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Enterprise Resource Planning

Dr. Djamal Ziani

CHAPTER 1

Understand Enterprise
Resource Planning Systems

Outline
Understand

What is an ERP
How ERP systems improve the effectiveness
of information systems in organizations
Recognize the business benefits of ERP
systems
History and evolution of ERP

What is an ERP System


A packaged business system that allows a
company to:
automate and integrate the majority of its
business practices
share common data and practices across the
entire enterprise
produce and access information in a realtime environment

What is an ERP System

ERP Market
One

of the fastest growing markets in


software industry
34.5% of companies with revenues over $1
billion plan to purchase or upgrade
$180 billion in sales in 2002
Maybe as much as $1 trillion by 2010

ERP Systems
Major

investment

Cost between $50,000 and $100,000,000+

Variety

of business justifications

Replace legacy systems


Reduce cycle times
Lower operating costs
Enables better management decisions
Real-time
On-line

Evolution of ERP

1960s: software packages with inventory control


1970s: MRP systems (Material Requirements
Planning)

1980s: MRPII systems

Adds financial accounting system

1990s: MRPII

Production schedule with materials management

Integrated systems for manufacturing execution

Late 1990s: ERP

Integrated manufacturing with supply chain

ERP Vendors
Vendor

Revenue
(M$)

Market
Share

Site

SAP

1949

30.33

www.sap.com

Oracle Applications

1374

21.38

www.oracle.com/
applications
/index.html

The sage Group

1121

11.21

www.sage.com

Microsoft Dynamics

916

14.25

www.microsoft.com/
dynamics/

ERP Vendors: SAP


SAP:

Multinational software development &


consulting corporation, which provides
enterprise software applications and support
to businesses of all sizes globally.
Headquartered: Walldorf, Germany
the largest software enterprise in Europe and
the 4th largest software enterprise in the
world.

ERP Vendors: SAP

SAP: Multinational software development & consulting


corporation, which provides enterprise software applications
and support to businesses of all sizes globally. Headquartered:
Walldorf, Germany

the largest software enterprise in Europe and the 4th largest


software enterprise in the world.

founded in 1972 as Systemanalyse und Programmentwicklung


("System Analysis and Program Development") by 5 former
IBM engineers: Dietmar Hopp, Hans-Werner Hector, Hasso
Plattner, Klaus E. Tschira, and Claus Wellenreuther.

More than 50.000 employees,

ERP Vendors: SAP

ERP Vendors: Oracle Applications


specializes

in developing and marketing


enterprise software products particularly
database management systems.
The company also builds tools for database
development, middle-tier software, ERP,
customer relationship management (CRM)
and supply chain management (SCM)
software.

ERP Vendors: Oracle Applications


specializes

in developing and marketing


enterprise software products particularly
database management systems.
The company also builds tools for database
development, middle-tier software, ERP,
customer relationship management (CRM)
and supply chain management (SCM)
software.

ERP Vendors: Oracle Applications

In 1977 Larry Ellison co-founded Oracle Corporation


under the name Software Development Laboratories
(SDL)

Ellison worked for Ampex Corporation. One of his


projects was a database for the CIA, which he
named "Oracle".

Oracle is the third software company in the world.

ERP Vendors: Oracle Applications

ERP Vendors: Microsoft Dynamics

is a line of ERP and CRM (customer relationship management)


applications developed by the Microsoft Business Solutions
group within Microsoft

There are 300,000 businesses that use Microsoft Dynamics


applications .

The Microsoft Business Solutions group was formed in part from


Microsofts acquisition of two software companies: Great Plains
Software, acquired in April 2001, and Navision, acquired in July
2002.

ERP Vendors: Microsoft Dynamics

The fundator of MicroSoft is William Henry Gates III, (known as


Bill Gates) called the developers of a new microcomputer.

Bill Gates demonstrate an implementation of the BASIC


programming language for the system to Micro Instrumentation
and Telemetry Systems (MITS).

After the demonstration, MITS agreed to distribute Altair BASIC.


Gates left Harvard University, moved to Albuquerque, New
Mexico where MITS was located, and founded Microsoft there.
The company's first international office was founded on
November 1, 1978

ERP cost

Software

24.2% 30.2%
Hardware 17.8% 18.5%
Consulting 24.1% 30.1%
Training 10.9% 13.8%
Implementation team 12.0% 13.6%

Tangible Benefits

Inventory reduction 32%


Personnel reduction 27%
Productivity improvement 26%
Order management improvement 20%
Financial close cycle reduction 19%
IT cost reduction 14%
Cash management improvement 11%
Revenue/profit increase 11%
Transportation/logistics cost reduction 9%
Maintenance reduction 7%
On-line delivery improvement 6%

Intangible benefits

Information/visibility 55%
New/improved processes 24%
Customer responsiveness 22%
Integration 13%
Standardization 12%
Flexibility 9%
Globalization 9%
Business performance 7%