erp session 2.pdf

8/10/2019 ERP SESSION 2.pdf

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Copyright Amity University

Introduction to Enterprise Resource Planning

Semester - VI


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GENERAL ERP IMPLEMENTATION METHODOLOGY

1. Identification of the needs for implementing an ERPpackage.

2. Evaluating the As-Is situation of your business.

3. Deciding upon the desired Would-Be situation of our

business.4. Re-engineering of the business processes to achievedesired results.

5. Evaluation of various ERP packages

6. Finalizing of the ERP package.

7. Installing requisite hardware and networks8. Finalizing the implementation with consultant.

9. Implementation of ERP package.


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Step 1

Identification of the needs for implementing an ERPpackage

Why should I implement an ERP package?

Will it significantly improve my profitability?

Will it lead to reduced delivery times for my products?

Will it enhance my customers satisfaction level in termsof cost, delivery time, service and quality?

Will it help reduce the costs of my products?

Will it enable me to achieve the same business volumewith reduced manpower?

Will it enable me to reengineer my business processes?


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Step 1 - Contd.

The other factors that should be taken intoconsideration are:

Need for quick flow of information between

business partners. Effective management information system for

quick decision-making.

Elimination of manual preparation of various

statutory statements. Need for a high level of integration between the

various business functions.


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Step 2

Evaluating the As-Is situation ofyour business

The various business functions should befirst enumerated.

For example, procurement, production,sales, etc. Now the processes used to

achieve the business transactions shouldbe listed in detail. The technique ofprocess mapping can be used here.


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Step 2Contd.

The process map should give you the following details forany business process:

The total time the business process takes tocomplete.

The total number of decision points involved.

The number of departments/geographical

locations that the business process involves. The flow of information.

The number of reporting points.


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Step 3

Deciding upon the desired Would-Besituation for your business

In this step, we decide on what we want ourbusiness processes to finally look like. Here weuse the techniques of benchmarking to ensurethat the targets set are comparable to the best in

the industry. Benchmarking can be done onvarious aspects of the business like cost, quality,lead time, service, etc.




Step 4

Re-engineering of the businessprocesses to achieve desired results.

In order to achieve the new business processes,

we reengineer the existing processes in such amanner that:

The business process cycle time is reduced significantly.

The number of decision points is reduced to the bare

minimum.

The flow of information is streamlined, i.e., there is no

unnecessary to-and-fro flow of information between

departments.




Step 5

Evaluation of the various ERP packages Global Presence

Local Presence

Investment in R & D

Target Market Price

Modularity

Obsolescence

Ease of Implementation

Cost of Implementation

Post-Implementation Support




Step 6

Finalizing of the ERP package

After a thorough evaluation of all the ERP

packages vis--vis the key factors of your

business, the package best suited to your

business needs is selected. The process

of finalizing can be simplified by making a

matrix of the key factors. You can thenrate all the packages under these heads.




Step 7

Installing the requisite hardware and networks

In this step, one has to install the hardware and

networks required for the chosen ERP package.

The installation of the hardware has to be well-planned because generally the hardware arrives

in time and lies idle due to the delays in

implementation. Also, the induction of the

hardware should be in a phased manner toavoid blocking of capital.




Step 8

Finalizing the Implementation Consultants

The factors which go into the selection of theconsultant are:

Skill-set available with the consultant(application area)

Installation base of the consultant

Industry-specific experience (knowledge of the

various industry-specific business processes) Finances involved in hiring the particular

consultant.




Step 9

Implementation of the ERP Package

The broad steps involved in the implementation of the ERPpackage are:

Formation of Implementation Team

Preparation of Implementation Team Mapping of business processes on to the package

Gap Analysis

Customization

Development of User-specific reports andtransactions

Uploading of data from existing systems




Step 9Contd.

Test runs

User Training

Parallel run

Concurrence from user on satisfactoryworking of the system

Migration to the new system

User Documentation

Post-Implementation support

System Monitoring and Fine Tuning



Formation of Implementation Team

Implementation Team consists of:

IT personnel

Implementation consultants Project Manager, Project Leaders and the

Module Leaders

Steering committee



Functions of the Steering

Committee To monitor the progress of the

implementation

To see to it that the schedule of theimplementation is adhered to

Resolve any problems that come up in the

due course of the implementation Allocation of resources for implementation



Preparation of The Implementation Plan

The implementation plan should have clear componentsand should include the schedule for the following:

Training of the Project Team

Mapping of business processes onto the software

Function-wise implementation

Customization

Uploading of Data

Test Runs

Parallel Run

Cross-Over



Mapping of Business Processes on to the

PackageThis is a crucial step where the re-engineered

business processes are mapped on to the

software. In mapping, the implementation team

tries to fulfill the user requirements by making

use of the standard functionality available in the

software. However, if the requirements cannot

be covered fully by the standard system, thenthe next step of implementation, ie, gap analysis

comes into picture.



Gap Analysis

The user requirements that cannot be directly mappedon to the standard system from the basis of gapanalysis. Here, all such uncovered requirements arecompiled into a gap analysis report. The gaps are then

classified into the following three heads:

Gaps which can be taken care of with a littleprogramming effort.

Gaps which involve an extensive programming effort andhence require extra resources.

Gaps which cannot be taken care of in the system.



Customization

Once the process mapping and gap

analysis have been done, the actual

customization starts. In this step, first the

customizing needs are chalked out andthen the actual job is handed over to the

respective functional teams.



Development of User-specific

Reports and TransactionsAs part of gap analysis, any user

requirements not covered by the standard

system need to be provided by extraprogramming effort. In this step, the

required reports and transactions are

created.



Uploading of data from Existing

SystemsWith customization in place, the system is now

ready to receive the master and transaction data

from the existing system. In this step,programmed transfer of data takes place from

the existing system to the new system. In order

to avoid wrong tabulation of master data, the

transfer process needs to be thoroughlychecked in the trial runs. At times it too involves

a lot of programming effort.



Test Runs

In this step, the test runs on the system

are started. Sample transactions are tried

to see whether the customizing and

master data uploading has been error-free. The result of the sample transactions

is evaluated and any changes required in

settings to get the desired results areincorporated.


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Parallel Run

With the successful test runs and user

training in place, the parallel run of the

system can be now started. In parallel run,

the business transactions are carried outboth through the existing system as well

as through the new system. The

implementation team then takes care ofany lacunae which come to light during the

parallel run.


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Concurrence from User on satisfactory

working of the SystemIf the parallel run is satisfactory and error-

free, or errors that may have come up

have been resolved, the users may beasked for their final approval.


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Migration to the New SystemWhen the parallel run has been

successfully tried for a reasonable length

of time and when the users and theimplementation team feel absolutely

confident, it is time to Go Live.


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User Documentation

User documentation includes the detailson how to carry out the various

transactions. It is different from the regularERP package documentation in the sensethat it is more specific in nature thangeneral documentation. It only covers

alternatives that are being used in theparticular business so as to make it easyfor the user to understand and use them.


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Post-Implementation Support

Post-Implementation support generally

involves queries from the user, minor

changes in the report formats, as well as

small changes in layouts of various printed

formats like purchase orders, etc.


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System Monitoring and Fine Tuning

In this phase, the IT people monitor the

system closely to see the performance

aspects and fine tune the database and

other administrative aspects of the systemso that the user can derive the best

performance from it.


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VANILLA IMPLEMENTATION

A Vanilla implementation is the decision toimplement an ERP As-Is and modifybusiness processes to match the ERP

system. It is fundamental to make thisdecision prior to starting animplementation. A Vanilla implementationis when the company chooses not to

modify (i.e., customize) the ERP system,but instead to change business practicesto fit the ERP system.


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Need for Vanilla Implementation

Businesses with relatively straightforwardbusiness practices that are not unique shouldconsider a Vanilla implementation.

Businesses that are not skilled or experienced at

building or changing systems should consider aVanilla implementation.

In Vanilla implementations all of a company'sbranches are running the same system in a

single instance, and entering and retrieving datain a similar fashion, thereby reducing hardware,software licensing, implementation, and trainingand support costs. This is a cost-control factor.


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Need for Vanilla Implementation

Contd. For a company using a purchased ERP system where

the financial component is critical for reporting, a Vanillasystem will more than likely pass the financial audits in atimely fashion.

Last, for a competitive advantage, it is important to knowthe ability of what and where things are around the worldwith your business in terms of parts inventory,maintenance agreements, and processes. Again, and asan example, if everyone is entering and retrieving thesame information, the ability to know inventories andwhat is needed in a timely fashion without needing tocontact others around the world creates a competitiveadvantage for a business that needs to react toinformation in a timely manner.


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Need for ERP Customization

Even though there are many reasons toimplement a Vanilla ERP, many businesseschoose to customize or modify the system tomeet business needs (i.e add-in some

Chocolate) and are very successful. Businessesthat have highly skilled IT developers and aproven process for managing modifications cancertainly choose to change the system in areaswhere a business already has a competitive

advantage. In a situation like this, an ERPsystem is too generic to fit the specializedbusiness or specialized process.


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GUIDELINES FOR ERP IMPLEMENTATION Very few companies succeed in the first instance after implementing

ERP.ERP is not a fortune but a technology that delivers results onlyafter effective execution of the laid down procedures.

ERP is not an answer to the errors in business plans and tactics. Infact ERP consultants are reluctant to attend to it because they don'twant it to disturb the purpose of ERP. It should therefore be

understood that ERP is an I.T. tool that assists and facilitates thebusiness process by being a part of it. On the contrary it ismisunderstood that ERP can rejuvenate the business. The answerto the popular question "What companies use Enterprise ResourcePlanning?" will help in clearing this trouble.

ERP gap analysis and business process reengineering should be

performed properly. This will ensure that other steps are followedsystematically and in accordance to the company's need. They areotherwise referred as enterprise resource planning phases.


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GUIDELINES FOR ERP IMPLEMENTATION

Contd. IT facilities in the organization should be at par with market

standards and international reputation. This will enable the operationpeople to constantly modify and update as and when it is necessaryin order to stay in tune with the competition. Research on enterpriseresource planning will reveal this.

The process of ERP implementation should be carried on by a team

of competent personnel so as to ensure perfection, accountabilityand transparency.

Readiness for change and the capability to implement that changewill be the first step towards successfully choosing the right ERP-based business solution. The top management team along-with thevarious departments must be prepared to accept that change, and to

implement the ERP package.


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Contd. The organization should first use the ERP implementation process

to identify the changes in business processes and in skills andattitudes that must be made. It will be useful for the organization toengage in a brief business process redesign exercise prior to theimplementation.

Obtaining support from executives is the key criterion for success.

Successful feedback and a forum for top management are requiredto address their concerns and is also vital. Employees at all levelswho are affected by the new system need to be informed by arigorous communications program. The key to success in this effortis repetition and a realistic setting of expectations.

It is very crucial for a successful project manager to appreciate and

apply strong Leadership. The difference between informal supportand active leadership can be the difference between success andfailure. It is imperative to develop a steering team which must becapable of change management and the process of redesign andintegration.


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Contd.

Ideally, the project team must include members of the ITdepartment, sales, materials, manufacturing, plant maintenance andfinance. Additionally, the company may hire and outside consultant-from an ERP consulting / implementation partner firm to provideknowledge in the concerned modules and in the project

management. It is not necessary to follow every step of the General ERP

Implementation methodology. But, it is extremely helpful to have aroad map. It is advisable for the project leaders to set out clear,measurable objectives at the very outset, and review the progress atintervals, as the implementation progresses.

An ERP implementation should not be looked upon as a shortdistance run. It has wide implications, and will impact the future ofthe company for many years to come. All the above factors have tobe kept in mind for successful implementation.


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BUSINESS PROCESS REENGINEERING

Business process is defined as "a set of logically related tasksperformed to achieve a defined business outcome."

A process is "a structured, measured set of activities designed toproduce a specified output for a particular customer or market. Itimplies a strong emphasis on how work is done within anorganization."

Re-engineering is now a business process or set of processes thatessentially dismantles existing processes into individual activitiesand puts them back together in a new set of business flows or setsof business flows. This is done to increase efficiencies and improveservices with greater returns. When ERP systems are built to applybest practices you can easily understand how BPR is likely to occur

during the ERP implementation.


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BUSINESS PROCESS REENGINEERING

Business process re-engineering is the analysis anddesign of workflows and processes within anorganization. Business process re-engineering (BPR)began as a private sector technique to help

organizations fundamentally rethink how they do theirwork in order to dramatically improve customer service,cut operational costs, and become world-classcompetitors. A key stimulus for re-engineering has beenthe continuing development and deployment of

sophisticated information systems and networks.Leading organizations are becoming bolder in using thistechnology to support innovative business processes,rather than refining current ways of doing work.


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BPR and ERP

BPR within a single unit is difficult and requires efficientand effective change management. BPR with an ERPimplementation will require crossing organizationalboundaries and require a much more extensive changemanagement process. Resistance to change will be high

and require a significant level of change management tosucceed. This resistance to change comes from severalareas, including loss or change in job and change in thepower structure. In addition to that, BPR has beenequated to downsizing, new technology, and quality,therefore increasing anxiety of staff both involved andnot involved in an ERP implementation. The creation ofteams and development of good teamwork is essential tomaking BPR changes work for the organization.


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BPR METHODLOGY


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BPR METHODLOGY

The BPR Methodology, as shown in Figure below,includes:

Preparation - set goals and vision, identify teams, anddevelop an inventory of processes that need to be

evaluated. Define the "As-Is" process and evaluate cross-

organizational issues

Map out "To-Be" processes based on best practices(i.e., related to ERP)

Test and measure new processes based on meetinggoals and vision

Re-evaluation - revise, adjust to improve processes


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BPR MethodologyStep 1 -

PreparationHere are some of the drivers behind the need for BPR:

Implementing a current purchased ERP system

Automating current manual or error prone processes

Improving service to customers

Streamlining current processes to decrease time tomarket

Participating in or conducting e-Marketplaces

Reducing costs Addressing accountability

Conducting e-Procurement


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BPR MethodologyStep 2As-Is

Working with the vision and goals, the

functional teams must define the existing

processes. The processes will need both a

written description and graphical depictionof each and every process. Each process

will likely have predecessors and

successors linking processes together forfuture analysis in the "To-Be" phase.


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BPR MethodologyStep 3To-Be

This phase must address timing of processesand the changes needed to meet the original setof goals. This phase requires much thought andanalysis. The questioning of current processes is

a must. A team member will often say thingssimilar to, "we've always done it like that." Theunderstanding of why a process does what itdoes need to be uncovered, irrespective of whodoes it. Some processes will even be eliminatedand all new processes must have estimates oftiming and who is responsible. This sets thestage for the measurement phase.


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BPR MethodologyStep 4Test &

MeasureThe testing and validation of each process isnecessary to ensure that a step was not missedor that a process not achievable. It is essential to

set up measurement processes that aremeaningful and measure the goals set out in thepreparation phase. It may take a coupleiterations of BPR to realize the goals fully, but

continuing to examine processes and to makeadjustments creates a sustainable ERP systemenvironment.


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CURRENT BPR TOOLS

Corporate Modeler, CASEwise Systems,Waltham,M A: The software is comprised of sixdiagramming modules that enable organizationsto depict: Organizations, Locations, Processes,Technologies, Applications, and Data fromdifferent perspectives.

iGrafx, iGrafx, Tualatin, O R: Features processmodeling, simulation, and reporting capabilities.

Designed for the front end of re-engineeringprojects. Teams can quickly create and editpresentation quality process maps.


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General Model of ERP


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General Model of ERP

The General Model of ERP as given in the figure

above is assumed to consist of four quadrants.

The circle at its centre represents the entities

that constitute the central database shared by allfunctions of the enterprise. The border

represents the cross-enterprise functionality that

must be shared by all systems. The most

important part of this cross-enterprise border willbe known as multi, representing the capability

required by it to compete and succeed globally.


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Multi-lingual

Must be flexible enough to have customer

service representatives in different

countries taking orders in different

languages and at the same time on asingle host platform. Orders must be

printed or returned to customers in their

native languages.


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Multi-currency functionality

Must be capable of, for instance, receiving

invoices in Indian Rupees, splitting the

payment into German Mark and Belgian

Francs, billing in Italian Lire, receivingcash in British Pounds, with the general

ledger stated in US Dollar or Japanese

Yen.


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Multi-mode or Mixed-mode

ManufacturingIn the enterprise of today, grown throughalliance and merger, a single manufacturing

strategy of either discrete or continuous processis no longer practical. Enterprises now employ amix of approaches including make-to-stock,highly-repetitive, assemble-to-order or design-to-order. A single integrated software solution, and

not satellite software, should handle all theseconcurrently, efficiently passing data from one tothe other.


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Multi-facility

The total solution must support multiple division orcompanies under a corporate banner. Multiple facilitiesare logical or physical entities linked to divisions. Each ofthese may or may not have independent stores,production units, assembly lines, overhead centre, andplanning units but each usually has a set of accounts.Each and every transaction must flow seamlessly to bedivisions or corporate set ofbooks. The software shouldalso seamlessly integrate operating platforms as the

corporate database and departmental level applicationsmay be required to run on a variety of hardware andsoftware platforms.


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Electronic Data Interchange or EDI

Todays users require flexible reporting tools to

extract the information as and when they need it

without depending on an information systems

department to produce the report. And they alsoneed Electronic Data Interchange (EDI) to

electronically accept customer information like

purchase orders, schedule amendments or cash

and electronically send data such as orderacknowledgement and invoices to customers.


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Imaging

Integration of information systems can be

further enhanced through imaging.

Imaging provides the ability to display

drawings or specifications. In addition, itprovides the ability to store original sales

orders, purchase orders, quotations,

contracts, etc.


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E-Mail

In order to reduce paperwork, e-mail

should be tied to the electronic approval

process for purchase orders and

engineering change orders. All this addsup to the effective workflow automation.


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T i l ERP M d l


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Typical ERP Modules


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ERP Modules From Three Vendors

Function SAP Oracle/PeopleSoft

MicrosoftDynamics

Sales Sales and

Distribution, Sales

Opportunity

Marketing and

Sales, Supply

Chain

Management

Retail POS

(point of sale),

Field Service

ManagementProcurement Purchasing,

Supplier

Relationship

Management

Procurement and

Supplier

Relationship

Management

Supply Chain

Management

Production MRP, Product LifeCycle Management

Manufacturing Manufacturing

Accounting Financial

Accounting

Financial

Management

Financial

Management


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ERP Modules From Three Vendors (Contd)

Function SAP Oracle/

PeopleSoft

MicrosoftDynamics

Distribution Warehouse

Management

Supply Chain

Management

Distribution

Management

CustomerService

CRM CRM CRM

Corporate

Performance &

Governance

Governance, Risk,

and Compliance

Management

Corporate

Performance

Management

Analytics

HumanResources

Human CapitalManagement

Human CapitalManagement

HRManagement

Miscellaneous Banking Campus

Solutions

E-commerce,

Portals


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Overview of Modules (Contd)

Sales and MarketingRevenues from the sales are the life blood of the organizations.

Implements functions of order placement, order scheduling,shipping, and invoicing

The marketing module support lead generation, direct mailingcampaign

Finance

Can gather financial data from various functional departments andgenerate valuable financial reports( p/l,trial bal, ledgers, bal sheetsetc)

Human Resource

Streamlines the management of human resources and humancapitals.

Other modules business intelligence, self services modules.


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Benefits of Key ERP Modules

Self Services Flexible support for employees business functions

Simplified access to relevant information

Performance Management

Delivery of real-time, personalized measurements and metrics Access to such information as business statistics and key

performance measurements

Financials

Ensure predictability of business performance Gain deeper insight across the enterprise

Automate accounting and financial SCM

Rigorous support for financial reporting.


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Benefits of Key ERP Modules (Contd)

HR Management Attract the right people, develop and leverage talents, align

efforts with corporate objectives, and retain top performers

Enable creation of project teams based on skills and availability,monitor progress on projects, track time, and analyze results

Procurement and Logistics Execution Cost savings for all spending categories by automation

Reduce costs through process automation, integration ofsuppliers, and better collaboration

Improve resource utilization (RFID and bar codes)

Enhance productivity of incoming and outgoing physical goodsmovements


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Benefits of Key ERP Modules (Contd)

Product Development and Production Shorten time to market

Deliver higher quality products and ensure timely delivery

Improve visibility in real time (availability check)

Sales and Service Higher number of sales orders processed and reduced

administrative costs

Easy access to accurate, timely customer information

Cost-effective mobile access for field employees Reduce travel costs by using online functions

Adhere to environmental, health, and safety reportingrequirements


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Q & AMultiple Choice Objective Questions:

1. Customization of an ERP package is enhanced if theERP Package is:

a. Modular

b. Inflexible

c. Both a and bd. Either a or b

2. Which of the following statements is true about ERPImplementation:

a. As-Is stage follows To-Be stage.b. To-Be stage follows As-Is stage.

c. Go-Live stage and As-Is stage can proceedsimultaneously.

d. None of the above.


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Q & A

3. Which of the following statement(s) is/are falsewith respect to ERP Implementationmethodologies:

a. The emphasis on the ERP software life cycle is whether tocustomize the software or to change the organizationsprocesses to match those embedded in the software.

b. The implementation strategy can be a comprehensiveone, vanilla, or middle-of-the road strategy.

c. ERP life cycle must incorporate traditional SDLC stages.

d. Rapid Implementation methodologies have beendeveloped by ERP consulting firms.


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Q & A

4. The decision to implement an ERP As-Is and modifybusiness processes to match the ERP system isknown as:

a. Vanilla Implementation

b. Business Process Reengineering

c. Chocolate Implementationd. Generic Implementation Methodology

5. An implementation with considerable modifications tothe ERP software package is referred to as:

a. Vanilla Implementationb. Business Process Reengineering

c. Chocolate Implementation

d. Generic Implementation Methodology


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Q & A

6. Which of the following is not a BPR Tool?a. Visual BPR

b. mySAP

c. iGrafx

d. iThink

7. Which of the following statements about BPR is false?a. The business process cycle time is reduced significantly.

b. The number of decision points is reduced to the bareminimum.

c. The flow of information is streamlined, i.e., there is nounnecessary to-and-fro flow of information betweendepartments.

d. It helps in duplication of inter-departmental effort for similarprocesses.


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Q & A8. ______________________ functionality of ERP makes it flexible

enough to have customer service representatives in different

countries taking orders in different languages and at the sametime on a single host platform. These orders are then printed orreturned to customers in their native languages.

a. Multi-lingual

b. Multi-currency

c. Multi-mode manufacturing

d. Multi-facility

9. ERPs that have the capability of allowing enterprises to employ amix of approaches including make-to-stock, highly-repetitive,assemble-to-order or design-to-order for manufacturing have the

following functionality built into their underlying models:a. Multi-lingual

b. Multi-currency

c. Multi-mode manufacturing

d. Multi-facility


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Q & A

10. ________________________________functionality of ERP makes it capable of, forinstance, receiving invoices in Indian Rupees,splitting the payment into German Mark and

Belgian Francs, billing in Italian Lire, receivingcash in British Pounds, with the general ledgerstated in US Dollar or Japanese Yen.

a. Multi-lingual

b. Multi-currencyc. Multi-mode manufacturing

d. Multi-facility


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Thank You

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