ERP

Past, Present and Future

 ERP – Enterprise Resource Planning
PLANNING the RESOURCES of an ENTERPRISE

 ERP is a way to integrate the data and processes of an organization

into one single system with modules that support core business areas
such as manufacturing, distribution, financials and human resources.

 ERP allows managers from most or all departments to look vertically

and horizontally across the organization to see what they must see
(information) to be productive in their managerial roles.

 ERP captures data from historical activity and current operations .

That data can be transformed into information that, along with
external information, is useful in planning and controlling operations,
and in developing business strategies.

 ERP is evolving into a Multi-Module Application Software Package that

automates inter-organizational business processes across the supply
chain which involve business partners, suppliers, customers, and
more.
 BEFORE ERP

Problems:
Delays, Lost Orders, Keying into different computer systems invites errors
AFTER ERP
 EVOLUTION OF ERP
 1960s – Inventory Control
 1970s – MRP (Material Requirement
Planning).
 This system helped in translating the master
production schedule into requirements for
individual units like sub assemblies, components
and raw materials. MRP systems helped determine
what to order, how much to order, when to order
and when to schedule delivery.
 1980s – MRPII (Manufacturing Resource
Planning)
 MRPII supported efforts to optimize the entire
plant production system by supporting capacity
planning, shop floor control, and distribution
management activities. MRPII was further
extended to support areas like Finance, Human
Resources, Engineering, Project Management etc.
As MRPII like systems were adopted by non
manufacturing enterprises like banks and airlines
to support cross-functional coordination and
integration of business processes, the “M” no
longer fit, thus the name ERP was coined.
 1990s – ERP
 Today, ERP is the foundation system for domestic
and global business operations, supporting most or
all functional areas in their daily operations. For
some organizations, ERP is a source of competitive
advantage.
 21st century – ERPII
 ERPII is the name some now use to describe ERP
like systems that are evolving to support inter-
organizational business processes across the supply
chain.
System Primary Business Scope Enabling Technology
Need (s)
MRP Efficiency Inventory Management and Mainframe computers, batch
Production planning and processing, traditional file
control. systems.
MRPII Efficiency, Effectiveness Extending to the entire Mainframes and Mini
and integration of manufacturing firm computers, real-time (time
manufacturing systems (becoming cross functional). sharing) processing ,database
management systems
(relational)
ERP Entire organization Mainframes, Mini and micro
Efficiency (primarily (increasingly cross Computers, Client server
back office), functional), both networks with distributed
Effectiveness and manufacturing and non- processing and distributed
integration of all manufacturing operations databases, Data warehousing,
organizational systems. and mining, knowledge
management.
ERPII Efficiency, Effectiveness Entire organization Mainframes, Client Server
and integration within extending to other systems, distributed
and among enterprises. organizations (cross computing, knowledge
functional and cross management, internet
enterprise--partners, technology (includes intranets
suppliers, customers, etc.) and extranets).
 ERP TODAY

 Today’s focus seem more to be external as

organizations look for ways to support and improve
relationships and interactions with customers,
suppliers, partners and other stakeholders.
 The focus of ERP in increasingly on Front-Office
Applications and inter-organizational business
processes, thus making it visible to “OUTSIDERS”
 The increasing importance of E-Commerce and
Globalization of business makes support of inter-
organizational processes more important.
 ERP Vendors
 SAP
 PeopleSoft
 Oracle
 Microsoft Business Solutions
 SSA Global
 ERP vendor products reflect the evolving business
needs of clients and the capabilities of IT, perhaps
most notably internet related technologies.
 ERP helps Organization to
 improve competitiveness
 increase profits
 prosper in the global economy.
ERPII—The Future of ERP

 ERPII is a business strategy and a set of collaborative

operational and financial processes internally and beyond
the enterprise

 New multi-enterprise business models like Value

Collaboration Networks, customer-centric networks that
coordinate all players in the supply chain, are becoming
popular as we enter the 21st century

 These new business models reflect an increased business

focus on external integration

 There is movement away from Client-Server System to

Internet Based Architecture
Keys ERP ERPII
Traditional ERP was concerned ERP II systems are about optimizing the
Role with optimizing an enterprise, supply chain through collaboration with
Internal optimization. trading partners.

ERP systems focused on ERP II systems will cross all sectors and
Domain manufacturing and segments of business.
distribution.

As ERP systems cross sectors ERP II vendors to pick the industries in

and segments, they will no which they’re going to play, and focus on
Function longer be able to present all providing deep functionality for those
things to all people. users.

In ERP systems, the processes ERP II systems will connect with trading
Process were focused on the four walls partners, to take those processes beyond
of the enterprise. the boundaries of the enterprise.

Old ERP systems were ERP II systems will be Web-based, open

monolithic and closed. to integrate and interoperate with other
Architecture systems that allow users to choose just
the functionality they need.

Information in ERP systems is In an ERP II system, that same

generated and consumed information will be available across the
Data within the enterprise. supply chain to authorized participants.
FUTURE DIRECTIONS IN ERP
 New Market
 Supplementing direct sales with reseller
channels.
 Software offerings to appeal on the basis of
reduced functionality.
 Improving the implementation methodology
for faster development.
 Removing the entry price to make it financially
viable.
 Using the platforms such as MS Windows NT.
 New Channels
 As all the vendors being forced to market their
product in the world of small business, they made their
software products more affordable by lowering the
prices for each module and by ramping up the total
costs by basing price on user licenses.
Example:
 Oracle offerings the lower price software from
companies such as platinum software and great
plains software.
 JD Edward provides less expensive versions of the
One World suit.
 Faster Implementation Methodologies:

 As to implement the whole business it has to go

through reengineering process.
 This may cause a complete change in the
business model working previously and thus also
find it difficult to implement.
 Some times only 10-15% of the implementation
takes years to complete and by that time
implementation cost may increase.
 To make the implementation of packages more
convenient the ERP vendors are searching for
faster implementation methodologies e.g.
Accelerated SAP (ASAP) is a program introduced
by SAP.
 This program takes the knowledge gained
from R/3 implementations and consolidates
this expertise in a product called the
Business engineer.
 This helps to configure the SAP modules to
confirm to the processing style of same 100
business operating scenarios.
 This methodology reduces SAP
implementation time to less than six months
in many cases.
 Oracle also introduced a faster
implementation methodology called fast-
forward
 This program speed up implementation of Oracle
application suites and nail down the costs up front.
 As there is dearth of skilled consultants, ERP systems
implementation often become a difficult task.
 To achieve system implementations the ERP vendors
also provide the consulting services with highly skilled
consulting teams and charged with delivering fully
trained experienced consultant on a worldwide basis
 Example, Oracle’s OracleOne or SAP’s Platinum
Consulting Services with highly skilled consulting
teams providing their services along with new channel
partners and implementation methodologies.
 Business Models and BAPIs:

 To review and simulate changes to a business

model, implementation team needs special type
of business model tools.
 The product such as Intel Corp Inc’s live model
provides the views of R/3 process, data models
and functions.
 Live model is OLE complaint; the R/3 model can
be manipulated and documented through OLE
application such as Microsoft World.
 Business Application Programming
Interfaces(BAPI) are sets of methods that allow
the external application to collaborate with R/3
business objects such as accounts, employees
or customers.
 With the help of this collaborate method,
BAPIs gives the third party application
vendors a lot of flexibility to build
supporting applications for R/3 system.
 Similarly, Baan offers Orgware, business
modeling tool which combine with
business specific templates that help to
automatically configure the software to
suit specific operational needs.
 To accelerate software implementation on
the Windows NT platform, Baan is in the
process of enhancing Orgware with new
setup wizards.
 New Business Segments:

 After establishing in business /enterprise environment,

ERP vendors are trying to deliver specialized variants of
their products to the business segments such as
government, health care, retail environments and
financial services.
 Some vendors are offering their services in more
specialized areas such as demand forecasting of sales
automation and marketing and supply chain
management e.g. PeopleSoft bought Red Pepper
Software to improve its supply chain application, Baan
bought Aurum Software for its Aurum Customer
Enterprise suit of CRM tools and also teamed up with
Hyperion Solution to strengthen its financial accounting,
budgeting and reporting solutions to Baan’s distribution
and manufacturing modules.
 More Features:

 ERP vendors are also focusing on providing improved

decision support applications. ERP vendors teamed up
with various software providers e.g. JD Edwards teamed
up with Information Builders Inc to deliver a data mart
i.e. Smart Mart Suit with data base access, data
transformation, reporting and OLAP Tools. Baan linking
its application software to the Gentia Software Inc’s
products to provide OLAP capabilities and for the setup
and monitoring of key performance indicators.
 Oracle offers a data mart designer and builder tool
for creating a data marts as well as offers Oracle
Discoverer, an enduser tool for reporting, charting and
querying data from Oracles Application suite.
 PeopleSoft is going to include closer
integration between PeopleSoft applications
and both the client based Congos Corp.
Power Play multidimensional OLAP tools and
Arbor Software Corp’s multidimensional
Essbase Server. SAP is not behind in this
race. It has previewed its own Business
Information Warehouse product for
synchronizing the R/3 system with data
warehouse that can manage both R/3 and
non R/3 data through the use of a metadata
repository and CLAP engine.
 WEB ENABLING:

 To deliver the self-services and e-commerce

capabilities, ERP vendors are being forced to move
from client/server to browser/server architecture to
web-enable their software.
 Vendors deliver java based application for web
enabling software
 Example, Baan is working to deliver a java based
web interface to all its products and also focusing on
the automation of supply chain relationship via
internet, on e-commerce via Microsoft merchant
server (Site Server) and on using Hyperion Software
Corp.’s Spider-Man technology for report and alert
distribution across the web.
 PeopleSoft delivers java based self service applets
with its version PeopleSoft-7, J.D. Edward is using
java to its One World to be available either through
a Windows client or a web browser.
 Oracle has used java to deliver its web employee
customers and suppliers module.
 In 1997, SAP released 25 web applications for its
version 3.1 of the R/3 and also previewed links to
online catalogs for web based procurement.
 For their first generation of web enabled application,
ERP vendors are all using java rather than Microsoft’s
Actives.
 ERP vendors deliver their universal application on
Java based web interface.
 This makes them to move away from proprietary
technologies to more open tools.
 E.g. SAP solutions and PeopleSoft offers tools for
customerising their products ABAPG and People Tools.
 These tools are proprietary and make the
implementation expensive, whereas many lower-tier
software vendors invites their application from ends
using the commercial tools like Power Builder, VB, or
Microsoft Access ERP vendors are not using these
options, thus the customers have to pay a premium
for ABAG and PeopleTools.
 Oracle is also a tool vendor and uses Oracle Forms,
Developer 2000 and Designer 2000 to develop its
Oracle Application.
 The emerging trends in the enterprise packaged
applications are its integration with latest cutting-
edge technology like sales force automaton (SFA),
customer relationship management (CRAM).
 As the internet based services like e-commerce are
available, the new applications get diverted from
Back-office and Front-office functioned items.
 CONCLUSION

 Enterprise systems are evolving because organizations are

changing.
 To know what the future of ERP holds, one must look to the
changing environment of business and changing business
needs.
 Systems will evolve to meet the business needs. Based on
current trends, these will be increasingly inter-organizational
and global.
 Inter-organizational systems (ERPII) will pose challenges
beyond the ones faced with ERP because of the need to
integrate the diverse systems of different organizations.
 Global supply chains mean inter-organizational systems that
span different cultures and countries. That will bring even
greater challenges due to cultural differences, legal issues, and
more.