Ch 1 Intro to Enterprise Systems for Management
the architecture of the ERP implementation influences the
cost, maintenance, and the use of the system
Go live is one of the most
critical points in a project's sucess
business process reengineering
current business process will need to be changed to use the functionality of an ERP system fully. It is best to make it clear to clients and users that processes will need to be changed, adjusted, or adapted as the ERp system is implemented
the logical provides the
database schemas of entities and relationships at the lowest tier, followed by the core business processes and business logic handled by the system at the second tier. The third tier provides details on the applications that support the various business functions built in to the ERP system. The end users do not ever see the first and second tiers because they interact primarily with the client-user interface application tier that provides them access to the functional applications.
whereas other IT architecture are driven by organizational strategy and business processes, if purchased
ERP architecture is often driven by the ERP vendor package-driven architecture
implications for management
- ERP systems implementation is a complex organizational activity - ERP systems implementation requires strong project management oversight - ERP systems provide improved and added functionality for an organization -ERP systems are set to proliferate globally
before seleccting a vendor, the organizartion must carefully evaluate its current and future needds in enterprise management systems
- looking at the size of the organization in terms of the number of employees that will accessig the ERP application - industry the organization belongs to and the functional areas that the ERP application will be supporing - must review the existing hardware, network, software infrastructure - the resources (money, and people commitment) availiable for implementation
an organization has two choices when implementing ERP:
1. change business processes to match the software's functionality or 2. modify the ERP software
ebusiness and ERP are more complementary technologies rather than competing technologies as predicted earlier
1. e-Business technology focus has been on linking a company with its external partners and stakeholders, whereas ERP focus has been on integrating the functional silos of an organization into an enterprise application. e-Business technologies that have emerged as successful over the decade (e.g., business-to-consumer and business-to-business) have generally focused on market growth by selling products and services to new consumers and markets. On the other hand, ERP technology has been successful in integrating business processes across the functional spectrum of the organization and in providing a central repository of all corporate data, information, and knowledge, thereby increasing organizational efficiency and worker productivity. 2. e-Business is a disruptive technology, whereas ERP is adaptive technology. e-Business practically transformed the way business operates in terms of buying and selling, customer service, and its relationships with suppliers. This caused a lot of disruptions in organizational strategy, structure, power, and the like. ERP has emerged as an adapter by merging the early data processing and integration efforts within a large corporation. It has been very successful in aligning and integrating accounting, finance, human resource, and manufacturing technologies by aligning business processes with information processing logic and in transforming these organizations from pure hierarchical structures to matrix and other hybrid or flexible organizational structures. Thus, even though e-Business caused a lot of disruptions in business, ERP helped these businesses survive by allowing them to adapt quickly to these disruptions. 3. Finally, the early focus of e-Business was on communication (e-mail), collaboration (calendaring, scheduling, group support), marketing and promotion (Web sites), and electronic commerce. These can all be considered front-office functions that involve user and/or customer interactions. In contrast, the focus of ERP systems was mainly on data sharing, systems integration, business process change, and improving decision making through the access of data from a single source. These functions can all be considered back-office functions helping the operational efficiencies of employees, vendors, and suppliers. For example, e-commerce, which facilitates selling of products online, requires tremendous back-end support, namely, fulfillment of the online order. This task can be efficient if an organization has an ERP system in place.
management is generally categorized into three levels:
1. strategic 2. middle or mid-management 3. operational
an effective response to stabilization issues will determine how well the system is accepted by the end user and management . five areas of stabilization are important:
1. training for the end users 2. reactive support (help desk for troubleshooting) 3. Auditing support to make sure data quality is not compromised by new system 4. data fix to resolve data migration and errors that are revealed by audits 5. new features and functionalities to support the evolving needs of the organization
The real value of BPM comes from gaining visibility and control of the business process.
BPM can activate the process, orchestrate the people, data, and systems that are involved in the process, give the business managers a detailed view into how the process is operating and where the bottlenecks are occurring, and highlight possible process optimization.
while e-Business systems are better for sharing unstructure data and collaboration,
ERP are better for sharing structured or transaction data; also ebusiness focus was external integration (interorganizational), while ERP systems' initial focus was on internal data integration
change management
For major system implementations, the change management role is essential because it prepares an organization for changes to how its business is done. In implementing any new system, communicating, preparing, and setting expectations are just as important as training and supporting the implementation.
System: inventory management control 1960s
Platform: mainframe legacy using third generation software With a focus on efficiency, these systems were designed to manage and track inventory of raw materials and guide plant supervisors on purchase orders, alerts, and targets, providing replenishment techniques and options, inventory reconciliation, and inventory reports
There should also be clear and well-defined business objectives written and communicated to the organization
The project methodology needs to be documented, reviewed, and fully understood by everyone involved in the project once objectives are outlined.
Capability maturity model
a model that exists to help organizations understand and access their ability to successfully implement the ERP system on their own or with the help of a consultant This model has five levels of organizational capability, with level one being the least capable and level five the most capable.
There has been a widespread increase in corporate white-collar crimes such as unscrupulous accounting and marketing practices, privacy violations, unauthorized data sharing, spam mail, viruses, snooping, phishing, and identity theft. Compliance management due to such regulations as the Sarbanes-Oxley (SOX) Act and the Health Insurance Portability and Accountability Act (HIPAA) are fast-growing software support areas
and several ERP vendors have started providing software modules or tools to support compliance management.
enterprise resource planning (ERP) systems
are the specific kind of enterprise systems to integrate data across and be comprehensive in supporting all the major functions of the organization
crucial role of ERP in business, besides integration of functional applications and organization information is to
better position the organization to change its business processes
the ERP architecture helps the implementation team
build the ERP system for an organization
stabilization is the time from
go live to avoout 9 days after, or until the number of issues and problems has been reduced
the key components for an ERP implementation are
hardware, software, database, processes, and people
business process
is a series of tasks or activities grouped to achieve a business function or goal
software leasing or Software as a service (Saas)
is an emerging model for outsourcing for many companies that do not want to invest large amounts of money on in-house ERP implementations
business process management (BPM)
is the understanding, visibility, and control of business processes. A business process represents a discrete series of activities or tasks that can span people, applications, business activities, and organizations BPM has a prescribed process or methodology that should be followed to help an organization document their business processes and understand where they are being used throughout their business. The initial stage of BPM is to create an "as-is" process map that defines the current process. The as-is process is then used as a baseline for determining where the process may be improved.
a flexible architecture is best because
it allows for scalability as the needs of the organization change and grow
the two types of architecture for an ERP system are
logical and physical or tiered
When selecting a methodology,
make sure it is robust and addresses issues at all components and levels of the enterprise system.
System: extended ERP or ERP II 2000s
platform: client-server using web platform, open source and integrated with fifth-generation applications like SCM, CRM, SFA. Also available on Software as a Service (SaaS) environments with the focus on agility and customer-centric global environment, these systems extended the first-generation ERP into interorganizational systems ready fr e-Business operations. They provide anywhere anytime access to resources of the organization and their partners; additionally, they integrate with newer external business modules such as supply chain management, customer relationship management, sales force automation (SFA), advance planning and scheduling (APS), etc.
System: manufacturing requirements planning II 1980s
platform: mainframe legacy using fourth-generation database software and manufacturing applications with a focus on manufacturing strategy and quality control, these systems were designed for helping production managers in designing production supply chain processes - from product planning, parts purchasing, inventory control, and overhead cost management to product distribution
System: materials requirement planning (MRP) 1970s
platform: mainframe legacy using third-generation software with a focus on sles and marketing, these systems were designed for job shop scheduling processes. MRP generates schedules for production planning, operations control, and inventory management
system: ERP 1990s
platform: mainframe or client-server using fourth-generation database software application to support most organizational functions with a focus on application integration and customer service, these systems were designed for improving the performance of internal business processes across the complete value chain of the organization. They integrate both primary business activities like product planning, purchasing, logistic control, distribution, fulfillment, and sales; additionally, they integrate secondary or support activities like marketing, finance, accounting, and human resources
For an ERP system to be implemented successfully,
project management must provide strong leadership, a clear and understood implementation plan, and close monitoring of the budget
most purchased ERP systems today are minimally modified (or as-is) to protect the investment in the system
this is sometimes called a "vanilla" implementation
ERP system implementations are very risky and using a well-defined project plan with a proven methodology will assist in managing those risk the key to a successful implementation, therefore, is to use a proven methodology,
to take it one step at a time, and to begin with an understanding of the ERP life cycle
the logical architecture, focuses on supporting the requirements of the end users
whereas the physical architecture focuses on the efficency (cost, response time, etc) of the system
the role of system architecture is similar to the architecture of a home,
which takes the vision of the homeowners with the system components similar to the wiring, plumbing, and furnishing of a home
Vendors need to be evaluated on the following:
• Business functions or modules supported by their software • Features and integration capabilities of the software • Financial viability of the vendor as well as length of time they have been in business • Licensing and upgrade policies • Customer service and help desk support • Total cost of ownership • IT infrastructure requirements • Third-party software integration • Legacy systems support and integration • Consulting and training services • Future goals and plans for the short and long term
the business benefits and limitations of ERP systems are as follows:
• Increasing agility of the organization in terms of responding to changes in the environment for growth and maintaining the market share in the industry. • Sharing of information across the functional departments means employees can collaborate easily with each other and work in teams. • Linking and exchanging information in real time with its supply chain partners can improve efficiency and lower costs of products and services. • Quality of customer service is better and quicker as information flows both up and down the organization hierarchy and across all business units. • Efficiency of business processes are enhanced due to business process reengineering of organization functions. • Retraining of all employees with the new system can be costly and time consuming. • Change of business roles and department boundaries can create upheaval and resistance to the new system. • Reduction in cycle time in the supply chain from procurement of raw materials to production, distribution, warehousing, and collection
the system benefits and limitations of ERP systems are as follows:
• Integration of data and applications across functional areas of the organization (i.e., data can be entered once and used by all applications in the organization, improving accuracy and quality of the data). • Maintenance and support of the system improves as the IT staff is centralized and is trained to support the needs of users across the organization. • Consistency of the user interface across various applications means less employee training, better productivity, and cross-functional job movements. • Security of data and applications is enhanced due to better controls and centralization of hardware, software, and network facilities. Complexity of installing, configuring, and maintaining the system increases, thereby requiring specialized IT staff, hardware, network, and software resources. • Consolidation of IT hardware, software, and people resources can be cumbersome and difficult to attain. • Data conversion and transformation from an old system to a new system can be an extremely tedious and complex process. • Retraining of IT staff and personnel to the new ERP system can produce resistance and reduce productivity over a period of time.