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CHAPTER 10
ENTERPRISE RESOURCE
PLANNING
McGraw-Hill/Irwin
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ENTERPRISE RESOURCE
PLANNING
Enterprise resource planning integrates all
departments and functions throughout an
organization into a single IT system (or integrated set
of IT systems) so that employees can make
enterprise-wide decisions by viewing enterprise-wide
information on all business operations
Many organizations fail to maintain consistency across
business operations. If a single dept decides to
implement a new system without considering the other
depts, inconsistencies can occur throughout the
company
Silos!
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ENTERPRISE RESOURCE
PLANNING
Reasons ERP systems are powerful tools
ERP is a logical solution to incompatible applications
ERP addresses global information sharing and
reporting
ERP avoids the pain and expense of fixing legacy
systems
Microsoft Business SolutionsAxapta helped Giant
Bicycle USA link four factories and 12 distribution centers,
and provided immediate information to their customer
service people.
http://www.microsoft.com/dynamics/ax/product/giantbicyc
le.mspx
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ENTERPRISE RESOURCE
PLANNING
Sample data from a sales database
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ENTERPRISE RESOURCE
PLANNING
Sample data from an accounting
database
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ENTERPRISE RESOURCE
PLANNING
Why is correlating these two spreadsheets difficult?
How can you understand customers when one spreadsheet
has customer name and one has customer ID?
How can you understand sales reps when one spreadsheet
has sales rep names and one spreadsheet has sales rep ID?
Date format is different will this cause problems?
One quantity is in units and one quantity has decimal points
what problems will this cause?
Unit price and unit cost is rounded to dollars in one
spreadsheet and contains cents in another what problems
will this cause?
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ENTERPRISE RESOURCE
PLANNING
ERP systems collect data from across an
organization and correlates the data generating
an enterprise-wide view to help run the business
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ENTERPRISE RESOURCE
PLANNING
Most organizations require anywhere from 10 to
100 to 1,000 different systems to run their business
Finding one system that could meet all the needs
of an entire organization from billing to sales is
almost impossible, sort of a utopia
An organization can purchase an ERP and still
have other applications running parts of its
business (for example, taxation packages) that are
not supported, or not supported well, by the ERP
system
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Update issues
Redundancy
Inaccurate information across databases
Different formats of information in the different databases
Inability to access other department information and not
being provided with a 360 degree view of the organization
Different customer information in different databases
Customer contact from multiple departments with different
messages
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Turner Industries
Turner Industries grew from $300 million in sales to
$800 million in sales in less than 10 years thanks
to the implementation of an ERP system.
Ranked number 369 on the Forbes 500 list of
privately held companies, it is a leading
industrial services firm.
It develops and deploys advanced software
applications designed to maximize the
productivity of its 25,000 employees and
construction equipment valued at more than
$100 million.
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Turner Industries
The company considers the biggest challenge in
its industry to be completing projects on time,
within budget while meeting customer
expectations
Its ERP system runs all of Turners construction,
turnaround, shutdown and maintenance projects
and helps achieve higher profit margins
The company passes on the cost savings to its
customers giving it an incredible competitive
advantage
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Integration Tools
Many companies purchase modules from an
ERP vendor, an SCM vendor, and a CRM
vendor and must integrate the different
modules together
Middleware
Enterprise application integration (EAI)
middleware
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Integration Tools
One of the big selling points of an ERP or SCM system can
be the EAI that is offered to easily integrate with other
vendors modules
For example, if a company is looking at purchasing Siebel
CRM and they find out that Siebel has already built many
integrations to PeopleSoft financials, it would be more
inclined to purchase the product
Middleware several different types of software which sit in the
middle of and provide connectivity between two or more software
applications
Enterprise application integration (EAI) middleware packages
together commonly used functionality which reduced the time
necessary to develop solutions that integrate applications from
multiple vendors
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Integration Tools
Data points where SCM, CRM, and ERP integrate
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