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IEI-4B2 – Enterprise Resource Planning

INTRODUCTION TO ERP

Ari Yanuar Ridwan

S1 Teknik Industri – Fakultas Rekayasa Industri

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Learning Objectives

• Definition of ERP
• Need for an ERP
• History of ERP Applications
• Benefits from an ERP System
• ERP Challenges
• ERP and Enterprise Applications – Emerging Trends
• ERP – A subset of Enterprise Applications

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DEFINITION OF ERP

• ERP is an integrated information system built on a centralized database and

having a common computing platform that helps in effective usage of
enterprise’s resources and facilitates the flow of information between all
business functions of the enterprise (and with external stakeholders)

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NEED FOR AN ERP

• From Department to Enterprise
• From Function to Process
• From Information Silos to Integrated Information System
• Duplication of data
• No integration between these different systems
• Systems can not update online all relevant information

• From Departmental Database to Companywide Integrated Database

• No data duplication
• Data standardisation
• Data tracking

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From Department to Enterprise

• The whole enterprise has a set of objectives. Any department can not have a
separate/conflicting objective from that of the enterprise.
• Objective/KPI (Key Performance Indicator) of every department is derived
from organizational objective.
• The whole enterprise works like a system where each department is a
part/sub-system of this. Each of these sub-systems knows what others are
doing, what is their objective/KPI and why they are doing so.

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From Function to Process

• Business functions: Activities specific to a functional area of

operation (Finance, Logistics, Production, Sales, etc.)
• Business process: Collection of activities that takes some input and
creates an output that is of value to the customer
• Better integration of functional areas leads to improvements in
communication, workflow, and success of company
• Start measuring process efficiency instead of functional KPIs.
• ERPs are designed around processes and facilitates process thinking.
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From Information Silos to Integrated Information System

• Duplication of data
• No integration between these different systems
• Systems can not update online all relevant information

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From Information Silos to Integrated Information System (2)

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Central Database and Integrated Information System
Source: Ray, Rajesh. Enterprise Resource Planning: Text & Cases. Tata McGraw Hill, 2011
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From Information Silos to Integrated Information System (1)

Information Silos for Different Departments

Source: Ray, Rajesh. Enterprise Resource Planning: Text & Cases. Tata McGraw Hill, 2011

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From Departmental Database to Companywide Integrated

Database

• No data duplication
• Data standardisation
• Data tracking

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THANK YOU

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