Business modeling and ERP architecture University of Palestine Information technology college Business modeling and ERP architecture Prepared by: Niddal abu swereh 120070576 Supervised By: Yasmeen elBubo April, 2011

Managerial Questions What is ERP? How will it help my business? What are its costs? What are the risks?

What is an ERP? Enterprise-wide system that integrates the business functions and processes of an organization Integration of business functions into one seamless application Usually runs on a relational database Replaces countless departmental and workgroup information systems

What is an ERP? Links business processes Maintains audit trail Utilizes a common information system Implementation normally involves BPR: Business Process Reengineering Difficult to Implement Correctly – Railroad Tracks

Before/After ERP

Evolution of ERP 1960’s: Inventory Control Systems 1970’s: MRP: Material Requirement Planning 1980’s: MRPII: MRP & Distribution 1990’s: MRPII  ERP with introduction of other business functions  CRM’s Today: Web Enabled ERP – Connecting ERP Externally

Factors Along the Path to ERP The development of client-server architecture …and later the n-tier client-server architecture The rush to replace out-dated and non-Y2K compliant systems. The desire to have integrated systems within the firm. The desire to get out of the application development "business".

SAP: An ERP in Profile Flagship products are MySAP ERP and Duet (with Microsoft) The largest ERP company in the world; world’s 3rd largest software company! 12 million users, 36,000 customers, 100,600 installations, 1,500 partners world-wide

Core Modules of SAP Finance Human Resources Corporate Services (asset management, project management, etc.) Operations (manufacturing, sales, service, logistics, etc.)

Other SAP Modules Portals Supply chain/Supplier relationship management Customer relationship management Product life cycle Business intelligence

ERP Vendor Landscape

E-business Application Architecture

Interfaces… The goal in ERP is to sunset as many systems as possible But some systems will remain Need to build interfaces these systems More interfaces built/maintained  more complexity of the ERP implementation  higher cost.

…and “Bolt-ons” Core ERP functions may be augmented by “bolt-ons” (specialized functionality above and beyond that of the ERP) Four major areas: Supply Chain Management (SCM) Product Lifecycle Management (PLM) Customer Relationship Management (CRM) Business Intelligence (BI)

ERP Enterprise Architecture

How SAP Works

Issues with SAP Cultural Issues System designed in North America or Western Europe Embodies best practices from ‘home’ country – based on ‘home’ country assumptions Practices and assumptions may not transfer across borders

Costs of ERP Meta Group survey of 63 companies (small to large, range of industries) Average of $15 M per firm (range $400,000 - $300M) On average the TCO is $53,000 per user Media annual savings: $1.6M Requires two-years of implementation and integration Source: CIO.com: "The ABCs of ERP"

Average Cost To Install ERP Costs of ERP (cont’d) Average Cost To Install ERP   Expenditure Amount (millions) Percentage Hardware 1.46 13.8 Software 1.86 17.5 Internal Staff 2.46 23.2 Professional Services 4.82 45.5 Source: CIO Magazine Oct. 15, 1999

Benefits of ERP - Promised Shorter order cycle time Increased productivity Lower IT costs Better cash management Reduced personnel

Benefits of ERP - Actual Expected and Actual Benefits Benefit Expected Actual Shorter cycle time 19% 31% Improved productivity 24% Lower IT costs 11% Better cash management 13% Personnel reduction 43% 33%

Reasons to Adopt ERP One face to the customer Knowing “what is possible” in terms of organizational inventory Eliminating redundancy Consolidation

Reasons to Adopt ERP (cont’d) Handle growth Reduce stress on existing IT Avoid legacy systems Modernizing

Reasons Not to Adopt Cost Loss of competitive advantage Resistance to change Poor cultural fit

Alternatives? Open Source ERP (+ Support Vendors) ERP for SMEs e.g. GNU Enterprise, Apache OFBiz ERP for SMEs less expensive systems with fewer "bells and whistles" ERP ASPs (Application Service Providers) ASPs will host and maintain the software for you

Post-ERP? Service-Oriented Architectures (SOA) hold some promise as the natural evolution from ERP The foundation of SOA is standardization based upon web services interoperability standards. SOA does not replace ERP provides the ability to “loosely couple” services (business functions). 

Before/After

References http://www.erp.com/ http://en.wikipedia.org/wiki/Enterprise_resource_planning http://www.webopedia.com/TERM/E/ERP.html http://www.lta.gov.sg/motoring_matters/index_motoring_erp.htm http://erp.ittoolbox.com/ http://searchsap.techtarget.com/definition/ERP April, 2011