erp
DESCRIPTION
ERP ImplementationTRANSCRIPT
MIS PresentationOn
PUTTING THE ENTERPRISE INTO THE ENTERPRISE SYSTEM
BY THOMAS H. DAVENPORT
Siddarthan Kameswaran,SOM, Manipal
Contents What is ERP?
ERP Scope
Costs of an ERP system
Advantages & Disadvantages
Anatomy of an enterprise system
Configuring an enterprise system
The Allure of Enterprise Systems
When System and Strategy Clash
The Impact on an Organization
Doing It Right at Elf Atochem
The Role of Management
Conclusion
ERP- Information System software
A suite of integrated applications that a company can use to store and manage data from every stage of business, including:
Manufacturing
Product planning, cost and development
Marketing and sales
Inventory management
Shipping and payment
E.g.- PeopleSoft from Oracle
SAP Business suite from SAP
ERP Scope
An enterprise system by its very nature imposes its own logic on a company's strategy, organization and culture.
Financial management
Human Resource Management
Operations & Logistics
Sales and Marketing
ERP Functions
Costs of an ERP system
Acquisition Price
Costs of customizing the system
Costs of installing the ERP system
Training
Transition to a new system can incur extra costs
Maintenance costs
Emerging Trends in ERP
CRM
Need based ERP purchases
Increasing focus on business intelligence ERP
Increased need for specialized ERP services
Big companies acquiring smaller startups
Rising importance of ERP on Cloud
More focus on profit from ERP
Mobile ERP
Emergence of two-tiered ERP systems
How actual system looks?
ANATOMY OF AN ENTERPRISE SYSTEM
At the heart of an enterprise system is a central database that draws data from and feeds data into a series of applications supporting diverse company functions.
Using a single database dramatically streamlines the flow of information throughout a business.
CONFIGURING AN ENTERPRISE SYSTEM
Adjust the system using configuration tables to achieve the best possible fit for the company
Two configuration mechanisms: Modules (Company Specific-functions grouped
together) Configuration tables (to tailor a particular
aspect of the system, e.g.: FIFO or LIFO) Customization vs Configuration
The Allure of Enterprise Systems
Every big company collects, generates, and stores vast quantities of data.
The information is spread across dozens or even hundreds of separate computer systems.
Maintaining many different computer systems leads to enormous costs
If a company's systems are fragmented, its business is fragmented.
The ES system performs nearly every information transaction resulting from the sale.
An ES streamlines a company's data flows and provides management with direct access to a wealth of real-time operating information.
These benefits have translated into dramatic gains in productivity and speed.
Eg:
Autodesk-2 weeks to 24hrs,
IBM Systems Division,
Fujitsu
When System and Strategy Clash
Companies would first decide how they wanted to do business and then choose a software package that would support their processes.
With enterprise systems however the sequence is reversed.
The company may Integrate its data and improve its processes only to lose its service edge and in turn its customers.
STRATEGY SYSTEM
For companies that compete on cost rather than on distinctive products or superior customer service, enterprise systems raise different strategic issues.
A speedy implementation of an enterprise system may be a wise business move, but a rash implementation is not.
Eg: Foxmeyer, compaq
The Impact on an Organization
Real-time access
Streamlines the management
Centralization of control
(or)
To break down hierarchical structures
To achieve tight coordination throughout their businesses.
They can rapidly shift sourcing, manufacturing, and distribution functions worldwide in response to changing patterns of supply and demand.
This capability allows them to minimize excess manufacturing capacity and reduce both component and finished-goods inventory.
Example
Owens Corning adopted an ES to replace 211 legacy systems. For the company to grow internationally, its chief executive, Glen Hiner, felt it was critical to coordinate order-management, financial-reporting, and supply chain processes across the world. Having implemented the system and established a new global-procurement organization, the company is now able to enter into larger, more advantageous international contracts for supplies. Finished-goods inventory can be tracked daily, both in company warehouses and in the distribution channel, and spare-parts inventory has been reduced by 50%. The company saved $65 million by the end of 1998 as a result of its adoption of these globally coordinated processes.
For most companies, however, differences in regional markets remain so profound that strict process uniformity would be counterproductive
Rather than implementing a single, global ES, these companies roll out different versions of the same system in each regional unit, tailored to support local operating practices.
This approach has been taken by a number of large companies, including Hewlett-Packard, Monsanto, and Nestlé.
Doing It Right at Elf Atochem
• ADOPTED SAP’ S R/3
• ESTABLISHED THE DESIGNATION “DEMAND MANAGER”
• MORE THAN 75 % IS UPDATED , 9 OF THE 10 BUSINESS UNITS RUNNING NEW SYSTEMS
• JUST ONE CALL , AGAINST GIANT 5 CALLS IN PREVIOUS DAYS
The role of management
ES as a silver bullet
Involment of top management in deciding the areas of ES implemantation
Importance of monitoring the development of ES
And maintain the system to run the process smoothly
Advantages/Benefits Information entered once into system
Allows customization
Provides functionality to interact with other modules
Eliminates disparate stand-alone systems
Provides integrated, enterprise-wide common tools, processes and systems
Integrates and increases control of budgeting, planning and financial management
Growth of an organization
Control over systems
Disadvantages
Implementation may require major changes in the company and its processes.
Maintenance is costly and time consuming
Data errors are replicated through the system
Conclusions
ERP system may be expensive but it offers organizations cost efficient system in the long run.
ERP software works by integrating all the different departments in an organization into one computer system allowing for efficient communication between these departments and hence enhances productivity.
Organizations should take extra measures when it comes to choosing the correct ERP systems.
A Cheapest one adds competitive advantage