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

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

3. 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

4. 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

5. Before/After ERP

6. 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

7. 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".

8. 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

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

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

11. ERP Vendor Landscape

12. E-business Application Architecture

13. 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.

14. …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)

15. ERP Enterprise Architecture

16. How SAP Works

17. 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

18. 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"

19. 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

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

21. 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%

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

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

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

25. 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

26. 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). 

27. Before/After

28. References http://www.erp.com/
April, 2011