Business Driven Technology 5th

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B10 - Enterprise Resource Planning

BUSINESS PLUG-IN B10

Enterprise Resource Planning

LEARNING OUTCOMES
1. Compare core enterprise resource planning components and extended enterprise resource
planning components.
Core ERP components include the traditional components included in most ERP systems and they
primarily focus on internal operations. Extended ERP components include the extra components that
meet the organizational needs not covered by the core components and primarily focus on external
operations.

2. Describe the three primary components found in core enterprise resource planning.
• Accounting and finance components – manage accounting data and financial processes within the
enterprise with functions such as general ledger, accounts payable, accounts receivable,
budgeting, and asset management
• Production and materials management components – handle the various aspects of production
planning and execution such as demand forecasting, production scheduling, job cost accounting,
and quality control
• Human resource components – track employee information including payroll, benefits,
compensation, performance assessment, and assumes compliance with the legal requirements of
multiple jurisdictions and tax authorities

3. Describe the four primary components found in extended enterprise resource planning
systems.
• Business intelligence – describes information that people use to support their decision-making
efforts
• Customer relationship management – involves managing all aspects of a customer’s relationships
with an organization to increase customer loyalty and retention and an organization's profitability
• Supply chain management – involves the management of information flows between and among
stages in a supply chain to maximize total supply chain effectiveness and profitability
• Ebusiness – means conducting business on the Internet, not only buying and selling, but also
serving customers and collaborating with business partners

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B10 - Enterprise Resource Planning

4. Explain the benefits and risks associated with enterprise resource planning systems.
ERP Benefits:
• Integrate financial information
• Integrate customer order information
• Standardize and speed up manufacturing processes
• Reduce inventory
• Standardize human resource information

ERP Risks (Costs):

• Software costs
• Consulting fees
• Process rework
• Customization
• Integration and testing
• Data warehouse integration and data conversion

5. Assess the future of enterprise resource planning systems.

The future of ERP includes:
• Internet – continue to help organizations integrate data and process across functional departments
• Interface – customizable employee browsers
• Wireless technology – support a mobile workforce
• Lines between SCM, CRM, and ERP will continue to blur

CLASSROOM OPENER
ERP Failures
Blaming ERP for the "pickle" that many a company who has implemented ERP find themselves in is like
blaming the CAD package for a poorly architected building. Like just about everything else, IT-enabling
business processes is about using the right tools for the right reasons and executing.

CLASSROOM EXERCISE
Analyzing ERP Components
Break your students into groups and ask them to provide an analysis of Figure B5.5, the enterprise
resource planning vendor components. Ask your students to analyze the different components and from
this brief description rank the vendors from the vendor that offers the greatest business intelligence and
strategic advantage to the vendor that offers the least business intelligence and strategic advantage.

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B10 - Enterprise Resource Planning

CORE MATERIAL
The core chapter material is covered in detail in the PowerPoint slides. Each slide contains detailed
teaching notes including exercises, class activities, questions, and examples. Please review the
PowerPoint slides for detailed notes on how to teach and enhance the core chapter material.

CLOSING CASE ONE

PepsiAmericas’ Enterprises
1. How have core ERP components helped PepsiAmericas improve its business?
Core ERP components include the traditional components included in most ERP systems and they
primarily focus on internal operations. The three primary core ERP components include:
• Accounting and finance components – manage accounting data and financial processes within the
enterprise with functions such as general ledger, accounts payable, accounts receivable,
budgeting, and asset management.
• Production and materials management components – handle the various aspects of production
planning and execution such as demand forecasting, production scheduling, job cost accounting,
and quality control.
• Human resource components – track employee information including payroll, benefits,
compensation, performance assessment, and assumes compliance with the legal requirements of
multiple jurisdictions and tax authorities.

2. How have extended ERP components helped PepsiAmericas improve its business?
Extended ERP components include the extra components that meet the organizational needs not
covered by the core components and primarily focus on external operations. The four primary
components found in extended enterprise resource planning systems include:
• Business intelligence – describes information that people use to support their decision-making
efforts
• Customer relationship management – involves managing all aspects of a customer’s relationships
with an organization to increase customer loyalty and retention and an organization's profitability
• Supply chain management – involves the management of information flows between and among
stages in a supply chain to maximize total supply chain effectiveness and profitability
• Ebusiness – means conducting business on the Internet, not only buying and selling, but also
serving customers and collaborating with business partners

3. Explain how future ERP systems will help PepsiAmericas increase revenues.
The benefits that PepsiAmericas can receive from an ERP system include integrated financial
information, integrated customer order information, standardized manufacturing processes, reduced
inventory, and standardized human resource information. All of these will help decrease costs, which
increase revenues.

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B10 - Enterprise Resource Planning

4. Assess the impact on PepsiAmericas’ business if it failed to implement the CRM component of
its ERP system.
Without a CRM strategy, PepsiAmericas would be unable to determine who its best customers are and
what products they are purchasing. With the new ERP system, the company can determine such things
as additional sales opportunities. For example, if the customer ordered certain products in the past and
there is a promotion going on for a similar product, the agents can offer that to the customers.

5. Review the different components in Figure B10.6. Which component would you recommend
PepsiAmericas implement if it decides to purchase an additional component?
Student answers to this question will vary. The important part of their answer will be their justification
for why the component will help PepsiAmericas’ business.

6. Compare PepsiAmericas experience with other ERP cases you can find in most business
articles.
Student answers to this question will vary. The important part of their answer will be their

CLOSING CASE TWO

Campus ERP
1. How could core ERP components help improve business operations at your college?
Student answers to this question will vary. The important part of their answer will be their justification
for why the ERP components will help improve business operations at your college.

2. How could extended ERP components help improve business operations at your college?
Student answers to this question will vary. The important part of their answer will be their justification
for why the component will add value to your college.

3. How can integrating SCM, CRM, and ERP help improve business operations at your college?
Student answers to this question will vary. The important part of their answer will be their justification
for why the component will add value to your college.

4. Review the different components in Figure B10.6. Which component would you recommend
your college implement if it decided to purchase three components?
Student answers to this question will vary. The important part of their answer will be their justification
for why the component will add value to your college.

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B10 - Enterprise Resource Planning

MAKING BUSINESS DECISIONS

Instructor Note: There are few right or wrong answers in the business world. There are really only
efficient and inefficient, and effective and ineffective business decisions. If there were always right answers
businesses would never fail. These questions were created to challenge your students to apply the
materials they have learned to real business situations. For this reason, the authors cannot provide you
with one version of a correct answer. When grading your students’ answers, be sure to focus on their
justification or support for their specific answers. A good way to grade these questions is to compare your
student’s answers against each other.

1. CRM, SCM, AND ERP VENDORS

Project Purpose: To explain ERP systems.
Potential Solution: With so many disparate systems, the company will have difficult time correlating
information. Enterprise resource planning systems integrate all departments and functions throughout
an organization into a single IT system (or integrated set of IT systems) so that employees can make
enterprisewide decisions by viewing enterprisewide information on all business operations. An ERP
system can help the company gain a common view and understand of its entire operations and
enterprisewide information.

2. BUILDING AN ERP SOLUTION – CIRRIS MINERALS

Project Purpose: To analyze an ERP purchase.
Potential Solution: If the company has similar system requirements as other companies in its
industry, then chances are high that there is an ERP system that will fit its needs. It is extremely
expensive to build an ERP system from scratch. The company should purchase an ERP system if it
meets most of its requirements. Potential questions for analysis could include:
• Which components are available from the ERP vendor?
• Does the accounting and billing component support multiple currencies and languages?
• Does the sales component track sales opportunities?
• Does the marketing component track campaign success?
• Does the human resource component track employee vacation?

3. BUILDING AN ERP SOLUTION – CIRRIS MINERALS (CONTINUED)

Project Purpose: To analyze an ERP purchase.
Potential Solution: Student answers to this question will vary. The important part of their answer will
be their justification for why the components should be the first two to be implemented.

4. MOST POPULAR ERP COMPONENT

Project Purpose: To explain the benefits and risks of ERP systems.
Potential Solution:
ERP Benefits include:
• Integrate financial information
• Integrate customer order information
• Standardize and speed up manufacturing processes
• Reduce inventory
• Standardize human resource information

B10-5
B10 - Enterprise Resource Planning

ERP Risks (Costs) include:

• Software costs
• Consulting fees
• Process rework
• Customization
• Integration and testing
• Data warehouse integration and data conversion

5. VALUE-ADDED ERP
Project Purpose: To analyze the costs of an ERP system.
Potential Solution: There are a number of different financial metrics the company can use to evaluate
the ERP purchase. A $12 million annual return on a $7 million investment is a great investment.
Students can use ROI or IRR to evaluate the purchase.

6. INCREASING REVENUES WITH ERP

Project Purpose: To summarize ERP systems.
Potential Solution: Core ERP components include the traditional components included in most ERP
systems and they primarily focus on internal operations. The three primary core ERP components
include:
• Accounting and finance components – manage accounting data and financial processes within the
enterprise with functions such as general ledger, accounts payable, accounts receivable,
budgeting, and asset management
• Production and materials management components – handle the various aspects of production
planning and execution such as demand forecasting, production scheduling, job cost accounting,
and quality control
• Human resource components – track employee information including payroll, benefits,
compensation, performance assessment, and assumes compliance with the legal requirements of
multiple jurisdictions and tax authorities

Extended ERP components include the extra components that meet the organizational needs not
covered by the core components and primarily focus on external operations. The four primary
components found in extended enterprise resource planning systems include:
• Business intelligence – describes information that people use to support their decision-making
efforts
• Customer relationship management – involves managing all aspects of a customer’s relationships
with an organization to increase customer loyalty and retention and an organization's profitability
• Supply chain management – involves the management of information flows between and among
stages in a supply chain to maximize total supply chain effectiveness and profitability
• Ebusiness – means conducting business on the Internet, not only buying and selling, but also
serving customers and collaborating with business partners

B10-6