FIGURE 10-3 Microsoft Dynamics is an ERP strategy that can integrate separate
systems and improve productivity throughout the organization.
CASE IN POINT 10.1: ABC SYSTEMS
You are a systems analyst at ABC Systems, a fast-growing IT consulting firm that provides a wide
range of services to companies that want to establish e-commerce operations. During the last
18 months, ABC acquired two smaller firms and set up a new division that specializes in supply
chain management. Aligning ABC’s internal systems was quite a challenge, and top management
was not especially happy with the integration cost or the timetable. To avoid future problems,
you have decided to suggest an ERP strategy, and you plan to present your views at the staff
meeting tomorrow. ABC’s management team is very informal and prefers a loose, flexible style
of management. How will you persuade them that ERP is the way to go?
Initial Cost and TCO
You learned earlier about the importance of considering economic feasibility and TCO
during systems planning and analysis. As Figure 10-4 on the next page suggests, TCO
includes tangible purchases, fees, and contracts called hard costs. However, additional
soft costs of management, support, training, and downtime are just as important, but
more difficult to measure. As the pie chart shows, the combination of user-related and
operational costs exceeds hardware and software acquisition costs.
A TCO analysis should include the the following questions.
• If in-house development was selected as the best alternative initially, is it still the
best choice? Is the necessary technical expertise available, and does the original
cost estimate appear realistic?
supply chain management (SCM), project management, human resources, and business
intelligence reporting.