ITM Present

8/9/2019 ITM Present

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Enterprise

Resource

PlanningBY:-FHA.ShiblySEU/IS/03/MG/031FMC

SEUSL

Business

Process

Reengineering


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Presentation - Path

ERP General Concepts

Why ERP For Business World

Advantages and Disadvantages of ERP

Implementing Issues in ERP

Different Types of ERP

Success and failure stories in ERP


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Job Opportunities in ERP

Challenges of ERP

ERP in Sri Lanka

BPR Some concepts


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What is ERP?An ERP or Enterprise ResourcePlanning system integratesinformation and businessprocesses to enable informationentered once to be sharedthroughout the organization.

ERP had its origins inmanufacturing and productionplanning. In the mid-90s it wasextended to other back-officefunctions such as financialmanagement and human resource

management.More recently these systems haveaddressed applications specific tohigher education such as studentsystems and grants management.

Common examples includeCommon examples include

SAP, PeopleSoft, BannerSAP, PeopleSoft, Banner

and Oracleand Oracle..

Needs

Assessment

Software

Selection

Process

Reengineering

Conference

Room

Pilot

Training

Phased

Implementation

ERP ProjectERP Project


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Finance

-General Ledger

-Accounts Receivable

-Accounts Payable

-Procurement

-Fixed Assets

-Treasury Mgmt

-Cost Control-Grant Management

Human Resources

-HR/Benefits

Administration

-Payroll

-Self-service HR

e-Business

-eProcurement

- Employee Self Service

- e-Recruiting/e-Hiring

- e-Filing

- Citizen Access

- Web-enabled transactions

- e-Commerce

Transaction Engine

Core software that manages

transaction flow among

applications and handles taskslike security and data integrity

Customer Relationship Mgt

-Consistent user experience

- Personalization of services- Realtime access- enterprise info

Supply Chain Mgmt

Planning, scheduling and fulfillment

applications that address all

procurement requirements across

the enterprise

Data Analysis

Decision support software that lets

senior executives and other users

analyze transaction data to track

business performance

Finance

ERP FunctionalityERP Functionality


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ManufacturingEngineering, Bills of Material,Scheduling, Capacity, Workflow

Management, Quality Control, CostManagement, Manufacturing Process,Manufacturing Projects, ManufacturingFlow

Supply Chain Management


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Supply Chain ManagementInventory, Order Entry, Purchasing,Product Configuration, Supply Chain

Planning, Supplier Scheduling,Inspection of goods, Claim Processing,Commission Calculation


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Human Resources

Human Resources, Payroll, Training, Time &Attendance, Fostering, Benefits

Customer Relationship Management Sales and Marketing, Commissions, Service,

Customer Contact and Call Center support

Data Warehouse

and various Self-Service interfaces for Customers,Suppliers, and Employees


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Why ERP?

For Management to know what is happeningin the companyOne solution for better ManagementFor cycle time reductionTo achieve cost control & low working capitalTo marry latest technologiesTo shun the geographical gaps

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


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Evolution of ERP

1960s - 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)


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How ERP applies in differentsectors


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ERP in Engineering


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ERP in Manufacturing


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ERP in Hospital


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ERP in HRM Division


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Production Planning

Demand management

Master planning

Rough-cut capacity

planning

MRP/Planned orders

Order

- Creation

- Release

- Confirmation

Shop floor controlCapacity leveling

Process planning

Quality ManagementLot inspection

Process charting

Warehouse management

Materials Management

Direct requisition

Purchasing

Inventory management

Goods receipt

Material valuation

Invoice verification

Preventive MaintenancePlanned repair

Emergency

Sales and Distribution

Customer order

processing

Shipping,

billing, transport

Sales planningProfit planning

SOP

Planned requirements

Forecasts

Project system

Tactical Within function integration relationship

between modules


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What are the Benefits of ERP?Improve access toinformation

Improve workflow andefficiency

Improve controls and

program alerts

Ship ProductReceiving

Buyer or Management

Approval Cycle

SupplierFulfillmentRoute to

Recipient

Requisitioning

Purchase

OrderUser Product

Selection

Accounts Payable

General Ledger

Financial Reconciliation

Process reengineering --update old processes

Foundation for newprocesses, such as e-procurement, with significantROI


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ERP Implementation BenefitsStreamlines or eliminates inefficient manualprocesses

Eliminates disparate stand-alone systems

Provides integrated, enterprise-wide common tools,processes and systems

Establishes a backbone structure that can beleveraged to handle all operational processes

Integrates and increases control of budgeting,planning and financial management processes


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ERP Implementation Benefits

(continued)Provides enterprise-wide reporting anddecision support

Presents opportunity for re-engineering withindustry best practices and templates

Presents opportunity to lever vendorsfuture investment in enhanced functionality

Incorporates new functionality andtechnology - provides a springboard to e-Business


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DisadvantagesSuccess depends on the skill and experience of the workforce,including training about how to make the system work correctly.

Small enterprises are often undercapitalized & are also not

updated about the latest offerings in the market

Personnel turnover; companies can employ new managerslacking education in the company's ERP system, proposingchanges in business practices that are out of synchronizationwith the best utilization of the company's selected ERP.

Customization of the ERP software is limited. Somecustomization may involve changing of the ERP softwarestructure which is usually not allowed.


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DisadvantagesRe-engineering of business processes to fit the "industrystandard" prescribed by the ERP system may lead to a loss ofcompetitive advantage.

ERP systems can be very expensive to install often rangingfrom 30,000 US Dollars to 500,000,000 US Dollars formultinational companies.

ERP vendors can charge sums of money for annual licenserenewal that is unrelated to the size of the company using theERP or its profitability.

Technical support personnel often give replies to callers thatare inappropriate for the caller's corporate structure.Computer security concerns arise, for example when telling anon-programmer how to change a database on the fly, at acompany that requires an audit trail of changes so as to meetsome regulatory standards.


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What are the Costs of ERP?Direct costs only represent a fraction of thetotal costs of ERP

Direct costs include hardware, software, andpeople on the project -- the largest categoryis personnel costs

Indirect costs include the costs of back-fillingpositions, increasing salaries and the total lifecycle costs of the ERP -- maintenance,ongoing production, and upgrades.


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How should we

implement ERP systems

Obtain the right mix of people,processes and technology!!


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How should we implement

ERP Systems?People

Project Structure

Should be aligned to processes

Process Implementation Process (outlined in detail)

Adapt your processes to those of the ERP.

Technology

Hardware

Software

Integrated Systems


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Process1. DefinitionandAnalysis

Hold discussions with various functional

personnel to establish the actual number ofsystems operating at client site, what they areused for, why and how often

Produce the Project Scoping Documentoutlining current situation, proposed solution

and budgeted time


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Process2. Design

Prepare various functional reports - specifies currentscenario and wish list

Prepare Design document which specifies how thesystem is going to work

Prepare test scripts to be followed on system testing

Map out the interface paths to various modules


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Process3.Build

Configure system as per set up documentspecifications i.e. transfer conceptual modelinto reality

Test system to verify accuracy (preliminarytests)


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Process4. Transition

Train users on their specific areas

Assist in test data compilation and systemtesting by users

Finalise the Live system and capturedopening balances


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Process

5. Production

Official hand holdingEffectiveness assessmentBusiness and Technical Directionrecommendations


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TechnologyTechnology is an enabler, not the driver(it is there to assist the organisation to

achieve business goals)

It is a means to an end, not the end


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ERP Implementation

ChallengesFocus on applications rather than business processesTurf battles over ownership

ERP project management expertise

Issue resolution bottlenecks (restricted)

Scope and change management

Sub-optimization of system capabilities

Staffing and retaining full time project resourcesExperienced implementation partners

Product maturity and limitations

Nature of government funding cycles


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Project Critical Success

FactorsLeadership commitmentCommunication

Full-time staff

Professional project managementPhased implementation approach

Scope management

Business transformation and change management

Job-specific end-user training

Focused issue resolution

Post implementation support


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An ERP Start-up Roadmap

Functional Requirements Analysis

Procurement Strategy

Proposal Evaluation Plan

Analysis of Software / Implementation ResourcesComparative Cost Analysis

Software Demonstrations

Site Visits

Discovery

Contract Negotiations

Evaluation of Final Vendor

Final Contract


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ERP Implementation Activities

Package Integration

(SAP,PeopleSoft, JDE,

Oracle...) Software Environment

Builds Enterprise-wide

Infrastructure

Planning/Design & Roll-out Interfaces and

Conversions Data Warehouse

Integration E-Business Business Intelligence Networking

Design Implementation Tuning

Manage It... Change It... Implement It.. Operate It... Service It... Teach It...

Change Mgment Business Vision and

Goals Process Analysis

Package Select .

Business Case Bus. Process

Reengineering Industry Best

Practices

As Is /To Be Process

Modeling Fit-Gap Analysis Policy Design and

Procedure Dev. Readiness

Assessment Organizational Design Communications Plan

Data Center Operations Application Development

& Maintenance Network Station

Management Network Operations &

Support

Platforms & Technology

Services

Installation/

Customization &

Maintenance Performance and

Tuning Software Services

Planning/Design/

Install Migration

Management Problem Mgmt.

Systems Mgmt.

Internet Enablement

Web Site Design Help Desk Disaster Recovery Business Resumption

Services

Training Needs

Assessment

Custom Curriculum and

Material Development

CBT Development End User Training

Classes Train-the-Trainers

Roll-out of Training

Prime Contractor Project

Management Detailed Project

planning and Tracking Communications Plan

Subcontractormanagement

Project Scope Control Financial Control

Project Oversight and

Quality Assurance Reviews


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Types Of ERP

JDEdwards

Lawson Oracle/Siebel

PeopleSoft

SAP BAAN


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SAPSAP is the name of the companyfounded in 1972 under the German

name (Systems, Applications, andProducts in Data Processing) is theleading ERP (Enterprise ResourcePlanning) software package.


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There are number of technical reasonsnumbers of companies are planning to

implement SAP. Its highly configurable,highly secure data handling, min dataredundancy, max data consistency, youcan capitalize on economics of sales like

purchasing, tight integration-crossfunction.


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What is SAP R/3A third generation set of highly integratedsoftware modules that performs common

business function based on multinationalleading practice. Takes care of any enterprisehowever diverse in operation, spread over theworld. In R/3 system all the three servers likepresentation, application server and databaseserver are located at different system.


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J. D. EdwardsAs an ERP system JDE comprises 3basic areas of expertise, functional-

business, programmer-developer andtechnical-CNC-system administration.


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Functional business analystA JDE functional person is an expert on oneor more of the JDE modules, financials,

manufacturing, operations, transportation,sales and other areas. This person is thebusiness subject matter expert. Often theystarted as a JDE user, the super user orpower user and gradually developed the skillset of being able to support the businessaspects ofJDE


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Developer/programmerThis person is trained in the softwaredevelopment and programming tools

that translate the businessrequirements as identified by thefunctional people above into code andprogramming.


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CNC - ERP System architect,

engineer and administratorThis is a catch-all function comprisingall that the two positions above do not

cover including, installation, upgrades,updates, change management, systemadministration, security, performancetuning, package build and deployment

and over-all architecture


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Siebel Systems/OracleSiebel Systems, Inc. was a software companyprincipally engaged in the design, development,marketing, and support of CRM applications.

The company was founded by Thomas Siebel in1993. At first known mainly for its sales forceautomation products, the company expanded into thebroader CRM market. By the late 1990s, SiebelSystems was the dominant CRM vendor, peaking at

45% market share in 2002.

On September 12, 2005, Oracle Corporationannounced it had agreed to buy Siebel Systems for$5.8 billion. Siebel is now a brand name owned byOracle Corporation.


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BaanBaan was a vendor of popular enterpriseresource planning (ERP) software that is nowowned by Inform Global Solutions.

Baan is still one of the best ERP products fordiscrete manufacturing industries, especiallyfor Make to Order and Engineering to order

market. Nowadays, still thousands ofmanufacturers are running on Baan software.


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PeopleSoftPeopleSoft, Inc. was a company thatprovided Human resource management

systems (HRMS), customer relationshipmanagement, Manufacturing,Financials, Enterprise PerformanceManagement, and Student

Administration software solutions tolarge corporations, governments, andorganizations.


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Success Stories In ERPJada precisions Plastics co INC andIQMS ERP software

Eiffel ERP software's implementation inU.S.based chemical company.

WinMan ERP in Athena controls

Intitutive ERP Software in San Antonio'sLighthouse

SAP ERP Solutions in TISCO (Tata Ironand steel company Limited)


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Failure Stories of ERP

Hershey is a leading manufacturer of chocolates,confectionaries and beverages in United States of

America. They offer lots of delicious and lip smacking

chocolates in various assortments. The company alsomakes sugar free chocolates and products suiting thenutritional constraints of the customers. What startedas a small entity by Milton.S.Hershey in Pennsylvaniahas now become a very big company commanding astake in the U.S. food market. They are also an

important player in the international scenario


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Job Opportunities in ERP

Positions-* Functional ERP/CRM

* Technical ERP/CRM* Developers* DBA's* Consultants* Data Architects* Data Modelers

* Project Leader / Management


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ERP in Sri Lanka

Enterprise Resource Planning (ERP) isno longer alien for Sri Lankan

organizations. Enterprise ResourcePlanning is not just another way ofautomating organizational activities


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Issues

ERP is not just another way ofautomating organizational activities. It

is more than a simple transactionprocessing system. In the recent pastmany Sri Lankan organizations haveinitiated ERP implementation projects

aiming to centralize and streamline theirorganization's processes for betterperformance.


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Issues

However, a large number of ERPimplementations have failed to deliverexpected results

This gave the insight to conduct a survey toinvestigate ERP implementations in Privatesector firms in Sri Lanka. The objective of theresearch was to identify Critical Success

Factors in ERP implementations and toidentify critical uncertainties in ERPimplementations


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Issues

For the research 74 private sector firmscovering business sectors of

telecommunication, hotels and travels,diversified holdings, banks, finance,insurance and services, and IT haveparticipated that have implemented ERP

systems.


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Issues

According to the results, the mostimportant Critical Success Factor in the

implementations of ERP in Sri Lanka aretop management support, fit betweenERP software and hardware, projectteam competence, user training and

education, and effective projectmanagement.


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Success in Sri Lanka

IFS Sri Lanka as the ERP solutionsprovider by TVS Lanka

IFS Sri Lanka, a global enterpriseapplications company, was chosen asthe solutions provider by TVS Lanka, ahouse hold brand name in Sri Lanka aswell as in India for motor cycles.


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The Enterprise Resource Planning system would offerTVS Lanka with better transparency within andoutside the company, quicker access to precise data,

superior dexterity in business progression andscaleable solution that supports growth of thecompany. As a result, business decisions taken willbe more accurate, whilst the company could as wellmore easily adapt to changes in business trends. Ithelps the company to avoid stock-outs and stock

piling up as well as on-line relocation of stock onrequirement basis.


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Chemical Company Re-engineers itsBusiness Process

FiNAC Blends Into Tea IndustryLocal FMCG Giant UNILEVER' PoweredBy FiNAC

NIPPOLAC streamlines with FINAC

Richardsons Projects implements FiNAC

Tokyo Cements the deal with FINAC


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Finac The Cash Flow Manager

Sri Lanka's number one locallydeveloped business software has been

facilitating many local wholesalers andTrading organizations in maintainingfocus on their Cash Flow thuspreventing them from working for the

lenders of capital.


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Over 350 SME's have invested in Finac tomainly focus on inventory and proper debtmanagement .

The most vital thing in any business is that itmakes optimum use of its financial resourcespreventing excess stocks and keeping debtorsunder control and strictly monitoring bouncedcheques and credit limits.


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Debt Management

Listing of debtors over 45 days. (Can be 30, 60, and 90 etc...)Prevent invoicing debtors who have exceeded the credit limit who havea track record of returned cheques.A general debtors age analysis 0-30, 31-60, 61-90 etc so that you canplan your next months cash flow.

Sending debtors monthly statements to reconcile and confirmoutstanding balances.Automatic letters reminding debtors of outstanding invoices.Monitoring debtors outstanding by salesman responsible for the debt.Have a register of PD cheques received with all information likereceived from, banked date etc.PD cheques banked and forecasted date of realisation.

PD cheques to be banked for a given period.PD cheques realised.Tracking of customers with PD cheques dishonoured.


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Stock Management

Identify all stocks in stores over 60 days.

Discount and sell off overdue stocks before they dryup your cash flow.

Identify all fast moving items. Ensure sufficientstocks are available.

Daily value your stock and ensure that the salesvalue of your stock is equal to your monthly turnover.(some multinationals have only 15 days stocks)

Perform regular stock counts of all items to preventtheft.


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Financial Management :

Prepare daily, weekly, monthly cash flow reports.

Budget all expenses and prevent issuing cheques ifbudget is exceeded.

Have a monthly profit and lost statement.Check profitability of each item and how much profitit had distributed during the month and year.

Perform weekly/monthly bank reconciliation.

Prevent discounting by sales reps who are only

interested in incentives and commissions.


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Customer RelationshipManagement :

Keep important customers with specialdiscount schemes.Monitor customers who give you the best

profit.Frequently perform Direct mail postings tocustomersEmail, Fax, or Call customers thru an updatedCustomer Database

Send Customer Monthly statements andprevent confusions and misunderstandings


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Squeezing Suppliers

Monitor suppliers who give you the bestprofit.

Use supplier's credit line to improveyour cash flow.

Negotiate with Creditors for longercredit periods

Do consignment sales. Thus working onthe suppliers cash flow


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Future of ERP

Move from Client/Server applications toInternet Based Application

Enterprise Application for the InternetEconomy

Electronic Commerce, Sales forceCustomization, and customer relationship

management software'sSelf-Service Application, Web Based Ordering


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Future Of ERP

The functioning of ERP has gained muchprominence and utility with the interventionof web enabled and open sourcetechnologies.

ERP II the latest advancement in ERPsoftware deserves special mention. In thiscontext it becomes important to analyze thedirection in which ERP is geared to progressor will ERP diminish in the future etc?


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Some of the points requiringattention

ERP is an effective application. It will be great if onecan bring an ERP system that id devoid of thedrawbacks from the existing ones. The latestintrusions namely open source and web enabledtechnologies has increased the effectiveness of theapplication. However they are not enough

ERP applications should be designed to make themaximum use of internet so that the user can accessdata from any part of the world just by a click of themouse. This has further deepened the future of ERP.ERP's future is yet to reach saturation.


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Market forecasting

Formerly ERP was purely restricted to fortune 500companies, in the sense only they could afford toinvest on them. This put the small and MediumIndustries at a large disadvantage. ERP's futureseemed to be dooming on them.

However this drawback has been removed after theintervention of open source facilities. The concept ofoutsourcing has helped in removing the difficultiesfaced by small and medium enterprises


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The future of ERP holds an undisputeddemand not only in the national level

but also at the global level. If thetechnology can be improvised to thedesired ext


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BPR Some Concepts


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BPR

Business Process Redesign

The fundamental rethinking and radically redesign ofbusiness processes to achieve dramatic improvement

in critical, contemporary measures of performancesuch as cost, quality, service and speed.

The implementation of deliberate and fundamentalchange in business processes to achieve breakthrough

improvements in performance.

Enabled by IT


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Business Process Redesign

Also known as Reengineering or ProcessInnovation is offered as an enabler of

organizational transformation.

Organization embrace a BPR approach when theybelieve that a radical improvement can be achievedby marring business process, organizationstructure, and IT change.

BPR


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BPR Objectives:

To dramatically reduce cost

Reduce time

To dramatically improve customer services or toimprove employee quality of life

To reinvent the basic rules of the business e.g.

the airline industry

taco bell from Mexican food to fast food tofeeding people anywhere, anyhow.

Customer satisfaction

Organizational learning

BPR


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Change:

To transform an organization, a deep change mustoccur in the key behavior levels of theorganization:

jobs, skills, structure, shared values, measurementsystems and information technology.

Role of IT

BPR is commonly facilitated by IT e.g. Organizational efficiency

Effectiveness

Transformation

BPR


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Efficiency Applications in the efficiency category allow users to

work faster and often at measurable lower cost

simple automation of manual tasks, resulting inefficiency gains (least deep)

Effectiveness Applications in the effectiveness category allow users to

work better and often to produce higher quality work. Requires changes not only in technology, but in

skills, job roles, and work flow (deeper).

BPR


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Transformation

Applications in the the transformation categorychange the basic ways that people and

departments work and may even change the verynature of the business enterprise itself.

A major change in the organization, includingstructure, culture, and compensation schemes(deepest).

BPR


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Process

A process is set of logically related tasksperformed to achieve a defined business outcome

A collection of activities that, taken together,create value for customer e.g. new product forcustomer. This tasks are inter-related tasks

BPR


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How can Companies Identify their BusinessProcesses. Examples Manufacturing: As the procurement-to-shipment

process

Product development as the concept-to-prototype process

Sales as the prospect-to-order process

Order fulfillment as the the order-to-paymentprocess

Service as the inquiry-to-resolution process

BPR


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Simple Rules

Start with a clean sheet of paper.

With my current experience what can I do today

If I were to re-create this company today, given what Iknow and current technology, what would it look like.

How will I be focusing, organizing and managing thecompany?

Transition from a vertical functional departments to onethat is horizontal, CUSTOMER focused and process-oriented?

BPR


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Process Improvement and redesign Process

Magnitude Increment adical

Improvement 30-50% 10x-100x

ought

tarting base xisting rocess Blank sheet

Top management elatively low High

commitment

ole o IT ow High

isk ow High

Improvement Innovation/ eengineering

BPR


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Phases

Activities:

Participate in

tailored training in

BPR tools and

techniques toinclude

approximately 60

NOAA and 40 other

Department of

Commerce staff

Complete an Action

Learning Modulethat prepares

participants for

next phase

Perform a 90-day

end-to-end

assessment of 8

administrativebusiness areas

across NOAA with

trained NOAA staff

Identify areas of

duplication and

redundancy as well

as opportunitiesand

recommendations

for improvement

Participate in To-Be

design effort with trained

NOAA and Department

staff

Focus areas:

Budget Formulation

and Execution

Grants

Administration

Workforce

Management

Analyze current

business processes,

develop new business

processes, and develop

implementation plan

Execute the plan to

implement new

organization and

business processes

changes

Evaluate, measure,

and adjust the new

business processes

Implementationof BPRTransformation

Design of To-Be Processes

Assessment ofAs-IsEnvironment

Business ProcessReengineeringTraining

I II III IV

BPR Approach


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Expected BPR BenefitsReduce cost to process a grant

Increase grant processing capacity

Decrease cycle time to process a grant

Shift focus of grants personnel from low valueadded to high-value added activities

Improve grant workload distribution

Increase ability to award grants 30-days prior

to their start date, leading to increasedcustomer satisfaction


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Combine Several Jobs into OneAssign multiple processactivities to one person

Avoid the Industrial Revolution Division of tasks

Specialization of labor

Unskilled work force

No need for communication

Create Task Inter-relationships


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Curr t

usi ss

Pr sses

Future

Busi ess

Pr esses

I f r ti

echnology

Skills

S

T

R

AT

E

G

I

C

D

I

R

E

C

T

I

O

N

S

Infor tion

Technology

Skills

Current

Environments (AS-IS)

Future

Environments (TO-BE)

Tr nsition/Implement tion (Change anagement)

BusinessProcess Reengineering ethodology

CurrentProducts/Services

FutureProducts/Services

AI CORP-Automated Information anagement Corporation


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BPR: STRATEGY

Stakeholder Assessment - shareholders, customers,

employees

Determine which stakeholder expectations shouldbe met to gain competitive advantage

Determine how to redesign to meet expectations

Map out IT solutions to support

Develop & implement new processes, etc.


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SOFTWARE REENGINEERING

RESTRUCTURING - Transforming unstructured

(spaghetti code) code into structured code

equivalent [10% penetration]REENGINEERING - Gradually clean up old

software without affecting user functionality

REVERSE ENGINEERING - Uncover or rediscover thedesign specification from existing code; then apply

forward engineering


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Thanks for your

Participation &Co-operation

Documents

ITM Present