enterprise resource planning (erp) systems.ppt
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Enterprise ResourcePlanning (ERP) Systems
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What is ERP?
An ERP system is an attempt to integrate
all functions across a company to a single
computer system that can serve all those
functions’ specific needs.
“Integration” is the key word for ERPimplementation.
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What is RP?
It may also integrate key customers and
suppliers as part of the enterprise’s
operation. It provides integrated dataase and custom!
designed report systems.
It adopts a set of “est practices” for carrying
out all usiness processes.
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Major Reasons for Adopting ERP
Integrate financial information
Integrate customer order information
"tandardi#e and speed up operations
processes
Reduce inventory
"tandardi#e $uman Resources
information
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Potential Benefits of ERP
Internal %enefits
& Integration of a single source of data
& 'ommon data definition& A real!time system& Increased productivity
& Reduced operating costs& Improved internal communication& (oundation for future improvement
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Potential Benefits of ERP
E)ternal %enefits
& Improved customer service and orderfulfillment
& Improved communication with suppliers andcustomers
& Enhanced competitive position& Increased sales and profits
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ERP mplementation Approaches
*he ig ang + install a single ERP system
across the entire organi#ation
(ranchising + Independent ERP systems areinstalled in different units linked y common
processes, e.g., ookkeeping.
"lam dunk + install one or several ERPmodules for phased implementation of key
usiness processes.
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Major Phases of ERP mplementation (!ent Sandoe" Enterprise ntegration)
Initiation + develop usiness case, pro-ectscope, and implementation strategy
Planning + estalish implementation team,determine goals and o-ectives, estalishmetrics
Analysis and process design + analy#e andimprove e)isting processes, map newprocesses to e adopted y the system
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Major Phases of ERP mplementation (!ent Sandoe" Enterprise ntegration)
Reali#ation + install a ase system,customi#ation, and test the system
*ransition + replace the formal system withthe new system, data conversion
peration + monitor and improve system
performance, provide continued training andtechnical support
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Major #hallenges to ERP mplementation
/imitations of ERP technical capailities
Inconsistency with e)isting usiness
processes'osts ! implementation 0hardware, software,
training, consulting1 and maintenance
Impact on organi#ational structure 0frontoffice vs. ack office, product lines, etc.1
'hanges in employee responsiilities
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Major #hallenges to ERP mplementation
(le)iility of software system upgrades
Implementation timelines
Availaility of internal technical knowledge
and resources
Education and training
Implementation strategy and e)ecution
Resistance to change
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$otal #ost of ERP %&nership (inmillions of ') ME$A roup Sur*ey
System Medium Average Smallest Largest
Baan 16.1 13.6 0.8 26.5
JD Edards 3.! 5." 0.8 21.6
Las#n 1.! $.1 0.$ 16.$
%ra&le 5.$ 11.2 1.$ $2.8
'e#(leS#)t ".$ 15.5 1.3 58.6
SA' 13.! 52.2 0.8 308.2
SSA 1." ".6 0." 2!.6
(rom2 “ Implementation "tudy Reveals 'osts, %enefits,” *hePerformance Advantage, API'", ctoer 3444, p.5
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Benefits of ERP mplementation(ME$A roup Sur*ey)
%enefits are mostly in terms of cost containment rather
than revenue increase.
67 companies 0out of 871 reported annual savings of
over 96 millions with the median annual saving of 93.8
million. :ine companies account for 57.;< of the
reported savings.
*he study found that much of the ERP value is inindirect, non!=uantifiale enefits.
A numer of companies surveyed had a negative net
present value.
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ERP mplementation !ey Ena+lers(AP,# BestPractice Report)
*he organi#ation is prepared for the change. *he e)ecutive leaders are active and visile in their
support. *he initiative is seen as a usiness imperative y the
organi#ation. *he resources are availale to conduct the pro-ect
completely.
A good packaged system is used and notcustomi#ed.
*he user group is trained to use the software eforeit is implemented.
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ERP mplementation Practices(AP,# BestPractice Report)
Pro-ect >anagement
& rgani#ations link implementation teams to oth thetechnical 0I"1 and functional departments.
& *hey tightly control implementation processes& *hey appropriately use consultants throughout the
implementation process
& *hey manage turnover of key implementation employees& *hey have asic usiness reasons for implementation& *hey align implementation with organi#ational strategies
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ERP mplementation Practices(AP,# BestPractice Report)
'hange >anagement
& Redesigned -os call for higher levels of skills and
accountaility& 'hange management is viewed as more than -ust
increased training and communication
& Enterprise!wide systems drive redesigned changes.& *he e)ecutive sponsor is the change agent.& Resistance from the work force 0including
management1 is the most significant ostacle.
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ERP mplementation Practices(AP,# BestPractice Report)
*echnology E)cellence
& rgani#ations rely heavily on the ERPpackage as the ma-ority of their applicationconfiguration.
& rgani#ations implement ERP packages on
time and within udget& rgani#ations centrali#e support groups within
their I* departments
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-e& .e*elopments n ERP
Availaility of we!ased and wireless ERP
systems
Adoption of easy!to!install ERP systems
/inkage to other software systems, e.g.,
supply chain management system, e!commerce, customer relationship
management system