ERP. Enterprise Resource Planning. Presented at May, 21st by. Mümtaz Copur Andreas Reichert. for. ITTM-class SS Managers and stakeholders

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1 Managers and stakeholders Customers Sales + delivery appl. Reporting Financial Central database Manufacturing ERP Service HR management Employees Inventory + supply appl. Enterprise Resource Planning Presented at May, 21st by Mümtaz Copur Andreas Reichert for ITTM-class SS 2004

2 Agenda What is ERP? Why ERP? ERP-architecture ERP-content ERP-suppliers Introducing ERP

3 What is ERP? ERP(Enterprise Resource Planning Systems) comprises of a commercial software package that promises the seamless integration of all the information flowing through the company - financial, accounting, human resources, supply chain and customer information. T.J. Davenport Harvard Business Review July-Aug., 1998

4 Why ERP? In 1970s extensive computing was introduced in firms to control and monitor operations and financials Financial and accounting systems typically introduced first Additional needs created additional solutions Problem: Added modules used inconsistent processes, conflicting assumptions and redundant data

5 Why ERP? More problems: Year 2000 Mergers & Acquisitions Customer orientation Cost control

6 ERP-architecture Managers and stakeholders Customers Sales + delivery appl. Reporting Financial Central database Manufacturing Service HR management Inventory + supply appl. Employees Source: Thomas H. Davenport. Putting the Enterprise into the Enterprise System, Harvard Business Review, July, August 1998, p.124.

7 ERP-architecture Central database ist developed relational Relates information regarding operational entities 2 ways of handling data: Proprietary: access to data just through ERP Open database architecture: access to data through different

8 ERP-content

9 ERP-content 8 major data files concerning logistic operations: Customer file Product file Supplier file Order file Bill-of-Materials file Purchase order file Inventory file History file

10 ERP-content Customer file Information describing the firm s customers Helpful when multiple devisions of the firm serve the same customer Product file Information describing products and services offered Maintenance is increasingly challenging due to shorter life cycles and more frequent price changes

11 ERP-content Supplier file Lists firm s suppliers for material and services Order file All open orders that are in some stage of processing or fulfillment by the firm Must accept orders from multiple sources, e.g. EDI, Internet, and internal order entry

12 ERP-content Bill-of-Materials file Describes how raw materials are combined for finished products Purchase order file Roughly comparable to order file except that it contains records of purchase orders that have been placed on suppliers Purchase order may be for raw material to support product or for MRO supplies necessary to support operations

13 ERP-content Inventory file Records physical inventory or quantity of product that is available History file Documents firm s oder and purchase history to facilitate management reporting, budget and decision analyses

14 ERP-content Managers and stakeholders Customers Sales + delivery appl. Reporting Financial Central database Manufacturing Service HR management Inventory + supply appl. Employees 3 modules support the supply chain activity Includes raw materials aquisition, production and customer order fulfillment Modules incorporate the transactions and processes that initiate the entire range of supply chain activities

15 ERP-suppliers 5 companies cover 50% of total ERP-market revenue: SAP 25.1 % Oracle 7.0 % Peoplesoft 6,5 % SAGE 5,4 % Microsoft Business Solutions 4,9 % Others 51,1 % New license software revenue: 5$ billion (2002) Source: Gartner Dataquest (June 2003)

16 ERP-suppliers Several points to analyze before the decission for one supplier: Are all functional aspects of the company covered? Are all business functions and processes integrated? Are all latest IT-trends covered? Does the supplier have customizing and implementing capabilities? Do I have enough reserves, when will be the ROI?

17 Introducing ERP Ensure the management is behind you Ensure enough financial funds Identify core project team, project manager, analysts and specialists for all functional areas Evaluate and select ERP package Evaluate implementation partner Make an implementation plan Present plan to management and employees

18 Introducing ERP Define requirements Check whether you have desired hardware Analyze existing processes Fine tune processes to be in line with those of ERP defined Prototype and present Refine prototype and freeze specifications

19 Introducing ERP Topics involved: Project planning Business and operational analysis Business requirements mapping to software Module configuration System modification and interfaces Data conversion Custom documentation End user training Acceptance testing implementation Post implementation support

20 Introducing ERP Implementation schedule Phase 1. Detailled discussions 2. Design & customization Tasks Project initialization Evaluation of processes, requirements Map organization Map business processes Define functions and processes Build ERP system modifications Deliverables Project organization chart Work teams Organization structure Design specification Process flow diagramms Function model Systems modification

21 Introducing ERP Implementation schedule Phase 3. Implementation / Prepare to go live 4. Production / go live Tasks Create go live-plan & documentation Integrate Test ERP customization Train users Run trial production Maintain systems Deliverables Testing environment report Customization test report Implementation report Reconciliation report Conversion plan execution

22 Thank you for your attention. Questions?