ERP

The Development of Enterprise Resource Planning Systems

The Evolution of Information Systems

ERP system was not feasible until the 1990’s Evolved as a result of

Development of hardware and software technology needed to support the system

Computers have gotten smaller and faster Moore’s Law

Performance doubled with each new generation of computers

Every 18-24 months the # of transistors on a computer chip doubled

Proliferation of personal productivity software

The Evolution of Information Systems

Development of a vision of integrated information systems

As PC’s gained popularity, managers became aware that important business information was being stored on individual PC/s, but there was no easy way to share the information electronically.

Servers became more powerful and less expensive and provided scalability

Possible to view ERP systems as an extension of MRP II (Manufacturing Resource Planning)

ERP Software Emerges

SAP Formed in 1972 by five former IBM systems analysts Systemanalyse und Programmentwicklung Systems Analysis and Program Development

R/3 Released in 1992 Designed using an open-architecture Allows all business areas to access the same

database, eliminating redundant data and communication s lags

The Significance and Benefits of ERP Software and Systems Allows easier global integration

Barriers of currency exchange rates, language and culture can be bridged automatically

Eliminates updating and repairing many separate computer systems

Allows management to manage operations, not just monitor them Makes the organization more responsive when

change is required

Questions About ERP

How Much Does an ERP Package Cost? Large company might spend from $50 million

to $500 million Midsize company might spend $10 million to

$20 million Cost includes several factors

ERP software New Hardware Consultants’ and analysts’ fees Time for implementaiton Training

What return can be expected from an ERP investment? Savings in operations expense

One study indicated that 33% of companies say costs savings in sales order management, and 34% of companies said their ERP systems significantly reduced their personnel needs

More sales can be generated every month Competitive advantage Save personnel, suppliers, distributors, and

customers much frustration

Why do some companies have more success with ERP than do other? Some executives hope that new software will

cure fundamental business problems that aren’t curable by any software

Some executives and IT managers don’t take enough time for a proper analysis during the planning and implementation phase

Some executives and IT managers skimp on employee education and training

The Continuing Evolution of ERP

The Internet has forced ERP companies to rethink how users get and use their ERP software