its all about integration paul hawking. sap university alliance program (uap) sap academic program...

Its all about Integration

Paul Hawking

SAP University Alliance Program (UAP)

SAP Academic Program Director

Research Industry Reports Best selling author ERP Systems and

Business Intelligence Visiting Professor

University

Background

SAP Mentor22 SAP million users2.5 million SAP Community Network members 6,000 active contributors100 SAP Mentors1 academic

Teach Academics Develop curriculum 2009 + 2010 Top 10 Most

Influential SAP People

SAP Presenter Design Events Advisor Past Chairperson

SAP User Group

Who? What? Why?

Tim Berners Lee

INTEGRATION

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

Strategy and Business Processes

Business Process Examples

Accounting

RecievePayment

Create & SendInvoice

Warehouse

SendShipment

(Ship)

Receive Customer

Purchase Order

PrepareShipment

(Pick & Pack)

Create Sales Order

Sales

Accounting

SendPayment

ReceiveInvoice

Warehouse

ReceiveShipment

Create & Send Purchase

Order

$

$ $

PurchasingWarehouse

CreateRequisition

Sales

Procurement

Business Process Elements

Organisational UnitsSales AreaDistribution Channel

TransactionsSales Order CreationGoods Issue

Data

Master DataCustomerMaterial

Transactional DataSales QuantitySales Price

Process Indicator

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

Executive Management

MiddleManagement

OperationalManagement

Operations

FinanceSales&Distribution

Production HumanResources

Traditional Business Landscape

Executive Management

MiddleManagement

OperationalManagement

Operations

FinanceSales&Distribution

Production HumanResources

Traditional Business Landscape

Intel (1995)

CUSTOMER

INFRASTRUCTURE

RCC

SECURITY

STARJASTAR ESTAR

PNA PRICE

AGREEMENTS

CWS

EUCEXTRACTS

JAPAN FORECAST

JAPAN DAISY

PGS

A / P

PMSEDI

G / LA / R PRODUCTCODE

DEMANDFORECAST

GPS II

MPS

AMAPS

MAXRST

DPA

NIMS

EUCEXTRACTS

DATAWAREHOUSE

EUCEXTRACTS

Configurator

PRICEBOOK

MDS

NOVA

AVAILABILITY

WMS

JAPANPRICEBOOK

HELPDAISY

ELECTRONICTRANSFER

DARE EDI

PRICEBOOK

COMPONENTSCOST

ISET GIMS

CLS

EUCEXTRACTSDPA

OEMQUOTE

SARP

Executive Management

MiddleManagement

OperationalManagement

Operations

FinanceSales&Distribution

Production HumanResources

Traditional Business Landscape

Integration Problems

Data• 9/11/2011• Last name• Subject vs Course

Process• Weekly vs Fortnightly• Workflow (goods receipt)

People• Application Screens• Information

Executive Management

MiddleManagement

OperationalManagement

Operations

FinanceSales&Distribution

Production HumanResources

Traditional Business Landscape

Public Sector Procurement Process? - Complexity

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

Why ERP?

Note: Based on multiple answers per respondent

6%

10%

11%

12%

15%

15%

19%

20%

21%

24%

26%

27%

37%

42%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Unable to Support Growth

Inconsistent Processes

Obsolete Systems

Difficult to Integrate Acquisitions

Business Becoming Global

Unable to Implement New Business Strategies

Business Processes or Systems Not Integrated

Complex, Ineffective Business Processes

Not Responsive Enough to Customers

Cost Structure Too High

Poor Quality/Visibility of Info

Poor/Uncompetitive Performance

Disparate Systems

Systems Not Y2K Compliant

Pro

gra

m M

oti

va

tio

n

% Respondents

Source: Deloitte Consulting and Benchmarking Partners (Based on a study of 62 companies that have gone live with an ERP system)

ERP Evolution

1970s

Accounts Receivable

Accounts Payable

General Ledger

Payroll

Financial ManagementInformation System

Human Resources

MRP11

Distribution

Scheduling

Planning

MRP

EDI

ERP

SCM

e-CommerceSFACRM

e-business

ERP11

1980s 1990s 2000s

What is an Enterprise Resource Planning System?

An ERP System can be defined as a “modularised, integrated, real time

information system with broad functional scope responsible for the processing and

management of business transactions”

(Hawking 2005)

Executive Management

MiddleManagement

OperationalManagement

Operations

Finance

Sales&Distribution

Production

HumanResources

ERP System

EnterpriseResourcePlanning System

ERP Characteristics

Links all business processes automatically

Reduce inter-processing time (transactions occur one time at the source)

Maintain an audit trail of all transactions

Utilises a common database

Perform internal conversions automatically (tax, foreign currency, legal rules for payroll)

Empowers employees by putting data at the fingertips of employees

Involve employees in the entire functional cycle

Raytheon’s Goals

Replace thirty year old non-integrated legacy systems

Obtain benefits of business process re-engineering

Use ERP to drive integration

One time entry and access to information

Facilitate achievement of Raytheon Aircraft Company five year plan

$19.8 billion in revenues

More than 100,000 employees worldwide

ERP Example

5,500 SAP users

6 countries

8 major business units

Over 40 key systems replaced, including primary manufacturing support system, corporate and field financial and purchasing systems, marketing expense control systems, and project management systems

7,500+ SAP transactions, 100+ reports, 150+ forms, 50+ interfaces to existing systems

Benefits Achieved

Davenport 2003

SAP R/3 Order Entry IBM Storage

Benchmarks - 110 days after production

Enter pricing data into system

Check customer credit upon order

Enter customer order in system

% Manual order/ship to total # of orders/ships

Generate customer invoice after ship

Respond to customer billing inquiry

Ship evaluation unit from customer request

Ship repair/replacement part

Credit returned drive

Obtain commit date for customer order

Unconstrained SJ manufactured drives

Allocated; non-SJ manufactured drives

Focus Area9/1/93

Cycle Time

5 - 80 Days

15 - 20 Minutes

30 Minutes

75%

2 - 23 Days

15 - 20 Minutes

3 - 30 Days

3 - 44 Days

1 - 5 Months

2 Hrs - 3 Weeks

ReengineeredTarget 10/1/93

SAP Performance01/20/95

5 Minutes

Automatic

5 Minutes

0%

1 Day

Real Time

2 Days

2 Days

5 Days

Real Time

5 Minutes

Automatic

15 Minutes

0%

8 Hours

Real Time

2 Days

3 Days

10 Days

Real Time2 Hrs- 3 Weeks

Toyota’s Benefits

D

Current

Future

TOPSPOSTEXCEL

Systems

ERP POST

ERPPOST

ERP ERPALC

ERP ERP ERP

ERP ERP

POSTBSS

VTSVOS

BSSALCVTS

BSSVTS

VTSVTSMSA

MSA VTS

BenefitsLead-time

Flexi-bility

Cost

LeanOrg.

O

O

D

D

D

O

D

D

D

D

O

D DD

D D

O O

O O

D

O

D

O

D

O

O

D

D

D

D

D

O

D

O

O

CreateSales/Prod’nPlan

FinalProd'nSchedule

CreateSalesOrder

CompleteFinishedVehicle

Enquiry onVehicleStatus

CompleteDelivery toDealer

CreateInvoice toFinanceCompany

PaymentFromFinanceCompany

CreateRetailDeliveryRecord

O = No Change D = Improvement X = Detriment

ERP Systems and Value Creation

Integrate Optimise Informate

ERP Evolution

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

Supply Chain

Supply Chain Challenges

GlobalizationWorldwide reach is not a competitive advantage but a necessity

Forces Driving the Evolution of the SCM

Cost LeadershipCost targets and industry consolidation

InnovationSuppliers need to be involved earlier in product development

Forces of Change

OutsourcingFocus on core activities, trusted partnership

Forces Driving the Evolution of the SCM

Retailer Time to Market

Traditional Clothing Retailer 36 weeks

Zara 4 weeks

Forces Driving the Evolution of the SCM

North American Glass Suppliers

2001

Owens-Illinois

Corning

Consumers

Anchor Hocking

2006

Owens-Illinois

Software Company Consolidation

Forces Driving the Evolution of the SCM

Date Entry Price

May 2002 Coca Cola $2.87/6-pack‘Vanilla Cola’

May 2003 Sam’s Choice $1.00/6-pack

‘Vanilla Cola’

August 2003 Pepsi $1.99/6-pack

‘Vanilla Cola’

Key Industry Trends

Quick Copying Erodes Price and Market Share

Product Date Price

Proctor &Gamble introducesSwiffer 1999 $9.62

Pledge 1999$7.32

Grabber

Magic 2001$7.09

Sweeper kit

Clorox 2002$6.69

Ready Mop37% PriceDecline

Forces Driving the Evolution of the SCM

Focusing on Core (Moore)

Core: Processes that create unique competitive differentiation Source of growth in revenues and profits

Context: All other processes No prize for doing these well But there are penalties for doing them poorly

This is not the same as your core competence

This is not the same as your core business

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

Business Network (Moore)

Business networks are core/context ecosystems Each member contributes a unique core—their “claim to fame” Every other member supplies the context to support that core

Business network create higher returns Differentiating spend is greater, duplicated spend is less Higher differentiation creates higher returns on capital for all

Business networks are competitive weapons Silicon Valley, New York, Milan, Bangalore, Shanghai The Internet has made this a “virtual” phenomenon

Dell Business Network

Business Networks: A Dell Laptop for Thomas Friedman

Total order lead time was 13 days.

The order was delayed 9 days because of a Wireless card “control issue”.

Total supply chain estimated at 400 companies in North America, Europe, & Asia.

112

3

4

5

67

89

10

11

1213

14

15

16

17

18

192021

1. Laptop was designed2. Order was taken by phone3. Order hit the Dell factory4. Intel microprocessor*5. Memory *6. Graphics card*7. Cooling Fan*8. Motherboard*9. Keyboard*10. LCD*

11. Wireless card*12. Modem*13. Battery*14. Hard Drive*15. CD/DVD drive*16. Notebook bag*17. Power adapter*18. Power Cord*19. Memory stick*20. Repackaged21. Sent to Tom Friedman

Dell Laptop Story

1. Laptop was designed jointly in Austin, TX and Taiwan2. Order was taken by Mutjeba Naqvi over Dell’s 800 number3. Order hit the Dell Factory in Penang, Malaysia4. Intel microprocessor came from either Phillipines, Costa Rica, Malaysia, or China5. Memory from either Samsung in Korea, Nanya in Taiwan, Infineon in Germany, or Elpida in

Japan6. Graphics card from MSI or Foxcom both in China7. Cooling Fan from CCI or Auras both in Taiwan8. Motherboard from Samsung or Quanta, both in Shanghai, or Compal or Wistron in Taiwan9. Keyboard from Alps, Sunrex, or Darfon, all in China10.LCD from Korea, Japan, or Taiwan11.Wireless card from Malaysia, Taiwan or China12.Modem from China13.Battery from Mexico, Maylasia, China, Taiwan, or Korea14.Hard Drive from Singapore, Thailand, or Phillipines15.CD/DVD drive from Indonesia, Philippines, China, or Malaysia16.Notebook bag from China17.Power adapter from Thailand, Taiwan, Korea, or China18.Power Cord from India, China, or Malaysia19.Memory stick from Israel or Malaysia20.Repackaged w/ external options in Nashville, TN21.Sent to Tom Friedman in Maryland

Apple

And companies must employ new strategies to survive in the new SCM reality

Cost Focus

Outsource everything

Cut Spending

Squeeze Suppliers

Sell to “best”

customers

Eliminate headcount

Value Focus

Partner Strategically

Spend Wisely

Collaborative/Win-win

Acquire “non”

customers

Increase productivity

It is all about INTEGRATION

ERP Systems and Business Network

Journey

Business Basics

Information Systems ERP Systems

Supply Chain Management

Business Network

TransformationSAP

SAP

SAP

Summary

ERP/Enterprise systems are the second most important technology of the last decade (after the Internet)

Considered essential infrastructure

Immense investment (time, money and attention) by businesses

Support global business networks

NOT all companies realize the benefits of these systems

Corporate Strategy

Paul HawkingSAP Academic Programs DirectorSchool of Management and Information systemsTelephone: +61-3-99194031Mobile: +61-419301628Email Paul.Hawking@vu.edu.au

Thankyou