Packaged Software and Enterprise Resource Planning

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Chapter 14

• Packaged Software and Enterprise Resource Planning

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Objectives

• Discuss three major analysis and design issues
  associated more often with packages than with
  custom software
• Name the three types of package customization and
  explain when each would be necessary
• Identify and explain the four major
  characteristics of ERP systems and discuss
  several reasons for adopting ERP

3
Objectives

• Identify and explain several critical success
  factors for ERP implementation
• Distinguish the three major approaches to ERP
  system development
• Discuss how methods used for ERP systems
  deployment differ from those for conventional
  systems development
• Identify and explain the four major steps to ERP
  package selection

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Objectives

• Discuss the major areas of expansion for ERP
• Identify the four high-level work areas of SAP
  R/3
• Identify and discuss the five types of master
  data in SAP R/3
• Describe the function of R/3 Basis software
• Describe how transactions are entered in SAP R/3

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IS Components Serving Multiple Business
FunctionsFigure 14-1
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Key Players in Enterprise ComputingFigure 14-2
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Packaged Software

• Traditionally focused on isolated business
  functions
• ERP focuses on integrated software solutions
• Current trends show increase in packaged software
  and decrease in in-house software development

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Three Critical Issues of Packaged Software
Spanning All Phases of the SDLCFigure 14-3
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Customization

• Desire is to minimize customization
• Best practices built-in already
• Unique requirements may exist
• Customization types
• Configuration
• Modification
• Enhancement

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Integration

• Standardize data so all functions can access it
  in real time
• Enterprise application integration (EAI) is the
  process of linking applications to support the
  flow of information across multiple business
  units and IT systems
• Middleware
• ERP with built-in middleware

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Obstacles to Integration Figure 14-4
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Upgrading Packages

• Upgrades can be challenging
• Frequency
• Existing level of customization
• Integration
• Must be planned and documented

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ERP

• Process of using integrated application software
  to improve the effectiveness and efficiency of
  the entire enterprise
• Objectives of ERP
• Provide best practice functionality within
  departments and high level of integration across
  all enterprise functions
• Bridge gap in value chain
• Included in ERPTPS, MIS, DSS

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Nonintegrated ISFigure 14-5a
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Integrated IS in an ERP SystemFigure 14-5b
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Major Characteristics of ERPFigure 14-6
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Major ERP Vendors

• SAP AG, Peoplesoft, Oracle, J.D. Edwards, Baan
• Began as integrated packages for core business
  function management
• Finance
• Manufacturing
• Human resources
• Expanded to extended business functions
• Sales-force automation
• E-commerce
• Business intelligence

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Why ERP?

• Reduces workforce in core transaction processing
  systems
• Supports global business
• Achieves economies of scale
• Reduces information systems development staff

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Why ERP?

• Improves customer service
• Improves data integrity
• Improves decision support

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Costs and Benefits

• ERP may cost several hundred thousand dollars for
  a mid-sized firm
• Cost competitive among major vendors
• Payback usually 6-30 months
• Savings based on 30 reduction in administrative
  and IS costs
• Consider operating costs

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Critical Success Factors of ERP

• Strong top management support
• Centralized project management
• Strong IT management and staff support
• Heavy user involvement
• Standardized business process reengineering on
  software capabilities

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Critical Success Factors of ERP

• Retraining of existing software developers in ERP
• Extensive training of end users
• Use of consultants to lead implementation and
  training
• A respected and effective champion of ERP within
  the organization

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Critical Success Factors of ERP

• Effective and continuous communication
• Top-notch systems analysts
• Retention of analysts throughout project and
  beyond
• Sensitivity to user resistance with new systems

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Three Approaches to ERPFigure 14-7
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Organizational Structure for an ERP
ProjectFigure 14-8
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ERP Development Methodology

• Phase 1 Planning
• ERP oversight committee
• Phase 2 Analysis
• Collection of requirements from in-house work
  groups
• Identify business reengineering initiatives
• Select vendors

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ERP Development Methodology

• Phase 3 Design
• Interfaces determined
• Hardware design
• Middleware issues
• Phase 4 Implementation
• Installation
• Configuration into cohesive system
• Phase 5 Support
• Training
• Maintenance

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Special Topics on ERP Development

• Select a comprehensive package
• Preliminary evaluation
• Detailed evaluation
• Vendor presentations
• On-site visits
• Final decision

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Special Topics on ERP Development

• Linking applications to an ERP package
• Purchasing middleware
• Select software vendors that partner with ERP
  packages
• Vendor-provided or in-house link development
• Using ERP packages for application development
• Investigate vendor-supplied development tools

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ERP Future

• Areas of expansion
• Supply chain management
• Business intelligence
• Continued integration of various business
  functions

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SAP R/3

• SAP AG is a German software development firm
• SAP R/3 is current ERP system
• SAP R/3 Organization
• Logistics
• Accounting
• Human resources
• Business tools
• Designed to meet business needs across entire
  enterprise

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SAP Industry Solutions

• SAP includes common core business functions plus
  Industrial Business Units (IBUs) to provide best
  practices for specific industries
• Automotive
• Electronics
• Public sector
• Retail

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Five Master Databases for SAP R/3Figure 14-10
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Implementing SAP R/3

• Three-tier client server system
• R/3 Basis
• Middleware that enables integration of R/3
  applications on various computing platforms
• Accelerated SAP (ASAP)
• Small to mid-sized business applications of SAP
• RMO would be a good candidate

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Three-Tier Architecture of SAP R/3 Figure 14-11