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Introduction to ERP

History of organizational systems


Calculation systems
Functional systems
Integrated systems

Calculation systems
1950-80
Single purpose
Eliminate tedious human work
Examples: Payroll, General ledger,
Inventory
Technology used: Mainframes, magnetic
tapes, batch processing
A System/370 Model 145
(1970s)
removable-disk hard drives
Hard drives
A very nice-looking magtape-
drive
Magtapes
Batch processing
Printer
800 lines/minute with 48 character
train, 136 columns with 6 or 8 lines
per inch spacing
Stack of Computer Printout Paper
Functional systems
1975-20??
Use computers to improve operations
Applications: Human resources, order
entry, manufacturing resource planning
Technologies: Mainframes, PCs, LANs


Minicomputer
Functional systems
Typically contained within a department
Islands of automation
Applications independently developed
and deployed
Driving force: availability of mini-
computers

Functional system applications
Human resources System
Accounting and finance systems
Sales and marketing System
Operations management System
Manufacturing Systems


Human Resources
Recruiting
Compensation
Assessment
Development and Training
Planning
Accounting and Finance
General Ledger
Financial Reporting
Costing
Budgeting
Accounts Payable
Accounts receivables

Sales and Marketing
Lead tracking
Sales forecasting
Customer management

Operations
Order management
Inventory management
Customer service

Manufacturing
Inventory
Planning
Types of Organizational
information Systems
Administrative systems
Scheduling / Transaction systems
Value oriented systems
Reporting and controlling systems
Analysis and information systems
Planning and decision support systems
(From Business Process Engineering by
A.W. Scheer)

Problems with function based
application
Sharing of data between systems
Data duplication
Data inconsistency
Applications that dont talk to one another
Limited or lack of integrated information
Isolated decisions lead to overall
inefficiencies
Increased expenses
Solution to disparate systems?
Integration
Consolidation
Right-sizing
Business Process Redesign
Enterprise wide system
Integrated systems
or
Enterprise Resource Planning
System
ERP - Definition
ERP is a process of managing all
resources and their use in the entire
enterprise in a coordinated manner
ERP system: Definition
ERP is a set of integrated business
applications, or modules which carry out
common business functions such as
general ledger, accounting, or order
management

What is ERP?
Enterprise Resource Planning
Support business through optimizing,
maintaining, and tracking business
functions
Broken down into business processes
HRM
Distribution
Financials
Manufacturing
What makes ERP different
Integrated modules
Common definitions
Common database
Update one module, automatically
updates others
ERP systems reflect a specific way of
doing business
Must look at your value chains, rather
than functions
Benefits of ERP
Common set of data
Help in integrating applications for
decision making and planning
Allow departments to talk to each other
Easy to integrate by using processed
built into ERP software
A way to force BPR (reengineering)
Easy way to solve Y2K problem
Vendors
Difficulty in implementation
Very difficult
Extremely costly and time intensive
Typical: over $10,000,000 and over a
year to implement
Company may implement only certain
modules of entire ERP system
You will need an outside consultant

Common Pitfalls
Do not adequately benchmark current
state
Did not plan for major transformation
Did not have executive sponsorship
Did not adequately map out goals and
objectives
Highly customized systems to look like
old MRP systems
Survey of ERP
implementations
Done by ittoolbox.com in 2004
Overview
375 IT and business professionals
52% anticipate budget increases for
new ERP implementations/new modules
SAP and PeopleSoft/J.D. Edwards were
cited as the most popular ERP packages
46% indicated that the main challenge
to successful ERP implementations was
inadequate definition of requirements
and resistance to change
How would you characterize your budget for new ERP
implementations/new modules deployments for 2004 compared to
your budget in 2003?
Who is directly responsible for determining
your ERP implementations/new modules
deployments?
Who are the other key decision-
makers/influencers in decisions to add new
ERP packages/new modules?
Do you currently have an ERP
package?
If your answer is "Yes", which ERP
package(s) do you currently use?
Are you considering adding new modules to
your existing ERP package?
If your answer is "Yes", which modules are
you planning to add?
If you plan to deploy a new ERP package
and/or add modules to your existing
packages, when would this implementation
take place?
Who do you partner with for new ERP
implementations and additions of new
modules?
What do you see as the main challenges to
successful ERP implementations within your
organization?
For more details
http://projectmanagement.ittoolbox.co
m/documents/research/

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