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Week Five: Chapter Nine Extension: Enterprise Resource Planning (ERP)…
Week Five:
Chapter Nine Extension: Enterprise Resource Planning (ERP) Systems
9.1 What is the purpose of ERP systems?
Primary Purpose:
Integrate all of an organisation's purchasing, HR, production, sales and accounting data into a single system
Allows real time global updates of transactions
Enable critical business decisions using latest data
9.2 What are the elements of an ERP solution?
For a product to be considered a true ERP product, must include applications that integrate:
Supply chain:
procurement, sales order processing, inventory / supplier management
Manufacturing:
scheduling, capacity planning, quality control, bill of materials
CRM:
sales prospecting, customer management, marketing, customer support
HR:
payroll, time and attendance, HR management
Accounting:
general ledger, accounts receivable / payable, cash management
ERP SOLUTION COMPONENTS
Hardware:
as organisations turn to cloud-based hosting in one of two modes:
PaaS:
Install ERP software and databases on leased cloud hardware
SaaS:
Use ERP vendors that offer their ERP software as a service e.g. SAP, Oracle, Microsoft
OR
Hybrid Model:
ERP customers store most data on cloud servers and sensitive data on self - managed servers
Software:
ERP application programs
Configurable design of application programs
during the ERP development process, the development team sets configuration parameters that specify how ERP applications will operate (e.g. number of hours in a standard work week)
Data:
ERP databases
Includes a database design and initial configuration data
Large organisational databases contain two types of
program code:
Triggers:
computer program stored within database that runs to keep the database consistent when certain conditions arise
Stored Procedures:
enforces business rules e.g. not selling an item at discount
These are part of the ERP solution that developers and businesses must configure
Procedures:
business process procedures
Process Blueprints:
comprehensive sets of inherent processes for all organisational activities, each which is documented with diagrams that use a set of standardised symbols
set of 100 - 1000s inherent procedures to enable ERP customer organisations to accomplish its work in the application provided by the vendor
ERP users must either adapt to the predefined, inherent processes / procedures or design new ones
People:
training and consulting
Vendor training curricula and numerous classes before and after ERP implementation
Types of Training:
How to implement the ERP solution - top level management support, preparing the organisation for change, dealing with resistance
How to use the ERP application software (specific steps for using ERP applications to accomplish the activities in processes)
on-site consulting for implementing and using ERP
9.3 How are the ERP systems implemented and upgraded?
Steps to Implement
1. Determine current and ERP models
Model current processes
(as-is model)
Identify relevant ERP blueprint processes
2. Remove inconsistencies
Compare as-is model to blueprint processes
Identify misfits between as-is and blueprint
Correct misfits by:
changing organisational processes and /or
modifying the ERP application
3. Implement the ERP application
Prepare detailed plan
Train users
Stimulate and test
Convert data
Convert to new procedures
Convert to ERP
9.4 What types of organisations use ERP?
ERP use by industry type
manufacturing
distribution
mining, materials extraction, petroleum
medical care
government and public service
utilities
retail
education
These were industry - specific solutions
ERP by organisation size
Companies of different sizes have one very important difference that has a major impact on ERP:
Availability of skilled IT personnel
small organisations:
employe one/ two IT specialists - spread thin to manage whole ERP system
midsize organisations:
expand from one IT person to a small staff - usually isolated from senior management creating misunderstanding and mistrust
large organisations:
full IT staff that is headed by the CIO, who is business and IT professional who sits on the executive board
International ERP
Inherent ERP procedures must be adaptable to different cultures
International ERP solutions are designed to support multiple currencies and languages, manage international transfers of goods in inventories and work effectively with international supply chains
9.5 How do major ERP vendors compete?
ERP Market Leaders
cloud having a major impact on ERP vendors
those with substantial resources (SAP) and deep technical talent (Oracle) are moving product suites into some version of SaaS, PaaS, IaaS
others unable to convert are losing customers who have converted
TOP ERP VENDORS
SAP:
sells to the largest companies and offers the most expensive of the ERP products
use thick- client, client / server architecture
moving partly to cloud - SAP HANNA (PaaS ERP offering that serves as a foundation of a long-term cloud solution)
SAP's biggest problem (and opportunity) is providing benefits of the cloud to customers who want the economic benefits of cloud but not to disrupt current ERP installation
Oracle:
deep base technology and high quality technical staff
designed according to SOA principles and hence are adaptable and customisable
offers ERP cloud service as SaaS
Infor:
span the mid range, serving higher-end small companies and lower end large companies
began to offer infor business cloud
Sage:
developed and now licenses enterprise applications, including CRM and ERP
Microsoft Dynamics:
offer 5 ERP products: AX, Nav, GP, Solomon and Dynamics CRM
offers its CRM product online as SaaS, but it has no full ERP implementation in the cloud
ERP in the future
Mobility will be the biggest problem
everyone will be using mobile devices at work - security problem
future belongs to those who can find and implement innovative applications of emerging trends