E TE T R E PR P IS I E S E R ES E O S URCE E P L P A L NNIN I G

Transcription

1 االله الرحمن الرحيم بسم ENTERPRISE RESOURCE PLANNING SYSTEMS OVERVIEW Omer Omarabi January 2010

2 Agenda IT Planning & Challenges In Sudan What is an ERP System? Why You Need an ERP System? How to get your ERP System? How much will cost you & ROI? Best Practices Conclusion 2

3 About the Speaker Omer Omarabi +18 years in IT Enterprise Systems Senior Director/Chief Architect Enterprise Systems Member of Sybase Technology Office E-Business Strategy Lead Lead Open Web Application Security Project (OWASP) Former GM of Vision Valley 3

4 IT PLANNING & CHALLENGES

5 IT Planning Benefits Ensuring the IT infrastructure is aligned with the business objectives Business-wide online access to the business shared information Streamline business processes through data sharing and integration Support the organization core business needs with an appropriate level of information Support the organization pace of growth and greater collaboration and cooperation within the business and with external customers and suppliers Delivering secure timely, efficient and reliable IT services 5

6 IT Projects Challenges companies continue to: Make IT investments in the dark Plow cash into risky and misguided IT initiatives, sometimes with catastrophic results. Evaluate IT solutions on a "problem by problem" basis Take a piecemeal approach in implementing information technology 6

7 ENTERPRISE RESOURCE PLANNING SYSTEMS (ERP) What is an ERP?

8 What is an ERP? Enterprise-wide system which integrates the business functions and processes of an organization Integration of business functions into one seamless application Utilizes a common information system Replaces Countless Departmental and Workgroup Information Systems Implementation normally involves BPR Difficult to Implement Correctly

9 Enterprise Resource Planning ERP systems are cross-functional and enterprise wide All functional departments that are involved in operations or production are integrated in one system. 9

10 Example: Order Fulfillment 10

11 Example: Order Fulfillment-2 11

12 Beyond ERP Supplier Collaboration Supply Chain Management Key Process Integration via ERP Product Lifecycle Management Customer Management Design Partners Consumers and Channels 12

13 ERP Expectations Integrating all the functions Integrating the systems running in all the locations Transparency of information using a single data source across the organization Software must be responsive Modular Flexible Easy to add functionalities Provide growth path 13

14 Evolution of ERP 1960 s: Inventory Control Systems 1970 s: MRP: Material Requirement Planning 1980 s: MRPII: MRP & Distribution 1990 s: MRPII ERP with introduction of other business functions CRM s Today: Web Enabled ERP Connecting ERP Externally

15 ERP Facts ERP market size was $46.38 billion in 2005 More than 71% of ERP implementations fail to achieve their corporate goals Every 3 years, a major ERP upgrade and several small upgrades are typically needed Payback is from months Average cost improvement 14.8% per year 15

16 ERP Market Size $16.5 billion in 1998 $18.3 billion in 1999 (11% growth) $21.5 billion in 2000 (17% growth) $38.8 billion in 2004 (80% growth) $46.4 billion in 2005 ( 19% growth) 16

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18 WHY ERP? The Business Driver What the ERP Can Do For You?

19 When to Consider an ERP If an organization is experiencing one or more of the following business conditions: Fast and uncontrolled growth The company s exact financial performance is unknown Unknown or inaccurate job costs Inventories that do not meet or far exceed production requirements on a consistent basis Duplication of effort in order to capture vital data that impacts employee efficiency Commonly setting inaccurate customer expectations Promised delivery dates are regularly missed Unknown operations performance The current system is negatively impacting the organization s ability to grow Little or no ability to forecast and plan production requirements with any degree of accuracy 19

20 The Current State Of Business Islands of Information Difficult to get timely & accurate information Heterogeneous Hardware & Software platforms & practices Poor connectivity between different organizational locations Sticking with obsolete technology Resist to change Lack of proven man-power to develop integrated software 20

21 Why ERP? Help decision making Automation of business processes (Standardization) Business cycle time reduction (Efficiency) Achieving cost control & low working capital Shun the geographical gaps Provides enterprise-wide reporting & decision support. Presents opportunity for re-engineering Improve Quality One solution for better management 21

22 CEO Survey - why ERP? 67% Improve info accuracy, availability 61% Improve management decision making 51% Reduce cost/improve efficiency 38% Upgrade technology 31% Resolve tactical issue 24% Grow revenue 15% Haven t done it yet 4% Other Gartner

23 Ask yourself! Do we really need it? Are we ready for it? Do we understand our business needs? Are there any other alternatives?

24 HOW WE GET OUR ERP?

25 Critical Questions Whether to buy? Analyzing costs and benefits Business benefits vs. technical benefits Buying early vs. buying late What to buy? Matching capabilities and needs Compatibility and standards How to implements? Top management support User involvement Phased approach 25

26 Define Business Requirements Clarify/Identify Strategic Drivers of ERP Document High-level Business Processes By major function e.g. Manufacturing, Finance, Maintenance, Supply Chain, etc. Document Current System Architecture Define and Prioritize Business Requirements Define and Prioritize Business Pain Points and Opportunities for Improvement Identify Process KPIs and Business Benefits 26

27 Software Database & Servers & OS (ready-made) ERP Software/Customization Maintenance & Support New Features Hardware What Are you getting? Distributed N-Tier architecture (Servers Hardware) Network capability Disaster Recovery & Backup Users Desktop Training & Changes Management 27

28 What to look for? ERP Product selection Criteria Goal: To select the Most Suitable Software Solution 5 Strategic Requirement Levels Functionality Technology Vendor Support Costs 28

29 ERP Options OPTION 1 MAKE [Using Internal resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of the in-house IT department OPTION 2 BUY (COTS- Commercial Of The Shelf) Going for Tailor-made (OFB) ERP packages available in the market like SAP, Oracle PeopleSoft. Dynamics, etc. OPTION 3 MAKE [using External resources] Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a software solution provider OPTION 4 Mix & Match 29

30 OPTION 1: Building Using Internal Resources Issues, Very costly and rarely succeeds, Why? Lack of adequate & qualified manpower Not driven with clear focus on expectations, time & cost Poor software project management Lack of seriousness with the Management & the IT Team High employee turnover Lot of schedule gaps during Project execution Normally project life is more Frequent change in the scope with the approval of the Management Very costly 30

31 OPTION 2: COTS ERP solutions Advantages: Generalized off the shelf application s/w packages Modules based on rich functionalities for all business functions User tested with lot of installations No lead time requirement for software development Tuned for more users/networks with adequate & inbuilt security Parameterized for flexibility Can sit on latest hardware & software platforms Upgrade of functionalities with version control 31

32 COTS Pitfalls & Points of Concern Vendors are foreign and not familiar with Sudan Costly comparing to custom-built options Lot of hidden costs Chances of cost & time overrun are high The Level of customization Compulsion to pay for redundant modules/features Vigorous involvement of all during implementation Non-availability of special practices like Customer Complaint, Logistics The requirement of Change Management is a must Dependency on outsiders is high IT department Poor grip on the Implemented systems 32

33 OPTION 3: Building Using External Sources Advantages: Here the whole package is designed & built from scratch Very economical while comparing the cost of COTS Less prone for hidden-cost hits The company and the software vendor have the direct relationship during the project execution. IT department has good control over the Project Maintenance & improvements are easy & less costlier. What is required only would be considered under the scope No redundancy 33

34 OPTION 3: Points of Concern Finding the right software development vendor Requirement/scope finalization Not time tested Chances of Prolonged project duration May be costly 34

35 OPTION 4: Mix and Match 35

36 COST

37 What does ERP upgrade really cost? Cost of Consultancy Costs of Hardware Cost of Software Costs of Professional Services Customization Integration Data Conversion Testing Change Management Training 37

38 Hidden Costs Training Technical and job processes Generally underestimated Transition costs A business transformation Data conversion; process conversion Prolonged schedule Plans are subject to change and surprise; so are the bills Consultants should typically be mapped to a shared overrun 38

39 Beware the Iceberg Syndrome 39

40 ERP System- Cost Components 40

41 Cost Analysis Costs to implement an ERP system is not just a one-time thing. Real costs are in constant training, upgrading, and maintenance. Average Total Cost of Ownership (TCO) is $15 million! ($450,000 $380,000,000). Benefits are not seen right away. 41

42 ERP PROJECTS BEST PRACTICES

43 How We plan it? Need business exec in charge, not IT Make a business case long term benefits Costs inventory reduction, customer service,. software hardware people (by far the most expensive) 43

44 Project Critical Success Factors Strong Leadership commitment Communication, Communication, Communication Empowered teams with ability to make decisions Phased implementation approach Business transformation and change management Job-specific end-user training Post implementation support Adaptable organization that can respond to challenges Deal with organizational resistance quickly Make decisions and manage change effectively Change in organizational structure, culture, strategy There is no perfect system, one size does not fit all Capabilities of the software development vendor 44

45 Project Risk Factors 45

46 Lessons from cases Must establish a win-win relationship with ALL stakeholders The client and the consultant Management and employees Suppliers and company Tight management of milestones events and Change management 46

47 ERP Project CSF Strong Leadership commitment Communication, Communication, Communication Empowered teams with ability to make decisions Job-specific end-user training Make decisions and manage change effectively There is no perfect system, one size does not fit all Capabilities of the software development vendor 47

48 ERP Project CFF Unrealistic Expectation Unfeasible Budget Design Poor Communication between Consultants and Internal Staff Failure to Redesign Business Process Incorrect System Configuration Insufficient Training and Reskilling of the IT Workforce Insufficient Testing Problem with System Bugs 48

49 CONCLUSION

50 In Summary ERP Systems are Generic Define the Process then Choose the System to handle the process Take Dead Aim. Detail Design Early Business owns the project Define Project Scope Early. Stick to it. Takes Significant Time & Money Eat the Elephant one bite at a time An ERP Systems implementation is not just another application development project. It is a business transformation project. 50

51 Conclusions Do your homework well in advance. Set a reasonable budget Develop a firm set of business processes. An IT solution is only as good as the processes it automates Negotiate a total, firm cost in advance To successfully implement a proper mix of people, processes and technology should be maintained Pay attention to training Break the project into small pieces with well defined boundaries 51

52 Remember: It s all about risk Get all the resources you need Manage scope aggressively Keep realistic expectations Implement on time and on budget Lay a foundation and build Be in the top 10% who succeed It can be done

53 Parting Advice Quality Speed Price Choose Two 53

54 Thank you Omer Omarabi Mobile: