Enterprise Resource Planning
Meiyappan Thandayuthapani
CIS 764
12/02/04
www.cis.ksu.edu/~meiyappa
Overview
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What is ERP?
Key Attributes
Potential modules of ERP
Example
Benefits of ERP
Cons of ERP
Major ERP players
SAP R/3
Key Strengths of SAP R/3
SAP R/3 Implementation
R/3 Architecture
R/3 views of the Firm
Procurement process overview
Conclusion
References
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What is ERP?
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A business software that enables an organization to
effectively and efficiently manage its resources including
material, people, plant and equipment across the entire
enterprise.
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Enterprise systems include ERP software and related
packages as advanced planning and scheduling, sales force
automation, sales forecasting, customer relationship
management, product configuration, etc.)
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Key attributes of ERP
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Automate and integrate the majority of an organization’s
process.
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Share common data and best practices across the enterprise.
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Produce and access information in a real-time environment.
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What’s the change imperative?
Five major reasons why organization’s undertake ERP
projects:
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Integrate financial information
Integrate customer order information
Standardize and speed up manufacturing processes
Reduce inventory levels
Standardize HR information
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Why Integrate???
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Integrated Database always helps
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Data is entered only once!
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Data that results from very different disconnected
applications is inconsistent
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Helps ERP Software's to offer intelligent information by
correlating data from various modules
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“Single version of the truth”
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Signs…
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Some signs that might indicate your organization could benefit
from an ERP:
Poor/uncompetitive performance
Inconsistent reporting
Current systems unable to support growth
Customer responsiveness not optimal
Business becoming global
Recent mergers or acquisitions
Business processes or systems not integrated
Unable to implement new business strategies
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Potential modules of ERP
Equipment
Maintenance
Order
Management
Payroll
Distribution
Sales Force
Automation
Supply chain
Management
Human
Resources
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Customer
Relationship
Management
Procurement
Finance
Order Processing
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When a customer places an order for, say a notebook
computer, over the internet…
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Before ERP…
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Customer representative enters data into the database
Output to the warehouse database, inventory would be set
aside
Entered into the shipping database and inventory database
Entered into the billing database
Sales and marketing try to forecast and determine future
plans
When a customer calls!!!
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After ERP…
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Sends an acknowledgement e-mail to the customer
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Checks customer credit limit
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Generates a Customer number, Order number and estimated
shipping date.
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Displays all the details or after checking all the details mails it
to the customer’s e-mail address.
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Schedules shipping
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After ERP contd…
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Reserves material
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Orders parts from suppliers
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Schedules assembly
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Updates sales and production forecasts database
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Creates MRP and Bill Of Materials (BOM)
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Calculates product cost and profitability
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Updates accounting, financial database
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Benefits of ERP
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One Integrated Database
Scalability
Vendor management
Functionality
Reliable service and support
Saves time
Potential Savings
 Cisco claims $1.3B from their ERP implementation.
ERP applications include a company’s reach beyond its walls
— to its suppliers, customers, and partners
Gotta have it!
 Competitors are implementing it.
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Watch out!
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Don’t just Install! Change business processes!
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An ERP will not necessarily make pure data entry faster.
GIGO – you can only report and use the data you capture.
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An ERP will not resolve failures or weaknesses in the
underlying business model.
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Don’t underestimate the cost!
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Don’t expect instant gains!
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Try not to change the base software!
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Don’t fail to train the staff!
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Major ERP Players in the market
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What is the best ERP software?
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There is no “best” software…
only software that best fits your
organization and it’s business
requirements.
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SAP R/3
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SAP stands for Systems, Applications, and Products in Data
Processing.
R/3 is a SAP product that integrates the information
throughout an organization, providing the benefits of single
data entry, immediate access and common data.
Global dimension
It is a multi-lingual package
It understands different currencies.
Configure the system to the organization
10 million users, 30,000 installations
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Key Strengths – SAP R/3
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Traditionally strong in large market
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Suited for discrete manufacturing and real-time environments
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Suited for asset-intensive environments and public sector
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SAP releases new updates very frequently
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SAP Implementation- Accelerated R/3
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Project Preparation Phase
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Business Blueprint Phase
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Organize teams
Setting Milestones
10 percent of project time
Configure the software
Question and Answer Database
Documentation of questions
20 percent of project time
Realization Phase
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Configuration completed
Data from legacy system converted
Testing under full load condition
45 percent of project time
SAP Implementation- Accelerated R/3
Contd…
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Final Preparation Phase
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End-user training
25 percent of project time
Go Live and Support
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Not the end of the road, continue training people and share knowledge
SAP R/3 Architecture
Computer Center
Management System (CCMS)
Implementation
Management Guide
(CCMS)
System Configuration
-process server assignment
-job/process priority
-user rights/privileges
Assignment Configuration
Tables-8000 entries
Dispatcher-dialog and
batch process
User Interface
Master
Data
Application and queued
processes
(batch processor)
Dialog
Manager
Update Processor
Transactions
Archive Files
Backup/
Archive
Processor
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Backup files
The R/3 views of the firm
Client
Business Areas
Sales Areas
Companies
Purchasing Organizations
Plants
Storage Locations
Distribution Channels
Sales Organizations
Divisons
Profit and Cost Centers
Control Areas
Organizational elements used to organize information within R/3
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Procurement Process overview
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Conclusion
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ERP is the future!
“If you weren’t concerned with how the business ran, you could
probably [install the ERP software] in 18 to 24 months. Then you
would probably be in the unemployment line in 19 to 25 months”.
-Jeri Dunn, CIO for Nestle USA
Selection of the right software and implementation in a proper way is
critical to the success.
Planning and staffing is really important
You will not find a system that matches your business requirements
100%.
There will always be gaps. The key is to prioritize requirements and
benefits.
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References
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Why ERP?A primer on SAP Implementation
F.Robert Jacobs and D.Clay Whybark
www.cio.com/research/erp/edit/erpbasics.html
www.misweb.com/magarticle.asp?doc_id=15318&rgid=5&listed_mo
nths=-2
www.ryerson.ca/~ppille/sap/index.htm
www.erp.ittoolbox.com
www.erp.com
http://www.hill.com/archive/pub/papers/2003/02/paper.pdf
12/02/04