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What is an ERP System? Why implement an ERP system? How should ERP systems beimplemented? Conclusion Questions and Answers
Simplistic DefinitionERP - Enterprise Resource PlanningDetailed Definition“a business strategy and set of industry-domain-specific applications that build customer andshareholder communities value network systemby enabling and optimizing enterprise and inter-enterprise collaborative operational andfinancial processes”(Source: Gartner’s Research Note SPA-12-0420)
Historically, companies created “islands ofautomation”. A hodge-podge of varioussystems that operated or managed variousdivergent business processes. Sometimesthese systems were integrated with eachother and sometimes they weren’t.Sometimes they were loosely interfacedand sometimes they were more tightlyinterfaced.
Integrationseamless integration of all the informationflowing through a company – financial andaccounting, human resource information,supply chain information, and customerinformation.
PackagesEnterprise systems are not developed in-house IS life cycle is different1. Mapping organizational requirements to the processesand terminology employed by the vendor and2. Making informed choices about the parameter setting. Organizations that purchase enterprise systemsenter into long-term relationships with vendors.Organizations no longer control their own destiny.
Best Practices ERP vendors talk to many different businesseswithin a given industry as well as academics todetermine the best and most efficient way ofaccounting for various transactions and managingdifferent processes. The result is claimed to be“industry best practices”. The general consensus is that business processchange adds considerably to the expense and riskof an enterprise systems implementation. Someorganisations rebel against the inflexibility of theseimposed business practices.
Some Assembly RequiredOnly the software is integrated, not thecomputing platform on which it runs. Mostcompanies have great difficulty integrating theirenterprise software with a package of hardware,operating systems, database managementsystems software, and telecommunications suitedto their specific needs. Interfaces to legacy systems Third-party bolt-on applications
EvolvingEnterprise Systems are changing rapidly Architecturally: Mainframe,Client/Server,Web-enabled,Object-oriented,Componentization Functionally: front-office (i.e. salesmanagement), supply chain (advancedplanning and scheduling), datawarehousing, specialized vertical industrysolutions, etc.
WebInternetMobileWirelesse-MailCall CenterICM/TelephonyInteractionChannelsMarketingIntelligenceSalesIntelligenceCustomerIntelligenceCall CenterIntelligenceAnalyticalApplicationsE-business PlatformTech StackCommon Data and Object Models, Security, Interfaces, GlobalisationE-BusinessFoundationMarketing Sales eCommerceInteraction History Universal Work Q1-to-1 FulfillmentAssignment EngineEscalationsTCATasks NotesResourcesCalendarOSS HRCRMFoundationBusinessApplicationsInstalled Base Territories
To support business goalsIntegrated, on-line, secure, self-service processes forbusinessEliminate costly mainframe/fragmented technologiesImproved Integration of Systems and ProcessesLower CostsEmpower EmployeesEnable Partners, Customers and Suppliers
Obtain the right mix of people, processesand technology!!
People Project Structure Should be aligned to processes Process Implementation Process (outlined in detail) Adapt your processes to those of the ERP. Technology Hardware Software Integrated Systems
1. Definition and Analysis Hold discussions with various functionalpersonnel to establish the actual numberof systems operating at client site, whatthey are used for, why and how often Produce the Project Scoping Documentoutlining current situation, proposedsolution and budgeted timeChallenge : REQUISITE EXPERTISE - Notwo clients are the same
. Design Prepare various functional reports - specifiescurrent scenario and wish list Prepare Design document which specifieshow the system is going to work Prepare test scripts to be followed on systemtesting Map out the interface paths to variousmodulesChallenge : INFORMATION SHARING -Availability of staff
3. Build Configure system as per set up documentspecifications i.e. transfer conceptualmodel into reality Test system to verify accuracy (preliminarytests)Challenge : TECHNICAL ENVIRONMENT- System functionality
4.Transition Train users on their specific areas Assist in test data compilation and systemtesting by users Finalise the Live system and capturedopening balancesChallenge : USER RESISTANCEUnderstanding and acceptancedata preparation
5. Production Official hand holding Effectiveness assessment Business andTechnical Directionrecommendations
Technology is an enabler, not the driver (it isthere to assist the organization to achievebusiness goals) It is a means to an end, not the end
• CRM systems focus specifically onThe organization before ERP ( systems)Isolated Information: their own systemsUpdate issues RedundantInaccurate and differentDifferent in the different databasesCan’t access information maintained by another departmentCan’t of the entire organization
ERP – integrates(or integrated set of IT systems) so that employees can makeenterprise wide decisions by viewing enterprise wideinformation on all business operations (enterprise wideinformation)Keyword inERP is“enterprise”ERP systems focusonall processes,departments andoperations for theentire enterprise
ERP systemsand correlates the data generating an enterprisewide view that is consistent and real-time.involved in sourcing, producing and delivering acompany’s product Complete Real time Consistent
Three core components focus on(accounting/finance, production/materials management and HR) Extended components typically focus onand require interactions with customers, suppliers and business partnersTypicallyInternetenabled.Make sure thatyou know whateach componenttypically handles.Skipped detailsslides follow
Accounting and finance component – managesaccounting data and financial processes withinthe enterprise with functions such as generalledger, accounts payable, accounts receivable,budgeting, and asset management Human resource component – tracks employeeinformation including payroll, benefits,compensation, performance assessment, andassumes compliance with the legal requirementsof multiple jurisdictions and tax authorities
Production andmaterials managementcomponent – handles thevarious aspects ofproduction planning andexecution such asdemand forecasting,production scheduling,job cost accounting, andquality control
Extended ERP components include: Business intelligence▪ Tools to help analyze your business information and betterunderstand it so that you can better understand the business. Customer relationship management Supply chain management E-business▪ E-logistics – manages the transportation and storage ofgoods▪ E-procurement – the business-to-business (B2B) purchaseand sale of supplies and services over the Internet
At the heart of all ERP systemswhen a user enters or updates information
1. Having integrated systems helps that many businesses hadpreviously started to use (also didn’t have to fix those old legacysystems)2. Integrate financial information and customer order information3. Everyone working with the same information and removesmisinformation4. Standardize and speed up manufacturing processes, as well asreduce inventory5. ERP addresses the6. One of the greatest benefits of an ERP system isProvides organizations with information that was previouslydifficult (if not impossible) to obtain, allowing the organization toperform more efficiently and effectively.
• Costly in terms of One vendor risks: too costly to Company essentiallyheld hostage.EmployeesDifficult to
Microsoft BusinessSolutions Great PlainsDynamics
ERP systems provide a mechanism forimplementing systems where a high degreeof integration between applications isrequiredThe Business Case or Value Proposition forimplementation must be outlinedTo successfully implement a proper mix ofpeople, processes and technology should bemaintainedConclusion