1. Enterprise Resource Planning December 4, 2006
Jun Han
Rongbi Liu
Brandon Swanner
Shicheng Yang
Brandon: Introductions & overview of what will be discussed

2. Overview 1
What? 2
Why? 3
How? 4
Case study

3. What is ERP? Outline Definition Understanding ERP Framework & Modules
History of ERP

4. Source: Christopher Koch “The ABCs of ERP” http:// www.CIO.com
Definition of ERP
A software that attempts to integrate
all departments and functions across
a company onto a single computer system that can serve all those departments’ particular needs.
Source: Christopher Koch “The ABCs of ERP”

5. Service representative
Before
Demand Planner
Sales representative
Sales/Marketing system
Financial system
Accountant
Operations
Service representative
Logistics/Manufacturing system
Customer service
Source: David Simchi-Levi, etc “designing and Managing the Supply Chain”, first edition

6. An example---Order fulfillment
Source:

7. Service representative
After
Sales representative
Demand Planning
Financing
Single-point-
of-contact
Procurement
Controlling
Manufacturing
Service representative
Distribution
Source: David Simchi-Levi, etc “designing and Managing the Supply Chain”, first edition

8. An example---Order fulfillment
Source: T. Davenport “putting the enterprise into the enterprise system” HBR 1998

9. ERP Philosophy
sales
Pur.
Mfg.
Log.

10. Core Components of ERP …… Sales and marketing Master scheduling
Purchasing
Bill of materials
Materials requirements planning
Capacity requirements planning
Accounts payable/receivable
Distribution ……

11. Source: http://www.crisoft.ro/Engleza/prod&serv/cros.html
Interface of Modules
Source:

12. Enterprise Applications Interface Landscape
analytical
tools
SCM
Inter-organization
ERP
Intra-organization
CRM
Inter-organization
Front office system
Back office system
Front office system

13. Enterprise Applications Architecture
Business Excellence
DSS
DSS BI BI
E-C …… ……
ERP
Infrastructure

14. Standardization / Integration
IT system goals
Collect
Access
Analyze
Goals
Standardization / Integration
Infrastructure
E-Commerce
Analytical Tools
Means
Source: David Simchi-Levi, etc “designing and Managing the Supply Chain” first edition

15. Expansion
ERP
MRPⅡ
MRP IC
1960s
1970s
1980s
1990s

16. ERP 1
What? 2
Why? 3
How? 4
Case study

17. Why ERP? ERP enabler Benefit Current status Metrics to success
Solution

18. To Keep Ahead Of Competition!
To make use of the advantages of ERP!
To enhance the core competency!

19. How can ERP help you ? ---Integration of Information Systems
Headquarter
Information
systems
Project Mgmt
Inventory
Purchasing
Sales
Budget
Cash Management
Manufacturing
Local purchasing, invoice verification
Inventory management
Internal sales, shipping and billing
Profit/loss
Capacity utilization
Marketing/Sales
Sales, shipping and billing
Purchasing of trading goods
Inventory Management
Customer service

20. How can ERP help you ? ---Streamline or Reengineering Process
Source: Gargeya, Vidyaranya, & Brady, Cydnee (2005). “Success and failure factors of adopting SAP in ERP system implementation,” Business Process Management Journal, 11(5), pp

21. Metrics Tied to Success
Sample:N>500
Source :

22. The Percentage and Age of ERP Implementations
91% of the sample (n>500) have implemented ERP(including MRP)
24% of them still had the first ERP system implemented
42% of their current ERP had replaced home-grown or custom developed applications
Only 34% of their current implementation as a replacement of another ERP.
Source :

23. The Number of ERP Packages Implemented
(Total sample n>500,large company 9%,mid-size:51%)
As ERP implementations have been aging ,they also been proliferating
71% of large companies have two or more ERP packages implemented across the enterprise and 26% with four or more.
(large company is the revenue over 1b,small company with revenues less than $50M.).
Source:

24. Current Release Status
Sample n>500
77% of respondents were not currently implemented on the latest release
Only 23% of respondents were currently implemented on the latest release.
Source:

25. Versions – Plan of Action
Total sample n>500,<2yrs:9%,2~5yrs:18%,5~10yrs:33%,10~15yrs:18%,>15yrs:13%
In the aggregate 40% anticipate keeping current versions of existing
implementations
14% across all companies have a replacement strategy
Almost 45% plan to upgrade to latest release.
Source:

26. The Factors Impacting ERP Strategies
For the aging and proliferation of ERP and its consolidating market,what business drivers are impacting the formulation of ERP strategies?
Source:

27. ERP 1
What? 2
Why? 3
How? 4
Case study

28. Source: http://www.erpfans.com
Do We Make or Buy
In house development
ERP package
Time consuming
Ready made projects
Needs only customization
Documentation is difficult
Documentation is part of system
Maintenance depends on individuals
Company takes care of
EDI modification to be taken of
EDI compatible
Each unit follows different software option
The package itself is designed as enterprise package
Latest developments to be studied before implementation
Constant updates assured
Source:

29. ERP Implementation Challenges and Responses
Source : AberdeenGroup 2006,

30. ERP Implementation - Considerations
Important factors; Success or Failure?
Definitions, spectrum?
Needs of the company
Complexity of the ERP
Phased vs “Big Bang”
Scope Creep
Source: Gargeya, Vidyaranya, & Brady, Cydnee (2005). “Success and failure factors of adopting SAP in ERP system implementation,” Business Process Management Journal, 11(5), pp

31. ERP Implementation – 6 Factors
Six factors – SAP study
Source: Gargeya, Vidyaranya, & Brady, Cydnee (2005). “Success and failure factors of adopting SAP in ERP system implementation,” Business Process Management Journal, 11(5), pp

32. Source: http://www.networkworld.com/news/2005/061505-sap-erp.html
Top 5 in revenue
Y1999, account for 59%
J.D. Edwards
Baan
Oracle
PeopleSoft
SAP
Y2005, account for 72%
SAP
Oracle
Sage Group
Microsoft
SSA Global
Source:

33. Source: http://www.amrresearch.com/Content/view.asp?pmillid=19840
Top 5 Revenue Share
Source:

34. http://www.oracle.com/corporate /story.html?_template=/ocom/printocom
- Just the Facts
Founded 1977
55,000 + employees
Used in 98 of the Fortune 100 companies
Market share
Innovation
100% Internet
Acquisition of PeopleSoft
2006 – $19.5 billion for acquiring PeopleSoft and Siebel Systems
Peoplesoft Benefits – more competitive, larer R&D budget – according to PeopleSofts FAQ
/story.html?_template=/ocom/printocom

35. - Choices Oracle e-Business suite - City of Memphis
PeopleSoft Enterprise
JD Edwards Enterprise One
JD Edwards World
Siebel
Business Benefits
• Faster, more flexible reporting improves financial analysis and decision making.
• Real-time visibility into sales and inventories supports fast-paced growth.
• Data integrity strengthens management reporting and compliance with International Financial Reporting Standards.
• Built-in controls deliver stronger internal control and accountability.
• Unified view into sales and inventories reduces key operational risks around seasonality, commodity price fluctuations, and competitive pricing.
• One-step execution of pick and pick confirm.
• Improved inventory accuracy and customer satisfaction.
Quantifiable Benefits
• 50 percent reduction in monthly close time.
• 99 percent inventory accuracy benchmark.
Accessed 11/30/06
Accessed 12/1/06

36. http://www.sap.com/usa/company/index.epx; Accessed 11/30/06
- Just the Facts
Systems, Applications, & Products in Data Processing
Founded 1972
Based in Germany
38,400 employees in 50 countries
36,200 customers
12 million users
100,600 installations
Market share – 29%
2006 – $19.5 billion for acquiring PeopleSoft and Siebel Systems
Peoplesoft Benefits – more competitive, larer R&D budget – according to PeopleSofts FAQ
Accessed 11/30/06
SAP, Annual report: annualreport/2005/pdf/2005_SAP_Annual_Report.pdf

37. - Choices Powered by NetWeaver mySAP Business Suite/All-in-One
mySAP Business One
Duet
Joint effort – SAP and Microsoft
SAP xApps Composite Applications
Demo -
Other companies
PepsiCo, Tyson Foods, U.S. Department of the Interior
MySAP All-in-One
Results
• 75% reduction in payroll processing time
(from 12 hours to less than 3 hours)
• 90% reduction in time evaluation
(from 3 hours to 20 minutes)
• 750,000-hour reduction in key program run times
per year, leading to savings of more than 100,000
work hours per year
• Reduction of year-end downtime from 1 week to
several hours
• Improvement in ability to quickly generate reports
• Support for future growth and expansion
• Streamlining of business processes
• Restoration of user confidence
mySAP Business One
• 29.3% annual ROI
• 35-month payback period
• 31.8% internal rate of return over 3 years
• 20% increase in overall operational efficiency
• 20% improvement in inventory control in the same
year as the implementation
• 2-day decrease in the turnaround time for reports
• Reduced service time for customer queries and
paperwork
• Improved production forecasts and data required to
help top management with the decision-making
process
• Increased customs benefits offered by the Chinese
government
• Increased information accessibility and availability
and financial savings
Duet – the result of a joing venture between SAP and Microsoft, so that it works seamlessly with MS Office.
SAP xApps Composite Applications
SAP xApp Resource and Portfolio Management (SAP xRPM) -- Improves the performance of your portfolio and aligns it with organizational objectives for new product development, IT, Six Sigma, and services across your entire enterprise

38. The best-run businesses run SAP!
SAP Business Modules
The best-run businesses run SAP!
Source: ttp://

39. ♫ Hey Big Vendor...♫ - What is the Difference?
Started as individual, specific applications
SAP is the leader – superior marketing?
Unique products?
SAP – integration
Acquire vs. expand
Source: Hill, Sidney (2004). “The Big Three: market powers, distinctly different, MSI. Vol 22(5), p 46

40. ♫ Hey Big Vendor...♫ - What is the Difference?
ERP Customer Survey -
Mid-market – better scores
Why?
Small – better scores

41. ERP 1
What? 2
Why? 3
How? 4
Case study

42. Case Studies
Few companies are making full use of their enterprise resource planning systems, despite the high cost of the software and the length of time an implementation can take
In a survey of 100 global or panEuropean companies by PMP Research, just 5% of those polled said they were using their ERP software to its full extent.
Most users customise the software, with only 12% installing ERP packages "out of the box". Once installed, more than 50% of companies said it was hard to make changes to ERP software in order to meet any changes in business processes or requirements.
more than 50% of the companies surveyed did not measure their return on investment from business applications,
Few companies are making full use of their enterprise resource planning systems, despite the high cost of the software and the length of time an implementation can take
In a survey of 100 global or panEuropean companies by PMP Research, just 5% of those polled said they were using their ERP software to its full extent.
Most users customise the software, with only 12% installing ERP packages "out of the box". Once installed, more than 50% of companies said it was hard to make changes to ERP software in order to meet any changes in business processes or requirements.
more than 50% of the companies surveyed did not measure their return on investment from business applications,
Arif Mohamed. Firms failing to fully exploit ERP systems  Computer Weekly. Sutton: Jan 17, 2006. pg. 8, 1 pgs

43. Case 1 – The Hershey Company
History and Background
Founded in 1893; largest chocolate producer in US
Revenue = $4 Billion
Employees = 13,000 in 90 countries
First ERP attempt in 1999
Cost = $120 Million
Malfunction
Source:
Failed ERP gamble haunts Hershey, Computerworld; Framingham; Nov 1, 1999; Craig Stedman;

44. ERP Software – SAP, Siebel, and Manugistics
In 1999 Hershey deployed a $112 million dollar ERP system made up of parts from SAP, Siebel, and Manugistics.
SAP - main components of the system
Siebel – Customer relationship management (CRM)
Manugistics - Supply chain management (SCM)
Failed ERP gamble haunts Hershey, Computerworld; Framingham; Nov 1, 1999; Craig Stedman;

45. What Went Wrong? Mistakes Outcomes
Scheduled for 4 years; reduced to 30 months
Decided to go live in July for Halloween,
“Big Bang” implementation
Outcomes
Could not deliver all orders on time
19% sales loss for Halloween & Christmas seasons
12% revenue loss for 1999
Stock price fell 8% due to reduced investor confidence
Reduced analyst confidence
Failed ERP gamble haunts Hershey, Computerworld; Framingham; Nov 1, 1999; Craig Stedman;

46. Lessons Learned
Hershey didn’t seem to need this ERP system implemented so quickly, and certainly didn’t plan accordingly.
Don’t rollout an ERP system before a critical business season.
The system provided by 3 different vendors should be rolled out in a more staggered fashion.
One rollout at a time
Time needed for training
Successful upgrade 3 years later in 2002
Source: ; Accessed on November 25, 2006.

47. Case 2 - KV History & Background Started more than six decades ago.
Offers 15 drug delivery technologies, in four principal areas, used in most of the company's more than 130 generic and non-branded drugs and 14 branded drugs that are sold today.
Net revenue (2006) = approx. $400 Million

48. IT and Business Department
There are about 50 employees in IT department.
There are about 8.6 million budget.
There are about 1100 computers
Today KV has more than 1,000,000 square feet of predominantly owned facility space located in 15 different locations.
Vice president (CIO) in Business Technology (IT) directly report to senior vice president and/or CEO

49. JD Edwards World at KV Implementation began 2000
Implementation finished 2003
Implementation fees = approx. $3 Million
License fees = approx. $1 Million
Ongoing cost of approx. $1 Million
Updated from A7.1 service pack to A8.1 service pack in 2006
About 900 users in 15 locations

50. JD Edwards at KV

51. ERP at KV
JD Edwards World was built for the IBM iSeries (AS/400) platform,
JD Edwards Worlds includes Financials, Purchasing, Manufacturing, Sales&Distribution, Inventory, Fixed Assets, Human Resources and Returns
ACOM, Varsity, Ingas, Kronos,

52. JD Edwards World A8.1 Distribution / Logistics
Repetitive, Process, & Improved Enablement of Lean Manufacturing & Distribution
Load & Delivery Management / Bulk Processing
Electronic Commerce
Financial Consolidations
World A8.1 is the platform for strategic enhancements going forward, the first of which is a new version of World planned for late 2006.
J.D. Edwards had two, related messages about World software. We had assumed that all customers would eventually migrate to OneWorld®. OneWorld® and World were co-existent through A / OneWorld® Xe in order to facilitate this migration. We advised customers to avoid A8.1, which was not co-existent, because it would be more difficult to migrate from A8.1 to OneWorld®. We described A8.1 as a “dead-end” release, with no future.
Most World customers internalized the second message, so that no one considered A8.1 as a viable option. Most World customers heard and ignored the first message, since they could find no business reason to migrate to OneWorld®. The PeopleSoft survey demonstrates the futility of using marketing to motivate people to do something they do not want to do. After several years of being told that they had to migrate to OneWorld® and getting few enhancements to World, most World customers had no intention of changing their World software in the near future. The value proposition of World Software is very compelling; rich functionality, with minimal administrative costs and few bugs
Both PeopleSoft and Oracle management have recognized that the World customer base is very attached to the product. They are unwilling to abandon those customers. The change in policy has given new life to World Software. The previous slides have focused on the reasons an upgrade to A8.1 should be considered. Now we should examine the reasons that an upgrade to A8.1 makes sense for most customers.
A8.1 has more functionality than A7.3. This functionality is available immediately. The enhancements to manufacturing and distribution are particularly significant. In particular, there is functionality to support “lean” operations that is not available in A7.3. It is important to note that all fixes and most of the enhancements that have been made to A7.3 have also been made to A8.1. The significant enhancements to A7.3, that have not yet been applied to A8.1, are the self service applications, the product catalog functionality and batch MRP message processing.
A8.1 will get more enhancements in the future. We have many A7.3 customers who have modifications and interfaces built around the A7.3 database. These customers do not want to be forced to re-write those modifications and interfaces by changes to the database. We cannot put significant enhancements, such as the re-design of address book, into A7.3. Potentially disruptive enhancements can only be made in A8.1.
The upgrade to A8.1 will require about the same effort as an upgrade to a current service pack of A7.3. Any modifications will have to be re-applied in either upgrade. The program names and file names will be the same, so the analysis time will not be different. The cutover to A8.1 will require that some files be converted to new formats, but we provide scripts to do that.

53. Outcomes With ERP to automate processes, the benefits are as follows:
Increase inventory turns
Increase inventory accuracy rate
Reduce inventory costs
Improve customer service
Reduce setup times
Reduce paper work reduced.
Provide a unified customer database usable by all applications
Provide greater and effective control on account.
Faster response and follow ups to customers
Improves supply demand linkage with remote locations and branches in different locations

54. Case 3 - ALMAB History & Background
Almab, a pseudo-name, is a leading newspaper company that operates in one of the Asian countries.
Headquartered in the Capital with 52 offices in more than eleven major cities.
Publishes more than 67 publications nationwide and has the highest number of readers among the English publications in the country.
Over 80% of Almab's revenue is generated from advertising.
Source: Business Transformation Through ERP: A Case Study of an Asian Company Alemayehu Molla, Arjun Bhalla. Journal of Information Technology Case and Application Research. Marietta: Vol. 8, Iss. 1; p. 34 (21 pages)

55. Research Questions Research questions addressed in this paper are:
(1) What are important contextual characteristics that influence transformation?
(2) What are organizational dynamics that are key indicators that transformation is happening?
(3) What key lessons can be drawn in terms of achieving and sustaining Information Technology (IT)-enabled organizational transformation?

56. THE SEVEN "S" FRAMEWORK
The role of IT in organizational transformation can be captured in terms of its influence on key organizational dimensions outlined as Seven "S"s - strategy, structure, systems, staff, skill, style, and shared values.
The Seven S framework stresses that organizational effectiveness depends on the interaction between all the Ss of an organization. These elements are interconnected and must be coordinated properly to avoid conflicts and bottlenecks.

57. ERP Implementation
SAP implementation began in the first quarter of 2000.
The main departments to be integrated via the implementation were the Classifieds, Display, Finance, Production and Print departments
An implementation team comprised of senior managers, heads of various departments.
Users from various departments were brought to the head office to test the system and participate in the training of trainers.
The system went live on time after 14 months in the 2nd quarter of 2001.

58. Data Collection and Analysis
The data were collected using
Retrospective participant observation
Based on experiences at ALMAB over 3 years
Unstructured interview and
Document analysis – Seven “S”
Strategy
Structure
System
Staff
Skill
Style
Shared value

59. Pre-ERP Data Transfer

60. Post-ERP Data Transfer

61. Pre and Post-ERP Comparison

62. Pre and Post-ERP Comparison -Continued

63. Practical Implications - Six Practical Lessons
Mustering the momentum for transformation
Effective managerial coordination
Investing in human resources development
Building mutual relationship within and with partner organizations and understanding of the organizational processes
Assimilation of ERP
Emphasis placed on organizational learning

64. Conclusion
It might be difficult to put a dollar value on the benefits that can be derived from ERP.
The business transformation of Almab is greatly enabled by ERP but its cause might not necessarily be attributed to ERP only.
The Seven S dimensions provide an effective utility to conduct such observations.
As a result, Almab's senior mangers believe that the ERP system has provided them with significant competitive gains in terms of "speed, efficiency and turnaround time".

65. Case Comparisons Case 1 - Hershey Case 2 -KV Case 3 - Almab Revenue
~$ 4 billion
~$ 400 million
~ $ 1 billion
Reason for ERP
Not clear. Replace legacy systems to provide global business processes
Replace legacy systems to provide integration processes
Replace legacy systems to provide business processes
Cost of ERP
$ 112 million
3 - 5 million
N/A
Time
Scheduled 4 years Actually 30 months
~ 2 years
14 month
Outcomes
Malfunction
Cause order-processing problems
Success
Provide a unified customer database usable by all applications
Faster response and follow ups to customers
Improves supply demand linkage
Increase in inventory turns
Reduction in administration costs
Better order fulfillment rates
Business Transformation
Significant

66. The Future of ERP
Source: Accessed on December 2, 2006.

67. The Future Ultimate goal – All for one
Open one application and get whatever information you need.
Big vendors “fishing in smaller ponds”
Creativity and innovation rather than current product
Source: Accessed on December 2, 2006.