Enterprise Resource Planning

Definition
Integrated suite of modules supporting (core) business processes
ERP

ERP

SCM

ERP

CRM

ERP modules

ERP - modules
Cross industry modules Industry modules
Specific to automotive, chemical, .. On the boundary company companies or company customer (CRM, SCM, ..) (very wide view of ERP becomes ES)
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Extended modules

ERP - levels
1. Suite
Set of software applications sharing one or more DB Supports set of business processes Software application Supports business process Made of functions Supports simple operation/activity

Diffusion (Motta 2003)

Vendor (dati 2000 da AMR 2001) Vendite (M di $) Quota mercato

Number of installations (I) or clients (C)

1999 WW Europe Italy 2000 WW Europe

Vendor Or acle (C)

(ND) (ND) (ND)

SAP Oracle Peopleso ft J.D.Edwa rds Others

5.839 2.870 1.736 980 7.127

30% 15% 9% 5% 41%

Peopl esoft( C)
4.000 900 (ND) 4.700 1.000* 40 5.700* 1.300 * 50

SAP (I)

2. Module

20.415 13.500* 517 28.968 19.300* 807 38.251 25.500* 1.256

10.00 0 3.600 180 (ND) (ND) (ND)

Italy 2001 WW Europe Italy

3. Function

Diffusion
Major players, world
SAP, Oracle, Peoplesoft Oligopoly in large companies, multinationals Local producers, products

The ERP model

Data sharing Modularity
No data replication Independent modules The appraoch is the same for all companies (pro and con)
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SMEs, Italy

Prescriptivity

Data replication: legacy islands

Data replication
Same data in several (legacy) systems Dedicated interfaces to synchrronize (point to point)
Cost Delays Unfeasibility (of overnight synchronization)

Same data in several (legacy) systems Dedicated interfaces to synchrronize (point to point) Cost Delays Unfeasibility (of overnight synchronization) Company must become system integrator
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Company must become system integrator

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ERP: data sharing

APPLICAZIONI A SUPPORTO DEL PROCESSO DECISIONALE (SEM EPM)

ERP: data sharing

One DB or replicas with automatic synchronization One data model All applications/modules share same data, with same data model From operation level to management level (aggregates of data)
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DATA WAREHOUSE DIREZIONALE

TRASFORMAZIONE INFORMAZIONE

Horizontal integrity of data Vertical integrity

DATA BASE OPERATIVO

APPLICAZIONI A SUPPORTO DEI PROCESSI OPERATIVI

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From functions to processes

Funzione A Funzione B Funzione C

Modularity
Ex.: SAP R/3 for Manufacturing
SD Sales And Distribution MM Materials Management PP Production Planning SD QM Quality Management MM PP PM Plant Management HR Human Resource QM FI Finance PM CO Controlling HR AM Asset Management PS Project WF Work Flow IS Information System (summary data)

FI CO AM W IS PS F

DB ERP

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Modularity
Smoother transition, extensibility Large module offer One stop shopping Best of breed

Prescriptivity
ERP modules contain a business logic
Ex.: Supply part can be accepted only of related order has been issued Ex.: Supply can be ordered only if authorized role needs it

All modules from same vendor, ease of integration Modules from different vendors

Current business process in company may or may not comply

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Approaches
Traditional: Understand business process, develop software supporting it ERP: Adapt business process to ERP
Actually ERP software can be parameterized and changed

Gap analysis

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Transition to ERP in company

Cost of licenses + personalization Delay Changes to business processes Heavy solution?
Acceptance, human factors Especially for SMEs Especially for SMEs

Options
Large company (turn over > 50MEuro)
ERP (Sap, Oracle, ..) + BPR activity
Core modules + industry modules Transition risks Delay (>12 months) Cost (0,5 - 10 M)

Same as for SME

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Options
SMEs
Package for accounting Package specific to domain ERP light ERP in ASP mode

Packages for accounting

gestionale: Esatto, Zucchetti, Buffetti
Sometimes rigid (data: like bill of materials, processes) Reduced cost: ~ 50K Hard to scale up

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Vertical packages
Often used by SMEs On open (Unix, MS) or close platform (AS/400) Specific to domain Sometimes with different vendors Cost: ~100K

ERP light
Reduced, precustomized versions of SAP, Oracle, etc New products of traditional local vendors (ESA, Formula)
Good coverage of processes Less impact for customization Cost: ~100K Inherit complexity of parent product Cost: ~150K

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ASP modes
Pay service and not product Access through Internet/Browser
Pay per client, per transaction

Ex.: BtoBiscom - RDS, SEMA, EDS, AONet - Formula,

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