Enterprise Resource Planning

OBJECTIVE
• Develop the understanding of integrated
business processes
• Application of information Technology to
execute integrated business processes for
competitive advantage
• Enterprise Business Systems
Enterprise Resource Planning

• A business organization.

• Complex, living system, continuously

changing.

• The enterprise actually operates as a

complex system, with many parts that
interact to function as a whole.
 Definition Of ERP

Business solution that addresses all the needs

of an enterprise with the process view of an
organization to meet the organizational goals
and integrate all the functions of the
Enterprise.
 Objective of The ERP

• Facilitates Company-wide integrated Information

Systems Covering all functional Areas.
• Performs core Corporate activities and increases
customer service augmenting Corporate Image.
• Organizes & Optimizes the data input methodologies
systematically.
• To have a fully harmonised online system, which
can integrate with Back Office
• To introduce proper systems and processes which
will not be man dependent
continued……………
 Objective of The ERP

• To ensure full security by introducing adequate controls,

checks and balances and also by maintaining audit
Trails.
• To minimize data redundancy by eliminating duplicate
entries.
• To enable the organizations to provide its customers a
more value added service.
• To create a flexible system so that future needs and
changes in the business flow can be easily incorporated
 Enterprise System
• Integrates business processes and
information from entire enterprise
• Helps coordinate the operation of business
functions
• ERP systems are software packages that
can be used for the core systems
necessary to support enterprise systems
Enterprise Systems Value Chain

• Enterprise systems facilitate value chain

management
• The value chain is the system of
activities that transform inputs into
outputs valued by the customer
• The goal of an organization is to add the
greatest value with the lowest costs
thereby increasing competitive
advantage
 Value
Chain and
System
 The Value of Systems Integration
• One of the values provided by an enterprise
system is the coordination of value activities in
the value chain.
• The system performs this coordination by
sharing data across business processes.
• In the following slides we describe what life
would be like without integrated systems and
then how enterprise systems solve some of
those problems.
Inefficient Customer Service
1. Check if the
customer exists
in the system
and has good
credit.
Inefficient Customer Service
2. Find out if
good can be
promised from
warehouse stock
or if it has to be
scheduled for
manufacturing.
Tell the
customer when
they would
receive
the item. The
date is known as
“available to
promise” or
ATP.
Inefficient Customer Service
3. If item is not on
the shelf, when
will it be released
from
manufacturing?
Sally could
review production
schedules and add
the time required
to pick, pack, and
ship the item.
This would not,
however, tell her
if the item
had already been
allocated to
another customer.
Inefficient Customer Service
4. In the event
that the item
must be
manufactured,
when could it be
scheduled, and
how long will
the
manufacturing
process take?
Inefficient Customer Service
5. How long will
it take vendors to
supply raw
materials so that
manufacturing
can take place?
Inefficient Customer Service
6. What price
will be charged
to this customer
for this order?
The price to
charge must be
obtained from
marketing.
Inefficient Customer Service
7. Needs to
check AR
balance to
determine if
customer has
sufficient credit.
Without direct
access to the
open AR data,
Sally will
have to call
accounting to
approve this
order.
Inefficient Customer Service
8. If credit is
insufficient,
must check with
credit
department for
change in credit
line.
 Inefficient Customer Service
• Do you think that sally wants to keep the
customer on the phone throughout this
process?
• Would you consider this to be good
customer service?
 Solution to Inefficient Customer
Service
• Enterprise system establishes available to
promise (ATP) by checking warehouses
and scheduled manufacturing
• Price and creditworthiness automatically
determined from database
 Requirement
• Provide agent with a single point of access from which
they can complete the order
– Check information (availability of items, pricing and credit)
– Request initiation of internal processes (manufacturing,
delivery)
– Provide reliable information to the customer (delivery date,
price)

 But associated data

and processes
relate to different
functions within the
organisation which
may be in different
systems.
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Enterprise Systems Store Data in
Tables
Processing Orders Requires
Multiple Tables
Stored Data Used for Decisions
 Potential Solutions
• Integration of existing function based systems

• Consolidation into a single application

• Business Process Redesign

• Transition to a global/enterprise wide system

• Note that in a given organisation different solutions may

be appropriate to different parts of a single organisation

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Recap: Problems with integration of
function based systems
• Data Sharing is difficult between systems
– Data duplication and inconsistencies
– Which is the true address or order?
– Data model inconsistencies

• Integration of information not automatic

– Often results in manual steps

• Partial information leads to isolated decisions

lead to overall inefficiencies
– Increased expenses
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 Enterprise Integration: Definition

• Enterprise integration is concerned with

facilitating information, control, and material
flows across organizational boundaries by
connecting all the necessary functions and
heterogeneous functional entities in order to
improve communication, cooperation, and
coordination within this enterprise so that the
enterprise behaves as an integrated whole,
therefore enhancing its overall productivity,
flexibility, and capacity for management of
change.
 Inter-Enterprise Integration vs. Intra-
Enterprise Integration
Inter-enterprise Partnership
Bank
integration level control system

inter-enterprise Retailers
interactions
In-house In-house
Intra-enterprise manufacturing inventory
integration level logistics MRPII
control
control

Local site Plant Plant Plant

control systems A B X

Enterprise 1 Enterprise 2
 GettingIndustry
to Class
ERPIndustry
II
A Sector Q

ERP Declared
“Dead”
Industry X

EAS
ERP II
Industry
Extended Segment
ERP Z

ERP Functionality
Deepens Technology
MRP II Infrastructure

Functionality
MRP Widens Increasing External Connectivity
 ERP II

ERP II is an application and deployment strategy

that expands out from ERP functions to achieve
integration of an enterprise’s key domain-specific,
internal and external collaborative, operational and
financial processes. (Gartner, 2002)
What
an application and
ERP II Defined Where
deployment strategy
within the enterprise,
for collaborative,
and between the enterprise
operational and
and key external
financial processes
partners and markets

traditional ERP vendors

in conjunction
Who with extensions When
with collaboration
(integrated or BOB)

migration from existing ERP

to provide deep, vertical-
vendors and integration with
specific functionality coupled
other enterprise-centric
with external connectivity
business applications
Why How
 How
ERP ERP II Evolves From
ERP ERP
II
Value chain participation/
Enterprise optimization Role c-commerce enablement

Manufacturing
and distribution Domain All sectors/segments

Manufacturing, sales and Cross-industry, industry

distribution, and finance Function sector and specific
processes industry processes

Internal, hidden Process Externally connected

Web-aware, Web-based, open,

closed, monolithic Architecture componentized

Internally generated and Internally and externally

consumed Data published and subscribed
 Recommendations
• Don’t count on a single vendor to meet all of your
domain and collaborative requirements.
• Make the ERP II elements of “integration” and
“domain specificity” key components of your strategy.
• Strive for seamless process enablement rather than general
point application solutions.
• Although there will be some degree of best-of-breed, evaluate
TCO to determine how much.
• Evaluate past successes/failures, compare to other
user experiences and don’t make the same
mistakes twice.
 ERP Implementation Best
Practices

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 Best Practices of ERP
Implementation
• A Business Strategy aligned with Business
Processes
• Top-Down Project Support and commitment
• Change Management
• Extensive Education and Training
• Data Clean up and Data Integrity
• Implementation is viewed as an ongoing process

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 Best Practices of ERP
Implementation
• A Business Strategy aligned with Business
Processes
– Business strategy that will give you a competitive
advantage
– Analyze and map your current business processes
– Develop your objectives
– Evaluate your business strategy and ERP plan before
you commit to software acquisition and installation.

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 Best Practices of ERP
Implementation
• Top-Down Project Support and
commitment
– CEO1
• support implementation costs
• champion the project, and
• demand full integration and cooperation.
– Most knowledgeable and valuable staff2

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 Best Practices of ERP
Implementation
• Change Management
– Changes in business procedures, responsibilities,
work load.1
– As a result, ERP implementations are times of high
stress, long hours, and uncertainty.1
– Mid-level managers must2
• facilitate continual feedback from employees,
• provide honest answers to their questions, and
• help resolve their problems.

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 Best Practices of ERP
Implementation
• Extensive Education and Training
– General education about the ERP system for everyone.
– Massive amount of end users training before and during
implementation.
– Follow-up training after the implementation.
– 10 to 15% of total ERP implementation budget for
training will give an organization an 80% chance of a
successful implementation.

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 Best Practices of ERP
Implementation
• Data Clean up and Data Integrity
– Clean-up data before cut-over.1
– “Near enough is no longer good enough.”2
– To command trust, the data in the system must
be sufficiently available and accurate.3
– Eliminate the old systems, including all
informal systems.3

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 Best Practices of ERP
Implementation
• Implementation is viewed as an ongoing
process
– Ongoing need for training and software support
after implementation.
– Ongoing need to keep in contact with all system
users and monitor the use of the new system.
– Ongoing process of learning and adaptation that
continually evolves over time.

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 ERP Lessons Learned
• ERP system implementations are not just
technical projects
• They’re strategic business decisions and
major organizational changes, involving
– International and business culture
– Corporate governance
– Extended enterprise issues

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 ERP Lessons Learned
• The benefits of a properly selected and
implemented ERP system can be significant.
– An average, 25 to 30% reduction on inventory costs;
25% reduction on raw material costs.
– Lead-time for customers, production time, and
production costs can be reduced.
• BUT cost of implementing can be quite high and
risks are great.

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