Ch 14


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Ch 14

  1. 1. Chapter 14 <ul><li>Packaged Software and Enterprise Resource Planning </li></ul>
  2. 2. Objectives <ul><li>Discuss three major analysis and design issues associated more often with packages than with custom software </li></ul><ul><li>Name the three types of package customization and explain when each would be necessary </li></ul><ul><li>Identify and explain the four major characteristics of ERP systems and discuss several reasons for adopting ERP </li></ul>
  3. 3. Objectives <ul><li>Identify and explain several critical success factors for ERP implementation </li></ul><ul><li>Distinguish the three major approaches to ERP system development </li></ul><ul><li>Discuss how methods used for ERP systems deployment differ from those for conventional systems development </li></ul><ul><li>Identify and explain the four major steps to ERP package selection </li></ul>
  4. 4. Objectives <ul><li>Discuss the major areas of expansion for ERP </li></ul><ul><li>Identify the four high-level work areas of SAP R/3 </li></ul><ul><li>Identify and discuss the five types of master data in SAP R/3 </li></ul><ul><li>Describe the function of R/3 Basis software </li></ul><ul><li>Describe how transactions are entered in SAP R/3 </li></ul>
  5. 5. IS Components Serving Multiple Business Functions Figure 14-1
  6. 6. Key Players in Enterprise Computing Figure 14-2
  7. 7. Packaged Software <ul><li>Traditionally focused on isolated business functions </li></ul><ul><li>ERP focuses on integrated software solutions </li></ul><ul><li>Current trends show increase in packaged software and decrease in in-house software development </li></ul>
  8. 8. Three Critical Issues of Packaged Software Spanning All Phases of the SDLC Figure 14-3
  9. 9. Customization <ul><li>Desire is to minimize customization </li></ul><ul><ul><li>Best practices built-in already </li></ul></ul><ul><ul><li>Unique requirements may exist </li></ul></ul><ul><li>Customization types </li></ul><ul><ul><li>Configuration </li></ul></ul><ul><ul><li>Modification </li></ul></ul><ul><ul><li>Enhancement </li></ul></ul>
  10. 10. Integration <ul><li>Standardize data so all functions can access it in real time </li></ul><ul><li>Enterprise application integration (EAI) is the process of linking applications to support the flow of information across multiple business units and IT systems </li></ul><ul><ul><li>Middleware </li></ul></ul><ul><ul><li>ERP with built-in middleware </li></ul></ul>
  11. 11. Obstacles to Integration Figure 14-4
  12. 12. Upgrading Packages <ul><li>Upgrades can be challenging </li></ul><ul><ul><li>Frequency </li></ul></ul><ul><ul><li>Existing level of customization </li></ul></ul><ul><ul><li>Integration </li></ul></ul><ul><li>Must be planned and documented </li></ul>
  13. 13. ERP <ul><li>Process of using integrated application software to improve the effectiveness and efficiency of the entire enterprise </li></ul><ul><li>Objectives of ERP </li></ul><ul><ul><li>Provide best practice functionality within departments and high level of integration across all enterprise functions </li></ul></ul><ul><ul><li>Bridge gap in value chain </li></ul></ul><ul><li>Included in ERP:TPS, MIS, DSS </li></ul>
  14. 14. Nonintegrated IS Figure 14-5a
  15. 15. Integrated IS in an ERP System Figure 14-5b
  16. 16. Major Characteristics of ERP Figure 14-6
  17. 17. Major ERP Vendors <ul><li>SAP AG, Peoplesoft, Oracle, J.D. Edwards, Baan </li></ul><ul><li>Began as integrated packages for core business function management </li></ul><ul><ul><li>Finance </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Human resources </li></ul></ul><ul><li>Expanded to extended business functions </li></ul><ul><ul><li>Sales-force automation </li></ul></ul><ul><ul><li>E-commerce </li></ul></ul><ul><ul><li>Business intelligence </li></ul></ul>
  18. 18. Why ERP? <ul><li>Reduces workforce in core transaction processing systems </li></ul><ul><li>Supports global business </li></ul><ul><li>Achieves economies of scale </li></ul><ul><li>Reduces information systems development staff </li></ul>
  19. 19. Why ERP? <ul><li>Improves customer service </li></ul><ul><li>Improves data integrity </li></ul><ul><li>Improves decision support </li></ul>
  20. 20. Costs and Benefits <ul><li>ERP may cost several hundred thousand dollars for a mid-sized firm </li></ul><ul><li>Cost competitive among major vendors </li></ul><ul><li>Payback usually 6-30 months </li></ul><ul><li>Savings based on 30% reduction in administrative and IS costs </li></ul><ul><li>Consider operating costs </li></ul>
  21. 21. Critical Success Factors of ERP <ul><li>Strong top management support </li></ul><ul><li>Centralized project management </li></ul><ul><li>Strong IT management and staff support </li></ul><ul><li>Heavy user involvement </li></ul><ul><li>Standardized business process reengineering on software capabilities </li></ul>
  22. 22. Critical Success Factors of ERP <ul><li>Retraining of existing software developers in ERP </li></ul><ul><li>Extensive training of end users </li></ul><ul><li>Use of consultants to lead implementation and training </li></ul><ul><li>A respected and effective champion of ERP within the organization </li></ul>
  23. 23. Critical Success Factors of ERP <ul><li>Effective and continuous communication </li></ul><ul><li>Top-notch systems analysts </li></ul><ul><li>Retention of analysts throughout project and beyond </li></ul><ul><li>Sensitivity to user resistance with new systems </li></ul>
  24. 24. Three Approaches to ERP Figure 14-7
  25. 25. Organizational Structure for an ERP Project Figure 14-8
  26. 26. ERP Development Methodology <ul><li>Phase 1: Planning </li></ul><ul><ul><li>ERP oversight committee </li></ul></ul><ul><li>Phase 2: Analysis </li></ul><ul><ul><li>Collection of requirements from in-house work groups </li></ul></ul><ul><ul><li>Identify business reengineering initiatives </li></ul></ul><ul><ul><li>Select vendors </li></ul></ul>
  27. 27. ERP Development Methodology <ul><li>Phase 3: Design </li></ul><ul><ul><li>Interfaces determined </li></ul></ul><ul><ul><li>Hardware design </li></ul></ul><ul><ul><li>Middleware issues </li></ul></ul><ul><li>Phase 4: Implementation </li></ul><ul><ul><li>Installation </li></ul></ul><ul><ul><li>Configuration into cohesive system </li></ul></ul><ul><li>Phase 5: Support </li></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>Maintenance </li></ul></ul>
  28. 28. Special Topics on ERP Development <ul><li>Select a comprehensive package </li></ul><ul><ul><li>Preliminary evaluation </li></ul></ul><ul><ul><li>Detailed evaluation </li></ul></ul><ul><ul><li>Vendor presentations </li></ul></ul><ul><ul><li>On-site visits </li></ul></ul><ul><ul><li>Final decision </li></ul></ul>
  29. 29. Special Topics on ERP Development <ul><li>Linking applications to an ERP package </li></ul><ul><ul><li>Purchasing middleware </li></ul></ul><ul><ul><li>Select software vendors that partner with ERP packages </li></ul></ul><ul><ul><li>Vendor-provided or in-house link development </li></ul></ul><ul><li>Using ERP packages for application development </li></ul><ul><ul><li>Investigate vendor-supplied development tools </li></ul></ul>
  30. 30. ERP Future <ul><li>Areas of expansion </li></ul><ul><ul><li>Supply chain management </li></ul></ul><ul><ul><li>Business intelligence </li></ul></ul><ul><li>Continued integration of various business functions </li></ul>
  31. 31. SAP R/3 <ul><li>SAP AG is a German software development firm </li></ul><ul><li>SAP R/3 is current ERP system </li></ul><ul><li>SAP R/3 Organization </li></ul><ul><ul><li>Logistics </li></ul></ul><ul><ul><li>Accounting </li></ul></ul><ul><ul><li>Human resources </li></ul></ul><ul><ul><li>Business tools </li></ul></ul><ul><li>Designed to meet business needs across entire enterprise </li></ul>
  32. 32. SAP Industry Solutions <ul><li>SAP includes common core business functions plus Industrial Business Units (IBUs) to provide “best practices” for specific industries </li></ul><ul><ul><li>Automotive </li></ul></ul><ul><ul><li>Electronics </li></ul></ul><ul><ul><li>Public sector </li></ul></ul><ul><ul><li>Retail </li></ul></ul>
  33. 33. Five Master Databases for SAP R/3 Figure 14-10
  34. 34. Implementing SAP R/3 <ul><li>Three-tier client server system </li></ul><ul><li>R/3 Basis </li></ul><ul><ul><li>Middleware that enables integration of R/3 applications on various computing platforms </li></ul></ul><ul><li>Accelerated SAP (ASAP) </li></ul><ul><ul><li>Small to mid-sized business applications of SAP </li></ul></ul><ul><ul><li>RMO would be a good candidate </li></ul></ul>
  35. 35. Three-Tier Architecture of SAP R/3 Figure 14-11