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.
Showing posts with label Why ERP?. Show all posts
Showing posts with label Why ERP?. Show all posts
Sunday, June 22, 2008
Why ERP?
Billy was working at a Furniture company. After he did vacation he started to work again and the announcer said something about providing solutions for small and medium size businesses in partnership with SAP.
In order to implement ERP company hired many consultants but they want to be a part of the ERP implementation process.
There is a professor Kellsdorf and she claims that ERP can not manage the whole
company.
There was a use of MRP system in the company. MRP system has some bugs.
Problem of that software was company cannot see the forecasts and company cannot see the situation of deliveries. It creates some problems.
Part of the problem was deliveries. From MRP software delivery situation cannot be seen properly. At that time it was seen that no problem was actually happened but in
MRP there seemed to be a problem.
CEO of the company wanted to implement an ERP program so he wanted to form an implementation team.
To be a part of implementation process Billy gone to educate himself to SAP seminars.
Billy took advice from professor and the professor told him that ERPs are implemented in order to increases integration.
There should be so much management work done before implementing ERP on a company.
That furniture company wanted to use the best practice approach that means seeing other companies as an example then implementing ERP according to their outcomes.
In the management process before ERP implementation Billy understood that some jobs may change after ERP implementation.
There was some tests done at the implementation process such as financial implementations and it seemed that converting different currencies to their own currency seemed a good issue.
There was a problem that while the company was using MRP, they wrote small applications. However, these applications may not work cooperatively with implementation of SAP. Thus, company may lose data.
The company showed Billy that Ohio as an example of successful SAP implementation and for the reasons such as Ohio factory was working as a mass production factory and Billy’s factory work as a niche factory, Billy refused to implement SAP in his plant.
Billy also saw that in the plan of implementing SAP in the factory, the time needed to train the staff was too low and he refused the implementation of SAP.
After the factory wanted to implement SAP, Billy resigned from the company and changed his job he started to work as a consultant.
Like 70% of the ERP implementations, implementation of ERP failed. Because best practice approach did not work in the factory like in Ohio. Problem was the factory was a niche factory and Ohio was a mass production company.
In order to implement ERP company hired many consultants but they want to be a part of the ERP implementation process.
There is a professor Kellsdorf and she claims that ERP can not manage the whole
company.
There was a use of MRP system in the company. MRP system has some bugs.
Problem of that software was company cannot see the forecasts and company cannot see the situation of deliveries. It creates some problems.
Part of the problem was deliveries. From MRP software delivery situation cannot be seen properly. At that time it was seen that no problem was actually happened but in
MRP there seemed to be a problem.
CEO of the company wanted to implement an ERP program so he wanted to form an implementation team.
To be a part of implementation process Billy gone to educate himself to SAP seminars.
Billy took advice from professor and the professor told him that ERPs are implemented in order to increases integration.
There should be so much management work done before implementing ERP on a company.
That furniture company wanted to use the best practice approach that means seeing other companies as an example then implementing ERP according to their outcomes.
In the management process before ERP implementation Billy understood that some jobs may change after ERP implementation.
There was some tests done at the implementation process such as financial implementations and it seemed that converting different currencies to their own currency seemed a good issue.
There was a problem that while the company was using MRP, they wrote small applications. However, these applications may not work cooperatively with implementation of SAP. Thus, company may lose data.
The company showed Billy that Ohio as an example of successful SAP implementation and for the reasons such as Ohio factory was working as a mass production factory and Billy’s factory work as a niche factory, Billy refused to implement SAP in his plant.
Billy also saw that in the plan of implementing SAP in the factory, the time needed to train the staff was too low and he refused the implementation of SAP.
After the factory wanted to implement SAP, Billy resigned from the company and changed his job he started to work as a consultant.
Like 70% of the ERP implementations, implementation of ERP failed. Because best practice approach did not work in the factory like in Ohio. Problem was the factory was a niche factory and Ohio was a mass production company.
Day 2 articles by Tolga YILDIRIM
Assessing ERP Software
Corporate decision-makers put great emphasis on integration of IT systems. The shift of demand from supply-chain management solutions to ERP solutions is a clear example of this fact. ERP vendors have improved their solutions and added new capabilities such as better supply chain management features. Decision makers in companies have favored integrated ERP solutions with supply chain management capabilities over pure SCM solutions.
ERP Purchase Decision: Influential Business and IT Factors
There are business, as well as technical reasons for implementing a specific ERP solution. The ability to better meet various competitive goals, the desire to reengineer business processes and access to integrated data are the business capabilities affecting decision process. In addition, the desire to replace mainframe systems, replace systems that do not meet needs anymore, and reduce IT costs by purchasing, rather than in-house development.
Decision Making in the Evaluation, Selection and Implementation of ERP Systems
Decisions during different phases of ERP implementation are not purely financial. There are six models of decision-making in implementation lifecycle, which are
The classical model
The administrative model
The incremental model
The adaptive model
The irrational model
The political model
Buyers’ insider ERP Software
ERP allows the collection and consolidation of information across the enterprise. It acts as a transactional system for capturing business information. The data conversion at the very beginning of the ERP implementation is a necessary and takes long time. In addition, the article emphasizes on the customization issue. Off-the-shelf products which are not customized can decrease the time needed to implement and are more agile for upgrades. However, since these are not customized, such solutions are too generic to solve the information problems of an organization in general.
Why ERP? A Primer on SAP Implementation
First of all, this book is a poor imitation of the classic ‘The Goal’.
The book summarizes some of the aspects of SAP applications, in addition to factors that affect decision-making in ERP implementations.
There are factors other than rational factors, in an ERP implementation. The success and failure of ERP projects depend on these factors. The key point of the book is that it lays out the fact that companies should thoroughly investigate their processes and their needs and try to match these with specific ERP solutions.
Many companies, unfortunately, choose a specific ERP solution just because others have implemented it. A company should not bet its operational effectiveness on its competitors’ choices. Each ERP implementation should be taken into hand separately and individually.
In the decision-making process, there are different roles. An important role revealed in the book is the information gatekeeper. Information gatekeeper is the person who has a perceived ‘expertise’ related to the decision. In this case, the key information gatekeeper is the so called ‘computer guy’. The computer guy has taken role in implementation of ERP system of the sister company. He was perceived to be the ‘expert’ and his words have influenced the way decision-makers act. Companies should understand the information gatekeepers can lead to wrong decisions, despite their perceived ‘expertise’. In addition, the second learning revealed by the information gatekeeper role, is the fact that an ERP system is a business project, rather than a traditional IT project.
In ERP implementations, the issues of people, organization, functions and business objectives that need to be addressed before the ERP system can be used. With Accelerated SAP methodology, the aim is to accelerate the implementation phase while evaluating the business processes, objectives and activities. This methodology strongly raises the chance of success in the implementation, especially for small and medium size businesses that do not completely reengineer their processes.
Corporate decision-makers put great emphasis on integration of IT systems. The shift of demand from supply-chain management solutions to ERP solutions is a clear example of this fact. ERP vendors have improved their solutions and added new capabilities such as better supply chain management features. Decision makers in companies have favored integrated ERP solutions with supply chain management capabilities over pure SCM solutions.
ERP Purchase Decision: Influential Business and IT Factors
There are business, as well as technical reasons for implementing a specific ERP solution. The ability to better meet various competitive goals, the desire to reengineer business processes and access to integrated data are the business capabilities affecting decision process. In addition, the desire to replace mainframe systems, replace systems that do not meet needs anymore, and reduce IT costs by purchasing, rather than in-house development.
Decision Making in the Evaluation, Selection and Implementation of ERP Systems
Decisions during different phases of ERP implementation are not purely financial. There are six models of decision-making in implementation lifecycle, which are
The classical model
The administrative model
The incremental model
The adaptive model
The irrational model
The political model
Buyers’ insider ERP Software
ERP allows the collection and consolidation of information across the enterprise. It acts as a transactional system for capturing business information. The data conversion at the very beginning of the ERP implementation is a necessary and takes long time. In addition, the article emphasizes on the customization issue. Off-the-shelf products which are not customized can decrease the time needed to implement and are more agile for upgrades. However, since these are not customized, such solutions are too generic to solve the information problems of an organization in general.
Why ERP? A Primer on SAP Implementation
First of all, this book is a poor imitation of the classic ‘The Goal’.
The book summarizes some of the aspects of SAP applications, in addition to factors that affect decision-making in ERP implementations.
There are factors other than rational factors, in an ERP implementation. The success and failure of ERP projects depend on these factors. The key point of the book is that it lays out the fact that companies should thoroughly investigate their processes and their needs and try to match these with specific ERP solutions.
Many companies, unfortunately, choose a specific ERP solution just because others have implemented it. A company should not bet its operational effectiveness on its competitors’ choices. Each ERP implementation should be taken into hand separately and individually.
In the decision-making process, there are different roles. An important role revealed in the book is the information gatekeeper. Information gatekeeper is the person who has a perceived ‘expertise’ related to the decision. In this case, the key information gatekeeper is the so called ‘computer guy’. The computer guy has taken role in implementation of ERP system of the sister company. He was perceived to be the ‘expert’ and his words have influenced the way decision-makers act. Companies should understand the information gatekeepers can lead to wrong decisions, despite their perceived ‘expertise’. In addition, the second learning revealed by the information gatekeeper role, is the fact that an ERP system is a business project, rather than a traditional IT project.
In ERP implementations, the issues of people, organization, functions and business objectives that need to be addressed before the ERP system can be used. With Accelerated SAP methodology, the aim is to accelerate the implementation phase while evaluating the business processes, objectives and activities. This methodology strongly raises the chance of success in the implementation, especially for small and medium size businesses that do not completely reengineer their processes.
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