Enterprise Resource Planning

Dr. Djamal Ziani

Understand Enterprise Resource Planning Systems

CHAPTER 1

Outline

Understand What is an ERP How ERP systems improve the effectiveness

of information systems in organizations Recognize the business benefits of ERP

systems History and evolution of ERP

What is an ERP System

A packaged business system that allows a company to:

automate and integrate the majority of its business practices

share common data and practices across the entire enterprise

produce and access information in a real-time environment

What is an ERP System

ERP Market

One of the fastest growing markets in software industry

34.5% of companies with revenues over $1 billion plan to purchase or upgrade

$180 billion in sales in 2002 Maybe as much as $1 trillion by 2010

ERP Systems

Major investment– Cost between $50,000 and $100,000,000+

Variety of business justifications– Replace legacy systems– Reduce cycle times– Lower operating costs– Enables better management decisions

Real-time On-line

Evolution of ERP

1960s: software packages with inventory control 1970s: MRP systems (Material Requirements

Planning)– Production schedule with materials management

1980s: MRPII systems– Adds financial accounting system

1990s: MRPII– Integrated systems for manufacturing execution

Late 1990s: ERP– Integrated manufacturing with supply chain

ERP Vendors

Vendor Revenue (M$)

Market Share

Site

1 SAP 1949 30.33 www.sap.com

2 Oracle Applications 1374 21.38 www.oracle.com/applications/index.html

3 The sage Group 1121 11.21 www.sage.com

4 Microsoft Dynamics 916 14.25 www.microsoft.com/dynamics/

ERP Vendors: SAP

SAP: Multinational software development & consulting corporation, which provides enterprise software applications and support to businesses of all sizes globally. Headquartered: Walldorf, Germany

the largest software enterprise in Europe and the 4th largest software enterprise in the world.

ERP Vendors: SAP

SAP: Multinational software development & consulting corporation, which provides enterprise software applications and support to businesses of all sizes globally. Headquartered: Walldorf, Germany

the largest software enterprise in Europe and the 4th largest software enterprise in the world.

founded in 1972 as Systemanalyse und Programmentwicklung ("System Analysis and Program Development") by 5 former IBM engineers: Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus E. Tschira, and Claus Wellenreuther.

More than 50.000 employees,

ERP Vendors: SAP

ERP Vendors: Oracle Applications

specializes in developing and marketing enterprise software products — particularly database management systems.

The company also builds tools for database development, middle-tier software, ERP, customer relationship management (CRM) and supply chain management (SCM) software.

ERP Vendors: Oracle Applications

In 1977 Larry Ellison co-founded Oracle Corporation under the name Software Development Laboratories (SDL)

Ellison worked for Ampex Corporation. One of his projects was a database for the CIA, which he named "Oracle".

Oracle is the third software company in the world.

ERP Vendors: Oracle Applications

ERP Vendors: The Sage Group

is engaged in the development, distribution and support of business management software and related products and services for medium-sized and smaller businesses.

The Company was founded by David Goldman together with Paul Muller and Graham Wylie in 1981 in Newcastle upon Tyne to develop estimating and accounting software for small businesses.

ERP Vendors: The Sage Group

While a student at Newcastle University Graham Wylie took a summer job with an accountancy firm to write software to help their record keeping. This became the basis for Sage Line 50.

Next, hired by David Goldman to write some estimating software for his printing company, Campbell Graphics, Graham used the same accounting software to produce the first version of Sage Accounts. David was so impressed he hired Graham and academic Paul Muller to form Sage, selling first to printing companies but then to the wider market through a network of resellers.

ERP cost

Software 24.2% –30.2% Hardware 17.8% –18.5% Consulting 24.1% –30.1% Training 10.9% –13.8% Implementation team 12.0% –13.6%

Tangible Benefits

Inventory reduction 32% Personnel reduction 27% Productivity improvement 26% Order management improvement 20% Financial close cycle reduction 19% IT cost reduction 14% Cash management improvement 11% Revenue/profit increase 11% Transportation/logistics cost reduction 9% Maintenance reduction 7% On-line delivery improvement 6%

Intangible benefits

Information/visibility 55% New/improved processes 24% Customer responsiveness 22% Integration 13% Standardization 12% Flexibility 9% Globalization 9% Business performance 7%