Transcript ERP Systems
Introduction to ERP Systems and SAP MBA 8556 Fall 2004 Dr. Wagner What is ERP Anyway? “Enterprise Resource Planning” A set of integrated software modules for supporting all of an enterprise’s processes in real-time. – Sales, Production, Logistics, Purchasing, Accounting, and Human Resources share relevant information with each other as needed. Your first business enterprise… Think in terms of business processes… What are the processes involved in running a lemonade stand? – Assume one person – Assume cash business Inputs Process Outputs Sample Lemonade Processes Get OK From Mom Get supplies together Make Get OK Make lemonade Sign(s) From Mom Rake in Make Make Set up Choose The cash lemonade lemonade table location Sample Lemonade Processes Get OK From Mom Is it feasible? Get supplies together What supplies do I need? Make Get OK Make lemonade Sign(s) From Mom How much do we make? How much to charge? Rake in Make Make Set up Choose The cash lemonade lemonade table location Is it worth continuing? Who are my customers? Your enterprise partners… Customers Grocery Friends Mom/Dad Lemonade Stand Exercise Point of this exercise? – We can view everything we do, personal and professional as a set of processes. – Start to think about how our decisions affect others and their processes Lemonade Stand Exercise Point of this exercise? – We can view everything we do, personal and professional as a set of processes. – Start to think about how our decisions affect others and their processes What would happen if all the partners in this process had access to each other’s information in real-time? Functional Silo View of an Organization Functional Silo View of an Organization Functional Silo View of an Organization Functional Silo View of an Organization Functional Silo View of an Organization Functional Silo View of an Organization Information? Cross-Functional Nature of the Order Management Process Quote Commit Produce Check Credit Deliver Bill Collect Cross-Functional Nature of the Order Management Process Quote Commit Produce Check Credit Deliver Bill Collect Sales & Distribution Production Planning Financial Materials Mgmt Accounting Cross-Functional Nature of the Order Management Process Quote Commit Produce Check Credit Deliver Bill Collect Sales & Distribution Production Planning Financial Materials Mgmt Accounting What if…. You had Real Time information in your Job? – Accurate inventory data – Single point of data entry What if…. You had Real Time information in your Job? – Accurate inventory data – Single point of data entry You could tap into information that other departments collect? – Vendor selection data – Vendor pricing data available What if…. You had Real Time information in your Job? – Accurate inventory data – Single point of data entry You could tap into information that other departments collect? – Vendor selection data – Vendor pricing data available You had certain tasks and work processes automated? – RFQ and contract processing – No more reconciliations – Automatic data transfer and update That’s what an ERP System Does It is a packaged business system that allows you to: Automate and integrate many of the more tedious business practices. That’s what an ERP System Does It is a packaged business system that allows you to: Automate and integrate many of the more tedious business practices. Share common data and practices across the entire enterprise. That’s what an ERP System Does It is a packaged business system that allows you to: Automate and integrate many of the more tedious business practices. Share common data and practices across the entire enterprise. Update and access information in a real-time environment Why implement ERP? Technological reasons Business reasons Other Organizations implemented ERP for these Technology Reasons 42 Y2K disparate systems 37 poor quality of information 26 systems not integrated 19 difficulty integrating acquisitions obsolete systems unable to support growth 12 11 6 Common Business Reasons for implementing ERP poor performance 27 high costs not responsive to customers 24 21 complex processes 20 unable to support strategies globalization inconsistent business processes 15 15 10 Business Process Reengineering BPR is the creation of entirely new and more effective business processes, without regard for what has gone before. BPR is cross-functional by its very nature BPR involves questioning assumptions Text prefers “Business Engineering” term to describe redesign of entire process chains across functional and even organizational boundaries ERP Industry 80% of Fortune 1000 have implemented – includes MSFT, IBM, and APPLE 30-40%+ annual revenue growth for 19952000 (SAP +14% Q2 2004) – partly attributable to Y2K re-engineering Major players – SAP ---38% of market – PeopleSoft – JDEdwards, Baan/Invensys, Oracle, SCT, SGAI Some ERP Market Figures 1998 worldwide revenues (only license sales): $4.8 Billion ERP: The Competitive Arena Source: Gartner Group What is SAP? A series of integrated core business application modules for transaction processing A set of functions that implement best business practices Client/Server software that processes business transactions A methodology for implementing application software SAP and Market SAP (Pronounced “Ess, Ay, Pee”!) is industry standard in: – software, oil, chemicals, consumer goods, electronics Expanding into: – healthcare, government, pharmaceuticals, automotive, construction, retail, service Event-Driven Transaction Processing An EVENT is a condition that has business relevance – customer order – production order – customer payment receipt Events trigger processing actions Events are fundamental activities in processing business transactions Behind SAP’s EPC methodology – (Event Driven Process Chain) 3 Key ERP Concepts 1. 2. 3. Everyone works with real-time shared data and applications Technology becomes transparent for users through open systems architecture A Process View of the organization is required to make the project a success Key Concept: Shared Data & Applications 1. Integrated Data and Applications – Data sharing in common relational database SAP term “Master Data” ex. Material master 95% accurate data is no longer good enough Key Concept: Shared Data & Applications 1. Integrated Data and Applications – Data sharing in common relational database SAP term “Master Data” ex. Material master 95% accurate data is no longer good enough – Different Application modules are responsible for maintaining master data Application modules should reflect “process view” of organization Name That Module. . . SD FI Sales & Distribution Financial Accounting MM CO Materials Mgmt. Controlling PP AM Production Planning R/3 QM Client / Server Quality Management Fixed Assets Mgmt. PS Project System PM Plant Maintenance WF Workflow HR IS Human Resources Industry Solutions Key Concepts: Technology becomes transparent for Users through Open Systems Architecture 2. Open systems architecture Generally entails a 3-tier Client/Server architecture May require connecting to a wide variety of databases and mainframes/servers SAP solves this problem through the use of various middleware technologies that make this transparent to the user Key Concepts: A Process View of the Organization is Required for the Project to be a Success 3. Business Process Redesign (BPR) of the Organization... – – – – – Often requires major changes. Why? May involve everyone in redesign of processes Creates entirely new and more effective business processes, without regard for what has gone before. Is Cross-functional by its very nature Involves questioning assumptions How will ERP affect our processes? Financial processes – Real-time cost and performance analysis Across projects and divisions – Better financial planning Logistics processes – Supports all phases of procurement process – Integrates transportation management across the supply chain Sales processes – Complex pricing and profitability analysis – Real-time inventory control Classification of Information Systems DSS MIS TPS Classification of Information Systems DSS MIS TPS Classification of Information Systems DSS MIS TPS Benefits of R/3 Reference Model Don’t have to start from scratch Quick overview of application architecture Identifies key R/3 process elements Helps visualize processes Shows R/3 functionality Speeds up process Helps to define current processes – maintains process documents SAP R/3 Basis System Hardware UNIX Systems Bull IBM Digital SNI HP SUN Operating AIX Systems Digital UNIX SINIX SOLARS AT&T Bull/Zenith Compaq Data General HP (Intel) IBM (Intel) Sequent SNI ... Windows NT IBM AS/400 OS/400 HP-UX Databases Dialog SAP-GUI ADABAS D DB2 for AIX INFORMIX-OnLine 7 ORACLE 7 ADABAS D MS SQL Server 6.0 ORACLE 7 Windows 3.11, Windows 95, Windows NT, OSF/Motif, OS/2-Warp, Macintosh Languages ABAP/4, C, C+ + DB2/400 Windows 3.11, Windows 95, Windows NT, OS/2-Warp Future Challenges for SAP Based on late 1980’s C/S technology – not pure Object-Oriented design – servers are treated as distributed m/f with desktop as almost a dumb terminal using function calls to application server Lack of flexibility – difficult to modify business processes – modifications done by configuration channels or tack on modules by external vendors--possible upgrade problems Complexity- frightens some customers Lack of strategic fit – best for strong top-down type of organizations