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Enterprise Information

Systems and ERP systems

Jing Shao

What is ERP System


Letter meaning: Enterprise Resource Planning Systems
Resource: All resources in an organization, including:
capital, equipment, material, intelligence, and so on.
What and how to Plan

Definition : ERP systems is a software solution that addresses


the enterprise needs. It takes the process view of an organization to
meet the organizational goals and tightly integrates all functions in
that organization.

Why Enterprise Have to Use ERP Systems


-------Problems in enterprise information system
1. Data exchange blocks;
Software applications built to run on different operating
systems cannot be connected to run together on the same
operating system. We need to re-entry data from one system to
another system in order to exchange information, thus leading to
data inconsistency;

2. Stove-piped operations and stove-piped systems;

Why Enterprise Have to Use ERP Systems


-------Problems in enterprise information system
(continue)
3. Authorization;
It is not always the cast that the more communication, the
better organizational performance
Q1

Price and demand curve

Q2
Optimistic
Expect
Pessimistic

Q3

4. business process reengineering.

P1

P2

P3

Examine the business process, question the necessity step


by step
Analyze the
Reengineering
Old
purpose
steps
processes
of those processes

Solution
Integrated enterprise information systems
It is a set of communication channels in a
business organization, combined together in such a
way as to form one network by which information is
gathered and disseminated.

======ERP System
Widely integrated information systems
covering all functional areas. It integrates database,
applications, interfaces, tools, and business process
reengineering ( BPR ).

ERP Working Theory


Customers

Departments

Suppliers

Network
(data
exchange)

ERP
system
Server

What ERP Systems Can Offer to an


Enterprise? Benefits
ERP creates value through
1. integrating activates across a firm,
2. Implementing best practices for each business
process
3. Standardizing processes within organizations
4. Creating one-source data
5. Providing on-line access to information
---facilitate better organizational planning,
communication, and collaboration.

Advantages and Disadvantages


Factor
System
Integration

Pro
Improved understanding

Con
Less flexibility

across users
Data Integration
Best Practices

Greater accuracy

Harder to make corrections

More efficient methods

Imposition of how people do their


work
Less freedom and creativity

More efficient system


Cost of computing
planned

Changing needs
Under budgeted training expense
Hidden costs of implementation

ERP Modules
Reasons of designing ERP systems in Modules
1. Obtain specific functionality

2. Cost

3. Implement the system in bits rather


than bring entire massive system online
at one time

Modules
Module

Degree of module used by


companies

Financial and Accounting

91.5%

Materials management

89.2%

Production Planning

88.5%

Order entry

87.7%

Purchasing

86.9%

Financial Control

81.5%

Distribution/logistics

75.4%

Market Trend and Vendors


Market:
1.

60 percent of Fortune 500 companies had adopted


ERP systems before 2000.

2.

The market spending was $13.4Billion in 2003

3.

The predicted market spending is $15.8 Billion in


2008

Vendors:
over fifty vendors, such as SAP, Oracle, Baan, and
J.D. Edwards

Ways to Developing ERP System


Method

Advantages

Disadvantages

Develop in-house

Best fit with organizational


needs

Most difficult to develop,


most expensive, Slowest

In house system with


vendor supplements

Gain commercial advantages


combined with organizational fit

Difficult to develop,
Expensive, slow

Best-of-breed

Theoretically gain best of all


systems

Difficult to link modules,


slow, potentially inefficient

Customized vendor
system

Retain flexibility while keeping


vendor expertise

Slower, usually more


expensive

Selected vendor modules

Less risk, relatively fast, least


expensive

If expand, long run time and


cost higher

Full vendor system

Fast, less expensive, efficient

Inflexible

Application service
provider

Least risk, least cost, fastest,


least subject to vendor change

At the mercy of the provider,


no control, and subject to
price increases

ERP System Selection Risks

The cost, time, and risk of an ERP project depends on


following factors:
1.

Project management ability;

2.

Experience with this type of environment;

3.

Experience with the programming environment;

4.

Experience with the language or system used;

5.

Familiarity with modern programming practices;

6.

Availability of critical equipment, software, and


programming language;

7.

Completeness of project team;

8.

Personnel turnover;

9.

Relative control of project manager over project team.

Questions from Last Discussion


1. How the business processes are modeled in
ERP systems ?
2. How ERP system installed in an organization?
Is it simple replace old separated operation
systems or it can be combined with old
systems?
3. How to combine ERP system with business
process?

Measurement of ERP Project


Intangible factors
increases in market share
improved customer service
better corporation image
employee satisfaction
supply chain integration
ability to support e-business operation

Hidden outcomes
change how people do their jobs

The changing nature of information technology


high dynamic technology and long-term project for
implementing ERP

ERP Project Management


Cost

time
Tool Critical Path Method

Right system

Critical Success Factors in ERP

1. Clear understating of strategic goals


2. Commitment by top management
3. Excellent implementation project management
4. Great implementation team
5. Successful coping with technical issues
6. Organizational commitment to change
7. Extensive education and training
8. Data accuracy
9. Focused performance measures
10. Multisite issues resolved

Open Source ERP


Reasons of Choosing open source ERP
1. cost
2. Free redistribution
3. Available source code

Available providers
There are about 20 vendors providing open source ERP
systems. For example:
1. Open MFG
2. FISTERRA
3. ERP 5
4. Compiere

Compiere Open Source ERP


Architecture

Compiere is a 100% pure Java


solution based on Oracle database
technology, and it is working on
database independence.

client application component is


written entirely in Java

The application server component


is implemented in Java based on
J2EE technology using the JBoss
server infrastructure.

Functionality
Business processes rather than traditional
departments drive Compiere's design.
Seven Modules:

quote-to-cash, requisition-to-pay, partner relationship management,


supply chain management, performance analysis, web store

Quote-to-Cash

Requisition-to-Pay

Customer relations
management

Partner Relations Management

Supply Chain Management

Performance Analysis

Web Store

Thank
You