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Defining the Purpose of ERP

Paulo de Matos

SYSPRO Business Development Executive

Why the need for ERP systems

Functional areas are interdependent

Each requires data from the othersEnterprise Resource Planning (ERP) programs: Core software used by companies to coordinate information in every area of business

Help manage company-wide business processes

Use common database & shared management reporting tools

Allows all functional areas to share a common, INTEGRATED database

Allows accurate, real-time information to be available

Modular

Primary Purpose of ERP

Money $$$ (Economic Theory)

Facilitation of trade (Exchange)

Store of Value (Wealth)

Measure or Index (Price, Worth)

“The delivery vehicle for a company to be able to

get its goods and services to market.”

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Benefits of ERP

Paulo de Matos

SYSPRO Business Development Executive

Benefits of ERP Systems

Elimination of redundant data and communications lagsData integration (data entered once into ONE database & then used throughout the organization)More efficient business processes that cost less than those in unintegrated systemsEasier global integration (integrates people & data while eliminating the need to update and repair many separate computer systems)

Allows management of operations, not just monitoring

Use of best (right) practice

Can reduce costs & improve operational efficiency

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Management Factors for ERP

Paulo de Matos

SYSPRO Business Development Executive

Management Factors for ERP…

Companies had unintegrated IS that supported only the activities of individual functional areas

Silos of information limits the exchange of information

Functional model led to top-heavy and overstaffed organizations incapable of reacting quickly to change

Companies shift focus from a functional focus to a business process focus

Development of a vision of integrated IS

Y2K issues

Compliance with the Sarbanes-Oxley Act of 2002

Requires internal controls on all information

Management Factors for ERP…

Figure 2-2 Information and material flows in a functional business model (Source: Monk and Wagner 2013)

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Info

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Top Management

Material & Product Flow

Management Factors for ERP

Figure 2-3 Information and material flows in a process business model (Source: Monk and Wagner 2013)

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Top Management

Finance & AccountingAccounts Payable

Accounts Receivable

Marketing & Sales

Procurement LogisticsManufacturing

Information Flow

SuppliesStorage & Shipping

Conversion

Material & Product Flow

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Technological Factors for ERP

Paulo de Matos

SYSPRO Business Development Executive

Technological Factors

Software enhancements (DBMS; EDI) support integration

Manufacturing software developed during the 1960s and 1970s

Evolved from simple inventory-tracking systems

To…

Material requirements planning (MRP) softwareA software based production planning & inventory control system used to manage manufacturing processes

MRPII (Manufacturing Resource Planning) systems

To…

ERP systems (1990 ->)

Materials planning

Order entry

Distribution

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The Evolution of ERP

Paulo de Matos

SYSPRO Business Development Executive

The Evolution of ERP…

ERPII2010

The Evolution of ERP

ERPII2010

"ERP II" was coined in 2000 in an article by Gartner Publications entitled ERP Is Dead – Long Live ERP II. 

It describes web-based software that provides real-time access to ERP systems to employees and partners (such as suppliers and

customers). The ERP II role expands traditional ERP resource optimization and transaction processing.

ERP II leverages information in the resources under its management to help the enterprise collaborate with other

enterprises. 

ERP II is more flexible than the first generation ERP. Rather than confine ERP system capabilities within the organization, it goes

beyond the corporate walls to interact with other systems.

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Business Processes, Functions & ERP

Paulo de Matos

SYSPRO Business Development Executive

Business Functions vs. Processes

Business functions: Activities specific to a functional area of operation

Business process: Collection of activities that takes one or more kinds of input and creates an output that is of value to a customer (internal or external). Looks at organization from customer’s perspective.

Integrated data leads to more efficient business processes

Integrated IS: Systems in which functional areas share data. Better integration leads to improvements in communication, workflow, and success of company

Functional Areas

Most companies have four primary functional areas of operation:

Marketing and Sales

Supply Chain Management (SCM)

Finance and Accounting

Human Resources (HR)

SCM consists of the procurement, manufacturing and logistics functions

Functional area of

Operation

Marketing & Sales

Supply Chain Management

(SCM)

Accounting & Finance

Human Resources

Business Functions

Marketing of a Product

Purchasing goods & raw materials

Financial accounting of payments from customers & to suppliers

Recruiting & hiring

Taking sales orders

Receiving good & raw materials

Cost allocation & control

Training

Customer support

Transportation & logistics

Planning & budgeting

Payroll

Customer relationship management

Scheduling production runs

Cash-flow management

Benefits

Sales forecasting

Manufacturing goods

Government compliance

Advertising Plant maintenance

Functional Areas of Operation

Figure 1-1 Examples of functional areas of operation(Source: Monk and Wagner, 2013)

Input Functional area responsible for

input

Process Output

Request to purchase computer

Marketing & Sales Sales order Order is generated

Financial help for purchase

Accounting & Finance

Arranging financing in-house

Customer finances through the computer company

Technical support Marketing & Sales 24-hour helpline available

Customer’s technical query is resolved

Fulfilment of order

Supply Chain Management (SCM)

Shipping & delivery

Customer receives computer

Business Processes

Figure 1-2 Sample business processes related to the sale of a PC (Source: Monk and Wagner, 2013)

Business Process Example

Figure 1-3 Example of a process view of business(Source: Monk and Wagner, 2013)

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Material Order Process

Customer Order Process

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Business Process Management or Modeling for ERP Selection,

Implementation and Maintenance

Paulo de Matos

SYSPRO Business Development Executive

Business Process Management (BPM) or Modeling

Role in Implementation

Role in ERP System Selection

On-going Role?

Further Uses – ISO, Standard Operating Procedures (SOP), On-boarding, Change Management

“Business Process Management or Modeling (SYSPRO Process

modeling – SPM) should be your go-to framework for ERP systems selection and implementation.”

Challenges in Implementations

Excessive customisation

Dilemma of internal integration

Poor understanding of business implications and requirements

Lack of change management

Poor data quality

Misalignment of IT with business

Hidden costs

Limited training

Lack of top management support

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