Chapter

Extension
9
Enterprise Resource
Planning (ERP) Systems

Study Questions
Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP
solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?

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Q1: What Is the Purpose of ERP

Systems?
Primary purpose: integration of purchasing,
human resources, production, sales, and
accounting data into a single system.
Allows real time global updates whenever a
transaction happens.
Enable critical business decisions using
latest data.

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Pre-ERP Information System: Bicycle

Manufacturer

Does not include accounting

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Five non-integrated databases

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ERP Information System

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Some Questions Procedures Need to

Answer or Resolve
How does sales department determine an order is
large? By dollars? By volume?
Who approves customer credit (and how)?
Who approves production capacity (and how)?
Who approves schedule and terms (and how)?
What actions to take if customer modifies an order?
How does management obtain oversight on sales
activity?

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Sales Dashboard

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Q2: What Are the Elements of an ERP

Solution?
ERP Application programs
ERP Business process procedures
ERP Databases
ERP Training and Consulting

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True ERP Have Application that Integrate: (

http://www.erpsoftware360.com/erp-101.htm)
Supply chain (procurement, sales order processing, inventory
management, supplier management, related activities)
Manufacturing (scheduling, capacity planning, quality control,
bill of materials, and related activities)
CRM (sales prospecting, customer management, marketing,
customer support, call center support)
Human resources (payroll, time and attendance, HR
management, commission calculations, benefits
administration, and related activities)
Accounting (general ledger, accounts receivable, accounts
payable, cash management, fixed asset accounting)

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ERP Solution Components

ERP Application Programs

Configurable vendor applications
ERP Databases
Trigger
Computer program within the database that
keeps database consistent when certain
conditions arise.
Stored Procedure
Enforces business rules
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ERP Solution Components (Contd)

ERP Business Processes and Procedures
Adapt to predefined, inherent processes
and procedures, or design new ones?
ERP Training & Consulting
Training to implement
Top management support, preparing for
change, dealing with resistance
Training to use

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Example of SAP Ordering Business

Process Blueprint

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Example of SAP Ordering Business

Process Blueprint (contd)

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Q3: How Are ERP Systems

Implemented?

Major tasks in implementation of an

ERP application

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Magnitude of ERP Implementation

SAP blueprint
contains over
a thousand
process
models

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ERP Projects
Few organizations develop their own ERP
software
Daunting and expensive:
Multi-year projects, millions of dollars,
and hundreds of employees, consultants
and vendor personnel.
SAP ERP databases contain over 15,000
tables!

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Q4: What Types of Organizations Use

ERP?
ERP Use
by
Industry

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International ERP
Worldwide consolidation of financial statements on a
timely basis
Inherent ERP procedures adaptable to many
cultures
Multiple currencies and languages, manage
international transfers of goods in inventories, work
with international supply chains
http://advice.Cio.Com/puneesh/deploy_erp_to_improv
e_globalization_efficiency_of_your_organization

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Q5: How Do the Major ERP Vendors

Compare?

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ERP Market Leaders

ERP market mature with only 2.2% to $24
billion in 2012.
Consolidation of vendors is likely, with
smaller vendors falling out entirely.
Top 10 vendors own 64% of market share
and top five own 55% of market share.

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ERP Products

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SAP
Classic SAP uses thick-client, client-server
architecture.
SAP HANNA Enterprise Cloud
Used as ERP solution by itself, or integrated with
existing SAP installation.
Big problem
Providing cloud benefits to existing customers
without disrupting organization with a nearly new
ERP installation

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Oracle
Deep base of technology, high-quality technical staff
Never known to create easy-to-use products
Fully featured, expensive products with superior
performance
Classic Oracle ERP products designed according to
SOA principles, adaptable and customizable
ERP Cloud Service as SaaS
Well positioned to use the cloud to expand market
share.

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Infor
Grew by acquisitions
Sells many ERP products for many different
industries
Products vary in purpose, scope, and quality
Serves midrange, higher-end small
companies and lower-end large companies
Infor Business Cloud (SaaS) or bare-bones
offered as IaaS.

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Sage
ERP software for small and midsized businesses, in
construction and real estate, and nonprofit
organizations
Sage 100 - very small firms
Sage 300 - larger small companies
Sage 500 - midsized businesses with advanced
requirements needing customization, configuration,
and optimization.
Sage ERP X3 - midsized international organizations

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Microsoft Dynamics
AX, Nav, GP, Solomon, and Dynamics CRM.
AX and Nav have the most capabilities;
GP more limited, easier to use.
Microsoft supposedly outsources maintenance of
Solomon code to support existing customers.
Dynamics CRM extensible to enable use for ERP
and CRM.
CRM product online as SaaS, no full ERP
implementation in the cloud.

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Active Review
Q1: What is the purpose of ERP systems?
Q2: What are the elements of an ERP
solution?
Q3: How are ERP systems implemented?
Q4: What types of organizations use ERP?
Q5: How do the major ERP vendors compare?

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