Introduction to Enterprise Systems Management

8/3/2019 Introduction to Enterprise Systems Management

1/40

Introduction to Enterprise SystemsManagement

DefinitionHistorical Perspective

Evolution

Authored & Designed by: Dr. Neelu J. Ahuja, COES


2/40

Whats an Enterprise?

A collection of organizations and people

formed to create and deliver products to

customers.


3/40

More about Enterprise

An enterprise is comprised of all the

establishments that operate under the

ownership or control of a single organization.

An enterprise may be a business, service, or

membership organization; consist of one orseveral establishments; and operate at one or

several locations


4/40

What are Enterprise Systems?

Enterprise Systems provides functionallyrich, easy-to-use, operationally stable

applications allowing our user community tooperate efficiently while providing high quality

support services.

Today Known more understandably as ERPSystems


5/40

Enterprise Systems.

Enterprise Systems (ES) are integrated,computer-based systems that allow information to

flow seamlessly around an organization.


6/40

The purpose of any enterprise or

organization..

To sustain itself

To provide benefits to beneficiaries.

To earn profit or to generate surplus

Revenue-Expenditure.

Revenue-Expenditure of an enterprise shouldbe Greater than or equal to Zero.


7/40

How do organizations achieve their

purpose? By producing such goods and services which

are needed by the society and for which there

is aBuyer


8/40

How are goods and services produced in

enterprises Enterprises/Organizations use

Energy

Information

Other Resources

to produce Goods and Services.


9/40

What is a system?

A system is that which consists of certain

elements, relationships & has a common goal.

The system could be of 2 types: Real

Conceptual


10/40

About System Types..

Real Systems have physical components whichcan be touched and which appeal to senses.

Conceptual Systems (eg: Railway reservations,schedules etc) attend to big business needs andbasically deal with Information & itsinterpretation.

Industry & Business is managedthrough conceptual systems.

Enterprise systems are such ConceptualSystems.


11/40

More.

ES software is complex and difficult to install

and maintain.

Companies that sell ES software include

SA P,Orac l e, PeopleSof t, Baa n, and J.D .

Ed w ard s.

Of these, SAP's products are by far the mostwidely used.
http://www.sap.com/http://www.sap.com/http://www.oracle.com/http://www.oracle.com/http://www.peoplesoft.com/http://www.peoplesoft.com/http://www.baan.com/http://www.baan.com/http://www.jdedwards.com/http://www.jdedwards.com/http://www.jdedwards.com/http://www.jdedwards.com/http://www.oracle.com/http://www.peoplesoft.com/http://www.baan.com/http://www.jdedwards.com/http://www.jdedwards.com/http://www.sap.com/


12/40

ERP systems

ERP attempts to integrate all departmentsand all functions across a company onto asingle computer system that can serve allthose departments particular needs.

ERP automates the tasks involved inperforming the business process.

If installed correctly it will have tremendous

payback.


13/40

Driving growth.

Enterprise Systems are the technologies that drivecorporate growth in many industries.

ES software pulls together a series ofcomplementary functions into one application.


14/40

What does an ERP or ES do?

It is designed to consolidate and integrate business

functions such as procurement, manufacturing control,

finance, and sales management, allowing companies to

more effectively monitor and control these critical facetsof their businesses.

The current trend in production planning toward build-

to-order in some industries would be impossible to

sustain without these sophisticated systems.


15/40

Before ERP: Delays, Lost Orders, Keying intodifferent Systems (inviting errors).

Sales Production Logistics Billing

Dispatch

Order Placed


16/40

Data Analysis Finance

Service

ERP-Centralized

Data Base

Manufacturing

Sales

Inventory & Supply

Human

Resources

Front-office FunctionsBack-office Functions


17/40

ES software can be installed in two ways:

1. A firm can install the software to support its currentoperations as they are.

2.Or it can redesign its business processes to be moreefficient and flexible.

The latter approach is the more expensive.

But it is more desirable of the two because it helps a

firm to customize and to further improve itsprocesses.


18/40

Need for ES.

Enterprise systems are essential technologies

for firms that want to i m ple m ent e - Business

app l ica t io n s. These applications require a highly available

infrastructure that can support the growing

requirements of storage and processing, and

can cater to these growing at different rates.


19/40

Aiding E-business .

The ultimate goal of e-business is to seamlessly

connect an organization's "front office"

(customer facing) and "back office" (businessprocesses) operations to serve its global

customers.


20/40

More about ERP

There are many different systems in a large company's

"back office," including planning, manufacturing,distribution, shipping, and accounting.

ERP is more of a methodology than a piece of software,although it does incorporate several software

applications, brought together under a single,integrated interface.

An ERP system spans multiple departments in acorporation, and in some cases an ERP will also

transcend the corporate boundary to incorporatesystems of partners and suppliers as well, to bring inadditional functions like S u p p ly C h ainM a n a gement.


21/40

ERP

Because it is so vast and all-encompassing, the ERPsystem goes far beyond being just a simple pie c e ofsoft w are.

Each implementation is u n ique and is designed tocorrespond to the implementer's various businessprocesses.

An ERP implementation can cost mil lions of d o llars tocreate, and may take s e veral ye a rs to complete.


22/40

An ERP is an investment.

An ERP system likely represents a company'slargest IT investment, so some companiesprefer to implement ERP in a moreinc r em e ntal fashion rather than all at once.

Some ERP vendors provide mo d ular sof tw are

u n its to g ether with a u n if ied int e rface to allow forthis gradual approach.


23/40

ERP- changing the way Enterprise

Works. ERP brings sure changes in the way firms do business.

Companies often meet with r e s is t a n ce on the part of employees who

are reluctant to let go of their proven methods.

Employees may also fear for their jobs; since ERP makes such radicalchanges to business processes.

Some job descriptions change and some activities get eliminatedaltogether.

Once implemented the ERP system brings t r em e nd o usa d v a ntages.


24/40

Advantages of ERP..

Because all systems are joined together, alldepartments can more easily share inform a tion.

The w ork f low that takes place between departmentscan become much more aut o mated.

The cus t o m e r s are bett e r s e r ved because theindividual using the customer-facing applications willhave acce s s to every bit of inform a tion regarding eachrelevant process.

F o r ex a mpl e, someone in sales would easily be able tolog into a single system to determine the status of acustomer order that is still in manufacturing.


25/40

Advantages contd..

It can speed up the manufacturing process byautomating processes and workflow, and as a result,

it also reduces the need to carry large inventories.

Even though the initial cost is quite high, but in the

end, if implemented correctly, the rewards will give

the company implementing the system, a major

com p et itive edge.


26/40

Advantages contd.

With an ERP system, the customer order information is enteredonce and then available throughout the business.

Every department is better placed to carry out its task and youhave clear and more timely information on which to base critical

business decisions.

A well-implemented and appropriate ERP system can createsignificant efficiencies across the business, resulting in

1. Timely Business Information.2. Better Customer Relationships.

3. A more cost-effective supply chain.

4. Improved Internal process

5. Increased profitability.


27/40

Entry only once & address all needs..


28/40

Advantages contd..

ERP systems stretch from headquarters across multiple factories,warehouses, engineering centers, and even sales offices.

By linking these operations with profitability, ERP helps executives

understand, manage, and accurately forecast all the factorsfromsales and purchases to capacity utilization and hiringthat mightaffect profits.

It is an especially powerful vision in an age of relentless globalcompetition and rising customer demands. It has helped vendors sell

hundreds of thousands of ERP systems. For many manufacturers,ERP delivers on its promises.


29/40


30/40

But the road is not as smooth..

Enterprise resource management

systemspromise to simplify business planning,

but gaps remain in moving information to andfrom the factory floor.


31/40

But road is not as smooth

ERPs power depends on recording and tracking thousands ofindividual transactions, or events, ranging from sales orders toeach component on a bill of materials.

It then models how those processes interact with one another.

Each new transaction sets off a cascade of new events.

A new sales order, for example, triggers factory work orders,

claims inventory, reserves manufacturing capacity, and scheduleslabor.

ERP models reflect reality only when each transaction is enteredcorrectly.


32/40

Cost factor in ERP..

Setting up ERP is cost ly and it also includes the

cost oftraining the off ic ials.

Training costs are high because employeesmust not only learn how to use new

software, they must also learn new proce s s e s.


33/40

Hidden costs of ERP

Training

Integration & Testing

Data Conversion

Data Analysis

Implementer teams never give up

Waiting for ROI

Post ERP Depression


34/40

Historical Perspective (Evolution of ERP)

In the 1960s inventory control assumed prime importance and

most of the software at that time were designed to help in

inventory management.

Typically, these were handled by tools called BOM processors(Bill of materials).

The focus shifted in the 1970s to Material Requirement

planning (MRP) as the complexity of manufacturing operations

increased.

The tools to support these continued to evolve by adding

further functionalities to meet the increased requirements.


35/40

Evolution..

Then in the 1980's the concept ofManufacturing Resourcesplanning (MRP-II), which was nothing but extension of MRP toshop floor and Distribution management activities, grew inimportance.

However, in the early 1990s, increased complexity of businessesand the need to integrate all the functions within an enterprise tosustain in the dynamic environment lead to development of ERP(Enterprise Resource planning) tool.

ERP was extension of MRP II to cover the range of activitieswithin any enterprise, additionally it addressed technology aspectslike client/server-distributed architecture, RDBMS, objectoriented programming.


36/40

Evolution

1960s-70s MRP

Inventory & Process timereduction with new production planningsystems.

1980s MRPII

Greater reductions due to

integration with accounting & HumanResource Systems.


37/40

Evolution..

1990 ERP

Focused on clients, Real time

transactions, Asset Management. 2000 ERP II or extended ERP

Focused on clients, Optimizing the

whole business network, including suppliers &clients.


38/40

Further evolution

ERP development:

Integrated systems, that cover firms entirevalue chain.

These are industry oriented (specialized).

Further development of E-commerce(linking with intranet and internet)& totalonline transactions.

Linking with Object OrientedProgramming to facilitate modularity &Plug & play facilities.


39/40


40/40

Commercial ERP packages implemented

SAP

Oracle

Baan

J.D.Edwards PeopleSoft

QAD

SSA/BPCS

Introduction to Enterprise Systems Management

Documents

Transcript of Introduction to Enterprise Systems Management