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ERP Business Case
Part One: Benefits
Benefits of Enterprise Systems
A business case needs to be developed before the implementation of the ERP system.
Benefits of implementing an ERP system: (NB!!)
There are 5 categories:
1. Operational/ business processes: cost reduction, cycle time reduction, scalability, reduction of
human errors, sales increase, growth in revenue.
2. Managerial: Internal data integration, elimination of data redundancy, real time BI, improved
information visibility, improved stock & finance control.
3. Strategic: Supply Chain Integration and Customer Relationship Management, eCommerce, adhere to
standards of practice
4. IT Infrastructure: Development of IT infrastructure
5. Broader organisational: empowerment of employees, promotes organisational change.
Integration (NB)
1. Application Integration: Benefit of using as little IT applications as possible. Cuts costs, less
maintenance, training and support. Cut DBMS, multiple languages, customised complex software.
2. Interface integration: Benefit of having a consistent UI for users and developers. Less systems =
less training.
3. Business integration: Benefit of transactions carried out in one unit need to be visible to other units
in real time. Enforces accuracy and organisation. Non-financial activities impact financials (financial
recording happens at source). ie: Manufacturing uses an item from the
inventory, The quantity on hand is updated, The inventory value is automatically changed on all
ledgers. Financial reports get updated all the time which is a major benefit. Sales orders are used by
production and accounting to schedule production and create invoices.
4. Data integration: The benefit of having one shared centralised database within the organisation that
houses all the master and organisational data. Data is only entered and stored once, therefore no
data redundancy or inconsistencies. Improved management and reporting information.
→ Data from material master is used: in Purchasing (for ordering), Inventory Management (for goods
movement postings and physical inventory), Invoice Verification (posting invoices), Sales and
Distribution (sales order processing), in Production Planning and Control (material requirements
planning, scheduling, and work scheduling.) | Negative impact that data integration can have: too
much data entry can constrain core functions, as the software is configured to prescribe precisely
ERP Business Case 1
, what data can be entered and the format by which that data can be entered or retrieved. Therefore,
needs to be well designed and need to agree to the levels of data designed in the business blueprint.
5. Global integration: the ability of an ERP to support multiple languages, currencies, local and
consolidation rules, procedures, practices and regulations simultaneously, allowing seamless global
transactions and reports. ie: Data is entered once in global holding country and reports generated in
various countries that align with local policies and regulations. The same data is converted and
consolodated to the global holding company following international and local rules.
Improvement of business processes
How ERPs improve business processes:
the automation of work practices, data integration and central storage and protection of data,
business integration, built-in controls, provision of reports for monitoring and managing of processes,
best practices / standard processes.
Some companies believe that implementing an ERP is “following best practice”. Business processes
change, therefore you need change management and training in place.
“Best practice” is defined as a method which has been judged to be superior to other methods and is
therefore the most efficient way to perform a task. It is mediocre and generic, and companies believe that
if something worked for another organisation, it should work for them. Can’t define best practices based
on characteristics drawn from surveys. You can’t actually put practices in software.
SAP use “best practice” as a marketing scheme, they actually offer efficient, automated standard
(average) processes and procedures not best practices. Practices should rather embody the ever
changing result of an ongoing learning process. “Best practices” can be used as an aid for companies to
establish what their own unique best practice actually is.
**These tie into the BP Redesign
ERP Business Case 2
