Erp

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Erp

  1. 1. INTRODUCTION TO BPR & ERP
  2. 2. What is BPR  The fundamental rethinking and radically redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance such as cost, quality, service and speed.  The implementation of deliberate and fundamental change in business processes to achieve breakthrough improvements in performance.  Enabled by IT  Also known as Reengineering or Process Innovation is offered as an enabler of organizational transformation.
  3. 3. BPR Objectives:  To dramatically reduce cost  Reduce time  To dramatically improve customer services or to improve employee quality of life  To reinvent the basic rules of the business e.g.  the airline industry  Customer satisfaction  Organizational learning
  4. 4. BPR  Change:  To transform an organization, a deep change must occur in the key behavior levels of the organization:  jobs, skills, structure, shared values, measurement systems and information technology.  Role of IT  BPR is commonly facilitated by IT e.g.  Organizational efficiency  Effectiveness  Transformation
  5. 5. BPR  Transformation  Applications in the transformation category change the basic ways that people and departments work and may even change the very nature of the business enterprise itself.  A major change in the organization, including structure, culture, and compensation schemes  Efficiency  Applications in the efficiency category allow users to work faster and often at measurable lower cost  Mere automation of manual tasks, resulting in efficiency gains  Effectiveness  Applications in the effectiveness category allow users to work better and often to produce higher quality work.  Requires changes not only in technology, but in skills, job roles, and work flow (deeper).
  6. 6. Process  A process is set of logically related tasks performed to achieve a defined business outcome  A collection of activities that, taken together, create value for customer e.g. new product for customer. This tasks are inter-related tasks
  7. 7. How can Companies Identify their Business Processes.  Manufacturing: As the procurement-to-shipment process  Product development as the concept-to-prototype process  Sales as the prospect-to-order process  Order fulfillment as the the order-to-payment process  Service as the inquiry-to-resolution process
  8. 8. Identify the need - consultant  Simple Rules  Start with a clean sheet of paper.  With my current experience what can I do today  If I were to re-create this company today, given what I know and current technology, what would it look like.  How will I be focusing, organizing and managing the company?
  9. 9. Simple Rules - Consultant  Listen to customer  Enhance those things that bring value to the customer or eliminate those that don’t  Be ambitious, focus your commitment to radical change on the process
  10. 10. What is an enterprise  An enterprise is a group of people with a common goal, which has certain resources at its disposal to achieve this goal. (ERP – Alexis Leon)
  11. 11. What is ERP  “Enterprise resource planning software, or ERP, doesn't live up to its acronym. Forget about planning—it doesn't do that—and forget about resource, a throwaway term. But remember the enterprise part. This is ERP's true ambition. It attempts to integrate all departments and functions across a company onto a single computer system…” From the Darwin “Executive Guide” reading
  12. 12. Basic Idea Unification of all key operational systems Integration is  „ Geographic (multiple sites in USA, Europe & Asia for many large firms) Functional, with modules for  „ Logistics  „ Financial  „ Human Resources  „ And more specialized areas, such as real estate
  13. 13. Problems: Delays, lost orders, keying into different computer systems invites errors
  14. 14. Major Suppliers  „ SAP  „ Oracle  „ Edwards J.D  „ PeopleSoft  „ Siebel Systems
  15. 15. Advantages  „ Lower cost  „ Data entered only once, used by all processes and departments  „ Better customer service  „ Current data accessible to all participants E.g. customer service rep can see stock levels in other divisions, progress on order, etc.  „ Allows management of processes across organizational boundaries
  16. 16. Issues  Project cost is 2 to 10 times software price  High profile implementation failures  Inflexibility  Can’t find better ways to do things  Loss of supports for distinctive culture  Inherent complexity of global project  Training costs for users easy to underestimate.
  17. 17. Issues  Integration  When doesn’t work well in one area  Problems in integrating into other systems  Dependence  How to deal with things it won’t support?  Upgrade  Like all software, frequent new releases can cause major disruption
  18. 18. Latest Trends  Increased Modularization of suites  Shift to web based front ends  Broadening to focus corporate portals, external links.
  19. 19. ERP History  MRP  Began its life in 1970  MRP asks the following  What products are we going to make  What are the materials needed to make these products  What are the materials that are presently available in stock  What are the items that are need to be purchased
  20. 20.  Closed Loop MRP  Planning of sales and Production levels  Development of production schedules  Forecasting sales planning  Capacity planning and order processing  MRP II  Sales and Operational Planning  Financial interface and simulation capabilities (Decision Making)
  21. 21. ERP Myths  MYTH: “Our project is not progressing as planned because it lacks management commitment”  FACT: Progress is often not achieved because of management burn-out. People involved can be disillusioned by promises made and expectations that were built-up by overzealous vendor reps, consultants who collect exorbitant fees as the project lingers and IT personnel who were looking for big budgets and the opportunity to rub shoulders with the “big boys.”
  22. 22.  MYTH: “Our system went live in just a few months”  FACT: It is more likely that the financial part of the ERP went live in a few months rather than the whole system. Corporate financials are fairly straight forward to implement
  23. 23.  MYTH: “Once we finished getting our ERP system up and running, our expenses went down drastically.”  FACT: Outside consulting fees may have been reduced and the initial costs for setting up the system are paid off, but companies often fail to take ongoing internal implementation investment into consideration. In the words of one CIO, “we planned for $600,000 and a 6 months project; we reached both and then stopped counting.” An ERP implementation extends over long periods of time, and any worth its salt will take years, not months
  24. 24.  MYTH: “Consultants are professionals who can guide the selection process and manage the project while maintaining an objective stance.”  FACT: Its all
  25. 25.  Myth: You Must Use Only the Latest ERP Technology  Fact: Although the latest ERP integration technologies offer many advantages to small business owners, they have their own share of problems. The biggest problem is the integration of new technology to the old. In some systems, you will find that retaining older applications may be more useful than overhauling it completely
  26. 26.  Myth: Installing ERP System Means That You Can Keep Fewer IT Staff  Fact: The ERP system is not meant to replace your IT staff, it is there to help them with dayto-day problems related to maintenance and troubleshooting.
  27. 27. ERP and Related Technologies          BPR Dataware Housing Data Mining OLAP Product Life Cycle Management Supply Chain Management CRM GIS Intranets and Extranes
  28. 28. Dataware Housing  Data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis.
  29. 29. Data Mining  Data mining is the process of extracting hidden patterns from data. As more data are gathered, with the amount of data doubling every three years, data mining is becoming an increasingly important tool to transform this data into information
  30. 30. OLAP  is an approach to quickly answer multi- dimensional analytical queries  OLAP is part of the broader category of business intelligence, which also encompasses relational reporting and data mining
  31. 31. Product Life Cycle Mgmt  The product life cycle goes through many phases, involves many professional disciplines, and requires many skills, tools and processes.  Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures;  whereas product lifecycle management (PLM) has more to do with managing descriptions and properties of a product through its development and useful life, mainly from a business/engineering point of view. To say that a product has a life cycle is to assert four things: 1) that products have a limited life
  32. 32. Supply Chain Management  Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-ofconsumption (supply chain).
  33. 33. GIS  A geographic information system (GIS) captures, stores, analyzes, manages, and presents data that refers to or is linked to location.  In the strictest sense, the term describes any information system that integrates, stores, edits, analyzes, shares, and displays geographic information
  34. 34. CRM  Customer relationship management (CRM) consists of the processes a company uses to track and organize its contacts with its current and prospective customers.
  35. 35. Security and ERP  Data Security:  Computer owners and administrator use a variety of security techniques like low-tech locks to hightech software scrambling  Passwords, use of firewalls, encryption of audits, creating backups, etc  Physical Security:  Physical protection could be of human access to buildings and information stored in critical rooms, in much the same way a bank are secured.
  36. 36. Crime and Security  A Dismissed employeee  Employee with over all access  Unauthorised access by a criminial(hacking)  Virus  Worms, trojans etc.
  37. 37. ERP Modules  Technical Modules  Basis ( SAP Administration)  ABAP ( SAP Coding)  Functional Modules           Finance Module Manufacturing Modules HR Module Materials Management Production Planning Plant Maintenance Quality Management Module Purchasing module Marketing Module Sales and Distribution module
  38. 38. Finance Module  Gather Financial Data from different departments  Generates valuable financial reports such balance sheet, general ledger, trail balance, and quarterly financial statements.
  39. 39.  Sub-Systems  Financial Management ( general ledger, accounts     receivable/payable, special ledger, fixed asset accounting, Legal consolidation) Investment Management ( Investment Planning/budgeting/controlling, depreciation forecast/forecast. Controlling( Overhead cost controlling, activity based costing, product cost accounting, profit ability analysis) Treasury ( Cash management, treasury management) Enterprise controlling ( business planning and budgeting)
  40. 40. Manufacturing Module  It Provides the information base upon which the entire operation should be run.  It contains the necessary business rules to manage the entire supply chain process.  Sub-Systems        Material and capacity Planning Shop floor control Quality management JIT/Repetetive management Engineering data management Engineering change control Configuration management
  41. 41. HR Module  Streamlines the management of human resources and human capitals.  Maintain complete employee database  Sub-systems  Personnel Management  Organizational Management  Payroll accounting  Time management  Personnel development
  42. 42. Materials Management  Maintains the appropriate level of stock in a ware house.  Activities  Identifying inventory requirement  Monitoring item usages  Reporting inventory status  Integrating inventory control to sales , purchase and finance modules and generate executive level reports.
  43. 43. Production planning Module  Optimizes the utilization of  manufacturing capacity,  parts,  components material resourcing using historical production data and sales forecasting.
  44. 44. Plant maintenance module  Provides technical and business reports and various presentation options  Eg: organization unit, location, execution period for the tasks.  This info helps to reduce the duration and costs of plant down times  Subsystems  Preventive maintenance control  Equipment tracking  Component tracking etc.
  45. 45. Quality Management Module  Supports different quality management Modules  Quality Planning  Quality Inspection  Quality Control
  46. 46. Purchasing Module  Streamlines the procurement of required raw     materials. Automates the processes of identifying potential suppliers Negotiating price Awarding the purchase orders to the supplier Billing process.
  47. 47. Marketing module  Maximize the efficiencies of marketing resources  Empowers marketers to acquire and develop long term customer relation ship.         Marketing resource management Segment management Campaign management Email marketing Trade promotion management Lead management Marketing analytics Web based marketing surveys
  48. 48. Sales and Distribution  Implements functions of  Order placement  Order scheduling  Shipping and invoicing  Closely integrate with the ecommerce websites
  49. 49.  Sales related business transaction  Sales queries such as inquiries and quotations  Sales orders  Outline agreements ( Contracts and scheduling aggmnts)  Delivery/shipment  Invoicing/billing  After sales support
  50. 50.  Basic Functions            Inquiry handling Quotation preparation and processing Contract and contact management Monitoring the sales transactions Checking the availability Transferring requirements to material planning Scheduling the delivery Calculating prices/taxes Checking credit limits invoicing/billing Printing/edocuments
  51. 51. Phases of ERP Implementation           Pre – Evaluation screening Package evaluation Project Planning Phase GAP Analysis Re-engineering Customization Implementation team training Going Live End user training Post-implementation
  52. 52. Transition strategies  Big bang strategy  Phased  Parallel  Process line  Hybrid
  53. 53. Big Bang Strategy  Installation of all modules will happen at once  Promised to reduce the implementation cost  Higher failure rate  Not many organizations dare to attempt anymore  Requires careful preparation and sound planning
  54. 54.  Advantages  Overall cost of implementation is less ( No interface app)  Eliminates all the sequencing and decision making of implementing one module at a time  Well designed for rapid implementations  Avoid complex integration issues
  55. 55.  Disadvantages  Amount and cost of planning and preparation is high  Bottlenecks are high ( Lack of funds and resources etc)  Recovery process is very difficult if something goes wrong  Consequences of failed implementations are huge may lead to shut down of business itself
  56. 56. Variants in big bang  Mini big bang  Takes single big bang approach and break into multiple sections ( based on few modules)  Mega big bang  With multiple sites, all going live at a time  Do or die situation  Multi mega big bang  Multiple big bangs for multiple geographical locations  For large companies which are located in different geographical locations
  57. 57. Phased implementation  Implements one module at a time  Limits scope for one functional department at a time  Suits to companies that do not share many common processes across departments and units  Integration will be done later part  Reduces the risk of implementation, customization and operation of system
  58. 58.  Advantages  Allows to implement module at time  Risk of implementation failure is less  Total number of resources required is less at a time  Scheduling of people is convenient
  59. 59.  Disadvantages  Large number of resources required , because of conversion and interface problems.  Overall and cost of implementation is high  High turn over rate because of the length of duration.
  60. 60. Parallel Implementation  Keeps both the legacy system and new system simultaneously active for some time  Have good recovery options in case something goes wrong  Gives good psychological cushion as both the systems running parallel
  61. 61.  Advantages  Ideally suited for mission critical situations that cannot survive major malfunctions  Advantageous for the business environments which require utmost stability like finance, pharma, insurance etc  Disadvantages  But requires more resources  Confusion may erupt when people don’t interact with the both the systems  Not suitable for which the legacy system has an expiration date ( y2k issue)
  62. 62. Process Line Transition Strategy  Conceptually similar to mini big bang  But breaks implementation strategy to manage parallel business flows and product lines  Mainly utilized by small and mid sized companies which have less critical processes  The smaller process lines, which pose less risk and have a higher probability of success, usually go first. Increasing its overall probability of success.
  63. 63. Hybrid Transition strategy  Combination of process line, phasing and parallel implementation.  Tend to evolve into the needed configuration as ERP team members learn and analyze information.  Small single site ERP implementations tend to have a simple hybrid strategies  Flexible in adapting to the specific needs of the situation.
  64. 64. Choosing a strategy  Technical resource availability  Number of users  Consultant availability  Structure of erp team  Deadlines  Reliability  Hardware resources
  65. 65. ERP Implementation Process  Before you leap consider          How do we want to run our business? What problems need to be resolved? Do we know and understand our priorities? Have we defined an action plan for pre-implemntation activities What tasks will be accomplished and by what dates? What are the missing links in our software of choice? What are real costs, benefits, and timetable Do you have an executive level ERP champion that provides link to top management Who will implement ERP and make it work?
  66. 66. Pre-implementation planning session               Assembling the participants – stakeholders Need analysis review Project vision and mission statements creation Determination of organization structure Determination of modules to be implemented Creating the core team Establishing the training needs Establishing the data conversion strategy Establishing interface Determining work estimates Cost of consultants Calculation of implementation time Identifying constraints Establishing policies and guidelines
  67. 67. Implementation Methodologies  Adoption decision  Acquisition  Implementation  Use and maintenance  Evolution  Retirement
  68. 68. Organization of the project team  CEO  Steering committee  Project Manager  Project team  Consultants  Vendors
  69. 69. Implementation strategy  Speed or urgency of implementation  Availability of people for carrying out the implementation tasks  Availability of time for training all users  Cost  Confidence in the new system  Disruption to operations  Total timescale
  70. 70. ERP implementation plan
  71. 71. Risk Assessment
  72. 72. Budget
  73. 73. Cost           Hardware Operating system Database license fee Core software license fee Additional module license fee Additional seat license fee Third party software license fee Integration of third party software Software customization Project Management
  74. 74. Cost  Consultancy  Training  Living and travel expenses  Software maintenance or warranty renewal  upgrades
  75. 75. Performance measurement  Performance Related Measures  Costs, time and benefits, deliverables  Objectives vs actual  Asses the variation  Learn  Apply in further phases
  76. 76. Problem Resolution  Issues which are raised and which will require resolution  Agreed procedure to resolve issues and their resolution  Keep the track of problems  Close the issues which are resolved.
  77. 77. System Issues  How does the system perform when the erp app is under heavy use?  How quickly will space be consumed when the system is live  What is the backup procedure  Can production server be maintained?  What happens when two persons try retrieve the same data  Does the system locked, if so, how it can be unlocked  Do the locations of pcs and printers required to be changed
  78. 78.  How secure the system  How will be the user access be selectively restricted  How are passwords managed  Automated logout facility  Disaster recovery procedure
  79. 79. Implementation methodologies by vendors and consulting firms  Methodology is a road map to implementation  Diff vendors have diff methods  Mainly used for marketing purposes  Now methods used in implementation based on their experience.
  80. 80. Hidden Costs  Eights areas most likely result in budget overruns         Training Customization Integration and testing Data conversion Data analysis Consultants Employee turnover Continuing maintenance
  81. 81. Training and education  Define Learning Objectives  Determine Content  Plan  Deliver  Asses Learner  Review effectiveness of the training program
  82. 82. Data migration  Translating data from one format to another  Good data migration solution  Reduce risk  Low operational expenses  Improve data quality

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