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2. What is ERP?
3. Managing ERP
• Success of 1990’s
– Fuelled by Y2K
– Internet / Intranet roll-out
– Powerful processors
– Development by SAP & BAAN
ERP 2003
• Event Driven Processes
• Supported by BPR
• Consulting expertise
Reporting
applications Financial
Sales and applications
delivery
applications
Service
applications Inventory and
Logistics
HRM applications
applications
Employees
ERP Client / Server Model
ERP Benefits
• Managerial effectiveness
– Empowered users
– Informed management decisions
4. Managing ERP
Roles
• Vendor
– delivery of software
– initial training for key users
– project support
– quality control
– conduct modifications
• Consultants
– bring/transfer know-how about package
– development of detailed work-plans
– optimize fit between processes and software
– analysis of customization issues
• Company
– learn/assimilate information about software (independence!)
– make people sufficiently available (reallocation of responsibilities)
– keep up motivation (monitoring progress)
– responsibility for conversion (data extraction, interfaces) programs
ERP Options
• DIY
- Expensive & cumbersome
- Few do this
• ASP
- The customer leases services rather than builds them.
- Services may include SCM, ERP, etc
- Good for SMEs – lack resources to build or buy their own
- Clients save money,…
- But..… the ASP may only offer a 5-year contract to tie in customers
- But……ASPs tend to offer a "one size fits all" solution
• Integrated packages
-OTS
- e.g. SAP R/3
ERP Design
• Process-oriented design: based on the operation process.
• Architecture
– One database for all data (minimal redundancy)
– Modular application (independent, but integrated modules)
– Software functionality configurable to customer’s requirements
• Master Data
– Information captured once
– Visibility though Business process
– Workflow management
– Event Triggered processes
Typical ERP Project
1. Understand the problem
– Understand business and how package fits,
– Determine characteristics of current system
– Arrange for training,
– Determine how stored data will be migrated.
1. Define the solutions (most critical!)
– Define all concepts associated with software implementation
– Run simulations of app. processing,
– Make definitions for master files, tables, parameters,
– Establish degree to which company needs to adapt package.
1. Put hands to the task (most difficult!)
– Load initial data
– Develop, test, place customization into operations;
– Develop, test interfaces put them into operation;
– Document new procedures, test new work environment.
1. Make it happen
– Run software in parallel w/ old system
– Support users
– Make final adjustments
– Release system for final use.
1. Keep on – going live is just a milestone!
Design & Implementation of ERP
Project Management
System Maintenance and Release Upgrade
Copyright, SAP AG.
Implementing ERP
• Configuration
– Parameters (rules) for business processes
– Local requirements
– 2004 - 7%
– 2005 - 8.5%
• SAP
• BAAN (Invensys)
• Oracle
• PeopleSoft
•J.D.Edwards
• SAP stands for Systems, Applications and Products in Data Processing
•More than 17,000 companies in over 120 countries run more than 44,500
installations of SAP software (50% of ERP in top companies)
• 3rd largest software company after Microsoft and Oracle, with subsidiaries in
over 50 countries
• SAP R/3 implements SAP solutions using three-tier client server computing
• SAP R/3 uses a three-tier client server computing, that is, there are three
servers with different tasks, database software, application software, and user
interface (GUI)
6. Critical Views on ERP
Issues with ERP I
• Considerable rate of failure in ERP implementation (study by Buckhout)
– 49% of respondents say SAP implementations are never complete
– Average schedule overrun 230%
– Desired functionality 59% below expectations
– Only 10% on projects finished on time
– 35% of projects cancelled
• Maintainance
– In most companies, maintenance of existing systems is at least 70% of application development budget
– Typically 80% of maintainance requests for enhancements
– Maintenance programmers are difficult to find
• Lack of Flexibility
– Difficult to modify processes (electronic concrete)
– Over-reliance on consultants
– Upgrade issues
Issues with ERP II
• Technical problems
– ERP software configuration
– Integrating ERP software with hardware, telecommunications, and database software. Rare to have
total integration.
Baan Baan IV 6% 5%