Introduction to ERP
History of organizational systems
- Eliminate tedious human work
- Examples: Payroll, General ledger, Inventory
- Technology used: Mainframes, magnetic tapes, batch processing
A System/370 Model 145 (1970’s)
removable-disk hard drives
A very nice-looking magtape-drive
Printer 800 lines/minute with 48 character train, 136 columns with 6 or 8 lines per inch spacing
Stack of Computer Printout Paper
- Use computers to improve operations
- Applications: Human resources, order entry, manufacturing resource planning
- Technologies: Mainframes, PC’s, LAN’s
- Typically contained within a department
- Applications independently developed and deployed
- Driving force: availability of mini-computers
Functional system applications
- Accounting and finance systems
- Sales and marketing System
- Operations management System
Accounting and Finance
Sales and Marketing
Types of Organizational information Systems
- Scheduling / Transaction 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
- Applications that don’t talk to one another
- Limited or lack of integrated information
- Isolated decisions lead to overall inefficiencies
Solution to disparate systems?
- Business Process Redesign
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
What makes ERP different
- 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
- 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
Difficulty in implementation
- 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
- 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
- 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?
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