By İlhan SAĞER INDUSTRIAL ENGINEERING DEPARTMENT OF DOKUZ EYLUL UNIVERSITY 1

Simplistic Definition ERP - Enterprise Resource Planning Detailed Definition “a business strategy and set of industry-domain- specific applications that build customer and shareholder communities value network system by enabling and optimising enterprise and inter- enterprise collaborative operational and financial processes” (Source: Gartner’s Research Note SPA ) 2

PLANNING the RESOURCES of an ENTERPRISE  ERP is a way to integrate the data and processes of an organization into one single system with modules that support core business areas such as manufacturing, distribution, financials and human resources.  ERP allows managers from most or all departments to look vertically and horizontally across the organization to see what they must see (information) to be productive in their managerial roles.  ERP captures data from historical activity and current operations. That data can be transformed into information that, along with external information, is useful in planning and controlling operations, and in developing business strategies.  ERP is evolving into a Multi-Module Application Software Package that automates inter-organizational business processes across the supply chain which involve business partners, suppliers, customers, and more. 3

Problems: Delays, Lost Orders, Keying into different computer systems invite errors 4

Top Management MarketingSalesManufacturingLogisticsFinance & Accounting Information Flow Material & Product Flow Figure 2-2 Information and material flows in a functional business model 5

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 1960s – Inventory Control  1970s – MRP (Material Requirement Planning).  This system helped in translating the master production schedule into requirements for individual units like sub assemblies, components and raw materials. MRP systems helped determine what to order, how much to order, when to order and when to schedule delivery.  1980s – MRPII (Manufacturing Resource Planning)  MRPII supported efforts to optimize the entire plant production system by supporting capacity planning, shop floor control, and distribution management activities. MRPII was further extended to support areas like Finance, Human Resources, Engineering, Project Management etc. As MRPII like systems were adopted by non manufacturing enterprises like banks and airlines to support cross- functional coordination and integration of business processes, the “M” no longer fit, thus the name ERP was coined.  1990s – ERP  Today, ERP is the foundation system for domestic and global business operations, supporting most or all functional areas in their daily operations. For some organizations, ERP is a source of competitive advantage.  21st century – ERPII  ERPII is the name some now use to describe ERP like systems that are evolving to support inter-organizational business processes across the supply chain. –. 7

SystemPrimary Business Need (s)ScopeEnabling Technology MRP EfficiencyInventory Management and Production planning and control. Mainframe computers, batch processing, traditional file systems. MRPII Efficiency, Effectiveness and integration of manufacturing systems Extending to the entire manufacturing firm (becoming cross functional). Mainframes and Mini computers, real-time (time sharing) processing,database management systems (relational) ERP Efficiency (primarily back office), Effectiveness and integration of all organizational systems. Entire organization (increasingly cross functional), both manufacturing and non- manufacturing operations Mainframes, Mini and micro Computers, Client server networks with distributed processing and distributed databases, Data warehousing, and mining, knowledge management. ERPII Efficiency, Effectiveness and integration within and among enterprises. Entire organization extending to other organizations (cross functional and cross enterprise--partners, suppliers, customers, etc.) Mainframes, Client Server systems, distributed computing, knowledge management, internet technology (includes intranets and extranets). IRP Enterprise Suite, or whatever label gains common acceptance Efficiency, Effectiveness and Integration within and among all relevant constituents on a global scale. Entire organization and its constituents (increasingly global) comprising supply chain from beginning to end as well as other industry and government constituents Internet, Web Service Architecture, wireless networking, mobile wireless, knowledge management, grid computing, artificial intelligence. The Evolution of ERP 8

 To support business goals  Integrated, on-line, secure, self-service processes for business  Eliminate costly mainframe/fragmented technologies  Improved Integration of Systems and Processes  Lower Costs  Empower Employees  Enable Partners, Customers and Suppliers 9

Obtain the right mix of people, processes and technology!! 10

E-business Platform Tech Stack CRM Foundation Web Internet Mobile Wireless Call Center ICM/Telephony Interaction Channels Common Data and Object Models, Security, Interfaces, Globalisation E-Business FoundationMarketingSales eCommerce Business Applications Marketing Intelligence Sales Intelligence Customer Intelligence Call Center Intelligence Analytical Applications Interaction HistoryUniversal Work Q 1-to-1 Fulfillment Assignment Engine EscalationsTCA Installed Base TasksNotes Resources Calendar Territories OSSHR 11

 Today’s focus seem more to be external as organizations look for ways to support and improve relationships and interactions with customers, suppliers, partners and other stakeholders.  The focus of ERP in increasingly on Front-Office Applications and inter- organizational business processes, thus making it visible to “OUTSIDERS”  The increasing importance of E-Commerce and Globalization of business makes support of inter-organizational processes more important.  ERP Vendors  SAP  PeopleSoft  Oracle  Microsoft Business Solutions  SSA Global  ERP vendor products reflect the evolving business needs of clients and the capabilities of IT, perhaps most notably internet related technologies.  ERP helps Organization to  improve competitiveness  increase profits  prosper in the global economy. 12

 SAP’s founders had to develop their first software package at night on their first customer’s computer  Computers were not commonly available in 1972  The first software package was referred to by various names, including R, RF and R/1  Between 1978 and 1982, SAP developed a more integrated software package, called R/2  R/2 was still a mainframe computer package  By 1988, SAP had developed R/2 into an international software program and had sold 1,000 systems 13

 Consolidation is currently taking place in the ERP software business  PeopleSoft purchased ERP vendor J.D. Edwards in 2003  Oracle, after a long battle, acquired PeopleSoft in 2005  SAP and Oracle are now the two largest ERP vendors  Microsoft is challenging SAP and Oracle to sell ERP systems to small- and medium-sized businesses 14

 ERPII is a business strategy and a set of collaborative operational and financial processes internally and beyond the enterprise  New multi-enterprise business models like Value Collaboration Networks, customer-centric networks that coordinate all players in the supply chain, are becoming popular as we enter the 21st century  These new business models reflect an increased business focus on external integration  There is movement away from Client-Server System to Internet Based Architecture 15

 E-Commerce (Electronic Commerce)  M-Commerce (Mobile & Wireless Technologies)  C-Commerce (Collaborative Commerce)  Middleware  Enterprise Portal Technologies  Web Services  RFID  Analytical Capabilities (Data Warehousing & Data Mining)  CRM, SCM, SRM  Knowledge Management  Business Intelligence 16

KeysERPERPII Role Traditional ERP was concerned with optimizing an enterprise, Internal optimization. ERP II systems are about optimizing the supply chain through collaboration with trading partners. Domain ERP systems focused on manufacturing and distribution. ERP II systems will cross all sectors and segments of business. Function As ERP systems cross sectors and segments, they will no longer be able to present all things to all people. ERP II vendors to pick the industries in which they’re going to play, and focus on providing deep functionality for those users. Process In ERP systems, the processes were focused on the four walls of the enterprise. ERP II systems will connect with trading partners, to take those processes beyond the boundaries of the enterprise. Architecture Old ERP systems were monolithic and closed. ERP II systems will be Web-based, open to integrate and interoperate with other systems that allow users to choose just the functionality they need. Data Information in ERP systems is generated and consumed within the enterprise. In an ERP II system, that same information will be available across the supply chain to authorized participants. Six key differences between ERP and ERP II Systems 17

 ERP eliminates redundant effort and duplicated data, resulting in reduced personnel needs  ERP systems can help produce goods and services more quickly, resulting in increased sales volume  An ERP system may be required to compete with competitors who have effectively implemented ERP systems  ERP systems can reduce frustration resulting from the inability to get accurate and timely data  More accurate and timely data can improve external customer relations  The payoff from ERP systems can occur over many years, when other factors may also affect the company, making the return hard to calculate 18

 Enterprise systems are evolving because organizations are changing.  To know what the future of ERP holds, one must look to the changing environment of business and changing business needs.  Systems will evolve to meet the business needs. Based on current trends, these will be increasingly inter-organizational and global.  Inter-organizational systems (ERPII) will pose challenges beyond the ones faced with ERP because of the need to integrate the diverse systems of different organizations.  Global supply chains mean inter-organizational systems that span different cultures and countries. That will bring even greater challenges due to cultural differences, legal issues, and more. 19

 ERP systems provide a mechanism for implementing systems where a high degree of integration between applications is required  The Business Case or Value Proposition for implementation must be outlined  To successfully implement a proper mix of people, processes and technology should be maintained 20

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