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BCIS 485College of BusinessNew Mexico State UniversityEnterprise Resource Planning (ERP)Enterprise Systems (ES)Knowledge workersThomas Davenport, Harvard University, says this is the skill setpeople should have tobe effective usingtoday's technologies in the businessenvironment. Technical skills. Knowledge of enterprise software and software tools for analysis and presentation.Analytical skills. Understand statistical models, assumptions and constraints in order to interpret analyses.Knowledge of data. What data are available and how to get it.Knowledge of business. What the business' goals are.How data analysis may help achieve goals.Communication/partnering skills.Coordinate and work with others to combine knowledge and skills.Communicate effectively.Timeline of software development

Inventory controlMaterial Requirements PlanningManufacturing Resource PlanningEnterprise Resource PlanningEnterprise System

3IT & ERPHistory of information technology (IT) and its impact on the development of ERP systemsSome engineers for IBM started SAP in the early 1970s.They didnt have a computer. They used their clients mainframe to begin developing software.1983: The company I worked for rented mainframe processing time. One PC was used by two departments: transportation and marketing. Computer-generated reports were distributed weekly and monthly. No one had a computer on his/her desk, only a terminal linked to a mainframe computer (which would fill this room).Computer hardware has gotten cheaper and more powerful every year since the 1950s but it wasnt until the early 1990s that IT could provide the processing and storage capacity an ERP system needs.Database management systems have also evolved since the 1970s.MRP & MRP IIManufacturers invested a lot of money in developing software to help handle the complexities of material requirements planning (MRP) and to integrate different production activities.Before a company can produce a product it must procure the raw materials for manufacturing this product.MRP takes into consideration raw materials already on hand and what is planned for production then generates a list of materials required (what needs to be purchased and when).MRP II added production planning and scheduling.ERP took integration furtherERP took the integration concept further. Data is stored in a central database that enables each functional area to work with current, up-to-date data.Historically, business functional areas tend to be isolated; sometimes referred to as functional silos. People sometimes take action without being aware of the impact on other parts of the business. ERP enables information to flow between functional areas, providing horizontal integration.

Impetus for ERP Implementation IT now offers the computing resources needed at a reasonable cost.During the 1990s the Y2K problem gave companies the opportunity to implement ERP while fixing the Y2K problem.Y2K problem = Legacy (old) programs and databases stored years in a two-digit format.Sarbanes-Oxley Act of 2002Tighter control of accounting and financial records and reports.Multinational corporationsCurrency differencesRegulation differencesERP Implementation CostsSummary taken from article in CIO (see full article) about a survey about ERP software

Total cost of the average ERP implementation?SAP = $16.8 millionOracle = $12.6 millionMicrosoft = $2.6 millionTier II average: $3.5 million (Tier II includes companies besides the industry leaders.)How long did it take?SAP = 20 monthsOracle = 18.6 monthsMicrosoft = 18 monthsTier II average: 17.8 monthsSatisfied with the result?SAP = 73%Oracle = 62%Microsoft = 69%Tier II average: 70%

Benefits of information integrationLack of integration creates problemsInefficienciesTime spent trying to get informationTime spent storing duplicate dataInconsistent dataKeeping the same data in more than one location makes data accuracy more difficultInability to access data in a timely mannerIntegration across functional areasAccounting/FinanceSales/MarketingSupply ChainMgtHuman ResourcesInformation is centralized and available to each functional area.Information System/Central DatabaseCUSTOMERSVENDORS/SUPPLIERSCRM = customer relationship managementSRM = supplier relationship managementERP ImplementationBusiness process re-engineeringThis can be an opportunity to change processes and become more efficient.This can create tension and resistance from employees.Good change management is necessary.SAPs best practices approachThough there are hundreds of customization settings in SAP, this is different from what customization has typically meant to software companies.SAP modules built on best of breed practices.

Overview of modules in ERP/ESBusiness functionsAccounting/FinanceHuman ResourcesSales/MarketingSupply Chain ManagementProcurementProductionDistributionBusiness processesForecasting demand/planningProcurementProductionSales order processingIntegrationAn ERP system you have used: BannerERP supports business functions Sales & MarketingSales/MarketingMarket productsTake sales ordersCustomer relationship managementSales forecastingAdvertisingERP supports business functions Supply Chain ManagementSupply Chain ManagementPurchase goods and raw materialsReceive goods and raw materialsLogistics (moving products and raw materials)Production schedulingManufacturePlant maintenanceERP supports business functions Accounting & FinanceAccounting/FinanceFinancial accountingCost allocation and controlPlanning and budgetingCash flow managementFinancial analysisERP supports business functions Human ResourcesHuman ResourcesRecruit and hireTrainingPayrollBenefitsGovernment/regulation complianceERP Data input/output

Technology evolution: Client/server architecture

Remote access to centralized data on the database server.Browser-based applications.SAP R/3 and mySAPR/3 = 3-tiered architecture

mySAPNetWeaver/Application Server introduced in 2003More browser-based functionalityBusiness Warehouse (BW), Customer Relationship Management (CRM) and other new modules offered

Now and the futureInternet and browser-based interfacesDatabase technology now provides the capacity for vast amounts of data to be stored.Business intelligence / data analytics Organizations want to take advantage of their data to help identify patterns or relationships and to aid decision-makers.Inventory controlMaterial Requirements PlanningManufacturing Resource PlanningEnterprise Resource PlanningEnterprise System

20SAP ModulesSales and Distribution (SD)Records sales orders, schedules deliveries and holds information about pricing, how and where to ship products, how the customer is to be billed.Materials Management (MM)Tracks acquisition of raw materials from suppliers (purchasing or procurement)Movement of inventoryGoods receivedMaterials moved to the shop floorFinished goods moved from shop floor to inventoryProduction Planning (PP)Production is planned, scheduled, released for execution, and confirmed (completed).

SAP ModulesQuality Management (QM)Helps to plan and record quality-control activities, such as product inspections and material certificationsPlant Maintenance (PM)Management of resources such as preventive maintenance of plant machineryAsset Management (AM)Helps in managing fixed-asset purchases (plant and machinery) and the related depreciation.Human Resources (HR)Tracks employee recruiting, hiring, training, payroll and benefits. Financial Accounting (FI)Records transactions in the general ledger accounts. Used to generate financial statements for external reporting purposeSAP ModulesControlling (CO)Used for internal management purposes. The companys manufacturing costs are assigned to products and to cost centers, so that the profitability of the companys activities can be analyzed Project System (PS)Provides tools for planning and control of special projects like Research and Development or Marketing Campaigns or low-volume, highly complex projects like aircraft or ship construction Workflow (WF)A set of tools that can be used to automate any of the activities in R/3. For example, a work flow can be created so that when a shipment is received at the warehouse both the production manager and accounts receivable receive a notice from within SAP.

Videos about ERP and SAPIntroduction to ERP & SAPhttp://www.youtube.com/watch?v=EO2Df1p_tcw

Introduction to SAPhttp://www.youtube.com/watch?v=I1fAcjEIEEM&p=1A70F57584733F6C&playnext=1&index=30

SAP Business One (ERP for small to medium-size companies)http://www.youtube.com/watch?v=zE9tmAcDaH4http://www.youtube.com/watch?v=WEcWutvYg5A

Tips for selecting ERP software for a businesshttp://www.youtube.com/watch?v=BCucG-1jUBY