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  • Blue indicates topic vor discussion and or comparison w/ alternatives
  • R/2 is a mainframe/dumb terminal
  • 4

    1. 1. For the IT and people discussions (one week from today: <ul><li>Be prepared to discuss (using terminology and concepts from chapter 12) </li></ul><ul><li>the organizational structure of IT in your company? </li></ul><ul><li>a recent IT project in your organization – its management and outcome </li></ul><ul><li>The IT culture in your organization – the attitudes and relationships between IT and the business units – from help desk through large projects </li></ul><ul><li>Does your organization have a CIO/CTO? If yes, is the position effective? If no, should you have one? </li></ul>
    2. 2. Case analyses <ul><li>For subsequent cases, I will require at least one citation to be from an academic journal </li></ul><ul><li>This will require detection of at least one of the key themes of the case and the use of this as a keyword </li></ul><ul><li>For example, the Land’s End case had as obvious underlying themes - strategic advantage through IT , mass customization </li></ul><ul><li>The next case (‘Failed BPR’) could have as possible themes: BPR , IT implementation failure , etc., etc., etc. </li></ul>
    3. 3. Assignment for Wednesday, September 26 th <ul><li>Read ERP chapter (4) in text </li></ul><ul><li>Be prepared to discuss any or all of the micro-cases of success and failure </li></ul><ul><li>Assume you and your CEO were having lunch and (s)he let it be know (s)he was considering an ERP installation for the organization. What advise would you give? (Its best if you can make your discussion specific to your actual work organization.) </li></ul><ul><li>Be prepared to discuss all “managerial questions” </li></ul>
    4. 4. ERP – Why? <ul><li>Given the risks involved in ERP implementation, why have and are so many companies attempting it? </li></ul>
    5. 5. <ul><li>Manager’s Guide to Making Decisions about IS </li></ul><ul><li>Paul Gray </li></ul><ul><li>Chapter 4: Enterprise Requirements Planning </li></ul><ul><li>Slides prepared by </li></ul><ul><li>Louis Beaubien </li></ul><ul><li>Providence College </li></ul>
    6. 6. Managerial Questions <ul><li>What is ERP? </li></ul><ul><li>How will it help my business? </li></ul><ul><li>What are its costs? </li></ul><ul><li>What are the risks? </li></ul><ul><li>What is ERP II and when can I expect it? </li></ul>
    7. 7. ERP – A Chronology <ul><li>Manufacturing Resource Planning (MRP) Systems – focused on production – ca. 1975 – mainframe based </li></ul><ul><li>MRP II – focused on planning and production </li></ul><ul><li>Integration of MRP and other back office functions into a single package = ERP </li></ul>
    8. 8. Factors Along the Path to ERP <ul><li>The development of client-server architecture </li></ul><ul><li>The rush to replace out-dated and non-Y2K compliant systems. </li></ul><ul><ul><li>Many felt it would be cheaper to replace everything than make existing software Y2K compliant! </li></ul></ul><ul><li>The desire to have integrated systems within the firm – why is this desirable? </li></ul>
    9. 9. Modular Systems <ul><li>ERP is the current incarnation of “modular applications” </li></ul><ul><li>Each module automates a traditional back-office function </li></ul><ul><li>All modules interact with a common database and common inter-module transactions are designed in </li></ul><ul><li>Many modular systems, some far more flexible than SAP, et al. existed from the early 1980’s. Where did they go? </li></ul>
    10. 10. How Modular Software Works
    11. 11. SAP – an ERP in Profile <ul><li>Products include R/2 and R/3 </li></ul><ul><li>The largest of ERP companies in the market </li></ul><ul><li>44, 500 installations </li></ul><ul><li>Serves 10 million desks in 17,500 organizations </li></ul><ul><li>In 120 countries </li></ul>
    12. 12. Core Modules of SAP <ul><li>Finance </li></ul><ul><li>Sales </li></ul><ul><li>Manufacturing </li></ul><ul><li>Human Resources </li></ul>
    13. 13. Other SAP Modules <ul><li>Portals </li></ul><ul><li>Supply chain </li></ul><ul><li>Customer relationship management </li></ul><ul><li>Product life cycle </li></ul><ul><li>Business intelligence </li></ul>
    14. 14. How SAP Works
    15. 15. Issues with SAP <ul><li>System designed in North America or Western Europe </li></ul><ul><li>Embodies best practices from ‘home’ country – based on ‘home’ country assumptions </li></ul><ul><li>Practices and assumptions may not transfer across borders (or even between companies). Discuss power-distance relationships </li></ul><ul><li>System like concrete – hardens over time </li></ul>
    16. 16. Issues with SAP (2) <ul><li>The book states that it is easier to modify an ERP system than an entrenched organizational culture. </li></ul><ul><li>Many consultants and researchers STRONGLY advise against major changes to ERP systems. </li></ul><ul><li>Discuss the tradeoffs and alternatives to vendor-based ERP. </li></ul>
    17. 17. Costs of ERP <ul><li>$15 million for a large firm </li></ul><ul><ul><li>(The above is the book’s VERY understated figure. UNR estimates are at $45M and counting.) </li></ul></ul><ul><li>On average $53,000 per user </li></ul><ul><li>Requires two-years of implementation and integration. (This is another under-estimation in my experience.) </li></ul>
    18. 18. Costs of ERP (cont’d) Average Cost To Install ERP – does NOT include internal costs for training process changes, attrition, etc.   Source: CIO Magazine Oct. 15, 1999 Largely consulting and parameter ‘tweaking’. These costs are potentially ‘bottomless’. Expenditure Amount (millions) Percentage Hardware 1.46 13.8 Software 1.86 17.5 Internal Staff 2.46 23.2 Professional Services 4.82 45.5
    19. 19. Benefits of ERP <ul><li>Shorter order cycle time </li></ul><ul><li>Increased productivity </li></ul><ul><li>Lower IT costs </li></ul><ul><li>Better cash management </li></ul><ul><li>Reduced personnel </li></ul><ul><li>A system that works! Over the last 8 years or so, many ERP installations have replaced legacy systems that just can’t be bandaided any longer! </li></ul>
    20. 20. Benefits of ERP (cont’d) Expected and Actual Benefits   Benefit Expected Actual Shorter cycle time 19% 31% Improved productivity 24% 31% Lower IT costs 24% 11% Better cash management 24% 13% Personnel reduction 43% 33%
    21. 21. Experiences with ERP <ul><li>From Markus and Tanis (2000) </li></ul><ul><ul><li>Integration – not guaranteed! </li></ul></ul><ul><ul><li>Packages </li></ul></ul><ul><ul><ul><li>The custom/package tradeoff can be a make or break decision </li></ul></ul></ul><ul><ul><li>Best Practices – take it or leave it? </li></ul></ul><ul><ul><li>Some assembly required </li></ul></ul><ul><ul><ul><li>Integration with legacy systems and existing hardware (i.e. telecom, POS) </li></ul></ul></ul>
    22. 22. Reasons to Adopt ERP <ul><li>One face to the customer (via integration) </li></ul><ul><li>Knowing “what is possible” in terms of organizational inventory </li></ul><ul><li>Eliminating redundancy (and data reentry) </li></ul><ul><li>Consolidation </li></ul>
    23. 23. Reasons to Adopt ERP (cont’d) <ul><li>Handle growth </li></ul><ul><li>Reduce stress on existing IT </li></ul><ul><li>Avoid legacy systems </li></ul><ul><li>Modernizing </li></ul>
    24. 24. Reasons Not to Adopt <ul><li>Cost – far greater than the book indicates </li></ul><ul><li>Loss of competitive advantage </li></ul><ul><ul><li>From the replacement of proprietary process with “best practice” </li></ul></ul><ul><li>Resistance to change </li></ul><ul><li>Poor cultural fit </li></ul>These make a successful installation dubious.

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