1. ERP Enterprise Resource Planning D Lewis 10/02

2. Definitions ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

3. What is ERP? Enterprise Resource Planning Support business through optimizing, maintaining, and tracking business functions Broken down into business processes HRM - Distribution Financials - Manufacturing

4. What makes ERP different Integrated modules Common definitions Common database Update one module, automatically updates others

5. What makes ERP different (cont) ERP systems reflect a specific way of doing business Must look at your value chains, rather than functions

6. History of ERP Departmentalized Systems 1960’s: systems for each department MRP Systems 1970’s: integrated manufacturing MRPII System 1980’s: more functions included ERP: 1990’s integrated all across

7. Trends in ERP Use of the Internet for access More customized solutions Decision support capabilities Data pulled to specific application Linkage of multiple organizations together

8. Benefits of ERP Common set of data Help in integrating applications for decision making and planning Allow departments to talk to each other Easy to integrate by using processed built into ERP software

9. Benefits of ERP A way to force BPR (reengineering) Easy way to solve Y2K problem

10. Benefits of ERP On 4 dimensions Firm structure Management processes Technology platform Business capability

11. Firm structure New structures More disciplined culture Globally everyone uses same processes and terminology Freely flowing information

12. Management process Unified reporting and decision making Better data on performance Determine which products are more desirable

13. Technology platform Single unified all encompassing platform Common data, common definitions and formats

14. Business capability Form basis of customer driven organization Better meet customers needs

15. Buy or Build Pros buy Best practices from many organizations included Vendor must keep up to date Smaller staff required

16. Buy vs. Build (cont.) Pros build Complete control of features More support required Not as much product support May not have best practices included

17. Why purchase ERP package? Increasing flexibility and agility Business benefits (competitive agility) Client/server IT architecture benefits IT purchasing benefits Lower costs and higher reliability than building from scratch

18. Why purchase ERP package? Data integration Improving access to data across business units New ways of doing business Moving to a process orientation Reduction in costs Global capabilities Common processes and country specific capabilities

19. Why purchase ERP package? IT architecture cost reduction Reduced costs for systems operations and maintenance Most important benefit? Data integration

20. Difficulty in implementation Very difficult Extremely costly and time intensive Typical: over $10,000,000 and over a year to implement

21. Common Pitfalls Do not adequately benchmark current state Did not plan for major transformation Did not have executive sponsorship Did not adequately map out goals and objectives Highly customized systems to look like old MRP systems

22. Leading vendors SAP Baan J.D. Edwards Oracle Peoplesoft

23. Which way to go? One vendor Easy integration Standardization of processes “Best of breed” approach Easy to adapt to own needs Decreased reliance on one vendor

24. How to implement You will need an outside consultant Potential benefits Better information for Strategic decision making Greater efficiency Greater profit Potential for growth

25. Unintended consequences of ERP Organizational changes Creating new work relationships Share information Make new types of decisions Reactions to changes Resistance Confusion Errors

26. Unintended consequences 50% of implementations fail Managers underestimate the need for change management Managers focus on potential benefit, rather than on impact on employees Emotional fallout after employees given greater responsibility

27. Implementation Issues Company may implement only certain modules of entire ERP system

28. Readings evaluation of ERP software Getting Increased Value from ERP Systems