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BCIS 485 College of Business New Mexico State University Enterprise Resource Planning (ERP) Enterprise Systems (ES)

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Knowledge workers Thomas Davenport, Harvard University, says this is the skill set people should have to be effective using today's technologies in the business environment. Technical skills. Knowledge of enterprise software and software tools for analysis and presentation. Analytical skills. Understand statistical models, assumptions and constraints in order to interpret analyses. Knowledge of data. What data are available and how to get it. Knowledge of business. What the business' goals are. How data analysis may help achieve goals. Communication/partnering skills. Coordinate and work with others to combine knowledge and skills. Communicate effectively.

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Timeline of software development

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IT & ERP History of information technology (IT) and its impact on the development of ERP systems Some engineers for IBM started SAP in the early 1970s. They didnt have a computer. They used their clients mainframe to begin developing software. 1983: The company I worked for rented mainframe processing time. One PC was used by two departments: transportation and marketing. Computer-generated reports were distributed weekly and monthly. No one had a computer on his/her desk, only a terminal linked to a mainframe computer (which would fill this room). Computer hardware has gotten cheaper and more powerful every year since the 1950s but it wasnt until the early 1990s that IT could provide the processing and storage capacity an ERP system needs. Database management systems have also evolved since the 1970s.

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MRP & MRP II Manufacturers invested a lot of money in developing software to help handle the complexities of material requirements planning (MRP) and to integrate different production activities. Before a company can produce a product it must procure the raw materials for manufacturing this product. MRP takes into consideration raw materials already on hand and what is planned for production then generates a list of materials required (what needs to be purchased and when). MRP II added production planning and scheduling.

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ERP took integration further ERP took the integration concept further. Data is stored in a central database that enables each functional area to work with current, up-to- date data. Historically, business functional areas tend to be isolated; sometimes referred to as functional silos. People sometimes take action without being aware of the impact on other parts of the business. ERP enables information to flow between functional areas, providing horizontal integration.

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Impetus for ERP Implementation IT now offers the computing resources needed at a reasonable cost. During the 1990s the Y2K problem gave companies the opportunity to implement ERP while fixing the Y2K problem. Y2K problem = Legacy (old) programs and databases stored years in a two-digit format. Sarbanes-Oxley Act of 2002 Tighter control of accounting and financial records and reports. Multinational corporations Currency differences Regulation differences

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ERP Implementation Costs Summary taken from article in CIO (see full article) about a survey about ERP softwaresee full article Total cost of the average ERP implementation? SAP = $16.8 million Oracle = $12.6 million Microsoft = $2.6 million Tier II average: $3.5 million (Tier II includes companies besides the industry leaders.) How long did it take? SAP = 20 months Oracle = 18.6 months Microsoft = 18 months Tier II average: 17.8 months Satisfied with the result? SAP = 73% Oracle = 62% Microsoft = 69% Tier II average: 70%

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Benefits of information integration Lack of integration creates problems Inefficiencies Time spent trying to get information Time spent storing duplicate data Inconsistent data Keeping the same data in more than one location makes data accuracy more difficult Inability to access data in a timely manner

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Integration across functional areas Accounting /Finance Sales/ Marketing Supply Chain Mgt Human Resources Information is centralized and available to each functional area. Information System/Central Database CUSTOMERS VENDORS/SUPPLIERS CRM = customer relationship management SRM = supplier relationship management

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ERP Implementation Business process re-engineering This can be an opportunity to change processes and become more efficient. This can create tension and resistance from employees. Good change management is necessary. SAPs best practices approach Though there are hundreds of customization settings in SAP, this is different from what customization has typically meant to software companies. SAP modules built on best of breed practices.

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Overview of modules in ERP/ES Business functions Accounting/Finance Human Resources Sales/Marketing Supply Chain Management Procurement Production Distribution Business processes Forecasting demand/planning Procurement Production Sales order processing Integration An ERP system you have used: Banner

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ERP supports business functions Sales & Marketing Sales/Marketing Market products Take sales orders Customer relationship management Sales forecasting Advertising

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ERP supports business functions Supply Chain Management Supply Chain Management Purchase goods and raw materials Receive goods and raw materials Logistics (moving products and raw materials) Production scheduling Manufacture Plant maintenance

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ERP supports business functions Accounting & Finance Accounting/Finance Financial accounting Cost allocation and control Planning and budgeting Cash flow management Financial analysis

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ERP supports business functions Human Resources Human Resources Recruit and hire Training Payroll Benefits Government/regulation compliance

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ERP Data input/output

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Technology evolution: Client/server architecture Remote access to centralized data on the database server. Browser-based applications.

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SAP R/3 and mySAP R/3 = 3-tiered architecture mySAP NetWeaver/Application Server introduced in 2003 More browser-based functionality Business Warehouse (BW), Customer Relationship Management (CRM) and other new modules offered

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Now and the future Internet and browser-based interfaces Database technology now provides the capacity for vast amounts of data to be stored. Business intelligence / data analytics Organizations want to take advantage of their data to help identify patterns or relationships and to aid decision-makers.

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SAP Modules Sales and Distribution (SD) Records sales orders, schedules deliveries and holds information about pricing, how and where to ship products, how the customer is to be billed. Materials Management (MM) Tracks acquisition of raw materials from suppliers (purchasing or procurement) Movement of inventory Goods received Materials moved to the shop floor Finished goods moved from shop floor to inventory Production Planning (PP) Production is planned, scheduled, released for execution, and confirmed (completed).

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SAP Modules Quality Management (QM) Helps to plan and record quality-control activities, such as product inspections and material certifications Plant Maintenance (PM) Management of resources such as preventive maintenance of plant machinery Asset Management (AM) Helps in managing fixed-asset purchases (plant and machinery) and the related depreciation. Human Resources (HR) Tracks employee recruiting, hiring, training, payroll and benefits. Financial Accounting (FI) Records transactions in the general ledger accounts. Used to generate financial statements for external reporting purpose

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SAP Modules Controlling (CO) Used for internal management purposes. The companys manufacturing costs are assigned to products and to cost centers, so that the profitability of the companys activities can be analyzed Project System (PS) Provides tools for planning and control of special projects like Research and Development or Marketing Campaigns or low-volume, highly complex projects like aircraft or ship construction Workflow (WF) A set of tools that can be used to automate any of the activities in R/3. For example, a work flow can be created so that when a shipment is received at the warehouse both the production manager and accounts receivable receive a notice from within SAP.

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Videos about ERP and SAP Introduction to ERP & SAP http://www.youtube.com/watch?v=EO2Df1p_tcw Introduction to SAP http://www.youtube.com/watch?v=I1fAcjEIEEM&p=1A70F57584 733F6C&playnext=1&index=30 http://www.youtube.com/watch?v=I1fAcjEIEEM&p=1A70F57584 733F6C&playnext=1&index=30 SAP Business One (ERP for small to medium-size companies) http://www.youtube.com/watch?v=zE9tmAcDaH4 http://www.youtube.com/watch?v=WEcWutvYg5A Tips for selecting ERP software for a business http://www.youtube.com/watch?v=BCucG-1jUBY