12/02/04 www.cis.ksu.edu/~meiyappa

Enterprise Resource PlanningEnterprise Resource Planning

Meiyappan Thandayuthapani

CIS 764

12/02/04

Overview What is ERP? Key Attributes Potential modules of ERP Example Benefits of ERP Cons of ERP Major ERP players SAP R/3 Key Strengths of SAP R/3 SAP R/3 Implementation R/3 Architecture R/3 views of the Firm Procurement process overview Conclusion References

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What is ERP?

A business software that enables an organization to effectively and efficiently manage its resources including material, people, plant and equipment across the entire enterprise.

Enterprise systems include ERP software and related packages as advanced planning and scheduling, sales force automation, sales forecasting, customer relationship management, product configuration, etc.)

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Key attributes of ERP

Automate and integrate the majority of an organization’s process.

Share common data and best practices across the enterprise.

Produce and access information in a real-time environment.

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What’s the change imperative?

Five major reasons why organization’s undertake ERP projects:

Integrate financial information Integrate customer order information Standardize and speed up manufacturing processes Reduce inventory levels Standardize HR information

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Why Integrate???

Integrated Database always helps

Data is entered only once!

Data that results from very different disconnected applications is inconsistent

Helps ERP Software's to offer intelligent information by correlating data from various modules

“Single version of the truth”

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Signs…

Some signs that might indicate your organization could benefit from an ERP:

Poor/uncompetitive performance Inconsistent reporting Current systems unable to support growth Customer responsiveness not optimal Business becoming global Recent mergers or acquisitions Business processes or systems not integrated Unable to implement new business strategies

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Potential modules of ERP

DistributionPayroll

Order Management Sales Force

Automation

Customer Relationship Management

Human Resources

Finance

ProcurementSupply chain Management

Equipment Maintenance

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Order Processing

When a customer places an order for, say a notebook computer, over the internet…

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Before ERP…

Customer representative enters data into the database Output to the warehouse database, inventory would be set

aside Entered into the shipping database and inventory database Entered into the billing database Sales and marketing try to forecast and determine future

plans When a customer calls!!!

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After ERP…

Sends an acknowledgement e-mail to the customer

Checks customer credit limit

Generates a Customer number, Order number and estimated shipping date.

Displays all the details or after checking all the details mails it to the customer’s e-mail address.

Schedules shipping

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After ERP contd… Reserves material

Orders parts from suppliers

Schedules assembly

Updates sales and production forecasts database

Creates MRP and Bill Of Materials (BOM)

Calculates product cost and profitability

Updates accounting, financial database

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Benefits of ERP One Integrated Database Scalability Vendor management Functionality Reliable service and support Saves time Potential Savings

Cisco claims $1.3B from their ERP implementation. ERP applications include a company’s reach beyond its walls

— to its suppliers, customers, and partners Gotta have it!

Competitors are implementing it.

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Watch out! Don’t just Install! Change business processes!

An ERP will not necessarily make pure data entry faster. GIGO – you can only report and use the data you capture.

An ERP will not resolve failures or weaknesses in the underlying business model.

Don’t underestimate the cost!

Don’t expect instant gains!

Try not to change the base software!

Don’t fail to train the staff!

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Major ERP Players in the market

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What is the best ERP software?

There is no “best” software…

only software that best fits your organization and it’s business requirements.

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SAP R/3

SAP stands for Systems, Applications, and Products in Data Processing.

R/3 is a SAP product that integrates the information throughout an organization, providing the benefits of single data entry, immediate access and common data.

Global dimension It is a multi-lingual package It understands different currencies. Configure the system to the organization 10 million users, 30,000 installations

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Key Strengths – SAP R/3

Traditionally strong in large market

Suited for discrete manufacturing and real-time environments

Suited for asset-intensive environments and public sector

SAP releases new updates very frequently

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SAP Implementation- Accelerated R/3

Project Preparation Phase Organize teams Setting Milestones 10 percent of project time

Business Blueprint Phase Configure the software Question and Answer Database Documentation of questions 20 percent of project time

Realization Phase Configuration completed Data from legacy system converted Testing under full load condition 45 percent of project time

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SAP Implementation- Accelerated R/3 Contd…

Final Preparation Phase End-user training 25 percent of project time

Go Live and Support Not the end of the road, continue training people and share knowledge

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SAP R/3 ArchitectureComputer Center

Management System (CCMS)Implementation

Management Guide (CCMS)

System Configuration-process server assignment

-job/process priority-user rights/privileges

Assignment Configuration Tables-8000 entries

Dispatcher-dialog and batch process

Dialog Manager

Application and queued processes

(batch processor)User Interface

Master Data

Update ProcessorTransactions

Backup/Archive

Processor

Archive Files

Backup files

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The R/3 views of the firm

Organizational elements used to organize information within R/3

CompaniesPurchasing Organizations

PlantsStorage Locations

Distribution ChannelsSales Organizations

Divisons

Profit and Cost Centers

Business Areas Sales Areas

Control Areas

Client

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Procurement Process overview

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Conclusion

ERP is the future! “If you weren’t concerned with how the business ran, you could

probably [install the ERP software] in 18 to 24 months. Then you would probably be in the unemployment line in 19 to 25 months”. -Jeri Dunn, CIO for Nestle USA

Selection of the right software and implementation in a proper way is critical to the success.

Planning and staffing is really important You will not find a system that matches your business requirements

100%. There will always be gaps. The key is to prioritize requirements and

benefits.

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References

Why ERP?A primer on SAP Implementation

F.Robert Jacobs and D.Clay Whybark www.cio.com/research/erp/edit/erpbasics.html www.misweb.com/magarticle.asp?doc_id=15318&rgid=5&listed_mo

nths=-2 www.ryerson.ca/~ppille/sap/index.htm www.erp.ittoolbox.com www.erp.com http://www.hill.com/archive/pub/papers/2003/02/paper.pdf