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ERP

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May not have best practices included. Why purchase ERP package? ... Readings. evaluation of ERP software. Getting Increased Value from ERP Systems ... – PowerPoint PPT presentation

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Title: ERP


1
ERP
  • Enterprise Resource Planning
  • D Lewis 10/02

2
Definitions
  • ERP is a process of managing all resources and
    their use in the entire enterprise in a
    coordinated manner
  • ERP is a set of integrated business applications,
    or modules which carry out common business
    functions such as general ledger, accounting, or
    order management

3
What is ERP?
  • Enterprise Resource Planning
  • Support business through optimizing, maintaining,
    and tracking business functions
  • Broken down into business processes
  • HRM - Distribution
  • Financials - Manufacturing

4
What makes ERP different
  • Integrated modules
  • Common definitions
  • Common database
  • Update one module, automatically updates others

5
What makes ERP different (cont)
  • ERP systems reflect a specific way of doing
    business
  • Must look at your value chains, rather than
    functions

6
History of ERP
  • Departmentalized Systems
  • 1960s systems for each department
  • MRP Systems
  • 1970s integrated manufacturing
  • MRPII System
  • 1980s more functions included
  • ERP 1990s integrated all across

7
Trends in ERP
  • Use of the Internet for access
  • More customized solutions
  • Decision support capabilities
  • Data pulled to specific application
  • Linkage of multiple organizations together

8
Benefits of ERP
  • Common set of data
  • Help in integrating applications for decision
    making and planning
  • Allow departments to talk to each other
  • Easy to integrate by using processed built into
    ERP software

9
Benefits of ERP
  • A way to force BPR (reengineering)
  • Easy way to solve Y2K problem

10
Benefits of ERP
  • On 4 dimensions
  • Firm structure
  • Management processes
  • Technology platform
  • Business capability

11
Firm structure
  • New structures
  • More disciplined culture
  • Globally everyone uses same processes and
    terminology
  • Freely flowing information

12
Management process
  • Unified reporting and decision making
  • Better data on performance
  • Determine which products are more desirable

13
Technology platform
  • Single unified all encompassing platform
  • Common data, common definitions and formats

14
Business capability
  • Form basis of customer driven organization
  • Better meet customers needs

15
Buy or Build
  • Pros buy
  • Best practices from many organizations included
  • Vendor must keep up to date
  • Smaller staff required

16
Buy vs. Build (cont.)
  • Pros build
  • Complete control of features
  • More support required
  • Not as much product support
  • May not have best practices included

17
Why purchase ERP package?
  • Increasing flexibility and agility
  • Business benefits (competitive agility)
  • Client/server IT architecture benefits
  • IT purchasing benefits
  • Lower costs and higher reliability than building
    from scratch

18
Why purchase ERP package?
  • Data integration
  • Improving access to data across business units
  • New ways of doing business
  • Moving to a process orientation
  • Reduction in costs
  • Global capabilities
  • Common processes and country specific
    capabilities

19
Why purchase ERP package?
  • IT architecture cost reduction
  • Reduced costs for systems operations and
    maintenance
  • Most important benefit?
  • Data integration

20
Difficulty in implementation
  • Very difficult
  • Extremely costly and time intensive
  • Typical over 10,000,000 and over a year to
    implement

21
Common Pitfalls
  • Do not adequately benchmark current state
  • Did not plan for major transformation
  • Did not have executive sponsorship
  • Did not adequately map out goals and objectives
  • Highly customized systems to look like old MRP
    systems

22
Leading vendors
  • SAP
  • Baan
  • J.D. Edwards
  • Oracle
  • Peoplesoft

23
Which way to go?
  • One vendor
  • Easy integration
  • Standardization of processes
  • Best of breed approach
  • Easy to adapt to own needs
  • Decreased reliance on one vendor

24
How to implement
  • You will need an outside consultant
  • Potential benefits
  • Better information for
  • Strategic decision making
  • Greater efficiency
  • Greater profit
  • Potential for growth

25
Unintended consequences of ERP
  • Organizational changes
  • Creating new work relationships
  • Share information
  • Make new types of decisions
  • Reactions to changes
  • Resistance
  • Confusion
  • Errors

26
Unintended consequences
  • 50 of implementations fail
  • Managers underestimate the need for change
    management
  • Managers focus on potential benefit, rather than
    on impact on employees
  • Emotional fallout after employees given greater
    responsibility

27
Implementation Issues
  • Company may implement only certain modules of
    entire ERP system

28
Readings
  • evaluation of ERP software
  • Getting Increased Value from ERP Systems
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