Enterprise Resource Planning

1. Enterprise Resource Planning David Haigh OISM 470W The Pennsylvania State University

2. Today we will be covering: • What exactly is ERP? • History of ERP. • How ERP can be used in our company? • ERP Implementation. • Company Examples. • Training Exercise. • Summary of today’s training.

3. What is ERP? • ERP software integrates all departments and functions onto a single system that can serve the needs of the entire company. • Some of ERP’s functions include: • Bookkeeping & Accounting • Human Resource Management • Planning Production • Supply-Chain Management

4. More Of What ERP can do

5. History of ERP • ERP has its roots in the MRP and MRPII systems of the 70’s and 80’s. • Came about as companies realized that the management and flow of information was just as important as materials and inventory management. • ERP has also evolved considerably with computer and technology advances.

6. How we can use ERP • Update our legacy systems. • Cut down on inter-office paperwork. • To standardize our manufacturing processes and increase productivity. • Will give us more information and better access to our suppliers and customers.

7. Brainstorming Session • What are the employee’s looking for in an ERP system? • Are there any ideas on how else we can use ERP to improve our processes?

8. Implementation Steps for implementation: • Cost analysis • Blueprinting of Business Processes • Staff Training • Integration • Data Conversion • Going live with ERP

9. Cost Analysis • Costs to implement an ERP system is not just a ‘one-time thing.’ • Real costs are in constant training, upgrading, and maintenance. • Average Total Cost of Ownership (TCO) is $15 million. • Benefits are not seen right away.

10. Blueprinting of Business Processes Business processes must be modeled to fit ERP software. • A blueprint can be modeled in-house. • We can choose from a ready made blueprint supplied by an ERP software company.

11. Pro’s of Blueprinting • Blueprints are made by industry professionals. • Blueprints can greatly optimize business processes. • Flexibility in choosing. • Few companies can afford a zero-based approach.

12. Con’s of Blueprinting • Professionals may still not know enough. • Pre-designed blueprints may still not be enough. • There are so many blueprints its overwhelming.

13. Staff Training • Most overlooked of ERP implementation costs. • Needed to get the most out of new software. • Training is needed to make sure employees do not abandon the system.

14. Integration • Installing new equipment and software. • Customization if needed. • Testing-Testing-Testing

15. Data Conversion Moving Data: • Employee Records • Company Information • Customer and Supplier Records, etc.

16. Going live with ERP • Final changeover to ERP system. • Real test of software. • Most costly errors can happen at this stage.

17. 3 Steps to Integration: • Implement entire business at once. • Implement one business unit at a time and make sure its right. • Implement one business unit until its right and then implement the rest all at once.

18. ERP & Raytheon Aircraft • $2.7 billion subsidiary of Raytheon Co. • Implemented SAP in just over 1 year. • Total cost of about $55 million. • Eliminated 30 legacy systems. • Integrated four manufacturing sites and fifteen airport service stations.

19. Raytheon’s Training • $5.5 million went into training employees. • 5,000 employees trained for 20 hours/week months before the go-live date. • 150 go-live managers worked full-time on SAP before go live date.

20. Energy Northwest • Chose an in-house approach. • Only implemented accounting functions. • Only $2 million in expenses.

21. Training Exercise Employee teams can now break off and decide if ERP is right for us. Some thing to look at are: • Can we afford implementation. • How and where can this help us. • How will our corporate culture be affected?

22. Summary • ERP is a business wide common system. • Can integrate all of our business units. • Very expensive and time intensive. • Proper implementation can help the business function better. • Poor implementation can hurt the business immensely. • Training

23. Bibliography Callaway, Erin. ERP-The Next Generation: ERP is Enabled For E-Business. Charleston, SC: Computer Technology Research, 2000. Curran, Thomas A. and Andrew Ladd. SAP R/3 Business Blueprint.New York: Prentice Hall, 2000. Hoffman, Tom. “ERP: Not Just for HR anymore.” Internet. Http://www.computerworld.com/cwi/story/0,1199,NAV47-72_STO43432,00.html. 13 February 2001. Jordan, Win G. and Kip R. Krumwiede. “Reaping the Promise of Enterprise Resource Systems.” Strategic Finance October 2000:48-52.

24. Bibliography (cont.) Konicki, Steve. “Fast Deployments at a Price.” InformationWeek October 2000: 77-96. Ptak, Carol A. and Eli Schragenheim. ERP: Tools, Techniques, and Applications for Integrating the Supply Chain. New York: St. Lucie Press, 2000. Slater, Derek. “The ABC’s of ERP.” Internet. Http://www.cio.com/forums/erp/edit/122299_erp_content.html. 14 February 2001. Wah, Louisa. “Give ERP a Chance.” Management Review March 2000: 20-24.