"Why ERP" learnings - OnurOzensoy

Billy, who is working as a production manager for a North Carolinan up scale furniture company, is assigned to work on ERP systems, particularly SAP R\3. This assignment includes enrolling to a SAP implementation course and assessing the necessity and feasibility of installing such a system as the boss is planning to takeover family business up north. Billy shares ideas with a professor from local college, ve olaylar gelişir...

-There are typically many different tracking systems for the same good among different departments. (i.e. functional departments) This means several inputs for the same good which is vulnerable to late if human error. These departments, such as sales, production, marketing etc. are likely to have separate forecasts for the same periods. This lack of consistency among organization.
-ERP is a system that integrates data among all departments. It can be visualized as business processes such as ordering, preparation of bill of materials crossing different "supposedly" parallel functions such as HR, Production, Sales etc. But this will involve re-engineering of business processes as well as jobs of different people at different functional departments.
-As it is a useful management tool, it is not a silver bullet solution to a firm's efficiency problems. In this sense it is also not a competitive advantage itself, but rather becoming more of an operational necessity that is acquired to gain competitive parity.
-ERP saves time and introduces some extent of efficiency to the organization by integration process since there is now a single designation for a single good, a single forecast for a particular period of time etc. In addition to inter departmental integration and coordination, it may provide better coordination among geographically separate plants and quarters, making way to efficient global operations as well. SAP is especially well known for its global references and leader position in global applications.
-All of pros of ERP implementation is prone to skepticism. As some companies do not need integration between separate plants and/or are in need of constant customization (i.e. flexibility) it may not be feasible to install an ERP system. Similarly most of the companies need serious amount of training before-after implementation as well as involvement of key people in business processes. They should adopt the system and be willing to use it instead of being afraid of it.
-Configuration process involves scaling the software to suit the scale of the company, i.e. number of clients. It, as well, involves customization of software to adapt to different industries and also different target segments in the value map as illustrated in the Ohio vs. North Carolina plants. In the former, finished goods are produced quickly in the fashion of a manufacturing plant whereas latter involves hand made production processes, determination of each particular production cost to assess profitability and in-production tracking.
-Even if we assume successful configuration and scaling, business processes must be revised as well as informal relations between departments. For example, the decision to use what kind of a forecast will not be given by the software itself. It typically involves a committee to devise a brand new forecast tool. So ERP does not solve interdepartmental problems itself but implementation may serve as a platform to revise relations and business processes.
-However, designers embed "best practice" business processes into the software that dictates the organization to adopt this best way, eventually increasing efficiency. But, these should be not only industry specific but also company specific so during configuration one should avoid short cuts and also not depend on superiority of dictated processes for particular situation. Everything should be analyzed by a person within the business who knows the process, industry and company well.
-Rather than emphasizing on time, it would be beneficial for prosperous ERP user companies to assess business processes and revise them through time and involvement. This is not a fast process, unfortunately it is impossible to do actuarial calculation with time.
-Other than multi plant operations and coordination a firm may want to implement ERP because of e-commerce compatibility. For example prevention of sale of same good on internet and on showroom. In all cases assessment of needs, careful inspection of organization, business processes and availability of successful legacy systems are crucial for the success of implementation. This seems to be most valid reason to implement ERP.
-During the assessment and usage of ERP it is important to keep in mind that inputs are given to the integrated database. So if you throw garbage in it, organization will try to process garbage. Special care must be given to pre-implementation legacy inputs which may not be accurate.
-Even with the best information these systems are unable to do any analysis. So at the end of the day, what makes a firm look forward is human capital. However these systems are more likely to be the basis for future business intelligence analysis software. Also it may be seen that as ERPs become more common, standards about the software and implementation will be introduced like accounting standards.
-Accelerated SAP is a roadmap for implementation of SAP. It involves Project Preparation, Business Blueprint, Realization, Final Preparation and Go Live&Support. So it involves a lot of preparation but paces the speed up, decreases costs completing typically in 6-9 months. However this is exclusively for smaller firms that will not re-engineer their processes. For a guaranteed success, on the other hand, configuration should be detailed. Other than smaller companies change costs are also smaller for highly centralized low flexibility companies as well as not thoroughly established, new firms.
-It is important to give room for flexibility both for empowerment of employees and continuity of operations in smaller companies.

Miscellaneous Learning
-SAP stands for Systems, Applications, Processes. It is a real time updating integration program. (R of R3 stands for real-time, although they are no more named as Rx but as mySAP)
-SAP R3 supports different languages and currencies as well as taxation legislations.
-SAP R3 is a client/server application, it does not use mainframes.
-Numerous companies may run under same client code.
-SAP utilized a 3 tier architecture. A presentation layer connects to user via an interface, GUI-graphical user interface; the second one is application layer which involves business specific logic forming the program; a third layer is database layer which stores all information on the system.