1. IS373 Large Systems Implementation Olayele Adelakun (Ph.D) Assistant Professor CTI Office: Room 735 CTI 7th Floor Phone: 312-362-8231 Fax: 312-362-6116 Email : yele@cs.depaul.edu Web: http://facweb.cs.depaul.edu/yelehttp://facweb.cs.depaul.edu/yele

2. Agenda  Course Overview  Expectation  Introduction to Large Scale Systems

3. Course Overview  Objective  Course Materials  Grading  Group Assignment

4. Course Objectives  Understand ERP implementation challenges  Key success factors in implementing large scale systems  Impact of large scale system implementation on organizational success

5. Course Material  The Enterprise Resource Planning Decade: Lessons Learned and Issues for the Future by Frederic Adam and David Sammon ISBN:1591401887 Idea Group Publishing © 2004 (302 pages) The Enterprise Resource Planning Decade: Lessons Learned and Issues for the Future by Frederic Adam and David Sammon ISBN:1591401887 Idea Group Publishing © 2004 (302 pages)  ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning by Thomas F. Wallace and Michael H. Kremzar ISBN:0471392014 John Wiley & Sons © 2001 (372 pages) ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning by Thomas F. Wallace and Michael H. Kremzar ISBN:0471392014 John Wiley & Sons © 2001 (372 pages)

6. Grading Participation 10% Homework 110% due 2nd week Homework 2 20% due 4th week Mid-term Paper30% due 6th week Group presentation 15% due 8th week Group project paper15% due 10th week Total100%

7. Group Project ?

8. Question

9. Agenda Course Overview  Expectation?  Introduction to Large Scale Systems

10. Expectations?

11. Agenda Course Overview Expectation?  Introduction to Large Scale System

12. Information Technology Challenges Regulated Monopoly Organization Productivity/ Efficiency Free Market Individual Individual/Group Efficiency Collaborative Enterprise and Industry Integration Value Creation Era I Era II Era III Administrative Framework Primary Target Justification/ Purpose ? ? ? ApplicationChallenges ? ? ?  Integrating Changing Technology Platforms

14. Large Systems / ERP Definitions  … complex megapackages (Gable et al., 1997) designed to support the key functional areas of an organization.  The American Production and Inventory Control Society (APICS) defines ERP as “an accountingoriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders” (Watson & Schneider, 1999).  An ERP system can be thought of as a company-wide Information System that tightly integrates all aspects of a business. It promises one database, one application, and a unified interface across the entire enterprise Bingi et al., 1999.

15. Large Systems / ERP Definitions  ERP links all areas of a company with external suppliers and customers into a tightly integrated system with shared data and visibility. ERP systems are designed to solve the problem of the fragmentation of information over many legacy systems in large business organizations (Chen, 2001, p. 374; Chen, 2001, p. 379)  ERP plays a critical role in improving or reengineering outdated infrastructures, gaining tighter control over internal operations, and driving down costs  enterprise systems” (Davenport, 1998; Chen, 2001) and “enterprise-wide Information Systems”

16. The Value Chain Support activities Primary activities Inbound logisticsMaterials receiving, storing, and distribution to manufacturing premises Operations Transforming inputs into finished products. Outbound logisticsStoring and distributing products Marketing and SalesPromotions and sales force ServiceService to maintain or enhance product value Corporate infrastructureSupport of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Human resources managementRecruiting, hiring, training, and development Technology DevelopmentImproving product and manufacturing process ProcurementPurchasing input

17. RATIONALE FOR ERP SYSTEMS  One of the key reasons why managers have sought to proceed with difficult ERP projects is: to end the fragmentation of current systems, to allow a process of standardization, to give more visibility on data across the entire corporation, to obtain competitive advantage (Sammon & Adam, 2000).  A seamless integration is essential to provide visibility and consistency across the enterprise.

20. Goals for Implementing Large Systems e.g. ERP 1.Integration of financial data 2.Standardization of manufacturing processes 3.Standardization of human resource information

21. Myth and Reality of ERP Benefit Realization

22. Business Benefits A Framework of Business Benefits DimensionSubdimensionExplanation [1] Operational1.1 Cost reduction 1.2 Cycle time reduction 1.3 Productivity improvement 1.4 Quality improvement 1.5 Customer services improvement Because ERP systems automate business processes and enable process changes, one would expect ERP systems to offer all of these types of benefits. Adapated from Shang and Seddon (2000)

23. Business Benefits cont. [2] Managerial2.1 Better resource management 2.2 Improved decision making and planning 2.3 Performance improvement With a centralized database and built in data analysis capabilities, it seems likely that ERP systems will provide informational benefits to management.

24. Business Benefits cont. [3] Strategic3.1 Support business growth 3.2 Support business alliance 3.3 Build business innovations 3.4 Build cost leadership 3.5 Generate product differentiation (including customization) 3.6 Build external linkages (customers and suppliers) 3.7 Worldwide expansion 3.8 Enabling e-commerce ERP systems, with their large-scale business involvement and internal and external integration capabilities, could assist in achieving these strategic benefits.

25. Business Benefits cont. [4] IT Infrastructure4.1 Build business flexibility for current and future changes 4.2 IT cost reduction 4.3 Increased IT infrastructure capability ERP systems, with their integrated and standard application architecture, provide an infrastructure that could support this dimension.

26. Business Benefits cont. [5] Organizational5.1 Support organizational changes 5.2 Facilitate business learning 5.3 Empowerment 5.4 Build common visions 5.5 Change employee behavior 5.6 Better employee morale and satisfaction The integrated information processing capabilities of ERP systems could affect the establishment of organizational capabilities.

27. The ERP Market VendorOriginSalient Features BAANHollandAn earlier ERP vendor OracleUSA relatively newcomer, but quickly gaining share PeopleSoftUSOriginally focused on HR management SAPGermanyThe pioneer and largest firm JDEdwardsUSInternet emphasis

28. Table 3: ERP Software Market Growth Rates Growth Rate (%) Annual RevenueReference 32US$66.6 billion by 2003 (e)Shakir, 2000 US$70 billion by 2002 (e)Shanks et al., 2000 36-40US$15–50 billion from 1999-2004 (e); eventual size of market to US$1 trillion (e) Bingi et al., 1999 36US$15.68 billion in 1997 (a) and US$72.63 billion by 2002 (e) Holland et al., 1999 Holland & Light, 1999 4020,000 companies paying US$10 billion in 1997 (a) Markus & Tanis, 2000 US$66 billion by 2003 (e)AMR Research, 1999 ERP revenue hit $16.6 billion in 1998 (a)Oliver & Romm, 2000 Note: (e) = expected; (a) = actual

29. The ERP Market

30.  SAP SAP R/3 is composed of four major parts — accounting, manufacturing, sales, and human resources — containing more than 70 smaller modules work for multinational corporations due to the fact that it has a strong international appeal, with capabilities to support multiple currencies, automatic handling of country-specific tax laws and regulations, and legal and language needs The complete suite of SAP R/3 applications is available in 24 languages, including Japanese (Kanji) and other double-byte character languages Furthermore, SAP software is available for all types of industries and for every major market (SAP, 2003). R/3 is designed as an “open” standard (it can run on a variety of hardware and platforms and software environments), and it uses a thin client and a three-tier architecture, consisting of database, application, and presentation tiers

31. Three-Tier Client/Server Architecture

32. The ERP Market Support  ERP supports about 70-95% of a large organizational need  The remaining 5-30% Interfacing the ERP application with existing legacy systems using middleware, which adds to the complexity Interfacing ERP to third-party solutions. Writing custom software to extend functionality. Modifying the ERP source code directly.

33. Summary 1.ERP systems create a framework that will improve customer order-processing systems, which were neglected in recent years. 2.ERP systems consolidate and unify business functions, such as manufacturing, finance, distribution, and human resources. 3.ERP systems integrate a broad range of disparate technologies into a common denominator of overall functionality. 4.ERP systems create a foundation on which next- generation applications can be developed.

34. Agenda Expectations? Course Overview Introduction to Large Scale Systems