ERP ISE413 Software Applications in Industry
Introduction to ERP Upon completion of this lecture you will be able to : Describe the concept of ERP Define key terms as they relate to ERP Describe the basic ERP model
Introduction to ERP Identify the five different ERP maturity levels Understand the transition from MRP to ERP State the benefits of ERP State the pitfalls of ERP implementations.
What is ERP? A Software tool Manages business systems Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR Allows automation and integration of business processes
What is ERP? Enables data and information sharing Enterprise-wide system Introduces best practices
ERP Definition An information system that supports different activities for different departments, assisting executives with planning and running interdependent functions - Oz & Jones
ERP Definition A set of integrated programs capable of managing a company s vital business operations for an entire multi-site, global organization Stair, Reynolds and Chesney
One more.. A commercial software package that promotes seamless integration of all the information flowing through a company. (Dawson & Owens, 2008) 8
ENTERPRISE RESOURCE PLANNING (ERP) IS..
Enterprise Resource Planning Replace old, disparate information systems with enterprise applications Enterprise Resource Planning: Manages daily operations Complex Require special tailoring for specific organizations Relatively expensive
HISTORY
History of ERP 1960 s - Systems Just for Inventory Control 1970 s - MRP Material Requirement Planning (Inventory with material planning & procurement) 1980 s - MRP II Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.)
History of ERP Mid 1990 s - ERP Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards ERP II Collaborative Commerce (Extending ERP to external business entities)
MODULES
Top five ERP software vendors SAP Oracle Microsoft Dynamics SSA Sage
Revenues and shares Vendor Revenue (million $) Market Share(%) 1 SAP 2,949 30.33 2 Oracle 1,774 21.38 3 The Sage Group 1,421 17.44 4 Microsoft 1,016 14.25 5 SSA Global Tech 564 7.22
ISE413 Software Applications in Industry
ISE413 Software Applications in Industry
ISE413 Software Applications in Industry
ISE413 Software Applications in Industry
ISE413 Software Applications in Industry
Facts About ERP projects 65% of executives believed that ERP could be harmful to their organizations. (Muscatello & Chen, 2008) Robbins-Gioia, an Alexandria, Va.-based program management consulting firm, recently reported that : 51 percent of ERP projects are considered failures, a full 30 percent far exceed budget and miss their completion dates by a wide margin (Caruso, 2007) 33
Facts About ERP projects 25% of organizations adopting ERP systems faced significant resistance from staff and that 10% of the organizations also encountered resistance from managers (Muscatello & Chen, 2008)
Advantages of ERP systems Improved access to data for operational decision making Elimination of costly, inflexible legacy systems Improvement of work processes Upgrade of technology infrastructure
Disadvantages of ERP systems Expense and time in implementation Difficulty implementing change Difficulty integrating with other systems Risks in using one vendor Risk of implementation failure
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
Conclusion ERP systems take a holistic view of an organisation by making the link between the different sub-systems Although an ERP system can be very beneficial to an organisation the implementation of ERP is not risk-free and needs careful managing
Conclusion The ERP system : is not a simple information system cannot automatically drive the strategic and tactical changes is a strategic and tactical revolution which requires a total commitment from all involved. 39
Summary ERP systems can improve the effectiveness of organizations through automation and integration of business processes ERP systems allow data and information sharing across the organization
Summary Departmental benefits include increased efficiency, faster design and production, and accuracy Implementing an ERP system helps the organization obtain and maintain a competitive advantage
ERP Options OPTION 1 MAKE (Using Internal resources) Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department
ERP Options OPTION 2 - BUY Going for Tailor-made ERP packages available in the market like SAP, Oracle applications, Microsoft, Baan, PeopleSoft etc.
ERP Options OPTION 3 MAKE (using External resources) Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a Software solution provider
END OF LECTURE 2