What is an Enterprise Wide Application? Introduction and principles Based on Chapter 1 in Adam, Frederic and Sammon, David (2004) The Enterprise Resource Planning Decade: Lessons Learned And Issues For The Future, Idea Publishing Group, Hershey, PS.
Enterprise Wide Applications • As the name indicates… • Keywords: • ….
Enterprise Wide Applications • As the name indicates… • Keywords: • Integrated • Centralised • Best practice • Cross functional • “mega packages” • Costly (inc. hidden costs) • Highly complex • High impact on business
Definition • No simple definition • American Production and Inventory Control Society (APICS) an accounting-oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders • Transaction-oriented / operational
Family of applications • Enterprise Resource Planning systems • Supply Chain Management • Customer Relationship Management • Other more specialised applications such as planning, warehouse management … • Merging into ERPII / XRP –encompassing all aspects of the business
SCM Logistics Electronic Invoicing Electronic Marketplaces Contract Management Late 90’s CRM Early 00’s Sales Force Automation Contract Management Customer Service & Support Marketing Automation Documentation Management Early 00’s ERP IIProduct Data Management Engineering Change Orders New Product Introduction Collaborative Product Design A Complete Family Tree
ERP Family history (brief) • As old as Fred under a variety of names • “ERP” name early 90s • Definitely “here to stay” • ERP creates a level of dependence that “far surpasses the dependence associated with prior technological regimes”* • ERP related expertise is in need in most firms * Markus, M. L., & Tanis, C. (2000). The Enterprise Systems Experience — From Adoption to Success. Claremont, CA: Claremont Graduate University.
Software characteristics • Modular • Centralised – single instance model • Reliant on large database (eg: oracle) • Web based interface • Robust but inflexible • Configurable rather than customisable • Very dependent on data entry
Goals of ERP implementations • Standardisation / centralisation • Control – eg: integration of financial data • End fragmentation of legacy systems • More visibility on key processes • Optimisation / productivity gains • Competitive advantage? • Platform for other projects = infrastructure / backbone • Mechanism for integration of latest technologies (eg: RFID)
Other strong points • No more uncoordinated applications – eg quality control • No more re-keying • Solution to reporting problems across the board • “Sorting out” HR • Harmonising nomenclatures – eg: product codes, inventory files …
Problems with ERP • Impact on business processes (eg: flexibility) • Understanding the “fit” problem • Doubtful benefits realisation (50% failure rate?) • Measurability • True origin of benefits • Impact on firm in wider sense • People • Clients / suppliers / partners… • Cost / disruption factor • $ • Time • Learning curve • Coping with evolution (version control)
Gorry and Scott Morton (1971) “The integrated management information systems ideas so popular in the literature are a poor design concept. More particularly, the integrated or company wide database is a misleading notion and even if it could be achieved, it would be exorbitantly expensive” Gorry A. and Scott Morton. M.(1971) A Framework for Management Information Systems, Sloan Management Review, Fall,55-70.
Dearden (1972) “The notion that a company can and ought to have an expert (or a group of experts) create for it a single, completely integrated super-system - an MIS - to help it govern every aspect of its activity is absurd” Dearden, A (1972) MIS is a mirage, Harvard Business Review, January / February
ERP Stats • Market dominated by 4/5 vendors though listings show 50+ • SAP (around 30%), JD Edwards/peoplesoft, Baan, Oracle, MAPICS… • SAP alone: 19,000 customers in 120 countries, adding up to 12 million users in 65,000 sites. • This number of firms cannot all be wrong!