Its all about Integration
Paul Hawking
Background
SAP University Alliance Program (UAP)
University
SAP
SAP User Group



Presenter

Design Events

Advisor

Past Chairperson
SAP Academic Program
Director
SAP Mentor
22 SAP million users
2.5 million SAP
Community Network
members
6,000 active contributors
100 SAP Mentors
1 academic

Research

Industry Reports

Best selling author

ERP Systems and
Business Intelligence

Teach Academics
Visiting Professor

Develop curriculum

2009 + 2010 Top 10 Most
Influential SAP People

Who? What? Why?
Tim Berners Lee
INTEGRATION
Journey
Business
Basics
Information
Systems
ERP Systems
Supply Chain
Management
Business
Network
Transformation
SAP
Strategy and Business Processes
Business Process Examples
Sales
Sales
Receive
Customer
Purchase Order
Warehouse
Prepare
Shipment
(Pick & Pack)
Create
Sales Order
Send
Shipment
(Ship)
Accounting
Create & Send
Invoice
Recieve
Payment
$
$
Procurement
$
Warehouse
Create
Requisition
Purchasing
Create & Send
Purchase
Order
Warehouse
Receive
Shipment
Accounting
Receive
Invoice
Send
Payment
Business Process Elements
Organisational Units
Sales Area
Distribution Channel
Transactions
Sales Order Creation
Goods Issue
Data
Master Data
Customer
Material
Transactional Data
Sales Quantity
Sales Price
Process Indicator
Journey
Business
Basics
Information
Systems
ERP Systems
Supply Chain
Management
Business
Network
Transformation
SAP
Traditional Business Landscape
Executive
Management
Middle
Management
Operational
Management
Operations
Sales
Production Human
Finance &
Resources
Distribution
Traditional Business Landscape
Executive
Management
Middle
Management
Operational
Management
Operations
Sales
Production Human
Finance &
Resources
Distribution
Intel (1995)
SECURITY
HELP
RCC
ELECTRONIC
TRANSFER
DAISY
PRICE
BOOK
WMS
Configurator
CUSTOMER
EUC
EXTRACTS
PNA
SARP
PRICE
NOVA
AGREEMENTS
INFRASTRUCTURE
MDS
JAPAN
FORECAST
CWS
JAPAN
DAISY
STAR
JASTAR
PGS
JAPAN
PRICE
BOOK
PRICE
BOOK
EDI
G/L
COMPONENTS
COST
NIMS
EUC
EXTRACTS
DPA
A/P
PRODUCT
CODE
OEM
QUOTE
MAX
RST
EUC
EXTRACTS
DEMAND
FORECAST
AVAILABILITY
EDI
EUC
EXTRACTS
DPA
A/R
PMS
DARE
ESTAR
CLS
AMAPS
GPS II
DATA
WAREHOUSE
ISET
MPS
GIMS
Traditional Business Landscape
Executive
Management
Middle
Management
Operational
Management
Operations
Sales
Production Human
Finance &
Resources
Distribution
Integration Problems
Data
• 9/11/2011
• Last name
• Subject vs Course
Process
• Weekly vs Fortnightly
• Workflow (goods receipt)
People
• Application Screens
• Information
Traditional Business Landscape
Executive
Management
Middle
Management
Operational
Management
Operations
Sales
Production Human
Finance &
Resources
Distribution
Public Sector Procurement Process? - Complexity
Journey
Business
Basics
Information
Systems
ERP Systems
Supply Chain
Management
Business
Network
Transformation
SAP
Why ERP?
Systems Not Y2K Compliant
42%
Disparate Systems
37%
Poor/Uncompetitive Performance
27%
Program Motivation
Poor Quality/Visibility of Info
26%
Cost Structure Too High
24%
Not Responsive Enough to Customers
21%
Complex, Ineffective Business Processes
20%
Business Processes or Systems Not Integrated
19%
Unable to Implement New Business Strategies
15%
Business Becoming Global
15%
Difficult to Integrate Acquisitions
12%
Obsolete Systems
11%
Inconsistent Processes
10%
Unable to Support Growth
6%
0%
Note: Based on multiple answers per respondent
5%
10%
15%
20%
25%
30%
35%
40%
% Respondents
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)
45%
ERP Evolution
EDI
e-Commerce
SFA
CRM
e-business
Planning
Scheduling
SCM
Distribution
MRP
Payroll
General Ledger
Accounts Payable
Accounts Receivable
1970s
MRP11
Human
Resources
Financial
Management
Information
System
1980s
ERP
ERP11
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)
ERP System
Finance
Enterprise
Resource
Planning
System
Executive
Management
Human
Resources
Middle
Management
Operational
Management
Sales
&
Distribution
Production
Operations
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
Focus Area
9/1/93
Cycle Time
Reengineered
Target 10/1/93
SAP
Performance
01/20/95

Enter pricing data into system
5 - 80 Days
5 Minutes
5 Minutes

Check customer credit upon order
15 - 20 Minutes
Automatic
Automatic

Enter customer order in system
30 Minutes
5 Minutes
15 Minutes

% Manual order/ship to total # of orders/ships

Generate customer invoice after ship
2 - 23 Days

Respond to customer billing inquiry
15 - 20 Minutes

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
75%
0%
0%
1 Day
8 Hours
Real Time
Real Time
3 - 30 Days
2 Days
2 Days
3 - 44 Days
2 Days
3 Days
1 - 5 Months
5 Days
10 Days
2 Hrs 3 Weeks
Real Time
Real Time
2 Hrs3 Weeks
Toyota’s Benefits
Create
Sales
/Prod’n
Plan
Final
Prod'n
Schedule
Create
Sales
Order
Complete
Finished
Vehicle
Enquiry on
Vehicle
Status
Complete
Delivery to
Dealer
Create
Invoice to
Finance
Company
Payment
From
Finance
Company
Create
Retail
Delivery
Record
TOPS
POST
EXCEL
POST
BSS
VTS
VOS
BSS
ALC
VTS
BSS
VTS
VTS
VTS
MSA
MSA
VTS
ERP
ERP
ERP
ERP
ERP
ERP
ERP
ERP
POST
POST
ERP
Leadtime
O
D
D
D
D
D
D
D
O
Flexibility
O
O
O
D
O
D
O
O
D
Cost

D
D
D
D
D
D
D
D
O
Lean
Org.
D
D
O
O
O
D
O
O
O
Systems
Current
Future
ALC
Benefits
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
Transformation
SAP
Supply Chain
Supply Chain Challenges
Forces Driving the Evolution of the SCM
Forces of Change
Globalization
Worldwide reach is not a competitive advantage but a necessity
Cost Leadership
Cost targets and industry consolidation
Innovation
Suppliers need to be involved earlier in product development
Outsourcing
Focus on core activities, trusted partnership
Forces Driving the Evolution of the SCM
Retailer
Traditional Clothing Retailer
Zara
Time to Market
36 weeks
4 weeks
Forces Driving the Evolution of the SCM
North American Glass
Suppliers
2001
2006
Owens-Illinois
Owens-Illinois
Corning
Consumers
Anchor Hocking
Software Company Consolidation
Forces Driving the Evolution of the SCM
Date
Entry
Price
May 2002
Coca Cola
‘Vanilla Cola’
$2.87/6-pack
May 2003
Sam’s Choice
$1.00/6-pack
‘Vanilla Cola’
August 2003
Pepsi
‘Vanilla Cola’
$1.99/6-pack
Key Industry Trends
Quick Copying Erodes Price and Market Share
Proctor &Gamble introduces
Product
Date
Price
Swiffer
1999
$9.62
Pledge
1999
$7.32
2001
$7.09
2002
$6.69
Grabber
Magic
Sweeper kit
Clorox
Ready Mop
37% Price
Decline
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
Transformation
SAP
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
1
13
20
17
5 10
21
19
16 12
9
17
6
8
14
3
11
Wireless card*
15
2
18
4
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Laptop was designed
Order was taken by phone
Order hit the Dell factory
Intel microprocessor*
Memory *
Graphics card*
Cooling Fan*
Motherboard*
Keyboard*
LCD*
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
Modem*
Battery*
Hard Drive*
CD/DVD drive*
Notebook bag*
Power adapter*
Power Cord*
Memory stick*
Repackaged
Sent to Tom 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.
Dell Laptop Story
1.
2.
3.
4.
5.
Laptop was designed jointly in Austin, TX and Taiwan
Order was taken by Mutjeba Naqvi over Dell’s 800 number
Order hit the Dell Factory in Penang, Malaysia
Intel microprocessor came from either Phillipines, Costa Rica, Malaysia, or China
Memory from either Samsung in Korea, Nanya in Taiwan, Infineon in Germany, or Elpida in
Japan
6. Graphics card from MSI or Foxcom both in China
7. Cooling Fan from CCI or Auras both in Taiwan
8. Motherboard from Samsung or Quanta, both in Shanghai, or Compal or Wistron in Taiwan
9. Keyboard from Alps, Sunrex, or Darfon, all in China
10.LCD from Korea, Japan, or Taiwan
11.Wireless card from Malaysia, Taiwan or China
12.Modem from China
13.Battery from Mexico, Maylasia, China, Taiwan, or Korea
14.Hard Drive from Singapore, Thailand, or Phillipines
15.CD/DVD drive from Indonesia, Philippines, China, or Malaysia
16.Notebook bag from China
17.Power adapter from Thailand, Taiwan, Korea, or China
18.Power Cord from India, China, or Malaysia
19.Memory stick from Israel or Malaysia
20.Repackaged w/ external options in Nashville, TN
21.Sent to Tom Friedman in Maryland
Apple
And companies must employ new strategies to
survive in the new SCM reality
It is all about INTEGRATION
Cost Focus
Value Focus
 Outsource everything
 Partner Strategically
 Cut Spending
 Spend Wisely
 Squeeze Suppliers
 Collaborative/Win-win
 Sell to “best”
customers
 Acquire “non”
customers
 Eliminate headcount
 Increase productivity
ERP Systems and Business Network
Journey
Business
Basics
Information
Systems
ERP Systems
Supply Chain
Management
Business
Network
Transformation
SAP
SAP
SAP
Summary
Corporate Strategy
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
Thankyou
Paul Hawking
SAP Academic Programs Director
School of Management and
Information systems
Telephone: +61-3-99194031
Mobile:
+61-419301628
Email
Paul.Hawking@vu.edu.au