CHAPTER 1

Introduction to Enterprise Systems for Management

Preview In the early days of ERP implementation most management did not understand the magnitude of issues an organization has to consider before, during, and after implementation. ERP systems are very different from conventional pac aged soft!are, such as "icrosoft #ffice and others. $here are no shortcuts !hen it comes to implementing an enterprise system.

2 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Information Systems in Organi ations Information &ystems are a critical component of a successful organization today. Information &ystems provide a high level of computer automation to support business functions such as'
( ( ( ( ( ( )ccounting *inance "ar eting +ustomer &ervice ,uman Resource "anagement #perations

Information &ystems play a ma-or role in primary and secondary activities of an organization.s value chain.
% Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

!a"ue C#ain

source: L. Jessup and J. Valacich, Information Systems Today: Why IS Matters, 3rd Edition, earson rentice !all
I$E+//20 Enterprise Resource Planning &ystems 1

!a"ue System +oordination of multiple value chains

source: L. Jessup and J. Valacich, Information Systems Today: Why IS Matters, 3rd Edition, earson rentice !all
I$E+//20 Enterprise Resource Planning &ystems 2

$primary % secondary activities of t#e firm&

Primary3
( inbound4outbound logistics , operations, mar eting and service ( $hese activities are essential to creating , producing , mar eting , selling supporting a product or service.e.g online order entry system

&econdary3 !hich supports primary activities e.g organizational

structure, ,R, purchasing e.g e3mail

Supp"y C#ain

I$E+//20 Enterprise Resource Planning &ystems

source: S" #$er$ie%, S" trainin& materials

Information Systems in Organi ations $Cont'd& Information systems include hard!are, soft!are, data processes, and people. Information $echnology includes only the hard!are and soft!are components. The role of an infor ation syste is to process data into infor ation using infor ation technology, business processes, and people resources.

6 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Information Systems in Organi ations $Cont'd& Information $echnology is thus a component of Information &ystems. Information systems generally use a three3phased model of input, process, and output.

7 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

(igure 1)1 Information System Components

10 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

(igure 1)* P#ases of an Information System

11 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ro"e of Information Systems in t#e Enterprise 8usiness organizations have become more comple9 due to increased layer of management hierarchy and increased level of coordination across departments.
( Each department has different information needs.

:o single information system can support all the business needs of an organization. "anagement is generally categorized into three levels3 &trategic, "iddle, and #perational.
( Each management level has different information re;uirements.

12 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

(igure 1)+ Management Pyramid wit# Information Re,uirements

1% Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Information Si"os and Systems Integration #ver time, Information &ystems create a hodgepodge of independent nonintegrated systems ultimately creating bottlenec s and interfering !ith productivity. #rganizations need to be agile and fle9ible and !ill re;uire their information systems to have integrated data, applications, and resources from across the organization. $o compete effectively, organizations have to be customer focused.
( $his re;uires cross3functional integration among the accounting, mar eting and other departments of the organization.
11 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Enterprise Resource P"anning $ERP& Systems ERP &ystems are the first generation of enterprise systems meant to integrate data and support all the ma-or functions of organizations. ERP systems integrate various functional aspects of the organization as !ell as systems !ithin the organization of its partners and suppliers. $he goal of an ERP system is to ma e the information flo! dynamic and immediate, therefore, increasing its usefulness and value.

I$E+//20 Enterprise Resource Planning &ystems

12

Evo"ution of ERP
$imeline 17/0s &ystem Inventory "anagement < +ontrol Platform "ainframe legacy systems using third generation soft!are3=+obol, *ortran>

1750s

"aterials Re;uirements Planning ="RP>

"ainframe legacy systems using third generation soft!are3=+obol, *ortran>

1760s

"anufacturing Re;uirements Planning ="RP3II> Enterprise Resource Planning E9tended ERP or ERP3II

"ainframe legacy systems using fourth generation database soft!are and manufacturing applications.

1770s

"ainframe client3server systems using fourth generation database soft!are and pac age soft!are. +lient3server systems using ?eb platform, open source !ith integration to fifth generation applications li e &+", +R", &*).

2000s

ERP Components

Enterprise Resource Planning &ystems

15

ERP Components Integration

Enterprise Resource Planning &ystems

16

E-amp"e of Arc#itecture of ERP at .arge /niversity

I$E+//20 Enterprise Resource Planning &ystems

17

.ogica" Arc#itecture of an ERP System

I$E+//20 Enterprise Resource Planning &ystems

20

P#ysica" Arc#itecture of An ERP System

I$E+//20 Enterprise Resource Planning &ystems

21

System Configuration

One -tier configuration Presentation

Two - tier configuration

Three -tier configuration

Presentation processes

Application/ Application Business Logic Database

Application processes

Database , application , presentation processes

Database , application processes

Database processes

I$E+//20 Enterprise Resource Planning &ystems

22

e0usiness and ERP

I$E+//20 Enterprise Resource Planning &ystems

2%

e0usiness and ERP $cont1& e8usiness lin s a company !ith e9ternal partners and sta eholders, !hereas ERP focuses on integrating the functional silos of an organization into an enterprise application.

I$E+//20 Enterprise Resource Planning &ystems

21

System 0enefits of an ERP System

Integration of data and applications across functional areas =i.e., data can be entered once and used by all applications>. Improvements in maintenance and support as I$ staff is centralized. +onsistency of the user interface across various applications
( less employee training, better productivity, and cross3 functional -ob movements.

&ecurity of data and applications is enhanced due to better controls and centralization of hard!are.
Enterprise Resource Planning &ystems 22

System .imitations of an ERP System

+omple9ity of installing, configuring, and maintaining the system increases, thus re;uiring specialized I$ staff, hard!are, and net!or facilities. +onsolidation of I$ hard!are, soft!are, and people resources can be cumbersome and difficult to attain. @ata conversion and transformation from an old system to a ne! one can be tedious and comple9 process. Re3training of I$ staff and end users of the ne! system can produce resistance and reduce productivity.

I$E+//20 Enterprise Resource Planning &ystems

2/

0usiness 0enefits of an ERP System

)gility of the organization in terms of responding to changes in environment for gro!th and maintaining mar et share &haring of information across functional areas helps collaboration bet!een employees. Ain ing and e9changing information in real3time !ith supply3chain partners improves efficiency leading to lo!er costs. 8etter customer service Efficiency of business processes are enhanced due to the re3engineering of business processes.

I$E+//20 Enterprise Resource Planning &ystems

25

0usiness .imitations of an ERP System

Retraining of all employees !ith the ne! system can be costly and time consuming. +hange of business roles and department boundaries can create upheaval and resistance to the ne! system.

I$E+//20 Enterprise Resource Planning &ystems

26

ERP Imp"ementation
#rganization has to plan and understand the life cycle of these systems. Bey to a successful implementation is to use a proven met#odo"ogy2 ta3e it one step at a time2 and 4egin wit# an understanding of t#e ERP "ife cyc"e. ERP system implementations are very ris y, and using a !ell3 defined pro-ect plan !ith a proven methodology !ill assist in managing those ris s.

I$E+//20 Enterprise Resource Planning &ystems

27

ERP .ife Cyc"e

The 'ey to a successful implementation is to use a pro$en technolo&y, to ta'e one step at a time, and to (e&in %ith an understandin& of E) life cycle

I$E+//20 Enterprise Resource Planning &ystems

%0

ERP Imp"ementation Met#odo"ogy

I$E+//20 Enterprise Resource Planning &ystems

%1

ERP Imp"ementation Strategies

:eed to analyze e9isting business processes. #ther!ise, the implementation !ill re;uire significant system modifications after implementation 8uy an off)t#e)s#e"f pac age or develop in)#ouse If modify off3the3shelf pac age to fit organization =chocolate implementation>, an upgrade of the pac age !ill also need modification !ith even greater cost Canilla implementation ' minimally modify soft!are re;uire greater time to train users

I$E+//20 Enterprise Resource Planning &ystems

%2

Product .ife Cyc"e

I$E+//20 Enterprise Resource Planning &ystems

%%

Software and !endor Se"ection 8etter to purchase an off3the3shelf ERP product if an organization that does not have the e9perience in developing ERP systems 8efore selecting a vendor, the organization must carefully evaluate its current and future needs in enterprise management systems. Revie! the organization.s e9isting hard!are, net!or , and soft!are infrastructure, and the resources available for the implementation.

I$E+//20 Enterprise Resource Planning &ystems

%1

!endor Eva"uation
8usiness functions or modules supported by their soft!are *eatures and integration capabilities of the soft!are *inancial viability of the vendor as !ell as length of time they have been in business Aicensing and upgrade policies +ustomer service and help des support $otal cost of o!nership I$ infrastructure re;uirements $hird3party soft!are integration Aegacy systems support and integration +onsulting and training services *uture goals and plans for the short and long term

I$E+//20 Enterprise Resource Planning &ystems

%2

Operations and Post)Imp"ementation

Doing live =EDo3liveF> is one of the most critical points in a pro-ect.s success. It is vital to focus the efforts of all pro-ect teams to ensure that tas and activities are completed before going live. &tabilization is time from Do live to about 70 days after, or until a number of issues an problems have been reduced

I$E+//20 Enterprise Resource Planning &ystems

%/

Operations and Post)Imp"ementation $cont1&

(ive areas of sta4i"i ation are important5 $raining for end3users Reactive support =i.e., helpdes for troubleshooting> )uditing support to ma e sure data ;uality is not compromised by ne! system @ata fi9 to resolve data migration and errors revealed by audits :e! features and functionalities to support the evolving needs of the organization

I$E+//20 Enterprise Resource Planning &ystems

%5

ERP !endors $here !ere five dominating ERP soft!are suppliers' &)P, #racle, People&oft, 8aan and G.@. Ed!ards. $hey controlled more than /0H of the multi3 billion dollar global mar et. Each vendor had a specialty in one particular module area such as
( ( ( ( 8aan in manufacturing, People&oft in human resources management, &)P in logistics, and #racle in financials

I$E+//20 Enterprise Resource Planning &ystems

%6

SAP A6
&)P )D =E&ysteme, )n!endungen, und Produ te in @atenverarbeitungF>, or &ystems, )pplications and Products in @ata Processing In 1757, &)P launched &)P R42, a mainframe3based ERP In 1772 &)P R4% !as launched based on client4server 8y 1777 &)P became the third largest soft!are vendor in the !orld and the largest in the ERP sector !ith a mar et share of about %/H serving over 15,000 customers in over 100 countries. In 1777 &)P e9tended the ERP functions by adding +R", &+", sales3force automation and data !arehousing. &)P.s Internet3enabled ERP solutions are provided by the recently launched ERP product called my&)P.+#"

I$E+//20 Enterprise Resource Planning &ystems

%7

Orac"e Corporation
founded in 1755 in the I&), is best3 no!n for its database soft!are and related applications and is the second largest soft!are company in the !orld after "icrosoft. second to &)P in the enterprise systems category !ith over 2,000 customers in 110 countries. #racles ERP system is no!n as Orac"e App"ications, having more than 20 different modules in si9 ma-or categories' finance, accounts payable, human resources, manufacturing, supply chain, pro-ects and front office. :o! has ta en over People&oft and G@ Ed!ards

I$E+//20 Enterprise Resource Planning &ystems

10

Peop"eSoft Inc1 &tarted in 1765 in +alifornia, !ith specialization in #uman resource management and financial services modules. Enterprise solutions from People&oft include modules for manufacturing, materials management, distribution, finance, human resources and supply chain planning. #ne of the strengths of People&oft is the recognition by its customers that it is fle9ible and collaborative In 2002 People&oft became a part of #racle offering People&oft 7

I$E+//20 Enterprise Resource Planning &ystems

11

7181Edwards
founded in 1755 in @enver =cofounded by Gac $hompson, @an Dregory and +. Ed!ard "cCaney> !ith long e9perience of supplying soft!are for the )&4100 mar et. Its ERP product called #ne?orld is Ecapable of running on multiple platforms and !ith multiple databases, ... JandK revolutionizes enterprise soft!are by liberating users from infle9ible, static technologies $he product includes modules for finance, manufacturing, distribution4logistics and human resources, ;uality management, maintenance management, data !arehousing, customer support and after3sales service :o! a part of #racle offering G@ Ed!ards Enterprise#ne and G@ Ed!ards ?orld

I$E+//20 Enterprise Resource Planning &ystems

12

0aan2 Invensys2 SSA ERP2 Infor

8aan !as found in 1756 !ith e9pertise in soft!are for the manufacturing industry ERP solution areas that 8aan covers include finance, procurement, manufacturing, distribution, integration and implementation, planning, sales, service and maintenance, business portals, collaborative commerce and business intelligence. 8aan !as bought by Invensys =in 2000>, then &&) Dlobal $echnologies =in 200%> and changed the name to &&) ERP &&) ERP !as ac;uired by Infor in 200/ :o! Infor becomes $he !orld.s third largest provider of enterprise soft!are. It delivers integrated enterprise solutions in supply chain, customer relationship and suppliers management.

I$E+//20 Enterprise Resource Planning &ystems

1%

Ot#er ERP !endors

Microsoft 8ynamics *ormerly "icrosoft 8usiness &olutions or Dreat Plains, "icrosoft @ynamics is a comprehensive business3 management solution built on the "icrosoft platform. .awson Industry3tailored soft!are solutions that include enterprise performance management, distribution, financials, human resources, procurement, and retail operations. !!!.Aa!son.com

I$E+//20 Enterprise Resource Planning &ystems

11

 http'44!!!.slideshare.net4dheera-L71020004dheera-M