ERP Systems - J. Mack Robinson College of Business · • ERP vendors offer SCM and CRM modules ... familiar with the ERP system, how to ... ERP Systems for Specific Industries

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Copyright © 2007Robinson College of Business, Georgia State UniversityDavid S. McDonald, Ph.D. Director of Emerging TechnologiesTel: 404-413-7368; e-mail: [email protected]

ERP Systems

L t d t d 8/28/07Last updated 8/28/07

Source for Most Slides

The ABCs of ERPhttp://www.cio.com/research/erp/edit/erpbasics.html

The article in .pdf format is available as a link from the ‘Class Schedule’ page in WebCT

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Systems Before ERPStandalone computer systems in diff t d t t th t t “t lk”different departments that cannot “talk” to each other • People have to key in information from

another system to their system to do their work

• Data entry errors accumulate• Data entry errors accumulate• It is difficult to track orders• It is difficult to share information across

departments and divisions

ERP• ERP vendors offer software modules for

finance, Human Resources (HR), , ( ),manufacturing, inventory, etc.

• Modules are easily integrated with one another and use a shared database

• Organizations may purchase individual modules for critical functions and add modules gradually

• ERP vendors offer SCM and CRM modules that integrate with the ERP modules

• Software must be configured for each organization

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Two Users of ERP• BMW• Individual institutions in the University

System of Georgia

BMW• BMW worldwide

• Any transaction entered into the system h i th ld lt i h tanywhere in the world results in changes to

summaries available to managers all over the world who have permission to access the information

• ERP systems used for all business functions, including finance, manufacturing, and g , g,accounting

• BMW provided input into the design of the SAP software

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Individual institutions in the University System of Georgia

• PeopleSoft ERP modules were implemented one by one at different USG institutions (GSU and later UGA)

• The financial module implemented about 6 years agoThe financial module implemented about 6 years ago caused major disruption (GRAs could not be paid until October) but allows administrators to track expenditures online; closing of the books at the end of the fiscal year is less harried

• The payroll module was implemented in spring 2005 with minor glitches (the PeopleSoft module assumes that employees work for 12 months and not 10 months, so d li t l ith th t idealing separately with the summer semester is complicated and has resulted in errors); payroll involves direct deposit only, and employees view pay information online

• Regents’ goal is to have an ERP system that integrates data from all USG institutions

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Challenges of Associated with ERP Systems

• Having employees update the system g p y p ypromptly (so the system reflects what is actually in the warehouse)

• The organization will probably have to change its procedures

• Employees are forced to change how they do their jobstheir jobs

• ERP projects can take one to three years • ERP systems must be integrated with web-

based systems

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Major Reasons Why Companies Implement ERP Systems

• Integrate financial information• Integrate customer order

information• Standardize and speed up

manufacturing processes• Reduce inventory• Standardize HR information

Integrate financial information

I tibl d t b d• Incompatible processes, databases and systems are replaced

• A single set of processes, a shared database, and integrated applications are usedFi i l i f ti i li bl d• Financial information is more reliable and available quickly to personnel who have permission to view it

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Integrate customer order information

• Organizations can keep track of orders and coordinate processes such as manufacturing, inventory, and shipping

• Different units of an organization can coordinate, if they all use the same ERP , ysystem

Standardize and speed up manufacturing processes

• Diverse processes and systems in different plants, divisions, or units are standardized

• Work can be done more quickly by fewer peoplepeople

• Until Sarbanes-Oxley was passed, the number of accountants needed was projected to drop sharply

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Reduce inventory

• Can lead to less inventory, efficient shipping

• SCM software may be used to supplement the ERP system

Standardize HR information

• Processes for tracking employee hours and communicating benefits information can be standardized across business units

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Benefits of ERP Systems

• First benefits typically apparent after eight months

• It often takes up to 31 months to realize all benefits

• Median annual savings from an ERP system are $1.6 million

Some ERP Projects Fail

• The ERP software does not support one or more important processes

• Cost of an ERP implementation• Hidden costs of an ERP were not

anticipated

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The ERP software does not support one or more important processes

• The organization must change how it operates to fit the ERP softwareoperates to fit the ERP software or

• The software must be modified to fit the organization’s process

• Expensive• Harder to upgrade to new releases of theHarder to upgrade to new releases of the

software because the custom code must be modified by the customer

Cost of an ERP implementation

• Includes hardware software professional• Includes hardware, software, professional services and internal staff costs (salaries and benefits)

• Average Total Cost of Operation can be $15 million (it can range from $400,000 to $300 million)$300 million)

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Hidden Costs of an ERP System• Training• Integration and testing• Customization and data conversion• Data analysis (including analysis to build a

data warehouse))• Hiring expensive consultants who are

familiar with the ERP system, how to configure it, and how to modify it

• Replacing best employees who change jobs to earn more

ERP in the News

PeopleSoft apps vex N.D. collegesp pp gThe $40M rollout breaks budget, misses deadlines, critics say

Source: htt // t ld / ti /http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9001396&source=NLT_ERP&nlid=17

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Example of a Legacy System About to be Upgraded

OnlineAthens.com, January 1, 2007

• Athens police officers have to call a dispatcher for warrant checks and• Athens police officers have to call a dispatcher for warrant checks and motor vehicle information

• “…dispatchers have to use as many as three computer screens to get the data officers need”

• The new system would allow officers to access information from laptops in their police cars and to produce online reports that have required fields, so that important information is not left out

• Supervisors will be able to review reports as soon as they are entered by officers and not after officers return to the station at the end of their shifts

http://onlineathens.com/stories/010207/news_20070102039.shtml

ERP Systems for Specific Industries

• Modules for health care• Patient records• Medical billing

• Modules for a veterinary practice • Patient records• Medical billing• Generation of reminder cards to owners

• Modules for law firms

Documents

ERP Systems - J. Mack Robinson College of Business · • ERP vendors offer SCM and CRM modules ... familiar with the ERP system, how to ... ERP Systems for Specific Industries