Enterprise Resource

Planning
(ERP)
systems
Associate professor Mikhail S. Slobodyan
Department of Natural Resources Economics
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Institute of Natural Resources
National Research Tomsk Polytechnic University
 CONTENTS OF THE COURSE
1. Introduction (What is ERP-system and for what purpose?)
2. Evolution of management and enterprise systems
3. Business process management
4. ERP solutions in the worldwide market
5. ERP implementation project management

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 REFERENCES
1. Ellen F. Monk and Bret J. Wagner. (2009). Concepts in
Enterprise Resource Planning. – Boston: Course Technology
Cengage Learning.
2. O’Leary, D. (2000). Enterprise Resource Planning Systems.
Cambridge, U.K.: Cambridge University Press.
3. Liaquat Hossain, Mohammad A. Rashid, Jon David Patrick.
(2002). Enterprise Resource Planning: Global Opportunities
and Challenges. London, Hershey: Idea Group Publishing.
4. Graeme Shanks, Peter B. Seddon and Leslie P. Willcocks.
(2003). Second-Wave Enterprise Resource Planning Systems:
Implementing for Effectiveness. – U.K.: Cambridge University
Press.
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 REFERENCES
5. Dimitris N . Chorafas. (2001). Integrating ERP, CRM, Supply
Chain Management, and Smart Materials. Auerbach
Publications.
6. Mathias Weske. (2012). Business Process Management –
Concepts, Languages, Architectures, 2nd Edition. Berlin,
Heidelberg: Springer.
7. Hammer,M., Champy.J. (1993). Reengineering the
Corporation: A Manifesto for Business Revolution. Harper
Collins, London.
8. Scheer A.-W. (1992). Architecture of Integrated Information
Systems. Berlin, Springer.
9. Scheer A.-W. (1998). ARIS – Business Process Frameworks.
Berlin, Springer. 4
INTRODUCTION

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 ENTERPRISE SYSTEMS (ES)
Enterprise systems (ES) are large-scale organizational systems
which composed of people, processes and information technology
built around packaged enterprise system software:
 is a set of packaged application software modules, with an
integrated architecture, that can be used by organizations as
their primary engine for integrating data, processes, and
information technology, in real time, across internal and
external value chains;
 impound deep knowledge of business practices that vendors
have accumulated from implementations in a wide range of
client organizations, that can exert considerable influence on
the design of processes within new client organizations;
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 ENTERPRISE SYSTEMS (ES)
 is a generic “semi-finished” product with tables and parameters
that client organizations and their implementation partners must
configure, customize, and integrate with other computer-based
information systems to meet their business needs.

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 ENTERPRISE SYSTEM
SOFTWARE (ESS)
Enterprise system software (ESS) includes:
 Enterprise Resource Planning (ERP)
 Customer Relationship Management (CRM)
 Supply Chain Management (SCM)
 Product Life Cycle Management (PLM)
 Enterprise Application Integration (EAI)
 Data Warehousing
 Decision Support
 Intelligent Presentation Layer
 eProcurement/eMarketplace/electronic exchange software

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 ENTERPRISE RESOURCE
PLANNING SYSTEMS (ERP)
 “ERP comprises of a commercial software package that
promises the seamless integration of all the information flowing
through the company – financial, accounting, human resources,
supply chain and customer information” (Davenport, 1998).
 “One database, one application and a unified interface across
the entire enterprise” (Tadjer, 1998).
 “ERP systems are configurable information systems packages
that integrate information and information-based processes
within and across functional areas in an organization” (Kumar &
Van Hillsgersberg, 2000).
 “ERP systems are computer-based systems designed to
process an organization's transactions and facilitate integrated
and real-time planning, production, and customer response”9
(O'Leary, 2001).
 ENTERPRISE RESOURCE
PLANNING SYSTEMS (ERP)
 “A method for the effective planning and controlling of all the
resources needed to take, make, ship and account for
customer orders in a manufacturing, distribution or service
company“ (American Production and Inventory Control Society,
2001).
 “Core software used by companies to coordinate information in
every area of the business such as planning, manufacturing,
sales, marketing, distribution, accounting, financial, human
resource management, project management, inventory
management, service and maintenance, transportation and
e-business” (Monk, 2009).

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 ENTERPRISE RESOURCE
PLANNING SYSTEMS (ERP)
SUMMARY:
1. ERP programs help to manage company-wide business
processes, using a common database and shared
management reporting tools.
2. ERP software supports the efficient operation of business
processes by integrating throughout a business tasks related
to sales, marketing, manufacturing, logistics, accounting, and
staffing.

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 WHAT IS IT
A “BUSINESS PROCESS”?
A business process is a collection of activities that takes one or
more kinds of inputs (raw material, information, etc.) and creates
an output, such as a goods, report or forecast, that is of value to
the customer.

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BUSINESS PROCESSES IN
CEMENT INDUSTRY

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THE SAMPLE OF THE FUNCTIONAL
ORGANIZATION CHART

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 MAIN FUNCTIONAL AREAS OF
COMPANY’S OPERATION
 Marketing and Sales (M/S)
 Marketing of a product
 Taking sales orders
 Customer support
 Customer relationship management
 Sales forecasting
 Advertising
 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Human Resources (HR)

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 MAIN FUNCTIONAL AREAS OF
COMPANY’S OPERATION
 Marketing and Sales (M/S)
 Supply Chain Management (SCM)
 Purchasing goods and raw materials
 Receiving goods and raw materials
 Transportation and logistics
 Scheduling production runs
 Manufacturing goods
 Plant maintenance
 Accounting and Finance (A/F)
 Human Resources (HR)

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 MAIN FUNCTIONAL AREAS OF
COMPANY’S OPERATION
 Marketing and Sales (M/S)
 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Financial accounting of payments from customers
and to suppliers
 Cost allocation and control
 Planning and budgeting
 Cash-flow management
 Human Resources (HR)

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 MAIN FUNCTIONAL AREAS OF
COMPANY’S OPERATION
 Marketing and Sales (M/S)
 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Human Resources (HR)
 Recruiting and hiring
 Training
 Payroll
 Benefits

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FUNCTIONAL AREA INFORMATION
SYSTEMS: MARKETING & SALES

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 FUNCTIONAL AREA INFORMATION
SYSTEMS: SUPPLY CHAIN MANAGEMENT

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 FUNCTIONAL AREA INFORMATION
SYSTEMS: ACCOUNTING & FINANCE

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FUNCTIONAL AREA INFORMATION
SYSTEMS: HUMAN RESOURCES

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INFORMATION AND MATERIAL FLOWS
IN A FUNCTIONAL BUSINESS MODEL

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DATA FLOW WITHIN AN INTEGRATED
INFORMATION SYSTEM

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 TYPICAL TECHNOLOGICAL
CHARACTERISTICS OF AN ERP
ERP systems are large integrated computer software packages
consisting of components, each with a given set of functions.
All available functions operate on a shared set of data, thereby
achieving integration.
The idea of these systems is to support every single aspect of
organizational storage, processing, retrieval, and distribution of
data.

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TYPICAL ERP SYSTEM MODULES

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INFORMATION AND MATERIAL FLOWS
IN A PROCESS BUSINESS MODEL

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 ADVANTAGES OF ERP SYSTEMS
What benefit How
Common DBMS, consistent and
Reliable information access
accurate data, improved reports
Modules access same data from
Avoid data and operations the central database, avoids
redundancy multiple data input and update
operations
Delivery and cycle time Minimizes retrieving and
reduction delays reporting
Time savings, improved control
Cost reduction by enterprise-wide analysis of
organizational decisions
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 ADVANTAGES OF
ERP SYSTEMS
What benefit How
Changes in business processes
Easy adaptability
easy to adapt and restructure
Structured and modular design
Improved scalability
with “add­ons”
Vendor-supported long-term
Improved maintenance contract as part of the system
procurement
Global outreach Extended modules such as CRM
E-business Internet commerce,
E-Commerce
collaborative culture

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 DISADVANTAGES OF
ERP SYSTEMS
Disadvantage How to overcome
Minimize sensitive issues,
Time-consuming internal politics and raise general
consensus
Cost may vary from thousands of
dollars to millions
Expensive
Business process reengineering
cost may be extremely high
The architecture and
components of the selected
system should conform to the
Conformity of the modules
business processes, culture and
strategic goals of the 30
organization
 DISADVANTAGES OF
ERP SYSTEMS
Disadvantage How to overcome
Single vendor vs. multi-vendor
consideration, options for “best of
Vendor dependence
breeds”, long-term committed
support
ERP system may have too many
features and modules so the user
Features and complexity
needs to consider carefully and
implement the needful only
Look for vendor investment in
R&D, long­term commitment to
Scalability and global outreach
product and services, consider
Internet-enabled systems 31
 DISADVANTAGES OF
ERP SYSTEMS
Disadvantage How to overcome
Consider middle-ware “add-on”
Extended ERP capability facilities and extended modules
such as CRM and SCM.

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