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Unformatted text preview: Enterprise Resource Planning Group 6 Alex Burgos Kari Haugeto David Reimel Derrys A. Richardson ERP and IS Many businesses have been involved in information systems As time goes on, people continue to strive to make things easier. ERP introduced to streamline IS applications Before ERP Departments within a company had their own computer systems. Systems had to rely on certain common data in order to communicate with each other. Usually causes complications because of this. Role of ERP Streamlines operations Eliminates overlaps Saves money and resources Provides integration with in-home and external systems for better system communications ERP's Influence The effects of ERP can be seen across a wide range of industries. ERP systems have driven demand for Radio Frequency Identification (RFID) systems, which track products in a retail environment. They have also served as catalysts for change in everything from accounting programs to collaboration software used by companies both large and small. ERP's Influence ERP can change how a product is made from engineering details to tracking updates. Another issue it deals with is computer security. An ERP is equipped with a security program to protect against both outsider crime, like industrial espionage, and insider crime, like embezzlement. ERP Defined Enterprise Resource Planning systems (ERPs) integrate (or attempt to integrate) all data and processes of an organization into a single system. (Wikipedia.com) More recently, ERP II links externally with their suppliers and customers. Key to most ERP systems is the use of a central database to collect and keep data for the various system components. This standardizes inputs enterprise-wide, which often adds to the duties of end-users. Although the tools for integration are quite simple computer software and hardware the implementation is anything but simple. ERP Defined ERP systems cover all basic functions of an organization. This extends beyond general businesses to non-profits, non-governmental associations, governments, and other large companies regardless of their existing structure. To be considered an ERP system, a software package generally only needs to provide functionality in a single package that traditionally would be covered by two or more systems. So, in a very loose interpretation, Quickbooks which has both accounting and payroll functions could be considered an ERP software package. Today the term is typically reserved for larger, more broadly-based applications and there is a greater emphasis on its enterprise-wide impact. ERP Defined ERP was derived from the term for manufacturing resource planning (MRP II) II MRP II was an extension of material requirements planning (MRP) ERP is the next evolutionary step in organizational communication. ERP Defined Instead of involving itself exclusively with manufacturing, ERP has expanded to include consolidating the manufacturing, logistics, manufacturing logistics distribution, inventory, shipping, invoicing, and distribution inventory shipping invoicing accounting for a company. It also allows for tracking of business activities, like sales, marketing, delivery, billing, production, sales delivery inventory management, quality management, and management human resources management. management ERP Defined It should be noted that initially, most companies integrate only a small portion of their processes. For example Oakland County, Michigan, had been using its ERP vendor's human resources and payroll functionality for five years before expanding to include HR functionality or the vendor's financial and supply-chain applications. In other cases, businesses may prefer one vendor's solution for financial systems but a competitor's module for point-of-sale. We'll address the management's role and implementation strategy in a moment. Implementation Implementation Approaches Phased One or a few modules are implemented in part of the organization Once this stabilizes, the system is implemented in other parts of the organization Implement entire system throughout the company at once Rare in large companies Implement entire system only in one business unit Big Bang Small Bang Implementation Approaches Approach Advantages Disadvantages Phased Lower risk Can return to old systems if necessary Can learn from experience Must operate ERP and legacy systems Lack of integration Big Bang Immediate integration Creates a sense of urgency Very risky High concentration of resources Factors Affecting Choice of Implementation Approach Organization Big bang approach is difficult to manage for very large organizations Big bang is easier in organizations that are centralized Big bang requires a large concentration of resources Big bang is less risky with simple processes (limited configuration) Big bang is also less risky when not many modules are implemented Resources available Complexity Today's implementation strategy must be built on a foundation of : People Processes Product. People This issue refers to: The people directly involved in the implementation. The associated issues that crop up when a new software tool appears on the scene People The challenge is to have the strong: Change management Organizational and project management skills (ERP Project Management Basics) that will likely reduce risk and manage complexity. People Successful teambuilding hinges on experienced leadership to evaluate and assemble the resources required - both internally and externally - to plan and launch a successful implementation and keep it on track. People The best implementation teams represent a combination of: Business process and product knowledge Skill sets and communication efforts that encourage people to share information and responsibility for the project's success. Process To secure management commitment and ongoing support, it's necessary to define a business case for the software tool Focusing first on the core functionality that provides the best and fastest payback. Process To achieve rapid implementation and return-on-investment, the successful implementation strategy should leverage the best practices built into the software. Process Processes should be realigned accordingly. This requires a knowledgeable implementation partner with industry experience. Product Today's implementation partner should possess a thorough understanding of: The software tool's capabilities Technical skills to provide interfaces Integration with other systems within the enterprise Product Today's implementation partner should possess: Business foresight to determine how the software can best be applied to further the organization's goals. Implementation Best Practices Best Practices Make sure goals, scope and expectations are clear from the outset Secure top management active commitment Treat implementation as an organizational change effort not a technology installation Devote necessary resources to the project Track the project's progress, results and scope Test the system every way you can before it goes live Organizational Structure Steering committee Chair is senior executive Representative from each functional area CIO or representative Project manager Solution architect Technical Support Organization SAP Technical Support Org (TSO) SAP TSO should be established at the outset of SAP implementation project During development, the TSO provides the technical expertise and project management required to develop and implement the SAP solution After implementation, the TSO supports end users, maintains the SAP solution stack as well as managing on-going development and evaluation of future solutions SAP TSO Typical Organizational Chart S A P C lie n t P r o je c t M a n a g e r S A P F u n c tio n a l T e a m F u n c tio n a l L e a d S A P In fr a s tr u c tu r e T e a m S A P B a s is /In fr a s tr u c tu r e Lead S A P In t e g r a tio n S p e c ia lis ts S A P B a s is T e a m SAP D BA Team O S /S e r v e r S p e c ia lis t s D is k S u b s y s t e m & S A N S p e c ia lis ts S A P H ig h A v a ila b ilit y & D is a s te r R e c o v e r y T e a m S A P D a ta C e n te r T e a m ( O p s & H e lp D e s k ) Many members of the functional team are experts from functional areas within the organization. These people should be dedicated full time to the SAP project during development. F u n c tio n a l S p e c ia lis t Team 1 F u n c tio n a l S p e c ia lis t T e a m 2 , e tc F u n tio n a l T e s tin g a n d U s e r S u p p o rt B u s in e s s L ia is o n 1 B u s in e s s L ia is o n 2 , e tc P r o g r a m m in g S t a f f F u n c tio n a l C h a n g e M anagem ent The SAP TSO & the Solution Stack SAPGUI/Client components/Browser components Various SAP Integration/Touch Points WAS & ITS/IIS Components SAP Application Server Layer (Online & Batch) SAP Database Server Layer SAP Central Instance Layer Database-Specific Updates/Service Packs/Patches Database Layer OS High Availability Layer (clustering, etc) OS & HW-Specific Driver Overlays OS Service Packs/Patches Operating System Layer Disk Subsystem/SAN HBA Layer Disk Subsystem/SAN Interconnects, Switches, Cables Disk Subsystem/SAN Firmware Layer Disk Subsystem/SAN Hardware Layer Server Firmware Server/CPU/RAM/Local Disk hardware Project Mgmt /Architecture Team SAP Basis & Integration DBA's OS/HA Specialists Server & Disk Specialists SAP Datacenter SAP TSO Senior Positions and Leads Solution Architect responsible overall SAPGUI/Client components/Browser components SAP Infrastructure Various SAP Integration/Touch Points & Basis Lead WAS & ITS/IIS Components SAP Application Server Layer (Online & Senior Batch) SAP Database Server Layer Database SAP Central Instance Layer Administrator Database-Specific Updates/Service Packs/Patches Database Layer OS High Availability Layer (clustering, etc) OS & HW-Specific Driver Overlays OS Service Packs/Patches Operating System Layer Disk Subsystem/SAN HBA Layer Disk Subsystem/SAN Interconnects, Switches, Cables Disk Subsystem/SAN Firmware Layer Disk Subsystem/SAN Hardware Layer Server Firmware Server/CPU/RAM/Local Disk hardware Network Infrastructure Rack and other Physical Mounting Infrastructure Cooling and Conditioning Infrastructure SAP Data Center Lead Training Technical training early in development for technical staff Functional training for end users before and after go live One of biggest mistakes is not devoting enough resources to training Organizational Change Management "...the effort to manage people through the emotional ups and downs that inevitably occur when an organization is undergoing massive change." People have a tendency to resist change because of perceived risks and because they are unwilling to change habits Organizational Change Management Create a clear vision of the future shape of the organization Communicate the vision to the organization and educate people about the issues involved Prepare a culture for change through strong, active leadership and providing an environment for participation Train people adequately to remove uncertainty The goal is to eliminate perceptions of risk by creating trust and to encourage changing habits by creating an appreciation for the necessity of change Testing Conference room tests Test functional capabilities Identify new procedures and draft policies and procedures Identify training needs and implementation issues Confirm data definitions and conversions Confirm the system can handle operational loads Automate many of the tasks required for testing Stress/load testing Computer Aided Test Tools (CATTs) Management and ERP ERP offers a platform from which a company can leverage its data into information and ultimately, to knowledge in a manager's hands. Articles on innovation often point to top management as the agency responsible for changing the norms, values and culture within an organization, and as a result paving the way for co-workers to adapt to the new technology. Key steps include, planning, vendor selection and assimilation. Management's Role: Planning What do you hope to accomplish with ERP? Detailed analysis of your existing business practices, processes and systems. Competitor's practices. Many organizations use benchmarks or competitive analyses to make that determination. Budgeting time and money. Analyze the hardware and software options from vendors Campaign for change getting all levels involved Management's Role: Vendor Selection Find the solution source that best fits your needs and your business environment. Does this provider have the ability to meet your needs, not only today but also in the future? Does their business practices, corporate culture, beliefs and values complement your organization? Look for a technology partner that is strong, growing and that has a proven track record. Do they understand and support industry standards during an ERP deployment and beyond? What about technical support? Management's Role: Vendor Selection Qualities to look for in vendors: Financial stability Aggressive research and development practices Comprehensive service and support Open communication channels when things don't go as planned. Management's Role: Vendor Selection Key Questions 1. Will this ERP system meet my business requirements? 2. Will the software company meet our needs in the future? 3. What is the total cost of ownership over the next five years? 4. Does the ERP provider have relevant customer references? 5. What kind of technology does the software run on? Peter Lotto, "Befriending Your ERP System" 11/2006 Management's Role: Assimilation The potential business value of IT applications cannot be realized until they are assimilated in an organization. The key objective of this postimplementation period is to ensure that the technical features of the new system are embedded as a part of business routines. Management's Role: Assimilation The main deterrent to success is uncertainty. Lack of commitment to the project by the top management, Weak training on the newly implemented system Poor communication by management of the role employees play in the design or implementation of the new system. Management's Role: Assimilation The Obstacles Work-arounds or shadow systems. In general it is very inefficient, but looking deeper these subroutines can offer hints for improving training on the newly installed ERP. Process centers may rely on a power-users (users who understand the ERP system and can communicate well with others) Knowledge transfer from the vendor and consultants to the end user Management's Role In the end, top management serves as not only facilitators but cheerleaders for change. ERP Success Consulting Teams Are Essential For ERP Implementation Over the years, it has been found that companies that are most successful at ERP implementation are those which have taken ownership/control of the project. This is often achieved by the purchasing company seeking the assistance of the ERP vendors. The employment of these consulting firms typically aids in three areas of professional services; Consulting, Customization and Support ERP Success ERP Systems Highly Customizable Another key factor in enabling ERP implementation to be successful is mainly due to most ERP systems ability to be customized to suit each and every organization that may employ it. ERP Success ERP Allows Smooth Transfer and Sharing of Information They may be used to sales and operations planning, fianc, marketing and information systems. This is key feature of ERP systems, because of EDI (Electronic Data Interchange), which allows communication with different departments. ERP Success The features are endless, especially in the area of security. Administrators can give access privileges to users, which out compromising security. For instance each user may not need to use the same information or processes on the system, so even if they may be given the opportunity to view some of the information outside of their normal scope, what they may be able to do with it is limited by access privileges. This has proven effective in Information Management. ERP Success Proper Planning and Testing Planning is and research is an essential factor for ensuring that these systems are successful. Often many organizations implement these systems and reach GO live dates, without proper training of employees. This has adverse effects. ERP in Real Business Unified ERP, Microsoft Dynamics Integrates in-house with external systems Integrates other Microsoft products like Office and Windows Allows for employees to access data in disparate information systems while working with tools they are familiar with In turn lowered training costs ERP in Real Business Hunter Douglas to automate their order processing system Implement data integration tool with a web front to extract business data Customers can check order status and confirm delivery dates in minutes, saving time and money ERP in Real Business Georgia's Dept. Of Admin. Services (DOAS) for an ERP system on time and within budget Service queries that used to take a month to do are done instantly Annual contract reviews are cut from weeks to hours Audit preparation time reduced by half ERP in Real Business Bradley Corporation implements ERP for storage issues and time Lowered inventory levels and warehouse space requirements Increased sales without added staff Decreased lead times and increased ontime deliveries ERP in Real Business When implemented properly, ERPs can result in dynamic benefits. ERP in Real Business Potential Problems Is a risky decision A company must be technically and culturally prepared to understand and implement change Business ways may change to adapt to the ERP's processes and must commit Expensive and time-consuming to set up ERP and UCF Students welcome Peoplesoft? ERP Conclusion Is ERP the new business standard? ERP Conclusion Why does support staff hate it so much? ERP Conclusion Did we forget anything? ERP Finale Thank you. References Allen Web, "Plan to Succeed in ERP Implementation," http://members.aol.com/AllenWeb/succeed.html , 6/1998 CorraTech.com, http://www.corratech.com/open-source/open-source-support-maintenance.html Dr. Ross Hightower, UCF, "ERP Implementation Practices," http://reach.ucf.edu/~ism6158a/notes/Implementation Practices.ppt, Spring 2007 Huigang Liang, Nilesh Saraf, Qing Hu and Yajiong, "Assimilation of Enterprise Systems: The effect of Institutional Pressures and the Mediating Role of Top Management," MIS Quarterly; 03/2007, v31 Issue 1, p59-87 Judy Sweeney and Simon Jacobson, "ERP Breaks," Industry Week/IW; Jan2007, v256 Issue 1, p11a-13-a Kelly Higgins, "ERP Goes On The Road" InformationWeek, 05/23/2005 http://www.informationweek.com/industries/showArticle.jhtml;jsessionid=PIDNGF0HQSTW4QSNDLR SKH0CJUNN2JVN?articleID=163106187&pgno=2&queryText= SKH0CJUNN2JVN?articleID=163106187&pgno=2&queryText Kendall & Kendall, "ERP and Organizational Effectiveness," System Analysis & Design 5th Edition, Prentice Hall, 2002, p33-35 References (con't) Microsoft.com, "Managing the Lifecycle of Government Business," http://www.microsoft.co m/emea/government/newsletters/erp.mspx Patricia Barton, "Enterprise Resource Planning, Factors Affecting Success and Failure," http://www.umsl.edu/~sauter/analysis/488_f01_papers/barton.htm#Other%20ERP %20Success%20Stories, 11/25/2001 %20Success%20Stories Peter Lotto, "Befriending Your ERP System," Electrical Wholesaling; 11/2006, v87 Issue 11, p54-56 ReferenceForBusiness.com, http://www.referenceforbusiness.com/management/EmExp/Enterprise-Resource-Planning.html Webopedia.com, http://www.webopedia.com/TERM/E/ERP.html Wikipedia.com, http://www.wikipedia.com ...
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