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10 Chapter 1 • Introduction to Enterprise Systems for Management

updated separately on every new version of the software. Thus, every time an organization has to
upgrade the ERP system, the IT staff will have to upgrade the application and upgrade the
modifications. Modifications will have to be reengineered into the system when they are incom-
patible with the new version.
On the other hand, if the organization decides to implement the ERP system “as-is” (aka.
vanilla implementation), disruptions will occur with the functioning of the organization.
Employees, business partners, and clients will have to be retrained in the new business processes
(in addition to the ERP system). This does generate resistance from the users, adding to the
training expense for the implementation. Thus, management must pay very close attention to the
organizational consequences of modifying or not modifying the ERP software to match their
organizations’ business process. This is not an easy decision. A wrong decision can bring down
the entire organization, whereas a right decision can reap enormous benefits. We will later
discuss several ERP implementation examples (e.g., Hershey Foods, Microsoft, and Cisco
Systems) that will highlight the consequences of early management decisions on their organiza-
tion. A good understanding of ERP technology and its implementation process can significantly
improve efficiency and effectiveness of the organization’s business processes.
ERP System Components

As shown in Figure 1-3, an ERP system, like its information system counterpart, has similar
components such as hardware, software, database, information, process, and people. These
components work together to achieve an organization’s goal of enhanced efficiency and effec-
tiveness in their business processes.
An ERP system depends on hardware (i.e., servers and peripherals), software (i.e., operating
systems and database), information (i.e., organizational data from internal and external resources),
process (i.e., business processes, procedures, and policies), and people (i.e., end users and IT staff)
to perform the input, process, and output phases of a system. The basic goal of ERP, like any other
information system, is to serve the organization by converting data into useful information for all
the organizational stakeholders.
The key components for an ERP implementation are hardware, software, database,
processes, and people. These components must work together seamlessly for the implementa-
tion to be successful. The implementation team must carefully evaluate each component in
relation to the others while developing an implementation plan. Hardware, software, and data
play a significant role in an ERP system implementation. Failures are often caused by a lack of

Server
Software Company Processes
(Hardware)

People
Database

FIGURE 1-3 ERP Components