Enterprise Resource Planning
David Haigh
OISM 470W
The Pennsylvania State University
Today we will be covering:
 What exactly is ERP?
 History of ERP.
 How ERP can be used in our company?
 ERP Implementation.
 Company Examples.
 Training Exercise.
 Summary of today’s training.
What is ERP?
 ERP software integrates all departments
and functions onto a single system that can
serve the needs of the entire company.
 Some of ERP’s functions include:
•
•
•
•
Bookkeeping & Accounting
Human Resource Management
Planning Production
Supply-Chain Management
More Of What ERP can do
History of ERP
ERP has its roots in the MRP and MRPII
systems of the 70’s and 80’s.
 Came about as companies realized that the
management and flow of information was just
as important as materials and inventory
management.
 ERP has also evolved considerably with
computer and technology advances.

How we can use ERP
Update our legacy systems.
 Cut down on inter-office paperwork.
 To standardize our manufacturing
processes and increase
productivity.
 Will give us more information and
better access to our suppliers and
customers.

Brainstorming Session
What are the employee’s
looking for in an ERP
system?
 Are there any ideas on how
else we can use ERP to
improve our processes?

Implementation
Steps for implementation:
• Cost analysis
• Blueprinting of Business Processes
• Staff Training
• Integration
• Data Conversion
• Going live with ERP
Cost Analysis
 Costs to implement an ERP system is not
just a ‘one-time thing.’
 Real costs are in constant training,
upgrading, and maintenance.
 Average Total Cost of Ownership (TCO) is
$15 million.
 Benefits are not seen right away.
Blueprinting of Business
Processes
Business processes must be modeled to fit
ERP software.
• A blueprint can be modeled in-house.
• We can choose from a ready made
blueprint supplied by an ERP software
company.
Pro’s of Blueprinting
 Blueprints are made by industry
professionals.
 Blueprints can greatly optimize business
processes.
 Flexibility in choosing.
 Few companies can afford a zero-based
approach.
Con’s of Blueprinting
 Professionals may still not know enough.
 Pre-designed blueprints may still not be
enough.
 There are so many blueprints its
overwhelming.
Staff Training
 Most overlooked of ERP implementation
costs.
 Needed to get the most out of new software.
 Training is needed to make sure employees
do not abandon the system.
Integration
 Installing new equipment and software.
 Customization if needed.
 Testing-Testing-Testing
Data Conversion
Moving Data:
• Employee Records
• Company Information
• Customer and Supplier
Records, etc.
Going live with ERP
Final changeover to
ERP system.
 Real test of software.
 Most costly errors can
happen at this stage.

3 Steps to Integration:
Implement entire business at
once.
 Implement one business unit
at a time and make sure its
right.
 Implement one business unit
until its right and then
implement the rest all at
once.

ERP & Raytheon Aircraft
 $2.7 billion subsidiary of Raytheon Co.
 Implemented SAP in just over 1 year.
 Total cost of about $55 million.
 Eliminated 30 legacy systems.
 Integrated four manufacturing sites and
fifteen airport service stations.
Raytheon’s Training
 $5.5 million went into training employees.
 5,000 employees trained for 20
hours/week months before the go-live date.
 150 go-live managers worked full-time on
SAP before go live date.
Energy Northwest
Chose an in-house
approach.
 Only implemented
accounting functions.
 Only $2 million in
expenses.

Training Exercise
Employee teams can now break off and
decide if ERP is right for us. Some thing to
look at are:
•
Can we afford implementation.
•
How and where can this help us.
•
How will our corporate culture be
affected?
Summary
 ERP is a business wide common system.
 Can integrate all of our business units.
 Very expensive and time intensive.
 Proper implementation can help the
business function better.
 Poor implementation can hurt the business
immensely.
 Training
Bibliography
Callaway, Erin. ERP-The Next Generation: ERP is Enabled For E-Business.
Charleston, SC: Computer Technology Research, 2000.
Curran, Thomas A. and Andrew Ladd. SAP R/3 Business Blueprint. New
York: Prentice Hall, 2000.
Hoffman, Tom. “ERP: Not Just for HR anymore.” Internet.
Http://www.computerworld.com/cwi/story/0,1199,NAV4772_STO43432,00.html. 13 February 2001.
Jordan, Win G. and Kip R. Krumwiede. “Reaping the Promise of Enterprise
Resource Systems.” Strategic Finance October 2000:48-52.
Bibliography (cont.)
Konicki, Steve. “Fast Deployments at a Price.” InformationWeek October
2000: 77-96.
Ptak, Carol A. and Eli Schragenheim. ERP: Tools, Techniques, and
Applications for Integrating the Supply Chain. New York: St. Lucie
Press, 2000.
Slater, Derek. “The ABC’s of ERP.” Internet.
Http://www.cio.com/forums/erp/edit/122299_erp_content.html. 14
February 2001.
Wah, Louisa. “Give ERP a Chance.” Management Review March 2000: 2024.