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Taking ERP to ROI How to Benefit from ERP Investments

Norbäck, Mikael and Åkerblom, Johan (2004) MIO920
Production Management
Abstract
Problem definition Even though a great deal of research have been done exploring the ERP
field, companies still have a hard time determining and obtaining the
full potential scope of benefits that comes with a fully working ERP
system. Implementing an ERP system is like changing a heart while the
patient still is running. It is therefore hard to measure the benefits and
the improved efficiencies, since those don’t appear over night. The
important questions asked in this master thesis are: How does a
company identify their potential benefits of an ERP system, to make an
investment analysis for a potential purchase? How does the company
then realize those benefits and control costs through a successful ERP
project? Which companies... (More)
Problem definition Even though a great deal of research have been done exploring the ERP
field, companies still have a hard time determining and obtaining the
full potential scope of benefits that comes with a fully working ERP
system. Implementing an ERP system is like changing a heart while the
patient still is running. It is therefore hard to measure the benefits and
the improved efficiencies, since those don’t appear over night. The
important questions asked in this master thesis are: How does a
company identify their potential benefits of an ERP system, to make an
investment analysis for a potential purchase? How does the company
then realize those benefits and control costs through a successful ERP
project? Which companies are in need of a new ERP system in the first
place?
Purpose The purpose of the master thesis is to construct a model for determining
the company specific price for an ERP system, by measuring and
validating the potential benefits and improved efficiencies, realized by
implementing a new ERP system. In addition critical success factors
and best practice when buying and implementing ERP systems will be
identified.
Method By conducting a number of case studies of ERP projects, mainly in
production companies, and focusing on the cost drivers, we have
identified the most common and important benefits and efficiencies
from the acquisition of an ERP system. In addition, we have gathered
information by interviewing seasoned officers within the business and
compared our results with their wisdoms. This has given us an insight
in how ERP projects are run, which in combination with a broad
understanding of the ERP business has given us the knowledge to
compare new findings with previous experience, and thereby reaching
our goal of making a model for how to run a successful ERP project.
Conclusions We have identified 24 cost drivers, which we believe to be the most
important to take in concern when making an investment analysis for
an ERP project. We have also found that there is a great difference
between companies that already have an older ERP system installed
and companies where no fully integrating business system exists. In the
first case, benefits with the new ERP system are hard to realize and the
investment analysis should instead be based on the alternative costs for
keeping the old ERP system running. In the second case, possible
benefits are easier to find and the investment analysis may rely on a
summarization of the discounted future cash flows from those. In
addition, an analysis of actual costs and learnings from the case studies
has been conducted and a guideline with best practice for running an
ERP project is presented. (Less)
Please use this url to cite or link to this publication:
author
Norbäck, Mikael and Åkerblom, Johan
supervisor
organization
course
MIO920
year
type
M1 - University Diploma
subject
keywords
ROI, ERP, change management., project management, investment analysis, business system
other publication id
04/5194
language
English
id
2007220
date added to LUP
2011-06-30 13:57:14
date last changed
2011-06-30 13:57:14
@misc{2007220,
  abstract     = {Problem definition Even though a great deal of research have been done exploring the ERP
field, companies still have a hard time determining and obtaining the
full potential scope of benefits that comes with a fully working ERP
system. Implementing an ERP system is like changing a heart while the
patient still is running. It is therefore hard to measure the benefits and
the improved efficiencies, since those don’t appear over night. The
important questions asked in this master thesis are: How does a
company identify their potential benefits of an ERP system, to make an
investment analysis for a potential purchase? How does the company
then realize those benefits and control costs through a successful ERP
project? Which companies are in need of a new ERP system in the first
place?
Purpose The purpose of the master thesis is to construct a model for determining
the company specific price for an ERP system, by measuring and
validating the potential benefits and improved efficiencies, realized by
implementing a new ERP system. In addition critical success factors
and best practice when buying and implementing ERP systems will be
identified.
Method By conducting a number of case studies of ERP projects, mainly in
production companies, and focusing on the cost drivers, we have
identified the most common and important benefits and efficiencies
from the acquisition of an ERP system. In addition, we have gathered
information by interviewing seasoned officers within the business and
compared our results with their wisdoms. This has given us an insight
in how ERP projects are run, which in combination with a broad
understanding of the ERP business has given us the knowledge to
compare new findings with previous experience, and thereby reaching
our goal of making a model for how to run a successful ERP project.
Conclusions We have identified 24 cost drivers, which we believe to be the most
important to take in concern when making an investment analysis for
an ERP project. We have also found that there is a great difference
between companies that already have an older ERP system installed
and companies where no fully integrating business system exists. In the
first case, benefits with the new ERP system are hard to realize and the
investment analysis should instead be based on the alternative costs for
keeping the old ERP system running. In the second case, possible
benefits are easier to find and the investment analysis may rely on a
summarization of the discounted future cash flows from those. In
addition, an analysis of actual costs and learnings from the case studies
has been conducted and a guideline with best practice for running an
ERP project is presented.},
  author       = {Norbäck, Mikael and Åkerblom, Johan},
  keyword      = {ROI,ERP,change management.,project management,investment analysis,business system},
  language     = {eng},
  note         = {Student Paper},
  title        = {Taking ERP to ROI How to Benefit from ERP Investments},
  year         = {2004},
}