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ERP Lori Martel Hahn Shin Ramkin Shetty Dinesh Sekar SIS Table of Contents ERP •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 SIS Introduction ERP Growing Competition Market Globalization Decreasing Innovation Cycles need for flexible, integrated, and open software Relationship Based Transactions Different Manufacturing Environments SIS Introduction ERP • Changes in Structure – Functional Vs. Process Based Structure • Value Chain Thinking Order Processing Product Development Customer Service Personnel Product Marketing Development & Sales Production SIS Introduction ERP • 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 SIS ERP Introduction • Use of Prototyping/Modeling - Building Systems around Business • Automating Business Processes through IT •Use of Blueprinting - Designing & Integrating Business Processes • IT used as a Strategic Tool SIS ERP Definition - ERP is a software package integrating organizational business processes & data across the company Integrated views Modeling all the processes Integrating all the information Strategic use of IT Quality, Cost, Delivery Effective use of resources EIS DSS MIS OA TPS SIS ERP Role in Supply Chain Extended Supply Chain Management Supply Planning ERP Scheduling Demand Planning Logistics Internal Supply Chain Management External Suppliers Internal Suppliers MRP External Customers ERP Internal Customers ERP Coordinated Manufacturing Plant Management MRP SIS ERP Business Aspects 11% 3% 3% 5% 5% 34% 5% 5% 7% SAP SSA J.D. Edwards Oracle Peoplesoft Others 9% 13% Computer Assoicates Baan JBA Marcam QDA SIS ERP Business Aspects High Rebuild Functionality J.D. Edwards * Remain * R/3 * Oracle Low Low * CA * Peoplesoft * Baan Review Reinforce Technology High SIS ERP Characteristics • Modeling Business Processes and Integrating through Software • NOT Multiple Packages Pieced together through Complex Interfaces Configuration • 8,000 Tables set up by Programmers • Series of Switches • Requires Deep Understanding of Existing Business Processes SIS ERP Business Aspects Aerospace & Defense Automotive Chemicals Consumer Products Financial Services Healthcare High-Tech & Electronics Oil & Gas Pharmaceuticals Retail Telecommunications Utilities SIS ERP • • • • • • • Business Aspects 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 SIS ERP Business Aspects • Business Components - Finance, HR, Logistics • Business Objects - Customer, Invoice • Business Information Warehouse - Aggregate Internal & External Data • Business Engineer - Customization Tool • Integration Technologies (ALE) SIS ERP Business Aspects Reference Model • Data Model • Business Object Model • Organization Model • Process Model • Distribution Model Event Driven Process Chain (EPC) • Event • Function/Task • Organization • Communication - Repository Holds the Reference Model, Industry Specific Models & Enterprise Models SIS ERP Business Aspects • Fast • Flexibility • Expandable • Open • Industry Specific SIS ERP Business Aspects •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 SIS ERP Business Aspects • 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 SIS ERP Business Aspects • Lack of Flexibility • Complexity & Rigidity • High Implementation Time • Difficult in Decentralized Environments • Difficult Interfaces • Steep Learning Curve SIS ERP Technical Aspects Layer Architecture Development workbench Applications Application Layer Dictionary Program Interface Modeling editor builder tools Repository Middleware Basis Layer Middleware System software: GUI, DBMS, OS, N/W - Issues: Scalability, Portability, Interoperability & openness, Customizability, GUI, etc. SIS ERP Technical Aspects Application Architecture SD CO AM System model Repository Business model MM FI WF Scope, Rules & Pattern DM PP HRM PS Business Kernel FM WFM Full Business QM PM DW Specific Situation - 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. SIS ERP 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. SIS ERP 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 SIS ERP 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 SIS ERP 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 SIS ERP 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 SIS ERP 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 SIS ERP 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 SIS ERP Project Statistics – October 1992 - May 1996 – 16 full time managers – 100 person multidisciplinary team – 1,632 meetings – 79 shouting matches Industry Examples – – – – – – 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 SIS ERP Future Aspects • Targeting Small & Medium Enterprises Business • Addition of Simple GUI based development Tools • Strategic Alliances - Andersen Consulting & SAP - IBM & J.D. Edwards - GE & Oracle • Supply Chain Management Technology • Internet Enabled • Workflow Management • Resource Planning • Data Warehousing SIS