10.3 ERP Flashcards
WHAT Is an information silo
do silos communicate well with each other?
NO! separated babygirl
Do erp systems encourage info silos
no! they do the opposite
WHAT do ERP do?
- improve communciation between the FAIS
- creates a common database
what is the goal of an ERP
- to integrate the FAIS
- to help info flow seamlessly across them
what does a highly integrated FAIS’s under an ERP look like
changes in one functional area are immediately reflected in other functional areas
Does ERP produce the same resports as another IS?
yes! the FAIS!! ERP integrates the individual FAIS to one big IS
What is an ERP II system?
ERP II systems are interorganizational ERP systems that provide web-enabled links among a company’s key business systems—such as inventory and production—and its customers, suppliers, distributors, and other relevant parties. These links integrate internal-facing ERP applications with the external-focused applications of supply chain management and customer relationship management. Figure 10.4 illustrates the organization and functions of an ERP II system.
The various functions of ERP II systems are now delivered as e-business suites. The major ERP vendors have developed modular, web-enabled software suites that integrate ERP, customer relationship management, supply chain management, procurement, decision support, enterprise portals, and other business applications and functions. Examples are Oracle’s e-Business Suite and SAP’s mySAP. The goal of these systems is to enable companies to execute most of their business processes using a single web-enabled system of integrated software rather than a variety of separate e-business applications.
ERP II systems include a variety of modules that are divided into core ERP modules—financial management, operations management, and human resource management—and extended ERP modules—customer relationship management, supply chain management, business intelligence, and e-business. If a system does not have the core ERP modules, then it is not a legitimate ERP system. The extended ERP modules, in contrast, are optional. Table 10.2 describes each of these modules.
3 benefits of ERP
1_ org flexibility and agility: ERP connects and integrates the org, org can respond faster
2_ decision support: ERP provides essential info on business performance and functional areas, improves managemetn ability to make decisions
3_ quality and efficiency: integration allows org to improve business processes
ERP BREAKS DOWN INFO SILOS
YES WORD
2 drawbacks of ERP
1_ the ERP vendor decides the best practices- companies need to change themselves to adapt to the ERP
-> BUT This gives companies an opportunity to improve outdated practices
2_ ERP can be very complex, expensive, time consuming to implement (risky and expensive)
what are the causes of ERP implementation failure
1) not involving affected employees in process
2 ) tryying to do too much too fast
3) insufficient training in new work tasks
4) failure to perform proper data conversion and testing for new system
what are the two ways companies implement ERP
1) on premise software
2) software as a service (SaaS)
3 types of on premise ERP implementation
The vanilla approach: In this approach, a company implements a standard ERP package, using the package’s built-in configuration options.
The custom approach: In this approach, a company implements a more customized ERP system by developing new ERP functions designed specifically for that firm. D
The best-of-breed approach: This approach combines the benefits of the vanilla and customized systems while avoiding the extensive costs and risks associated with complete customization.
SaaS ERP implementation
Companies can acquire ERP systems without having to buy a complete software solution (i.e., on-premise ERP implementation). Many organizations are using software-as-a-service (SaaS) (discussed in Chapter 13 and Technology Guide 3) to acquire cloud-based ERP systems. (We discuss cloud computing in Technology Guide 3).
In this business model, the company rents the software from an ERP vendor that offers its products over the Internet using the SaaS model. The ERP cloud vendor manages software updates and is responsible for the system’s security and availability.
Cloud-based ERP systems can be a perfect fit for some companies. For example, companies that cannot afford to make large investments in IT, yet already have relatively structured business processes that need to be tightly integrated, might benefit from cloud computing.
The relationship between the company and the cloud vendor is regulated by contracts and by service level agreements (SLAs). The SLAs define the characteristics and quality of service; for example, a guaranteed uptime, or the percentage of time that the system is available. Cloud vendors that fail to meet these conditions can face penalties.
The decision about whether to use on-premise ERP or SaaS ERP is specific to each organization, and it depends on how the organization evaluates a series of advantages and disadvantages. The following are the three major advantages of using a cloud-based ERP system:
The system can be used from any location that has Internet access. Consequently, users can work from any location using online shared and centralized resources (data and databases). Users access the ERP system through a secure virtual private network (VPN) connection (discussed in Chapter 4) with the provider.
Companies using cloud-based ERP avoid the initial hardware and software expenses that are typical of on-premise implementations. For example, to run SAP on-premise, a company must purchase SAP software as well as a licence to use SAP. The magnitude of this investment can hinder small-to medium-sized enterprises (SMEs) from adopting ERP.
Cloud-based ERP solutions are scalable, meaning it is possible to extend ERP support to new business processes and new business partners (e.g., suppliers) by purchasing new ERP modules.
There are also disadvantages to adopting cloud-based ERP systems that a company must carefully evaluate. The following are the three major disadvantages of using a cloud-based ERP system:
It is not clear whether cloud-based ERP systems are more secure than on-premise systems. In fact, a survey conducted by North Bridge Venture Partners indicated that security was the primary reason why organizations did not adopt cloud-based ERP.
Companies that adopt cloud-based ERP systems sacrifice their control over a strategic IT resource. For this reason, some companies prefer to implement an on-premise ERP system, using a strong in-house IT department that can directly manage the system.
A third disadvantage is a direct consequence of the lack of control over IT resources. This disadvantage occurs when the ERP system experiences problems; for example, some ERP functions are temporarily slow or are not available. In such cases, having an internal IT department that can solve problems immediately rather than dealing with the cloud vendor’s system support can speed up the system recovery process.This situation is particularly important for technology-intensive companies. In such companies, IT is crucial to conduct any kind of business with customers. Examples are e-commerce companies, banks, and government organizations that manage emergencies or situations that might involve individual and national security (e.g., health care organizations, police, Public Safety Canada, antiterrorism units, and others).
Finally, slow or unavailable software from a cloud-based ERP vendor creates business continuity problems for the client. (We discuss business continuity in Chapter 4.) That is, a sudden system problem or failure makes it impossible for the firm to operate. Companies lose money when they lose business continuity because customers cannot be serviced and employees cannot do their jobs. A loss of business continuity also damages the company’s reputation because customers lose trust in the firm.
