ERP
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The document discusses enterprise resource planning (ERP) systems. It provides an overview of what an ERP system is, the scope and costs of implementation. Key points covered include the anatomy of an ERP system with its central database, configuring an ERP system, and the allure of an integrated system. Challenges that can arise when the system and company strategy do not align are also examined. The impact on an organization is streamlined processes and real-time access to information. Successful implementation requires top management involvement and customizing the system to the business.
ERP
- 1. MIS Presentation On PUTTING THE ENTERPRISE INTO THE ENTERPRISE SYSTEM BY THOMAS H. DAVENPORT Siddarthan Kameswaran, SOM, Manipal
- 2. Contents What is ERP? ERP Scope Costs of an ERP system Advantages & Disadvantages Anatomy of an enterprise system Configuring an enterprise system The Allure of Enterprise Systems When System and Strategy Clash The Impact on an Organization Doing It Right at Elf Atochem The Role of Management Conclusion
- 3. ERP- Information System software A suite of integrated applications that a company can use to store and manage data from every stage of business, including: Manufacturing Product planning, cost and development Marketing and sales Inventory management Shipping and payment E.g.- PeopleSoft from Oracle SAP Business suite from SAP
- 4. ERP Scope An enterprise system by its very nature imposes its own logic on a company's strategy, organization and culture. Financial management Human Resource Management Operations & Logistics Sales and Marketing
- 6. Costs of an ERP system Acquisition Price Costs of customizing the system Costs of installing the ERP system Training Transition to a new system can incur extra costs Maintenance costs
- 7. Emerging Trends in ERP CRM Need based ERP purchases Increasing focus on business intelligence ERP Increased need for specialized ERP services
- 8. Big companies acquiring smaller startups Rising importance of ERP on Cloud More focus on profit from ERP Mobile ERP Emergence of two-tiered ERP systems
- 9. How actual system looks?
- 10. ANATOMY OF AN ENTERPRISE SYSTEM At the heart of an enterprise system is a central database that draws data from and feeds data into a series of applications supporting diverse company functions. Using a single database dramatically streamlines the flow of information throughout a business.
- 12. CONFIGURING AN ENTERPRISE SYSTEM Adjust the system using configuration tables to achieve the best possible fit for the company Two configuration mechanisms: Modules (Company Specific-functions grouped together) Configuration tables (to tailor a particular aspect of the system, e.g.: FIFO or LIFO) Customization vs Configuration
- 13. The Allure of Enterprise Systems Every big company collects, generates, and stores vast quantities of data. The information is spread across dozens or even hundreds of separate computer systems. Maintaining many different computer systems leads to enormous costs If a company's systems are fragmented, its business is fragmented.
- 14. The ES system performs nearly every information transaction resulting from the sale. An ES streamlines a company's data flows and provides management with direct access to a wealth of real-time operating information. These benefits have translated into dramatic gains in productivity and speed. Eg: Autodesk-2 weeks to 24hrs, IBM Systems Division, Fujitsu
- 15. When System and Strategy Clash Companies would first decide how they wanted to do business and then choose a software package that would support their processes. With enterprise systems however the sequence is reversed. The company may Integrate its data and improve its processes only to lose its service edge and in turn its customers. STRATEGY SYSTEM
- 16. For companies that compete on cost rather than on distinctive products or superior customer service, enterprise systems raise different strategic issues. A speedy implementation of an enterprise system may be a wise business move, but a rash implementation is not. Eg: Foxmeyer, compaq
- 17. The Impact on an Organization Real-time access Streamlines the management Centralization of control (or) To break down hierarchical structures
- 18. To achieve tight coordination throughout their businesses. They can rapidly shift sourcing, manufacturing, and distribution functions worldwide in response to changing patterns of supply and demand. This capability allows them to minimize excess manufacturing capacity and reduce both component and finished-goods inventory.
- 19. Example Owens Corning adopted an ES to replace 211 legacy systems. For the company to grow internationally, its chief executive, Glen Hiner, felt it was critical to coordinate order-management, financial-reporting, and supply chain processes across the world. Having implemented the system and established a new global-procurement organization, the company is now able to enter into larger, more advantageous international contracts for supplies. Finished-goods inventory can be tracked daily, both in company warehouses and in the distribution channel, and spare-parts inventory has been reduced by 50%. The company saved $65 million by the end of 1998 as a result of its adoption of these globally coordinated processes.
- 20. For most companies, however, differences in regional markets remain so profound that strict process uniformity would be counterproductive Rather than implementing a single, global ES, these companies roll out different versions of the same system in each regional unit, tailored to support local operating practices. This approach has been taken by a number of large companies, including Hewlett-Packard, Monsanto, and Nestlé.
- 21. Doing It Right at Elf Atochem • ADOPTED SAP’ S R/3 • ESTABLISHED THE DESIGNATION “DEMAND MANAGER” • MORE THAN 75 % IS UPDATED , 9 OF THE 10 BUSINESS UNITS RUNNING NEW SYSTEMS • JUST ONE CALL , AGAINST GIANT 5 CALLS IN PREVIOUS DAYS
- 22. The role of management ES as a silver bullet Involment of top management in deciding the areas of ES implemantation Importance of monitoring the development of ES And maintain the system to run the process smoothly
- 23. Advantages/Benefits Information entered once into system Allows customization Provides functionality to interact with other modules Eliminates disparate stand-alone systems Provides integrated, enterprise-wide common tools, processes and systems Integrates and increases control of budgeting, planning and financial management Growth of an organization Control over systems
- 24. Disadvantages Implementation may require major changes in the company and its processes. Maintenance is costly and time consuming Data errors are replicated through the system
- 25. Conclusions ERP system may be expensive but it offers organizations cost efficient system in the long run. ERP software works by integrating all the different departments in an organization into one computer system allowing for efficient communication between these departments and hence enhances productivity. Organizations should take extra measures when it comes to choosing the correct ERP systems. A Cheapest one adds competitive advantage