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Introduction to ERP

History of organizational systems


Calculation systems
Functional systems
Integrated systems

Calculation systems
1950-80
Single purpose
Eliminate tedious human work
Examples: Payroll, General ledger,
Inventory
Technology used: Mainframes, magnetic
tapes, batch processing

A System/370 Model 145


(1970s)

removable-disk hard drives

Hard drives

A very nice-looking magtape-drive

Magtapes

Batch processing

Printer

800 lines/minute with 48 character


train, 136 columns with 6 or 8 lines
per inch spacing

Stack of Computer Printout Paper

Functional systems
1975-20??
Use computers to improve operations
Applications: Human resources, order
entry, manufacturing resource planning
Technologies: Mainframes, PCs, LANs

Minicomputer

Functional systems
Typically contained within a department
Islands of automation
Applications independently developed
and deployed
Driving force: availability of minicomputers

Functional system applications

Human resources System


Accounting and finance systems
Sales and marketing System
Operations management System
Manufacturing Systems

Human Resources

Recruiting
Compensation
Assessment
Development and Training
Planning

Accounting and Finance

General Ledger
Financial Reporting
Costing
Budgeting
Accounts Payable
Accounts receivables

Sales and Marketing


Lead tracking
Sales forecasting
Customer management

Operations
Order management
Inventory management
Customer service

Manufacturing
Inventory
Planning

Types of Organizational
information Systems
Administrative systems
Scheduling / Transaction systems
Value oriented systems
Reporting and controlling systems
Analysis and information systems
Planning and decision support systems
(From Business Process Engineering by
A.W. Scheer)

Problems with function based


application

Sharing of data between systems


Data duplication
Data inconsistency
Applications that dont talk to one another
Limited or lack of integrated information
Isolated decisions lead to overall
inefficiencies
Increased expenses

Solution to disparate systems?

Integration
Consolidation
Right-sizing
Business Process Redesign
Enterprise wide system

Integrated systems
or
Enterprise Resource Planning
System

ERP - Definition
ERP is a process of managing all
resources and their use in the entire
enterprise in a coordinated manner

ERP system: Definition


ERP is a set of integrated business
applications, or modules which carry out
common business functions such as
general ledger, accounting, or order
management

What is ERP?
Enterprise Resource Planning
Support business through optimizing,
maintaining, and tracking business
functions
Broken down into business processes

HRM
Distribution
Financials
Manufacturing

What makes ERP different


Integrated modules
Common definitions
Common database
Update one module, automatically
updates others
ERP systems reflect a specific way of
doing business
Must look at your value chains, rather
than functions

Benefits of ERP
Common set of data
Help in integrating applications for
decision making and planning
Allow departments to talk to each other
Easy to integrate by using processed
built into ERP software
A way to force BPR (reengineering)
Easy way to solve Y2K problem

Vendors

Difficulty in implementation
Very difficult
Extremely costly and time intensive
Typical: over $10,000,000 and over a
year to implement
Company may implement only certain
modules of entire ERP system
You will need an outside consultant

Common Pitfalls
Do not adequately benchmark current
state
Did not plan for major transformation
Did not have executive sponsorship
Did not adequately map out goals and
objectives
Highly customized systems to look like
old MRP systems

Survey of ERP
implementations
Done by ittoolbox.com in 2004

Overview
375 IT and business professionals
52% anticipate budget increases for
new ERP implementations/new modules
SAP and PeopleSoft/J.D. Edwards were
cited as the most popular ERP packages
46% indicated that the main challenge
to successful ERP implementations was
inadequate definition of requirements
and resistance to change

How would you characterize your budget for new ERP


implementations/new modules deployments for 2004 compared to
your budget in 2003?

Who is directly responsible for determining


your ERP implementations/new modules
deployments?

Who are the other key decisionmakers/influencers in decisions to add new


ERP packages/new modules?

Do you currently have an ERP


package?

If your answer is "Yes", which ERP package(s)


do you currently use?

Are you considering adding new modules to


your existing ERP package?

If your answer is "Yes", which modules are


you planning to add?

If you plan to deploy a new ERP package


and/or add modules to your existing
packages, when would this implementation
take place?

Who do you partner with for new ERP


implementations and additions of new
modules?

What do you see as the main challenges to


successful ERP implementations within your
organization?

For more details


http://projectmanagement.ittoolbox.co
m/documents/research/