1. ENTERPRISE RESOURCE PLANNING (ERP)
Prof. Hussin J. Hejase Faculty of Business Administration Lecture Series July 17, 2017
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INTRODUCTION
# An appropriate way to define ERP is to take a historical approach. # The roots of ERP lie in Material Requirements Planning (MRP) which evolved into Manufacturing Resource Planning (MRPII). Demand for increased functionality led to the current Enterprise Resource Planning (ERP).
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3. The Evolution Of Integrated Systems
INVENTORY
PRODUCTION
SCHEDULING
MRP
1960s +
PURCHASING
As early as the 1960s , the material requirements planning (MRP) model was devised.
MRP integrates production,
purchasing, and inventory
management.
MRP software packages
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4. The Evolution Of Integrated Systems
MRP II
MRP
FINANCE,
LABOR
1970s +
Failure of MRP
An enhanced MRP
methodology called
Manufacturing Resource
Planning (MRP II)
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5. The Evolution Of Integrated Systems
MRP II
ALL INTERNAL
RESOURCES
ERP +
Need to have more and more integration of functional information systems.
The new challenge
Enterprise Resource Planning
(ERP) concept was the solution.
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6. The Evolution Of Integrated Systems
EXTERNAL
SUPPLIERS &
CUSTOMERS
EXTENDED
ERP/SCM
ERP
1990s +
By the 1990s, ERP has extended along the supply chain to include suppliers and customers.
Difference between an ERP system and an MRPII system
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7. ENTERPRISE RESOURCE PLANNING (ERP)
ERP is a process of planning and managing all resources and their use in the entire enterprise.
It promises benefits ranging from increased efficiency to improved quality, productivity, and profitability.
The name enterprise resource planning is misleading because the software does not concentrate on either planning or resources.
ERP’S major objective is to integrate all departments and functions across a company onto a single computer system that can serve all of the enterprise’s needs.
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8. How Can a Business Get an ERP ?
Self-develop an integrated system by using existing functional packages, or by programming one’s own systems.
Use commercially available
integrated ERP software.
Lease systems from application
service providers (ASPs).
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9. Phases of ERP Life Cycle
Markus and Tanis (2000) identified the
following four phases in an ERP life cycle:
Chartering - decisions defining the
business case and solution constraints;
Project - getting system and end users up and running;
Shakedown - stabilizing, eliminating "bugs", getting to normal operations;
Onward and upward - maintaining systems, supporting users, getting results, upgrading, system extensions.
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ADVANTAGES
ERP allows a company to be more cost efficient and time efficient in the long run
They prevent data duplicity and poor data integrity
A company with an ERP can look forward to higher customer satisfaction levels
An ERP facilitates the business processes of all departments in the company
Reduces operating costs of the company
Makes information available to users at any time, and any place
Consolidates software from many different vendors into one
Improved process time
Improved decision making due to availability of timely and appropriate information
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DISADVANTAGES
Implementing and maintaining an ERP is incredibly expensive. The average cost of an ERP can easily be in the millions of dollars range
An ERP is very time consuming. The average ERP project can take anywhere from three months to three years to complete and be at maximum usage.
ERP’s are very complex and can require experts to support and maintain.
ERP’s are usually not tailored to a specific company’s needs and therefore a company may have to reorganize its business processes in order to fit
With the information available to all the users, it is harder to control who can view and edit the information.
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12. Critical factors for successful Implementation of ERP
Teamwork and composition
Top management support
Business plan and vision
Effective communication
Project management
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IMPLEMENTATION
ERP software is complex and expensive.
The Total Cost of Ownership (TCO)
range between $400,000 for small business
to $15 million for large companies and
implementation requires significant
human resource and often hires
consultants or systems integrator.
An alternative popular option is to lease
applications rather than to build systems.
This approach is known as the “ASP alternative” where an Application Service Provider is very useful as both small and medium organizations as in offering ERP added functions such as CRM.
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14. The Main Steps of an ERP Implementation Project
Vendor selection
Business strategy formation
Application configuration
Testing and end-users acceptance
Training
Rollout
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APPLICATION
ERP’s major objective is to integrate the primary business applications of all departments and functions across the company into a single computer system that can serve all of the enterprise’s needs.
A typical ERP system provides applications for:
Accounting and Controlling
Production and Materials Management
Quality Management
Plant Maintenance
Sales and Distribution
Human Resources
Project Management
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APPLICATION
ERP vendors add more and more modules in their products to incorporate more business processes of an enterprise such as supply chain management SCM, data warehousing software and they are also focusing on incorporating Internet technology to provide extensive mobile computing abilities to company’s employees as customers through the web.
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Leading Software
The leading software for ERP is SAP. Oracle, PeopleSoft, J.D. Edwards, Computer Associates, Baan Company also makes similar products. One of the SAP flagships is SAP R/3 very used by large organization even used by the giant Microsoft. It is designed to operate in three-tier client/server configuration.
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SAP Flagship is SAP R/3
* Fully integrated between all applications where data are shared between all integrated applications that use a common networked database. For example if an order is received from a customer via the internet; accounting, production scheduling, and purchasing immediately know about the order and the impact it has on their areas.
* R/3 consists of four major modules:
Financial Accounting Module: includes financials, controlling and asset management
Human Resources Module: includes payroll, benefits administration, applicant data administration, personal development planning, workforce planning, etc…
Manufacturing and Logistics: is the largest and most complex module in the organization and includes material management, plant maintenance, quality management, production planning and controlling, and a project management system
Sales and Distribution: includes sales order management, transportation management, etc…
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MYSAP
An other version of SAP is known by MYSAP which can only be implemented using the internet interface .It allows users to have the full functionality of SAP software without the deployment of any special software to the users .An example: is my SAP Demand Planning a toolkit of statistical forecasting techniques and planning features that helps the user create accurate estimates of future requirements.
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Conclusion
Business software technology is moving at an amazing rate, every day a new package becomes available. In reality, there are not many new ideas, but conventional techniques are typically repackaged in new ways. Consequently, understanding the conventional approaches is an important first step to being able to keep up with this rapidly expanding area of software technology.
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Further Readings
[1] Hejase, Ale J., & Hejase, Hussin J. (2011). Foundations of Management Information Systems. Beirut, Lebanon: DAR SADER. Pp [2] SAP. (2017). Products. Retrieved June 17, 2017, from [3] T-Systems. (2017). ICT as a Service and dynamic delivery of SAP applications. Retrieved June 19, 2017, from systems.com/whitepaper/107452/dl-ict-as-a-service.pdf?dl=ok [4] Rutten, Peter, & Marden, Matthew (2016, March). The Business Value of Cisco UCS Integrated Infrastructure Solutions for Running SAP Workloads. Retrieved June 19, 2017, from virtualization/sap-applications-on-ucs/value-of-ucs-for-sap-idc-white- paper.pdf
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