Enterprise systems

Target class :- Information systems 4th

1 Enterprise systems
 Chapter One

2 Enterprise systems
 Introduction
 Earlier ,in large organization ,different IS were used to serve different business functions
like sales ,marketing ,production ,manufacturing ,etc. separately.
 Business organizations have become very complex.
 This is due to an increased layer of management hierarchy and an increased level of coordination
across departments.
 Each staff role and management layer has different information needs and requirements.
 Management is generally categorized into three levels:
 Strategic, Middle management, and Operational.
 Today’s enterprise systems are designed to serve these varied organizational
requirements.
 Enterprise systems solve the critical problem of integrating information from various
sources inside and outside the organization’s environment and
 make it available, in real time, to all employees and partners of the organization
 Enterprise systems, are a crucial component of any successful organization today.
 provide computer automation support for most business functions such as accounting, finance,
marketing, customer service, HRM, and more.

3 Enterprise systems
Cont.….

4 Enterprise systems
Introduction …
 As organizations become larger and more complex, they tend to break
functions into smaller units by assigning a group of staff to specialize in
these activities
 This allows the organization to manage complexity as well as some of the
staff to specialize in those activities to enhance productivity and efficiency.
 The role of IS has been and always will be one of supporting business
activities and enhancing the workers, efficiency.
 Organizations need to be agile and flexible
 systems need to have integrated data, applications, and resources from
across the organization
 Integrated IS are needed today to focus on customers, to process
efficiency, and to help build teams that bring employees together that cross
functional areas.
 Today’s competitive business is cross-functional , dynamic and
global
5 . Enterprise systems
Enterprise systems
 Enterprise systems (ES) are industry-specific, customizable software packages
that integrate information and business process in organizations.
 Enterprise-wide Systems
 Enterprise Systems, are systems that allow companies to integrate information
across operations on a company-wide basis.
 Inter-organizational Systems (IOS)
 Systems that communicate across organizational boundaries whose goal it is to
streamline information flow from one company to another
 An enterprise system is central to an organization
 Ensure information can be shared across all business functions and all levels of
management to support the running and managing of a business
 An enterprise system is also known as enterprise resource planning(ERP).
 The ultimate goal is to satisfy customers and provide a competitive advantage by
reducing costs and improving service
 Create Value – transform inputs into outputs valued by the customer
 Organizations create value by performing activities at lower cost or enhancing
differentiation of products or services.
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Enterprise resource planning(ERP)
 ERP systems are the specific kind of enterprise systems to integrate
data across and be comprehensive in supporting all the major functions
of the organization.
 Enterprise systems are referred to as ERP systems mainly because the
term ERP is more popular and commonly understood in the IT industry.
 ERPs, are basically integrated information systems.
 ERP systems are comprehensive software applications that support
critical organizational functions.
 Like accounting, financial, marketing, and production requirements of
organizations.
 This allows for real-time data flows between the functional
applications.
 In addition, an ERP system acts as a central repository eliminating data
redundancy and adding flexibility.
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 Business processes and integration
 A crucial role of ERP in business, beside integration of functional applications
and organization information,
 is to better position the organization to change its business processes.
 Business process is a series of tasks or activities grouped to achieve a business
function or goal.
 For e.g. Order processing may include such tasks as taking an order, checking
inventory, and preparing invoices.
 Most organizations have a set of policies and procedures to guide their business
process.
 The ERP software has hundreds of business processes built into the logic of the
system.
 These processes may or may not agree with the organization’s current business processes.
 An organization has two choices when implementing ERP: change business
processes to match the software’s functionality or modify the ERP software.
 Vendors assert that they have embedded the “ best practices or leading
practices ” of a business process in their software.
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 Business integration(BI)
 Business integration is the alignment of organizational strategy and goals with
information Systems.
 The first and the most important advantage lie in the promotion of ERP packages
are integrated,
 i.e. Exchange of data among related business components is possible .
 For example, Relevant information from accounting can be shared with marketing and
HR and vice Versa.
 ERP designed to combine business technology tools and functions together, so
they can easily be accessed through a single system.
 ERP packages the data of related business functions is also automatically updated at
the time a transaction occurs.
 For this reason, one is able to grasp business details in real time, and carry out various types
of management decisions in a timely manner based on that information.
 ERP BI eradicates errors and time consuming manual processes.
 BI Improve workflow of individual departments in addition to visibility and
accuracy.
9 Enterprise systems
ERP Modules and their features
Production Planning Module:
 This helps in planning and optimizing the manufacturing
capacity, parts , components, and material resources using
historical production data and sales forecasting.
 Give overall production lifecycle.

purchase module:
 Streamlines the procurement process of required raw materials
and other supplies.
 It automates the processes of identifying potential suppliers,
negotiating price, awarding purchase orders to the supplier, and
billing processes.
 The purchase module is tightly integrated with the inventory
control and production planning modules.
10 Enterprise systems
ERP Modules and their features….
Inventory management module
 Facilitates the processes of maintaining the appropriate level of
stock in a warehouse.
 Inventory control identifies inventor requirements, sets targets,
provides replacement techniques and options, Monitors Item usages,
Reconciles the inventory balances and reports inventory status
 Integration of the inventory control module with sales, purchase, and
finance modules.
Sales and marketing
 The sales module implements functions of order placement, order
scheduling, shipping, and invoicing.
 The sales module is closely integrated with an organization’s e-
commerce Web sites.
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 Cont.…
Finance module
 The financial module is the core of many ERP software systems.
 It can gather financial data from various functional departments and generate
valuable financial reports
 (e.g., budgets, balance sheet, general ledger, tax management and quarterly

financial statements)
Human Resource module
 The HR module streamlines the management of human resources and
human capital.
 The HR modules routinely maintain a complete employee database,
including contact information, salary details, attendance, performance
evaluation, and promotion.
 An advanced HR module is integrated with knowledge management
systems
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ERP System Components
 An ERP system, like its IS counterpart, has similar components such as
hardware, software, database, information, process, and people.
 ERP system depends on hardware (i.e., servers and peripherals)
 Software (i.e., operating systems and database)
 Information (i.e., organizational data from internal and external
resources),
 Process (i.e., business processes, procedures, and policies), and
 People (i.e., end users and IT staff)
 These components work together to achieve an organization’s goal of
enhanced efficiency and effectiveness in their business processes.
 Goal of ERP to serve the organization by converting data into useful
information for all the organizational stakeholders.
 ERP Failures are often caused by a lack of attention to the business
processes and people components
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 Issues to be consider in planning design and
implementation of ERP systems:
 The problem with ERP packages is that they are very general and need to be
configured to a specific type of business.
 This customization takes a long time, depending on the specific requirements of the
business.

1.Implementation Costs :The implementation costs would increase as the

degree of customization increases.
 The cost of hiring consultants and all that goes with it can consume up to 30 per
cent of the overall budget for the implementation.
 Once the selected employees are trained after investing a huge sum of money, it
is a challenge to retain them
2. ERP Vendors :-As there are about 500 ERP applications available and there
is some company consolidation going on.
 Selecting a suitable product is extremely important.
 Top management input is very important when selecting a suitable vendor. Management
needs to ask questions about the vendor,
 such as its market focus (for example, midsize or large organization), vision of the future,
14 and with whom the vendor is strategically aligned.
Enterprise systems
 Cont.…
3. Selecting the Right Employees : companies intending to implement an
ERP system must be willing to dedicate some of their best employees to the
project for a successful implementation.
 Employee exhibit the ability to understand the overall needs of the company
and
 should play an important role in guiding the project efforts in the right
direction.
4. Training Employees :- Without proper training, about 30 % to 40 % of
frontline workers will not be able to handle the demands of the new system.
 training and updating employees on ERP is a major challenge.
 It is difficult for trainers or consultants to pass on the knowledge to the
employees in a short period of time.
 This "knowledge transfer" gets hard if the employees lack computer
literacy or have computer phobia
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Cont.…
 Employee Morale:-Employees working on an ERP
implementation project put in long hours (as much as
20 hours per day) including seven-day weeks and
even holidays.
 many times employees still spend 25 to 50 percent of
their time on regular job duties) could decrease their
morale rapidly.
 Leadership from upper management and support
and caring acts of project leaders would certainly
boost the morale of the team members.
 Other strategies, such as taking the employees on
field trips, could help reduce the stress and improve
the morale.
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 why do organizations acquiring and
implementing enterprise systems
 Organizations today face twin challenges of globalization and shortened
product life cycle.
 Globalization has led to unprecedented levels of competition
 to face such competitions, successful corporations should follow the best business
practices in the industry.
 Shortened life cycles call for
 continuous design improvements, manufacturing ,flexibility, super-efficient
logistics control and better management of the entire supply chain.
 All these need faster access to accurate information, both inside the
organization and the entire supply chain outside.
 The organizational units such as finance, marketing production, human
resource development etc. need to operate with a very high level of
integration without losing flexibility
 ERP system with an organization-wide view of business processes,
business need of information and flexibility meet these demands admirably.
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18
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Enterprise systems
 Chapter 2

2.1 Analyzing business requirements for selecting and implementing an enterprise

system.

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Business Process Management(BPM)
 The term BPM covers how we study, identify, change, and
monitor business processes to ensure they run smoothly
and can be improved over time.

 The literature report three alternatives to business process

manage:
 Automation

 Streamlining

 Business process engineering

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Automation
 While automation can make a business more efficient, it
cannot be used to provide a competitive advantage.
 Simply automating a bad process does not make it better.

 Organizations that are serious about improving their

business processes will also create structures to manage
those processes.

 Business process management (BPM) can be thought of as

an intentional effort to plan, document, implement, and
distribute an organization’s business processes with the
support of information technology.
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 Streamlining
 Streamlining processes refers to the practice of identifying
and eliminating repetitive and unnecessary steps or activities
in a process in order to make it more efficient and effective.

 Streamlining has a better impact on efficiency and

productivity, but it cannot warranty a competitive or
sustainable advantage.

 It is a good strategy for process that are essential to the

company but they cannot bring competitive advantage.

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Business Process Reengineering:
 Organizations look to manage their processes to gain a competitive
advantage.

 Companies should “blow up” their existing processes and develop new
processes that take advantage of the new technologies and concepts

 Before implementing ERP, the organization needs to:-

 Analyse current processes,
 Identify non-value adding activities and
 Redesign the process to create value for the customer.

 BPR is fully understanding the goals of a process and

 then dramatically redesigning it from the ground up to achieve dramatic
improvements in productivity and quality.

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Business Process management(BPM)
 BPM is the understanding, visibility, and control of business processes.
 BPM is a methodology that should be followed to help an organization to:-
 document their business processes and
 understand where they are being used throughout their business.
 The initial stage of BPM is to create an “as-is” process map that defines
the current process.
 The as-is process is then used as a baseline for determining where the
process may be improved.
 BPM can activate the process, arrange the people, data, and systems that are
involved in the process,
 give the business managers a detailed view into how the process is
operating and where the bottlenecks are occurring, and highlight possible
process optimization

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Difference between BPR and BPM
 BPR and BPM are not the same

 BPR suggests that businesses will become competitive by

redesigning core business processes.

 It aims at eliminating the human intervention and automating

the process, wherever possible.

 BPM is not about radical automation; instead, it follows

an iterative approach of making incremental
improvements in the processes.

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2.2 Selection of enterprise systems software
 A successful ERP project requires :-
 Selecting an ERP solution
 Implement the solution
 Manage changes and
 Examine the practicality of the system
 Most enterprises, the decision to implement ERP functionalities will
require buying a software package from one of the more popular vendors
on ERP market:-
 like SAP, INFOR , MICROSOFT , LAWSON , SSA GLOBAL and
Oracle,.

 But the selection process is not a straightforward task,

 hence thorough understanding of what ERP packages are to offer,
 differences in each of them
27 Enterprise systems
For effective ERP Solution evaluation and selection
process 5 phases
Stage 1 - Plan Requirement
 Develop a specific business case with business value for a solution.
 Ensure that the project sponsor is willing to articulate the business
case for change.
 Identify vendors that operate in the line of products you are looking
for.
 Get familiar with the software and hardware infrastructure presence
for the solution seeking.
 Get general view of investment needed, considering software,
hardware, other related infrastructure and on going support.
 Evaluate the organisation readiness for the investment and decide
whether to continue or not.
 Now define priorities under "must-have" and "nice-to-have"
accordingly.
28 Enterprise systems
Stage 2 - Request for Proposals (RFP)

 Shortlist interesting vendor based on the outcome of market survey

for products.
 Invite interesting vendors for interaction/demonstration of their
products.
 Collects facts/functionalities in line with the business need

 Set-up a neutral body to develop RFP using all facts gathered during
products demonstration aligned to the business requirements.

 Distribute out RFP that addresses the vendor as a company and the
products they offer.
 Generate basic expectations from an ideal proposal in line with the
business need for onward selection of the ideal software vendor.
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Stage 3 - Solution Evaluation
 Identify and prioritise remaining gaps between software
capabilities as demonstrated and business requirements.

 Identify how the gaps will be bridge in terms of

configuration, process change or combination of all these.

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Stage 4 - Contract Negotiation
 Negotiate with each vendor.
 Establish software, hardware and other infrastructure
agreement requirements, which include
 version, components, maintenance and support.
 Also negotiate participation in user groups,
 license costs, maintenance fees and many others.
 Establish service provider agreement which also include
deliverables, timelines, resources, costs and payment
schedules.
 Establish other legal requirements.

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Stage 5 - Selection and Agreement
 Upon successful negotiation with the right vendor;

 Review all legal terms on privacy protection, operation

guidance and data manipulation etc.

 Approve agreements with the selected vendors.

 Agree on implementation plan

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ERP Implementation Life Cycle:
 According to the staged system implementation model, the ERP
life cycle consists of four phases:-
 Adaptation
 Acceptance
 Routinization, and
 Infusion.
 Adaptation is similar to system investigation.
 Acceptance is similar to system analysis
 where user requirements are analysed and accepted by the
team before proceeding to design and implementation.
 Routinization is where the ERP system is either customized or
business processes are changed to assimilate the system in the
organization.
 Once operational, the infusion or maintenance and
evaluation phase gets started
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Comparing and contrasting SDLC and ERPLC

34 Enterprise systems
ERP Implementation plan
 is used to create a roadmap or blueprint to meet cost, scope, and
time constraints of an implementation.

 The appropriateness of the plan depends, in part, on the project, the

company, and the reasons for the implementation.
 Following are three major implementation plan choices:
1) Comprehensive
 A comprehensive ERP integration plan is the most expensive and lengthy
approach.
 It involves implementation of the full functionality of the ERP soft- ware
in addition to industry-specific modules
 Implementing the full functionality requires a high level of business
process reengineering (BPR)
 with major changes in the business processes and customization of legacy systems.
35 Enterprise systems
Cont.…
2) Middle of the Road
 A middle-of-the-road ERP implementation plan involves some
changes in the core ERP modules and a significant amount of
BPR.
 The middle-of-the-road approach is not as expensive as the
comprehensive approach
3) Vanilla.
 A vanilla ERP implementation plan utilizes core ERP
functionality and exploits the best practice business processes
built into the software.
 A company following a vanilla implementation will have to
simply align their business processes to the ERP system, rather
than modify the software.
36 Enterprise systems
ERP Implementation Methodology
 Methodology refers to a systematic approach to solving a
business problem.

 Like SDLC, an ERP development life cycle provides a systematic

approach to implementing ERP software in the changing.

 There are many different vendor-driven methodologies or

approaches that use:-
 Traditional ERP development life cycle
 Rapid ERP life cycles (e.g., Total Solution, FastTrack, Rapid-Re,
Accelerated SAP (ASAP), and
 Business integration methodology (BIM))

37 Enterprise systems
Phases Of ERP Implementation

1. Pre-evaluation Screening
 Define your goals and requirements: Start by defining your company's
goals and objectives for implementing an ERP system.
 This will help you identify the specific features and functions you
need in the software.
 When the company has decided to implement the ERP:-
 search for the convenient and suitable ERP package begins.
2. Package Evaluation:-
Select the right ERP system: Research and evaluate different
ERP systems to find the one that best fits your company's needs
 The objective of this phase is to find the package that is flexible
enough to meet the company’s need or
 Software that could be customized to obtain a ‘good fit’.
38 Enterprise systems
Cont.…
 Some important points to be kept in mind while evaluating
ERP software include:
1. Functional fit with the company’s business process.
2. Degree of integration between the various components of the
ERP system.
3. Flexibility and scalability
4. Complexity
5. User friendliness
6. Quick implementation
7. It is better to have a selection committee that will do the
evaluation process.

39 Enterprise systems
 3.Project Planning Phase(pp)
 This is the phase that designs the implementation process.

 The project plan is developed, roles are identified and responsibilities are
assigned.
 Organizational resources that will be used for the implementation are decided
 The implementation team members are selected and task allocation is done.

 The phase will decide when to begin the project, how to do it…

 The phase will plan what control measures should be installed and what
corrective actions should be taken when things get out of control

 PP is usually done by a committee constituted by the team leaders of each

implementation group headed by CIO.
40 Enterprise systems
4.Gap Analysis phase
 Simply it is the process through which companies create
a complete model of where they are now, and
 in which direction they want to head in the future.

 Some companies decide to live without a particular

function. Other solutions include:
 Upgrade
 Identify the third party product that might fill the gap
 Design a custom program
 Altering the ERP source code, (the most expensive alternative)

41 Enterprise systems
5. Reengineering
 This phase involves human factors
 In ERP ,Reengineering has two connotations.

 The first connotation is the controversial one, involving

the use of ERP to aid in downsizing efforts.
 In this case ERP is purchased with aim of reducing the number
of employees.
 It is best to regard ERP as investment and cost-cutting measure
rather than a downsizing tool.

 The second use of the word ‘reengineering’ in the ERP

field focus on the Business Process Reengineering (BPR)
42 Enterprise systems
6.Configuration
 It is important for the success of ERP implementation.

 Configuring the system are able to explain what won’t fit

into the package where the gaps in functionality occur.

 ERP vendors are constantly make efforts to lower

configuration costs.

 Strategies that are currently being done include automation

and pre – configuration.

43 Enterprise systems
7. Implementation Team Training
 Synchronously when the configuration is taking place,
 the implementation team is being trained.

 This is the phase where the company trains its employees to

implement and later, run the system.

 For the company to be self-sufficient in running the ERP system

 it should have a good in-house team that can handle the various
solutions.

 Thus the company must realise the importance of this phase and
selects right employees with good attitude
Enterprise systems
44
8.Testing
 This is the point where you are testing real case scenarios.
 The test cases must be designed to specifically to find the
weak links in the system and these bugs should be fixed
before going live.
9.Going Live
 This is the phase where all technicalities are over, and the
system is officially declared operational.
 In this phase all data conversion must have been done, and
databases are up and running; and
 the prototype is fully configured and tested
 Once the system is ‘live’ the old system is removed and
the new system is used for doing business.
45 Enterprise systems
10.End-User Training
 This is the phase where the actual users of the system will be trained on
how to use the system.

 The employees who are going to use the new system are identified and
their skills are noted

 Based on their skill levels are divided into groups.

 Then each group is given training on the new system.

 The end-user training is much more important and much more difficult than
implementation team training since people are always reluctant to change.
Post – Implementation
 There must be enough employees who are trained to handle the problem
that might occurred when the system is running.

46 Enterprise systems
Data Migration:
 Data migration is the process of moving required volume of data from
existing systems to new systems.

 Data migration encompasses all the necessary steps to cleanse, correct

and move data into a new system.

 Technological changes, change in providers, software updates or data

warehousing/data mining projects make such delicate and critical
operations necessary

 A good data migration should allow one to:

 Reduce risk:
 Lower operational expenses:
 Improve data quality:
47 Enterprise systems
Vendors and Consultants
 Vendors are the people who have developed the ERP
software’s.

 These people have invested huge amount of time and efforts in

research and development to create the software solutions.

 The vendor should supply the product and its documentation as

soon as the contract is signed
 The another role or responsibility of a vendor is as a trainer

48 Enterprise systems
 Consultants
 Business consultants are highly skilled professionals
 The consultant should be responsible for administrating, monitoring, and
inspecting the activities of implementation.
 Consultants are responsible for analyzing and clearly addressing customization
issues,
 Consultants develop in-depth understanding of each product’s strengths and
weaknesses, worked by side of the ERP vendors.
 It confirms that vendor’s package works and learns the techniques
 consultant shares their previous experience about the implementation of a
package
 The consultant should guarantee the success of the project and
 should be able to show the results to the satisfaction of the company
management.

49 Enterprise systems
 2.3 Challenges associated with the
implementation of global ERP
 An ERP implementation involves people as well as technology.
 Accordingly, it may face people-related challenges, such as resistance to change, as
well as technical obstacles
 Common ERP implementation challenges include:-
1.Project management:-
 ERP implementations involve multiple phases:
 Each phase brings critical tasks, and all elements need to stay on track, which requires
careful project management
2.Project planning: Organizations often underestimate the time and budget necessary
for a successful implementation.
 One of the most common causes of budget overruns
 Developing a clear and realistic plan from the start can help to avoid those issue
3.Data integration:
 A key step in ERP implementation is data migration, But first, you have to find all of your
data; This may be much more challenging than you expect.
 Well-planned data migration can help to keep the entire ERP implementation project on time and
on budget.
50 Enterprise systems
Cont.…
4.Data quality:
 The information may be stored in different formats; there may be inconsistencies, and
some information may be inaccurate
 Ensuring data quality can become a sizable project on its own,
 involving validating the data, cleaning out duplicates and adding missing values before
migrating data to the ERP system.
5.Change management
 This requires a shift in mindset and a change in everyday work processes for many
employees
 Resistance to change can be a difficult roadblock

6.Cost overruns:
 Many organizations underestimate the amount of work required to move to a new
business system, and
 That results in spending more money than expected

7.Continuous improvement:
 The project team needs to continue to manage the project after deployment, fixing
issues and supporting new requirements as they come up.
51 Enterprise systems
52
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Enterprise systems
 Assignment 30%
1. Review at list 5+ articles and discuss each question briefly including
definition, advantage, disadvantage architecture and reference.
 Human resource functions
 How enterprise systems support business
2. Search the following IP address “10.197.10.10” and assesse each application and
suggest your recommendation how to integrate each of application in the concept
of ES

3. Download free ERP software package then install on your work environment

 Finally compare and contrast the ERP software package with 10.197.10.10
applications then write a repot that include the strength and weaknesses of
10.197.10.10 applications and ERP package

Note: Submission date is 10/08/2015

53 Enterprise systems
 Chapter 3

3.1 Organizational Change and Change management

Enterprise systems
Organizational change
 Typically, the concept of organizational change is in regard to
organization wide change, as opposed to smaller changes,

 Examples of organization wide change might include

 a change in mission, restructuring operations (e.g., restructuring to self-managed
teams, layoffs,etc.), new technologies, mergers, major collaborations,
“rightsizing,” new programs such as Total Quality Management, re-engineering,
etc.
 Some experts refer to it as organizational transformation.

 Often designates a fundamental and radical reorientation in the way the

organization operates.

 ERP implementation projects usually mean radical changes to an

organization
Enterprise systems
Organizational change….
 “Approximately one half of all ERP projects fail with out achieve expected
benefits due to managers underestimating the efforts involved in managing
change.”
 The decision to implement an ERP must be addressed logically and
communicated to key management and staff in order to achieve the desired
company goals.
 The reasons to move to an integrated ERP system are to improve the bottom
line by streamlining business processes and to create a competitive
advantage.
 ERPs would almost immediately increase profits and
 provide a short-term return on investment.
 The rationale to implement an ERP is often a result of an organization
conducting a BPR study.
 These studies both identify process and procedural changes to streamline the business and
they identify best business practices that can create industry advantage
 The next step is to communicate the BPR results to the company
 so they can begin gaining an overall organizational commitment
Enterprise systems in replacing legacy systems
with an integrated ERP
Change Management(CM)
 CM in terms of adopting an ERP system,:
 as activities, processes, and methodologies that support employee
understanding and organisational shifts during the implementation of
ERP systems and reengineering initiative

 Change management is another critical factor that must be addressed by the

project manager (i.e. managing change)
 The objective is typically to maximize the collective benefits for all people
involved in the change and to minimize the risk of failure of implementing
the change.
 The discipline of change management deals primarily with the human aspect
of change, and is therefore related to pure and industrial psychology.
 Change Management focus of section will be more on the OPM3 area.

Enterprise systems
 Organization Project Management Maturity Model
(OPM3 )
 OPM3 as “seeking to create a framework within which organizations can re-
examine their pursuit of strategic objectives via Best Practices in
organizational project management.”

 OPM3 :-help companies to understand the level of competency and ability to

implement an ERP System successfully.

 In this case successfully means meeting the overall needs of the organization
as described in the project scope and delivered on time and on budget.
 The more skilled companies have a greater chance of implementing ERP
systems than those with lesser skills.

 The OPM3 model is a three-step continuous improvement process.

 The steps include knowledge, assessment, and improvement

Enterprise systems
Cont.…

Enterprise systems
Strategic Alignment
 Understanding strategic alignment starts with understanding what
strategy really is.
 Within any organisation there will be visions, mission and goals which
are set by the governing body that Define the purpose of the
organisation.

 Then the organisation’s strategic plan prioritises, and describes how

each strategic objective will be achieved.

 Sub plans (business, programme, project etc) are then developed to

define at a greater level of detail how specific elements of the
overall strategy will be accomplished.

Enterprise systems
Strategic Alignment.…
 Having a strategy is not enough.
 Research suggests that
having a strategy has no real effect on the performance of your b
usiness.

 Strategic Alignment is the process of aligning an organization’s

decisions and actions

 such that they support the achievement of strategic goals.

 Most people think of strategic alignment is
 “the state of having everything aligned to strategy”), but it’s
better to think of strategic alignment as a - it’s about action.
Enterprise systems
Creating Strategic Alignment

Strategic: Tactical
• Purpose: What is the • Processes: The project
reason for this project? management processes
• Vision: Once complete that need to be applied
what will success look to accomplish the
like? work.
• Strategy: How will • Resources: The
the project achieve this people and other
vision? resources are needed
• Objectives: What to accomplish the
‘SMART work.
• Structure:
• Culture: What culture
do you want to
develop within the
project team and how
will you work to create
it?

Enterprise systems
Conditions for Successful Alignment
 Successful project alignment relies on six factors:
1. Balanced and comprehensive objectives
2. Specific and durables objectives.
3. Hierarchical framework.
4. Measurable objectives.
5. Stakeholder agreement.
6. Environmental and organizational assumptions.

Enterprise systems
Communications and Training
 Change management(CM) will develop both the training plan and a
communications plan for the project.
 Communication and training are the keys to a successful change management
effort.
 It is normal for people to resist change and have a fear of the unknown.
 It is up to the project manager to communicate the importance and
significance of the project to the entire organization, top to bottom
 CM should use all communication methods available to them to ensure the
message is getting out.
 This includes e-mail, Web, letters, and presentations.
 There is no better way to calm a user’s fears than to implement an aggressive
training program.
 Inadequate or lack of training has been one of the most significant reasons of
many ERP systems failure

Enterprise systems
Governance
 Governance is critical in any project that transforms an organization.
 In an ERP system implementation, governance should outline and define
committees and workgroups
 that are responsible for the different components of the implementation,
 how the different groups interact, and
 the decision-making process, including escalation procedures.
 The components of governance should include, but not be limited to:-
 project organization as technical development,
 hardware and software installation,
 functional components,
 communications,
 change management,
 reporting,
 project management,
 project owners and sponsors,
 budget management, and the issue escalation process.
Enterprise systems
Governance
 The governance structure must be communicated to all involved and
fully understood before the project begins.

 Governance is a framework of processes and underlying

accountabilities that guide the management of the project.

 This framework defines the leadership, organization structure (i.e., roles and
responsibilities), and processes that align decision making with strategies
and direction.
 Leadership provides clear and consistent direction.

 organization structure creates the infrastructure to support

 the implementation of decisions, and
 process alignment defines the activities that turn ideas into action.
Enterprise systems
Roles and Responsibilities of governance

Owners:-
 The owners will consist of the senior management.
 The chair is empowered to make decisions when the owners cannot
reach consensus.
 The owners determine overall policy, budget, and scope of the project.
 Owner:- Senior management functional area
 Senior IT Management
 Project executive

Project Executive(PE) :-
 The PE works directly with the implementation partner (if one is being
hired) and
 PE is person ultimately responsible for the success of the implementation
 provides project status updates (as needed) to the owners.

Enterprise systems
Cont.…
Steering committee(SC)
 The SC will oversee the project’s efforts and ensure appropriate leadership.
 The committee will link business leaders with the project to assure that
 High-level direction, Resource commitments, and
 Timeframes are consistent and support business priorities and strategies.
 Members will include business owners, information technology
leaders, and project management staff

Application Steward(AP)
 AP is appointed by the owners cabinet.

 The steward will work with the other business owners to develop an
overall business direction of the system, developing consensus, and
resolving functional issues raised to the steering committee.
Enterprise systems
Cont.…
Chairperson
 The chair will oversee the activities of the steering committee, ensuring that
the committee functions in accordance with the overall project oversight.
 This includes budget, resources, deliverables, risk, and expectations
management.
Project Management Office (PMO)
 PMO)consists of the project executive, business and technical project
manager(s), and the implementation partner (if hired).

 Project managers manage the day-to-day aspects of the project,

 ensure that the project plan is being followed, and keep both team members and the
project executive aware of the status of the project.

 PMO responsibility includes overall management of the project

 to ensure that all work tasks are completed on a timely basis, in a quality fashion,
and in accordance with the approved project plan.
Enterprise systems
Cont.…
Project Teams
 Project team members provide direction and
 ERP application knowledge with respect to business process design,
configuration, conversion, testing, training, reporting, and
implementation.
 The following (module or project) teams will exist:
 Cross-functional component team
 Functional component teams
 Technical infrastructure team
 Development team
 Change management team
 Conversion team
 Reporting team
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Cont.…
Project Team Leads
 The project team leads provide leadership and
 overall direction for the implementation, ensuring the quality of
deliverables and adherence to the project plan and milestones.
Cross-Functional Team:
 The integration team will consist of the module or project team
leads from the business modules and the development leads.
 This group will meet as needed to discuss and resolve cross-
module issues.

Enterprise systems
Project Organization

Enterprise systems
 Chapter 4

4.1 Post-implementation issues

Enterprise systems
Going live Readiness
 Going live (“Go-live”) is one of the most critical points in a project’s success.
 A lot of time and resources have been spent to get to this point.
 Several tasks and activities need to fall into place to Go-live, and
determining the level of readiness is a challenge.

 All implementation areas must be assessed in the readiness process

 These include the infrastructure, development, configuration, conversion,
testing, training, communications, operations, command central, reporting,
and users.

 Input from the project teams, users, and team leaders needs to be gathered and
summarized for review.

 There should be at least three readiness reviews, about one month to six
weeks apart.

Enterprise systems
Cont.….
 The process for determining readiness consists of a series of
meetings and discussions on the status of each area’s tasks and
activities.

 The meeting will be with each of the team leads, team

members, and the subject matter experts (SMEs)
 The PMO will assess the overall implementation readiness
after each meeting.
 It is important to discuss the value of training and the training
concept on ERP implementations as an organization is going
live.
 Training must be provided to everyone who will be using the
system and should use real data.
Enterprise systems
Stabilization
 The stabilization process begins when the ERP system software is in
production, initial training is complete, and conversion of critical
data is done

 After the ERP system goes live, the organization will need to shift to
stabilization process—60 to 90 days

 This stabilization time frame must be used to let the users get familiar
with the system and the new processes and to fix problems or bugs in
the system.
 During the stabilization period:-
 The IT staff will be monitoring the infrastructure for response times and
ensure that backups are taken appropriately for all hardware and software.
 Hence, they are often simultaneously researching and fixing problems.
Enterprise systems
 Some user issues and activities that arise
during stabilization are as follows:
 Customization add to the complexity if not documented and
communicated well.

 Users make mistakes as they use the new process for the first
time.

 Reconciliation has to be done between the new ERP system and

the old legacy system to validate the inputs and outputs.

Enterprise systems
postproduction support
 Managing the daily system operations and ensuring that the system is
doing what it needs to do is really the purpose of post production
support.
 Many new processes must be understood and communicated to gain the
benefits of the ERP implementation fully.

 It is important to know the effect the new system has on the

organization.
 Are people using the system effectively?
 Is the software making the business more efficient (e.g., through
improved reporting or time to distribution)?
 Is it adding value to the organization?

Enterprise systems
Post implementation support is generally
divided into the five points that follow:
 Training:- Usually addressed before the Go-live and will continue at
varying rates after Go-live
 Go-live support:- This is a day-to-day process when the users require
assistance in using the system.
 Data validation.
 Data correction:-The ability to identify bad data and correct it will be a
part of the stabilization process.
 Patches and fixes:-The patch/fix will need to be added to the software
and regression tested and moved to production.
 New features/upgrades:- No system is ever complete

Enterprise systems
Enterprise System Processes
 ERP software supports the efficient operation of business processes by
integrating tasks related to
 sales, marketing, manufacturing, logistics, accounting, and staffing—
throughout a business
 Most companies have four main functional areas of operation:
 Marketing and Sales (M/S),
 Supply Chain Management (SCM),
 Accounting and Finance (A/F), and
 Human Resources (HR).
 Each area is composed of a variety of narrower business functions, which
are activities specific to that functional area of operation

Enterprise systems
Examples of functional areas of operation and their
business functions

Enterprise systems
Sample business processes related to
the sale of a smartphone

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Order Processing

Enterprise systems
 Order Processing
 An ERP system can improve a company’s sales order process in
several ways.
 Because an ERP system uses a common database, it can minimize
data entry errors and provide accurate information in real time to
all users.
 An ERP system can also track all transaction data
 (such as invoices, packing lists, RMA numbers, and payments)
involved in the sales order process.
 We will look at how one ERP system, SAP ERP—in particular, its
Sales and Distribution module :-manages the sales order process.
 (Other ERP software handles the process in a similar fashion.)

Enterprise systems
Cont.…
 The SAP ERP Sales and Distribution module treats the
sales order process as a cycle of events.
 SAP ERP defines up to six events for any sale:
1. Presales activities
2. Sales order processing
3. Inventory sourcing
4. Delivery
5. Billing
6. Payment

Enterprise systems
1.Presales Activities:

 At this phase, customers can get pricing information about

the company’s products, either through an inquiry or a
sales quotation.
 Presales activities also include marketing activities
 such as tracking customer contacts—including sales calls,
visits, and mailing

Enterprise systems
 2.Sales Order Processing(sop)
 SOP is the series of activities that must take place to record a sales order
 Information collected from the customer (contact name, address, phone number)
is immediately included in the sales order.
 Critical sales order processing steps include
 recording the items to be purchased, determining the selling price, and
recording the order quantities.
 Users can define various pricing alternatives in the SAP ERP system
 For example, a company can use product-specific pricing OR it can define
discounts that depend on both the product and a particular customer.
 During (sop) the SAP ERP system checks the accounts receivable tables in the
SAP ERP database to confirm the customer’s available credit

 SAP ERP adds the value of the order to the customer’s credit balance.
 If the customer has sufficient credit available, the order is completed.
 If not, the SAP ERP system prompts sales personnel to reject the order.
Enterprise systems
3.Inventory Sourcing:
 The SAP ERP system checks the company’s inventory records and

 The production planning records to see whether the requested

material is available and can be delivered on the date the customer
desires.
 This available-to-promise (ATP) check includes the expected
shipping time, taking into account weekends and holidays.

 In the SAP ERP system, availability is automatically checked, and

the system can recommend an increase in planned production if a
shortfall is expected.

Enterprise systems
Cont.…
4. Delivery:-
 creating a delivery means releasing the documents that the
warehouse uses to pick, pack, and ship orders
 The process allows deliveries to be created so the warehouse and
shipping activities are carried out efficiently .
 For example, combining similar orders for picking, or
 grouping orders based on shipping method and destination.

5.Billing
 The SAP ERP system creates an invoice by copying the sales order
data into the invoice document.
 Accounting can print this document and mail it, fax it, or transmit
it electronically to the customer.
 Accounting records are also updated at this point

Enterprise systems
6. Payment
 When the customer sends in a payment, this payment must be
recorded in the SAP system.

 If the payment is made electronically, it can be automatically

processed by the SAP ERP system,
 which records the payment as an electronic sales order
document , debits the cash account, and credits (reduces) the
customer’s account balance.
 If the customer sends a check, a clerk must manually enter the
payment information, at which point the system updates all
information related to the sale.

Enterprise systems
Production logistics

Enterprise systems
Production logistics
 In this section, We will examine a systematic process for developing a
production plan that takes advantage of an ERP system.
 Production planners are employees who interact with
 the inventory system and
 the sales forecast to determine how much to produce

 Planners follow three important principles:

1. Using a sales forecast, and taking into account current inventory levels ,
create an aggregate (combined) production plan for all products.

2. Break down the aggregate plan into more specific production plans for
individual products and then into smaller time intervals.

3. Use the production plan to determine raw material requirements.

Enterprise systems
The SAP ERP production planning process

Enterprise systems
The SAP ERP production planning process
Sales forecasting
 is the process of predicting future demand for a company’s products.
 With an integrated IS, accurate historical sales data are available for
forecasting.
 One simple forecasting technique is : -
 to use a prior period’s sales and
 then adjust those figures for current conditions.
Sales and operations planning (SOP)
 (SOP) is the process of determining what the company will produce.
 The input to this step is the sales forecast provided by Marketing and Sales.
 The output is a production plan designed to balance demand with production
capacity
 SOP determines how Manufacturing can efficiently produce enough goods to
meet projected sales
Enterprise systems
Demand management(DM)
In the Demand management step,
 the production plan is broken down into smaller time units,
 such as weekly or even daily production figures, to meet demand for
individual products.

 DM Links the sales and operations planning process with the detailed
scheduling and materials requirements planning processes

 The output of the demand management process is the master production

schedule (MPS),which is the production plan for all finished goods.

Enterprise systems
 Materials Requirements Planning
(MRP)
 MRP process determines the amount and timing of raw material orders.
 This process answers the questions:-
 “What raw materials should we be ordering so we can meet a particular level
of production?” and
 “When should we order these materials?”
 To understand MRP, you must understand :-
 The bill of material:- is a list of the materials (including quantities)
 The material’s lead time:-
 is cumulative time required for the supplier to receive and process the order,
 take the material out of stock, package it, load it on a truck, and deliver it
to the manufacturer.
 The material’s lot sizing:-
 Is the process of determining production quantities (for raw materials
produced in-house) and order quantities (for purchased items).
Enterprise systems
Cont.…
In the Purchasing step,
 the quantity and timing information from the MRP process is used to
create raw materials purchase orders,
 which are transmitted to qualified suppliers.

The Detailed scheduling process

 uses the production plans developed during the demand management
step as an input for a production schedule.
 The detailed scheduling method used depends on the manufacturing
environment.
 a detailed plan of what is to be produced needs to be developed,
considering machine capacity and available labor.
 A key decision in detailed production scheduling is determining how
long the production runs for each product should be.

Enterprise systems
Cont.…
 The Production process
 uses the detailed schedule to manage daily operations.
 answering the questions: “What should we be producing?” and
 “What staffing do we need to produce those products?”

Enterprise systems
Accounting

Enterprise systems
Accounting
 Accounting activities can generally be classified as either financial accounting
or managerial accounting.
 Financial accounting consists of :-
 Documenting all the transactions of a company that have an impact on the
financial state of the organization and
 Then using those documented transactions to create reports for investors and
external parties and agencies.
These reports, typically called financial statements,
 Common financial statements include balance sheets and income statements.
 The balance sheet is a summary of account balances such as
 Cash held; amounts owed to the company by customers
 The cost of raw materials and finished-goods inventories;
 The value of fixed assets such as buildings; amounts owed to vendors, banks, and
 other creditors; and amounts that the investors have invested in the company

Enterprise systems
Cont.…
 The Income Statement, or profit and loss (P&L) statement
 shows the company’s revenue and expenses and the profit or loss
for a period of time (typically a quarter or ayear).
 It is also important information for managers in charge of day-to-day
operations.
 In general, a manager views profits as indicators of success and losses
as indicators of problems to be solved.

 In an ERP system, the balance sheet and P&L statement are database
reports that can be quickly generated at any time,

 Another feature of the ERP balance sheet and P&L statement is the
ability to quickly display data at different levels of detail
Enterprise systems
Cont.…
 Managerial accounting deals with determining the costs
and profitability of a company’s activities.
 The goal of managerial accounting is to provide managers
with detailed information for making informed decisions
such as :-
 creating budgets
 determining the profitability of a particular product
 sales region, or marketing campaign, and so on.
 Managerial accounting produces information that:-
 managers use to control a company’s day-to-day activities and
 to develop long-term plans for operations, marketing, personnel
needs, repayment of debt, and other management issues
Enterprise systems
Human Resource

Enterprise systems
Human Resource Processes With ERP
 The responsibilities of a human resources department usually include the
following:
 Attracting, selecting, and hiring new employees using information from
résumés, references, and personal interviews
 Communicating information regarding new positions and hires throughout
the organization and beyond
 Ensuring that employees have the proper education, training, and
certification to successfully complete their duties.
 Making sure employees understand the responsibilities of their jobs.
 Handling issues related to employee conduct
 Reviewing employee performance and determining salary increases and
bonuses.
 Communicating changes in salaries, benefits, or policies to employees.

Enterprise systems
Cont.…

 The HR department is responsible for many of the activities that a company

performs to attract, hire, reward, train, and, occasionally, terminate employees

 A good information system allow:-

 a company can store employee information electronically.
 to retrieve relevant employee information and
 to maintain proper controls so sensitive information is not compromised
and privacy rules are not violated

 The SAP ERP Human Resources (HR) module provides tools for:-
 managing an organization’s roles and responsibilities, definitions, personal employee
information, and tasks related to time management, payroll, travel management, and
employee training.

Enterprise systems
Cont..
 SAP ERP distinguishes between a person, task, job, and position.

 In SAP, a person is a unique individual who holds a position and who

performs tasks, which are the assigned responsibilities related to a
specific job or position.

 Tasks can be assigned to a position directly, or they can be grouped

together in a job.

 A job is a general classification of tasks that are routinely performed

together.

Enterprise systems
Advanced Sap ERP Human Resources Features

1.Time Management
 Hourly employees:-
 who are paid for each hour worked, must record the hours they work so
they can be paid.
 Salaried employees are not paid based on the number of hours worked, but
typically their time must still be tracked.

 HR module uses Cross Application Time Sheets (CATS) to record employee

working times and provide data to other modules, including the following:
 SAP Controlling module—Monitors and manages costs
 SAP Payroll module—Calculates employee pay
 SAP Production Planning module—Determines whether enough labor is
available to support production plans

Enterprise systems
Cont.…
2.Payroll Processing
 Without proper management of the payroll process:
 employees might not be paid for all of the hours they worked,
 they might not be paid at the appropriate rate, or
 they might have too much or too little money withheld from their pay for taxes
and benefits.

 The process of determining each employee’s pay is called a payroll run

 The payroll run is used to :-
 generate employee pay statements
 process electronic funds transfers to individual employees’ bank accounts,
 submit tax payments to the appropriate government entities, and
 perform other calculations as required by human resources and
accounting.

Enterprise systems
Cont.…
3.Training and Development Coordination:-
 The Personnel Development component of the SAP ERP Human Resources
module allows:-
 companies to plan and implement employee development and training activities-
 that maximize an employee’s ability to contribute to the organization.
 In the SAP ERP system, employee development is driven by qualifications
and requirements.
 Requirements are skills or abilities associated with a position, while
 qualifications are skills or abilities associated with a specific employee.

 By using the SAP Personnel Development tool, a manager can compare an

employee’s qualifications with the requirements for a position to which the
employee aspires.
 This comparison enables the manager to identify gaps and to plan
development and training efforts to close those gaps
Enterprise systems
Cont.…
4.Management of Family and Medical Leave

 The Human Resources module alleviates some of the administrative burden

imposed by the federal Family and Medical Leave Act (FMLA) of 1993.
 Companies can program the Human Resources module to determine
whether an employee is eligible to take FMLA leave and
 to automatically deduct those absences from the employee’s allowable
leave.

Enterprise systems
Cont.…
3.Travel Management
 Any companies spend a substantial amount of money on employee travel, and
managing travel and its associated expenses can be a significant task.

 Travel requests usually require management approval, and the organizational

level at which travel must be approved may depend on the duration, location,
and cost of the travel.

 Once management has approved the travel, employees must make their travel
reservation.
 The SAP ERP Travel Management system facilitates this process by maintaining
travel data for each employee—including flight, hotel, and car preferences. and
 integrating this data with the Payroll module (to administer reimbursements) and
 with the Financial Accounting and Controlling modules (to properly record travel
expenses)
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Cont.….
 How enterprise systems support business?

Enterprise systems
Thank you

Enterprise systems