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Enterprise Resource Planning


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Enterprise Resource Planning

  1. 1. Enterprise Systems ES Enterprise Resource Planning (ERP) Enterprise Resource Management (ERM) P.Pille, Ryerson Polytechnic University School of Information Technology Management
  2. 2. Enterprise Systems <ul><li>Early Automation </li></ul><ul><li>What is ERP </li></ul><ul><li>ERP Implementation </li></ul><ul><li>Beyond ERP </li></ul><ul><li>ERM </li></ul><ul><li>SAP </li></ul><ul><li>Electronic Marketplace </li></ul>
  3. 3. Early Automation <ul><li>Automation of tasks within departments </li></ul><ul><li>Therefore, each dept had its own system(s) </li></ul><ul><ul><li>Functionality for tasks for that department only </li></ul></ul><ul><ul><li>Systems weren’t powerful enough to attempt broader range of tasks </li></ul></ul><ul><ul><li>Usually single vendor for all parts of system (e.g. IBM) </li></ul></ul><ul><ul><ul><li>All hardware and network components </li></ul></ul></ul><ul><ul><ul><li>All operating system and application software </li></ul></ul></ul><ul><li>Result: Generally communication between departments remained largely manual </li></ul><ul><ul><li>IS/IT was often at the mercy of single vendors </li></ul></ul>Antony Upward,CGI
  4. 4. <ul><li>Open Systems </li></ul><ul><ul><li>Application vendors built applications to support the tasks in specific departments (Finance, Billing, Workforce Management, HR etc.) -- “Best of breed” </li></ul></ul><ul><ul><li>Better technology allowed automated interfaces between systems </li></ul></ul><ul><li>But… Interfaces </li></ul><ul><ul><li>Have difficulty with different data definitions </li></ul></ul><ul><ul><li>Often don’t eliminate re-keying </li></ul></ul><ul><ul><li>Are expense to build and maintain </li></ul></ul><ul><ul><li>Are visible and get in the way of the end-users </li></ul></ul><ul><li>Result: Functional organizations systems landscape are usually a mess and can’t support end-to-end processes </li></ul>Antony Upward,CGI
  5. 5. Business Processes <ul><li>Cross functional boundaries </li></ul><ul><li>simple example </li></ul><ul><ul><li>Customer orders a product </li></ul></ul><ul><ul><li>deals with salesperson </li></ul></ul><ul><ul><li>warehouse picking </li></ul></ul><ul><ul><li>out of stock? </li></ul></ul><ul><ul><ul><li>purchase order to vendor </li></ul></ul></ul><ul><ul><ul><li>manufacturing order </li></ul></ul></ul><ul><ul><li>shipping </li></ul></ul><ul><ul><li>accounts receivable </li></ul></ul><ul><ul><li>effect on demand forecasting (marketing, manuf.) </li></ul></ul>
  6. 6. <ul><li>In Classical / Functional / Hierarchical organizations business processes exist… but </li></ul><ul><ul><li>No single point of accountability </li></ul></ul><ul><ul><li>No single source of consistent, timely, information about a process </li></ul></ul><ul><ul><ul><li>Multiple incompatible systems poorly connected via multiple expensive interfaces </li></ul></ul></ul><ul><li>Result: In a functional organization a process </li></ul><ul><ul><li>is very hard to change </li></ul></ul><ul><ul><li>is very hard to e-enable </li></ul></ul>Business Processes Antony Upward,CGI
  7. 7. ERP - What is it? <ul><li>Process view of business vs. functional “silos” </li></ul><ul><li>Integration of systems, one database </li></ul><ul><li>Support most of co.’s info needs </li></ul><ul><li>Transaction oriented systems (OLTP) </li></ul><ul><li>Accounting, payroll, invoicing, supply chain optimization, sales force automation, customer service,… </li></ul>
  8. 8. ERP - What is it? <ul><li>Leads to improved performance, better decision making, competitive advantage </li></ul><ul><li>Lays foundation for electronic commerce </li></ul><ul><li>Replaces a multiplicity of different systems and databases </li></ul><ul><ul><li>one integrated system </li></ul></ul>
  9. 9. Evolution to ERP <ul><li>MRP - Material Requirements Planning </li></ul><ul><ul><li>what material needed? </li></ul></ul><ul><ul><li>when & how purchased? </li></ul></ul><ul><ul><li>how managed? </li></ul></ul><ul><ul><li>maximize efficiency of physical, financial assets </li></ul></ul><ul><li>MRP 1960's </li></ul><ul><ul><li>master production schedule </li></ul></ul><ul><ul><li>material requirements planning </li></ul></ul><ul><ul><li>capacity requirements planning </li></ul></ul>
  10. 10. <ul><li>MRPII 1970's </li></ul><ul><ul><li>sales & operations planning </li></ul></ul><ul><ul><li>simulation </li></ul></ul><ul><ul><li>forecasting </li></ul></ul>
  11. 11. <ul><li>ERP 1990's </li></ul><ul><ul><li>sales and distribution </li></ul></ul><ul><ul><li>material management </li></ul></ul><ul><ul><li>plant maintenance </li></ul></ul><ul><ul><li>quality management </li></ul></ul><ul><ul><li>financial accounting </li></ul></ul><ul><ul><li>controlling </li></ul></ul><ul><ul><li>investment management </li></ul></ul><ul><ul><li>human resource management </li></ul></ul><ul><ul><li>... </li></ul></ul>
  12. 12. ERP Requires <ul><li>Strong executive support to implement </li></ul><ul><li>Process approach rather than “silos” </li></ul><ul><li>Change in business procedures (BPR) </li></ul><ul><li>Change in organizational structure, culture, strategy </li></ul><ul><li>Technology change </li></ul>
  13. 13. ERP <ul><li>Difficult to install </li></ul><ul><li>Very large and complex software </li></ul><ul><li>Provides info about all aspects of the business -- worldwide </li></ul><ul><li>Reduces inventory, waste </li></ul><ul><li>Easy communication with customers, suppliers </li></ul>
  14. 14. Before ERP <ul><li>Multiple systems, different interfaces, difficult to extract info about customers, sales,... </li></ul><ul><li>Hard to maintain, many languages, databases, inconsistencies </li></ul><ul><li>Can take weeks or months to obtain info about customers, or where systems changes are needed </li></ul>
  15. 15. After ERP <ul><li>Integrated systems </li></ul><ul><li>Consistent interface </li></ul><ul><li>One database </li></ul><ul><li>Access to current data </li></ul><ul><li>Improved planning capabilities </li></ul><ul><li>Multinational capabilities </li></ul>
  16. 16. Example: Order Processing <ul><li>Salesperson generates a quote for computer equipment overseas </li></ul><ul><li>System immediately creates product configuration, price, delivery date, shipping method,... </li></ul><ul><li>Customer accepts quote over Internet </li></ul>
  17. 17. System automatically: <ul><li>Schedules shipping </li></ul><ul><li>Reserves material </li></ul><ul><li>Orders parts from suppliers </li></ul><ul><li>Schedules assembly </li></ul><ul><li>Checks customer credit limit </li></ul><ul><li>Updates sales & production forecasts </li></ul><ul><li>Creates MRP & bill-of-material lists </li></ul>
  18. 18. <ul><li>Updates salesperson's payroll </li></ul><ul><ul><li>commission </li></ul></ul><ul><ul><li>travel account </li></ul></ul><ul><li>Calculates product cost & profitability </li></ul><ul><li>Updates accounting, financial records </li></ul>System automatically:
  19. 19. ERP Implementation <ul><li>Need business exec in charge, not IT </li></ul><ul><li>Make a business case </li></ul><ul><ul><li>long term benefits </li></ul></ul><ul><ul><ul><li>inventory reduction, customer service,…. </li></ul></ul></ul><ul><li>Costs </li></ul><ul><ul><li>software </li></ul></ul><ul><ul><li>hardware </li></ul></ul><ul><ul><li>people (by far the most expensive) </li></ul></ul>
  20. 20. <ul><li>Software </li></ul><ul><ul><li>ERP, database licenses </li></ul></ul><ul><ul><li>maintenance </li></ul></ul><ul><ul><li>support fees </li></ul></ul><ul><ul><li>add-on packages </li></ul></ul><ul><li>Hardware </li></ul><ul><ul><li>new client/server architecture </li></ul></ul><ul><ul><li>network capability </li></ul></ul><ul><ul><li>backup </li></ul></ul><ul><ul><li>multiple servers -operations, testing </li></ul></ul>ERP Implementation
  21. 21. ERP Implementation <ul><li>People - for system configuration </li></ul><ul><ul><li>internal, consultants </li></ul></ul><ul><li>Managers </li></ul><ul><ul><li>can require time commitment for several years </li></ul></ul><ul><li>Continual support from senior execs </li></ul><ul><li>Change management </li></ul><ul><ul><li>almost all personnel will be affected </li></ul></ul>
  22. 22. <ul><li>ERP system configuration </li></ul><ul><ul><li>thousands of parameters to set </li></ul></ul><ul><li>Need stability, but business constantly changes </li></ul><ul><li>Difficult to implement, difficult to change </li></ul><ul><ul><li>but is a non ERP collection of poorly integrated systems & databases any easier? </li></ul></ul><ul><li>Change is never ending </li></ul>ERP Implementation
  23. 23. ERP Implementation <ul><li>Training needed </li></ul><ul><ul><li>technical staff </li></ul></ul><ul><ul><li>business staff </li></ul></ul><ul><li>20-50% of project budget on educational and skills development </li></ul><ul><li>Results in less people needed, but more skills, understanding of the organization </li></ul><ul><li>4 months to 5 + years to implement </li></ul>
  24. 24. ERP Implementation <ul><li>Options: </li></ul><ul><ul><li>add-on systems where ERP is lacking? </li></ul></ul><ul><ul><li>keep good legacy systems, build interfaces to good legacy systems? </li></ul></ul><ul><ul><li>more than one ERP instance? </li></ul></ul><ul><ul><ul><li>different divisions, subsidiaries </li></ul></ul></ul><ul><ul><ul><li>but more than one increases complexity, reduces benefits </li></ul></ul></ul><ul><ul><li>interconnect consistent, distributed ERP systems (one logical system) </li></ul></ul>
  25. 25. ES Implementation <ul><li>DOW Chemical </li></ul><ul><ul><li>global SAP implementation </li></ul></ul><ul><ul><li>great transformation of DOW </li></ul></ul><ul><ul><li>common processes, info in finance, admin </li></ul></ul><ul><ul><li>substantial customer service improvements </li></ul></ul><ul><ul><li>info support - better management decisions </li></ul></ul><ul><ul><li>more integrated organizational structure </li></ul></ul><ul><ul><li>15% ROI </li></ul></ul>
  26. 26. CEO Survey - why ERP? <ul><li>67% Improve info accuracy, availability </li></ul><ul><li>61% Improve management decision making </li></ul><ul><li>51% Reduce cost/improve efficiency </li></ul><ul><li>38% Upgrade technology </li></ul><ul><li>31% Resolve tactical issue (e.g. Y2k) </li></ul><ul><li>24% Grow revenue </li></ul><ul><li>15% Haven’t done it yet </li></ul><ul><li>4% Other </li></ul>Davenport,T.H., Mission Critical
  27. 27. ERP Package Selection <ul><li>Major packages are similar </li></ul><ul><li>Some packages suited to specific industries </li></ul><ul><ul><li>e.g. JDA, Richter Systems for retail </li></ul></ul><ul><li>PeopleSoft - strong in HR </li></ul><ul><li>SAP - financial, supply chain </li></ul><ul><li>Baan - flexible manufacturing software </li></ul>
  28. 28. ERP Package Selection <ul><li>ERP appropriate for $25 US million and up </li></ul><ul><li>Mid-tier $25 to $1 billion </li></ul><ul><li>SAP - typically largest global firms </li></ul><ul><ul><li>(but can be done for smaller co. also) </li></ul></ul><ul><li>J.D.Edwards - smaller firms </li></ul><ul><li>Oracle, PeopleSoft, - middle </li></ul><ul><li>Baan - mostly middle customers </li></ul>
  29. 29. ERP Market <ul><li>$15 US billion ERP hardware, software worldwide market </li></ul><ul><li>Plus professional services $10 billion </li></ul><ul><li>High growth rate </li></ul><ul><li>Large co. e.g. Intel expect to spend $1 billion on ERP (can never finish) </li></ul>Davenport,T.H., Mission Critical
  30. 30. SAP R/3 ERP <ul><li>Market leading ERP product </li></ul><ul><li>Extensive functionality </li></ul><ul><li>Used by mid to large companies </li></ul><ul><li>International features </li></ul><ul><li>Can be run over internet/intranet </li></ul><ul><li>10 million users, 30,000 installations </li></ul><ul><li>13,000 companies, > 100 countries </li></ul><ul><li>SAP AG $5 billion, 5,000 developers, 15-20% on research </li></ul>
  31. 31. SAP R/3 <ul><li>SAP’s core transaction system </li></ul><ul><ul><li>Logistics </li></ul></ul><ul><ul><li>Financials </li></ul></ul><ul><ul><li>Human Resources </li></ul></ul>
  32. 32. Logistics Accounting Human Resources
  33. 33. R/3 Logistics <ul><li>Sales and Distribution </li></ul><ul><li>Production Planning </li></ul><ul><li>Materials Management </li></ul><ul><li>Plant Maintenance </li></ul><ul><li>Quality Management </li></ul><ul><li>Procurement </li></ul>
  34. 36. R/3 Financials <ul><li>Financial Accounting </li></ul><ul><ul><li>general ledger, accounts receivable, payable,... </li></ul></ul><ul><li>Controlling </li></ul><ul><ul><li>costing, profitability, planning,… </li></ul></ul><ul><li>Treasury </li></ul><ul><ul><li>Cash, funds management,… </li></ul></ul><ul><li>Capital Investments </li></ul>
  35. 37. R/3 Human Resources <ul><li>Administration </li></ul><ul><li>Payroll accounting </li></ul><ul><li>Shift management </li></ul><ul><li>Employee attendance </li></ul><ul><li>Trip costs </li></ul><ul><li>Training </li></ul><ul><li>Recruitment </li></ul><ul><li>Personal management </li></ul>
  36. 38. Industry Specific R/3 Solutions <ul><li>Aerospace & Defense </li></ul><ul><li>Automotive </li></ul><ul><li>Banking </li></ul><ul><li>Chemicals </li></ul><ul><li>Consumer Products </li></ul><ul><li>Engineering & Construction </li></ul><ul><li>Healthcare </li></ul><ul><li>High Tech & Electronics </li></ul><ul><li>Higher Education & Research </li></ul><ul><li>Insurance </li></ul><ul><li>Media </li></ul><ul><li>Mill Products </li></ul><ul><li>Mining </li></ul><ul><li>Oil & Gas </li></ul><ul><li>Pharmaceuticals </li></ul><ul><li>Project Oriented Manufacturing </li></ul><ul><li>Public Sector </li></ul><ul><li>Retail </li></ul><ul><li>Service Provider </li></ul><ul><li>Telecommunications </li></ul><ul><li>Utilities </li></ul>
  37. 39. SAP R/3 Architecture <ul><li>Processes written in ABAP/4 language </li></ul><ul><li>1000’s of switches for package configuration </li></ul><ul><li>Multiple platforms </li></ul><ul><li>Client server - multi tier </li></ul><ul><ul><li>database server (multiple servers, distributed database ) </li></ul></ul><ul><ul><li>application server (multiple servers, distributed ) </li></ul></ul><ul><ul><li>Internet server </li></ul></ul><ul><ul><li>presentation level (browsers) </li></ul></ul><ul><li>User exits - Java, C++,... </li></ul><ul><li>Communication interfaces with other packages </li></ul>
  38. 40. Multi tier client / server architecture Multiple database, application servers Technology Infrastructure 4.0 at <ul><li>Presentation </li></ul><ul><li>Internet / intranet </li></ul><ul><li>Application </li></ul><ul><li>Database </li></ul>Layers:
  39. 41. SAP R/3 Platforms <ul><li>OS </li></ul><ul><ul><li>NT </li></ul></ul><ul><ul><li>AS/400 </li></ul></ul><ul><ul><li>UNIX </li></ul></ul><ul><ul><li>OS/390 </li></ul></ul><ul><li>Database 20-30GB initially </li></ul><ul><ul><li>Oracle </li></ul></ul><ul><ul><li>Informix </li></ul></ul><ul><ul><li>AS/400 </li></ul></ul><ul><ul><li>DB2 </li></ul></ul><ul><ul><li>MS/SQL </li></ul></ul>
  40. 42. Ryerson Academic R/3 Configuration <ul><li>SAP R/3 version 4.6B </li></ul><ul><li>IBM Netfinity 8500R server equipped with </li></ul><ul><ul><li>4Gb RAM </li></ul></ul><ul><ul><li>P!!! Xeon 550Mhz processor </li></ul></ul><ul><ul><li>20 - 9.1 Gb HDDs in a Raid 5 array </li></ul></ul><ul><ul><li>40/80 DLT tape drive </li></ul></ul><ul><ul><li>CD-ROM </li></ul></ul><ul><ul><li>APC smart UPS 5000 </li></ul></ul><ul><li>NT 4 </li></ul><ul><li>Oracle 8.0 database </li></ul><ul><li>100 GB in use for NT, R/3, IDES-TS training database </li></ul>
  41. 43. Implementation Options <ul><li>Hosted solutions </li></ul><ul><ul><li>hardware & software outsourced to an Application Service Provider (ASP) </li></ul></ul><ul><ul><li>minor configuration, no license </li></ul></ul><ul><ul><li>major configuration, need license </li></ul></ul><ul><ul><li>user access through Web browser </li></ul></ul><ul><li>In house </li></ul><ul><ul><li>hardware & software on site </li></ul></ul><ul><ul><li>optional maintenance by SAP partners </li></ul></ul><ul><ul><li>user access through Web browser </li></ul></ul>
  42. 44. The Alpha NZ Case <ul><li>Larsen,M.A., Myers, M.D., 1999. When success turns into failure: a package-driven business process re-engineering project in the financial services industry. Strategic Information Systems, 8 (1999) 395-417. </li></ul>
  43. 45. The Alpha NZ Case <ul><li>9 New Zealand banks merged, same core financial services </li></ul><ul><li>BPR project to centralize Accounting at head office </li></ul><ul><ul><li>re-engineer recording & reporting </li></ul></ul><ul><ul><li>automate routine accounting </li></ul></ul><ul><ul><li>improve access to financial info </li></ul></ul><ul><ul><li>create new corporate accounting team - highly skilled, motivated </li></ul></ul><ul><li>Timeline </li></ul><ul><ul><li>July 1993 - preliminary report - goal to integrate the banks </li></ul></ul><ul><ul><li>Dec 1993 - key areas identified for improvement </li></ul></ul><ul><ul><li>Aug 1994 - consultant appointed </li></ul></ul><ul><ul><li>Feb 1995 - contract with SAP, hardware, software installed, training </li></ul></ul><ul><ul><li>Jan 1996 - go live </li></ul></ul>
  44. 46. The Alpha NZ Case <ul><li>Accounting staff reduced from 75 to 24 </li></ul><ul><li>Consultants consider system a great success </li></ul><ul><li>No original project team members remained </li></ul><ul><li>All in-house expertise disappeared, low skills remain </li></ul><ul><li>Management reporting deficiencies in the system </li></ul><ul><ul><li>no skills to enable implementation of needed reports </li></ul></ul><ul><ul><li>lack of expertise in the system </li></ul></ul><ul><ul><li>low moral, poor management </li></ul></ul><ul><li>Users consider the system a failure </li></ul><ul><li>Oct 1996 Alpha merges with Beta Ltd. </li></ul><ul><li>Alpha SAP system to be scrapped, Beta Oracle Financials system to be implemented </li></ul>
  45. 47. OLTP e.g. SAP R/3 <ul><li>Highly normalized data </li></ul><ul><li>Many tables represent an object and are connected with foreign key relationships to one another </li></ul><ul><ul><li>Database tuned for writing records </li></ul></ul><ul><li>Problems </li></ul><ul><ul><li>Reporting </li></ul></ul><ul><ul><ul><li>Difficult to combine data from different applications </li></ul></ul></ul><ul><ul><ul><li>Performance issues with reporting </li></ul></ul></ul><ul><ul><ul><li>SAP R/3 Includes Limited Operational Reporting, updated in Real-time from the transactional data </li></ul></ul></ul><ul><ul><li>Integrating external data </li></ul></ul>
  46. 48. ERP and beyond <ul><li>Supply Chain Management (SCM) </li></ul><ul><li>Customer Relationship Management (CRM) </li></ul><ul><li>Data Warehouse </li></ul><ul><li>Electronic Marketplace </li></ul>ES or ERM
  47. 49. ERP and beyond <ul><li>Supply Chain Management </li></ul><ul><ul><li>planning and optimization </li></ul></ul><ul><ul><li>supply planning, demand planning, plant scheduling, transportation & warehouse management </li></ul></ul><ul><ul><li>more integration with trading partners </li></ul></ul><ul><li>Customer Relationship Management (CRM) </li></ul><ul><ul><li>marketing, sales, service </li></ul></ul><ul><li>Data Warehouse </li></ul><ul><ul><li>On line Analytical Processing (OLAP) </li></ul></ul><ul><li>Internet access </li></ul><ul><ul><li>for employees, customers, suppliers </li></ul></ul>
  48. 50. ERP and beyond <ul><li>Buy, sell products and services on-line </li></ul><ul><li>Collaborate with suppliers </li></ul><ul><ul><li>planning, forecasting, customer demand needs (collaborative forecasting) </li></ul></ul><ul><li>Collaborate with distributors and resellers </li></ul><ul><li>Auction off excess inventory </li></ul><ul><li>Publish or bid on requests for proposals </li></ul><ul><li>… . </li></ul>Electronic (Internet) Marketplace
  49. 51. <ul><li>R/3 ERP </li></ul><ul><li>Supply Chain Management (SCM) </li></ul><ul><li>Business to Business Procurement (BBP) </li></ul><ul><li>Strategic Enterprise Management (SEM) </li></ul><ul><li>Customer Relationship Management (CRM) </li></ul><ul><li>Business Information (Data) Warehouse (BW) </li></ul><ul><li>… . </li></ul>E-business platform for inter-enterprise collaboration between a company, its suppliers and customers.
  50. 52. R/3 Basis Database R/3 Applications Logistics HR Accounting R/3 Industry Solutions Internet / Intranet Business to Business Consumer Employee Business Information (Data) Warehouse Logistics Advanced Planner & Optimizer Strategic Enterprise Management Knowledge Warehouse Automotive, ...Utilities,... Customer Relationship Management SAP AG mySAP Business to Business Procurement Corporate Finance Management Environment, Health & Safety
  51. 53. mySAP Workplace <ul><li>Single point of access to all applications </li></ul><ul><ul><li>SAP </li></ul></ul><ul><ul><li>non SAP </li></ul></ul><ul><li>Customized for each employee </li></ul><ul><li>Roles on left </li></ul><ul><li>Applications on right </li></ul>
  52. 55. SAP Components Beyond R/3 <ul><li>Supply Chain Management (SCM) </li></ul><ul><ul><li>planning, optimizing, scheduling </li></ul></ul><ul><ul><li>suppliers, agents, production planners, purchasers, customers </li></ul></ul>
  53. 56. SCM -APO Solvers <ul><li>Demand Planning </li></ul><ul><li>Supply Network Planning </li></ul><ul><li>Production Planning & Scheduling </li></ul><ul><li>Heuristic Methods </li></ul><ul><li>Linear Programming /Mixed Integer Linear Programming </li></ul><ul><li>Genetic Algorithms </li></ul><ul><li>Constraint- based Programming </li></ul><ul><li>Exponential Smoothing </li></ul><ul><li>Holt Winters </li></ul><ul><li>Multiple Linear Regression </li></ul>APO - Advanced Planning & Optimization
  54. 57. Business to Business Procurement <ul><li>Requisitions </li></ul><ul><li>Purchase orders </li></ul><ul><li>Approval, rejection </li></ul><ul><li>Payments </li></ul><ul><li>Status </li></ul><ul><li>By end users from the desk top </li></ul><ul><li>Internet, EDI, ALE </li></ul>
  55. 58. CRM Roles <ul><li>Sales </li></ul><ul><ul><li>Sales Manager </li></ul></ul><ul><ul><li>Global Account Manager </li></ul></ul><ul><ul><li>Sales Representative </li></ul></ul><ul><ul><li>Sales Assistant </li></ul></ul><ul><ul><li>... </li></ul></ul><ul><li>Service </li></ul><ul><ul><li>Service Manager </li></ul></ul><ul><ul><li>Hotline Specialist </li></ul></ul><ul><ul><li>External Service Engineer </li></ul></ul><ul><ul><li>Contact Center Agent </li></ul></ul><ul><li>Marketing </li></ul><ul><ul><li>Marketing Manager </li></ul></ul><ul><ul><li>Marketing Analyst </li></ul></ul><ul><ul><li>Product/Brand Manager </li></ul></ul><ul><ul><li>... </li></ul></ul>
  56. 59. SAP Business Warehouse (BW) <ul><li>On-line Analytical Processing (OLAP) </li></ul><ul><ul><li>De-normalized data </li></ul></ul><ul><ul><ul><li>Diverse data is combined into large aggregated data sets </li></ul></ul></ul><ul><ul><ul><li>Logistics Information System,... </li></ul></ul></ul><ul><ul><li>Used for decision support and investigation </li></ul></ul><ul><li>Future </li></ul><ul><ul><li>SAP is using BW as the base for many analysis products </li></ul></ul><ul><ul><li>SAP will likely move from batch to on-line updates of BW in future releases (small scale this is already in place with current release) </li></ul></ul>Antony Upward, CGI.
  57. 60. Strategic Enterprise Management (SEM) <ul><li>Integration of strategic, financial and operational information </li></ul><ul><li>Internal & external business information sourcing </li></ul><ul><li>Financial and non-financial Key Performance Indicators (KPI) </li></ul><ul><li>Business Planning and Simulation </li></ul><ul><ul><li>Business simulation </li></ul></ul><ul><ul><li>Operational Planning </li></ul></ul>
  58. 61. Knowledge Management <ul><li>SAP Knowledge Warehouse </li></ul><ul><li>All standard SAP training courses </li></ul><ul><li>20 languages </li></ul><ul><li>Glossary </li></ul><ul><li>Can be modified by customer </li></ul>
  59. 62. Integration Also Means... Linking Transactions, Analysis and Planning Transaction Transaction Transaction Act Operational Process (OLTP) Management Process (OLAP) Analyze Plan
  60. 63. ERM Systems <ul><li>Trust the vendor to embed and continually improve their support for best business practices into their product </li></ul><ul><ul><li>Leverage vendors R&D spending via upgrades </li></ul></ul><ul><ul><li>… But only if no modifications to core code </li></ul></ul><ul><li>Actively work with vendor to identify opportunities for improvement </li></ul><ul><ul><li>User Groups (ASUG, T-SIG) </li></ul></ul><ul><ul><li>SAP Industry Business Units (IBU’s) </li></ul></ul><ul><ul><ul><li>Joint development of industry specific functionality </li></ul></ul></ul><ul><ul><li>SAP Account Executives </li></ul></ul>Antony Upward,CGI
  61. 64. ERM Systems <ul><li>Assume vendor solutions embed best business practices and you will change business practices, not vendors core code </li></ul><ul><li>Leverage package to gain lowest total cost of ownership advantages - maximize use of product before considering alternatives </li></ul>Antony Upward,CGI
  62. 65. ERM Systems <ul><li>Within organizations -greatest strength - ability to facilitate end-to-end business processes through integration </li></ul><ul><ul><li>Shared Database for all Users </li></ul></ul><ul><ul><li>On-line Real Time </li></ul></ul><ul><ul><li>Shared, Integrated Functionality and Process Designs </li></ul></ul><ul><ul><li>Web based Portal to allow access anywhere anytime </li></ul></ul><ul><ul><li>Roles Based, to focus Functionality and Security for Users </li></ul></ul>Antony Upward,CGI
  63. 66. ERM Systems <ul><li>Between organizations ERM’s greatest strength is their ability to facilitate end-to-end business processes using the Internet </li></ul><ul><ul><li>Database Shared via Marketplaces </li></ul></ul><ul><ul><li>Shared, Integrated Functionality and Process Designs </li></ul></ul><ul><ul><li>Portal to allow access to Business Partners (Customers, Vendors, etc.) </li></ul></ul><ul><ul><li>Roles Based to focus Functionality and Security for Users </li></ul></ul><ul><li>Gartner calls this Collaborative Commerce – or c-Commerce </li></ul>
  64. 67. Collaborative-Commerce <ul><li>c-Commerce achieves the dynamic collaboration of people, applications, and corporations in all aspects of business </li></ul><ul><li>Customers, employees, suppliers, and business partners work together as if they were all one company </li></ul><ul><li>Examples </li></ul><ul><ul><li>Collaborative buying and selling </li></ul></ul><ul><ul><li>Public bidding </li></ul></ul><ul><ul><li>Collaborative forecasting </li></ul></ul><ul><ul><li>Collaborative planning </li></ul></ul><ul><ul><li>Collaborative engineering </li></ul></ul><ul><ul><li>Collaborative invoicing/billing </li></ul></ul><ul><ul><li>… </li></ul></ul>Customer Partner Employee Supplier Collabo- ration
  65. 68. Seller Buyer c- Commerce Marketplaces <ul><li>The “Old World” </li></ul><ul><li>Individual connection to each business partner </li></ul><ul><li>Different technologies (EDI, Edifact, FAX, XML, cXML, …) </li></ul><ul><li>Constant maintenance </li></ul><ul><li>Need to buy the technology </li></ul>Seller Buyer <ul><li>The “New World” </li></ul><ul><li>Only one connection to the marketplace to connect to all business partners </li></ul><ul><li>The marketplace deals with issues like technology, security, search tools, catalog, etc. </li></ul><ul><li>Enables ad-hoc buying from all participants in the marketplace. </li></ul>Marketplace
  66. 69. Buyer Seller c-Commerce Example: Buying and Selling Sell Internet Selling Buy Internet Buying Search Select Register Offer Marketplace Receive Collect ! Operational Systems (Financials & Logistics) Operational Systems (Financials & Logistics) Transact Other systems
  67. 70. Kinds of Marketplaces Content Community Commerce Collaboration <ul><li>Buying/selling goods and services </li></ul>Infrastructure <ul><li>General content </li></ul><ul><li>Business-specific content </li></ul><ul><li>Interaction </li></ul><ul><li>Communication </li></ul><ul><li>Discussion </li></ul>Vertical (industry-specific ) Horizontal (Cross industry ) Regional (USA, France, ..) <ul><li>Business-oriented communities/forums </li></ul><ul><li>Specialized inter-enterprise applications & services </li></ul>Oil & Gas, Chem/Pharma Human Resources US Home-building
  68. 71. Likely End-point – “Federations” of Marketplaces Vertical Marketplace Vertical Marketplace Horizontal Marketplace Horizontal Marketplace Local/vertical Marketplace Horizontal Marketplace e.g. Chemical Marketplace Buyer Seller Marketplace as a Product Marketplace Joint Venture Marketplaces
  69. 72. ERM Implementation <ul><li>Very Little Analysis / Design / Programming Required </li></ul><ul><ul><li>Typically 10-20% of Total Effort </li></ul></ul><ul><ul><li>Interfaces </li></ul></ul><ul><ul><li>Conversions </li></ul></ul><ul><ul><li>Bolt-ons (via Published User Exits) </li></ul></ul><ul><li>Configuration Replaces Programming </li></ul><ul><ul><li>Table Driven </li></ul></ul><ul><ul><li>Master Data </li></ul></ul><ul><ul><li>Enables substantially automated upgrades </li></ul></ul>Antony Upward,CGI
  70. 73. ERM Implementation <ul><li>Business People Normally Configure (with some Training) </li></ul><ul><ul><li>Largely removes non-value added activity of translating business requirements to technology requirements </li></ul></ul><ul><li>Result: </li></ul><ul><ul><li>Implementation focuses on realizing business value not getting the technology to work </li></ul></ul>
  71. 74. ERM Implementation <ul><li>ERM makes technology less “visible” during implementation – allowing project teams to focus simultaneously on all aspects of delivering business value </li></ul><ul><ul><li>Business Process Design; Organization Design; Application Configuration </li></ul></ul><ul><ul><li>This is a good thing! </li></ul></ul><ul><li>Typical ERM implementation project teams are cross functional: </li></ul><ul><ul><li>End-users 50-75%, frequently including project leadership </li></ul></ul><ul><ul><li>ERM configurators (usually ex-business people) 15-30%, </li></ul></ul><ul><ul><li>ERM and legacy technicians / programmers 5-25% </li></ul></ul>Antony Upward,CGI
  72. 75. ERM Implementation <ul><li>Typical ERM implementation projects have a different mix of tasks </li></ul><ul><ul><li>Delivering business value requires significant focus on Business Change Management, typically 10-30% of team tasks </li></ul></ul><ul><ul><li>Technology is no longer the prime driver of ERM implementations (only 10-40% of team tasks) </li></ul></ul><ul><ul><ul><li>Less program specifications and programming </li></ul></ul></ul><ul><ul><ul><li>Little or no data design </li></ul></ul></ul><ul><li>ERM Specific Implementation Methodologies Required </li></ul><ul><ul><li>Still learning how to do ERM implementations well </li></ul></ul>Antony Upward,CGI
  73. 76. ERM & Re-engineering <ul><li>Re-engineering typically started with a “blank sheet of paper” for the process designs </li></ul><ul><ul><li>Equivalent to asking “What are the requirements?” </li></ul></ul><ul><li>Numerous re-engineering efforts failed </li></ul><ul><ul><li>Analysis paralysis </li></ul></ul><ul><ul><li>Huge software projects </li></ul></ul><ul><ul><li>Customizing ERP systems </li></ul></ul><ul><li>Today ERM packages can support so much of so many processes can now ask: </li></ul><ul><ul><li>Not what do you want, but: </li></ul></ul><ul><ul><li>Which process designs can the ERM system support </li></ul></ul><ul><li>Leverages the massive R&D spending of ERM vendors </li></ul><ul><ul><li>SAP spends 15-20% of Revenues on R&D </li></ul></ul><ul><ul><li>Need to do regular upgrades to get benefit of this R&D </li></ul></ul>Antony Upward,CGI
  74. 77. Implications of ERM for IT Strategy <ul><li>Can no longer ask the question of the end-users </li></ul><ul><ul><li>What is your requirement? </li></ul></ul><ul><li>This question was fundamental to I.T. strategy from the 1970’s to the mid-1990’s </li></ul><ul><li>I.T. practitioners made the following assumptions that </li></ul><ul><ul><li>The business knew what they needed </li></ul></ul><ul><ul><li>Requirements would stay still long enough for I.T. to build systems to support them </li></ul></ul><ul><ul><li>I.T. could use open systems to make each department’s systems work together without a lot of effort or expense </li></ul></ul><ul><li>Recent business trends, particularly the increasing pace of change, have made all these assumptions false </li></ul><ul><li>Now we must ask what business process designs can a package support out of the box </li></ul><ul><ul><li>Assumes ERM vendor has done their home work </li></ul></ul>Antony Upward,CGI
  75. 78. ERM Job Opportunities <ul><li>Account executive - SAP support </li></ul><ul><li>Business consultant - system solutions </li></ul><ul><li>Sales manager - ERP solutions </li></ul><ul><li>Instructor - SAP products </li></ul><ul><li>Software developer - ABAP/4, C++,... </li></ul><ul><li>Systems analyst </li></ul><ul><li>MIS manager </li></ul><ul><li>SAP administration. </li></ul><ul><li>SAP installation, support </li></ul><ul><ul><li>OS, database, SAP Basis knowledge </li></ul></ul>
  76. 79. Sources <ul><li>Antony Upward, Director, Business Architecture, CGI Group Inc. </li></ul><ul><li>Davenport ,T.H., 2000, Mission Critical - Realizing the Promise of Enterprise Systems , Harvard Business School Press </li></ul><ul><li>Watson, E., Schneider, H., 1999, Using ERP Systems in Education , Communications of AIS Volume 1, Article 9 </li></ul><ul><li>The AMR Research SAP Advisory Alert for June 15, 2000: </li></ul><ul><li>SAP info and links: </li></ul><ul><li>SAP: </li></ul><ul><li>SAP USA home site: </li></ul><ul><li>SAP emedia file Technology Infrastructure 4.0 at: </li></ul><ul><li>SAP emedia file mySAP Frequently Asked Questions at: </li></ul>
  77. 80. Sources <ul><li>SAP R/3 Functionality Overview, Wednesday, September 15, 1999, Jim Kelly, Curriculum Development Manager - ERP, SAP America: </li></ul><ul><li>Central Michigan University: </li></ul><ul><li>International Demo and Education System (IDES) </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Go to site and register for a user id and password </li></ul></ul><ul><ul><li>Can trial pretty much the whole SAP product over the internet (HTML GUI) </li></ul></ul><ul><li>America’s SAP User Group (ASUG) - </li></ul><ul><li>Other Web Sources - </li></ul>