Enterprise Resource Planning & Management
Oct-Nov09 N Raveendran General Manager Enterprise wide solutions Sakthi Finance Ltd., Coimbatore [email protected]
The class room approach
With practical examples Very theoretical - Should be interactive Syllabus focused Doubts have to be cleared for the benefit of all More homework to be done by the students Theory to be covered using multiple books Extra study materials to be provided, wherever necessary
Team Formation
For Functional representation Finance Manufacturing Distribution & Logistics Sales & marketing To handle business cases
SESSION PLAN
Sl.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24-27
Topic Course Introduction. An Overview of ERP What is an ERP System A tour of an ERP System IT strategy and ERP fit Impact of ERP on Finance Impact of ERP on Manufacturing Impact of ERP on Distribution /Logistics Impact of ERP on Sales and Marketing SAP Basics Windows / Training / User Group Re-engineering and ERP Preparing for ERP Implementation Focus As Is Picture To Be Design Construction / Testing / Implementation Managing the Implementation process: Partners in Implementation Change Management Team formation and development Risk Management Project and Program Management
Changes in Users and IT Roles
Readings Lecture Notes
TB 1 pp 1-11, TB 2 Ch. 1 & 7
Bancroft Ch. 1 Norris Ch. 2 Norris Ch. 3 Norris Ch. 4 Norris Ch. 4 Norris Ch. 4 Bancroft Ch. 2 Bancroft Ch. 5 Bancroft Ch. 6 Bancroft Ch. 7 Bancroft Ch. 8 Bancroft Ch. 9 Bancroft Ch. 10 Norris Ch. 9 Bancroft Ch. 11 Bancroft Ch. 12 Norris Ch. 13 Norris Ch. 14
Bancroft Ch. 13
Integration Management Lessons Learnt Project Report presentations
Norris Ch. 20
Bancroft Ch. 14
Presentation - Path
ERP General Concepts ERP based applications - Options ERP @ Pricol A case Beyond ERP Overall Summary - Recap
World without computer engineers
ERP General Concepts
ERP General Concepts
Enterprise Resource Planning
What is ERP? The Current Scenario Why ERP? Definition Evolution Expectations BPR & ERP BPR The Steps
What is ERP?
Enterprise Resource Planning
ERP is a solution, which facilitates company-wide integrated information systems, covering all functional areas performs core Corporate activities and increases customer service augmenting Corporate Image
The Current Scenario
Enterprise Resource Planning
Islands of Information Difficult to get timely & accurate information Heterogeneous Hardware & Software platforms & practices Poor connectivity between different organizational locations Sticking with obsolete technology Resist to change Lack of proven man-power to develop integrated software
Information Islands [existing]
Planning Human Resources Production
Sales
Materials
Finance
Information @ an Enterprise [Need to be]
Planning Human Resources Production
Sales
Finance Materials
Why ERP?
Enterprise Resource Planning
For Management to know what is happening in the company One integrated solution for better Management Transparency of Information thro single data source For cycle time reduction To achieve cost control & low working capital To marry latest technologies To shun the geographical gaps To satisfy the customers with high expectations To be Competitive & for survival
ERP - Definition
Enterprise Resource Planning
Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform
ERP - Definition
Enterprise Resource Planning
[As per Frost & Sullivan]
Enterprise Resource Planning (ERP), is a software driven business management system which integrates all the facets of business, including planning, manufacturing, sales and marketing. ERP as a business solution aims to help the management by setting better business practice and equipping them with the right information to take timely decision
Evolution of ERP
Enterprise Resource Planning
1960s - Systems Just for Inventory Control 1970s - MRP Material Requirement Planning (Inventory with material planning & procurement) 1980s - MRP II Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.) Mid 1990s - ERP Enterprise Resource Planning (Covering all the activities of an Enterprise) 2000 onwards ERP II Collaborative Commerce (Extending ERP to external business entities)
BPR & ERP
Business Process Re-engineering
Just automating the existing business practices will not help ERP to achieve the anticipated results because, OO + NT = EOO Business Process Re-engineering [BPR] brings out the deficiencies of the existing setup BPR and ERP will give way to implement new systems and the long pending improvements in the existing systems BPR may be time consuming but the scope can be restricted & controlled by the Management
BPR - Steps
Business Process Re-engineering
Step 1
Step 2
Step 3
Understand Simplify/Improve Automate
Understand the existing systems associated with all the functionalities Draft & frame the Implement possibilities & ways with the help to simplify or of ERP Improve or eliminate the processes
ERP for an Enterprise The options
Just to Relax
Crazy Maths
ERP Options
Enterprise Resource Planning
OPTION 1 MAKE [Using Internal resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department OPTION 2 - BUY Going for Tailor-made ERP packages available in the market like SAP, Oracle applications, Baan, PeopleSoft etc. OPTION 3 MAKE [using External resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a software solution provider
Building ERP solutions using Internal Sources
ERP Building using Internal resources The Facts
Lack of adequate & qualified manpower Not driven with clear focus on expectations, time & cost Poor software project management Lack of seriousness with the Management & the IT Team High employee turnover Lot of schedule gaps during Project execution Normally project life is more Frequent change in the scope with the approval of the Management
Tailor-made ERP Solutions
About
Generalized off the shelf application s/w packages Modules based on rich functionalities for all business functions User tested with lot of installations No lead time requirement for software development Tuned for more users/networks with adequate & inbuilt security Parameterized for flexibility Can sit on latest hardware & software platforms Upgradation of functionalities with version control
Tailor-made ERP solutions
Execution phases
Tailor-made ERP solutions
ERP product selection Preparations Production Implementation Post-Implementation
ERP Product selection Phase
Tailor-made ERP solutions
ERP Team formation for selection Appointment of Consultants [if needed] Scoping study Product selection Implementation partners selection Hardware/Communication cost estimation
ERP Product selection Criteria
Goal: To select the Most Suitable Software Package Solution Functionality
5 Strategic Requirement Levels
Technology
Vendor
Support
Costs
Reputed ERP Products
Tailor-made ERP solutions
[partial list]
[MFG Pro]
[Ax/Nav/GP]
[Ver 9.0]
Preparation Phase
Tailor-made ERP solutions
Framing ERP Implementation Strategies Formation of Apex & Steering committees Functional & IT team formation Training on ERP functions & features Scope finalization [as is & to be] GAP analysis Action plan to resolve the gaps
ERP product acceptance - options
Tailor-made ERP solutions
1. Adapting directly, all the functions available in the ERP Product [Applicable for startup companies] 2. Change the way the firm does the business to fit the product [Compromising] 3. Customize the ERP product to suit the business Processes. [Customization]
GAP Analysis
Tailor-made ERP solutions
This is the process to identity the gaps by mapping the expectations of the company with the capabilities of the ERP product Results of Gap Analysis Directly Supported Workaround suggested Extension required Change in business process suggested Not fully supported Manual not under the scope of ERP
Production Phase
Tailor-made ERP solutions
Installing the ERP software & hardware Tuning the ERP software to meet the customization needs Master & Control data arrival as per the Product data structures Location & people specific roles & rights allocation for module access & security
Implementation Phase
Tailor-made ERP solutions
Conference Room Pilot [Parallel run] Resolving the Parallel run issues Training the end users Live run
Post-Implementation Phase
Tailor-made ERP solutions
Regular monitoring Tuning [hardware/software] for patching the performance issues Maintenance
Pitfalls & Points of concern
Costly comparing to custom-built options Lot of hidden costs Chances of cost & time overrun are high The Level of customization/Indianization Compulsion to pay for redundant modules/features Vigorous involvement of all during implementation Non-availability of special practices like Customer Complaint, Logistics Linking historical data offline & painful The requirement of Change Management is a must Dependency on outsiders is high IT department Poor grip on the Implemented systems
Tailor-made ERP solutions
Critical Success Factors
Tailor-made ERP solutions
The firm & optimistic approach of the Management - on adapting the ERP product driven methodologies - on customization - on monetary commitments The dedicated Team ? Good Training Strict adherence to the Project schedules Right technical infra-structure Change Management
Just to Relax
Go
The cheapest car is Tata Nano Do you want to see the Cheapest Bike?
Custom-built ERP Solutions using external resources
Building ERP using Ext.sources
About this option The Principle! The Steps Why? Points of Concern Software Vendor selection Critical Success factors
About
Custom-Built ERP solutions
Here the whole package is designed & built by keeping a specific enterprise & its business Practices in mind by incorporating the improvements/additions with due integration without compromising or changing the current way of doing the business and providing flexibility to accommodate your business fluctuations
The Principle!
Custom-Built ERP solutions
The best as seen elsewhere, need not be the the best for you. What is your best is what can be successfully implemented
The Steps
Custom-Built ERP solutions
1. Software vendor selection 2. Detailed study by the vendor 3. Scope & platform finalization 4. Freezing the commercials 5. Development 6. Hardware addition/upgradation 7. Old master/transaction data migration 8. Parallel run with Integration & connectivity check 9. Implementation 10. Maintenance
Why?
Custom-Built ERP solutions
Very economical while comparing the cost of implementing tailor-made ERP solutions Less prone for hidden-cost hits The company can opt for its choice of Hardware, Software & communication platforms based on the skill availability The company and the software vendor have the direct relationship during the project execution. The proximity would be high & convenient. IT department has good control over the Project What is required only would be considered under the scope No redundancy
Why? - Cont.
The requisite flavor of E-Biz & work-flow components can be embraced towards value edition The existing practices & applications can be tuned and linked with the proposed package Maintenance & improvements are easy & less costlier. Even IT team can maintain the setup after getting the source code
Points of Concern
Software development vendor selection Requirement/scope finalization [high chances of retaining the islands as it is] Less chances of Value addition Not time tested Chances of Prolonged project duration
The Critical Success Factors
Custom-Built ERP solutions
Clear Vision & support of the Management Capabilities of the software development vendor Scope & Expectations finalization towards meeting the ERP concepts Strict implementation schedules & periodical monitoring The involvement of the IT & functional teams
What is your Choice
Just to Relax
Go
Good advts.
Creative advts.
Big Bazar Women's Day Celebrations....... They have gone.... what about you???????
ERP/SAP @ Pricol A Case
Beyond ERP !!!
Beyond ERP [ERP II]
Supplier Supplier Collaboration Collaboration
Supply Chain Supply Chain Management Management
Product Product Lifecycle Lifecycle Management Management
Key Process Key Process Integration Integration via ERP via ERP
Customer Customer Management Management
Design Design Partners Partners
Consumers Consumers and Channels and Channels
ERP in the Supply chain
Summary of key points
Why should you adopt and ERP
Greater accessibility to data, allowing management upto-the-minute access to information needed to make key decisions Ability to track actual costs of activities and perform activity based costing Elimination of duplication and the current practice of building stand-alone databases and spreadsheets to enter and manipulate data for reporting purposes Establishment of uniform processes that are based on recognized best business practices Replaces aging, non-integrated core legacy systems that are costly to support and maintain Enables a single integrated data repository that provides superior reporting and data analysis capabilities and promotes information sharing Improves workflow and efficiency
ERP Project Macro level steps
Step 1: Evaluate your needs and requirements useful as a guide for the project, used as a benchmark Compare solutions more gap means more costly customization, choose that fits need best Step 2: While developing the contract- consider: Fixed costs Vs time and materials, with or without a cap Build flexibility into the contract to accommodate changing technology Check references Step 3: Limit customizations
ERP Project Macro level steps [cont]
Step 4: Address key functional issues Need and gap analysis Process engineering Process documentation Audit of data and system Step 5: Address key technical issues Sizing the system (inclusive of desktop & network) Distributed versus centralized production Conversion of data and report development
Conference room pilot Validation of data and systems Staffing and training
Change management and problem tracking Help desk and ongoing support Planned upgrades and revisions
What factors influence the purchase of an ERP
Cost and Perception
Price of software Real Time processing Vendor reputation Implementation time
Platform compatibility Degree of Industry functionality customization
Scalability
Technology and expertise
ERP Implementation methodology
Forming Core Team for each Module Understanding Client Business processes Requirement Specification Sign off Master Data Templates & Client Resources Data Migration strategy (eg. Handling pipe-line transactions) Configuration Board Room Pilot 1 (Sample Data) Core Team training Master Data & Sample Transactions Legacy Data Upload Board Room Pilot 2 (Live Data) Parallel run Go live
Critical Success factors
Top Management Involvement (weekly reviews)
- on adapting the ERP product driven methodologies - on customization decisions - on monetary commitments
Dedicated Core Team Training & Change management Right technical infra-structure Efforts required during parallel run The right strategy to handle the transactions in pipe-line while going live Involving clients technical team during ABAP and Script program developments. Pre-printed formats & Printer arrangements Strict Process / Procedure discipline Project schedule adherence Post Implementation support/maintenance
ERP 7 Keys for Success
Scope is realistic and managed Work and schedule are predictable Team is high-performing Stakeholders are committed Business benefits are realized Risks are mitigated Delivery organization benefits are realized
ERP .. As a System
ERP - Cost Vs. Benefit
Business Systems Are The Heart Of Your Business
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