April 20, 2015

The Benefits of Two–tier ERP

Two-tier ERP is when organization having 2 separate different ERP. One having Tier-1 ERP (Oracle/SAP) and its subsidiary using lower type ERP or Tier-2 such as Microsoft Dynamics.

Company that adopt two-tier ERP as a strategy would gain many benefits and among others are:

Reduce Cost

The cost to acquire Tier-1 ERP is between $13 million to $17 million according to an estimate publish by CIO magazine and with Tier-2 or lower, the cost would reasonably cheap and since adopting two-tier ERP, there is no need for Tier-1 ERP for subsidiary and subsequently can save cost.

Improve Innovation

Subsidiary with their Tier-2 ERP is more easy to configure and enable for improve innovation. They would find that their ERP is easy to customize as compared to their main company Tier-1 ERP system.

Greater Agility

As company expanding rapid, they would want a system that could follow suit. However with Tier-1 that cannot keep up with the the changing environment because it takes long time and cost so much to deploy. Tier-2 on the other hand is easy to configure and easier to control over fast changing environment

For that, Two-tier ERP is more strategic for fast changing company and large organization with multiple unique subsidiary

R “Ray” Wang, “Tuesday’s Tips: When to go with a Two-Tier ERP Strategy,” Enterprise Irregulars, March 2010



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Disadvantages of cloud–based ERP vs. on–premise

Summary of disadvantages of cloud-based vs on-premise ERP systems,

  • Subscription expenses (Periodic vs Capital expenditure)
  • Security risks
  • Performance risks
  • Customization and integration limitations
  • Strategic risks (high dependancy on service provider)
  • Compliance risks
  • Loss of IT competencies
  • Functionality limitations (Relatively new system)
  • Limitation on hybrid deployment strategy (retaining legacy systems and integration with on-premise solutions)
  • Service Level Agreement (SLA) issues

Reference: Duan, Jiaqi, et al. "Benefits and drawbacks of cloud-based versus traditional ERP systems." Advanced Resource Planning(2012).

Potential benefits about the utilization of ERP system

Nowadays, ERP system are being increasingly adopted by organizations of any kind and size, in order to avoid technical obsolesce and create sustainable competitive advantages. Some experts note that most multinational firms are using ERP software packages and even more small and midsize companies are on the route of adopting them.

ERP system acquisition and implementation generally enhance productivity and working quality, since the system offers standardization and simplification in multiple, complicated operational procedures across the company . Moreover, information can easily be transferred, shared and exchanged among users who are working at different business divisions. In general, the literature has identified the following potential benefits of ERP system implementation:

- improved coordination across functional departments;

- increased efficiency in doing business;

- reduced operating costs (lower inventory control cost, lower production costs, lower marketing costs, lower help desk support costs);

- facilitation of day-to-day management;

- rapid access to information for decision making and managerial control; and

- support of strategic planning (through the planning of available resources).

BY: Ziwei Wang 1452383

April 19, 2015

Cloud–ERP vs In–House ERP

Cloud is evolving and expanding to include more intelligent systems. As they continue to develop they will eventually gain the ability to perform as good as in-house ERP systems. With current development level, Cloud ERPs are most suitable for SMS who are sensitive to cost and can make the trade off between cost and security regarding data management issues. A more detailed comparison between cloud ERP and in-house ERP systems are as follows.


Cloud systems are maintained by 3rd party providers. This helps to reducte the implementation costs drastically. On the other hand, traditional ERP systems require servers, extra module costs, operating systems, database management systems and further training and consultant costs to maintain the system. On the other hand, maintenance for cloud systems are automatically done by the provider and updates come with no cost. However, cloud systems have subscription fees and sometimes they may become more costly than traditional ERP systems on the long run.

2- Time

Cloud systems are genarally more agile systems. They minimize the time needed to deploy and implement systems. Traditional ERP systems require significantly more time for implementation plus employee training and change management issues.

3- Processing Speed

For this factor, the ByDesign(cloud ERP) of SAP and ECC 6.0 are compared. Cloud ERP is significantly more faster than traditional ERP. The actual results can be seen from the table below.processing speed- cloud vs traditional

All in all, cloud systems outperform traditional ERPs nearly in all criteria(implementation cost, implementation time, processing time and flexibility to work in different areas). Cloud ERPs lack the desired security in traditional ERPs as the data storage system is outsourced to 3rd party providers. However, implementing an ERP system is an objective decision making process, as long as companies objectives do not contradict with security issues, it is highly advised to make the tradeoff between cost, time, processing speed, flexibility and security.

Reference article:

Elragal, A., & Malak, K. E. (2012). In-House versus In-Cloud ERP Systems: A Comparative Study. Journal of Enterprise Resource Planning Studies , 1-13.

ERP implementation in China

Background of ERP implementation and its situation in China:

ERP is a type of business management software with multimodule including manufacturing resource planning, supply chain management, financial management, customer relationship management and human resource management. ERP comes form original material requirement planning (MRP) and has developed to integrate some new module in the control system during the period of evolution.

Nevertheless in China, implementation of ERP still in the developing stage during which time industry equipped with this information system would come across some difficulties and even failure. While ERP system enables multi-functional information system integrate into a coherent network in enterprise, the implementation of ERP still is a challenge in China due to its expensive implementation cost, complicated technology, insufficient information technology infrastructure, inexperienced operation staff. This situation sometimes is caused by cultural difference from foreign countries, especially for the state-owned companies that are always lack of passion and incentive for ERP integration.

Barrier of ERP implementation:

ERP often faces with the crisis of being abandoned just before completing or gaining the expected outcome, especially for the small and middle-sized enterprise with limited budget, although ERP has numerous benefits to win competitive advantages. Apart from the huge expense of implementation, another factor is the complex technical process of implementation (Soh et al., 2000), which requires expertise to give training or guidance for the employees.

In China, expensive cost and technical complexity are two most common barriers in the ERP implementation. As for the specific enterprise, the IT infrastructure is the big headache for Chinese companies, followed with less well-trained staff, cultural difference and language barrier. In order to pursue a better outcome of managing resource via ERP, overcoming the obstacles listed above is the key to success.

Too much rely on the ERP software vendors can also endanger the whole company, which means company purchasing the ERP system should invest more time to study and be familiar with its function. Otherwise, if enterprises just rely on their providers, the whole business process can be a failure. To sum up, company should be aware of the project initiative and how to manage it with ERP system, only doing like this, the ERP implementation could be a success.

Management problem is another barrier of ERP implementation. Before explaining this point, it is necessary to illustrate the background and situation in China. Several years ago, China witness a long period of planning economy and then market economy took a place of that, leading to managerial method and strategy lagging behind industries in western countries. Apart from that, even laws and policies are not ready to serve and organization forms a hierarchical structure. However, these changes had a bad influence on the ERP implementation, as the key to ERP implementation is to integrate suitable and state-of-art management concept and method into business process. In this case, with enough support of management experience and practice, company is unlikely to achieve a better performance in ERP implementation.

By Bo Yang (U1451409)

The Importance of Computer Science

Industry statistics shows that cloud ERP are the present, not the future. As a result, it is important to have in the watch list the challenges and disadvantages that this systems have, in particular cybersecurity. For this, it is essential that management knows this subject and does not rely on vendor’s advice. Otherwise, mistakes like purchasing useless expensive security software might happen, it would be like “Purchasing an iron door to protect your house and leaving the windows open” (Vigfússon 2014).

However, there is a gap in the computer science field, as most managers today does not have deep knowledge of it. Principally because most managers age from 35 to 54 (Pardey and May 2013, p. 8), and therefore they grew at the same time as computers were developed. Contrasting with children today, which are likely to study some computer degree when at school (IEEE- The Institute 2014). Therefore, it is believed that computer science training within managers is one of the most vital task for organisations today.

“Age, class and other factors does not matter, what matters is your knowledge, skills and curiosity for understanding how the digital world works” (Vigfússon 2014).

IEEE- The Institute (2014) Computer Science Classes for Kids Becoming Mandatory [online] available from <http://theinstitute.ieee.org/career-and-education/preuniversity-education/computer-science-classes-for-kids-becoming-mandatory> [19 April 2015]

Pardey, D. and May, T. (2013) UK Managers’ Profile,2013. Institute of Leadership and Management. available from <https://www.i-l-m.com/~/.../uk-managers-profile-2013%20pdf.ashx>

Vigfússon, Ý. (2014) Why I Teach People How to Hack [online] available from <https://www.youtube.com/watch?v=KwJyKmCbOws>

Ricardo Pimentel Loria


Advantages and disadvantages with cloud ERP systems

Cloud ERP systems have many advantages and disadvantages. In some instances cloud ERP is a better solution then traditional ERP systems, however it may not suit all companies, depending on their size, complexity etc.

The table outlines some of the advantages and disadvantages that have to be taken into account when selection whether to choose traditional or Cloud based ERP systems.



Lower upfront cost


Lower operating cost

Privacy issues


Down time of servers

Faster implementation and set up

Slow internet


Difficult to customise

April 17, 2015

Challenges in Implementing Enterprise Resource Planning system

Challenges in Implementing Enterprise Resource Planning system

Enterprise Resource Planning (ERP) is a software solution that integrates business functions and data into a single system to be shared within a company. While ERP originated from manufacturing and production planning systems used in the manufacturing industry, ERP expanded its scope in the 1990’s to other "back-office" functions such as human resources, finance and production planning. Moreover, in recent years ERP has incorporated other business extensions such as supply chain management and customer relationship management to become more competitive.

In spite of ERP’s significant growth from the late 1990s to the present day, there are a number of challenges that companies may encounter when implementing ERP. Most multinational firms are using ERP and that more small and midsize companies have begun to adopt ERP. Despite ERP’s promises to benefit companies and a substantial capital investment, not all ERP implementations have successful outcomes. ERP implementations commonly have delayed an estimated schedule and overrun an initial budget.

Furthermore, the literature indicates that ERP implementations have sometimes failed to achieve the organization’s targets and desired outcomes. Much of the research reported that the failure of ERP implementations was not caused by the ERP software itself, but rather by a high degree of complexity from the massive changes ERP causes in organizations


Ehie & Madsen, 2005; Helo, Anussornnitisarn & Phusavat, 2008).

Scott & Vessey, 2000; Helo et al., 2008; Maditinos, Chatzoudes & Tsairidis, 2012).


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