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Executive MBA EMBA 103 Information Management

SESSION 8: Large Scale Integrated Applications

JP Kawalek

Purpose
To consider the current status of modern business technologies To identify the future of integrated applications that cross functions and organisations To demonstrate the ease and accessibility of the new technologies, juxtaposed with its huge organisational impact To consider the implementation implications of large scale integrated applications

ERP and its relationship with the domain of Information Systems


Human Business Processes
Services

Software Functionality Stock control Purchasing Ledger Accounts HR Resource Planning CRM
Services

Backend Database structure

Enterprise Resource Planning has been concerned with integration of internal functions. ERP2 integrate the internal with suppliers and customers across the supply chain.

What is an ERP?
Serves as the information backbone for a given organisation Standard software that automates some key aspects of the basic processes of an organisation Addresses standard business functions finance, manufacturing, logistics, accounting, human resources, etc. Eliminate islands of automation

An example
Enter data One time At one place At the source.

Place order

Requisitions part

Sends pick to warehouse

For use In many places At many times Real time

Adjusts inventory

Typical modules Financials Human Resources Sales and Distribution

Updates Accounts

Manufacturing Materials Management Logistics Reporting

One Integrated Database, held on one or more servers

Updates configuration Updates cost data accounting

Requisition s part

Sends pick to warehouse

Arranges transportation Initiates maintenance action Posts to demand forecast

Ships carcass

Releases P.O. at Reorder Point

Debits OPTAR

Adjusts inventory

SAP is the world leading ERP provider.


SAP is the company name and the product name Systems Applications and Products in Data Processing Founded in 1972 in Mannheim, Germany Worlds third largest independent software vendor Global market leader in collaborative, inter-enterprise business solution Trades on the Frankfurt and New York stock exchanges Employs nearly 44,000 staff More than 12 million users worldwide 121,000 installations worldwide 46,100 customers in 120 countries

Open Source nearest equivalent is OFBIZ


See http://ofbiz.apache.org/ As in any ERP, it integrates the key functions of an organisation (sales, order processing, purchasing, accounts, manufacturing, HRM, CRM, marketing, project management, workflow, facilities management etc), e.g. https://www.bizwizzz.com:8602/accounting/control/main Includes a web-shop for sales across supply chain (B2B and B2C) e.g. http://www.bizwizzz.com:8604/ecommerce/control/main

Utilises the Universal Data Model (UDM)

Quick tour of OFBIZ ERP


Below are some screen dumps for reference.

ERP2 Crossing the traditional organisational boundaries


Web shop integrates B2C, or certain types B2B transactions B2B matures as the integration of the databases occur There is great potential in developing universal data models that can be used up and down the supply chain, which is the ultimate in the integration of IT across the organisations involved. The UDM, as implemented by OFBIZ OFBIZDataModel.pdf - UniversalDataModel.GIF

Gaining competitive advantage via supply chain management


Dell pioneered the mail order approach to selling PCs In 1993, Compaq cuts prices to drive Dell out of the market. Dell experiences $65 million in losses. Dell implemented based on the following principles: mass customization just-in-time marketing electronic orders & shipments e-collaboration with major buyers reduction in testing period monitoring of productivity & returns on investments

Supply Chain (cont.)


In 1996, Dell began selling computers via its web site.
In 2001, Dell made over $4 million in computer web sales/ day. Becomes leader in Customer Relationship Management (CRM) Online tracking of orders & shipments Viewer approved configurations and pricing Customized home web pages for clients. Increased communication with suppliers. Around 2002, Dell becomes the number one PC seller in the world and is a leader in management & profitability.

Supply Chain
By introducing a new business model, one can change the manner in which business is done. To implement this model on a large scale, one needs to build superb supply chain management. Another major success factor in Dells plans was the improvements made in its logistics system along the entire supply chain.

Improved communications and customer service, which are part of Dells CRM program, are the cornerstones of its success.
Dell was using e-Commerce with its business partners.

Estimated time line for implementing OFBIZ


Software could be implemented in as little as 3 hours. Adaptations to the software might last months, to make it fit for purpose. Updating the data, and integrating with business processes would probably take about 1 year for an SME. It is not the technology that presents the challenge, it is the other stuff hence, in recent years there has been a greater focus on, e.g. (i) processes, analysing efficiencies, effectiveness, integration, control structures etc, (ii) change management, helping people work differently (iii) intervention in a wider sense, rather than just focused on the technology.

Oops! Where Did All The Money Go?

ERP implementations
Failed 23% Success 28% Challenged 49%

A full-blown implementation in a large organization can exceed 100 million An average implementation costs 10 million and takes months to complete More than 70% of companies experience some degree of implementation failure

Management of Change
Holistic change management needed: not just technology change Needs senior project sponsor/CEO Inadequate IT & project (change) management skills inhouse to succeed? Implementation team members must be good

Control
Control of suppliers? IS competency? Requires BPR driven rather than IT technologists in control? Tricky to manage consultants, particularly if they are from more than one company

Critical Success Factors


(1) Top management support (2) Project team competence (3) Interdepartmental co-operation (4) Clear goals and objectives (5) Project management (6) Interdepartmental communication (7) Management of expectations (8) Project champion (9) Vendor support (10) Careful package selection

Lecture Learning Task


Consider the value to your client organisation, of an ERP Web-shop Supply Chain integration (e.g. via ERP2) Justify your answer.