch enDB an torge yG16 –Increasing employee productivity :An ERP system can reduce cycle times and avoid data exchangeerrors. Processes are reengineered and can be performed muchfaster. Communication is improved both within the companyand the group as a whole as the “real-time” monitoring isenabled. Therefore, if employees are well trained in using theERP system and do not show resistance against it, an increasein their productivity is usually achieved. Example for this goal :ClayProducts (Bradley 2008).Crea VLte 01de NliveryAlong with faster reaction time, improved customer services,or differentiated products, company competitiveness is alsoimproved through an ERP system implementation. Examplesfor G19 : CompGroup (Al-Mashari & Al-Mudimigh 2003) andElf Atochem (Davenport 1998). Examples for G20 : DefenseCo(Bradley 2008) and Elf Atochem (Davenport 1998).DBFipr nisod heuc dtHence, the standardization of the application landscape withinnot just one company, but throughout the whole group, can bean important goal of ERP system implementations. Examples forthis goal : This goal was not cited in the cases.m RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 220
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBProdor uctde ior n411Mprod Re D0luc e a 7tio sepr Ma COod ss 4uc re 1tio lean seorderRCCR5Cpr Con O15od fiuc r mtion30CashDBentsCRInvestDBmR3 – Adjustment to company’s growth :Most enterprises, particularly small and medium-sized enterprises, are confronted with fast expansion and growth or heavychanges within the business. As mentioned in the goal’s section(G19), the aim of an ERP implementation can be to providesupport for the company’s anticipated growth ; however, expansion and growth cannot always be predicted.2.4 Results of the Case Study ReviewAs mentioned above, we identified 18 papers that include 36case studies. The companies studied in these cases are 28 largescale enterprises and eight S&MEs. These companies operatewithin the manufacturing sector (22 companies), process industry (10 companies), and the public sector (4 facilities).For example, the enterprise can expand so fast that either theexisting ERP system functions do not cover the new businessrequirements any longer, or the system is not scalable enoughto handle this growth. Therefore, company growth and expansion can be seen as a reason for ERP projects, too. Examples forthis reason : GlobalEnergy (Bradley 2008) and FurnitureCo (Xue,Liang, Boulton & Snyder 2005).2.4.1 Goal EvaluationIn examining the goals of ERP implementation projects, 15 of the18 described goals were mentioned by the case study companies (Table 3).Mpu Co E5rc nv 9Nha erse t toorderEx Mec Dut 01eMRPCRoDB raw ns.CRDBR6 – Adjustment to changed laws and regulations :Enterprises operating in specific industries must perform theirproduction, production processes, and business procedures inconformity with certain laws or guidelines. Therefore, a suitableand appropriate ERP system that fulfills the specific industryrequirements is mandatory for those enterprises. Again, changesof specific laws and regulations may lead to implementation ofa new ERP system if the legacy system cannot handle the newrequirements. Examples for this reason : This reason was notcited in the cases.CR5Puror chade serR4 – IT support for multiple currencies and languages :Enterprises operating internationally are confronted with amultitude of details such as country-specific financial questionsand tax requirements, as well as multi-language aspects ofdoing business. Not all ERP systems support this “multi-nationality” requirement and thus, the replacement of old systems canbecome necessary. Examples for this reason : This reason wasnot cited in the cases.640Po Mst IROinvoiceCR/IRDBGR40CRt p y Version - send comments to [email protected] on Enterprise Resource PlanningtmentsDBGR/IRDBInveso ntold rypr chod anuc getRco awns mum atept riaio lnsa Dole mre esve ticnuesDBRawmatR5 – Adjustment to changed business processes :Fundamental changes throughout the whole company aresometimes necessary to stay competitive. Companies have toadjust their products, reduce their production cycles, make theirbusiness processes faster, improve their customer services, andmore. All these changes have to be implemented within the ERPsystem as well. Sometimes older ERP or legacy systems are notcapable of handling these changes and cannot be adapted tomeet new requirements. Thus, changes in business processes aswell as in the business itself may require a new version of theexisting ERP system, or even a completely new system to beimplemented.GoodsreceiptPo Ms IGre t go Oce oip dstsInre depqu eire ndm enen tt40Invch enDB an torge y413Crea VLte 01de NliveryExamples for this reason : Statco (Holland & Light 1999) andMudCo and PAE (Bradley 2008).DBFipr nisod heuc dtR2 – System upgrade to obtain new functions :Another reason for ERP projects is the necessity to upgradesystems to obtain new functions. Sometimes new functionsare included in updates, but if these functions are too complexor if there are even more recent modules included in the newERP version, upgrades are unavoidable. Often, companiesneed these new functions and modules to stay competitive inthe market, or the old module version cannot fulfill changedbusiness requirements any longer. In this situation an ERP systemupgrade becomes mandatory. Examples for this reason : MudCoand DefenseCo (Bradley 2008) and Water Corporation (Mandal &Gunasekaran 2003).m RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.ec.Leyh - Why do Companies Implement ERP Systems ? – Goals and Reasons behind ERP Implementation ProjectsDBCRAcc.RCHAPTER 221
DBR410Acc.Pay.CFacpr toryod ouc uttio pun tCRRevenueDBDBpr Ma COod ss 4uc re 1tio lean seorderRm RawateriaC lCRFipr nishoDB d eductsCRPuto roDB utp d.FREQUENCY1153G18 – Increasing the satisfaction and skills of employees31058DB58G17 – IT upgrade for facing future changes58G6 – Increasing the ability to respond / reactG20 –Improvement of competitiveness8145103041CRCpr Con O15od fiuc r mtionInvestDBmentsG3 – Supervision improvement for managementG10 – Reduction of cycle times585G5 – Improvement of customer services104G9 – Quality improvements104G8 – Customer loyalty strengthening123G14 – Decision Support Improvement123G19 – Supporting the company’s growth123G7 – Improvement of product differentiation152G11 – Standardization of the IT landscape152G16 – Increasing employees’ productivi
The Goals and Reasons behind ERP Implementation Projects Christian Leyh (Technische Universität Dresden) 2.1 Motivation After decades of implementing MRP I and MRP II and their "successors," ERP systems, the ERP market targeting large-scale enterprises became saturated. Thus, ERP vendors were forced to identify new customers.