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Enterprise Resource Planning


Title: ERP Past, Present and Future Author: Deepti Last modified by: abc Created Date: 10/18/2007 5:35:30 PM Document presentation format: On-screen Show – PowerPoint PPT presentation

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Title: Enterprise Resource Planning

Enterprise Resource Planning
Need, Usage and Advantage
ERP Enterprise Resource Planning
  • ERP is a way to integrate the data and processes
    of an organization into one single system with
    modules that support core business areas such as
    manufacturing, distribution, financials and human
  • ERP allows managers from most or all departments
    to look vertically and horizontally across the
    organization to see what they must see
    (information) to be productive in their
    managerial roles.
  • ERP captures data from historical activity and
    current operations . That data can be transformed
    into information that, along with external
    information, is useful in planning and
    controlling operations, and in developing
    business strategies.
  • ERP is evolving into a Multi-Module Application
    Software Package that automates
    inter-organizational business processes across
    the supply chain which involve business partners,
    suppliers, customers, and more.

Problems Delays, Lost Orders, Keying into
different computer systems invites errors
  • 1960s Inventory Control
  • 1970s MRP (Material Requirement Planning).
  • This system helped in translating the master
    production schedule into requirements for
    individual units like sub assemblies, components
    and raw materials. MRP systems helped determine
    what to order, how much to order, when to order
    and when to schedule delivery.
  • 1980s MRPII (Manufacturing Resource Planning)
  • MRPII supported efforts to optimize the entire
    plant production system by supporting capacity
    planning, shop floor control, and distribution
    management activities. MRPII was further extended
    to support areas like Finance, Human Resources,
    Engineering, Project Management etc. As MRPII
    like systems were adopted by non manufacturing
    enterprises like banks and airlines to support
    cross-functional coordination and integration of
    business processes, the M no longer fit, thus
    the name ERP was coined.
  • 1990s ERP
  • Today, ERP is the foundation system for domestic
    and global business operations, supporting most
    or all functional areas in their daily
    operations. For some organizations, ERP is a
    source of competitive advantage.
  • 21st century ERPII
  • ERPII is the name some now use to describe ERP
    like systems that are evolving to support
    inter-organizational business processes across
    the supply chain.

The Evolution of ERP
System Primary Business Need (s) Scope Enabling Technology
MRP Efficiency Inventory Management and Production planning and control. Mainframe computers, batch processing, traditional file systems.
MRPII Efficiency, Effectiveness and integration of manufacturing systems Extending to the entire manufacturing firm (becoming cross functional). Mainframes and Mini computers, real-time (time sharing) processing ,database management systems (relational)
ERP Efficiency (primarily back office), Effectiveness and integration of all organizational systems. Entire organization (increasingly cross functional), both manufacturing and non-manufacturing operations Mainframes, Mini and micro Computers, Client server networks with distributed processing and distributed databases, Data warehousing, and mining, knowledge management.
ERPII Efficiency, Effectiveness and integration within and among enterprises. Entire organization extending to other organizations (cross functional and cross enterprise--partners, suppliers, customers, etc.) Mainframes, Client Server systems, distributed computing, knowledge management, internet technology (includes intranets and extranets).
IRP Enterprise Suite, or whatever label gains common acceptance Efficiency, Effectiveness and Integration within and among all relevant constituents on a global scale. Entire organization and its constituents (increasingly global) comprising supply chain from beginning to end as well as other industry and government constituents Internet, Web Service Architecture, wireless networking, mobile wireless, knowledge management, grid computing, artificial intelligence.
  • Todays focus seem more to be external as
    organizations look for ways to support and
    improve relationships and interactions with
    customers, suppliers, partners and other
  • The focus of ERP in increasingly on Front-Office
    Applications and inter-organizational business
    processes, thus making it visible to OUTSIDERS
  • The increasing importance of E-Commerce and
    Globalization of business makes support of
    inter-organizational processes more important.
  • ERP Vendors
  • SAP
  • PeopleSoft
  • Oracle
  • Microsoft Business Solutions
  • SSA Global
  • ERP vendor products reflect the evolving business
    needs of clients and the capabilities of IT,
    perhaps most notably internet related
  • ERP helps Organization to
  • improve competitiveness
  • increase profits
  • prosper in the global economy.

ERPIIThe Future of ERP
  • ERPII is a business strategy and a set of
    collaborative operational and financial processes
    internally and beyond the enterprise
  • New multi-enterprise business models like Value
    Collaboration Networks, customer-centric networks
    that coordinate all players in the supply chain,
    are becoming popular as we enter the 21st century
  • These new business models reflect an increased
    business focus on external integration
  • There is movement away from Client-Server System
    to Internet Based Architecture

New Technologies in ERPII
  • E-Commerce (Electronic Commerce)
  • M-Commerce (Mobile Wireless Technologies)
  • C-Commerce (Collaborative Commerce)
  • Middleware
  • Enterprise Portal Technologies
  • Web Services
  • RFID
  • Analytical Capabilities (Data Warehousing Data
  • Knowledge Management
  • Business Intelligence

Difference Between ERP ERPII
Six key differences between ERP and ERP II Systems
Role Traditional ERP was concerned with optimizing an enterprise, Internal optimization. ERP II systems are about optimizing the supply chain through collaboration with trading partners.
Domain ERP systems focused on manufacturing and distribution. ERP II systems will cross all sectors and segments of business.
Function As ERP systems cross sectors and segments, they will no longer be able to present all things to all people. ERP II vendors to pick the industries in which theyre going to play, and focus on providing deep functionality for those users.
Process In ERP systems, the processes were focused on the four walls of the enterprise. ERP II systems will connect with trading partners, to take those processes beyond the boundaries of the enterprise.
Architecture Old ERP systems were monolithic and closed. ERP II systems will be Web-based, open to integrate and interoperate with other systems that allow users to choose just the functionality they need.
Data Information in ERP systems is generated and consumed within the enterprise. In an ERP II system, that same information will be available across the supply chain to authorized participants.
ERP Characteristics
Real Time
Integrated System
Customizing (Configuration)
Best Practice
Process Oriented
ERP Characteristics (cont.)
  • Modular design comprising many distinct business
    modules such as financial, manufacturing,
    accounting, distribution, etc.
  • Use centralized common DBMS
  • Integrated modules provide seamless data flow
    among the modules, increasing operational
    transparency through standard interfaces
  • Generally complex systems involving high cost
  • Flexible and offer best business practices
  • Require time-consuming tailoring and
    configuration setups for integrating with the
    companys business functions
  • Work in real time with online and batch
    processing capabilities
  • They are Internet-enabled

Core ERP Modules
  • Accounting management
  • Financial management
  • Manufacturing management
  • Production management
  • Transportation management
  • Sales distribution management
  • Human resources management
  • Supply chain management
  • Customer relationship management
  • E-Business

Advantages Disadvantages of ERP
  • Advantages
  • Centralized database common software
  • Communicates with supply chain members
  • Helps reduce supply chain inventories. Supply
    chain visibility leads to reductions of the
    bullwhip effect (buildup of supply chain safety
    stock inventories)
  • Standardizes processes eliminates redundant
    resources while increasing productivity
  • Tracks employees time performance
  • Integrates financial, production, supply,
    customer information.

ERP Advantages
What benefits How
Reliable information access Common DBMS, consistent and accurate data, improved reports.
Avoid data and operations redundancy Modules access same data from the central database, avoids multiple data input and update operations.
Delivery and cycle time reduction Minimizes retrieving and reporting delays.
Cost reduction Time savings, improved control by enterprise-wide analysis of organizational decisions
Easy adaptability Changes in business processes easy to adapt and restructure.
Improved scalability Structured and modular design with
Improved maintenance Vendor-supported long-term contract as part of the system procurement
Global outreach Extended modules such as CRM and SCM
E-Commerce, e-business Internet commerce, collaborative culture
Advantages Disadvantages of ERP- Cont.
  • Disadvantages
  • Substantial capital investment is needed to
    implement the system. The average total cost of
    ERP ownership was 15 million.
  • Software is designed around a specific business
    model based on specific business processes. The
    adopting firm must change its business model
    associated processes to fit the built-in business
    model designed into the ERP system.

ERP Disadvantages
Disadvantages How to overcome
Time-consuming Minimize sensitive issues, internal politics and raise general consensus
Expensive Cost may vary from thousands of dollars to millions. Business process reengineering cost may be extremely high
Conformity of the modules The architecture and components of the selected system should conform to the business processes, culture and strategic goals of the organization
Vendor dependence Single vendor vs. multi-vendor consideration, options for best of breeds, long-term committed support.
Features and complexity ERP system may have too many features and modules so the user needs to consider carefully and implement the needful only
Scalability and global outreach Look for vendor investment in RD, long-term commitment to product and services, consider Internet-enabled systems
Extended ERP Capability Consider middle-ware and extended modules SCM.
ERP Vendors
  • There were five dominating ERP software
    suppliers SAP, Oracle, PeopleSoft, Baan and J.D.
  • They controlled more than 60 of the multi-
    billion dollar global market.
  • Each vendor had a specialty in one particular
    module area such as
  • Baan in manufacturing,
  • PeopleSoft in human resources management,
  • SAP in logistics, and
  • Oracle in financials

  • Enterprise systems are evolving because
    organizations are changing.
  • To know what the future of ERP holds, one must
    look to the changing environment of business and
    changing business needs.
  • Systems will evolve to meet the business needs.
    Based on current trends, these will be
    increasingly inter-organizational and global.
  • Inter-organizational systems (ERPII) will pose
    challenges beyond the ones faced with ERP because
    of the need to integrate the diverse systems of
    different organizations.
  • Global supply chains mean inter-organizational
    systems that span different cultures and
    countries. That will bring even greater
    challenges due to cultural differences, legal
    issues, and more.
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