Introduction to ERP

History of organizational systems Calculation systems Functional systems Integrated systems

Calculation systems 1950-80 Single purpose Eliminate tedious human work Examples: Payroll, General ledger, Inventory Technology used: Mainframes, magnetic tapes, batch processing

A System/370 Model 145 (1970’s)

Printer 800 lines/minute with 48 character train, 136 columns with 6 or 8 lines per inch spacing

Functional systems 1975-20?? Use computers to improve operations Applications: Human resources, order entry, manufacturing resource planning Technologies: Mainframes, PC’s, LAN’s

Minicomputer

Functional systems Typically contained within a department Islands of automation Applications independently developed and deployed Driving force: availability of mini-computers

Functional system applications Human resources System Accounting and finance systems Sales and marketing System Operations management System Manufacturing Systems

Human Resources Recruiting Compensation Assessment Development and Training Planning

Accounting and Finance General Ledger Financial Reporting Costing Budgeting Accounts Payable Accounts receivables

Sales and Marketing Lead tracking Sales forecasting Customer management

Operations Order management Inventory management Customer service

Manufacturing Inventory Planning

Types of Organizational information Systems Administrative systems Scheduling / Transaction systems Value oriented 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 Data duplication Data inconsistency Applications that don’t talk to one another Limited or lack of integrated information Isolated decisions lead to overall inefficiencies Increased expenses

Solution to disparate systems? Integration Consolidation Right-sizing Business Process Redesign Enterprise wide system

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 HRM Distribution Financials Manufacturing

What makes ERP different Integrated modules Common definitions Common database 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 Common set of data 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

Vendors

Difficulty in implementation Very difficult 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

Common Pitfalls 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

Overview 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?