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Enterprise Resource Planning

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Presentation on theme: "Enterprise Resource Planning"— Presentation transcript:

1 Enterprise Resource Planning
Lori Martel Hahn Shin Ramkin Shetty Dinesh Sekar

2 Definition & ERP’s role in the Supply Chain Business Aspects
Table of Contents Introduction Organizational & Technological Change Business Engineering Vs. Business Process Re-engineering Definition & ERP’s role in the Supply Chain Business Aspects ERP: Vendors, Comparison, Characteristics of ERP, Applications and Advantages SAP R/3 Constraints: Business &Technical Technical Aspects Layer Architecture Application Architecture Customization Industry Example: Quantum Look into the Future

3 Organizational Change
Introduction Organizational Change Growing Competition Market Globalization need for flexible, integrated, and open software Decreasing Innovation Cycles Relationship Based Transactions Different Manufacturing Environments

4 Organizational Change
Introduction Organizational Change Changes in Structure Functional Vs. Process Based Structure Value Chain Thinking Order Processing Product Development Customer Service Product Development Marketing & Sales Personnel Production

5 Technological Change 70’s Standard Software, Mainframe Systems
Introduction Technological Change 70’s Standard Software, Mainframe Systems Separate Applications for business functions 90’s Technological Trends Client/Server Computing Innovative process integrated business solutions Open Systems Increasing computing speed, GUI’s Faster Data processing Data Integration

6 Business Re-engineering (BPR) Business Engineering (BE)
Introduction Business Re-engineering (BPR) Vs. Business Engineering (BE) BPR BE Use of Prototyping/Modeling - Building Systems around Business Automating Business Processes through IT Use of Blueprinting - Designing & Integrating Business Processes IT used as a Strategic Tool

7 ERP Definition - ERP is a software package integrating organizational business processes & data across the company Modeling all the processes Integrated views Quality, Cost, Delivery Effective use of resources BPR Integrating all the information Strategic use of IT BE EIS OA DSS MIS TPS SIS

8 Internal Supply Chain Management
Role in Supply Chain Extended Supply Chain Management Supply Planning Demand Planning ERP Scheduling Logistics Internal Supply Chain Management External Suppliers External Customers Internal Suppliers Internal Customers ERP Coordinated Manufacturing ERP Plant Management MRP MRP

9 Market Share of ERP Vendors
Business Aspects Market Share of ERP Vendors

10 Comparison of ERP Products
Business Aspects Comparison of ERP Products High Rebuild Remain * R/3 J.D. Edwards * * Oracle * Peoplesoft Functionality * CA * Baan Review Reinforce Low Technology Low High

11 Modeling Business Processes and Integrating through Software
Characteristics Modeling Business Processes and Integrating through Software NOT Multiple Packages Pieced together through Complex Interfaces Configuration - 8,000 Tables set up by Programmers Series of Switches Requires Deep Understanding of Existing Business Processes

12 High-Tech & Electronics
Business Aspects ERP in Industry Aerospace & Defense Automotive Chemicals Consumer Products Financial Services Healthcare High-Tech & Electronics Oil & Gas Pharmaceuticals Retail Telecommunications Utilities

13 Largest vendor of standard business application
Business Aspects SAP - The Leader Largest vendor of standard business application R/3: Real-Time Version 3.0 Client/Server enterprise application software 6,000 companies, 50 countries Companies in diverse businesses 30 seats or installations with 3,000 end users 800 predefined business processes

14 SAP R/3 Business Framework
Business Aspects SAP R/3 Business Framework Business Components - Finance, HR, Logistics Business Objects - Customer, Invoice Business Information Warehouse - Aggregate Internal & External Data Business Engineer - Customization Tool Integration Technologies (ALE)

15 SAP Business Blueprint
Business Aspects SAP Business Blueprint Event Driven Process Chain (EPC) Reference Model Data Model Business Object Model Organization Model Process Model Distribution Model Event Function/Task Organization Communication - Repository Holds the Reference Model, Industry Specific Models & Enterprise Models

16 Advantages of Component Based
Business Aspects Advantages of Component Based SAP R/3 Product Fast Flexibility Expandable Open Industry Specific

17 Advantages of ERP Allows Companies to Adapt
Business Aspects Advantages of ERP Allows Companies to Adapt to New Business Opportunities Synchronous Transfer of Data Encourages Multi-Disciplined Teamwork Reduces Redundant Labor Provides Standard Based Development Environment Process Engineering Cost Benefits Flattens Organizations to Increase Agility

18 Business Disadvantages
Business Aspects Business Disadvantages Very Expensive Every $1 Spent in Software Licenses - $8 - $10 Spent on Consulting Support Outside Consulting Fees can cost $1500/day Requires Equipping employees with new skill sets Hard to Keep Resources Changing Business Processes to suit ERP/ can Effect the Organization’s Culture Can NOT Impose ERP Infrastructure on Company

19 Technical Disadvantages
Business Aspects Technical Disadvantages Lack of Flexibility Complexity & Rigidity High Implementation Time Difficult in Decentralized Environments Difficult Interfaces Steep Learning Curve

20 Technical Aspects Layer Architecture
Development workbench Applications Dictionary Program editor Interface builder Modeling tools Repository Application Layer Middleware Middleware Basis Layer System software: GUI, DBMS, OS, N/W - Issues: Scalability, Portability, Interoperability & openness, Customizability, GUI, etc.

21 Application Architecture
Technical Aspects Application Architecture IS SD CO AM MM PP HRM PS WF FI QM PM DW System model Business model Scope, Rules & Pattern Business Kernel Full Business Specific Situation DM FM WFM Repository - Issues: Independent from all types of computers(UNIX, Window NT, AS/400, etc.), DBMS(Informix Online, Oracle 7, ADABAS, DB2, MS SQL Server 6.0, etc.), GUI flatform(OS/2 Presentation Mgr.., OSF/Motif, Macintosh, Windows, etc) Independent from the country specific rules, languages, etc.

22 Technical Aspects Customization: Support of initial implementation projects, follow-up projects, and release-change projects Implementation environment Procedure model Implementation guides Customized model Reference model: FM, PM, DM, IFM, OM, Comm. Model, Distr. Model Documentation Release management - Issues: Integrated customizing functions, quality assurance, etc.

23 Industry Examples Objectives Available-to-Promise (ATP), the real-time capability to take an order, schedule it to be delivered anywhere in the world and confirm delivery instantly Ability to determine what was actually in inventory or in production and how much of it had been promised to other customers

24 Industry Examples Scope Based on the full suite of Oracle Corp.'s manufacturing and operations applications 750 users in 25 locations worldwide To adopt Big-bang approach One of the largest distributed business systems to go live worldwide at one time HP9000 hardware, HP UX operating system (10.1) and Oracle Release 10.4

25 Pre-Implementation Assessment
Industry Examples Pre-Implementation Assessment Legacy system-based MRP system in use Each division's business transactions in separate databases by business unit, and by function within a unit Databases couldn't share information

26 Project Planning & Control
Industry Examples Project Planning & Control Project team members pulled from regular jobs & relocated to “Building 12” “Building 12” essentially set up a scaled-down business model of Quantum Team members play-acted their real-life roles Improved business processes and wrote requirements for the new system

27 Implementation Process
Industry Examples Implementation Process Packaged available applications & selected Oracle applications Consultants from Price Waterhouse and Oracle, installed the software & began pilot projects Complexity and magnitude of the project quadrupled (Digital Disk drive division acquisition) Conference room pilots tests

28 Industry Examples Human (HR) Side Locally trained about 100 users from all over the world and flew them into Milpitas to run a full-scale system simulation Sponsored massive user training - users had to pass a test before returning to their jobs Ran Internal PR campaign- Entailed group meetings, presentations,an intranet site and events emphasizing system's importance

29 Project Statistics October 1992 - May 1996 800GB of disk space
Industry Examples Project Statistics October May 1996 16 full time managers 100 person multidisciplinary team 1,632 meetings 79 shouting matches 800GB of disk space 18,064 miles of cable 300,000 cups of coffee 58,000 s 7,503 cases of beer 1.62 million miles of air travel

30 A Look to the Future Business Technology
Future Aspects A Look to the Future Targeting Small & Medium Enterprises Addition of Simple GUI based development Tools Strategic Alliances - Andersen Consulting & SAP - IBM & J.D. Edwards - GE & Oracle Business Supply Chain Management Internet Enabled Workflow Management Resource Planning Data Warehousing Technology

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