BCIS 485 College of Business New Mexico State University
Enterprise Resource Planning (ERP) Enterprise Systems (ES)
Slide 2
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.
Slide 3
Timeline of software development
Slide 4
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.
Slide 5
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.
Slide 6
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.
Slide 7
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
Slide 8
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%
Slide 9
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
Slide 10
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
Slide 11
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.
Slide 12
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
Slide 13
ERP supports business functions Sales & Marketing
Sales/Marketing Market products Take sales orders Customer
relationship management Sales forecasting Advertising
Slide 14
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
Slide 15
ERP supports business functions Accounting & Finance
Accounting/Finance Financial accounting Cost allocation and control
Planning and budgeting Cash flow management Financial analysis
Slide 16
ERP supports business functions Human Resources Human Resources
Recruit and hire Training Payroll Benefits Government/regulation
compliance
Slide 17
ERP Data input/output
Slide 18
Technology evolution: Client/server architecture Remote access
to centralized data on the database server. Browser-based
applications.
Slide 19
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
Slide 20
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.
Slide 21
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).
Slide 22
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
Slide 23
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.
Slide 24
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