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Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
Session 9 Notes
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Session 9 Notes


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  • 1. IS560 ERP - Session Number: 9
      • Session Date: March 3, 2003
      • Session Objectives:
        • Administrative Items
      • Session Topics:
        • ERP Trends, Emerging Techniques & Technology (continued)
  • 2. ERP Trends Meta Group Research
    • ERP was a hot area of IT investment leading up to Y2K.
    • Global 2000 enterprises spent millions on transaction record-keeping systems to enhance operational efficiency and consolidate accounting systems.
    • Market took a breather at the start of the second half of 1998, as larger corporations prepared for the millennial transition.
    • ERP market staging a comeback since early/mid-2000
      • Most dramatic example is PeopleSoft’s performance.
    • META Group projects that the market will sustain 15% to 25% trend line growth during the next several years.
      • Strongly depends on the strength of the world economy.
    • Key players include JD Edwards, Oracle, PeopleSoft, and SAP
      • And, to a limited extent, Lawson Software, a private company.
  • 3. ERP Trends Meta Group Research
    • Key drivers for enterprise resource planning (ERP) investment in 2002+ will include:
      • M&A activity,
      • Consolidation of line-of-business and cross-geographic deployments
      • Global expansion of initial ERP investments
      • Late-stage ERP adoption.
    • Most ERP investment will continue to be burdened with the “seamless” (i.e., integrated), or “unseemly” (best-in-class) decision, as traditional ERP vendors continue to move into new product categories with more credible offerings this year (e.g., CRM, eMarketplaces).
  • 4. ERP Growth Drivers – Mergers & Acquisitions Meta Group Research
    • ERP rationalization efforts following corporate M&A are significant.
    • Especially critical when both M&A partners were running the same ERP backbone prior to merging.
    • “ Major league” M&A (i.e., mergers among the Fortune 500) and smaller but more frequent acquisitions will continue to promote significant ERP spending in 2002 and beyond.
  • 5. ERP Growth Drivers – ERP Consolidation Meta Group Research
    • ERP consolidation (i.e., “value investment”) Despite considerable ‘bolt-on’ functionality available in ERP suites, many Global 2000 organizations to operate older point solutions.
      • Either packages from vendors other than the ERP system vendor, or
      • Custom-built solutions.
    • Many companies compelled to consolidate existing ERP investments spawned by the initial availability LOB-focused or geography-focused solutions.
    • Investment to consolidate existing back-office assets will yield greater systems value (and costs savings) and will contain the rash of widely deployed point solutions.
  • 6. ERP Growth Drivers – ERP Consolidation Meta Group Research
    • Cross-LOB analysis supporting an organization’s supply-chain strategy will play a key part in the decision-making process for ERP expansion within and across geographies in 2001.
    • For 2003/04, inter-enterprise business modeling (i.e., including partner/supplier, OEM, as well as vertically integrated divisions) expected to form a routine part of continuous IT/LOB planning.
    • Expected to dovetail with the data warehousing decision-making process.
  • 7. ERP Growth Drivers – Late Adoption Meta Group Research
    • Certain companies beginning to adapt modern HR, finance, and service/supply-chain functions.
    • Especially evident in the financial services and retail verticals, where ERP vendors have been less successful providing end-to-end solutions,
  • 8. ERP Trends – Functionality & Architecture Meta Group Research
    • Traditional ERP vendors continue movement into the best-in-class product categories.
      • Includes CRM, eMarketplaces, e-procurement, etc.
    • Leading ERP package providers should be able to sustain growth in excess of the market.
    • Another factor driving high-end ERP investment in 2001 will be the push to Web-based architecture supporting core business application functionality.
    • Enterprises are beginning to exploit the development initiatives that vendors like PeopleSoft and SAP have been investing in for some time.
    • More server-side application logic and less reliance on accessing objects stored on the client side should result in upgrade cycles that require fewer IT/end-user touch points.
    • Wave of upgrades expected as existing customers wait for successful test cases of new architectural approach.
      • PeopleSoft and mySAP showing signs of success in moving market.
  • 9.  
  • 10. ERP Trends: Combined ERP & E-business Benefits Improved cash management Improved supplier relationships Capability to manufacture to actual demand Continuous operation Shorter cycle times Frees employees to work on tasks requiring human creativity and judgment Reduced costs, inventories, and collection efforts Improved customer and employee satisfaction Increased revenue INTANGIBLE BENEFITS TANGIBLE BENEFITS
  • 11. An E-business analytical framework (Service) (Quality) Customer Value = ------------------------------- (Price) (Time) (Agility) (Reach) Competitive Capability = ----------------------- (Time-to-Market) (Revenue) Supply Chain Value = -------------------- (Cost)
  • 12. E-business Models and Disintermediation
    • Pure e-business play?
      • The case of
    • Click-and-mortar
      • Hybrid of the pure e-business and the brick-and-mortar model
      • Dependence of e-business and physical facilities
    • Disintermediation
      • Manufacturers interact directly with consumers, bypassing intermediaries such as wholesalers and retailers
      • Impact on a company’s business processes
        • Warehouse must now manage a large number of low-volume orders
        • Accounts receivable must now process a large number of invoices and accommodate increased collection activity
        • Customer service may be inundated with calls
        • Customer returns must now be managed by manufacturer
  • 13. The E-business Platform – Extreme Demands
    • Operating demands place a strain on e-business platforms.
      • Fluctuating traffic.
      • Frequent system changes.
      • 24 x 7 operation.
    • Flawless system stability.
      • True 24 x 7 availability requires 99.999% reliability.
    • Scalable.
      • Dramatic spikes in site traffic.
    • Security.
      • Exposure of corporate resources on the Web.
    • Robust Design.
      • Testing tools available.
    • Examples of AOL, E*Trade, Charles Schwab and eBay.
  • 14. ERP and E-business: Adaptive vs. Disruptive Technology
    • E-business is a revolution
      • Internet (4 years to reach 50 million users)
      • Television (13 years)
      • PC (16 years)
      • Radio (38 years)
    • Adaptive technologies move earlier technologies forward incrementally while Disruptive technologies change the way people live or the way businesses operate.
      • ERP is adaptive while e-Business is disruptive.
      • Touch-tone telephone was adaptive while telephone itself was disruptive.
      • Electric train was adaptive while the train itself was disruptive.
  • 15. Life Cycle of Adaptive versus Disruptive Technologies Impact Time Disruptive technology Adaptive technology Critical Mass (1) Initial hype (2) Learning, Experimenting, investing (3) New wave of Technology and equipment (4) Infrastructure consolidation (5) Critical mass achieved. Mass marketing
  • 16. ERP & E-business Recap
    • Structured approach to optimizing a company’s internal value chain.
    • Organize, codify and standardize a company’s business processes and data. Collate and transform transactional data into useful information for analysis.
    • Not intrinsically strategic; rather, it is an enabling technology.
    • Business process re-engineering or re-design (BPR) often accompanies ERP projects to eliminate non-value-adding work, thus improving a company’s financial performance through operational improvements.
    • ERP implementation requires employees to be willing to new technology, & also new ways of working.
      • This forces employees to upgrade their skill sets.
    • ERP implementation with BPR affects a company’s organizational structure.
      • Affects individual roles within the organization.
      • Staff reductions are often seen, or staff may be moved into other areas (in expanding companies).
    • Change management is key to successful implementations.
  • 17. ERP & E-Business Re-cap (continued)
    • E-commerce
      • Leverage an Internet-based sales channel to enhance marketing and sell products or services, or leverage the Internet to make purchasing more efficient.
        • Ideally, with minimal disruption to organizational culture and business processes
      • e-storefront, e-catalog, e-billing, e-payment, e-procurement
      • Focuses on efficiency in selling, marketing and purchasing
    • E-business
      • Uses IT and open standards to connect suppliers and customers at all steps along the value chain.
      • Requires trust among business partners, and agreement on standard ways of working.
      • Focuses on effectiveness through improved customer service, reduced costs and streamlined business processes.
      • Many companies enter e-business by first engaging in e-commerce.
  • 18. Complementary Technologies of ERP and E-Business
    • ERP and Internet technologies are rapidly coming together.
      • Merger is still incomplete and its exact nature unclear
    • ERP is the internal technological hub of a single enterprise.
      • Web-based technology extends each enterprise’s organizational boundaries.
    • ERP is focused on internal process efficiency and effectiveness while E-Business is focused on external, cross-enterprise process efficiency, operational effectiveness, and product promotion.
    • ERP technology supports current business strategy while E-business opens the door to new strategic opportunities.
    • E-business is best supported by a well-tuned ERP system.
      • What lies behind the web page is important.
      • ERP is necessary to fulfill the promises made on the Web page, that is, the promise of e-business.
      • Enterprises need some sort of internal transaction engine to match the internal information flow with the actual flow of goods and/or services.
      • Key issue is to blend ERP and Web-based technology successfully and to push each to achieve its maximum benefit.
  • 19. ERP complements E-Business
    • ERP: The hub of a single enterprise
      • Integrates resource planning, supply-chain management, demand-chain management and knowledge management.
      • Achieved through tightly integrated modules for Finance, Manufacturing, Logistics, Human Resources, and Sales & Marketing.
    • E-Business: The ideal extension to internal processes
      • Enables improved customer focus (individualized service, low-cost products, short cycle times, and accurate delivery dates) and customer relationship management
      • Enables interactive relationships with value-chain partners
    • ERP boosts E-Business potential
      • Communication with partners in the supply chain and customers in the value chain is not enough.
      • Collaboration and coordination are also important.
      • Processing logic is required in order to respond to information available across the Internet.
  • 20. ERP / E-Business Matrix Greenfield Non-integrated systems Limited / Single- Function ERP Integrated Business- Unit ERP Integrated Enterprise ERP No E-Business Capabilities Channel Enhancement Value Chain Integration Industry Transformation Convergence
  • 21. ERP / E-Business Organizational Issues: Domain & Level Matrix Greenfield Non-integrated systems Limited / Single- Function ERP Integrated Business- Unit ERP Integrated Enterprise ERP No E-Business Capabilities Channel Enhancement Value Chain Integration Industry Partnership Convergence 1. Start-Up
    • Enterprise Growth Limited
    • (High Risk = Opportunity)
    • High Cost Relative to Benefit
    5. Optimize Business at Unit Level 6. Optimize across Enterprise
    • Customer Benefit Limited
    • (Reduced E-Options
    • and Flexibility)
  • 22. E-Business Examples
    • - Point solutions such as selling over the Web, providing customer self-service and conducting Web-based indirect procurement. ( e-commerce )
    • VALUE CHAIN INTEGRATION (e.g. Adaptec)
    • - Integrate customers’ and suppliers’ operations with their processes and systems (e-CRM and e-SCM).
    • INDUSTRY TRANSFORMATION (e.g. Solectron and Ingram Micro)
    • - Boundaries between companies and their partners become less pronounced as they link internal systems through the Web, creating new markets, new opportunities, new customers and new products and services. There is an intense relationship between the partners to create an environment for shared business improvements, mutual benefits and joint rewards.. ( Collaborative Advantage )
    • CONVERGENCE (e.g. Shell, Mobil, BP, GM and GE)
    • - Coming together of companies from different industries to provide goods and services to consumers. This is not solely a function of e-business technologies: it is equally a function of industry deregulation, globalization of business, evolving customer demand and new competitive tactics. However, it is helped by decreasing costs and rapid adoption of technology. ( Industry Convergence )
  • 23. Summary: ERP Vendor Responses to E-Business Challenges Traditional ERP versus E-Business Applications Dimensions ERP Apps E-Business Apps Intuitive User Training Required User Interface Simple Complex Business Processes Browser, Portals, IT Through APIs or EDI Method of Integrating with Other Businesses Continuous, Small Changes Periodic, Complex Upgrade Release Process Outside Company In Inside Company Out Focus Vendors Customers Employees
  • 24. ERP Vendor Responses to E-Business Challenges (cont’d)
    • Extend ERP Functionality
      • SCM
      • CRM
      • APS
      • BI
      • Internet-based Procurement
    • Build communities of users through portals and trading exchanges
      • Public versus private
      • Horizontal versus vertical
      • Direct versus indirect materials
  • 25. ERP Vendor Responses to e-business challenges (cont’d)
    • Create new ERP delivery and pricing models
      • Traditional pricing includes initial license fee for a specified number of employees, with annual maintenance fees
      • Introduction of Role-based pricing (part of SAP’s strategy in which users access the system through role-specific Workplaces)
      • Industry-specific, pre-configured solutions to offset high implementation costs (e.g. SAP’s Accelerated Applications and Oracle’s FastForward RPM)
      • Pre-configured, pre-installed and pre-integrated (e.g. partnership between IBM and vendors like J D Edwards, MAPICS, QAD and SAP)
      • Traditional outsourcing (either through ERP vendors or their partners)
      • Application service provision
        • Third-party service provider typically licenses the software from the ERP vendor and resells the package to many buyers for fixed, per-month, per-user fee. Users access the offsite system via Internet.
      • Internet-based delivery of basic ERP system (e.g. Biztone)
  • 26. ERP Trends: Current ERP Vendor Plays
    • SAP
      • Web-enabling its current suite of modules
      • Experimenting with outsourced operations and ASPs
      • workplace and marketplaces
    • Oracle
      • The first of the big ERP vendors to begin web-enabling its modules (adding CRM)
      • Oracle’s Business Online (BOL)
      • JV with Ford on AutoXchange
    • PeopleSoft
      • Purchased Vantive Corporation to acquire CRM technology
      • Developed suite of strategic management analytical applications called Enterprise Performance Management
      • JV with Guess? And Commerce One to create portal for apparel industry
  • 27.
    • J D Edwards
      • Web-enabling its basic ERP suite under the name OneWorld
      • Purchased Numetrix for supply chain technology
      • Created ActivEra portal for access to its ERP system and third-party software applications (such as Siebel’s CRM)
    • Baan
      • Built around Microsoft’s site server commerce platform software
      • E-Sales, E-Collaboration and E-Procurement
    • i2
      • Is actually a SCM vendor selling sophisticated APS software
      • Possible that i2 may break into the enterprise from the outside
      • Created its own portal TradeMatrix marketplaces (eg.
    ERP Trends: Current ERP Vendor Plays (continued)
  • 28. Next Session Highlights:
    • Topics
      • ERP Trends, Emerging Techniques & Technology (continued)