Paper 6 Topik-Topik Lanjutan Sistem Informasi
“ERP Implementation”
Group 3:
-
Andiga Putra
Ferri Gunawan
Ivan Jonathan
Stephen Sutandhi
William
1501163073
1501143651
1501183075
1501142825
1501169934
Abstract
The purpose of doing this research is to know deeply about ERP system
implementation. We will be analyzing the advantages and disadvantages of the
implementation in company, example of ERP Tools, what kind of industries mostly
implement the ERP system, and how it brings profits for companies.
The research methodology that is used in this research is internet searching. We
search for references from journals, articles, and Internet. The information should also be
analyzed and gathered because they come from various sources.
We expect readers to be familiar with the implementation of ERP systems by
analyzing its advantages and disadvantages, recognizing ERP tools. It is also expected to
realize how effective an ERP system can deliver to an enterprise in many aspects, especially
profits in every aspects.
The conclusion of this research is that ERP system is a system that focuses on
reducing cost and time by integrating data so that data flows seamlessly and transparently
within an enterprise. Most companies that implement ERP system gain huge profits from it.
But, if the implementation of ERP system is not based on the business process, then it can
bring disasters.
Keywords
Enterprise Resource Planning (ERP), ERP Tools, Profits, Benefit Framework, Software,
Advantages, Disadvantages, SAP R/3
CHAPTER 1
INTRODUCTION
1.1. Background
In modern era like nowadays,
the company using ERP for their business
processes increases highly in total within a year, when you search ERP on the website,
the total information that is provided can be over whelming and little confusing for
certain people. Every website seems to have their own definition of ERP, and one ERP
implementation can vary widely from the next. However with this flexibility
differences can make ERP such a powerful business tool.
Company are required to have automated systems which can monitor and
complete various tasks across the companies. The system expected can be integrated for
avoiding data redundancy and secured for avoiding data theft. The system also expected
to maintain relationships with suppliers and customer. This could help the company and
supplier to deliver materials for the company in real time.
The definition of ERP is an enterprise-wide information system that provide
information and coordinates all resources and activities within the business
organization ( Fourth Generation Software, 2011). ERP help to improve performance
management, and helps in managing connections outside stakeholders.
1.2. Scope
The Scope of this paper is not only explain Enterprise Resource Planning in detail, but
also to provide answers for:
1. Advantage and disadvantage of ERP
2. Kind of industry that have ERP application
3. Example of ERP tools
4. The effectiveness of using ERP
5. Do ERP Increase Profit ?
1.3. Objectives and Benefits
The objectives of this paper are
a. Identify the advantages and disadvantages of ERP implementation
b. Analyse the company that using ERP
c. Identify the tools in the ERP implementation
d. Analyse the effectiveness of ERP implementation and its effect for company.
The benefits of this paper are
a. We can know the information about the ERP in more detail
b. Learn and understand one tools that the company using in ERP implementation
c. Understand the effective ERP can contribute to the industry
d. Learn the impact from implement ERP into the company.
1.4. Research Methodology
The methodology used in this paper is Internet searching. We search for various
informations regarding ERP on the internet, then we gather it, analyze which ones that
suits the questions perfectly. Finally, after all answers are provided, we change some
difficult words that are hard to understand, replacing it with daily words that we can
understand well.
Chapter 2
Literature Review
2.1 Definition of Enterprise Resource Planning (ERP)
Enterprise resource planning (ERP) is business management software, usually a suite of
integrated application that a company can use to store and manage data from every stage of
business, including:





Product planning, cost and development
Manufacturing
Marketing and sales
Inventory management
Shipping and payment
ERP provides an integrated real-time view of core business processes, using common
databases maintained by a database management system. ERP systems track business
resources such as cash, raw materials, production capacity and the status of business
commitments: orders, purchase orders, and payroll. The applications that make up the system
share data across the various departments (manufacturing, purchasing, sales, accounting, etc.)
that entered the data. ERP facilitates information flow between all business functions, and
manages connections to outside stakeholders.
2.2 Definition of Hardware
Hardware or to be specific computer hardware is the collection of physical elements
that constitutes a computer system. Computer hardware refers to the physical parts or
components of a computer such as the monitor, mouse, keyboard, computer data storage,
hard drive disk (HDD), system unit (graphic cards, sound cards, memory, motherboard and
chips), etc. all of which are physical objects that can be touched.
2.3 Definition of Software
Computer software, or simply software, also known as computer programs, is the
non-tangible component of computers. Computer software contrasts with computer hardware,
which is the physical component of computers. Computer hardware and software require
each other and neither can be realistically used without the other.
Computer software includes all computer programs regardless of their architecture;
for example, executable files, libraries and scripts are computer software. Yet, it shares their
mutual properties: software consists of clearly defined instructions that upon execution,
instructs hardware to perform the tasks for which it is designed.
Based on the goal, computer software can be divided into:



Application software uses the computer system to perform useful work or
provide entertainment functions beyond the basic operation of the computer
itself.
System software is designed to operate the computer hardware, to provide
basic functionality, and to provide a platform for running application software.
System software includes:
1. Operating system, an essential collection of computer programs that
manages resources and provides common services for other software.
Supervisory programs, boot loaders, shells and window systems are
core parts of operating systems. In practice, an operating system comes
bundled with additional software (including application software) so
that a user can potentially do some work with a computer that only has
an operating system.
2. Device driver, a computer program that operates or controls a
particular type of device that is attached to a computer. Each device
needs at least one corresponding device driver; thus a computer needs
more than one device driver.
3. Utilities, software designed to assist users in maintenance and care of
their computers.
Malicious software or malware, computer software developed to harm and
disrupt computers. As such, malware is undesirable. Malware is closely
associated with computer-related crimes, though some malicious programs
may have been designed as practical jokes.
2.4 Definition of Information
Information refers to an organized set of data that is meaningful or useful to some or
specific receiver. (Rainer & Cegielski, 2011).
Information is data that have been perfected and organized through processing for
intelligence purposes (Whitten, Bentley, & Dittman, 2004).
Information has to possess several characteristics:
1.
Relevance: the information should be related to the decision to be taken in order to
achieve the set goals.
2.
Accurate: information should be reliable
3.
Punctual: the information must be received in a timely manner. If the information is not
received on time, then that information has less or no meaning at all.
Completeness: information should be able to provide a complete picture of an issue or to
provide closure.
2.5 Definition of System
A system is defined as a collection of interrelated components that function together
to achieve an outcome (Satzinger, Jackson, & Burd, 2010).
System is a set of components, which implement the requirements for modeling, functions,
and interfaces (Mathiassen, Munk-Madsen, Nielsen, & Stage, 2000).
The system has three main components, so that the system can function or interact properly:
1. Input: involves the capture and assembly of the various elements that enter the system
to be processed.
2. Process: involves processing or transformation that turns inputs into outputs.
Output: involves the process of transferring the elements that have been processed through
the stages of transformation, resulting in a desired result.
2.6 Definition of Information System
Information system is defined as collections of interrelated components that collect,
process, store, and provide as output the information needed to complete business tasks
(Satzinger, Jackson, & Burd, 2010).
Information system is an arrangement of people, data, processes, information presentation,
and information technology that interact to collect, process, store, and provide the
information output needed to support an organization(Whitten, Bentley, & Dittman, 2004).
Information system consists of:
1. Customer Relationship Management (CRM) System: A system that supports
marketing, sales, and service operations.
2. Supply Chain Management (SCM) System: a system that integrates products, product
development, acquisition, manufacturing, and management of inventory.
3. Accounting and Financial Management (AFM) System: a system that records
accounting information to produce financial statements and other reports used by
investors and creditors.
4. Human Resource Management (HRM) System: a system that supports tasks
associated with employee work, study, allowances, recruitment and training
5. Manufacturing Management System (MMS): a system that controls internal
production processes, which transform raw materials into goods.
6. Knowledge Management System (KMS): a system that supports storage and access to
documents from every part of the organization or company.
7. Collaboration Support Systems (CSS): a system that allows the distribution of tasks to
individuals and groups geographically.
8. Business Intelligence System (BI): a system that supports strategic planning and
executive decision-making.
CHAPTER 3
DISCUSSION
3.1 Advantages & Disadvantages of ERP
ERP or Enterprise Resource Planning is an important enterprise application that
integrates all the individual department functions into a single software application.ERP
Systems make it easier to track the workflow across various departments. They reduce the
operational costs involved in manually tracking and (perhaps) duplicating data using
individual & disparate systems. In this paper, let us have a look at the advantages and disadvantages of implementing ERP (Enterprise Resource Management) Software Systems.
Advantages of ERP System:
1. Complete visibility into all the important processes, across various departments of an
organization (especially for senior management personnel).
2. Automatic and coherent workflow from one department/function to another, to ensure a
smooth transition and quicker completion of processes. This also ensures that all the interdepartmental activities are properly tracked and none of them is ‘missed out’.
3. A unified and single reporting system to analyze the statistics/status etc. in real-time,
across all functions/departments.
4. Since same (ERP) software is now used across all departments, individual departments
having to buy and maintain their own software systems is no longer necessary.
5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence
functionalities, that can give overall insights on business processes and identify potential
areas of problems/improvements.
6. Advanced e-commerce integration is possible with ERP systems – most of them can
handle web-based order tracking/ processing.
7. There are various modules in an ERP system like Finance/Accounts, Human Resource
Management, Manufacturing, Marketing/Sales, Supply Chain/Warehouse Management,
CRM, Project Management, etc.
8. Since ERP is a modular software system, its possible to implement either a few modules
(or) many modules based on the requirements of an organization. If more modules
implemented, the integration between various departments may be better.
9. Since a Database system is implemented on the backend to store all the information
required by the ERP system, it enables centralized storage/back-up of all enterprise data.
10. ERP systems are more secure as centralized security policies can be applied to them. All
the transactions happening via the ERP systems can be tracked.
11. ERP systems provide better company-wide visibility and hence enable better/faster
collaboration across all the departments.
12. It is possible to integrate other systems (like bar-code reader, for example) to the ERP
system through an API (Application Programing Interface).
13. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales
forecasting and related activities.
14. ERP systems are especially helpful for managing globally dispersed enterprise
companies, better.
Disadvantages of ERP Systems:
1. The cost of ERP Software, planning,
implementation, etc. is too high.
customization, configuration, testing,
2. ERP deployments are highly time-consuming – projects may take 1-3 years (or more) to
get completed and fully functional.
3. Too little customization may not integrate the ERP system with the business process & too
much customization may slow down the project and make it difficult to upgrade.
4. The cost savings/payback may not be realized immediately after the ERP implementation
& it is quite difficult to measure the same.
5. The participation of users is very important for successful implementation of ERP projects
– hence, exhaustive user training and simple user interface might be critical. But ERP
systems are generally difficult to learn (and use).
6. There maybe additional indirect costs due to ERP implementation – like new IT
infrastructure, upgrading the WAN links, etc.
7. Migration of existing data to the new ERP systems is difficult (or impossible) to achieve.
Integrating ERP systems with other stand alone software systems is equally difficult (if
possible). These activities may consume a lot of time, money & resources, if attempted.
8. ERP implementations are difficult to achieve in decentralized organizations with disparate
business processes and systems.
9. Once an ERP systems is implemented it becomes a single vendor lock-in for further
upgrades, customizations etc. Companies are at the discretion of a single vendor and may not
be able to negotiate effectively for their services.
10. Evaluation prior to implementation of ERP system is critical. If this step is not done
properly and experienced technical/business resources are not available while evaluating,
ERP implementations can (and have) become a failure.
3.2
Kind of Industry that have ERP Application
An ERP system supports most of the business system that maintains in a single
database the data needed for a variety of business functions such as Manufacturing,
Supply Chain Management, Financials, Projects, Human Resources and Customer
Relationship Management.
An ERP system is based on a common database and a modular software design.
The common database can allow every department of a business to store and retrieve
information in real-time. The information should be reliable, accessible, and easily
shared. The modular software design should mean a business can select the modules
they need, mix and match modules from different vendors, and add new modules of
their own to improve business performance.
Ideally, the data for the various business functions are integrated. In practice the
ERP system may comprise a set of discrete applications, each maintaining a discrete
data store within one physical database.
The term ERP originally referred to how a large organization planned to use
organizational wide resources. In the past, ERP systems were used in larger more
industrial types of companies. However, the use of ERP has changed and is extremely
comprehensive, today the term can refer to any type of company, no matter what
industry it falls in. In fact, ERP systems are used in almost any type of organization –
large or small.
In order for a software system to be considered ERP, it must provide an
organization with functionality for two or more systems. While some ERP packages
exist that only cover two functions for an organization (QuickBooks: Payroll &
Accounting), most ERP systems cover several functions.
Today’s ERP systems can cover a wide range of functions and integrate them into
one unified database. For instance, functions such as Human Resources, Supply Chain
Management, Customer Relations Management, Financials, Manufacturing functions
and Warehouse Management functions were all once stand alone software
applications, usually housed with their own database and network, today, they can all
fit under one umbrella – the ERP system.
3.3
Example of ERP Tools
There are several ERP software manufacturers and among them, prominent
are SAP, Oracle Corporation, People Soft, JD Edwards, Lawson etc. SAP has the
major share in the ERP market and next comes the Oracle Corporation. Oracle has
bought JD Edwards, People Soft, and Siebel recently and they compete with SAP
aggressively. Leading ERP software like SAP, Oracle Apps, etc., are focusing on all
functionalists of an enterprise and few companies are focusing on certain domains
only. But, I will pick SAP R/3 for this paper’s topic.
SAP R/3 is the former name of the enterprise resource planning software
produced by the German corporation SAP AG. It is an enterprise-wide information
system designed to coordinate all the resources, information, and activities needed to
complete business processes such as order fulfillment, billing. Human Resource
Management, and Production Planning.
With the advent of distributed client–server computing SAP AG brought out a
client–server version of the software called SAP R/3 (The "R" was for "Real-time data
processing" and 3 was for 3-tier): 1) database, 2) application server and 3) client
(SAPgui). This new architecture is compatible with multiple platforms and operating
systems, such as Microsoft Windows or UNIX. This opened up SAP to a whole new
customer base.
SAP R/3 was officially launched on 6 July 1992. Various releases of the
software were made through the 90s.
A newer version of the software, with new architecture, was released in 20032004, renamed as SAP ERP. ECC is a version name for SAP ERP,(ERP Central
Component). Other SAP Implementations can be customized products can function on
the central component. SAP came to dominate the large business applications market
over the next 10 years. SAP ECC 5.0 ERP is the successor of SAP R/3 4.70. The
newest version of the suite is SAP ERP 6.0, Enhancement Pack 7.
3.4
The Effectiveness of using ERP
By Implementing Enterprise Resource Planning (ERP) System, the
effectiveness and efficiency of company will increase.Below are the benefits
framework of ERP System:
a. Operational benefits
The ERP system implementation is expected to give benefits in operational activities
by speeding up processes and increasing operation volume. Assessing the
effectiveness can be done by seeing the benefits in terms of cost reduction cycle time
reduction, productivity improvement, quality improvement, and improved customer
service.
b. Managerial benefits
In order to know whether the implementation of the ERP system can give benefits in
managerial dimension or not, an enterprise may assess it in terms of better resource
management, performance improvement, and improved decision- making and
planning,
c. Strategic benefits
The effectiveness of ERP system implementation in strategic dimension can be
assessed in the terms of support for business growth and alliance, building
innovation and cost leadership, generating product differentiation and building
external linkages.
d. IT infrastructure
The effectiveness of ERP system implementation in IT infrastructure dimension can
be assessed in the terms of IT cost reduction, increased IT infrastructure capability,
and business flexibility for future and current changes
e. Organizational benefits
The effectiveness of ERP system implementation in organizational dimension can be
assessed in the terms of work patterns, organizational learning, empowerment, and
building common vision.
3.5 Do ERP increase profit?
Do ERP system increase profit? The answer can be both yes and no. The
answer depends on whether the ERP system benefit the company or not. Because the
wrong implementation of ERP system can bring disasters for the company (especially
in business processes and financial loss). But if the ERP system is implemented based
on the needs of company, then the ERP system might bring huge profits.
In order to ensure that we gain profits from the implementation of ERP
system, there are 6 steps that business owners have to learn:
1. Learn. Before investing in ERP, it's crucial that business owners understand
all the ins and outs of their own companies. Knowing how the enterprise works will
help an executive see where ERP can eliminate double data entry, streamline processes,
and work to make the company more efficient. Understanding how the business
functions is fundamental to choosing the right ERP system and implementing that
system in the most beneficial way.
2. Plan. It may sound simple, but too many business owners think that they can
simply "wing it" when it comes to ERP. The truth is that deciding to just tackle
problems as they arise is much less effective than planning for potential issues and
handling stressful situations long before they erupt into major ERP mishaps.
Planning means making -- and sticking to -- schedules. If business owners want
their ERP implementation projects to run smoothly, they will need to set deadlines for
each step of the process, block out days for training, and have a backup plan in case the
implementation process takes longer or costs more than expected. Having these kinks
worked out before you embark on your ERP implementation process is a great way to
stay on track toward ERP success.
3. Budget. As any good investor knows, high risks signal enormous potential
for rewards. ERP can be a big financial risk, but it can offer great financial rewards
when successful. That's why the most crucial step toward becoming an ERP success
story is budgeting appropriately.
Many ERP projects go way over their budgets, cost thousands more than
expected, and end up falling by the wayside, uncompleted and idle, reaping no benefits.
To avoid this trap, business owners interested in ERP should be careful to calculate all
the costs, hidden and obvious, of investing in ERP -- including not just the initial
software costs but also the maintenance, upgrade and training fees, which can add up.
Total cost of ownership, or TCO, is a useful tool in determining this figure and
budgeting accordingly.
4. Train. Another major cause of ERP failure is employees who either don't
know or don't care how to work the new system. It's natural for employees to feel some
resistance to change, and executives should even expect it. That's why it's so critical to
make sure employees are properly trained in managing the new system. Employees
who feel prepared to tackle ERP are less likely to report being disgruntled or unhappy
with the new system.
In addition, well-trained employees come in prepared to work with ERP,
thereby eliminating some of the awkwardness that can occur when adjusting to a new
system.
You wouldn't let somebody operate a car without sending them to driver's ed.
Likewise, don't let your employees work with ERP until they've been thoroughly
trained in how to do so properly.
5. Commit. Business owners who are only partially committed to their ERP
projects are setting themselves up for failure. ERP requires a good deal of investment -both fiscal and emotional. ERP will need to become a major priority for the company if
it wants the system to pay off in the end.
6. Follow through. Handling ERP doesn't end when the implementation process
is over. Like any other software, ERP is evolving at a rapid pace and requires frequent
maintenance and upgrades to perform at its best. Keeping track of upgrades and
installing them in a timely manner, as well as following through with all scheduled
maintenance, will have you enjoying the benefits of ERP success for years.
Investing in ERP is risky, but it carries the promise of great rewards if done
correctly. Following these steps is one way that business owners can work to ensure
that their own ERP stories will be successful ones
Chapter 4
Conclusion & Suggestion
CONCLUSION
ERP (Enterprise Resource Planning) system is a system that focuses on reducing cost
and time by integrating data so that data flows seamlessly and transparently within an
enterprise. Despite being able to reduce cost and time, an ERP system may also bring
disadvantages, such as needing high cost for the implementation. Selecting the suitable ERP
tool for implementation also depends on what kind of industry the enterprise is in order to
meet its needs. Lastly, the effectiveness of an ERP system can be assessed by using a benefits
framework comprises five dimensions
SUGGESTION
The ERP technology should be implemented wisely to avoid unnecessary loss for the
company even though it may save the company lots of money, reckless implementation of
ERP may result in more loss than its profit. And also implement only the needed module. Do
not over implement and causing loss
Bibliography
excitingip.com. (2010). advantages and disadvantages of erp enterprise resource planning
systems. Retrieved 2014, from excitingip.com: http://www.excitingip.com/2010/advantagesdisadvantages-of-erp-enterprise-resource-planning-systems/
itoverview.com. (n.d.). erp tools. Retrieved 2014, from itoverview.com:
http://itoverview.com/erp_tools.php
kass, E. (2010). 6 steps to ERP profit. Retrieved 2014, from crmbuyer.com:
http://www.crmbuyer.com/story/71049.html
Storani, M. (2008). enterprise resource planning erp concepts methods and frameworks.
Retrieved 2014, from mauriziostorani.wordpress.com:
http://mauriziostorani.wordpress.com/2008/12/06/enterprise-resource-planning-erp-conceptsmethods-and-frameworks/
wikipedia.org. (n.d.). SAP R3. Retrieved 2014, from wikipedia.org:
http://en.wikipedia.org/?title=SAP_R/3
Biography
1.
Name
: Andiga putra
Place, Date of Birth : Jakarta, 16 October 1992
Gender
: Male
Address
: Japos, M5/24b 05/09 kel.Jr. mangu barat Kec.pd aren Tangsel
Phone Number
: 021-7301601
Email
: kalengringsek@gmail.com
Education History and Course
:
1999-2005
: SD Budi Mulia ciledug
2005-2008
: SMP YADIKA 5 Joglo
2008-2011
: SMA YADIKA 5 Joglo
2011-present
: BINUS University, Jakarta
2.
Name
Address
: Ferri Gunawan
: Perumahan Taman Palem Lestari, Blok A11 No. 70,
Cengkareng.Jakarta Barat – 11730
Gender
: Male
Telephone No.
: 021-55957540
E-Mail
: GOLIATH_946@yahoo.co.id
Date of birth
: 06-10-1992
Gender
: Male
Education History and Course
1996-1998 : TK Harapan Bunda, Jakarta.
1998-2002 : SD Tunas Agung, Jakarta.
2002 : SD Mardi Waluya, Bogor.
2002-2004 : SD Advent III Menteng, Jakarta.
2004-2008 : SMP Santo Kristoforus II, Jakarta
2008-2011 : SMA Santo Kristoforus II, Jakarta.
2011-Present : Bina Nusantara University, Jakarta.
2003-2004 : EF English Course, Jakarta.
2005-2007 : ILP English Course, Jakarta.
3.
Name
: Ivan Jonathan
Place & Date of Birth : Jakarta, May 25, 1993
Gender
: Male
Address
: Jl.Pejagalan Raya no.65, Jakarta Barat
Telephone Num.
: 083808500778
E-mail
: ivanjonathan93@yahoo.com
Education History & Course
-
1999 -2005
2005-2008
2008-2011
2011-present
: SD Tri Ratna, Jakarta
: SMP Tri Ratna, Jakarta
: SMA Tri Ratna, Jakarta
: Bina Nusantara University, Jakarta
4.
Name
: Stephen
Place & Date of Birth : Jakarta, January 13,1993
Gender
: Male
Address
: Jalan Cipinang Elok 2 blok AV 6 Jakarta Timur
Telephone No.
: 081212127225
E-mail
: dragrebirth@gmail.com
Education:
o 1 SMP Tarakanita 4
o 2 SMA Fons Vitae 1 Marsudirini
o 3 BINUS University, Information Systems
5.
Name
: William
Place of birth
: pontianak,19 july 1993
Address
: jalan tanah pasir ruko remaco 2/2 jakarta utara
phone number
: 087782905354
Gender
: Male
Education:
SD : SD Immanuel I pontianak
SMP : Bina Mulia pontianak
SMA : SMA K Immanuel I pontianak
Present : Universitas Bina Nusantara Jakarta