Title: ERP Design and Implementation
1ERP Design and Implementation
Intro to ERP and SAP08/23/2006
2SMIS Movie Night
Youre Invited
SMIS is showing the movie Office Space out on
the lawn in front of Fulton Hall on THURSDAY,
AUGUST 24 at 830 pm. Refreshments, T-shirts and
the movie ARE ALL FREE. Please come and kick off
the 06-07 year with some laughs.
3Overview
- Roots of ERP
- Future of ERP
- SAP Products and Capabilities
- SAP R/3 Modules
- What, Who and How of Implementation
- Advantages and disadvantages of SAP
4Roots of ERP
- The concept of ERP has been around since 1960s
- It has its beginning in Materials Requirements
Planning (MRP), and this later evolved into
Manufacturing Resource Planning (MRP II)
5Past - MRP
- Primary business systems installed in
manufacturing companies - Introduced in the 1970s
- Computerized approach to planning and obtaining
the required materials for manufacturing /
production - Uses mainframes as the main source for input and
processing.
6MRP Issues
- Lead Time
- Aggregating demand
- Multiple locations distances not accounted for
- Capacity
7Past - MRP II
- 1980s
- MRP Personnel Financial planning
- Address operational planning in units, financial
planning in dollars, and has a simulation
capability to answer "what-if" questions - Issues - lead times to be fixed, the capacity to
be infinite, the batch sizing concept
8What is Enterprise Resource Planning (ERP)?
ERP (Koch, 2002) The term enterprise
resource planning (ERP) was coined by Gartner
Group in the 1990s. Enterprise resource
planning (ERP) software places its focus on
integrating an organizations departments (i.e.,
finance, HR, warehousing, etc.) and functions
onto a single integrated computer system that
aims to serve all those different departmental
needs.
9What is ERP
- Integration of Business Processes
- Group of processes, applications and technology
- Network and Systems Infrastructure
- Databases
- Applications to support business processes like
Manufacturing (Make), Procurement (Buy), Sales
(Sell), Accounting (Track), Human Resources,
Payroll - Middleware
10ERP System Characteristics
- Standardized processes
- Reduces costs of production and inventory
- Improves customer service
- Materials management
- Resource planning
11What Goes into an ERP System?
Integrated Enterprise Architecture
Integrated database used by organizational
departments for
Human Resources Data
Financial Data
Manufacturing and Logistics Data
12ROI for an ERP System
- Reduce operating costs
- Generate more accurate demand forecasts
- Speed production cycles
- Enhance customer service
13Order Fulfillment Before ERP
14Order Fulfillment After ERP
15Functional Evolution
16Future - ERP II
- ERP Within the boundaries of the enterprise
- ERP II An application and deployment strategy to
integrate all things enterprise centric (Gartner,
2001)
17ERP solution providers
18- AMR Research Article on ERP Market
19ERP Vendors Ranked by Growth (Worldwide)
20Gartner Research on ERP Market
- The enterprise resource planning market will grow
7.7 percent worldwide and the supply chain
management market will grow 6.8 percent worldwide
through 2009.- Nov 11, 2005 - In 2005, total ERP applications grew 5.2 percent
annually as the market deals with mergers,
on-demand and technology advances. Financial
applications and Europe were the largest segments
with 42 percent and 44 percent market shares,
respectively.- June 22, 2006 - Asia/Pacific is the fastest-growing region in the
forecast period, with a compound annual growth
rate of 9.2 percent from 2005 to 2010. New
license revenue for ERP software will reach 721
million by 2010.- April 20, 2006 - Among consulting and solution implementation
services, there are many areas in which certain
skills, competencies and expertise are becoming
increasingly difficult to find. - - June 15, 2006
21Birth of SAP
- Until 1972 ERP was just a concept that companies
had to integrate all departments and functions to
increase revenues and strengthen the business - In 1972, 5 IBM managers set out to start what is
today known as SAP - SAP was the first to develop and implement ERP
specific software and Applications
22SAP a corporate overview
- SAP Systeme, Anwendungen und Produkte (in der
Datenverarbeitung). - Fun facts
- Founded in 1972 by five IBM engineers
- Third largest software vendor in the world,
behind Microsoft and Oracle respectively. - 22000 customers in 120 countries
- 95 of the Fortune 1000 companies use SAP
worldwide - 8 of the top ten largest US corporations use SAP
- 55 market share (July 2004) in the business
software market compared to 51 in 2003.
23Financial Information
- Two Corporate Entities
- SAP AG (AktienGesselschaft)
- German Headquarters, based in Waldorf, Germany.
- SAP America Inc.
- American Headquarters, based in Newtown Square,
Pa - Ticker symbol NYSE SAP, German SAP
- 2003 Sales 8,831.3 million, 13.4 growth from
2002 - 2003 Net Income 1,354.1 million, 153.5 growth
from 2002
24SAP Business Suite
(Product Life-Cycle Management)
Note mySAP ERP is also called R/3 and was called
R/2
(Customer Relationship Management)
(Supplier Relationship Management)
(Supply Chain Management)
(Application Infrastructure)
25SAP Product Offering
mySAP.com
Full functionality
Increasing Business Size
Full functionality, pre-configured, single
database
mySAP All-in-One
mySAP Business One
Necessary functionality up to 250 users
26SAP Products Features
- World-wide usage
- Designed to satisfy the information needs for all
business sizes (international to local) - Multi-lingual
- Multi-currency
- Designed to satisfy the information needs for all
industries (industry solutions)
27SAP Products Features
- Enables a company to link its business processes
- Ties together disparate business functions
(integrated business solution) - Helps the organization run smoothly
- Real-time environment
- Scalable and flexible
28SAP R/3 Modules
Client/Server Architecture
Multi-national
Open System
Comprehensive Functionality
Integrated Solution
44,000 world-wide installations
29R/3 Modules
- Financials
- Human Resources
- Logistics
30Financial (FI)
- Complete picture of accounting
- Extensive reporting facilities
- Suitable for international corporations
- Supports multiple currencies, languages
31FI Modules
- Financial Accounting external
- Controlling cost structures, internal
- Enterprise Controlling monitors critical
success factors - Investment Management plan and manage capital
investment projects - Treasury Cash management
32Human Resources (HR)
- Includes all processes for efficient management
of the organization - Country-specific module
- Includes different transactions, procedures for
different countries
33Logistics
- Most extensive module
- Manage all applications in the supply chain
- Contain comprehensive business processes for
manufacturing - Seamless integration
34Relational Database
- Tables Defines and links thousands of tables of
information - Advantages
- Consistent and accurate data
- Common definitions for terms
- Shared, but restricted usage (e.g., profiles)
- Eliminates data redundancy
35Architecture
- Central relational database (e.g., Oracle and
many others) - Client/Serverthree-tiered
- ERP ComponentOriented towards common
identifiable business modules (PP, MM, SD, FI,
CO, HR)
36What Does it Involve
- Database server
- Application server
- Presentation server
- 24,000 tables in R/3 Enterprise
- 47,000 in ECC 6.0
- 12,000 separate relations
- 22,000 in ECC 6.0
37Who is Involved
- Consultants installation, configuration,
training - Individual employees
- In-house implementation teams
- Super users
- SAP and in-house support teams
- Hosting Centers
38How Long Does it Take
- Large organizations spend 2-3 years implementing
- Value SAP approach allows basic implementation in
6-9 months - Smaller organizations have implemented in 3-4
months - To implement
- Training
- Prepare for change
39Advantages of SAP R/3
- Integration
- Business Process Re-Engineering
- Non-redundant data
- Automatic international conversions
- Complete audit trail
- Compliance with Sarbanes-Oxley
40Advantages (contd.)
- Open system
- Integrated development
- Sophisticated management and monitoring
capabilities - Workflow capabilities
41Disadvantages of R/3
- Expensive
- Complex
- Demands highly trained staff
- Very lengthy implementation times
- Inter-module functions least understood by
business - Internal conflict in organizations
42Research Paper
- Write a paper discussing the
- Product development history
- technology path adopted by Oracle and SAP for the
future development of their respective ERP
product suites. Are they different? Discuss the
pros and cons, if any. - Paper details will be posted on blackboard
- Submissions via digital drop box in blackboard