MIS PresentationOn

PUTTING THE ENTERPRISE INTO THE ENTERPRISE SYSTEM

BY THOMAS H. DAVENPORT

Siddarthan Kameswaran,SOM, Manipal

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

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

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

ERP Functions

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

Emerging Trends in ERP

 CRM 

Need based ERP purchases

 Increasing focus on business intelligence ERP

 Increased need for specialized ERP services

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

How actual system looks?

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.

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

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.

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

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

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

The Impact on an Organization

Real-time access

Streamlines the management

Centralization of control

(or)

To break down hierarchical structures

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.

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.

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.

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

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

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

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

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