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  • MRP: Out of manufacturing MRP II: integrated with financial systems
  • data-driven development, stressed improving early phases in development; 4GL and software prototyping permitted more rapid development; CASE and object oriented (software re-use)
  • An EVENT is a condition that has business relevance customer order production order customer payment receipt Decision Making Software – i.e. “should I take this order?”, rather than “how can I take this order?”
  • The rise of JIT
  • Core Applications Financials – records and manages accounting data including applications such as general ledger, accounts payable, accounts receivable, budgeting and asset management. HR – Tracks employee information Manufacturing – production planning and execution such as demand forecasting production scheduling, job cost accounting, bill of materials, shop flow management, shop floor execution, and quality control Project Management – plans schedules, and tracks project costs, contracts, and resources. Extended ERP Business Intelligence – collects information for systems used throughout the enterprise CRM – provides an integrated view of customer data and interactions so companies can work more effectively SFA – improves the effectiveness of the sales process SCM – plans schedules, controls, and optimizes the supply chain E-Logistics – Manages the transportation and storage of goods throughout the supply chain. E-Procurement – Assist corporate buyers with the specification and acquisition of goods from suppliers using tools such as online catalogues, auctions, and requests for quotes (RFQ) PLM – allows manufacturers to produce and share product planning, design, manufacturing and distribution information with suppliers to improve development of products and fielding of product offerings. Internet Transformation Portals – enable users to access multiple applications via a single point of entry with a browser Exchanges – creates a web based environment in which multiple internal and external users can use applications such as B2B e-marketplaces, e-procurement, and SCM to automate the business relationship between trading partners Mobile access – provides means for users with handheld devices such as PDA’s and Web enables telephones to connect to the internet with enterprise applications.
  • Master Data: data relating to individual objects that remain unchanged for an extended period of time, in contrast to transaction data. Contains info that is used in the same way for similar objects. E.g., MD of a supplier including name, address and banking information or MD of a R/3 user containing name, authorization, default printer, etc.
  • Post implementation review: Clear diagnosis about use of system. To be performed regularly. (evaluation of software, helps maintain integrity of package) Remove remaining “bugs”. Establish “maintenance organisation”, responsibilities. Simplify structure and processes. Turn “nice to have” into the real thing. Join the club: Establish/maintain contact with other user companies, help out if necessary. Continue user training. Maintain knowledge networks and repositories. Upgrade when needed But not too frequently/not every version. Bring in a consultant to provide external evaluation of progress.
  • ERP system reporting capabilities are not cheaply employed by all users, and there is often a “seat” cost, since ERP system prices are typically based on the number of system users.
  • Above 60% of the ERP systems are products of the top five providers BAAN Provides a gateway with personalized interface for role-based access of business information Portal uses XML to access applications data and databases Content includes alerts, online analytical processing (OLAP) views, reports, messaging, and data searches Information can be brought to the desktop from a variety of data sources, including different Web addresses, different application, folders, documents or messages. Collaboration provides a toolset of a dynamic commerce business model across the supply chain Users can reconfigure applications as relationships change including dynamic addition of users, roles, business objects, and business processes Oracle Vision – enterprises are best served by a single business application built on a coherent data model implemented with a single database – Oracle Combines traditional ERP functionality with a variety of other enterprise application ranging from business intelligence and CRM to SCM and B2B marketplaces. Architecture – e-business suites based on three-tier software architecture including a desktop tier with a browser-based interface, a middle tier with the application server and a database tier. Applications – Core ERP applications as well as newer, collaborative e-business application such as SCM and CRM. Human Resources – maintains employee data and workforce management features for monitoring and administering employee oversite, training, time management, and payroll. Also provides benefits administration with access to information via browser. Financials – general ledger, receivables, payables, and inventory – global consolidation and reporting in multiple currencies – analytic functions helping cash flow, analyzing profitability, and tracking project performance – helps managers improve profitability track global property and equipment assets, handles capital spending, depreciation, and tax accounting – administers corporate travel guidelines. Manufacturing – handles processes and project manufacturing process with supply chain information and process management Projects – managed project basis including costing, billing, contracts, resource planning and tracking and project-based manufacturing with expenses and time management. Business Intelligence – data from all application integrated with Oracle Business Intelligence (BIS)( to allow management to make informed decisions based on performance measurements, operating alerts and management reports. PeopleSoft Internet Architecture without client software thus eliminating a significant source of complexity and cost – web enabled client device accessing internet architecture has software and configuration it needs. Applets and Dynamic Link Libraries (DLL) or browser plug-ins are not necessary for the browser based client architecture Inbound and outbound HTTP request, internet Application Server uses three different servlets executed by Java-based Web server. These are called : Presentation Relay – dedicated to queriers and transactions Integration Relay –third party requests Portal Servlets – act as a relay for HTML and Wireless Markup Language and XML Contains all the application data and metadata with application object definition SAP Is in the midst of a multi year program to adapt its software architecture and product offerings to the internet while making its applications perform more accessible and flexible. – implementation of SAPS Internet strategy Portal infrastructure based on TopTier Software mySAP Financials – accounting tools including general ledger, sub-ledgers, revenue and cost accounting and job and project accounting mySAP Human Resources – maintains employee information, payroll processes, time management, legal reporting, structure and policy information – manages organizational development analysis, recruitment, differential compensation for expartriates, compensation planning, training, and knowledge management – also provides analytics and works with protals with access to web. mySAP Mobile Business – links to mobile devices with WAP mySAP Product Life Cycle Management – helps plan manage and control product development including bill of materials, resource data, and quality control mySAP SCM – assists with planning with demand and order forecasting, design event management, performance measuring procurement, manufacturing and fulfillment integration mySAP Business Intelligence – Gathers information to support analysis tools and decision making including data warehousing, reporting and analysis, data modeling, target publishing and knowledge management mySAP E-Procurement – improves requisitioning and purchasing allowing strategic sourcing and direct materials with links to e-marketplaces mySAPCRM – provides single view of customer data and interactions facilitating sales and service mySAP Portals – enables employees to interacte with application and and view data using a single browser based view mySAP Marketplace – allows companies to operate exchanges with business applications such as procurement, business document exchange, development, inventory management, demand aggregation and shipping J.D.Edwards major mid-market ERP systems provider known for highly integrated packages Flagship product – OneWorld – set of enabled collaborative commerce applications portal providing single point entry Recast itself as a provider of collaborative commerce
  • R/3 is a development from R/2 which ran on mainframes. In mainframe computing, all the computing is done on a single computer. Users are then allowed to share the computing resources (e.g., via time sharing---the mainframe computer. The user will be at a terminal without computing capabilities. That’s primitive! Over time, the users began have increasing computing capabilities locally. We needed to shift some of the processing to the user’s computing facilities… what to do? Client server computing to the rescue! Here clients and servers are linked so that the computing and storage can be distributed between… the client and the server … the client and the server? Client refers to the user’s computer; server to some other computing source that provides computing resources, software, or data.
  • Prominent implementation failures: Dell (SAP R/3), Aerogroup (SAP R/3), Boeing (Baan), Kellogg (Oracle).
  • Cost (average of $15 million : £10 million) Average cost overrun 179% The (some) hidden costs Training Lss of productivity Integration and testing Data conversion Data analysis Consultants ad infinitum Replacing your best and brightest people Implementation teams can go forever Waiting for ROI (Return On Investment) Cost of data conversion for 'dirty' data
  • Cisco also lost a lot of qualified staff and had to buy others in to make up for the shortfall
  • But, was Virgin naïve?
  • ERP

    1. 1. ORGANISATION TRANSFORMATIONS Enterprise Resource Planning (ERP) Joe O’Mahoney
    2. 2. The Agenda <ul><li>The Context of ERP </li></ul><ul><li>Supply Chain Management </li></ul><ul><li>What is ERP? </li></ul><ul><li>Managing ERP </li></ul><ul><li>Real World ERP </li></ul><ul><li>Critical views on ERP </li></ul>
    3. 3. Learning Objectives <ul><li>To understand the context of ERP, how it emerged and how it has become what it is today </li></ul><ul><li>To appreciate the importance of Supply Chain Management in developing ERP </li></ul><ul><li>To know what an ERP system is, what its components are and appreciate its basic architecture </li></ul><ul><li>To understand how ERP can be managed as an implementation and an operation. </li></ul><ul><li>To possess a more detailed understanding of SAP ERP offerings </li></ul><ul><li>To have a strong understanding of the costs, weaknesses and dangers of ERP systems </li></ul><ul><li>To have an overview of the critical (political, social and ethical) views of ERP systems </li></ul>
    4. 4. 1. The Context of ERP
    5. 5. Problems of Organisation: Information <ul><li>Globalisation, M&A, take-overs </li></ul><ul><li>Functional / Departmental divisions </li></ul><ul><ul><li>Disparate systems lead to time delays </li></ul></ul><ul><ul><li>Redundant systems (e.g. 24 different general ledgers) </li></ul></ul><ul><ul><li>Huge software maintenance expenses </li></ul></ul><ul><li>Lack of common data structures </li></ul><ul><ul><li>Inconsistent terminologies </li></ul></ul><ul><ul><li>Field mismatches in data bases </li></ul></ul><ul><ul><li>Weak Management Information </li></ul></ul><ul><ul><li>No “Process” information (e.g. how long does it take to order X?) </li></ul></ul><ul><ul><li>Data redundancy / overlap </li></ul></ul>
    6. 6. 1950 – 1970: Out of Fordism <ul><li>Control, efficiency & scientific management </li></ul><ul><li>1950s: Inventory Control Systems </li></ul><ul><li>1960s: Materials Requirements Planning (MRP) </li></ul><ul><li>1970s: Manufacturing Resource Planning (MRPII) </li></ul><ul><li>But, failures due to: </li></ul><ul><ul><li>Organisational & technical complexity </li></ul></ul><ul><ul><li>Long & difficult implementations </li></ul></ul><ul><ul><li>Manual rather than automated </li></ul></ul>
    7. 7. 1970 – 2000: The Power of Computing <ul><li>1980s </li></ul><ul><ul><li>OO data-driven software & client / server models </li></ul></ul><ul><ul><li>Automation of processes </li></ul></ul><ul><ul><li>Data-mining & warehousing </li></ul></ul><ul><li>Rise of integrated SCM & BPR </li></ul><ul><ul><li>Global supply-chains </li></ul></ul><ul><ul><li>Automated value-chains </li></ul></ul><ul><ul><li>Re-engineering of e2e processes </li></ul></ul><ul><ul><li>Interation with HR, warehousing, CRM & MIS </li></ul></ul><ul><li>Success of 1990’s </li></ul><ul><ul><li>Fuelled by Y2K </li></ul></ul><ul><ul><li>Internet / Intranet roll-out </li></ul></ul><ul><ul><li>Powerful processors </li></ul></ul><ul><ul><li>Development by SAP & BAAN </li></ul></ul>
    8. 8. ERP 2003 <ul><li>Event Driven Processes </li></ul><ul><li>Supported by BPR </li></ul><ul><li>Consulting expertise </li></ul><ul><li>Plug & Play Architectures </li></ul><ul><li>Move towards Decision Making Software </li></ul>
    9. 9. 2. Supply Chain Management (SCM)
    10. 10. Importance of Supply Chain Management
    11. 11. Supply Chain Problems <ul><li>UNCERTAINTY </li></ul><ul><li>In demand forecast </li></ul><ul><li>In delivery times & </li></ul><ul><li>production delays </li></ul><ul><li>POOR COORDINATION </li></ul><ul><li>With Internal units and </li></ul><ul><li>business partners </li></ul><ul><li>Ineffective customer </li></ul><ul><li>service </li></ul><ul><li>High inventory costs, loss of revenue & extra cost for expediting services. </li></ul>
    12. 12. Push v Pull Supply Chains
    13. 13. Successful Supply Chains <ul><li>Extends the chain all the way from sub-suppliers to customers </li></ul><ul><li>Integrates the back-office operations with those of the front office </li></ul><ul><li>Focuses on customer demand generation and service </li></ul><ul><li>Is proactively designed as an “extended enterprise” </li></ul><ul><li>Optimize the value added by information services </li></ul>ERP
    14. 14. 3. What is ERP?
    15. 15. Definition <ul><li>Integrates disparate information from e.g. finance, accounting, distribution, production, logistics, human resource, etc., </li></ul><ul><li>Into a single, enterprise-wide, shared database </li></ul><ul><li>A software architecture that sits on a common database and is supported by a single development environment </li></ul><ul><li>It is customized to support an organization’ s business processes.” </li></ul><ul><li>Interacts with an integrated set of applications, consolidating all business operations in a single computing environment.” </li></ul><ul><li>To provide useful real-time information to support managerial decision making </li></ul>
    16. 16. Practical definition…. <ul><li>ERP stands for Enterprise Resource Planning </li></ul><ul><ul><li>it does not do any planning </li></ul></ul><ul><ul><li>forget about resource too… </li></ul></ul><ul><ul><li>remember the “enterprise”. This is ERP’s ambition. </li></ul></ul><ul><li>Typically, ERP combines Finance and HR departments </li></ul><ul><li>ERP systems automate and standardise business processes </li></ul><ul><li>ERP should contain a “best practice” model of the business </li></ul>
    17. 17. Chaos v Hub & Spoke
    18. 18. ERP Components <ul><li>Core Applications </li></ul><ul><ul><li>Financials </li></ul></ul><ul><ul><li>Human Resources (HR) </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Project Management </li></ul></ul><ul><li>Extended ERP </li></ul><ul><ul><li>Business Intelligence </li></ul></ul><ul><ul><li>Customer Relationship Management (CRM) </li></ul></ul><ul><ul><li>Sales Force Automation (SFA) </li></ul></ul><ul><ul><li>Supply Chain Management (SCM) </li></ul></ul><ul><ul><li>E-Logistics </li></ul></ul><ul><ul><li>E-Procurement </li></ul></ul><ul><ul><li>Product Life-cycle Management (PLM) </li></ul></ul><ul><li>Internet Transformation for ERP </li></ul><ul><ul><li>Portals </li></ul></ul><ul><ul><li>Exchanges – B2B </li></ul></ul><ul><ul><li>Mobile Access </li></ul></ul>
    19. 19. Typical ERP Components Sales and delivery applications Service applications Central Database Reporting applications Financial applications Manufacturing applications Inventory and Logistics applications HRM applications Customers Suppliers Management Employees
    20. 20. ERP Client / Server Model
    21. 21. ERP Benefits <ul><li>Improved efficiency, lowered costs. </li></ul><ul><ul><li>Average expected administrative cost reduction = 30% </li></ul></ul><ul><li>Controlled operational disorder </li></ul><ul><ul><li>Streamlining of business processes </li></ul></ul><ul><li>Reduce size and cost of the company’s IT </li></ul><ul><ul><li>Maintenance of outdated legacy systems </li></ul></ul><ul><li>Managerial effectiveness </li></ul><ul><ul><li>Empowered users </li></ul></ul><ul><ul><li>Informed management decisions </li></ul></ul>
    22. 22. 4. Managing ERP
    23. 23. Roles <ul><li>Vendor </li></ul><ul><ul><li>delivery of software </li></ul></ul><ul><ul><li>initial training for key users </li></ul></ul><ul><ul><li>project support </li></ul></ul><ul><ul><li>quality control </li></ul></ul><ul><ul><li>conduct modifications </li></ul></ul><ul><li>Consultants </li></ul><ul><ul><li>bring/transfer know-how about package </li></ul></ul><ul><ul><li>development of detailed work-plans </li></ul></ul><ul><ul><li>optimize fit between processes and software </li></ul></ul><ul><ul><li>analysis of customization issues </li></ul></ul><ul><li>Company </li></ul><ul><ul><li>learn/assimilate information about software (independence!) </li></ul></ul><ul><ul><li>make people sufficiently available (reallocation of responsibilities) </li></ul></ul><ul><ul><li>keep up motivation (monitoring progress) </li></ul></ul><ul><ul><li>responsibility for conversion (data extraction, interfaces) programs </li></ul></ul>
    24. 24. ERP Options <ul><li>DIY </li></ul><ul><ul><li>Expensive & cumbersome </li></ul></ul><ul><ul><li>Few do this </li></ul></ul><ul><li>ASP </li></ul><ul><ul><li>The customer leases services rather than builds them. </li></ul></ul><ul><ul><li>Services may include SCM, ERP, etc </li></ul></ul><ul><ul><li>Good for SMEs – lack resources to build or buy their own </li></ul></ul><ul><ul><li>Clients save money,… </li></ul></ul><ul><ul><li>But..… the ASP may only offer a 5-year contract to tie in customers </li></ul></ul><ul><ul><li>But……ASPs tend to offer a &quot;one size fits all&quot; solution </li></ul></ul><ul><li>Integrated packages </li></ul><ul><ul><li>OTS </li></ul></ul><ul><ul><li>e.g. SAP R/3 </li></ul></ul>
    25. 25. What Approach? <ul><li>Big Bang </li></ul><ul><ul><li>Implementing all modules at the same time </li></ul></ul><ul><ul><li>One cutover date for the entire new system </li></ul></ul><ul><ul><li>Very risky </li></ul></ul><ul><ul><li>Cheaper (in total - if everything goes well) </li></ul></ul><ul><ul><li>Faster </li></ul></ul><ul><li>Phased approach </li></ul><ul><ul><li>Implement modules in different phases. </li></ul></ul><ul><ul><li>More expensive (development of temporary interfaces) </li></ul></ul><ul><ul><li>Takes longer (danger of losing speed) </li></ul></ul><ul><li>Series of “Small Bangs” </li></ul><ul><ul><li>Implement subgroups of modules in parallel </li></ul></ul><ul><ul><li>Best of both worlds? </li></ul></ul>
    26. 26. ERP Design <ul><li>Process-oriented design: based on the operation process. </li></ul><ul><li>Architecture </li></ul><ul><ul><li>One database for all data (minimal redundancy) </li></ul></ul><ul><ul><li>Modular application (independent, but integrated modules) </li></ul></ul><ul><ul><li>Software functionality configurable to customer’s requirements </li></ul></ul><ul><li>Master Data </li></ul><ul><ul><li>Information captured once </li></ul></ul><ul><ul><li>Visibility though Business process </li></ul></ul><ul><ul><li>Workflow management </li></ul></ul><ul><ul><li>Event Triggered processes </li></ul></ul>
    27. 27. Typical ERP Project <ul><li>Understand the problem </li></ul><ul><ul><li>Understand business and how package fits, </li></ul></ul><ul><ul><li>Determine characteristics of current system </li></ul></ul><ul><ul><li>Arrange for training, </li></ul></ul><ul><ul><li>Determine how stored data will be migrated. </li></ul></ul><ul><li>Define the solutions (most critical!) </li></ul><ul><ul><li>Define all concepts associated with software implementation </li></ul></ul><ul><ul><li>Run simulations of app. processing, </li></ul></ul><ul><ul><li>Make definitions for master files, tables, parameters, </li></ul></ul><ul><ul><li>Establish degree to which company needs to adapt package. </li></ul></ul><ul><li>Put hands to the task (most difficult!) </li></ul><ul><ul><li>Load initial data </li></ul></ul><ul><ul><li>Develop, test, place customization into operations; </li></ul></ul><ul><ul><li>Develop, test interfaces put them into operation; </li></ul></ul><ul><ul><li>Document new procedures, test new work environment. </li></ul></ul><ul><li>Make it happen </li></ul><ul><ul><li>Run software in parallel w/ old system </li></ul></ul><ul><ul><li>Support users </li></ul></ul><ul><ul><li>Make final adjustments </li></ul></ul><ul><ul><li>Release system for final use. </li></ul></ul><ul><li>Keep on – going live is just a milestone! </li></ul>
    28. 28. Design & Implementation of ERP Create Interfaces and Enhancements Establish Reporting Establish Archiving Management Establish Archiving Management Perform Final Test Establish Global Settings Establish Company Structure Establish Master Data Perform Final Test Create Go - Live Plan Create User Documentation Set Up Production Environment Train Users Establish System Administration Transfer Data to Production System Support Productive Operation Optimize System Use Set Up System Environment Train Project Team Define Functions and Processes Design Interfaces and Enhancements Project Preparation Quality Con- ceptual Design Quality Appli- cation System Quality Pro- duction System Check Check Check Project Management System Maintenance and Release Upgrade Organization and Conceptual Design Detailed Design and System Set-Up Preparations for Going Live Productive Operation Copyright, SAP AG.
    29. 29. Report & Query Requirements <ul><li>Information is produced in standard reports or via Queries </li></ul><ul><li>eg. Financial reports: income statements and balance sheets </li></ul><ul><li>Queries are helpful seeing where the reports do not meet user needs </li></ul><ul><li>Too many queries will slow the system down </li></ul>
    30. 30. Implementing ERP <ul><li>Configuration </li></ul><ul><ul><li>Parameters (rules) for business processes </li></ul></ul><ul><ul><li>Local requirements </li></ul></ul><ul><li>Understanding your own business processes </li></ul><ul><li>Making a fit possible </li></ul><ul><ul><li>Reengineering processes - adopting a “best practice” </li></ul></ul><ul><ul><li>Reengineering the system </li></ul></ul>
    31. 31. Successful implementation….? <ul><li>Lead from Business Strategy </li></ul><ul><li>Position project as business, not IT, initiative. </li></ul><ul><li>Have a strong project leader: commitment of senior management. </li></ul><ul><li>Get all affected parties to “buy in”. </li></ul><ul><li>Communication within organization about expected change </li></ul><ul><li>Re-engineer before the project: best practice processes </li></ul><ul><li>Set customer’s expectations. </li></ul><ul><li>The customer’s organization and culture. </li></ul><ul><li>The risks presented by politics within the customer organization. </li></ul><ul><li>What software package(s)? </li></ul><ul><li>What consulting company? </li></ul><ul><li>What hardware? </li></ul><ul><li>What approach? </li></ul>
    32. 32. e.g Pasty Makers <ul><li>Pasty Makers </li></ul><ul><ul><li>Finance system </li></ul></ul><ul><ul><li>Sales system </li></ul></ul><ul><ul><li>Warehouse system </li></ul></ul><ul><li>Problems </li></ul><ul><ul><li>Supply Chain </li></ul></ul><ul><ul><li>Timely Information </li></ul></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>Management Reporting </li></ul></ul><ul><ul><li>Manual Short-cuts </li></ul></ul><ul><ul><li>Forecasting </li></ul></ul><ul><li>Questions </li></ul><ul><ul><li>Can I cut costs? How? </li></ul></ul><ul><ul><li>Can I improve efficiency? </li></ul></ul><ul><ul><li>How much does the process cost? </li></ul></ul><ul><ul><li>When should I order? </li></ul></ul><ul><ul><li>What should I order? </li></ul></ul><ul><li>Integrated Database </li></ul><ul><ul><li>Single GUI </li></ul></ul><ul><ul><li>Document creation </li></ul></ul><ul><ul><li>Data Protection </li></ul></ul><ul><li>Supply Chain integration </li></ul><ul><ul><li>Triggered by orders </li></ul></ul><ul><ul><li>Minimises inventory </li></ul></ul><ul><li>Defined Reporting </li></ul><ul><ul><li>Linked to strategy </li></ul></ul><ul><ul><li>Order tracking </li></ul></ul><ul><ul><li>BPI & costing </li></ul></ul><ul><li>Automated Processes </li></ul><ul><ul><li>Ordering </li></ul></ul><ul><ul><li>Credit checks </li></ul></ul><ul><ul><li>Database management </li></ul></ul><ul><ul><li>Billing & Payment </li></ul></ul>
    33. 33. 5. Real world ERP
    34. 34. ERP Market <ul><li>The global ERP market is about $30bn in 2002 </li></ul><ul><ul><li>4.84 billion in software licensing </li></ul></ul><ul><ul><li>25.36 billion in information service </li></ul></ul><ul><ul><li>up 2.5% compare with 2001 </li></ul></ul><ul><li>The estimated global ERP market annual growth rate </li></ul><ul><ul><li>2003 - 5.7% </li></ul></ul><ul><ul><li>2004 - 7% </li></ul></ul><ul><ul><li>2005 - 8.5% </li></ul></ul><ul><li>70% of Fortune 500 have implemented ERP </li></ul><ul><li>In 2000-2005, the fast growing area will be: </li></ul><ul><ul><li>Japan - 9.74% </li></ul></ul><ul><ul><li>Asia - 9.58% </li></ul></ul><ul><ul><li>E. Europe - 5.51% </li></ul></ul><ul><ul><li>S. America - 4.97% </li></ul></ul>
    35. 35. Leading Vendors <ul><li>SAP </li></ul><ul><li>BAAN (Invensys) </li></ul><ul><li>Oracle </li></ul><ul><li>PeopleSoft </li></ul><ul><li>J.D.Edwards </li></ul>
    36. 36. <ul><li>SAP stands for Systems, Applications and Products in Data Processing </li></ul><ul><li>SAP is 3 rd largest vendor of standard business application software </li></ul><ul><li>More than 17,000 companies in over 120 countries run more than 44,500 installations of SAP software (50% of ERP in top companies) </li></ul><ul><li>3rd largest software company after Microsoft and Oracle, with subsidiaries in over 50 countries </li></ul><ul><li>SAP R/3 is their 3 rd Release </li></ul><ul><li>SAP R/3 implements SAP solutions using three-tier client server computing </li></ul><ul><li>ASAP is a methodology to implement SAP ERP solutions </li></ul><ul><li>SAP R/3 uses a three-tier client server computing, that is, there are three servers with different tasks, database software, application software, and user interface (GUI) </li></ul>
    37. 37. R/3 Business Architecture R/3 Client / Server ABAP/4 FI Financial Accounting CO Controlling AM Fixed Assets Mgmt. PS Project System WF Workflow IS Industry Solutions MM Materials Mgmt. HR Human Resources SD Sales & Distribution PP Production Planning QM Quality Manage-ment PM Plant Main-tenance Integrated solutions Open systems Client / server architecture Designed for all types of business Multinational Comprehensive functionality
    38. 38. SAP R/3 Implementation Times < 3 months 4 - 6 months 7 -9 months 10 - 12 months 13 - 15 months 0 10 20 30 40 50 % 16% 24% 21% 16% 9% Small companies Medium-size companies Large companies > 15 months 14%
    39. 39. 6. Critical Views on ERP
    40. 40. Issues with ERP I <ul><li>Considerable rate of failure in ERP implementation (study by Buckhout) </li></ul><ul><ul><li>49% of respondents say SAP implementations are never complete </li></ul></ul><ul><ul><li>Average schedule overrun 230% </li></ul></ul><ul><ul><li>Desired functionality 59% below expectations </li></ul></ul><ul><ul><li>Only 10% on projects finished on time </li></ul></ul><ul><ul><li>35% of projects cancelled </li></ul></ul><ul><li>Maintainance </li></ul><ul><ul><li>In most companies, maintenance of existing systems is at least 70% of application development budget </li></ul></ul><ul><ul><li>Typically 80% of maintainance requests for enhancements </li></ul></ul><ul><ul><li>Maintenance programmers are difficult to find </li></ul></ul><ul><li>Lack of Flexibility </li></ul><ul><ul><li>Difficult to modify processes (electronic concrete) </li></ul></ul><ul><ul><li>Over-reliance on consultants </li></ul></ul><ul><ul><li>Upgrade issues </li></ul></ul>
    41. 41. Issues with ERP II <ul><li>Technical problems </li></ul><ul><ul><li>ERP software configuration </li></ul></ul><ul><ul><li>Integrating ERP software with hardware, telecommunications, and database software. Rare to have total integration. </li></ul></ul><ul><ul><li>Need for periodic upgrades </li></ul></ul><ul><li>Human, social and political problems </li></ul><ul><ul><li>Inappropriate expectations for software </li></ul></ul><ul><ul><li>Failure to specify strategic objectives </li></ul></ul><ul><ul><li>Inadequate project championship or project management </li></ul></ul><ul><ul><li>Lack of cross-functional approach to implementation </li></ul></ul><ul><ul><li>Need to adopt built-in business processes </li></ul></ul><ul><ul><li>No sensitivity to culture, structure, end-users </li></ul></ul><ul><ul><li>Inadequate resources for training </li></ul></ul>
    42. 42. Cost of ERP <ul><li>Large company </li></ul><ul><ul><li>$50-500 Million </li></ul></ul><ul><ul><li>$30 million in software </li></ul></ul><ul><ul><li>$200 million in consulting </li></ul></ul><ul><ul><li>$ millions for hardware </li></ul></ul><ul><ul><li>Implementation: 4-6 years </li></ul></ul><ul><li>Medium sized companies </li></ul><ul><ul><li>$10-20 million </li></ul></ul><ul><ul><li>2 year implementation </li></ul></ul><ul><li>Cost break-up (rule of thumb) </li></ul><ul><ul><li>Software – 10% </li></ul></ul><ul><ul><li>Hardware – 10% </li></ul></ul><ul><ul><li>Change management/training – 15% </li></ul></ul><ul><ul><li>BPR – 15% </li></ul></ul><ul><ul><li>Severance / re-educating / re-skilling – 20% </li></ul></ul><ul><ul><li>Consulting – 30% </li></ul></ul>
    43. 43. Critical examination <ul><li>Contextualist Critique </li></ul><ul><ul><li>What is a business process (practice?) </li></ul></ul><ul><ul><li>Logical work v actual work </li></ul></ul><ul><ul><li>Is radical possible? </li></ul></ul><ul><ul><li>What is lost / gained (ST vs LT) </li></ul></ul><ul><ul><li>Organisation usually conforms to the software </li></ul></ul><ul><li>Political critique </li></ul><ul><ul><li>Whose interests are being served? </li></ul></ul><ul><ul><li>Often known as a cover for redundancies </li></ul></ul><ul><ul><li>Work deskilling & intensification </li></ul></ul><ul><ul><li>Commodotisation of employee knowledge </li></ul></ul><ul><ul><li>Definition of “known” </li></ul></ul><ul><ul><li>A political project? (surveillance + control) </li></ul></ul><ul><li>Ethical critique </li></ul><ul><ul><li>Sharing of personal information globally </li></ul></ul>
    44. 44. e.g. Cisco Source: Cisco ERP steering Committee Report, October 20, 1994 Cisco’s total ERP implementation costs = US$15 million Hardware 32% Headcount 14% System Integration 38% Software 16%
    45. 45. One Size Fits All? <ul><li>Global Supply Chains = Supply chains that involve suppliers and/or customers in other countries. Some of the issues involved in global supply chains; </li></ul><ul><ul><li>legal issues, customs fees and taxes </li></ul></ul><ul><ul><li>language and cultural differences </li></ul></ul><ul><ul><li>fast changes in currency exchange rates </li></ul></ul><ul><ul><li>political instabilities </li></ul></ul><ul><li>Different company structures & cultures </li></ul><ul><li>Different local configurations </li></ul><ul><li>Cultural clash – 'open systems' ERP and 'closed systems' organisation </li></ul>
    46. 46. e.g. SAP in Singaporean Hospitals <ul><li>Types of misfits </li></ul><ul><ul><li>Company-specific misfits </li></ul></ul><ul><ul><ul><li>System’s patient management module does not allow for billing individual patients on installment plan </li></ul></ul></ul><ul><ul><li>Public sector-specific misfits </li></ul></ul><ul><ul><ul><li>System uses internally generated patient ID, instead of government issued ID number </li></ul></ul></ul><ul><ul><li>Country-specific misfits </li></ul></ul><ul><ul><ul><li>Package did not provide reports needed for government reporting </li></ul></ul></ul><ul><ul><ul><li>System requires names entered in Western name format (first, middle, last); operators had trouble parsing Indian, Malay and Chinese names </li></ul></ul></ul>
    47. 47. e.g British Airways – Virgin Atlantic <ul><li>Virgin rented space for a customer and sales database – from its key trans-Atlantic rival, BA </li></ul><ul><li>There was a confidentiality agreement – Virgin's data is safe and secured </li></ul><ul><li>But, BA broke the agreement, found the names & addresses of Virgin's top customers, and stole them – with special offers </li></ul><ul><li>Virgin took BA to court – and won. BA forced to pay huge damages and suffered considerable loss of face/reputation </li></ul>
    48. 48. For more information <ul><li>WWW.SAPINFO.NET </li></ul>
    49. 49. Appendices
    50. 50. ERP Market Share ERP Providers Product Name 1997/10~1998/9 2001 SAP AG SAP R/3 37% 29% PeopleSoft PeopleSoft 7.5 8% 6% Oracle Oracle Applications 8% 10% Baan Baan IV 6% 5% JD Edwards One world 5% 7% System Software Associates BPCS Client/Sever 5% 5% Other   31% 38%
    51. 51. SAP R/3 Installation by Industry SAP HIGH TECH & ELECTRONICS 11.3% SAP CHEMICALS 9.5% SAP CONSUMER PRODUCTS 10.3% Consulting & Professional Services 6.0% SAP RETAIL 6.3% SAP PHARMA - CEUTICALS 3.4% SAP PUBLIC SECTOR 3.4% SAP OIL & GAS 3.2% Metal, Paper & Wood Products 2.8% Services 3.1% SAP HEALTHCARE 2.3% SAP BANKING 2.0% SAP MEDIA 2.3% Others 11.5% SAP UTILITIES 3.9% SAP AUTOMOTIVE 4.8% SAP TELECOM - MUNICATIONS 3.4% SAP ENGINEERING & CONSTRUCTION 10.5%
    52. 52. R/3 Implementations by Org Size SAP R/3 installations by customer size, as of June, 30th, '98 (16,191 R/3 installations) 1000 - 2500 500 - 1000 200 - 500 16.9% 15.1% 12.4% 19.4% 36.2% Company size in USD mill. revenues > 2500 < 200