ERP_APPLICATION_TYPICAL_IMPLEMENTATION.ppt

8/14/2019 ERP_APPLICATION_TYPICAL_IMPLEMENTATION.ppt

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ERP Modules

Historical development


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Historical

Initial Computer support to business

Easiest to automatepayroll & accounting

Precise rules for every case Early 1970s

centralized mainframe computer systems

MIS systematic reports of financialperformance

Variance analysis between budget and actual


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MRP

Material requirements planning

Inventory reordering tool

Evolved to support planning

MRPII extended to shop floor control


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SAP Modules

SD Sales & Distribution

MM Materials Management MRP

PP Production Planning MRPII(with others)

QM Quality Management

PM Plant Maintenance

HR Human Resources

FINANCIAL FI Financial Accounting

CO ControllingAM Asset Management

PS Project System

R/3 INTERNAL WF Workflow: prompt actions

IS Industry solutions: best practices


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BAAN Industry-Specific

VariantsDiscrete Manufacturing Process Manufacturing

Aerospace & Defense Chemicals

Automobile Food & Beverage

Industrial Machinery Pharmaceuticals

Electronics Cable & Wire

Telecommunications Pulp & PaperConstruction Metals

Logistics


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PeopleSoft Industry Solutions

Communications Consumer Products Federal

Government

Financial Services Healthcare Higher Education

High Technology Industrial Products Public Sector

ProfessionalServices Staffing

Utilities Wholesale

Distribution


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Microsoft Great Plains Business

SolutionsAccounting & Finance

Customer Relationship Management

E-Business

Human Resources & Payroll

Manufacturing

Project Accounting

Supply Chain Management


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Relative ERP Module Use

(Mabert et al. 2000; Olhager & Selldin, 2003)Module Use reported - US Use reportedSweden

Financial & Accounting 91.5% 87.3%

Materials Management 89.2% 91.8%

Production Planning 88.5% 90.5%

Order Entry 87.7% 92.4%

Purchasing 86.9% 93.0%

Financial Control 81.5% 82.3%

Distribution/Logistics 75.4% 84.8%Asset Management 57.7% 63.3%

Quality Management 44.6% 47.5%

Personnel/HR 44.6% 57.6%

Maintenance 40.8% 44.3%

R&D Management 30.8% 34.2%


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Relative Module Use

Mabert et al. (2000) surveyed Midwestern

US manufacturers

Some modules had low reported use (below50% in red)

Financial & Accounting most popular

Universal need Most structured, thus easiest to implement

Sales & Marketing more problematic


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Why Module Use?

Cost:

Cheaper to implement part of system

Conflicts with concept of integration Best-of-Breed concept:

Mabert et al. found only 40% installed system as

vendor designed

50% used single ERP package; 4% used best-of-breed

Different vendors do some things better

Conflicts with concept of integration


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Middleware

Third-party software

Integrate software applications from several

vendorsCould be used for best-of-breed

Usually used to implement add-ons (specialty

software such as customer relationshipmanagement, supply chain integration, etc.)


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Customization

Davenport (2000) choices:

Rewrite code internally

Use existing system with interfaces

Both add time & cost to implementation

The more customization, the less ability to

seamlessly communication across systems


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Federalization

Davenport (2000)

Roll out different ERP versions by region

Each tailored to local needs Core modules shared

some specialty modules unique

Used by:

Hewlett-Packard Monsanto

Nestle


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EXAMPLES

Dell Computers

Chose to not adopt

Siemens Power Corporation

Implementation of selected modules


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Dell Computers

Evaluation of SAP R/3


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Need to continue project

evaluation Initial project adoption

1994 Dell began implementation of SAP R/3

enterprise software suiteSpent over 1 year selecting from 3,000

configuration tables

After 2 year effort ($200 million), revised

planDell business model shifted from global focus

to segmented, regional focus


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Rethinking

In 1996 revised plan

Found SAP R/3 too inflexible for Dells

new make-to-order operation

Dell chose to develop a more flexible

system rather than rely on one integrated,

centralized system


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Best-of-Breed

I2 Technologies software Manage raw materials flow

Oracle software Order management

Glovia software Manufacturing control

Inventory control Warehouse management

Materials management

SAP module Human resources


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Points

Demonstrates the need for speed

Prolonged installation projects become outdated

Need to continue to evaluate project need afteradoption

Tendency to stick with old decision

But sunk cost view needed

Demonstrates need to maintain corecompetitive advantage

Adopting vendor ERP doesnt


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Siemens ERP Implementation

Hirt & Swanson (2001)

Nuclear fuel assembly manufacturer

Engineering-oriented


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Siemens Power Corporation

1994 Began major reengineering effort

Reduced employees by 30%

1996 Adopted SAP R/3 system

Replacement of IS budgeted at $4 million

Some legacy systems retained


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Siemens Modules

FI Finance

CO Controlling

AR Accounts receivable

AP Accounts payable

MM Materials management

PP Production planning

QC Quality control


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Implementation

To be led by users

Project manager from User community

Consultant hired for IT support

IS group only marginally involved


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Project Progress

Oct 1996 Installed FI module

Sep 1997 Installed other modules

On time, within budget


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Permanent Team

Made project team a permanent group

Project manager had been replaced

2ndPM retained

SAP steering committee

SAP project team formed


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SAP steering committee

7 major user stakeholders

Guided operating policy

major expenditures

major design changes


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SAP project team formed

15 members from key user groups part-time

TrainerUser help

Advisors to middle management


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Training

End users became more proficient with time

Average of 3 months to learn what needed

Management training took longer

Management didnt understand system well

Often made unrealistic requests


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Operations

During first year

Major errors in ERP configuration

Evident that users needed additional training

New opportunities to change system scope

suggested

Two years after installationR/3 system upgrade


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Summary

Core idea of ERP complete integration

In practice, modulesused

More flexible, less risk Can apply best-of-breed concept

Ideal, but costly

Related concepts

Middlewareintegrate external software Customizationtailor ERP to organization

Federalizationdifferent versions of ERP in different

organizational subelements

Documents

ERP_APPLICATION_TYPICAL_IMPLEMENTATION.ppt