i - erp introduction

8/7/2019 I - ERP Introduction

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ERP Systems

Introduction to ERP



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Information Systems� IS Evolution

± TPS

± MIS

± DSS

± EIS

� Stand Alone Systems

± Functional IS



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Information Systems� Disadvantages of Stand Alone IS

± Non Integrated Systems

± Data Duplication, Triplication etc.

± Data Redundancy

± No single repository of data across the

Organization± No centralized control

± Information retrieval will take time



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Information Systems� Hence the need for Integrated IS across the

Organization

� What is Integrated IS ?

± One Single Database across the company

± All IS are integrated into one single software

solution

± Same data can be seen across different

applications and functions



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Information Systems� What options a company has to have

integrated information system solution ?

± Integrate the existing stand alone systems� Is it possible or no ?

± Develop afresh Integrated IS either withinternal IS resources or by an external vendor

� What are the pros & cons

± Look for readymade Integrated IS solutionsavailable in the market



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ERP Introduction� What is it called ?

± It is ERP ± Enterprise Resources Planning

� What is ERP ?

± Integrated IS solution

± Way to integrate data & processes of a co. into one

single system

± Used in any organization large or small

± Any system which provides the company with 2 or

more functionalities



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ERP Introduction� What is ERP ?

± Ideal ERP System includes functions such as

� Manufacturing: Some of the functions include;

engineering, capacity, workflow management,

quality control, bills of material, manufacturing

process, etc.

� Financials: Accounts payable, accounts receivable,fixed assets, general ledger and cash management,

etc.



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� Human Resources: Benefits, training, payroll,

time and attendance, etc

� Supply Chain Management: Inventory, supply

chain planning, supplier scheduling, claim

processing, order entry, purchasing, etc.

� Projects: Costing, billing, activity management,

time and expense, etc.





� Customer Relationship Management: sales and

marketing, service, commissions, customer contact,

calls center support, etc.

� Data Warehouse: Usually this is a module that can

be accessed by an organizations customers,suppliers and employees.



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ERP Introduction� ERP Advantages & Disadvantages

± Advantages

� There are many advantages of implementing an EPR system;here are a few of them:

� A totally integrated system

� The ability to streamline different processes and workflows

� The ability to easily share data across various departments inan organization

� Improved efficiency and productivity levels

� Better tracking and forecasting

� Lower costs

� Improved customer service



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± Disadvantages

� While advantages usually outweigh disadvantagesfor most organizations implementing an ERPsystem, here are some of the most commonobstacles experienced:

� Usually many obstacles can be prevented if

adequate investment is made and adequate trainingis involved, however, success does depend on skillsand the experience of the workforce to quickly adaptto the new system.



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± Disadvantages

� Customization in many situations is limited� The need to reengineer business processes

� ERP systems can be cost prohibitive to install andrun

� Technical support can be shoddy� ERP's may be too rigid for specific organizations

that are either new or want to move in a newdirection in the near future.



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ERP Claims� Fortune 500 ± 60% companies using ERP

� Benefits:

± Reduction of Inventory

± Reduced Cycle Times

± Reduced Operational Costs

± Improving SCM± Integrated IS

± Faster Information flows



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ERP Claims� Create value through integrating activities

across organization

� Implementation of best practices

� Standardization of processes

� One-source data

� On-line access to information



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Benefits of ERP� Some Examples

� Weil [1999]:

± Applied Robotics increased on-time deliveries

40% through ERP

± Delta Electronics reduced production control

labor requirements 65%



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Role in Business� ERP began with SAP in early 1970s

± Accounting basis

± US products ± some extension of MRP

± Combine business computing

� Unified system sharing one set of data

� Advantages in efficiency, accuracy± Best Practices

� Apply the best process for each function



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Why Study ERP?� Technical:

± Integration of computer systems foster

consistency, efficiency

� Financial:

± Integrating applications saves money

� Organizational:

± All members of organization use same system



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Conception vs. Reality� Integrated System

� In fact, vendors usually sell modules

± Would like to sell full system

± Buyers reduce cost, risk, by starting smaller

scale

� Risk of converting entire system� Complex cost impact



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Market for ERP� Over 100 vendors

� BOPSE

± BAAN Dutch

± Oracle database

± PeopleSoft HRM originally

± SAP German, pioneer of ERP

± JDEdwards emphasize Internet



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Market for ERP� BOPSE

± Now Oracle has acquired PeopleSoft who had

acquired JD Edwards.

± So, now in ERP market there are two major

players, SAP & Oracle



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SAP: Best Practices� A key to original product

� Davenport [1998]:

± Firm¶s vary in what is best for them

± Business world dynamic

± Rigid approach has dangers

± If a firm develops a competitive advantage,

they give it up by adopting ³best practices´



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Table 2: ERP Supported

FunctionsFinancial Hum Res Ops & Log Sales & M

Accts receivable Time accounting Inventory Orders

Asset account Payroll MRP Pricing

Cash forecast Personnel plan Plant Mtce Sales Mgt

Cost accounting Travel expense Prod planning Sales plan

Exec Info Sys Project Mgmt

Financial consol PurchasingGeneral ledger Quality Mgmt

Profit analysis Shipping

Standard costing Vendor eval



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Advantages & Disadvantages� System Integration

± Improved understanding across users

± Less flexibility

� Data Integration

± Greater accuracy

± Hard er to corr ect

� Better methods

± More efficiency± Less f r eed om & cr eativity

� Expected lower costs± More efficient system planned

± Dynamic need s, t raining typically und er bud geted , hidd en

implement ation costs

i - erp introduction

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