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Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Main objectives
Explain and detail why any given company should deploy an ERP information system within its organization Expose the main advantages of adopting an Open Source Business Application Brief review of OpenERP as a tool that improves the management of enterpresarial resources
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Table of contents
Introduction to Information Systems Why does my company need and ERP solution? ERP implementation What is OpenERP? OpenERP project OpenERP community OpenERP technology How does OpenERP do business? Implementation approaches
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Human component
Information
Information
Organizational component
Information
Technological component
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Intelligence
Data: gathered facts within the organization. They are raw data, this is, not processed yet Information: processed data and presented personalized to the end-user Knowledge: solutions for problems. Needed information and rules to resolve some given problems Wisdom: it simulates the behavior of an expert in a particular domain (expert systems, Data Mining, etc.)
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Forecasting
Investment management Quality management Personal management Human Resource Management Plant maintenance
MRP: 1960
Master Production Schedule Material Requirements Planning Capacity Requirements Planning Execute capacity plans Execute material plans
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
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Tailor-made software
Internet
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Internet
Internet
Internet
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Data
Information
DIKW Pyramid
Knowledge
+ Intelligence
Evaluation
Data
Wisdom
Wisdom
Challenges
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ERP implementation
Chronological process
Chronological steps prior to being in production phase the ERP 1) Take the decision to implement an ERP 2) ERP selection 3) BPR (Business Process Reengineering) 4) Implementation 5) Entering to production 6) Success analysis
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ERP implementation
Chronological process (II)
Why it is recommended to change business practice to suit the ERP software rather than customizing the software? Before implementing an ERP software the organization needs to: Analyze current processes Identify non-value adding activities Redesign the process to create value for the customer Then, develop an ERP system package to suit the organizations requirements A key contribution of ERP software is the bundled business process knowledge that comes along with ERP software These processes have evolved over the past two decades of ERP implementation in some of the most well-managed corporations around the world By adapting to those processes that have proved successful in some of the finest corporations around the world, an organization implementing ERP would get the advantage of these best of the breed practices consultant recommendations
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ERP implementation
1) Take the decision to implement an ERP
Do we already have clear that we need an ERP for our company? Fast technological changes have provoked companies not to demand specific solutions for their problems, but integrated solutions such as ERP When C-level managers realize that profits exceed costs when every single department is sharing information through an ERP, they ask a consulting firm to assess them in choosing and deploying an ERP solution Some questions to answer: Where is the company right now? Where does the company want to be? What is exactly what the company needs? Where exactly do we must start? Who is the responsible?
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ERP implementation
2) ERP selection
Prior to choose a specific solution, we must check that Every single functional aspect is properly covered Processes are properly integrated Lately deployed IT Are they compatible with the new solution? Customization capacity (specific software) and parametrization utilities Can the business absorb implicit cost? Is the ROI positive? (regarding also opportunity costs)
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ERP implementation
2) ERP selection (II)
Proprietary ERP software
Microsoft Dynamics NAV, Sage/API, SAP R/3, BAAN, Oracle EBusiness Suite y JD Edwards, Eurowin, etc.
Free and Open Source ERP software
OpenERP, Compiere, Open Bravo, Apache OFBix/opentaps, ERP5, OpenMFG, OpenPro, etc. List of ERP software packages
http://en.wikipedia.org/wiki/List_of_ERP_software_packages
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ERP implementation
2) ERP selection (III)
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ERP implementation
2) ERP selection (IV)
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ERP implementation
2) ERP selection (V)
In 2010 (of over 1.600 companies)
Tier II solutions have increased their market share by 30% since 2008 SAP is still the benchmark in the ERP market Oracle eBusiness has been the most demanded solution Dynamics the most profitable one (payback and ROI) In almost 72% of the implementations, parameterizations were done, while in up to 24% of them almost full parameterizations Tier I solutions usually require more parameterizations than Tier II and III solutions Albeit 72% of the companies answer satisfactorily to the performance of its vendor, 55% of them expose how their solutions provided 30% or less of the expected profits
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ERP implementation
2) ERP selection (VI)
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ERP implementation
2) ERP selection (VII)
The closest future CRM and SCM integration (OpenERP has some modules that already do it CRM & SRM) With GSI Deal, eBay Shifts to Big Retail: EBay, synonymous with second-hand wares, is seeking a new retail identity, from small power sellers to connect with large retailers (Toys R Us, Aropostale and Kenneth Cole, etc.). [03/29/2011] Web architecture instead of desktop (OpenERP offers both GTK client and web) Wireless technologies and progress in mobile technologies Why SAP Is Buying Sybase for $5.8 billion; SAP relies on Sybases strengths in transporting data to and from the smartphones of customers. [05/12/2011] Open Source ERPs are a down to earth solution (both on functionality and acceptance) Big corporations were the first ones to deploy ERPs But, recently, SME (95% of employment in Spain) are starting to grab market share SAP launches innovative new solution for U.S. SME businesses; While many SME have invested in multiple software applications, several report that they lack the ability to access the information they need, when they need it, to make critical decisions. [09/14/2011]
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ERP Implementation
3) BPR (Business Process Reengineering)
It is a key pre-requirement to any implementation It emphasizes current system's drawbacks It stresses and tries to maximize the productivity restructuring and reorganizing human resources, departments, functions, etc. Basic principles: Understand Simplify Automate Tools: brain storming, previous complaints, interviews with the responsibles, job title definitions, etc.
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ERP Implementation
4) Implementation
An ERP implementation it is a long process that implies two working groups: Parameterizing group: consulting firm Implementation group: within the organization or a consulting firm Classic question: how long will it take the implementation? Commercials usually say that 6 to up to maximum 9 months However, it usually takes between 18 and 24 months usually (a recent study to 1.600 ERP implementations over the world fiexed the average on 18 months) Problem: those are the months for the go-live (one the main phases, see next slide) This includes the implementation of the basic functionality, but it is just an initial step until the company really sees a Return On Investment (ROI)
Similar to what happens with the Social Media strategy How can I know that an ERP will be profitable for my company?
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ERP Implementation
4)
Implementation (II)
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ERP Implementation
4)
Implementation (III)
The Great Mystery of the ERP 10-Year Itch: Why Businesses Can't Seem to Stick with Their ERP Software for More Than 10 Years? Like most capital investments, CIOs and CFOs typically expect the investment in their new ERP software to last ten or more years Problem: technology fast changes that it is simply not feasible to remain too far behind the curve for too long What is new in 2011? SaaS, cloud-based and hosted ERP software Even if your software isn't outdated per se, there are enough ERP vendors developing compelling new solutions that make it tough to not at least think about replacing your current system In most cases, however, the software itself isn't the problem Most of the leading vendors in the marketplace have been around for 20 years or more, so you would think that their offerings would be keeping up to date with technology trends (JD Edwards from Oracle, BAAN from Infor, and Epicor)
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ERP Implementation
4)
Implementation (IV)
It all comes back to misalignment between the business and the software itself
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ERP Implementation
4)
Implementation (V)
The business is not going to stand still just because you don't want to deal with replacing your ERP software ERP vendor isn't going to create a custom application just for you that meets all of your evolving business needs First: do not stop upgrading your software. ERP vendors spend millions of dollars each year on making their software better, faster, and more robust to meet changing business needs, so the longer you wait to upgrade, the more you are exposing misalignments in the software Second: revisit your software on an ongoing basis. You may find that it's time to replace it with something new, but you may also find that some simple configuration changes to the software or business process improvements will close the gap between what it's doing now and what the business needs. It's unlikely you will delay the need for an ERP software selection indefinitely, but it will buy you more time and a higher ROI on the original investment in the meantime
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ERP Implementation
5) Entering to production
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ERP Implementation
6)
Success analysis
Profits and returns will arrive, but we must be patient Basic functionality of the Phase 1 just provides a 30 50% of the profits Some companies see how their expectations are not satisfied (perhaps the problem is that they had not established well their expectations). Perhaps, that is why 72% of them do not go over this initial phase The important fact is to step up next two phases: Phase 2: adding modules for report generation, exhaustive analysis, mobility, etc. Phase 3: Business Intelligence modules. Take advantage of the full potential of an ERP, this is, generate wisdom from it Just 28% of the companies arrive to this finish line :-( These ones are the phases for business processes' restructuring (Business Process Management, GexAP of Ibermtica, SAP Starter Kit) and change in organizational model
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ERP Implementation
6)
So, if an ERP offers me competitive advantages and a ROI, how can I measure those returns? i.e. Panorama Consulting Group: ROI calculator
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ERP Implementation
6)
Some of the main benefits of implementing and ERP solutions: More accurate information Tighter control of the costs Faster answer to our clients Tracking and monitoring activities Quick answer to technological and market changes Improvement of the interrelations in the value chain It allows to have a unique client database table for all the companies within the group It will make easier for the international operations It allows daily accounting Reduces paper documentation Reduces activity duplication
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ERP Implementation
6)
Some of the main benefits of implementing and ERP solutions (continuation) Better stock management Quality improvement Reliability in service dates Reduces operational costs
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ERP Implementation
6)
Some of the main costs of implementing and ERP solutions Obvious costs (/$) Licensing (if applicable) Parameterizing and consulting firms Internal team hours, Learning courses Administration costs Resource and function adaptation Development of new functionalities Other maintenance costs (back-ups, updates, etc.)
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ERP Implementation
6)
Some of the main costs of implementing and ERP solutions Less obvious costs (/$) Loss of clients when the system fails Operational delays Fails while parameterizing, defining, etc. Uncertainty risks when choosing software supplier Some employees' responsibilities Migration of databases Structural organizational problems are not fixed just by implementing and ERP They do not imply previous and later steps/phases if it is a partial implementation
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ERP Implementation
6)
The parameterizing of some ERPs is quite limited Some ERP are quite expensive (SAP Business One 20.000 + programmer for about 3.000 ) Some ERP are seen by the market as very stiff and hardly adaptable solutions for the organizational workflow and business process requirements (in OpenERP both workflow and business processes are quite intuitive)
http://doc.openerp.com/book/1/1_2_Guided_Tour/1_2_Guided_Tour_openerp.html#process-management
This latest argument is the most important one when refusing to implement an ERP in the organizations
And what about selecting an Open Source solution for my company?
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What is OpenERP?
A set of integrated solutions (all the pieces in the puzzle) for enterprise management It automates and organizes business processes What is a business process? Porter's value chain
Administration
Human Resources Research and Development Infrastructure
Internal logistics
Operations
External logistics
After-sales services
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Adaptable: Every company is a unique world. Configuration and parameterization of the business processes and models. It allows the development of modules
A-GPL License for the server + modules, GTK client and Koo client. OPL License (OpenERP Public license) for the web client (it is a MPL With some restrictions in the logos)
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OpenERP Project
2002: 1.0 version. Originally developed as an Open Source solution by Fabien Pinckaers as a specific solution for an auction house 2004: first versions of TinyERP. Fabien Pinckaers sets the Belgian company Tiny Sprl 2005: OpenERP founded by CEO Fabien Pinckaers. Fabien's vision was that Open Source provided a better way to meet customers' expectations. 2006: 3.0 version. First version of OpenERP implemented in Spain successfully 2007: SVN repository opened. Some successful implementations. 35 official modules and 120 extras 2008: code in launchpad/bazaar. Community participation is opened. TinyERP becomes OpenERP. First Spanish OpenERP Conference in Zaragoza
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OpenERP Community
More than 1000 individuals contribute to improving the software every day. Working groups: Expert Team Accounting https://launchpad.net/~openerpexpert-accounting/+members Services Management https://launchpad.net/~openerp-expert-service/ +members Manufacturing Industries https://launchpad.net/~openerp-expert-production/ +members Translators Team Developer Team Quality team Committee team Community team
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OpenERP Technology
All-in-one install kit GNU/Linux and Windows Multiplatform GNU/Linux, Windows, Mac (there is no native version http://devteam.taktik.be) Potent clients Web, GTK, Koo (Qt) MVC scheme Model: PostgreSQL View: XML (calendar, graphics, list, form) Controller: Python
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
PostgreSQL
OpenERP Server
NET-RPC
Web client
eTiny
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Implementation approaches
Traditional ERP systems Independent applications that must later be integrated Dedicated information to every functional area Each application, own database, own execution and development environment, etc. Not easy control and maintenance of the ERP
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Integration
Implementation
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Analysis
Design
Development
Integration
Implementation
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Analysis
Design
Development
Integration
Implementation
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Analysis
Design
Development
Integration
Implementation
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References
Web sites
Break on Through to the Other Side: Moving Beyond ERP "Go-Live" to Competitive Edge and ROI http://it.toolbox.com/blogs/erp-roi/break-on-through-to-the-other-side-moving-beyond-erp-golive-to-competitive-edge-and-roi-40982 ERP Implementation http://panorama-consulting.com/services/erp-software-implementation/ ERP ROI Calculator http://panorama-consulting.com/resource-center/erp-roi-calculator/ Tier I and Tier II ERP Comparison 2008 http://whatiserp.net/erp-comparison/erp-comparison-saporaclemicrosoft-and-tier-2/ ERP Market Share And Evaluation 2010 http://whatiserp.net/erp-comparison/erp-vendor-evaluation-2010/ The 2010 ERP Vendor Analysis Results Are In, and the Winner Is... http://www.backbonemag.com/Backblog/the-2010-erp-vendor-analysis-results-are-in-and-the-winner-is.aspx OpenERP: posicionamiento en el mercado http://www.slideshare.net/izquierdosusana/openerp-presentacion Comunidad OpenERP http://www.slideshare.net/ejordi/comunidades-software-libre-comunidad-openerp III Jornadas Estatales OpenERP http://www.slideshare.net/openerpsite/open-erp-jornadas-bilbao-2010-presentacin-carlos-libana-ting-y-ana-juaristi Analysis: Why SAP Is Buying Sybase for $5.8B http://gigaom.com/2010/05/12/analysis-why-sap-bought-sybase-for-5-8-billion/ SAP launches innovative new solution for US Small and Midsize Businesses http://www.sap.com/press.epx?pressID=2128 OpenERP http://www.openerp.com/ The Great Mystery of the ERP 10-Year Itch: Why Businesses Can't Seem to Stick with Their ERP Software for More Than 10 Years http://it.toolbox.com/blogs/erp-roi/the-great-mystery-of-the-erp-10year-itch-why-businesses-cant-seem-to-stick-with-their-erp-software-for-more-than-10 Gartner Says Worldwide Enterprise Software Revenue to Surpass $232 Billion in 2010 http://www.gartner.com/it/page.jsp?id=1437613 Why it is recommended to change business practice to suit the ERP software rather than customizing the software? http://www.eresourceerp.com/Why-it-is-recommended-to-change-business-practice.html Stress Test for the Global Supply Chain http://www.nytimes.com/2011/03/20/business/20supply.html?pagewanted=1&_r=1&seid=auto&smid=tw-nytimestec Employment protection and technology choice http://www.voxeu.org/index.php?q=node/6291 With GSI Deal, eBay Shifts to Big Retail http://dealbook.nytimes.com/2011/03/28/ebay-to-buy-gsi-commerce-for-2-4-billion-bid/?smid=twnytimes&seid=auto
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Copyright (c) 2011 Alex Rayn Jerez This work (but the quoted images, whose rights are reserved to their owners*) is licensed under the Creative Commons Attribution-ShareAlike License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?
Profesor: Ing. Alex Rayn Jerez Bilbao, March 2011 Facultad de Ingeniera, ESIDE Universidad de Deusto Departamento de Tecnologas Industriales, Facultad de Ingeniera, Universidad de Deusto Avda. de las Universidades, 24, 48007 Bilbao, Pas Vasco, Espaa Alex Rayn Jerez alex.rayon@deusto.es To contact me, so many other ways :-) http://alexrayon.es/alex-rayon-20/
Atlantis IBIM Program at the University of Deusto Why does my company need OpenERP?