Enterprise Resource Planning (ERP)

1. Enterprise Resource Planning (ERP)

2. Intoduction • Food for Thought! • Why are organisations interested in this concept of integration? • What is integration? • What have organisations looked for in terms of integration? • How have organisations tried to achieve this integration?

3. Intoduction • Question? • Try and find the answers over time • Is Business Process integration the same as Business Process standardisation? • Is data the same as information?

4. TechCentral • Enterprise Resource Planning (ERP) Systems • The Irish ERP system marketplace is a highly competitive arena with more than 17 system providers • In the Irish manufacturing and distribution market, the big 4 - SAP, Oracle, Sage and Microsoft Business Solutions feature strongly, accounting for 55% of the market

5. ERP Defined • No agreed upon definition for ERP • Enterprise Systems, Enterprise-Wide Systems, Enterprise Information Systems • Modular Structure (# of modules) • Single point of entry for each item of data: a single database of shared data • It is in fact an Operational-Level System by definition

6. Financials Accounts Receivable & Payable Concept of an ERP system Asset Accounting Cash Management & Forecasting General Ledger Product-Cost Accounting Profitability Analysis Cost-Element & Cost-Center Profit-Centre Accounting Standard & Period-Related Costing Operations & Logistics Financial Consolidation Sales & Marketing Inventory Management Order Management Material Requirements Planning (MRP) Sales Management Materials Management DB Sales Planning Production Planning Pricing Plant Maintenance After-Sales Service Human Resources Project Management Payroll Quality Management Personnel Planning Purchasing Travel Expenses Routing Management HR Time Accounting Shipping Training Adapted From: Davenport (1998) & Chen (2001) Vendor Evaluation

7. Data Management in ERP systems • Data is released from one module into the relevant modules once it has been checked • Each module links into the others so as to eliminate re-entry of data • ERPs have the potential to solve many Back-End headaches

8. Data Model of ERP Systems Enterprise Resource Planning System Relational Data Model 8000 data tables Database structure well suited to such a system X X X X X Marketing System Finance System Manufacturing System HR System Distribution System

9. Commissions Payable Crossbow Software Contact Information Self-service registration HR Systems Order Events FieldWatch Commissions Treasury Systems Spare/Inventory Primus Case History Lease Events Get Paid Collections SYR Install base tracking Spares Request Payroll Eagle Lease Mgmt (domestic) Contract Mgmt RTS WinPeak Vantage Access Manual Cash/Investments A/R Commissions Configuration update Invoices Entitlement Symptoms and Solutions Invoices Lease dB (Int’l) Macpac (CommII) Accounts Rec. Sales Analysis Shipping Orders ONYX Customer Surveys Vertex Sales Tax (domestic) Tax Clarify Call Center Case Routing Install Base Field Schedule Tax EMC Product at Customer’s Site Calls and Upgrades Active Leases G/L Update GBA Assets (domestic) Order Info PTMS Prop Tax Mgmt (domestic) Excel Consolidations Receipts LMS Freight Costs (domestic) OnTrack Training and certification Balances Shipments and govt reports Bookings, Billings Order Information Depreciation Freight Track (int’l) Shipments, A/R Service Requests Balances Essbase Budgeting Consol. FileNet Document Repository-Product and Procedures Revenue Forecasts Excel/Manual CS Scheduling (Int’l) BRM & Model Mix Sales & Ops Planning Macpac G/L Initial Config PO changes Prof. Services Workbench Actuals Excel Manual adjustments to MRP suggestions TRAX Freight Mgmt. Excel Reformat and modify data (manual) Non-end customer shipments Prices Netting of WIP, Demand (int’l) Forecast Acct Mgmt (various systems) Cust Data A/P, RMA, Inventory Excel/Access Price book Excel/Access Reseller Inventory Tracking Forecast MRP Data Quote Win Price analysis Quotes with BOM and revision Freight MRP Excel (250 sheets) capacity planning MPS/MRP Unit costs Prices Macpac (Mfg) Accounts Pay. Inventory Mgmt. BAT Tool Board Allocation (domestic only) Supply (Boards) BOM ‘s for purchased items Functional to Physical Translation CQS Functional Configuration CAT Tool Prod Sched, Prod Config, Allocations Engineering Rules Electrical BOMs Demand Substitution Rules Allocated Orders Supply forecasts (Engineering consignment, RMAs, Spares) MARS Indirect Procurement Approval Routing system Inventory Movements, Receipts, Config Mechanical BOMs Other Engineering Systems Pro/E, EDA, Concept, Allegro, Star Valor, Board Check, CMS, Engineering BOM, Excel, Prototrack, Approved Material List (AML), SW Design Management Excel Non-revenue demand Translated Prod Sched APC Mfg Data Collection, Trackdoc Audit Inventory Barcode Serial # Tracking, Quality Data Collection, Min Rev BOMs, Changes Access Databases (domestic only) Cabinets Mechanical BOMs ICOM Change Orders (ECO/TCO) Excel Other Supply Forecasts S/N Loc. Rev Changes Excel Other Demand Forecasts Netting of WIP, Demand (int’l) (Future) Cycle Count Excel/Access Lead Tracking (domestic) Pre-Allocations Telemar Opportunity Management (int’l) Quality tracking Quality Data Design Changes Why ERP? “As-Is” Automated Processes Manual Processes

10. EMC Product at Customer’s Site Automated Manual “To-Be” Architecture New system, developed in-house New Packaged application Already existing system Contract Management (HW and SW) Warranties Licensing Billing Primus Case History Customer, Shipment, and A/R Data HR System Comm- issions Lease Events Oracle Backbone Data Structure Product Configurations Sales Orders Replenishment Orders Work Orders Purchase Orders RMA’s Service Orders Inventory Management Project Management General Ledger Accounts Receivable Accounts Payable Fixed Assets Costing Install Data Symptoms and Solutions Commissions Payable Calls and Upgrades Info Lease Lease Mgmt Payroll Entitlement Order Events Clarify Call Center Case Routing Spares Mgmt Customer Info/Invoices Configuration Updates Config Update Active Leases Treasury Systems Customers Calls Cash and Investments PTMS Tax FileNet Document Repository Product Info. Remote Install Tracking Install Base Data Invoices Vertex Sales Tax Service Requests Crossbow Software Contact Information, Host Software distribution over the Internet Field Schedule Assign field resources. Calls ConfiguratorCQS Configure products to customer reqmt. Essbase Budgeting Consolidations Customer and Product Info Customer Relationship Management Opportunity Mgmt Quotations Price book Workflow (post-Catalyst) Actuals Quotes Revenue Forecast Bookings/Backlog BRM / Model Mix Forecasting, BRM, Model Mix. Sales, Production and Inventory plans(All Demand Sources) BOM’s and BOM/Rev Changes APC Serial# Tracking Quality Data Collection Min Rev Control SO, PO, WO Inventory, Demand Engineering Rules Other Engineering Systems Pro/E, EDA, Concept, Allegro, Star Valor, Board Check, CMS Engineering BOM, Excel, Prototrack Inventory Receipts Shipments i2 (Supply Chain) Material optimization BRM-MPS Translation Automated Allocation (post-Catalyst) PDM ECO/TCO Document Mgmt Other Functions Approved Mat. List Demand Design Changes Min Rev Update Substitution Rules

11. Investing in ERP

12. Case FOR ERP  • Managerial goals of standardising/integrating systems • Search for operational excellence using “best practice” models (optimised business processes) • Boudreau and Robey (1999) • Organisations spending millions for the sole purpose of becoming members of the ERP Club(O’ Doherty and Adam, 1999) • 71% follow a trend (Caldas and Wood, 2001) • Cost savings!!??!! • ERP = common grammar and common pool of data • By extension, a platform for E-Commerce

13. Case AGAINST ERP  • High risk projects • ERP implementation means 80% of existing systems must go • Re-engineering ‘core competencies’ • Achieving best fit between ERP functionalities and business model • Misguided belief that there is an ERP that “does it all” • Lack of internal expertise • Intense vendor/consultant push • No real build or buy decision • Rationale pursued by managers in acquiring ERP packages has sometimes been weak and not well informed

14. Reality of Adopting ERP • ERP Implementation – corporate equivalent of a brain transplant • Nine out of ten organisations don’t get ERP right the first time around (Donovan, 2001) • Organisationally Disruptive and Resource Intensive • ERP project implementation failure rate of approximately 50% (Stefanou, 2000) • Estimated 90% of ERP implementations failing to fulfill the promise of significant return on investment (Donovan, 1998) • ERP systems implementation disasters are avoidable(Donovan, 1998) • To receive benefit from ERP there must be no misunderstanding of what it is about, or underestimation of what is involved in implementing it effectively (Donovan, 2001) • Due to the all-encompassing nature of all ERP offerings, a level of dependence is created that "far surpasses the dependence associated with prior technological regimes” Markus and Tanis (2000)

15. Reality of Adopting ERP • Organisations are unique • Selecting the right ‘blueprint’ is a critical factor in ERP projects • Sacrifice valuable managerial and organisational learning • The scale of ERP projects has rarely been tackled by most organisations. The reports of project ‘failures’, cost and time difficulties may be due to an inadequate organisational analysis at the beginning of the project (Kelly et al., 1999) • Need to gain a better understanding of the ERP decision-making process and assist managers considering ERP projects

16. ERP Myth: Just an IS project Data ERP Technologies Enterprise-Wide Change Programme Organisational Structure Business Processes ERP solutions are enormously challenging change projects involving technology, data, business processes, and organisational structure