Business Plug-In B10

1. Business Plug-In B10 Enterprise Resource Planning

2. LEARNING OUTCOMES • Compare core enterprise resource planning components and extended enterprise resource planning components. • Describe the three primary components found in core enterprise resource planning. • Describe the four primary components found in extended enterprise resource planning systems. • Explain the benefits and risks associated with enterprise resource planning systems. • Assess the future of enterprise resource planning systems.

3. INTRODUCTION • Enterprise Resource Planning—Integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprisewide decisions by viewing enterprisewide information on all business operations • SAP, the leading ERP vendor, boasts 20,000 installations and 10 million users worldwide. These figures represent only 30 percent of the overall ERP market.

4. CORE AND EXTENDED ERP COMPONENTS • Core ERP Component—Traditional components included in most ERP systems and they primarily focus on internal operations • Extended ERP Component—Extra components that meet the organizational needs not covered by the core components and primarily focus on external operations

5. CORE AND EXTENDED ERP COMPONENTS

6. CORE ERP COMPONENTS • Accounting and Finance Component—Manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management • One of the most useful features included in an ERP accounting/finance component is its credit-management feature

7. CORE ERP COMPONENTS • Production &Materials Management Component—Handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control

8. CORE ERP COMPONENTS • Human Resource Component—Tracks employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities • Human resources components offer features that allow the organization to perform detailed analysis on its employees to determine such things as the identification of individuals who are likely to leave the company unless additional compensation or benefits are provided

9. EXTENDED ERP COMPONENTS • Extended ERP components include: • Business Intelligence • Customer Relationship Management • Supply Chain Management • Ebusiness Components

10. EXTENDED ERP COMPONENTS • Ebusiness components include elogistics and eprocurement • Elogistics—Manages the transportation and storage of goods • Eprocurement—The business-to-business (B2B) purchase and sale of supplies and services over the Internet • ERP vendors need to build two new channels of access into the ERP system information—one channel for customers (B2C) and one channel for businesses, suppliers, and partners (B2B)

11. ERP BENEFITS AND RISKS (COSTS) • Common ERP Benefits: • Integrate financial information. • Integrate customer order information. • Standardize and speed up manufacturing processes. • Reduce inventory. • Standardize human resource information.

12. ERP BENEFITS AND RISKS (COSTS) • ERPs focus on how a corporation operates internally, and optimizing these operations takes significant time and energy • The average savings from new ERP systems are $1.6 million per year • ERP systems do not come cheap • The average TCO was $15 million (highest $300 million and lowest $400,000)

13. ERP BENEFITS AND RISKS (COSTS)

14. THE FUTURE OF ERP • Lines between SCM, CRM, and ERP will continue to blur • Internet—Continue to help organizations integrate data and process across functional departments • Interface—Customizable employee browsers • Wireless Technology—Support a mobile workforce