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Lecture Slides 11 12 08

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Lecture Slides 11 12 08

  1. 1. ITM 309 Enterprise Resource Planning and Collaboration Dr. Frederick Rodammer Michigan State University Eli Broad College of Business [email_address] November 12, 2008
  2. 2. Today’s Learning Objectives <ul><li>Describe Enterprise Resource Planning (ERP) and ERP components </li></ul><ul><li>Describe the three primary components found in core enterprise resource planning </li></ul><ul><li>Describe the four primary components found in extended enterprise resource planning systems </li></ul><ul><li>Explain ERP benefits, costs and risks </li></ul>
  3. 3. ENTERPRISE RESOURCE PLANNING <ul><li>Enterprise resource planning – 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 </li></ul>
  4. 4. Enterprise Resource Planning <ul><li>Serves as a Cross-Functional Enterprise Backbone that Integrates and Automates Many Internal Business Processes and Information Systems </li></ul><ul><li>Helps Companies Gain the Efficiency, Agility, and Responsiveness Needed to Succeed Today </li></ul><ul><li>Gives a Company an Integrated Real-Time View of its Core Business Processes </li></ul><ul><li>ERP Software consists of many integrated modules and relies upon a common data base management system </li></ul>
  5. 5. ERP and Business Process Integration <ul><li>ERP systems automate business processes </li></ul>
  6. 6. CORE AND EXTENDED ERP COMPONENTS <ul><li>Core ERP component – traditional components included in most ERP systems and they primarily focus on internal operations </li></ul><ul><li>Extended ERP component – extra components that meet the organizational needs not covered by the core components and primarily focus on external operations </li></ul>
  7. 7. CORE ERP COMPONENTS <ul><li>Three most common core ERP components </li></ul><ul><ul><li>Accounting and finance </li></ul></ul><ul><ul><li>Production and materials management </li></ul></ul><ul><ul><li>Human resource </li></ul></ul>
  8. 8. Accounting and Finance ERP Components <ul><li>Accounting and finance ERP component – manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management </li></ul>
  9. 9. Production and Materials Management ERP Components <ul><li>Production and materials management ERP component – handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control </li></ul>
  10. 10. Human Resource ERP Component <ul><li>Human resource ERP component – tracks employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities </li></ul>
  11. 11. CORE AND EXTENDED ERP COMPONENTS
  12. 12. EXTENDED ERP COMPONENTS <ul><li>Extended ERP components include: </li></ul><ul><ul><li>Business intelligence </li></ul></ul><ul><ul><li>Customer relationship management </li></ul></ul><ul><ul><li>Supply chain management </li></ul></ul><ul><ul><li>E-business </li></ul></ul>
  13. 13. ERP BENEFITS <ul><li>Common ERP benefits </li></ul><ul><ul><li>Integrate financial information </li></ul></ul><ul><ul><li>Integrate customer order information </li></ul></ul><ul><ul><li>Standardize and speed up manufacturing processes </li></ul></ul><ul><ul><li>Reduce inventory </li></ul></ul><ul><ul><li>Standardize human resource information </li></ul></ul>
  14. 14. ERP Implementation Costs
  15. 15. ERP RISKS
  16. 16. Causes of ERP Failures <ul><li>Business mangers and IT professionals underestimate the complexity of the planning , development, and training needed </li></ul><ul><li>Failure to involve affected employees in the planning and development phases </li></ul><ul><li>Trying to do too much too fast in the conversion process </li></ul><ul><li>Failure to do enough data conversion and testing </li></ul>
  17. 17. ERP SOFTWARE <ul><li>Successful ERP projects share 3 attributes </li></ul><ul><ul><li>Overall fit </li></ul></ul><ul><ul><ul><li>Off the rack </li></ul></ul></ul><ul><ul><ul><li>Off the rack and tailored to fit </li></ul></ul></ul><ul><ul><ul><li>Custom made </li></ul></ul></ul><ul><ul><li>Proper business analysis </li></ul></ul><ul><ul><ul><li>Successful companies spend up to 10 percent of the project budget on a business analysis </li></ul></ul></ul><ul><ul><li>Solid implementation plans </li></ul></ul><ul><ul><ul><li>A plan is needed to monitor the quality, objectives, and timelines </li></ul></ul></ul>
  18. 18. ERP Process and Information Flows
  19. 19. ERP VENDOR OVERVIEW <ul><li>SAP boasts 20,000 installations and 10 million users worldwide </li></ul><ul><li>ERP solutions are growing because: </li></ul><ul><ul><li>ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses </li></ul></ul><ul><ul><li>ERP addresses the need for global information sharing and reporting </li></ul></ul><ul><ul><li>ERP is used to avoid the pain and expense of fixing legacy systems </li></ul></ul>
  20. 20. ERP Benefits <ul><li>Quality and Efficiency – ERP creates a framework for integrating and improving a company’s internal business processes that results in significant improvements in the quality and efficiency of customer service, production, and distribution </li></ul><ul><li>Decreased Costs – Significant reductions in transaction processing costs and hardware, software, and IT support staff </li></ul><ul><li>Decision Support – Provides vital cross-functional information on business performance quickly to managers to significantly improve their ability to make better decisions in a timely manner </li></ul><ul><li>Enterprise Agility – ERP breaks down many former departmental and functional walls of business processes, information systems, and information resources </li></ul>
  21. 21. ITM 309 Homework <ul><li>Assignment #5 due November 19-20 </li></ul>

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