Enterprise Resource
Planning
Tinesar Forrest
Rachelle Rentschler
Elizabeth Sampson
Shuba Natarajan
Introduction
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What is ERP?
PeopleSoft and Higher Education
The University of Missouri System and the
ASP Project
The University of Missouri-Saint Louis
PeopleSoft Implementation
ERP Best Practices
What is ERP?
“Corporate Root Canal”1...
ERP is an integrated, multi-module software
application package designed to serve and support
multiple business processes.2
ERP evolved from the manufacturing industry. 2
ERP implies packaged software not proprietary
software.2
Sources:
1 White,
J. Clark, D., Ascarelli, S. “This German Software Is Complex, Expensive And Wildly Popular,” The Wall Street Journal, March 14,
1997, pA1.
2 www.erpassist.com Viewed 4/11/2002
Shuba’s Shirts Inc. Demonstration:
Why the Need for ERP?
Customer Service
Shipping
Manufacturing
Accounting
Anatomy of ERP
Source: “Putting the Enterprise into the Enterprise System,” Thomas H. Daveneport; Harvard Business Review, July/August 1998
Evolution of Planning Systems
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MRP-Material Requirements Planning
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MRP II-Next Generation MRP
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ERP
Source: www.erpfans.com Viewed 4/13/2002
Benefits of ERP
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Information integration and accessibility
Better customer service
Decreased material shortages
Reduced inventory
Enhanced productivity
Improved cash management
ERP Implementation Cost
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Average 5.6% of annual revenues
1997 survey of companies with most popular version of ERP:
• average $20 million
• largest organizations > $100 million
• small firms < $12 million
2000 A.T. Kearney survey:
• 45% of North American companies expected to spend > $10
million
Expenditures are proportional to firm size
Hardware, software, training, consulting included
Harvard Business School study found 65% of executives believe
ERP could hurt business due to implementation problems
Consultant fees-$2000/day
Source: Willis et al.,”Cost Containment Strategies for ERP Implementations;” Production and Inventory Management Journal;
Alexandria; Second Quarter 2001
The Big Four
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SAP1
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Customers: Nike, PriceWaterhouseCoopers, Samsung, Yamaha,
Hoffman LaRouche and Unilever1
2001 Revenues: $7.34 Billion1
Oracle2
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Customers: Xerox, IKON, HP, Cigna
2001 Annual Revenues: $11 Billion
Baan
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Customers: Volkswagen, BAE, DuPont, Diebold, Boise Cascade3
2001 Annual Revenues: N/A Acquired in September 2000 by
Invensys4
1999 Annual Revenues: $619 Million3
PeopleSoft
Sources: 1www.sap.com/company/press/press.asp?pressID=977 Viewed 4/12/2002
2www.oracle.com/corporate/investor_relations/financials/index.html Viewed 4/12/2002
31999 Baan Annual Report
4www.baan.com/home/investorrelations/
ERP Market Share
12
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1987-Founded
1995-Developed Student Administration System for
higher education
Revenues $1.7 billion
Craig Conway, CEO
NasDaq PSFT $25.17 4-5-02
Customers include: FedEx, Cal State, Borden
Foods, Credit Suisse First Boston
Strategic partnerships: Corio, IBM, Sun
Microsystems, Accenture, HP, KPMG,
PriceWaterhouseCoopers, Deloitte Consulting
Source: PeopleSoft Corporate Report 2000
Products
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Human Resource Management
Supply Chain Management
Financial Management
Student Administration
Customer Relation Management
Enterprise Performance Management
Mid-Market Solutions
Source: PeopleSoft Corporate Report 2000
Why Higher Education?
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University of Maine1
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7 Campuses
Total Enrollment: 32,955
Employees: 5,586
Revenues: $294 Million
California State University2
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23 Campuses
Total Enrollment: 368,252
Employees: 41,592
Revenues: $5.5 Billion
Sources: 1Http://www.maine.edu/pubaff/snap.htm viewed 3/23/02
2Http://www.calstate.edu/datastore/quick_facts.shtml viewed 3/23/02
Why Would Higher Education
Choose ERP?
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Modernization
Web applications (registration)
Easier access to data
Information technology for on-line courses
Faster than developing home-grown
Source: Olsen, Florence, “Delays, Bugs, and Cost Overruns Plague PeopleSoft’s Services” Chronicle of Higher Education, September 24, 1999, p. A31.
What’s Happening?
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11-30-99 seven universities in the Big Ten
Conference complained to PeopleSoft
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Ohio State University: $53 million budget
became $80 million
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University of Minnesota: $43 million budget
became $53 million
Source: Leibowitz, Wendy R., “Officials of 7 Large Universities Complain to PeopleSoft About Its Programs” Chronicle of Higher Education, January 7, 2000,
p A54.
Case Study:
ASP: People Soft
Administrative Systems Project
The University of Missouri System
Source: www.system.missouri.edu viewed 3/17/2002
University of Missouri System
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Total Enrollment, Fall 2000: 56,030 Students
(76% Undergraduate, 24% Graduate and
First Professional Students)
Teaching and Research Staff: 9,543 (40.4%
Full-time, 51.6% Part-time)
Administrative, Service, and Support Staff:
15,039 (48.4% Full-time, 51.6% Part-time)
Physical Plant Assets: $3,099,677,049
Source: www.system.missouri.edu/urel/main/second/wfacts2.htm viewed 3/17/2002
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Enrollment, Fall 2000: 15,397 (12,737
Undergraduate, 2,660 Graduate and
First Professional Students)
Teaching and Research Staff: 1,429
(35.5% Full-time, 64.5% Part-time)
Administrative and Support Staff: 1,479
(55.1% Full-time, 44.9% Part-time)
Source: www.system.missouri.edu/urel/main/second/wfacts2.htm viewed 3/17/2002
UM System Total Revenues
$1,604,323,000
Federal &
State Grants,
Contracts, and
Federal
Appropriations
9.2%
Other Sources
12.6%
Auxiliary
Enterprises
7.4%
Hospitals and
Clinics
18.4%
Source: www.system.missouri.edu/urel/main/second/wfacts5.htm viewed 3/17/2002
Private Gifts,
Grants, and
Contracts
5.2%
State
Appropriations
28.1%
Student Fees
19.1%
UM System Total Expenditures
$1,576,441,000
Auxiliary
Enterprises
Hospital and
8.6%
Clinics
19.9%
Instruction,
Research,
Public Service,
and Support
Services
71.5%
Source: www.system.edu/urel/main/second/wfacts5.htm viewed 3/17/2002
UM System IS/ASP Branch
Board of Curators
President
VP for IS
Ralph Caruso
Executive Director
ASP
Eileen Heveron
Source: www.system.missouri.edu/urel/main/second/worgch21.htm viewed 3/25/2002
History of the ASP
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Early 90’s: System-wide student group
wanted to replace student information system
October 1996: Board planning goal
October 1996-December 1997: Project
developed
December 1997: Board authorized project
March 1998: Board approval to purchase
PeopleSoft
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
PeopleSoft Modules
Purchased
 Student
 Human Resources
 Finance
Options to Purchase
 Grants
 EPM
 Treasury Management
 Expenses
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
The Vision
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Integration
Accuracy
Ease of Use
Flexibility
Timeliness
Cost Efficiency
Benchmarks of Performance Goals
Continuous Learning
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
The State: Fall 2000
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Processes have long cycle times
Lack of accountability
Administrative processes are not adequate
Lack of integration = Redundant data entry
Use of “shadow systems”
Inflexible and outdated data structures
Poor management reporting and decision
support
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
Expected Benefits
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24 Hour electronic access for students
On-line, real-time information
Reduction in labor-intensive administrative
tasks
Improved recruitment and retention
Better information for better decisions
More time for core missions
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
Project Funding
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$40 Million estimated cost over 4 year
period
Campuses fund 20%
System provides remaining 80%
Separate from IT budget
Currently expected to exceed original
budget by 20%
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
Selected ASP Student Timelines
Original (5-99) to Revised (12-01)
Admissions UMSL, UMKC
9-2001
Recruiting
7-2001
Financial Aid (loans)
5-2002
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
9-2002
7-2002
2-2003
Selected ASP Financial Timelines
Original (5-99) to Revised (12-01)
General Ledger
7-2000
Asset Management
7-2000
Budget
11-2000
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
7-2001
7-2001
2-2001
Selected ASP Human Resources
Timelines
Original (5-99) to Revised (12-01)
Base HR, Base Benefits, Payroll
1-2001
1-2002
Pension
1-2001
2-2002
Benefits Administration
7-2001
2-2002
Recruit Workforce UMSL, UMKC
3-2001
4-2002
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
Changes in Financial
Terminology
Old
 Fiscal Year
 Campus
 Ledger
 Account
 Account
 Account
 Subcode
 Variable Subcode
 None
New
 Budget Period (BP)
 Business Unit (BU)
 FUND
 DEPTID
 PROJECT/GRANT
 PROGRAM
 ACCOUNT
 CLASS
 STATISTICS CODE
Source:http://www.system.missouri.edu/acct/PeopleSoft/cfoverview.htm
Interviews with:
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Dr. Gordon Anderson, Chair of Chemistry
Department
Ms. Charmaine Henson, Executive Associate
Chemistry Department
Ms. Karen Boyd, Manager, Business and Fiscal
Operations, Office of Research Administration
Dr. James Krueger, Vice Chancellor for Managerial
and Technological Services
Dr. Eileen Heveron, Executive Director, ASP Project
Dr. Gordon Anderson
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“Tail wagging the dog”
End user
No formal PeopleSoft training
Pre-audit versus Post-audit concerns
$70,000 budget carryover?
Budget is difficult to read
Scheduling conflicts for students
Source: Interview with Dr. Gordon Anderson 3/22/2002
Ms. Charmaine Henson
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End user
Participated in campus-wide PeopleSoft training
sessions
Participated in Arts and Sciences PeopleSoft
training sessions
Has training manual and created “cheat sheet” for
Chemistry Department
Reconciles Procard and enters payroll
Source: Interview With Ms. Charmaine Henson 3/22/2002
Ms. Charmaine Henson, Cont.
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New contract sheets are templates
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Easier to read
Easier to make changes
Financial reports convert easily
Receives support from superusers, colleagues,
and help-desk
“There is a sense that no one knows the system
and that we are all in this together.”
Source: Interview With Ms. Charmaine Henson 3/22/2002
Ms. Karen Boyd
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20% of work hours devoted to ASP project
Working with KPMG and research
administrators from other 3 campuses
Structuring PeopleSoft to accommodate
administrative procedures
Populating data tables
Grants Information System (GIS)
Source: Interview With Ms. Karen Boyd 3/18/2002
Grants Implementation
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GIS is home-grown system for UM
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UM System is out-growing its capacity
Not integrated
Grants Module
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UM System is among the first to implement
Dependent on HR and financial modules’
implementation
Source: Interview with Karen Boyd 3/18/2002
Dr. James Krueger
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Campus liaison
Member of Steering Committee
Advancement will not convert to PeopleSoft
immediately
UMSL sends 3-4 IT staff to assist with ASP
One data table versus several
UMSL will not have any customization
Student data access by other campuses
Source: Interview with Jim Krueger 3/27/2002
Dr. James Krueger
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GPA calculation
Pre-audit mentality to Post-audit mentality
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Streamlining
Split funding is the largest problem
“Train the Trainer”
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Short on training due to cost
Timing issues
Source: Interview with Jim Krueger 3/27/2002
Dr. Eileen Heveron
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System purchased “Education Units”
available from PeopleSoft
Using “Train the Trainer” methods will
improve training
PeopleSoft gives Higher Education
discounts
The UM-System prepays for
maintenance
Source: Interview With Dr. Eileen Heveron 3/29/02 Via Email Through Elizabeth Sampson
Dr. Eileen Heveron
From an IT Perspective
• All campuses will now use the same
definitions and terms
• All modules will have more data
• Data will be better organized
• The UM System will have better decision
making and reporting in the future
Source: Interview with Eileen Heveron 3/27/2002
Best Practices
ERP
Proving The System‘s Worth
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CEOs and CFOs need to know what they are
getting out of such a huge investment;
determining metrics is only a first step in figuring
out the value of an ERP system
Establish an overall strategy for emerging from
the process knowing the value of the ERP
system
Manage the ERP as a separate business with a
detailed business plan and a separate set of
books
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Measuring Success:
Survey of 30 IT Directors in various industries
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42% actually measure their ERP systems
75 % of those who measure use traditional
ROI
90% of those who measured determined their
metrics prior to implementation
Modules most commonly evaluated were
Finance and Manufacturing
HR most commonly not evaluated
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Financial Module Indications
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Most common metric used was length of
monthly or quarterly close
Reductions in IT department costs
Manufacturing Module Indications
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Improved inventory turnovers
Reduced inventory levels
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
HR and Logistics Indications
HR
 Decreased time to execute payroll
 Reduction in total HR costs by employee
self-service direct access
Logistics
 Reduction in past-due deliveries
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Tools For Measuring Success
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Vendors- SAP's ValueSAP and
Peoplesoft's Client Lifecycle Services
Consultants
Benchmarking- pre-implementation vs.
post-implementation; vs. industry
averages, competitors, and comparable
installations
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Who Chooses These Metrics?
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CFO was primarily responsible for
determining metrics
Input from functional areas such as
Accounting, Human Resources, and
Manufacturing
Only one company mentioned the CEO
helped determine metrics
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Monitoring and Communication
Survey of 30 IT Directors in various industries
50% reported continuous monitoring
 only one-third formally shared results with
those not involved in the initial determination
of metrics
Modes of communication:
 online intranet postings
 memos to functional managers
 formal meetings and conferences with
members of the board and senior
management
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Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Why Don‘t Companies Use
Metrics?
Survey of 30 IT Directors from various industries
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80% of the companies who did not use metrics said
the ERP was a technical necessity for Y2K
compliance
The ERP was adopted to stay competitive ( other
majority)
The measurement process was considered arbitrary
and specific metrics too difficult to quantify
ERP installations are so complicated to measure that
calculating an accurate ROI may never truly work
Too difficult to price intangible benefits
Companies see the investment as merely a cost of
doing business and the monitoring of metrics as a
moot issue
Source: Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
Objective and Benefit
Relationships
Source: Cost containment strategies for ERP system implementations
Production and Inventory Management Journal; Alexandria; Second Quarter 2001; T Hillman Willis; Ann Hillary
Willis-Brown; Amy McMillan;
Implementation Strategies For
Success
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Establish three-way partnership among
client, implementation staff consultants, and
software support personnel
Chose implementation staff based on
accomplishments, flexibility, and skills
Include business analysts, information
technologists, and all super users on
implementation team
Have full support from CEO and upper
management
Source: Will users of ERP stay satisfied? Mit Sloan Management Review; Cambridge; Winter 2001; Barbara McNurlin
Implementation Strategies For
Success Cont.
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Define a clear vision to communicate the
long-term goals for the business
Promote effective user communication- “war
room”
Do not sacrifice core competencies for the
sake of adopting ERP
Install the ERP system one business unit at a
time
Selecting the proper ERP system
Source: Will users of ERP stay satisfied? Mit Sloan Management Review; Cambridge; Winter 2001; Barbara McNurlin;
Commonly Underestimated
Implementation Costs
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Training
Integration and testing
Data conversion
Data analysis
Transition from consultants
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal;
Alexandria; Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Training
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10-20% of total project budget
Superusers, end users, and technical
users
Instructor-led, web-based, CD-ROM
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal;
Alexandria; Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Integration and Testing
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Reformatting and reentering fragmented systems’ data
Testing the links between ERP packages and other
company software built on a case-by-case basis.
30% of the cost is in integration
Decide what data should be common throughout the
organization and what should be allowed to vary; what
identification codes and business processes need to be
standardized throughout the company?
Decide which modules are to be purchased and installed
Configuration tables are then used to adjust the way
processes function within the system
Run a pilot test at one business unit site instead of
attempting a companywide installation
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal; Alexandria;
Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Data Conversion
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Data should be transferred from the old system to
the new one according to a planned schedule that
includes milestones
Should the system move data incrementally or follow
a companywide approach to data conversion?
Should the system follow the long-range plans of the
implementation project or curtail activities if danger
signs appear?
Should data islands be allowed to exist if integration
is not necessary?
Plan for future data requirements
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal; Alexandria;
Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Data Analysis
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ERP vendors advertise that users can do
practically all the analyses desired; however,
data from the ERP system must be combined
with data from external systems to perform
the required analysis
The need for custom reports should be
carefully justified
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal; Alexandria;
Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Transitioning From Consultants
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Identify objectives for consulting partners to
aim for when training internal staff
Ensure “knowledge transfer" from
consultants to company employees during
implementation
Establish rewards or incentives to retain
employees who have obtained the valuable
new knowledge
Source: Cost containment strategies for ERP system implementations Production and Inventory Management Journal; Alexandria;
Second Quarter 2001; T Hillman Willis; Ann Hillary Willis-Brown; Amy McMillan;
Results of Conference Board and
Deloitte-Touche Surveys
CONFERENCE
BOARD
DELOITTETOUCHE
VERY
SATISFIED
34%
SATISFIED
DISSATISFIED
58%
22%
37%
?
25%
Source: Mullin, Rick; “ERP Users Say Payback is Passe;” Chemical Week; New York; Feb 24, 1999; Volume 16
UNSURE
36%
The Conference Board Study 12/00
"ERP Post Implementation Issues
and Best Practices."
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Survey of 117 firms in 17 countries that had
implemented ERP In the study
34% of the organizations were very satisfied with
ERP
58% were somewhat satisfied
7% were somewhat unsatisfied
1% were unsatisfied
78% of the organizations that were "very satisfied"
had made a quantifiable business case for ERP
when they looked into using it - compared with only
22% that had not
Source: Mullin, Rick; “ERP Users Say Payback is Passe;” Chemical Week; New York; Feb 24, 1999; Volume 16
The Conference Board Study 12/00
"ERP Post Implementation Issues
and Best Practices.“ Cont.
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Satisfaction rose as ERP modules were interfaced
more tightly with one another
75% experienced a productivity drop for up to a year
after first implementing ERP
25% did not due to: successful user training and
change management; effective handling of the risks
and the fundamentals of project management; and
continued executive commitment
Respondents found that ERP, by improving time-tomarket and data quality, generally has been an
enabler for e-commerce
Source: Mullin, Rick; “ERP Users Say Payback is Passe;” Chemical Week; New York; Feb 24, 1999; Volume 16
The Trends:
Survey of mid to senior level executives at 400 mid to
large size companies
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65% Plan to use outside professionals for ERP, new
systems, business process engineering, e-- business, &
mergers
50% Will keep or increase levels of spending on such
initiatives
46% Plan to fund systems integration and ERP
solutions
36% Will select and implement new systems in coming
year
35% Will use capital for business processing
engineering projects
Source: ERP consulting holding its own Financial Executive; Morristown; Nov 2001; Anonymous
Changes in ERP
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Piecing ERP- Not the entire system1
Fixed Price Deals- Smaller systems1
Multisourcing- Example: Boeing uses SAP, Baan,
WDS and Oracle1
University and ERP vendor alliances2
Layer/level implementation for complex or dispersed
organizations3
Rapid implementation to lower cost and realize
benefits faster4
Sources: 1Does your ERP system measure up? Strategic Finance; Montvale; Sep 2001;Marianne Bradford; Doug Roberts
2Integrating ERP in the Business School Curriculum Association for Computing Machinery. Communications of the ACM;
New York; Apr 2000; Irma Bercerra-Fernandez; Kenneth E. Murphy; Steven J. Simon; Sic: 611310 Vol. 43
3Multisite ERP implementations Association for Computing Machinery. Communications of the ACM; New York; Apr 2000;
M Lynne Markus; Cornelis Tanis; Paul C van Fenema;
4Up and running in nine months Management Accounting; Montvale; Dec 1998; Robert N West; Murrell Shields
UMSL Best Practice Check List
Scheduled data conversion
 Minimal customization
 Effective communication to end users
 Training
 Installed business units one at a time
 Full commitment from CEO and senior
executives
