1. 1 Enterprise Resource Planning Systems MSc. Nguyen Thanh Tuan Introduction to ERP Systems

2. Contents zHistorical Context of ERP zProblems with Non-ERP Systems zTraditional IS Model zWhat is ERP zTwo Main ERP Applications zERP System Configurations zData Warehouse For ERP System 2

3. Historical Context of ERP zHistorically, companies created “islands of automation”. A hodge-podge of various systems that operated or managed various divergent business processes. Sometimes these systems were integrated with each other and sometimes they weren’t. Sometimes they were loosely interfaced and sometimes they were more tightly interfaced. 3

4. Historical Context of ERP zThe total organizational costs of maintaining a patchwork of redundant and overlapping systems has grown over the years to the point where the cost of maintaining these systems is greater than installing a new system. 4

5. Historical Context of ERP zAnalysts have speculated that widespread adoption of the same ERP package by the firms in a single industry (an observed phenomenon for semi-conductor manufacturers) might lead to the elimination of process innovation-based competitive advantage (Davenport, 1998). 5

6. Historical Context of ERP Most companies have failed to implement ERP packages successfully or to realize the hoped-for financial returns on their ERP investment. Companies have had similar difficulties with each new wave of information technology since the first mainframe systems. It takes years to realize some envisioned IT- enabled changes in organizational processes and performance, and there are many ways to fail along the way. 6

7. 7 Problems with Non-ERP Systems zIn-house design limits connectivity outside the company zTendency toward separate IS’s within firm ylack of integration limits communication within the company zStrategic decision-making not supported zLong-term maintenance costs high zLimits ability to engage in process reengineering

8. 8 Traditional IS Model: Closed Database Architecture zSimilar in concept to flat-file approach ydata remains the property of the application yfragmentation limits communications zExistence of numerous distinct and independent databases yredundancy and anomaly problems zPaper-based yrequires multiple entry of data ystatus of information unknown at key points

9. Order Entry System Manufacturing and Distribution System Procurement System Customer Sales Account Rec Production Scheduling Shipping Vendor Accts Pay Inventory Customer DatabaseManufacturing Database Procurement Database Business Enterprise Customer Supplier Products Orders Purchases Materials Traditional Information System with Closed Database Architecture 9

10. What is ERP? zEnterprise systems are commercial software packages that enable the integration of transactions-oriented data and business processes throughout an organization zEnterprise systems include ERP software and related packages as advanced planning and scheduling, sales force automation, customer relationship management, product configuration. 10

11. 11 What is ERP? zThose activities of software packages help a company manage the important parts of its business in an integrated fashion. zKey features include: ySmooth and seamless flow of information across organizational boundaries yStandardized environment with shared database independent of applications and integrated applications

12. Data Warehouse On-Line Analytical Processing (OLAP) Bolt-On Applications (Industry Specific Functions) Sales & Distribution Business Planning Shop Floor Control Logistics Customers Suppliers Operational Database Customers, Production, Vendor, Inventory, etc. Legacy Systems Core Functions [On-Line Transaction Processing (OLTP)] ERP System Business Enterprise ERP System 12

13. What is ERP? zERP Functional Architecture yInformation Systems Modules xHuman Resources Management xManufacturing Management xFinancial Management xAccounting xMarketing Management xWorkflow Management 13

14. ERP Life Cycle zDeciding to go ERP zChoosing an ERP zDesigning an ERP zImplementing ERP Systems zAfter Going Live (Stabilization Period) 14

15. 15 Two Main ERP Applications Core applications za.k.a. Online Transaction Processing (OLTP) ztransaction processing systems zsupport the day-to-day operational activities of the business zsupport mission-critical tasks through simple queries of operational databases zinclude Sales and Distribution, Business Planning, Production Planning, Shop Floor Control, and Logistics modules

16. 16 Two Main ERP Applications Business analysis applications za.k.a. Online Analytical Processing (OLAP) zdecision support tool for management-critical tasks through analytical investigation of complex data associations zsupplies management with “real-time” information and permits timely decisions to improve performance and achieve competitive advantage zincludes decision support, modeling, information retrieval, ad-hoc reporting/analysis, and what-if analysis

17. 17 OLAP zSupports management-critical tasks through analytical investigation of complex data associations captured in data warehouses: yConsolidation is the aggregation or roll-up of data. yDrill-down allows the user to see data in selective increasing levels of detail. ySlicing and Dicing enables the user to examine data from different viewpoints often performed along a time axis to depict trends and patterns.

18. 18 ERP System Configurations: Client-Server Network Topology Two-tier ycommon server handles both application and database duties yused especially in LANs

19. Server ApplicationsDatabase User Presentation Layer First Tier Second Tier Application and Database Layer Two-Tier Client Server Server 19

20. 20 ERP System Configurations: Client-Server Network Topology Three-tier yclient links to the application server which then initiates a second connection to the database server yused especially in WANs

21. Three-Tier Client Server Applications Database First Tier Second Tier Third Tier User Presentation Layer Application Layer Database Layer Application Server Database Server 21

22. ERP with OLTP and OLAP Client Server using Data Warehouse OLTP Server OLTP Applications Operations Database Server Operations Database First Tier Second Tier Third Tier User Presentation Layer Application Layer Database Layer OLAP Server OLAP Applications Data Warehouse Server Data Warehouse 22

23. 23 ERP System Configurations: Databases and Bolt-Ons zDatabase Configuration yselection of database tables in the thousands ysetting the switches in the system zBolt-on Software ythird-party vendors provide specialized functionality software ySupply-Chain Management (SCM) links vendors, carriers, third-party logistics companies, and information systems providers

24. 24 What is a Data Warehouse? zA relational or multi-dimensional database that may consume hundreds of gigabytes or even terabytes of disk storage yThe data is normally extracted periodically from operational database or from a public information service. zA database constructed for quick searching, retrieval, ad-hoc queries, and ease of use zAn ERP system could exist without having a data warehouse. The trend, however, is that organizations that are serious about competitive advantage deploy both. The recommended data architecture for an ERP implementation includes separate operational and data warehouse databases

25. 25 Data Warehouse Process zThe five essential stages of the data warehousing process are:  Modeling data for the data warehouse  Extracting data from operational databases  Cleansing extracted data  Transforming data into the warehouse model  Loading the data into the data warehouse database

26. 26 Data Warehouse Process: Stage 1 zModeling data for the data warehouse yBecause of the vast size of a data warehouse, the warehouse database consists of de-normalized data. xRelational theory does not apply to a data warehousing system. xWherever possible normalized tables pertaining to selected events may be consolidated into de- normalized tables.

27. 27 Data Warehouse Process: Stage 2 zExtracting data from operational databases yThe process of collecting data from operational databases, flat-files, archives, and external data sources. ySnapshots vs. Stabilized Data: xa key feature of a data warehouse is that the data contained in it are in a non-volatile (stable) state.

28. 28 Data Warehouse Process: Stage 3 z Cleansing extracted data yInvolves filtering out or repairing invalid data prior to being stored in the warehouse xOperational data are “dirty” for many reasons: clerical, data entry, computer program errors, misspelled names, and blank fields. yAlso involves transforming data into standard business terms with standard data values

29. 29 Data Warehouse Process: Stage 4 zTransforming data into the warehouse model yTo improve efficiency, data is transformed into summary views before they are loaded. yUnlike operational views, which are virtual in nature with underlying base tables, data warehouse views are physical tables. xOLAP, however, permits the user to construct virtual views from detail data when one does not already exist.

30. 30 Data Warehouse Process: Stage 5 zLoading the data into the data warehouse database yData warehouses must be created and maintained separately from the operational databases. xInternal Efficiency xIntegration of Legacy Systems xConsolidation of Global Data

31. Current (this weeks) Detailed Sales Data Sales Data Summarized Quarterly Archived over Time Data Cleansing Process Operations Database VSAM Files Hierarchical DB Network DB Data Warehouse System The Data Warehouse Sales Data Summarized Annually Previous Years Previous Quarters Previous Weeks Purchases System Order Entry System ERP System Legacy Systems 31

32. Thank for your listening