International Management Program ERP By Rob van der Sanden RIC International Business & Management Consultancy

What is ERP? Enterprise Resourse Planning System An integrated set of programs, which will in coherence, support most of the company processes From production, warehousing and logisticts to management support and finance reporting With a set of different defined parameters, of which the significance is not always clear to the users. With a relative large number of users in the organization. * Related to „everybodies“ work environment. * Everybody has a meaning about it. * it is „Software“, so it can always be changed.

What is ERP? Suppliers deliver the ERP systems on market demand, this means: They implement „best practices“. This is what most Companies do, based on accepted practices in business. They commit to accounting standards IFRS, Sabarnes-Oxley, Basel II. They commit to industry standards EDI, EFTS, etc. This is of a great advantage for all the users, because they could not implement without these standards.

What is ERP? What means „integrated“ when talking about ERP. Seen from the users perspective it means, that the system is 1 Central database always „up to date“ and random available for questions and reports. Every transaction will be reported only once. All updates needed will take place from here. Not integrated sytems are known as manual linked sub systems, slow moving and periodical updated

ERP systems contain mostly next modules / functions (1) Finance and Accounting: General Ledger, A/P, A/R, Cash management, Fixed Assets, Consolidation. HRM Payroll, Recruitment, Training. Production Product Data Management, BoM Recipies, Materials, Requirements Calculation, Work Orders, Scheduling, Capacity planning, Quality control, Costing. Supply Chain Management. Sales order processing, Inventory Management, Purchasing, Product configurator, Supply chain planning, Claim processing.

ERP systems contain mostly next modules and functions (2) Project management Costing, billing, Time and expense, activity management. Customer relation management Marketing, Commissions, Customer contacts, Call center support. Data services Various „self service“ interfaces for customers, suppliers and employees. Frequently via Internet and Intranet. Access control Management of user previleges for various processes.

History of ERP ERP started from the 50th. Is was called MRP (material needs calculataion). It is the „Mother“ of all database systems. The 1st. Software packages in this field were marketed in the beginning 70th. Mapics and Copics of IBM. After IBM drew back from application software, the market for this software environment became a billion dollar business.

ERP development during last 16 years. The ERP systems were growing in functionality (CRM, E-business; Portals; SaaS, SOA), but often special modules or „add-ons“ were (are) needed like APS, WMS, Retail management. Former main players are no longer there, but most survived in a different form. SAP is dominating the market, but local suppliers stay important and can dominate the world market. Microsoft succeeded in conquering an important market share.

Why ERP selection No company can do without ERP systems in the future, because the management and the employees do not accept the old and simple „island computing“ methods any more. The only question is „make-or-buy“ and today this question is answered by Buy. ERP selection is a step in the buying cycle process like selection in other investments Compare it with selection of a complete integrated production line instead of parts (or taylor made). But what is typical for ERP ?

Aquistion strategy 2 alternative methods (approaches) First descide what you need and then investigate if you can find it. Determine the existing systems and search if you can use it. This is not Trivial Method A is a time wasting process by searching what is not available. ( a car with the steering in the middle) Method B leads to time wasting in desk research. However for „B“ there is much market information, unless the „A“ approach leads to tailor made solutions. In both cases, knowledge of the Company is fundamental

Practice in ERP selection Important activity and service of established consultancy companies. Meanwhile standards are common. For the customers the choises are limited. Almost every one uses consultants in this process. Every respectable advising company offers selection and implementing methods. Many of these methods contain a lot of „empty air space“

Implementation Contract negotiations Start up of the implementation Set up a detailed project plan Determine a project budget inclusive results and take care of agreement. Make a blue print and prepare a pilot implementation (conference room implmentation). Train the key users (participants to the CRM)

ERP the business case ERP is infrastructure Just like railroads; If they are constructed you cannot put them away easy. Systems are in use for 10 to 15 years. For construction you need a long term perspective. Keep informed about the costs and revenues

ERP the business case Revenues of the ERP system Increasing delivery security. Shorter production throughput times. Decreasing of stock and right stock. Higher turn over. Lower IT costs. Lower purchase costs. Neglectable „Avoided Costs“ by optimized new ERP systems.

ERP the business case Revenues of ERP systems In general: Better logistic performance. Up-to-date and complete information. Lower costs (on longer term).

ERP the business case Costs of ERP systems. Perpetual License fees and periodical maintenance fees. Periodical license fee. Hardware costs (computers; network). System software (operating software and database systems). Training and education costs. Advising and consultancy costs. Costs for tailor-made solutions and add ons. Extra investments in hours for management and employees. Start up losses and compensations. (timely higher stock; missed orders; etc.)

ERP the business case Costs of ERP systems. Extra costs for tailor-made solutions and „add-ons“ are difficult to estimate. The extra investments in hours for management and employees are difficult to calculate. Handle these objectives as a additional investments like constructing ac building. Avoid „salami“ tactics of your suppliers. (delays in the program will cost a lot of money)

Thank you for your attention. Conclusions ERP is an integrated software system, that is covering the TOTAL administrative and management needs. Every institution or company should consider to implement these software systems, to handle, optimize and manage the organisation. Thank you for your attention.