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ERP Systems: History, Implementation, and Benefits

Explore the evolution of ERP systems from the 1970s to present, benefits of implementation, market overview, SAP's role, best practices, and success cases. Learn about the advantages, disadvantages, and challenges associated with ERP software.

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ERP Systems: History, Implementation, and Benefits

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Presentation Transcript

  1. Chapter 1: ERP Systems Introduction to ERP (Modified)

  2. ERP Claims • Create value through integrating activities across organization • Implementation of best practices • Standardization of processes • One-source data • On-line access to information

  3. Role in Business • ERP began with SAP in early 1970s • Accounting basis • US products – some extension of MRP • Combine business computing • Unified system sharing one set of data • Advantages in efficiency, accuracy • Best Practices • Apply the best process for each function

  4. Historical Growth • 1970s & 1980s – more development than growth • 1990s – became widely adopted by large firms • Late 1990s – growth exploded with fears of Y2K problems • Post-2000 – growth slowed • Saturated market, economy dipped • Seeking to • Fill in gaps with larger firms • Make products useful for smaller firms • Emphasize Internet

  5. Why Study ERP? • Technical: • Integration of computer systems foster consistency, efficiency • Financial: • Integrating applications saves money • Organizational: • All members of organization use same system

  6. Market for ERP • Over 100 vendors • BOPSE • BAAN Dutch • Oracle database • PeopleSoft HRM originally • SAP German, pioneer of ERP • JDEdwards emphasize Internet

  7. SAP • Originally mainframe • SAP R/2 – 1974 • Client/Server architecture early 1990s • More flexible • SAP R/3

  8. SAP: Best Practices • A key to original product • Davenport [1998]: • Firm’s vary in what is best for them • Business world dynamic • Rigid approach has dangers • If a firm develops a competitive advantage, they give it up by adopting “best practices”

  9. Table 2: ERP Supported Functions

  10. Benefits of ERP • Davenport [1998]: • Increases speed of information flows • O’Leary [2000]: • Create value through integration of activities • Best practices improve operations • Standardization increases efficiency • One-source data more accurate, easier to access • Better organizational planning • Better communication • More collaboration

  11. Success case of ERP • Weil [1999]: • Applied Robotics increased on-time deliveries 40% through ERP • Delta Electronics reduced production control labor requirements 65%

  12. Advantages & Disadvantages • System Integration • Improved understanding across users • Less flexibility • Data Integration • Greater accuracy • Harder to correct • Better methods • More efficiency • Less freedom & creativity • Expected lower costs • More efficient system planned • Dynamic needs, training typically underbudgeted, hidden implementation costs

  13. Conception vs. Reality • Integrated System • In fact, vendors usually sell modules • Would like to sell full system • Buyers reduce cost, risk, by starting smaller scale • Risk of converting entire system • Complex cost impact

  14. Summary • ERP software has had a major impact on organizational computing • Technological, financial, organizational benefits • Also expensive, massive, inflexible • Many hidden costs • Complex system meriting study

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