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It is not the end , means for a successful end.
It is not an advantage, but it creates an advantage.
Success lies in the speed at which U… react ……...
Islands of information. Focus was on functions. Data was redundant. Consolidation was not possible. Managerial control was difficult.
Advantages of Integrated Information system • Integration of Systems across the Functional Departments in a Company as well as across the Enterprise as a Whole. • Better Customer Service. • Introduction of Latest Technologies as and when the are ready for the Industry acceptance • Expertise database • Avoids data redundancy 4 .
Evolution of ERP 1960s: software packages with inventory control 1970s: MRP systems Production schedule with materials management Adds financial accounting system Integrated systems for manufacturing execution Integrated manufacturing with supply chain 1980s: MRPII systems 1990s: MRPII Late 1990s: ERP 5 .
Evolution of Business System ERP II ERP 20 00 MRPII 19 90 MRP Inventory Control 196 0 198 0 1970 .
7 .THE EVOLUTION OF ERP Innovation derived from manufacturing industry In the 70’s MRP (materials requirement planning) was developed In the 80’s MRP II (manufacturing resource planning ) extends to floor and distribution activities In the 90’s other organizational activities were integrated with MRP II to give yield ERP.
Enterprise Resource Planning MRP II – Manufacturing Resource Planning mrp – material requirements planning 8 .Historical Perspective ERP.
ERP Enterprise Next resource planning (ERP): step in an evolution that began with MPR and evolved into MRPII Integration of financial. 9 . manufacturing. and human resources on a single computer system.
. Industry Solutions 10 ..Then came ERP Human Resources Workflow Financial Accounting Materials Management Sales and Distribution Fixed Asset Management Others...
What is Enterprise Resource Planning? ERP is a system that integrates and automates all facets of business operations. 11 . ERP combines them all together into a single. and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems. inventory control. finance and human resources. This includes planning. and sales. while more recent ERP software products encompass marketing. ERP vanquishes the old standalone computer systems in finance. customer service. manufacturing and satellite offices. HR. manufacturing. integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other. order tracking.
Manufacturing & Production Scheduling Inventory Control & Warehousing Distribution & Accounts Receivable Finance and Accounting Human Resources Customers Suppliers 12 .Enterprise Resource Planning The Business Value of ERP Demand Planning Manufacturing Planning Logistics Planning Distribution Planning Order Entry Enterprise Resource Planning Purchasing & Accounts Payable MRP Inbound Inventory Plant Mgmt.
13 . For use In many places At many times.Goals of ERP Enter data One time At one place At the source.
But we all work together…… How many forecasts of business for next year Sales Production Accounting …… 14 .
the islands of Enable information sharing among various departments..The ERP way…. 15 . Improving efficiency. Need for a single system for the entire organization. It integrates information. Enhancing productivity.Y? .
ERP Strategy Considerations High initial cost High cost to maintain Future upgrades Training 16 .
HAPPY MARRIAGE between IT & BPR.What is ERP ??? It is an integrated suite of application software modules providing operational. managerial & strategic information for improving productivity. It synergies the resources of an organization. 17 .quality and competitiveness.
Highly integrated.Advantages of ERP…. 18 . Technological edge.. Flexible. Reliable data. Better customer satisfaction/ delight Effective planning. Improved resource utilization. Global adoption.
multi-company capability.Unix/Windows Is maintenance costly? Is your vendor supporting the application with training and upgrades? Is there a product development map? Do you have a dead-end system? 19 .is your current system the right size for your growth plans? multi-user capable Throughput Platform. and the ability to manage fixed assets/HR/payroll? Limited scalability.Current system assessment Are you confident that your current systems are going to meet tomorrow’s needs? Limited functionality Do you have the features you need? For example. customizability.
With Decentralized IT Decision Making Redundant systems (e. how many business locations do we have 175 or 250?) 20 . 140 different definitions of “full-time equivalent employee” or 225 different job titles) Difficulty consolidating information (e..g. 24 different general ledgers) Huge software maintenance expenses Lack of common data structures (e.g..g..
Small return on the huge amount of energy it takes to feed the system. It cannot build productivity and ensure quality. It doesn’t take decisions for you. Is the tail wagging the dog? BPR We haven't changed our behavior 21 . Cumbersome animal that needs to be fed.What is limiting our business benefit? It doesn’t run your business. So rigid that we cant be flexible and agile.
The Potential Solution?
Common systems Decision-support capabilities Cheaper and faster than in-house development Lower maintenance costs Automatic currency conversions and consolidations Multiple language interfaces Built-in international “best practices”
Individual “modules” often not best of breed. Limited flexibility. Loss of internal strength and agility. Cultural clash – 'open systems' ERP and 'closed systems' organisation. Risk of implementation failure. Not cheap!
Why think about ERP?
Integrate business information
ERP creates a single version of the data that cannot be questioned because everyone is using the same system. Integrate multiple systems into “one”
Better reporting, audit trails, manageability and scalability
Reduce cost of ownership of many systems by just maintaining one system
Get rid of the mix and match of systems/applications and manual processes across an organization
Company operations need to be better coordination and understood Non-standard company practices create inefficiencies Need more time for customer needs Need to maximizes profits 25 .WHAT MAKES ERP NECESSARY? Company must query numerous company databases separately to gather information.
PROBLEMS WITH NON-ERP SYSTEMS In-house design limits connectivity outside the company Tendency toward separate IS’s within firm Lack of integration limits communication within the company Strategic decision-making not supported Long-term maintenance costs high Limits ability to engage in process reengineering 26 .
Enterprise Resource Planning Definition A set of integrated programs that is capable of managing a company’s vital business operations for an entire multisite. 27 . global organization.
Definition of ERP Business solution that addresses all the needs of an enterprise with the process view of an organization to meet the organizational goals and integrate all the functions of the Enterprise. 28 .
ensures accuracy 29 .” An Infrastructure backbone for the enterprise Avoids data duplication.ERP: Definition “A software solution that tightly integrates all functions of an enterprise.
easily accessible by all ERP programs Each item documented in data dictionary Operate in Client/Server Environment Applications run on multilevel client/server architecture consisting of: Clients Application servers Database servers Based on Objects A collection of data and programs Employ Tables System configuration tables Control tables Applications data tables Enterprise Resource Planning Commonalities Among ERP Systems 30 . Integrate data Data entered once.
Enterprise Resource Planning Real-time monitoring of business functions Supports human resources. and distribution Accommodates the different ways each company runs business 31 . sales.
Enterprise Resource Planning Advantages of ERP Elimination of costly. inflexible legacy systems Improvement of work processes Increase in access to data for operational decision making Upgrade of technology infrastructure 32 .
Enterprise Resource Planning Disadvantages of ERP Expense and time in implementation Difficulty integrating with other systems Risks in using one vendor Radical change 33 .
You can further reduce costs by sharing ERP services Share one system amongst multiple companies. Leverage the ERP investment 34 . departments and physical locations.
Is your organization ready for ERP? Small but growing business?
Hiring new people and need better HR, benefits and payroll management ready to diversify into new areas- multi-company Manufacturing Distribution eCommerce Scalability Need ways to automate and tie other systems into a flexible ERP system membership, housing, etc.. Organizations that are spending too much money maintaining many old and outdated systems. These systems are at the end of their lifecycle and don’t meet your needs anymore
What is that ERP enables ?
Systematic Look into your Systems & procedures Optimizing the processes Enables you to adapt yourself to new technologies Discipline across the functions
What drives ERP ?
Customer Satisfaction Business Development - new areas, products, services Ability to face competition Efficient processes required to push the company to top gear Present Software does not meet business needs Legacy systems difficult to maintain Obsolete hardware/software difficult to maintain
Why ERP? To improve control over data from distant locations To improve control over the organization And reduce factionalism To reduce chaos and data redundancy 39 .
shared database for all functions that directly or indirectly depend on this information. and update a single.g. part of a larger systems environment) 40 .. at the materials receiving stage of a manufacturing process).ERP ERP systems are: potentially integrated systems that allow information to enter at a single point in the process (e.
ERP can be extended to support B2B EC – CRM. not through interfaces or programs that transfer information to one or more modules only after the information has already been processed and updated in the module through which it entered the system… .Integration? This integration should take place in realtime. but typically do not provide management reports or decision support ERP need external data warehouses.. and data mining & expert system tools 41 .. SCM.
ERP systems are only part of a complex systems solution ERP Systems Operational Data Stores CRM & SCM Legacy Systems Middleware Data Marts & Warehouses Analysis Programs Reports & Analyses 42 .Therefore.
Why ERP Systems are interesting (and potentially useful) Many global businesses lack integrated systems Global businesses need language and currency support provided by ERP systems Global businesses are often decentralised 43 .
Simple Decentralization G l o C A m G e e r i E c au sr o r m aU p nK y b E e F a O a n r a d MA n G c re e si d i ad a t e 44 l B u s i n e s s . l e r .
More Complex Decentralisation G l o C A m G e r i c E a us r o e r m a Un p yK H o e a F n n b E d r a g n a O M i Ad Gc e r e ds a i l ae t e c E r a C s t h i n i n a a a ha # 45 l B u s i n e s s . T K a o i wn gaM n a B e t oF a C u h gh i j i Sn n Hg ar 2 F a c r a y c #t o 1 r y . I n c .
Furthermore ERP packages may be cultural “misfits” Multiple sites make implementations challenges worse The “extended enterprise” must also be integrated 46 .
ERP ADVANTAGES Inventory reduction Personnel reduction Productivity improvements Order management improvements Improved Planning Procurement cost reduction Cash management improvements Revenue / profit increases 47 .
Enterprise Resource Planning ERP is a cross functional enterprise system that serves as a framework to integrate and automate many of the business processes within Manufacturing Logistics Distribution Finance Accounting Human Resources 48 .
and invoices Forecast raw material and human resource materials 49 .Enterprise Resource Planning ERP software is a family of software that supports the business activities involved in back office processes Example: ERP software for a manufacturing company will typically Track status of sales. shipping. inventory.
agility.Enterprise Resource Planning Companies began to implement ERP as a vital conceptual foundation for reengineering their business processes. and responsiveness 50 . and as the software engine required to accomplish these new cross functional processes Now ERP is a necessary part of an Ebusiness enterprise that requires efficiency.
Enterprise Resource Planning Companies are finding business value in two major ways ERP creates a framework for integrating and improving their back office systems that results in major improvements in customer service. production. and distribution efficiency ERP provides vital cross functional information quickly on business performance to managers to significantly improve their ability to make better business decisions 51 .
ERP FILLS THE INFORMATION GAP 52 .
ERP BRINGS IN INTEGRATION 53 .
ERP BRINGS IN INTEGRATION 54 .
What are we getting from ERP? Before ERP Islands of information No real-time data Low accuracy of information With ERP Consolidated “Big Picture” Real-time data High accuracy of information Manual collation of Instant reporting information Does it automatically translate into a real business benefit? 55 .
Value addition in applications Industry specific solutions. Highly competitive. Fast growing market.ERP Market…. 57 . Compounded annual growth rate of 37 % Shift in target audience.
ERP Packages…. SAP Oracle financials / manufacturing People soft J D Edwards Baan Ramco Marshel QAD MFG PRO 58 .
1972 Baan .1979 59 .1979 SSA Inc.1977 QAD Mfg Pro .1978 Oracle .Players….1987 J D Edwards .1977 People soft . SAP AG . .
streamlined and automated procedures that span functional areas. -.Automatic purchase order generation from sales order Ability to perform cross-functional queries to answer enterprise wide questions Ability to generate real-time reports Ability to “drill down” to view details of summary reports 61 .ERP Advantages No data redundancies/inconsistencies Online data validation/low errors Cross-functional integration.
ERP Obstacles Cost Corporate Culture Complex and Extended Undertaking Reliance on ERP Vendor 62 .
Obstacles to Integration 63 .
Evaluating Enterprise-Wide Systems It is necessary to have tools that can be used to model the business processes around which ES are built 64 .
Packaged Software Traditionally focused on isolated business functions ERP focuses on integrated software solutions Current trends show increase in packaged software and decrease in in-house software development Customization. integration. and upgrades of packages must be considered 65 .
Three Critical Issues of Packaged Software Spanning All Phases of SDLC 66 .
Integrating Packages Standardize data so all functions can access it in real time Enterprise application integration (EAI) – process of linking applications to support flow of information across multiple business units and IT systems Middleware ERP with built-in middleware 67 .
Customizing Packages Desire is to minimize customization Best practices already built-in Unique business requirements may exist Customization types Configuration – selecting options Modification – changing program code to alter processing Enhancement – adding functionality 68 .
Upgrading Packages Upgrades can be challenging Vendors frequently upgrade packages Existing level of customization Integration within organization Must be planned and documented during system development 69 .
management information systems (MIS).Enterprise Resource Planning Using integrated application software to improve effectiveness and efficiency of entire enterprise Objectives of ERP Provide best practice functionality within departments and high level of integration across all enterprise functions Bridge gap in value chain Includes transaction processing system (TPS). decision support systems (DSS) 70 .
What is Enterprise Resource Planning (ERP)? A large database that integrates all of the functions of an organization. 71 . ERP replaces numerous databases with a single database that integrates financial and non-financial data as well as operating. financing and investing activities. ERP is multi-module software that runs on client-server networks that is designed to support and automate business practices.
TRADITIONAL IS MODEL: CLOSED DATABASE ARCHITECTURE Similar in concept to flat-file approach Data remains the property of the application Fragmentation limits communications Existence of numerous distinct and independent databases Redundancy and anomaly problems Paper-based Requires multiple entry of data Status of information unknown at key points 72 .
BUSINESS ENTERPRISE Products Materials Customer Orders Order Entry System Manufacturing and Distribution System Procurement System Purchases Supplier Customer Sales Account Rec Production Scheduling Shipping Vendor Accts Pay Inventory Customer Database Manufacturing Database Procurement Database Traditional Information System with Closed Database Architecture 73 .
WHAT IS ERP? Those activities supported by multi-module application software that help a company manage the important parts of its business in an integrated fashion Key features include: Smooth and seamless flow of information across organizational boundaries Standardized environment with shared database independent of applications and integrated applications 74 .
Production. Vendor. Inventory. 75 . etc.ERP System Data Warehouse BUSINESS ENTERPRISE Legacy Systems ERP System On-Line Analytical Processing Bolt-On Applications (OLAP) (Industry Specific Functions) Customers Core Functions [On-Line Transaction Processing (OLTP)] Sales Business Shop Floor & Logistics Planning Control Distribution Suppliers Operational Database Customers.
ERP key feature: Cross-functional integration 76 .What is Enterprise Resource Planning (ERP)? “Enterprise Resource Planning” came about because these systems span the entire enterprise and address all of the enterprise’s resources.
What is it? ERP is a generic term used to describe a comprehensive information system designed to integrate all the business processes found in an enterprise. Efficiency 77 .ERP . and productivity are improved through the integration of information and the removal of duplicate information and processes.
78 . perhaps using 4 different information systems.Cross Functional Integration ERP system can be configured so that when a new customer order is created the following actions are “triggered”: Production schedule is updated Shipping schedule updated Any needed parts are ordered Update online sales reports to reflect order Without ERP these 4 actions would have to be performed by employees in 4 different departments.
which facilitates streamlined and automated procedures that span functional areas Ability to perform cross-functional queries to answer enterprise wide questions Ability to generate real-time reports Ability to “drill down” to view details of summary reports 79 . which virtually eliminates inconsistencies in data Online data validation. 5. 3. 6. No data redundancy. 2.Advantages of ERP Systems 1. 4. which results in data being relatively error-free Cross-functional integration.
employee time. and training Requires significant changes in corporate culture and business processes.Disadvantages of ERP Systems 1. Complex and extended undertaking that can fail and waste millions of dollars. 4. consultants. Extensive reliance on the ERP vendor 80 . High cost of the software itself. 2. 3.
2. Legacy systems outdated and need replacing anyway Desire for greater communication between locations Reconfigure business to take advantage of current and future communications and computing breakthroughs 81 .3 Reasons for ERP 1. 3.
Creating in-house experts vs. drilldown visibility? 2. accessibility 4.Control: how much centralization. how willing? Ability to modify in real time.ERP Considerations 1. Best practices: how willing to embrace? 82 . Customization: out/in source. how tightly integrated does it need to be? 3. Database: desired structure.Structure: How large & dispersed. continued consulting dependence 5.
Major Characteristics of ERP 83 .
Why Consider ERP? Reduces workforce in core transaction processing systems by eliminating tasks and duplication Supports global business operations Achieves economies of scale Improves communication and information exchange among departments 84 .
Why Consider ERP? (continued) Reduces information systems development staff Improves customer service through better logistics Improves data integrity Improves decision support 85 .
Organizational Structure for an ERP Project 86 .
R / 3 system architecture contains the THE DATABASE SERVERS. 87 . THE APPLICATION SERVERS and THE PRESENTATION SYSTEMS.allows the distribution of the workload to multiple PCs linked together through a network.Technical Architecture SAP runs on R/3 system architecture. R / 3 ( runtime system) .
Historical Perspective User PCs Application Server(s) Database Server(s) 88 .
Client / Server Environment is one in which the client is requesting information of the supplying machine. Communication / interchange of information. know as the server. 89 .
Presentation server . 90 .data is stored. Application server .Three .administrative functions of the system.Tier Hierarchy Database server .you work with SAP.
Change and re-engineering. Representative and qualified team. Clear project objectives.ERP Implementation Phase 1 Project preparation. Senior Level Mgt Support. Team ERP support 91 .
ERP Implementation Phase 2 Business Blueprint Questions designed to probe for information on how your company does business. 92 .
Two parts.ERP Implementation Phase 3 Realization U are ready to configure your ERP system. 1. Fine-tuning the system Configuration testing. 93 . Configure basic system 2. Knowledge transfer..
ERP Implementation Phase 4 Go Live and Support 94 .
Phase 1: Planning An ERP System Development Methodology ERP oversight committee Project team Phase 2: Analysis Collection of requirements from in-house work groups Identify business reengineering initiatives Select vendors Prototypes may be developed 96 .
An ERP System Development Methodology (continued) Phase 3: Design Interfaces determined Hardware design Middleware issues End users trained Phase 4: Implementation Installation Configuration into cohesive system 97 .
An ERP System Development Methodology (continued) Phase 5: Support Training Maintenance 98 .
Special Topics on ERP Development Select a comprehensive package Preliminary evaluation Detailed evaluation Vendor presentations On-site visits Final decision 99 .
Special Topics on ERP Development (continued) Linking applications to an ERP package Purchasing middleware Select software vendors that partner with ERP packages Vendor-provided or in-house link development Using ERP packages for application development Investigate vendor-supplied development tools Developers often become system integrators 100 .
RISKS ASSOCIATED WITH ERP IMPLEMENTATION Pace of implementation ‘Big Bang’--switch operations from legacy systems to ERP in a single event ‘Phased-In’--independent ERP units installed over time. assimilated and integrated Opposition to changes to the businesses culture User reluctance and inertia Need of (upper) management support 101 .
Not best for service firms Scalability: system’s ability to grow. data entry volume. data output volume. transaction cost Need good software selection process Common to use a third-party (the Final Four) $20 billion market! Be thorough in interviewing potential consultants Establish explicit expectations…contract…pay performance scheme. data storage volume. Choosing the wrong consultant 102 .RISKS ASSOCIATED WITH ERP IMPLEMENTATION Choosing the wrong ERP Goodness of fit: no ERP system is best for all industries SAP’s R/3 was designed for manufacturing firms with highly predictable processes that are relatively similar to those of other manufacturers. speed. size. transaction processing volume. workload.
Boeing. Hershey 103 . Apple. Waste Management.RISKS ASSOCIATED WITH ERP IMPLEMENTATION High cost and cost overruns Common areas with high costs: Training: software and new processes Testing and integration: special programs often have to be written to link to old legacy systems Database conversion Disruptions to operations ERP is reengineering--expect major changes in how business is done Dow Chemical. Whirlpool. Dell.
less of a pre-set structure than SAP’s Modularity: accept modules (bolt-ons) from other vendors J. XML Flexibility: users can change features.ERP PRODUCTS SAP: largest ERP vendor Modules can be integrated or used alone New features include SCM. Edwards 104 . B2B. ecommerce.D.
modular architecture allows rapid integration with existing systems Use of “best-of-class” applications 105 PeopleSoft Baan . client-server based applications Open.ERP PRODUCTS Oracle Tailored to e-business focus Internet based vs.
known for human resource package.Distribution . 106 .SCM module (SCOREx) WSJ 11/17/98.D. Baan .coordination of flow oriented manufacturing. Comprehensive forecasting module. Edwards . J. i2 Technologies . By far the largest vendor (approx. Strong finance and accounting. Recently advertising flow manufacturing enhancement.truck loading and routing focus. Manugistics . Oracle .still must maintain mainframe architecture of large R/2 user population.The Players SAP R/3 . distribution. 30% market share).known for manufacturing.simplest product to install and support. process modeling modules . PeopleSoft .Rhythm product .web and Internet.
Enterprise Resource Planning Some ERP Software Vendors 107 .
ERP System 108 .
Subsystems of ERP Store and purchase Raw Materials Payroll and HRD Production Planning and scheduling Financial Accounting Sales and dispatch Export process Marketing Customer Relationship Inter office communication Event Tracking Inter office data synchronization Engineering & Maintenance 109 .
Automatic adaptation to new technology. Knowledge transfer between industries guarantees innovation. 110 .Advantages of an ERP Package? Highly Graphics based User Interface. Easy enterprise wide information sharing. Zero Down time/ planned down time. Integration of all functions ensured. Suppliers and Customers can be on-line communication. Readymade solutions for most of the Problems.
ERP Modules Abbreviations FI Financial Acctg CO Controlling AM Asset Mgmt PS Project System WF Workflow IS Industry Solutions HR Human Resources PM Plant Maintenance QM Quality Management PP Production Planning MM Materials Mgmt SD Sales & Distribution 111 .
Authorization and Security User / Password level authentication User wise activity permission Tracking of changes made by users Facility of authorization/approval of transaction Restriction in modifying the transaction after approval is done 112 .
Management Information Online follow ups and status information for various activities Consumption mismatch Budgeting and control 113 .
Manufacturing Systems Manufacturing Resources Planning Systems Manufacturing Execution Systems Shop Floor Scheduling Shop Floor Control Engineering Systems Enterprise Resource Planning Production Forecasting Production Scheduling Material Requirements Planning Capacity Planning Production Cost Control Quality Control Computer-Aided Design Computer-Aided Engineering Machine Control Computer-Aided Process Planning Product Simulation and Prototyping Robotics Control Process Control Computer-Integrated Manufacturing 114 .
Special Features Remote authorization/approval Online remote connection Through e-mail Through file transfer 115 .
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