The Phoenix Fine Electronics company is considering implementing an ERP system to improve customer service and profitability. The estimated cost of implementation for 25 stores is $8,400,000 with an estimated return on investment of 78.57%. The ERP system will provide the company with several benefits including improved financial management, data security, and better customer relationships. The scope of the project includes enhancing cost control, increasing online presence, and improving business decision support. The new system will allow the company to assess customer value and monitor customer behavior. The company should consider factors such as budget, staffing, risks, and maintenance in the 18-month implementation plan. The final recommendation is to implement the ERP system, as it will improve customer data management, increase online visibility, and provide insight into customer relationships.
Phoenix Fine Electronics’ ERP System
ERP System of Phoenix Fine Electronics, Part 1
According to the ERP implementation cost estimate of $750,000 for a system with 51 or more users and a high level of customization, the ERP implementation cost estimate for each store is $2,100,000. To calculate the ROI for an ERP implementation, the investment gain is reduced from the investment cost and then divided by the investment cost (Calculator.net, 2019). Due to the fact that there are four stores, the total expected cost is multiplied by four to achieve the investment cost of $8,400,000. The ROI for ERP implementation is 78.57%, which is calculated by subtracting the cost of investment of $8,400,000 from the amount returned of $15,000,000, dividing by the cost of investment, and multiplying by 100%. The productivity of the implementation of the system per store, assuming ERP is installed in 25 stores, is calculated by dividing the annual revenue by 25, which yields $600,000 per store.
The second executive summary
ERP is customer resource management software with a large capacity for capturing data on business interactions with clients. The deployment of the ERP system is crucial for Phoenix Fine Electronics because it will bring a number of benefits, such as data security, a competitive advantage in terms of client retention, improved financial management, and enhanced business customer relationships (Doumi et al., 2013). However, the ERP project faces two substantial risks. The first risk is that the installation and execution of the ERP system are capital intensive, necessitating a substantial financial investment by the business. Since the data is stored in a central system that is prone to attack or data loss if it is not carefully guarded and monitored, there are also data security risks.
Comprehensive business requirements and desired outcomes
The ERP system would help Phoenix Fine Electronics meet three essential business requirements. The first need is enterprise resource planning, including product planning, development, manufacturing, and sales and marketing management. The targeted results for this need are that the ERP is able to support management by facilitating communication and information exchange between departments and making information readily available for productive usage (Sudhaman & Thangavel, 2015). The second requirement is customer relationship management, which includes recording, reporting, and analyzing interactions between the organization and its users. The expected results for this requirement are that the system would assist the organization in maintaining client relationships and increasing profitability (Choudhury & Harrigan, 2014). The final PFE requirement is business decision support. The anticipated results for this requirement include the expansion of management strategy, the improvement of data processes, the execution of projects, and the steady improvement of quality control.
Scope of the undertaking
The aims of the ERP project include enhancing customer service and the company’s overall profitability. The project is also to enable the company to remain competitive by reacting quickly to changes in the market or new customers. Additionally, the initiative aims to improve the company’s cost management and grow its online presence by promoting client access through various social media platforms. The duration of the project’s planning, preparation, sourcing, and implementation is 18 months.
The new system’s measurable values.
The new system will enable the company to evaluate the worth of its consumers based on the customer data provided, including the nature of their purchases, such as product, price, and quality, thereby enhancing the company’s understanding of its customers. The system may also identify consumer profiles on social media platforms through customer behaves, enabling the organization to effectively monitor potential customers’ requirements, preferences, and behavior, hence establishing strategies that are aligned with customer needs (Baran, & Galka, 2013). Measurable metrics are used by the new system to measure campaign replies, campaign purchases, web page reviews, customer referrals, and the amount of new customers acquired through campaigns. The new system also measures the number of cases handled, the average number of service calls per day, customer callbacks, and the number of cases closed each day.
A description of strategic alignment.
In 18 months, the company will be ready to make a seamless transformation across all of its departments and branches so that their operations are integrated into the system. The company’s primary considerations would be the budget for implementing the project, the staffing, including employee training for the new system, the risks involved with implementing the project, and the maintenance plan for the project.
ROI and output projections (from Part 1)
As computed in section 1, the estimated ROI for implementing the ERP system is 78.57 percent. The estimated productivity of the implementation of the ERP system per store monthly is $600,000.
The final recommendation is the PFE should implement the ERP system. The first argument for recommending the system’s adoption is its capacity to record data on client contacts with the organization and to surface the information whenever it is required. Additionally, the system captures the customer’s contact information, which may even include social media profiles, thereby increasing the company’s online visibility. Lastly, by categorizing the obtained data, the system will assist the business in comprehending the nature of its interaction with its clients, a crucial aspect of Public Relations.
Baran, R. J., & Galka, R. J. (2013). CRM is the cornerstone of modern marketing strategy. Routledge. Calculator.net. (2019). Calculator for Return on Investment (ROI). Retrieved from https://www.calculator.net/roi-calculator.html?beginbalance=8400000&endbalance=15000000&investmenttime=length&investmentlength=1&beginbalanceday=06%2F14%2F2019&endbalanceday=12%2F31%2F2023&ctype=1&x=45&y=19
Choudhury, M. M., & Harrigan, P. (2014). CRM to social CRM: the integration of new technologies into customer relationship management. Journal of Strategic Marketing, 22(2), 149-176.
Doumi, K., Baina, S., & Baina, K. (2013). Strategic Business and It Alignment: Representation and Evaluation. Journal of Theoretical & Applied Information Technology, 47(1).
Sudhaman, P., & Thangavel, C. (2015). Efficiency analysis of ERP projects—software quality perspective. International Journal of Project Management, 33(4), 961-970.