ERP and SAPSAP University Alliances

Version 2.01Sumantra SarkarGeorgia State UniversityRobinson College of Business8th November, 2011

Presentation OverviewBusiness ChallengesIntroduction to ERPIntroduction to SAPSales & DistributionMaterials ManagementProduction PlanningFinancial Accounting Controlling

Challenges Senior ManagmentHow much AR is more than 180 days old? Todays total Sales Orders and Collections across North America?Is the Sales from West going up / down compared to the same time last year ?How much did we Purchase this year from X globally ?How much fast-moving Inventory do we have at the New Mexico Warehouse?Inventory Turnaround Time for class A items?How much is todays Production Batch cost?Can my Cash-On-Hand last me for 15 days w/out overdraft?Can our Business Processes and Systems enable me with answers immediately ?

MRP MRP II - ERP*Production planning within MRPII.ERP in retrospect

ERPIntegrates internal and externalmanagement informationacross an entire organization, embracingfinance/accounting,manufacturing, sales and service, etc. ERP systems automates activity with an integratedsoftwareapplication. The purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.*

Supply Chain Managementdefined as a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances. and/or information from a source to a customerTransaction flows from Supplier to Customers and vice versaCapture GL transactions underneath*

Revenues*

Vendor landscape*

Market share by Vendor*

Revenue by ERP Vendor*

Implementation Cost*2010 Panorama Consulting Group LLC

ERP Failures (2010) http://www.cio.com/article/647564/Biggest_ERP_Failures_of_2010New York's CityTime 'disaster' - CityTime, an effort by New York City to modernize its payroll system, is more of an ERP "project failure of the decade" - originally budgeted at around US$60 million, but has since ballooned to a colossal $700 million-plusBSkyB (BSY) gets 318 million settlement from Hewlett-Packard/EDS (HPQ) - A court found that HP's EDS division had lied about how long it would take to finish the project, which was started in 2000 and originally budgeted at 48 million. BSkyB fired EDS in 2002 and completed the job itself, but costs ultimately quintupled.Marin County's "rip and replace" - Marin County sued system integrator Deloitte Consulting in connection with the system earlier this year, saying Deloitte used the project as "a trial-and-error training ground" SAP settles with Waste Management - One of the ugliest ERP project legal battles in memory came to an end in May, when SAP reached a settlement with trash hauler Waste Management. Waste Management originally sued SAP for fraud in March 2008 over an allegedly failed implementation of its ERP software. The company claimed it suffered significant damages, including more than US$100 million it spent on the project, as well as more than $350 million for benefits it would have gained if the software had worked as intended.

*

Hershey Foods Corporation (1999)One of the largest known project failures linked to an ERP systemSAP was implemented in a short amount of timeThe big bang approach was elected as a cutover strategyHershey lost large amounts of revenue during a high season (Halloween) because they could not fulfill orders in time, even though the inventory was available. The software was not the issueThe processes were mapped in a poor mannerThis is more of a Project failure than an ERP failure

*

Hershey Income Statement*

Success with ERP*

Functional ModulesVendors Function:Vendor MastersVendor/Material AnalysisVendor QualityVendor RatingVendor PaymentsVendor Credit StatusVendor ReportsVendor LedgerCustomers Function:Customer MastersSales Order ProcessingOrder DeliveriesSales InvoicesCustomer ReceiptsDealers CommissionSales Forecasting

*

Functional Modules Contd.Accounting FunctionGeneral LedgerFixed AssetsFinancial StatementsCash Flow StatementsProduct CostsProfitability AnalysisManagement Information SystemBalance Sheet AnalysisYearly Financial Statements

Materials Function:Material MastersPurchase RequisitionsPurchase OrdersNon-Stock ItemsPricingQuality ControlPurchase LedgerInventory ControlTools and Gauges

*

Presentation OverviewIntroduction to ERPIntroduction to SAPSales & DistributionMaterials ManagementProduction PlanningFinancial Accounting Controlling

What is SAP?Systeme, Anwendungen und Produkte in der Datenverarbeitung(English: Systems, Applications, and Products in Data Processing)SAP AGFounded in Walldorf, Germany in 1972Worlds Largest Business Software CompanyWorlds Third-largest Independent Software ProviderWorld-wide usageDesigned to satisfy the information needs for all business sizes (small local to large all international)Multi-lingualMulti-currencyMulti-balance (parallel G/L Accounting)

Evolution of SAP*1996Davenport mega-packages1997/1998ERP at IS conferences2000ERP in IS journals

SAP Enterprise Resource Planning (SAP ERP)Enables a company to support and optimize its business processesTies together disparate business functions (integrated business solution) such asFinance (Financial Accounting, Managerial Accounting, Treasury, )Logistics (Sales, Procurement, Production, Fulfillment, )Human ResourcesHelps the organization run smoothlyReal-time environmentScalable and flexible

SAP Components

SAP ERP Business ModulesCollections of logically related transactions within identifiable business functionsMM (Buy)PP (Make)SD (Sell)FI and CO (Track)HCM

SAP ERP Core ApplicationsLogistics Sales & DistributionMaterials ManagementProduction PlanningPlant MaintenanceQuality ManagementFinanceFinancial AccountingManagerial AccountingAsset ManagementTreasuryHuman ResourcesPersonnel ManagementBenefitsPayroll

SAP Industry SolutionsAerospace & DefenseAutomotiveBankingChemicalsConsumer ProductsDefense & SecurityEngineering, Const.HealthcareHigh TechHigher EducationIndustrial MachineryInsuranceLife SciencesLogistics Service Prod.MediaMill ProductsMiningOil & GasPharmaceuticalsPostal ServicesProfessional ServicesPublic SectorRailwaysRetailTelecommunicationsUtilitiesWholesale Distribution

Presentation OverviewIntroduction to ERPIntroduction to SAPSales & DistributionMaterials ManagementProduction PlanningFinancial Accounting Controlling

FunctionalitySales SupportSales Shipping and TransportationBillingCredit ManagementForeign Trade

Sales Order ProcessNo financial impact (FI)Bank XXXX A/R XXXXA/R XXXX Sales XXXXCOGS XXXX Inventory-FG XXXXMaterials Management (MM) and Financial Accounting (FI)via automatic account assignmentAmount owed isassigned and transferred toCustomer account receivableAmount owed by customer is received and Account Receivables is reduced*Good Sent

GL Transactions Tracking

*Post Goods IssueCOGS XXXX INV-FG XXXXXInvoice CustomerA/R XXXX SALES XXXXX

GL Transactions Tracking

*Payment ReceivedBANK XXXX A/R XXXXX

Production Process with SAPProduction cycle example

Video*

Can our business processes and Systems help me in answering these immediately ?*http://opensourceerpguru.com/2009/02/25/erp-history/In 1972, five systems analysts began working nights and weekends to create standard software withrealtime data processing. Twenty-five years later their vision is a reality: SAP is the worlds market andtechnology leader in business application software.On April 1, 1972 five former IBM employees founded SAP as Systemanalyse und Programmentwicklung(Systems Analysis and Program Development) in Mannheim, Germany. Their vision was to developand market standard enterprise software which would integrate all business processes. The idea came tothem through their work as systems consultants for IBM when they noticed that client after client wasdeveloping the same, or very similar, computer programs. The second part of their vision was that datashould be processed interactively in realtime, and the computer screen should become the focal point ofdata processing.

*Enterprise resource planning(ERP) integrates internal and externalmanagement informationacross an entire organization, embracingfinance/accounting,manufacturing, sales and service, etc. ERP systems automate this activity with an integratedsoftwareapplication. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.[1]** Copyright 2007 by AMR Research, Inc. AMR Research is a registered trademark of AMR Research, Inc.*Copyright 2011 Panorama Consulting Group LLC. All rights reserved.*Copyright 2011 Panorama Consulting Group LLC. All rights reserved.

* Copyright 2007 by AMR Research, Inc. AMR Research is a registered trademark of AMR Research, Inc.

*Copyright 2010 Panorama Consulting Group LLC. All rights reserved.*http://www.cio.com/article/647564/Biggest_ERP_Failures_of_2010 *ERP implementation Failure at Hershey Foods Corporation Case study Reference no 908-001-1 2008 ICFACI Center for Management Research *ERP implementation Failure at Hershey Foods Corporation Case study Reference no 908-001-1 2008 ICFACI Center for Management Research

*This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/indexhttp://opensourceerpguru.com/2009/02/25/erp-history/In 1972, five systems analysts began working nights and weekends to create standard software withrealtime data processing. Twenty-five years later their vision is a reality: SAP is the worlds market andtechnology leader in business application software.On April 1, 1972 five former IBM employees founded SAP as Systemanalyse und Programmentwicklung(Systems Analysis and Program Development) in Mannheim, Germany. Their vision was to developand market standard enterprise software which would integrate all business processes. The idea came tothem through their work as systems consultants for IBM when they noticed that client after client wasdeveloping the same, or very similar, computer programs. The second part of their vision was that datashould be processed interactively in realtime, and the computer screen should become the focal point ofdata processing.

*This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/indexThis slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

This slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/indexThis slide was developed with the help of SAP and the Univeristy Alliance. http://www.sdn.sap.com/irj/uac/index

Videohttp://www.sdn.sap.com/irj/scn/index?rid=/library/uuid/b057b7b7-3d68-2e10-26a7-e995e3886e20&overridelayout=true *