Give your opinion on which is the greatest risk of failure for an ERP system for an organization: selecting the wrong system ERP model or the wrong consultant not familiar with the company's business operations. Justify your answer.
Choosing the Wrong ERP
Because ERP systems are prefabricated systems, users need to determine whether a particular ERP fits their organization’s culture and its business processes. A common reason for system failure is when the ERP does not support one or more important business processes. In one example, a textile manufacturer in India implemented an ERP only to discover afterward that it did not accommodate a basic need. The textile company had a policy of maintaining two prices for each item of inventory that it sold. One price was used for the domestic market, and a second price, which was four times higher, was for export sales. The ERP that the user implemented was not designed to allow two different prices for the same inventory item. The changes needed to make the ERP work were both extensive and expensive. Serious system disruptions resulted from this oversight. Furthermore, modifying an ERP program and database can introduce potential processing errors and can make updating the system to later versions difficult.
Goodness of Fit
Management needs to make sure that the ERP they choose is right for the company. No single ERP system is capable of solving all the problems of all organizations. For example, SAP’s R/3 was designed primarily for manufacturing firms with highly predictable processes that are relatively similar to those of other manufacturers.
System Scalability Issues
If an organization’s management expects business volumes to increase substantially during the life of the ERP system, then there is a scalability issue that needs to be addressed. Scalability is the system’s ability to grow smoothly and economically as user requirements increase.
Choosing the Wrong Consultant
Implementing an ERP system is an event that most organizations will undergo only once. Success of the projects rests on skills and experience that typically do not exist in-house. Because of this, virtually all ERP implementations involve an outside consulting firm,