Information system functionality- ERP

By Raghavendra Rao(112231) Vivek Kumar(112237)

History of organizational systems

Calculation systems Functional systems Integrated systems

Calculation systems
1950-80 Single purpose Eliminate tedious human work Examples: Payroll, General ledger, Inventory Technology used: Mainframes, magnetic tapes, batch processing

A System/370 Model 145 (1970s)

removable-disk hard drives

Hard drives

A very nice-looking magtapedrive

Magtapes

Batch processing

Printer

800 lines/minute with 48 character train, 136 columns with 6 or 8 lines per inch spacing

Stack of Computer Printout Paper

Functional systems
1975-20?? Use computers to improve operations Applications: Human resources, order entry, manufacturing resource planning Technologies: Mainframes, PCs, LANs

Minicomputer

Functional systems
Typically contained within a department Islands of automation Applications independently developed and deployed Driving force: availability of minicomputers

Functional system applications

Human resources System Accounting and finance systems Sales and marketing System Operations management System Manufacturing Systems

Human Resources
Recruiting Compensation Assessment Development and Training Planning

Accounting and Finance

General Ledger Financial Reporting Costing Budgeting Accounts Payable Accounts receivables

Sales and Marketing

Lead tracking Sales forecasting Customer management

Operations
Order management Inventory management Customer service

Manufacturing
Inventory Planning

Types of Organizational information Systems

Administrative systems Scheduling / Transaction systems Value oriented systems Reporting and controlling systems Analysis and information systems Planning and decision support systems (From Business Process Engineering by A.W. Scheer)

Problems with function based application

Sharing of data between systems Data duplication Data inconsistency Applications that dont talk to one another Limited or lack of integrated information Isolated decisions lead to overall inefficiencies Increased expenses

Solution to disparate systems?

Integration Consolidation Right-sizing Business Process Redesign Enterprise wide system

Integrated systems or Enterprise Resource Planning System

ERP - Definition
ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner

ERP system: Definition

ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

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

What makes ERP different

Integrated modules Common definitions Common database Update one module, automatically updates others ERP systems reflect a specific way of doing business Must look at your value chains, rather than functions

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 A way to force BPR (reengineering) Easy way to solve Y2K problem

Vendors

Difficulty in implementation
Very difficult Extremely costly and time intensive Typical: over $10,000,000 and over a year to implement Company may implement only certain modules of entire ERP system You will need an outside consultant

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

Survey of ERP implementations

Done by ittoolbox.com in 2004

Overview
375 IT and business professionals 52% anticipate budget increases for new ERP implementations/new modules SAP and PeopleSoft/J.D. Edwards were cited as the most popular ERP packages 46% indicated that the main challenge to successful ERP implementations was inadequate definition of requirements and resistance to change

How would you characterize your budget for new ERP implementations/new modules deployments for 2004 compared to your budget in 2003?

Who is directly responsible for determining your ERP implementations/new modules deployments?

Who are the other key decisionmakers/influencers in decisions to add new ERP packages/new modules?

Do you currently have an ERP package?

If your answer is "Yes", which ERP package(s) do you currently use?

Are you considering adding new modules to your existing ERP package?

If your answer is "Yes", which modules are you planning to add?

If you plan to deploy a new ERP package and/or add modules to your existing packages, when would this implementation take place?

Who do you partner with for new ERP implementations and additions of new modules?

Major Issues Affecting SCM

Information technology enablers include
the Internet, Web, EDI, intranets and extranets, bar code scanners, and point-ofsales demand information
internet and web to transact business

E-commerce and e-business uses

2010 Wiley

50

Major Issues cont

Business-to-business (B2B) E-commerce
businesses selling to and buying from other
businesses

Business-to-Business (B2B) Evolution:

Automated order entry systems started in 1970s Electronic Data Interchange (EDI) started in the 1970s Electronic Storefronts emerged in the 1990s Net Marketplaces emerged in the late 1990s 2010 Wiley 51

Major Issues cont

Benefits of B2B E-Commerce Lower procurement administrative costs, Low-cost access to global suppliers Lower inventory investment due to price transparency/reduced response time Better product quality because of increased cooperation between buyers and sellers, especially during the product design and development
2010 Wiley 52

Types of E-Commerce
Business-to-Consumer (B2C) E-Commerce on-line businesses sell to individual consumers:

Advertising Revenue Model Provides users w/information on services & products; provides opportunity for suppliers to advertise Subscription Revenue Model Web site charges a subscription fee for access to the site 2010 Wiley 53 Transaction Fee Model Company receives a

Types of E-Commerce cont

Sales Revenue Model A means of selling goods, information, or service directly to customers Affiliate Revenue Model Companies receive a referral fee for directing business to an affiliate Intranets An organizations internal networks Extranets Intranets linked to the Internet 2010 Wiley 54 for suppliers and customers to interact within

Major Issues cont

SCM must consider the following trends, improved capabilities, & realities:
Consumer Expectations and Competition power has shifted to the consumer Globalization capitalize on emerging markets Government Regulations and E-Commerce issues of Internet government regulations Green Supply Chain Management recycling, sustainable eco-efficiency, and waste minimization
2010 Wiley 55

Global SCM Factors

Managing extensive global supply chains introduces many complications
Infrastructure issues like transportation, communication, lack of skilled labor, & scarce local material supplies Product proliferation created by the need to customize products for each market

2010 Wiley

56

Sourcing Issues
Which products to produce in-house and which are provided by other supply chain members Vertical integration a measure of how much of the supply chain is owned by the manufacturer
Backward integration owning or controlling of sources of raw material and component parts Forward integration owning or control the channels of distribution

Vertical integration related to levels of insourcing or outsourcing products or services 2010 Wiley 57

The Role of Purchasing

The purchasing dept plays important role in SCM and is responsible for:
Selecting suppliers Negotiating and administering long-term contracts Monitoring supplier performance Placing orders to suppliers Developing a responsible supplier base Maintaining good supplier relations
2010 Wiley 58

The Traditional Purchasing Process

2010 Wiley

59

The E-purchasing Process

2010 Wiley

60

What do you see as the main challenges to successful ERP implementations within your organization?