Enterprise Resource Planning

1. Enterprise Resource Planning Saad Ahmed Javed National College of Business Administration & Economics

2. Enterprise Resource Planning Saad Ahmed Javed National College of Business Administration & Economics (NCBA&E) Chapter # 01

3. Today we will be covering: • What exactly is ERP? • History of ERP. • How ERP can be used in your company? • ERP Implementation. • Company Examples. • Training Exercise. • Summary of today’s lecture.

4. What is ERP? • ERP software integrates all departments and functions onto a single system that can serve the needs of the entire company. • Some of ERP’s functions include: • Bookkeeping & Accounting • Human Resource Management • Planning Production • Supply-Chain Management

5. ERP Integration

7. More Of What ERP can do

8. History of ERP • ERP has its roots in the MRP and MRPII systems of the 70’s and 80’s. • Came about as companies realized that the management and flow of information was just as important as materials and inventory management. • ERP has also evolved considerably with computer and technology advances. *Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. 

9. How we can use ERP • Update our legacy systems. • Cut down on inter-office paperwork. • To standardize our manufacturing processes and increase productivity. • Will give us more information and better access to our suppliers and customers.

10. Brainstorming Session • What are the employees looking for in an ERP system? • Are there any ideas on how else we can use ERP to improve our processes?

11. Implementation Steps for implementation of ERP in a firm: • Cost analysis • Blueprinting of Business Processes • Staff Training • Integration • Data Conversion • Going live with ERP

12. Cost Analysis • Costs to implement an ERP system is not just a ‘one-time thing.’ • Real costs are in constant training, upgrading, and maintenance. • Average Total Cost of Ownership (TCO) is over $15 million. • Benefits are not seen right away.

13. Blueprinting of Business Processes Business processes must be modeled to fit ERP software or vice versa. • A blueprint can be modeled in-house. • We can choose from a ready made blueprint supplied by an ERP software company.

14. Pro’s of Blueprinting • Blueprints are made by industry professionals. • Blueprints can greatly optimize business processes by benchmarking against similar businesses. • Flexibility in choosing from pre-designed BPs. • Blueprints serves as common starting point and language for teams engaged in process design.

15. Con’s of Blueprinting • Professionals may still not know enough. • Pre-designed blueprints may still not be enough. • There are so many blueprints its overwhelming.

16. Staff Training • Most overlooked of ERP implementation costs. • Needed to get the most out of new software. • Training is needed to make sure employees do not abandon the system.

17. Integration • Installing new equipment and software. • Customization if needed. • Testing-Testing-Testing

18. Data Conversion Moving Data: • Employee Records • Company Information • Sales information • Customer and Supplier Records, etc.

19. Going live with ERP • Final changeover to ERP system. • Real test of software. • Most costly errors can happen at this stage.

20. 3 Steps to Integration: • Implement entire business at once. • Implement one business unit at a time and make sure its right. • Implement one business unit until its right and then implement the rest all at once.

21. Training Exercise Employee teams can now break off and decide if ERP is right for us. Some thing to look at are: • Can we afford implementation. • How and where can this help us. • How will our corporate culture be affected?

22. ERP & Raytheon Aircraft • $2.7 billion subsidiary of Raytheon Co. • Implemented SAP in just over 1 year. • Total cost of about $55 million. • Eliminated 30 legacy systems. • Integrated four manufacturing sites and fifteen airport service stations.

23. Raytheon’s Training • $5.5 million went into training employees. • 5,000 employees trained for 20 hours/week months before the go-live date. • 150 go-live managers worked full-time on SAP before go live date.

24. Energy Northwest • Chose an in-house approach. • Only implemented accounting functions. • Only $2 million in expenses.

25. Examples of ERP

26. Summary • ERP is a business wide common system. • Can integrate all of our business units. • Very expensive and time intensive. • Proper implementation can help the business function better. • Poor implementation can hurt the business immensely. • Training

27. Bibliography Callaway, Erin. ERP-The Next Generation: ERP is Enabled For E-Business. Charleston, SC: Computer Technology Research, 2000. Curran, Thomas A. and Andrew Ladd. SAP R/3 Business Blueprint.New York: Prentice Hall, 2000. Hoffman, Tom. “ERP: Not Just for HR anymore.” Internet. Http://www.computerworld.com/cwi/story/0,1199,NAV47-72_STO43432,00.html. 13 February 2001. Jordan, Win G. and Kip R. Krumwiede. “Reaping the Promise of Enterprise Resource Systems.” Strategic Finance October 2000:48-52.

28. Bibliography (cont.) Konicki, Steve. “Fast Deployments at a Price.” InformationWeek October 2000: 77-96. Ptak, Carol A. and Eli Schragenheim. ERP: Tools, Techniques, and Applications for Integrating the Supply Chain. New York: St. Lucie Press, 2000. Slater, Derek. “The ABC’s of ERP.” Internet. Http://www.cio.com/forums/erp/edit/122299_erp_content.html. 14 February 2001. Wah, Louisa. “Give ERP a Chance.” Management Review March 2000: 20-24. David Haigh, OISM 470W, The Pennsylvania State University