Professional Documents
Culture Documents
Hour 2: ERP Modules: Historical Development
Hour 2: ERP Modules: Historical Development
Historical development
Historical
• Initial Computer support to business
– Easiest to automate – payroll & accounting
– Precise rules for every case
• Early 1970s
– centralized mainframe computer systems
– MIS systematic reports of financial
performance
– Variance analysis between budget and actual
MRP
• Material requirements planning
• Inventory reordering tool
• Evolved to support planning
• MRPII extended to shop floor control
SAP Modules
SD Sales & Distribution
MM Materials Management MRP
PP Production Planning MRPII (with others)
QM Quality Management
PM Plant Maintenance
HR Human Resources
FINANCIAL FI Financial Accounting
CO Controlling
AM Asset Management
PS Project System
R/3 INTERNAL WF Workflow: prompt actions
IS Industry solutions: best practices
Comparative Modules
SAP Oracle PeopleSoft JDEdwards
SD Marketing, Sales Supply chain Order management
MM Procurement Supplier relationship Inventory, procurement
PP Manufacturing Manufacturing mgmt
QM Enterprise perform Technical foundation
PM Service Enterprise service
HR Human Resources Human capital mgmt Workforce management
FI Financials Financial mgmt sol. Financial management
CO Time & Expense mgmt
AM Asset Management Enterprise asset mgmt
PS Projects Project management
WF Order Management
Contracts Subcontract, real estate
Industry-Specific Focus
• Each vendor has turned to customized ERP
products to serve industry-specific needs
– Examples given from BAAN, PeopleSoft
– Microsoft also has entered the fray
BAAN Industry-Specific Variants
Discrete Manufacturing Process Manufacturing
Aerospace & Defense Chemicals
Automobile Food & Beverage
Industrial Machinery Pharmaceuticals
Electronics Cable & Wire
Telecommunications Pulp & Paper
Construction Metals
Logistics
PeopleSoft Industry Solutions
Communications Consumer Products Federal
Government
Financial Services Healthcare Higher Education
Professional Staffing
Services
Utilities Wholesale
Distribution
Microsoft Great Plains Business
Solutions
Accounting & Finance
Customer Relationship Management
E-Business
Human Resources & Payroll
Manufacturing
Project Accounting
Supply Chain Management
Relative ERP Module Use
(Mabert et al. 2000; Olhager & Selldin, 2003)
Module Use reported - US Use reported – Sweden
Financial & Accounting 91.5% 87.3%
Materials Management 89.2% 91.8%
Production Planning 88.5% 90.5%
Order Entry 87.7% 92.4%
Purchasing 86.9% 93.0%
Financial Control 81.5% 82.3%
Distribution/Logistics 75.4% 84.8%
Asset Management 57.7% 63.3%
Quality Management 44.6% 47.5%
Personnel/HR 44.6% 57.6%
Maintenance 40.8% 44.3%
R&D Management 30.8% 34.2%
Relative Module Use
• Mabert et al. (2000) surveyed Midwestern
US manufacturers
– Some modules had low reported use (below
50% in red)
– Financial & Accounting most popular
• Universal need
• Most structured, thus easiest to implement
– Sales & Marketing more problematic
Why Module Use?
• Cost:
– Cheaper to implement part of system
– Conflicts with concept of integration
• Best-of-Breed concept:
– Mabert et al. found only 40% installed system as
vendor designed
• 50% used single ERP package; 4% used best-of-breed
– Different vendors do some things better
– Conflicts with concept of integration
Middleware
• Third-party software
– Integrate software applications from several
vendors
– Could be used for best-of-breed
– Usually used to implement “add-ons” (specialty
software such as customer relationship
management, supply chain integration, etc.)
Customization
• Davenport (2000) choices:
– Rewrite code internally
– Use existing system with interfaces
• Both add time & cost to implementation
• The more customization, the less ability to
seamlessly communication across systems
Federalization
• Davenport (2000)
– Roll out different ERP versions by region
– Each tailored to local needs
• Core modules shared
• some specialty modules unique
– Used by:
• Hewlett-Packard
• Monsanto
• Nestle
EXAMPLES
• Dell Computers
– Chose to not adopt
• Siemens Power Corporation
– Implementation of selected modules
Dell Computers