BPMJ 7,5 374 Business Process Management Journal, Vol. 7 No. 5, 2001, pp. 374-386. # MCB University Press, 1463-7154 Planning for ERP systems: analysis and future trend Injazz J. Chen College of Business Administration, Cleveland State University, Cleveland, Ohio, USA Keywords Enterprise economics, Business planning Abstract The successful implementation of various enterprise resource planning ERP) systems has provoked considerable interest over the last few years. Management has recently been enticed to look toward these new information technologies and philosophies of manufacturing for the key to survival or competitive edges. Although there is no shortage of glowing reports on the success of ERP installations, many companies have tossed millions of dollars in this direction with little to show for it. Since many of the ERP failures today can be attributed to inadequate planning prior to installation, we choose to analyze several critical planning issues including needs assessment and choosing a right ERP system, matching business process with the ERP system, understanding the organizational requirements, and economic and strategic justification. In addition, this study also identifies new windows of opportunity as well as challenges facing companies today as enterprise systems continue to evolve and expand. Introduction Enterprise resource planning ERP), when successfully implemented, links all areas of a company including order management, manufacturing, human resources, financial systems, and distribution with external suppliers and customers into a tightly integrated system with shared data and visibility. Potential benefits include drastic declines in inventory, breakthrough reductions in working capital, abundant information about customer wants and needs, along with the ability to view and manage the extended enterprise of suppliers, alliances, and customers as an integrated whole Escalle et al., 1999). While companies such as Cisco Systems, Eastman Kodak, and Tektronix have reaped the expected benefits of ERP systems, many businesses are discovering that their ERP implementation is a nightmare. For example, FoxMeyer Drug, a $5 billion pharmaceutical company, recently filed for bankruptcy. FoxMeyer argued that major problems were generated by a failed ERP system, which created excess shipments resulting from incorrect orders and costing FoxMeyer millions of dollars Bicknell, 1998; Boudette, 1999). Dell Computer spent tens of millions of dollars on an ERP system only to scrap it because the system was too rigid for their expanding global operations. Recent ERP failures also include Boeing, Dow Chemical, Mobil Europe, Applied Materials, Hershey, and Kellogg's. A recent study indicates that 40 percent of all ERP installations only achieve partial implementation and 20 percent of attempted ERP adoptions are scrapped as total failures Trunick, 1999). Depending on the definition of failure, other studies have suggested that ERP failure rate may even be greater than 50 percent Escalle et al., 1999). Ptak and The research register for this journal is available at http://www.mcbup.com/research_registers The current issue and full text archive of this journal is available at http://www.emerald-library.com/ft