ITEC6620 Enterprise Resource Planning Systems

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ITEC6620Enterprise Resource Planning Systems

• Supakorn Kungpisdan, Ph.D.
• supakorn_at_mut.ac.th

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Supakorn Kungpisdan

• Education
• PhD (Computer Science and Software Engineering),
  Monash University, Australia
• M.Eng. (Computer Engineering), KMUTT
• Specializations
• Information and Network Security, Electronic
  Commerce, Formal Methods, Computer Networking,
  ERPs
• Experiences
• Director, MUTs SAP University Alliance Program
• Director, Master of Science in Network
  Engineering, MUT
• External Research Advisor, Network Security
  Research Group, Monash University, Australia
• http//www.mut.ac.th/supakorn/

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Course Descriptions

• Saturday 3.30 PM 6.30 PM
• Textbook
• L. F. Motiwalla and J. Thompson, Enterprise
  Systems for Management, Pearson Prentice Hall,
  ISBN 978-0-13-207950-1
• Supplementary materials
• M. Sumner, Enterprise Resource Planning, Pearson
  Prentice Hall, ISBN 0-13-140343-5
• SAP training materials SAP01, SAPTEC, ADM01
• http//www.msit.mut.ac.th/

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Evaluation Criteria

• Quizzes 10
• Reports 20
• Midterm exam 20
• Final exam 50

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Course Outlines

• Introduction to Enterprise Information Systems
• Enterprise Systems Development
• Planning, Design, Development, Implementation,
  Post-implementation, Operations
• Enterprise Systems Functions
• Sales and Marketing, Accounting and Finance,
  Production and Materials, Human Resources, SCM,
  CRM, E-commerce
• Ethics in Enterprise Systems
• SAP Technical Administration and ABAP

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Learning Objectives

• Understand the information systems evolution and
  its historical role in the organization leading
  to systems integration and Enterprise Resource
  Planning (ERP).
• Learn about ERP systems and evolution,
  components, and architecture understand the
  benefits and drawbacks of implementing ERP
  systems and how they can help an organization
  improve its efficiency and worker productivity.
• Gain an overview of the implementation process
  (e.g., the ERP life cycle, business process
  reengineering, project and change management).
  Understand the role of people, vendors,
  consultants, and the organization in making the
  ERP implementation process successful.
• Comprehend the ethical, global, and security
  challenges while implementing an ERP system, and
  look at the ERP vendors and industry trends.

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Introduction to Enterprise Information
SystemsLecture 1

• Supakorn Kungpisdan, Ph.D.
• supakorn_at_mut.ac.th

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Outline

• Information Systems in Organizations
• Enterprise Resource Planning System
• ERP Implementation
• ERP Vendors

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Preview

• In the early days of ERP implementation, most
  management did not understand the magnitude of
  issues an organization has to consider before,
  during, and after implementation.
• ERP systems are very different from conventional
  packaged software, such as Microsoft Office and
  others.
• No shortcuts when it comes to implementing an
  enterprise system

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Information Systems in Organizations

• Information Systems are a critical component of a
  successful organization today.
• Information Systems provide a high level of
  computer automation to support business functions
  such as
• Accounting
• Finance
• Marketing
• Customer Service
• Human Resource Management
• Operations
• Information Systems play a major role in primary
  and secondary activities of an organizations
  value chain.

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Supply Chain
source SAP Overview, SAP training materials
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Value Chain
source L. Jessup and J. Valacich, Information
Systems Today Why IS Matters, 3rd Edition,
Pearson Prentice Hall
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Value System

• Coordination of multiple value chains

source L. Jessup and J. Valacich, Information
Systems Today Why IS Matters, 3rd Edition,
Pearson Prentice Hall
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Information Systems in Organizations (Cont.)

• Information systems include hardware, software,
  data processes, and people.
• Information Technology includes only the hardware
  and software components.
• The role of an information system is to process
  data into information using information
  technology, business processes, and people
  resources.

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Information System Components
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Phases of an Information System
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Role of Information Systems in the Enterprise

• Business organizations have become more complex
  due to increased layer of management hierarchy
  and increased level of coordination across
  departments.
• Each department has different information needs.
• No single information system can support all the
  business needs of an organization.
• Management is generally categorized into three
  levels- Strategic, Middle, and Operational.
• Each management level has different information
  requirements.

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Management Pyramid with Information Requirements
Executive Information System
Management Information System
Transaction Processing System
What are Decision Support Systems located?
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Information Silos and Systems Integration

• Over time, Information Systems create a number of
  independent nonintegrated systems ultimately
  creating bottlenecks and interfering with
  productivity.
• Organizations need to be agile and flexible and
  will require their information systems to have
  integrated data, applications, and resources from
  across the organization.
• To compete effectively, organizations have to be
  customer focused.

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Evolution of Enterprise Systems
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Legacy Systems

• Each department has its own system
• Infrastructure specific
• Inefficient processes
• Potential for inaccuracies

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Enterprise System Approach
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Internally focused systems

• Support functional areas, business processes and
  decision-making within an organization
• New information (value) is added at every step

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Externally Focused Systems

• Coordinate business activities with customers,
  suppliers, business partners and others who
  operate outside the organization

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The Rise of Enterprise Systems

• Packaged applications
• Written by third-party vendors
• Used by many different organizations
• Useful for standardized, repetitive tasks
• Cost effective
• E.g., Microsoft Money and Quicken
• Custom applications
• Developed exclusively for a specific organization
• Designed for particular business needs
• Higher development costs

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Best Practices-Based Software

• Most ERP vendors build best practices into their
  ERP systems
• Identify business processes in need of change
• Future updates are smoother if businesses change
  their business processes to fit with ERP systems
• Is following the best practices always the best
  strategy?
• If companies have competitive advantage from
  unique business processes

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Enterprise Resource Planning (ERP) Systems

• ERP Systems are the first generation of
  enterprise systems meant to integrate data and
  support all the major functions of organizations.
  
• ERP systems integrate various functional aspects
  of the organization as well as systems within the
  organization of its partners and suppliers.
• The goal of an ERP system is to make the
  information flow dynamic and immediate,
  therefore, increasing its usefulness and value.

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Integrated Systems - ERP
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Evolution of ERP
Timeline System Platform
1960s Inventory Management Control Mainframe legacy systems using third generation software-(Cobol, Fortran)
1970s Materials Requirements Planning (MRP) Mainframe legacy systems using third generation software-(Cobol, Fortran)
1980s Manufacturing Requirements Planning (MRP-II) Mainframe legacy systems using fourth generation database software and manufacturing applications.
1990s Enterprise Resource Planning Mainframe client-server systems using fourth generation database software and package software.
2000s Extended ERP or ERP-II Client-server systems using Web platform, open source with integration to fifth generation applications like SCM, CRM, SFA.
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ERP Components
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ERP Components (cont.)
Hardware Servers and peripherals
Software Process Operating systems and database
Information Organizational data from internal and external sources
Process Business processes, procedures, and policies
People End users and IT staff
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ERP Components Integration
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ERP Architecture

• The architecture of an ERP system influences the
  cost, maintenance, and the use of the system.
• The ERP architecture helps the implementation
  team build the ERP system for the organization.
• If purchased, ERP architecture is often driven by
  the vendor (Package-Driven Architecture).
• There are two types of architectures.
• Logical focuses on the supporting needs of the
  end users.
• Physical focuses on the efficiency of the system.

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Example of Architecture of ERP at Large University
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Logical Architecture of an ERP System
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Physical Architecture of An ERP System
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System Configuration
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eBusiness and ERP
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eBusiness and ERP (cont.)

• eBusiness links a company with external partners
  and stakeholders, whereas ERP focuses on
  integrating the functional silos of an
  organization into an enterprise application.

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System Benefits of an ERP System

• Integration of data and applications across
  functional areas (i.e., data can be entered once
  and used by all applications).
• Improvements in maintenance and support as IT
  staff is centralized.
• Consistency of the user interface across various
  applications
• less employee training, better productivity, and
  cross-functional job movements.
• Security of data and applications is enhanced due
  to better controls and centralization of hardware.

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System Limitations of an ERP System

• Complexity of installing, configuring, and
  maintaining the system increases, thus requiring
  specialized IT staff, hardware, and network
  facilities.
• Consolidation of IT hardware, software, and
  people resources can be cumbersome and difficult
  to attain.
• Data conversion and transformation from an old
  system to a new one can be tedious and complex
  process.
• Re-training of IT staff and end users of the new
  system can produce resistance and reduce
  productivity.

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Business Benefits of an ERP System

• Agility of the organization in terms of
  responding to changes in environment for growth
  and maintaining market share
• Sharing of information across functional areas
  helps collaboration between employees.
• Linking and exchanging information in real-time
  with supply-chain partners improves efficiency
  leading to lower costs.
• Better customer service
• Efficiency of business processes are enhanced due
  to the re-engineering of business processes.

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Business Limitations of an ERP System

• Retraining of all employees with the new system
  can be costly and time consuming.
• Change of business roles and department
  boundaries can create upheaval and resistance to
  the new system.

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ERP Implementation

• Organization has to plan and understand the life
  cycle of these systems.
• Key to a successful implementation is to use a
  proven methodology, take it one step at a time,
  and begin with an understanding of the ERP life
  cycle.
• ERP system implementations are very risky, and
  using a well-defined project plan with a proven
  methodology will assist in managing those risks.

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ERP Life Cycle

• The key to a successful implementation is to use
  a proven technology, to take one step at a time,
  and to begin with an understanding of ERP life
  cycle

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ERP Implementation Methodology
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ERP Implementation Strategies

• Need to analyze existing business processes.
  Otherwise, the implementation will require
  significant system modifications after
  implementation
• Buy an off-the-shelf package or develop in-house
• If modify off-the-shelf package to fit
  organization (chocolate implementation), an
  upgrade of the package will also need
  modification with even greater cost
• Vanilla implementation minimally modify
  software ? require greater time to train users

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Product Life Cycle
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Software and Vendor Selection

• Better to purchase an off-the-shelf ERP product
  if an organization that does not have the
  experience in developing ERP systems
• Before selecting a vendor, the organization must
  carefully evaluate its current and future needs
  in enterprise management systems.
• Review the organizations existing hardware,
  network, and software infrastructure, and the
  resources available for the implementation.

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Vendor Evaluation

• Business functions or modules supported by their
  software
• Features and integration capabilities of the
  software
• Financial viability of the vendor as well as
  length of time they have been in business
• Licensing and upgrade policies
• Customer service and help desk support
• Total cost of ownership
• IT infrastructure requirements
• Third-party software integration
• Legacy systems support and integration
• Consulting and training services
• Future goals and plans for the short and long term

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Operations and Post-Implementation

• Going live (Go-live) is one of the most
  critical points in a projects success.
• It is vital to focus the efforts of all project
  teams to ensure that task and activities are
  completed before going live.
• Stabilization is time from Go live to about 90
  days after, or until a number of issues an
  problems have been reduced

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Operations and Post-Implementation (cont.)

• Five areas of stabilization are important
• Training for end-users
• Reactive support (i.e., helpdesk for
  troubleshooting)
• Auditing support to make sure data quality is not
  compromised by new system
• Data fix to resolve data migration and errors
  revealed by audits
• New features and functionalities to support the
  evolving needs of the organization

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ERP Vendors

• There were five dominating ERP software
  suppliers SAP, Oracle, PeopleSoft, Baan and J.D.
  Edwards.
• They controlled more than 60 of the multi-
  billion dollar global market.
• Each vendor had a specialty in one particular
  module area such as
• Baan in manufacturing,
• PeopleSoft in human resources management,
• SAP in logistics, and
• Oracle in financials

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SAP AG

• SAP AG (Systeme, Anwendungen, und Produkte in
  Datenverarbeitung), or Systems, Applications and
  Products in Data Processing
• In 1979, SAP launched SAP R/2, a mainframe-based
  ERP
• In 1992 SAP R/3 was launched based on
  client/server
• By 1999 SAP became the third largest software
  vendor in the world and the largest in the ERP
  sector with a market share of about 36 serving
  over 17,000 customers in over 100 countries.
• In 1999 SAP extended the ERP functions by adding
  CRM, SCM, sales-force automation and data
  warehousing.
• SAPs Internet-enabled ERP solutions are provided
  by the recently launched ERP product called
  mySAP.COM

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Oracle Corporation

• founded in 1977 in the USA, is best-known for its
  database software and related applications and is
  the second largest software company in the world
  after Microsoft.
• second to SAP in the enterprise systems category
  with over 5,000 customers in 140 countries.
• Oracles ERP system is known as Oracle
  Applications, having more than 50 different
  modules in six major categories finance,
  accounts payable, human resources, manufacturing,
  supply chain, projects and front office.
• Now has taken over PeopleSoft and JD Edwards

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PeopleSoft Inc.

• Started in 1987 in California, with
  specialization in human resource management and
  financial services modules.
• Enterprise solutions from PeopleSoft include
  modules for manufacturing, materials management,
  distribution, finance, human resources and supply
  chain planning.
• One of the strengths of PeopleSoft is the
  recognition by its customers that it is flexible
  and collaborative
• In 2005 PeopleSoft became a part of Oracle
  offering PeopleSoft 9

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J.D.Edwards

• founded in 1977 in Denver (cofounded by Jack
  Thompson, Dan Gregory and C. Edward McVaney) with
  long experience of supplying software for the
  AS/400 market.
• Its ERP product called OneWorld is capable of
  running on multiple platforms and with multiple
  databases, ... and revolutionizes enterprise
  software by liberating users from inflexible,
  static technologies
• The product includes modules for finance,
  manufacturing, distribution/logistics and human
  resources, quality management, maintenance
  management, data warehousing, customer support
  and after-sales service
• Now a part of Oracle offering JD Edwards
  EnterpriseOne and JD Edwards World

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Baan, Invensys, SSA ERP, Infor

• Baan was found in 1978 with expertise in software
  for the manufacturing industry
• ERP solution areas that Baan covers include
  finance, procurement, manufacturing,
  distribution, integration and implementation,
  planning, sales, service and maintenance,
  business portals, collaborative commerce and
  business intelligence.
• Baan was bought by Invensys (in 2000), then SSA
  Global Technologies (in 2003) and changed the
  name to SSA ERP
• SSA ERP was acquired by Infor in 2006
• Now Infor becomes The worlds third largest
  provider of enterprise software. It delivers
  integrated enterprise solutions in supply chain,
  customer relationship and suppliers management.

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Other ERP Vendors

• Microsoft Dynamics
• Formerly Microsoft Business Solutions or Great
  Plains, Microsoft Dynamics is a comprehensive
  business- management solution built on the
  Microsoft platform.
• Lawson
• Industry-tailored software solutions that
  include enterprise performance management,
  distribution, financials, human resources,
  procurement, and retail operations.
  www.Lawson.com

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Questions?