Enterprise Resource Planning

(ERP) Systems

https://www.erp-information.com
Supervised by DR. Sayed Kamal
Name: Mohamed Refaat
Types based on their functionality and the
organizational levels they support
 Transaction Processing Systems (TPS):
• Focus: Operational level
• Purpose: Record and process routine business transactions (e.g., sales, purchases, inventory changes).
 Management Information Systems (MIS):
• Focus: Middle management
• Purpose: Provide summarized, structured information for managerial decision-making and planning.
 Decision Support Systems (DSS):
• Focus: Management level
• Purpose: Assist in decision-making by providing interactive information and analytical tools.
 Executive Support Systems (ESS):
• Focus: Executive level
• Purpose: Provide strategic information to top-level executives for long-term planning and decision-making.
 Enterprise Resource Planning (ERP) Systems:
• Focus: Organization-wide
• Purpose: Integrate and manage all aspects of business processes, such as finance, human resources, and
supply chain, in a unified system.
 Knowledge Management Systems (KMS):
• Focus: Organization-wide
• Purpose: Capture, organize, and apply the collective knowledge of an organization to enhance decision-making
and problem-solving.
 Types based on their functionality and the
organizational levels they support
 Office Automation Systems (OAS):
• Focus: Individual and team level
• Purpose: Support day-to-day office activities, including document creation, communication, and
collaboration.
 Transaction Processing Systems (TPS):
• Focus: Operational level
• Purpose: Record and process routine business transactions (e.g., sales, purchases, inventory
changes).
 Business Intelligence (BI) Systems:
• Focus: Organization-wide
• Purpose: Collect, analyze, and present business data to support decision-making processes.
 Geographic Information Systems (GIS):
• Focus: Organization-wide
• Purpose: Capture, store, analyze, and present spatial or geographical data to support decision-
making.
 Customer Relationship Management (CRM) Systems:
• Focus: Organization-wide
• Purpose: Manage and analyze interactions with customers, improve customer relationships, and
support sales and marketing efforts.
 Expert Systems:
• Focus: Organization-wide
• Purpose: Mimic human expertise in a specific domain to provide advice or make decisions.
ERP Background
 Introduction of PC led to narrowly focused information
systems.
 Duplicate data across the enterprise not shared
between departments.
 Mid – late 1990’s companies implemented Enterprise
Resource Planning (ERP) which would integrate the data
across the enterprise.
 MRP software used by 1990’s
The Current Scenario

Difficult to get timely & accurate information.

Heterogeneous Hardware & Software.
platforms & practices.
Poor connectivity between different.
organizational locations.
Sticking with obsolete technology
Resist to change.
Lack of proven man-power to develop
integrated software.
 Why ERP?

For Management – to know what is happening

in the company
One solution for better Management
For cycle time reduction
To achieve cost control & low working capital
To marry latest technologies
To shun the geographical gaps
To satisfy the customers with high expectations
To be Competitive & for survival
ERP - Definition

Software solution that addresses the

Enterprise needs, taking a process view of
the overall organization to meet the goals,
by tightly integrating all functions and
under a common software platform”
ERP-Supported Business Processes
Typical Modules in an ERP System
Who Uses/Needs to know about ERP?
ERP – Expectations

Integrating all the functions

Integrating the systems running in all the locations

Transparency of information using a single

data source across the organization

Software must be responsive

Modular
Flexible
Easy to add functionalities
Provide growth path
BPR & ERP

 Business Process Reengineering (BPR) is a management approach that involves the radical redesign of core business
processes to achieve dramatic improvements in performance, efficiency, and effectiveness. BPR often involves the
complete overhaul of existing processes, rather than incremental adjustments, with the goal of achieving significant and
sustainable improvements.
Key Principles of BPR:
 Radical Redesign: BPR involves a fundamental rethinking and redesign of business processes rather than incremental
changes.
 Cross-Functional Teams: Teams made up of individuals from various departments collaborate to redesign end-to-end
processes.
 Customer-Centric Focus: The redesign is centered around meeting customer needs and enhancing customer
satisfaction.
 Use of Technology: BPR often leverages technology to streamline and automate processes for greater efficiency.
Sequential Relationship:
 In practice, BPR often precedes ERP implementation. The redesigned processes are then supported and automated
through the deployment of ERP systems.
 BPR - Steps

Step 1 Step 2 Step 3

Understand Simplify/Improve Automate

Understand the Draft & frame the Implement
existing possibilities & ways with the help
systems to simplify or of ERP
associated with Improve or
all the eliminate the
functionalities processes

Business Process Re-engineering

ERP – Options

OPTION 1 – MAKE [Using Internal resources]

Developing a custom-built ERP package, specific to the

requirements of the organization, with the help of the
in-house IT department

OPTION 2 - BUY

Going for Tailor-made ERP packages available in the market like

SAP, Oracle applications, Baan, PeopleSoft etc.

OPTION 3 – MAKE [using External resources]

Developing a custom-built ERP package, specific to the

requirements of the organization, with the help of a
software solution provider
ERP – Building using Internal resources – The
Facts
 Lack of adequate & qualified manpower
 Not driven with clear focus on expectations,
time & cost
 Poor software project management
 Lack of seriousness with the Management & the
IT Team
 High employee turnover
 Lot of schedule gaps during Project execution
 Normally project life is more
 Frequent change in the scope with the approval
of the Management
 Execution phases

 ERP product selection

 Preparations
 Production
 Implementation
 Post-Implementation
 ERP Product selection Phase

 ERP Team formation for selection

 Appointment of Consultants [if needed]
 Scoping study
 Product selection
 Implementation partners selection
 Hardware/Communication cost estimation
 ERP Product selection Criteria

Goal: Functionality
To select the 5 Strategic
Most Suitable Software Requirement
Package Solution Levels Technology

Vendor

Support

Costs
General Model Of ERP
Before and After ERP
Beyond ERP

Supplier
Supplier
Collaboration
Collaboration

Supply
Supply Chain
Chain
Management
Management

Key
Key Process
Process
Integration
Integration via
via
ERP
ERP
Product
Product
Lifecycle
Lifecycle Customer
Customer
Management
Management Management
Management

Consumers
Consumers and
and
Design
Design Partners
Partners Channels
Channels
ERP Diffuses Best Practices

 ERP systems are based on so-called best practices

 SAP has thousands of best practices embedded in their applications.
 This means that any firm that installs has access to a wide range of best
practices.
 Further, business practices are being added all of the time. As new best
practices are found and embedded in particular applications, they can
become available for inclusion in new versions of software.
 As a result, there is this cycle of finding best practices, building them
into the software and diffusing them out to new users.
  Vertical solutions – industry specific version of software.
 Potential Benefits of ERP
 Internal Benefits
• Integration of a single source of data
• Common data definition
• A real-time system
• Increased productivity
• Reduced operating costs
• Improved internal communication
• Foundation for future improvement
 Potential Benefits of ERP

 External Benefits
• Improved customer service and order
fulfillment
• Improved communication with suppliers and
customers
• Enhanced competitive position
• Increased sales and profits
ERP System Disadvantages
 Standardized way of conducting business can be a
disadvantage too because levels the playing field
somewhat between companies.
 Lack of employee/user acceptance.
 Complex solution.
 Maintenance of hardware and software.
 Costly and time consuming implementations.
Implementation Issues
 Employee resistance.
 They develop “work around” .
 Sabotage implementation process
 Caused by lack of training (“how”) or understanding of organization’s motivation for
adoption (“why”).
 Need Change Management to lower resistance.
 Technical Issues.
 Complex system to implement – configuration issues and possible customization
issues .
 Sometimes need expensive external consultants to assist implementation.