Ibusiness Model

7/21/2019 Ibusiness Model

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ERP Basics,Business Functions and

Processes


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Introduction to ERP:

Software solutionthat address the

enterprise needstaking theprocessviewof an organization to meet theorganizational goalstightly

integratingall functions of anenterprise.


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Business process is a collection ofactivities that takes one or more

kinds of input and creates

an output that is ofvalue to the customer.

In other words ERP software supports theecient operation of business processesb inte!ratin! activitiesthrou!hout a

business, includin! sales, marketin!,manufacturin!, lo!istics, accountin! andstan!.


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"hat Is an Enterprise# $ !roup of People with a common goal, which has certain

resources at its disposal to achieve this !oal.

%i&erent from traditional approach due to 'A common goal.

%ue to this the Enterprise acts as a Single Entity


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(raditional approach:

Inte!rated approach.


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Functional areas and Business Processes:

Before understandin! ERP and its utilit one mustunderstand how a business works.

Functional areas of )peration:


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(o take the customer perspective further supposethe P* stops workin! with in the !uarantee period.

(o repair and return the P* to customer is aBusiness Process and several functional areas areinvolved in this process.

$ successful customer interaction in such case

would be that the customer is not re+uired tointeract with each business function involved andhis interaction with *R would be sucient toinitiate the entire process of repair and return.

$ successful business mana!ers view theirbusiness operations from the perspective of asatis-ed customer.

(o achieve above Inte!ration / internal

customer0 supplier relationship is a must.


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Business odelin! :

*reatin! a business model is the -rst activit in anERP pro1ect

It is a representation of business as a lar!e sstem,showin! the interconnections and interdependenciesof the various sub0sstems and business processes.


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Inte!rated data model (he most critical step in ERP implementation is the creation of

inte!rated data model.

"ith ERP on !round , isolated departmental informationsstems and departmental data bases will have to !ointe!rated

(hus reduction in data duplicac and ever one !ets chance tohave updated and up to minute information about the entireor!ani2ation.


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For Inte!rated data model to be e&ective it should clearldepict the or!ani2ation,

It should re3ect the da to da transactions and to beupdated continuousl.

4o if :

order is entered the sales are done the

!oods are dispatched,then :

the database should

capture these chan!es to show that the activities areperformed and with the re+uired details such as name of thepart, +uantit sold, sale price, +uantit dispatched, truck noetc, and also

the inventor to be reduced /

account receivable is to be increased

/ $ll these thin!s have to happen instantaneousl andautomaticall and with hi!h accurac, so that the model!ives real time status of the business activities.

(his is the challen!e and the advanta!e of the inte!rateddatabase and the inte!rated data model.


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*ommon ERP mths:5. ERP means more work and Procedures:

5. )nl durin! the transition phase,

6. Proper communication and trainin! to emploees help a lot

7. )nce used to new sstem emploees appreciate the advanta!es as their life become

much easier

6. ERP will make emploees redundant and 1obless:5. ERP automates man repetitive tasks, avoids unnecessar procedures

6. (here would be chan!e in 1ob descriptions

7. *reates new 1ob opportunities and emploees can be trained for these 1obs.

7. ERP is sole responsibilit of ana!ement:5. ana!ement8s main : to create environment suitable for ERP implementation and

functionin!

6. akin! ERP sstem work is the responsibilit of all the emploees as it is People sstem.

9. ERP is 1ust of ana!er8s and %ecision makers:5. ost useful for ana!ers and decision makers

6. $ll emploees can use is to advanta!e due to re!ulari2ed emploees records of leave,

loan etc

. ERP is for anufacturin! or!ani2ations:

;. ERP slows down the or!ani2ation:

. )ne ERP packa!e will suit everbod


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5?. ERP is ver e@pensive:5. one spent on ERP are well spent and the ERP sstem will pa for itself.

55. )r!ani2ations can succeed without ERP: )nl ver small or!ani2ationservicin! niche market.

Evolution of ERP:


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MRP

Manufacturing-centric/Push mgt.

Master production schedule

Final production schedule

Inventory management Bill of materials

Gross requirement generation

et requirement generation

!eorder point calculation

"utomatic replenishment

MRP I I

#apacity requirement. planning

Production control

Mar$eting interface

"ccounting interface Financial interface

Personnel interface

%upplier interface

#ustomer interface


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ERP AI4()R IC %EP(A

(he -rst software that was desi!ned toassist the manufacturin! processhappens to be the RP Daterial

Resource Plannin! in the ear 5>


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$%EC( )F ERP

EP came into being with e!ect from"##$. %hough EP e&isted from theyear "#'$ in the form of (P" and(P).

*nfact (P) was more or less EPe&cept for its inability to coordinatedepartments other than marketing.

%he whole period from the year "#'$ isdenoted as the age of EP.

%he benet of EP was slowly felt fromthis stage onwards.


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(here are three basic sides to ERPmana!ement , People +'#,-Processes +"/,- and

%echnology +"0,- and risk ofEP by them are mentioned inbrackets


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People Pro1ect 4tructure

4hould be ali!ned to processes

Process Implementation Process Doutlined in detail

$dapt our processes to those of the ERP.

(echnolo! Aardware

4oftware

Inte!rated 4stems

$d f ERP


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$dvanta!es of ERP:

5. Improved ecienc

6. Information inte!ration for better decision makin!, 3e@ibilit

7. Faster response time to customer +ueries

9. *ost reduction

. Better analsis and plannin! capabilit

;. $s a base for future reforms

. Enable Cew Business and Growth strate!ies

5?. *ontinuous Improvement

55. E@tend our business usin! internet


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*hapter 6

Issues in ERP

$ % t " h i D f i t ti d


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$ %ata "arehousin! D for inte!ration andmana!ement:

E&ective data mana!ement is the foundation for successful ERPimplementation.

%ata warehouse is a collection of data desi!ned to support decisionmakin! process. %ata warehouses contain a wide variet of data thatpresent a coherent picture of business conditions at a sin!le point intime.

%evelopin! a data warehouse involves development of sstems to

E@tract data from operatin! sstems

Installation of a warehouse database sstem to safel store data

Interconnectin! H combinin! man di&erent such databases across the entireenterprise

Providin! mana!ers 3e@ible access to data from the above combination ofdata warehouses for business analsis and e&ective decision makin!.

(he primar !oals of a data warehouse are:5. Provide access to data of an or!ani2ation

6. %ata consistenc

7. *apacit to separate and combine data

9. Inclusion of tools setup to +uer, anal2e and present information

. Published used data;. %rive business reen!ineerin!

% t i d t h (h ll ti f d t b


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%ata in data warehouse: (he collection of data bdata warehouse ma be characteri2ed as 4ub1ect )riented : e! data about customer, product, transaction, activit,

account etc

Inte!rated : $ data warehouse can potentiall receive data from number ofresources . (he -lterin! and translation necessar for one consistent data baseis known as inte!ration. De! bottlesH crates

Con volatile : %ata can be loaded and accesses but can not be chan!ed D CoBack end correction

(ime variant: (he data is clocked with time element of operational sstem.

%ata "arehouse $rchitecture:


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(he components of data warehouse as !iven b ".A.Inmon , father of data warehouse concept, are:

5. )perational sstems of Record (he source of data that

feed the data warehouse. It di&ers from the operational data that itcan be read onl but can not be chan!ed. It has to be of thehi!hest +ualit meanin! most timel, complete, accurate andhavin! best structural conformance to the data warehouse, oftenthese data are closest to the source but in other cases it can be aalread summari2ed data, %ata capturin! can be automated or

manual6. Inte!ration H (ransformation pro!rams0(o perform

functions re+uired for meanin!ful inte!ration of data, such as:5. Reformattin!, recalculatin!, restructurin!6. $ddin! time element

7. Identifin! default values9. 4upplin! lo!ic to choose between multiple data sources. 4ummari2in!, tallin! and mer!in! data from multiple sources

7 *urrent detail It i th l t l l d t l it i th


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7. *urrent detail It is the lowest level data !ranularit in thedata warehouse. It when or!ani2ed as per sub1ect arearepresents the entire enterprise. Ever entit in current detail is asnap shot, at a moment in time, representin! the instance whenthe data are accurate. *urrent detail is tpicall 6 to ears oldand its refreshment occurs as fre+uentl as necessar to supportthe enterprise re+uirements.

9. $rchives *ontains old data of si!ni-cant, continuin! interestand value to the enterprise, normall 6 ears or more old. ostoften used for trend analsis, forecastin!. It includes not onl old

data but also the metadata.. etadata %ata about data :(he phsical implementation

of a data warehouse is de-ned usin! a namin! convention andsnta@ rules which ma be convenient to I( sta&, can be obscureto business users. Aence a separate data de-nition lan!ua!e is

implemented which provides a meanin!ful description of theinformation contents. an products implement an e&ectivemetadata laer and users de-ne their re+uirements in terms ofmeanin!ful real world descriptions. nfortunatel , due to lack ofstandardi2ation, sometimes this ma create a problem for data

inte!ration between two di&erent data sstems.

; 4ummari2ed %ata: *lassi-ed into li!htl summari2ed


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;. 4ummari2ed %ata: *lassi-ed into li!htl summari2edand hi!hl summari2ed: Ji!htl summari2ed data are hallmark of a data warehouse. $ll

enterprise elements such as department, re!ion, function, product donot have the same information re+uirements, hence provision is made

for element wise customi2ed summari2ation of data called the li!htlsummari2ed data.

Ai!hl summari2ed data are primaril for enterprise e@ecutives. It cancome from li!htl summari2ed data or current detail. %ata volume atthis level is much less than at other levels and represents an eclecticcollection supportin! a wide variet of needs and interests.

In addition to access Ai!hl summari2ed data, e@ecutives also have thecapabilit of accessin! increasin! levels of detail throu!h a '%rill %ownK process.

ses of %ata "arehouse:". Standard reports and 1ueries2 an users need to access

such standard reports periodicall. %ata warehouse sstem can bemade to automaticall periodicall !enerate such reports and usersneed to 1ust view them rather than runnin! it themselves whichma be time consumin! as some reports take lon! time to run.

). 1ueries against summarized data32 $s e@plained above,

summar views contain prede-ned standard business analsis.

ses of %ata "arehouse: *ontd


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ses of %ata "arehouse: *ontdL0. 4ata (ining2 (he reports and +ueries answer man '"hat#K

+uestions in the business. (he drill down into detail data providesanswers to '"h#K and 'Aow#K +uestions. %ata minin! is anevolvin! science. $ data minin! user starts with summar dataand drills down into the detail data lookin! for ar!uments toprove or disprove a hpothesis. )ne of the important -eld ofapplication of %ata inin! is the -eld of consumer behaviorresearch.

ses of %ata "arehouse: *ontd


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ses of %ata "arehouse: *ontdL5. *nterface with other 4ata 6arehouses3 $ data

warehouse ma feed data to other data warehouses or smallerdata warehouses called data marts

B ERP Implementation:


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B ERP Implementation:

F t


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Funct

F t


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Funct

Funct


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Funct

Funct


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Funct

Funct


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Funct

Funct


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Funct

Functional area information


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Functionalarea informationsstems:

Jet us now look into5.(he breakdown of each functional area in

detail of the various sub functions

6. (he kinds of data needed b eachfunctional area and how the data is

bein! used.

$lso let us tr to understand theinformation sstems8 relationshipsbetween eachfunctional area and process


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arketin! and sales:


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arketin! and sales:


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4uppl chain mana!ement:


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4uppl chain mana!ement:


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$ccountin! and Finance:


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$ccountin! and Finance:


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Auman Resources:


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Auman Resources:


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(pes of )r!ani2ationalinformation 4stems

$dministrative sstems

4chedulin! H (ransaction sstems

alue oriented sstems

Reportin! and controllin! sstems

$nalsis and information sstems

Plannin! and decision support sstems

DFrom Business Process En!ineerin! b$.". 4cheer


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P bl i h f i b d


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Problems with function basedapplication

4harin! of data between sstems

%ata duplication

%ata inconsistenc

$pplications that don8t talk to one another

Jimited or lack of inte!rated information

Isolated decisions lead to overall

ineciencies Increased e@penses


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4olution to disparate sstems#

Inte!ration

*onsolidation

Ri!ht0si2in! Business Process Redesi!n

Enterprise wide sstem


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Inte!rated sstemsor

Enterprise Resource Plannin!4stem


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ERP 0 %e-nition

ERP is a process of mana!in! allresources and their use in the entireenterprise in a coordinated manner


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ERP sstem: %e-nition

ERP is a set of inte!rated businessapplications, or modules which carrout common business functions such

as !eneral led!er, accountin!, ororder mana!ement


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"hat is ERP#

Enterprise Resource Plannin!

4upport business throu!h optimi2in!,maintainin!, and trackin! business

functions Broken down into business processes

AR

%istribution Financials

anufacturin!


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"hat makes ERP di&erent

Inte!rated modules

*ommon de-nitions

*ommon database

pdate one module, automaticallupdates others

ERP sstems re3ect a speci-c wa of

doin! business ust look at our value chains, rather

than functions


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Bene-ts of ERP

*ommon set of data

Aelp in inte!ratin! applications fordecision makin! and plannin!

$llow departments to talk to each other

Eas to inte!rate b usin! processedbuilt into ERP software

$ wa to force BPR Dreen!ineerin!

Eas wa to solve 6M problem


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endors
http://www.microsoft.com/dynamics/default.mspxhttp://www.oracle.com/index.htmlhttp://www.sap.com/index.epxhttp://www.siebel.com/


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%icult in implementation

er dicult

E@tremel costl and time intensive

(pical: over N5?,???,??? and over aear to implement

*ompan ma implement onlcertain modules of entire ERP sstem

ou will need an outside consultant


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*ommon Pitfalls

%o not ade+uatel benchmarkcurrent state

%id not plan for ma1or transformation

%id not have e@ecutive sponsorship

%id not ade+uatel map out !oalsand ob1ectives

Ai!hl customi2ed sstems to looklike old RP sstems


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4urve of ERP

implementations%one b [email protected] in

6??9


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)verview

7


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7ow would you characterize your budget for new EPimplementations8new modules deployments for )$$5

compared to your budget in )$$09

6ho is directly responsible for


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determining your EPimplementations8new modules

deployments9

6ho are the other key decision2


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6ho are the other key decisionmakers8in:uencers in decisions to add

new EP packages8new modules9

4o you currently have an


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4o you currently have anEP package9

*f i ;< ; hi h EP


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*f your answer is ;


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Are you considering adding newmodules to your e&isting EP package9

*f i ;< ; hi h d l


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*f your answer is ;


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package and8or add modules to youre&isting packages when would this

implementation take place9

6ho do you partner with for new EP


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6ho do you partner with for new EPimplementations and additions of new

modules9

6hat do you see as the mainh ll t f l EP


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challenges to successful EPimplementations within your

organization9


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For more detailsL

http:[email protected]

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