Enterprise Resource Planning Systems
ERP-system Investments
Although the ERP-system is an IT-system investment it still has some unique features. Firstly, the ERP-system investment span all the four groups identified by Falk & Olve (1996), and thus often constitutes the information backbone of the company and is in the fullest sense of the word an infrastructural IT investment. Secondly, an ERP-system investment is not just a technical solution, but it will also have a very direct impact on the company’s organisation, structure, culture and strategy. Thirdly, due tothe fact that the ERP-system investment impacts on so many different levels of the company, it is difficult to find an investment evaluation model that successfully will capture the multidimensionality of the system. Finally, unlike most other types of investments, the ERP-system investment’s cost structure is different.
Although there are some considerable costs related to licences and hard- and software costs, the main cost element is implementation costs. The implementation process is also quite lengthy, and although the ERP-system vendors state that implementations are possible to do in approximately six months, this only includes the installation of the system, rather than any delivery of business benefits, which might take years to materialise. (Banks, et al., 1999) Before moving on to focus on what evaluation is, we would like to present a short historic background regarding a company’s ITarchitecture, as well as outlining the main characteristics and functions of an ERP-system.
Although there are some considerable costs related to licences and hard- and software costs, the main cost element is implementation costs. The implementation process is also quite lengthy, and although the ERP-system vendors state that implementations are possible to do in approximately six months, this only includes the installation of the system, rather than any delivery of business benefits, which might take years to materialise. (Banks, et al., 1999) Before moving on to focus on what evaluation is, we would like to present a short historic background regarding a company’s ITarchitecture, as well as outlining the main characteristics and functions of an ERP-system.
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