ERP Overview 3 — Questions and Answers
Question 1: Which metric best measures the return on investment of an ERP implementation?
- Number of modules deployed
- Reduction in total cost of ownership and process efficiency gains (Correct answer)
- Speed of user login times
- Number of reports generated per day
Correct answer: Reduction in total cost of ownership and process efficiency gains
ROI for ERP is measured through tangible outcomes like reduced operational costs, faster processes, and eliminated redundant systems.
Question 2: What is the function of an ERP 'sandbox' environment?
- A secure server for storing financial data
- An isolated testing environment that mirrors production without affecting live data (Correct answer)
- A module for managing physical warehouse locations
- A dashboard for monitoring system performance
Correct answer: An isolated testing environment that mirrors production without affecting live data
A sandbox is a safe, isolated copy of the ERP used for testing configurations, customizations, and training without impacting live operations.
Question 3: Why do many ERP implementations fail to deliver expected benefits?
- ERP software is typically too expensive to configure properly
- Inadequate change management and user adoption are leading causes of failure (Correct answer)
- Modern ERP systems are incompatible with most hardware
- Regulatory requirements prevent full ERP utilization
Correct answer: Inadequate change management and user adoption are leading causes of failure
Research consistently shows that poor change management and low user adoption—not technical issues—are the top reasons ERP projects underperform.
Question 4: In ERP terminology, what is a 'configuration' as opposed to a 'customization'?
- Configuration modifies source code; customization uses built-in settings
- Configuration uses built-in settings to adapt the system; customization involves changing the source code (Correct answer)
- Both terms mean the same thing in modern ERP
- Configuration is done by vendors; customization is done by end users
Correct answer: Configuration uses built-in settings to adapt the system; customization involves changing the source code
Configuration adjusts system behavior using built-in options and settings, while customization involves writing new code to alter the software itself.
Question 5: What does 'two-tier ERP' mean in an enterprise context?
- Running two separate ERP systems simultaneously at headquarters and subsidiaries (Correct answer)
- An ERP with two separate user interface layers
- A pricing model with two subscription tiers
- A backup ERP system that activates during outages
Correct answer: Running two separate ERP systems simultaneously at headquarters and subsidiaries
Two-tier ERP means a large enterprise uses a full-featured ERP at headquarters while smaller subsidiaries run a lighter, separate ERP solution.
Question 6: Which stakeholder group is most critical to involve during ERP requirements gathering?
- External auditors
- End users and process owners from each business department (Correct answer)
- IT infrastructure specialists only
- The ERP software vendor's implementation team
Correct answer: End users and process owners from each business department
Process owners and end users understand day-to-day workflows best and must be involved to ensure the ERP meets actual business needs.
Question 7: What is the purpose of a 'fit-gap analysis' during ERP selection?
- To compare the salaries of ERP vendors' implementation teams
- To identify where standard ERP functionality meets business needs and where gaps require customization (Correct answer)
- To measure network bandwidth requirements for ERP deployment
- To assess employee readiness for system training
Correct answer: To identify where standard ERP functionality meets business needs and where gaps require customization
Fit-gap analysis compares the ERP's standard features against the company's requirements to identify areas needing configuration or custom development.
ERP Overview 3
Which metric best measures the return on investment of an ERP implementation?