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Agenda - Assignment 7

Agenda - Assignment 7. Rettig - The Trouble With Enterprise Software (Review) The trouble with ERP systems SOA What is the solution? Ragowsky et al. - Assessing the Value Provided by ERP Applications Through Organizational Activities (Study) Assumes that ERP is beneficial

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Agenda - Assignment 7

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  1. Agenda - Assignment 7 • Rettig - The Trouble With Enterprise Software (Review) • The trouble with ERP systems • SOA • What is the solution? • Ragowsky et al. - Assessing the Value Provided by ERP Applications Through Organizational Activities (Study) • Assumes that ERP is beneficial • What is actually the gain of ERP? • How do we measure success? • Ross & Vitale – The ERP Revolution: Surviving vs. Thriving (Study) • Background for the study • The prisoner analogy • Metrics • Comparison, what do we gain from these texts? Assignment 7 - Presentation by Rune Bergendorff

  2. Rettig – The Troubles with ERP Systems • Complexity very high • Need for more functions have created software ”monsters” • Calculator not ”thinking machine”, difficult to handle changes (data integrity e.g.) • ERP systems just as heavy as the old legacy systems (didn’t simplify) • Implementation cost enormous (upgrading too) • Errors in 15% of code lines • Single systems can have error rates of up to 50% • High demands for data input - Etc. etc. etc. Assignment 7 - Presentation by Rune Bergendorff

  3. Rettig - SOA • My thoughts were SOA? BUT.. • SOA creates an even more complex data structure • High requirements for input/output data • Impossible to trace errors, because of the structure • Isn’t Lego like • Impossible to increase performance Assignment 7 - Presentation by Rune Bergendorff

  4. Rettig – What is the Solution? • She has a very strong unwillingness towards new technologies • Writes past tense? • Is the paper worth reading? • Gives you a second thought of today's saviors of the business • Easy to criticize systems – what is the solutions? • Stuck with the best current systems? • What is the alternative? Assignment 7 - Presentation by Rune Bergendorff

  5. Ragowsky – Data foundation • Examination of 200 SMB’s • Having all 5 steps of Porter’s value chain • Collected from 1992-2004(massive changes in this period) • Different demographics, organization types and no. employees/suppliers • Interviews with senior managers (only 10% IT Managers), background was structured questionnaire • Multiple interviews, education sessions to limit interviewers own bias • Evaluates the investment from the owner of the ERP systems point of view (stockholder) • Research goal, will an ERP investment add to the performance? Assignment 7 - Presentation by Rune Bergendorff

  6. Ragowsky – Assumes that ERP is beneficial • Hard to measure direct benefit from ERP • De-facto to assume positive effect • Study showed (DeLone & McLean): • 1975: Humans were the limit of the system • 1992: Overall system quality, information use is the limit • Hard for the investor to see the benefints of ERP in short terms • Evaluate the investment as any other product Assignment 7 - Presentation by Rune Bergendorff

  7. Ragowsky –What is actually the gain? • Uses 3 hypothesis for success • Depends on the use of the included applications • Depends on the organizational operational characteristics (ERP binds e.g. Manufacturing processes) • The mediating variable between individual ERP apps and ERP system (does the apps fit the primary activities) • Investigates these on the background of Porters VC • Inbound logistics, Operations, Outbound Logistics, Marketing & Sales and Service) • Results • Reduction in inventory holding costs • Unit production costs (suppliers/purchasing mgmt) • Reduction in after-sales service cost (pro. mgmt, q cont. cust. order mgmt.) Assignment 7 - Presentation by Rune Bergendorff

  8. Ragowsky – How do we measure success? • Differentiation strategy • % of Production for Customer Orders • No. Of Parallel Production Lines • No. Of Finished Items • Avg. no. Of Customer Orders per Month • % of Cost of After-sales Service in Total Product Cost • Cost Leadership • Work order length • % of Cost of Raw Materials in Tot. Prod. Cost • % of Costs of Machinery in the Tot Prod. Cost • Avg. no. Of Levels in the BOM • Avg. % of Costs of Scrap in Tot. Prod. Cost • Quantity Discount Assignment 7 - Presentation by Rune Bergendorff

  9. Ragowsky –Benefits • What is the benefit from this text? • Thorough explanation of ways to measure • Formalization of some things, we had a god feeling for existed, but didn’t quite understand full Assignment 7 - Presentation by Rune Bergendorff

  10. Ross – Background for the study • Research of packaged ERP systems on org. • How is ERP systems generating business value • Data collection aug/sep 1998 • Across different vendors • Interviews of.. • Executives who sponsored the implementation • Manager who headed up the implementation • Business Executive affected by the change • Very different reasons for adopting • Common platform, process improvement, operating costs reduction etc. • Deployment of ERP systems to succeed old legacy systems, and several systems from mergers & acquisitions Assignment 7 - Presentation by Rune Bergendorff

  11. Ross – The PrisonerAnalogy • The approach – ERP design • The dive–implementation • Resurfacing–stabilization • Swimming, continousimprovement • Transformation (the gain) Assignment 7 - Presentation by Rune Bergendorff

  12. Ross - Metrics • The hurdles: • Metrics • Quantify anticipated benefits • Performance metrics for the ERP system • Ongoing resource requirements • Critical that mgmt keeps focus even post impl. • Keep an eye on processes, ex. of automated processes, which turned manually after ERP, adapt. • Management reporting requirement • Know what your system are capable of, use ERP to manage your business! • Addressing resistance • Mid-level positions most anxious of changes (some get superfluous) • Intellectual resistance, employees do not understand the flow of the data, and importance of entering correctly, for the rest of the business to function • Political resistance, mgmt approach “the system can’t be the change, it “enables” change“ which is wrong Assignment 7 - Presentation by Rune Bergendorff

  13. Ross - Benefits • Light text, quick overview, good ”reminders” • Assing the best people 100% of the time to the project • Develop a clear business case with performance objectives • Demand regular reports based on established metrics • Communicate goals and estasblish program scope • Establish a long-term vision Assignment 7 - Presentation by Rune Bergendorff

  14. Comparison of texts • 3 very different texts • Rettig is kind of a criticism of ERP systems • Ragowsky is a study of the benefits from ERP systems, done very thoroughly • Ross, process oriented text • However both Ragowsky and Ross, looks at metrics for success, two different results Assignment 7 - Presentation by Rune Bergendorff

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