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McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, All Rights Reserved
Chapter 12
Integrating the Organization from End to End – Enterprise
Resource Planning
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Learning Outcomes
12.1 Describe the role information plays in enterprise resource planning systems
12.2 Identify the primary forces driving the explosive growth of enterprise resource planning systems
12.3 Explain the business value of integrating supply chain management, customer relationship management, and enterprise resource planning systems
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Traditional view of systems
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Traditional View of the Systems
• Within the business: There are functions, each having its uses of information systems
• Outside the organization’s boundaries: There are customers and vendors
• Functions tend to work in isolation
• CRM and SCM and ERP are steps forward in solving this problem
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INTRODUCTION
• Enterprise Resource Planning [ERP]
integrates all departments and functions throughout an organization into a single IT system so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations
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Enterprise Systems - ERP
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Enterprise Resource Planning (ERP)
• At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system
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Enterprise Resource Planning (ERP)
• ERP systems automate business processes
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Bringing the Organization Together
ERP – The organization before ERP
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Bringing the Organization Together
• ERP – bringing the organization together
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Major Problems of Isolated Functional Systems
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Major ERP vendors
SAP is the largest ERP vendor in the world. It is second largest software company after Microsoft.
Oracle PeopleSoft
Microsoft
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The Evolution of ERP
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Integrating SCM, CRM, and ERP
• SCM, CRM, and ERP are the backbone of e-business
• Integration of these applications is the key to success for many companies
• Integration allows the unlocking of information to make it available to any user, anywhere, anytime
• Many ERP vendors offer SCM and CRM components
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Integrating SCM, CRM, and ERP• General audience and purpose of SCM, CRM and ERP
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Integration Tools
• Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together– Middleware – several different types of software
which sit in the middle and provide connectivity between two or more software applications
– Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduce the time necessary to develop solutions that integrate applications from multiple vendors
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EAI improves connectivity
• If integration is applied without following a structured EAI approach, point-to-point connections grow across an organization resulting in a tangled mess that is difficult to maintain. This is commonly referred to as spaghetti.
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Enterprise Resource Planning’s Explosive Growth
– There are an estimated 70,000 ERP installations worldwide with over 35 million users
• ERP solutions are growing because:
– ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses
– ERP addresses the need for global information sharing and reporting
– ERP is used to avoid the pain and expense of fixing legacy systems
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Characteristics of ERP
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Benefits of ERP
• Benefits– Processes effective and efficient– Organizations do not need to reinvent processes
• Built-in process based on Industry best practices
– Reduce lead time (The time between the initiation and completion of a production process)
– No data inconsistency problem– Lower costs – in Long Run– Higher profitability
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Problems with ERP
