Business Information Systems Chapter 12

A central database that collects information from and feeds information into all the ERP system’s individual application components, supporting diverse business functions such as accounting, manufacturing, marketing, and human resources.

What is the heart of an ERP system

1.Enterprise wide integration. Business processes are integrated end-to-end across departments and business units. 2. Real-time (or near real-time) operations. 3. A common database —> It allowed data to be defined once for the enterprise with every department using the same definition. 4. Consistent look and feel —> A consistent user interface reduces training costs and appears more professional.

What are the 4 benefits of ERP

Materials planning, order entry, distribution, general ledger, accounting, and shop floor control.

What does ERP include

Scheduling, forecasting, capacity planning, e-commerce, warehousing, and logistics.

What does Extended ERP include?

Project management, knowledge management, workflow management, customer relationship management, human resources management, portal capacity, and integrated financials.

What does ERP-II include?

Middleware

Several different types of software that sit in the middle of and provide connectivity between two or more software applications.

Enterprise application integration (EAI) middleware

Represents a new approach to middleware by packaging together commonly used functionality, such as providing prebuilt links to popular enterprise applications, which reduces the time necessary to develop solutions that integrate applications from multiple vendors.

Core ERP components

Traditional components included in most ERP systems and they primarily focus on internal operations. Include: Accounting and Finance; Production and materials management; and HR.

Extended ERP components

The extra components that meet the organizational needs not covered by the core components and primarily focus on external operations. Ex: BI, CRM, SCM, and E-business.

Accounting and finance ERP components

Manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management.

Production and materials management ERP components

Handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control.

Human resources ERP components

Tracks employee information including payroll. benefits, compensation, and performance assessment, and assures compliance with the legal requirements of multiple jurisdictions and tax authorities.

Business Intelligence

typically collect information used throughout the organization, organize it, and apply analytical tools to assist managers with decisions.

Customer Relationship Management

include contact centers, sales force automation, and advanced marketing functions. Business Benefits are sales forecasts, sales strategies, and marketing campaigns.

Supply Chain Management

allow a firm to monitor and control all stages in the supply chain from the acquisition of raw materials to the receipt of finished goods by customers. Benefits are market demand, resource and capacity constraints, and real-time scheduling.

E-business

The newest extended ERP components are the e-business components that allow companies to establish an internet presence and fulfill online orders.

Software customization and ERP costs

What are the two primary forces driving ERP failures?

Software customization

Modifies existing software according to the business’ or user’s requirements.

Business Processes or Workflows

Software can be customized to support the needs of business process workflows unique to each business or department.

Code modifications

The most expensive customization occurs when application code is changed and should only be done if the code change provides specific competitive advantages.

Integrations

Data integration is key for business process support that spans functional areas and legacy systems.

Report, Documents, Forms

Customization to reports, documents, and forms can consist of simple layout or design changes or complex logic programming rules for specific business requirements.

User-Interface Changes

An ERP system can be customized to ensure that each user has the most efficient and effective view of the application.

Software Costs

Purchasing the software, which can cost millions of dollars for a large enterprise.

Consulting fees

Hiring external experts to help implement the system correctly, which can cost millions of dollars.

Process Rework

Redefining processes to ensure that the company is using the most efficient and effective processes.

Customization

Customizing the software, if the software package does not meet all of the company’s needs.

Integration

Ensuring that all software products, including disparate systems are not part of the ERP system, are working together or are integrated.

Testing

Testing that all functionality works correctly, along with testing all integrations.

Training

Training all new users and creating the training user manual.

Data Warehouse Integration and Data Conversions

Moving data from an old system into the new ERP system.

On-premise systems

Includes a server at a physical location using an internal network for internal access and firewalls for remote user’s access. Business owns all the hardware and software.

Legacy system

An old system that is fast approaching or beyond the end of its useful life within an organization.

Cloud computing

Stores, manages, and processes data and applications over the Internet rather than on a personal computer or server.

Software as a Service (SaaS)

Delivers applications over the cloud using a pay-per-use revenue model.

Hybrid ERP

Splits the ERP functions between an on-premises ERP system and one or more functions handled as Software as a Service (SaaS) in the cloud. The business owns pieces of the hardware and software