ACC 440 Modern ERP Chapter 1 End of Chapter Questions

What are advantages of ERP systems? Disadvantages?

ADVANTAGES One of the main benefits is data integration. Another benefit of ERP systems is real-time access to information. Information is available sooner, and interdepartmental communication improves. This real-time, immediate access to enterprise information can help improve operations, corporate governance, and management of enterprise risk, creating a horizontally "joined up," process-centered company and ultimately improving productivity, insight, and optimized business processes. An ERP system requires that the company share a common process and data model covering broad and deep operational end-to-end processes. This standardization improves coordination within the organization and across the organization, making it easier to interact with internal and external stakeholders. ERP vendors design their solutions around processes based on industry best practices. Another advantage of ERP systems is that an ERP vendor's modules look and act the same. This similarity makes it easy for users to move from one module to the next. ERP systems can reduce operational costs and increase revenue. DISADVANTAGES Implementing an ERP system is a complex, time-consuming undertaking that can often involve a myriad of problems along the way. Employees may oppose the additional training, process modifications, and organizational change that inevitably occur or complain that the system is difficult to use, too restrictive, or inflexible. Another disadvantage of ERP systems is their price tag. ERP systems are sophisticated and complex, and implementing them requires, in many cases, hiring expensive consultants to assist in the implementation. Companies often struggle to take command of the technology and to leverage that technology into measurable and maintainable business process change. Since implementation of an ERP system requires that a company adhere to the best practices in the software, a company could lose the advantage of a unique (and perhaps better) business practice

How are ERP systems different from traditional enterprise systems used in organizations?

ERP systems are designed to enhance all aspects of key operations, such as purchasing, accounting, manufacturing, and sales, by taking processes and functions that were previously disjointed and supported by various legacy systems, or older, standalone, disparate business systems, and seamlessly integrating and coordinating them. The foundation of an ERP system is a well-structured database that serves the operational and decision-making needs of the entire enterprise. By supporting the information requirements of more than one functional area, ERP systems are considered cross-functional in nature. ERP systems are also considered process-centered; that is, the application enables a clear, complete, logical, and precise view of the organization's business processes.

What is an ERP system?

Enterprise resource planning (ERP) systems are business systems that integrate and streamline data across the company into one complete system that supports the needs of the entire enterprise.

T/F: ERP systems evolved from customer management relationship systems

FALSE, ERP systems evolved from customer relationship management systemsttt

How do ERP systems support industry best practices?

Matching best practices to organizational needs is what differentiates one ERP package from another and is a key contributor to the ultimate success of the implementation. Larger ERP vendors, such as SAP SE and Oracle, have thousands of best practices programmed into their software. These vendors support enormous research and development efforts to identify best practices in various industries and incorporate them into their solutions. As a result, the cycle of finding, codifying, and delivering best practices to customers allows the ERP vendor to maintain and increase its customer base. This commitment to best practice research and development has enabled ERP vendors to offer industry-specific versions of their software called vertical solutions (or industry solutions).

ERP systems are sold in ______________, or groups of related programs performing a major function within the system, such as accounting or manufacturing.

Modules

What are the differences among the three tiers that describe the ERP market?

TIER 1 • High complexity • Highest cost of ownership • Many industry solutions • Large companies • Global functionality TIER 2 • Medium complexity • Medium cost of ownership • Fewer industry solutions • Mid-market companies • Global functionality TIER 3 • Limited functionality • Lowest cost of ownership • Fewest industry solutions • Small to mid-sized companies • Few locations

T/F: A best practice is a process that is generally recognized as more effective and/or efficient than others in a particular industry

TRUE

T/F: A business process is a collection of activities that together add value to the company.

TRUE

ERP software for a particular industry is known as a(n) ____________________ solution.

vertical (or industry)