chapter extension 9 enterprise resource planning (erp) systems
TRANSCRIPT
Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?
Study Questions
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Enterprise Resource Planning (ERP): Suite of modules, a database, and set
of inherent processes for consolidating business operations into a single, consistent, computing platform.
Primary purpose: integration of purchasing, human resources, production, sales, and accounting data into a single system.Allows real time global updates whenever a transaction happens.
Critical business decisions can be made using latest data.
Q1: What Is the Purpose of ERP Systems?
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Pre-ERP Information System: Bicycle Manufacturer
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Does not include accounting Five non-integrated databases
ERP Information System
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All activity processed by ERP application programs and consolidated data stored in centralized ERP
database
How does sales department determine an order is “large”? By dollars? By volume?
Who approves customer credit (and how)?
Who approves production capacity (and how)?
Who approves schedule and terms (and how)?
What actions need to be taken if customer modifies an order?
How does management obtain oversight on sales activity?
Many other questions must be answered as well.
Some Questions that Procedures Need to Answer or Resolve
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Almost no organization develops its own ERP software
Daunting and expensive:
Multi-year projects, millions of dollars, and hundreds of employees, consultants and vendor personnel
SAP ERP databases contain over 15,000 tables!
ERP Projects
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ERP Application programs
ERP Databases
ERP Business process
procedures
ERP Training and
consulting
Q2: What Are the Elements of an ERP Solution?
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ERP
Supply chain (procurement, sales order processing, inventory management, supplier management, and related activities)
Manufacturing (scheduling, capacity planning, quality control, bill of materials, and related activities)
CRM (sales prospecting, customer management, marketing, customer support, call center support)
Human resources (Payroll, time and attendance, HR management, commission calculations, benefits administration, and related activities)
Accounting (General ledger, accounts receivable, accounts payable, cash management, fixed asset accounting)
ERP Include Applications that Integrate: (http://www.erpsoftware360.com/erp-101.htm)
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• ERP vendor applications configurable so can alter without changing program code.
• Set configuration parameters specifying how ERP application programs will operate: Hourly payroll application configured to specify number of hours in standard work week, hourly wages for different job categories, wage adjustments for overtime and holiday work, etc.
ERP Applicatio
n Programs
•Trigger: Database program to keep database consistent when certain conditions arise.
•Stored procedure: Database program to enforce business rules.
ERP Database
s
ERP Solution Components
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•Adapt to predefined, inherent processes and procedures, or design new ones?
ERP Business Processes
and Procedures •Training on how to implement
Obtaining top-level management support, preparing the organization for change, and dealing with inevitable resistance
•Training on how to use Super Users become in-house trainers;
train the trainers•Vendor and third-party consultants
ERP Training
and Consulting
ERP Solution Components (cont’d)
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Inherent Processes: SAP Ordering Business Process (Process Blueprints)
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Inherent Processes: SAP Ordering Business Process (cont’d)
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Q3: How Are ERP Systems Implemented?
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Major tasks in implementation of an ERP application
Model current
business processes “as
is”
Identify relevant
ERP blueprint processes
Compare as-is process
models with blueprints,
note differences
Find ways to
eliminate differences
Prepare detailed
plan
Train users processes, procedure
s, ERP features
and functions
Conduct simulation tests new system
Convert data,
procedures, personnel
to new system
Magnitude of ERP Implementation
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SAP blueprint contains over a thousand process models
Industry-specific solutions
Industries
Manufacturing
Distribution
Mining, materials
extraction, petroleum
Medical careGovernmen
t and public service
Utilities
Retail
Education
Q4: What Types of Organizations Use ERP?
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Small Market Midsize Enterprise
Annual Revenue
$5M–$100M $100M–$1 B Over $1B
Staff Fewer than 100 101–500 Over 500
ERP Users 5–30 users 31–250 Over 250
IT Staffing One or few Small group; often lack executive participation and long-term strategy
Full IT line of business staffing; with executive participation and CIO
IT Skills Very modest, often OJT
Generalist skills; generally lacking specialty skills
Portfolio of broad and specific skills
ERP by Organization Size (2010)
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Source: http://www.erpsoftware360.com/software-markets.htm
Provide a worldwide consolidation of financial statements on a timely basis
Inherent ERP procedures must be adaptable to many cultures
Designed to work with multiple currencies, multiple languages, manage international transfers of goods in inventories, and work effectively with international supply chains
http://advice.Cio.Com/puneesh/deploy_erp_to_improve_globalization_efficiency_of_your_organization
International ERP
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Q5: How Do the Major ERP Vendors Compare?
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Epicore
MS Dynamic
s Infor Oracle SAP
Revenue
(2009)
$410M+
$1.3B ~$2B >$2B $11.9B
Market Share (2005)
1% 4% 2% 20% 42%
ERP Vendor Market Ranking
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No true ERP product in the cloud in 2010
ERP industry entering a new phase
Vendors cannot ignore SOA, thin-client technology like HTML 5, Enterprise 2.0, social CRM, ERP on a cell phone, and other recent developments
SAP and Oracle maintain control of traditional ERP functionality; smaller vendors create complimentary products that incorporate newer technologies.
With SOA architecture, easier to integrate applications with ERP functionality and easier for specialty software vendors to connect their programs with ERP programs and data
The Future: ERP in the Cloud
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Active Review
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?
CE12-24
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Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall