Enterprise Resource Planning - Universitas BrawijayaDBMS is designed to facilitate use of database...
Transcript of Enterprise Resource Planning - Universitas BrawijayaDBMS is designed to facilitate use of database...
ENTERPRISE RESOURCE PLANNING
Fajar Pradana S.ST., M.Eng
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
CHAPTER ONE WHY STUDY ERP SYSTEMS?
ERP Affects Most Major Corporations in the World
SAP is used by more than 60% of the major firms.
“Almost every company is more or less in its hands.” Arthur D. Little’s Global Strategy Leader.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Impacts Small and Medium Enterprises (SME)
In 1995 SAP generated 90% of their revenues from global companies
But 1997, SAP expected 50% its revenue SME
In 1997, roughly 35% of SAP’s revenues were from customers with revenues less than $200 million
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Affects Competitor Behavior On June 24, 1996, Oracle’s Application Division
announced that “Several companies went live with their Oracle Applications implementations during the quarter, including Silicon Graphics, Inc. and Quantum Corporation, both of whom successfully deployed large-scale implementations.” … at the same time, Oracle’s Application Division announced that “among the customers added that quarter included ... Western Digital ....” Western Digital was a direct competitor of Quantum.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Affects Business Partner Requirements
Adopting an ERP system makes firms more “information agile,” able to more easily meet the information demands made upon them
As they become more agile they expect more from their customers, possibly integrating across the supply chain
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Provides A Key Reengineering Tool
In 1990 Hammer’s highly influential article on reengineering, got the corporate world interested in obliterating existing processes. Unfortunately, after things were obliterated many firms had no idea what to replace them with.
ERP provides perhaps the primary tool to guide those efforts, so much so that Gendron (1996) called ERP (particularly SAP’s) the electronic embodiment of reengineering and Hammer (1997) commented that “SAP equals forced reengineering.”
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP has Diffused Many Best Practices
ERP systems are based on so-called “best practices” - the best ways of doing processes. SAP has over 1,000 of them! What this means is that any firm that installs has access to a wide range of best practices. Further, business practices are being added all of the time. As new best practices are found and embedded in particular applications, they can become available for inclusion in new versions of SAP. As they become available, other firms install them. As a result, there is this cycle of finding best practices, building them into the software and diffusing them out to new users.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Functional Area
Financial Accounting
General Ledger, Fixed Asset, Payables, Receivables, Cash Management, Financial Consolidation
Management Accounting
Budgeting, Costing, Cost Management, Activity Based Costing
Human Resources
Recruiting, Training, Payroll, Benefits, Diversity Management, Retirement, Separation
Manufacturing Engineering
Bill of Materials, Work Orders, Scheduling, Capacity, Workflow Management, Quality Control, Manufacturing Process,
Supply Chain Management
Supply Chain Planning, Supplier Scheduling, Order to Cash, Purchasing, Inventory, Product Configurator, Claim Processing
Project Management
Project Planning, Resource Planning, Project Costing, Work Break Down Structure, Billing, Time and Expense, Performance Units, Activity Management
Customer Relationship Management
Sales and Marketing, Commissions, Service, Customer Contact, Call Center Support - CRM systems are not always considered part of ERP systems but rather BSS systems . Specifically in Telecom scenario
ERP Facilitated Adoption of Client Server Computing
In the early 1990’s client server computing was an available technology, that offered many advantages over existing mainframe solutions. Unfortunately, there was limited software available to exploit the advantages. ERP changed all that becoming one of the dominant, initial corporate applications of client server computing.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Changed the Nature of the IS and Accounting Functions
ERP systems are replacing major portions of most firms’ software needs. This changes the basic nature of the information systems function from one where systems analysts and programmers are needed, to one where knowledge of existing software packages is now critical.
Not only have needs changed, but personnel have become more mobile.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP has Changed the Nature of Jobs in All Functional Areas
IT (information technology) professionals in manufacturing say ERP systems are blurring the lines between IT and users. There is a huge demand for users or line-of-business personnel who also have professional level IT skills. But traditional IT types who know only about technology and nothing about the business are not needed now as they once were. “Understanding the business is probably the most critical (aspect) … Its more important to understand how you want things to flow through your factory than [to have] the skill of programming -- except for the few places where SAP doesn’t do what’s needed so you need coders.”
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Cost is High
After cost of ownership is $15 million, typically at a cost of $53,320 per user, according to a Meta Study.
ERP costs can run 2-3% of revenues
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Systems Can Create Value
Integrates Firm Activities
Allows Use of Best Practices
Enables Organizational Standardization
Eliminates Information Asymmetries
Provides On-Line and Real-Time Information
Facilitates Intra and Inter Organization Communication and Collaboration
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Integrate Firm Activities As noted by Hammer, “Integration is the
defining characteristic of SAP”
ERP processes are cross functional, forcing the firm out of traditional, functional and locational silos.
Formerly diverse systems are integrated in ERP systems
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Employ Best Practices
ERP’s employ processes that are known to work and that integrate with each other
Those processes can be used to improve the way that firms do business.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Enable Organizational Standardization
The same best practices can be employed at multiple locations.
This allows firms to bring those locations with substandard processes in line with other more efficient locations.
Now clients can “see” the corporation the same way, even if a firm has multiple locations.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Eliminate Information Asymmetries
What is an “information asymmetry”?
Since all information goes into a single database, accessible to many, means that many information asymmetries disappear.
“If you don’t do your job, I can see that something hasn’t been done”
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Provide On-Line and Real Time Information
Since data is widely available and available on-line and in real time, all have access to the same information
As a result, information is available
Anytime! Anywhere! to Anyone!
which can facilitate more consistent planning.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP’s Facilitate Inter/Intra Organization Communication and Collaboration
Increasingly firms are opening up their databases to facilitate procurement and other functions, thus ERP facilitates collaboration
Since the ERP has all the transaction processing information in it, communication is facilitated.
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
CHAPTER 2 SYSTEMS AND TECHNOLOGY BACKGROUND
What Technologies Are Of Direct Interest?
Client Server Computing
Networks
Relational Databases
Software
Reengineering
Systems Analysis
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Client Server Computing
SAP’s client server system has its root in its mainframe system
SAP was one of the first client server packages generally available
Nature of client differentiates some ERP systems
E.g., Oracle is thin client oriented
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Client/Server Configuration
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Data Management
Application Function
Presentation
Presentation
Data Management
Application Function
Presentation
Data Management
Application Function
Presentation
Data Management
Application Function
Presentation
Data Management
Presentation
Data Management
Application Function
Application Function
Distributed Presentation (Thin Client)
Distributed Presentation (Fat Client)
Remote Presentation
Distributed Application
Remote Data Mgmt
Networks
Local Area Networks (LAN) link computers together over small geographical areas, such as a building
Metropolitan Area Networks (MAN) link computers together across a city.
Wide Area Networks (WAN) link computers together over larger geographical areas, such as across different states
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Bandwidth and TCP/IP
Bandwidth is a network’s transmission capacity. The greater the bandwidth, the greater the capacity.
Capacity and availability are key issues
TCP/IP - Transmission Control Protocol and Internet Protocol, are standards associated with transmissions across networks.
SAP uses TCP/IP standards
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Relational Databases
ERP systems “sit on top of a database”
Currently, ERP software is organized based on relational databases
A relational data base is a set of related tables
Related using key attributes
For examples ...
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
... Salesperson # Last Name Address
A Table
Primary Key attribute is a
unique identifier for each row
0001 Jones 123 Sunnyvale ….
A row is a set of related attributes
Non-key attribute represents a unique characteristic of the salesperson or
‘entity instance’
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Customer # Customer ... Lastname
Salesperson # Last ... Name
Sales Order # Customer # Salesperson # ...
0001 0005 0001
0005 O’Leary 0001 Jones
A set of related tables
Customer Table Sales Person Table
Sales Event Table
Data Warehouse
Is a single place located across a corporation where a user can get the latest data, efficiently organized
They are large repositories of data
Typically, they include multiple years of data so that trend analysis can be done
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Software
Legacy Software
Package Software
Versions of Software
Database Management Software
Operating Systems
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Legacy System
Typically refers to the software that is in use prior to the new ERP software
Oftentimes, the legacy system is mainframe software
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Package Software
In the same sense that personal computing software has moved toward a standard set of package options, corporate enterprise computing also has moved toward packages.
Now, some argue that the primary problem is one of choosing the right package
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Versions of Software
Software has different versions
Windows, 3.1, 95, 98, 2000, ME
SAP’s R/3 has a number of different versions, 3.0, 3.1, 4.0, 4.5, 4.6
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Database Management Software
DBMS is designed to facilitate use of database structures, e.g., relational database systems.
SAP supports a number of database systems
Oracle is most frequently used
There is a cost associated with having a data base work with an ERP system
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Operating Systems
ERP systems are designed to run under different operating systems, e.g., Windows and Unix
For some systems, the operating systems for presentation, application and database can be all different
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Software Layers
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
ERP Applications
Database Management System
Operating System(s)
Reengineering
ERP can be used as a tool for reengineering
“Technology Enabled”
ERP contain many “best practices”
What is a “best practice?”
Reengineering provides one theory base
for viewing ERP
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Systems Analysis
Understanding and modeling flows of information
Many different tools used to model different views of enterprise models
“Enterprise Resource Planning Systems”, D. E. O’Leary, 2000 ©
Thank you