Enterprise Resource Planning & Management

Oct-Nov09 N Raveendran General Manager Enterprise wide solutions Sakthi Finance Ltd., Coimbatore nravi@sakthifinance.com

The class room approach

With practical examples Very theoretical - Should be interactive Syllabus focused Doubts have to be cleared for the benefit of all More homework to be done by the students Theory to be covered using multiple books Extra study materials to be provided, wherever necessary

Team Formation
For Functional representation Finance Manufacturing Distribution & Logistics Sales & marketing To handle business cases

SESSION PLAN
Sl.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24-27

Topic Course Introduction. An Overview of ERP What is an ERP System A tour of an ERP System IT strategy and ERP fit Impact of ERP on Finance Impact of ERP on Manufacturing Impact of ERP on Distribution /Logistics Impact of ERP on Sales and Marketing SAP Basics Windows / Training / User Group Re-engineering and ERP Preparing for ERP Implementation Focus As Is Picture To Be Design Construction / Testing / Implementation Managing the Implementation process: Partners in Implementation Change Management Team formation and development Risk Management Project and Program Management
Changes in Users and IT Roles

Readings Lecture Notes

TB 1 pp 1-11, TB 2 Ch. 1 & 7

Bancroft Ch. 1 Norris Ch. 2 Norris Ch. 3 Norris Ch. 4 Norris Ch. 4 Norris Ch. 4 Bancroft Ch. 2 Bancroft Ch. 5 Bancroft Ch. 6 Bancroft Ch. 7 Bancroft Ch. 8 Bancroft Ch. 9 Bancroft Ch. 10 Norris Ch. 9 Bancroft Ch. 11 Bancroft Ch. 12 Norris Ch. 13 Norris Ch. 14
Bancroft Ch. 13

Integration Management Lessons Learnt Project Report presentations

Norris Ch. 20
Bancroft Ch. 14

Presentation - Path
ERP General Concepts ERP based applications - Options ERP @ Pricol A case Beyond ERP Overall Summary - Recap

World without computer engineers

ERP General Concepts

ERP General Concepts

Enterprise Resource Planning

What is ERP? The Current Scenario Why ERP? Definition Evolution Expectations BPR & ERP BPR The Steps

What is ERP?
Enterprise Resource Planning

ERP is a solution, which facilitates company-wide integrated information systems, covering all functional areas performs core Corporate activities and increases customer service augmenting Corporate Image

The Current Scenario

Enterprise Resource Planning

Islands of Information Difficult to get timely & accurate information Heterogeneous Hardware & Software platforms & practices Poor connectivity between different organizational locations Sticking with obsolete technology Resist to change Lack of proven man-power to develop integrated software

Information Islands [existing]

Planning Human Resources Production

Sales

Materials

Finance

Information @ an Enterprise [Need to be]

Planning Human Resources Production

Sales

Finance Materials

Why ERP?
Enterprise Resource Planning

For Management to know what is happening in the company One integrated solution for better Management Transparency of Information thro single data source For cycle time reduction To achieve cost control & low working capital To marry latest technologies To shun the geographical gaps To satisfy the customers with high expectations To be Competitive & for survival

ERP - Definition
Enterprise Resource Planning

Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform

ERP - Definition
Enterprise Resource Planning

[As per Frost & Sullivan]

Enterprise Resource Planning (ERP), is a software driven business management system which integrates all the facets of business, including planning, manufacturing, sales and marketing. ERP as a business solution aims to help the management by setting better business practice and equipping them with the right information to take timely decision

Evolution of ERP
Enterprise Resource Planning
1960s - Systems Just for Inventory Control 1970s - MRP Material Requirement Planning (Inventory with material planning & procurement) 1980s - MRP II Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.) Mid 1990s - ERP Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards ERP II Collaborative Commerce (Extending ERP to external business entities)

BPR & ERP

Business Process Re-engineering
Just automating the existing business practices will not help ERP to achieve the anticipated results because, OO + NT = EOO Business Process Re-engineering [BPR] brings out the deficiencies of the existing setup BPR and ERP will give way to implement new systems and the long pending improvements in the existing systems BPR may be time consuming but the scope can be restricted & controlled by the Management

BPR - Steps
Business Process Re-engineering

Step 1

Step 2

Step 3

Understand Simplify/Improve Automate

Understand the existing systems associated with all the functionalities Draft & frame the Implement possibilities & ways with the help to simplify or of ERP Improve or eliminate the processes

ERP for an Enterprise The options

Just to Relax

Crazy Maths

ERP Options
Enterprise Resource Planning
OPTION 1 MAKE [Using Internal resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department OPTION 2 - BUY Going for Tailor-made ERP packages available in the market like SAP, Oracle applications, Baan, PeopleSoft etc. OPTION 3 MAKE [using External resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a software solution provider

Building ERP solutions using Internal Sources

ERP Building using Internal resources The Facts

Lack of adequate & qualified manpower Not driven with clear focus on expectations, time & cost Poor software project management Lack of seriousness with the Management & the IT Team High employee turnover Lot of schedule gaps during Project execution Normally project life is more Frequent change in the scope with the approval of the Management

Tailor-made ERP Solutions

About
Generalized off the shelf application s/w packages Modules based on rich functionalities for all business functions User tested with lot of installations No lead time requirement for software development Tuned for more users/networks with adequate & inbuilt security Parameterized for flexibility Can sit on latest hardware & software platforms Upgradation of functionalities with version control
Tailor-made ERP solutions

Execution phases
Tailor-made ERP solutions

ERP product selection Preparations Production Implementation Post-Implementation

ERP Product selection Phase

Tailor-made ERP solutions

ERP Team formation for selection Appointment of Consultants [if needed] Scoping study Product selection Implementation partners selection Hardware/Communication cost estimation

ERP Product selection Criteria

Goal: To select the Most Suitable Software Package Solution Functionality

5 Strategic Requirement Levels

Technology

Vendor

Support

Costs

Reputed ERP Products

Tailor-made ERP solutions

[partial list]

[MFG Pro]

[Ax/Nav/GP]

[Ver 9.0]

Preparation Phase
Tailor-made ERP solutions

Framing ERP Implementation Strategies Formation of Apex & Steering committees Functional & IT team formation Training on ERP functions & features Scope finalization [as is & to be] GAP analysis Action plan to resolve the gaps

ERP product acceptance - options

Tailor-made ERP solutions

1. Adapting directly, all the functions available in the ERP Product [Applicable for startup companies] 2. Change the way the firm does the business to fit the product [Compromising] 3. Customize the ERP product to suit the business Processes. [Customization]

GAP Analysis
Tailor-made ERP solutions

This is the process to identity the gaps by mapping the expectations of the company with the capabilities of the ERP product Results of Gap Analysis Directly Supported Workaround suggested Extension required Change in business process suggested Not fully supported Manual not under the scope of ERP

Production Phase
Tailor-made ERP solutions

Installing the ERP software & hardware Tuning the ERP software to meet the customization needs Master & Control data arrival as per the Product data structures Location & people specific roles & rights allocation for module access & security

Implementation Phase
Tailor-made ERP solutions

Conference Room Pilot [Parallel run] Resolving the Parallel run issues Training the end users Live run

Post-Implementation Phase
Tailor-made ERP solutions

Regular monitoring Tuning [hardware/software] for patching the performance issues Maintenance

Pitfalls & Points of concern

Costly comparing to custom-built options Lot of hidden costs Chances of cost & time overrun are high The Level of customization/Indianization Compulsion to pay for redundant modules/features Vigorous involvement of all during implementation Non-availability of special practices like Customer Complaint, Logistics Linking historical data offline & painful The requirement of Change Management is a must Dependency on outsiders is high IT department Poor grip on the Implemented systems

Tailor-made ERP solutions

Critical Success Factors

Tailor-made ERP solutions

The firm & optimistic approach of the Management - on adapting the ERP product driven methodologies - on customization - on monetary commitments The dedicated Team ? Good Training Strict adherence to the Project schedules Right technical infra-structure Change Management

Just to Relax
Go

The cheapest car is Tata Nano Do you want to see the Cheapest Bike?

Custom-built ERP Solutions using external resources

Building ERP using Ext.sources

About this option The Principle! The Steps Why? Points of Concern Software Vendor selection Critical Success factors

About
Custom-Built ERP solutions

Here the whole package is designed & built by keeping a specific enterprise & its business Practices in mind by incorporating the improvements/additions with due integration without compromising or changing the current way of doing the business and providing flexibility to accommodate your business fluctuations

The Principle!
Custom-Built ERP solutions

The best as seen elsewhere, need not be the the best for you. What is your best is what can be successfully implemented

The Steps
Custom-Built ERP solutions

1. Software vendor selection 2. Detailed study by the vendor 3. Scope & platform finalization 4. Freezing the commercials 5. Development 6. Hardware addition/upgradation 7. Old master/transaction data migration 8. Parallel run with Integration & connectivity check 9. Implementation 10. Maintenance

Why?
Custom-Built ERP solutions
Very economical while comparing the cost of implementing tailor-made ERP solutions Less prone for hidden-cost hits The company can opt for its choice of Hardware, Software & communication platforms based on the skill availability The company and the software vendor have the direct relationship during the project execution. The proximity would be high & convenient. IT department has good control over the Project What is required only would be considered under the scope No redundancy

Why? - Cont.
The requisite flavor of E-Biz & work-flow components can be embraced towards value edition The existing practices & applications can be tuned and linked with the proposed package Maintenance & improvements are easy & less costlier. Even IT team can maintain the setup after getting the source code

Points of Concern
Software development vendor selection Requirement/scope finalization [high chances of retaining the islands as it is] Less chances of Value addition Not time tested Chances of Prolonged project duration

The Critical Success Factors

Custom-Built ERP solutions

Clear Vision & support of the Management Capabilities of the software development vendor Scope & Expectations finalization towards meeting the ERP concepts Strict implementation schedules & periodical monitoring The involvement of the IT & functional teams

What is your Choice

Just to Relax
Go

Good advts.

Creative advts.

Big Bazar Women's Day Celebrations....... They have gone.... what about you???????

ERP/SAP @ Pricol A Case

Beyond ERP !!!

Beyond ERP [ERP II]

Supplier Supplier Collaboration Collaboration

Supply Chain Supply Chain Management Management

Product Product Lifecycle Lifecycle Management Management

Key Process Key Process Integration Integration via ERP via ERP
Customer Customer Management Management

Design Design Partners Partners

Consumers Consumers and Channels and Channels

ERP in the Supply chain

Summary of key points

Why should you adopt and ERP

Greater accessibility to data, allowing management upto-the-minute access to information needed to make key decisions Ability to track actual costs of activities and perform activity based costing Elimination of duplication and the current practice of building stand-alone databases and spreadsheets to enter and manipulate data for reporting purposes Establishment of uniform processes that are based on recognized best business practices Replaces aging, non-integrated core legacy systems that are costly to support and maintain Enables a single integrated data repository that provides superior reporting and data analysis capabilities and promotes information sharing Improves workflow and efficiency

ERP Project Macro level steps

Step 1: Evaluate your needs and requirements useful as a guide for the project, used as a benchmark Compare solutions more gap means more costly customization, choose that fits need best Step 2: While developing the contract- consider: Fixed costs Vs time and materials, with or without a cap Build flexibility into the contract to accommodate changing technology Check references Step 3: Limit customizations

ERP Project Macro level steps [cont]

Step 4: Address key functional issues Need and gap analysis Process engineering Process documentation Audit of data and system Step 5: Address key technical issues Sizing the system (inclusive of desktop & network) Distributed versus centralized production Conversion of data and report development

Conference room pilot Validation of data and systems Staffing and training

Change management and problem tracking Help desk and ongoing support Planned upgrades and revisions

What factors influence the purchase of an ERP

Cost and Perception
Price of software Real Time processing Vendor reputation Implementation time

Platform compatibility Degree of Industry functionality customization

Scalability

Technology and expertise

ERP Implementation methodology

Forming Core Team for each Module Understanding Client Business processes Requirement Specification Sign off Master Data Templates & Client Resources Data Migration strategy (eg. Handling pipe-line transactions) Configuration Board Room Pilot 1 (Sample Data) Core Team training Master Data & Sample Transactions Legacy Data Upload Board Room Pilot 2 (Live Data) Parallel run Go live

Critical Success factors

Top Management Involvement (weekly reviews)
- on adapting the ERP product driven methodologies - on customization decisions - on monetary commitments

Dedicated Core Team Training & Change management Right technical infra-structure Efforts required during parallel run The right strategy to handle the transactions in pipe-line while going live Involving clients technical team during ABAP and Script program developments. Pre-printed formats & Printer arrangements Strict Process / Procedure discipline Project schedule adherence Post Implementation support/maintenance

ERP 7 Keys for Success

Scope is realistic and managed Work and schedule are predictable Team is high-performing Stakeholders are committed Business benefits are realized Risks are mitigated Delivery organization benefits are realized

ERP .. As a System

ERP - Cost Vs. Benefit

Business Systems Are The Heart Of Your Business

If you needed a heart transplant, you would want
The best surgeon has done this hundreds of times The best heart can last as your body changes & grows The best procedure proven successful The best support continued care to insure your health

You want whatever it takes to get it right the first time. You want to

Do It Once, Do It Right, Make It Last

Open Session