Enterprse Resource Planning (ERP) Systems

ERP System

Integrate various functional aspects of the organization as well as systems within the organization of its partners and suppliers

Goal of an ERP system

to make the information flow dynamic and immediate, therefore, increasing its usefulness and value

Integrated Systems ERP

• HRM

• FIN

• AR/AP

• IM

• Other Module

Integrated Data Model

• the heart of any ERP exercise is to create this

• Ability to drill down through successive levels of data provided

1960s

System: Inventory Management & Control

Platform: Mainframe legacy systems using third generation software- (Cobol, Fortran)

1970s

System: Materials Requirements Planning (MRP)

Platform: Mainframe legacy systems using third generation software-(Cobol, Fortran)

1980s

System: Materials Requirements Planning (MRP - II)

Platform: Mainframe legacy systems using fourth generation database software and manufacturing applications

1990s

System: Enterprise Resource Planning

Platform: Mainframe legacy systems using fourth generation database software and package software

2000s

System: Extended ERP or ERP-II

Platform: Client-server system using Web platform, open source with integration to fifth generation applications like SCM, CRM, SFA

ERP

• Materials Planning

• Order Entry

• General Ledger

• Accounting

• Shop Floor Control

Extended ERP

• Scheduling

• Forecasting

• Capacity Planning

• e-Commerce

• Warehousing

• Logistics

ERP-III

• Project Management

• Knowledge Management

• Workflow Management

• Customer Relationship Management

• Human Resource Management

• Portal Capability

• Integrated Financials

ERP Components

• Server (Hardware)

• Software

• Database

• Company Processes

• People

ERP Systems Components

Hardware, Software Process, Information, Process, People

Hardware

Servers and peripherals

Software Process

Operating systems and database

Information

Organizational data from internal and external sources

Process

Business processes, procedures, and policies

People

End users and IT staff

ERP Components Integration [pyramid]

• User

• ERP

• Database

• Operating System Components

• Hardware Infrastructure

ERP Architecture

influences the cost, maintenance, and the use of the system.

System’s architecture

is a blueprint of the actual ERP system and helps the implementation tea build the ERP system

If purchased, ERP architecutre

is often driven by the vendor but other IT architectures are driven by organizational strategy and business processes

Physical or Tiered Architecture

Presentation Logic Tier, Business Logic Tier, Data Tier

Presentation Logic Tier

Remote user clients, Integration servers, Load Balancing Web Servers, CITRIX Server Farm

Business Logic Tier

Load Balancing, Application Servers, Batch Server, Print Servers

Data Tier

Production DB Server, Reporting DB Server, Disk DB Server

ERP Internal Process

Goal: Integration and efficiency

E-business External Process

Goal: Integration and effectiveness

ERP

• Focuses on inetegrating the internal functional silos of the organization into an enterprise application

• Adaptive Technology

Adaptive Technology

Merged the early data processing and integration efforts within an organization

ERP

Focus was mainly on data sharing, system integration, business process change, and improving decision making through the access of data from a single source (Back office functions)

E-Business

• Focuses on linking a business with its external partners and stakeholders

• Disruptive technology

Disruptive Technology

totally transformed the way a business operates in terms of buying and selling, customer service, and relationships with suppliers

E-Business

Early focus was on communication (e-mail), collaboration (calendaring, scheduling, group support), marketing and promotion (Websites), and E-Commerce (Front office functions)

ERPs system implements (ERPs Role in Logical Integration) for processesing a customer order

• order entry

• routing through departments

• communications of output to various parties

ERPs Role in Physical Integration

Before installing the ERP system, an organization may have to upgrade or install middleware or get rid of their legacy systems hardware and software

ERPs Role in Physical Integration

Improved efficiency with a paperless flow and electronic data interchange (EDI) or business to business (B2B) commerce environment with partners

Implications for Management

• Silos do not work

• System Integration has many hidden benefits

• System Integration has many challenges

• System Integration raises many new ethical issues