Enterprise Resource Planning

(ERP)

Dr. Prabin K Panigrahi

IIM Indore

1
Agenda
• What is ERP?
• Why ERP?
• ERP Vendors
• SAP R/3 & Modules
• ERP Trends
• Questions/Answers

2
ERP
• A collection of software systems that help
to manage business processes for an
entire organization

• Designed to integrate all information

processing support for an entire
organization

3
Organization
• A group of people engaged in
purposeful activity over extended
time

• A tool used to coordinate in order to

obtain Value for organizational goals

4
How an Organization Creates Value

INPUTS PROCESS

ENVIRONMENT OUTPUTS

5
Business Process
• Work activities across time and
place, with a beginning, an end, and
clearly identified inputs and outputs
(Davenport, 1993)

• Has sequence, purpose, interaction

6
 Example – ERP HR Module
HR processes
PAYROLL
BENEFITS

RECRUITING
TRAINING

payroll programs, personnel

IT resources files, health plan documents,
recruiting, Servers &
networks, etc.

7
Theme of ERP
• Reflects assumptions about the way
companies operate

• Provides the integration of all the

information flowing through a company
i.e.,
– Financial/accounting information
– HR information
– Customer information

8
An Organization with ERP

• A process-oriented organization
• Data at the core of the enterprise
• ERP as a major part of the
enterprise architecture

9
Differences between Function & Process

Function Process
Focus on “What” Focus on “How”
Vertical Horizontal
Static Dynamic
Task-centered Customer-oriented
Individual/Specialist Team/Generalist
Parochial Holistic

10
 Cross-functional Processes
i.e., Product Development
competitor analysis

MARKETING R&D PRODUCTION

market research

new product
prototype
Product development

needs analysis component process

research design design
market test product test equipment
product design
release production
start

11
ERP for Organizational Value Chain

Support:

Profit Margin
Infrastructure, HR, R&D, Procurement

Primary:
Inbound Outbound Marketing
Operations Service
logistics logistics & Sales

− Stream of activities
− Applies to both products and services
12
Business Process Reengineering (BPR)

An organization fundamentally and radically

redesigns its business process to achieve
dramatic improvement
− From the restructuring of an organization
− To the redesigning of individual processes

13
ERP Strategic Issues

• Compelling reasons - efficiencies

• Organization change - better than
current
• Strategic advantage - gaining an
advantage

14
ERP Tactical Issues

• Functional /Cross-functional
integration
• Supply chain integration
• Decision support

15
Operational Issues – ERP Implementation

• Configuration – Methodology &

Processes
• Plan vanilla to start
• Populating the data with integrity
• Modifications made
• Cut over or Phased rollout
• Add-ons

16
ERP Trends

1. Further integration of suppliers

& customers
2. Focus on ERP system flexibility
3. Mass customization
• Standard interfaces across chain

17