Enterprise Information Systems and ERP systems
Jing Shao
What is ERP System
Letter meaning: Enterprise Resource Planning Systems
Resource: All resources in an organization, including:
capital, equipment, material, intelligence, and so on.
What and how to Plan
Definition : ERP systems is a software solution that addresses the enterprise needs. It takes the process view of an organization to meet the organizational goals and tightly integrates all functions in that organization.
1. Data exchange blocks;
Software applications built to run on different operating systems cannot be connected to run together on the same operating system. We need to re-entry data from one system to another system in order to exchange information, thus leading to data inconsistency;
2. Stove-piped operations and stove-piped systems;
Why Enterprise Have to Use ERP Systems
-------Problems in enterprise information system
Why Enterprise Have to Use ERP Systems
-------Problems in enterprise information system
(continue…)3. Authorization;
It is not always the cast that the more communication, the
better organizational performance
4. business process reengineering.
Examine the business process, question the necessity step by step
Analyze the purpose
of those processes
Reengineering steps
Old processes
Expect
Optimistic
Pessimistic
P1 P2 P3
Q1
Q2
Q3Price and demand curve
Solution
Integrated enterprise information systems
It is a set of communication channels in a business organization, combined together in such a way as to form one network by which information is gathered and disseminated.
======ERP System
Widely integrated information systems covering all functional areas. It integrates database, applications, interfaces, tools, and business process reengineering ( BPR ).
Departments
Customers
Suppliers
ERP systemServerNetwork
(data exchange)
ERP Working Theory
What ERP Systems Can Offer to an Enterprise? – Benefits
ERP creates value through
1. integrating activates across a firm,
2. Implementing best practices for each business
process
3. Standardizing processes within organizations
4. Creating one-source data
5. Providing on-line access to information
---facilitate better organizational planning,
communication, and collaboration.
Advantages and Disadvantages
Factor Pro Con
System Integration Improved understanding Less flexibility
across users
Data Integration Greater accuracy Harder to make corrections
Best Practices More efficient methodsImposition of how people do their
work
Less freedom and creativity
Cost of computingMore efficient system
planned Changing needs
Under budgeted training expense
Hidden costs of implementation
ERP Modules
Reasons of designing ERP systems in Modules
1. Obtain specific functionality
2. Cost
3. Implement the system in bits rather
than bring entire massive system online
at one time
M o d u l e sModule Degree of module used by
companies
Financial and Accounting 91.5%
Materials management 89.2%
Production Planning 88.5%
Order entry 87.7%
Purchasing 86.9%
Financial Control 81.5%
Distribution/logistics 75.4%
Market Trend and Vendors
Market:
1. 60 percent of Fortune 500 companies had adopted ERP systems before 2000.
2. The market spending was $13.4Billion in 2003
3. The predicted market spending is $15.8 Billion in 2008
Vendors:
over fifty vendors, such as SAP, Oracle, Baan, and J.D. Edwards
Ways to Developing ERP SystemMethod Advantages Disadvantages
Develop in-house Best fit with organizational needs
Most difficult to develop, most expensive, Slowest
In house system with vendor supplements
Gain commercial advantages combined with organizational fit
Difficult to develop, Expensive, slow
Best-of-breed Theoretically gain best of all systems
Difficult to link modules, slow, potentially inefficient
Customized vendor system
Retain flexibility while keeping vendor expertise
Slower, usually more expensive
Selected vendor modules Less risk, relatively fast, least expensive
If expand, long run time and cost higher
Full vendor system Fast, less expensive, efficient Inflexible
Application service provider
Least risk, least cost, fastest, least subject to vendor change
At the mercy of the provider, no control, and subject to price increases
ERP System Selection Risks
The cost, time, and risk of an ERP project depends on following factors:
1. Project management ability;
2. Experience with this type of environment;
3. Experience with the programming environment;
4. Experience with the language or system used;
5. Familiarity with modern programming practices;
6. Availability of critical equipment, software, and programming language;
7. Completeness of project team;
8. Personnel turnover;
9. Relative control of project manager over project team.
Questions from Last Discussion
1. How the business processes are modeled in ERP systems ?
2. How ERP system installed in an organization? Is it simple replace old separated operation systems or it can be combined with old systems?
3. How to combine ERP system with business process?
Measurement of ERP Project
• Intangible factors
increases in market share
improved customer service
better corporation image
employee satisfaction
supply chain integration
ability to support e-business operation
• Hidden outcomes
change how people do their jobs
• The changing nature of information technology high dynamic technology and long-term project for
implementing ERP
ERP Project Management
Cost
time
Tool – Critical Path Method
Right system
Critical Success Factors in ERP
1. Clear understating of strategic goals 2. Commitment by top management 3. Excellent implementation project management 4. Great implementation team 5. Successful coping with technical issues 6. Organizational commitment to change 7. Extensive education and training 8. Data accuracy 9. Focused performance measures 10. Multisite issues resolved
Open Source ERP
Reasons of Choosing open source ERP 1. cost
2. Free redistribution
3. Available source code
Available providers There are about 20 vendors providing open source ERP
systems. For example:
1. Open MFG
2. FISTERRA
3. ERP 5
4. Compiere
Compiere Open Source ERP
Architecture Compiere is a 100% pure Java
solution based on Oracle database
technology, and it is working on
database independence.
client application component is
written entirely in Java
The application server component
is implemented in Java based on
J2EE technology using the JBoss
server infrastructure.
FunctionalityBusiness processes rather than traditional
departments drive Compiere's design.
quote-to-cash, requisition-to-pay, partner relationship management, supply chain management, performance analysis, web store
Seven Modules:
Quote-to-Cash
Requisition-to-Pay
Cu
sto
mer
rel
atio
ns
man
agem
ent
Partner Relations Management
Supply Chain Management
Performance Analysis
Web Store
Thank You
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