ERP

ENTERPRISE
RESOURCE
PLANNING
By İlhan SAĞER 2010503055

INDUSTRIAL ENGINEERING DEPARTMENT OF DOKUZ EYLUL UNIVERSITY

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WHAT İS AN ERP SYSTEM – DEFİNİTİONS

Simplistic Definition
ERP - Enterprise Resource Planning
Detailed Definition
“a business strategy and set of industry-domain-
specific applications that build customer and
shareholder communities value network system
by enabling and optimising enterprise and inter-
enterprise collaborative operational and financial
processes”(Source: Gartner’s Research Note SPA-12-0420)

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ERP – ENTERPRİSE RESOURCE PLANNİNG
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.
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BEFORE ERP

Problems:
Delays, Lost Orders, Keying into different computer systems invite errors

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 Information Flow

Marketing

Information Flow

Sales
ERP STRUCTURE

Information Flow

Manufacturing
Top Management

Material & Product Flow

Information Flow

Logistics

Information Flow
Figure 2-2 Information and material flows in a functional business model

Finance & Accounting

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AFTER ERP

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 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.

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 The Evolution of ERP
System Primary Business Need (s) Scope Enabling Technology
MRP Efficiency Inventory Management Mainframe computers, batch
and Production planning processing, traditional file
and control. systems.
MRPII Efficiency, Effectiveness and Extending to the entire Mainframes and Mini computers,
integration of manufacturing manufacturing firm real-time (time sharing)
systems (becoming cross processing ,database management
functional). systems (relational)
ERP Entire organization Mainframes, Mini and micro
Efficiency (primarily back (increasingly cross Computers, Client server
office), Effectiveness and functional), both networks with distributed
integration of all organizational manufacturing and non- processing and distributed
systems. manufacturing operations databases, Data warehousing, and
mining, knowledge management.
ERPII Efficiency, Effectiveness and Entire organization Mainframes, Client Server
integration within and among extending to other systems, distributed computing,
enterprises. organizations (cross knowledge management, internet
functional and cross technology (includes intranets
enterprise--partners, and extranets).
suppliers, customers, etc.)
IRP Efficiency, Effectiveness and Entire organization and its Internet, Web Service
Enterprise Suite, Integration within and among constituents (increasingly Architecture, wireless
or whatever label all relevant constituents on a global) comprising supply networking, mobile wireless,
gains common global scale. chain from beginning to knowledge management, grid
acceptance end as well as other computing, artificial intelligence.
industry and government
constituents

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WHY İMPLEMENT AN ERP SYSTEM?
 To support business goals
 Integrated, on-line, secure, self-service processes for
business
 Eliminate costly mainframe/fragmented
technologies
 Improved Integration of Systems and Processes
 Lower Costs
 Empower Employees
 Enable Partners, Customers and Suppliers

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HOW SHOULD WE İMPLEMENT ERP SYSTEMS

Obtain the right mix of people, processes

and technology!!
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 TYPİCAL ERP COMPONENTS

Interaction Web Mobile Call Center

e-Mail
Channels Internet Wireless ICM/Telephony

Analytical Marketing Sales Customer Call Center

Applications Intelligence Intelligence Intelligence Intelligence

Business Marketing Sales eCommerce OSS HR

Applications

Installed Base Resources Territories Assignment Engine

CRM
Foundation Tasks Notes Calendar 1-to-1 Fulfillment
TCA Escalations Interaction History Universal Work Q
E-Business
Foundation
Common Data and Object Models, Security, Interfaces, Globalisation

Tech Stack E-business Platform

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 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.

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 AN ERP SOFTWARE : SAP
 SAP’s founders had to develop their first software package
at night on their first customer’s computer
 Computers were not commonly available in 1972
 The first software package was referred to by various
names, including R, RF and R/1
 Between 1978 and 1982, SAP developed a more integrated
software package, called R/2
 R/2 was still a mainframe computer package
 By 1988, SAP had developed R/2 into an international
software program and had sold 1,000 systems

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ERP VENDORS
 Consolidation is currently taking place in the
ERP software business
 PeopleSoft purchased ERP vendor J.D. Edwards in
2003
 Oracle, after a long battle, acquired PeopleSoft in
2005
 SAP and Oracle are now the two largest ERP vendors
 Microsoft is challenging SAP and Oracle to sell ERP
systems to small- and medium-sized businesses

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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

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NEW TECHNOLOGİES İN ERPII
 E-Commerce (Electronic Commerce)
 M-Commerce (Mobile & Wireless Technologies)
 C-Commerce (Collaborative Commerce)
 Middleware
 Enterprise Portal Technologies
 Web Services
 RFID
 Analytical Capabilities (Data Warehousing & Data Mining)
 CRM, SCM, SRM
 Knowledge Management
 Business Intelligence

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 DİFFERENCE BETWEEN ERP & ERPII
Six key differences between ERP and ERP II Systems
Keys ERP ERPII

Traditional ERP was concerned with
Role optimizing an enterprise, Internal
optimization.
ERP systems focused on manufacturing
Domain and distribution.
As ERP systems cross sectors and
segments, they will no longer be able to
Function present all things to all people.
ERP II systems are about optimizing the
supply chain through collaboration with
trading partners.
ERP II systems will cross all sectors and
segments of business.
ERP II vendors to pick the industries in
which they’re going to play, and focus on
providing deep functionality for those users.

In ERP systems, the processes were ERP II systems will connect with trading
Process focused on the four walls of the partners, to take those processes beyond
enterprise. the boundaries of the enterprise.
Old ERP systems were monolithic and ERP II systems will be Web-based, open to
closed. 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 information
Data generated and consumed within the will be available across the supply chain to
enterprise. authorized participants.
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RETURNS FROM THE ERP INVESTMENT
 ERP eliminates redundant effort and duplicated data, resulting in
reduced personnel needs
 ERP systems can help produce goods and services more quickly,
resulting in increased sales volume
 An ERP system may be required to compete with competitors who
have effectively implemented ERP systems
 ERP systems can reduce frustration resulting from the inability to get
accurate and timely data
 More accurate and timely data can improve external customer
relations
 The payoff from ERP systems can occur over many years, when other
factors may also affect the company, making the return hard to
calculate

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 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.

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CONCLUSİON ( CONT.)

 ERP systems provide a mechanism for implementing

systems where a high degree of integration between
applications is required
 The Business Case or Value Proposition for
implementation must be outlined
 To successfully implement a proper mix of people,
processes and technology should be maintained

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THANKS FOR YOUR ATTENTION!!!

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