Enterprise Resource Planning

Lecture 2
Recap
• What is a MIS
• What is a ERP
• Introduction to ERP
• Characteristics of ERP
• Business Function
• Functional Areas of Operation
• Importance of using ERP systems
• ERP Advantages
• ERP Challenges
ERP-Definition
• Enterprise resource planning (ERP) is business management

software—typically a suite of integrated applications—that a

company can use to collect, store, manage and interpret data from
many business activities, including: Product planning, cost.
Manufacturing or service delivery. Marketing and sales, inventory
management, shipping and payment etc.

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Introduction
• Enterprise system software is a multi-billion dollar industry that produces
components that support a variety of business functions
• ERP provides an integrated view of core business processes, often in real-time,
using common databases maintained by a database management system.
• ERP systems track business resources like:
• cash,
• raw materials,
• production capacity
• and the status of business commitments like:
• orders,
• purchase orders, and
• payroll.
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Characteristics
• ERP (Enterprise Resource Planning) systems typically include the
following characteristics:
• An integrated system that operates in (or near) real time
without relying on periodic updates
• A common database that supports all applications
• A consistent look and feel across modules
• Installation of the system with elaborate application/data
integration by the Information Technology (IT) department,
provided the implementation is not done in small steps

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Functional Areas
• An ERP system covers the following
common functional areas. In many ERP
systems these are called and grouped
together as ERP modules:

• Financial accounting • Order processing

• Management accounting • Supply chain management
• Human resource • Project management
• Manufacturing • CRM
• Data services

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Origin
• The Gartner Group and others first used the acronym ERP in the
1990s, where it was seen to extend the capabilities of material
requirements planning (MRP), and the later manufacturing resource
planning (MRP II).
• Not all ERP packages developed from a manufacturing core; ERP vendors
variously began assembling their packages with accounting, maintenance,
and human-resource components.

• By the mid-1990s ERP systems addressed all core enterprise functions

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ERP-Evolution

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• ERP (Enterprise Resource Planning) is the evolution of Manufacturing
Requirements Planning (MRP) II.
• From business perspective, ERP has expanded from coordination of
manufacturing processes to the integration of enterprise-wide backend
processes.

• From technological aspect, ERP has evolved from legacy implementation to

more flexible tiered client-server architecture.

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1960s- Inventory Management and
• The term ERP was coined in 1990 by Gartner, but its roots date to the 1960
Control
• The concept applied to inventory management and control in the manufacturing sector.

• IT+ Business Process

• Maintain level of stock

• Identify requirements and set targets

• Monitor item usage

• Reconcile balances

• Reports status

• Enterprise Resource Planning was born from its predecessor, Manufacturing Resource Planning (MRP).

1. http://www.netsuite.com/portal/resource/articles/erp/what-is-erp.shtml
2. http://blogs.globalteckz.com/history-of-enterprise-resource-planning-erp/
1970s-Material Requirement Planning
• By 1970s, this had evolved into Material
Requirements Planning (MRP) systems for
scheduling production processes.
• It included
• planning of Materials requirement,
• Scheduling production processes such
as operations, raw material purchase,
production structure, lot sizing
procedure

http://www.erpandmore.com/erp-reference/erp-history/
1980s-Manufacturing Resource
Planning (MRPII)
• In the 1980s, MRP grew to encompass more
manufacturing processes, prompting many to
call it MRP-II or Manufacturing Resource
Planning which was largely supplied by IBM.
• It was a coordinating manufacturing process
• Product planning
• Parts purchasing
• Inventory control
• Product distribution

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1990s-ERP
• By 1990, these systems had expanded beyond inventory control and
• other operational processes to other back-office functions.
• It is a multi module application software
• Improve internal business process performance
• Integrated with

• Marketing
• Finance
• Accounting
• HR

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2000s-Extened ERP
• By 2002 Most ERP systems are enhancing their products to become
“Internet Enabled” so that customers worldwide can have direct
access to the supplier’s ERP system.
• It is connected to value chain and more
• Includes:
• Supply chain management
• Customer relation management
• Product life cycle management
• E-commerce

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Top ERP trends
1. Mobile ERP
• Executives and employees want real-time access to information, regardless of where they are. It is
expected that businesses will embrace mobile ERP for the reports, dashboards and to conduct key
business processes.

2. Cloud ERP
• The cloud has been advancing steadily into the enterprise for some time, but many ERP users
have been reluctant to place data cloud. Those reservations have gradually been evaporating,
however, as the advantages of the cloud become apparent.

3. Social ERP
• There has been much hype around social media and how important – or not -- it is to add to ERP
systems. Certainly, vendors have been quick to seize the initiative, adding social media packages to
their ERP systems with much fanfare. But some wonder if there is really much gain to be had by
integrating social media with ERP.

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