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…) Authorization; It is not always the cast that the more communication, the better organizational performance business process reengineering. Examine the business process, question the necessity step by step Q1 Q2 Price and demand curve Optimistic Q3 Expect Pessimistic P1 P2 P3 Analyze the purpose of those processes Reengineering steps Old processes

Solution Integrated enterprise information systems ======ERP System 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 ERP system Server Network Departments Customers ERP system Server Network (data exchange) Departments 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 Best Practices More efficient methods Imposition of how people do their work Less freedom and creativity Cost of computing More efficient system 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

Degree of module used by companies M o d u l e s 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 60 percent of Fortune 500 companies had adopted ERP systems before 2000. The market spending was $13.4Billion in 2003 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 Disadvantages Develop in-house Best fit with organizational needs Most difficult to develop, most expensive, Slowest In house system with vendor supplements Gain commercial advantages combined with organizational fit Difficult to develop, Expensive, slow Best-of-breed Theoretically gain best of all systems Difficult to link modules, slow, potentially inefficient Customized vendor system Retain flexibility while keeping vendor expertise Slower, usually more expensive Selected vendor modules Less risk, relatively fast, least expensive If expand, long run time and cost higher Full vendor system Fast, less expensive, efficient Inflexible Application service provider Least risk, least cost, fastest, least subject to vendor change 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: Project management ability; Experience with this type of environment; Experience with the programming environment; Experience with the language or system used; Familiarity with modern programming practices; Availability of critical equipment, software, and programming language; Completeness of project team; Personnel turnover; Relative control of project manager over project team.

Questions from Last Discussion 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. Application client --- network ----- application server HTML ---- network ---- application server

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

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