1. Presented by Your Friends at Team Gold
“Putting the Enterprise into the Enterprise System” & Other ERP Insights
Presented by Your Friends at Team Gold

2. Big Picture
Enterprise Resource Planning (ERP) systems enable companies to “Integrate” data throughout the entire organization.
Typically Modular
Finance – Most popular
Human Resources
Operations and Logistics
Sales and Marketing

3. Suppliers Customers Managers Sales Force Back Office Central Database
Reporting Applications
Managers
Sales and Delivery Applications
Service Applications
Sales
Force
Inventory and
Supply Applications
Manufacturing Applications
Financial Applications
Back
Office
Central Database
Suppliers
Customers
Human Resource Applications
Employees

4. Fast Facts $10 billion per year industry
Major Software Suppliers/Integrators
SAP (e.g., NIKE, Weyerhaeuser/Norpac)
Baan
Oracle ( Used by Tektronix & Cisco in Cases)
PeopleSoft

5. The Promised Land Autodesk IBM’s Storage Systems Division Fujitsu
2 weeks shipping to 24 hours
IBM’s Storage Systems Division
Reprice time from 5 days to 5 minutes
22 day shipping to 3 days
Credit check from 20 min. to 3 sec.
Fujitsu
Order filling from 18 days to 1.5 days
Close financials from 8 days to 4 days

6. The Dark Side FoxMeyer Drug Mobil Europe Dow Chemical
Blames bankruptcy on ERP implementation
Mobil Europe
Abandoned implementation after $100 million
Dow Chemical
7 years, $500 million, then started over

7. Only Three to Six Months, Huh…
Time Issues
Be leery of short implementation estimates
Size of company
Modules to be installed
Standardization vs. Customization and time implications
How long to train staff after the initial implementation?
If, and how long, to run parallel legacy systems?

8. They have the time if you have the $$$
Cost of implementation
Modular Decisions
Big Bang
Franchising Success
Slam Dunk
Hidden Costs
Training of staff often miscalculated
Integration & Testing
Customization
Conversion of Existing data
Data Warehousing Costs
What is Ed Warnock’s true earning potential?

9. To customize or not to customize…
Standardization
Easier implementation (in relative terms!)
Consultancy less likely to be indefinite
Software upgrades and module additions handled in less time and expense
Is this really how we want out company to run though? Possible sacrifice of a competitive advantage!
Customization
Extended implementation (as well as maintenance…if it ever works)
Consultants will most likely move in for good
With upgrades or add-ons, the customization matrix has got to be reworked
It’s great, but can our people really work with this?

10. CIO ERP Thought: Why did I do it??
Organizational implications
Initial productivity losses
This doesn’t work like the old system!!
Panic by staffers.
Implementation is only the first step
Additional coding for reports, etc.
Ongoing maintenance
Employee retention
Positions backfilled
Poached by consulting firms

11. ROI? Yeah, not for a while yet…
Investment returns on ERP
Misconceptions of management
Possible positives (it could happen)
Integrated financial data great for roll-up
Heightened management of supply chain
Highly integrated information allow for great data mining and CRM by Sales & Marketing departments

12. CEO Thought: “What Happened?!?
The most successful ERP deployments involved companies that viewed them in strategic terms.
“ They stressed the enterprise, not the system.”
Main reason for “failures” is that companies fail to reconcile the technological needs of the ERP with the business needs of the enterprise.
“The logic of the system may conflict with the logic of the business.”

13. Key Learnings: Success Themes
Strong Corporate Leadership
Active Business Involvement
Excellent Project Management
‘Homework’ Prepared
Organizational Change Actively Managed
Corporate Leadership –
Active, involved sponsorship roles. (Makes the case for business change, eliminates barriers to progress including business redesign if necessary )
Scope, project pace, cost limitations, and standardization decisions made in context of business strategic goals.
Businesses –
Multi-level buy-in via negotiations to insure information flow to implement functional strategies supplied
Supply capable, credible resources full time for process reengineering to modify the business processes to fit the system
Project Management –
Business leaders actively involved in status of project
Project manager technically capable with previous ERP experience
Vendor is a “partner” in success of project
Homework –
Business processes mapped before hand
Clean legacy data and limited scope of data transferred to simplify early weeks of startup
Organizational Change Process
Plan for both technical and business process retraining
Change management training and “super user” resources to deal with “loss of competence” after ‘go live’

14. Key Learnings : Failure Themes
Conflict of business model with System model
Lack of User acceptance of Process Change
Budget and Schedule overruns
Availability of adequate skills
Technical Failures
Conflict of business model with System model – Did not recognize trade offs, didn’t deal with them, External environment changed
Lack of User acceptance of Process Change – Lack of recognition and planning for resistance to change and fear of change throughout organization.
Budget and Schedule overruns – Underestimate hidden project costs, especially with process reengineering, training, customization requests and legacy data clean up.
Availability of adequate skills – in company skills not developed, over reliance on consultants at exorbitant costs over time due to lack of disengagement plan
Technical Failures – Rollout to long and software became obsolete, cut over to complex at go live and data not clean or lack of complete testing prior to go live

15. Key Learnings: Summary
“ If the development of an enterprise system is not carefully controlled by management, management may soon find itself under control of the system.”
Before Decisions, should answer the following strategic questions:
What are the internal / external drivers for this change?
How might an ERP strengthen our competitive advantages? How might it erode them?
What will the system’s effect be on our organization & culture?
Do we implement a limited amount of modules or all of them? What pace of rollout?
For internationals; Is a global ERP better or regionalize it?

16. Questions to ask BEFORE an ERP
How will an ERP strengthen, or erode, our competitive advantage?
What will be the effect on our organization?
Do we need to implement the system across all functions, or can we implement only certain modules?
Are there other Enterprise systems which might suit our needs better?

17. What an ERP Won’t DO! ERP on its own will not improve processes
ERP will not reduce inventory
ERP will not embrace customization with easy upgrades
ERP will not yield immediate results
ERP will not revolutionize or revitalize your business

18. ERP – Wrap up Benefits: Costs:
Seamless integration of all company data - integration of data from all functional areas
Streamlines the company’s data flows and allows direct access to real time information
Costs:
Expensive Hidden costs
High costs to reorganize or redesign company processes

19. ERP – Future Highlights
Growth is forecasted to continue, although at a slower rate.
CRM and APS (advanced demand planning software) will be the new functional niche categories
ERP solutions will attempt to simplify their product offerings and implementation approaches as they move to smaller markets
ERP solutions will offer web-enhancements to their current systems