Most organisations realise the potential of enterprise resource planning (ERP) systems, yet struggle to materialise real benefits. One out of four ERP projects is over budget and some 20 per cent are terminated before completion. ERP projects often fail to achieve business objectives even a year after the system has been implemented. The return on investment (ROI) also takes six months longer than expected. There are many reasons that contribute to the low success rates, yet one common aspect that prevails is a misunderstanding of what ERP entails (ComputerWorld, 2001).
The purpose of this article is to provide a high-level conceptual framework that will assist in understanding what ERP is and how to go about implementing it. It is important for general and project managers to understand what ERP is and what the impact is on the organisation when implementing an ERP system. Since it is a high-level conceptual model, it will be used by middle to top management as well as project managers that need to implement an ERP system.
The article starts with a definition of ERP and this definition will be used as the basis of the conceptual model. An ERP system will be explained by dividing it into four components and by describing a methodology on how to implement it.