Q&A

Foundation of ERP
Outline
1. What is ERP?
2. How can ERP improve a company's business performance?
3. How long will an ERP project take?
4. Will ERP fix my integration problems?
5. What will ERP fix in my business?
6. Will ERP fit the ways I do business?
7. What does ERP really cost?
8. When will I get payback from ERP—and how much will it be?
9. What are the hidden costs of ERP?
10. Why do ERP projects fail so often?
11. How do I configure ERP software?
12. How do companies organize their ERP projects?
13. Is a "single instance" of ERP better?
14. How difficult is it to upgrade ERP software?
15. Will service-oriented architecture (SOA) replace ERP?
16. How does ERP fit with e-commerce?
17. Can I use ERP to manage a network of foreign suppliers?
What is ERP?
• Enterprise Resource Planning
– Forget about Planning, Resource term
– Enterprise: true ambition
• Integrate all departments and functions
 a computer system
How can ERP improve a company’s
business performance?

• A sort of battering-ram for improving

business functions
• Back-office software
• Example:
– Take a customer order and provide a road map for
automating to fulfilling the order
– Provide all information necessary to complete the
order
• Order history, Credit rating (Finance)
• Inventory level (Warehouse)
• Shipping schedule (Logistic)
How can ERP improve a company’s
business performance? (cont.)

• Different departments can see the same

information and update it
• Reality:
– People don’t like to change
– ERP want to change
–  so hard to pin down
– The reality is not so rosy
How long will an ERP project
take?

• Short, 3 – 6 months
• Long, 1 – 3 years
• Important thing is
– Not how long
– But need to understand Why and How
Will ERP fix my integration
problems?
• No.
• ERP is designed to sovle integration
problems.
– Only provide environment for working
– About human?
• Customers are the happiest if ERP is
used to create new capabilities and
processes.
What will ERP fix in business?
• 5 major reasons:
– Integrate financial information
– Integrate customer order information
– Standardize and speed up manufacturing
processes
– Reduce inventory
– Standardize HR information
Will ERP fit the ways I do
business?

• Two questions need to be clear:

– Can you change the business process to
accommodate the software?
– Or can they modify the software to fit the
current business model?
What does ERP really cost?
• Can not predict ERP cost, because:
– Number of divisions?
– Number of modules?
– Amount of integration?
– Ambition of the project?
• 63 companies are surveyed:
– Lowest: $400,000
– Highest: $300 million
–  average: $15 million
 What does ERP really cost?
Size of ERP- Number
No. Cost (USD) Example
system of users
SAP, PeopleSoft, Oracle,
1 Large >500 >1.000.000
Baan
JD Adwards, JBA,
Very big
101.000 – Intentia, IBS
2 51 – 500
1.000.000 IFS, QAD, Dataworks,
Big
(Baan)
Scala, Great Plans,
20.000 –
3 Medium 10 – 50 Exact, Platinum,
100.000
Solomon
4 Small 5 – 10 5.000 – 20.000 IRP, Lemon3, Accnet

5 Very small 1.500 – 5.000 Effect, Misa, e-Soft

When will I get payback from ERP?
And how much will it be?

• Optimizing the way things are done

• Belongs to ambition
• Veterans said:
– ERP is more a cost of doing business to
make the company operate more efficiently
than something that offers dramatic
payback.
What are the hidden costs of
ERP?
• Training
• Integration and testing
• Customization
• Data conversion
• Data analysis
• Consultants
• Replacing your best and brightest persons
• Implementation teams can never stop
• Waiting for ROI
• Post-ERP depression
Why do ERP project fail so often?

• Human!?
• Customization make the software more
unstable and harder to maintain
• Changing people’s habits easier than
customizing the software
How do I configure ERP software?

• Very hard and complex to do it

• Need IT team
How do companies organize their ERP
project?

• 3 commonly used ways of installing ERP

– The Big Bang
– Franchising strategy
– Slam dunk (embed system)
Is a “single instance” of ERP better?

• Advantage:
– Single database
– Easy to upgrade
• Disadvantage:
– Network
– Storage system
– Complex to implement
Is a “single instance” of ERP better?
(cont.)

• Single instance if
– Have fairly commonplace business processes
– Have older systems that need to be replaced
– Have multiple ERP instances from a single vendor
• Integration layer if
– Have unique business processes that can’t be
change
– An existing investment is the best solution
– Want an environment in which it is easy to
integrate new application
How difficult is it to upgrade ERP
software?

• Extremely difficult!
Will service-oriented architecture
(SOA) replace ERP?

• An SOA is implemented via a

programming interface (API) that allows
components to communicate with each
other. The most popular interface is the
use of XML over HTTP, known as "Web
services."
• No.
How does ERP fit with e-Commerce?

• Not prepare for the e-commerce

• Need to build two channels of access
into ERP system:
– For customers (B2C)
– For supplier and partners (B2B)
• Requires careful planning for integrating
ERP and e-Commerce
Can I use ERP manage a network of
foreign suppliers?

• Business Intelligence