BIS11 ERP

Kollaborative Klassroom Template

Business Information Systems
Build vs Buy : the ERP story

Prithwis Mukerjee, Ph.D.

Agenda

Evolution of ERP

Benefits of ERP

ERP Implementation - Key Elements

Package Selection

Implementation Partner Selection

Methodology & Tools

Implementation Approach

CSFs of Implementation

The Make approach

Advantages of in-house development

Tailored or customized systems

Constant in-house support

Disadvantages

Difficulty in upgrading, enhancing or modifying to meet change business needs

80% of s/w budget spent on maintenance

Difficulty of maintaining isolated systems

External Vendors

Companies relieved of unnecessary expenditure in terms of employing skilled IT professionals

Many companies started providing custom made software solutions

Advantages of the make approach

Customized according to the special needs of the company

Domain experts can be retained as the specialized domain knowledge already built into the legacy system can be transferred by third party tool

The Buy approach

The changing scenario

Early 1970s, some vendors started selling packaged solutions

Corporates started looking for integrated solutions as they began to reorganize existing processes for better performance

Popularity of packaged solution

Heavy cut down on in-house costs

Robust and well tested solutions

Aid in BPR by assisting in process improvement

Drawbacks

Does not handle niche domain needs

Significant amount retraining of employees

Provisions for custom development within a wide framework of enterprise wide package solutions, e.g., ORACLE Financials has a custom develop module for Energy Accounting

Enterprise-wide packages should be customized for targeted sectors, e.g. IS-Media, IS-Oil from SAP

A Typical I/T Story

PurchasingA/RInventory General LedgerSalesA/P

1,000 island solution

ProductionPlanning

Shop Floor execution

EngineeringDesign

Controlling

Mfg.Engineering

42

03

Graphical UserInterface

Open
SystemEnterprise
Data Model

Integrated
SolutionClient/Server
ArchitectureMultinational
UseComprehensive
Functionality

R/3Client / ServerFIFinancial
Acctg.COControllingAMAsset
MgmtPSProject
SystemWFWorkflowMMMaterials
MgmtHRHuman
ResourcesSDSalesPPProduction
PlanningQMQuality
MgmtPMPlant
Maint.

ISIndustry
Solutions

IndustrySolutions/ICOEs

ISBankingISHospitalISPublishingISOil

Electronics

CPG

ProcessIndustry

Utilities

Business EngineeringSAP -- The Overall Picture

R/3 Integration

Production
ProcurementDistributionSalesControllingAccountingTreasury

Make
or Buy

Availability
Check

Credit
Limit Check

ForexMatching

Currency
Risk

Order
receipt

Financing
decision

Deliverydecision

Profitability
Decision

Posting
order
receipt

Profitability
Analysis

Integration of previously off-line functions into the operational flow is a key enabler for competitive advantage

Results of Integration

Focus on Business Processes

Elimination of Redundant Data (Common Constant Data)

Easier Corporate Consolidation

Better Managerial Control

Elimination of Interfaces

Faster reaction to changing structures

Organization/Customers/Competitors

57

Materials Management

Material
Special stock
Batch

Vendor/one-time
customer

Purchasing
info record

Service
specifications

Workflow

Optical archive

Texts
Mail
Communication

Classification

Documents

Conditions

BASIC DATAPurchasing information systemVendor evaluation

Purchase requisition

PURCHASING MRP

Direct requisition

Release procedures

RFQ/Quotation

Material/service

Price comparisons

Price comparison list

Purchasing

Purchase orders

Outline agreements

Scheduling agreements

Goods receipt/issue

Transfer posting

Quantities and values

Physical inventory

Storage bins

Check and post

Price update

INVENTORY MANAGEMENTINVOICE VERIFICATION

SD

PP

PM

QM

FI

AM

CO

PSThird-partyorderRequirementsService /spare partsInspection lotG/L accountsCash managementand forecastFixed assetsCost center /
BudgetProject

Production Planning

FI

CO

AM

HR

CostaccountingFinancialaccountingAssetsmanagementHumanresourcesProjectNetworksMaintenanceRepairsPlant maintenanceMaintenanceRepairsPlant maintenanceSales and operations planningDemand management / MPSMaterial requirements planning

Capacity planning

Shop floor control

Costing

Information system

PurchasingWarehouseInvoice verificationSalesShippingBillingCustomersVendors

SD

PP

SD

SD

SD

MM

SD

QM

SD

PM

SD

PS

Why clients buy ERP?

Corporate Initiatives

Strategic initiatives

A requisite capability in a competitive global business

Operational initiative

A foundation for performance and cost improvement
via integration

Organizational initiative

To initiate a major organizational change within the company

Technology

IT is making the transition from a supporting operational entity to becoming a strategic competitive tool.

BECAUSE OTHERS ARE BUYING IT!!!

New Toys for Old ?

Key Benefits of Enterprise Systems

Effectiveness of the business

Improved Customer Service

Faster cycle time to market

Improved access to integrated information for more effective decisions(costs, profitability etc.)

Commonality of global information

Responsiveness to regulatory changes

Catalyst/enabler of (cross-functional) organizational renewal

Added business functionality

Logistics and DistributionSales & Customer ServiceVendorsInbound Manufacturing Transportation Distribution DeliveryCustomerConsumer Logistics

Key Benefits of Enterprise Systems

Efficiency of the business

Reduced Costs of business operations

Reduced inventories

Standardization of business processes across unit, across functions

Reduced cost of business information management (e.g., clerical cost of transaction inputs, cost of data reconciliation)

Integrate Supply Chain Management

Agenda

Evolution of ERP

Benefits of ERP


Package Selection


Methodology & Tools


Change Management

Agenda

Introduction

Evolution of ERP

Benefits of ERP


Package Selection


Methodology & Tools


Change Management

ERPs in the market

SAP R/3

Oracle Applications

Peoplesoft

JD Edwards

Baan

BPCS

CA

MfgPro

Scala

Ramco Marshall

MAKESS

Mapics

JBA

QAD

.. and many more

Recipe for ERP Package Selection

Functional

Functional Requirement Specification

Technical

Operating System

RDBMS

Application language

Web-enablement

Bandwidth requirements

Vendor

Stability of vendor

Commitment to India

Client support (through reference visit)

Support

Alternate implementation support

Availability of support for technology environment

Commercial

Cost of ownership

Agenda

Evolution of ERP

Benefits of ERP


Package Selection


Methodology & Tools


Change Management

What should you look for in a Partner ?

Expertise

Resources

Project Management Skills

Areas of Expertise

Domain/Industry

Process Improvement

ERP - Functional & Technical

Complementary Solutions in IT

Change Management

Quality Management

The implementation partner must be able to add value to the client by bringing in their global expertise and best practices.

Resources

Technology Infrastructure

Competency Center

Helpdesk

OSS Connectivity

R&D and Training facility

People

Strength in numbers

Qualification

Experience

Knowledge-sharing Databases

Project Management Skills

Methodology & tools

Is the methodology Certified by Product Vendor?

Does it offer any add-ons?

Is it supported by an electronic toolkit?

How does it support document management?

Is there a methodology for Change Management?

Project Managers with experience and skills, having managed ERP implementations in India and abroad

Project Methodology - Ascendant SAP

People TechnologyKnowledgeProcess

Evaluation

Accelerated SAP

Ascendant SAPProject PreparationBusiness BlueprintRealisationFinal PreparationGo Live and SupportSustain

MethodsPractice
AidsPreferred
Practices

Best of Both Worlds

Phase Outcomes

Project
CharterBusiness
Blueprint

Configured
and
Tested
SystemProduction
System
and
Ready
OrganizationHelp Desk
and Support
Organization

Project
PreparationBusiness
BlueprintRealization

Final
PreparationGo Live
and SupportSustainBusiness
Benefits
and
Continuous
Improvement Business
Case and
Project Proposal

Evaluation

Phase Deliverables

Project Preparation

Project Procedures: Documentation, issue management, implementation standards and procedures, and system landscape strategy

Technical Requirements Planning

Business Blueprint

Core team training

Install system environment

Business Process Definition,based on AS IS & TO BE studies

Deliverables

Realization

Configuration

Conversion programs

Application interface programs

Reports, Layout sets

Authorization concept

Integration testing

End user documentation

Final Preparation

End user training

System management

Cut over

Go Live

Production support

Set up Helpdesk

Sustain

System tuning

Upgrade

Archiving

Benefits Realization

Ascendant SAP Toolset

Portal Tab

Project management and communication topics e.g., news, important documents, discussions, Issues, meeting schedules and minutes etc.

Method Tab

Access Ascendant SAP method

Access ASAP and PwC accelerators, and deliverable document templates

SAP R/3 Reference Model

The R/3 Reference Model is used for deliverable management

Definition of process scope

Customisation of the Reference Model

Integration with SAP

Integration to 3rd party tools (Aris, LiveModel etc.)

The Portal Concept

Store information in Ascendant SAP Toolset or integrate with other sources

Link to intranet, or other web-based information

E-services

Distribute functionality as an e-service

Install in the clients existing intranet

or give the client access to our extranet

E-learning

Use Ascendant SAP Toolset as a vehicle for e-learning initiatives

Create learning sites based on Ascendant SAP Toolset

Build EPSS systems from existing information

Knowledge Management

Dynamic navigation dependent on users role

Project taxonomies

Personalisation features

Alert functionality

Big-Bang Approach

Implement all functionality at all divisions simultaneously

Phase 1Hitachi America, LimitedDivision 1Division 2Division 3

FI/CO

SD

MM

FI/CO

SD

MM

FI/CO

SD

MM

Functional Approach

Hitachi America, LimitedDivision 1Division 2Division 3Phase 1Phase 2Phase 3

FI/CO

SD

MM

FI/CO

SD

MM

FI/CO

SD

MM

Implement a single SAP module (e.g., FI) at all locations at the same time

Pilot + Rollout Approach

Implement all functionality within an organization, one division at a time

Hitachi America, LimitedDivision 1Division 2Division 3Phase 1Phase 2Phase 3

FI/CO

SD

MM

FI/CO

SD

MM

FI/CO

SD

MM

ERP Implementation Alternatives - Pros/Cons

Project Team Structure

Four - tier project management structure

Project Steering Committee, comprising Sr. Management team & Project Sponsor from Clients side and Project Director from the Consultants side

Project Managers - one each from Client & Consultant.

Module Leaders - one for each module from Client & Consultant.

Team members - Functional & Technical

Project Team Structure

Project ManagerPwC

Project DirectorPwC

Project ManagerTEC

Steering CommitteeTEC

ERP Module TeamsConsultant + ClientERP Technical TeamsConsultant + Client

Project Manager(Consultant)Project Director(Consultant)Project Manager (Client)

Project Sponsor(Client)Steering Committee

Role of Steering Committee

Ensure alignment with Vision and Mission

Ensure alignment with other Strategic initiatives of the company - the big picture

Visibly communicate commitment and provide support to the team

Resolve issues which are strategic in nature and need intervention

Manage project scope

Monitor progress

Implementation Team (e.g.)

ModulesNo. Of Resources No. Of Resources ( Consultant ) (Client )

Project Manager11FI/CO/AM/TR4 6MM/QM2 4 SD2 4 PP/PM2 4ABAP2 6 Basis1 3

Total14 28

Agenda

Evolution of ERP

Benefits of ERP


Package Selection


Methodology & Tools


Change Management

How much change does an ERP implementation cause ?

ERP causes change in:

Business processes

Organization, authority, jobs and roles

Performance measures and reward systems

Technology and IT support infrastructure

Impact of ERP implementation

ERP will impact

Communication and information domain

Leadership and authority

Company policies

Jobs and rewards

Company structure and culture

Skills and knowledge of employees

Information is available online generally to a much broader audience

ERP can alter how work gets done and thus how people work together

ERP alters the level of decision-making authority

ERP can alter organizational structure

Impact on Information Technology

The organization must be able to support all aspects of the transition to a ERP platform

Mature and integrated network

Real time transactions

Advanced technical support requirements

Integrating / Interfacing with legacy systems and/or other software packages

Impact on People

At Senior & Middle Management levels,

Information like the shipment/stock availability/remittance status would not remain with individuals,but will be transparent & shared by the concerned functionaries

Accountability would increase since the system throws up exceptions in performance at any desired frequency

Impact in Lower management & Clerical cadres

routine/mundane work in terms of duplicate data entry,reconciliation work and other routine analyses will be greatly eliminated in all locations. People would now spend more time in follow-ups

Since the workload of the past would be partly reduced,excess manpower from departments may need to be re-deployed.

Changes in Decision Making Authority

Widespread access to information enables:

Decentralized decision making

Responsibility to be pushed to lower levels

Front line personnel to make better decisions

Impacts:

Skilled staff to analyze and process the information

Accountability systems & guidelines for decision making

Job descriptions and training for new roles and responsibilities

Aligned organizational structures which empower staff

Impact on people and job roles

Recognize the need for changed and new jobs

Align skills with new processes

Responsibility typically broaden

Technology skills become more important

Alignment of rewards with new skills

Direct compensation

Retainer bonus for Hot skills

Yes!Do youknowABAP?

TASKS

Old Organization + New Technology = Expensive Old Organization

OO + NT = EOO

One Overwhelming Insight :

Click to edit the title text format

Click to edit the outline text format

Second Outline Level

Third Outline Level

Fourth Outline Level

Fifth Outline Level

Sixth Outline Level

Seventh Outline Level

Eighth Outline Level

Ninth Outline Level

Prithwis Mukerjee

Click to edit the outline text format

Second Outline Level

Third Outline Level

Fourth Outline Level

Fifth Outline Level

Sixth Outline Level

Seventh Outline Level

Eighth Outline Level

Ninth Outline Level

Education

BIS11 ERP