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ERP

ERP. Enterprise Resource Planning D Lewis 10/02. Definitions. ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner

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ERP

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  1. ERP Enterprise Resource Planning D Lewis 10/02

  2. Definitions • ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner • ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

  3. What is ERP? • Enterprise Resource Planning • Support business through optimizing, maintaining, and tracking business functions • Broken down into business processes • HRM - Distribution • Financials - Manufacturing

  4. What makes ERP different • Integrated modules • Common definitions • Common database • Update one module, automatically updates others

  5. What makes ERP different (cont) • ERP systems reflect a specific way of doing business • Must look at your value chains, rather than functions

  6. History of ERP • Departmentalized Systems • 1960’s: systems for each department • MRP Systems • 1970’s: integrated manufacturing • MRPII System • 1980’s: more functions included • ERP: 1990’s integrated all across

  7. Trends in ERP • Use of the Internet for access • More customized solutions • Decision support capabilities • Data pulled to specific application • Linkage of multiple organizations together

  8. Benefits of ERP • Common set of data • Help in integrating applications for decision making and planning • Allow departments to talk to each other • Easy to integrate by using processed built into ERP software

  9. Benefits of ERP • A way to force BPR (reengineering) • Easy way to solve Y2K problem

  10. Benefits of ERP • On 4 dimensions • Firm structure • Management processes • Technology platform • Business capability

  11. Firm structure • New structures • More disciplined culture • Globally everyone uses same processes and terminology • Freely flowing information

  12. Management process • Unified reporting and decision making • Better data on performance • Determine which products are more desirable

  13. Technology platform • Single unified all encompassing platform • Common data, common definitions and formats

  14. Business capability • Form basis of customer driven organization • Better meet customers needs

  15. Buy or Build • Pros buy • Best practices from many organizations included • Vendor must keep up to date • Smaller staff required

  16. Buy vs. Build (cont.) • Pros build • Complete control of features • More support required • Not as much product support • May not have best practices included

  17. Why purchase ERP package? • Increasing flexibility and agility • Business benefits (competitive agility) • Client/server IT architecture benefits • IT purchasing benefits • Lower costs and higher reliability than building from scratch

  18. Why purchase ERP package? • Data integration • Improving access to data across business units • New ways of doing business • Moving to a process orientation • Reduction in costs • Global capabilities • Common processes and country specific capabilities

  19. Why purchase ERP package? • IT architecture cost reduction • Reduced costs for systems operations and maintenance • Most important benefit? • Data integration

  20. Difficulty in implementation • Very difficult • Extremely costly and time intensive • Typical: over $10,000,000 and over a year to implement

  21. Common Pitfalls • Do not adequately benchmark current state • Did not plan for major transformation • Did not have executive sponsorship • Did not adequately map out goals and objectives • Highly customized systems to look like old MRP systems

  22. Leading vendors • SAP • Baan • J.D. Edwards • Oracle • Peoplesoft

  23. Which way to go? • One vendor • Easy integration • Standardization of processes • “Best of breed” approach • Easy to adapt to own needs • Decreased reliance on one vendor

  24. How to implement • You will need an outside consultant • Potential benefits • Better information for • Strategic decision making • Greater efficiency • Greater profit • Potential for growth

  25. Unintended consequences of ERP • Organizational changes • Creating new work relationships • Share information • Make new types of decisions • Reactions to changes • Resistance • Confusion • Errors

  26. Unintended consequences • 50% of implementations fail • Managers underestimate the need for change management • Managers focus on potential benefit, rather than on impact on employees • Emotional fallout after employees given greater responsibility

  27. Implementation Issues • Company may implement only certain modules of entire ERP system

  28. Readings • evaluation of ERP software • Getting Increased Value from ERP Systems

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