ERP Frequently Asked Questions 1. Explain Stages of IT Deployment

ERP frequently asked questions

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1. Explain stages of IT deployment in an organization and evolutionary path of CBIS

Computer Based Information Systems

TPS: Perform routine operations (viz customer orders, purchase orders etc.) and serve as a foundation for other systems MIS: An MIS provides managers with information and support for effective decision making, and provides feedback on daily operations DSS: Offers potential to assist in solving both semi-structured and unstructured problems ESS: A specialized DSS mainly used to assist senior level managers in the org. ES: Display intelligent behavior, Draw conclusions from complex relationships, Provide portable knowledge


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Porters Competitive five forces model & its application in

development of SIS SIS stands for Strategic information systems. Mainly to address “competition”

Porter’s Competitive five forces

1. Threat of new entrants

1. Reduced prices 2. Decreased market share

Potential Use of IS to Combat Competitive Force

3. Better web site to reach customers and differentiate product 4. Inventory control system to lower costs and better manage excess

capacity

2. Bargaining power of suppliers

1. Reduced quality 2. Prices raised


3. Use internet to establish closer electronic ties with suppliers and to create relationships with new suppliers located far away

3. Bargaining power of buyers

1. Increased quality 2. Reduced prices 3. Demand for more services, quicker delivery, etc.


4. Implement CRM system to serve customers better 5. Implement CAD/CAM system to improve product quality

4. Threat of substitute products and services

1. Losing customers for life 2. Decreased market share


3. Use DSS and customer purchase database to assess trends and customer needs better

4. Use CAD systems to redefine products 5. Rivalry among existing firms

1. Competition in price, product distribution, and service Potential Use of IS to Combat Competitive Force

2. Implement information system to reduce costs and be able to act and react more quickly

3. Implement web site to offer better service to customers


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ERP, definition, evolution and future trends. ERP vs ERP II 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.

Evolution: The concept of ERP has been around since 1960’s It has its beginning in Materials Requirements Planning (MRP), and this later evolved into Manufacturing Resource Planning (MRP II)

Pre 1960 Order Point 1960 MRP 1970 Closed loop MRP 1980 MRPII, JIT, CIM, WCM, COMMS, COMS 1990 ERP

ERP II is an application and deployment strategy that expands out from ERP functions to achieve integration of an enterprise’s key domain-specific, internal and external collaborative, operational and financial processes.


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Integrated ERP system provides

Physical Adv:

Faster and more access to information

Decision Making requires less time and resources

Tasks are done correctly the first time and not redundant

Organizational Adv:

Strategies become proactive and are the main focus

An overall organization’s willingness to constantly improve and be innovative

Company Benefits:

Improved Cost Control

Better monitoring and quicker resolution of queries

Helps to achieve competitive advantage by improving its business process.


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BPR vs BE. ERP implementation approaches using BPR and BE

Business process reengineering is a management approach that examines aspects of a business and its interactions, and attempts to improve the efficiency of the underlying processes. The fundamental rethinking and radical redesign of business process to bring about dramatic improvements in performance. Business Engineering:

Method for changing the way a company works based on best business practices and IT. A complete re-thinking and reshaping of business processes based on structures native to IT

How does BE differ from BPR?

BE extends the use of IT by creating process models based on IT structures and applying these models to BPR’s vision of better business processes

Ideally, BPR should define the solutions that can be implemented, the ‘how’ of it is governed by the ERP package.

� ERP acts as technological enabler for the new business model. � ERP package is a technological implication of a BPR exercise. � Matured ERP packages become the most suitable option for the IT

solution required to implement the ‘to-be’ model resulting from a BPR exercise.


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Costs and risks associated with ERP implementation.

How the success of ERP implementation is assessed

The different phases of ERP implementation are given below:

• Pre Evaluation training

• Package evaluation

• Project planning phase i. Gap Analysis

ii. Reengineering iii. Configuration iv. Implementation Team training v. Testing

vi. End user Training

• Going Live

• Post Implementation

Major Cost Centers are

Training - Training is the near-unanimous choice of experienced ERP implementers as the most underestimated budget item. Training expenses are high because workers almost invariably have to learn a new set of processes, not just a new software interface.

Integration and testing - Testing the links between ERP packages and other corporate software links that have to be built on a case-by-case basis is another of the underestimated cost. Customization - Add-ons are only the beginning of the integration costs of ERP. Much more costly, and something to be avoided if at all possible, is actual customization of the core ERP software itself. Data conversion - It costs money to move corporate information, such as customer and supplier records, product design data and the like, from old systems to new ERP homes. Data analysis - Often, the data from the ERP system must be combined with data from external systems for analysis purposes. Users with heavy analysis needs should include the cost of a data warehouse in the ERP budget Consultants charges - When users fail to plan for disengagement, consulting fees run wild.


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ERP Risks

– Technical risk - risks arising due to information processing technology, sensor technology, and telecommunication technology

– Business risk - risks deriving from models, artifacts and processes adopted as part of ERP

• Do they match? Are they consistent? Do partners processes match up?

– Organizational risk - risks deriving from the environment in which the system is placed - including personnel and organization structure

Survey results for Risks

• Organization risk is the “biggest” risk -- the most likely to be seen as “high” or “very high”

• Business risk is the next biggest risk

• Technical risk is the smallest of the bunch, with 72.5% rated very low to moderate. Technical risk is also the easiest to fix, e.g., just choose more power.

ERP: Success Factors

• Manage expectations – the why

• Know your scope – the what

• Choose the right approach – the how

• Focus on the users

• Have committed sponsors

• Avoid modifications to the package – go vanilla

• Don’t make assumptions about your own success or failure based on the experience of others

Best Practices of ERP Implementation

A Business Strategy aligned with Business Processes Top-Down Project Support and commitment Change Management Extensive Education and Training Data Clean up and Data Integrity Implementation is viewed as an ongoing process

Evaluate Success

• Timing – When benefits could be realized and measured – During the 1st or 2nd year AFTER going live

• Determining if the system meets the criteria set out for it in the beginning (choice rationale)

• Independent measures or a weighted portfolio of measures?


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BPM ? explain ARIS frame used for managing business processes.

Business Process Management (or BPM) refers to activities performed by businesses to optimize and adapt their processes. Business Process Management deals with the continuity and embedding of process orientation in the organization.

ARIS-House of business engineering (HOBE) enhances the ARIS process architecture by addressing comprehensive business process management, not only from an organizational, but also from an IT perspective

Levels:

I: Process and product models, Reference Models, Evaluation Bench Marking, Simulation, Quality control, Warehousing II: Monitoring, Scheduling and Capacity control, EIS III: Work Flow Control IV: Std Software modules, Component, business objects, object libraries, java applets, database. At level 1 (process engineering), business processes are modeled in accordance with a manufacturing work schedule. Various methods for optimizing, evaluating and ensuring the quality of the processes are also available. Level II (process planning and control) is where business process owners’ current business processes are planned and controlled, with methods for scheduling and capacity, and (activity based) cost analysis also available. Process monitoring lets process managers keep an eye on the states of the various processes. At level III (workflow control), objects to be processed, such as customer orders with appropriate documents or insurance claims, are delivered from one workplace to the next. Electronically stored documents are delivered by workflow systems. At level IV (application system), Functions of the business process are executed using computer-aided application systems -- ranging from simple word processing systems to complex standard software solution modules--, business objects and java applets. The four Levels are interdependently connected. Information at Level II reg. the profitability of current processes is the point of departure for continuous adjustment and improvement of the business processes at Level I. Workflow Control is linked to Level I, because Workflow Control at Level III requires the description of business processes. At the same time, Workflow Control reports actual data regarding the processes to be executed (amounts, times, organizational allocation) back to Level II. Applications at Level IV are executed from the workflow system at Level III and configured according to the business process models at Level I.


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Technology enabled and clean state reengineering approach

Technology Enabled Reengineering:

A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering.

– Thus, reengineering choices are a function of the technologies chosen.

– The technology drives the reengineering. Advantages

• ERP provides a tool to facilitate change • ERP helps structure complex reengineering efforts • ERP bounds the design, limiting overload • Designs likely are cost effective • Designs likely can be implemented in a timely manner • There is software available

Clean Slate Reengineering:

– Process design starts with a clean slate – Also referred to as “starting from scratch” – Theoretically, no limits

Advantages

• Not constrained by a particular tool • Not constrained to a limited set of processes • Evolution is not limited by a particular technology • Can develop a design that others cannot access


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ERP failures: Examples Failure to find the right fit between ERP apps and the needs of the business Is ERP even a good fit? Understanding the business goals is essential ERP: the marriage of business goals and IT strategy Managers must ask:

– What business are we in? Where do we want to go? – What are the key issues facing us today? – What will be the key issues facing us tomorrow?

FoxMeyer Drug Bankrupt

Hershey’s 19% drop in profit

29% increase in inventory

City of Oakland Erroneous paychecks

Miller Industries Inefficient ERP – operating loss

WW Grainger Inc Earnings dropped $11 million

How to avoid Failures

Don’t start a project with a deadline in mind. Update your budget projection at regular intervals. ERP isn’t only about the software.

“No major software implementation is really about the software.”

Former Nestlé CIO Jeri Dunn says, “You are challenging their principles,

their beliefs and the way have done things for many many years”

Keep the communication lines open. Remember the integration points.


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ERP Implementation Methods ERP Design: MAPs

• Models

– Organization models (e.g., B2C, B2B, Auctions, Centralized, Decentralized…)

• Artifacts

– (e.g., Charts of accounts and Vendor numbering schemes…) • Processes

– (Sales order, Customer management, Procurement…) Implementation Methods

Big Bang:

In a full big bang, an entire suite of ERP applications is implemented in all locations in a matter of days. Big Bang employs a three step process.

• Virtually all processes and artifacts are chosen and implemented in the software (e.g., 8 months)

• System is tested by process and then by interfaces between processes (e.g., 8 months)

• Old system is turned off. New system is then implemented and minor changes made.

Phased: At the extreme, modules are implemented one at a time, possibly one location at a time

– For example, one implementation did the following: • Phase 1 - Finance, controlling, accounts receivable, accounts

payable, and purchasing (12 months) • Phase 2 - Materials management, production planning and quality

planning (7 months) • Phase 3 - Remainder (5 months)

– Using a phased approach, the new system is implemented in a structure of legacy systems.


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How PP module supports the implementation of MP and E process. Explain the integration of PP module with other functional modules of ERP How SD module supports the implementation of Customer Order management process. Explain the integration of SD module with other functional modules of ERP How MM module supports the implementation of Procurement. Explain the integration of MM module with other functional modules of ERP

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ERP Frequently Asked Questions 1. Explain Stages of IT Deployment