1. Chapter 15: Packaged Software and Enterprise Resource Planning
Systems Analysis and Design in a Changing World, 3rd Edition

2. IS Components Serving Multiple Business Functions

3. Key Components in Enterprise Computing

4. Packaged Software Traditionally focused on isolated business functions
ERP focuses on integrated software solutions
Current trends show increase in packaged software and decrease in in-house software development
Customization, integration, and upgrades of packages must be considered

5. Three Critical Issues of Packaged Software Spanning All Phases of SDLC

6. Customizing Packages Desire is to minimize customization
Best practices already built-in
Unique business requirements may exist
Customization types
Configuration – selecting options
Modification – changing program code to alter processing
Enhancement – adding functionality

7. Integrating Packages
Standardize data so all functions can access it in real time
Enterprise application integration (EAI) – process of linking applications to support flow of information across multiple business units and IT systems
Middleware
ERP with built-in middleware

8. Obstacles to Integration

9. Upgrading Packages Upgrades can be challenging
Vendors frequently upgrade packages
Existing level of customization
Integration within organization
Must be planned and documented during system development

10. Enterprise Resource Planning
Using integrated application software to improve effectiveness and efficiency of entire enterprise
Objectives of ERP
Provide best practice functionality within departments and high level of integration across all enterprise functions
Bridge gap in value chain
Includes transaction processing system (TPS), management information systems (MIS), decision support systems (DSS)

11. Non-integrated IS and Integrated IS

12. Major Characteristics of ERP

13. ERP Vendor Packages Began as integrated packages for core business:
Finance, Manufacturing, Human resources
Expanded to extended business functions
Customer relationship management
Supply chain management
Sales-force automation
E-commerce
Business intelligence

14. Why Consider ERP?
Reduces workforce in core transaction processing systems by eliminating tasks and duplication
Supports global business operations
Achieves economies of scale
Improves communication and information exchange among departments

15. Why Consider ERP? (continued)
Reduces information systems development staff
Improves customer service through better logistics
Improves data integrity
Improves decision support

16. Costs and Benefits
ERP may cost up to $5 million for a mid-sized firm and up to $50 million for a large corporation
Cost competitive among major vendors
Implementation can take up to 2 years
Payback usually 6-30 months
Savings based on 30% reduction in administrative and IS costs
Consider operating costs

17. Implementing ERP / Critical Success Factors
Realistic ERP budget and proper allocation of resources
Education of all key management personnel about ERP
Strong top management support
Centralized project management with business leader in charge
Strong IT management and staff support
Selection of right approach to ERP

18. Implementing ERP / Critical Success Factors (continued)
Heavy user involvement from all affected areas
Standardized business process reengineering on software capabilities
Retraining of existing software developers in ERP
Extensive training of end users
Use of consultants (knowledgeable in specific business functions and ERP modules) to lead implementation and training

19. Implementing ERP / Critical Success Factors (continued)
Respected and effective champion of ERP within the organization
Effective and continuous communication
Top-notch systems analysts with excellent business knowledge and technical skills
Retention of analysts throughout project and beyond
Sensitivity to user resistance with new systems

20. Three Approaches to ERP

21. Organizational Structure for an ERP Project

22. An ERP System Development Methodology
Phase 1: Planning
ERP oversight committee
Project team
Phase 2: Analysis
Collection of requirements from in-house work groups
Identify business reengineering initiatives
Select vendors
Prototypes may be developed

23. An ERP System Development Methodology (continued)
Phase 3: Design
Interfaces determined
Hardware design
Middleware issues
End users trained
Phase 4: Implementation
Installation
Configuration into cohesive system

24. An ERP System Development Methodology (continued)
Phase 5: Support
Training
Maintenance

25. Special Topics on ERP Development
Select a comprehensive package
Preliminary evaluation
Detailed evaluation
Vendor presentations
On-site visits
Final decision

26. Special Topics on ERP Development (continued)
Linking applications to an ERP package
Purchasing middleware
Select software vendors that partner with ERP packages
Vendor-provided or in-house link development
Using ERP packages for application development
Investigate vendor-supplied development tools
Developers often become system integrators

27. Future of ERP Areas of expansion
Supply chain management
Business intelligence
Application service providers (ASPs)
Continued integration of various business functions
Firms that use ERP system to full capabilities could gain significant competitive advantage

28. A Closer Look at One ERP Package: SAP R/3
SAP AG is a German software development firm
SAP R/3 is current ERP system
Logistics
Accounting
Human resources
Business tools
Designed to meet business needs across entire enterprise

29. SAP Industry Solutions
SAP has created Industrial Business Units (IBUs) to provide “best practices” for specific industries
Automotive
Electronics
Public sector
Retail
Other industries and IBUs include: insurance, telecommunications, aerospace and defense, banking, chemicals, consumer products, health care, oil and gas, pharmaceuticals, and utilities

30. Five Master Databases for SAP R/3

31. Implementing SAP R/3 Three-tier client-server architecture R/3 Basis
Middleware that enables integration of R/3 applications on various computing platforms
Accelerated SAP (ASAP)
Small to mid-sized business applications of SAP
Should require 6 months to implement
RMO would be a good candidate

32. Three-Tier Architecture of SAP R/3

33. Summary
Issue of how to best procure business application software – customer-developed versus packaged – critical for future of business organizations
Equally important is how to best deploy business application software integrated versus stand- alone
Most recent trend is deployment of integrated packages to increase efficiency and effectiveness of information technology development

34. Summary (continued)
Major issues that differentiate application packages from customer software are customization, integration, and upgrades
Major class of packaged software is comprehensive enterprise resource planning (ERP) system
Current market leader in comprehensive ERP systems is SAP R/3 (Logistics, Accounting, and Human Resources)