MIS479W: ERP

(Enterprise Resource Planning)

What is an ERP system?

Traditional Decentralized Information Systems

Information system for M/S Customer, Product data

Information system for SCM Products, Inventory, BOM

Multiple, separate databases Not integrated!!

M/S

IS for M/S

SCM

IS for SCM

HR

IS for HR

A/F

IS for A/F

Traditional Decentralized Systems

ERP System
An integrated Information system to manage an
organizations resources and facilitate integrated and
real-time operations using a centralized database
M/S

A/F

SCM

ERP
System

Database

HR

Single
Common
Shared
Database!

ERP System

ERP Systems help to Automate Business

Processes: e.g. Order fulfillment

ERP Advantages
Integration among different functional areas to improve
communication, productivity and efficiency
Order tracking from placement through payment

Manage revenue cycle from invoice through cash receipt

Manage inter-dependencies of complex bills of materials
Shorten production lead time and delivery time

Tracking and reconciliation of deliveries, payments, etc.

Accurate forecasting Less inventory More profit

ERP Disadvantages
Implementation cost can be very high

ERPs are often seen as too rigid and too difficult to

adapt to the specific workflow and business
process major change in the way of doing business.
Customization of the ERP software is limited.
Most companies are forced to follow the "industry
standard" prescribed by the ERP system
Increased organizational politics

ERP Vendors
SAP, the German juggernaut - www.sap.com
Systeme, Anwendungen, Produkte in der
Datenverarbeitung, or
Systems, Analysis and Products in Data Processing.

Oracle (merged with PeopleSoft/J. D. Edwards)

- www.oracle.com
Microsoft Great Plains, aimed at smaller
companies
SAP Business One is competing product

SYSPRO (Small Manufacturers)

Banner: Universities
Meditech: Hospital

SAP
Founded 1972 in Waldorf, Germany

Largest market share (approx. 30%)

Used by most Fortune 500 companies
Over 2.5 million users
2011 Revenues approx. $13.7 billion.
Over 9,000 implementations of R/3 at over 6,000
companies
Industry specific solutions
Newer products: Business Objects One, SAP Hanna

Modules in SAP ERP System

Sales &
Distribution

SD

Material
Management
Production
Planning
Quality
Management
Plant
Maintenance

Financial
Accounting

FI

MM

Controlling

CO

PP

R/3
Client / Server

QM
PM

WF
HR

IS

Human
Resources

2008 by SAP AG. All rights

reserved.

AM

Fixed Asset
Management

PS

Project
System
Workflow

Industry
Solutions

ERP Supported Functions

Financial

Human
Resources

Operations &
Logistics

Sales &
Marketing

Accounts
Receivable

Time
Accounting

Inventory

Order
Processing

Asset Account

Payroll

MRP

Pricing

Cash Forecast

Personnel Plan

Plant
Maintenance

Sales Reporting

Cost Accounting Travel Expense

Production
Planning

Sales Planning

General Ledger

Manufacturing

Catalog Mgmt

Benefits Mgmt

Profit Analysis

Purchasing

Standard
Costing

Quality Mgmt.
Shipping

All of these functions. One software

package. One database

Two views of Information Systems

View 1
A company should have state-of-the-art IS
Buy a state-of-the-art system even if it costs more
IS folks need to be experts in the IS area only

View 2
A company should have adequate IS as per needs
The cost of every IS investment must be justified
IS folks must understand the business first

Course Objectives
Learn:

What is an ERP system?

Why does a business need an ERP system?
How does an ERP system affect business processes?
Use of an ERP system in functional areas of business?
SAP as an example of an ERP system
How can data collected by an ERP system be analyzed?
How does a business implement an ERP system?
This course is as much about business as it is about technology