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Chapter 14

Chapter 14. Enterprise Resource Planning Systems. Learning Objectives. Understand the scope of enterprise resource planning (ERP) systems. Recognize the client/server structure of ERP systems. Relate the value of integrated information in a complex firm.

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Chapter 14

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  1. Chapter 14 Enterprise Resource Planning Systems

  2. Learning Objectives • Understand the scope of enterprise resource planning (ERP) systems. • Recognize the client/server structure of ERP systems. • Relate the value of integrated information in a complex firm. • Identify the challenges associated with implementing ERP systems.

  3. Enterprise Resource Planning (ERP) • Enterprise resource planning (ERP) system: computer system that links all the areas of the business • Manufacturing knows about new orders as soon as they are entered • Sales knows the exact status of a customer order • Purchasing knows what manufacturing needs to the minute The accounting • system is updated as all the relevant transactions occur LO 1

  4. Enterprise Resource Planning (ERP) Continued • The potential benefits are huge • Savings in redundant postings • Redundant jobs can be eliminated • Other jobs can be done faster • Creates new ways to do business • Benefits are not without cost • ERP systems are complex and expensive • May require major changes in processes LO 1

  5. Major Developers of Enterprise Resource Planning Software LO 1

  6. SAP • SAP AG is the world leader in providing ERP software • Flagship product is R/3 • Software designed to operate in a three-tier client/server configuration • Cost is a high-speed network of database servers • Application consists of software modules • Applications are fully integrated and share data • Firms wishing to use SAP may need to change their practices to those implemented by SAP LO 1

  7. Three-Tier Client/Server Configuration LO 2

  8. SAP Application Modules • Software is built around a set of application modules: • Financials • Human capital management • Operations • Corporate services • Duet–Microsoft Office integration • Can be used either alone or in combination LO 2

  9. Financials • Financial application provides functionality to run the financial accounts for the company • The application is divided into three areas: • Financial and management accounting module: includes general ledger, accounts payable, accounts receivable, capital investments and closing the books • Corporate governance: internal control and audit functions needed to adhere to corporate governance standards, documentation of internal controls, and audits that comply with current requirements • Financial supply chain management: handles the money flow related to supply chain activities LO 3

  10. Human Capital Management • This application contain the full set of capabilities needed to manage, schedule, pay, and hire the people who make a company run • It includes: • Payroll • Benefits administration • Application data administration • Personnel development planning • Workforce planning • Schedule and shift planning • Time management • Travel expense accounting LO 3

  11. Human Capital Management Continued • The “talent management” functions are designed to help align employee goals with corporate goals by maximizing the impact of training • “Workforce deployment” applications are to aid in deploying the right people with the right skills to positions in the firm • Managing project teams, monitoring the progress of projects, and tracking time are supported LO 3

  12. Operations • Materials management covers all tasks within the supply chain • It also includes inventory and warehouse management • Plant maintenance supports the activities associated with planning and performing repairs and preventive maintenance • Quality management plans and implements procedures for inspection and quality assurance and is built around the ISO 9001 specifications. LO 3

  13. Operations Continued • Production planning and control supports both discrete and process manufacturing processes • Sales order management, configuration management, distribution export control, and shipping and transportation management are handled as well LO 3

  14. Corporate Services • The corporate services applications are designed to manage both centralized and decentralized services • This includes managing the firm’s real estate portfolio, including: • Property acquisition and disposal • Property management • Building operations and maintenance • Investment reporting • Another major aspect of the corporate services is travel management LO 3

  15. mySAP.COM and SAP NetWeaver–Integrated E-Business Applications • All SAP functions can be implemented using an Internet interface • mySAP versions work over the Internet • Can run SAP without deploying any special software • Cloud computing: delivering hosted services over the Internet • Three distinct characteristics: • Sold on demand • It is elastic • The service is fully managed by the provider LO 3

  16. NetWeaver • NetWeaver allows users to build their own application on top of SAP applications • Users and third-party vendors can offer an unlimited variety of specialized applications LO 3

  17. Implementing ERP Systems • SAP has strong competition • Oracle • i2 Technologies • PeopleSoft • Implementation of ERP is costly • Cost of the software typically one-third or less of the total cost • ERP implementation does not always work out LO 4

  18. Major Problems with ERP Implementation • ERP technology could not support their businesses • Their organizations could not make changes needed to benefit from ERP • ERP implementation might actually damage their businesses LO 4

  19. Reasons to Implement ERP • Desire to standardize and improve processes • To improve systems integration • Improve information quality LO 4

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