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Enterprise Resource Planning

Enterprise Resource Planning. Tinesar Forrest Rachelle Rentschler Elizabeth Sampson Shuba Natarajan. Introduction. What is ERP? PeopleSoft and Higher Education The University of Missouri System and the ASP Project The University of Missouri-Saint Louis PeopleSoft Implementation

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Enterprise Resource Planning

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  1. Enterprise Resource Planning Tinesar Forrest Rachelle Rentschler Elizabeth Sampson Shuba Natarajan

  2. Introduction • What is ERP? • PeopleSoft and Higher Education • The University of Missouri System and the ASP Project • The University of Missouri-Saint Louis PeopleSoft Implementation • ERP Best Practices

  3. What is ERP? “Corporate Root Canal”1... ERP is an integrated, multi-module software application package designed to serve and support multiple business processes.2 ERP evolved from the manufacturing industry. 2 ERP implies packaged software not proprietary software.2 Sources: 1 White, J. Clark, D., Ascarelli, S. “This German Software Is Complex, Expensive And Wildly Popular,” The Wall Street Journal, March 14, 1997, pA1. 2 www.erpassist.com Viewed 4/11/2002

  4. Shuba’s Shirts Inc. Demonstration: Why the Need for ERP? Customer Service Manufacturing Shipping Accounting

  5. Anatomy of ERP Source: “Putting the Enterprise into the Enterprise System,” Thomas H. Daveneport; Harvard Business Review, July/August 1998

  6. Evolution of Planning Systems • MRP-Material Requirements Planning • MRP II-Next Generation MRP • ERP Source: www.erpfans.com Viewed 4/13/2002

  7. Benefits of ERP • Information integration and accessibility • Better customer service • Decreased material shortages • Reduced inventory • Enhanced productivity • Improved cash management

  8. ERP Implementation Cost • Average 5.6% of annual revenues • 1997 survey of companies with most popular version of ERP: • average $20 million • largest organizations > $100 million • small firms < $12 million • 2000 A.T. Kearney survey: • 45% of North American companies expected to spend > $10 million • Expenditures are proportional to firm size • Hardware, software, training, consulting included • Harvard Business School study found 65% of executives believe ERP could hurt business due to implementation problems • Consultant fees-$2000/day Source: Willis et al.,”Cost Containment Strategies for ERP Implementations;” Production and Inventory Management Journal; Alexandria; Second Quarter 2001

  9. The Big Four • SAP1 • Customers: Nike, PriceWaterhouseCoopers, Samsung, Yamaha, Hoffman LaRouche and Unilever1 • 2001 Revenues: $7.34 Billion1 • Oracle2 • Customers: Xerox, IKON, HP, Cigna • 2001 Annual Revenues: $11 Billion • Baan • Customers: Volkswagen, BAE, DuPont, Diebold, Boise Cascade3 • 2001 Annual Revenues: N/A Acquired in September 2000 by Invensys4 • 1999 Annual Revenues: $619 Million3 • PeopleSoft Sources: 1www.sap.com/company/press/press.asp?pressID=977 Viewed 4/12/2002 2www.oracle.com/corporate/investor_relations/financials/index.html Viewed 4/12/2002 31999 Baan Annual Report 4www.baan.com/home/investorrelations/

  10. ERP Market Share

  11. 12 • 1987-Founded • 1995-Developed Student Administration System for higher education • Revenues $1.7 billion • Craig Conway, CEO • NasDaq PSFT $25.17 4-5-02 • Customers include: FedEx, Cal State, Borden Foods, Credit Suisse First Boston • Strategic partnerships: Corio, IBM, Sun Microsystems, Accenture, HP, KPMG, PriceWaterhouseCoopers, Deloitte Consulting Source: PeopleSoft Corporate Report 2000

  12. Products • Human Resource Management • Supply Chain Management • Financial Management • Student Administration • Customer Relation Management • Enterprise Performance Management • Mid-Market Solutions Source: PeopleSoft Corporate Report 2000

  13. Why Higher Education? • University of Maine1 • 7 Campuses • Total Enrollment: 32,955 • Employees: 5,586 • Revenues: $294 Million • California State University2 • 23 Campuses • Total Enrollment: 368,252 • Employees: 41,592 • Revenues: $5.5 Billion Sources: 1Http://www.maine.edu/pubaff/snap.htm viewed 3/23/02 2Http://www.calstate.edu/datastore/quick_facts.shtml viewed 3/23/02

  14. Why Would Higher Education Choose ERP? • Modernization • Web applications (registration) • Easier access to data • Information technology for on-line courses • Faster than developing home-grown Source:Olsen, Florence, “Delays, Bugs, and Cost Overruns Plague PeopleSoft’s Services” Chronicle of Higher Education, September 24, 1999, p. A31.

  15. What’s Happening? • 11-30-99 seven universities in the Big Ten Conference complained to PeopleSoft • Ohio State University: $53 million budget became $80 million • University of Minnesota: $43 million budget became $53 million Source:Leibowitz, Wendy R., “Officials of 7 Large Universities Complain to PeopleSoft About Its Programs” Chronicle of Higher Education, January 7, 2000, p A54.

  16. CaseStudy: ASP: People Soft Administrative Systems Project

  17. The University of Missouri System Source: www.system.missouri.edu viewed 3/17/2002

  18. University of Missouri System • Total Enrollment, Fall 2000: 56,030 Students (76% Undergraduate, 24% Graduate and First Professional Students) • Teaching and Research Staff: 9,543 (40.4% Full-time, 51.6% Part-time) • Administrative, Service, and Support Staff: 15,039 (48.4% Full-time, 51.6% Part-time) • Physical Plant Assets: $3,099,677,049 Source: www.system.missouri.edu/urel/main/second/wfacts2.htm viewed 3/17/2002

  19. Enrollment, Fall 2000: 15,397 (12,737 Undergraduate, 2,660 Graduate and First Professional Students) • Teaching and Research Staff: 1,429 (35.5% Full-time, 64.5% Part-time) • Administrative and Support Staff: 1,479 (55.1% Full-time, 44.9% Part-time) Source: www.system.missouri.edu/urel/main/second/wfacts2.htm viewed 3/17/2002

  20. UM System Total Revenues$1,604,323,000 Source: www.system.missouri.edu/urel/main/second/wfacts5.htm viewed 3/17/2002

  21. UM System Total Expenditures$1,576,441,000 Source: www.system.edu/urel/main/second/wfacts5.htm viewed 3/17/2002

  22. UM System IS/ASP Branch

  23. Source: www.system.missouri.edu/urel/main/second/worgch21.htm viewed 3/25/2002

  24. History of the ASP • Early 90’s: System-wide student group wanted to replace student information system • October 1996: Board planning goal • October 1996-December 1997: Project developed • December 1997: Board authorized project • March 1998: Board approval to purchase PeopleSoft Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  25. PeopleSoft Modules Purchased • Student • Human Resources • Finance Options to Purchase • Grants • EPM • Treasury Management • Expenses Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  26. The Vision • Integration • Accuracy • Ease of Use • Flexibility • Timeliness • Cost Efficiency • Benchmarks of Performance Goals • Continuous Learning Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  27. The State: Fall 2000 • Processes have long cycle times • Lack of accountability • Administrative processes are not adequate • Lack of integration = Redundant data entry • Use of “shadow systems” • Inflexible and outdated data structures • Poor management reporting and decision support Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  28. Expected Benefits • 24 Hour electronic access for students • On-line, real-time information • Reduction in labor-intensive administrative tasks • Improved recruitment and retention • Better information for better decisions • More time for core missions Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  29. Project Funding • $40 Million estimated cost over 4 year period • Campuses fund 20% • System provides remaining 80% • Separate from IT budget • Currently expected to exceed original budget by 20% Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  30. Selected ASP Student TimelinesOriginal (5-99) to Revised (12-01) Admissions UMSL, UMKC 9-2001 9-2002 Recruiting 7-2001 7-2002 Financial Aid (loans) 5-2002 2-2003 Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  31. Selected ASP Financial TimelinesOriginal (5-99) to Revised (12-01) General Ledger 7-2000 7-2001 Asset Management 7-2000 7-2001 Budget 11-2000 2-2001 Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  32. Selected ASP Human Resources TimelinesOriginal (5-99) to Revised (12-01) Base HR, Base Benefits, Payroll 1-2001 1-2002 Pension 1-2001 2-2002 Benefits Administration 7-2001 2-2002 Recruit Workforce UMSL, UMKC 3-2001 4-2002 Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  33. Old Fiscal Year Campus Ledger Account Account Account Subcode Variable Subcode None New Budget Period (BP) Business Unit (BU) FUND DEPTID PROJECT/GRANT PROGRAM ACCOUNT CLASS STATISTICS CODE Changes in Financial Terminology Source:http://www.system.missouri.edu/acct/PeopleSoft/cfoverview.htm

  34. Interviews with: • Dr. Gordon Anderson, Chair of Chemistry Department • Ms. Charmaine Henson, Executive Associate Chemistry Department • Ms. Karen Boyd, Manager, Business and Fiscal Operations, Office of Research Administration • Dr. James Krueger, Vice Chancellor for Managerial and Technological Services • Dr. Eileen Heveron, Executive Director, ASP Project

  35. Dr. Gordon Anderson • “Tail wagging the dog” • End user • No formal PeopleSoft training • Pre-audit versus Post-audit concerns • $70,000 budget carryover? • Budget is difficult to read • Scheduling conflicts for students Source: Interview with Dr. Gordon Anderson 3/22/2002

  36. Ms. Charmaine Henson • End user • Participated in campus-wide PeopleSoft training sessions • Participated in Arts and Sciences PeopleSoft training sessions • Has training manual and created “cheat sheet” for Chemistry Department • Reconciles Procard and enters payroll Source: Interview With Ms. Charmaine Henson 3/22/2002

  37. Ms. Charmaine Henson, Cont. • New contract sheets are templates • Easier to read • Easier to make changes • Financial reports convert easily • Receives support from superusers, colleagues, and help-desk • “There is a sense that no one knows the system and that we are all in this together.” Source: Interview With Ms. Charmaine Henson 3/22/2002

  38. Ms. Karen Boyd • 20% of work hours devoted to ASP project • Working with KPMG and research administrators from other 3 campuses • Structuring PeopleSoft to accommodate administrative procedures • Populating data tables • Grants Information System (GIS) Source: Interview With Ms. Karen Boyd 3/18/2002

  39. Grants Implementation • GIS is home-grown system for UM • UM System is out-growing its capacity • Not integrated • Grants Module • UM System is among the first to implement • Dependent on HR and financial modules’ implementation Source: Interview with Karen Boyd 3/18/2002

  40. Dr. James Krueger • Campus liaison • Member of Steering Committee • Advancement will not convert to PeopleSoft immediately • UMSL sends 3-4 IT staff to assist with ASP • One data table versus several • UMSL will not have any customization • Student data access by other campuses Source: Interview with Jim Krueger 3/27/2002

  41. Dr. James Krueger • GPA calculation • Pre-audit mentality to Post-audit mentality • Streamlining • Split funding is the largest problem • “Train the Trainer” • Short on training due to cost • Timing issues Source: Interview with Jim Krueger 3/27/2002

  42. Dr. Eileen Heveron • System purchased “Education Units” available from PeopleSoft • Using “Train the Trainer” methods will improve training • PeopleSoft gives Higher Education discounts • The UM-System prepays for maintenance Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson

  43. Dr. Eileen HeveronFrom an IT Perspective • All campuses will now use the same definitions and terms • All modules will have more data • Data will be better organized • The UM System will have better decision making and reporting in the future Source: Interview with Eileen Heveron 3/27/2002

  44. Best Practices ERP

  45. Proving The System‘s Worth • CEOs and CFOs need to know what they are getting out of such a huge investment; determining metrics is only a first step in figuring out the value of an ERP system • Establish an overall strategy for emerging from the process knowing the value of the ERP system • Manage the ERP as a separate business with a detailed business plan and a separate set of books Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts

  46. Measuring Success:Survey of 30 IT Directors in various industries • 42% actually measure their ERP systems • 75 % of those who measure use traditional ROI • 90% of those who measured determined their metrics prior to implementation • Modules most commonly evaluated were Finance and Manufacturing • HR most commonly not evaluated Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts

  47. Financial Module Indications • Most common metric used was length of monthly or quarterly close • Reductions in IT department costs Manufacturing Module Indications • Improved inventory turnovers • Reduced inventory levels Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts

  48. HR and Logistics Indications HR • Decreased time to execute payroll • Reduction in total HR costs by employee self-service direct access Logistics • Reduction in past-due deliveries Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts

  49. Tools For Measuring Success • Vendors- SAP's ValueSAP and Peoplesoft's Client Lifecycle Services • Consultants • Benchmarking- pre-implementation vs.post-implementation; vs. industry averages, competitors, and comparable installations Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts

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