Table Of ContentEnterprise Resource Planning
A Managerial Perspective
Veena Bansal
Department of Industrial and Management Engineering
Indian Institute of Technology Kanpur
Delhi • Chennai
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Dedicated to Manu, Gita and Devika
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Contents
Preface ix
Acknowledgements x
About the Author xi
ChaPtER 1 Introduction to Enterprise Resource Planning Systems 1
1.1 Introduction 1
1.2 Value Chain Framework 2
1.3 Problems with Disintegrated Data in an Organization 4
1.4 Evolution of ERP Systems 4
1.5 Role of ERP Systems in an Organization 9
1.6 Three-tier Architecture for ERP Systems 9
1.7 Stages Theory and Its Application to Evolution of ERP 12
1.8 Are ERP Systems Different from Traditional Information Systems? 13
1.9 Scope of ERP systems 13
1.10 General Model of Business and Role of ERP 14
1.11 Major ERP Players 16
1.12 Implementations in India 16
Conclusion 17
Case Study 17
Exercises 19
Endnotes 20
ChaPtER 2 Life Cycle of an ERP Implementation Project 21
2.1 Introduction 21
2.2 Life Cycle of an ERP Project 21
2.3 Teams 30
Conclusion 33
Case Study 34
Exercises 37
Endnotes 37
vi Contents
ChaPtER 3 Benefits and Cost of an ERP System 38
3.1 Introduction 38
3.2 Benefits 39
3.3 Cost of an ERP Implementation 43
3.4 Cost-benefit Analysis 46
Conclusion 48
Case Study 48
Exercises 50
Endnotes 50
ChaPtER 4 Change Management 51
4.1 Introduction 51
4.2 People Issues: Are You Ready for ERP? 52
4.3 Factors That Influence Pre-implementation Attitude 52
4.4 How to Enhance Attitude? 54
4.5 Change Management Strategies to Handle Organizational Issues 57
4.6 Creating a Change Management Strategy to Handle
Organizational Issues 59
4.7 Tools for Assessing the Organizational Changes 60
Conclusion 66
Case Study 66
Exercises 69
Endnotes 70
ChaPtER 5 Business and It alignment 73
5.1 Introduction 73
5.2 Components of Alignment 74
5.3 Strategic Alignment Framework and Its Application to
Strategic Alignment 75
5.4 Are Business and IT Aligned? 79
5.5 Balanced Scorecard: An Alignment Tool 80
Conclusion 83
Exercises 83
Endnotes 83
ChaPtER 6 Requirements Engineering 86
6.1 Introduction 86
6.2 Structured English and Structured Interviews 88
6.3 Event-driven Process Chains 89
6.4 Object-oriented Model 96
6.5 Object Process Modelling 100
Contents vii
6.6 Data Activity Model for Configuration 100
Conclusion 105
Case Study 105
Exercises 109
Endnotes 110
ChaPtER 7 Re-engineering 112
7.1 Introduction 112
7.2 Processes and Their Characteristics 114
7.3 Life Cycle of a BPR Project 116
7.4 Life Cycle of an IT-driven BPR Project 120
7.5 Re-engineering Examples 121
Conclusion 122
Case Study 122
Exercises 125
Endnotes 125
ChaPtER 8 ERP Selection 127
8.1 Introduction 127
8.2 ERP System Selection Team 128
8.3 ERP Solution and Vendor Selection 129
8.4 Information Gathering 129
8.5 Preliminary Filtering 129
8.6 Parameters for ERP Selection 130
8.7 Prepare and Release Request for Proposal (RFP) 133
8.8 Gap Analysis 144
8.9 AHP for ERP Selection 145
Conclusion 153
Case Study 153
Exercises 154
Endnotes 154
ChaPtER 9 Managing an ERP Project 156
9.1 Introduction 156
9.2 Success of an ERP System is Multi-dimensional 157
9.3 Critical Success Factors 159
9.4 Risk Associated with an ERP Project 163
9.5 Measuring Performance of ERP System Using Balanced Scorecard 166
Conclusion 169
Exercises 169
Endnotes 170
viii Contents
ChaPtER 10 ERP and Related technologies 171
10.1 Introduction 171
10.2 Electronic Data Interchange 171
10.3 Supply Chain Management 173
10.4 Customer Relationship Management 177
10.5 Data Warehouse 178
10.6 Data Mining 182
Conclusion 183
Exercises 184
Endnote 184
ChaPtER 11 Introduction to Commercial ERP Softwares 185
11.1 Introduction 185
11.2 Indian Market 186
11.3 SAP 187
11.3 Oracle 190
11.4 Oracle Peoplesoft 191
11.5 JD Edwards 192
11.6 MS Dynamics 193
11.7 Baan 193
11.8 Ramco 194
11.9 QAD 195
11.10 Conclusion 195
Endnotes 195
appendix a: Implementations in India 196
appendix B: articles and Cases 198
Index 201
Preface
This book provides a managerial perspective to ERP projects. An ERP system is a software solution that
integrates all facets of a business. When an ERP system is implemented and deployed in an organiza-
tion, it impacts the culture of the organization, its processes, structure and everyone in the organization.
Careful planning is required to handle an information technology project that involves people as well
as organizational issues. In 2004, I, along with three of my students at Indian Institute of Technology
Kanpur started exploring ERP systems and found it very interesting. We visited organizations of dif-
ferent sizes across the country to learn about the entire life cycle of ERP projects. The effort resulted
into a graduate level course that I started teaching at IIT Kanpur to management students. I then started
developing course notes which were augmented by the current research papers and my own consultancy
work in the area of ERP and this has resulted in this book. It will serve as a textbook for a semester-long
course on ERP as well as a reference book for practitioners.
A manager would be able to follow the book to manage an ERP project, whereas an uninitiated reader
will gain a thorough understanding of an ERP project life cycle. The first chapter explains the role that
an ERP system plays in an organization and its evolution. The stages theory that has been included in the
first chapter is, very interestingly, applicable to an individual’s evolution as well with different names
of stages . Chapter 2 describes the life cycle of an ERP project. Each phase of the life cycle is covered
in detail and in depth, supported by theoretical framework and examples in subsequent chapters. The
exercises at the end of each chapter are divided into two parts with an objective of testing and applying
the knowledge gained. I urge the readers to attempt exercises to get the best out of their reading effort.
The references at the end of each chapter provide a rich source of knowledge that can be used for iden-
tifying research problems. Appendix B provides a list of cases that should be discussed in the class to
help students identify with the issues involved. Chapter 9 covers management of ERP project. I have
deliberately not included the technological aspect in this book. This is because the readers should get
a clear idea that ERP is not an information technology project even though technology is involved and
constitutes an important part. I hope reading the book will be an enriching and fulfilling experience for
the readers.
Veena Bansal
