ERP (Enterprise Resource Planning) Introduction

ERP(Enterprise Resource Planning)

Introduction

An ERP system is a very useful tool for refining a businesses processes. A properly implemented ERP system can help a company improve its effectiveness and up its profit. There are many parts in an ERP system, all of which are designed to work together.

Objectives

• Give a general definition of what an ERP system is and what it does.

• Inform you about ERP standards

• Give examples of businesses using ERP systems

• Talk about outsourcing ERP applications

What is an ERP system?

• “ERP systems are accounting-oriented information systems for identifying and planning the enterprise-wide resources needed to take, make, distribute and account for customer orders.”

www.hyperdictionary.com

What is an ERP system?(cont)

• Though ERP is specifically designed around an enterprise, resource planning is usable by any company or business regardless of size.

Are there any standards?

• Unable to find any world wide standards.

• Companies/businesses create their own standards according to their company.

Are there any standards?(cont)

• “Policies and standards and the associated forms continue to improve through additions and revisions”

• UFL regularly performs updates to its ERP system to keep it current and efficient

http://www.ufl.edu

What kind of company can benefit from an ERP system?

• There are many companies and businesses that can benefit from utilizing an ERP system

Moret, Ernst & Young management consultants

• “Moret, Ernst & Young management consultants is a large Dutch management and computer consulting firm”

• Grew very rapidly in recent years

• Needed a more efficient way to keep track of recruits and new hires

Enterprise Resource Planning (ERP)

The MacManus Group

• The MacManus Group is a global communication firm that developed and maintained a myriad of customized financial and human resource systems.

• In 1996 the firm was growing so rapidly these systems were no longer sufficient.

The MacManus Group(cont)

• “…needed a high degree of functionality and integration to improve responsiveness both to customers and to its own business units”

• The MacManus Group decided to purchase software from Peoplesoft

Enterprise Resource Planning (ERP)

Sybase Inc.

• Sybase Inc is a developer of database, middleware and desktop-to-enterprise tools

• They needed a method “to reach their corporate goal: “to provide customers with an open, adaptable information systems architecture that enables the development and delivery of complete information solutions that facilitate rapid business change””

Sybase Inc.(cont)

• Sybase Inc incorporated a software developed by PeopleSoft

• PeopleSoft’s software seemed perfect to show the power of the new Sybase SQL server

The federal government

• “Half of all U.S. federal, state and local government agencies still rely on such systems, and about 70 percent of those are looking to implement ERP in the next five years…”

Feds, States Lean on ERP as E-Gov Pillar

The federal government(cont)

• “As citizens become more web-savvy, an increasing demand for online governmental services is expected…”

• People are demanding easier access to governmental information

Enterprise Solutions (ERP) for Government

The federal government(cont)

• “ERP is an end-to-end solution that can enable governments to reduce costs and help you streamline your administrative processes while maintaining a high level of citizen satisfaction”

Enterprise Solutions (ERP) for Government

Governments

• “Every week, the governor of Minnesota gets 13,000 e-mails from the public”

• “75 percent of Australians file income taxes online”

• “Brazilians vote electronically in all national and local elections”

ERP Integration Enterprise Portals: e-Government comes of Age

Governments(cont)

• “Enterprise portals allow governments to extend knowledge management and business processes in previously unimaginable ways”

• “U.S. General Services Administration implemented its GSA Advantage! trading portal and saw an 80 percent costs reduction”


Governments(cont)

• “Integrates legacy systems from formerly incompatible silos”

• “Enables groups to organize and share information from different applications”

• “Reduces costs and errors associated with manual processes for tagging and indexing with integrated search, categorization and auto-indexing tools”


Governments(cont)

• “Simplification of information access through single sign-onto network applications”

• “Reduction of training and support costs through use of common look and feel interfaces”


Governments(cont)

• Increase in revenues by slashing transaction processing and overhead costs, boosting efficiency…”

• “Provision of the highest levels of security to enable departments and agencies to collaborate and share data seamlessly and safely”


Governments(cont)

• “Ability to scale to accommodate growing numbers of users to meet even the heaviest traffic loads”

• These key functions serve to provide the user of the e-government system endless usability and scalability.


Spice of the science club

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Four main components for starting an e-government portal process

• Portal architecture

• Portal services

• Portal foundation

• Integration tools

Portal architecture

• “Enterprise portals can be built on intranet, extranet or internet web sites”

• Though every portal is a web site, not every web site is a portal

• “its basic building blocks are portal services, a portal foundation and integration tools”


Portal services

• “A personalized presentation layer gives legacy systems one look and feel”

• The portal site should have access to all of your processes and along with tools to gather, organize, refine and disperse data without the user needing to know where it came from


Portal foundation

• The system has to have secure and continuous availability.

• “Users get access to all designated enterprise applications and information with a single sign-on.”

• The sign-on has several levels of access control.


Portal foundation(cont)

• The different levels have the capability of meeting the requirements for “top secret” clearances.

Integration tools

• “Integration tools, along with adapters and integration servers, ensure effective data transfer and enable companies to accelerate time-to-market by eliminating the need for extensive hand-coding, providing reliable connections between mainframe and legacy systems”


Key security features

• “An 128-bit encrypted Secure Socket Layer (SSL) that meets the most stringent security standards

• “Encryption of all communications between a user’s browser and the portal, regardless of physical location, and the ability to store data in encrypted form”


Key security features(cont)

• “Levels of accountability to match transaction importance, with protection ranging from auditing to requiring digital signatures”

• “Enforcement of workflow security checks and balances-for example, providing rules to ensure that if one person requests a check, a person must approve disbursement”


Key security features(cont)

• “Integration with other security frameworks, such as Lightweight Directory Access Protocol (LDAP), VeriSign and Entrust”


Incremental transition

• Develop a first release of your portal quickly

• Pilot the portal to a limited audience

• Implement lessons learned to add features

• Deploy the portal in stages to larger and more diverse audiences

Give me a big smile

ERP outsourcing

• What is ERP outsourcing?

• Why would a company outsource?

• What are the possible negative impacts of outsourcing?

What is ERP outsourcing?

• ERP outsourcing is the use of another company, especially one specialized in ERP processes and procedures, to help improve some or all structures of a company.

Why would a company outsource?

• “With a predictable monthly payment, a company can solve all of the problems of running an application.”

• “Outsourcing can be a strategic, competitive move.”

ERP outsourcing Can it meet market demands?

What are the possible negative impacts of outsourcing?

• “…such organizations built their reputations on upscale IT handholding that could – and did – take over entire data centers including staff.”

ERP outsourcing Can it meet market demands?

Two major arguments of the outsourcing decision

• Transaction Cost Theory (TCT)

• Resource Based Theory (RBT)

Transaction Cost Theory (TCT)

• “Organizations compare the production and transaction costs for internal and external provision.”

Rethinking ERP-Outsourcing Decisions…

Resource-Based Theory

• “Organizations evaluate their own IS resources and capabilities in comparison to the market, giving consideration to their strategic potential. The discovery of deficits within the company leads to consideration of market utilization with regard to complimentary resources and capabilities.”


Outsourcing propositions

• There are 6 propositions that should help shape a businesses structural model

Proposition 1

• “The more firm specific the knowledge is to perform the tasks within an IS function, the higher the risks associated with outsourcing the function”


Proposition 2

• “The higher the risks associated with outsourcing an IS function, the less this function will be outsourced”


Proposition 3

• “The higher the degree of special technological knowledge to perform the tasks within the IS function, the higher is the perception of internal knowledge deficits compared to external service providers.”


Proposition 4

• “The higher the perception of internal knowledge deficits compared to external service providers in performing the tasks within an IS function, the more this function will be outsourced”


Proposition 5

• “The higher the risks associated with outsourcing an IS function the lower will be the strength of proposition 4.”


Proposition 6

• “Ways of risk reduction will lower the strength of proposition 1.”


Phases and tasks in the lifecycle of an ERP system

The four phases of the ERP system lifecycle

• Acquisition

• Implementation

• Stabilization

• Operation and Improvement

Acquisition phase

• “Define specification”

• “Select ERP package”


Implementation phase

• “Define target concept, including a detailed description of the business processes to be supported”

• “Install IT-infrastructure and ERP-software package”

• “Configure and possibly modify the ERP package; also documentation”


Implementation phase(cont)

• “Build interfaces to other systems & data conversion”

• “Test and rectify errors”

• “Train end-users”

• “Roll out and switching to productive operations”


Stabilization phase

• “Rectify errors in ERP system or IT-infrastructure”

• “Modify business routines”

• “Improve systems performance”

• “Repeat training or provide additional training”


Operation and Improvement Phase

• Implement updates or new releases

• Support users and provide delta training

• Operate ERP-system (IT-infrastructure and ERP-Basis)

• Continuous process improvement and respective system tailoring


Knowledge categories in the lifecycle of the ERP system

• IS-Infrastructure and ERP basic knowledge

• Programming knowledge

• ERP-Functionality knowledge

• Legacy-system knowledge

• Best practice knowledge

• Business Process knowledge

• Usage knowledge

IS-infrastructure and ERP basic knowledge

• Knowledge of technical tasks in the ERP lifecycle

• Learned through training

Programming knowledge

• Knowledge of the language the ERP system is written in

• Needed to modify the ERP system

• Learned through handbooks and courses

ERP-functionality knowledge

• “This knowledge refers to the functionality available in ERP software packages that reflects the reference processes depicted in the software”


Legacy-system knowledge

• This refers primarily to individually customized applications

• Data is often converted or the systems work together

Best-practice knowledge

• “…best standard procedure for business processes and the appropriate organizational structure…”


Business process knowledge

• “This knowledge includes the unique manner in which business processes are performed within an individual firm.”


Usage knowledge

• “This category consists of the knowledge regarding the correct use of the ERP applications.”


Knowledge categories

• All are required for an efficient ERP system

What we covered

• Definition of an ERP system and what it does

• Discussed what I discovered about ERP standards

• Gave examples of some businesses who use ERP systems and how

• Discussed outsourcing ERP applications

I’m Done

• Please feel free to ask questions

ERP (Enterprise Resource Planning) Introduction

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