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    Nterprise Esource Lanning: By: Rahul Gupta

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    Rahul Gupta
    ERP systems integrate key business functions like marketing, production, accounting, and human resources onto a single computer system. This allows information to flow seamlessly between departments and automates business processes. While ERP systems promise benefits like reduced costs and improved productivity, implementations often face challenges like high expenses, customization limitations, and resistance to standardized business processes.

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    Nterprise Esource Lanning: By: Rahul Gupta

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    Rahul Gupta
    351 views20 pages
    ERP systems integrate key business functions like marketing, production, accounting, and human resources onto a single computer system. This allows information to flow seamlessly between departments and automates business processes. While ERP systems promise benefits like reduced costs and improved productivity, implementations often face challenges like high expenses, customization limitations, and resistance to standardized business processes.

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    ERP systems integrate key business functions like marketing, production, accounting, and human resources onto a single computer system. This allows information to flow seamlessly between departments and automates business processes. While ERP systems promise benefits like reduced costs and improved productivity, implementations often face challenges like high expenses, customization limitations, and resistance to standardized business processes.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    351 views20 pages

    Nterprise Esource Lanning: By: Rahul Gupta

    Uploaded by

    Rahul Gupta
    ERP systems integrate key business functions like marketing, production, accounting, and human resources onto a single computer system. This allows information to flow seamlessly between departments and automates business processes. While ERP systems promise benefits like reduced costs and improved productivity, implementations often face challenges like high expenses, customization limitations, and resistance to standardized business processes.

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    Enterprise

    Resource
    Planning
    By : Rahul Gupta
    Contents
    • What is ERP?
    • ERP Evolution
    • Characteristics of ERP Systems
    • ERP Market Share
    • ERP System – Cost Components ERP
    • Advantages
    • Disadvantages
    • Conclusion
    Historical Context of ERP
    • Historically, companies created “islands of automation”. A
    hodge-podge of various systems that operated or
    managed various divergent business processes.
    • Sometimes these systems were integrated with each other and
    sometimes they weren’t.
    • The total organizational costs of maintaining a patchwork of
    redundant and overlapping systems has grown over the years to
    the point where the cost of maintaining these systems is greater
    than installing a new system.
    What is ERP?
    • It integrates all departments and functions across
    a company onto a single computer system that
    can serve all those different departments’
    particular needs.

    • ERP automates the tasks involved in performing a


    business process
    An example: order
    fulfillment
    Before ERP

    Problems:
    Delays, lost orders, keying into different
    computer systems invites errors
    An example: order fulfillment
    (2)

    Front-Office Functions Back-Office Functions


    ERP Evolution
    1960- MRP (Material Requirement Planning)
    70’s Inventory and process time reduction with new
    production planning systems
    1980’s MRP II (Manufacturing Resource
    Planning )
    Greater reductions due to the integration with
    accounting and human resource systems
    1990’s ERP
    Focused on clients. Real time transactions.
    Corporate optimization.
    2000’s ERP Extended or ERP II
    Focused on clients, optimizing the whole business
    network; including suppliers and clients
    Characteristics of ERP Systems
    • Integration: seamless integration of all the information flowing
    through a company – financial and accounting, human resource
    information, supply chain information, and customer information.

    • Best Practices: ERP vendors talk to many different businesses


    within a given industry as well as academics to determine the
    best and most efficient way of accounting for various
    transactions and managing different processes.
    processes The result is
    claimed to be “industry best practices”.
    Characteristics of ERP Systems

    • The general consensus is that business process change adds


    considerably to the expense and risk of an ERP systems
    implementation. Some organizations rebel against the inflexibility
    of these imposed business practices.
    ERP Package Saturation in U.S.
    Manufacturing Firms
    • Company has installed a package ERP 44.1%
    system
    • Company is currently installing a package 18.8%
    ERP system
    •Company plans to install a package ERP 10.3%
    system within 18 months
    • No ERP system is planned 26.8%
    ERP Market Share
    SAP 25%
    Oracle 14.2%
    Multiple packages 9.8%
    Baan 8.8%
    J.D. Edwards 7.4%
    Peoplesoft 2.5%
    SSA/BPCS 2.5%
    QAD 2.5%
    Other packages 27.3%
    ERP System – Cost Components
    Software 30.2%
    Consulting 24.1%
    Hardware 17.8%
    Implementation Team 13.5%
    Training 10.9%
    Other 3.3%
    Source: Enterprise Resource Planning Survey of US Manufacturing Firms, Mabert, Soni
    and Venkatraman, Production and Inventory Management Journal, 2000
    Hidden costs of ERP
    • Integration and testing
    • Data conversion
    • Data analysis
    • Replacing your best and brightest
    • Implementation teams can never stop
    • Waiting for ROI
    • Post-ERP depression
    Advantages
    • design engineering (how to best make the
    product)
    • Reduction of personnel
    • Increased productivity
    • Increased visibility of corporate data
    • Improved on-time delivery performance
    • Improved responsiveness to customer
    Benefits of Implementing ERP
    Disadvantage )

    • Customization of the ERP software is limited. Some customization may involve changing of
    the ERP software structure which is usually not allowed
    • ERP systems can be very expensive to install often ranging from 30,000 to 500,000,000 for
    multinational companies.
    • ERP vendors can charge sums of money for annual license renewal that is unrelated to the
    size of the company using the ERP or its profitability.

    • Once a system is established, switching costs are very


    high for any one of the partners (reducing flexibility and
    strategic control at the corporate level). Once a system is
    established, switching costs are very high for any one of
    the partners (reducing flexibility and strategic control at the
    corporate level).
    ERP Failure
    Standish Group Study of ERP Implementations:
    • 35% are Cancelled
    • 55% overrun their budgets
    • Less than 10% are on time and under budget.
    ERP Failure
    Standish Group Study of ERP Implementations:
    Implementation Averages
    • Cost: 178% over budget
    • Schedule: 230% longer
    • Functionality: –59%
    – or: the system will only perform 41% of the
    functions it was intended to perform.
    Summary

    • Companies that manufacture products to sell have these


    basic functional areas:
    – Marketing and Sales
    – Production and Materials Management
    – Accounting and Finance
    – Human Resources
    • Functional areas are served by information systems
    Summary Continued

    • Employees in one functional area need information


    from another to do their job
    • Today, business managers think in terms of business
    processes rather than functional areas. ERP
    software encourages this new thinking

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