1. Enterprise Resource Planning (ERP) Systems
Chapter Extension 9
Enterprise Resource Planning (ERP) Systems

2. Study Questions Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?
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3. Q1: What Is the Purpose of ERP Systems?
Enterprise Resource Planning (ERP):
Suite of modules, a database, and set of inherent processes for consolidating business operations into a single, consistent, computing platform.
Primary purpose: integration of purchasing, human resources, production, sales, and accounting data into a single system.
Allows real time global updates whenever a transaction happens.
Critical business decisions can be made using latest data.
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4. Pre-ERP Information System: Bicycle Manufacturer
Does not include accounting
Five non-integrated databases
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5. ERP Information System
All activity processed by ERP application programs and consolidated data stored in centralized ERP database
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6. Some Questions that Procedures Need to Answer or Resolve
How does sales department determine an order is “large”? By dollars? By volume?
Who approves customer credit (and how)?
Who approves production capacity (and how)?
Who approves schedule and terms (and how)?
What actions need to be taken if customer modifies an order?
How does management obtain oversight on sales activity?
Many other questions must be answered as well.
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7. Sales Dashboard
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8. Almost no organization develops its own ERP software
ERP Projects
Almost no organization develops its own ERP software
Daunting and expensive:
Multi-year projects, millions of dollars, and hundreds of employees, consultants and vendor personnel
SAP ERP databases contain over 15,000 tables!
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9. Q2: What Are the Elements of an ERP Solution?
ERP Application programs
ERP Databases
ERP Business process procedures
ERP Training and consulting
ERP
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10. ERP Include Applications that Integrate: (http://www. erpsoftware360
Supply chain (procurement, sales order processing, inventory management, supplier management, and related activities)
Manufacturing (scheduling, capacity planning, quality control, bill of materials, and related activities)
CRM (sales prospecting, customer management, marketing, customer support, call center support)
Human resources (Payroll, time and attendance, HR management, commission calculations, benefits administration, and related activities)
Accounting (General ledger, accounts receivable, accounts payable, cash management, fixed asset accounting)
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11. ERP Solution Components
ERP vendor applications configurable so can alter without changing program code.
Set configuration parameters specifying how ERP application programs will operate: Hourly payroll application configured to specify number of hours in standard work week, hourly wages for different job categories, wage adjustments for overtime and holiday work, etc.
ERP Application Programs
Trigger: Database program to keep database consistent when certain conditions arise.
Stored procedure: Database program to enforce business rules.
ERP Databases
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12. ERP Solution Components (cont’d)
Adapt to predefined, inherent processes and procedures, or design new ones?
ERP Business Processes and Procedures
Training on how to implement
Obtaining top-level management support, preparing the organization for change, and dealing with inevitable resistance
Training on how to use
Super Users become in-house trainers; train the trainers
Vendor and third-party consultants
ERP Training and Consulting
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13. Inherent Processes: SAP Ordering Business Process (Process Blueprints)
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14. Inherent Processes: SAP Ordering Business Process (cont’d)
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15. Q3: How Are ERP Systems Implemented?
Major tasks in implementation of an ERP application
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16. Magnitude of ERP Implementation
SAP blueprint contains over a thousand process models
Model current business processes “as is”
Identify relevant ERP blueprint processes
Compare as-is process models with blueprints, note differences
Find ways to eliminate differences
Prepare detailed plan
Train users processes, procedures, ERP features and functions
Conduct simulation tests new system
Convert data, procedures, personnel to new system
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17. Q4: What Types of Organizations Use ERP?
Industry-specific solutions
Industries
Manufacturing
Distribution
Mining, materials extraction, petroleum
Medical care
Government and public service
Utilities
Retail
Education
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18. ERP by Organization Size (2010)
Small Market
Midsize
Enterprise
Annual Revenue
$5M–$100M
$100M–$1 B
Over $1B
Staff
Fewer than 100
101–500
Over 500
ERP Users
5–30 users
31–250
Over 250
IT Staffing
One or few
Small group; often lack executive participation and long-term strategy
Full IT line of business staffing; with executive participation and CIO
IT Skills
Very modest, often OJT
Generalist skills; generally lacking specialty skills
Portfolio of broad and specific skills
Source:
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19. International ERP
Provide a worldwide consolidation of financial statements on a timely basis
Inherent ERP procedures must be adaptable to many cultures
Designed to work with multiple currencies, multiple languages, manage international transfers of goods in inventories, and work effectively with international supply chains
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20. Q5: How Do the Major ERP Vendors Compare?
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21. ERP Vendor Market Ranking
Epicore
MS Dynamics
Infor
Oracle
SAP
Revenue (2009)
$410M+
$1.3B
~$2B
>$2B
$11.9B
Market Share (2005) 1% 4% 2%
20%
42%
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22. ERP Products
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23. The Future: ERP in the Cloud
No true ERP product in the cloud in 2010
ERP industry entering a new phase
Vendors cannot ignore SOA, thin-client technology like HTML 5, Enterprise 2.0, social CRM, ERP on a cell phone, and other recent developments
SAP and Oracle maintain control of traditional ERP functionality; smaller vendors create complimentary products that incorporate newer technologies.
With SOA architecture, easier to integrate applications with ERP functionality and easier for specialty software vendors to connect their programs with ERP programs and data
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24. Active Review Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

25. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
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Publishing as Prentice Hall