- ERP is the term used to describe a comprehensive information system designed to integrate all the business processes found in an enterprise.
- ERP is a computer system that integrates application programs in finance, sales, manufacturing, inventory & supply, human resource management, and other functions in the entire enterprise.
- ERP system providers can be classified into three major categories such as; major players, smaller ones and open source.
- Major players: These companies are the pioneers of the ERP market. The well-known examples of this category are S.A.P. and Oracle companies. The major features of this category are as follows:
Strong support is provided
Many consultants are dedicated
These firms are well-known and trusted
They have got the advantage of international know-how
According to other categories they are extremely expensive
- Smaller ones: These companies are generally localized and small-scaled. According to major players, they are cheaper and easier to adjust. They are more flexible.
- Open source: This category provides free service because of its shared open-source software codes and therefore it has many volunteers working on the improvement of the system. However, they are lack of support, because they are not institutional providers and they don’t have a support system except the help forums that are provided online.
- S.A.P has a three-tier structure that consists of client workstation, web server plus the application server and the database server.
- ERP implementation: In the ERP implementation process, at first the investment of the project should be accomplished including the company CFO or the financial authority. And then a specified core team should complete the implementation process. This core team is generated from; the workers from the workflow level, the necessary top managers of the company (department managers or directors) and the linking workers between the top level and workflow level, the ERP provider’s consultants, I.T. managers of the company, and the champion which will undertake the responsibility of the project when necessary.
- The interaction and communication between the core team and the consultants are important because after the implementation process the consultants complete their task in the firm and commit to another project. Therefore, the company is left on its own. So, the managers and the workers of the project must have the expertise to continue on-going ERP process.
%70 of the I.T. implementations are resulting with failures
The symptoms are as:
- The troubles with meeting the requirements.
- The project budget balancing failures
- Failures due to time constraints
- The resistance to use of the product
Wednesday, June 18, 2008
Day 1 Learnings from OnurO
16.06.2008
-ERP is a database platform on which modules work to solve certain functional problems and uses this single database which has cross functional nature to do these.
-ERPs also integrate geographically, i.e. manufacturing plants which are geographically dispersed. SAP supports multiple languages and currencies.
-Most of the time business processes should be re-engineered to adapt ERP system, this is also about "best practice". Analysis of bottlenecks through ERP implementation is possible since the problematic areas will not probably adapt.
-For some cases, though, ERP itself should be customizable to adapt to organization. In-house coded ERPs are more costly to build but more useful in assessing bottlenecks.
-ERPs stemmed from MRPs and MRP-IIs which were concentrated on materials, inventory and manufacturing mostly. In ERPs, though, several support modules are available in an integrated manner. These modules include applications in finance, HR, CRM etc.
-Most of ERP projects fail due to required budget, time, capability of personnel to use and/or dissatisfaction with the performance of system.
-ERP vendors can be classified into four categories including major players such as SAP, Oracle etc; small one which are local or specialized; open source ERPs such as OFBiz, Compiere etc. and on-demand ERP like SAAS.
-Each category of source has its own pros/cons. Major players have greater support and contain less bugs, smaller ones have more specialized or customizable traits; open source ERP is free or cheaper to implement and a successful alternative but support is not available most of the time. On-demand systems have low initial costs but may encounter speed and consistency problems as it is directly downloaded.
-The implementation of ERP should involve a team of IT people, someone from top management, consultants and champion to pioneer to additional resources. During the implementation and business process revision phase someone within that particular area may be useful.
-SAP is a three tier architecture, multi language/currency, highly modular (i.e. presentation, data storage and functional applications are all separate.) and frequently upgraded type of ERP. It has an audit trail system to track what is done by who.
-Data interpretation-this is important s’nce ERP is just an information tool, it does not do analysis on itself.
Data Mining: Drawing conclusions from patterns in data. You do not have anything in mind but hoping to obtain some pattern.
Data warehouse: This requires that you know what to look. It is module that draws graphs etc. about certain variables via 3-D cubes.
Why ERP? Learnings
Why ERP? Notes:
- Billy was working as a manufacturing manager for a local furniture company.
- There is Professor Kellsdorf whom Billy often asks for advice.
- “ERP cannot manage a company”
- The company, McDougle Furniture, is known for its quality and well-designs with awards for innovation and style.
- Company has experienced and highly skilled work force.
- Company was using MRP system to help production and manufacturing seems ok even though they do not have clear forecasting system and clear forecasts.
- There is often tension between manufacturing and sales.
- Billy faces with problems in some deliveries and with raw materials.
- CEO is considering implementing ERP.
- “ERP systems are integrated information systems for the company” says Professor Kellsdorf.
- There is no integration and low communication
- Billy checked the forecasts as Professor Kellsdorf advised.
- Billy thinks that Mr. McDougle believes SAP is a miracle for management of company and integration of accounting of two family companies.
- Professor Kellsdorf tells Billy that people even implemented ERP systems in order to overcome y2k problems, but more logically they implemented ERP for better integration and also integration and communication of multiple plants. Some firms implement ERP for future aims, e-business and other applications.
- The companies using ERP are diverse with various origins and various businesses.
- Billy sees this at the SAP school he started to go.
- At SAP school representative, Amanda, shows SAP R/3.
- SAP stands for systems, applications and products and is the name of a German company.
- SAP is organized around business processes which cut across business functions.
- The idea behind ERP is that if information is common and the processes are integrated, then the organizational integration is possible.
- After implementation, it will probably be necessary to change the way people do things – change their jobs.
- R/3 is like turbo-changed version of MRP with addition of solutions in areas like hiring, training and firing, running a sales campaign, tracking the portfolio of assets and so on.
- The resources managed with ERP are employees, buildings, equipment and so on.
- ERP systems can integrate with softwares as it is done in the switching to Euro was realized.
- There are some best practices coming with SAP.
- Companies usually have customer service problems and SAP also address to them.
- There is a project preparation phase
- Business blue printing is the means by which the parts of the software appropriate to a company are configured.
- Phase three of the ASAP process is realization.
- Phase four is final preparation and phase five is Go Live and support.
- R/3 uses some organization element like client, business areas, sales areas and control areas in order to organize information.
- Financial applications are among the most needed and SAP has modules for it.
- The manufacturing module and example shown makes Billy to think that SAP may change things.
- Three-tier architecture: Presentation (user computers) > Application Servers > Database Servers.
- When Billy is back at plant he still has questions in mind and he wants to discuss them with professor.
- Professor Kellsdorf explains the single database principle which is used in areas like Marketing, Manufacturing, IT, Finance and Accounting meaning that all use the same information.
- There are two important factors called flexibility and centralization both can be high or low.The implementation of ERP is failed like most of the ERP implementation projects.
- Billy was working as a manufacturing manager for a local furniture company.
- There is Professor Kellsdorf whom Billy often asks for advice.
- “ERP cannot manage a company”
- The company, McDougle Furniture, is known for its quality and well-designs with awards for innovation and style.
- Company has experienced and highly skilled work force.
- Company was using MRP system to help production and manufacturing seems ok even though they do not have clear forecasting system and clear forecasts.
- There is often tension between manufacturing and sales.
- Billy faces with problems in some deliveries and with raw materials.
- CEO is considering implementing ERP.
- “ERP systems are integrated information systems for the company” says Professor Kellsdorf.
- There is no integration and low communication
- Billy checked the forecasts as Professor Kellsdorf advised.
- Billy thinks that Mr. McDougle believes SAP is a miracle for management of company and integration of accounting of two family companies.
- Professor Kellsdorf tells Billy that people even implemented ERP systems in order to overcome y2k problems, but more logically they implemented ERP for better integration and also integration and communication of multiple plants. Some firms implement ERP for future aims, e-business and other applications.
- The companies using ERP are diverse with various origins and various businesses.
- Billy sees this at the SAP school he started to go.
- At SAP school representative, Amanda, shows SAP R/3.
- SAP stands for systems, applications and products and is the name of a German company.
- SAP is organized around business processes which cut across business functions.
- The idea behind ERP is that if information is common and the processes are integrated, then the organizational integration is possible.
- After implementation, it will probably be necessary to change the way people do things – change their jobs.
- R/3 is like turbo-changed version of MRP with addition of solutions in areas like hiring, training and firing, running a sales campaign, tracking the portfolio of assets and so on.
- The resources managed with ERP are employees, buildings, equipment and so on.
- ERP systems can integrate with softwares as it is done in the switching to Euro was realized.
- There are some best practices coming with SAP.
- Companies usually have customer service problems and SAP also address to them.
- There is a project preparation phase
- Business blue printing is the means by which the parts of the software appropriate to a company are configured.
- Phase three of the ASAP process is realization.
- Phase four is final preparation and phase five is Go Live and support.
- R/3 uses some organization element like client, business areas, sales areas and control areas in order to organize information.
- Financial applications are among the most needed and SAP has modules for it.
- The manufacturing module and example shown makes Billy to think that SAP may change things.
- Three-tier architecture: Presentation (user computers) > Application Servers > Database Servers.
- When Billy is back at plant he still has questions in mind and he wants to discuss them with professor.
- Professor Kellsdorf explains the single database principle which is used in areas like Marketing, Manufacturing, IT, Finance and Accounting meaning that all use the same information.
- There are two important factors called flexibility and centralization both can be high or low.The implementation of ERP is failed like most of the ERP implementation projects.
Can Kızılay Bio
Hi, I am Can Kızılay. I am graduated from Middle East Technical University Electrical and Electronics Engineering department in 2006. I had my internships at Aselsan, Siemens and Alarko in several positions. Just after graduation, I have founded 2 companies about designing and manufacturing lighting poles, high mast poles and high mast lowering devices for high ways, airports, stations, docks, shopping malls, etc. with my partners. The companies we have founded reached the total revenue levels of $1,4M and $0,3M until we have sold these companies in early 2008 just before the sharp increase in steel prices.
In November 2007, my father passed away. Since than, I have to deal with real estate especially about renting, which includes a hotel, a medical center and some others that belong to my family.
I have started my MBA in fall 2007 and I have a year to graduate. After my graduation, I want to deal with real estate, also start in a company in energy sector which may be an energy consultancy company. After than, I want to involve in entrepreneurial acts related with energy sector in at most 5 years.
I believe this course will enable me to analyze an ERP system in terms of ESI (Evaluation, Selection and Implementations) framework. And, I will learn the benefits and possible drawbacks of an ERP system with the help of cases that we will study. I believe that the benefits of ERP concept is significant for enterprise-grade large companies. Especially for large energy companies which have to be fast responding to demand, flexible in business processes ERP is crucial. So, more or less it is obvious that I have to deal with ERP. After this course, I will learn key concepts about ERP which will be an important asset and advantage in my professional life.
In November 2007, my father passed away. Since than, I have to deal with real estate especially about renting, which includes a hotel, a medical center and some others that belong to my family.
I have started my MBA in fall 2007 and I have a year to graduate. After my graduation, I want to deal with real estate, also start in a company in energy sector which may be an energy consultancy company. After than, I want to involve in entrepreneurial acts related with energy sector in at most 5 years.
I believe this course will enable me to analyze an ERP system in terms of ESI (Evaluation, Selection and Implementations) framework. And, I will learn the benefits and possible drawbacks of an ERP system with the help of cases that we will study. I believe that the benefits of ERP concept is significant for enterprise-grade large companies. Especially for large energy companies which have to be fast responding to demand, flexible in business processes ERP is crucial. So, more or less it is obvious that I have to deal with ERP. After this course, I will learn key concepts about ERP which will be an important asset and advantage in my professional life.
Tuesday, June 17, 2008
What we learned 1st day? (Serkan)
ERP (Kurumsal Kaynak Planlama)
ERP is a technological tool that is used to have right information-right people-right time.
ERP is a software, which links each S/W, each business unit, and operations.
The difference between MRP and ERP can be thought as their sizes and application areas.
MRP is used for to calculate the materials (time, quantity) for manufacturing.
However, ERP is dealing with all business functions such as: Accounting, Sales, Production Planning, Supply Management…
Why ERP?
· Increases efficiency by deleting overtime and paper work.
· Efficient production by resource planning, profitability can be achieved.
· Best Practices
· Copying other companies can not be a reason!
· Year 2000 Problem should not be the reason also!
o These kinds of reasons should not be the reasons to implement ERP
Open Source ERP’s are good because their code is good because of volunteers. And their code is there.
Open Source ERP’s are bad because of their support
ERP Providers (properties)
Major: strong support, many consultants, easy upgrade…
Smaller Ones: (IAS) Cheaper than Major ones, language flexibility, easier to adjust…
Open Source: Free, you can develop yourself…
Core Team of ERP implication should consist of:
- People who knows the whole workflow
- Top management
- Consultants
- IT manager (project manager)
- Champion
Note: CFO is going to be needed but his/her door is going to be knocked by Champion.
And also someone from suppliers will be needed in next stages.
60-70 % of the IT applications fails; if they are not working get over budget, get over time, and useless.
Data warehouses: 3 dimensional data storing
Data mining: finding the relevant information in between the collected data.
the relevant information can be taken in order to a purpose or
results can confirm the relevant information.
ERP is a technological tool that is used to have right information-right people-right time.
ERP is a software, which links each S/W, each business unit, and operations.
The difference between MRP and ERP can be thought as their sizes and application areas.
MRP is used for to calculate the materials (time, quantity) for manufacturing.
However, ERP is dealing with all business functions such as: Accounting, Sales, Production Planning, Supply Management…
Why ERP?
· Increases efficiency by deleting overtime and paper work.
· Efficient production by resource planning, profitability can be achieved.
· Best Practices
· Copying other companies can not be a reason!
· Year 2000 Problem should not be the reason also!
o These kinds of reasons should not be the reasons to implement ERP
Open Source ERP’s are good because their code is good because of volunteers. And their code is there.
Open Source ERP’s are bad because of their support
ERP Providers (properties)
Major: strong support, many consultants, easy upgrade…
Smaller Ones: (IAS) Cheaper than Major ones, language flexibility, easier to adjust…
Open Source: Free, you can develop yourself…
Core Team of ERP implication should consist of:
- People who knows the whole workflow
- Top management
- Consultants
- IT manager (project manager)
- Champion
Note: CFO is going to be needed but his/her door is going to be knocked by Champion.
And also someone from suppliers will be needed in next stages.
60-70 % of the IT applications fails; if they are not working get over budget, get over time, and useless.
Data warehouses: 3 dimensional data storing
Data mining: finding the relevant information in between the collected data.
the relevant information can be taken in order to a purpose or
results can confirm the relevant information.
Day 2 Article Learnings-OnurO
The ERP Purchase Decision: Influential Business and IT Factors
-Most of the European firms choose an ERP purchase with more than three functional areas whereas only 13% decides on single area.
-ERP as we know it is a client server architecture solution rather a mainframe ran one.
-A classification on intention of buyer may be done as; support ERP purchases vs. value-chain purchases which involve production, operations and materials management.
-Business related reasons for purchasing ERP include a perceived need to reengineer business processes, introduce flexibility, access to integrated data, devising a system which is globally compatible i.e. regardless of language / currency.
-IT related reasons include, ERP as a cheaper and faster to develop alternative to in-house development, cost advantages as it replaces large, costly to maintain mainframe computer with more flexible and less costly client server architecture and ERP implementation as a solution to Y2K problems.
-In the midmarket, some ERP vendors capitalize on presenting supply chain management solutions fitted into complete solutions that specialize on vertical industries. SSA is emphasized to bridge between point solution providers and tier1 ERP. In this segment, however, third-party solution providers are stronger due to increased specialty in certain functional areas.
-Some firms prefer to implement point solutions on their centralized ERP system to solve specific problems such as inventory visibility within third parties(contractors).
-ERP deficiencies are discussed as they can not handle certain cases successfully. These include but not limited to; reverse logistics/returns, product lifecycle management.
Buyer's Insider: ERP Software
-Benefit: One single program contains all the information that is needed and the information is traceable.
-Drawback: Data from legacy systems, currently used, need to be converted in order to be integrated with ERP.
Duplication of data
Such large amount of information may turn out to be confusing(only if the information is not given to the right person at the right time) and ERPs do not have any analysis capability.
-Cost depends on scale and customization.
-Strategic business intelligence applications such as those which do what-if analysis are probably next in technology. And ERP forms a platform for these improvements.
-ERPs originate from MRPs and are consistently evolving to include functionalities as HR, CRM or Professional Service Automation.
-Decisions considerations are not totally financial in selecting and evaluating ERPs because the implementation involves business process re-design and business strategy and stakeholder interests (politics) are practically important.
-Six different decision making processes are explained:
The Classical Model (sequential)
The Administrative Model (cyclical)
The Incremental Model (successive comparison)
The Adaptive Model
The Irrational Model
The Political Model (stakeholder interests)
-Using HSP Ltd. Case, it was discussed which models are used in separate parts of the ESI diagram. Initiation, selection of consultant, involves political model; in vendor short-listing administrative model was used; final voting on vendor is also deemed to be political since the voting starts from project sponsor who is the employer of half of the committee.
-Decision making involves stakeholder interest to a great extent. Decisions during the lifetime of ERP are generally structured/semi-structured and a small number of alternatives were taken into consideration.
Can Altay-Why ERP? Learnings
* No software can manage the company regardless of what other people say.
* ERP uses a single number for everything (including forecasts, inventory levels, sales, budgets etc). Therefore, people in the company should come together and decide on a common approach to decide the numbers that are going to be entered into the ERP system.
* You can hire consultants, but you can’t delegate important jobs (like an ERP implementation) only to them when they do not have a real good understanding of what the company is like.
* ERP systems are designed for all kinds of firms, hence should be configured to match our company.
* Garbage in, Garbage out
* Great deal of management work needed before implementing an ERP system.
* The way people work with information is important.
* Trying to put a Big Ben into your living room when your clock battery ran down. The approach to Y2K problem.
* Legacy systems are very slow and difficult to maintain. An ERP system may be necessary to integrate these systems into each other.
* Firms implement ERP systems when they have a large number of plants and facilities scattered around the world, looking for better communication and integration among the facilities.
* Some firms implement ERP systems, because they feel that they should change to exploit the opportunities in communications and technology.
* R/3 is an SAP product that integrates the information throughout an organization, providing the benefits of single data entry, immediate access and common data.
* Data are updated in real time.
* SAP R/3 is designed around business processes.
* Organizational integration is possible, along with elimination of duplication of information. Efficiency
* Business practices unique to US, Europe and Japan are built into the system.
* R/3 has a number for everything
* Best practices: Contemporary business practices or processes incorporated into the software.
* “The resistance if we try to implement R/3 will be incredible.”
* To get the most out of R/3, some jobs may need to change.
* ERP uses a single number for everything (including forecasts, inventory levels, sales, budgets etc). Therefore, people in the company should come together and decide on a common approach to decide the numbers that are going to be entered into the ERP system.
* You can hire consultants, but you can’t delegate important jobs (like an ERP implementation) only to them when they do not have a real good understanding of what the company is like.
* ERP systems are designed for all kinds of firms, hence should be configured to match our company.
* Garbage in, Garbage out
* Great deal of management work needed before implementing an ERP system.
* The way people work with information is important.
* Trying to put a Big Ben into your living room when your clock battery ran down. The approach to Y2K problem.
* Legacy systems are very slow and difficult to maintain. An ERP system may be necessary to integrate these systems into each other.
* Firms implement ERP systems when they have a large number of plants and facilities scattered around the world, looking for better communication and integration among the facilities.
* Some firms implement ERP systems, because they feel that they should change to exploit the opportunities in communications and technology.
* R/3 is an SAP product that integrates the information throughout an organization, providing the benefits of single data entry, immediate access and common data.
* Data are updated in real time.
* SAP R/3 is designed around business processes.
* Organizational integration is possible, along with elimination of duplication of information. Efficiency
* Business practices unique to US, Europe and Japan are built into the system.
* R/3 has a number for everything
* Best practices: Contemporary business practices or processes incorporated into the software.
* “The resistance if we try to implement R/3 will be incredible.”
* To get the most out of R/3, some jobs may need to change.
Osman Murat Bio
I am Osman Murat. I graduated from Bilkent University Electrical and Electronics Engineering in 2007. I am a MBA student in Bilkent University. I have no work experience and I did not use ERP before. After graduating from Bilkent MBA, I want to work as an electrical and electronics engineer for few years in a project and try to be a manager in the company. After several years of work experience, I want to establish my own company in the technology sector or since I am so interested in marketing, I would want to establish my firm in different sectors other than technology sector. This course would help me to learn how a manager should behave while implementing ERP in a company. By the end of this course, I would be familiar with ERP systems and I would judge the key issues surrounding ERP implementations. The interesting thing about me is that I memorize most of the numbers that I have seen such as phone numbers, tables in books, statistics etc.
Lessons Learned v1.0 by Tolga YILDIRIM
ERP is a software system that makes sure the right information is delivered to the right people at the right time in an organization. With this definition, an ideal ERP solution acts as a digital nervous system, where information flows naturally so that related parties can make sound decisions and tackle problems, just like the nervous system in a human being.
SAP’s ERP solutions are modular, where businesses can implement different sets of modules, such as Financials, Human Resources, Controlling, Sales & Distribution, and Materials Management and so on. Such modularity has benefits, as well as shortcomings. A company may choose to implement several of the modules, and choose not to implement the others. One benefit is iterativeness. For example, you may implement the Sales & Distribution and Materials Planning first, after some time, you add the Financial module to that, and after some time, you add another module. However, what if a business chooses not to implement all the modules that it actually needs? Suppose a business implements only Materials Management and Sales & Distribution modules. Then, can we state that the company is planning its ‘enterprise’ ‘resources’? I don’t think so, because such case contradicts with the digital nervous system concept.
Another issue we mentioned in the class was the very interesting example of a factory implementing ERP while building the factory. This is a real issue. A company’s strategic positioning gives it sustainable competitive advantage. Companies are in search for unique strategic positions which will deliver them sustainable competitive advantage. However, sustainable competitive advantage requires a company’s activities ‘fit’ strategic positioning. It is therefore, the unique and consistent sets of activities that matters. Ideally, ERP systems should be aligned to serve for business’ processes. ERP is a tool, not the end. It is perfectly sensible for a company to first analyze its processes before implementing an ERP. By analyzing and re-engineering business processes, a business eliminates what we call ‘waste’, which is anything that does not add value to the customers. However, that’s not the case here.
The four aspects of IT implementation failures, inability to meet requirements, inability to meet the budget, the time, and inability to diffuse and eliminate resistance, make perfect sense.
A business can get an ERP solution in the following four ways:
Purchase from a major vendor
Purchase from a small vendor
Use Open Source
Use On-Demand ERP
Each model has benefits and shortcomings. However, in order to elaborate the discussion in class, I’ll mention a couple of ones that have not been mentioned.
If you are a middle-sized company, it is more likely that a major vendor will not care about you as much as a small vendor would.
In the traditional ERP models (the first two), you don’t receive patches quickly. Plus, it takes time to upgrade your ERP. The ERP vendor may deliver upgrades each year, however, an on-demand service provider continuously delivers patches and upgrades that effect you instantly.
Lastly, time to implement an ERP system usually takes 6+ months; however, on-demand solutions take 10 minutes.
The book we read, “Why ERP, a primer on SAP installation” reminded me of the following AMR Research.
http://www.amrresearch.com/Content/View.asp?pmillid=21364
ERP vendors specialize their solutions to industries, so that they can become experts in industries by understanding their distinct processes. SAP has specialized its solutions to 25 industries, mainly manufacturing industries. However, in the next years, it is expected to increase its efforts in service industries such as retailing, insurance and education.
SAP’s ERP solutions are modular, where businesses can implement different sets of modules, such as Financials, Human Resources, Controlling, Sales & Distribution, and Materials Management and so on. Such modularity has benefits, as well as shortcomings. A company may choose to implement several of the modules, and choose not to implement the others. One benefit is iterativeness. For example, you may implement the Sales & Distribution and Materials Planning first, after some time, you add the Financial module to that, and after some time, you add another module. However, what if a business chooses not to implement all the modules that it actually needs? Suppose a business implements only Materials Management and Sales & Distribution modules. Then, can we state that the company is planning its ‘enterprise’ ‘resources’? I don’t think so, because such case contradicts with the digital nervous system concept.
Another issue we mentioned in the class was the very interesting example of a factory implementing ERP while building the factory. This is a real issue. A company’s strategic positioning gives it sustainable competitive advantage. Companies are in search for unique strategic positions which will deliver them sustainable competitive advantage. However, sustainable competitive advantage requires a company’s activities ‘fit’ strategic positioning. It is therefore, the unique and consistent sets of activities that matters. Ideally, ERP systems should be aligned to serve for business’ processes. ERP is a tool, not the end. It is perfectly sensible for a company to first analyze its processes before implementing an ERP. By analyzing and re-engineering business processes, a business eliminates what we call ‘waste’, which is anything that does not add value to the customers. However, that’s not the case here.
The four aspects of IT implementation failures, inability to meet requirements, inability to meet the budget, the time, and inability to diffuse and eliminate resistance, make perfect sense.
A business can get an ERP solution in the following four ways:
Purchase from a major vendor
Purchase from a small vendor
Use Open Source
Use On-Demand ERP
Each model has benefits and shortcomings. However, in order to elaborate the discussion in class, I’ll mention a couple of ones that have not been mentioned.
If you are a middle-sized company, it is more likely that a major vendor will not care about you as much as a small vendor would.
In the traditional ERP models (the first two), you don’t receive patches quickly. Plus, it takes time to upgrade your ERP. The ERP vendor may deliver upgrades each year, however, an on-demand service provider continuously delivers patches and upgrades that effect you instantly.
Lastly, time to implement an ERP system usually takes 6+ months; however, on-demand solutions take 10 minutes.
The book we read, “Why ERP, a primer on SAP installation” reminded me of the following AMR Research.
http://www.amrresearch.com/Content/View.asp?pmillid=21364
ERP vendors specialize their solutions to industries, so that they can become experts in industries by understanding their distinct processes. SAP has specialized its solutions to 25 industries, mainly manufacturing industries. However, in the next years, it is expected to increase its efforts in service industries such as retailing, insurance and education.
Day 1 Learnings
ERP is a software links each business unit and operations.
Aim of the ERP is to send data to right people,at right time.
ERP connects business practices. I also learned what MRP is
MRP- Material Requirements Planning
MRP II- Manufacturing Resource Planning
When implementing ERP we should
- analyze business processes first and learn bottlenecks
It is better to check the best practices.
ERP is a new increased connection to suppliers.
ERP become a huge part in supply chain management.
ERP is also an increased connection to customers.
When selecting ERP among different ERP providers we should check the advantages and disadvantages.
3 type of firms provide ERP
Major players, small players and open source players
Majors' advantages are
Strong support, many consultants, well known and trusted, high variety of applications, easy upgrades, high competition driver for better products for the customer.
They have also disadvantages,
Very expensive, the support might be weak and late, and you may wait for the long upgrade time.
Smalller firm properties are;
Easier to adjust and customize, focused on specific sectors, language preference is key and they are more flexible since they focus on specific sectors, and cheaper.
Disadvantages are
Customers do not want to pay for a company which is small because in the long term they have the suspicion that small firms will bankcrupt.
Open source advantages are,
They are free, easy to customize, support is cheaper, they are usually better coded without thinking in marketing perspective, and you can develop your program while using open source ERP.
Disadvantages,
you do not know when the support comes
SAP models
FI: Financials, CO:Controlling,
PLM: Production Lifecycle management
PLM is terminology for integration
When implementing ERP
there should be a core team,
Knows the whole workflow
Top management should be included
Consultants
IT manager of the company should be included
About 70% of the IT implementation has failure, because of the following reasons
1- Works 2- Budget 3- Time 4-Use (Resistance of Users)
Aim of the ERP is to send data to right people,at right time.
ERP connects business practices. I also learned what MRP is
MRP- Material Requirements Planning
MRP II- Manufacturing Resource Planning
When implementing ERP we should
- analyze business processes first and learn bottlenecks
It is better to check the best practices.
ERP is a new increased connection to suppliers.
ERP become a huge part in supply chain management.
ERP is also an increased connection to customers.
When selecting ERP among different ERP providers we should check the advantages and disadvantages.
3 type of firms provide ERP
Major players, small players and open source players
Majors' advantages are
Strong support, many consultants, well known and trusted, high variety of applications, easy upgrades, high competition driver for better products for the customer.
They have also disadvantages,
Very expensive, the support might be weak and late, and you may wait for the long upgrade time.
Smalller firm properties are;
Easier to adjust and customize, focused on specific sectors, language preference is key and they are more flexible since they focus on specific sectors, and cheaper.
Disadvantages are
Customers do not want to pay for a company which is small because in the long term they have the suspicion that small firms will bankcrupt.
Open source advantages are,
They are free, easy to customize, support is cheaper, they are usually better coded without thinking in marketing perspective, and you can develop your program while using open source ERP.
Disadvantages,
you do not know when the support comes
SAP models
FI: Financials, CO:Controlling,
PLM: Production Lifecycle management
PLM is terminology for integration
When implementing ERP
there should be a core team,
Knows the whole workflow
Top management should be included
Consultants
IT manager of the company should be included
About 70% of the IT implementation has failure, because of the following reasons
1- Works 2- Budget 3- Time 4-Use (Resistance of Users)
Serkan Kocak Bio
Education
2007 - … Bilkent University, Ankara
Faculty of Business Administration / Department of Business Administration
Current Status: MBA
2002-2007 Bilkent University, Ankara
Faculty of Engineering / Department of Industrial Engineering
1999-2002 Eskisehir Fatih Science High School
Science and Mathematics Department
1995-1999 Eskisehir Kılıçoğlu Anatolian High School
Experiences
2006 - 2007, Coca Cola İçecek A.Ş., Ankara
Worked on a project about establishing a demijohn water sales distribution system in the region of Ankara for CCI
2006, Two Months Internship at Visy Paper Pty Ltd Australia
Visy Paper Pty Ltd Melbourne, Australia
Worked in the Engineering Department for a period of two months
2005, One-Month Internship at Arçelik Turkey
Arçelik A.Ş. Refrigerator Plant Eskişehir, Turkey
Worked in the Process Engineering Department for a period of one month
Participated in the project of designing a database program in MS Access
Working in MESMAK Industrial Kitchen
Working at MesMak Industrial Kitchen’s Production and Marketing Plant, and also at Management Department in holidays
I want to work for a privately owned and international company (as a consultant) for 5 to 10 years then I want to do my own business. So that ERP as an IT tool is very important for me.
I am here to learn more about ERP and at the end of the course I want to have enough knowledge about ERP to ask someone to do something about it.
Having lots of telephone numbers in my mobile phone is one of my interesting properties that my friends told me :D
2007 - … Bilkent University, Ankara
Faculty of Business Administration / Department of Business Administration
Current Status: MBA
2002-2007 Bilkent University, Ankara
Faculty of Engineering / Department of Industrial Engineering
1999-2002 Eskisehir Fatih Science High School
Science and Mathematics Department
1995-1999 Eskisehir Kılıçoğlu Anatolian High School
Experiences
2006 - 2007, Coca Cola İçecek A.Ş., Ankara
Worked on a project about establishing a demijohn water sales distribution system in the region of Ankara for CCI
2006, Two Months Internship at Visy Paper Pty Ltd Australia
Visy Paper Pty Ltd Melbourne, Australia
Worked in the Engineering Department for a period of two months
2005, One-Month Internship at Arçelik Turkey
Arçelik A.Ş. Refrigerator Plant Eskişehir, Turkey
Worked in the Process Engineering Department for a period of one month
Participated in the project of designing a database program in MS Access
Working in MESMAK Industrial Kitchen
Working at MesMak Industrial Kitchen’s Production and Marketing Plant, and also at Management Department in holidays
I want to work for a privately owned and international company (as a consultant) for 5 to 10 years then I want to do my own business. So that ERP as an IT tool is very important for me.
I am here to learn more about ERP and at the end of the course I want to have enough knowledge about ERP to ask someone to do something about it.
Having lots of telephone numbers in my mobile phone is one of my interesting properties that my friends told me :D
Lessons Learned Posting
What is ERP?
It is kurumsal kaynak planlama in Turkish. ERP is software that links each business unit, each software and operations in an organization. It is different than MRP - Materials Requirement Planning.ERP systems are modular with a single databases; the modules can be: HR, Finance, Accounting, Sales…Systems provide right information to right people at the right time. ERP can also be defined as Complete suite of integrated applications. ERP is evolved from MRP, after MRP II which was a more complete solution for organizations in management, ERP with even more complete solutions emerge.
- MRP => MRP II => ERP => ERP2(?)
Modular structure is very important for organizations since the organizations can decide and pay only for the modules they need.
When to implement?
ERP systems are usually expensive, costly and difficult-to-implement systems. Therefore, organizations must make decisions very carefully when implementing ERP system also the timing of implementation is also important. First of all not all of the organizations need ERP systems, even though the systems are very beneficial, especially if the organization is not capable of using the system. During implementation, usually there is consultancy but after that consultants left and organizations must use the system effectively on their own even though some level of support is usually available. In order to assure effective use after the implementation period, some people from the company must participate to the implementation period, it is important to have some people who knows the business especially from departments. In addition to people from departments, upper and/or middle level management are better to join to the process. Also it is always a good idea to analyze operations before implementing the system. Implementing system during the establishment of business is the best way and ideal time but it is not always possible mostly due to the cost issues. Moreover, it is important to know that ERP systems usually causes changes in the business practices in the organizations therefore, it is not a good idea to implement ERP right after radical changes in business practices since additional changes may be needed. This may cause more than doubled costs but changing business practices after both analyses within the company and ERP implementation would a better practice.
Organizational size and ERP system provider types:
All ERP systems come with best practices and these may force the organizations to change their business practices. For a small size organization it may be easier to change its business practices rather than ERP system. However, for a larger organizations business practices cannot be changed that easy, there may be higher costs and higher resistance within the company. It is also noteworthy that ERP systems can be customized depending on the needs of the organizations and also there are sector-specific versions of the systems.
Before looking at the ERP provider types, we can briefly talk about on-demand ERP (SAAS). This type of ERP requires less money since it requires less infrastructure since the SAAS provides online service in which company uses the ERP provider’s servers. However, it is very risky to give company’s whole information to a third party due to the security reasons.
There are basically 3 types of ERP providers:
- Major Players (SAP, Oracle, SSA Global…)
- Small providers (many local companies)
- Open Source (Compiere, OFBiz, WebERP)
Since most of the ERP projects fail, and there are always bugs; it is important to evaluate which provider type has best solutions for us. To do so we need to determine advantages and disadvantages of all three.
Advantages of major players:
Good products, good codes, and better know-how and experience
Better consultancy and stronger support
More sector specific solutions
Disadvantages of major players:
Expensive
Less company specific solutions
Advantages of small providers:
More company specific solutions
Cheaper than major players
Sometimes very good codes
More care for small size businesses
Disadvantages of small providers:
Sometimes lower quality
Less support
Stability of the provider
Advantages of open sources:
It is free
Better and cheaper or free support (if available)
In-house customization (if possible)
Disadvantages of open sources:
Less support
Weak documantation
Tolga YILDIRIM - Bio
This is Tolga YILDIRIM.
I am a computer scientist, studied at Bilkent University Computer Science department. This is my first and last year @ MBA, I am taking six courses in the summer, and graduating. Next year, I’ll be in the Netherlands, studying Information Management in Tilburg University.
This course will be a smooth introduction to my studies in the Netherlands. After that, I want to move to the Silicon Valley and have my own high-tech startup in a couple of years to change the way people live and work. As Beethoven says, ‘I have never thought of writing for reputation and honor. What I have in my heart must come out; that is the reason why I compose’.
So Much Action For One Night
Wow, lots of action going on at the last minute!
Sweet!
Keep up the good job
PS: Guys and Gals, if you sleep during the class tomorrow, I will give you a hard time about it :))))
Having said that, what the heck am I doing up?
Sweet dreamz..
Sweet!
Keep up the good job
PS: Guys and Gals, if you sleep during the class tomorrow, I will give you a hard time about it :))))
Having said that, what the heck am I doing up?
Sweet dreamz..
Can Altay-Day 1 Learnings
Hi everyone,
Each and every one of you just wrote and wrote. I will add a few lines to this “epic” (çevirisi olarak destansı da diyebiliriz) blog J
* ERP is the software that links each business unit of a company in one common database.
* It has a modular structure; different modules (such as marketing, finance, human resources, supply chain management etc) exist and are connected to the database.
* The database is working on real-time; any changes made by one department is reflected immediately to the database
* SAP has industry specific solutions, as well as softwares that work in different currencies and different languages
* 3-tier system: OS, BASIS (which requires specific IT knowledge that is different than those of the implementers) and Network. The hardware-side is also three-tier system: (1) Database Server, (2) Application Server, (3) Presentation Server.
* It is possible to implement single modules to create cheaper alternatives for companies
* It would not be a good idea to analyze and reengineer your business processes first, as different departments may come up with different business processes that may ruin the overall workflow of the company and create a totally different structure, which may not fit with the ERP system.
* It is important to know what you need before contacting the consultants for ERP implementation.
* If everybody is implementing ERP, you do not have to! It’s just a tool and your need of implementing an ERP system depends on the size and needs of the company.
* A cheaper alternative for smaller firms would be the ASAP, a special system provided by SAP. Roadmap to ASAP: Project Preparation, Business Blueprint, Realization, Final Preparation, Go Live & Support.
* An ERP system may create integrated solutions, which may increase the level of communication through the supply chain and even give you the chance to empower your suppliers in terms of inventory management. (You can let your suppliers/distributors control your level of inventory with the help of the system).
* Also, you can avoid duplication by creating integrated systems.
* There are major players (SAP, Oracle, PeopleSoft) as well as small players and even open-source software (Compiere). Each has advantages and disadvantages. Major players are well-known, trusted and have strong support, but are not very flexible. Small players offer cheaper and more flexible alternatives to major players, but are not well-known and probably will not be selected by bigger firms. Open-source software is totally free and can be customized by yourself, but has support-security and development speed issues.
* Core Team for the implementation process:-Someone who knows the workflow -Top management-Consultants-IT Managers-Champion (go-getter)
* 70% of all IT implementations fail – Yeliz’s criteria for failure:
- Meeting the requirements
- Budget
- Time
-Resistance to use
However, projects that are implemented (actually the projects that Yeliz implementedJ) may still fail according to this interpretation. Therefore, the failure of the implementation depends on both several internal and external factors.
* An ERP implementation should not be treated as an IT implementation! Best example is the Y2K problem.
* Data Mining enables you to turn the data into knowledge that you can use through correlations, patterns, trends etc. This tool is very important and I will have to learn it for my Marketing Research studies.
* By SAP’s audit trail option, you can track what is done by whom in the company. It is a good way to enable transparency within the organization and across the business units.
* Installing an ERP system requires you to consider the trade-off between the possible reduction in operational costs vs. the potential increase in hardware costs after the implementation.
Each and every one of you just wrote and wrote. I will add a few lines to this “epic” (çevirisi olarak destansı da diyebiliriz) blog J
* ERP is the software that links each business unit of a company in one common database.
* It has a modular structure; different modules (such as marketing, finance, human resources, supply chain management etc) exist and are connected to the database.
* The database is working on real-time; any changes made by one department is reflected immediately to the database
* SAP has industry specific solutions, as well as softwares that work in different currencies and different languages
* 3-tier system: OS, BASIS (which requires specific IT knowledge that is different than those of the implementers) and Network. The hardware-side is also three-tier system: (1) Database Server, (2) Application Server, (3) Presentation Server.
* It is possible to implement single modules to create cheaper alternatives for companies
* It would not be a good idea to analyze and reengineer your business processes first, as different departments may come up with different business processes that may ruin the overall workflow of the company and create a totally different structure, which may not fit with the ERP system.
* It is important to know what you need before contacting the consultants for ERP implementation.
* If everybody is implementing ERP, you do not have to! It’s just a tool and your need of implementing an ERP system depends on the size and needs of the company.
* A cheaper alternative for smaller firms would be the ASAP, a special system provided by SAP. Roadmap to ASAP: Project Preparation, Business Blueprint, Realization, Final Preparation, Go Live & Support.
* An ERP system may create integrated solutions, which may increase the level of communication through the supply chain and even give you the chance to empower your suppliers in terms of inventory management. (You can let your suppliers/distributors control your level of inventory with the help of the system).
* Also, you can avoid duplication by creating integrated systems.
* There are major players (SAP, Oracle, PeopleSoft) as well as small players and even open-source software (Compiere). Each has advantages and disadvantages. Major players are well-known, trusted and have strong support, but are not very flexible. Small players offer cheaper and more flexible alternatives to major players, but are not well-known and probably will not be selected by bigger firms. Open-source software is totally free and can be customized by yourself, but has support-security and development speed issues.
* Core Team for the implementation process:-Someone who knows the workflow -Top management-Consultants-IT Managers-Champion (go-getter)
* 70% of all IT implementations fail – Yeliz’s criteria for failure:
- Meeting the requirements
- Budget
- Time
-Resistance to use
However, projects that are implemented (actually the projects that Yeliz implementedJ) may still fail according to this interpretation. Therefore, the failure of the implementation depends on both several internal and external factors.
* An ERP implementation should not be treated as an IT implementation! Best example is the Y2K problem.
* Data Mining enables you to turn the data into knowledge that you can use through correlations, patterns, trends etc. This tool is very important and I will have to learn it for my Marketing Research studies.
* By SAP’s audit trail option, you can track what is done by whom in the company. It is a good way to enable transparency within the organization and across the business units.
* Installing an ERP system requires you to consider the trade-off between the possible reduction in operational costs vs. the potential increase in hardware costs after the implementation.
Can Altay-Bio
BIO – CAN ALTAY
* Graduated from Özel İzmir Amerikan Lisesi in 2003
* Graduated from Bilkent Industrial Engineering department in 2007.
* Currently a student at Bilkent MBA (Graduating August 2008)
* Accepted to Tilburg University (Netherlands) for an MSc in Marketing Research
Work Experience
* Pınar Yem : Studied production planning, quality management and operations analysis. Finished a project on quality management. (June 2005 – July 2005 internship)
* Egepen Deceuninck: Carried a production planning project for the profiles by applying the Silver Meal Heuristic on the 2006 sales data (June 2006 – July 2006 internship)
* I have only taken a course that involved some ERP knowledge (Production Information Systems) Therefore, I would like to obtain some further knowledge of the ERP systems and hopefully get some hands-on experience. At the end of the course, I want to have more familiarity with ERP systems, as I will be somehow involved with them throughout my career.
* My career goal is to concentrate on marketing and become a consultant in marketing research. If not a consultant, I would like to work in the marketing areas of the automotive sector or the FMCG sector. In 10-15 years, I would like to start my own company.
* With this course, I hope to see the connection of marketing to other departments (especially to finance) through ERP and see how marketing decisions affect the company as a whole. In other words, I hope to put myself in the shoes of other department people through ERP.
* I happen to give very different reactions even though I think that it is wrong to do so. I really do not know why I do so J
* Graduated from Özel İzmir Amerikan Lisesi in 2003
* Graduated from Bilkent Industrial Engineering department in 2007.
* Currently a student at Bilkent MBA (Graduating August 2008)
* Accepted to Tilburg University (Netherlands) for an MSc in Marketing Research
Work Experience
* Pınar Yem : Studied production planning, quality management and operations analysis. Finished a project on quality management. (June 2005 – July 2005 internship)
* Egepen Deceuninck: Carried a production planning project for the profiles by applying the Silver Meal Heuristic on the 2006 sales data (June 2006 – July 2006 internship)
* I have only taken a course that involved some ERP knowledge (Production Information Systems) Therefore, I would like to obtain some further knowledge of the ERP systems and hopefully get some hands-on experience. At the end of the course, I want to have more familiarity with ERP systems, as I will be somehow involved with them throughout my career.
* My career goal is to concentrate on marketing and become a consultant in marketing research. If not a consultant, I would like to work in the marketing areas of the automotive sector or the FMCG sector. In 10-15 years, I would like to start my own company.
* With this course, I hope to see the connection of marketing to other departments (especially to finance) through ERP and see how marketing decisions affect the company as a whole. In other words, I hope to put myself in the shoes of other department people through ERP.
* I happen to give very different reactions even though I think that it is wrong to do so. I really do not know why I do so J
Elif -- bio
I have graduated from METU Economics in 2005. Before that, I had been a student of Aykan Kolej for 13 years, from primary school until graduating from high school.
After my graduation from METU, I have worked for PricewaterhouseCoopers (Ankara) Assurance and Business Advisory Services, Audit department until May, 2007. Although audit does not seem relevant to ERP, most of the clients that we have been giving audit service have used ERP systems. So, I am familiar with how all business units are integrated through such systems. Also, during auditing the work flows and control points within each work flow, understanding how the system works is crucial and it has been made easier by ERP systems.
Although I believe that having strict career goals does not mean much in real life practices, for the moment I am planning to work for our family business that produces insulated glass on a medium-scale in Ankara. Taking this course will help me understand how to relate different business units to each other and give me some insights about a possible future implementation of ERP to our business. So, I expect to accomplish these understandings at the end of this course.
I have made yoga for four years during university. Also, as an interesting (or ironic) thing about me, although I have worked for PricewaterhouseCoopers for almost two years day and night, with long overtime hours, there is no one in my family that can spell where I have worked correctly.
After my graduation from METU, I have worked for PricewaterhouseCoopers (Ankara) Assurance and Business Advisory Services, Audit department until May, 2007. Although audit does not seem relevant to ERP, most of the clients that we have been giving audit service have used ERP systems. So, I am familiar with how all business units are integrated through such systems. Also, during auditing the work flows and control points within each work flow, understanding how the system works is crucial and it has been made easier by ERP systems.
Although I believe that having strict career goals does not mean much in real life practices, for the moment I am planning to work for our family business that produces insulated glass on a medium-scale in Ankara. Taking this course will help me understand how to relate different business units to each other and give me some insights about a possible future implementation of ERP to our business. So, I expect to accomplish these understandings at the end of this course.
I have made yoga for four years during university. Also, as an interesting (or ironic) thing about me, although I have worked for PricewaterhouseCoopers for almost two years day and night, with long overtime hours, there is no one in my family that can spell where I have worked correctly.
Bio of Basak Tektemur
My name is Basak Tektemur. I have studied Molecular Biology and Genetics at Bilkent University and graduated at January 2007. I started MBA at Bilkent University September 2007 and I am going to finish it at the end of the summer school, July 2008. I am going to the Netherlands this august to start my MS studies on International Business at Tilburg University and I will get my MS degree in one year.
I have no job experience and since I studied science at university, my internships were not business-related. During my two internships at Bilkent and an internship at University of Toronto, Princess Margaret Hospital, McLaughlin Centre for Molecular Medicine, I concentrated on cancer research. Even though, it was a great thing to make scientific research and hands-on experiments, I noticed that a stronger biotechnology private-sector is needed for genetics to develop in Turkey. Therefore, during my last semester at university, I decided to get an MBA degree either to work in a biotechnology company or start my own. After my graduation, I am planning to work in an international company, probably for a few years abroad and then to come back to Turkey to achieve my goals and be part of the development of genetics as a science in Turkey.
I am taking this course since I think that a biotechnology company cannot be managed without an ERP system and I want to learn at least basics of the ERP systems.
I have no job experience and since I studied science at university, my internships were not business-related. During my two internships at Bilkent and an internship at University of Toronto, Princess Margaret Hospital, McLaughlin Centre for Molecular Medicine, I concentrated on cancer research. Even though, it was a great thing to make scientific research and hands-on experiments, I noticed that a stronger biotechnology private-sector is needed for genetics to develop in Turkey. Therefore, during my last semester at university, I decided to get an MBA degree either to work in a biotechnology company or start my own. After my graduation, I am planning to work in an international company, probably for a few years abroad and then to come back to Turkey to achieve my goals and be part of the development of genetics as a science in Turkey.
I am taking this course since I think that a biotechnology company cannot be managed without an ERP system and I want to learn at least basics of the ERP systems.
Lessons Learned 1 by ahmet k
ERP - Enterprise Resource Planning
Realtime, implement business processes according to 'best practices'. This may be problematic since we can't really know what is 'best'
One database, different modules connected. Integrated package, connecting different functions.
Industry spesific solutions: financial services, transportation etc..
Multiple language support
Can work in different currencies, multi-currency environments
Supply chain apps (out)
ERP (in)
3 tier system:
OS
BASIS (spesifics)
Network
Evolution: (From materils planning to manufacturing planning to ERP)
MRP - MRP II - ERP
Big companies: SAP, Oracle, BAAN (Expensive, strong support)
Open Source: Compiere, OFBiz, WebERP (you can develop yourself, lack of support)
There are small companies (more flexible, cheap, limited) and web based ERP as well (cheap, less resources used, but security issues).
Businesses and ERP systems change in implementation. Both are problematic. Minimizing # of changes is a good idea.
Core Team:
-Someone who knows workflow/dept, Suppliers (maybe),
-Top management (Dept Directors/Managers),
-Consultants
-IT Managers (Project Manager probably)
-Champion (if additional resources are needed, this person should have the influence to get it, also motivates)
manager - consultant dipole is a basic building block of a project
Political model seems to explain best the decision process of implementation of ERP systems. Others are partially effective.
IT implementation failure: 70% - subjective (criteria are important)
1 - Does it Work? does it meet the requirements?
2- On budget?
3- On time?
4- Usable? Is there resistance to use?
Usually where there is change, there is resistance, and with the implementation of ERP systems, businesses change; hence there is resistance.
SAP Audit Trail: keep track of user actions
Data Warehouse:
3-D database, you know what you want
Data Mining:
Fun, can look at different patterns or try to see correlations. You want to find something valuable.
Realtime, implement business processes according to 'best practices'. This may be problematic since we can't really know what is 'best'
One database, different modules connected. Integrated package, connecting different functions.
Industry spesific solutions: financial services, transportation etc..
Multiple language support
Can work in different currencies, multi-currency environments
Supply chain apps (out)
ERP (in)
3 tier system:
OS
BASIS (spesifics)
Network
Evolution: (From materils planning to manufacturing planning to ERP)
MRP - MRP II - ERP
Big companies: SAP, Oracle, BAAN (Expensive, strong support)
Open Source: Compiere, OFBiz, WebERP (you can develop yourself, lack of support)
There are small companies (more flexible, cheap, limited) and web based ERP as well (cheap, less resources used, but security issues).
Businesses and ERP systems change in implementation. Both are problematic. Minimizing # of changes is a good idea.
Core Team:
-Someone who knows workflow/dept, Suppliers (maybe),
-Top management (Dept Directors/Managers),
-Consultants
-IT Managers (Project Manager probably)
-Champion (if additional resources are needed, this person should have the influence to get it, also motivates)
manager - consultant dipole is a basic building block of a project
Political model seems to explain best the decision process of implementation of ERP systems. Others are partially effective.
IT implementation failure: 70% - subjective (criteria are important)
1 - Does it Work? does it meet the requirements?
2- On budget?
3- On time?
4- Usable? Is there resistance to use?
Usually where there is change, there is resistance, and with the implementation of ERP systems, businesses change; hence there is resistance.
SAP Audit Trail: keep track of user actions
Data Warehouse:
3-D database, you know what you want
Data Mining:
Fun, can look at different patterns or try to see correlations. You want to find something valuable.
Bio from OnurO
Hello everyone,
In 2007, I graduated from Sabanci University in which I studied Materials Engineering and Chemistry. I worked as a part time R&D engineer for Alcan Packaging Inc. during the last year of my B.S. Then, with a couple of friends, we established a firm to produce a device of our design that is used in medical waste disposal; the venture encountered serious opposition from Turkish legislation, tough. Now, I work for a medical equipment supplier in business development unit.
We are seeking an information solution that will help us to automate and coordinate business processes efficiently and at the same time, this tool should not be costly since our company is SME. I am taking this course to learn about managerial decision support systems and expect to find out a solution to our current problem.
My career goal is to establish many high value businesses from which my country and people will benefit.
A fact that most people around me do not know and possibly can not guess is that I used to be a professional wrestler and I can eat more baklava than you can expect from a human being, shame on me :)
In 2007, I graduated from Sabanci University in which I studied Materials Engineering and Chemistry. I worked as a part time R&D engineer for Alcan Packaging Inc. during the last year of my B.S. Then, with a couple of friends, we established a firm to produce a device of our design that is used in medical waste disposal; the venture encountered serious opposition from Turkish legislation, tough. Now, I work for a medical equipment supplier in business development unit.
We are seeking an information solution that will help us to automate and coordinate business processes efficiently and at the same time, this tool should not be costly since our company is SME. I am taking this course to learn about managerial decision support systems and expect to find out a solution to our current problem.
My career goal is to establish many high value businesses from which my country and people will benefit.
A fact that most people around me do not know and possibly can not guess is that I used to be a professional wrestler and I can eat more baklava than you can expect from a human being, shame on me :)
Bio of Inanc Erdagi
- BACKGROUND
HAVELSAN A.Ş., Ankara – Turkey, (Senior Engineer)
¨ Quality and Process Management Department
¨ Integrated Logistics Support Department
TTGV (Technology Development Foundation of Turkey), Ankara – Turkey, (Technical Specialist)
ACCENTURE GmbH., Frankfurt a.M. – Germany, (IT consultant)
ABB (ASEA BROWN BOVERI) Elektrik San. A.S., Istanbul – Turkey,
Flexible Automation Division (Project Manager, Application and Sales Engineer)
HONEYWELL A.S., Istanbul – Turkey,
Industrial Control Division (Application Engineer)
- CAREER GOAL
Establishing own business, top managerial position at a large scale company or a consulting position
- HELP of the COURSE
ERP systems are a must for many firms at different sizes. ERP investment decisions (the criteria to be used while making this decision), implementation process, capabilities of ERP systems are very important for anybody at managerial or consulting position. The corect knowledge on different dimensions of ERP systems could significantly help to improve the performance of a firm or could cause to waste important resources.
- EXPECTATİON
I hope to get some basic information that would enable me where to look at and what for to look at about any issues that I may face with in the future about ERP implementations. I also hope to learn what kinds of benefits an ERP system could provide and what kind of risks exist.
HAVELSAN A.Ş., Ankara – Turkey, (Senior Engineer)
¨ Quality and Process Management Department
¨ Integrated Logistics Support Department
TTGV (Technology Development Foundation of Turkey), Ankara – Turkey, (Technical Specialist)
ACCENTURE GmbH., Frankfurt a.M. – Germany, (IT consultant)
ABB (ASEA BROWN BOVERI) Elektrik San. A.S., Istanbul – Turkey,
Flexible Automation Division (Project Manager, Application and Sales Engineer)
HONEYWELL A.S., Istanbul – Turkey,
Industrial Control Division (Application Engineer)
- CAREER GOAL
Establishing own business, top managerial position at a large scale company or a consulting position
- HELP of the COURSE
ERP systems are a must for many firms at different sizes. ERP investment decisions (the criteria to be used while making this decision), implementation process, capabilities of ERP systems are very important for anybody at managerial or consulting position. The corect knowledge on different dimensions of ERP systems could significantly help to improve the performance of a firm or could cause to waste important resources.
- EXPECTATİON
I hope to get some basic information that would enable me where to look at and what for to look at about any issues that I may face with in the future about ERP implementations. I also hope to learn what kinds of benefits an ERP system could provide and what kind of risks exist.
lessons learned by Inanc Erdagi
- ERP is a single database from which modular applications get the data,
- ERP systems work real time, i.e. the up to date data could be reached any time,
- ERP comprises all functions of a business,
- The main difference between an ERP system and an MRP system is that, ERP system capabilities regarding to Financial and HR issues are improved,
- Before implementing an ERP system, the management problems must have been solved and the relationships between functions must have been well established. Improper performance regarding to these issues is one of the main reasons why an ERP implementation projects fails,
- The failure of a project could be described as not being able to attain the targets at following;
o Budget,
o Time,
o Performance of the implemented system (meeting the requirements)
o Resistance to use the new system
- ERP systems are designed for all kinds of firms, therefore they have to be configured to match the needs of a specific company,
- ERP consultants should not be expected to solve the managerial issues since they can not know all operations of a firm immediately.
- ERP systems are especially useful for companies having facilities/plants at different locations and looking for a solution that will provide better communication and integration of them,
- SAP is organized around business processes created with contribution of business functions
- SAP could work with different languages, currencies, accounting practices, tax regulations
- An important step ERP implementation is forming the core team and this team should include representatives of different departments having significant operations within the organization as well as a champion from the upper management. The champion’s main contribution will be through enabling allocation of enough resources for the ERP project and solving any issues that may need involvement of upper management. IT manager, and consultants are other major members of the team
- Consultants and managers should work together since this would enable keeping the knowledge developed/gained during implementation process
- The main reasons why the processes of a firm could change prior to implementing ERP are,
o SAP includes best practices and the firm may find them more appropriate to use rather than insisting on existing practices,
o The analysis performed before implementing SAP could reveal the required/necessary improvements and changes at the existing processes, however it is advisable to make the analysis before implementation and make the process changes during implementation
o If the firm is at a certain size, customizing the process could be less costly/difficult than customizing the SAP,
- There are different ERP options; major players (such as SAP, Oracle etc.), smaller ones and open source. They have different advantages and disadvantages,
- The mergers at the ERP industry result in transfer of special know-how as well as increasing the market share,
- Regarding to open source ERP applications, the quality of the community could be understood from the presentation of several metrics,
- SAP has a three tier architecture,
- Audit trail capability of SAP enables knowing who did what,
- ERP systems work real time, i.e. the up to date data could be reached any time,
- ERP comprises all functions of a business,
- The main difference between an ERP system and an MRP system is that, ERP system capabilities regarding to Financial and HR issues are improved,
- Before implementing an ERP system, the management problems must have been solved and the relationships between functions must have been well established. Improper performance regarding to these issues is one of the main reasons why an ERP implementation projects fails,
- The failure of a project could be described as not being able to attain the targets at following;
o Budget,
o Time,
o Performance of the implemented system (meeting the requirements)
o Resistance to use the new system
- ERP systems are designed for all kinds of firms, therefore they have to be configured to match the needs of a specific company,
- ERP consultants should not be expected to solve the managerial issues since they can not know all operations of a firm immediately.
- ERP systems are especially useful for companies having facilities/plants at different locations and looking for a solution that will provide better communication and integration of them,
- SAP is organized around business processes created with contribution of business functions
- SAP could work with different languages, currencies, accounting practices, tax regulations
- An important step ERP implementation is forming the core team and this team should include representatives of different departments having significant operations within the organization as well as a champion from the upper management. The champion’s main contribution will be through enabling allocation of enough resources for the ERP project and solving any issues that may need involvement of upper management. IT manager, and consultants are other major members of the team
- Consultants and managers should work together since this would enable keeping the knowledge developed/gained during implementation process
- The main reasons why the processes of a firm could change prior to implementing ERP are,
o SAP includes best practices and the firm may find them more appropriate to use rather than insisting on existing practices,
o The analysis performed before implementing SAP could reveal the required/necessary improvements and changes at the existing processes, however it is advisable to make the analysis before implementation and make the process changes during implementation
o If the firm is at a certain size, customizing the process could be less costly/difficult than customizing the SAP,
- There are different ERP options; major players (such as SAP, Oracle etc.), smaller ones and open source. They have different advantages and disadvantages,
- The mergers at the ERP industry result in transfer of special know-how as well as increasing the market share,
- Regarding to open source ERP applications, the quality of the community could be understood from the presentation of several metrics,
- SAP has a three tier architecture,
- Audit trail capability of SAP enables knowing who did what,
Lessons Learned Posting (June 16, 2008)
Introduction:
ERP includes integrating different business units to each other through software links as a whole business process. It was also mentioned in the class as combining right information with right people in the right time.
ERP allows real-time updates so you don’t need to update the database on a regular basis.
It may be efficient to analyze your business processes and identifying bottlenecks (reengineering) before implementing ERP. However, it can also be claimed that ERP should be well enough to enable customization according to every different business processes. Also, sometimes, identifying bottlenecks can be easier with a well-working ERP system in-house.
ERP is just a tool; it does not give way to a successful strategy. It can only help to implement your strategy more effectively.
Providers of ERP Systems:
ERP system providers are considered in four main categories (one of which has been added by one of our classmates):
(1) Major Players (such as Oracle, SAP, etc.)
(2) Smaller Ones (such as local firms)
(3) Open Source ERP System Providers (on a voluntarily basis)
(4) On-Demand ERP (SAAS)
Major Players:
Pros of making business with the major providers of ERP systems are: strong support, international know-how, the fact that high competition in the market forces these major players to provide better products and services.
Cons: for bugs, you need to wait for the next versions; you need to upgrade; and sometimes you may get more functions than you actually need.
Smaller Ones:
Pros: They are cheaper, easier to customize (hopefully). In addition, in countries like Turkey, language can be a major reason for choosing local ERP providers in order to have programs using Turkish as a main language.
Cons: reliability of these small providers is an important issue. They might go out of business.
Open Source Providers:
Pros: You can develop your system by yourself. It is free. Also, it has been discussed that support is cheaper and/or free, if available.
Cons: It has been mentioned that support is cheaper and/or free. However, most of the time, support is not available for these open source systems. If you don’t have your own developer in-house, buying open-source systems may not make sense.
Costs of Implementing ERP Systems:
· Implementation Cost: It includes consultancy costs, the time spent on implementation, etc.
· Maintenance Costs: maintenance should be made on a regular basis and these future costs should also be included in the total costs associated with ERP implementation.
· Infrastructure Costs
· License Fees: Although these amounts are too small relative to other costs, total cost of ERP systems also includes license fees.
· Patch means collecting a number of bugs and developing a set of fixes for these bugs. These patches are added to new versions of ERP systems. This is applied mostly by major providers.
SAP:
SAP is a major type of ERP systems.
Applications, data, and presentations are all separate within SAP. So, you can add applications and make them use the same data.
There are different modules within SAP, each having different two-letter codes. Each module is integrated and related to each other. As an end-user, you might even not recognize that you are using several different modules while working.
Who should be involved in the implementation process of ERP?
People from inside of the company knowing the whole work flows well. These can be department/line managers, or assistant managers.
Top management / key people
Here, best would be having key people (managers) knowing the workflows well.
Consultants. Each should be experts on different modules or sets of modules.
IT manager in-house.
Champion (Assistant manager has been given as an example for Tübitak).
Not as part of the core implementation team; but earlier in the implementation process, staff should be included too as daily users of the system.
In summary, as İnanç mentioned during the class, you need both sides during implementation:
(1) one knowing the system’s capabilities (mostly technical) -- consultants
(2) one knowing the work flows and the needs – in-house people
· The benefits of this process: After the implementation period, when consultants leave the organization, we would be left with our managers and/or staff knowing the system well. So, we still have some knowledge in-house. Other ways to ensure that you have still knowledge in-house can be well documentation, high level of training, etc.
Failure of Implementation:
· First of all, definition of failure should be made well. Since each implementation can be considered as a project by itself, time and budget constraints should be included too. So, failure can be defined within four dimensions:
(1) Not meeting the requirements.
(2) Not on time.
(3) Not on budget.
(4) For any reason, resistance to use the new system within the company.
· Within the failure definition made above, more than 70% of the implementation projects are considered to be failed.
· The main reason for failure is to treat an ERP implementation project just as an IT implementation. In that case, the issues in the above section (who should be involved in the implementation process of ERP) are not considered and implementation fails. Best example for such failures can be Y2K IT implementations.
ERP includes integrating different business units to each other through software links as a whole business process. It was also mentioned in the class as combining right information with right people in the right time.
ERP allows real-time updates so you don’t need to update the database on a regular basis.
It may be efficient to analyze your business processes and identifying bottlenecks (reengineering) before implementing ERP. However, it can also be claimed that ERP should be well enough to enable customization according to every different business processes. Also, sometimes, identifying bottlenecks can be easier with a well-working ERP system in-house.
ERP is just a tool; it does not give way to a successful strategy. It can only help to implement your strategy more effectively.
Providers of ERP Systems:
ERP system providers are considered in four main categories (one of which has been added by one of our classmates):
(1) Major Players (such as Oracle, SAP, etc.)
(2) Smaller Ones (such as local firms)
(3) Open Source ERP System Providers (on a voluntarily basis)
(4) On-Demand ERP (SAAS)
Major Players:
Pros of making business with the major providers of ERP systems are: strong support, international know-how, the fact that high competition in the market forces these major players to provide better products and services.
Cons: for bugs, you need to wait for the next versions; you need to upgrade; and sometimes you may get more functions than you actually need.
Smaller Ones:
Pros: They are cheaper, easier to customize (hopefully). In addition, in countries like Turkey, language can be a major reason for choosing local ERP providers in order to have programs using Turkish as a main language.
Cons: reliability of these small providers is an important issue. They might go out of business.
Open Source Providers:
Pros: You can develop your system by yourself. It is free. Also, it has been discussed that support is cheaper and/or free, if available.
Cons: It has been mentioned that support is cheaper and/or free. However, most of the time, support is not available for these open source systems. If you don’t have your own developer in-house, buying open-source systems may not make sense.
Costs of Implementing ERP Systems:
· Implementation Cost: It includes consultancy costs, the time spent on implementation, etc.
· Maintenance Costs: maintenance should be made on a regular basis and these future costs should also be included in the total costs associated with ERP implementation.
· Infrastructure Costs
· License Fees: Although these amounts are too small relative to other costs, total cost of ERP systems also includes license fees.
· Patch means collecting a number of bugs and developing a set of fixes for these bugs. These patches are added to new versions of ERP systems. This is applied mostly by major providers.
SAP:
SAP is a major type of ERP systems.
Applications, data, and presentations are all separate within SAP. So, you can add applications and make them use the same data.
There are different modules within SAP, each having different two-letter codes. Each module is integrated and related to each other. As an end-user, you might even not recognize that you are using several different modules while working.
Who should be involved in the implementation process of ERP?
People from inside of the company knowing the whole work flows well. These can be department/line managers, or assistant managers.
Top management / key people
Here, best would be having key people (managers) knowing the workflows well.
Consultants. Each should be experts on different modules or sets of modules.
IT manager in-house.
Champion (Assistant manager has been given as an example for Tübitak).
Not as part of the core implementation team; but earlier in the implementation process, staff should be included too as daily users of the system.
In summary, as İnanç mentioned during the class, you need both sides during implementation:
(1) one knowing the system’s capabilities (mostly technical) -- consultants
(2) one knowing the work flows and the needs – in-house people
· The benefits of this process: After the implementation period, when consultants leave the organization, we would be left with our managers and/or staff knowing the system well. So, we still have some knowledge in-house. Other ways to ensure that you have still knowledge in-house can be well documentation, high level of training, etc.
Failure of Implementation:
· First of all, definition of failure should be made well. Since each implementation can be considered as a project by itself, time and budget constraints should be included too. So, failure can be defined within four dimensions:
(1) Not meeting the requirements.
(2) Not on time.
(3) Not on budget.
(4) For any reason, resistance to use the new system within the company.
· Within the failure definition made above, more than 70% of the implementation projects are considered to be failed.
· The main reason for failure is to treat an ERP implementation project just as an IT implementation. In that case, the issues in the above section (who should be involved in the implementation process of ERP) are not considered and implementation fails. Best example for such failures can be Y2K IT implementations.
key points from the book
WHY ERP?
Key points
A company’s requirements in terms of software to support business operations might change over time even though the business does not grow extensively.
The software used (MRP or ERP) can be customized also by in house developers to keep track of the specific needs of a company
Flexibility in ERP systems is essential
ERP solutions target all kinds of businesses, there are industry specific solutions to lower customization
SAP is more hierarchical and tries to centralize the decision making process
Oracle has a separate DB and is more flexible in the modules
The fact that another company has already installed SAP does not necessarily mean that you’ll also need it. This fact can only make you aware that there is an ERP tool. However prior to making the decision of buying it the situation must be analyzed quickly
To provide healthy operations and service information must be consistent and available
It is possible to integrate SAP systems at different plants and locations, there is also the option of implementing different systems but consolidating information when necessary
Reasons for implementing ERP Systems are; the want to integrate the legacy systems, to improve communication, the need for change to exploit business
Process details, workflows are defined in SAP and the actions, functions are defined.
There are 8000 options if all the modules of SAP are implemented. The management has to decide which ones to use and which ones not to use
The management has to be involved in many aspects of the ERP implementation project
It is very likely that employees feel threatened by a system that facilitates the operations and they become afraid of loosing their jobs
Data entry is an important issue
ASAP is the accelerated version of SAP, accelerated meaning the installation is quicker. It is even possible to use it without outside help
Consultants are very important in the ERP business
The ASAP consists of five steps; Project preparation phase, business blueprint, realization, final preparation, go live and support
The modules in SAP are linked
Procurement (MRP) is also included in SAP
Database servers, application servers, presentation (user computers) are the hardware requirements of SAP. The size depends on the system.
The higher your ERP system is customized the more difficult it becomes to update it with a newer version
The whole process of implementing an ERP system must be planned very carefully
There are improvements in operations, inventory holding costs etc, but on the other hand hardware costs increase after the implementation of an ERP system
Key points
A company’s requirements in terms of software to support business operations might change over time even though the business does not grow extensively.
The software used (MRP or ERP) can be customized also by in house developers to keep track of the specific needs of a company
Flexibility in ERP systems is essential
ERP solutions target all kinds of businesses, there are industry specific solutions to lower customization
SAP is more hierarchical and tries to centralize the decision making process
Oracle has a separate DB and is more flexible in the modules
The fact that another company has already installed SAP does not necessarily mean that you’ll also need it. This fact can only make you aware that there is an ERP tool. However prior to making the decision of buying it the situation must be analyzed quickly
To provide healthy operations and service information must be consistent and available
It is possible to integrate SAP systems at different plants and locations, there is also the option of implementing different systems but consolidating information when necessary
Reasons for implementing ERP Systems are; the want to integrate the legacy systems, to improve communication, the need for change to exploit business
Process details, workflows are defined in SAP and the actions, functions are defined.
There are 8000 options if all the modules of SAP are implemented. The management has to decide which ones to use and which ones not to use
The management has to be involved in many aspects of the ERP implementation project
It is very likely that employees feel threatened by a system that facilitates the operations and they become afraid of loosing their jobs
Data entry is an important issue
ASAP is the accelerated version of SAP, accelerated meaning the installation is quicker. It is even possible to use it without outside help
Consultants are very important in the ERP business
The ASAP consists of five steps; Project preparation phase, business blueprint, realization, final preparation, go live and support
The modules in SAP are linked
Procurement (MRP) is also included in SAP
Database servers, application servers, presentation (user computers) are the hardware requirements of SAP. The size depends on the system.
The higher your ERP system is customized the more difficult it becomes to update it with a newer version
The whole process of implementing an ERP system must be planned very carefully
There are improvements in operations, inventory holding costs etc, but on the other hand hardware costs increase after the implementation of an ERP system
Key Points of Why ERP?
Why ERP?
ERP systems cannot be used to manage the organizations. They just make management easier and more in line with strategies, if implemented efficiently.
ERP has a unique database for everybody to use. Since the data is unique, the reports or the information produced using this data would be reliable and consistent with each other. The similar things that different departments use can be reconciled easily as they use a common data base. This means “integration”.
One of the advantages of having integration is to eliminate duplication of information and the time spent for the duplicated efforts. However, savings in quality is more significant. In addition to these, errors are minimized by having a common database.
Without a management making the decisions, ERP cannot solve anything by itself.
Matching the system to the organization is called as “configuration”.
Best practices approach is used in designing the business processes within SAP R/3. These are mostly too general and common business processes or practices.
For firms (usually small scaled firms) that do not prefer reengineering their business processes before the implementation of ERP, SAP provides a special system called ASAP (Accelerated SAP). Roadmap to ASAP include five phases: Project Preparation, Business Blueprint, Realization, Final Preparation, Go Live & Support. It is better to have representatives from each major function in the company within the Project preparation phase (in the implementation team). Also, you should ensure that you have consultants are expertise in the specific program you are implementing. However, you cannot leave decision making to consultants! Realization phase consists of testing; it is better to have daily users within testing phase. Final preparation phase is about end-user training.
Hardware of SAP includes three parts: (1) Database Server, (2) Application Server, (3) Presentation Server. This is called three-tier client-server system.
Figure 26 in page 69 explains how SAP really works in detail. It helps to understand how everything is kept in line during business flows.
Companies should assess their business processes and their businesses itself very well before giving a decision whether to implement an ERP system or not; or before deciding which ERP system to implement. Two important aspects are needed to be understood well in this process: (1) Flexibility of the work and the level of the flexibility needed in the system, (2) the level of centralization within the company. Systems applying best practices like SAP are mostly appropriate where flexibility is low and centralization is high.
The importance of understanding and analyzing your business processes and evaluating how a system your company actually needs has become very significant in the Ohio vs. Carolina example in the book. The fact that one system has been so beneficial to one plant does not necessarily mean that it will work so well in another plant, even if the sectors are same. As important as the specific sector, the way the business is done and the production strategy are important elements. The fact that Ohio plant has a just-in-time production strategy made SAP R/3 more beneficial for them, since everything was more standardized relative to Carolina plant. Ohio plant had high volume efficiency with having a few customers with standardized demands while Carolina had a much more flexible production system with many different customers with many different design needs. All these differences should have been evaluated by Mr. McDougal before giving the implementation decision.
Implementation project of ERP has failed in the Carolina plant due to the reasons mentioned above. As also discussed in the class, the major reason for failure was the fact that Mr. McDougal has treated R/3 as solely an IT technology. He hasn’t evaluated the consistency of this system with his company’s strategy. As Billy mentions, R/3 is only capable to provide information for making decisions, but without making decisions, it would not bring a competitive advantage to the company by itself.
The importance of communicating the implementation project through the whole organization is very clear. Without informing people and including them into the change, resistance to the new system and de-motivation would be high; which are among the reasons for failure of implementation.
ERP systems cannot be used to manage the organizations. They just make management easier and more in line with strategies, if implemented efficiently.
ERP has a unique database for everybody to use. Since the data is unique, the reports or the information produced using this data would be reliable and consistent with each other. The similar things that different departments use can be reconciled easily as they use a common data base. This means “integration”.
One of the advantages of having integration is to eliminate duplication of information and the time spent for the duplicated efforts. However, savings in quality is more significant. In addition to these, errors are minimized by having a common database.
Without a management making the decisions, ERP cannot solve anything by itself.
Matching the system to the organization is called as “configuration”.
Best practices approach is used in designing the business processes within SAP R/3. These are mostly too general and common business processes or practices.
For firms (usually small scaled firms) that do not prefer reengineering their business processes before the implementation of ERP, SAP provides a special system called ASAP (Accelerated SAP). Roadmap to ASAP include five phases: Project Preparation, Business Blueprint, Realization, Final Preparation, Go Live & Support. It is better to have representatives from each major function in the company within the Project preparation phase (in the implementation team). Also, you should ensure that you have consultants are expertise in the specific program you are implementing. However, you cannot leave decision making to consultants! Realization phase consists of testing; it is better to have daily users within testing phase. Final preparation phase is about end-user training.
Hardware of SAP includes three parts: (1) Database Server, (2) Application Server, (3) Presentation Server. This is called three-tier client-server system.
Figure 26 in page 69 explains how SAP really works in detail. It helps to understand how everything is kept in line during business flows.
Companies should assess their business processes and their businesses itself very well before giving a decision whether to implement an ERP system or not; or before deciding which ERP system to implement. Two important aspects are needed to be understood well in this process: (1) Flexibility of the work and the level of the flexibility needed in the system, (2) the level of centralization within the company. Systems applying best practices like SAP are mostly appropriate where flexibility is low and centralization is high.
The importance of understanding and analyzing your business processes and evaluating how a system your company actually needs has become very significant in the Ohio vs. Carolina example in the book. The fact that one system has been so beneficial to one plant does not necessarily mean that it will work so well in another plant, even if the sectors are same. As important as the specific sector, the way the business is done and the production strategy are important elements. The fact that Ohio plant has a just-in-time production strategy made SAP R/3 more beneficial for them, since everything was more standardized relative to Carolina plant. Ohio plant had high volume efficiency with having a few customers with standardized demands while Carolina had a much more flexible production system with many different customers with many different design needs. All these differences should have been evaluated by Mr. McDougal before giving the implementation decision.
Implementation project of ERP has failed in the Carolina plant due to the reasons mentioned above. As also discussed in the class, the major reason for failure was the fact that Mr. McDougal has treated R/3 as solely an IT technology. He hasn’t evaluated the consistency of this system with his company’s strategy. As Billy mentions, R/3 is only capable to provide information for making decisions, but without making decisions, it would not bring a competitive advantage to the company by itself.
The importance of communicating the implementation project through the whole organization is very clear. Without informing people and including them into the change, resistance to the new system and de-motivation would be high; which are among the reasons for failure of implementation.
Lessons Learned 1 by ahmet k
ERP - Enterprise Resource Planning
Realtime, implement business processes according to 'best practices'. This may be problematic since we can't really know what is 'best'
One database, different modules connected. Integrated package, connecting different functions.
Industry spesific solutions: financial services, transportation etc..
Multiple language support
Can work in different currencies, multi-currency environments
Supply chain apps (out)
ERP (in)
3 tier system:
OS
BASIS (spesifics)
Network
Evolution: (From materils planning to manufacturing planning to ERP)
MRP - MRP II - ERP
Big companies: SAP, Oracle, BAAN (Expensive, strong support)
Open Source: Compiere, OFBiz, WebERP (you can develop yourself, lack of support)
There are small companies (more flexible, cheap, limited) and web based ERP as well (cheap, less resources used, but security issues).
Businesses and ERP systems change in implementation. Both are problematic. Minimizing # of changes is a good idea.
Core Team:
-Someone who knows workflow/dept, Suppliers (maybe),
-Top management (Dept Directors/Managers),
-Consultants
-IT Managers (Project Manager probably)
-Champion (if additional resources are needed, this person should have the influence to get it, also motivates)
manager - consultant dipole is a basic building block of a project
Political model seems to explain best the decision process of implementation of ERP systems. Others are partially effective.
IT implementation failure: 70% - subjective (criteria are important)
1 - Does it Work? does it meet the requirements?
2- On budget?
3- On time?
4- Usable? Is there resistance to use?
Usually where there is change, there is resistance, and with the implementation of ERP systems, businesses change; hence there is resistance.
SAP Audit Trail: keep track of user actions
Data Warehouse:
3-D database, you know what you want
Data Mining:
Fun, can look at different patterns or try to see correlations. You want to find something valuable.
Realtime, implement business processes according to 'best practices'. This may be problematic since we can't really know what is 'best'
One database, different modules connected. Integrated package, connecting different functions.
Industry spesific solutions: financial services, transportation etc..
Multiple language support
Can work in different currencies, multi-currency environments
Supply chain apps (out)
ERP (in)
3 tier system:
OS
BASIS (spesifics)
Network
Evolution: (From materils planning to manufacturing planning to ERP)
MRP - MRP II - ERP
Big companies: SAP, Oracle, BAAN (Expensive, strong support)
Open Source: Compiere, OFBiz, WebERP (you can develop yourself, lack of support)
There are small companies (more flexible, cheap, limited) and web based ERP as well (cheap, less resources used, but security issues).
Businesses and ERP systems change in implementation. Both are problematic. Minimizing # of changes is a good idea.
Core Team:
-Someone who knows workflow/dept, Suppliers (maybe),
-Top management (Dept Directors/Managers),
-Consultants
-IT Managers (Project Manager probably)
-Champion (if additional resources are needed, this person should have the influence to get it, also motivates)
manager - consultant dipole is a basic building block of a project
Political model seems to explain best the decision process of implementation of ERP systems. Others are partially effective.
IT implementation failure: 70% - subjective (criteria are important)
1 - Does it Work? does it meet the requirements?
2- On budget?
3- On time?
4- Usable? Is there resistance to use?
Usually where there is change, there is resistance, and with the implementation of ERP systems, businesses change; hence there is resistance.
SAP Audit Trail: keep track of user actions
Data Warehouse:
3-D database, you know what you want
Data Mining:
Fun, can look at different patterns or try to see correlations. You want to find something valuable.
Lessons Learned Day 1
What is ERP?
ERP (Enterprise Resource Planning/Kurumsal Kaynak Planlama); is a software that connect/links each business unit/ each operation. Ii provides the right information to right people at the right time.
An ERP system has a modular structure and a similar interface for all modules; it can be regarded as a single integrated database for a company. The information is updated real time, there is no need to wait and update the information. Also the systems are modular like, Customer Service, Finance, Accounting, HR modules. The ERP system can consist of one single module, or numerous modules depending on the company’s needs, it is also possible to increase the modules later on.
Where Does ERP Come From?
The software supporting business activities started with MRP (Materials Resource Planning) which are designed for mainly production processes. The software includes the Bill of Materials, which brakes down the entire sub assemblies and parts required for the end product. Upon the entrance of the forecasts of sales or demand, the software works its way back in the production process and determines when and how much to order from the suppliers.
The MRP system provides lot sizes and timing of the orders however these systems were excluding financing and human resources aspects. Therefore the need for MRP II arose, now the question of the financing of the orders was also considered.
The picture becoming bigger and reaching company level ERP systems came into the business. These systems becoming broader in the application area the implementation became more difficult.
Implementing ERP and the Effects on a Company’s Processes
Prior to the implementation of an ERP system a company has to analyze its own operations very well, they have to be aware of their strengths and weaknesses, the bottlenecks must be clearly defined, and the system requirements (for the ERP System) must be determined carefully. Sometimes business process reengineering might be beneficial while adapting to the software. Changing the processes prior to an ERP implementation will not be so smart since it will be too hard to adopt since there will be two changes in parallel and due to the software implementation the business processes might have to be changed again.
The ERP software usually comes with “best practice” and for a company. There are industry specific solutions; eg. For Banking there is a different ERP system than for an automotive industry each one focusing on the industry activities.
Especially if small, it might be easier and more beneficial to adopt the process suggested by the software rather than changing the system and adopting it according to the business. Also if you do fewer changes on the software it will be easier to upgrade the system.
Which ERP Provider to Choose
There are different companies providing ERP Software; some are major very well known big, worldwide companies like SAP and Oracle which have industry specific solutions and a worldwide expertise in many areas. There are also smaller providers, local providers which are not that big, and therefore are cheaper. Another type of provider are the open source one which are available to everyone. The advantages and disadvantages of the providers are summarized below
Major Players (Oracle, SAP, etc..)
Pros
Strong support
Many consultants
High variety of applications
Competition forces good service
Cons
Expensive
Late support
Less flexible
Smaller Providers
Pros
Cheaper
Easier to adjust
Language is more flexible
Cons
Support takes time
The company might shut down
Open Source
Pros
Free
Code is good
Code is there
Possible to modify yourself
Support where available is cheap
Easy to customize
Cons
Weak documentation (or not free)
With increase of popularity, software starts costing
In house developers are needed
Service, support is bad
There are also On Demand ERP (SAAS) providers. These providers have their own servers and the software is installed there, also all your information is stored by them. When a company chooses this kind of ERP they will have lower costs for implementation the only need is an internet connection. However the major problem with these kind of providers is the security issues, since all the company’s information is stored on a database off site and is hosted by another company it will be more prone to attacks.
For all the ERP Systems there is a common problem “bugs”, the detection and time needed to fix the bug differs not according to the type of the provider, however bugs a more widely used ERP software are more likely to be detected.
Success of an IT Project
There are four basic criteria to measure the success of a project;
Meeting the requirements
Budget
Due date/time
Use (resistance to use, or anything else).
70% of IT projects do not succeed. However is a project meets the requirements and is used at the end even if budget and time constraints are not met it can be considered successful.
What to Do and Team Formation
Understand business process
Define system requirements
Investment decision, provide resources
Form an adequate team
Do not implement because competitors implement!
Team formation
People from the top management (people who are familiar with the workflow, have the power to decide on changes, avoid resistance to implementation)
Consultants (key consultants, who have expertise in the modules you need)
IT managers (to learn ABAP code and provide you with future assistance once you have started using the ERP system)
Champion (preferably someone high in management also familiar with the operations and close to the employees, assistant manager)
Staff end users (not in the core team but in the early stages)
CFO for the initial decision making process since he’ll be providing the money
Match key consultants with key managers, capabilities of the software, knowledge of how things in the company work/should work
SAP (System Application Products)
Modular, yet integrated
Three Tier Architecture
Upgrades come with versions
Industry specific solutions are provided
Global business architecture
Language is user driven
Multi currency
Tax issues can be handled on the basis of currency
Audit trail (everything is signed with your user name)
Data Mining vs. Data Warehouse
With the databases there is a huge amount of information saved. However just by collecting this data nothing happens. It is essential to analyze and draw meaningful conclusions.
Data mining is one approach; here you don’t know what you are really looking for (what kind of relationship among the data) but you try to form a relationship between variables.
Business warehouse is another approach where you define three dimensional data cubes and know what you are looking for. The business warehouse is a module that can be purchased separately and provides you with graphs, tables etc, from the data.Lessons Learned Day 1
What is ERP?
ERP (Enterprise Resource Planning/Kurumsal Kaynak Planlama); is a software that connect/links each business unit/ each operation. Ii provides the right information to right people at the right time.
An ERP system has a modular structure and a similar interface for all modules; it can be regarded as a single integrated database for a company. The information is updated real time, there is no need to wait and update the information. Also the systems are modular like, Customer Service, Finance, Accounting, HR modules. The ERP system can consist of one single module, or numerous modules depending on the company’s needs, it is also possible to increase the modules later on.
Where Does ERP Come From?
The software supporting business activities started with MRP (Materials Resource Planning) which are designed for mainly production processes. The software includes the Bill of Materials, which brakes down the entire sub assemblies and parts required for the end product. Upon the entrance of the forecasts of sales or demand, the software works its way back in the production process and determines when and how much to order from the suppliers.
The MRP system provides lot sizes and timing of the orders however these systems were excluding financing and human resources aspects. Therefore the need for MRP II arose, now the question of the financing of the orders was also considered.
The picture becoming bigger and reaching company level ERP systems came into the business. These systems becoming broader in the application area the implementation became more difficult.
Implementing ERP and the Effects on a Company’s Processes
Prior to the implementation of an ERP system a company has to analyze its own operations very well, they have to be aware of their strengths and weaknesses, the bottlenecks must be clearly defined, and the system requirements (for the ERP System) must be determined carefully. Sometimes business process reengineering might be beneficial while adapting to the software. Changing the processes prior to an ERP implementation will not be so smart since it will be too hard to adopt since there will be two changes in parallel and due to the software implementation the business processes might have to be changed again.
The ERP software usually comes with “best practice” and for a company. There are industry specific solutions; eg. For Banking there is a different ERP system than for an automotive industry each one focusing on the industry activities.
Especially if small, it might be easier and more beneficial to adopt the process suggested by the software rather than changing the system and adopting it according to the business. Also if you do fewer changes on the software it will be easier to upgrade the system.
Which ERP Provider to Choose
There are different companies providing ERP Software; some are major very well known big, worldwide companies like SAP and Oracle which have industry specific solutions and a worldwide expertise in many areas. There are also smaller providers, local providers which are not that big, and therefore are cheaper. Another type of provider are the open source one which are available to everyone. The advantages and disadvantages of the providers are summarized below
Major Players (Oracle, SAP, etc..)
Pros
Strong support
Many consultants
High variety of applications
Competition forces good service
Cons
Expensive
Late support
Less flexible
Smaller Providers
Pros
Cheaper
Easier to adjust
Language is more flexible
Cons
Support takes time
The company might shut down
Open Source
Pros
Free
Code is good
Code is there
Possible to modify yourself
Support where available is cheap
Easy to customize
Cons
Weak documentation (or not free)
With increase of popularity, software starts costing
In house developers are needed
Service, support is bad
There are also On Demand ERP (SAAS) providers. These providers have their own servers and the software is installed there, also all your information is stored by them. When a company chooses this kind of ERP they will have lower costs for implementation the only need is an internet connection. However the major problem with these kind of providers is the security issues, since all the company’s information is stored on a database off site and is hosted by another company it will be more prone to attacks.
For all the ERP Systems there is a common problem “bugs”, the detection and time needed to fix the bug differs not according to the type of the provider, however bugs a more widely used ERP software are more likely to be detected.
Success of an IT Project
There are four basic criteria to measure the success of a project;
Meeting the requirements
Budget
Due date/time
Use (resistance to use, or anything else).
70% of IT projects do not succeed. However is a project meets the requirements and is used at the end even if budget and time constraints are not met it can be considered successful.
What to Do and Team Formation
Understand business process
Define system requirements
Investment decision, provide resources
Form an adequate team
Do not implement because competitors implement!
Team formation
People from the top management (people who are familiar with the workflow, have the power to decide on changes, avoid resistance to implementation)
Consultants (key consultants, who have expertise in the modules you need)
IT managers (to learn ABAP code and provide you with future assistance once you have started using the ERP system)
Champion (preferably someone high in management also familiar with the operations and close to the employees, assistant manager)
Staff end users (not in the core team but in the early stages)
CFO for the initial decision making process since he’ll be providing the money
Match key consultants with key managers, capabilities of the software, knowledge of how things in the company work/should work
SAP (System Application Products)
Modular, yet integrated
Three Tier Architecture
Upgrades come with versions
Industry specific solutions are provided
Global business architecture
Language is user driven
Multi currency
Tax issues can be handled on the basis of currency
Audit trail (everything is signed with your user name)
Data Mining vs. Data Warehouse
With the databases there is a huge amount of information saved. However just by collecting this data nothing happens. It is essential to analyze and draw meaningful conclusions.
Data mining is one approach; here you don’t know what you are really looking for (what kind of relationship among the data) but you try to form a relationship between variables.
Business warehouse is another approach where you define three dimensional data cubes and know what you are looking for. The business warehouse is a module that can be purchased separately and provides you with graphs, tables etc, from the data.
ERP (Enterprise Resource Planning/Kurumsal Kaynak Planlama); is a software that connect/links each business unit/ each operation. Ii provides the right information to right people at the right time.
An ERP system has a modular structure and a similar interface for all modules; it can be regarded as a single integrated database for a company. The information is updated real time, there is no need to wait and update the information. Also the systems are modular like, Customer Service, Finance, Accounting, HR modules. The ERP system can consist of one single module, or numerous modules depending on the company’s needs, it is also possible to increase the modules later on.
Where Does ERP Come From?
The software supporting business activities started with MRP (Materials Resource Planning) which are designed for mainly production processes. The software includes the Bill of Materials, which brakes down the entire sub assemblies and parts required for the end product. Upon the entrance of the forecasts of sales or demand, the software works its way back in the production process and determines when and how much to order from the suppliers.
The MRP system provides lot sizes and timing of the orders however these systems were excluding financing and human resources aspects. Therefore the need for MRP II arose, now the question of the financing of the orders was also considered.
The picture becoming bigger and reaching company level ERP systems came into the business. These systems becoming broader in the application area the implementation became more difficult.
Implementing ERP and the Effects on a Company’s Processes
Prior to the implementation of an ERP system a company has to analyze its own operations very well, they have to be aware of their strengths and weaknesses, the bottlenecks must be clearly defined, and the system requirements (for the ERP System) must be determined carefully. Sometimes business process reengineering might be beneficial while adapting to the software. Changing the processes prior to an ERP implementation will not be so smart since it will be too hard to adopt since there will be two changes in parallel and due to the software implementation the business processes might have to be changed again.
The ERP software usually comes with “best practice” and for a company. There are industry specific solutions; eg. For Banking there is a different ERP system than for an automotive industry each one focusing on the industry activities.
Especially if small, it might be easier and more beneficial to adopt the process suggested by the software rather than changing the system and adopting it according to the business. Also if you do fewer changes on the software it will be easier to upgrade the system.
Which ERP Provider to Choose
There are different companies providing ERP Software; some are major very well known big, worldwide companies like SAP and Oracle which have industry specific solutions and a worldwide expertise in many areas. There are also smaller providers, local providers which are not that big, and therefore are cheaper. Another type of provider are the open source one which are available to everyone. The advantages and disadvantages of the providers are summarized below
Major Players (Oracle, SAP, etc..)
Pros
Strong support
Many consultants
High variety of applications
Competition forces good service
Cons
Expensive
Late support
Less flexible
Smaller Providers
Pros
Cheaper
Easier to adjust
Language is more flexible
Cons
Support takes time
The company might shut down
Open Source
Pros
Free
Code is good
Code is there
Possible to modify yourself
Support where available is cheap
Easy to customize
Cons
Weak documentation (or not free)
With increase of popularity, software starts costing
In house developers are needed
Service, support is bad
There are also On Demand ERP (SAAS) providers. These providers have their own servers and the software is installed there, also all your information is stored by them. When a company chooses this kind of ERP they will have lower costs for implementation the only need is an internet connection. However the major problem with these kind of providers is the security issues, since all the company’s information is stored on a database off site and is hosted by another company it will be more prone to attacks.
For all the ERP Systems there is a common problem “bugs”, the detection and time needed to fix the bug differs not according to the type of the provider, however bugs a more widely used ERP software are more likely to be detected.
Success of an IT Project
There are four basic criteria to measure the success of a project;
Meeting the requirements
Budget
Due date/time
Use (resistance to use, or anything else).
70% of IT projects do not succeed. However is a project meets the requirements and is used at the end even if budget and time constraints are not met it can be considered successful.
What to Do and Team Formation
Understand business process
Define system requirements
Investment decision, provide resources
Form an adequate team
Do not implement because competitors implement!
Team formation
People from the top management (people who are familiar with the workflow, have the power to decide on changes, avoid resistance to implementation)
Consultants (key consultants, who have expertise in the modules you need)
IT managers (to learn ABAP code and provide you with future assistance once you have started using the ERP system)
Champion (preferably someone high in management also familiar with the operations and close to the employees, assistant manager)
Staff end users (not in the core team but in the early stages)
CFO for the initial decision making process since he’ll be providing the money
Match key consultants with key managers, capabilities of the software, knowledge of how things in the company work/should work
SAP (System Application Products)
Modular, yet integrated
Three Tier Architecture
Upgrades come with versions
Industry specific solutions are provided
Global business architecture
Language is user driven
Multi currency
Tax issues can be handled on the basis of currency
Audit trail (everything is signed with your user name)
Data Mining vs. Data Warehouse
With the databases there is a huge amount of information saved. However just by collecting this data nothing happens. It is essential to analyze and draw meaningful conclusions.
Data mining is one approach; here you don’t know what you are really looking for (what kind of relationship among the data) but you try to form a relationship between variables.
Business warehouse is another approach where you define three dimensional data cubes and know what you are looking for. The business warehouse is a module that can be purchased separately and provides you with graphs, tables etc, from the data.Lessons Learned Day 1
What is ERP?
ERP (Enterprise Resource Planning/Kurumsal Kaynak Planlama); is a software that connect/links each business unit/ each operation. Ii provides the right information to right people at the right time.
An ERP system has a modular structure and a similar interface for all modules; it can be regarded as a single integrated database for a company. The information is updated real time, there is no need to wait and update the information. Also the systems are modular like, Customer Service, Finance, Accounting, HR modules. The ERP system can consist of one single module, or numerous modules depending on the company’s needs, it is also possible to increase the modules later on.
Where Does ERP Come From?
The software supporting business activities started with MRP (Materials Resource Planning) which are designed for mainly production processes. The software includes the Bill of Materials, which brakes down the entire sub assemblies and parts required for the end product. Upon the entrance of the forecasts of sales or demand, the software works its way back in the production process and determines when and how much to order from the suppliers.
The MRP system provides lot sizes and timing of the orders however these systems were excluding financing and human resources aspects. Therefore the need for MRP II arose, now the question of the financing of the orders was also considered.
The picture becoming bigger and reaching company level ERP systems came into the business. These systems becoming broader in the application area the implementation became more difficult.
Implementing ERP and the Effects on a Company’s Processes
Prior to the implementation of an ERP system a company has to analyze its own operations very well, they have to be aware of their strengths and weaknesses, the bottlenecks must be clearly defined, and the system requirements (for the ERP System) must be determined carefully. Sometimes business process reengineering might be beneficial while adapting to the software. Changing the processes prior to an ERP implementation will not be so smart since it will be too hard to adopt since there will be two changes in parallel and due to the software implementation the business processes might have to be changed again.
The ERP software usually comes with “best practice” and for a company. There are industry specific solutions; eg. For Banking there is a different ERP system than for an automotive industry each one focusing on the industry activities.
Especially if small, it might be easier and more beneficial to adopt the process suggested by the software rather than changing the system and adopting it according to the business. Also if you do fewer changes on the software it will be easier to upgrade the system.
Which ERP Provider to Choose
There are different companies providing ERP Software; some are major very well known big, worldwide companies like SAP and Oracle which have industry specific solutions and a worldwide expertise in many areas. There are also smaller providers, local providers which are not that big, and therefore are cheaper. Another type of provider are the open source one which are available to everyone. The advantages and disadvantages of the providers are summarized below
Major Players (Oracle, SAP, etc..)
Pros
Strong support
Many consultants
High variety of applications
Competition forces good service
Cons
Expensive
Late support
Less flexible
Smaller Providers
Pros
Cheaper
Easier to adjust
Language is more flexible
Cons
Support takes time
The company might shut down
Open Source
Pros
Free
Code is good
Code is there
Possible to modify yourself
Support where available is cheap
Easy to customize
Cons
Weak documentation (or not free)
With increase of popularity, software starts costing
In house developers are needed
Service, support is bad
There are also On Demand ERP (SAAS) providers. These providers have their own servers and the software is installed there, also all your information is stored by them. When a company chooses this kind of ERP they will have lower costs for implementation the only need is an internet connection. However the major problem with these kind of providers is the security issues, since all the company’s information is stored on a database off site and is hosted by another company it will be more prone to attacks.
For all the ERP Systems there is a common problem “bugs”, the detection and time needed to fix the bug differs not according to the type of the provider, however bugs a more widely used ERP software are more likely to be detected.
Success of an IT Project
There are four basic criteria to measure the success of a project;
Meeting the requirements
Budget
Due date/time
Use (resistance to use, or anything else).
70% of IT projects do not succeed. However is a project meets the requirements and is used at the end even if budget and time constraints are not met it can be considered successful.
What to Do and Team Formation
Understand business process
Define system requirements
Investment decision, provide resources
Form an adequate team
Do not implement because competitors implement!
Team formation
People from the top management (people who are familiar with the workflow, have the power to decide on changes, avoid resistance to implementation)
Consultants (key consultants, who have expertise in the modules you need)
IT managers (to learn ABAP code and provide you with future assistance once you have started using the ERP system)
Champion (preferably someone high in management also familiar with the operations and close to the employees, assistant manager)
Staff end users (not in the core team but in the early stages)
CFO for the initial decision making process since he’ll be providing the money
Match key consultants with key managers, capabilities of the software, knowledge of how things in the company work/should work
SAP (System Application Products)
Modular, yet integrated
Three Tier Architecture
Upgrades come with versions
Industry specific solutions are provided
Global business architecture
Language is user driven
Multi currency
Tax issues can be handled on the basis of currency
Audit trail (everything is signed with your user name)
Data Mining vs. Data Warehouse
With the databases there is a huge amount of information saved. However just by collecting this data nothing happens. It is essential to analyze and draw meaningful conclusions.
Data mining is one approach; here you don’t know what you are really looking for (what kind of relationship among the data) but you try to form a relationship between variables.
Business warehouse is another approach where you define three dimensional data cubes and know what you are looking for. The business warehouse is a module that can be purchased separately and provides you with graphs, tables etc, from the data.
ERP Feedback From Emre
Emre AKIN, PMP
EDUCATION
- BS: Metallurgical & Materials Eng., Middle East Technical University (92-96)
- MSc: Materials Science & Engineering, Middle East Technical University (96-99)
- MBA: Bilkent University (05-present)
PROFESSIONAL EXPERIENCE
- Project Manager @ Roketsan (99-05)
- Business Development Manager @ AYESAS (05-present)
CAREER GOALS
- Working in a company having global operations in aerospace & defense or energy industries in business development or marketing positions
HELP OF THE COURSE TO MY CAREER
- ERP systems are used almost all companies that I intend to work. Understanding the IT infrastructure of organizations (my own organization, customers and suppliers) will enhance my business skills.
EXPECTATIONS FROM THE COURSE
- Improving my managerial perspective on ERP systems, what to expect from ERP systems, how to execute ERP implementation programs.
WHAT I LEARNT FROM DAY-1 OF THE COURSE
One of the most critical thing that I have learnt in the course in day-1 was that the systems uses a single database. Sharing of the same database by all departments and functions eliminates the risk of various entries for the same transaction and minimizes labor requirement for labor entries.
I was familiar with MRP systems from my previous job as a project manager. It was not surprising to find out that ERP systems was developed from MRP systems. It was basically integration of other functions like HR, Finance to MRP system.
In my previous employment I observed the implementation of an ERP system by Oracle and in my current employment I observed the implementation of an ERP system by SAP. In both cases my position had no modules in ERP system, thus I was not directly involved in ERP implementation programs. However I was fortunate to observe the pain created in organizations during the implementation. Thus it was no new information for me to have strong top management support for the ERP implementations to overcome internal strains.
So far I have heard only SAP and Oracle companies as ERP solution providers, however I have found out several other ERP solution providers like SSa Global, Compiere, OFBiz.
Another important thing for me was the open source companies for ERP systems. From the discussions held in the class, it seems that open source companies are more effective and beneficial for companies than other usual ERP systems. However I did not understand why open source solutions are used so rarely. Could the insufficient amount of customer support only reason for this?
KEY POINTS IN DAY-1 ARTICLES
1) ERP Software
-ERP systems may require organziations to change the way they work, as in the case of staff vacation time which was a double entry before the implementation.
-Customization of software packages of the ERP system is costly not only at the beginning but in the coming years as well. The reason is that every time a new version of the software package is received, the implications of modifications should be reviewed again.
-ERP may provide organizations valuable information that they did not even anticipate to get.
2) ERP Purchase Decision
-SAP has the largest market share in ERP systems
-In the first half of 1990s, ERP system implementations, depending on the companies requirements, were classified as either Support ERP Purchases, which involves HR and finance modules or Value Chain ERP Purchaes, which involves materials management, production and operations as well as support functions.
-In the second half of 1990s, ERP system implementations was mainly ralized in order to meet various competitive goals better, to reengineer business processes, and to access to the integrated data. Furthermore IT capabilities of the companies significantly influenced their ERP purchases, such that existing insufficient in-house systems should be replaced with the most appropriate ERP solutions.
3) Decision Making in the Evaluation, Selection and Implementation of ERP Systems
-ERP projects are expensive and time consuming
-ERP market was growing at a significant rate of 23% in early 2000s.
-ERP selection decision is not only based on financial parameters but also business strategy, business processes and expectations of different stakeholders.
-ERP projects consist of different phases namely; initiation, requirement analysis, inviting vendors to bid, vendor short listing, design and implementation and post implementation.
-Different models could be generated for ERP decision makings. The paper states six different models; classical, administrative, incremental, adaptive, irrational and political models.
-At different stages of ERP projects different models shall be dominant in the same organization, depending on the dynamics of the business and organization structure.
4) Assesing ERP Software
-SAP has the largest market share in the ERP marlet and is unique in integrating both SAP and non-SAP applications.
-ERP solution providers develop solutions on vertical industry business units, to be able to serve all supply chain.
-ERP systems are not very effective in returns or reverse logistics.
-Even though ERP solution providers offer wide variety of modules for various functions, there may be still need for 3rd party solutions.
EDUCATION
- BS: Metallurgical & Materials Eng., Middle East Technical University (92-96)
- MSc: Materials Science & Engineering, Middle East Technical University (96-99)
- MBA: Bilkent University (05-present)
PROFESSIONAL EXPERIENCE
- Project Manager @ Roketsan (99-05)
- Business Development Manager @ AYESAS (05-present)
CAREER GOALS
- Working in a company having global operations in aerospace & defense or energy industries in business development or marketing positions
HELP OF THE COURSE TO MY CAREER
- ERP systems are used almost all companies that I intend to work. Understanding the IT infrastructure of organizations (my own organization, customers and suppliers) will enhance my business skills.
EXPECTATIONS FROM THE COURSE
- Improving my managerial perspective on ERP systems, what to expect from ERP systems, how to execute ERP implementation programs.
WHAT I LEARNT FROM DAY-1 OF THE COURSE
One of the most critical thing that I have learnt in the course in day-1 was that the systems uses a single database. Sharing of the same database by all departments and functions eliminates the risk of various entries for the same transaction and minimizes labor requirement for labor entries.
I was familiar with MRP systems from my previous job as a project manager. It was not surprising to find out that ERP systems was developed from MRP systems. It was basically integration of other functions like HR, Finance to MRP system.
In my previous employment I observed the implementation of an ERP system by Oracle and in my current employment I observed the implementation of an ERP system by SAP. In both cases my position had no modules in ERP system, thus I was not directly involved in ERP implementation programs. However I was fortunate to observe the pain created in organizations during the implementation. Thus it was no new information for me to have strong top management support for the ERP implementations to overcome internal strains.
So far I have heard only SAP and Oracle companies as ERP solution providers, however I have found out several other ERP solution providers like SSa Global, Compiere, OFBiz.
Another important thing for me was the open source companies for ERP systems. From the discussions held in the class, it seems that open source companies are more effective and beneficial for companies than other usual ERP systems. However I did not understand why open source solutions are used so rarely. Could the insufficient amount of customer support only reason for this?
KEY POINTS IN DAY-1 ARTICLES
1) ERP Software
-ERP systems may require organziations to change the way they work, as in the case of staff vacation time which was a double entry before the implementation.
-Customization of software packages of the ERP system is costly not only at the beginning but in the coming years as well. The reason is that every time a new version of the software package is received, the implications of modifications should be reviewed again.
-ERP may provide organizations valuable information that they did not even anticipate to get.
2) ERP Purchase Decision
-SAP has the largest market share in ERP systems
-In the first half of 1990s, ERP system implementations, depending on the companies requirements, were classified as either Support ERP Purchases, which involves HR and finance modules or Value Chain ERP Purchaes, which involves materials management, production and operations as well as support functions.
-In the second half of 1990s, ERP system implementations was mainly ralized in order to meet various competitive goals better, to reengineer business processes, and to access to the integrated data. Furthermore IT capabilities of the companies significantly influenced their ERP purchases, such that existing insufficient in-house systems should be replaced with the most appropriate ERP solutions.
3) Decision Making in the Evaluation, Selection and Implementation of ERP Systems
-ERP projects are expensive and time consuming
-ERP market was growing at a significant rate of 23% in early 2000s.
-ERP selection decision is not only based on financial parameters but also business strategy, business processes and expectations of different stakeholders.
-ERP projects consist of different phases namely; initiation, requirement analysis, inviting vendors to bid, vendor short listing, design and implementation and post implementation.
-Different models could be generated for ERP decision makings. The paper states six different models; classical, administrative, incremental, adaptive, irrational and political models.
-At different stages of ERP projects different models shall be dominant in the same organization, depending on the dynamics of the business and organization structure.
4) Assesing ERP Software
-SAP has the largest market share in the ERP marlet and is unique in integrating both SAP and non-SAP applications.
-ERP solution providers develop solutions on vertical industry business units, to be able to serve all supply chain.
-ERP systems are not very effective in returns or reverse logistics.
-Even though ERP solution providers offer wide variety of modules for various functions, there may be still need for 3rd party solutions.
bio-Selma
Education and Experience
I’m a 2005 Middle East Technical University Industrial Engineering graduate, since my graduation I have done a 6 month internship in Switzerland in a Software development company, I was employed as marketing assistant and was also responsible for accounting, controlling and reporting tasks. After my internship I started working in the headquarters of Migros Türk T.A.Ş. three months later I started my job at TUBITAK UZAY, I have been working almost two years now.
Experience Relevant to the Course
· Internship-SIEMENS:
The company had implemented SAP to run most of its actions. While writing the report for the internship and trying to understand how the processes are carried out I had the chance to see what SAP can do in a manufacturing company.
· Work Experience Migros Türk T.A.Ş.
The company was using Balanced Score Cards for performance evaluation, promotion etc, and purchased Business Warehouse to track the data coming from different departments and reflect these on the score cards of the employees.
I only worked for three months but still since I was at the heart of the implementation, and there were many problems with adapting the software to the specific business needs of the company, and we were to transfer data from other databases to BW I had the chance to observe difficulties in the implementation process.
Career Goal and ERP
My career goal is to have a leading position in a dynamic company.
ERP systems are tools to carry out business operations/activities. There are several types and applications, all serving different purposes. To know whether an ERP system will be beneficial for a company, or to make the decision of implementation a thorough understanding of the pros and cons of such a system and the alternatives is required.
Knowledge and understanding of ERP systems also gives an understanding of the big picture; regarding a company as a whole, relate the business units and operations.
Also how to manage change and motivate people, project management are skills and knowledge associated with ERP system implementations.
From this course I expect to have a basic understanding of the concepts I have mentioned above; which I consider very important to be able to handle a upper level position in any company.
Coming to the interesting point about me, I’m a simultaneous bilingual.
I’m a 2005 Middle East Technical University Industrial Engineering graduate, since my graduation I have done a 6 month internship in Switzerland in a Software development company, I was employed as marketing assistant and was also responsible for accounting, controlling and reporting tasks. After my internship I started working in the headquarters of Migros Türk T.A.Ş. three months later I started my job at TUBITAK UZAY, I have been working almost two years now.
Experience Relevant to the Course
· Internship-SIEMENS:
The company had implemented SAP to run most of its actions. While writing the report for the internship and trying to understand how the processes are carried out I had the chance to see what SAP can do in a manufacturing company.
· Work Experience Migros Türk T.A.Ş.
The company was using Balanced Score Cards for performance evaluation, promotion etc, and purchased Business Warehouse to track the data coming from different departments and reflect these on the score cards of the employees.
I only worked for three months but still since I was at the heart of the implementation, and there were many problems with adapting the software to the specific business needs of the company, and we were to transfer data from other databases to BW I had the chance to observe difficulties in the implementation process.
Career Goal and ERP
My career goal is to have a leading position in a dynamic company.
ERP systems are tools to carry out business operations/activities. There are several types and applications, all serving different purposes. To know whether an ERP system will be beneficial for a company, or to make the decision of implementation a thorough understanding of the pros and cons of such a system and the alternatives is required.
Knowledge and understanding of ERP systems also gives an understanding of the big picture; regarding a company as a whole, relate the business units and operations.
Also how to manage change and motivate people, project management are skills and knowledge associated with ERP system implementations.
From this course I expect to have a basic understanding of the concepts I have mentioned above; which I consider very important to be able to handle a upper level position in any company.
Coming to the interesting point about me, I’m a simultaneous bilingual.
Secil Akdemir - Why ERP? Book Notes
WHY ERP?
ERP systems are large computer systems that tie separate application programs of different business functions. ERP systems work in real-time so exact status of everything is always available. Moreover, ERP systems are generally global so they enable working in different languages and in different currencies.
Billy is currently working as manufacturing manager in McDougle Furniture Company in North Carolina. The owner of the Company, Mr. McDougle, was considering acquiring the furniture company of his brother in Ohio. Company in Ohio has implemented a new ERP system – SAP R/3. Therefore, Mr. McDougle wanted to analyze the pros and cons of implementing an ERP system in North Carolina in order to integrate two companies each other and he appointed Billy for this mission.
The reason behind ERP implementation is important so as to analyze the costs and benefits of it. Some companies implements to solve the Year2000 problem which is non-sense. Some other firms will implement ERP to integrate the various functions of the business or to force a badly needed organizational change. McDougle wanted to implement ERP in order to get common information, common management systems, common data and common reports from the system in order to use the same kind of management in both places.
Billy had participated to an SAP seminar and he gained a general knowledge of SAP R/3. R/3 is an SAP product which ties the information throughout an organization and therefore it provides benefits of single data entry, immediate access and common data. In this system, all processes are integrated with the same data.
With the help of ERP systems, duplication of information is eliminated therefore efficiency of operations can be improved with time savings. Moreover, the quality of the data could be increased due to decrease in errors in data entries. Another benefit of ERP is that it assures that all divisions of the company are dealing with current and identical data.
The main issue in using R/3 is configuration which is the process of matching the system to the organization. This system also enables to creating your own menus and sub-menus that are in line with the organization.
R/3 system works in line with the contemporary business practices which are referred as best practices.
In SAP seminar, instructor mentioned to ASAP – Accelerated SAP, which can be used as a guide before the implementation especially for the smaller firms that do not want to re-engineer their processes. ASAP is formed from 5 major steps which are Project Preparation, Business Blueprint, Realization, Final Preparation and Go Live stages. One of the most important features of ASAP is that it can be used for solving the open issues related to the implementation since the data related to the issue, parties involved are all documented.
SAP also gave high importance to organizing the computers to run R/3 applications. Database computer is placed at the heart of the system since all of the data are stored in that database. Therefore, the reliability of the database is very important for the health of the system. There are also 2 other layers which are called application and presentation layer. Application layer is formed from computers which run the software. Presentation layer consists of end-user computers. This system is called “three-tier client-server system”.
System configuration is one of the most important parts of the system because system administrator has to authorize users for the usage of the system.
After the SAP seminar, the owner of the company also sent Billy to the factory in Ohio to understand the processes there and the benefits of SAP. When Billy went there, he realized that the two factories are very different from each other and the same system with the same configuration is very hard to implement in North Carolina.
Conclusion
ERP systems could be very beneficial for some firms but in others it cannot be as beneficial as others. In the case of this book the main reason behind this is the need for flexibility in the production process. ERP will certainly change the business processes and this will lead to negative results in this firm since they generally produced tailor made products in line with the consumer needs.
In general, companies within the same sector have similar workflows but in this case factories did not have similar workflows. They were totally different therefore using the same configuration without having consultancy from experts will lead to negative results.
Moreover, top management should also consider the psychological effects of this kind of a big change. They have to be transparent to their employees in order to prevent bad rumors within and outside the company. Rumors will decrease the motivation of workers. People will certainly resist to big changes so implementation team and top management are responsible for explaining the main aim and the results of this project in order to decrease the retention from workers.
ERP systems are large computer systems that tie separate application programs of different business functions. ERP systems work in real-time so exact status of everything is always available. Moreover, ERP systems are generally global so they enable working in different languages and in different currencies.
Billy is currently working as manufacturing manager in McDougle Furniture Company in North Carolina. The owner of the Company, Mr. McDougle, was considering acquiring the furniture company of his brother in Ohio. Company in Ohio has implemented a new ERP system – SAP R/3. Therefore, Mr. McDougle wanted to analyze the pros and cons of implementing an ERP system in North Carolina in order to integrate two companies each other and he appointed Billy for this mission.
The reason behind ERP implementation is important so as to analyze the costs and benefits of it. Some companies implements to solve the Year2000 problem which is non-sense. Some other firms will implement ERP to integrate the various functions of the business or to force a badly needed organizational change. McDougle wanted to implement ERP in order to get common information, common management systems, common data and common reports from the system in order to use the same kind of management in both places.
Billy had participated to an SAP seminar and he gained a general knowledge of SAP R/3. R/3 is an SAP product which ties the information throughout an organization and therefore it provides benefits of single data entry, immediate access and common data. In this system, all processes are integrated with the same data.
With the help of ERP systems, duplication of information is eliminated therefore efficiency of operations can be improved with time savings. Moreover, the quality of the data could be increased due to decrease in errors in data entries. Another benefit of ERP is that it assures that all divisions of the company are dealing with current and identical data.
The main issue in using R/3 is configuration which is the process of matching the system to the organization. This system also enables to creating your own menus and sub-menus that are in line with the organization.
R/3 system works in line with the contemporary business practices which are referred as best practices.
In SAP seminar, instructor mentioned to ASAP – Accelerated SAP, which can be used as a guide before the implementation especially for the smaller firms that do not want to re-engineer their processes. ASAP is formed from 5 major steps which are Project Preparation, Business Blueprint, Realization, Final Preparation and Go Live stages. One of the most important features of ASAP is that it can be used for solving the open issues related to the implementation since the data related to the issue, parties involved are all documented.
SAP also gave high importance to organizing the computers to run R/3 applications. Database computer is placed at the heart of the system since all of the data are stored in that database. Therefore, the reliability of the database is very important for the health of the system. There are also 2 other layers which are called application and presentation layer. Application layer is formed from computers which run the software. Presentation layer consists of end-user computers. This system is called “three-tier client-server system”.
System configuration is one of the most important parts of the system because system administrator has to authorize users for the usage of the system.
After the SAP seminar, the owner of the company also sent Billy to the factory in Ohio to understand the processes there and the benefits of SAP. When Billy went there, he realized that the two factories are very different from each other and the same system with the same configuration is very hard to implement in North Carolina.
Conclusion
ERP systems could be very beneficial for some firms but in others it cannot be as beneficial as others. In the case of this book the main reason behind this is the need for flexibility in the production process. ERP will certainly change the business processes and this will lead to negative results in this firm since they generally produced tailor made products in line with the consumer needs.
In general, companies within the same sector have similar workflows but in this case factories did not have similar workflows. They were totally different therefore using the same configuration without having consultancy from experts will lead to negative results.
Moreover, top management should also consider the psychological effects of this kind of a big change. They have to be transparent to their employees in order to prevent bad rumors within and outside the company. Rumors will decrease the motivation of workers. People will certainly resist to big changes so implementation team and top management are responsible for explaining the main aim and the results of this project in order to decrease the retention from workers.
June 16, 2008 - Lecture Notes
ERP means Enterprise Resource Planning and in practice it is a kind of software that links all business units and processes. It has a modular structure; therefore it enables companies to implement just a single module. ERP allow real time updates so it does not require nightly updates.
When we look to the historical development of ERP, it is the extension of MRP and MRP-II. MRP is Materials Requirement Planning and it is helpful in deciding when to buy what based on the manufacturing activity of the Company. MRP-II is Manufacturing Resource Planning and it is an extended version of MRP since it also brought Human Resources and Financial aspects. ERP is the broadest one and it includes all of the functions of the Company.
The most important feature of ERP systems is the database since all of the data are stored in a database. All ERP systems come with some best practice business processes in mind but in general they enable customization in line with the needs of the related Company.
We can classify ERP providers into 3 groups which are major players such as Oracle, SAP, SSA Global; small ones and finally the open source communities and firms such as Compiere, OFBiz, WebERP.
There is also one more type of ERP provider which is called On Demand ERP (SAAS) which provides this service over internet. On Demand ERP has lower initial costs but on the other hand it has some security issues since companies should share all of the private information with an outside company. Moreover, it might slow down the transaction due to internet and network problems.
Advantages and Disadvantages of Each Type of ERP Providers
Advantages of Major Players:
-Strong support
-High availability of consultants
-International know-how
-High variety of applications
-Better products due to the increased competition in the sector
Disadvantages of Major Players:
-High cost
-More functions than needed
-Less flexibility
Advantages of Small Ones
-Lower cost
-More flexible
Disadvantages of Small Ones
-Lower quality
-Less availability of consultants
-Going concern of existing firms for future updates, maintenance and consultancy
Advantages of Open Source
-It is free
-Support is cheaper when it is available
-Easy to customize
Disadvantages of Open Source
-Weak documentation
-Less availability of consultants
ERP Implementation
ERP implementation is an important strategic decision for a company so for the implementation companies should form a core team which will analyze the main business processes of company in order to identify the suitable modules. The most important issue is the determination of the team since companies should not treat ERP implementation projects as simple IT projects.
Core team should involve people from strategic departments who know the whole process, top management, consultants, IT manager and a Champion. Support of the top management is very important in order to reflect the importance of the project to all layers of the Company. Champion is like a project leader who has the authority to affect both the staff and the top management of the Company by forming a bridge between them.
In general, each manager within the company would be paired with a consultant in order to increase the effectiveness of the project since insiders know the business processes and the company in detail whereas consultants know the capabilities of software in detail. Moreover, after the implementations managers become new inside consultants since they have the chance to learn the software more than the others. Matching IT managers with consultants would also increase the involvement of the IT department which in turn increase the benefits of ERP system usage.
IT Implementation
Approximately 70% of all IT implementation projects are failed. We can define failure in 4 bullets which are as follows:
· It might not work in terms of meeting the requirements
· It might not meet budget requirements
· It might not meet time requirements-deadlines
· It might not be used – there can be failure to use
When we look to the historical development of ERP, it is the extension of MRP and MRP-II. MRP is Materials Requirement Planning and it is helpful in deciding when to buy what based on the manufacturing activity of the Company. MRP-II is Manufacturing Resource Planning and it is an extended version of MRP since it also brought Human Resources and Financial aspects. ERP is the broadest one and it includes all of the functions of the Company.
The most important feature of ERP systems is the database since all of the data are stored in a database. All ERP systems come with some best practice business processes in mind but in general they enable customization in line with the needs of the related Company.
We can classify ERP providers into 3 groups which are major players such as Oracle, SAP, SSA Global; small ones and finally the open source communities and firms such as Compiere, OFBiz, WebERP.
There is also one more type of ERP provider which is called On Demand ERP (SAAS) which provides this service over internet. On Demand ERP has lower initial costs but on the other hand it has some security issues since companies should share all of the private information with an outside company. Moreover, it might slow down the transaction due to internet and network problems.
Advantages and Disadvantages of Each Type of ERP Providers
Advantages of Major Players:
-Strong support
-High availability of consultants
-International know-how
-High variety of applications
-Better products due to the increased competition in the sector
Disadvantages of Major Players:
-High cost
-More functions than needed
-Less flexibility
Advantages of Small Ones
-Lower cost
-More flexible
Disadvantages of Small Ones
-Lower quality
-Less availability of consultants
-Going concern of existing firms for future updates, maintenance and consultancy
Advantages of Open Source
-It is free
-Support is cheaper when it is available
-Easy to customize
Disadvantages of Open Source
-Weak documentation
-Less availability of consultants
ERP Implementation
ERP implementation is an important strategic decision for a company so for the implementation companies should form a core team which will analyze the main business processes of company in order to identify the suitable modules. The most important issue is the determination of the team since companies should not treat ERP implementation projects as simple IT projects.
Core team should involve people from strategic departments who know the whole process, top management, consultants, IT manager and a Champion. Support of the top management is very important in order to reflect the importance of the project to all layers of the Company. Champion is like a project leader who has the authority to affect both the staff and the top management of the Company by forming a bridge between them.
In general, each manager within the company would be paired with a consultant in order to increase the effectiveness of the project since insiders know the business processes and the company in detail whereas consultants know the capabilities of software in detail. Moreover, after the implementations managers become new inside consultants since they have the chance to learn the software more than the others. Matching IT managers with consultants would also increase the involvement of the IT department which in turn increase the benefits of ERP system usage.
IT Implementation
Approximately 70% of all IT implementation projects are failed. We can define failure in 4 bullets which are as follows:
· It might not work in terms of meeting the requirements
· It might not meet budget requirements
· It might not meet time requirements-deadlines
· It might not be used – there can be failure to use
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