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During the last decade, ERP systems have received a significant
amount of attention from researchers and practitioners from a variety of functional disciplines
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Thus,
Enterprise resource planning (ERP) system solutions are currently in high demand by both
manufacturing and service organizations because they provide a tightly integrated solution to an
organization’s information system needs
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It attempts to identify
the main benefits of ERP systems, the drawbacks, and its architecture
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0 Acknowledgments

―I would like to thank my lecturer, Mr
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Thanks also to all the
people who provide useful suggestions to me in which aid me in researching and compiling the
paper
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"

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Hence, managers need information to be more readily accessible
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Therefore, Integration has become the big issue
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Enterprise Resource Planning (ERP) software is designed to improve and auto-mate your business
process operations
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Through Enterprise Resource Planning
software system approach, business leaders can control the details of their complex businesses by
linking all departments together to maximize productivity and profitability
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This paper will provide an essential understanding of how traditional ERP implementations have set
the groundwork within organizations to start capturing all information onto one true ―enterprise‖
system where a comprehensive review concerning ERP software is presented
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By reviewing
these issues and literature, business leaders may better understand how to simplify their complex
business operations
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0 Background

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2 What is Enterprise resource planning (ERP)?

Enterprise resource planning ERP consists of three word—enterprise, resource and planning and
among the three the last two words are insignificant compared to the first
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In other words, it is a customized, packaged software-based system as a strategic business solution
provides a software architecture that integrates all business functions, including manufacturing,
finance, and distribution handling the majority of an enterprise’s information systems requirements
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It uses a centralized database and usually relies on a common
computing platform
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Figure 1

Take a customer order in pharmacy (Figure 1), for example
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All that lounging around in in-trays causes delays and lost orders, and all the keying into
different computer systems invites errors
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This can be a quite
tedious and frustrating experience
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Finance, manufacturing and the
warehouse all still get their own software, except now the software is linked together so that
someone in finance can look into the warehouse software to see if an order has been shipped
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Many companies, for example, will just install the finance module or HR module
and leave the rest of the functions for another day
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3 Brief History of ERP - How did the ERP evolve?

Step One: Material Requirements Planning (MRP)
ERP has grown over the years to become part of the entire enterprise
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MRP’s inventors were looking for a better method of
ordering material and components, and they found it in this technique
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The logic of material requirements planning
asks the following questions:
(1) What are we going to make? - The master schedule
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(3) What do we have? - Inventory records
(4) What do we have to get? - To determine future requirements
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Ideally, it is extended to addresses operational planning in units, financial
planning in amounts (LE), and has a simulation capability to answer ―what-if‖ questions
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(2) Financial interface - financial reports such as the business plan, purchase commitment report,
shipping budget and inventory projections in amounts
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Step Three: Enterprise Resource Planning (ERP)
This is the latest step in this evolution
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Financial integration is even stronger
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Moreover, now, administrative, sales, marketing, and human resources
staff can share a tool that is truly ―enterprise-wide‖
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These inclusions result from the emergence of Supply Chain Management (SCM) and Customer
Relations Management (CRM) strategies and systems
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(2) Flow of Information – Facilitates the flow of information between the different functions and
processes of an enterprise:
(a) Functions: manufacturing, finance, HR, sales and distribution, material management, logistics
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(3) Plan Events – Plans future events
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However, the names and numbers of modules in an ERP system provided by
various software vendors may differ
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(2) Sales, purchase and inventory – sales and distribution, inventory and purchase
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(4) Resource flow management – production scheduling, finance and human resources
management
(5) Works documentation – work order, shop order release, material issue release and route cards
for parts and assemblies
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(7) Finance – financial accounting, treasury management, enterprise control and asset management
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(9) Human resources – personnel management, training and development and skills inventory
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Figure 3

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with each responsible for a particular system function
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The 3-tier architecture is composed of three layers (Figure 4):
(1) Presentation Layer (End-User Interface—GUI)
- It is considered the top layer, in which the user interacts with a system
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(2) Business Logic Layer (Business logic of functional modules)
- It is the driver of the entire system
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It then takes those requests and runs business logic against them to
provide answers to the presentation and data management layers
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Figure 4
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2
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(b) Potential bottleneck for data requests - the client computer usually can’t see the database
directly and can only access the data by starting the client
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(2)Client program executes application logic
(a) Limited by processing capability of client workstation (memory, CPU) - the server is processing
data that allows the client to work on the presentation and business logic only
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2 Three-tier Client/Server Architectures

In three-tier architectures, the database and application functions are separated (Figure 6)
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In this scenario, satisfying client requests
requires two or more network connections
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(b) No client modification if database location changes - because the middle layer protects the
database tier
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(2) One server handles many client requests
(a) More resources available for server program - additional tiers increase the complexity and cost
of the installation
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 Low cost in terms of infrastructure
requirements
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applications
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 Flexibility in partitioning is very
simple
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 Easier to implement reusable
components
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Drawbacks

 Inflexible in terms of adding more

 Can be very expensive and complex
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 Requires expensive middleware for
integration
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 Limited flexibility in moving
program functionality from one
server to another
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0 The Benefits of ―Full-Function‖ ERP

Overall an ERP system is expected to improve both backbone and front-end functions
simultaneously
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Dimension

Sub-dimension

Explanation

- Cost reduction

Because ERP systems automate

- Cycle time reduction

business processes and enable

- Productivity improvement

process changes, one would

- Quality improvement

expect ERP systems to offer all

- Customer services

of these types of benefits
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- Support business growth
- Support business alliance

large-scale business

- Build business innovations

involvement and internal and

- Build cost leadership

external integration

- Generate product

capabilities, could assist in

differentiation (including

achieving these strategic

customization)

Strategic

ERP systems, with their

benefits
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- Support organizational

The integrated information

changes

processing capabilities of ERP

- Facilitate business learning

systems could affect the

- Empowerment

establishment of organizational

- Build common visions

capabilities
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0 Drawbacks of the ERP systems

To reap the benefits of ERP systems, however, organizations need to over-come certain problems
and disadvantages, which are listed in Table 2
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Cost may vary from thousands of dollars to millions
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The architecture and components of the selected system should
Conformity of the modules conform to the business processes, culture and strategic goals of the
organization
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multi-vendor consideration, options for ―best of
Vendor dependence

breeds,‖ long-term committed support
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Scalability and global
outreach
Extended ERP capability

Look for vendor investment in R&D, long-term commitment to
product and services, consider Internet-enabled systems
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To adapt to today’s challenging and competitive business environment, organizations are
implementing ERP systems to achieve a capability to plan and integrate enterprise-wide resources
in order to shorten lead times, and to be more responsive to customer demands
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Although ERP provides many advantages; one of the biggest problems with ERP is that it is hard
to customize
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It must be
modified to suit their needs, and this process can be both expensive and tedious
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Hence, combinations of factors have to be considered when undertaking an ERP implementation
including: top management support, business plan and vision, Re-engineering business process,
effective project management and project champion, careful package selection process, teamwork
and composition, user involvement and education and training
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0 Reference

World Wide Web:

[PDF] Alexis Leon ERP Demystified (Second Edition)
Available at
http://www
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com/it/erpdse/downloads/sg02
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M
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W
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Supramaniam and T
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Spedding Enterprise resource
planning An integrative review
Available at
http://miha
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uni-lj
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pdf
[1 September 2012]

[PDF] Channu Kambalyal 3-Tier Architecture
Available at
http://channukambalyal
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com/NTierArchitecture
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collegiateproject
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pdf [1 September 2012]

[PDF] Khurram Ahmad ERP - An Introduction
Available at
http://www
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com/white_paper_pdfs/ERP-An%20Introduction
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Ltd (2003-2012) The Advantages and Disadvantages of ERP
Available at
http://www
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com/erp/erp-advantages

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