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