Enterprise Resource Planning (ERP)
At the heart of all ERP systems is a database, when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system.
ERP systems automate business processes.
ERP systems automate business processes, for example, order fulfillment :
* When a CSR takes an order from a customer, he or she has all the information necessary to complete the order (the customer’s credit rating and order history, the company’s inventory levels, and the delivery schedule)
* Since the company is using an ERP, everyone else in the company will automatically see the information that the CSR types into the ERP system
* When one department finishes with the order, it is automatically routed via the ERP system to the next department
* To determine where an order is at any point in time, a user only needs to login to the ERP system and track it down
Bringing the Organization Together
THE ORGANIZATION BEFORE ERP
In most organizations, information has traditionally been isolated within specific departments, whether on an individual database, in a file cabinet, or on an employee’s PC.
Disadvantages:
- Update issues
- Redundancy
- Inaccurate information across databases
- Different formats of information in the different databases
- Inability to access other department information and not being provided with a 360 degree view of the organization
- Different customer information in different databases
- Customer contact from multiple departments with different messages
ERP - BRINGING THE ORGANIZATION TOGETHER
ERP enables employees across the organization to share information across a single, centralized database.
Disadvantages:
- Not as flexible and far more difficult to change
- Might not meet all department needs as well as an individual specific system
- Multiple access levels increases security issues
- Ethical dilemmas from accessing different department information – such as payroll.
The Evolution of ERP
Integrating SCM, CRM, and ERP
* SCM, CRM, and ERP are the backbone of e-business
* Integration of these applications is the key to success for many companies
* Integration allows the unlocking of information to make it available to any user, anywhere, anytime
* Many ERP vendors offer SCM and CRM components
* These modules are typically not as functional or flexible as the modules offered by industry leaders who specialize in SCM and CRM
* A good analogy is to brand-name foods at a grocery store
- A grocery store, such as Tesco, maintains all types of products
- Tesco offers its own products, such as Tesco’s spaghetti and Tesco’s paper towels, (these are known as name brand products and usually offer a cost advantage)
- The store also carries products that are specific to a manufacturer, such as San Remo’s spaghetti and Scott’s paper towels
- Customers can choose to buy Tesco’s product (this is similar to product supplied by the ERP), or customers can choose to buy a specialty product that is usually more expensive but offers better quality, additional features, and better taste (such as San Remo)
- ERP vendors carry SCM and CRM components, but they are usually not as good as the vendors that specialize in SCM and CRM components (Siebel CRM, i2 SCM)
* SCM and CRM market overviews :
* General audience and purpose of SCM, CRM and ERP
Integration Tools
Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and must integrate the different modules together.
Middleware – several different types of software which sit in the middle of and provide connectivity between two or more software applications.
Enterprise application integration (EAI) middleware – packages together commonly used functionality which reduced the time necessary to develop solutions that integrate applications from multiple vendors.
Data points where SCM, CRM, and ERP integrate.
Enterprise Resource Planning (ERP)
ERP systems must integrate various organization processes and be:
1. Flexible - must be able to quickly respond to the changing needs of the organization
2. Modular and open - must have an open system architecture, meaning that any module can be interface, with or detached whenever required without affecting the other modules.
3. Comprehensive - must be able to support a variety of organizational functions for a wide range of businesses
4. Beyond the company - must support external partnerships and collaboration efforts.
Enterprise Resource Planning’s Explosive Growth
SAP boasts 20,000 installations and 10 million users worldwide
ERP solutions are growing because:
* ERP is a logical solution to the mess of incompatible applications that had sprung up in most businesses
* ERP addresses the need for global information sharing and reporting
* ERP is used to avoid the pain and expense of fixing legacy systems
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