Lecture 1_ Introduction to Business Processes_V1.pptx
Download as PPTX, PDF0 likes6 views
This document provides an introduction to ERP systems. It describes the objectives of understanding how ERP systems improve organizational effectiveness through integration of business processes. ERP systems allow automation and sharing of data across departments. Implementing an ERP system helps standardize processes, reduce costs, and provides timely information to enable better decision making. While an ERP implementation requires significant resources, the benefits include eliminating incompatible legacy systems, improved customer interactions, and obtaining a competitive advantage through more efficient operations.
Lecture 1_ Introduction to Business Processes_V1.pptx
- 1. INTRODUCTION TO ERP Lecture 1 1
- 2. 1-2 Objectives • Develop an understanding of how ERP systems improve the effectiveness of information systems in organizations • Recognize the business benefits of ERP systems • Understand the history and evolution of ERP • Describe the functional organizational structure, and explain why this structure creates problems for modern businesses. • Describe key business processes in an organization. • Identify the main integration points between and among processes. • Understand the cross-functional nature of processes and their relationship to organizational areas
- 3. Objectives • Adopt and apply an integrated perspective to business processes. • Describe GBI’s organizational structure. • Explain how the SAP system promotes an integrated approach to business processes 3
- 4. 1-4 ERP Market • One of the fastest growing markets in software industry • 34.5% of companies with revenues over $1 billion plan to purchase or upgrade • $180 billion in sales in 2002 • Maybe as much as $1 trillion by 2010
- 5. 1-5 ERP Systems • Major investment • Cost between $50,000 and $100,000,000+ • Variety of business justifications • Replace legacy systems • Reduce cycle times • Lower operating costs • Enables better management decisions • Real-time • On-line
- 6. 1-6 What is ERP? • Software tools • Manages business systems • Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR • Allows automation and integration of business processes • Enables data and information sharing • Enterprise-wide system • Introduces “best practices”
- 7. 1-7 Evolution of ERP • 1960s: software packages with inventory control • 1970s: MRP systems • Production schedule with materials management • 1980s: MRPII systems • Adds financial accounting system • 1990s: MRPII • Integrated systems for manufacturing execution • Late 1990s: ERP • Integrated manufacturing with supply chain
- 8. 1-8 Integrated Systems Approach • Common set of applications • Usually requires re-engineering business processes • Better alignment • Limited customization • Easier upgrades • Overcomes inefficiencies of independent systems • Integrated data supports multiple business functions
- 9. 1-9
- 10. 1-10 Overall Business Benefits • Information • Maximizes information throughput • Provides timely information • Integrates information throughout supply chain • Minimizes response time • Pushes decision making down to lowest levels • Reduces costs • Cuts inventory • Improves operating performance
- 11. 1-11 Department Benefits • Sales • Increased efficiency • Lower quotes, reduced lead time, improved responsiveness • Manufacturing • Concurrent engineering • Faster design and production • Data Service • Accurate customer service history and warranty information • Accounts Payable • Suppliers paid accurately
- 12. 1-12
- 13. 1-13 Systems Benefits • Eliminating legacy systems • Reduces incompatible data • Can cause fragmentation • Allows sharing and monitoring of information across organization • Foundation of eBusiness • Back-office functions • Standardization • Helps obtain and maintain competitive advantage • Improved interactions with customers and suppliers
- 14. 1-14
- 15. 1-15 Design Alternatives • “Vanilla” implementation • Complete vendor package • Benefits • Total integration across all functional areas • Re-engineering of all business processes • Deficits • Expensive • Time-consuming • Selected ERP modules • Benefits • Less costly and time-consuming • Deficits • Lacks total integration of data • Limited applicability and use
- 16. 1-16 Design Alternatives, continued • Build in-house • Benefits • Can create system based on its needs • Competitors will not have access to similar system • Deficits • Time- and resource-consuming • Expensive • Risky • May not provide competitive advantage • Maintain concurrent legacy systems • Benefits • Familiarity • Deficits • May be a competitive disadvantage
- 17. 1-17 Cost-Benefit Analysis • Net Present Value • Time value of money • 5-year timeframe for ERP • Non-recurring costs: • Hardware, software, consulting, training, implementation • Recurring expenses: • Licenses, maintenance, consulting, teams
- 18. 1-18 Maintaining Competitive Advantages • Implement ERP system better than competitors • Migrate to new versions faster • Use “vanilla” ERP for core systems and build customized modules for others • Increase availability of operational data • Better use of data for analysis
- 19. 1-19 Challenges • Realization of benefits • On-time, on-budget implementations • Applying multi-stage approach • Markus • Three phases: project, shakedown, and onward and upward phases • Business results not achieved until last phase • Parr and Shanks • Four phases: planning, re-engineering, design, and configuration and testing phases • Benefits not achieved until last two phases • Holland and Light • Benefits occur after implementation of advanced modules
- 20. 1-20 Case: Business Research • Expected future growth in ERP Marketplace • Fortune 500 and mid-cap • Fortune 500 and mid-cap • Market share of major vendors • Fortune 500 and mid-cap • Fortune 500 and mid-cap
- 21. 1-21 Summary • ERP systems can improve the effectiveness of organizations through automation and integration of business processes • ERP systems allow data and information sharing across the organization • Departmental benefits include increased efficiency, faster design and production, and accuracy • Implementing an ERP system helps the organization obtain and maintain a competitive advantage
- 22. REVIEW QUESTIONS 1. Describe the functional organizational structure. Why do you think this structure is so widely used 2. What is the SILO effect? Why does it exist? What problems does it create? How can an organizations reduce or eliminate the SILO effect 3. What is a business process? Why is adopting a process view of organizations essential to becoming a successful manager? 4. Briefly describe the key business processes in this chapter in terms of their key steps 5. Explain the interrelationships among the key processes included in this chapter? Why are this interrelationships importants? 22