ENTERPRISE RESOURCE

PLANNING

Challenges that Businesses

Face Today

Global competition

Rapid shifts in consumer demands

High shareholder expectations
Pressure of reducing costs
Increase productivity

Emerging Imperatives for

Businesses

Re-engineer business and supply-chain processes

Integrated Information Technology Systems

Use Industry Best Practices through package based
software solutions that combine multiple business
process functions instead of building a customized
information solution

The Solution

ENTERPRISE RESOURCE PLANNING

ERP
A powerful tool(if used properly) to
Orchestrate Business
* Business Planning
* Sales Planning
* Production Planning
* Materials Planning
* Capacity Planning
* Financial Planning

Integrated and formal approach

Top Management Drivers

for ERP Adoption
Corporate

growth ( market share , profits etc.)

Improved customer service
Efficient distribution system
Reduced operational expenses
Integration of business processes

Top Management Inhibitors for

ERP Adoption

Costs and budgets

Low perceived strategic benefits

Difficulty in assessing tangible contribution of ERP
solution
Problems associated with organizational change
during ERP implementation

ERP Product Development

MRP

MRP II

ERP

Majority of large ERP vendors with

manufacturing heritage focussed
only on Discrete, Process and
Automotive industry segments till
1996.

Expansion across
verticals

Product expansion

Integrate functionality
specific to vertical segments

Integrate into ERP

Data warehousing

Internet/
Intranet

Product
Data
Management

Utilities/Power
Telecom

Govt. and
Education

Banking and
Financial

Retail and
Transportation

CONVENTIONAL

FINANCE

ENGINEERING

Mfg.
QUALITY
CONTROL

MARKETING

BUSINESS-IN FUNCTIONAL ISLANDS

SAP R/3 COMPREHENSIVE SOLUTIONS

SD

Business
processes

FI

Sales &
Distribution

MM

CO

Mate rials
Mgm t.

Controlling

PP
Comprehensive
functionality
Designed
for all types
of business

HR

Hu man
Resources

SAP AG CP96_e.PPT Feb96 / 16

Fixe d Assets
Mgm t.

Client / Server
ABAP/4

Quality
Managemen t PM
Plant Maintenance

Multinational

AM

R/3

Product io n
Plann ing

QM

Business
Engineering

Financial
Accoun ting

Client / server
architecture

PS

WF

Project
System

Workflow

Open
systems

IS

Industry
Solu tions

Over 5,000
installations around
the world

Overview
Basic data
Customers
Vendors
Material
Bill of material, CAD
Work plan, plant maintenance plan,
inspection plan, CAP
Work center
Production resources and tools

SD

Customer order
processing
Customer
requirements

PP
Demand management

Rough-cut capacity
planning
Planned
orders

Equipment

Opening
period

Document

WF
Word processing
MAIL

Communication

Project system

Profit planning

Network
Projects

SOP
Planned
requirements
Forecasts

QM

Materials planning

Rough-cut planning profile

Classification

Sales planning

Order:
- Creation
- Release
- Confirmation
Shop floor control
Capacity leveling
CAP

Inspection lot
Inspection order

MM
Direct requisition
Purchasing
Inventory
management
Goods receipt
Material valuation
Invoice verification

PM

Warehouse
management

Repair
Maintenance

TELEFAX
EDI
Internet

SD

Shipping, billing,
transport

CO

Product costing

FI
AR / AP

Integrated Business Process Overview

Sales Logistics
FI
G/L
G/LCOS
COS//
Inventory
Inventory

AR
AR
Invoice
Invoice//
GL
GL
Revenue
Revenue

Delivery
Delivery

Billing
Billing

SD
Pre-Sales
Pre-Sales
Activities
Activities

Sales
SalesOrder
Order
Processing
Processing

Inventory
Inventory
Sourcing
Sourcing

Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Customer
Customer
Payment
Payment

Integrated Business Process Overview

Production

ForeForecast
cast

Sales
SalesOper
Oper
Planning
Planning

MPS
MPS

MRP
MRP

Manufacturing
Manufacturing
Execution
Execution

Order
Order
Settlement
Settlement

Inventory
Inventory

Capacity
Capacity
Costing
Costing

Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Integrated Business Process Overview

Procurement
FI
G/L
G/L
Inventory
Inventory//
GRIR
GRIR

G/L
G/LGRIR/
GRIR/
Expense
Expense
AP
APInvoice
Invoice

Purchase
Purchase

Goods
Goods

Invoice
Invoice

Order
Order

Receipt
Receipt

Verification
Verification

SD
Requirement
Requirement
for
forGoods
Goods//
Services
Services

Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Vendor
Vendor
Payment
Payment

HOME GROWN SOLUTION

DEMERITS

Lack of integration
Database redundancy
Lack real time functionality
Inadequately tested
No documentation
Difficult to maintain
Difficult to understand
No process improvement
Poor acceptance

What ERP Is Not?

A magic potion to solve your business problems

A resource optimization tool

Merely a tool to automate business transaction processing
Merely a tool to reduce inventory
Inventory is the score board , not the game
You implement ERP to orchestrate your business
and improve business efficiency,which reflects in
reduced inventory

Tangible Benefits
15-25% increase in sales due to timely and faster

shipments
11-20% increase in productivity due to availability
of matched sets, reduced follow-up and overtime
10-20% reduction in purchase costs due to less
expediting and more time available for sourcing
15-35% reduction in inventory due to valid
schedules and matched sets

Intangible Benefits

Better customer satisfaction

Improved vendor performance
Increased flexibility
Reduced quality cost
Improved resource utility
Improved information accuracy
Reduced expediting

Comprehensive Industry Solutions

SAP High Tech & Electronics

SAP Engineering & Construction

SAP Consumer Products

SAP Oil & Gas

Business
Information
Warehouse

SAP Utilities
SAP Health Care

SAP Transportation
Sales
Force
Automation

...

R/3
R/3

SAP Telecomm.
SAP Chemicals

SAP Automotive
SAP Media

SAP Public Sector

Advanced
Planner &
Optimizer

B2B
Procurement

SAP Pharmaceuticals
SAP Retail

SAP Aerospace & Defense

SAP Service Providers

SAP Banking

SAP Today
SAP AG in 1997 revenues: 6 Bill. DEM
(3.5 Billion USD)
3rd largest independent software vendor in
the world
Market Leader in Enterprise Applications
Software
(55% market share)

19000+ customers* in 120 countries

IMPLEMENTATION
AS-IS
BIG BANG
PHASE WISE

Why do I need an ERP ?

An ERP implementation just for the sake of it,
does not lead to business benefits
Articulate the organizational problems that the
ERP implementation is expected to resolve
Set measurable performance goals for the ERP
implementation
Understand that the ERP system by itself does
not lead to business improvement. Other
initiatives may be necessary in conjunction, to
deliver the business benefits

Critical Success Factors for Implementation

Business Process Reengineering
Effective Change Management
Robust and Proven Methodologies
Project Management expertise
User ownership of installed systems and skills transfer
ERP package implementation experience
Sound understanding of industry
ERP product knowledge

BUSINESS PROCESS RE-ENGINEERING

What is it ?
To

fundamentally change the way work is performed

in order to achieve radical performance improvements
in quality, speed and cost

At the heart of business re-engineering is the notion of

discontinuous thinking of recognizing and breaking
away from the outdated rules and fundamental
assumptions that underline assumptions. We cannot
achieve breakthroughs in performance by cutting fat
or automating processes. Rather, we must challenge
old assumptions and shed old rules that made the
business under perform in the first phase.

KEY ELEMENTS IN BPR

PEOPLE
PROCESSES
TECHNOLOGY

Business Process

A business process is a set of interrelated activities

which, when executed result in a business outcome.
BPR involves :

Mapping AS-IS situation of processes.

Deciding TO-BE situation.

Establish how big a gap has to be bridged.

DRIVERS FOR BPR

1.

Organizational expectations
Organization needs to be flatter, leaner and faster
Team work as a means of delivering better products and services
Changing employees expectations and loyalties

2.

Process Imperative
Global competition necessitates cheaper and more flexible products
Customer loyalties are no longer guaranteed
Quality consciousness among customers

3. Technology
Has become more flexible and user friendly
Proliferation of easy to use software tools are allowing
organizations to develop systems rapidly

Implementation Issues
Many ERP implementation projects fail because of
improper attention
Lack of user/management involvement and
commitment
Lack of visibility and early wins
Preoccupation with technology issues at the cost of
business level issues
Not addressing behavioral change issues

ERP Implementation Process

Focus
Create the As Is Picture
Create the To Be Design
Construction and Testing
Actual Implementation

Phase 1 : Focus
The Steering Committee
Identify R/3 Modules
Structure the project teams
Set objectives
Develop guiding principles
Develop a detailed project plan

Phase 2 : Create As Is picture

Analyze current business processes
Identify data and system interfaces
Inventory existing hardware/software
Begin project team training

Phase 3 : Create To Be design

Develop high level design
Define the R/3 hierarchy
Gain user acceptance
Detailed design
Scenarios, scripts and tables
Iterative prototyping using tables
Gain final acceptance

Phase 4 : Construction and Testing

Develop a comprehensive configuration
Populate the test instance with real data
Build and test interface programs
Write and test reports
Test the system
User Test system

Phase 5 : Actual Implementation

Build the networks
Install desktops
Train and support users
Communicate
Populate the production system with real data
Go live

Effective Change Management

Comprehensive change management methodology addressing
essential ingredients of change
Organization change
Individual
Technology assimilation
Provide the surge capacity during the change process
Develop an effective communication plan to focus on the
communication needs within and outside the project team
Identify appropriate roles
- Project team
- Core user groups/task force
- Functional steering committees

Robust and Proven Methodology

To use a proven and structured approach to improve the probability
of success and ensure effective senior management control
Provide a common language between users and systems personnel
Ensure phased commitment
Ensure user involvement
Provide necessary documentation
Avoid reinventing the wheel
Force early identification of risks
Facilitate effective project control and status reporting