1. McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved Chapter 12 Integrating the Organization from End to End – Enterprise Resource Planning

2. 12-2 Learning Outcomes 12.1 Describe the role information plays in enterprise resource planning systems 12.2 Identify the primary forces driving the explosive growth of enterprise resource planning systems 12.3 Explain the business value of integrating supply chain management, customer relationship management, and enterprise resource planning systems

3. 12-3 Traditional view of systems

4. 12-4 Traditional View of the Systems Within the business: There are functions, each having its uses of information systems Outside the organization’s boundaries: There are customers and vendors Functions tend to work in isolation CRM and SCM and ERP are steps forward in solving this problem

5. 12-5 Major Problems of Isolated Functional Systems

6. 12-6 INTRODUCTION Enterprise Resource Planning [ERP] integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprisewide decisions by viewing enterprisewide information on all business operations

7. 12-7 Enterprise Systems - ERP

8. 12-8 Enterprise Resource Planning (ERP) At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system

9. 12-9 Enterprise Resource Planning (ERP) ERP systems automate business processes

10. 12-10 Bringing the Organization Together ERP – The organization before ERP

11. 12-11 Major Problems of Isolated Functional Systems

12. 12-12 Bringing the Organization Together ERP – bringing the organization together

13. 12-13 Major ERP vendors  www.SAP.com is the largest ERP vendor in the world. It is second largest software company after Microsoft. www.SAP.com  Oracle PeopleSoft

14. 12-14 SAP ERP Demo 1 SAP ERP: Delivering Employee and Manager Self-Services SAP ERP Demo

15. 12-15 The Evolution of ERP

16. 12-16 Integrating SCM, CRM, and ERP SCM, CRM, and ERP are the backbone of e- business Integration of these applications is the key to success for many companies Integration allows the unlocking of information to make it available to any user, anywhere, anytime Many ERP vendors offer SCM and CRM components

17. 12-17 Integrating SCM, CRM, and ERP General audience and purpose of SCM, CRM and ERP

18. 12-18 Integration Tools Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together –Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications –Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors

19. 12-19 EAI improves connectivity If integration is applied without following a structured EAI approach, point-to-point connections grow across an organization resulting in a tangled mess that is difficult to maintain. This is commonly referred to as spaghetti. For example: The number of connections needed to have a fully meshed point-to-point connections, with n points, is given by n((n-1)/2. Thus, for ten applications to be fully integrated point-to-point, 10X9/2, or 45 point-to-point connections are needed.

20. 12-20 Integration Tools Data points where SCM, CRM, and ERP integrate If one application of the company does not function well, the entire customer value delivery system is affected

21. 12-21 SAP ERP Demo 2 SAP ERP: Improving Accounts Payable Invoice Management SAP ERP Demo

22. 12-22 Enterprise Resource Planning’s Explosive Growth –There are an estimated 70,000 ERP installations worldwide with over 35 million users ERP solutions are growing because: –ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses –ERP addresses the need for global information sharing and reporting –ERP is used to avoid the pain and expense of fixing legacy systems

23. 12-23 Characteristics of ERP

24. 12-24 Benefits and Problems of ERP- Enterprise Resource Planning Benefits –Processes effective and efficient –Organizations do not need to reinvent processes –Reduce lead time –No data inconsistency problem –Lower costs –Higher profitability Problems –Costly –Change is challenging

25. 12-25 ERP Benefits and Risks (Costs)

26. 12-26 Challenges of Enterprise Systems Difficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertise Inflexibility: because ERPs are integrated it is difficult to make a change in only one part of the business without affecting other parts Decision making: Not the best way for the firms to operate, ERP software may prevent the firm from following their successful business model

27. 12-27 Enterprise Resource Planning in the Army Video (9Min): ERP in US ARMY