ERP Systems

in Partial Requirements of
SOFTWARE CONSTRUCTION COURSE

UNDER THE FACULTY OF
COMPUTER & IT
Prepared By
Tawheed Al_qussi
Under the Guidance of

Prof. Fahd Alwsabi
2015-2016
Agenda
 What is an ERP System ?
 Evolution of ERP
 ERP architecture
 Advantages , benefits
 Disadvantage
 Implementation of ERP system
 Critical factors for successful implementation of ERP
 ERP Adaptation Motivations
 The Top Ten ERP Vendors
Review..
The reuse landscape
Key observation
 A typical Enterprise has many departments/business

units(BU)
 These departments/BU continuously communicate and

exchange data with each other.
 The success of any organization lie’s in the effective

communication and data exchange within the
departments/BU as well as associated third party such as
vendors, outsourcer and customer
Types of Enterprise Systems
Enterprise software systems can be classified into tow types :
 Decentralized systems
 Centralized systems also called ERP

Decentralized systems
In a company with decentralized system of data management…..
 Data is maintained locally at the individual departments
 Departments do not have access to data from other departments /BU

Problems with decentralized systems
 Inconsistency and duplication of the data

 Lack of timely information leads to customer dissatisfaction, loss
of revenue and repute
 High inventory ,material and human resource cost
What is ERP ?
 The term "ERP" stands for "Enterprise Resource Planning".
What is ERP ? cont.
Enterprise :
entire business
What is ERP ? cont.
Resource:
What is ERP ? cont.
Planning :
What is ERP ? cont.
 ERP is not a name of any software, instead it is a class (or type) of software
The system could be used by all departments of the company to manage the
information.
ERP Definition
 “An Enterprise Resource Planning (ERP) system is a generic system that supports
common business processes such as ordering and invoicing, manufacturing,
etc”(Sommerville - Software Engineering 9ed).
 “configurable information systems packages that integrate information and

information-based processes within and across functional areas in an
organization”(Somers and Nelson, 2003)
 Enterprise Resource Planning (ERP) system is a set of modules each works on a

particular functional area linked together to one main accessible database by all
users if authorized. According to Jacobs & Whybark (2000) "the easiest way to
think of ERP is as a big information system that everybody has access to."
Functional Area
PRODUCTION
MANAGRMRNT
ORDERING manufacturing
ERP
HR CRM
INVENTORY
Evolution of ERP
 1960’s - Systems Just for Inventory Control
 1970’s - MRP – Material Requirement Planning

(Inventory with material planning & procurement)
 1980’s - MRP II – Manufacturing Resources Planning
(Extended MRP to shop floor & distribution Mgnt.)
 Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)
 2000's – ERP II – Collaborative Commerce
(Extending ERP to external business entities)
 2010 ERP via Internet facilities

ERP Architecture
• A number of modules to support different business functions.

• A defined set of business processes, associated with each
module, which relate to activities in that module.
• A common database that maintains information about all

related business functions.
• A set of business rules that apply to all data in the database.

ERP Architecture
Characteristics
 The system comprises many business modules linked together on single data base
such as: financial, manufacturing, accounting, inventory management etc.
 The system should use centralized common database
 The integration between the system modules should provide seamless dataflow,
increasing operational transparency through standard interfaces.
 The system modules work in real-time
 ERP system flexible and offer best business practices.
Modules
 Each module is focused on one area of business processes e.g. finance,
human resources etc.
 Enterprise Resource Planning is an integrated, software centric

information system (Klaus, Rosenmann &Gable, 2000) that operates via
a common database at the core of the system (Burt,2000)
Communication Among Modules
When we say modules are integrated that means:

 A module could share information stored in another modules
e.g. list of suppliers etc.
 Also information could flow from one module to the other e.g.
accounting entries etc.
Licensing
Modules could be individually purchased based on what best meets

the specific needs and technical capabilities of the company
Types of users
The end-users of ERP software could be divided into these groups:
 Business users: Performs day to day operations e.g. data entry,

operational reports etc
 Management or executives: Run reports and perform inquiries
that would help them in decision making
ERP Objectives
Advantages
 Integrated myriad business processes saves time and

expense
 Management can make decisions faster and with fewer

errors
 Data becomes visible across the organization

Benefits
 ERP can improve quality and efficiency of the business
 ERP supports upper level management by providing information

for decision making
 ERP creates a more agile company that adapts better to change
 ERP can improve data security
 ERP provides increased opportunities for collaboration

Disadvantages
 A common disadvantage for all ERP systems is the high risks associated with
the implementation process
 Customization can be problematic
 Re-engineering business processes to fit the ERP system may damage
competitiveness or change focus from other critical activities
 ERP can cost more than less integrated or less comprehensive solutions
 High ERP costs can increase the ERP vendor's negotiating power, which can
increase support, maintenance, and upgrade expenses
 Overcoming resistance to sharing sensitive information between departments
can divert management attention
 Integration of truly independent businesses can create unnecessary
dependencies
 Extensive training requirements take resources from daily operations
 ERP systems can be a hard task (especially for big companies) and requires a
lot of time, planning, and money
Implementation
 Wognum et. al (2010) stated that implementing the ERP system is not an easy
job, this is due to the fact that so many aspects must be managed and
controlled
 According to The Gartner Group, 70% of all ERP projects fail to be fully
implemented even after three years (Gillooli, 1998) either partially or
completely
 Moreover, 90% of ERP implementations end up late or over budget and 67%
of enterprise application initiatives could be considered negative or
unsuccessful (Boston Consulting Group,2000)
 ERP projects' failure grades from minor dissatisfactions on certain functions or
a slight exceed on allocated budget/duration to much more serious and
sometime fetal Consequences
 One of major failure cases recorded because of ERP was with Hershey Foods
Corporation in 1999 that faced a 19% drop in 3rd-quarter profits and a 29%
increase in inventories over the previous year due to order processing problems
caused by faulty $112 million ERP implementation (Stedman, 1999).
Critical factors for successful implementation of ERP
 The difficulties of ERP implementations have been widely cited in the literature but
research on the critical factors for initial and ongoing ERP implementation success is
rare and fragmented
 Eleven factors were found to be critical to ERP implementation success:
 ERP teamwork and composition (consultants , internal staff , should be familiar ,)

 change management program and Culture
 top management support(The project must receive approval from top management)
 business plan and vision
 business process reengineering with minimum customization
 project management
 monitoring and evaluation of performance
 effective communication
 software development, testing and troubleshooting
 project champion
 appropriate business and IT legacy systems
ERP Adaptation Motivations
 Motivations behind adopting ERP systems vary from an organization to

another according to their visions, requirements, capabilities, size, sector and
difficulties they need to eliminate
 In ERP case, the major motivation is the need to integrate all functional
processes together in a single system
ERP Adaptation Motivations cont.
Olhager and Selldin (2013) and Marbert et al. (2010) listed the major motivations
based on survey they done on Swedish and U.S. companies that adopted ERP
systems:
The Top Ten ERP Vendors
References
[1] cited from the book: Sommerville - Software Engineering 9ed
[2] cited from the book :SYSTEMS ANALYSIS and DESIGN EIGHTH EDITION KENNETH E.
KENDALL
[3] Nah.F,etc all, “Critical factors for successful implementation of enterprise systems”, University of
Nebraska-Lincoln, Lincoln, Nebraska, USA, and Jinghua Kuang University of Texas-Austin, Austin,
Texas, USA
[4] E. Ertugrul Karsak , C. Okan Ozogul,” An integrated decision making approach for ERP system
selection”, a Industrial Engineering Department, Galatasaray University, Ciragan Caddesi No.
36,Ortakoy, Istanbul 80840, Turkey b HAVELSAN, Mustafa Kemal Mahallesi, Ankara 06520, Turkey
[5] Yousuf.S,” CRITICAL SUCCESS FACTORS IN ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS IMPLEMENTATION”,
An Applied Study on Manufacturing Companies in Jordan That Adopted Baan LN. ERP System

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in Partial Requirements of

SOFTWARE CONSTRUCTION COURSE

Under the Guidance of

 A typical Enterprise has many departments/business

 These departments/BU continuously communicate and

 The success of any organization lie’s in the effective

Enterprise software systems can be classified into tow types :

 Centralized systems also called ERP

In a company with decentralized system of data management…..

 Data is maintained locally at the individual departments

 Departments do not have access to data from other departments /BU

 Inconsistency and duplication of the data

 “configurable information systems packages that integrate information and

 Enterprise Resource Planning (ERP) system is a set of modules each works on a

 1960’s - Systems Just for Inventory Control

 1970’s - MRP – Material Requirement Planning

 2010 ERP via Internet facilities

• A number of modules to support different business functions.

• A common database that maintains information about all

• A set of business rules that apply to all data in the database.

 Enterprise Resource Planning is an integrated, software centric

When we say modules are integrated that means:

Modules could be individually purchased based on what best meets

The end-users of ERP software could be divided into these groups:

 Business users: Performs day to day operations e.g. data entry,

 Integrated myriad business processes saves time and

 Management can make decisions faster and with fewer

 Data becomes visible across the organization

 ERP supports upper level management by providing information

 ERP creates a more agile company that adapts better to change

 ERP can improve data security

 ERP provides increased opportunities for collaboration

 ERP teamwork and composition (consultants , internal staff , should be familiar ,)

 Motivations behind adopting ERP systems vary from an organization to

[1] cited from the book: Sommerville - Software Engineering 9ed

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