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Examples of enterprise systems

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1 Examples of enterprise systems

2 Core enterprise data: Mapping to application types
Orders Purchases Customers Shipments Marketing Planning Service Supply Chain Management Customer Relation ship management Billing Inventory Project management Assets ERP Accounting HR As an alternative to pure integration for some classes of application consolidation is chosen In some cases, the solution is a mix of integration and consolidation CRM, SCM and ERP are common examples of enterprise applications

3 Example 1: ERP Systems

4 What is ERP? ERP stands for Enterprise Resource Planning, which is a software system that: Takes an enterprise approach to integrating and optimising business processes across departments (finance, HR, sales, etc). Provides consistent information for timely decision-making and performance measurement

5 ERP vendors and market The ERP market consolidated considerably leaving SAP and Oracle as leaders. Oracle acquired PeopleSoft who had acquired JD Edwards Typical of maturing technology markets which have 2 leaders and a few niche players There are also specialised vendors Infor (GEAC, SSA) – consolidator/vertical niches Microsoft Dynamics - SME Open source projects are not widely used Unclear if they will gain ground This lecture will cover general ERP issues but focus on SAP as an example. This is not an advert for SAP!

6 Example Requirement: Customer service
Provide agent with a single point of access from which they can complete the order Check information (availability of items, pricing and credit) Request initiation of internal processes (manufacturing, delivery) Provide reliable information to the customer (delivery date, price) But associated data and processes relate to different functions within the organisation which may be in different systems.

7 Potential Solutions Integration of existing function based systems
EAI is the solution Consolidation into a single application with a consistent set of process and data models ERP is the solution In most cases, an enterprise will combine both approaches Consolidate in some places Integrate in other places

8 Enterprise Resource Planning
An ERP deployment consists of Integrated modules Common process and data models and definitions Common database Update one module, automatically updates others ERP is More about business process change than technology An approach to managing all resources and their use in the entire enterprise in a coordinated manner A set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management An approach to supporting business through optimizing, maintaining, and tracking business functions Focused on value chains, rather than individual functions

9 Typical Technical Architecture
N-tier architecture Database server with a single data model (multiple servers hosting a distributed database ) Application logic servers with process models (multiple servers, distributed ) Web/Internet server Presentation level (browsers) Provides an integration layer to enable integration of external systems into the ERP system.

10 Functionality of an ERP e.g. mySAP

11 Functionality of an ERP e.g. mySAP
Integrate SAP systems Portal Data Warehouse Technology to integrate people, information and business processes across technologies

12 Functionality of an ERP e.g. mySAP
Management of travel costs and expense claims HR: Workforce compensation Managing corporate liability Management of property etc Traditional ERP: Controlling areas of most expense

13 Functionality of an ERP e.g. mySAP
Traditional ERP: All the well-known value chain processes: Order to cash etc.

14 Functionality of an ERP e.g. mySAP
Human Capital Management: support of line management, retention/recruitment, global HR planning and management

15 Functionality of an ERP e.g. mySAP
Financials: Automation of finance functions to minimise costs. Speed up the preparation of financial information. Compliance, better management of free cash resources

16 Functionality of an ERP e.g. mySAP
Analytics: Optimisation and automation of planning, analysis of performance, management accounting support.

17 mySAP Business Suite Solutions
Cross-Industry Solutions mySAP Workplace mySAP CRM mySAP SCM mySAP Marketplace mySAP E-Procurement mySAP BI mySAP PLM mySAP HR mySAP Financials mySAP Mobile Business Industry Solutions mySAP Aerospace & Defense mySAP Automotive mySAP Banking mySAP Chemicals mySAP Consumer Products mySAP Engineering & Construction mySAP Financial Service Provider mySAP Healthcare mySAP High Tech mySAP Higher Education & Research mySAP Insurance mySAP Media mySAP Mill Products mySAP Mining mySAP Oil & Gas mySAP Pharmaceuticals mySAP Public Sector mySAP Retail mySAP Service Providers mySAP Telecommunications mySAP Utilities Infrastructure and Services mySAP Technology mySAP Services mySAP Hosted Solutions Many variants of the horizontal ERP package are available for specific industy needs. There are also some niche ERP vendors focusing exclusively on individual industries.

18 The user view of an ERP: Login screen

19 The user view of an ERP: Choose your options

20 The user view of an ERP: Create a requisition

21 The user view of an ERP: Create a requisition (II)
ERP implementations may contain 1,000s of screens ERP embeds knowledge of the organisation’s and industry’s terminology, processes and data

22 Benefits of ERP Common set of data
Removes consistency and synchronisation issues Ready integration for decision support systems Inter-department integration for all departments using the ERP Library of available standard template processes and modules make integration easier Forces Business Process Reengineering

23 Potential Limitations of ERP
Global ERP can be a never-ending project for large organisations No organisation exists in isolation There are always suppliers and clients who use different data models. This means that the need for integration cannot be removed. Inter-department integration relies on using the global ERP Causes problems with anomalous departments, recently required, geographically isolated or with different business processes. The software can drive the business rather than the other way around Templates tend to impose the standard business process rather than your organisations business process. This is okay for commoditised processes but not for all. Note: ERP requires similar types of organisational readiness as EAI Only technology readiness is not relevant as technology is being replace

24 ERP and organisational readiness
ERP requires similar types of organisational readiness as EAI Only technology readiness is not relevant as technology is being replace Issues are more significant because Cost and impact of the project is greater Degree of process change is much more significant User interface and interaction is totally changed Impact on organisational and individual roles is greater

25 ERP Implementation Options
Green field Create IS architecture from scratch ERP by Function Deploy one or a few ERP modules across all Business Units Risk: May never extend beyond original function. ERP by Business Unit Deploy fully integrated ERP suite in one or more Business Units Fully Integrated ERP Full scale deployment across the enterprise

26 ERP and integration capabilities
All ERP implementations require integration with other systems Supplier or customer systems Legacy systems which cannot be retired. As part of an incremental transition to a global ERP system ERP Integration layers Provide SOA or EAI type capabilities Typically tightly coupled to the ERP and focus on integration into the ERP E.g. SAP NetWeaver Oracle Fusion

27 Example: SAP XI SAP Exchange Infrastructure (SAP XI)
An integration server (EAI) Integrates SAP applications and 3rd party applications Integration server Message routing Message mapping/transformation Integration adapters Protocol and data format conversion (into/out of XML)

28 Implementing an ERP system

29 Impact of an EAI project on the organisation
ERP projects typically completely replace the existing applications Change the user interface and workflows Implements redesigned business processes impacting all aspects of the business using the new system ERP systems change the way the organisation operates ERP systems significantly impacts the work duties undertaken by individuals using the new system ERP systems change the reports and information available to senior management ERP systems replace existing ‘working applications’ While the new system should be an improvement, there is significant risk and inconvenience associated with the roll out of any new system

30 Implementing an ERP system
ERP is always a major project Any ERP project requires significant time and cost. It is likely to be disruptive and result in business process changes across the organisation. To be successful The project must have high priority and visibility within an organization. Senior management commitment with regular progress reviews at the appropriate levels of management. Risks Many companies are unclear on the likely total project cost or return. As with any enterprise level project, scope creep, organisational politics and change regularly cause failure.

31 ERP readiness Most of the factors described as EAI readiness also apply to ERP projects Exception is technology readiness as the applications are being replaced Process readiness is particularly important for an ERP project The core of an ERP project is the redesign of existing business processes Culture Processes Technology Employees Structure ©2001, IT Catalysts, Inc.

32 SAP‘s ASAP – Rapid Implementation Methodology
Continuous Change Project Preparation Final Preparation Go Live & Support Business Blueprint Realization © SAP Five step approach to implementation of SAP to address the potential challenges and ensure effective project management Incorporates many standard concepts of project management

33 SAP‘s ASAP – Rapid Implementation Methodology
Phase 1: Project Preparation Provides initial planning and preparation for project. Gather requirements Requirements workshops Requirements documentation and control processes Project success requires requirements gathering which Is inclusive with representation and engagement from all participants. Has clear and effective approval processes at senior management level. Phase 2: Business Blueprint Create the Business Blueprint detailed documentation of the results gathered during requirements workshops. documents the business process requirements of the company which creates a common understanding of how the company will operate.

34 Strengths/Weaknesses of Business Blueprints
Share a common understanding with everyone on the project Formalises the agreement between The IT project team and business Different business departments Reduced level of communication required during implementation Supports impact analysis when requirement change occurs. Weaknesses Processes can be difficult to model Business process can be poorly defined Need to distinguish between real business process requirements and legacy “way we do business” Must balance need to perfect definitions and need to complete the project. Business processes can change rapidly

35 SAP‘s ASAP – Rapid Implementation Methodology
Phase 3: Realization Implement all the business and process requirements based on the Business Blueprint. Configure the system step by step in two work packages, Baseline and Final configuration. Phase 4: Final Preparation Complete testing, end user training, system management and cutover activities to achieve go-live readiness. Final Preparation phase requires resolution of all critical open issues.

36 SAP‘s ASAP – Rapid Implementation Methodology
Phase 5 Go Live and Support: Transition from a project-oriented, pre-production environment to live production operation. Continuous Change: Provide on-going support and assistance for post go-live. Provide solutions for standard minor tweaks and changes Provice solutions for evolution of the solution to support: Business changes Technology changes Changes in the user community or New business content. ASAP covers these activities

37 Supporting Continuous Change
ASAP Continuous Change Competitive Environment Changes Implementation Release 3 New Business Content New Analysis Requirements Implementation Release 2 Market Technology Changes New Functionality Implementation Release 1 ASAP Implementation 5 4 1 2 3 Go Live & Support Project Preparation Final Preparation Business Blueprint Realiz- ation

38 Comparing EAI and ERP

39 Comparing EAI and ERP:EAI
App1 App 3 App2 App1 App 3 App2 EAI integrates primarily behind the scenes Most of the user interaction is unchanged Process changes occur only for the integrated process

40 Benefits of EAI based process automaton
Integrates with existing process and data models – handling incompatibilities when necessary Allows the high value integration problem to be addressed without disrupting the other applications Minor/moderate changes to the user interaction causes minor/moderate changes to the business as a whole

41 Comparing EAI and ERP: ERP
App1 App 3 App2 Module2 Module1 Module3 ERP changes both user interaction and applicaton All user interaction, data/process models are changed

42 Benefits of ERP based process automation
Creates a set of processes and associated data models which are mutually compatible and comprehensive Equally effective at automation within a single department or across multiple departments ERP vendor typically provides ‘standard’/template processes already proven for a particular industry

43 Penguin’s Global ERP Strategy – an example of a consolidation strategy

44 of Supply Chain Systems
28th International Supply Chain Specialist Meeting The Globalization of Supply Chain Systems Anne Naramore Vice President International Technology Strategy Pearson plc Frankfurt Book Fair

45 Agenda Pearson Supply Chain Environment Today
Supply Chain Technology Strategy Case Study: Asia Summary

46 2005 Adjusted Operating Profit: £509M / $875M
PEARSON A Good Read Pearson is a world leading education and information company, helping people of all ages to live and learn. 2005 Sales: £4,096M / $7,045M +9% 2005 Adjusted Operating Profit: £509M / $875M +22%

47 Geographic Businesses
Main Businesses Geographic Businesses North America: 66% £2,717M / $4,673M Europe: 24% £963M / $1,656M Penguin: 20% £804M / $1,383M School: 32% £1,295M / $2,227M FT Group: 15% £629M / $1,082M Asia Pacific: 7% £300M / $516M Rest of World: 3% £116M / $200M Professional: 14% £589M / $1,013M Higher Education: 19% £779M / $1,340M

48 Interesting Facts 18M U.S. school students learning English and Math with a Pearson programme 3.5M Professionals who qualified in our testing centres 250 New authors published by Penguin around the world

49 Interesting Facts 4.5M 0.5BN 3.6M
People learning English with Longman materials 3.6M College students in America using a Pearson online service 4.5M Readers reached by the Financial Times in print and online

50 Supply Chain: Environment Today
Pearson’s business strategy and organization culture has yielded a relatively diverse, decentralized portfolio of ERPs implemented at the region/operating company level. Business process standardization within Pearson occurs largely at the region/operating company level due to market demands. Consequently, Pearson has adopted a decentralized IT strategy, with implementations occurring at the region/operating company level. Business processes: The life cycle of a product/title Editorial & Production Sales & Marketing Inventory Management Sales Order Processing Financials Distribution and Warehousing eCommerce Human Resources/Payroll Business Intelligence (analysis and reporting)

51 Complex Environment: North America
ERP Editorial & Production Sales & Marketing Inventory Mgmt Order Mgmt Finance Distribution eCommerce HR/Payroll Business Intelligence Oracle Assessment SAP 4.6 Penguin SAP 3.1i School Vista Canada Custom System - Higher Education Supported by ERP Not supported by ERP Legend:

52 Complex Environment: Europe
ERP Editorial & Production Sales & Marketing Inventory Mgmt Order Mgmt Finance Distribution eCommerce HR/Payroll Business Intelligence Vista - Dutch JDE - Spain Infos - Germany Exact - Poland Libris - France Oracle - Italy SAP UK Vista - UK Supported by ERP Not supported by ERP Legend: Not in scope for business

53 Complex Environment: Latin America
ERP Editorial & Production Sales & Marketing Inventory Mgmt Order Mgmt Finance Distribution eCommerce HR/Payroll Business Intelligence JDE - Mexico Siscorp - Brazil Stradivarius - Argentina JDE - Colombia Saab - Chile Figaro - Uruguay Supported by ERP Not supported by ERP Legend:

54 Complex Environment: Pacific Rim
ERP Editorial & Production Sales & Marketing Inventory Mgmt Order Mgmt Finance Distribution eCommerce HR/Payroll Business Intelligence IBS Bookmaster - Hong Kong - Singapore Malaysia Epicor - Taiwan Korea Custom System - Japan IBS Bookmaster - Australia Supported by ERP Not supported by ERP Legend:

55 Exercise What should Pearson do? Identify three strategies
Identify business risks with each strategy

56 Supply Chain Technology: Strategy
Pearson has adopted a decentralized strategy, with implementations occurring at the region/operating company level. While supporting all the operating companies from a single ERP is desirable, the cost to consolidate is high and difficult to justify, and the process standardization required could inhibit business performance. Pearson’s Roadmap sets a course to: Maintain a decentralized approach Allow ‘scope’ to meet regional /operating company requirements Upgrade as versions go end-of-life Govern introduction of new systems Consolidate and standardize when cost justified

57 Case Study: Asia Goals: Scope (Locations):
September 2004: Consolidate business units into a single ERP instance NPV: $954.9K | IRR: 37% | Payback: 1.3years Goals: Standardize business processes & operating procedures across the region Reduce long-term costs (IT, Customer Service, Finance) Improve utilization of IT systems & resources Provide standard system platform for operation Scope (Locations): Hong Kong, Taiwan, Korea, Japan, Singapore and Malaysia Hong Kong hosting location and support center MPLS connectivity for each country access

58 Case Study: Asia Functionality:
Consolidate business units into a single ERP instance Functionality: Editorial & Production processing Academic adoption management Sales Order processing Inventory management Procurement Distribution & warehousing Financials (GL, AP, AR) Royalty management Business intelligence (analysis and reporting)

59 Taiwan (delayed 6 months)
Case Study: Asia Consolidate business units into a single ERP instance Rollout Timeline: Malaysia Singapore Korea Taiwan (delayed 6 months) Japan Apr 2006 May 2006 Jun 2006 Jul 2006 Aug 2006 Sep 2006 Oct 2006 Nov 2006 Dec 2006 Jan 2007 Feb 2007 Mar 2007 Apr 2007 May 2007 Jun 2007 Jul 2007 Aug 2007 Sep 2007 Hong Kong 2006 2007

60 Case Study: Asia Solution Provider: IBS Bookmaster
Consolidate business units into a single ERP instance Solution Provider: IBS Bookmaster Build upon existing implementation in Singapore Build upon existing relationship with vendor Singapore and Malaysia Pearson Australia South Africa (MML) Most cost effective solution Met majority of functionality needs

61 Case Study: Asia What We Learned: Replicate Success and Learnings:
Consolidate business units into a single ERP instance What We Learned: Partnership with vendor Strong executive sponsorship and project governance Thorough functionality requirements Functionality gaps always found – accept it and manage closely Dedicated and skilled project managers (internal & vendor) Contingency: money, time and resources Don’t underestimate language barriers and cultural styles: slows process down Replicate Success and Learnings: Taking approach to Europe

62 Summary: Environment today

63 Long-term strategy | Time, Money, and Strong Partners
Summary: Future environment Long-term strategy | Time, Money, and Strong Partners

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