Introduction to ERP

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Introduction to ERP
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History of organizational systems

• Calculation systems
• Functional systems
• Integrated systems

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Calculation systems

• 1950-80
• Single purpose
• Eliminate tedious human work
• Examples Payroll, General ledger, Inventory
• Technology used Mainframes, magnetic tapes,
  batch processing

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A System/370 Model 145 (1970s)
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removable-disk hard drives
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Hard drives
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A very nice-looking magtape-drive
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Magtapes
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Batch processing
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Printer
800 lines/minute with 48 character train, 136
columns with 6 or 8 lines per inch spacing
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Stack of Computer Printout Paper
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Functional systems

• 1975-20??
• Use computers to improve operations
• Applications Human resources, order entry,
  manufacturing resource planning
• Technologies Mainframes, PCs, LANs

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Minicomputer
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Functional systems

• Typically contained within a department
• Islands of automation
• Applications independently developed and deployed
• Driving force availability of mini-computers

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Functional system applications

• Human resources System
• Accounting and finance systems
• Sales and marketing System
• Operations management System
• Manufacturing Systems

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Human Resources

• Recruiting
• Compensation
• Assessment
• Development and Training
• Planning

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Accounting and Finance

• General Ledger
• Financial Reporting
• Costing
• Budgeting
• Accounts Payable
• Accounts receivables

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Sales and Marketing

• Lead tracking
• Sales forecasting
• Customer management

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Operations

• Order management
• Inventory management
• Customer service

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Manufacturing

• Inventory
• Planning

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Types of Organizational information Systems

• Administrative systems
• Scheduling / Transaction systems
• Value oriented systems
• Reporting and controlling systems
• Analysis and information systems
• Planning and decision support systems
• (From Business Process Engineering by A.W.
  Scheer)

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Problems with function based application

• Sharing of data between systems
• Data duplication
• Data inconsistency
• Applications that dont talk to one another
• Limited or lack of integrated information
• Isolated decisions lead to overall inefficiencies
• Increased expenses

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Solution to disparate systems?

• Integration
• Consolidation
• Right-sizing
• Business Process Redesign
• Enterprise wide system

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Integrated systems orEnterprise Resource
Planning System
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ERP - Definition

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

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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

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What is ERP?

• Enterprise Resource Planning
• Support business through optimizing, maintaining,
  and tracking business functions
• Broken down into business processes
• HRM
• Distribution
• Financials
• Manufacturing

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What makes ERP different

• Integrated modules
• Common definitions
• Common database
• Update one module, automatically updates others
• ERP systems reflect a specific way of doing
  business
• Must look at your value chains, rather than
  functions

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Benefits of ERP

• Common set of data
• Help in integrating applications for decision
  making and planning
• Allow departments to talk to each other
• Easy to integrate by using processed built into
  ERP software
• A way to force BPR (reengineering)
• Easy way to solve Y2K problem

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Vendors
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Difficulty in implementation

• Very difficult
• Extremely costly and time intensive
• Typical over 10,000,000 and over a year to
  implement
• Company may implement only certain modules of
  entire ERP system
• You will need an outside consultant

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Common Pitfalls

• Do not adequately benchmark current state
• Did not plan for major transformation
• Did not have executive sponsorship
• Did not adequately map out goals and objectives
• Highly customized systems to look like old MRP
  systems

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Survey of ERP implementations

• Done by ittoolbox.com in 2004

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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

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How would you characterize your budget for new
ERP implementations/new modules deployments for
2004 compared to your budget in 2003?
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Who is directly responsible for determining your
ERP implementations/new modules deployments?
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Who are the other key decision-makers/influencers
in decisions to add new ERP packages/new modules?
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Do you currently have an ERP package?
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If your answer is "Yes", which ERP package(s) do
you currently use?
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Are you considering adding new modules to your
existing ERP package?
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If your answer is "Yes", which modules are you
planning to add?
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If you plan to deploy a new ERP package and/or
add modules to your existing packages, when would
this implementation take place?
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Who do you partner with for new ERP
implementations and additions of new modules?
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What do you see as the main challenges to
successful ERP implementations within your
organization?
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For more details

• http//projectmanagement.ittoolbox.com/documents/r
  esearch/