1. Enterprise Requirements
Planning
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2. Managerial Questions
 What is ERP?
 How will it help my business?
 What are its costs?
 What are the risks?
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3. What is an ERP?
 Enterprise-wide system that integrates the
business functions and processes of an
organization
 Integration of business functions into one
seamless application
 Usually runs on a relational database
 Replaces countless departmental and
workgroup information systems
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4. What is an ERP?
 Links business processes
 Maintains audit trail
 Utilizes a common information system
 Implementation normally involves
BPR: Business Process Reengineering
 Difficult to Implement Correctly – Railroad
Tracks
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5. Before/After ERP
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6. Evolution of ERP
 1960’s: Inventory Control Systems
 1970’s: MRP: Material Requirement
Planning
 1980’s: MRPII: MRP & Distribution
 1990’s: MRPII  ERP with introduction
of other business functions 
CRM’s
 Today: Web Enabled ERP – Connecting
ERP Externally
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7. Factors Along the Path to ERP
 The development of client-server architecture
 …and later the n-tier client-server architecture
 The rush to replace out-dated and non-Y2K
compliant systems.
 The desire to have integrated systems within
the firm.
 The desire to get out of the application
development "business".
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8. SAP: An ERP in Profile
 Flagship products are MySAP ERP and Duet
(with Microsoft)
 The largest ERP company in the world;
world’s 3rd largest software company!
 12 million users, 36,000 customers, 100,600
installations, 1,500 partners world-wide
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9. Core Modules of SAP
 Finance
 Human Resources
 Corporate Services (asset management,
project management, etc.)
 Operations (manufacturing, sales, service,
logistics, etc.)
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10. Other SAP Modules
 Portals
 Supply chain/Supplier relationship
management
 Customer relationship management
 Product life cycle
 Business intelligence
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11. ERP Vendor Landscape
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12. E-business Application Architecture
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13. Interfaces…
 The goal in ERP is to sunset as many systems
as possible
 But some systems will remain
 Need to build interfaces these systems
 More interfaces built/maintained
 more complexity of the ERP implementation
 higher cost.
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14. …and “Bolt-ons”
 Core ERP functions may be augmented by “bolt-
ons” (specialized functionality above and beyond
that of the ERP)
 Four major areas:
 Supply Chain Management (SCM)
 Product Lifecycle Management (PLM)
 Customer Relationship Management (CRM)
 Business Intelligence (BI)
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15. ERP Enterprise Architecture
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16. How SAP Works
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17. Issues with SAP
Cultural Issues
 System designed in North America or
Western Europe
 Embodies best practices from ‘home’ country
– based on ‘home’ country assumptions
 Practices and assumptions may not transfer
across borders
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18. Costs of ERP
 Meta Group survey of 63 companies (small to
large, range of industries)
 Average of $15 M per firm (range $400,000 -
$300M)
 On average the TCO is $53,000 per user
 Media annual savings: $1.6M
 Requires two-years of implementation and
integration
Source: CIO.com: "The ABCs of ERP" 18

19. Costs of ERP (cont’d)
Average Cost To Install ERP
Expenditure Amount (millions) Percentage
Hardware 1.46 13.8
Software 1.86 17.5
Internal Staff 2.46 23.2
Professional Services 4.82 45.5
Source: CIO Magazine Oct. 15, 1999
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20. Benefits of ERP - Promised
 Shorter order cycle time
 Increased productivity
 Lower IT costs
 Better cash management
 Reduced personnel
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21. Benefits of ERP - Actual
Expected and Actual Benefits
Benefit Expected Actual
Shorter cycle time 19% 31%
Improved 24% 31%
productivity
Lower IT costs 24% 11%
Better cash 24% 13%
management
Personnel 43% 33%
reduction
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22. Reasons to Adopt ERP
 One face to the customer
 Knowing “what is possible” in terms of
organizational inventory
 Eliminating redundancy
 Consolidation
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23. Reasons to Adopt ERP (cont’d)
 Handle growth
 Reduce stress on existing IT
 Avoid legacy systems
 Modernizing
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24. Reasons Not to Adopt
 Cost
 Loss of competitive advantage
 Resistance to change
 Poor cultural fit
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25. Alternatives?
 Open Source ERP (+ Support Vendors)
 e.g. GNU Enterprise, Apache OFBiz
 ERP for SMEs
 less expensive systems with fewer "bells and
whistles"
 ERP ASPs (Application Service Providers)
 ASPs will host and maintain the software for you
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26. Post-ERP?
 Service-Oriented Architectures (SOA) hold
some promise as the natural evolution from
ERP
 The foundation of SOA is standardization
based upon
web services interoperability standards.
 SOA does not replace ERP
 provides the ability to “loosely couple” services
(business functions).
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27. Before/After
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