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Enterprise Resource Planning

Enterprise Resource Planning. Lori Martel. Hahn Shin. Ramkin Shetty. Dinesh Sekar. Table of Contents. Introduction Organizational & Technological Change Business Engineering Vs. Business Process Re-engineering Definition & ERP’s role in the Supply Chain Business Aspects

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Enterprise Resource Planning

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  1. Enterprise Resource Planning Lori Martel Hahn Shin Ramkin Shetty Dinesh Sekar

  2. Table of Contents • Introduction • Organizational & Technological Change • Business Engineering Vs. Business Process Re-engineering • Definition & ERP’s role in the Supply Chain • Business Aspects • ERP: Vendors, Comparison, Characteristics of ERP, • Applications and Advantages • SAP R/3 • Constraints: Business &Technical • Technical Aspects • Layer Architecture • Application Architecture • Customization • Industry Example: Quantum • Look into the Future

  3. Introduction Organizational Change Growing Competition Market Globalization need for flexible, integrated, and open software Decreasing Innovation Cycles Relationship Based Transactions Different Manufacturing Environments

  4. Introduction Organizational Change • Changes in Structure • Functional Vs. Process Based Structure • Value Chain Thinking Order Processing Product Development Customer Service Product Development Marketing & Sales Personnel Production

  5. Introduction Technological Change • 70’s Standard Software, Mainframe Systems • Separate Applications for business functions • 90’s Technological Trends • Client/Server Computing • Innovative process integrated business solutions • Open Systems • Increasing computing speed, GUI’s • Faster Data processing • Data Integration

  6. Use of Prototyping/Modeling • - Building Systems around Business • Automating Business Processes through IT BPR • Use of Blueprinting • - Designing & Integrating Business Processes • IT used as a Strategic Tool BE Introduction Business Re-engineering (BPR) Vs. Business Engineering (BE)

  7. ERP Definition - ERP is a software package integrating organizational business processes & data across the company Modeling all the processes Integrated views Quality, Cost, Delivery Effective use of resources BPR Integrating all the information Strategic use of IT BE EIS OA DSS MIS TPS SIS

  8. Role in Supply Chain Extended Supply Chain Management Supply Planning Demand Planning ERP Scheduling Logistics Internal Supply Chain Management External Suppliers External Customers Internal Suppliers Internal Customers ERP Coordinated Manufacturing ERP Plant Management MRP MRP

  9. Business Aspects Market Share of ERP Vendors

  10. Business Aspects Comparison of ERP Products High Rebuild Remain * R/3 J.D. Edwards * * Oracle * Peoplesoft Functionality * CA * Baan Review Reinforce Low Technology Low High

  11. Configuration - • 8,000 Tables set up by Programmers • Series of Switches • Requires Deep Understanding of • Existing Business Processes Characteristics • Modeling Business Processes and • Integrating through Software • NOT Multiple Packages Pieced together • through Complex Interfaces

  12. Business Aspects ERP in Industry Aerospace & Defense Automotive Chemicals Consumer Products Financial Services Healthcare High-Tech & Electronics Oil & Gas Pharmaceuticals Retail Telecommunications Utilities

  13. Business Aspects SAP - The Leader • Largest vendor of standard business application • R/3: Real-Time Version 3.0 • Client/Server enterprise application software • 6,000 companies, 50 countries • Companies in diverse businesses • 30 seats or installations with 3,000 end users • 800 predefined business processes

  14. Business Aspects SAP R/3 Business Framework • Business Components - Finance, HR, Logistics • Business Objects - Customer, Invoice • Business Information • Warehouse - Aggregate Internal & External Data • Business Engineer - Customization Tool • Integration Technologies (ALE)

  15. Business Aspects SAP Business Blueprint Event Driven Process Chain (EPC) ReferenceModel • Data Model • Business Object Model • Organization Model • Process Model • Distribution Model • Event • Function/Task • Organization • Communication - Repository Holds the Reference Model, Industry Specific Models & Enterprise Models

  16. Business Aspects Advantages of Component Based SAP R/3 Product • Fast • Flexibility • Expandable • Open • Industry Specific

  17. Business Aspects Advantages of ERP • Allows Companies to Adapt • to New Business Opportunities • Synchronous Transfer of Data • Encourages Multi-Disciplined Teamwork • Reduces Redundant Labor • Provides Standard Based Development Environment • Process Engineering Cost Benefits • Flattens Organizations to Increase Agility

  18. Business Aspects Business Disadvantages • Very Expensive • Every $1 Spent in Software Licenses - • $8 - $10 Spent on Consulting Support • Outside Consulting Fees can cost $1500/day • Requires Equipping employees with new skill sets • Hard to Keep Resources • Changing Business Processes to suit ERP/ can • Effect the Organization’s Culture • Can NOT Impose ERP Infrastructure on Company

  19. Business Aspects Technical Disadvantages • Lack of Flexibility • Complexity & Rigidity • High Implementation Time • Difficult in Decentralized Environments • Difficult Interfaces • Steep Learning Curve

  20. Program editor Interface builder Modeling tools Dictionary Repository Technical Aspects Layer Architecture Development workbench Applications Application Layer Middleware Middleware Basis Layer System software: GUI, DBMS, OS, N/W - Issues: Scalability, Portability, Interoperability & openness, Customizability, GUI, etc.

  21. System model SD CO AM Repository Business model MM FI WF Scope, Rules & Pattern DM IS PP HRM PS Business Kernel FM WFM Full Business QM PM DW Specific Situation Technical Aspects ApplicationArchitecture - Issues:1.Independent from all types of computers(UNIX, Window NT, AS/400, etc.), DBMS(Informix Online, Oracle 7, ADABAS, DB2, MS SQL Server 6.0, etc.), GUI flatform(OS/2 Presentation Mgr.., OSF/Motif, Macintosh, Windows, etc) 2. Independent from the country specific rules, languages, etc.

  22. Technical Aspects Customization: Support of initial implementation projects, follow-up projects, and release-change projects Implementation environment Procedure model Implementation guides Customized model Reference model: FM, PM, DM, IFM, OM, Comm. Model, Distr. Model Documentation Release management - Issues: Integrated customizing functions, quality assurance, etc.

  23. Industry Examples Objectives • Available-to-Promise (ATP), the real-time capability to take an order, schedule it to be delivered anywhere in the world and confirm delivery instantly • Ability to determine what was actually in inventory or in production and how much of it had been promised to other customers

  24. Industry Examples Scope • Based on the full suite of Oracle Corp.'s manufacturing and operations applications • 750 users in 25 locations worldwide • To adopt Big-bang approach • One of the largest distributed business systems to go live worldwide at one time • HP9000 hardware, HP UX operating system (10.1) and Oracle Release 10.4

  25. Industry Examples Pre-Implementation Assessment • Legacy system-based MRP system in use • Each division's business transactions in separate databases by business unit, and by function within a unit • Databases couldn't share information

  26. Industry Examples Project Planning & Control • Project team members pulled from regular jobs & relocated to “Building 12” • “Building 12” essentially set up a scaled-down business model of Quantum • Team members play-acted their real-life roles • Improved business processes and wrote requirements for the new system

  27. Industry Examples Implementation Process • Packaged available applications & selected Oracle applications • Consultants from Price Waterhouse and Oracle, installed the software & began pilot projects • Complexity and magnitude of the project quadrupled (Digital Disk drive division acquisition) • Conference room pilots tests

  28. Industry Examples Human (HR) Side • Locally trained about 100 users from all over the world and flew them into Milpitas to run a full-scale system simulation • Sponsored massive user training - users had to pass a test before returning to their jobs • Ran Internal PR campaign- Entailed group meetings, presentations,an intranet site and events emphasizing system's importance

  29. Industry Examples Project Statistics • October 1992 - May 1996 • 16 full time managers • 100 person multidisciplinary team • 1,632 meetings • 79 shouting matches • 800GB of disk space • 18,064 miles of cable • 300,000 cups of coffee • 58,000 e-mails • 7,503 cases of beer • 1.62 million miles of air travel

  30. Future Aspects A Look to the Future • Targeting Small & Medium Enterprises • Addition of Simple GUI based • development Tools • Strategic Alliances • - Andersen Consulting & SAP • - IBM & J.D. Edwards • - GE & Oracle Business • Supply Chain Management • Internet Enabled • Workflow Management • Resource Planning • Data Warehousing Technology

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