ERP Overview
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The document discusses enterprise resource planning (ERP) systems. It describes ERP as a system that integrates all departments and functions of a company onto a single computer system to serve their needs. ERP automates business processes and can provide tremendous payback if installed correctly. The document outlines the evolution of ERP from earlier MRP systems of the 1960s-1980s to more modern ERP systems of the 1990s-2000s that integrate functions across the entire value chain of a business.
ERP Overview
- 1. Introduction to Dr. C.V. Suresh Babu 1 © SB Institute
- 2. What is ERP? The dream … • ERP attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs. • ERP automates the tasks involved in performing a business process • If installed correctly,it can have a tremendous payback Prof. Dr. C.V. Suresh Babu (c) SB Institute 2
- 3. An example: order fulfillment Before ERP Sales Production Logistics Billing Order Problems: Delays, lost orders, keying into different computer systems invites errors Prof. Dr. C.V. Suresh Babu (c) SB Institute 3
- 4. An example: order fulfillment (2) With ERP Data Finance Analysis Service Manu- E facturing R P Sales Human Inventory Resour- & Supply ces Front-Office Functions Back-Office Functions Adapted from Putting the Enterprise into the Enterprise System, T. Davenport, HBR, 1998 Prof. Dr. C.V. Suresh Babu (c) SB Institute 4
- 5. ERP evolution 1960-70’s MRP Inventory and process time reduction with new production planning systems 1980’s MRP II Greater reductions due to the integration with accounting and human resource systems 1990’s ERP Focused on clients. Real time transactions. Asset management 2000’s ERP Extended or ERP II Focused on clients, optimizing the whole business network; including suppliers and clients Prof. Dr. C.V. Suresh Babu (c) SB Institute 5
- 6. ERP evolution 1960-70’s MRP Inventory and process time reduction with new production planning systems 1980’s MRP II Greater reductions due to the integration with accounting and human resource systems 1990’s ERP Focused on clients. Real time transactions. Asset management 2000’s ERP Extended or ERP II Focused on clients, optimizing the whole business network; including suppliers and clients Prof. Dr. C.V. Suresh Babu (c) SB Institute 7
- 7. ERP evolution (2) • Integrated systems that cover the firm’s entire value chain - Industry oriented (specialized) - Transition from an internal view of the firm to business network vision within the industry • Electronic commerce - Developing html interfaces for the intranet/internet - Supporting complete commercial transactions • Applications with an object-oriented structure - Transition from an highly integrated structure to modules with higher complementarity - Plug & play facilities Prof. Dr. C.V. Suresh Babu (c) SB Institute 8
- 8. ERP Evolution (3) Source: Gartner Group, 2001 Prof. Dr. C.V. Suresh Babu (c) SB Institute 9
- 9. Comparison: ERP vs. ERP II Prof. Dr. C.V. Suresh Babu (c) SB Institute 10
- 10. Functional Evolution Prof. Dr. C.V. Suresh Babu (c) SB Institute 11
- 11. ERP Evolution: Meeting the Challenges Source: Gartner Research, 2001 Prof. Dr. C.V. Suresh Babu (c) SB Institute 12
- 12. ERP System - Cost Components Software 30.2% Consulting 24.1% Hardware 17.8% Implementation Team 13.5% Training 10.9% Other 3.3% Source: Enterprise Resource Planning Survey of US Manufacturing Firms, Mabert, Soni and Venkatraman, Production and Inventory Management Journal , 2000 Prof. Dr. C.V. Suresh Babu (c) SB Institute 13
- 13. Hidden costs of ERP • Training • Integration and testing • Data conversion • Data analysis • Consultants ad infinitum • Replacing your best and brightest • Implementation teams can never stop • Waiting for ROI • Post-ERP depression Prof. Dr. C.V. Suresh Babu (c) SB Institute 15
- 14. Project Risk Factors • Project Size • Experience with technology • Project Structure • Stability of the group that will implement the system • Strategic relevance of the system to be deployed • Number of users new to the technology Prof. Dr. C.V. Suresh Babu (c) SB Institute 17
- 15. ERPs are enablers to other business opportunities Ad-hoc Sales Purchasing Internal IS: ERP system Control Finance Human Resources Prof. Dr. C.V. Suresh Babu (c) SB Institute 18