Enterprise Resource Planning (ERP) Systems

Chapter Extension 9

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Study Questions

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Q1: What is the purpose of ERP systems?

Q2: What are the elements of an ERP solution?

Q3: How are ERP systems implemented?

Q4: What types of organizations use ERP?

Q5: How do the major ERP vendors compare?

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• Primary purpose: integration of purchasing, human resources, production, sales, and accounting data into a single system.

• Allows real time global updates whenever a transaction happens.

• Critical business decisions can be made using latest data.

Q1: What Is the Purpose of ERP Systems?

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Pre-ERP Information System: Bicycle Manufacturer

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Does not include accounting Five non-integrated databases

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ERP Information System

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• How does sales department determine an order is “large”? By dollars? By volume?

• Who approves customer credit (and how)?

• Who approves production capacity (and how)?

• Who approves schedule and terms (and how)?

• What actions need to be taken if customer modifies an order?

• How does management obtain oversight on sales activity?

Some Questions Procedures Need to Answer or Resolve

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Sales Dashboard

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ERP Projects

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• Few organizations develop their own ERP software

• Daunting and expensive:

– Multi-year projects, millions of dollars, and hundreds of employees, consultants and vendor personnel.

SAP ERP databases contain over 15,000 tables!

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Q2: What Are the Elements of an ERP Solution?

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• ERP Application programs

• ERP Business process procedures

• ERP Databases

• ERP Training and Consulting

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True ERP Must Integrate: (http://www.erpsoftware360.com/erp-101.htm)

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• Supply chain

• Manufacturing

• CRM

• Human resources

• Accounting

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ERP Solution Components

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• ERP Application Programs– Configurable vendor applications

• ERP Databases– Trigger– Stored Procedure

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ERP Solution Components (Cont’d)

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• ERP Business Processes and Procedures– Adapt to predefined, inherent processes

and procedures, or design new ones?• ERP Training & Consulting

– Training to implement

– Top management support, preparing for change, dealing with resistance

– Training to use

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Example of SAP Ordering Business Process Blueprint

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Example of SAP Ordering Business Process Blueprint (cont’d)

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Q3: How Are ERP Systems Implemented?

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Major tasks in implementation of an ERP application

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Model current “as is”

processes

Identify relevant

ERP blueprint

processes

Compare as-is models with blueprints,

note differences

Find ways to eliminate

differences

Prepare detailed

plan

Train users processes, procedures,

ERP features and

functions

Conduct simulation tests new system

Convert to new system

Magnitude of ERP Implementation

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SAP blueprint contains over a thousand process models.

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Q4: What Types of Organizations Use ERP?

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• Worldwide consolidation of financial statements on a timely basis

• Inherent ERP procedures adaptable to many cultures

• Multiple currencies and languages, manage international transfers of goods in inventories, work with international supply chains

• http://advice.Cio.Com/puneesh/deploy_erp_to_improve_globalization_efficiency_of_your_organization

International ERP

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Q5: How Do the Major ERP Vendors Compare?

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ERP Vendor Market Ranking

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EpicoreMS

Dynamics Infor Oracle SAPRevenue (2009) $410M+ $1.3B ~$2B >$2B $11.9B

Market Share (2005)

1% 4% 2% 20% 42%

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Top ERP Vendors and Customer Size

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The Future: ERP in the Cloud

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• Oracle and SAP acquiring companies with cloud-based products

• Cannot plunge into cloud-based solutions without causing considerable organizational turmoil

• Companies need to move applications to cloud, while providing thin-client and native mobile applications

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Active Review

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Q1: What is the purpose of ERP systems?

Q2: What are the elements of an ERP solution?

Q3: How are ERP systems implemented?

Q4: What types of organizations use ERP?

Q5: How do the major ERP vendors compare?

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