Presentation on theme: "Business modeling and ERP architecture"— Presentation transcript:
1 Business modeling and ERP architecture University of PalestineInformation technology collegeBusiness modeling and ERP architecturePrepared by:Niddal abu swerehSupervised By:Yasmeen elBuboApril, 2011
2 Managerial Questions What is ERP? How will it help my business? What are its costs?What are the risks?
3 What is an ERP?Enterprise-wide system that integrates the business functions and processes of an organizationIntegration of business functions into one seamless applicationUsually runs on a relational databaseReplaces countless departmental and workgroup information systems
4 What is an ERP? Links business processes Maintains audit trail Utilizes a common information systemImplementation normally involves BPR: Business Process ReengineeringDifficult to Implement Correctly – Railroad Tracks
6 Evolution of ERP 1960’s: Inventory Control Systems 1970’s: MRP: Material Requirement Planning1980’s: MRPII: MRP & Distribution1990’s: MRPII ERP with introduction of other business functions CRM’sToday: Web Enabled ERP – Connecting ERP Externally
7 Factors Along the Path to ERP The development of client-server architecture…and later the n-tier client-server architectureThe rush to replace out-dated and non-Y2K compliant systems.The desire to have integrated systems within the firm.The desire to get out of the application development "business".
8 SAP: An ERP in ProfileFlagship products are MySAP ERP and Duet (with Microsoft)The largest ERP company in the world; world’s 3rd largest software company!12 million users, 36,000 customers, 100,600 installations, 1,500 partners world-wide
9 Core Modules of SAP Finance Human Resources Corporate Services (asset management, project management, etc.)Operations (manufacturing, sales, service, logistics, etc.)
10 Other SAP Modules Portals Supply chain/Supplier relationship managementCustomer relationship managementProduct life cycleBusiness intelligence
13 Interfaces… The goal in ERP is to sunset as many systems as possible But some systems will remainNeed to build interfaces these systemsMore interfaces built/maintained more complexity of the ERP implementation higher cost.
14 …and “Bolt-ons”Core ERP functions may be augmented by “bolt-ons” (specialized functionality above and beyond that of the ERP)Four major areas:Supply Chain Management (SCM)Product Lifecycle Management (PLM)Customer Relationship Management (CRM)Business Intelligence (BI)
17 Issues with SAP Cultural Issues System designed in North America or Western EuropeEmbodies best practices from ‘home’ country – based on ‘home’ country assumptionsPractices and assumptions may not transfer across borders
18 Costs of ERPMeta Group survey of 63 companies (small to large, range of industries)Average of $15 M per firm (range $400,000 - $300M)On average the TCO is $53,000 per userMedia annual savings: $1.6MRequires two-years of implementation and integrationSource: CIO.com: "The ABCs of ERP"
19 Average Cost To Install ERP Costs of ERP (cont’d)Average Cost To Install ERPExpenditureAmount (millions)PercentageHardware1.4613.8Software1.8617.5Internal Staff2.4623.2Professional Services4.8245.5Source: CIO Magazine Oct. 15, 1999
20 Benefits of ERP - Promised Shorter order cycle timeIncreased productivityLower IT costsBetter cash managementReduced personnel
21 Benefits of ERP - Actual Expected and Actual BenefitsBenefitExpectedActualShorter cycle time19%31%Improvedproductivity24%Lower IT costs11%Better cashmanagement13%Personnelreduction43%33%
22 Reasons to Adopt ERP One face to the customer Knowing “what is possible” in terms of organizational inventoryEliminating redundancyConsolidation
23 Reasons to Adopt ERP (cont’d) Handle growthReduce stress on existing ITAvoid legacy systemsModernizing
24 Reasons Not to Adopt Cost Loss of competitive advantage Resistance to changePoor cultural fit
25 Alternatives? Open Source ERP (+ Support Vendors) ERP for SMEs e.g. GNU Enterprise, Apache OFBizERP for SMEsless expensive systems with fewer "bells and whistles"ERP ASPs (Application Service Providers)ASPs will host and maintain the software for you
26 Post-ERP?Service-Oriented Architectures (SOA) hold some promise as the natural evolution from ERPThe foundation of SOA is standardization based upon web services interoperability standards.SOA does not replace ERPprovides the ability to “loosely couple” services (business functions).