ERP Business Model Paper

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Before examining the aspects of Enterprise resource planning software, or ERP, it may be necessary to describe exactly what it is, or rather is meant to do, and how it most commonly used.

As the name implies, ERP is a software system that helps the planning, tracking, and usage of resources throughout an enterprise base organization. However, it really doesnt live up to its acronym in that it doesnt do much in the way of true planning, and in most cases such a large software package is more of a nightmare than a resource. Yet the enterprise part of the acronym is ERPs true ambition in that it attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular needs. (Koch, 00)

Building a single enterprise-wide software system that serves the needs of people in finance as well as it does the people in human resources and down into the production facilities, is to say the least a monumental undertaking by any company or software vendor. It is fairly standard for each of these departments within the organization to typically have its own computer system, optimized for the particular ways in which that department does its work. But ERP, in theory, combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other. (Koch, 00) When successfully implemented, a fully functional and integrated ERP system can have a tremendous impact, as well as payback, for the organization.

As the above implies, ERP is more of an ideal way of managing through software all aspects of a company's assets, both products and employees. Yet depending on the company trying to implement ERP into its business model, a single software package may be a step backwards rather than forwards. The business model itself may not lend nicely to implementation of a prewritten, or packaged, ERP system and Dell™ Computers is just such a company. (Holt, 18)

In 14 Dell™ began implementation of an ERP system by SAP (http//www.sap.com/) to run its manufacturing operations, and then over the following two years, the computer maker tried to implement the software across its multiple operations, but pulled back at the end of 16. Terry Kelley, CIO of manufacturing at Dell gave the explanation, "Over the two years we were working on SAP, our business model changed from a worldwide focus to a segmented regional focus." Dell worked for two years to customize SAP to its needs only to find out along the way that the nature of its business had radically changed. (Stein, 18)

Due to the overwhelming problems and complications with implementation of a single prewritten enterprise-wide software package, Dell™ has decided to take on a multivendor approach for its ERP system. (Holt, 18) What this means is that vendors that have a strong package for a specific branch of a company will be used, thus increasing efficiency and productivity throughout the system, vice trying to find a single package to fit all situations or bend the business model to conform to that single application.

Dell™ Computer chose the software vendor Glovia International LLC (http//www.glovia.com/), a subsidiary of Fujitsu based in Los Angeles, for manufacturing tasks such as inventory control, warehouse management, and materials management. The globally known and a data storage industry powerhouse Oracle (http//www.oracle.com/) was selected for order management, thus very effectively putting all Dell™ facilities on the same system. Supply-chain vendor i Technologies Inc. (http//www.i.com/) was chosen as the vendor of software to manage the flow of raw materials throughout the company. Despite the problems Dell™ faced during its SAP implementation challenge, it has decided to retain the SAP Human resources module to round out the ERP software system.

When first coming on board Jerry Gregoire, Dell vice president and chief information officer, found himself squarely in the middle of the SAP struggle. It was his leadership and decision to forgo the single vendor approach and implement a "Best-of-Breed" strategy to the ERP system needed by Dell™. (Finney, 1) According to Jerry, "a single, tightly wound enterprise approach wasnt going to work for us."

During an Association of Information Technology Professionals (AITP) presentation held in Austin, Texas, Jerry touched on his opinions regarding the current industry trend of huge ERP implementations. "I feel that the large packages can lead to complacency, no changes can be made to these systems in order to create a technology advantage for the company." He then went on to point out that, "no IT director really wants to implement one - what they really want to implement is best of breed systems. When we convert our company to a software vendors vision, we give up our ability to innovate." (Finney, 1)

Jerry set the attending press ablaze at the conference by presenting this opinion of Dell™ Computers since it was in essence a slap in the face to the modern ideology of large-scale, single system, pre-packaged ERP applications. He further caught their attention stating that I pray that our competitors are successful in their large ERP implementations - then we will drive them crazy with customer innovations using our own technology. Our competitors will find themselves vendor dependent for these innovations. (Finney, 1)

In todays fast-paced, web-enabled business environment an important point is that with sales being increasing driven by electronic commerce, the technology behind these changes must remain flexible and adaptive. Quick implementation was a priority for Dell™, which has been consistently growing by as much as $ billion per quarter, and the company wanted, quite possibly even needed, a more flexible approach. (Holt, 18)

As mentioned at the beginning this paper, ERP is just a tool, and offers a way to integrate business functions. Companies make several mistakes in implementing ERP systems, of which Dell™ is not immune. They may equate investment in ERP system with realizing efficiencies. ERP systems can certainly improve the efficiency of supply chains, if used correctly. But ERP systems can also be imitated very easily by competitors. Therefore, they need to be constantly updated, and new insights about improving supply chains be fed into the system, to stay ahead of the competition. This is how Dell™ approaches its investments in IT infrastructure in general. (Goel, 000)

Dell underwent an extensive testing process before implementing the multivendor ERP system first at its U.S. operations in Austin, Texas, starting in the first half of 1, then rolling it out to its other two plants, in Malaysia and Ireland, over the next two years. The success of the system is in no small part due to Glovias software smoothly interfacing with Dells own shop floor system and i Technologys supply-chain planning software. The Oracle ERP component, for the first time, puts all Dell facilities on the same order-management system, helps configure online orders more quickly and accurately, boost productivity, and also handling all of Dells financial transactions. (Holt, 1)

Dell™ Computers has found the ERP system that best suits its business model; a system made not from a single vendor, but a system comprised of modules designed by independent vendors best at what they do. As easily seen by their financial statements (http//www.dell.com/us/en/gen/corporate/investor/investor.htm), it is not only a system that works, a system to keep, but also a system that keeps them working at the top of the PC industry food chain. Finney, R. (1, February 14). Dell Business Strategy Secrets (Part 1). The itmWEB

Site™. Retrieved March 1, 00 from itmWeb on the World Wide Web

http//www.itmweb.com/f010.htm

Goel, S. (000, July 1). Hard Act to Follow. Financial Times. Retrieved March , 00

from Pearson Prentice Hall on the World Wide Web

http//myphlip1.pearsoncmg.com/cw/mpviewce.cfm?vceid=1617&vbcid=4151

Holt, S. (18, May 11). Dell takes on a multivendor approach to ERP applications.

InfoWorld. Retrieved March , 00 from InfoWorld Online on the World Wide

Web http//www.findarticles.com/cf_0/m0IFW/n1_v0/0574/p1

Koch, C. (00, February, 7). The ABCs of ERP. CIO Magazine. Retrieved March ,

00 from CIO Magazine Online on the World Wide Web

http//www.cio.com/research/erp/edit/erpbasics.html

Stein, T. (18, May 11). Dell Takes Best-Of-Breed Approach In ERP Strategy.

Information Weekly. Retrieved March 1, 00 from Information Weekly Online

on the World Wide Web http//www.informationweek.com/681/81iuerp.htm

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