1. ERP (Enterprise Resource Planning) Ryan Loughlin Gustavo Rayo Shannon Villarroel Khoung Nguyen HTM 304 Professor Fang Fang May 10 th, 2007

2. What is ERP? An infrastructure that provides an overview about every function in the organization. An infrastructure that provides an overview about every function in the organization. Provides a Cross-Functional, process view of the organization Provides a Cross-Functional, process view of the organization Developed in 1990 Developed in 1990 First develop business model according to the essence activities and processes. First develop business model according to the essence activities and processes. Draw interconnection of all subsystems Draw interconnection of all subsystems Underlying data model Underlying data model

3. ERP Software Price is variable Price is variable Specific softwares don’t implement fluently with the business Specific softwares don’t implement fluently with the business Send a RFP (Request for Proposal) to vendors Send a RFP (Request for Proposal) to vendors Rank vendor responses Rank vendor responses Outside firms assist in the managing, training and maintaining of the system and its employees Outside firms assist in the managing, training and maintaining of the system and its employees

4. Who distributes ERP products? There are numerous different ERP vendors in today's market. There are numerous different ERP vendors in today's market. Examples Examples SAP SAP Oracle Oracle PeopleSoft PeopleSoft Invensys Invensys Etc… Etc…

5. Implementation of ERP Three major tasks that must take place: Three major tasks that must take place: 1. Determine the system that is currently functioning and specific ERP system the company wishes to implement 2. Removing all inconsistencies within company 3. The implementation process itself. Knowing what you wish to achieve is the most important part of ERP implementation Knowing what you wish to achieve is the most important part of ERP implementation Without a specific and consistent goal it is going to be hard to implement the system successfully Always remember that the post implementation process is just as critical Always remember that the post implementation process is just as critical Must not only create but MAINTAIN the system Be alert for company changes that could result in a system change

6. Why ERP (and why not)? Why? Why? Improves Efficiency Improves Efficiency Reduces Inventory Reduces Inventory Shortens Lead Time Shortens Lead Time Improved Customer Service Improved Customer Service Larger Profits Larger Profits Etc…. Etc…. Why Not? Why Not? Hard to Estimate Underestimate Cost and Time Implementation Process Painstaking and costly Systems Must Be Specifically Designed Otherwise won’t work properly Maintenance Cost Often High

7. Real world implementation of ERP Started implementation in 1996 Started implementation in 1996 Took about 4 years before the implementation process could be completed Took about 4 years before the implementation process could be completed Meet most of their ERP goals by the year 2000 Meet most of their ERP goals by the year 2000

8. Texas Instruments Overview and Goals Texas Instruments has: Texas Instruments has: 10,000 Employees 10,000 Employees 45,000 Products 45,000 Products 120,000 orders per month 120,000 orders per month $250,000,000 dollar budget for ERP implementation $250,000,000 dollar budget for ERP implementation Needed a information technology system that could continually meet customer and business needs. Needed a information technology system that could continually meet customer and business needs. Specific Goals of ERP implementation into Texas Instruments: Specific Goals of ERP implementation into Texas Instruments: To evolve process that support market trends Leverage E-commerce to link customers to Texas Instruments systems Base implementation on open hardware and software systems

9. Results of Implementation Negative Results Negative Results Productivity Dip Productivity Dip Due to specific learning curves the productivity dip slightly in the initial phase Due to specific learning curves the productivity dip slightly in the initial phase On time Delivery On time Delivery Did not achieve its goal of on-time delivery Did not achieve its goal of on-time delivery Due to market conditions TI booked more orders then they could deliver Due to market conditions TI booked more orders then they could deliver Positive Results Positive Results A Global System A single-instance, global system has transformed how TI does business Better Response 70% of business was conducted electronically Reduced order management costs by allowing all order access Inventory Reduction Increased out put by 5- 10% Thus reducing inventory by up to 15%

10. Conclusions Set out to achieve three goals: Set out to achieve three goals: Standardize process and information systems Standardize process and information systems Integrate manufacturing, procurement and logistics to support market trends Integrate manufacturing, procurement and logistics to support market trends Provide product visibility to customers and suppliers via the internet Provide product visibility to customers and suppliers via the internet All achieved and completed within four years All achieved and completed within four years Received ComputerWorld Smithsonian Award for their efforts. Received ComputerWorld Smithsonian Award for their efforts. Achievements; Achievements; System response time under three about 90% of the time System response time under three about 90% of the time 10,000 internal users 10,000 internal users 3,000 external users 3,000 external users 120,000 processed orders 120,000 processed orders 45,000 devices 45,000 devices

11. City of San Diego … Time for a Change? San Diego city government:7th largest employer in the county (11,000 employees, 22 departments) San Diego city government:7th largest employer in the county (11,000 employees, 22 departments) The city’s IT is run by three different groups, with no specific one in charge The city’s IT is run by three different groups, with no specific one in charge An IT department An IT department IT employees in different departments IT employees in different departments San Diego Data Processing Corp. San Diego Data Processing Corp. Current system was designed in 1978 Current system was designed in 1978 Numerous functions currently run independently (i.e. accounting, human resources) Numerous functions currently run independently (i.e. accounting, human resources) SD Union Tribune audit findings: current system defies efficiency and accountability SD Union Tribune audit findings: current system defies efficiency and accountability “a patchwork of mainframe computer programs, incompatible software and outdated machines” “a patchwork of mainframe computer programs, incompatible software and outdated machines”

12. The Proposed Solution: ERP Estimated Date of Full Installation: January 2009 Estimated Date of Full Installation: January 2009 Software Being Considered: Oracle and SAP Software Being Considered: Oracle and SAP The Cost: $36.5 million The Cost: $36.5 million Loan: $29.5 million from IBM Credit, LLC Loan: $29.5 million from IBM Credit, LLC Payable over 7 years Payable over 7 years Interest rate matching that of a 7-year treasury note Interest rate matching that of a 7-year treasury note $7 million cash from existing funds $7 million cash from existing funds

13. Will It Work? The acknowledged concerns: The acknowledged concerns: Cost overruns Cost overruns Lack of budget control Lack of budget control Shortage of staff to support implementation Shortage of staff to support implementation Will it work as advertised? Will it work as advertised? If a successful implementation were not achieved, at whose expense would it be?? If a successful implementation were not achieved, at whose expense would it be??

14. Any…. Questions? Questions? Comments? Comments? Concerns? Concerns? Constructive Criticisms? Constructive Criticisms? If not….Thank You!