Enterprise Resource Planning (ERP)
The need for integrated information in business
Learning Objectives Name the main functional areas of operation in a business Identify the kinds of data that each main functional area produces Identify the kinds of data that each main functional area needs Define integrated information systems and state why they are important Understand what an ERP system is and how it evolved
Introduction: Enterprise Resource Planning Manage company-wide business operations Uses a common database and shared management reporting tools
Key Functional Areas of Operation Marketing and Sales Production and Materials Management Accounting and Finance Human Resources
Business Processes Managers now think in terms of business process - a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer Take the customer’s perspective
Business Processes Cut Across Functional Lines
Purchasing a new computer - customer is not concerned about how computer was marketed or how its components were purchased or how it was built, or the route the delivery truck took - just want a working computer at a reasonable price!
Example: Buying a new PC Information on products available Place order quickly, maybe obtain financing Quick delivery 24 Hour help
To do this, company needs to: Make sure functional areas are integrated Information on customer configuration must be up-to-date Manufacturing needs configuration from sales If financing is required, that information from sales is needed in accounting
Functional Areas and Business Processes of a Very Small Business Marketing and Sales Production and Materials Management Accounting and Finance Human Resources
Functional Area Information Systems Potential inputs and outputs for each functional area Different kinds of data and usage of data
Marketing and Sales Determine pricing Take customer orders Create sales forecast
Production and Materials Management Planning Need accurate forecasts from Marketing and Sales Compare costs with Accounting
Accounting and Finance Record transactions Summarize data
Human Resources Recruit Train Evaluate Compensate
Evolution of Information Systems to Meet Integration Needs of Business Prior to 1960, all systems were paper based Data entry, storage, retrieval were slow, labor-intensive processes
Computer Hardware and Software Development The first business computers mainframes (huge computers) performed repetitious data processing tasks Computers smaller and faster - the PC is born!
Software proliferates - release of PC software gave people control over their own computing
Early Attempts to Share Data You may have heard the term Client/Server architecture: this was and is a way to share data residing on individual PCs By the end of the 1980s, the hardware and software needed to support the development of integrated systems, like ERP systems, was in place: fast computers, network access and centralized database capability
ERP Systems Software to allow all business areas to be integrated -- finance, sales, production, etc.
Interactive and real-time processing Users interact with computer screen, not printed data Major advantage: access to common data across business functions -- eliminated redundant data and communications lags
Questions about ERP Is it for every company?
Is the software flexible? How long does it take to implement?
How costly is it?
How much profit should you expect? How long does it take to see an ROI? Why do some have more success while others fail?