Enterprise Resource

Planning (ERP) Systems

Chapter Extension 9

CE9-2

Study Questions

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

Q1: What is the purpose of ERP systems?

Q2: What are the elements of an ERP solution?

Q3: How are ERP systems implemented?

Q4: What types of organizations use ERP?

Q5: How do the major ERP vendors compare?

CE9-3

Q1: What Is the Purpose of ERP Systems?

• Primary purpose: integration of purchasing, human resources, production, sales, and accounting data into a single system.

• Allows real time global updates whenever a transaction happens.

• Enable critical business decisions using latest data.

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-4

Pre-ERP Information System: Bicycle Manufacturer

Does not include accounting Five non-integrated databases

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-5

ERP Information System

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-6

Some Questions Procedures Need to Answer or Resolve

• How does sales department determine an order is “large”? By dollars? By volume?

• Who approves customer credit (and how)?

• Who approves production capacity (and how)?

• Who approves schedule and terms (and how)?

• What actions to take if customer modifies an order?

• How does management obtain oversight on sales activity?

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-7

Sales Dashboard

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-8

Q2: What Are the Elements of an ERP Solution?

• ERP Application programs

• ERP Business process procedures

• ERP Databases

• ERP Training and Consulting

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-9

True ERP Have Application that Integrate: (http://www.erpsoftware360.com/erp-101.htm)

• Supply chain (procurement, sales order processing, inventory management, supplier management, related activities)

• Manufacturing (scheduling, capacity planning, quality control, bill of materials, and related activities)

• CRM (sales prospecting, customer management, marketing, customer support, call center support)

• Human resources (payroll, time and attendance, HR management, commission calculations, benefits administration, and related activities)

• Accounting (general ledger, accounts receivable, accounts payable, cash management, fixed asset accounting)

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-10

ERP Solution Components

• ERP Application Programs• Configurable vendor applications

• ERP Databases• Trigger

– Computer program within the database that keeps database consistent when certain conditions arise.

• Stored Procedure– Enforces business rules

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-11

ERP Solution Components (Cont’d)

• ERP Business Processes and Procedures– Adapt to predefined, inherent processes

and procedures, or design new ones?• ERP Training & Consulting

– Training to implement

– Top management support, preparing for change, dealing with resistance

– Training to use

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-12

Example of SAP Ordering Business Process Blueprint

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-13

Example of SAP Ordering Business Process Blueprint (cont’d)

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-14

Q3: How Are ERP Systems Implemented?

Major tasks in implementation of an ERP application

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-15

Magnitude of ERP Implementation

SAP blueprint contains over a thousand

process models

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-16

ERP Projects

• Few organizations develop their own ERP software

• Daunting and expensive:

– Multi-year projects, millions of dollars, and hundreds of employees, consultants and vendor personnel.

SAP ERP databases contain over 15,000 tables!

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-17

Q4: What Types of Organizations Use ERP?

ERP Use by

Industry

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-18

International ERP

• Worldwide consolidation of financial statements on a timely basis

• Inherent ERP procedures adaptable to many cultures

• Multiple currencies and languages, manage international transfers of goods in inventories, work with international supply chains

• http://advice.Cio.Com/puneesh/deploy_erp_to_improve_globalization_efficiency_of_your_organization

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-19

Q5: How Do the Major ERP Vendors Compare?

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-20

ERP Market Leaders

• ERP market mature with only 2.2% to $24 billion in 2012.

• Consolidation of vendors is likely, with smaller vendors falling out entirely.

• Top 10 vendors own 64% of market share and top five own 55% of market share.

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-21

ERP Products

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-22

SAP

• Classic SAP uses thick-client, client-server architecture.

• SAP HANNA Enterprise Cloud– Used as ERP solution by itself, or integrated with

existing SAP installation.

• Big problem– Providing cloud benefits to existing customers

without disrupting organization with a nearly new ERP installation

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-23

Oracle

• Deep base of technology, high-quality technical staff

• Never known to create easy-to-use products

• Fully featured, expensive products with superior performance

• Classic Oracle ERP products designed according to SOA principles, adaptable and customizable

• ERP Cloud Service as SaaS

• Well positioned to use the cloud to expand market share.

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-24

Infor

• Grew by acquisitions

• Sells many ERP products for many different industries

• Products vary in purpose, scope, and quality

• Serves midrange, higher-end small companies and lower-end large companies

• Infor Business Cloud (SaaS) or bare-bones offered as IaaS.

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-25

Sage

• ERP software for small and midsized businesses, in construction and real estate, and nonprofit organizations

• Sage 100 - very small firms

• Sage 300 - larger small companies

• Sage 500 - midsized businesses with advanced requirements needing customization, configuration, and optimization.

• Sage ERP X3 - midsized international organizations

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-26

Microsoft Dynamics

• AX, Nav, GP, Solomon, and Dynamics CRM.

• AX and Nav have the most capabilities;

• GP more limited, easier to use.

• Microsoft supposedly outsources maintenance of Solomon code to support existing customers.

• Dynamics CRM extensible to enable use for ERP and CRM.

• CRM product online as SaaS, no full ERP implementation in the cloud.

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

CE9-27

Active Review

Q1: What is the purpose of ERP systems?

Q2: What are the elements of an ERP solution?

Q3: How are ERP systems implemented?

Q4: What types of organizations use ERP?

Q5: How do the major ERP vendors compare?

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5

© P e a r s o n E d u c a t i o n L i m i t e d 2 0 1 5 CE9-28