“Putting the Enterprise into the Enterprise System” & Other ERP Insights

1. “Putting the Enterprise into the Enterprise System” &Other ERP Insights Presented by Your Friends at Team Gold

2. Big Picture • Enterprise Resource Planning (ERP) systems enable companies to “Integrate” data throughout the entire organization. • Typically Modular • Finance – Most popular • Human Resources • Operations and Logistics • Sales and Marketing

3. Managers Reporting Applications Financial Applications Sales and Delivery Applications Manufacturing Applications Sales Force Back Office Service Applications Inventory and Supply Applications Human Resource Applications Employees Central Database Suppliers Customers

4. Fast Facts • $10 billion per year industry • Major Software Suppliers/Integrators • SAP (e.g., NIKE, Weyerhaeuser/Norpac) • Baan • Oracle ( Used by Tektronix & Cisco in Cases) • PeopleSoft

5. The Promised Land • Autodesk • 2 weeks shipping to 24 hours • IBM’s Storage Systems Division • Reprice time from 5 days to 5 minutes • 22 day shipping to 3 days • Credit check from 20 min. to 3 sec. • Fujitsu • Order filling from 18 days to 1.5 days • Close financials from 8 days to 4 days

6. The Dark Side • FoxMeyer Drug • Blames bankruptcy on ERP implementation • Mobil Europe • Abandoned implementation after $100 million • Dow Chemical • 7 years, $500 million, then started over

7. Only Three to Six Months, Huh… • Time Issues • Be leery of short implementation estimates • Size of company • Modules to be installed • Standardization vs. Customization and time implications • How long to train staff after the initial implementation? • If, and how long, to run parallel legacy systems?

8. They have the time if you have the $$$ • Cost of implementation • Modular Decisions • Big Bang • Franchising Success • Slam Dunk • Hidden Costs • Training of staff often miscalculated • Integration & Testing • Customization • Conversion of Existing data • Data Warehousing Costs • What is Ed Warnock’s true earning potential?

9. To customize or not to customize… • Standardization • Easier implementation (in relative terms!) • Consultancy less likely to be indefinite • Software upgrades and module additions handled in less time and expense • Is this really how we want out company to run though? Possible sacrifice of a competitive advantage! • Customization • Extended implementation (as well as maintenance…if it ever works) • Consultants will most likely move in for good • With upgrades or add-ons, the customization matrix has got to be reworked • It’s great, but can our people really work with this?

10. CIO ERP Thought: Why did I do it?? • Organizational implications • Initial productivity losses • This doesn’t work like the old system!! • Panic by staffers. • Implementation is only the first step • Additional coding for reports, etc. • Ongoing maintenance • Employee retention • Positions backfilled • Poached by consulting firms

11. ROI? Yeah, not for a while yet… • Investment returns on ERP • Misconceptions of management • Possible positives (it could happen) • Integrated financial data great for roll-up • Heightened management of supply chain • Highly integrated information allow for great data mining and CRM by Sales & Marketing departments

12. CEO Thought: “What Happened?!? • The most successful ERP deployments involved companies that viewed them in strategic terms. • “ They stressed the enterprise, not the system.” • Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise. • “The logic of the system may conflict with the logic of the business.”

13. Key Learnings: Success Themes • Strong Corporate Leadership • Active Business Involvement • Excellent Project Management • ‘Homework’ Prepared • Organizational Change Actively Managed

14. Key Learnings : Failure Themes • Conflict of business model with System model • Lack of User acceptance of Process Change • Budget and Schedule overruns • Availability of adequate skills • Technical Failures

15. Key Learnings: Summary • “ If the development of an enterprise system is not carefully controlled by management, management may soon find itself under control of the system.”

16. Questions to ask BEFORE an ERP • How will an ERP strengthen, or erode, our competitive advantage? • What will be the effect on our organization? • Do we need to implement the system across all functions, or can we implement only certain modules? • Are there other Enterprise systems which might suit our needs better?

17. What an ERP Won’t DO! • ERP on its own will not improve processes • ERP will not reduce inventory • ERP will not embrace customization with easy upgrades • ERP will not yield immediate results • ERP will not revolutionize or revitalize your business

18. ERP – Wrap up • Benefits: • Seamless integration of all company data - integration of data from all functional areas • Streamlines the company’s data flows and allows direct access to real time information • Costs: • Expensive Hidden costs • High costs to reorganize or redesign company processes

19. ERP – Future Highlights • Growth is forecasted to continue, although at a slower rate. • CRM and APS (advanced demand planning software) will be the new functional niche categories • ERP solutions will attempt to simplify their product offerings and implementation approaches as they move to smaller markets • ERP solutions will offer web-enhancements to their current systems