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ERP Design and Implementation

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Enables a company to link it's business processes ... Paper details will be posted on blackboard. Submissions via digital drop box in blackboard ... – PowerPoint PPT presentation

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Title: ERP Design and Implementation


1
ERP Design and Implementation
Intro to ERP and SAP08/23/2006
2
SMIS Movie Night
Youre Invited
SMIS is showing the movie Office Space out on
the lawn in front of Fulton Hall on THURSDAY,
AUGUST 24 at 830 pm. Refreshments, T-shirts and
the movie ARE ALL FREE. Please come and kick off
the 06-07 year with some laughs.
3
Overview
  • Roots of ERP
  • Future of ERP
  • SAP Products and Capabilities
  • SAP R/3 Modules
  • What, Who and How of Implementation
  • Advantages and disadvantages of SAP

4
Roots of ERP
  • The concept of ERP has been around since 1960s
  • It has its beginning in Materials Requirements
    Planning (MRP), and this later evolved into
    Manufacturing Resource Planning (MRP II)

5
Past - MRP
  • Primary business systems installed in
    manufacturing companies
  • Introduced in the 1970s
  • Computerized approach to planning and obtaining
    the required materials for manufacturing /
    production
  • Uses mainframes as the main source for input and
    processing.

6
MRP Issues
  • Lead Time
  • Aggregating demand
  • Multiple locations distances not accounted for
  • Capacity

7
Past - MRP II
  • 1980s
  • MRP Personnel Financial planning
  • Address operational planning in units, financial
    planning in dollars, and has a simulation
    capability to answer "what-if" questions
  • Issues - lead times to be fixed, the capacity to
    be infinite, the batch sizing concept

8
What is Enterprise Resource Planning (ERP)?
ERP (Koch, 2002) The term enterprise
resource planning (ERP) was coined by Gartner
Group in the 1990s. Enterprise resource
planning (ERP) software places its focus on
integrating an organizations departments (i.e.,
finance, HR, warehousing, etc.) and functions
onto a single integrated computer system that
aims to serve all those different departmental
needs.
9
What is ERP
  • Integration of Business Processes
  • Group of processes, applications and technology
  • Network and Systems Infrastructure
  • Databases
  • Applications to support business processes like
    Manufacturing (Make), Procurement (Buy), Sales
    (Sell), Accounting (Track), Human Resources,
    Payroll
  • Middleware

10
ERP System Characteristics
  • Standardized processes
  • Reduces costs of production and inventory
  • Improves customer service
  • Materials management
  • Resource planning

11
What Goes into an ERP System?
Integrated Enterprise Architecture
Integrated database used by organizational
departments for
Human Resources Data
Financial Data
Manufacturing and Logistics Data
12
ROI for an ERP System
  • Reduce operating costs
  • Generate more accurate demand forecasts
  • Speed production cycles
  • Enhance customer service

13
Order Fulfillment Before ERP
14
Order Fulfillment After ERP
15
Functional Evolution
16
Future - ERP II
  • ERP Within the boundaries of the enterprise
  • ERP II An application and deployment strategy to
    integrate all things enterprise centric (Gartner,
    2001)

17
ERP solution providers
18
  • AMR Research Article on ERP Market

19
ERP Vendors Ranked by Growth (Worldwide)
20
Gartner Research on ERP Market
  • The enterprise resource planning market will grow
    7.7 percent worldwide and the supply chain
    management market will grow 6.8 percent worldwide
    through 2009.- Nov 11, 2005
  • In 2005, total ERP applications grew 5.2 percent
    annually as the market deals with mergers,
    on-demand and technology advances. Financial
    applications and Europe were the largest segments
    with 42 percent and 44 percent market shares,
    respectively.- June 22, 2006
  • Asia/Pacific is the fastest-growing region in the
    forecast period, with a compound annual growth
    rate of 9.2 percent from 2005 to 2010. New
    license revenue for ERP software will reach 721
    million by 2010.- April 20, 2006
  • Among consulting and solution implementation
    services, there are many areas in which certain
    skills, competencies and expertise are becoming
    increasingly difficult to find.
  • - June 15, 2006

21
Birth of SAP
  • Until 1972 ERP was just a concept that companies
    had to integrate all departments and functions to
    increase revenues and strengthen the business
  • In 1972, 5 IBM managers set out to start what is
    today known as SAP
  • SAP was the first to develop and implement ERP
    specific software and Applications

22
SAP a corporate overview
  • SAP Systeme, Anwendungen und Produkte (in der
    Datenverarbeitung).
  • Fun facts
  • Founded in 1972 by five IBM engineers
  • Third largest software vendor in the world,
    behind Microsoft and Oracle respectively.
  • 22000 customers in 120 countries
  • 95 of the Fortune 1000 companies use SAP
    worldwide
  • 8 of the top ten largest US corporations use SAP
  • 55 market share (July 2004) in the business
    software market compared to 51 in 2003.

23
Financial Information
  • Two Corporate Entities
  • SAP AG (AktienGesselschaft)
  • German Headquarters, based in Waldorf, Germany.
  • SAP America Inc.
  • American Headquarters, based in Newtown Square,
    Pa
  • Ticker symbol NYSE SAP, German SAP
  • 2003 Sales 8,831.3 million, 13.4 growth from
    2002
  • 2003 Net Income 1,354.1 million, 153.5 growth
    from 2002

24
SAP Business Suite
(Product Life-Cycle Management)
Note mySAP ERP is also called R/3 and was called
R/2
(Customer Relationship Management)
(Supplier Relationship Management)
(Supply Chain Management)
(Application Infrastructure)
25
SAP Product Offering
mySAP.com
Full functionality
Increasing Business Size
Full functionality, pre-configured, single
database
mySAP All-in-One
mySAP Business One
Necessary functionality up to 250 users
26
SAP Products Features
  • World-wide usage
  • Designed to satisfy the information needs for all
    business sizes (international to local)
  • Multi-lingual
  • Multi-currency
  • Designed to satisfy the information needs for all
    industries (industry solutions)

27
SAP Products Features
  • Enables a company to link its business processes
  • Ties together disparate business functions
    (integrated business solution)
  • Helps the organization run smoothly
  • Real-time environment
  • Scalable and flexible

28
SAP R/3 Modules
Client/Server Architecture
Multi-national
Open System
Comprehensive Functionality
Integrated Solution
44,000 world-wide installations
29
R/3 Modules
  • Financials
  • Human Resources
  • Logistics

30
Financial (FI)
  • Complete picture of accounting
  • Extensive reporting facilities
  • Suitable for international corporations
  • Supports multiple currencies, languages

31
FI Modules
  • Financial Accounting external
  • Controlling cost structures, internal
  • Enterprise Controlling monitors critical
    success factors
  • Investment Management plan and manage capital
    investment projects
  • Treasury Cash management

32
Human Resources (HR)
  • Includes all processes for efficient management
    of the organization
  • Country-specific module
  • Includes different transactions, procedures for
    different countries

33
Logistics
  • Most extensive module
  • Manage all applications in the supply chain
  • Contain comprehensive business processes for
    manufacturing
  • Seamless integration

34
Relational Database
  • Tables Defines and links thousands of tables of
    information
  • Advantages
  • Consistent and accurate data
  • Common definitions for terms
  • Shared, but restricted usage (e.g., profiles)
  • Eliminates data redundancy

35
Architecture
  • Central relational database (e.g., Oracle and
    many others)
  • Client/Serverthree-tiered
  • ERP ComponentOriented towards common
    identifiable business modules (PP, MM, SD, FI,
    CO, HR)

36
What Does it Involve
  • Database server
  • Application server
  • Presentation server
  • 24,000 tables in R/3 Enterprise
  • 47,000 in ECC 6.0
  • 12,000 separate relations
  • 22,000 in ECC 6.0

37
Who is Involved
  • Consultants installation, configuration,
    training
  • Individual employees
  • In-house implementation teams
  • Super users
  • SAP and in-house support teams
  • Hosting Centers

38
How Long Does it Take
  • Large organizations spend 2-3 years implementing
  • Value SAP approach allows basic implementation in
    6-9 months
  • Smaller organizations have implemented in 3-4
    months
  • To implement
  • Training
  • Prepare for change

39
Advantages of SAP R/3
  • Integration
  • Business Process Re-Engineering
  • Non-redundant data
  • Automatic international conversions
  • Complete audit trail
  • Compliance with Sarbanes-Oxley

40
Advantages (contd.)
  • Open system
  • Integrated development
  • Sophisticated management and monitoring
    capabilities
  • Workflow capabilities

41
Disadvantages of R/3
  • Expensive
  • Complex
  • Demands highly trained staff
  • Very lengthy implementation times
  • Inter-module functions least understood by
    business
  • Internal conflict in organizations

42
Research Paper
  • Write a paper discussing the
  • Product development history
  • technology path adopted by Oracle and SAP for the
    future development of their respective ERP
    product suites. Are they different? Discuss the
    pros and cons, if any.
  • Paper details will be posted on blackboard
  • Submissions via digital drop box in blackboard
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