Introduction to ERP

History of organizational systems

Calculation systemsFunctional systemsIntegrated systems

Calculation systems

1950-80Single purposeEliminate tedious human workExamples: Payroll, General ledger, InventoryTechnology used: Mainframes, magnetic tapes, batch processing

A System/370 Model 145 (1970s)

removable-disk hard drives

Hard drives

A very nice-looking magtape-drive

Magtapes

Batch processing

Printer

800 lines/minute with 48 character train, 136 columns with 6 or 8 lines per inch spacing

Stack of Computer Printout Paper

Functional systems

1975-20??Use computers to improve operationsApplications: Human resources, order entry, manufacturing resource planningTechnologies: Mainframes, PCs, LANs

Minicomputer

Functional systems

Typically contained within a departmentIslands of automationApplications independently developed and deployedDriving force: availability of mini-computers

Functional system applications

Human resources SystemAccounting and finance systemsSales and marketing SystemOperations management SystemManufacturing Systems

Human Resources

RecruitingCompensationAssessmentDevelopment and TrainingPlanning

Accounting and Finance

General LedgerFinancial ReportingCostingBudgetingAccounts PayableAccounts receivables

Sales and Marketing

Lead trackingSales forecastingCustomer management

Operations

Order managementInventory managementCustomer service

Manufacturing

InventoryPlanning

Types of Organizational information Systems

Administrative systemsScheduling / Transaction systemsValue oriented systemsReporting and controlling systemsAnalysis and information systemsPlanning and decision support systems

(From Business Process Engineering by A.W. Scheer)

Problems with function based application

Sharing of data between systemsData duplicationData inconsistencyApplications that dont talk to one anotherLimited or lack of integrated informationIsolated decisions lead to overall inefficienciesIncreased expenses

Solution to disparate systems?

IntegrationConsolidationRight-sizingBusiness Process RedesignEnterprise wide system

Integrated systems
or
Enterprise Resource Planning System

ERP - Definition

ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner

ERP system: Definition

ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

What is ERP?

Enterprise Resource PlanningSupport business through optimizing, maintaining, and tracking business functionsBroken down into business processesHRMDistributionFinancialsManufacturing

What makes ERP different

Integrated modulesCommon definitionsCommon databaseUpdate one module, automatically updates othersERP systems reflect a specific way of doing businessMust look at your value chains, rather than functions

Benefits of ERP

Common set of dataHelp in integrating applications for decision making and planningAllow departments to talk to each otherEasy to integrate by using processed built into ERP softwareA way to force BPR (reengineering)Easy way to solve Y2K problem

Vendors

Difficulty in implementation

Very difficultExtremely costly and time intensiveTypical: over $10,000,000 and over a year to implementCompany may implement only certain modules of entire ERP systemYou will need an outside consultant

Common Pitfalls

Do not adequately benchmark current stateDid not plan for major transformationDid not have executive sponsorshipDid not adequately map out goals and objectivesHighly customized systems to look like old MRP systems

Survey of ERP implementations

Done by ittoolbox.com in 2004

Overview

375 IT and business professionals 52% anticipate budget increases for new ERP implementations/new modules SAP and PeopleSoft/J.D. Edwards were cited as the most popular ERP packages 46% indicated that the main challenge to successful ERP implementations was inadequate definition of requirements and resistance to change

How would you characterize your budget for new ERP implementations/new modules deployments for 2004 compared to your budget in 2003?

Who is directly responsible for determining your ERP implementations/new modules deployments?

Who are the other key decision-makers/influencers in decisions to add new ERP packages/new modules?

Do you currently have an ERP package?

If your answer is "Yes", which ERP package(s) do you currently use?

Are you considering adding new modules to your existing ERP package?

If your answer is "Yes", which modules are you planning to add?

If you plan to deploy a new ERP package and/or add modules to your existing packages, when would this implementation take place?

Who do you partner with for new ERP implementations and additions of new modules?

What do you see as the main challenges to successful ERP implementations within your organization?

For more details

http://projectmanagement.ittoolbox.com/documents/research/