Enterprise Resource Planning

Business Needs
Global Operations
Heterogeneous Solutions Business Processes

Different locations Different countries Different languages

Different time zones

Central vs. distributed

Business Needs contd.

Global Operations
Heterogeneous Solutions Business Processes

Different applications Different technologies Different vendors

Point-to-point integration
Custom-made solutions

Business Needs contd.

Global Operations
Heterogeneous Solutions Business Processes

Inefficient Customer Service

1950s: unlimited demand

Deliver Supplier Make Customer

1960s Inventory Management & Control

Deliver Supplier Make Customer

Plan

Buy

1970s : Material Requirement Planning (MRP)

Deliver Supplier Make Customer

Plan

Buy

MRP

MRP calculates what I need, compares it to what I have and calculates what I need to go get and when.

1980s :Manufacturing Requirement Planning (MRP II)

Deliver Supplier Make Customer

Plan Sell

Buy

MRP

MRP II

1990s : back-office integration

Accounting & Finance Human Resources

Deliver Supplier Make Customer

Plan Sell

Buy

MRP

MRP II

ERP

2000s : the extended enterprise

SCM
Accounting & Finance Human Resources

CRM
Deliver Supplier Make Customer

Plan Sell

Service

Buy

MRP

MRP II

ERP

Whats next?
SCM
Accounting & Finance Human Resources

CRM
Deliver Supplier Make Customer

ERP II
Plan Design Sell

Service

Buy

MRP

MRP II

ERP

ERP (Enterprise Resource Planning) HISTORY:

The Concept of ERP has been around since 1960s.

* * What is ERP? ERP is an integrated system that allows information to enter at a single point in the process and updates a single shared database for all functions that directly or indirectly depend on this information. ERP attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments particular need.
13

Anatomy of a Traditional (Non-Integrated) Architecture

Interface Order Entry

Interface

Interface Billing

Interface Others Finance

Inventory Mgmt.

14

ANATOMY OF: AN ENTERPRISE SYSTEM

Managers & Stakeholders

Ext Int C u s t o m e r s

Sales & delivery applns.

Int Ext
Reporting applns. Financial applns

Sales force & customer service reps.

Central database

Mfg. applns

Back office admin. & workers

S u p p l i e r s

Service applns.

HRM Applns.

Inventory & supply applns.

15

System

Primary Business Need Scope (s) Efficiency

Enabling Technology

MRP

Inventory Management and Mainframe computers, batch Production planning and processing, traditional file control. systems. Extending to the entire manufacturing firm Mainframes and Mini computers, real-time (time sharing) processing ,database management systems (relational) Mainframes, Mini and micro Computers, Client server networks with distributed processing and distributed databases, Data warehousing, and mining, knowledge management. Mainframes, Client Server systems, distributed computing, knowledge management, internet technology (includes intranets and extranets).
16

MRPII

Efficiency, Effectiveness and integration of manufacturing systems

ERP Efficiency (primarily back office), Effectiveness and integration of all organizational systems. ERPII Efficiency, Effectiveness and integration within and among enterprises.

Entire organization (increasingly cross functional)

Entire organization extending to other organizations (cross functional and cross enterprise--partners, suppliers, customers, etc.)

Difference Between ERP & ERPII

Keys ERP ERPII

Role

Traditional ERP was concerned with optimizing an enterprise, Internal optimization. In ERP systems, the processes were focused on the four walls of the enterprise. Old ERP systems were monolithic and closed.

ERP II systems are about optimizing the supply chain through collaboration with trading partners. ERP II systems will connect with trading partners, to take those processes beyond the boundaries of the enterprise. ERP II systems will be Web-based, open to integrate and interoperate with other systems that allow users to choose just the functionality they need.

Process

Architecture

Data

Information in ERP systems is generated and consumed within the enterprise.

In an ERP II system, that same information will be available across the supply chain to authorized participants.

Common ERP Myths

ERP means more WORK and PROCEDURES
ERP will makes Employee's JOBLESS ERP is just for the DECISION-MAKERS

ERP is just for MANUFACTURING ORGANIZATION

ERP package will take care of EVERYTHING. One ERP Package will suit EVERYBODY.

Risk Factor of ERP Implementation People Issues

CM Employee Re-location and Re-Training Top Management Support Vendors & Consultants Project Team

Process Issues BPR Stage Transition Benefits Realization Technology Issues Functionality Enhancements & Upgrades Choice of Technology

ERP Implementation Issues

Project Size
Implementation Time High Initial Investment

Unreasonable Deadlines
Interface Organizational Politics Configuration Difficulties Operations and Maintences Issues

Causes for ERP Success and Failure

21

ERP Implementation Tangible Benefits

Streamlines or eliminates inefficient manual processes Eliminates disparate stand-alone systems Provides integrated, enterprise-wide common tools, processes and

systems

Reduced Inventory and Inventory Carrying Costs Reduced Manpower Costs Improved Sales and customer services Improved supply-demand linkage with remote locations Better monitoring and quicker resolution of queries from within and outside. Availability of timely, accurate information

22

Intangible Benefits of ERP

Improved customer service and satisfaction Information Visibility Increased flexibility in operations Standardization Business Performance Improved resource utility, reduced quality cost and

information accuracy

23

Causes of Failures of ERP

Underestimation of complexity of planning, development and training

Incorrect expectations
Failure to involve affected employees in planning and development phases

Insufficient training in the new work tasks required by ERP systems

Failure to do the data conversion and testing

Inability to accurately map the business processes

Poor IT Infrastructure User resistance to change
24

How should we implement ERP systems ?

Obtain the right mix of people, processes and technology!!

Process Theory Approach by Markus and Tanis

chartering -- decisions defining the business case and solution constraints; 2. project -- getting system and end users up and running; 3. shakedown -- stabilizing, eliminating "bugs", getting to normal operations; 4. onward and upward -- maintaining systems, supporting users, getting results, upgrading, system extensions.
1.

PREPARATION

ANALYSIS

DESIGN

IMPLEMENTATION

MAINTENANCE

CHARTERING PHASE

PROJECT PHASE

SHAKEDOWN PHASE

ONWARD & UPWARD

ERP Teamwork & Composition Top Management Support Business Plan & Vision Effective Communication Project Management Project Champion Appropriate Business & IT Legacy Syst Change Mgmt. Program & Culture BPR & Minimum Customization S/W Dev, Testing & Troubleshooting Monitoring & Evaluation of Performance Business Vision

ERP- Business Modules

Human Resource

Financial Module
Sales and Marketing Materials Management

Plant Maintenance
Manufacturing (Production) Quality Management

29

mySAP ERP: Functional Enhancements

Improved Usability Improved Self-Services Greater Use of Process Guides Improved Business Intelligence Improved Portal Capabilities New Enterprise Services Repository (ESA) Support for 28 Industry Solutions Updated Mobile Infrastructure Integrated Financial Compliance Reporting Automated Travel & Expense Management Complete Control of Real Estate & Assets

Richer Reporting, Analytics

Improved Receivables Processing

Streamlined Hiring and Training

Improved Invoice management Integrated Manufacturing Capabilities

Link: http://solutionbrowser.erp.sap.fmpmedia.com/ 30

Bundles of Enterprise Services Now Available

Overview Industries
Banking
Credit Risk Management Financial Instrument Pricing Credit Risk Modeling Customer Information Management Business Operations Current Account Management Business Operations Financial Accounting Financial Instrument Accounting Integration Financial Accounting Financial Instrument Pricing Financial Accounting Loans Integration Financial Accounting Results Integration Loans Management Business Operations Management Accounting Results Integration Sales and Service Account Origination

Insurance
Insurance Billing and Payment Insurance Claims Handling Insurance Credentialing Insurance Document Vendor Insurance External Claims Investigation Insurance External Reporting

Media
Advertising Management Subscription Management

Retail
Demand Management Global Data Synchronization In-Store Food Production Integration

Public Sector
Funds Commitment Processing Public Sector Accounting Structures Public Sector Budget Management

Wholesale Distribution
Trade Price Specification Contract

Defense
Information System Integration

Oil and Gas

Supply Chain Operations and Execution for Oil and Gas

Healthcare
Foundation for Collaborative Health Networks Resource and Supply Chain Planning for Healthcare Providers

Travel and Logistic Services

Compliance Relevant Data Exchange eLogbook

Higher Education and Research

Course Approval Processes

Utilities
Advanced Meter Infrastructure

View them** in www.sdn.sap.com Service Oriented Architecture Explore Enterprise Services ( ES Workplace / ES Wiki)
*Disclaimer: SAP reserves the right to change the ES bundles listed without prior notice. **Some of the bundles listed on this page can be viewed in the ES Wiki.

31

The Leading ERP Software SAP and others

32

 SAP ( System Application Products in Germany)

Founded in 1972 by five ex-IBM employees, by 2005, there were 100,200 installations worldwide, with over 25 industryspecific modules in the SAP portfolio.

8.513 billion revenues in 2005 100,200 installations 36,200 companies run SAP 12,000,000 users in +120 countries Providing 25 Industry Solutions 38,468 SAP employees (September, 2006) in +50 countries #1 in ERP market with 22,6% global market share*

*SAP Global Software Market Share Core Enterprise Application Software Market Rolling 4 Quarters as of Q3 2006E Application Software Revenues

33

SAP R/3 Customer Installations by Industry

Others 11.5% SAP BANKING 2.0% SAP MEDIA 2.3% SAP HEALTHCARE 2.3% Metal, Paper & Wood Products 2.8% Services 3.1% SAP OIL & GAS 3.2% SAP TELECOMMUNICATIONS 3.4% SAP PHARMA CEUTICALS 3.4% SAP PUBLIC SECTOR 3.4% SAP CHEMICALS 9.5% SAP UTILITIES 3.9% SAP AUTOMOTIVE 4.8% Consulting & Professional Services 6.0% SAP RETAIL 6.3% SAP HIGH TECH & ELECTRONICS 11.3% SAP ENGINEERING & CONSTRUCTION 10.5%

Worldwide

SAP CONSUMER PRODUCTS 10.3%

34

Global and Local, Large & Mid Size Customers - A Selection

35

Example: i.e. Production Supervisor Overview of your tasks.

Personalized by role and individual

Starting point for mySAP ERP processes.

Analytics right from mySAP ERP using SAP BW and from Partner systems

Collaborate with your team to jointly analyze situations and to discuss action plans
36

ERP Vendor : Comparative Analysis

39

 Oracle 1977, USA, Financial Applications Baan 1978, Netherlands, Manufacturing Ramco 1989, India, Cost/Time Deployments JD Edwards 1977, USA, Construction/Energy &Utilities World S/W QAD 1979, USA, Distribution & Manufacturing

Other Vendors by Category

Supply Chain Management (SCM) i2 Technologies

Customer Product Lifecycle Relationship Management Management (PLM) (CRM) Agile Software Epiphany Centric Software Pegasystems Dassault Systemes Formation Systems Invensys / Baan
Matrix One

Business Intelligence (BI) Actuate

Logility Manugistics
SAP AG

Business Objects Cognos

Hyperion Solutions Informatica Information Builders MicroStrategy SAS

Siebel

Oracle
PTC SAP AG UGS PLM

How to select ERP PACKAGE ? ERP Software Selection

42

ERP Product selection Criteria

Goal: To select the Most Suitable Software Package Solution Functionality

5 Strategic Requirement Levels

Technology

Vendor

Support

Costs

Example: Allied Signal, Inc.

www.honeywell.com $14.5 B Manufacturer World-Wide Operations 11 countries, 18 sites, 9 languages Large and complex database

Estimated Costs 1. $30 million in software licensing 2. $200 million in consulting fees 3. Hardware integration 4. Software integration 5. Training

Time to Implement System: 4 to 6 years