Enterprise Resource Planning (ERP)Enterprise Systems (ES)Part 2 BCIS 485 College of Business New Mexico State University
Knowledge workers • Thomas Davenport, Harvard University, says this is the skill set people should have to be effective in today's technologies and business environment. • Technical skills. • Knowledge of enterprise software and software tools for analysis and presentation. • Analytical skills. • Understand statistical models, assumptions and constraints in order to interpret analyses. • Knowledge of data. • What data are available and how to get it. • Knowledge of business. • What are the business' goals are. • How data analysis may help achieve goals. • Communication/partnering skills. • Coordinate and work with others to combine knowledge and skills. • Communicate effectively.
Impetus for ERP Implementation • IT now offers the computing resources needed at a reasonable cost. • During the 1990s the “Y2K problem” gave companies the opportunity to implement ERP while fixing the Y2K problem. • Y2K problem = Legacy (old) programs and databases stored years in a two-digit format. • Sarbanes-Oxley Act of 2002 • Tighter control of accounting and financial records and reports. • Multinational corporations • Currency differences • Regulation differences
ERP Implementation Costs • Summary taken from article in CIO (see full article) about a survey about ERP software • Total cost of the average ERP implementation? • SAP = $16.8 million • Oracle = $12.6 million • Microsoft = $2.6 million • Tier II average: $3.5 million (Tier II includes companies besides the industry leaders.) • How long did it take? • SAP = 20 months • Oracle = 18.6 months • Microsoft = 18 months • Tier II average: 17.8 months • Satisfied with the result? • SAP = 73% • Oracle = 62% • Microsoft = 69% • Tier II average: 70%
SAP R/3 and mySAP • R/3 = 3-tiered architecture • mySAP • NetWeaver/Application Server introduced in 2003 • More browser-based functionality • Business Warehouse (BW), Customer Relationship Management (CRM) and other new modules offered
SAP Modules • Sales and Distribution (SD) • Records sales orders, schedules deliveries and holds information about pricing, how and where to ship products, how the customer is to be billed. • Materials Management (MM) • Tracks acquisition of raw materials from suppliers (purchasing or procurement) • Movement of inventory • Goods received • Materials moved to the shop floor • Finished goods moved from shop floor to inventory • Production Planning (PP) • Production is planned, scheduled, released for execution, and confirmed (completed).
SAP Modules • Quality Management (QM) • Helps to plan and record quality-control activities, such as product inspections and material certifications • Plant Maintenance (PM) • Management of resources such as preventive maintenance of plant machinery • Asset Management (AM) • Helps in managing fixed-asset purchases (plant and machinery) and the related depreciation. • Human Resources (HR) • Tracks employee recruiting, hiring, training, payroll and benefits. • Financial Accounting (FI) • Records transactions in the general ledger accounts. • Used to generate financial statements for external reporting purpose
SAP Modules • Controlling (CO) • Used for internal management purposes. The company’s manufacturing costs are assigned to products and to cost centers, so that the profitability of the company’s activities can be analyzed • Project System (PS) • Provides tools for planning and control of special projects like Research and Development or Marketing Campaigns or low-volume, highly complex projects like aircraft or ship construction • Workflow (WF) • A set of tools that can be used to automate any of the activities in R/3. For example, a work flow can be created so that when a shipment is received at the warehouse both the production manager and accounts receivable receive a notice from within SAP.
SAP Newer Modules • Business Warehouse • Provides analysis tools for “mining” historical data for information that might help plan marketing compaigns, better serve customer, etc. • Customer Relationship Management • Provides tools tracking contacts with customer –sales and support contacts. • Others …