Chapter 12

Integrating the Organization

from End to End Enterprise
Resource Planning

McGraw-Hill/Irwin

2008 The McGraw-Hill Companies, All Rights Reserved

Learning Outcomes
12.1

Describe the role information plays in enterprise

resource planning systems

12.2

Identify the primary forces driving the explosive

growth of enterprise resource planning systems

12.3

Explain the business value of integrating supply

chain management, customer relationship
management, and enterprise resource planning
systems
12-2

Traditional view of systems

12-3

Traditional View of the Systems

Within the business: There are functions, each
having its uses of information systems

Outside the organizations boundaries: There

are customers and vendors

Functions tend to work in isolation

CRM and SCM and ERP are steps forward in
solving this problem

12-4

INTRODUCTION
Enterprise Resource Planning [ERP]
integrates all departments and functions
throughout an organization into a single IT
system (or integrated set of IT systems)
so that employees can make
enterprisewide decisions by viewing
enterprisewide information on all business
operations
12-5

Enterprise Systems - ERP

12-6

Enterprise Resource Planning

(ERP)
At the heart of all ERP systems is a database, when
a user enters or updates information in one module,
it is immediately and automatically updated
throughout the entire system

12-7

Enterprise Resource Planning

(ERP)
ERP systems automate business processes

12-8

Bringing the Organization Together

ERP The organization before ERP

12-9

Bringing the Organization Together

ERP bringing the organization together

12-10

Major Problems of Isolated Functional

Systems

12-11

Major ERP vendors

SAP is the largest ERP vendor in the world. It
is second largest software company after
Microsoft.

Oracle PeopleSoft
Microsoft
12-12

ERP Demo 1
What is ERP?

12-13

The Evolution of ERP

12-14

Integrating SCM, CRM, and ERP

SCM, CRM, and ERP are the backbone of ebusiness
Integration of these applications is the key to
success for many companies
Integration allows the unlocking of information to
make it available to any user, anywhere,
anytime
Many ERP vendors offer SCM and CRM
components

12-15

Integrating SCM, CRM, and ERP

General audience and purpose of SCM, CRM and ERP

12-16

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 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 reduce the time
necessary to develop solutions that integrate
12-17
applications from multiple vendors

EAI improves connectivity

If integration is applied without following
a structured EAI approach, point-topoint connections grow across an
organization resulting in a tangled mess
that is difficult to maintain. This is
commonly referred to as spaghetti.

12-18

Enterprise Resource Plannings

Explosive Growth
There are an estimated 70,000 ERP installations worldwide
with over 35 million users

ERP solutions are growing because:

ERP is a logical solution to the mess of incompatible
applications that had sprung up in most businesses
ERP addresses the need for global information sharing
and reporting
ERP is used to avoid the pain and expense of fixing legacy
systems
12-19

Characteristics of ERP

12-20

Benefits of ERP
Benefits
Processes effective and efficient
Organizations do not need to reinvent processes
Built-in process based on Industry best practices

Reduce lead time (The time between the initiation and

completion of a production process)
No data inconsistency problem
Lower costs in Long Run
Higher profitability

12-21

Problems with ERP

12-22