Year 033 –Semester

Year Semester 02 - 42016

2 / Year Semester 2

IM3460
Enterprise Resource Planning

Lecture 01

Introduction to ERP

By Vandhana Dunuwila
BBA special (Hons) in MIS [SLIIT]
MPhil in BEc [University of Sri Jayewardenepura]
Certificate in Teaching Methodology in Higher Education [SLIIT]
 Module details

• 3 credit module
– 2 Hours Lecture + 1 Hour Tutorial + 2 Hours Labs

• Assessment criteria:
✓ Mid term – 20%

✓ Group assignment – 20%

✓ Final exam – 60%

• Lecturer contact info: [email protected]

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 Learning Outcomes

Learning
Description
Outcome

LO1 Analyze the concept of ERP and explain how ERP systems work.

LO2 Evaluate the risk and benefit of ERP systems.

LO3 Evaluate the implementation process of ERP systems.

Assess the critical success factors of ERP implementation and

LO4
be able to assist in effective ERP implementation.

LO5 Assess the ERP marketplace & marketplace dynamics and

recognize the present and future trends in ERP.

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 Assignment
The objective: To understand the business operations of an
ERP vendor in Sri Lanka.

• Get into groups of 8 members (Do not exceed the number)

• Choose an organization (vendor) who is implementing ERP
solutions for Sri Lankan clients.
– Date of handing over : During the 2nd Lecture
– Date of submission : During the 10th Lecture (Report + Presentation)

• Please adhere to the deadlines and use this opportunity to

enhance your knowledge on ERP implementations

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 Learning Outcomes
LO1: Analyze the concept of ERP and explain
how ERP systems work.

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 ERP Background

• Introduction of PC led to narrowly focused information

systems
• Duplicate data across the enterprise not shared
between departments
• Mid – late 1990’s many large companies implemented
Enterprise Resource Planning (ERP) which would
integrate the data across the enterprise and replace
outdated systems (legacy systems).

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 What is ERP?
• An ERP system is an integrated suite of information
technology applications that support the operations
of an enterprise from a process perspective.
– Cross-Functional – serves many functions
– Process-Centered – organized around processes
• Built upon relational database systems
– There is one data store, one source of the truth
• Sold in modules
– Don’t need to purchase/implement all modules
• Can cost millions of dollars and take years to
implement (for larger companies – less for smaller –
cloud makes faster)

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ERP-Supported Business Processes

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Typical Modules in an ERP System

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Who Uses/Needs to know about ERP?
• End User
– Purchasing
– Manufacturing
– Sales
– Accounting/Finance
– Human Resources
– etc
• Internal/external auditor
– Verify that the ERP system is secure and maintains privacy over
individuals. Also has proper segregation of duties (SoD).
• Consultant
– Assist in implementation and or maintenance of ERP systems
• Developers
– Customize the system

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 ERP Value – Integration
• The value of ERP is the opportunity to integrate an entire
organization by having a single point of entry and sharing of
data across the enterprise.
• ERP becomes the authoritative data source: a recognized or
official data production source with a designated mission
statement to publish reliable and accurate data for subsequent
use by users.
• Creates less need to reconcile data and rekey which causes
inefficiencies and delays
• Inefficient business processes that were disjointed become
much more efficient.

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 Before and After ERP

Legacy systems (islands of automation) may be connected with enterprise

application integration (EAI) - the process of linking such applications within
a single organization together in order to simplify and automate business
processes to the greatest extent possible, while at the same time avoiding
having to make sweeping changes to the existing applications or data
structures. Not as optimal as having an integrated system, common database,
and common technical infrastructure.
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 ERP Diffuses Best Practices
• ERP systems are based on best practices
• For instance, SAP has thousands of best practices embedded
in their applications.
– This means that any firm that installs has access to a wide
range of best practices.
• Further, business practices are being added all of the time. As
new best practices are found and embedded in particular
applications, they can become available for inclusion in new
versions of software.
• As a result, there is a cycle of finding best practices, building
them into the software and diffusing them out to new users.
– Vertical solutions – industry specific version of software

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ERP Facilitated Adoption of Client Server Computing

• In the early 1990’s ,client server computing

became available and offered many
advantages over existing mainframe
solutions.
• Client/server describes the relationship
between two computer programs in which
one program, the client, makes a service
request from another program, the server,
which fulfills the request.
• ERP became one of the dominant, initial
corporate applications of client server
computing.

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 An Enterprise System - Reality
In reality, an ERP
implementation is usually
just one part of a more
complex environment,
including bolt-ons, legacy
applications retained,
possible data
warehouse(s), enterprise
application integration
(EAI) solutions and
connections to external
business partners.

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 Implementation Issues

• Employee resistance
– They develop “work arounds”
– Sabotage implementation process
– Caused by lack of training (“how”) or understanding of
organization’s motivation for adoption (“why”)
– Need Change Management to lower resistance
• Technical Issues
– Complex system to implement – configuration issues
and possible customization issues
– Sometimes need expensive external consultants to
assist implementation

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 ERP Market
• Billion dollar industry and growing
• Growth drivers
– Globalization
– Centralization
– Competition
– Best practices etc

ERP - Lecture 01 Source: AMR research

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ERP Product selection criteria

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 ERP Sourcing Options

• Option 1 – Make [using internal resources]

– Developing a custom-built ERP package, specific to
the requirements of the organization, with the help
of the in-house IT department
• Option 2 - Buy
– Going for tailor-made ERP packages available in the
market like IFS, SAP, Oracle applications, Microsoft
etc.
• Option 3 – Make [using external resources]
– Developing a custom-built ERP package, specific to
the requirements of the organization, with the help
of a software solution provider 1

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 Main Considerations
• Speed
– Amount of time going to spend
The above areas
• Scope
are interrelated
– Few modules to full-fledged ERP
• Resources
– People, H/W, S/W, Experts, Ultimately all about money
• Risk
– Acceptance, ROI, Time
• Complexity
– Degree of difficulty of Imp, Operating, Maintaining
• Benefit
– Extent of using the ERP.
– ERP needs to be build up around core business functionalities

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Leading ERP Vendors

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 ERP Tiers
• Tier 1 Vendor – “Enterprise Space” - multi-site, multi-
national corporations, government entities with 1000
or more employees
– #1 SAP
• Stands for Systems, Applications and Products in Data processing
• Formed by 5 former IBM engineers in 1972 in Walldorf Germany
• SAP AG, SAG UK, SAP North America etc
• Nearly 200,000 customers, over 50,000 employees
• Service over 20 different industries
– #2 Oracle
• More than 380,000 customers—including 100 of the Fortune
100—and with deployments across a wide variety of industries in
more than 145 countries around the globe,
• In 2003 acquired PeopleSoft, Hyperion and Siebel

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 ERP Tiers
• Tier 2 Vendors
– Market towards medium sized companies, few sites, 100-999 employees
– Largest of all ERP tiers in number of potential customers
– Tier 1 vendors moving into this area and below by reducing prices and
simplifying product
– Some vendors – QAD and SSA
• Tier 3 Vendors
– Market towards small, single site, family run corporations, sales under $40
million and less than 100 employees
– Vendors – Microsoft Dynamics GP, NetSuite, Made-2-Manage, SAP
Business by Design, SAP Business All in One
• Tier 4 Vendors
– Market towards small companies that can manage with basic accounting
software
– Vendors – Peachtree, Accpac, Quickbooks, SAP Business One, SAP
Business by Design

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