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

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

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

More Of What ERP can do

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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. Can we afford implementation. How and where can this help us. How and where can this help us. How will our corporate culture be affected? How will our corporate culture be affected?

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

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

Bibliography (cont.) Konicki, Steve. “Fast Deployments at a Price.” InformationWeek October 2000: Ptak, Carol A. and Eli Schragenheim. ERP: Tools, Techniques, and Applications for Integrating the Supply Chain. New York: St. Lucie Press, Slater, Derek. “The ABC’s of ERP.” Internet February Wah, Louisa. “Give ERP a Chance.” Management Review March 2000: