Enterprise Information

Systems and ERP systems

Jing Shao
What is ERP System

Letter meaning: Enterprise Resource Planning Systems

Resource: All resources in an organization, including:
capital, equipment, material, intelligence, and so on.
What and how to Plan

Definition : ERP systems is a software solution that addresses

the enterprise needs. It takes the process view of an organization to
meet the organizational goals and tightly integrates all functions in
that organization.
Why Enterprise Have to Use ERP Systems
-------Problems in enterprise information system
1. Data exchange blocks;
Software applications built to run on different operating
systems cannot be connected to run together on the same
operating system. We need to re-entry data from one system to
another system in order to exchange information, thus leading to
data inconsistency;

2.   Stove-piped operations and stove-piped systems;

Why Enterprise Have to Use ERP Systems
-------Problems in enterprise information system
(continue…)
3. Authorization;
It is not always the cast that the more communication, the
better organizational performance
Q1

Q2
Price and demand curve Optimistic
Q3
Expect
Pessimistic

4. business process reengineering. P1 P2 P3

Examine the business process, question the necessity step

by step
Old Analyze the Reengineering
processes purpose steps
of those processes
Solution
Integrated enterprise information systems
It is a set of communication channels in a
business organization, combined together in such a
way as to form one network by which information is
gathered and disseminated.

======ERP System
Widely integrated information systems
covering all functional areas. It integrates database,
applications, interfaces, tools, and business process
reengineering ( BPR ).
 ERP Working Theory

Customers

ERP
system
Departments Network Server
(data
exchange)

Suppliers
What ERP Systems Can Offer to an
Enterprise? – Benefits
 ERP creates value through

1. integrating activates across a firm,

2. Implementing best practices for each business
process
3. Standardizing processes within organizations
4. Creating one-source data
5. Providing on-line access to information
---facilitate better organizational planning,

communication, and collaboration.

 Advantages and Disadvantages
Factor Pro Con
System
Integration Improved understanding Less flexibility

  across users  

Data Integration Greater accuracy Harder to make corrections

Imposition of how people do their
Best Practices More efficient methods work

    Less freedom and creativity

More efficient system
Cost of computing planned Changing needs

    Under budgeted training expense

    Hidden costs of implementation

ERP Modules
Reasons of designing ERP systems in Modules

 1. Obtain specific functionality

 2. Cost
 3. Implement the system in bits rather
than bring entire massive system online
at one time
 Modules
Module Degree of module used by
companies
Financial and Accounting 91.5%
Materials management 89.2%
Production Planning 88.5%
Order entry 87.7%
Purchasing 86.9%
Financial Control 81.5%
Distribution/logistics 75.4%
Market Trend and Vendors
Market:
1. 60 percent of Fortune 500 companies had adopted
ERP systems before 2000.
2. The market spending was $13.4Billion in 2003
3. The predicted market spending is $15.8 Billion in
2008

Vendors:
over fifty vendors, such as SAP, Oracle, Baan, and
J.D. Edwards
 Ways to Developing ERP System
Method Advantages
Develop in-house Best fit with organizational
needs
In house system with Gain commercial advantages
vendor supplements combined with organizational fit
Best-of-breed Theoretically gain best of all
systems
Customized vendor Retain flexibility while keeping
system vendor expertise
Selected vendor modules Less risk, relatively fast, least
expensive
Full vendor system Fast, less expensive, efficient
Application service Least risk, least cost, fastest,
provider least subject to vendor change
Disadvantages
Most difficult to develop,
most expensive, Slowest
Difficult to develop,
Expensive, slow
Difficult to link modules,
slow, potentially inefficient
Slower, usually more
expensive
If expand, long run time and
cost higher
Inflexible
At the mercy of the provider,
no control, and subject to
price increases
 ERP System Selection Risks
 The cost, time, and risk of an ERP project depends on
following factors:

1. Project management ability;

2. Experience with this type of environment;
3. Experience with the programming environment;
4. Experience with the language or system used;
5. Familiarity with modern programming practices;
6. Availability of critical equipment, software, and
programming language;
7. Completeness of project team;
8. Personnel turnover;
9. Relative control of project manager over project team.
Questions from Last Discussion

1. How the business processes are modeled in

ERP systems ?

2. How ERP system installed in an organization?

Is it simple replace old separated operation
systems or it can be combined with old
systems?

3. How to combine ERP system with business

process?
Measurement of ERP Project
• Intangible factors
increases in market share
improved customer service
better corporation image
employee satisfaction
supply chain integration
ability to support e-business operation
• Hidden outcomes
change how people do their jobs
• The changing nature of information technology
high dynamic technology and long-term project for
implementing ERP
ERP Project Management

 Cost

 time
Tool – Critical Path Method

 Right system
Critical Success Factors in ERP

 1. Clear understating of strategic goals

 2. Commitment by top management
 3. Excellent implementation project management
 4. Great implementation team
 5. Successful coping with technical issues
 6. Organizational commitment to change
 7. Extensive education and training
 8. Data accuracy
 9. Focused performance measures
 10. Multisite issues resolved
Open Source ERP

Reasons of Choosing open source ERP

1. cost
2. Free redistribution
3. Available source code

Available providers
There are about 20 vendors providing open source ERP
systems. For example:
1. Open MFG
2. FISTERRA
3. ERP 5
4. Compiere
 Compiere Open Source ERP

Architecture
 Compiere is a 100% pure Java
solution based on Oracle database
technology, and it is working on
database independence.
 client application component is
written entirely in Java
 The application server component
is implemented in Java based on
J2EE technology using the JBoss
server infrastructure.
 Functionality
Business processes rather than traditional
departments drive Compiere's design.
Seven Modules:

quote-to-cash, requisition-to-pay, partner relationship management,

supply chain management, performance analysis, web store
Quote-to-Cash
Requisition-to-Pay
Customer relations
management
Partner Relations Management
Supply Chain Management
Performance Analysis
Web Store
Thank
You