Enterprise Resource Planning

1. Enterprise Resource Planning Meiyappan Thandayuthapani CIS 764 www.cis.ksu.edu/~meiyappa

2. 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

3. 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.)

4. 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.

5. 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

6. 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”

7. 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

8. Potential modules of ERP Payroll Equipment Maintenance Distribution Order Management Customer Relationship Management Sales Force Automation Supply chain Management Procurement Human Resources Finance

9. Order Processing • When a customer places an order for, say a notebook computer, over the internet…

10. 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!!!

11. 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

12. 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

13. 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.

14. 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!

15. Major ERP Players in the market

16. What is the best ERP software? • There is no “best” software… only software that best fits your organization and it’s business requirements.

17. 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

18. KeyStrengths – 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

19. 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

20. 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

21. SAP R/3 Architecture

22. The R/3 views of the firm Organizational elements used to organize information within R/3

23. Procurement Process overview

24. 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.

25. 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_months=-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