REVIEWER ICT 4 main functional areas of operation.
● Marketing and Sales
ENTERPRISE RESOURCE PLANNING
● Supply Chain Management
● used to coordinate information in every area of
● Accounting And Finance
the business.
● Human Resources
● It helps manage company-wide business
processes, using a common database and
shared management reporting tools.
Business Process
● attempt to integrate all functions across a
company to a single computer system. A collection of activities that takes one or more kinds of
input and creates an output, such as a report or
● integrating throughout a business tasks
forecast, that is of value to the customer.
● integrate key customers suppliers as part of the
Marketing and Sales (M/S)
enterprise’s operation.
Major Reasons for Adopting ERP ● developing products,
● determining pricing,
● Integrate financial information
● promoting products to customers
● Integrate customer order information
● Standardize and speed up operations processes Inputs
● Customer data
Potential Benefits of ERP
● Order data
Internal Benefits ● Sales trend data
● Per-unit cost
● Foundation for future improvement
● Travel expense company policy
● Integration of data
Outputs
● A real-time system
● Sales strategies
● Increased productivity
● Product pricing
● Reduced operating costs
● Employment needs
● Improved internal communication
Supply Chain Management
External Benefits ● management of flow of goods and services
includes all processes that transform raw
● Improved customer service and order materials into final products.
fulfillment Inputs
● Improved communication with suppliers and ● Product sales data
customers ● Production plans
● Enhanced competitive position
● Inventory levels
● Increased sales and profits
● Layoff and recall company policy
Outputs 1965
Intel employee Gordon Moore -transistors that could be
● Raw materials orders
built into a computer chip has the capabilities of
● Packaging orders computer hardware
● Resource expenditure data 1980’s
Business information stored on individual PCs, but
● Production and inventory reports
sharing information electronically is not easy.
● Hiring information
Mid 1980’s
Accounting and Finance allowed users to share data and peripherals on local
recording raw data about transactions, raw materials networks.
purchases, payroll and receipt of cash from customers.
end of 1980’s
Inputs support the development of ERP was in place: fast
computers and advance database technology
● Payments from customers
Early 1990’s
● Accounts receivable data
caused many companies to downsize and reorganize.
● Accounts payable data
Material Requirements Planning (MRP) software
● Sales data
● Production and inventory data ● Allowed manager to plan production and raw
materials requirements by working backward
● Payroll and expense data
from the sales forecast.
Outputs 1 .Managers looked at Marketing and Sales’
● Payments to suppliers forecast of demand
2. Managers looked at the production schedule
● Financial reports needed to meet that demand, calculated
needed raw materials
● Customer credit data
3 . Projected raw materials purchase orders to
suppliers.
Electronic Data Interchange (EDI)
Human Resources (HR)
Recruitment, training, evaluate, and compensate ● The direct computer-to-computer exchange of
employees. standard business documents
Inputs ● allowed companies to handle purchasing
Personnel forecasts
process electronically
Skills data
● avoiding the cost and delays resulting for paper
Outputs purchase order and invoice systems.
Regulation compliance
Employee training and certification ● service product- collects all the data from the
Skills database various departments and keeps it stored up to
Employee evaluation and date in the cloud.
compensation
● data exchange takes place
THE DEVELOPMENT OF ERP SYSTEM
Bills, Invoices, payment documents, shipping details
1960-1970
Computer hardware and software developed rapidly
Advantages of EDI
Software Development
Savings in Money and Time
- Automates manual processes, saving time. Software Modules
- Reduces paper usage and minimizes human - can be purchased, installed, and run separately.
involvement. - All modules extract data from a common database,
enhancing integration and efficiency.
Improvement in Efficiency and Productivity
- Capable of sharing more documents in less time, SAP Early History
Improvement in Traceability and Reporting April 1, 1972
- Integrates with various IT systems for better data
● Founders could not afford their own computer.
collection and analysis.
● Secured first contract with ICI to develop
Customer Satisfaction materials and logistics management systems
- Timely and accurate transactions lead to higher
customer satisfaction. ● Developed first software package called System
R later known as R/1(real-time financial
Fast Response accounting).
- Centralized data storage allows for quick access
to information, enabling prompt query resolution. 1978
● Began developing a more integrated software
Payments
- Facilitates online payments through net banking version named R/2
and PayPal integrated with EDI software.
1988
Formation of SAP (1972) ● Established subsidiaries in various foreign
countries.
👥 Founders
- Five former IBM business analysts: ● Formed a joint venture with consulting
● Dietmar Hopp company
Arthur Andersen
● Claus Wellenreuther ● Sold its 1,000th system and became a publicly
● Hasso Plattner traded company as SAP AG.
● Klaus Tschira 1988
● Hans-Werner Hector ● SAP recognized the potential of client-server
hardware architecture
● Began development of the R/3 system to
Company Formation
o Established in Mannheim, Germany as leverage client-server technology.
Systemanalyse und
Programmentwicklung (SAP). 1992
● Released the first version of SAP R/3
Goals
● The client-server architecture allowed R/3 to
● Develop a standard software product to meet
operate on various computer platforms,
individual company needs. including UNIX and Windows NT
● Ensure data availability in real-time for users.
● Promote the use of computer screens over
printed outputs. Open Architecture
● Encourages third-party software companies to ● Plans and schedules production activities;
develop add-on products that integrate with records actual activities.
existing software.
Quality Management (QM)
● Facilitates integration of hardware products)
with the SAP system. ● Plans and records quality control activities.
● Includes product inspections and material
PeopleSoft
certifications.
● Founded by David Duffield, a former IBM
employee. Plant Maintenance
● developed software for human resources and ● Manages maintenance resources.
payroll accounting.
● Plans preventive maintenance for machinery to
● Achieved success by using SAP for accounting minimize breakdowns.
and production.
Asset Management (AM)
Oracle
● Manages fixed asset purchases (e.g., plant and
● Founded in 1977 machinery).
- Originally known as Software
● Handles related depreciation.
Development Laboratories (SDL)
● Founders Human Resource (HR)
● -Larry Ellison, Bob Miner, and Ed Oates ● Facilitates employee recruiting, hiring, and
- Won a contract from the CIA to develop training.
a system named Oracle for managing
● Includes payroll and benefits management.
large volumes of data.
Project System (PS)
● 1988
● Allows planning and control of R&D,
- Released Oracle Financials a set of
financial applications. construction, and marketing projects.
● Collects costs against projects; manages build-
SAP ERP Modules Basic Functions to-order items (e.g., ships, aircraft).
Sales and Distribution (SD) Financial Accounting (FI)
● Records sales and scheduled deliveries. ● Records transactions in general ledger accounts.
● Maintains customer information (pricing, ● Generates financial statements for external
shipping, billing). reporting.
-Material Management (MM) Controlling (CO)
● Manages acquisition of raw materials and ● Serves internal management by assigning
inventory. manufacturing costs to products and cost
● Oversees the handling from storage to shipping centers.
of finished goods. ● Analyzes profitability and supports managerial
decisions.
Production Planning (PP) Workflow (WF)
● Maintains production information.
● Automates activities within SAP ERP.
● Performs task-flow analysis and prompts
employees via email for actions.
Significance and Benefits of ERP Systems
Global Integration
● Bridges barriers of currency exchange rates,
language, and culture for data integration
across borders.
Integration of People and Data
● Eliminates the need for multiple computer
systems, streamlining operations.
Enhanced Management
● Enables management to focus on improving
processes rather than just monitoring
operations.
● Increases organizational adaptability to
change.
Costs of ERP Systems
Factors Influencing Cost
● Size of ERP software corresponding to company
size.
● Need for new hardware to run complex ERP
software.
● Consultants and analysts’ fees.
● Implementation time causing business
disruption.
● Training costs.
Estimated Costs
Large Companies - $50 million to $500 million for
multi-national operations.
Midsized Companies-$10 million to $20 million in total
implementation costs.
