Enterprise Resource Planning ( ERP ) and Project Management by Sabita Mishra
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Enterprise Resource Planning ( ERP ) and Project Management by Sabita Mishra

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Enterprise Resource Planning and Project Management by Sabita Mishra

Enterprise Resource Planning and Project Management by Sabita Mishra

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    Enterprise Resource Planning ( ERP ) and Project Management by Sabita Mishra Enterprise Resource Planning ( ERP ) and Project Management by Sabita Mishra Presentation Transcript

    • Enterprise Resource Planning and Project Management Sabita Mishra sabita_mishra@yahoo.com
    • What is an Enterprise?The term is often used in general businesssituations to describe as a corporate entity,anything form a sidewalk espresso cart to anEnterprise as large as Microsoft. It comprises of agroup of people with a common goal, which hascertain resources at its disposal to achieve thisgoal. It acts as a single entity. In the traditionalapproach, the Enterprise is considered as asystem and all the departments are itssubsystems. The information about all theaspects of the Enterprise is stored centrally and isavailable to all departments. 2
    • The Enterprise PeopleResources Goals and Objectives
    • Enterprise• The term enterprise is used because it is generally applicable in many circumstances, including – Public or private sector Enterprises – An entire business or corporation – A part of a larger enterprise (such as a business unit) – A conglomerate of several Enterprises, such as a joint venture or partnership – A multiply outsourced business operation – Many collaborating public and/or private Enterprises in multiple countries 4
    • Enterprise The term enterprise also includes the whole complex, socio-technical system, including:• People• Information• Technology• Business (e.g. operations) 5
    • Enterprise as an Open System Environment Input of Output of Information, Transformation of Products, Ideas,Energy, Materials Energy Services (Import) (Throughput) (Export) Environment 6
    • Enterprise and its Internal Environment EnterpriseManagement Workforce Technological Ethical Political and Legal Human Relations Economic 7
    • Enterprise and its External Environment Enterprise Technological EthicalCompetitors Economic Political and Legal Social 8
    • Factors Affecting the Structure of an Enterprise 1. • Environment 2. • Culture 3. • Task 4. • Technology 5. • Strategy 6. • Size 7. • Span of control 8. • Form 9. • Managerial characteristics 10. • Employee characteristics 9
    • Environmental Key FactorsWhile every Enterprise must define its own relevant environment, some keyenvironment factors which should be addressed are : Political Legal Factors Factors Economic Competitive Factors Social & Cultural Factors 10
    • Enterprise Structure – Tall Enterprise 1.Decision Making Centre (Authority Base) 2. Enterprise Levels Tall Enterprise Implies: 3. Enterprise Levels a) Distance from top to bottom b) Extended communication lines c) Impersonality 4. Enterprise Levels d) Narrow span of control e) Centralization 11
    • Enterprise Structure – Flat Enterprise 1 2 3Flat Enterprise Implies:a) High levels of decentralizationb) Extremely wide spans of control determined on the basis of each superior’sinterpersonal skillsc) Less extended communication lines 12
    • Management Combines Business’sResources To Produce Goods and ServicesFinancial Resources Natural Resources Human Resources Management Production Process 13 Product & Services
    • Business Functions and Business Process• Managers and Enterprises have now started thinking in terms of business processes instead of business functions.• A business process is a collection of activities that takes one or more kind of input and creates an output that is of value to the customer• Thinking of business functions as business processes helps managers to think of their Enterprises from a customer’s perspective• The difference between a business function and a business process is that a process cuts across more than one business function to get a task done 14
    • Business Functions and Business Process (cont’d)• Sharing data effectively and efficiently between and within functional areas leads to more efficient business processes• Information systems can be designed so that accurate and timely data are shared between functional areas• These systems are called integrated information system• Today an information system is an organized combination of people, hardware, software, communications networks and data resources that collects, collates, transforms and disseminates in an Enterprise 15
    • Real World and the Business Model Real World Business Model Plant Material Customer Contract Invoice Order Processes Interrelationships & Interdependencies 16
    • Data Model and its Relationship with the Real World Real World Business Model Plant Material Customer Contract Invoice Order Processes Interrelationships & Interdependencies Data Model Data & Program Model Program Model - Tables - Program - Fields - Function - Views - Display Screens, etc. - Domains etc. 17
    • Different Departments that comprise an Enterprise Procurement Production/Manufacturing Engineering Research and Development Marketing Sales Finance Accounting Human Resources Shipping 18
    • Procurement Planning/ Sales/Shop Requisitions Schedule Definitions floor Sourcing Information Request forWarehouse Orders Quotation/Schedule Purchase Contract Definitions 19
    • Production/ManufacturingReceiving Production/Process Shipping Quality Control 20
    • Engineering Problem?(Yield, Throughput, Collect Data Analyze Data Defects, Quality) Root Cause Failure Analysis Report Troubleshooting 21
    • Research and Development Define Bench Scale/PilotProblem/Background Collect Data Scale Testing Research Analyze Data Report Internal/External Provide Solutions Implementation Evaluation 22
    • MarketingMarket Research and Events, Product Lead Generation Evaluation Service Launch Promotion Public Relations Advertising Communication 23
    • Sales Inquiry Quotation Contracts Order Materials Picking and Delivery Financial AccountingManagement 24
    • Finance Treasury Market RiskCash Management Management Management Enterprise Controlling Profit Center Business Planning & Executive Accounting Budgeting Information System 25
    • Accounting Purchasing Sales General Ledger(Quantity & Volume) (Order & Bill)Business Planning & Customer Receivable Budgeting Profit Center Employees Accounting (Salary & Wages) 26
    • Human ResourcesEnterprise Structure Recruitment/ Manpower Planning and Modeling Selection Placement Workforce Benefits/Payroll Orientation Management 27
    • Shipping Order Shipping Point Shipping Document WarehouseGoods Issue and Picking and Delivery Delivery Note Scheduling Transportation 28
    • Typology of Enterprises according to Blau and Scott1. • Enterprises which benefit their owners. All business Enterprises fall under this category2. • Enterprises which benefit their members. Wide class of unions, cooperatives and clubs3. • Enterprises which benefit their clients. e.g., insurance companies, private schools etc.4. • Enterprises which benefit the whole society such as governmental Enterprises, commonwealth, etc 29
    • Key attributes of a virtual Enterprise1. 2. 3. 4. 5.• Technology • Opportun- • No borders • Trust • Excellence ism 30
    • Virtual Enterprise – Primary Benefits 1. • Its ability to save on lease rentals of office space and employee commuting costs 2. • Its ability to focus on core competence as a result of outsourcing of all non-essential activities 3. • Its use of synchronous technologies such as audio and video conferencing which allow members to interact t the same time or in real time 31
    • Virtual Enterprise – Drawbacks1.• There is a phenomenal increase in the daily number of e-mails if its executives.2.• Its employees miss the opportunity of meeting their coworkers. They also fear that their lack of interaction with superiors may not bode well for their careers3.• It is common for some employees to have conference calls during off hours spanning mid-day in Bangalore, early morning in Norway and close to mid-night in California.4.• Some customers do not like to deal with the Enterprise through web site which lacks emotional pitch and body language associated with verbal communication 32
    • Enterprise Architecture - Definition• Enterprise architecture is an ongoing business function that helps an enterprise figure out how to execute best the strategies that drive its development. The MIT Center for Information Systems Research (MIT CISR) defines enterprise architecture as the specific aspects of a business that are under examination:• Enterprise architecture is the organizing logic for business processes and IT infrastructure reflecting the integration and standardization requirements of the companys operating model. The operating model is the desired state of business process integration and business process standardization for delivering goods and services to customers.[3] The United States Government classifies enterprise architecture as an Information Technology function, and defines the term not as the process of examining the enterprise, but rather the documented results of that examination. Specifically, US Code Title 44, Chapter 36, defines it as a strategic information base that defines the mission of an agency and describes the technology and information needed to perform that mission, along with descriptions of how the architecture of the Enterprise should be changed in order to respond to changes in the mission 33
    • Enterprise Architecture• An enterprise architecture framework bundles tools, techniques, artifact descriptions, process models, reference models and guidance used by architects in the production of enterprise-specific architectural description. Several enterprise architecture frameworks break down the practice of enterprise architecture into a number of practice areas or domains.• See the related articles on enterprise architecture frameworks and domains for further information.• In 1992, Steven Spewak described a process for creating an enterprise architecture that is widely used in educational courses. 34
    • Enterprise Architecture• Developing an Enterprise Level Architectural Description• Paramount to the enterprise architecture is the identification of the sponsor, his/her mission, vision and strategy and the governance framework to define all roles, responsibilities and relationships involved in the anticipated transition.• As the purpose of architecture is: "INSIGHT, TO DECIDE, FOR ALL STAKEHOLDERS", enterprise architects work very closely with the enterprise sponsor and key stakeholders, internal and external to the enterprise. The architect understands the enterprise mission, vision and strategy and the sponsors ideas about the approach. The architect articulates the existing enterprise infrastructure value- chain: market, business, systems and technology. Architects present and discuss the technology, systems, business and market options to fulfill the enterprise mission.. 35
    • Enterprise Architecture• Insight is improved by using the solution architecture which is, relative to the decisions ahead, a specific blend of technology, systems, business and market options. Together with the sponsor and the main stakeholders, they make informed choices about the options. For large transitions, architectural decisions are supported by proofs-of-concept and/or business pilots.• Enterprise architects use various methods and tools to capture the structure and dynamics of an enterprise. In doing so, they produce taxonomies, diagrams, documents and models, together called artifacts. These artifacts describe the logical Enterprise of business functions, business capabilities, business processes, people, information resources, business systems, software applications, computing capabilities, information exchange and communications infrastructure within the enterprise 36
    • Enterprise Architecture• A collection of these artifacts, sufficiently complete to describe the enterprise in useful ways, is considered by EA practitioners an enterprise level architectural description, or enterprise architecture, for short. The UK National Computing Centre EA best practice guidance[7] states• Normally an EA takes the form of a comprehensive set of cohesive models that describe the structure and functions of an enterprise.• The individual models in an EA are arranged in a logical manner that provides an ever-increasing level of detail about the enterprise: its objectives and goals; its processes and Enterprise; its systems and data; the technology used and any other relevant spheres of interest.• This is the definition of enterprise architecture implicit in several EA frameworks including the popular TOGAF architectural framework. 37
    • Enterprise Architecture• Using an enterprise architecture• Describing the architecture of an enterprise aims primarily to improve the effectiveness or efficiency of the business itself. This includes innovations in the structure of an Enterprise, the centralization or federation of business processes, the quality and timeliness of business information, or ensuring that money spent on information technology (IT) can be justified.[2]• One method of using this information to improve the functioning of a business, as described in the TOGAF architectural framework, involves developing an "architectural vision": a description of the business that represents a "target" or "future state" goal. Once this vision is well understood, a set of intermediate steps are created that illustrate the process of changing from the present situation to the target. These intermediate steps are called "transitional architectures" by TOGAF.[9] Similar methods have been described in other enterprise architecture frameworks. 38
    • Enterprise Architecture - Benefits• Benefits of enterprise architecture• As new technologies arise and are implemented, the benefits of enterprise architecture continue to grow. Enterprise architecture defines what an Enterprise does; who performs individual functions within the Enterprise; how the Organizational functions are performed; and how data is used and stored. IT costs are reduced and responsiveness with IT systems is improved. However, to be successful, continual development and periodic maintenance of the enterprise architecture is essential. Building an enterprise architecture could take considerable time and proper planning essential, including phasing the Program in slowly, prior to implementation. If the enterprise architecture is not kept up to date, the aforementioned benefits will become useless. 39
    • Enterprise Architecture• The growing use of enterprise architecture• Documenting the architecture of enterprises is done within the U.S. Federal Government[10] in the context of the Capital Planning and Investment Control (CPIC) process. The Federal Enterprise Architecture (FEA) reference models guides federal agencies in the development of their architectures.[11] Companies such as Independence Blue Cross, Intel, Volkswagen AG[12] and InterContinental Hotels Group[13] also use enterprise architecture to improve their business architectures as well as to improve business performance and productivity. 40
    • Enterprise Architecture• Relationship to other disciplines• Enterprise architecture is a key component of the information technology governance process in many Enterprises, which have implemented a formal enterprise architecture process as part of their IT management strategy. While this may imply that enterprise architecture is closely tied to IT, it should be viewed in the broader context of business optimization in that it addresses business architecture, performance management and process architecture as well as more technical subjects. Depending on the Enterprise, enterprise architecture teams may also be responsible for some aspects of performance engineering, IT portfolio management and metadata management. Recently, protagonists like Gartner and Forrester have stressed the important relationship of Enterprise Architecture with emerging holistic design practices such as Design Thinking and User Experience Design.[14]• The following image from the 2006 FEA Practice Guidance of US OMB sheds light on the relationship between enterprise architecture and segment (BPR) or Solution architectures. (This figure demonstrates that software architecture is truly a solution architecture discipline, for example.) 41
    • Enterprise Architecture• Defining the boundary or scope of the enterprise to be described is an important first step in creating the enterprise architecture. Enterprise as used in enterprise architecture generally means more than the information systems employed by an Enterprise.[6] A pragmatic enterprise architecture provides a context and a scope. The context encompasses the (people), Enterprises, systems and technology out of scope that have relationships with the Enterprise(s), systems and technology in the scope. In practice, the architect is responsible for the articulation of the scope in the context, engineers are responsible for the details of the scope (just as in the building practice). The architect remains responsible for the work of the engineers, and the implementing contractors thereafter. 42
    • Enterprise Architecture• NIST Enterprise Architecture Model (NIST EA Model) is a reference model for Enterprise Architecture, that illustrates the interrelationship of enterprise business, information, and technology environments.[1]• This model developed by the National Institute of Standards and Technology (NIST) in 1989, became in the 1990s widely accepted and promoted within the U.S. federal government as an Enterprise Architecture management tool.[1]• This NIST Enterprise Architecture Model is the foundation of several U.S. federal Enterprise Architecture frameworks, for example the Federal Enterprise Architecture Framework.[1] 43
    • Enterprise Architecture• The NIST Enterprise Architecture Model is a five-layered model allows for organizing, planning, and building an integrated set of information and information technology architectures. The five layers are defined separately but are interrelated and interwoven.[1] This interrelation between the architecture layers is defined in the model:[2]• Business Architecture drives the information architecture• Information architecture prescribes the information systems architecture• Information systems architecture identifies the data architecture 44
    • Enterprise Architecture• Data Architecture suggests specific data delivery systems, and• Data Delivery Systems (Software, Hardware, Communications) support the data architecture.• The hierarchy in the model is based on the notion that an Enterprise operates a number of business functions, each function requires information from a number of source, and each of these sources may operation one or more operation systems, which in turn contain data organized and stored in any number of data systems.[3] 45
    • Enterprise Architecture• The U.S. National Institute of Standards and Technology (NIST) is responsible for developing technical, management, physical and administrative standards and guidelines; providing technical assistance; and conducting research for computer systems technology within the Federal government. Two NIST efforts in particular have provided direction to Federal agencies in the development of an open systems environment (OSE) to promote interoperability, portability, scalability, and standardization of agency information architectures and systems.[5]• Information Management Directions: The Integration Challenge, NIST Special Publication 500-167, September 1989.• Application Portability Profile (APP) - The U.S. Government’s Open System Environment Profile Version 3.0, NIST Special Publication 500-230, February 1996.• Information Management Directions• DoE Information Architecture View.[5] 46
    • Enterprise Architecture• The NIST report entitled "Information Management Directions: The Integration Challenge" defines the Enterprise Architecture, levels within the Architecture, and the standards required to implement and enforce such an Architecture. The NIST Enterprise Architecture has provided a framework for service and agency architecture model definitions. It consists of a five-tiered framework to illustrate business, information, and technology interconnectivity. Although the tiers are separately identified, they are interrelated. An integrated set of information and information technology architectures can be derived from the Enterprise Architecture. In the 1990s the Department of Energy (DOE) has adopted NIST’s Enterprise Architecture model to define its Information Architecture, see image.[5] 47
    • Enterprise Architecture• Application Portability Profile• The "Application Portability Profile (APP) - The U.S. Government’s Open System Environment Profile Version 3.0" provides recommendations on a set of industry, Federal, national, international and other specifications that define interfaces, services, protocols, and data formats to support an Open System Environment (OSE). The APP addresses the lowest architecture in the NIST Enterprise Architecture Model, i.e., the Delivery System Architecture. Based on these specification recommendations, various services and agencies have defined detailed technical reference models. In the 1990s both the U.S. Patent and Trademark Office (PTO) of the Department of Commerce (DoC) and the Department of Defense (DoD) in its Technical Architecture Framework for Information Management (TAFIM) have defined their Technical Reference Models based on NIST’s APP.[5] 48
    • Enterprise Architecture• Enterprise architecture (EA) is the process of translating business vision and strategy into effective enterprise change by creating, communicating and improving the key requirements, principles and models that describe the enterprises future state and enable its evolution.[1]• Practitioners of EA call themselves enterprise architects. An enterprise architect is a person responsible for performing this complex analysis of business structure and processes and is often called upon to draw conclusions from the information collected. By producing this understanding, architects are attempting to address the goals of Enterprise Architecture: Effectiveness, Efficiency, Agility, and Durability.[2 49
    • The following image from the 2006 FEA Practice Guidance of US OMB sheds light on the relationshipbetween enterprise architecture and segment (BPR) or Solution architectures. (This figure demonstrates that software architecture is truly a solution architecture discipline, for example.) 50
    • What is ERP?• ERP is acronym for Enterprise Resource Planning and is a software that helps an Enterprise optimize its resources (money, manpower and material) by integrating information and making it easily accessible and available.• This in turn leads to superior decision making capabilities and execution of business processes within the Enterprise thereby giving the Enterprise a competitive edge in the marketplace 52
    • Fundamental Characteristics of Information ACCURACY RELEVANCY TIMILINESS
    • Enterprises with No or Little Communication Between the Departments R&D Marketing Finance Sales & Distribution Production Production Planning
    • An Enterprise where all departments know what others are doing R&D Marketing Finance Central DatabaseSales & Distribution Production Production Planning
    • Information Integration Through ERP Systems Service Management Supply Chain Management Customer RelationshipProject Management Management Business Supply Chain Analytics Execution SupplierBusiness Intelligence Relationship Extended Financial Management Management 56
    • ERP System – Business Environment Financial Management HR Management Prouction Planning Manufacturing Plant MaintenanceQuality Management Sales and Materialsl Distribution Management 57
    • Supply Chain Integration Strategic & Operational Planning Finance Human Resources ManufacturingBusiness LogisticsAnalytics Management Maintenance Management Sales & DistributionQuality Management 58
    • Technology Motivations for ERP Program Obsolete systems 7% Unable to support growth 5%Difficult to integrateacquisitions 8% Disparate systems 24%BusinessProcesses/Systems notintegrated 12% Poor quality/visibility of information 17% System not Y2K compliant 27% 59
    • Operational Motivations for ERP Program Inconsistent Poor uncompetitive business processes business performance Business 7% 22% becoming global 11%Unable to support new business strategies 11% Complex ineffective business processes Cost structure too high 15% Not responsive enough 18% to customers 16% 60
    • Common ERP Myths1. • ERP means more work and procedures2. • ERP will make many employees redundant and jobless3. • ERP is the sole responsibility of the management4. • ERP is just for manager/decision makers5. • ERP is just for manufacturing Enterprise6. • ERP is just for the ERP implementation team7. • ERP slows down the Enterprise8. • ERP is just to impress customers9. • ERP package will take care of everything10. • One ERP package will suit everybody11. • ERP is very expensive12. • Enterprises can succeed without ERP 61
    • ERP Market Share in 2006SSA Global Intentia Infor Global Lawson Others 3% 2% solutions 1% 19% Geac 2% Microsoft 2% business solutions 4%SageGroup 6% Oracle SAP 19% 42% 62
    • Reasons for ERP growth1. • Enable improved business performance (Cycle time reduction, increased business agility, inventory reduction, order fulfillment improvement)2. • Support business growth requirements ( New products/product lines, new customers, global requirements including multiple languages and currencies)3. • Provide flexible, integrated, real time decision support (Improve responsiveness across the Enterprise)4. • Eliminate limitation in legacy systems( Century dating issues, fragmentation of data and processing, inflexibility to change, insupportable technologies)5. • Take advantage of the untapped mid-market (medium size Enterprises) (Increased functionality at a reasonable cost, client server/open systems technology, vertical market solutions) 63
    • Why is ERP Important to a Company1. • ERP affects almost all Enterprises2. • ERP forces competition to change3. • ERP forces business partner to become more competitive4. • ERP improves the profits of the consulting firms5. • ERP is he most important tool for business process reengineering6. • ERP enforces “Best Practice Business Processes” in Enterprises • ERP fully utilizes the true potential of client server computing to7. deliver an enterprise product8. • ERP has changed the nature of IS function and IT professionals9. • ERP has changed the nature of jobs in all functional business areas10. • ERP implementation is very costly 64
    • How does ERP create value1. • Integrates Enterprises activities2. • Forces the use of “Best Practices”3. • Enables Organizational standardization4. • Eliminates information asymmetries5. • Provides on line and real time information6. • Allows simultaneous access to data for planning and control7. • Facilitates intra Enterprise communication8. • Facilitates inter Enterprise collaboration9.10. 65
    • Tangible Benefits of ERP Inventory reduction 32% Personnel reduction 27% Productivity improvements 26% Other management improvements 20% Financial close cycle reduction 19% IT cost reduction 14% Procurement cost reduction 12% Cash management improvements 11% Revenue/Profit increases 11%Transpotation/Logistics cost reduction 9% Manitenance reductions 7% On time delivery improvements 6% 66
    • Intangible Benefits of ERP Information visibillity 55% New improved process 24%Customer responsiveness 22% Cost reduction 14% Integration 13% Standardization 12% Flexibility 9% Globilazition 9% Technology 8% Business performance 7% Supply demand chain 5% 67
    • Risks of ERP Process 18% Technology 13%People 69% 68
    • Risks of ERP – People Issues1. • Change management2. • Internal staff inadequacy3. • Program team4. • Training5. • Employee relocation and re training6. • Staffing (Includes turnover)7. • Top management support8. • Consultants9. • Discipline10. • Resistance to change 69
    • Risks of ERP – Process Risks1. • Program management2. • Business process reengineering3. • Stage transition4. • Benefit realization5.6.7.8.9.10. 70
    • Risks of ERP – Technological Risks1. • Software functionality2. • Technological obsolescence3. • Application portfolio management4. • Enhancement and upgrades 71
    • Risks of ERP – Implementation Issues 1. • Program size2. • Lengthy implementation size 3. • High initial investment4. • Unreasonable deadlines 5. • Insufficient funding 6. • Interface 7. • Organizational politics 8. • Scope creep 9. • Unexpected gaps10. • Configuration difficulties 72
    • Managing Risks on ERP Programs1. • Find potential failure point or risks2. • Analyze the potential failure points to determine the damage they might do3. • Assess the probability of the failure occurring4. • Based on the first three factors, prioritize the risks5. • Mitigate risks through whatever action is necessary 73
    • Three Pillars of ERP Implementation PEOPLE PROCESS TECHNOLOGY 74
    • “Not Best“ Implementation Practices 1. • Not willing to change current business practices 2. • Not learning from mistakes 3. • Ignoring sound change control practices 4. • Lack of sound Program management 5. • Relying too heavily on third party consultants 6. • Lack of documentation 7. • Lack of executive level and functional level buy in 8. • Failing to test adequately 9. • Challenging processes 10. • Cost and time overruns 75
    • Challenges to Successful ERP Implementations Inadequate Definition of Requirements 46.50% Resistance to Change (Lackof buy in) 43.90% Inadequate Resources 43.10% Inadequate Training and Education 36.20% Lack of top Management support 32.40%Unrealistic Expectations f Benefits and ROI 30.60% Miscalculation of Time and Effort 27.70% Poor Communications 27.40%Software Business Process Incompatibility 23.10% Poor Project Design and Management 16.80% Poor ERP Package Selection 6.40% Other 4% 76
    • Challenges to ERP Implementation Business ROI Technology People Process 77
    • Challenges to ERP Implementation(cont’d)• Business Challenges: • Resource hungry • Inflexibility • Overly hierarchal • Difficult to implement: easier to adapt business processes to the ERP software than other way around • Business challenge in terms of Enabling Partners, Customers and Suppliers • System wide change resulting in personnel related problems • Maintenance and support challenges 78
    • Challenges to ERP Implementation(cont’d)• Technology: • Hardware • Software • Integrated Systems • Matching capabilities and needs • Compatibility and standards • Data Integrity • High availability • Disaster recovery • Scalability and Performance • Security and manageability and other operations area 79
    • Challenges to ERP Implementation(cont’d)• Process: • How to implement? • Implementation Process itself (outlined in detail) • Adapting processes to those of the ERP • Program Structure • Alignment to processes • Top management support • User involvement • Phased approach 80
    • Challenges to ERP Implementation(cont’d)• People: • Redefines the process • Jobs affected because of new way of doing business as a result of ERP re-engineering • Resistance to change • Results in changes in required skill sets at the workplace • Involves making changes in measurement and reward systems by the management 81
    • Challenges to ERP Implementation(cont’d)• Return On Investment: (Whether to invest? ) • One time acquisition costs • Product installation costs • Training costs in support of installation • Recurring costs in terms of maintenance and management • Process costs • People costs • Technology costs 82
    • Challenges to ERP Implementation(cont’d)• Return On Investment: (Whether to invest? ) • Business benefits vs. technical benefits • Operations and management cost analysis • Business cost of downtime • Analyzing costs and benefits 83
    • Implementation Success Rate On time, within Time and cost budget and as overrun planned 55% 10%Cancelled 35% 84
    • Implementation Details – Planned vs Actual 230350 178250 59150 100 100 41 50-50 Cost Schedule Planned functionality 85
    • Advantages of ERP Implementation• ERP software provides an integrated and process oriented environment leading to enhanced alignment of business values and technology goals of the Enterprise• Leads to optimization of resources (material, money and manpower) within an Enterprise by making information easily accessible and available• Results in improved decision making capabilities• Results in enhanced resource planning• Provides improved customer service• Leads to increased competitiveness• Results in reduced costs 86
    • Advantages of ERP Implementation (cont’d)• Results in improvement in the execution of different business processes within the Enterprise• Provides an opportunity to re-examine business processes and revise them to reflect industry standards and best practices• Results in better Program management and production planning efforts• Reduces lead times in production• Reduces cycle time• Reduces idle time• Enhances other supply chain functional areas 87
    • Advantages of ERP Implementation (cont’d)• Results in improved product quality or availability by better managing or reporting on assembly line defects• Reduced costs through reduced overall product inventories across warehouses and distribution centers• Improved information about distribution channels• Reduced customer billing time• Management of better insight into company wide cash flow leading to better cash management• Creates well defined and short line of accountability in an Enterprise leading to better decision making process 88
    • Advantages of ERP Implementation (cont’d)• Addresses shift in customer demands by analyzing buying trends across various geographies• Provides analyses of buying trends across different customer demographics• Leads to increased knowledge of customer orders and trends• Better response to changing market conditions by rapidly analyzing customer and product trends• Increased knowledge of better turnarounds on returns• Addresses rapid changes in business processes as these are demand important• Increases efficiency in an Enterprise along with compliance with safety and quality standards 89
    • Advantages of ERP Implementation (cont’d)• It folds all company units into one system of records• Provides one system or portal by which to manage activities in a number of other systems ”behind the scenes”• Addresses changing government regulations through integration with standard tax and other systems 90
    • Solution to ERP Implementation Challenge Effective Program Management for successful execution and implementation of the Program 91
    • What is Program Management?Program Management is the disciplineof planning, organizing, securing andmanaging resources to bring aboutsuccessful execution andimplementation of specific business andtechnology goals by a group of peoplecomprising of managers and functionalrepresentatives within an Enterprise 92
    • Advantages of Effective Program Management• Provides a structured approach towards identification, strategizing, planning, design, execution, imple- mentation and re-engineering of the strategic goals of the Program to meet business and technology requirements• Program Management helps to reduce and manage risks• Results in better team coordination leading to enhanced team productivity and smooth operation of the Program• Creates an organized approach towards managing material, money and manpower in the Program leading to enhanced resource planning and allocation of resources• It puts in place a methodology where lines of accountability are short and the responsibilities of individuals are clearly defined 93
    • Advantages of Effective Program Management (cont’d)• Results in advanced and coordinated development activities due to superior Organizational, communication, analytical, problem solving and interpersonal skills as a result of effective Program management• Effective Program management helps to standardize and systemize it as an engineering discipline since as mentioned before, ERP implementation is a very resource hungry Program• When all the above mentioned factors are carefully taken into consideration, it leads to better management and implementation of the Program 94
    • ERP Implementation - Traditional ApproachPhase 1- Pre Selection Screening PhaseBusiness Evaluation Vendor & Package Evaluation Initial ScreeningPhase 2- Execution and Implementation PhaseBusiness Blueprinting Gap Analysis Reengineering Execution and Implementation Realization Training Phase 3-Post Implementation Phase Going Live/Support Going Live/Support 95
    • ERP Implementation – New ApproachPhase 1 – Pre Selection Screening PhaseBusiness Process Study (Business Evaluation) Program Scope Management (Technical Evaluation)Phase 2 – Execution and Implementation PhaseProgram Plan Management Organizational Planning Risk Management Execution & Implementation Phase 3 – Go Live Going Live Phase 4 – Post Implementation Phase Program Report/Sign Off 96
    • ERP Program Management MethodologyBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 97
    • ERP Program Management Methodology – Business Process StudyBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 98
    • Business Process StudyObjective : Establish a Business case for ERPinvestment by making a case for business alignmentof the objectives and values of the Enterprise that canbe highlighted and realized through ERP investment • Define strategic business goals of the Enterprise • Identify business strategy in place • Detailed business analysis including Organizational and historical information, operational information, financial information, market study, ROI investigation, product metrics to support the objectives of the Program • An overall identification and study of existing processes and conceived processes and mapping of business processes that needs to be resolved 99
    • Business Process Study (cont’d)• Comparison to industry standards• Create clear linkages with business strategy along with creating a strategic map to define cause and effect linkages• Determine program management, its impact on the business being run differently, employees and their jobs, training and implementation issues• Identify business requirements and high level business problems that ERP implementation will resolve• Assess corporate change readiness• Create realistic goals and expectations for the management• Design an overall future state for making a case for ERP implementation 100
    • ERP Program Management Methodology – Program Scope ManagementBusiness Process Study Program Scope Management Program Plan Management Program Enterprise Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 101
    • Program Scope ManagementObjective : Establish a Technical case for ERPinvestment by identifying business processes that canbe re-engineered and mapped into ERP softwarefunctionalities• Set up a steering committee and appoint a Program sponsor• Baseline scope identification by redefining Program goals and objectives along with Program deliverable and timeframes• Scope major business processes the business will transform through ERP implementation 102
    • Program Scope Management (cont’d)• Study the relationship of the Program with the legacy information systems, e-commerce applications, high level technical architecture, timeframes of application release and measures of the success of the Program• Identify changes in business structure and its impact on business and software usage to create a cohesive business operation model using the future IT infrastructure as the operation backbone• Detailed evaluation and selection of ERP package involving (cont’d) 103
    • Program Scope Management (cont’d)• Detailed evaluation and selection of ERP package involving • Benefits • Flexibility • Maintenance and support challenges • Risks involved • ERP functional capabilities • ERP expansion potential • ERP technology deliverables • Value enhancements • ERP vendor credibility in the marketplace etc. • ERP product quality 104
    • Program Scope Management (cont’d)• Identify which modules will be used for the Program and the functionalities that are going to be used for each module• Identify proper hardware that will be required to support development work on ERP software as a critical deliverable and physical space requirements for the Program• Conduct a general study to have an overall view of the resource allocation that will be required for the selected package• Conduct a feasibility study along with ROI investigation of the selected ERP package• Develop an overall Program plan and program management methodology along with an overall implementation strategy for the ERP Program 105
    • ERP Program Management Methodology – Program Plan ManagementBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 106
    • Program Plan ManagementObjective : Detailed breakdown of the strategicbusiness requirements into technical and functionalrequirements by conducting a feasibility study andmapping the Program deliverables from all angles forthe successful implementation of the Program(Process mapping and gap analysis – Technologyimplementation plan)• Translate business requirements into technical requirements by first identifying key business process flows that the business will transform• Detailed analysis and study of the identified business process flows to customize it to individual customer requirements to meet business and technical requirements 107
    • Program Plan Management (cont’d)• Develop Program plan and detailed methodology for delivering defined goals for each process flow• Detailed implementation strategy and proper sequencing and scheduling of each step in the implementation process for successful execution and implementation of the Program• The details of the implementation process should include thoroughly defined scheduling to include realistic goals, costs and timeframes to minimize system downtime• Carefully analyze and resolve each factors affecting the implementation plan ranging from business factors, technology factors, budgetary factors and human factors such that they are broken down in different phases of the Program for effective execution and implementation 108
    • Program Plan Management (cont’d)• Program plan should include a complete inventory and analysis of application customization, interfaces, output and data conversion requirements should be performed as a basis for developing a detailed implementation plan and determine effort levels and resource requirements• Detailed analysis of design and sizing of the SAP components to be implemented including accessibility options like SAP web application server (WebAs) internet transaction server as required• Detailed analysis and evaluation of the implementation strategy adopted for the Program ex. Big bang implementation, phased implementation etc. 109
    • Program Plan Management (cont’d)• Explore process map from every angle and provide solutions along with configuration for the worst case scenarios• Stress on automation as opposed to manual intervention• Optimizing the creation of new objects during configuration• Prepare realistic goals and milestones with simple and straightforward solution 110
    • ERP Program Management Methodology – Program Organizational PlanningBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Signing Off 111
    • Program Organizational Planning ManagementObjective : Establish a structured approach for teamformation and effective communication between theteam members in the Program to achieve strategicgoals and deliverables for the successful executionand implementation of the Program• ERP Programs being very resource hungry and heavy demands it puts on personnel working on these Programs, it becomes Program managers and steering committees job of careful staff acquisition for the Program for their intended roles and responsibilities as prime movers of the Program• Careful team development which includes representatives from different functional groups from all departments that will be affected by ERP re-engineering along with technology partners and external and internal customers as applicable 112
    • Program Organizational Planning Management (cont’d)• Delegating responsibilities to each and every member of the Program along with their intended role and involvement in the Program• Establish Program communication activity and milestone deliverables• Develop a plan for Program time management involving • Activity definition • Activity sequencing • Activity duration estimation • Schedule development • Schedule control 113
    • Program Organizational Planning Management (cont’d)• Establish a detailed communication management and information and distribution system including • Administrative • Reporting • Daily deliverables • Weekly targets • Weekly progress reports • Establishing a frequency of reviews with team members, supervisors and management• Establish a detailed plan and format for the meetings to utilize the time efficiently and to get the most of the Program meetings 114
    • Program Organizational Planning Management (cont’d)• Establish a consistent method and format for information distribution among team members from electronic mail system to in person information and data distribution to providing status reports to supervisors and management• Create a Program issues database to allow Program team members an opportunity to record problems relating to the Program for effective communication and resolution of the issues along with proper monitoring of the issues that comes up during the implementation process• Evaluation and monitoring of the Program progress on a regular basis to keep track of the competency of the team and the Program for the timely execution of the Program 115
    • ERP Program Management Methodology – Program Resource AllocationBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 116
    • Program Resource AllocationObjective : Proper allocation and delegation of theProgram resources to the Program deliverables tocomply with time and budget constraints along withProgram metrics for the successful implementation ofthe Program • Since ERP is a resource hungry Program, identify major resources namely money, manpower and material that is required for the Program • Analyze and evaluate the importance of each of these resources and its importance for the strategic goals of the Program for effective resource allocation • Prioritize these strategic goals of the Program 117
    • Program Resource Allocation (cont’d)• Develop simulations or create scenarios to allow flexibility and tolerances on the Program deliverables to prevent scope creep during the implementation process of the Program• Develop contingency plans to avoid budgetary issues• Develop a detailed methodology for complying with the above requirements where ever possible or applicable 118
    • ERP Program Management Methodology – Program Risk ManagementBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 119
    • Program Risk ManagementObjective : To identify and analyze quantitative andqualitative risk factors and tolerances of the Programmetrics for successful risk management• Program risk identification• Detailed identification and analysis of the constraints of the Program including budgeting, time and performance criteria etc.• Quantitative and qualitative risk analysis• Identify and include roles and responsibilities of different groups and individuals in the risk management, define Organizational and stakeholder risk tolerances and high level plans for risk management 120
    • Program Risk Management (cont’d)• Identify factors presumed to be real that may affect the Program, its effect on daily operation, employees and processes. (These are slightly different than constraints that and can include stakeholder participation, expected funding system etc.)• Identify effective contingency plans for each scenario for successful risk management• Identify and assess change controls in the Program for effective management and implementation of the Program. Any change control made to the Program in the implementation stage is likely to pose a threat to progress in some way 121
    • Program Risk Management (cont’d)• Assess and identify the vendors and technology partners involvement in the Program and its effect in effective implementation of the Program such that company secrets and business practices are handled properly• Understanding systems thinking involving quality management since any improvement in quality is direct improvement in productivity• Assess quality control issues and develop a quality plan and carry out quality assurances and control activities• Develop a high level quality management implementation team that can run the test plan against high level requirements to validate the scope of the Program 122
    • Program Risk Management (cont’d)• Assess time and cost schedule by creating a Program schedule, resource and budget plan• Assess the current methodology for monitoring and controlling Program progress such that factors affecting Program requirements, unexpected technical challenges and charges in resources availability can managed to control change management and scope creep 123
    • Program Risk Management (cont’d)Objective : To develop solutions and methodology forsuccessful risk management of the Program leadingto successful execution and implementation of theProgram• Develop a detailed quantitative and qualitative risk management plan• Develop a system for monitoring, identifying and tracking progress for effective risk management and control• Develop a methodology for risk response along with appointing a risk response committee 124
    • Program Risk Management• Roles and responsibilities should be clearly delegated and defined to each member of the cross functional team to effectively manage risks and minimize downtime and change control• Develop alternative plans and contingency plans for each scenarios as identified constraints of the Program namely budgeting, time and performance criteria in a cost effective way and without sacrificing quality• Develop a methodology for managing change controls in the Program for effective implementation and minimized downtime 125
    • Program Risk Management• Develop a methodology and implementation plan for resolving quality issues for effective quality management and control• Develop a methodology for monitoring and controlling Program progress such that factors affecting Program requirements, unexpected technical challenges and changes in the resource availability can be managed to control change management and scope creep• Develop a shared understanding of the Program and the best tool for identifying all of the attributes of the Program objective and deliverables to quantify and manage risks effectively 126
    • ERP Program Management Methodology – Program Execution and ImplementationBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Planning Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/ Sign off 127
    • Program Execution and Implementation Objective : To execute the implementation strategy methodology and the module rollout plan that was developed involving prioritizing and sequencing of the different phases of implementation such that it results in minimized downtime and effective execution and implementation of the Program• The implementation team should be knowledgeable about: • Data and data recovery • Information about standard ERP updates • Knowledgeable about system debugging 128
    • Program Execution and Implementation• The implementation team should be knowledgeable about (cont’d): • Ability to excel at cross modular dependencies using ERP correction Transport system (CTS) • Effect of ERP systems upgrade configuration and custom programs • Baseline configuration • Final configuration • Cycle tests • Integration tests 129
    • Program Execution and Implementation• ERP team should also be knowledgeable about ERP technical architecture which consists of : • The database server • The application server • The presentation server • Two or three tier architecture • System sizing • SAP instance for example • SAP clients for example • Nature of SAP clients 130
    • Program Execution and Implementation• Detailed consideration given to developed methodology of pre installations tasks comprising of : • Implementation strategy • Global system topology • Organizational change management • Global business process standardization • Development of global elements such as documentation templates, standard IMGs, structure and settings, master data format and documents and so on 131
    • Program Execution and Implementation• Detailed planning and execution of ERP data center operations with detailed considerations given to : • Standardization • Physical requirements from power to cooling and other environmental controls • Cabling and cable management • Physical storage requirements for ERP infrastructure • Network infrastructure for ERP network fault tolerances • Control systems and optimal network configuration • Optimum server configuration 132
    • Program Execution and Implementation • Operating systems best practices for given ERP • General storage conditions • Special considerations to storage area networks • General best practices and observations when developing ERP infrastructure • Leveraging storage virtualization • Planning for ERP data center operations • Special considerations when deploying the technical sandbox • Special considerations when deploying the development system 133
    • Program Execution and Implementation• Performance improvement through : • Changes in standard ERP code • Performance improvement criteria through configuration settings • Performance improvement through master data • Performance improvement through development of custom ABAP/4 coding • Performance improvement with buffered tables • By keeping track of response time • Through database reEnterprise and archiving • Through ERPP information system versus ABAP/4 134
    • Program Execution and Implementation• Detailed planning and execution of: • Hardware management tools and utilities • OS management utilities • Database management tools • Proper leveraging of SAP solution manager • ERPs solution servers • ERP net assistant • Specialty utilities (microsoft management control- MMC) • Cluster administration and CCmon • Remote management tools 135
    • Program Execution and Implementation• Addressing in general ERP post installation tasks • Setting up a client or transport strategy • Addressing security, access and authorization • Setting up printing or faxing • Implementing a desktop restore solution • Addressing archiving• Addressing change control and managing end user perceptions• Testing high availability and disaster recovery along with testing data conversion and ERP monitoring 136
    • Program Execution and Implementation• Functional regression and integration testing along with ERP system and system test databases• Develop and follow the methodology conducting business process testing• Preparing for production stress testing with the objective of achieving system levels stress testing and for training purposes• Disk subsystem and database testing and network infrastructure testing in the real world, ERP component and DS testing tools and best practices 137
    • General New Product Testing “Inside Out” - Example SAP GUI and Web GUI SAP Client Strategy Web Access Layer Central Instance and applications Servers Database Server 138
    • Program Execution and Implementation• Key ERP stress testing considerations are: • Creating an ERP stress test Program plan • Analyzing online users and batch processes • Its all about the data • Updating the Program plan • Real versus the virtual users • ERP users versus freeware and inexpensive testing tools • Developing business process scripts • Planning “what if” • Verify system redundancy and failover perform as expected • Ramp up to excessive loads 139
    • Program Execution and Implementation• Script development and preparation in the real world by creating administrative and other utility scripts • Core script development • Stress testing client infrastructure • Creating administrative and other utility scripts • Login and establishing a virtual user session • Ramping up users and processes • Collecting statistics• Ensure that disaster recovery plan is effective and back restore criteria is verified and meets requirements 140
    • Program Execution and Implementation• Rounding off ERP system landscape along with speeding up OS installation process and preparation for an ERP database installation process• Using SAP solutions manager for ERP standard methodology and implementation along with founding off ERP system landscape• Leveraging system landscape installation manager like SAPinst along with installation documents, tools and approaches along with installing the ERP enabling foundations netweaver, SAP exchange infrastructure enterprise information portal and installation details for mySAP components for example• Special considerations should be given when deploying ERP development system and the technical sandbox 141
    • Program Execution and Implementation• Developing system management techniques for ERP• Leveraging CCMS (computer center management systems) for manual processes and checklists along with automating CCMS data collection processes• Piloting systems management application for ERP along with evaluating enterprise systems management applications for ERP 142
    • ERP Program Management Methodology – Program TrainingBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 143
    • Program Training ManagementObjective : To transfer knowledge and train andfamiliarize the employees and the management withthe newly implemented process for effective executionof the business processes within the Enterprise• Formal classes and courseware for ERP end users as well as system developers and technical support staff• Onsite training workshops• Determining the personnel that need to be trained from management to end users and customizing and delivering training curriculum accordingly• Create and provide access to ERP knowledge warehouse 144
    • Program Training Management (cont’d)• Designing and using enterprise portal for knowledge management along with designing ongoing knowledge management and transfer process• Creating computer based and online training product documents and user manuals• Creating customized training manuals along with product documents and user manuals• Design or provide certification programs along with documenting training of the personals• Create a feed back loop to improve the value of the training 145
    • ERP Program Management Methodology – Going LiveBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going live Program Report/Sign Off 146
    • Going Live (Cont’d)Objective : The final signing off of the Program wherethe ERP Program transitions from developmenttraining and testing stages to a full blown productionenvironment • Preparing the go live strategy and the cutover plan along with simulating go live scenarios • Readying the production system and preparing for technical go live • ERP going live, check and other review process • ERPGUI rollout mechanism • Final system updates and review and locking down the system 147
    • Going Live (Cont’d)• Preparing for the first change management package• Updating responsibilities and roles of each member involved in the Program• Preparing ERP operations and help desk along with updating “as-is” documentation• Providing future support and service information along with support agreements and leveraging joint escalation centers• Monitoring during go live week and in the real work and planning for continuous improvement• Post implementation evaluation and support 148
    • Going Live (Cont’d)• Signing off of on the ERP Program and contract closeout• Knowledge transfer to the client and the final Program report• Provide ERP operations and helpdesk information along with additional information regarding ERP support specialists, tools and techniques 149
    • ERP Program Management Methodology – Program ReportBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 150
    • Program Report ManagementObjective : To create a document that contains allpertinent details about the Program includingbusiness requirements, process flow charts, processmaps, configuration settings along with the logic ofcustom developed programs and issues for futureconsideration to serve as a reference for futuresupport and maintenance • Create a format for the Program which basically covers each step of the Program management plan from business process study to go live according to client and Program requirements • The format of the report should basically have the structure of all the steps of the Program management plan with an objective, methodology, data (qualitative and quantitative) followed with conclusion 151
    • Program Report Management (cont’d)• The data for the final report should come from all the information that that was collected during the course of the Program in the form of actual reports (namely weekly or management reports), e-mail transactions of information and or the database system that was set up for Program communication• The report should also include all the Programs business requirements, all the system settings that were made to satisfy the requirements in ERP and all the business decisions that were taken to overcome issues that were taken to overcome issues during the implementation of the Program• The Program report should serve as a future reference material or a guide for the client as they maintain the system after the Program has been completed 152
    • ERP Program Management MethodologyBusiness Process Study Program Scope Management Program Plan Management Program Organizational Planning Program Resource Allocation Program Risk Management Program Execution and Implementation Program Training Going Live Program Report/Sign Off 153
    • Conclusion 154
    • Different Departments that comprise an Enterprise Procurement Production/Manufacturing Engineering Research and Development Marketing Sales Finance Accounting Human Resources Shipping 155
    • Different Departments that comprise an Enterprise Procurement Production/Manufacturing Engineering Research and Development Marketing Sales Finance Accounting Human Resources Shipping 156