Introduction to Enterprise Systems for Management (Session 1-2)
Preview
In ERP
implementation, we need to consider what need to do before, during, and after
the implementation. ERP systems are different from conventional packaged
software, such as Microsoft Office. There are no shortcuts when it comes to
implementing an enterprise system.
Key lessons of implementing ERP
-
Go
slowly and stock to the initial implementation plan
-
Use
phased strategy (slow but safe)
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Spend
appropriate time and resources to test the new system thoroughly
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Keep
things simple by limiting number of software applications
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Functional
groups must communicate their specific data requirement to implementation team
-
Definitions
of basic business processes that should be addressed by insider are often left
for outsiders
-
A
steering committee must include such top management (CEO and CIO)
Enterprise
systems in organizations
Nowadays, business organizations become more complex
and their business needs can no longer be supported by one single information
system. Information systems are a critical component of a successful
organization today, because information systems may provide high level of
computer automation to support business functions (accounting, HRM, marketing,
finance, customer service, and operations) and it plays a major role in the
primary and secondary activities of the organization’s value chain.
Management is generally categorized into three
levels: strategic, mid-management, and operational.
Over time, information systems create a hodgepodge
of independent non-integrated systems ultimately creating bottlenecks and
interfering with productivity. Organizations need to be agile and flexible and
will require the information systems to have integrated data, applications, and
resources from across the organization.
Enterprise Resource Planning (ERP) Systems are the
first generation of enterprise systems meant to integrate data and support all
the major functions of organizations. In addition, ERP systems integrate
various functional
aspects of the organization as well as systems within the organization of its
partners and suppliers. The goal of an ERP system is to make the information
flow dynamic and immediate, therefore, increasing its usefulness and value. Another
goal of ERP is to integrate departments and functions across an organization
into a single infrastructure that serves the needs of each department.
Evolution
of ERP
Business
Processes and ERP
A crucial role of ERP in business is to to better position the organization to change its
business processes. ERP software have hundreds of business processes built into
the logic of the system which may not agree with the current processes of an
organization. To implement ERP, organization may need to change their business
processes to match the software or modify the ERP software to match their
business processes.
ERP
Components Integration
ERP
Architecture
The Architecture of an ERP system influences the
cost, maintenance, and how the system use. The best architecture is flexible
because it allows for scalability as needs change and grow. A system’s
architecture is a blueprint that helps the implementation team build ERP
system. There are two types of architecture: physical and logical
Example
of Architecture of ERP at Large University
Logical
Architecture of an ERP System
Tiered
Architecture Example of ERP System
Differences between
E-business and ERP
Systems
Benefits of an ERP System
-
Integration of data and applications
across functional areas
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Improvement in maintenance and support
as IT staff is centralized
-
Consistency of user interface across
various applications means less employee
training, better productivity, and cross-functional job movements
-
Security of data and applications is enhanced due to better controls and centralization
of hardware
Systems
Limitations of an ERP System
-
Complexity
of installing, configuring, and maintaining the system increases, thus
requiring specialized IT staff, hardware, and network facilities
-
Consolidation
of IT hardware, software, and people resources can be cumbersome and difficult
to attain
-
Data
conversion and transformation from an old system to a new one can be a tedious
and complex process
-
Retraining
of IT staff and end users of the new system can produce resistance and reduce
productivity.
Business
benefits of an ERP System
-
Increase agility in terms of responding
to changes in environment for growth
and maintaining market share
-
Information
sharing helps collaboration between units
-
Linking
and exchanging information in real-time with supply-chain partners improves
efficiency
-
Better
customer service due to quicker information flow across departments
-
Efficiency
of business processes are enhanced due to the re-engineering of business
processes
Business
limitations of an ERP System
-
Retraining
of all employees with the new system can be costly and time consuming
-
Change
of business roles and department boundaries can create upheaval and resistance
to the new system
ERP
Implementation
Business Process Management (BPM) is the understanding,
visibility, and control of business processes. Improved business processes may
result in improved customer satisfaction, reductions is cost, and increased
productivity by allocating resources to more value-added activities.
ERP
Life Cycle
The key to a successful implementation is to use a
proven methodology. ERP system implementations are very risky, and using a
well-defined project plan with proven methodology will assist in managing those
risks.
ERP
Implementation Methodology
Software
and vendor selection
An organization that does not have experience in
developing ERP systems should purchase one on the market instead try to make
it. Before choosing a vendor, organization must carefully evaluate its current
and future needs in enterprise management systems. Review the organization’s
existing hardware, network, software infrastructure, and resources available
for the implementation.
Vendor
Evaluation
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Business functions must supported by
their software
-
Features and integration capabilities of
the software
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Financial viability of the vendor as
well as length of time they have been in business
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Licensing and upgrade policies
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Customer service and help desk support
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Total cost of ownership
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IT infrastructure requirements
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Third-party software integration
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Legacy systems support and integration
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Consulting and training services
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Future goals and plans for the short and
long term
Operations
and Post-Implementation
Going live (“Go-live”) is one of the most critical points in a project’s
success. It is vital to ensure that task and activities are completed before
going live.
Five areas of stabilization are important:
-
Training for end-users
-
Reactive support (ex: troubleshooting)
-
Auditing support to ensure data quality
is not compromised by new system
-
Data fix to resolve data migration and
errors
-
New functionalities to support the
evolving needs of the organization
Project
Management
Project
life cycle
People
and Organization
-
Project Management
For an ERP system to be implemented successfully,
project management must provide strong
leadership, a clear and understood implementation plan, and close monitoring of
the budget.
-
Consultant
It is often the case for organization without much
experience about ERP to use a consultant
-
Change Management
This helps
prepare for changes to how business is done. In implementing new systems,
communicating, preparing, and setting expectations is as important as providing
training and support.
-
Business Process Re-engineering
Business
processes will need to be changed, adjusted, or adapted to the new system to
use the functionality of an ERP system fully.
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Global, Ethical and Security Management
Outsourcing overseas, ethical issues, and problems
with system security have also attracted a lot of attention in ERP
implementation.
ERP market tiers
ERP
Vendors
-
SAP
SAP is the recognized global leader among ERP vendors
with over 12 million users. Its solutions are for all types of industries and
for every major market.
-
Oracle/Peoplesoft
As the second largest ERP vendor, Oracle provides solutions divided by industry category and
promises long-term support for customers of PeopleSoft
-
Infor10
The world’s third largest provider of enterprise
software. It delivers integrated enterprise solutions in supply chain, customer
relationship and suppliers management.
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Microsoft Dynamic
Formerly Microsoft Business Solutions or Great Plains,
Microsoft Dynamics is a comprehensive business- management solution built on
the Microsoft platform. Microsoft Dynamics integrates finances, e-commerce,
supply chain, manufacturing, project accounting, field service, customer
relationships, and human resources.
-
Lawson
Industry-tailored software solutions that include
enterprise performance management, distribution, financials, human resources,
procurement, and retail operations.
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SSA Global
Acquired Baan in 2004.They claim to offer solutions
that accomplish specific goals in shorter time frames and are more efficient
with time.
-
Epicor
This company provides enterprise software solutions
for midmarket companies around the world. Claims to have solutions to a variety
of needs, whether a customer is looking for a complete end-to-end enterprise
software solution or a specific application.
Software
extensions and trends
As e-Business firms
started growing bigger with advanced needs in HR, accounting, and warehousing,
non-ERP vendors were unable to support their requirements. ERP vendors were starting to expand their functionality
to the Internet and e-Business. Intense competition and fluctuating sales have
forced the ERP vendors to expand functionality to add value.
Implication of Management
ERP systems
implementation is a complex organizational activity.
-
Evaluate and learn from successes and
failures
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Managing risk is all about keeping
project focus and clear communications throughout the organization
ERP systems
implementation requires strong project management oversight. ERP systems
provide improved and added functionality for organization.
