ERP Evolution: From ERP to ERP III (PDF)

w3 Describe the evolution of ERP systems from ERP to ERP III Enterprise Resource Planning II Aka. Internet-enabled ERP, extended ERP As e-Business firms started growing bigger with advanced needs in HR, accounting, and warehousing, non-ERP vendors were unable to support their requirements. ERP vendo...

w3 Describe the evolution of ERP systems from ERP to ERP III Enterprise Resource Planning II Aka. Internet-enabled ERP, extended ERP As e-Business firms started growing bigger with advanced needs in HR, accounting, and warehousing, non-ERP vendors were unable to support their requirements. ERP vendors were starting to expand their functionality to the Internet and eBusiness. Intense competition and fluctuating sales have forced the ERP vendors to expand functionality to add value. The saturation of the demand in big business and the lucrative nature of the small and midsized business markets have led vendors like SAP and Oracle to enter the small business market. ERP Role of system Processes supported IS architecture w3 ERPII ERPIII Multi-organizational Multi-organizational, participation with some collaborative commerce potential internet based, full collaborative commerce functionality Internal, hidden, with an intracompany boundary Externally connected with intra-enterprise focus Externally connected, open network to create borderless interenterprise/industry wide focus Web aware, closed & monolithic Web-based, componentized, nonproprietary, internally & externally available, Single organization optimization & integration Web-based communication, SOA, external exchange via 1 Enterprise type Vertically integrated enterprises often subscribed to by joint ventures open source and cloud computing Extended enterprise Virtual enterprise Differentiate between best of breed, monolithic and postmodern ERP 1. Best of Breed ERP: Integration Approach: Best of Breed ERP systems take a modular or "best-of-breed" approach. They consist of individual, specialized software modules, each designed to excel in a specific function (e.g., HR, finance, supply chain). Customization: These systems often allow for a high degree of customization within each module, making it easier to meet unique business requirements. Pros: Offers the advantage of using the best software for each specific function, potentially resulting in superior performance. Cons: Integration between modules can be complex, and maintaining multiple vendor relationships may be necessary. 2. Monolithic ERP: Integrated Suite: Monolithic ERP, also known as "integrated suite," provides a single, comprehensive software solution that covers a wide range of business functions in one package. Integration: The modules within a monolithic ERP are tightly integrated, providing seamless data flow and a single source of truth. Pros: Easier to maintain, as it's from a single vendor; data consistency and integrity are maintained throughout the system. Cons: Limited flexibility and may not excel in specialized areas, leading to potential compromises in certain functionalities. 3. Postmodern ERP: w3 2 Post modern ERP moves away from a product centric focus of single instance to user centric focus. Postmodern ERP separates ERP into administrative(e.g.finance,HRand indirect procurement) and operational (e.g. manufacturing, logistics) • A tiered strategy that balances between standardisation and meeting business needs is used. Hybrid Approach: Postmodern ERP represents a more flexible and hybrid approach, combining the strengths of best of breed and monolithic ERP systems. Core and Edge Solutions: In this model, the organization retains a core ERP system for essential functions while using additional, specialized software for niche or edge applications. Integration: Integration is a key focus, with the goal of achieving a balance between a single source of truth and flexibility. Pros: Offers flexibility, allowing organizations to choose the best solutions for both core and niche needs. Integration can be more manageable than a pure best of breed approach. Cons: Requires careful planning to ensure proper integration and data consistency. Monolithic Systems Monolithic systems refer to tightly integrated suites offered by single vendors with the aim of enabling process simplification and standardisation ERP III – Postmodern ERP “Postmodern ERP is a technology strategy that automates and links administrative and operational business capabilities (such as finance, HR, purchasing, manufacturing and distribution) with appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility.” Postmodern ERP is about getting the right mix of applications to support organisation’s business capabilities: w3 3 Administrativestrategy– focusesonadministrativecapabilitiessuchasfinance,human capital management, indirect procurement. Operationalstrategy– focusesonoperationalcapabilitiessuchasordermanagement, manufacturing, supply chain etc. Discuss the problems with monolithic ERP systems Too big, complex and expensive and thus prone to failure Value integration over functional fit and usability, thus heavily customized. Force single suite across enterprise. Inflexible and difficult to make rapid changes. Over-reliant on a single vendor. Describe the benefits of 2-tier ERP strategy 2-Tiered Strategy Tier 1: Core ERP with standardised functions to achieve integrating and operating efficiencies Tier 2: Non-core ERP with differentiated functions that require specialised solutions This results in a hybrid solution that includes a tightly integrated core suite with a loosely coupled domain or line of business applications Understand the relation between corporate IT landscape and ERP evolution Understand the concept of cloud computing A form of standardized IT-based capability — such as Internet-based services, software, or IT infrastructure — offered by a service provider that is accessible via Internet protocols from any computer, is always available and scales automatically to adjust to demand, is either pay-per-use or advertising-based, has Web- or programmatic-based control interfaces, and enables full customer selfservice. Identify and explain the defining characteristics of cloud computing services w3 4 Explain the differences between public, private and hybrid cloud Public cloud: Made available to the general public or a large industry group Owned by organisation selling cloud services Multi-tenancy Private cloud: Operated solely for an organisation May be managed by a third party May be on premise or off premise w3 5 Hybrid cloud: Composition of public & private Discuss the benefits and limitations of cloud ERP Lack of transparency and control – e.g. location of data Data security – unclear access, national regulations Vendor lock-in – switching cloud vendor is complicated Limitations on customization Network dependency Limited functionalities Long term costs – subscription could increase 5-7% annually Elements of Software Applications Presentation layer–Contains instructions for input and output w3 6 Application logic layer–contains instructions that specify functionalities of the program Data management layer–contains instructions to specify where and how to store, search, retrieve and secure data for the application Monolithic Systems Monolithic systems refer to tightly integrated suites offered by single vendors with the aim of enabling process simplification and standardisation Weaknesses: Too big, complex and expensive and thus prone to failure Value integration over functional fit and usability, thus heavily customized. Force single suite across enterprise. Inflexible and difficult to make rapid changes. Over-reliant on a single vendor. w3 7