Enterprise Resource Planning (ERP)

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Enterprise Resource Planning (ERP)

• The need for integrated information in business

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Learning Objectives

• Name the main functional areas of operation in a
  business
• Identify the kinds of data that each main
  functional area produces
• Identify the kinds of data that each main
  functional area needs
• Define integrated information systems and state
  why they are important
• Understand what an ERP system is and how it
  evolved

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Introduction Enterprise Resource Planning

• Manage company-wide business operations
• Uses a common database and shared management
  reporting tools

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Key Functional Areas of Operation

• Marketing and Sales
• Production and Materials Management
• Accounting and Finance
• Human Resources

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Business Processes

• Managers now think in terms of business process
  - a collection of activities that takes one or
  more kinds of input and creates an output that is
  of value to the customer
• Take the customers perspective

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Business Processes Cut Across Functional Lines

• Purchasing a new computer - customer is not
  concerned about how computer was marketed or how
  its components were purchased or how it was
  built, or the route the delivery truck took -
  just want a working computer at a reasonable
  price!

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Example Buying a new PC

• Information on products available
• Place order quickly, maybe obtain financing
• Quick delivery
• 24 Hour help

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To do this, company needs to

• Make sure functional areas are integrated
• Information on customer configuration must be
  up-to-date
• Manufacturing needs configuration from sales
• If financing is required, that information from
  sales is needed in accounting

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Functional Areas and Business Processes of a Very
Small Business

• Marketing and Sales
• Production and Materials Management
• Accounting and Finance
• Human Resources

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Functional Area Information Systems

• Potential inputs and outputs for each functional
  area
• Different kinds of data and usage of data

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Marketing and Sales

• Determine pricing
• Take customer orders
• Create sales forecast

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Production and Materials Management

• Planning
• Need accurate forecasts from Marketing and Sales
• Compare costs with Accounting

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Accounting and Finance

• Record transactions
• Summarize data

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Human Resources

• Recruit
• Train
• Evaluate
• Compensate

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Evolution of Information Systems to Meet
Integration Needs of Business

• Prior to 1960, all systems were paper-based
• Data entry, storage, retrieval were slow,
  labor-intensive processes

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Computer Hardware and Software Development

• The first business computers - mainframes (huge
  computers) performed repetitious data processing
  tasks
• Computers smaller and faster- the PC is born!
• Software proliferates - release of PC software
  gave people control over their own computing

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Early Attempts to Share Data

• You may have heard the term Client/Server
  architecture this was and is a way to share data
  residing on individual PCs
• By the end of the 1980s, the hardware and
  software needed to support the development of
  integrated systems, like ERP systems, was in
  place fast computers, network access and
  centralized database capability

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ERP Systems

• Software to allow all business areas to be
  integrated -- finance, sales, production, etc.
• Interactive and real-time processing
• Users interact with computer screen, not printed
  data
• Major advantage access to common data across
  business functions -- eliminated redundant data
  and communications lags

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Questions about ERP

• Is it for every company?
• Is the software flexible?
• How long does it take to implement?
• How costly is it?
• How much profit should you expect?
• How long does it take to see an ROI?
• Why do some have more success while others fail?