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Enterprise

ResourcePlanning &

Management

Oct-Nov09

N RaveendranGeneral Manager Enterprise wide solutionsSakthi Finance Ltd., Coimbatorenravi@sakthifinance.com

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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

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Team Formation

For Functional representation

Finance

Manufacturing

Distribution & Logistics

Sales & marketing

To handle business cases

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SESSION PLAN

Sl. Topic Readings1 Course Introduction. An Overview of ERP Lecture Notes2 What is an ERP System TB 1 pp 1-11, TB

2 Ch. 1 & 73 A tour of an ERP System Bancroft Ch. 14 IT strategy and ERP fit Norris Ch. 25 Impact of ERP on Finance Norris Ch. 3

6 Impact of ERP on Manufacturing Norris Ch. 47 Impact of ERP on Distribution /Logistics Norris Ch. 48 Impact of ERP on Sales and Marketing Norris Ch. 49 SAP Basics Windows / Training / User Group Bancroft Ch. 210 Re-engineering and ERP Bancroft Ch. 511 Preparing for ERP Implementation Bancroft Ch. 6

12 Focus Bancroft Ch. 713 As Is Picture Bancroft Ch. 814 To Be Design Bancroft Ch. 915 Construction / Testing / Implementation Bancroft Ch. 1016 Managing the Implementation process: Partners

in ImplementationNorris Ch. 9

17 Change Management Bancroft Ch. 1118 Team formation and development Bancroft Ch. 1219 Risk Management Norris Ch. 1320 Project and Program Management Norris Ch. 1421 Changes in Users and IT Roles Bancroft Ch. 1322 Integration Management Norris Ch. 2023 Lessons Learnt Bancroft Ch. 14

24-27 Project Report presentations

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Presentation - Path

ERP General ConceptsERP based applications - Options

ERP @ Pricol A case

Beyond ERP

Overall Summary - Recap

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World without computer engineers

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ERP General Concepts

What is ERP?

The Current Scenario

Why ERP?

Definition Evolution

Expectations

BPR & ERP

BPR The StepsEnte

rpriseResourcePlan

ning

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What is ERP?

facilitates company-wide integratedinformation systems, covering all

functional areas

performs core Corporate activities andincreases customer service augmentingCorporate Image

ERP is a solution, which

Ente

rpriseResourcePlan

ning

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The Current Scenario

Islands of InformationDifficult to get timely & accurate informationHeterogeneous Hardware & Softwareplatforms & practices

Poor connectivity between differentorganizational locationsSticking with obsolete technology

Resist to changeLack of proven man-power to developintegrated software

Ente

rpriseResourcePlan

ning

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Information Islands [existing]

B

Finance

Sales

Production

Human

Resources

Materials

Planning

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Information @ an Enterprise [Need to be]

Finance

Sales

Production

Human

Resources

Materials

Planning

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Why ERP?

For Management to know what is happening

in the companyOne integrated solution for better ManagementTransparency of Information thro single data sourceFor cycle time reduction

To achieve cost control & low working capitalTo marry latest technologiesTo shun the geographical gaps

To satisfy the customers with high expectationsTo be Competitive & for survivalEnte

rpriseRes

ourcePlan

ning

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ERP - Definition

Software solution that addresses theEnterprise needs, taking a process view ofthe overall organization to meet the goals,

by tightly integrating all functions andunder a common software platform

Ente

rpriseRes

ourcePlan

ning

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Enterprise Resource Planning (ERP), is a

software driven business managementsystem which integrates all the facets ofbusiness, including planning,

manufacturing, sales and marketing.

ERP as a business solution aims to help themanagement by setting better business

practice and equipping them with the rightinformation to take timely decision

ERP - Definition [As per Frost & Sullivan]

Ente

rpriseRes

ourcePlan

ning

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Evolution of ERP1960s - 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)

Ente

rpriseRes

ourcePlan

ning

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BPR & ERP

Just automating the existing business practices

will not help ERP to achieve the anticipated resultsbecause, OO + NT = EOO

Business Process Re-engineering [BPR] brings out the

deficiencies of the existing setup

BPR and ERP will give way to implement newsystems and the long pending improvements in theexisting systems

BPR may be time consuming but the scope can berestricted & controlled by the Management

Busines

sProcessRe-engineering

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BPR - Steps

AutomateSimplify/ImproveUnderstand

Implement

with the helpof ERP

Draft & frame the

possibilities & waysto simplify or

Improve or

eliminate the

processes

Understand

the existingsystems

associated

with all the

functionalities

Step 3Step 2Step 1

Busines

sProcessRe-engineering

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ERP for an Enterprise

The options

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Just to Relax

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Crazy Maths

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ERP OptionsOPTION 1 MAKE [Using Internal resources]

Developing a custom-built ERP package, specific to therequirements of the organization, with the help of thein-house IT department

OPTION 2 - BUY

Going for Tailor-made ERP packages available in the market likeSAP, Oracle applications, Baan, PeopleSoft etc.

OPTION 3 MAKE [using External resources]

Developing a custom-built ERP package, specific to therequirements of the organization, with the help of asoftware solution provider

Ente

rpriseRes

ourcePlan

ning

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Building ERP solutionsusing

Internal Sources

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ERP Building using Internalresources 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

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Tailor-made

ERP

Solutions

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About

Generalized off the shelf application s/w packages

Modules based on rich functionalities for all businessfunctionsUser tested with lot of installationsNo lead time requirement for software developmentTuned for more users/networks with adequate & in-built securityParameterized for flexibility

Can sit on latest hardware & software platformsUpgradation of functionalities with version controlTailor-madeE

RPsolutio

ns

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Execution phases

ERP product selection

Preparations

Production

Implementation

Post-ImplementationTailor-madeE

RPsolutio

ns

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ERP Product selection Phase

ERP Team formation for selection

Appointment of Consultants [if needed]

Scoping study

Product selection Implementation partners selection

Hardware/Communication cost estimation

Tailor-madeE

RPsolutio

ns

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Technology

Support

Costs

5 Strategic5 StrategicRequirementRequirement

LevelsLevels

FunctionalityGoal:Goal:

To select theTo select the

Most Suitable SoftwareMost Suitable SoftwarePackage SolutionPackage Solution

Vendor

ERP Product selection Criteria

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Reputed ERP Products [partial list]

Tailor-madeE

RPsolutio

ns

[Ax/Nav/GP]

[MFG Pro]

[Ver 9.0]

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Preparation Phase

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 gapsTailor-madeE

RPsolutio

ns

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ERP product acceptance - options

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 fitthe product [Compromising]

3. Customize the ERP product to suit the businessProcesses. [Customization]

Tailor-madeE

RPsolutio

ns

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GAP Analysis

This is the process to identity the gaps by mapping

the expectations of the company with thecapabilities of the ERP product

Results of Gap Analysis

Directly SupportedWorkaround suggestedExtension required

Change in business process suggestedNot fully supportedManual not under the scope of ERP

Tailor-madeE

RPsolutio

ns

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Production Phase

Installing the ERP software & hardware

Tuning the ERP software to meet thecustomization needs

Master & Control data arrival as perthe Product data structures

Location & people specific roles & rights

allocation for module access & securityTailor-madeE

RPsolutio

ns

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Implementation Phase

Conference Room Pilot [Parallel run]

Resolving the Parallel run issues

Training the end users

Live run

Tailor-madeE

RPsolutio

ns

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Post-Implementation Phase

Regular monitoring

Tuning [hardware/software] for patchingthe performance issues

Maintenance

Tailor-madeE

RPsolutio

ns

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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

Tai

lor-madeE

RPsolutio

ns

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Critical Success Factors

Tai

lor-madeE

RPsolutio

ns 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

?

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Just to Relax

Go

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The cheapest car is

Tata Nano

Do you want to see the

Cheapest Bike?

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Custom-built

ERP

Solutions

using external resources

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Building ERP using Ext.sources

About this option

The Principle! The Steps

Why?

Points of Concern

Software Vendor selection

Critical Success factors

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About

Here the whole package is designed & built

by keeping a specific enterprise & its businessPractices 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

fluctuationsCustom-Built

ERPsolutions

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The Principle!

Custom-Built

ERPsolutions

The best as seen elsewhere, need not be the

the best for you.

What is your best is whatcan be successfully implemented

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Custom-Built

ERPsolutions

The Steps

1. Software vendor selection

2. Detailed study by the vendor3. Scope & platform finalization4. Freezing the commercials5. Development

6. Hardware addition/upgradation7. Old master/transaction data migration8. Parallel run with Integration & connectivity check9. Implementation

10.Maintenance

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Custom-Built

ERPsolutions

Why?

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

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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 thesource code

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Points of Concern

Software development vendor selection

Requirement/scope finalization [high chances ofretaining the islands as it is]

Less chances of Value addition

Not time tested

Chances of Prolonged project duration

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Custom-Built

ERPsolutions

The Critical Success Factors

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

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What is your

Choice?

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Just to Relax

Go

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Good advts.

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Big Bazar Women's Day Celebrations....... They have gone.... what about you???????

Creative advts.

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ERP/SAP @

Pricol A Case

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Beyond ERP !!!

Beyond ERP [ERP II]

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Key ProcessIntegration

via ERP

Key ProcessIntegration

via ERP

ProductLifecycle

Management

ProductLifecycle

Management

Supply ChainManagement

Supply ChainManagement

CustomerManagement

CustomerManagement

SupplierCollaboration

SupplierCollaboration

DesignPartners

DesignPartners

Consumersand Channels

Consumersand Channels

ERP in the Supply chain

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Summary

of key points

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Why should you adopt and ERP

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Greater accessibility to data, allowing management up-to-the-minute access to information needed to makekey decisions

Ability to track actual costs of activities and performactivity based costing

Elimination of duplication and the current practice ofbuilding stand-alone databases and spreadsheets to

enter and manipulate data for reporting purposes Establishment of uniform processes that are based onrecognized best business practices

Replaces aging, non-integrated core legacy systemsthat are costly to support and maintain

Enables a single integrated data repository thatprovides superior reporting and data analysiscapabilities and promotes information sharing

Improves workflow and efficiency

ERP Project Macro level steps

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Step 1:

Evaluate your needs and requirements useful as a

guide for the project, used as a benchmarkCompare solutions more gap means more costlycustomization, 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 accommodatechanging technology

Check references

Step 3: Limit customizations

ERP Project Macro level steps [cont]

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Step 4: Address key functional issues

Need and gap analysis

Process engineering

Process documentation

Audit of data and system

Step 5: Address key technical issuesSizing the system (inclusive ofdesktop & network)

Distributed versus centralizedproduction

Conversion of data and reportdevelopment

Conference room pilot

Validation of data and

systemsStaffing and training

Change management andproblem tracking

Help desk and ongoing

supportPlanned upgrades andrevisions

What factors influence the purchase of an ERP

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Industry

functionality

Degree ofcustomization

Platform

compatibilityScalability

Vendor

reputation

Implementation

time

Real Timeprocessing

Price of

software

Technology

and expertise

Cost and

Perception

p

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ERP Implementation methodology

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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

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Critical Success factors

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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

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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

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ERP .. As a System

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ERP - Cost Vs. Benefit

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Business Systems Are The Heart Of Your Business

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If you needed a heart transplant,you would want

The best surgeon has done this hundreds of times

The best heart can last as your body changes & grows

The best procedure proven successful

The best support continued care to insure your health

You want whatever it takes to get it right

the first time. You want to

Do It Once, Do It Right,Make It Last

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Open

Session

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