Enterprise Resource Planning
• Enterprise Resource Planning Systems is a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in the firm
• This integration is accomplished through a database shared by all the application programs
ERP can be considered an initiative launched to better manage business processes across the organization using a common, integrated database, shared data management applications and reporting tools.

Enterprise Resource Planning - Background
An organization’s critical business processes often cut across many of its functional units.
In most organizations, each process has its own data needs and applications that operate as distinct systems.
The results of this approach:
- Function-Centric view in the business units
- Operational Inefficiencies
Example: A customer order

Enterprise Resource Planning - Background
ERP evolved from MRP (Material Requirements Planning) and MRP II.
Customer orders Forecasts
Master production schedule
Bills of materials
Routings
Time standards
MRP explosion
Inventory records
Inventory transactions
Material requirements plan
Manufacturing resource plan
Cost and financial data

Enterprise Resource Planning - Background
“Instead of having one set of numbers for the operating system in manufacturing and one set kept by the financial people
– once the manufacturing people have numbers that are valid, the financial people can use these to get their numbers. Of course, whenever there are two systems – the numbers are bound to be different. With MRP
II, everybody can be working with the same set of numbers, but that’s only the technical difference. The big difference comes in the way management uses these tools…MRP II becomes a company game plan for manufacturing, marketing, engineering, and finance.”
Oliver Wright, The Executives Guide to Successful MRP II, 1982.

Enterprise Resource Planning – Background Timeline

ERP Functional Components
Financial
Accounting
Customer Management
Order Management
Configuration Management
Billing
Rebate Processing
Sales & Distribution
Functional
Components
Largest and most complex
Materials Management
Plant Maintenance
Quality Management
Production Planning and Control
Project Management
Budgeting
Manufacturing
& Logistics
Accounts Payable
Accounts Receivable
General Ledger
Capital Investments
Open Item Management
ABC (costing approaches)
Asset Management
Human Resources
Payroll
Benefits
Scheduling
Personnel Development
Workforce Planning
Travel Expense Accounting

SAP System Functional Components

Reasons for implementing ERP
• Desire to standardize and improve processes
• To improve the level of systems integration
• To improve information quality
• Integrate Financial Information
• Integrate Customer Order Information
• Standardize and Speed Up Manufacturing Processes
• Reduce Inventory
• Standardize Human Resources Information
• Global Outreach
• Avoid Redundancies

ERP Disadvantages
• Time-consuming
• Expensive
• Fit
• Vendor Dependence
• Too many features, too much complexity
• Process Rigor (Standardized)

The General ERP Process
1.
Product Analysis
2.
Module Selection
3.
Process Analysis
4.
Data Analysis
5.
Applications Integration
6.
Testing and Installation
7.
Employee Training
Average Implantation Time
24+ Months
Meta Group Study

How Much Does an ERP Implementation Cost?
1.
The size and geographic distribution of the company.
2.
The size of the ERP package.
3.
Hardware
4.
Software
5.
Consultants and Analysts Fees
6.
Time
7.
Training
A large company may spend from $ 50 to $ 100 M or more USD for an integrated ERP implementation.
Meta group survey; 63 companies (large and small) in a range of industries.
Average cost $ 15,000,000.
High $300 M, $300,000,000 USD
Low $ 400 K, $400,000 USD

Successful ERP Implementation Criteria
• Top Management Support
• Good Cost Estimation
• Realistic Expectations
• ERP Implementation
• Cultural Impact
• Training
• Customization and Integration

Hillerich & Bradsby
About Hillerich & Bradsby

Additional ERP Resources
• SSA Global Technologies – www.ssaglobal.com
• SAP – www.sap.com
• Oracle/PeopleSoft – www.oracle.com
• IBM http://www-03.ibm.com/solutions/businesssolutions/erp
• Microsoft (Great Plains) – www.microsoft.com
• Also, American Software, i2, Manugistics

Additional ERP Resources

Additional ERP Resources