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Introduction To ERP

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Introduction To ERP Evolution of ERP 1960 s: Inventory Control Systems 1970 s: MRP: Material Requirement Planning 1980 s: MRPII: MRP ... – PowerPoint PPT presentation

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Title: Introduction To ERP


1
Introduction To ERP
2
Evolution of ERP
  • 1960s Inventory Control Systems
  • 1970s MRP Material Requirement
    Planning
  • 1980s MRPII MRP Distribution
  • 1990s MRPII ? ERP with introduction
    of other business functions ?
    CRMs
  • Today Web Enabled ERP Connecting
    ERP Externally

3
What is an ERP?
  • Enterprise-wide system which integrates the
    business functions and processes of an
    organization
  • Integration of business functions into one
    seamless application
  • Usually runs on a RDBMS
  • 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
  • Total implementation cost up to 2-3 of
    revenues (100 million for a 5 billion company)

5
Implementation Issues
  • Customization Change the code or the process?
  • One vendor or best of breed?
  • 60 adopt best of breed (HBS, 2001)
  • Staffing model
  • Cultural issues
  • Big bang or phased approach?
  • Project duration
  • Centralization of data (ownership)
  • Data integrity
  • Politics and balance of power
  • Training
  • Outsourcing

6
Implementation success?
  • HBS survey executives believe it at least
    moderately likely that
  • ERP technology wont support their business
  • Their organization cant make changes needed to
    extract benefits
  • ERP might actually damage their business
  • The Robbins-Gioia Survey (2001) found that 51
    of companies felt their ERP implementation was
    unsuccessful

HBS, 1998-2001
7
Plus, upgrades are a significant investment
  • 1,839 per business user half of original
    software license fee 20 of original
    implementation cost, or 9.2M for a 5,000-user
    system.
  • One person-week of internal or consulting labor
    per business user.
  • Eight to nine months, with a team of one
    full-time employee per 35 business users.
  • Much more likely to finish on-time and on-budget.
  • Companies should build upgrades into expansion
    plans

AMR Research, August, 2004
8
So why do it?
  • Some firms recognize benefit in 10 to 100
    million
  • e.g. Competitive advantage in international
    supply chains
  • Standardize and improve processes
  • Davenports Federalism
  • Improve level of systems integration
    replacement of outdated legacy systems
  • Improve IT responsiveness and information quality
  • Customer-driven
  • Year 2000 and the Euro
  • Reporting requirements of Sarbanes-Oxley and
    International Accounting Standards
  • Mergers and Acquisitions

9
What is the State of the ERP Market?
  • Mature market in U.S. and parts of Europe - ERP
    Systems firmly entrenched in infrastructure
  • Continued growth in implementations worldwide
  • Implementing CRM, KM, SCM ERP
    Applications
  • Linking ERPs to Web Web Services
  • ASPs possible new market segments
  • Enterprise Application Integration (EAI) Tools
  • Open source

10
What is the State of the ERP Market?
  • Portals
  • Public Sector Growth ? laggards
  • Better Implementations ?Experience
  • Upgrades
  • Roll Up Projects
  • Microsoft Dynamics ? Midmarket growth
  • Current Buzz ERP II and c-commerce
  • Next Web Services Integration
  • Business Process Management (BPM)
  • Niche ERP packages

11
Business Process Management
  • Modeling, automating, managing and optimizing any
    business process.
  • Includes
  • Workflow Automation
  • Enterprise Application Integration
  • Business Process Modeling and analysis
  • Business Activity Monitoring
  • SOA service oriented architecture
  • Focus on reducing cycle times and errors,
    increasing accuracy of pricing and cust sat

12
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13
Market in 2004
  • In 1999, the five biggest ERP vendors--SAP,
    PeopleSoft, Oracle, Baan, and J.D.
    Edwards--accounted for 59 percent of the market.
  • In 2004, the five biggest ERP vendors--SAP,
    Oracle (which bought PeopleSoft and J.D.
    Edwards), Sage Group, Microsoft's Business
    Solutions group, and SSA Global (which bought
    Baan)--accounted for 72 percent of the revenues.
  • (AMR Research)

14
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