BIS

Enterprise Resource Planning

ERP
 Enterprise Resource Planning

ERP ERP
Introduction Framework Applications

Outlines
 Introduction
 Definition & History
 Core & Extended ERP Components
 Operating Model
 Vendors of the ERP System
 ERP Challenges

ERP Framework
 Conceptual Model
 Critical Issues across the ERP Life Cycle
 Analysis of Failure Attributes for an ERP System
 Influence of ERP systems on business process agility

ERP Applications
 Stages of ERP Implementation
 Critical Implementation Concerns
 Commercial ERP system
 Success Stories

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 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 enterprise-wide
decisions by viewing enterprise-wide information on all
business operations
The International Journal of Management Science, (2003)

Program description
Objectives
 Provide a better growth platform
Align and consolidate existing
process and IT  Integrate the former processes and tools
into one system
 Finance
 Supply chain management  Provide a basis for synergy savings
 Services value chain
 Customer interface
Program importance

 Future success of the company

 Capture respective synergies

Introduction
 ERP systems handle the manufacturing, logistics,
distribution, inventory, shipping, invoicing, and
accounting for a company

ERP software can aid in the control of many

business activities, including sales, marketing,
delivery, billing, production, inventory management,
quality management, and HR management

Introduction
 Material Manufacturing
Requirements Resource Planning ERP
Planning (MRP). (MRP II)

EAS ERP II

Enterprise Application Search (EAS)

is a tool that is well integrated with
an ERP application and helps users
find relevant information from the
application database.

Introduction
 Purchasing, Manufacturing, Distribution
Advanced Applications

Financials, Distribution
Accounting, HRM, PLC ….
Integration with SCM, CRM,..

Cloud Management Portal/ Dashboard

Transactional Backbone
Decision Support, intelligence Sys.

ERP Components

Introduction
 Journal of Enterprise Information Management, 2009

Introduction
 The organization Before ERP

Introduction
 The organization After ERP

Introduction
 ERP Integration Data Flow

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

Introduction
 ERP Process Flow Example:
ERP automates business processes such as order fulfillment—taking an
order from a customer, shipping the purchase, and then billing for it.
With an ERP system, when a customer service representative takes an
order from a customer, he has all the information necessary to complete
the order (the customer’s credit rating and order history, the company’s
inventory levels, and the delivery schedule).

Introduction
Introduction
 Source: IDC, Worldwide ERP Applications 2006-2011

Introduction
 Source: IDC, Worldwide ERP Applications Vendor Shares. 2011

Introduction
 Source: IDC, Worldwide ERP Applications (per module) 2011

Introduction
 Source: IDC, Worldwide ERP Applications (per region)

Introduction
 Journal of Enterprise Information Management, 2009

Introduction
 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 reduced the time
necessary to develop solutions that integrate
applications from multiple vendors

Introduction
 Journal of Enterprise Information Management, 2009

Introduction
 Legacy
Data Warehouse Systems
ERP System
On-Line Analytical Processing Bolt-On Applications
(OLAP) (Industry Specific Functions)
Customers Suppliers
Core Functions [On-Line Transaction Processing (OLTP)]
Sales
Business Shop Floor
& Logistics
Planning Control
Distribution

Operational Database
Customers, Production,
Vendor, Inventory, etc.

ERP Framework
 Pre implementation Project Business Final preparation
Realization & go live Support
Activities Preparation blueprinting

ERP Framework
Company Management Pre-Evaluation Screening ERP Vendors
Go ahead

Package Evaluation

Project Planning

Gap Analysis Re-engineering Configuration

Implementation Team Training Testing End-User Training

Going Live

Post Implementation Phase

 ERP
Before Implementation

Scope ERP
During Implementation

Scope

ERP Framework
 Unisource Worldwide, Inc., a $7 billion distributor of paper
products, wrote off $168 million in costs related to an abandoned
nationwide implementation of SAP software.

FoxMeyer Drug, a former $5 billion drug distributor, went bankrupt

in 1996 and has filed a $500 million lawsuit against SAP. FoxMeyer
charged the ERP giant that its package was a "significant factor" that
led the firm into financial ruin.

ERP Applications
 Dell Computer Corp. has recently abandoned a much-publicized SAP
implementation following months of delay and cost overruns.

Dow Chemical, after spending half a billion dollars over seven years
of implementing SAP R/2, the mainframe version, now has decided
to start all over again on the new client/server version (R/3).

ERP Applications
 The Earthgrains Co. implemented SAP R/3 and:
• Reports that its operating margins improved from 2.4 to 3.9
percent
• Pushed its on-time product delivery rate to 99 percent in
1997.
• The company also reports better management information
and happier customers.

ERP Applications
 At Par Industries in Moline, IL, an ERP system allowed management to
base production on current customer orders rather than forecasts of
future orders.
• The delivery performance improved from 60 percent on time to
more than 95 percent.
• Lead times to customers reduced from six weeks to two weeks.
• Repair parts reduced from two weeks to two days
• work-in-process inventory dropped almost 60 percent.
• The life of a shop order dropped from weeks to mere hours.

ERP Applications
 IBM Storage Systems division, after implementing an ERP system:
• Was able to re-price all of its products in five minutes compared
with five days prior to the implementation.
• It also reduced the time to ship a replacement part from 22 days
to three days.
• The time to perform a credit check from 20 minutes to three
seconds.

ERP Applications
 The first tier players in the ERP market are SAP, Baan, Oracle,
and PeopleSoft, while the second tier players are vendors such
as J.D. Edwards, Lawson, and QAD.

SAP, a German company, holds about one-third of the market

share and is the leading vendor of ERP products. SAP's ERP
product is R/3.

ERP Applications
 Mergers/Acquisitions => Standardization over the same
ERP solution.

Getting rid of legacy systems.

ERP Applications
 One important reason for its failure is related with the reluctance or
unwillingness of users to accept ERP system. Therefore, a good
understanding of users acceptance of ERP systems is essential to
user productivity.
Studies from Amaoko-Gyampah and Nah et al. found that users are
more concerned with whether the ERP system can help them
perform their daily job functions rather than with system
capabilities to integrate data.
ERP systems are designed to meet these characteristics by
embedding technological and functional competences that can only
be streamlined by firm’s user usage.

ERP Applications
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 The Approach –
This is the stage of making the design decisions. Especially in ERP
systems, companies have found that the organization has to adapt
to the packaged system rather than changing the software to
meet current company processes.

The Dive –
The point of implementation when the inevitable problems arise.
Technology problems, bad data, inadequate understandings; all
the typical occurrences but on a grander scale.

ERP Applications
 Resurfacing –
Typically four to twelve months after implementation, new roles and
workflows have been learned and the organization has re-stabilized.
Swimming –
Finally some of the expected benefits are starting to occur. Systems are
continually improving as new capabilities are added and processes start
to optimize.
Jet-skiing –
Organizational boundaries have been changed, the organization has
developed agility and ability to rapidly change to a changing
environment, and management decision making processes have been
redefined. A business transformation has occurred.

ERP Applications
 • Top Management • Implementation Costs
Commitment • ERP Vendors
• Reengineering • Selecting the Right
• Integration Employees

• ERP Consultants • Training Employees

• Implementation Time • Employee Morale

ERP Applications
 • System Compatibility • Embedded Best Practices
• System Complexity • Online Training
• Transactional Efficiency • Employee Empowerment

ERP Applications
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 BIS

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