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Universidad de Navarra
Introduction to ERP
Rafael AndreuSandra Sieber
Josep ValorMay 2003
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 2
What is ERP? The dream
ERP attempts to integrate all departments and
functions across a company onto a single
computer system that can serve all those
different departments particular needs.
ERP automates the tasks involved in
performing a business process
If installed correctly, it can have a tremendous
payback
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 3
An example: order fulfillment
Before ERP
Sales Logistics BillingProduction
Order
Problems:
Delays, lost orders, keying into different computer systems
inviteserrors
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 4
An example: order fulfillment (2)
Manu-
facturing
Human
Resour-ces
Finance
Inventory
& Supply
Service
Sales
Data
Analysis
ERP
Adapted from Putting the Enterprise into the EnterpriseSystem,
T. Davenport, HBR, 1998
Front-Office Functions Back-Office Functions
CLIENT
S
SU
P
PLIER
S
With ERP
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 5
ERP evolution
ERP Extended or ERP II
Focused on clients, optimizing the whole business
network; including suppliers and clients
2000s
ERP
Focused on clients. Real time transactions. Asset
management
1990s
MRP II
Greater reductions due to the integration withaccounting and
human resource systems
1980s
MRPInventory and process time reduction with newproduction
planning systems
1960-70s
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 6
ERP Package Saturation in U.S.Manufacturing Firms
Company has installed a package ERP
system
Company is currently installing a package
ERP system
Company plans to install a package ERP
system within 18 months
No ERP system is planned
44.1%
18.8%
10.3%
26.8%
Source: Enterprise Resource Planning Survey of US Manufacturing
Firms, Mabert, Soniand Venkatraman, Production and Inventory
Management Journal, 2000
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 7
ERP evolution
ERP Extended or ERP II
Focused on clients, optimizing the whole business
network; including suppliers and clients
2000s
ERP
Focused on clients. Real time transactions. Asset
management
1990s
MRP II
Greater reductions due to the integration withaccounting and
human resource systems
1980s
MRPInventory and process time reduction with newproduction
planning systems
1960-70s
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 8
ERP evolution (2)
Integrated systems that cover the firms entirevalue chain
Industry oriented (specialized)
Transition from an internal view of the firm to business
network vision within the industry Electronic commerce
Developing html interfaces for the intranet/internet
Supporting complete commercial transactions
Applications with an object-oriented structure Transition from
an highly integrated structure to
modules with higher complementarity
Plug & play facilities
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 9
ERP Evolution (3)
Source: Gartner Group, 2001
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 10
Comparison: ERP vs. ERP II
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 11
Functional Evolution
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 12
ERP Evolution: Meeting the Challenges
Source: Gartner Research, 2001
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 13
ERP System - Cost Components
3.3%Other
10.9%Training
13.5%Implementation Team
17.8%Hardware
24.1%Consulting
30.2%Software
Source: Enterprise Resource Planning Survey of US Manufacturing
Firms, Mabert, Soniand Venkatraman, Production and Inventory
Management Journal, 2000
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 14
Commercial ERP Package Implemented
27.3%Other packages
2.5%SSA/BPCS
2.5%QAD
2.5%Peoplesoft
7.4%J.D. Edwards
8.8%Baan
9.8%Multiple packages
14.2%Oracle25%SAP
Source: Enterprise Resource Planning Survey of US Manufacturing
Firms, Mabert, Soniand Venkatraman, Production and Inventory
Management Journal, 2000
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 15
Hidden costs of ERP
Training Integration and testing
Data conversion
Data analysis Consultants ad infinitum
Replacing your best and brightest
Implementation teams can never stop Waiting for ROI
Post-ERP depression
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 16
ERP - Total Cost of Ownership(million $)
29,60,77,61,7SSA
308,20,852,213,9SAP
58,61,315,57,4Peoplesoft
42,81,411,25,4Oracle
16,40,44,11,9Lawson
21,60,85,73,9JJD Edwards
25,60,813,616,1Baan
LargestSmallestAverageMedian
Source: ERP Implementation Study Reveals Costs, Benefits,APICS -
ThePerformance Advantage, October 1999.
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 17
Project Risk Factors
Project Size
Experience with technology
Project Structure
Stability of the group that will implement the system
Strategic relevance of the system to be deployed
Number of users new to the technology
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Prof. Sandra Sieber - [email protected] - Universidad de
Navarra, Av. Pearson 21, Tel: +34 93 602 40 00; Fax: +34 93 253 43
43 18
ERPs are enablers to other businessopportunities
Ventas
Ad-hoc
production
system
Sales
Control
Finance
Human Resources
e-Com
merce
Purchasing
e-Pro
cure
-ment
Internal IS: ERP
