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ERP implementation and E-business
ERP Implementation: Six Deadly Sins
Not understanding the true significance of what you have taken on.
Not committing the right resources to the project.
Not managing the change effectively.
Not managing the benefits.
Not embracing integration.
Not planning for the end of the project before you start.
Project Management Fundamentals
Co-ordination Tasks Equipment Products People Time Money
Balancing Scope Time Cost Quality Needs vs..
Expectations Needs & Expectations
of stakeholders
Step 1: Define the Scope of the Project
Step 2: Estimate Staffing to Lead the Project and Support Each Process Area
Step 3: Estimate Custom and Interface Development
Step 4: Assess Data Conversion Magnitude
Step 5: Estimate Project Duration
Step 6: Assess External Connectivity Requirements
Step 7: Estimate Supplemental Staffing
Step 8: Create a Time-Phased, Resource-Loaded Project Plan
Step 9: Estimate Resource Rates and Apply Them to the Plan
Step 10: Estimate Travel, Contingency and Final Project Costs
ERP Project Management – 10-Step Estimation Process
Step 1: Define the Scope of the Project
• Typical Macro-Processes Identified as Part of an ERP Implementation
• Sample Process Decomposition
Step 2: Estimate Staffing to Lead the Project and Support Each Process Area
Step 3: Estimate Custom and Interface Development
• Custom Development
• Interface Development
ERP PM – 10-Step Estimation Process (continued)
Step 4: Assess Data Conversion Magnitude
• Code Tables
• Master Tables
• Transaction Tables
Step 5: Estimate Project Duration
• Project Planning and Preparation
• Phase 1: Standard Solution Design
• Phase 2: Standard Solution Development
• Phase 3: Pilot Deployment
• Phase 4: Rollout
• Project Management
ERP PM – 10-Step Estimation Process (continued)
Step 6: Assess External Connectivity Requirements
Step 7: Estimate Supplemental Staffing
• Point Staffing for Custom Development
• Point Staffing for Data Conversion
• Point Staffing for End-User Training
Step 8: Create a Time-Phased, Resource-Loaded Project Plan
Step 9: Estimate Resource Rates and Apply Them to the Plan
Step 10: Estimate Travel, Contingency and Final Project Costs
ERP PM – 10-Step Estimation Process (continued)
Change Management: Of Vital Important
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ERP enables better, faster decisions by unleashing the power of the integrated enterprise66
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There are three distinct stages in each wave after going live
Companies should anticipate a temporary dip in performance after going live
ERP also yields significant returns from unexpected benefits
ERP delivers significant tactical and bottom-line strategic benefits
ERP provides a backbone to further extend functionality through bolt-ons and other solutions
Issues and obstacles show dramatic shifts in emphasis after going live
An ERP implementation is at its core a people project
There are twelve best practices for accelerating, maximizing, and sustaining the benefits of the ERP journey
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ERP Success Factors: Top Ten Findings
Going live is not the end of the ERP journey
Findings and Conclusions
12 best practices for sustaining the benefits of ERP
Focus on Benefits
Alignment
Breadth of Change
Business Case
Post-Implementation Plan
Role Transition
Process Expertise
Extending Capabilities
Commonality
Using Capabilities
Benefits Ownership
Metrics
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Implementation: ERP The Next Wave
ERP 2: The e-business challenge
Information Sharing – ERP focus is on internal information , e-business provides ability to share info internally & externally
Optimization Focus – ERP focus is across one value chain, e-business focus is on multiple value chains
Internet Substitute – ERP “one in all in application” opposed to “standalone apps” linked on internet backbone
Technology Obstacle – Closed client/server vs. open standards
ERP Trends: Combined ERP & E-business Benefits
TANGIBLE BENEFITS INTANGIBLE BENEFITS
Increased revenue Improved customer and employee satisfaction
Reduced costs, inventories, and collection efforts
Frees employees to work on tasks requiring human creativity and judgment
Shorter cycle times Continuous operation
Capability to manufacture to actual demand
Improved supplier relationships
Improved cash management
E-business Models and Disintermediation
Pure e-business play? The case of Amazon.com
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
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.
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.
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 andequipment
(4)Infrastructure consolidation
(5)Critical mass
achieved.Mass marketing
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.
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.
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.
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.
ERP / E-Business Matrix
Greenfield
Non-integratedsystems
Limited / Single-Function ERP
Integrated Business-Unit ERP
Integrated Enterprise ERP
No E-BusinessCapabilities
ChannelEnhancement
ValueChain
IntegrationIndustry
Transformation Convergence
ERP / E-Business Organizational Issues: Domain & Level Matrix
Greenfield
Non-integratedsystems
Limited / Single-Function ERP
Integrated Business-Unit ERP
Integrated Enterprise ERP
No E-BusinessCapabilities
ChannelEnhancement
ValueChain
IntegrationIndustry
Partnership Convergence
1. Start-Up2. Enterprise Growth Limited (High Risk = Opportunity)
4. High Cost Relative to Benefit
5. Optimize Business at Unit Level
6. Optimize across Enterprise
3. Customer Benefit Limited (Reduced E-Options
and Flexibility)
E-Business Examples
CHANNEL ENHANCEMENT
- 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)
Summary: ERP Vendor Responses to E-Business Challenges
Employees Customers Vendors
Focus Inside Company Out Outside Company In
Release Process Periodic, Complex Upgrade
Continuous, Small Changes
Method of Integrating with Other Businesses
Through APIs or EDI Browser, Portals, IT
Business Processes Complex Simple
User Interface User Training Required
Intuitive
Traditional ERP versus E-Business Applications
Dimensions ERP Apps E-Business Apps
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
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 mySAP.com 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)