Enterprise Resource Planning ERP Systems Chapter 12 pages 157-165 Business Plug-In B10 pages 364-372 I from End to End

The organization before ERP ( systems) SCM systems focus specifically on CRM systems focus specifically on The organization before ERP ( systems) Isolated Information: their own systems Update issues Redundant/ Inaccurate and different Different in the different databases Can’t access information maintained by another department Can’t of the entire organization In most organizations, information has traditionally been isolated within specific departments, whether on an individual database, in a file cabinet, or on an employee’s PC. When reviewing this diagram demonstrate to the students how each department has its own database separate from all other organizational departments Ask your student what types of problems could occur if all departments maintain their own database and systems? Update issues Redundancy Inaccurate information across databases Different formats of information in the different databases Inability to access other department information and not being provided with a 360 degree view of the organization Different customer information in different databases Customer contact from multiple departments with different messages

ERP: Bringing the Organization Together ERP – integrates (or integrated set of IT systems) so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations ( enterprise wide information) An ERP system provides a method for effective planning and controlling of all the resources required to take, make, ship, and account for customer orders in a manufacturing, distribution, or service organization. What happens when sales and marketing departments are working from two different sets of customer information and product information? Would the marketing campaigns be accurate? Would sales be able to deliver the products it sells to its customers? Enterprise resource planning systems provide organizations with consistency. The key word in enterprise resource planning is enterprise. SCM systems focus specifically on suppliers CRM systems focus specifically on customers ERP systems focus on everything, all processes, departments, and operations for an enterprise ERP systems encompass everything, including SCM and CRM. ERP enables employees across the organization to share information across a single, centralized database. With extended portal capabilities, an organization can also involve its suppliers and customers to participate in the workflow process, allowing ERP to penetrate the entire value chain, and help the organization achieve greater operational efficiency One database that supports the entire organization could eliminate many of the issues mentioned on the previous slide However, there are also issues could be caused by having one database that supports the entire organization? Not as flexible and far more difficult to change Might not meet all department needs as well as an individual specific system Multiple access levels increases security issues Ethical dilemmas from accessing different department information – such as payroll Keyword in ERP is “enterprise” ERP systems focus on all processes, departments and operations for the entire enterprise

Sa l es We don’t need this ERP stuff. We already have enterprise wide software that we are all using. It is called a SPREADSHEET. Acctg When displaying the sales database example and the accounting database be sure to point out the differences in the data Correlating and making sense of these two similar, but different, spreadsheets, is going to be challenging. How can you understand customers when one spreadsheet has customer name and one has customer ID? How can you understand sales reps when one spreadsheet has sales rep names and one spreadsheet has sales rep ID? Date format is different – will this cause problems? One quantity is in units and one quantity has decimal points – what problems will this cause? Unit price and unit cost is rounded to dollars in one spreadsheet and contains cents in another – what problems will this cause?

Enterprise Resource Planning ERP systems and correlates the data generating an enterprise wide view that is consistent and real-time. involved in sourcing, producing and delivering a company’s product C Complete Real time Consistent O The true benefit of an ERP system is its ability take the many different forms of data from across the different organizational systems and correlate, aggregate, and provide an enterprise wide view of organizational information. The two previous spreadsheets display examples of differences in data that can be fixed by using an ERP system. Without understanding how all of the different divisions, products, departments, etc. are operating you cannot run the business

Components of ERP Software Three core components focus on (accounting/finance, production/materials management and HR) Extended components typically focus on and require interactions with customers, suppliers and business partners Typically Internet enabled. Core ERP components – traditional components included in most ERP systems and they primarily focus on internal operations Extended ERP components – extra components that meet the organizational needs not covered by the core components and primarily focus on external operations Make sure that you know what each component typically handles. Skipped details slides follow

CORE ERP COMPONENTS Accounting and finance component – manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management Human resource component – tracks employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities

CORE ERP COMPONENTS Production and materials management component – handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control

Extended ERP Components Extended ERP components include: Business intelligence Tools to help analyze your business information and better understand it so that you can better understand the business. Customer relationship management Supply chain management E-business E-logistics – manages the transportation and storage of goods E-procurement – the business-to-business (B2B) purchase and sale of supplies and services over the Internet Depending on when you cover this plug-in, these terms may or may not need to be reviewed If you do want to review – simply cut and paste the definitions into the slide above Business intelligence – describes information that people use to support their decision-making efforts Customer relationship management – involves managing all aspects of a customer’s relationships with an organization to increase customer loyalty and retention and an organization's profitability Supply chain management – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability E-business – means conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners

Enterprise Resource Planning (ERP) At the heart of all ERP systems , when a user enters or updates information , it is Why do organizations need integrations, if an ERP system contains one database that connects all applications together? Most organizations operate functional “silos”, and each department typically has its own systems A company might purchase an ERP and then all of the functional silos would be on one system, however, this doesn’t happen very often in the real world Most organizations require anywhere from 10 to 100 to 1,000 different systems to run their business Finding one system that could meet all the needs of an entire organization from billing to sales is almost impossible, “sort of a utopia” An organization can purchase an ERP and still have other applications running parts of its business (for example, taxation packages) that are not supported, or not supported well, by the ERP system

Enterprise Resource Planning (ERP) ERP systems automate business processes, for example, order fulfillment When a CSR takes an order from a customer, he or she has all the information necessary to complete the order (the customer’s credit rating and order history, the company’s inventory levels, and the delivery schedule) Since the company is using an ERP, everyone else in the company will automatically see the information that the CSR types into the ERP system When one department finishes with the order, it is automatically routed via the ERP system to the next department To determine where an order is at any point in time, a user only needs to login to the ERP system and track it down

ERP Benefits Having integrated systems helps that many businesses had previously started to use (also didn’t have to fix those old legacy systems) Integrate financial information and customer order information Everyone working with the same information and removes misinformation Standardize and speed up manufacturing processes, as well as reduce inventory ERP addresses the One of the greatest benefits of an ERP system is . Provides organizations with information that was previously difficult (if not impossible) to obtain, allowing the organization to perform more efficiently and effectively. 1. Integrate financial information: To understand an organization’s overall performance, managers must have a single financial view. 2. Integrate customer order information: With all customer order information in a single system it is easier to coordinate manufacturing, inventory, and shipping to send a common message to customers regarding order status. 3. Standardize and speed up manufacturing processes: ERP systems provide standard methods for manufacturing companies to use when automating steps in the manufacturing process. Standardizing manufacturing processes across an organization saves time, increases production, and reduces head count. 4. Reduce inventory: With improved visibility in the order fulfillment process, an organization can reduce inventories and streamline deliveries to its customers. 5. Standardize human resource information: ERPs provide a unified method for tracking employees’ time, as well as communicating HR benefits and services.

ERP Risks (Costs) Employees Difficult to Although there are great benefits to be realized from ERP systems, there are also failure stories. ERP systems are very expensive in terms of resources, such as time, money, and effort. Although they can help introduce good business processes, many companies implementing ERP software must change their business processes to match the software, which can cause employee resistance. Costly in terms of One vendor risks: too costly to . Company essentially held hostage.

Microsoft Business Solutions Great Plains Dynamics SAP: market leader: #1 Oracle: #2 in market share. Has grown, in part, through acquisition 2005: Oracle acquired PeopleSoft 2003: PeopleSoft acquired JD Edwards Oracle has enhanced their ERP product by acquiring the product’s of other companies and then integrating their products with the Oracle product. 2008: Oracle acquired BEA Systems 2007: Oracle acquired Hyperion Solutions 2005: Oracle acquired Siebel Systems In June 2003, Baan was sold to SSA Global Technologies. In May 2006, SSA was acquired by Infor Global Solutions of Atlanta, which was a major ERP consolidator in the market. In 2002, Microsoft acquired Great Plains Dynamics. Its products has gone under the name of Microsoft Business Solutions Great Plains Dynamics, as well as Microsoft Dynamics Microsoft Business Solutions Great Plains Dynamics