Highlight of the Book "Why ERP?" - Emre AKIN

What I have learned from the book "Why ERP?" is as below.
- ERP can be seen both as a silver bullet solution and as a horror story. It all depends on how companies realize ERP implementation programs.
- No software can manage the company; it is the people who run the company indeed.
- MRP systems can handle necessary production processes and can be tailored to customize different processes. However successes of these customizations are mainly depends on the experience of the workforce and managers.
- Once ERP systems are implemented, they project significant benefits including better clerical efficiency, some reductions in overhead costs, and much better information running the business.
- ERP systems are simply integrated information systems, like talking of accounting system to sales system, which talks to production systems…
- It’s even possible to integrate your customers and suppliers within an ERP system.
- ERP is based on using a common information/databease. There is one inventory for an item like one value for monthly sales, a single production schedule, and only one accounts receivable amount.
- The information in the ERP systems is updated as changes occur and the new status is available for everybody to use to manage their part of business.
- Before implementing an ERP system, the management problems need to clarified and the relationship between functions should be clearly defined. ERP software is not able make such managerial decisions.
- Since ERP system is based on an integrated approach, it leads great complexity. This requires a second set of decisions to be made before ERP implementation and it is about the information flow between functions of the company.
- ERP software houses have a view of the enterprise that may not match that of some of their customers. It may be too restrictive for managers to apply these formality required by ERP systems.
- Entering data into ERP systems, especially at the initial transition phase requires extensive formal procedures.
- There is a great deal of management work needed before ERP implementation, which can not be delegated to someone who does not know the plant intimately.
- There are several reasons who companies implement ERP systems:
--- Legacy systems of the company may not be totally integrated. ERP may serve to sweep out these legacy systems and integrate various functions of the business of force a badly needed organizational change.
--- If the company has several plants and facilities around the country or the world, ERP may provide an effective tool for better communication and integration between them.
--- If the company needs to change to be positioned to exploit future communication and computing technology for E-business and other applications.
- ERP/SAP systems can be applied by companies from a variety of sectors, as can be understood from the diversity of the SAP seminar group.
- SAP stands for Systems, Applications and Products in Data Processing.
- R3 is an SAP product that integrates the information throughout an organization, providing the benefits of single data entry, immediate access, and common data.
- R3 is a multi-lingual software package and understands different currencies.
- R3 has chosen names for functions like sales, product development/marketing, human resources etc… However if a company has other names for these functions, R3 can accommodate these differences.
- The basic idea behind ERP is that if information is completely common, and the processes are completely integrated then organizational integration is possible. Moreover duplication of information is eliminated, saving time and improving the efficiency of operations.
- Integration of the organization requires changing the way people handle their businesses most of the time.
- R3 goes beyond material, labor, and production centered manufacturing systems to integrate all functions of the business, from hiring, training, and firing decisions to running the sales campaign to tracking the portfolio of assets owned by the company.
- R3 can support the operation of multiple international sites, global sourcing of parts, global distribution and provide appropriate performance metrics for operations around the world.
- R3 can be implemented to both multi-plant enterprises and single shops. R3 systems should be scaled according to need, which is called configuration.
- R3 allows companies to create their own menus and submenus.
- R3 designers have incorporated contemporary business practices in the R3 software. SAP calls these processes as best practices.
- Every one of the hundreds of processes supported by the R3 system is documented.
- One of the significant benefits of ERP systems is that everyone who needs to know of a change that could affect them is immediately notified.
- Having just one entry point for data that is distributed is a very big advantage in terms of minimizing the chances of error.
- Accelerated SAP (ASAP) is a guide for companies to get involved with R3 implementation. This program is mainly for smaller companies or for the ones that do not want to reengineer their processes completely.
- ASAP defines a sequence of activities called Roadmap in five major phases; namely Project Preparation, Business Blueprint, Realization, Final Preparation, and Go Live and Support.
- R3 programs are general so they apply to all kinds of organizations. That means they are developed around generic processes that must be performed in any business.
- Even after configuring the R3 system, it may still be needed to change some people’s job to fit the new processes.
- R3 is designed so that multiple clients can be run within a single system, if each division has their own version of R3. Each division in this case is a client and independent.
- R3 is a collection of individual computer programs.
- Integration of sales system to R3 makes it possible to receive orders via fax, EDI, internet.
- R3 system can also handle vendor contracts that include various quantity discounts, special scheduling agreements, and special quotas such as minimum order quantities.
- It is possible to automatically generate an electronic mail message to inform the person that ordered the goods that they have been received.
- Information obtained from R3 can also be quickly exported to Microsoft Excel spreadsheet for more specialized analysis.
- R3 organizes accounting information around external and internal users.
- External users require published information in conformance with legal requirements such as audit/annual reports.
- Internal users could be at any level in the company and require information on internal operations.
- Custom reports can be created and all data can be exported to Microsoft Excel sheets for custom analysis.
- R3 has materials requirements planning. The first step is determination of requirements. The second step is called master scheduling and is the process of determining how to meet this demand. The actual master schedule is a manufacturing plan reflecting how demand will be met. MRP program calculates detailed schedules for all supporting assemblies, subassemblies, and component parts.
- Execution of the MRP program also involves capturing details for tracking progress and cost accounting. An extensive reporting system regarding MRP activities is also provided by R3.
- Scalability refers to the ability to match the processing requirements to the needs of the organization over time.
- To make scalability possible, the computers are organized into three distinct tiers. At the heart of the system is the data base computer called server. The database server is a special computer designed to be very reliable. These database servers can be purchased from many vendors and there few suppliers of database programs that can work with R3.
- The next tier is the application layer. These are the computers that run R3 software.
- The last tier is the presentation layer. This consist of computers that users are actually using.
- The terms three tier client-server system is used to describe this approach to hardware support for the system. The application servers also send commands to the database servers to retrieve and store all the data used by the system.
- Knowledgeable people working in the implementation project in order to configure the system appropriately.
- Since each server will be running multiple programs, the system administrator needs to assign programs to the available computers and to set priorities for running these programs. This allocation of resources and setting priorities is often referred as tuning of the system.
- Oracle supplies both database software and ERP application software. The common database is still important aspect of their approach but their software is much more open to customization. Than means that R3 could use Oracle as the database for their system.
- If customers and suppliers are utilizing a special kind of ERP systems like SAP, the company should also utilize the same system to maximize the data communication between systems.
- Employees should be well communicated about ERP systems. Otherwise it is not surprising have bad attitudes toward ERP implementation. Their main concern is to be replaced by computers or at best have to learn whole new jobs.
- ERP systems don’t provide competitive advantages but may be generic operational effectiveness.