1. Enterprise Business Processes and Applications (IS 6006) Masters in Business Information Systems 13 th Jan 2009 Fergal Carton Business Information Systems

2. Last week Review of topics covered in first term Integration = how far IS supports decisions Decoupling point = where IS stop –Because it doesn’t work / has broken down / is too slow (technical problem) –Because human judgement necessary (decision complexity problem) –Because people want some room for manoeuvre (behavioural problem) RICE: development work for ERP projects –Cost is in person days –Comes in addition to software licence costs –If it touches ERD, vendors won’t do it or make it exorbitantly expensive Gap analysis (UCC example) –Expense claim processing demo: significance No power users, no training, frosty reception to change among depts –Difference between package and requirements –Highly detailed, relies on good faith of vendor, difficult to test in anger –Difficult to identify in advance unique ways of doing things No sales orders at UCC for revenue Line item independence at EMC Shipping discounted line items instead of standard price

3. This week Single instance ERP systems Hardwiring processes Impact for subsidiaries Data integrity issues Agressso project issues UCC requirements document (hand-out) UCC payment schedules Scope definitions

4. Room for manoeuvre = moving away from systems for decisions GSK –Use of KanBan cards for production control EMC –Sales order forecasts unreliable –Sales order allocation on best deals …

5. Single instance One system clock One copy of the production data One version of master data One transaction engine One database administrator

6. ERP is often single instance Single point of data entry (PO’s, SO’s, …) Inventory control Opportunity to re-design processes Single technical platform (support) Common language, common pool of data SalesShippingCollect cashProduction Customer information (ship-to, bill-to, install-at, …)

7. Human decisions replaced by data and interfaces –An approved sales order triggers the creation of an invoice (running Accounts Receivable “interface”) –A production schedule triggers the creation of work orders –A batch release from warehouse triggers quality checks –A component quality failure triggers purge on all inventory –An incomplete payment triggers a debit note –An unpaid invoice triggers a reminder letter –… ERP “hardwires” processes Increased focus on data!

8. Single instance scenario: SIT ERP database is in Boston 43 countries linked via Wide Area Network 4,500 users (# concurrent users?) 20,000 customer records (all countries) 10,000 supplier records 1,400 products in price book 10,000 shipments per quarter (for one plant)

9. Impact for subsidiaries: the good news Complete conformance to HQ standards No need to re-work local data for HQ Little local IT support required for ERP Real time visibility of worldwide operations Closing the books quickly (2-5 days)

10. Impact for subsidiaries: the bad news Gap between template process & reality –Workarounds can be onerous System response time degradation Support structure is centralised Lack of transparency of transactions –Transactions can get stuck in interface Inability to access data for reporting

11. Data integrity issues Forecast figures versus plan Buffer stocks (GSK) Multiple repositories of customer data (EMC) Multiple repositories of product data (GSK) Sales holding back on deals (EMC) Lack of faith in orders (EMC)

12. Data integrity issues eg. customers When creating a new customer, who has control? 42 occurrences of one customer in your database, why? Customers exist in ERP core database, but also in several legacy systems. How do you make sure they are in synch? Different depts. require and record different addresses for same customer (ship-to, bill-to, install-at, …)

13. SIT production planning: single instance impact? Planning extremely manual (Excel based) By definition planning is by plant (local) What impact would a global single instance system have? –Customer benefit? –Efficiency gain?

14. GAP analysis = setting the scope Reconciling technological necessities of the system with business needs ERP systems impose their own logic Balancing the way you want to work with the way the system will let you work 2 stage model for scope decisions –Choice of modules (Purchasing, AP, …) –Configuring the system to your way of working Davenport, 1998

15. Other scope definitions Number of modules Number of functional units affected Number of sites Extent of customisation Number of interfaces with legacy applications Bingi, 1999

16. UCC Finance – Phase 1 General Ledger Accounts Payable Accounts Receivable PurchasingCash Fixed Assets Budgeting and Forecasting Reporting

17. UCC Finance payment schedule

18. UCC revenue clarity

19. Analysing Fit Functionality grid Break down per functional area Down to process stage level Ask vendors to rate fit –Not supported –Supported with mod / workaround –Supported with minor alteration –Fully supported Score and recommend (see diagram)

20. UCC Finance - modules General Ledger Accounts Payable/Creditors ledger including Tax Compliance Reporting Accounts Receivable/Debtors ledger/Invoicing Procurement Management Purchase Order Processing Cash Book, Cash Receipts, Cash Forecasting Capital Project Accounting Fixed Asset Register and Management Research Accounting Budgeting and Forecasting Tax Compliance & Reporting Costing Report Writers System Manager