BBC2302 ENTERPRISE APPLICATION SYSTEMS

BY
OYUGI JAMES
James.oyugi@jkuat.ac.ke

BSc in business computing Third year semester one

@2019
Course outline
 Course Purpose: To enable students to have a critical understanding of Enterprise
Information Systems so as to be able to support the operative functions of organizations
in business related contexts.
 Learning Outcomes
 Upon successful completion of this course, the student should be able to:
 Outline the functionality and usage of Enterprise Information Systems;
 Evaluate the offerings of various Enterprise Information Systems vendors;
 Compare various implementation strategies and their applicability for different
implementation scenarios
 Integrate Enterprise Information Systems knowledge with other issues such as electronic
commerce, supply-chain integration, business process reengineering, and object
technology.
Course Description
 Introduction; Enterprise Information Systems definitions and benefits, Enterprise
Information Systems concepts
 The history and evolution of Enterprise Information Systems. Enterprise
Information Systems Life Cycle
 Deciding to go Enterprise Information Systems, Choosing an Enterprise
Information System
 Designing an Enterprise Information System, Choosing Standard Models,
Artefacts and Processes
 Implementing Enterprise Information Systems, After Going Alive and Training.
 Electronic Commerce and Risk; Enterprise Information Systems and Electronic
Commerce, Enterprise Information Systems Risk
 Success and Failure Factors.
 Teaching Methodology
• Lectures, practical and tutorial sessions in Computer Laboratory, individual and group
assignments, exercises and project work.
• Instructional Materials Overhead projector and computer, hand-outs, white boards,
appropriate software.
• Course Assessment 30% Continuous Assessment (Tests 10%, Assignment 10%, Practical
10%) 70% End of Semester Examination.
Course Textbooks
• Daniel E. O’Leary: ”Enterprise Resource Planning Systems: Systems, Life Cycle, Electronic
Commerce and Risk”, Cambridge University Press ( 2000), ISBN: 0521791529 2.
• Brady, Monk, Wagner: “Concepts in Enterprise Resource Planning”, Thomson Learning
(2001), ISBN: 0619216638
• Information Resources Management Association (2011), Enterprise Information Systems:
(Concepts, Methodologies, Tools and Applications), Idea Group Inc, ISBN 1616928530,
9781616928537.
History of organizational
systems
 Calculation systems
 Functional systems
 Integrated systems
Calculation systems
 1950-80
 Single purpose
 Eliminate tedious human work
 Examples: Payroll, General ledger, Inventory
 Technology used: Mainframes, magnetic
tapes, batch processing
A System/370 Model 145
(1970’s)
removable-disk hard drives
Hard drives
A very nice-looking magtape-
drive
Magtapes
Batch processing
Printer

 800 lines/minute
with 48
character train,
136 columns
with 6 or 8 lines
per inch spacing
Stack of Computer Printout Paper
Functional systems
 1975-20??
 Use computers to improve operations
 Applications: Human resources, order entry, manufacturing
resource planning
 Technologies: Mainframes, PC’s, LAN’s
 Typically contained within a department
 Islands of automation
 Applications independently developed and deployed
 Driving force: availability of mini-computers
Minicomputer
Functional system applications
 Human resources System
 Accounting and finance systems
 Sales and marketing System
 Operations management System
 Manufacturing Systems
Problems with function based
application
 Sharing of data between systems
 Data duplication
 Data inconsistency
 Applications that don’t talk to one another
 Limited or lack of integrated information
 Isolated decisions lead to overall
inefficiencies
 Increased expenses
 What is ERP?
 It may also integrate key customers and
suppliers as part of the enterprise’s
operation.
 It provides integrated database and custom-
designed report systems.
 It adopts a set of “best practices” for carrying
out all business processes.
What is ERP?

 An ERP system is an attempt to integrate

all functions across a company to a single
computer system that can serve all those
functions’ specific needs.
 “Integration” is the key word for ERP
implementation.
Major Reasons for Adopting ERP

 Integrate financial information

 Integrate customer order information
 Standardize and speed up operations
processes
 Reduce inventory
 Standardize Human Resources
information
 Potential Benefits of ERP
 Internal Benefits
• Integration of a single source of data
• Common data definition
• A real-time system
• Increased productivity
• Reduced operating costs
• Improved internal communication
• Foundation for future improvement
 Potential Benefits of ERP

 External Benefits
• Improved customer service and order
fulfillment
• Improved communication with suppliers and
customers
• Enhanced competitive position
• Increased sales and profits
Vendors
Evolution of ERP
 Enterprise Resource Planning systems automate and integrate the core
functionality of an organization. ERP facilitates the flow of information among
the different functions of an enterprise, while also permitting information
sharing across organizational units and geographical locations (Markus et al.,
2000).
 According to Kalakota and Robinson (2001) the evolution of ERP systems
can be divided into 4 phases: Manufacturing Integration, Enterprise
Integration, Customer-centric Integration and Inter-enterprise Integration.
Phase 1: Manufacturing Integration (MRP) In the 1970s, production oriented
information systems were known as manufacturing resource planning (MRP)
systems. The aim of the MRP was to schedule and release manufacturing
work orders and purchase orders.
Evolution of ERP
Phase 2: Enterprise Integration (ERP):In the mid-1990s, ERP became the latest
enhancement of MRP II, with added “back-office” functions such as finance,
warehousing, distribution, quality control and human resource management,
integrated to handle the global business needs of a networked enterprise (Siriginidi,
2000). The main goal of the ERP was to facilitate information sharing and
integration across these varying functions and to provide automated solutions to a
wide range of business processes.
Phase 3: Customer-centric Resource Planning (CRP):The range of ERP functions
was further expanded at the end of the 1990s to include “front-office” functions
such as sales, marketing and e-commerce. E-commerce applications needed to be
connected to back-end systems and thus forced many ERP software providers
(including SAP, PeopleSoft and BAAN) to reinvent themselves as CRP providers.
Evolution of ERP
Phase 4: Inter-enterprise Integration (XRP):Since the world of the 2000s has
become one of interconnected enterprises creating global information systems,
the scope of ERP systems comprises the entire value chain of the enterprise, its
customers, suppliers and trading partners. The main goal of the XRP system is to
provide intelligent decision-support capabilities in order to reduce inventory,
foster strategic pricing, improve cycle times and increase customer satisfaction
throughout the supply chain management and selling chain management.
 ERP Implementation Approaches

 The big bang – install a single ERP system

across the entire organization
 Franchising – Independent ERP systems are
installed in different units linked by common
processes, e.g., bookkeeping.
 Slam dunk – install one or several ERP
modules for phased implementation of key
business processes.
Major Phases of ERP Implementation
(Kent Sandoe, Enterprise Integration)

 Initiation – develop business case, project

scope, and implementation strategy
 Planning – establish implementation team,
determine goals and objectives, establish
metrics
 Analysis and process design – analyze and
improve existing processes, map new
processes to be adopted by the system
 Major Phases of ERP Implementation
(Kent Sandoe, Enterprise Integration)

 Realization – install a base system,

customization, and test the system
 Transition – replace the formal system with
the new system, data conversion
 Operation – monitor and improve system
performance, provide continued training and
technical support
Major Challenges to ERP Implementation

 Limitations of ERP technical capabilities

 Inconsistency with existing business
processes
 Costs - implementation (hardware, software,
training, consulting) and maintenance
 Impact on organizational structure (front
office vs. back office, product lines, etc.)
 Changes in employee responsibilities
Major Challenges to ERP Implementation

 Flexibility of software system upgrades

 Implementation timelines
 Availability of internal technical knowledge
and resources
 Education and training
 Implementation strategy and execution
 Resistance to change
 Total Cost of ERP Ownership (in
millions of $) - META Group Survey
System Medium Average Smallest Largest Baan
16.1 13.6 0.8 26.5 JD Edwards 3.9
5.7 0.8 21.6 Lawson 1.9 4.1 0.4
16.4 Oracle 5.4 11.2 1.4 42.8 PeopleSoft
7.4 15.5 1.3 58.6
SAP 13.9 52.2 0.8 308.2
SSA 1.7 7.6 0.7 29.6
From: “ Implementation Study Reveals Costs, Benefits,” The Performance
Advantage, APICS, October 1999, p.7
 Benefits of ERP Implementation
(META Group Survey)
 Benefits are mostly in terms of cost containment rather
than revenue increase.
 53 companies (out of 63) reported annual savings of
over $5 millions with the median annual saving of $1.6
million. Nine companies account for 73.4% of the
reported savings.
 The study found that much of the ERP value is in
indirect, non-quantifiable benefits.
 A number of companies surveyed had a negative net
present value.
 ERP Implementation - Key Enablers
(APQC Best-Practice Report)
 The organization is prepared for the change.
 The executive leaders are active and visible in their
support.
 The initiative is seen as a business imperative by
the organization.
 The resources are available to conduct the project
completely.
 A good packaged system is used and not
customized.
 The user group is trained to use the software before
it is implemented.
 ERP Implementation Practices
(APQC Best-Practice Report)
 Project Management
• Organizations link implementation teams to both the
technical (IS) and functional departments.
• They tightly control implementation processes
• They appropriately use consultants throughout the
implementation process
• They manage turnover of key implementation employees
• They have basic business reasons for implementation
• They align implementation with organizational strategies
 ERP Implementation Practices
(APQC Best-Practice Report)

 Change Management
• Redesigned jobs call for higher levels of skills and
accountability
• Change management is viewed as more than just
increased training and communication
• Enterprise-wide systems drive redesigned changes.
• The executive sponsor is the change agent.
• Resistance from the work force (including
management) is the most significant obstacle.
 ERP Implementation Practices
(APQC Best-Practice Report)

 Technology Excellence
• Organizations rely heavily on the ERP
package as the majority of their application
configuration.
• Organizations implement ERP packages on
time and within budget
• Organizations centralize support groups
within their IT departments
 New Developments In ERP

 Availability of web-based and wireless ERP

systems
 Adoption of easy-to-install ERP systems
 Linkage to other software systems, e.g.,
supply chain management system, e-
commerce, customer relationship
management system