ERP notes

16,794 views

Published on

ERP notes

  1. 1. ERP Enterprise Resource Planning D Lewis 10/02
  2. 2. Definitions <ul><li>ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner </li></ul><ul><li>ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management </li></ul>
  3. 3. What is ERP? <ul><li>Enterprise Resource Planning </li></ul><ul><li>Support business through optimizing, maintaining, and tracking business functions </li></ul><ul><li>Broken down into business processes </li></ul><ul><ul><li>HRM - Distribution </li></ul></ul><ul><ul><li>Financials - Manufacturing </li></ul></ul>
  4. 4. What makes ERP different <ul><li>Integrated modules </li></ul><ul><ul><li>Common definitions </li></ul></ul><ul><ul><li>Common database </li></ul></ul><ul><li>Update one module, automatically updates others </li></ul>
  5. 5. What makes ERP different (cont) <ul><li>ERP systems reflect a specific way of doing business </li></ul><ul><li>Must look at your value chains, rather than functions </li></ul>
  6. 6. History of ERP <ul><li>Departmentalized Systems </li></ul><ul><ul><li>1960’s: systems for each department </li></ul></ul><ul><li>MRP Systems </li></ul><ul><ul><li>1970’s: integrated manufacturing </li></ul></ul><ul><li>MRPII System </li></ul><ul><ul><li>1980’s: more functions included </li></ul></ul><ul><li>ERP: 1990’s integrated all across </li></ul>
  7. 7. Trends in ERP <ul><li>Use of the Internet for access </li></ul><ul><li>More customized solutions </li></ul><ul><li>Decision support capabilities </li></ul><ul><li>Data pulled to specific application </li></ul><ul><li>Linkage of multiple organizations together </li></ul>
  8. 8. Benefits of ERP <ul><li>Common set of data </li></ul><ul><li>Help in integrating applications for decision making and planning </li></ul><ul><li>Allow departments to talk to each other </li></ul><ul><li>Easy to integrate by using processed built into ERP software </li></ul>
  9. 9. Benefits of ERP <ul><li>A way to force BPR (reengineering) </li></ul><ul><li>Easy way to solve Y2K problem </li></ul>
  10. 10. Benefits of ERP <ul><li>On 4 dimensions </li></ul><ul><ul><li>Firm structure </li></ul></ul><ul><ul><li>Management processes </li></ul></ul><ul><ul><li>Technology platform </li></ul></ul><ul><ul><li>Business capability </li></ul></ul>
  11. 11. Firm structure <ul><li>New structures </li></ul><ul><li>More disciplined culture </li></ul><ul><ul><li>Globally everyone uses same processes and terminology </li></ul></ul><ul><ul><li>Freely flowing information </li></ul></ul>
  12. 12. Management process <ul><li>Unified reporting and decision making </li></ul><ul><li>Better data on performance </li></ul><ul><li>Determine which products are more desirable </li></ul>
  13. 13. Technology platform <ul><li>Single unified all encompassing platform </li></ul><ul><li>Common data, common definitions and formats </li></ul>
  14. 14. Business capability <ul><li>Form basis of customer driven organization </li></ul><ul><li>Better meet customers needs </li></ul>
  15. 15. Buy or Build <ul><li>Pros buy </li></ul><ul><ul><li>Best practices from many organizations included </li></ul></ul><ul><ul><li>Vendor must keep up to date </li></ul></ul><ul><ul><li>Smaller staff required </li></ul></ul>
  16. 16. Buy vs. Build (cont.) <ul><li>Pros build </li></ul><ul><ul><li>Complete control of features </li></ul></ul><ul><ul><li>More support required </li></ul></ul><ul><ul><li>Not as much product support </li></ul></ul><ul><ul><li>May not have best practices included </li></ul></ul>
  17. 17. Why purchase ERP package? <ul><li>Increasing flexibility and agility </li></ul><ul><ul><li>Business benefits (competitive agility) </li></ul></ul><ul><ul><li>Client/server IT architecture benefits </li></ul></ul><ul><li>IT purchasing benefits </li></ul><ul><ul><li>Lower costs and higher reliability than building from scratch </li></ul></ul>
  18. 18. Why purchase ERP package? <ul><li>Data integration </li></ul><ul><ul><li>Improving access to data across business units </li></ul></ul><ul><li>New ways of doing business </li></ul><ul><ul><li>Moving to a process orientation </li></ul></ul><ul><ul><li>Reduction in costs </li></ul></ul><ul><li>Global capabilities </li></ul><ul><ul><li>Common processes and country specific capabilities </li></ul></ul>
  19. 19. Why purchase ERP package? <ul><li>IT architecture cost reduction </li></ul><ul><ul><li>Reduced costs for systems operations and maintenance </li></ul></ul><ul><li>Most important benefit? </li></ul><ul><ul><li>Data integration </li></ul></ul>
  20. 20. Difficulty in implementation <ul><li>Very difficult </li></ul><ul><li>Extremely costly and time intensive </li></ul><ul><ul><li>Typical: over $10,000,000 and over a year to implement </li></ul></ul>
  21. 21. Common Pitfalls <ul><li>Do not adequately benchmark current state </li></ul><ul><li>Did not plan for major transformation </li></ul><ul><li>Did not have executive sponsorship </li></ul><ul><li>Did not adequately map out goals and objectives </li></ul><ul><li>Highly customized systems to look like old MRP systems </li></ul>
  22. 22. Leading vendors <ul><li>SAP </li></ul><ul><li>Baan </li></ul><ul><li>J.D. Edwards </li></ul><ul><li>Oracle </li></ul><ul><li>Peoplesoft </li></ul>
  23. 23. Which way to go? <ul><li>One vendor </li></ul><ul><ul><li>Easy integration </li></ul></ul><ul><ul><li>Standardization of processes </li></ul></ul><ul><li>“Best of breed” approach </li></ul><ul><ul><li>Easy to adapt to own needs </li></ul></ul><ul><ul><li>Decreased reliance on one vendor </li></ul></ul>
  24. 24. How to implement <ul><li>You will need an outside consultant </li></ul><ul><li>Potential benefits </li></ul><ul><ul><li>Better information for </li></ul></ul><ul><ul><ul><li>Strategic decision making </li></ul></ul></ul><ul><ul><ul><li>Greater efficiency </li></ul></ul></ul><ul><ul><ul><li>Greater profit </li></ul></ul></ul><ul><ul><ul><li>Potential for growth </li></ul></ul></ul>
  25. 25. Unintended consequences of ERP <ul><li>Organizational changes </li></ul><ul><ul><li>Creating new work relationships </li></ul></ul><ul><ul><li>Share information </li></ul></ul><ul><ul><li>Make new types of decisions </li></ul></ul><ul><li>Reactions to changes </li></ul><ul><ul><li>Resistance </li></ul></ul><ul><ul><li>Confusion </li></ul></ul><ul><ul><li>Errors </li></ul></ul>
  26. 26. Unintended consequences <ul><li>50% of implementations fail </li></ul><ul><ul><li>Managers underestimate the need for change management </li></ul></ul><ul><ul><li>Managers focus on potential benefit, rather than on impact on employees </li></ul></ul><ul><ul><li>Emotional fallout after employees given greater responsibility </li></ul></ul>
  27. 27. Implementation Issues <ul><li>Company may implement only certain modules of entire ERP system </li></ul>
  28. 28. Readings <ul><li>evaluation of ERP software </li></ul><ul><li>Getting Increased Value from ERP Systems </li></ul>

×