ERP LECTURE 1 LEARNINGS

Decision making in an organization

Motives of OrganizationThe fundamental motive of any organization is creating more customers and manage them . For this company wants to : Be scalableBe agileGrow using opportunities

Three As Attitude towards the projectand Approach taken to achieve projectwill determine your Altitude at the project.

Introduction to ERP

What is Enterprise Resource Planning? Enterprise Resource Planning (ERP) is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. 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. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment.

Why ERP System is used in Organizations?ERP System is used in an organization due to the following reasons:It Integrates various business functions .It leads to effective utilization of resources.It Enables data simplification.It helps in strategy building based on centralized data.It leads to Single centralized data.Integrates different functions of business.Balances systems, process and people.Helps to create and retain customers.Helps organization to be agile and flexible.Helps acquire a competitive advantage.

Principles for implementation of ERP SystemsPrinciples for Implementation of an ERP system are as follows:Know about the organization.Know the growth parameters of the organization.Know the competitive advantage or the differentiation of the company from its competitors.Work towards strengthening the core competencies of the organization.Create and work as a team.Understand the country and the laws, regulations, compliances etc. prevalent in that country.Understand the Industry in which the company is operating.Know the current systems in placeKnow the purpose for ERP implementationUnderstand the concerns and challenges of implementation

Advantages of implementing an ERP System in an Organization

ERP system in an organization facilitates the following:Readymade solutions for most of the Problems.Integration of all functions ensured.Easy enterprise wide information sharing.Suppliers and Customers communication can be on-line. Automatic adaptation to new technology.

Drawbacks of Implementing ERP Systems in an Organization

Implementing an ERP System in an organization has the following drawbacks:Success depends on the skill and experience of the workforce, including training.Customization of the ERP software is limited. This may involve changing of the ERP software structure. ERP systems can be very expensive to install.Systems are too restrictive and do not allow much flexibility in implementation and usage.

Why ERP projects fail?

Lack of understanding purpose of implementation.Inadequate requirements definition Being solution oriented rather than problem orientedLack of top management commitment Package does not address the basic business functions of the client Inadequate resources employed by the clientInternal resistance to changing the 'old' processes Unrealistic expectations of the benefitsInadequate training Unrealistic time frame expectations

ERP implementation a SituationA company wants to set-up a new ERP system in entities in 7 different countries. There is a specific time constraint for this to be completed and also the company has to adhere to the country laws, the specific company policies and industry standards in each country.The following options are availableOption 1 Go to each country and study the requirements individually.Option 2Study the system required in one country and develop a basic framework. Make the design for the required ERP system in other countries on the basis of this framework.

Option 3Make assumptions about the possible system in each country and implement the same.

Option 4 Involve people working in the specific entities in different countries in a Conference Room Discussion and understand the system requirements of each country.

Evaluating the optionsThe first option is too time consuming and given the condition that we have time constraints this option cannot be considered. The second and third option rely heavily on assumptions and given that every country has different laws and industry standards it would be incorrect to rely on assumptions. The fourth option is based on developing a system on the basis of discussion with team members across all countries. This is the best option as it satisfies all the given constraints. This also establishes the importance of creating a good team to accomplish any given task.

Order fulfillment before ERP : An example

Problems

The various problems in the above System which was implemented before ERP Systems came are as follows:

DelaysLost OrdersKeying into different computer systems invites errors

Order Fulfillment after ERP an example

ERP vendorsSAP - Systems Applications Products in Data Processing29% market share - Honda, IBM, Bank of Canada , P &G

BAAN - Dutch - 5% - Russell Stover Candy, Mercedes Benz, Boeing, Nortel

Peoplesoft - California - 6% - NBA, Adidas, Anderson Consulting, Hilton Hotels, NYNEX

Oracle - California - 10% - USPS, CBS, Nike, Kodak, Toronto Dominion Bank

J.D. Edwards - Colorado - 7% - Harley Davidson, Saab Automobile, BellSouth Cellular Corporation, Holiday Inns, Fox Television Stations

ERP Success Stories : TISCOThe company decided to implement SAP ERP 3 after careful consideration for they matched best with their requirements. In addition the company also forecasted on what would happen to their operations in the future while making this choice .This anticipation helped them to obtain the proper solution at the right point of time. The implementation process took a long span of about a year owing to the volume of operations and the major steps to be taken. The company never got bogged down by the reported failure rate of ERP implementations especially in bigger units and kept continuing their endeavors with vigor to get the best and make the whole process learning cum experimental one. The net result brought substantial increase in profits.

WinMan ERP in Athena controlsThis company is a concrete example and a living proof to substantiate the fact regarding the steps that a company needs to take and in not believing that a more implementation of ERP will give the necessary impetus for success in the organization. The basic factor for success in this company is backed by the fact that they believed software to be a tool and not the solution to the enterprise problems. This is backed up by the fact that the company successfully combined the business practices with the nuances of the software.The facts and figures were amazing and would not have happened if the company had not used the circumstance like a platform for doing their best and understanding the fundamental mistake of not aligning software with business process.

Jada precisions Plastics co INC and IQMS ERP softwareThe manufacturing Company Jada Precisions Plastics INC was not happy within the initial ERP systems. software definitely helped them to reduce the complexity of the labor but it was not the ultimate answer.Then they changed the ERP software.Upon analysis it was found that the former ERP systems tried to give ready made solutions to their problems in the form of packaged solutions while the later facilitated tin creating an automatic system for data transfer. This resulted in ERP success.

ERP Horror Stories : NikeThe company said that the failure in the supply chain software installation by i2 Technologies was the cause of this revenue shortfall.Analysts pointed to lapses in project management, too much customization and an over reliance on demand forecasting software. Nike insiders raised doubts about the Single Instance Strategy being followed by Nike. Single Instance Strategy refers to one ERP application with one data store that serves the entire company. Everything a company needs from financials, order entry, supply chain to CRM comes from a single vendorBy 2004, the company had successfully implemented its Nike Supply Chain (NSC) project, indicating that its centralized planning, production and delivery processes were right for the Single Instance Strategy. With this success, Nike's Single Instance Strategy became the desired approach for many companies implementing ERP software. Nike used SAP for 95% of its global business.

ERP Horror StoriesFoxMeyer Drug software helped drive the company into bankruptcyDell computer software will not fit its decentralized management modelApplied Materials overwhelmed by the organizational changes involvedDow Chemicals spent seven years and 500 million dollars on R/2 now starting again with R/3

Conclusion

Thus,

ERP is a Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all the functions under a common software platform.

Software logic and the company strategy may not match! : Thus proper consideration has to take place before implementation.

GE Workout Model

How does it work?Infuses entrepreneurial spiritCreates ownershipQuick and critical discussion of ideasPromotes lateral thinking

Actions begin immediately because

Leadership decides live on the recommendationsTeams are empowered to implement their solutionsRecommendations must be completed in 90 days

Workout involves everyone

Pay off matrix for a critical idea analysisSmall pay OffBig pay off Easy to implement Tough to implement

Conducting a workoutIntroductionBrain-storming within small teamsPresenting the ideasDeveloping the top 4 business ideasDecision making by the key decision manager

Workout aims to.. Create forum for dialogueEliminate bureaucracies and barriersCultivate grass root solutions