Basics of ERP Concept

7/25/2019 Basics of ERP Concept

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Introduction to ERPsystemsLeonard Walletzk

[email protected]

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Who am I

Leonard Walletzky

Assistant Professor of Service Science,Management and Engineering study program

- Master (Ing.) - Faculty of Economics andAdministration, Masaryk University, Brno, CZ(thesis: Accounting software in trade company)

- PhD (Economics) Faculty of Economics andAdministration, Masaryk University, Brno, CZ(doctoral thesis: Economics of information)

Fields of the research: Service Science, ERPsystems, Management by Competencies

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Masaryk University

Brno

Prague


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Masaryk university

is the second largest university in the Czech Republic.

is a respected research university

is the second largest employer in the South Moravian

Region, currently providing work for a total of 5.000employees

consists of 9 faculties and over 200 departments, institutesand clinics.

about 50.000 students are enrolled at MU

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Faculty of informatics

Founded in 1994

More than 2.200 students

25 bachelor and master branches

Increasing cooperation with the Brno Silicon Valley

IBM

AT&T

Red Hat

Motorola

Intensive cooperation with more than 200 IT companies

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Who are you?

How familiar are you with ERP?

What do you expect from this course?

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What is the course about?

Originally designed for non-ITs to understand IT market

For ESIEE rebuiltfor IT to understand IT market

The difficulty of communication with customers

How to understand client s needs

Is there any difference in selling ERP systems and apples?

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What is IT?

IT = information technology

Definition (techterms.com)

Stands for "Information Technology," and is pronounced "I.T." It

refers to anything related to computing technology, such asnetworking, hardware, software, the Internet, or the people thatwork with these technologies. Many companies now have ITdepartments for managing the computers, networks, and othertechnical areas of their businesses. IT jobs include computerprogramming, network administration, computer engineering,Web development, technical support, and many other related

occupations. Since we live in the "information age," informationtechnology has become a part of our everyday lives. Thatmeans the term "IT," already highly overused, is here to stay.

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But what is the sense of IT?

What is the essence of IT?

What is the purpose of its existence?

What can be called IT and why?

How is IT perceived by non-IT population?

Try to make your own definition to be understandable fornon-IT manager

5 min individual task

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IT definition

IT is

The service

Unique

Helping with the most economic, social and inter-humanactivities

Inseparable from those activities

IT is only instrument to provide any kind of activityincluding itself.

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Services Services have become a driving force in economics around the world

Services represent more than 70% of global GDP.

The services sector in EU accounts for almost 70% of EU GDP.

Also manufacturing industries include more and more services. Thereare becoming part of tangible and intangible products

Services are more and more knowledge and information intensive

Service innovation is recognized as key for the economic growth andcompetitiveness

Academic programs and research activities in engineering and businessschools didnt meet the needs of this sector.

Universities, governments and industry start to work together to ensure

that service become a distinct and legitimate area for research andteaching.

ICT plays a major role in services innovation and realization

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Conclusion

Can we live without services?

Try to name all services you have used before you cometo the class today.

We live more in the world of services than in the world ofproducts.

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Why we are talking about

services? ERP (Enterprise Resource Planning) is part of the IT market

It is one of the services offered by IT companies

Without understanding basic consequences of the global IT market noone is able to provide proper service

ERP are on the border between IT and non-IT sector

We need to use a different view to the problems

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Goods or services?

Is the goods the aim of exchange or it is a service theirprovide?

The new logic says

Everything is a service! There is no goods, only services! How is it possible?

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Providing goods

The process is considered as an ownership transfer

The producer and buyer are not closely connected

They are in touch only in the moment of ownership transfer

The product is tangible and it is easy to convert it to moneyThe major task in production is an optimization of product

quantity according to fixed and variable costs

The main goal is to achieve maximum profit in short term

Only difference for the services is immateriality

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The emphasis is not on tangible product

Is on services the customer can get

No matter if the service is realized through the product or

someone else to perform the service

Ownership is not important

The customer obtain benefits by renting to:

use a physical object

hire the labour and expertise

pay for access to facilities and networks

Providing services16


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Relation to information

Work of informatics specialists is about work withinformation

Do they know all semantics and consequences?

SeS is the reaction to moral hazard problem on IT market a tendency to take undue risks because the costs are not

born by the party taking the risk

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Moral hazard example

IT example

Organization has a problem

This problem can be solved by a IT solution (tools)

There is a lot of IT companies able to supply this kind ofsolution

Questions

How would IT expert recognize the right identification ofcustomers problem?

How does customer recognize the IT expert offers the rightsolution for his company?

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Description of MHP19


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Solution of the Moral Hazard

problem To be able to answer both questions we need:

IT expert that has knowledge from both sides

Is able to analyse problem on customers side

He knows proper IT tools Has multidisciplinary knowledge

IT expert is able to act on any side of the market (customer orsupplier)

This kind of expert needs

Servicethinking multidisciplinary education.

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Formalizing the difference

We will speak about dominant logic

It means the point of view we use

Product dominant logic

Service dominant logic

To formalize those systems we need a few fundamentals

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Product dominant logic

Products are tangible

Product is developed by producer

Consumer has no power to affect the product

development Value for customer is based on product ownership

By using the product the value is destroyed

The difference for services is immateriality, other point areused appropriatelly

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Service dominant logic

Service is the fundamental basis of exchange

The customer is always a co-creator of the value

All social and economics actors are the resource integrators

Value is always uniquely and phenomenologically determined

by the beneficiaryThe enterprise cannot deliver value, but only valueproposition

Operant resources are the fundamental source ofcompetitive advantage

All economies are service economies

A service-centered view is inherently customer oriented andrelational

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Service is the fundamental basis of exchange

The application of operant resources

The seller uses his resources to provide the service

The basis for all exchange

There is not possible to simply exchange the product

without using services or this possibility is only marginal

Service is exchanged for service

Services are used on both sides of the market to finish

the transaction

Example: Credit cards transactions

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The customer is always a co-creator of the value

The role of the customer is interactional

The customer can not be ignored

Without interaction with the customer the transaction can

not be finished

Value creation is interactional

Example:

You can not provide the cloud service without

communication with the customer and analysing of his/her

needs

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The enterprise cannot deliver value,but only value proposition

Not only enterprise, generally every entity providing aservice (provider)

School, university, state

Provider can offer their applied resources for the valuecreation

Collaborate on value creation following acceptance ofvalue propositions

Can not create and/or deliver value independently

Example: University and its study programs

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All social and economics actors are the resourceintegrators

Value creation is network of networks

The sellers needs to buy other services

The are customers for other providers

They also participate on value creation

The integration of the resources is kind of the service

Example

Internet provider needs to integrate:

Wired infrastructure rent from the other company

Power supply from electricity company

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Value is always uniquely and phenomenologicallydetermined by the beneficiary

Value is

Idiosyncratic

Designed for particular customer

Experiential

The knowledge and information are not static

Contextual

The combination of knowledge and information is

unique in every particular case

Meaning laden

Client and provider should understand the meaning of

the value (must see the value for both)

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Operant resources are thefundamental source ofcompetitive advantage We speak bout knowledge an information intensive

services

The services are provided by combination of specializedknowledge, ownership of information and combination of

other resources (labour, capital)

The comparative ability to cause desired change drivescompetition

Example:

Apple and iPhonesnew way of communication

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All economies are service

economies Present economics systems can not exist without services

Even developing countries are dependent on services

Example: Payments are done by mobile phones

Services are now becoming more apparent withincreased specialization and outsourcing

X as a Service, where X could be

Infrastructure

Software

Payment

Anything else

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A service-centered view is inherentlycustomer oriented and relational

Service is defined in terms of customer-determined benefit

Service is co-created with the customer

Only customer decide the final version of the service

Co-creation is inherently customer oriented and relational

Example

Development of the IT serv ices

Always need to ask about the basic of the problem they aresolving

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Comparison:

Product Dominant Logic:

Customer is value destroyer

Customer has limited power

to impact quality or features

Customer is motivated todestroy goods to buy new

one

Seller is maximizing short

time profit

Service Dominant Logic:

Customer is value co-creator

Customer communicate with

seller about all features of the

serviceLong time relationship is

preferred

Seller is maximizing the longtime profit

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Using service thinking

Group work

manage team with at least 4 members.

make a research on the internet

find examples of the offer of Product and Servicedominant logic

Does not matter on focusing of company or organization

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Final conclusion

What to remember

IT is a service

We live in world of services

Providing ERP (whatever it is) is a service

Service and product dominant logic examples

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Basics of ERP Concept

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