E-Business ERP

Focuses on linking a business with its external Focuses on integrating the internal functional silos
partners and stakeholders of the organization into an enterprise application

Disruptive technology—Totally transformed Adaptive technology—Merged the early data

the way a business operates in terms of buying processing and integration efforts within an
and selling, customer service, and relationships organization
with suppliers

Early focus of e-Business was on
communication (e-mail), collaboration
(calendaring, scheduling, group support),
marketing and promotion (Web sites), and E-
commerce (Front office functions)
Focus of ERP systems was mainly on data sharing,
systems integration, business process change, and
improving decision making
through the access of data from a single source
(Back office functions)

VENDOR EVALUATION

• Business functions or modules supported by their software.

• Features and integration capabilities of the software.

• Financial viability of the vendor as well as length of time they have been in business.
 • Licensing and upgrade policies.

• Customer service and help desk support.

• Total cost of ownership.

• IT infrastructure requirements.

• Third-party software integration.

• Legacy systems support and integration.

• Consulting and training services.

Future goals and plans for the short and long term.

SESSION 3-4

Benefits and Limitations of Systems Integration

Benefits Limitations

Increased Revenue and Growth High Initial Set-up Costs

Leveling the Competitive Environment Power and Interdepartmental Conflicts (due to the
sharing of information)

Enhanced Information Visibility Long-term and Intangible ROI (Usually several years)

Increased Standardization Creativity Limitations (Restricts Creativity and

Independence)

ERP’s Role in Logical Integration

• ERP systems require organizations to focus on business process rather than on functions.

• ERP systems come with built-in processes for a wide variety of common business functions.

• An ERP system implements best practices via specific built-in steps for processing a customer
order in terms of:

– order entry.

– routing through departments.

 – communication of output to various parties.

ERP’s Role in Physical Integration

• Before installing the ERP system, an organization may have to upgrade or install middleware or
get rid of their legacy system’s hardware and software.

• Integration is also required at the Data level, Client level, and at the Application level.

• A good ERP implementation improves operational efficiency with better business processes that
focuses on organizational goals rather than on individual departmental goals.

• Improved efficiency with a paperless flow and electronic data interchange (EDI) or business-to-
business (B2B) commerce environment with partners.

Implications for Management

• Silos do not work.

– Most organizations lose out in the long-term when information is not shared in real time
across the functional boundaries within the company.

• System integration has many hidden benefits.

– Allows decision making to be cascaded to all departments

– Allows employees at lower-levels to make better decisions while interacting with clients
or partners.

• System integration has many challenges.

– Replacing old hardware and software

– Working with IT consultants

– Human challenges, such as impact on IT staff, department heads losing control of data,
and rumors of layoffs

• Systems integration raises many new ethical issues.

– Possibility of some employees exploiting information for personal advantage and illegal
access of information.

• Remedies can consist of:

– Develop policies on ethical usage of information.

– Install proper security software and hardware (like firewalls).

Allocate resources for training and education on accessing information

Session 5-6

Components of the Enterprise Systems Architecture

• Functional

– Defines the ERP modules that support the various business functions of the organization.
Examples include:

• Accounting

• Human Resources

• Procurement

• Fulfillment

• System

– Defines the ERP architecture through the physical components of hardware, software,
and networking angle.

ERP Modules From Three Vendors

 Function SAP Oracle/ PeopleSoft Microsoft Dynamics

Sales Sales and Distribution, Marketing and Sales, Retail POS, Field Service
Sales Opportunity Supply Chain Management Management

Procurement Purchasing, Supplier Procurement and Supplier Supply Chain Management

Relationship Relationship Management
Management

Production MRP, Product Life Manufacturing Manufacturing

Cycle Management

Accounting Financial Accounting Financial Management Financial Management

Distribution Warehouse Supply Chain Management Distribution Management

Management

Customer CRM CRM CRM

Service

Corporate Governance, Risk, and Corporate Performance Analytics

Performance Compliance Management
& Management
Governance

Human Human Capital Human Capital HR Management

Resources Management Management

Miscellaneou Banking Campus Solutions E-commerce, Portals

s

BENEFIT OF ERP MODULES

• Self Services

– Flexible support for employees’ business functions.

– Simplified access to relevant information.

• Performance Management
 – Delivery of real-time, personalized measurements and metrics.

– Provides executives with access to such information as business statistics and key
performance measurements.

• Financials

– Ensure compliance and predictability of business performance.

– Gain deeper financial insight and control across the enterprise.

– Automate accounting and financial SCM.

– Rigorous support for financial reporting—SOX Act.

• HR Management

– Attract the right people, develop and leverage talents, align efforts with corporate
objectives, and retain top performers.

– Increase efficiency and help ensure compliance with changing global and local
regulations by using standardized and automated workforce processes.

– Enable creation of project teams based on skills and availability, monitor progress on
projects, track time, and analyze results.

– Manage human capital investments by analyzing business outcomes, workforce trends

and demographics, and workforce planning.

• Procurement and Logistics Execution

– Sustain cost savings for all spending categories by automating such routine tasks as
converting requisitions into purchase orders and by allowing employees to use
electronic catalogs to order products and services.

– Reduce costs through process automation, integration of suppliers, and better

collaboration.

– Improve resource utilization with support for cross-docking processes and data
collection technologies. (RFID and bar codes).

– Enhance productivity of incoming and outgoing physical goods movements.

– Reduce transportation costs through better consolidation and collaboration.

• Product Development and Production

– Shorten time to market.

 – Deliver higher quality products and ensure timely delivery.

– Real time visibility and transparency (availability check).

• Sales and Service

– Higher number of sales orders processed and reduction in administrative costs.

– Easy access to accurate, timely customer information.

– Cost-effective mobile access for field employees.

– Reduce travel costs by using online functions.

– Adhere to environmental, health, and safety reporting requirements.

– Improve the management of incentives and commissions.

– Realize more effective real estate management.

THREE TIER ARCHITECTURE

• The Web Tier

– Web-based portal allows users the ability to access and analyze information through
their Web browser.

• The Application Tier

– Consists of a Web browser and reporting tool where business processes and end-users
interact with the system.

– It shields the business users from the inner workings of an ERP system, but still
provides the information relevant to their job and business process.

• The Data Tier

– Focus is on structure of all organizational data and its relationships with both internal
and external systems.

• Benefits

– Scalability - Easier to add, change, and remove applications.

– Reliability - Implementing multiple levels of redundancy.

– Flexibility - Flexibility in partitioning is very simple.

 – Maintainability - Support and maintenance costs are less on one server.

– Reusability - Easier to implement reusable components.

– Security - IT staff has more control system to provide higher security.

ERP IMPLEMENTATION PLAN

• Comprehensive

– Involves implementation of the full functionality of the ERP software in addition to

industry-specific modules.

– Requires a high level of business process re-engineering.

– Middle-of-the-Road

– Involves some changes in the core ERP modules and a significant amount of business
process re-engineering.

• Vanilla

– Utilizes core ERP functionality and exploits the best practice business processes built
into the software.

– Business process re-engineering is eliminated.

TRADITIONAL ERP LIFE CYCLE

• Scope and Commitment Stage

– In addition to conducting the feasibility study, a scope of the ERP implementation is

developed within the resource and time requirement.

– Characteristics of the ERP implementation are defined.

– Develop a long-term vision for the new system and a short-term implementation plan
and top management’s commitment.

– Vendor Selection.

• Analysis and Design Stage

– A decision on the software is made and decide on consultants and SMEs.

– Analysis of user requirements.

– Map the differences between the current business process and the embedded process
in the ERP software.
 – Design a change management plan, a list of embedded processes, user interface
screens, and customizable reports in the ERP software.

– Data conversion.

– System conversion.

– Training.

• Acquisition & Development Stage

– Purchase the license and build the production version of the software to be made
available to the end-users.

– The tasks identified in the gap analysis are executed at this stage.

– Change management team works with end-users on implementing the changes in

business processes.

– Data team similarly works on migrating data from the old system to the new system.

– Finally, the ERP system needs to be configured with proper security.

• Implementation Stage

– Focus is on installing and releasing the system to the end-users and on monitoring the
system release to the end-users.

– System conversion (4 Phases)

• Phased.

• Pilot.

• Parallel.

• Direct Cut or big bang.

– Feedback received from system usage needs to be funneled to the post-implementation

team for ongoing system support.

• Operation Stage

– Handover or knowledge transfer is the major activity as support for the new system is
migrated to the help desk and support staff.

– Training of new users to the system as ERP modules are released.

– Managing of new releases of the software, installation of patches and upgrades.

 – Managing the software contract with the ERP vendor.

LIST OF SCOPES AND COMMITMENT

Gap Analysis Evaluation of the functions provided by the ERP system compared

with the operational processesnecessary to run your business

Physical Scope Establishes which sites will be addressed, the geographical locations of the sites,

and the number of users.

BPR Scope Will the current processes be refined, replaced, or eliminated? What users, departments,

sites will be affected?

Technical Scope How much modification will be done to the ERP software? What processes will be utilized

as is and which will be customized?

Resource Scope How much time and budget is allocated for the project?

Implementation Which modules should be implemented? How should the modules be connected to
Scope
the existing system?