SAP Implementation Cost Benefit Analysis Essay

Words: 10631
Pages: 43


In the modern age of competition, Businesses and Organizations need to undergo transformation in order to compete with the best and create Value for its Stake holders. Numerous methods have been tried over several years for mapping the functions of business on software, however most of them have been limited to conversion of data from legacy Systems to new systems till the advent of ERP System. Many projects have failed, new systems were not up to the task and this meant additional cost and loss of business. With the arrival of ERP, all this has changed.

Advent of ERP’s has led to introduction of new tools, custom methodology databases and applications leading to effective and efficient utilization of resources &
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The criticisms of ERP systems are summarized as follows 1.1.6 Inflexibility
Once an ERP is installed in a company, it is too difficult to change how the company works and is organized. ERP systems are like cement, which is highly flexible in the beginning, but rigid afterward.
1.1.7 Long implementation periods
It takes too long to implement ERP systems. A three to five year implementation period of ERP systems is fairly common in a large company. In the current rapidly changing business world, five and even ten year projects are not supportable.

1.1.8 Overly hierarchical organizations
ERP systems presume that information will be centrally monitored and that organizations have a well-defined hierarchical structure. Therefore, these systems will not match with organizations of empowerment or with employees as free agents

1.2 Major Vendors

1.2.1 - SAP

SAP AG, headquartered in Walldorf, Germany was the first company which introduced a functional enterprise system. Five software engineers at IBM in Germany had the idea for a cross-functional information system. However, the idea was rejected by IBM, so the engineers founded their own company in 1972. R/2, SAP’s first integrated system, which ran on mainframes. Introduced in 1992 R/3, the next version of the system was a client/server system. mySAP ERP, the successor to SAP R/3, is the first service-oriented