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ERP implementation and E-business

ERP Implementation: Six Deadly Sins

Not understanding the true significance of what you have taken on. Not committing the right resources to the project. Not managing the change effectively. Not managing the benefits. Not embracing integration. Not planning for the end of the project before you start.

Project Management Fundamentals

Co-ordination Tasks Equipment Products People Time Money Balancing Scope Time Cost Quality Needs vs.. Expectations Needs & Expectations of stakeholders

ERP Project Management 10-Step Estimation Process

Step 1: Define the Scope of the Project

Step 2: Estimate Staffing to Lead the Project and Support Each Process Area
Step 3: Estimate Custom and Interface Development Step 4: Assess Data Conversion Magnitude Step 5: Estimate Project Duration

Step 6: Assess External Connectivity Requirements

Step 7: Estimate Supplemental Staffing Step 8: Create a Time-Phased, Resource-Loaded Project Plan Step 9: Estimate Resource Rates and Apply Them to the Plan Step 10: Estimate Travel, Contingency and Final Project Costs

ERP PM 10-Step Estimation Process (continued)

Step 1: Define the Scope of the Project

Typical Macro-Processes Identified as Part of an ERP

Implementation Sample Process Decomposition

Step 2: Estimate Staffing to Lead the Project and Support Each Process Area Step 3: Estimate Custom and Interface Development Custom Development
Interface Development

ERP PM 10-Step Estimation Process (continued)

Step 4: Assess Data Conversion Magnitude
Code Tables
Master Tables Transaction Tables

Step 5: Estimate Project Duration

Project Planning and Preparation Phase 1: Standard Solution Design Phase 2: Standard Solution Development

Phase 3: Pilot Deployment

Phase 4: Rollout Project Management

ERP PM 10-Step Estimation Process (continued)

Step 6: Assess External Connectivity Requirements Step 7: Estimate Supplemental Staffing
Point Staffing for Custom Development Point Staffing for Data Conversion

Point Staffing for End-User Training

Step 8: Create a Time-Phased, Resource-Loaded Project Plan Step 9: Estimate Resource Rates and Apply Them to the Plan

Step 10: Estimate Travel, Contingency and Final Project Costs

Change Management: Of Vital Important

ERP Success Factors: Top Ten Findings

Findings and Conclusions

6 1

Going live is not the end of the ERP journey


ERP enables better, faster decisions by unleashing the power of the integrated enterprise ERP provides a backbone to further extend functionality through bolt-ons and other solutions Issues and obstacles show dramatic shifts in emphasis after going live An ERP implementation is at its core a people project There are twelve best practices for accelerating, maximizing, and sustaining the benefits of the ERP journey

ERP delivers significant tactical and bottom-line strategic benefits


ERP also yields significant returns from unexpected benefits Companies should anticipate a temporary dip in performance after going live There are three distinct stages in each wave after going live


12 best practices for sustaining the benefits of ERP

Focus on Benefits

7 8 9

Process Expertise

3 4 5 6


Extending Capabilities

Breadth of Change


Business Case

10 11 12

Using Capabilities

Post-Implementation Plan

Benefits Ownership

Role Transition


Implementation: ERP The Next Wave

ERP 2: The e-business challenge

Information Sharing ERP focus is on internal information , ebusiness provides ability to share info internally & externally Optimization Focus ERP focus is across one value chain, ebusiness focus is on multiple value chains Internet Substitute ERP one in all in application opposed to standalone apps linked on internet backbone Technology Obstacle Closed client/server vs. open standards

ERP Trends: Combined ERP & E-business Benefits


Increased revenue
Reduced costs, inventories, and collection efforts Shorter cycle times Capability to manufacture to actual demand Improved cash management

Improved customer and employee satisfaction

Frees employees to work on tasks requiring human creativity and judgment Continuous operation Improved supplier relationships

E-business Models and Disintermediation

Pure e-business play? The case of Click-and-mortar Hybrid of the pure e-business and the brick-and-mortar model Dependence of e-business and physical facilities

Disintermediation Manufacturers interact directly with consumers, bypassing intermediaries such as wholesalers and retailers Impact on a companys business processes Warehouse must now manage a large number of low-volume orders Accounts receivable must now process a large number of invoices and accommodate increased collection activity Customer service may be inundated with calls Customer returns must now be managed by manufacturer

The E-business Platform Extreme Demands

Operating demands place a strain on e-business platforms. Fluctuating traffic. Frequent system changes. 24 x 7 operation. Flawless system stability. True 24 x 7 availability requires 99.999% reliability. Scalable. Dramatic spikes in site traffic. Security. Exposure of corporate resources on the Web. Robust Design. Testing tools available. Examples of AOL, E*Trade, Charles Schwab and eBay.

ERP and E-business: Adaptive vs. Disruptive Technology

E-business is a revolution Internet (4 years to reach 50 million users) Television (13 years) PC (16 years) Radio (38 years) Adaptive technologies move earlier technologies forward incrementally while Disruptive technologies change the way people live or the way businesses operate. ERP is adaptive while e-Business is disruptive. Touch-tone telephone was adaptive while telephone itself was disruptive. Electric train was adaptive while the train itself was disruptive.

Life Cycle of Adaptive versus Disruptive Technologies

Critical Mass (5) Critical mass achieved. Mass marketing (3) New wave of Technology and equipment (2) Learning, Experimenting, investing (4) Infrastructure consolidation


(1) Initial hype


Disruptive technology Adaptive technology

ERP & E-business Recap

Structured approach to optimizing a companys internal value chain. Organize, codify and standardize a companys business processes and data. Collate and transform transactional data into useful information for analysis. Not intrinsically strategic; rather, it is an enabling technology. Business process re-engineering or re-design (BPR) often accompanies ERP projects to eliminate non-value-adding work, thus improving a companys financial performance through operational improvements. ERP implementation requires employees to be willing to new technology, & also new ways of working.

This forces employees to upgrade their skill sets.

ERP implementation with BPR affects a companys organizational structure.

Affects individual roles within the organization. Staff reductions are often seen, or staff may be moved into other areas (in expanding companies).

Change management is key to successful implementations.

ERP & E-Business Re-cap (continued)

E-commerce Leverage an Internet-based sales channel to enhance marketing and sell products or services, or leverage the Internet to make purchasing more efficient.

Ideally, with minimal disruption to organizational culture and business processes

e-storefront, e-catalog, e-billing, e-payment, e-procurement Focuses on efficiency in selling, marketing and purchasing E-business Uses IT and open standards to connect suppliers and customers at all steps along the value chain. Requires trust among business partners, and agreement on standard ways of working. Focuses on effectiveness through improved customer service, reduced costs and streamlined business processes. Many companies enter e-business by first engaging in e-commerce.

Complementary Technologies of ERP and E-Business

ERP and Internet technologies are rapidly coming together.

Merger is still incomplete and its exact nature unclear

Web-based technology extends each enterprises organizational boundaries.

ERP is the internal technological hub of a single enterprise.

ERP is focused on internal process efficiency and effectiveness while EBusiness is focused on external, cross-enterprise process efficiency, operational effectiveness, and product promotion. ERP technology supports current business strategy while E-business opens the door to new strategic opportunities. E-business is best supported by a well-tuned ERP system.

What lies behind the web page is important. ERP is necessary to fulfill the promises made on the Web page, that is, the promise of e-business. Enterprises need some sort of internal transaction engine to match the internal information flow with the actual flow of goods and/or services. Key issue is to blend ERP and Web-based technology successfully and to push each to achieve its maximum benefit.

ERP complements E-Business

ERP: The hub of a single enterprise

Integrates resource planning, supply-chain management, demand-chain management and knowledge management. Achieved through tightly integrated modules for Finance, Manufacturing, Logistics, Human Resources, and Sales & Marketing. Enables improved customer focus (individualized service, low-cost products, short cycle times, and accurate delivery dates) and customer relationship management Enables interactive relationships with value-chain partners

E-Business: The ideal extension to internal processes

ERP boosts E-Business potential

Communication with partners in the supply chain and customers in the value chain is not enough. Collaboration and coordination are also important. Processing logic is required in order to respond to information available across the Internet.

ERP / E-Business Matrix

No E-Business Capabilities Greenfield Non-integrated systems Limited / SingleFunction ERP Integrated BusinessUnit ERP Integrated Enterprise ERP Channel Enhancement Value Chain Integration Industry Transformation Convergence

ERP / E-Business Organizational Issues: Domain & Level Matrix

No E-Business Capabilities Channel Enhancement

Value Chain Integration


Industry Partnership


Greenfield Non-integrated systems Limited / SingleFunction ERP Integrated BusinessUnit ERP Integrated Enterprise ERP

1. Start-Up

Enterprise Growth Limited (High Risk = Opportunity)

4. 3. Customer Benefit Limited (Reduced E-Options and Flexibility)

High Cost Relative to Benefit

5. Optimize Business at Unit Level 6. Optimize across Enterprise

E-Business Examples
CHANNEL ENHANCEMENT - Point solutions such as selling over the Web, providing customer self-service and conducting Webbased indirect procurement. (e-commerce) VALUE CHAIN INTEGRATION (e.g. Adaptec) - Integrate customers and suppliers operations with their processes and systems (e-CRM and e-SCM). INDUSTRY TRANSFORMATION (e.g. Solectron and Ingram Micro) - Boundaries between companies and their partners become less pronounced as they link internal systems through the Web, creating new markets, new opportunities, new customers and new products and services. There is an intense relationship between the partners to create an environment for shared business improvements, mutual benefits and joint rewards.. (Collaborative Advantage) CONVERGENCE (e.g. Shell, Mobil, BP, GM and GE) - Coming together of companies from different industries to provide goods and services to consumers. This is not solely a function of e-business technologies: it is equally a function of industry deregulation, globalization of business, evolving customer demand and new competitive tactics. However, it is helped by decreasing costs and rapid adoption of technology. (Industry Convergence)

Summary: ERP Vendor Responses to E-Business Challenges

Dimensions ERP Apps E-Business Apps

Employees Focus Release Process

Customers Inside Company Out Periodic, Complex Upgrade

Vendors Outside Company In Continuous, Small Changes

Method of Integrating with Other Businesses

Business Processes User Interface

Through APIs or EDI

Complex User Training Required

Browser, Portals, IT
Simple Intuitive

Traditional ERP versus E-Business Applications

ERP Vendor Responses to E-Business Challenges (contd)

Extend ERP Functionality SCM CRM APS BI Internet-based Procurement Build communities of users through portals and trading exchanges Public versus private Horizontal versus vertical Direct versus indirect materials

ERP Vendor Responses to e-business challenges (contd)

Create new ERP delivery and pricing models Traditional pricing includes initial license fee for a specified number of employees, with annual maintenance fees Introduction of Role-based pricing (part of SAPs strategy in which users access the system through role-specific Workplaces) Industry-specific, pre-configured solutions to offset high implementation costs (e.g. SAPs Accelerated Applications and Oracles FastForward RPM) Pre-configured, pre-installed and pre-integrated (e.g. partnership between IBM and vendors like J D Edwards, MAPICS, QAD and SAP) Traditional outsourcing (either through ERP vendors or their partners) Application service provision Third-party service provider typically licenses the software from the ERP vendor and resells the package to many buyers for fixed, per-month, peruser fee. Users access the offsite system via Internet. Internet-based delivery of basic ERP system (e.g. Biztone)