ENTERPRISE

RESOURCE PLANNING
ABINAYA S
9919014035
 Unit-5
ERP Procurement Issues.
Content:

 Market trends,
 Outsorcing ERP,
 Case study,
 Hidden cost issues,
 ROI.
ERP Implementation issues:

 ERP is a core system for businesses, driven by market

characteristics such as widespread digital adoption,
thriving global trade and vast amounts of data that need
to be tracked, maintained and analyzed. ERP market
statistics show the move towards increased usage and
global demand.
ERP implementation issues:

 Themajor issues and challenges facing ERP implementation were

identified. The respondents provided insight into the difficulties
experienced during ERP implementation. These issues and challenges
were categorized into six major themes namely reengineering
(organization and infrastructures), top management commitment,
funds, skilled manpower, implementation time and data fill-in
MARKET TRENDS
Market statistics:

 The ERP market remains in a phase of rapid expansion, with

total market size expected to exceed $49.5 billion by
2024(opens in a new tab).
 In 2019, the global ERP software market grew by 9%(opens in a
new tab), resulting in a worldwide value of approximately $39
billion in total software revenue.
Market statistics:

 Revenue growth occurred for ERP in all areas in 2019, with strong
growth for administrative ERP with  financial management software
(FMS) growth at 7% and human capital management (HCM) growth at
10%(opens in a new tab).
 TheERP market size in North America is worth over $10 billion.Asia-
Pacific is an emerging ERP market expected to achieve a CAGR of
13.2% through 2026(opens in a new tab).
Market statistics:

 In a survey of IT decision-makers, 53% said ERP was an

investment priority(opens in a new tab), in addition to
CRM.50% of companies(opens in a new tab) are soon
acquiring, upgrading or planning to update ERP systems
soon.
 The global ERP software market is expected to reach $78.4
billion by 2026(opens in a new tab).
OUTSOURCING ERP:
Outsourcing ERP:

Outsourcing
 the entire ERP functionality provide a solution in a faster
means and overhauls and major hurdles and allow more attention to
company’s core competence.
Several factors are Contributing to the interest in ERP outsourcing.

ERP system mostly find its existence in large Corporations thereby

Hardly providing any kind of Competitive edge in the buisness arena .
Outsourcing ERP:

 ERP sysytem require setting up of new server system and

purchasing new software pertaining to that ERP system.
 Outsourcing the software Ownership and other maintanance
cost pertaining to ERP simplifies the traditional difficulties in
implementation.
 Ithelped in avoiding problem arising out of hiring and
retaining IT staff.
CASE STUDY
Case study 1:

ERP Case Study #1: Fulton & Roark

Fulton
 & Roark, a retailer of men’s grooming products, is an example of a successful ERP
implementation.Prior to upgrading to full-featured ERP, the North Carolina-based business
tracked its inventory in a spreadsheet and its financial data in desktop accounting software, Sage
Live.
When the company began doubling sales year-over-year, leadership felt its current processes

weren’t keeping up. Spreadsheets couldn’t account for changing inventory costs, and the
accounting software didn’t have the workflows necessary to record the cost of goods sold
(COGS), an important financial metric.As a result, the Fulton & Roark team did double data entry
—manually.
Case study 1:

To centralize all work in one place, the company’s co-founders

implemented NetSuite ERP. After a three-week implementation process, changes
were immediate, according to team members.Increase sales roughly 50% year-over-
year without increasing headcount.Get a more accurate picture of margins and
inventory, which helped grow its ecommerce operation.
 ERP implementations don’t have to drag on—Fulton & Roark’s team was up and
working in about 20 days.The company’s story also emphasizes a major success
factor: Getting management committed to an ERP project. In this case, the co-
founders initiated the project.
Case study 2:

ERP Case Study #2: N&N Moving Supplies

N&N
 Moving Supplies, a family-run distributor of moving equipment and supplies,
successfully implemented an ERP system after expanding from one location in Georgia
to three locations in multiple states and more than quadrupling its workforce.
Running on QuickBooks and a third-party payroll provider, it was nearly impossible to

keep accurate time records and reconcile payroll with general ledger accounts.
So, N&N turned to ERP to manage its accounting and payroll processes.

Case study 2:

N&N was able to: Reduce payroll processing time by 84%.Balance accounts faster.Improve
the accuracy of hours and vacation time counts.See labor-cost trends across its three
locations.
N&N’s case study nods to another major implementation success factor: managing
employee morale. ERP projects often fail when execs and other employees don’t feel a
sense of buy-in.
By providing personalized dashboards—and ideally explaining their benefits to employees
before the implementation—N&N avoided this pitfall.The case study also shows that a
third-party partner can be helpful in tailoring the ERP system to precisely fit your
company’s needs.
Case study 3:

ERP Case Study #3: Green Rabbit

Once
 upon a time, two friends launched a candy wholesale business. Then, they ran into a
problem: shipping melt-prone chocolate bars during summer months.
After the pals designed a heat-sensitive supply chain, other food companies turned to

them for help. The duo rebranded as Green Rabbit, a supply chain logistics provider
specializing in fast delivery of perishable goods.That shift in strategy tested the
company’s current processes, which relied on QuickBooks, Excel and email. Green
Rabbit’s multiple databases couldn’t communicate with one another, making real-time
data analysis impossible.
Case study 3:

 The warehouse was often waiting on help from the IT team, too.Green Rabbit
chose NetSuite ERP, and the NetSuite professional services team got the
company up and running on the system in three months.
 Delivers tens of thousands of orders per day, without delays.Gets guaranteed
error-free data from its ERP system, instead of risking errors from manually
entered data.
 When implemented correctly, ERP makes it easier to manage a complicated
supply chain.
HIDDEN COST ISSUE:
Hidden cost Issue:

 Hidden Costs Behind ERP Implementation is a common pain point in

companies while implementing an ERP system.
 Many times ERP implementation costs are underestimated by companies. In
fact, ERP budgets are the most complicated part of ERP selection and
implementation process.
 Many small enterprises adopt ERP system to save their money and time.
However, the estimated costs always exceed in most of the cases. Even a well-
planned budgeting can overrun.
Hidden cost issue:

Testing:
 Testing is an important phase of an ERP
implementation process. Before it goes live, it needs to be
thoroughly tested. This is bound to take much time as the
connection is created between the ERP system and other systems
on a case-by-case basis. This cost can be reduced if your team
run actual purchase orders through the system instead of using
fake data.
Hidden cost issue:

Data conversion:
 The business data in your old systems need to be transferred to
the ERP system. This is not going to happen or import itself.
 Import of company data will require you to spend some money
on it. Moreover, a lot of time will also be engrossed in
removing outdated data records and modifying them in order
to match the processes of the ERP solution
Hidden cost issue:

Training:
 There is common misconstrue by companies when it comes to the
cost of training their employees for using the new ERP software
system.
 Your staff doesn’t only have to understand and get skilled in a new
set of processes but also be comfortable using a new software
interface. So, bear in mind, on-going training and improvement
procedures may exceed your implementation budget.
Hidden cost issue:

Customization:
While
 buying an ERP system is considered to be the most cost-effective
solution, the reality is beyond this.
Every company has their own unique needs that are expected to meet by
the software. No matter you have the best system to achieve your goals,
there will be some chances where you need to fulfill those specific needs.
So, customization adds up to expense. To tackle this, communicate with
your ERP vendor and look out for any obvious or possible customizations
that you might need. This can save you from unexpected expenses
Hidden cost issue:

Travel:
 Other potential hidden costs come from travel. The ERP
implementation process requires a person to go to all company sites
and branches for setting up the software solution.
 So, when the locations are distant, you have to spend bucks on
traveling.Last, being prepared in advance for these hidden costs
behind ERP implementation might help you to reduce the overall
expenses.
ROI:
ROI:

 ERP ROI StatisticsOrganizations use ERP to become more efficient and save
costs. Statistics on ERP return on investment (ROI) highlight the benefits of the
technology. 
 ERP implementation led to business process improvement for 95% of
businesses(opens in a new tab).In a study of companies implementing ERP, 85%
had a projected timeline for ROI.
 Of that group, 82% achieved ROI in their expected time(opens in a new
tab).The top three benefits(opens in a new tab) businesses said they gained from
an ERP system are reduced process time, increased collaboration and a
centralized data system.
ROI

 An average for ROI time in a group of companies that implemented ERP was
just over 2.5 years.
 The top three business cited for implementation are achieving cost savings
(46%), improving performance metrics (46%) and improved efficiencies in
business transactions (40%).
 When asked to select areas where ERP produced the top three answers were
reduced IT costs (40%), reduced inventory levels (38%) and reduced cycle
time (35%)
ROI:

 For midsize companies—revenue under $1 billion—the cost of

owning an ERP system is approximately 3-5% of annual
revenue.For large companies—revenue over $1 billion—the cost
of owning an ERP system is 2-3% of annual revenue.
Conclusion:
ERP implementation is a process. It requires lots of planning to
ensure success. However, your company isn’t the first to go
through it. Consider case studies of successful
implementations, choose the right partner and your business
will enjoy the benefits of the system, quickly.
Thank you.