Putting the Enterprise into the Enterprise System & Other ERP Insights

Presented by Your Friends at Team Gold

Big Picture
Enterprise Resource Planning (ERP)

systems enable companies to Integrate data throughout the entire organization. Typically Modular
Finance Most popular Human Resources Operations and Logistics Sales and Marketing

Managers

Reporting Applications

Sales and Delivery Applications

Financial Applications

Suppliers

Customers

Sales Force
Service Applications

Central Database

Manufacturing Applications

Back Office

Human Resource Applications

Inventory and Supply Applications

Employees

Fast Facts
$10 billion per year industry
Major Software Suppliers/Integrators
SAP (e.g., NIKE, Weyerhaeuser/Norpac) Baan Oracle ( Used by Tektronix & Cisco in Cases) PeopleSoft

The Promised Land

Autodesk
2 weeks shipping to 24 hours

IBMs Storage Systems Division

Reprice time from 5 days to 5 minutes 22 day shipping to 3 days Credit check from 20 min. to 3 sec.

Fujitsu
Order filling from 18 days to 1.5 days Close financials from 8 days to 4 days

The Dark Side

FoxMeyer Drug
Blames bankruptcy on ERP implementation

Mobil Europe
Abandoned implementation after $100 million

Dow Chemical
7 years, $500 million, then started over

Only Three to Six Months, Huh

Time Issues Be leery of short implementation estimates
Size of company Modules to be installed Standardization vs. Customization and time implications

How long to train staff after the initial implementation? If, and how long, to run parallel legacy systems?

They have the time if you have the $$$

Cost of implementation
Modular Decisions
Big Bang Franchising Success Slam Dunk

Hidden Costs
Training of staff often miscalculated Integration & Testing Customization Conversion of Existing data Data Warehousing Costs What is Ed Warnocks true earning potential?

To customize or not to customize

Standardization
Easier implementation (in relative terms!) Consultancy less likely to be indefinite Software upgrades and module additions handled in less time and expense Is this really how we want out company to run though? Possible sacrifice of a competitive advantage!

Customization
Extended implementation (as well as maintenanceif it ever works) Consultants will most likely move in for good With upgrades or add-ons, the customization matrix has got to be reworked Its great, but can our people really work with this?

CIO ERP Thought: Why did I do it??

Organizational implications
Initial productivity losses
This doesnt work like the old system!! Panic by staffers.

Implementation is only the first step

Additional coding for reports, etc. Ongoing maintenance

Employee retention
Positions backfilled Poached by consulting firms

ROI? Yeah, not for a while yet

Investment returns on ERP
Misconceptions of management

Possible positives (it could happen)

Integrated financial data great for roll-up Heightened management of supply chain Highly integrated information allow for great data mining and CRM by Sales & Marketing departments

CEO Thought: What Happened?!?

The most successful ERP deployments involved companies that viewed them in strategic terms.
They stressed the enterprise, not the system.

Main reason for failures is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise.
The logic of the system may conflict with the logic of the business.

Key Learnings: Success Themes

Strong Corporate Leadership
Active Business Involvement Excellent Project Management Homework Prepared

Organizational Change Actively Managed

Key Learnings : Failure Themes

Conflict of business model with System

model Lack of User acceptance of Process Change Budget and Schedule overruns Availability of adequate skills Technical Failures

Key Learnings: Summary

If

the development of an enterprise system is not carefully controlled by management, management may soon find itself under control of the system.

Questions to ask BEFORE an ERP

How will an ERP strengthen, or erode, our competitive advantage?
What will be the effect on our organization?

Do we need to implement the system across all functions, or can we implement only certain modules? Are there other Enterprise systems which might suit our needs better?

What an ERP Wont DO!

ERP on its own will not improve processes
ERP will not reduce inventory ERP will not embrace customization with

easy upgrades ERP will not yield immediate results ERP will not revolutionize or revitalize your business

ERP Wrap up
Benefits:
Seamless integration of all company data integration of data from all functional areas Streamlines the companys data flows and allows direct access to real time information

Costs:
Expensive Hidden costs High costs to reorganize or redesign company processes

ERP Future Highlights

Growth is forecasted to continue, although at a slower rate. CRM and APS (advanced demand planning software) will be the new functional niche categories ERP solutions will attempt to simplify their product offerings and implementation approaches as they move to smaller markets ERP solutions will offer web-enhancements to their current systems