ERP and SAP - Overview

ERP – General Concepts

What is ERP?

ERP is a solution, which facilitates company-wide integrated information systems, covering all functional
areas performs core corporate activities and increases customer service augmenting Corporate Image.

ERP System

Enterprise Resource Planning Serves as the information backbone for your entire business Addresses
standard business functions finance, manufacturing, logistics, accounting, human resources, etc.

Characteristics of an ERP System.

Includes business management software that enables finance and human resources in a completely
integrated fashion

Enables high levels of integration across business functions and units

Provides for widespread sharing of data from a single information repository

Drives extensive business transformation and change management efforts

Requires high levels of implementation effort and support

Timeliness, Purpose, Mode and Format, Rate, Frequency, Completeness, Reliability, Cost Benefit
Analysis, Validity, Quality, Value of Information, Management Oriented, Management Directed, Integrated,
Common Data Flows, Heavy Planning Element – 3 to 5 years, Sub-System Concept, Common Data Base,
Modular and Open, Flexibility, Comprehensive, Beyond the company, & Best Business Practices.

The Current Scenario

1. Islands of Information
2. Difficult to get timely & accurate information
3. Heterogeneous Hardware & Software platforms & practices
4. Poor connectivity between different organizational locations
5. Sticking with obsolete technology
6. Resist to change
7. Lack of proven man-power to develop integrated software

Why ERP?

 For Management – to know what is happening in the company

 One solution for better Management
 For cycle time reduction
 To achieve cost control & low working capital
 To marry latest technologies
 To shun the geographical gaps
 To satisfy the customers with high expectations
 To be Competitive & for survival
 Enter data

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 One time
 At one place
 At the source.
 For use
 In many places
 At many times.

Features of ERP

1. ERP Provides Multiplatform, Multi-facility, multi mode manufacturing, multi- currency, multi tax
structure, multi lingual facilities…International Support
2. Integrated flow of data
3. Has end to end Supply Chain Management to optimize the overall demand and supply data
4. Integration of various functionalities
5. Increases customer service and thereby company’s image
6. Bridges the information gaps across organizations
7. Integrates departments and organizations too - Consolidation
8. Better Project Management
9. ERP Implementation Benefits
10. Streamlines or eliminates inefficient manual processes

11. Eliminates disparate stand-alone systems

12. Provides integrated, enterprise-wide common tools, processes and systems

13. Establishes a backbone structure that can be leveraged to handle all operational processes

14. Integrates and increases control of budgeting, planning and financial management processes

15. Better Cash Management – Receivable and Payables

16. Reduce Paper work
17. Timeliness of information
18. Better Presentation
19. Greater Accuracy of information
20. Improved Man, Material, Production and Cost Control
21. Faster Response to information needs
22. Better Monitoring and quicker resolution of Queries
23. Competitive Advantage by improving the business process
24. Remote location linkages
25. Improves information access and management throughout the enterprise
26. Complies with Statutory Regulations!
27. Provides enterprise-wide reporting and decision support

28. Presents opportunity for re-engineering with industry best practices and templates

29. Presents opportunity to lever vendors’ future investment in enhanced functionality

30. Incorporates new functionality and technology - provides a springboard to e-Business

ERP Implementation Challenges

1. Focus on applications rather than business processes

2. Turf battles over ownership
3. ERP project management expertise

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4. Issue resolution bottlenecks

5. Scope and change management
6. Sub-optimization of system capabilities
7. Staffing and retaining full time project resources
8. Experienced implementation partners
9. Product maturity and limitations
10. Nature of government funding cycles

ERP – Expectations

 Integrating all the functions

 Integrating the systems running in all the locations

 Transparency of information using a single data source across the organization

 Software must be responsive

 Modular
 Flexible
 Easy to add functionalities
 Provide growth path
 BPR & ERP

Just automating the existing business practices will not help ERP to achieve the anticipated results

Business Process Re-engineering [BPR] brings out the deficiencies of the existing setup

BPR and ERP will give way to implement new systems and the long pending improvements in the
existing systems. BPR may be time consuming but the scope can be restricted & controlled by the
Management

ERP – Options

OPTION 1 – MAKE [Using Internal resources]

Developing a custom-built ERP package, specific to the requirements of the organization, with the help of
the in-house IT department

OPTION 2 - BUY

Going for Tailor-made ERP packages available in the market like

SAP, Oracle applications, Baan, PeopleSoft etc.

OPTION 3 – MAKE [using External resources]

Developing a custom-built ERP package, specific to the requirements of the organization, with the help of a
Software solution provider

Building ERP solutions using Internal Sources

1. Lack of adequate & qualified manpower
2. Not driven with clear focus on expectations,
3. time & cost
4. Poor software project management

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5. Lack of seriousness with the Management & the

6. IT Team
7. High employee turnover
8. Lot of schedule gaps during Project execution
9. Normally project life is more
10. Frequent change in the scope with the approval of the Management

Project Critical Success Factors

 Leadership commitment
 Communication
 Full-time staff
 Professional project management
 Phased implementation approach
 Scope management
 Business transformation and change management
 Job-specific end-user training
 Focused issue resolution
 Post implementation support

Tailor-made ERP solutions

About this option
 Execution Phases
 ERP product selection phase
 Product selection - Parameters
 Preparation Phase
 ERP product acceptance - Options
 Gap Analysis
 Production Phase
 Implementation Phase
 Post-Implementation Phase
 Pitfalls & Points of Concern
 Critical Success factors

About Generalized off the shelf application s/w packages

 Modules based on rich functionalities for all business functions

 User tested with lot of installations
 No lead time requirement for software development
 Tuned for more users/networks with adequate & in- built security
 Parameterized for flexibility
 Can sit on latest hardware & software platforms
 Upgradation of functionalities with version control

Execution phases

1. ERP product selection

2. Preparations
3. Production
4. Implementation
5. Post-Implementation
6. ERP Product selection Phase

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ERP Team formation for selection

 Appointment of Consultants [if needed]
 Scoping study
 Product selection
 Implementation partners selection
 Hardware/Communication cost estimation

Product Selection - Parameters

 Reputation of the ERP product

 No. of installations in the geographical vicinity
 % of the overall functional availability
 Customization possibilities
 After sales support
 Your investment plan & budget
 Implementation partner’s track record
 Preparation Phase
 Framing ERP Implementation Strategies
 Formation of Apex & Steering committees
 Functional & IT team formation
 Training on ERP functions & features
 Scope finalization
 GAP analysis
 Action plan to resolve the gaps

ERP product acceptance - options

1. Adapting directly, all the functions available in the ERP Product [Applicable for startup
companies]

2. Change the way the firm does the business to fit the product [Compromising]

3. Customize the ERP product to suit the business Processes. [Customization]

GAP Analysis

This is the process to identity the gaps by mapping the expectations of the company with the
Capabilities of the ERP product

Results of Gap Analysis

 Directly Supported
 Workaround suggested
 Extension required
 Change in business process – suggested
 Not full supported
 Manual – not under the scope of ERP

Production Phase

 Installing the software & hardware

 Tuning the software to meet the customization needs

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 Master & Control data arrival as per the Product data structures

 Location & people specific roles & rights allocation for module access & security

Implementation Phase

 Conference Room Pilot [Parallel run]

 Resolving the Parallel run issues

 Training the end users

 Live run
 Post-Implementation Phase

 Regular monitoring

 Tuning [hardware/software] for patching

 the performance issues
 Maintenance

Pitfalls & Points of concern

 Costly comparing to custom-built options

 Lot of hidden costs
 Chances of cost & time overrun are high
 The Level of customization/Indianization
 Compulsion to pay for redundant modules/features
 Vigorous involvement of all during implementation
 Non-availability of special practices like Customer
 Complaint, Logistics
 Linking historical data – offline & painful
 The requirement of Change Management is a must
 Dependency on outsiders is high
 IT department – Poor grip on the Implemented systems

Critical Success Factors

The firm & optimistic approach of the Management on adapting the ERP product driven methodologies
on customization on monetary commitments. The dedicated Team Good Training, Strict adherence to the
Project schedules, Right technical infra-structure & Change Management

Building ERP using Ext.sources

 About this option

 The Principle!
 The Steps
 Why?
 Points of Concern
 Software Vendor selection

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Critical Success factors About

Here the whole package is designed & built by keeping a specific enterprise & its business Practices in
mind by incorporating the improvements/additions with due integration without compromising or changing
the current way of doing the business and providing flexibility to accommodate your business fluctuations

The Principle!

The best as seen elsewhere need not be the best for you. What is your best is what can be successfully
implemented

The Steps

 Software vendor selection

 Detailed study by the vendor
 Scope & platform finalization
 Freezing the commercials
 Development & Testing
 Hardware addition/upgradation
 Old master/transaction data migration
 Parallel run with Integration & connectivity check
 Implementation
 Maintenance

Why?
 Very economical while comparing the cost of implementing tailor-made ERP solutions
 Less prone for hidden-cost hits
 The company can opt for its choice of Hardware, Software & communication platforms based on
the skill availability
 The company and the software vendor have the direct relationship during the project execution.
The proximity would be high & convenient.
 IT department has good control over the Project
 What is required only would be considered under the scope – No redundancy
 The requisite flavor of E-Biz & work-flow components can be embraced towards value edition
 The existing practices & applications can be tuned and linked with the proposed package
 Maintenance & improvements are easy & less costly.
 Even IT team can maintain the setup after getting the source code

Points of Concern

 Software development vendor selection

 Requirement/scope finalization [high chances of retaining the islands as it is]
 Less chances of Value addition
 Not time tested
 Chances of Prolonged project duration
 Software Vendor Selection
 The following traits should be considered while selecting the software vendor for building the
ERP application
 Technical expertise
 Domain knowledge
 Adequate manpower
 Project management skills
 Long existence in the field
 Extra skills [e-biz & workflow]

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The Critical Success Factors


 Clear Vision & support of the Management
 Capabilities of the software development vendor
 Scope & Expectations finalization towards
 meeting the ERP concepts
 Strict implementation schedules & periodical
 monitoring
 The involvement of the IT & functional teams

Keys to success

 Roles and Responsibilities

 Money
 Staff
 System Integrator and Consultants
 User Expectations
 Scope Management
 Methodologies
 Readiness Assessment

SAP AG

1. Founded in 1972 in Germany

2. World’s fourth largest software provider
3. World’s largest provider of ERP
4. Trades on the Frankfurt and New York stock exchanges
5. World-wide usage
6. Designed for all business types
7. Integration
8. Real-time
9. Scalable and flexible
10. Year 2000 compliant
11. Euro enabled
12. Enables a company to link its business processes.
13. Ties together disparate business functions.
14. Help the organization run smoothly.

Top ERP Providers

 SAP
 Oracle
 People soft
 J.D. Edwards
 Baan

The SAP Architecture

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A central relational database

Three-tier client/server software
Business Modules

Relational Database
Defines and links thousands of tables of information.

Advantages

Consistent data
Controls data redundancy
Client/Server Software
Client
Software that can make a request
Server
Software that can that can fill a request

Three Tier

GUI (presentation server)

Application server
Database server

SAP Modules

1. FI Financial Acctg
2. CO Controlling
3. AM Asset Mgmt
4. PS Project System
5. WF Workflow
6. IS Industry Solutions
7. HR Human Resources
8. PM Plant Maintenance
9. QM Quality Management
10. PP Production Planning
11. MM Materials Mgmt
12. SD Sales & Distribution

ASAP METHODOLOGY

Introduction to ASAP Methodology

Accelerated SAP methodology is proven, repeatable and successful approach to implement SAP solutions
across industries and customer environments.
It provides content, tools and expertise from thousands of successful implementations.

Phase 1: Project Preparation:

During this phase the team goes through initial planning and preparation for SAP project.
Define project goals and objectives
Clarify the scope of implementation
Define project schedule, budget plan, and implementation sequence
Establish the project organization and relevant committees and assign resources

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Phase 2: Business Blueprint

The purpose of this phase is to achieve a common understanding of how the company intends to run SAP to
support their business. Also, to refine the original project goals and objectives and revise the overall project
schedule in this phase. The result is the Business Blueprint, a detailed documentation of the results gathered
during requirements workshops.

Phase 3: Realization:
The purpose of this phase is to implement all the business process requirements based on the Business
Blueprint. The system configuration methodology is provided in two work packages: Baseline (major
scope); and Final configuration (remaining scope). Other key focal areas of this phase are conducting
integration tests and drawing up end user documentation.

Phase 4: Final Preparation:

The purpose of this phase is to complete the final preparation (including testing, end user training, system
management and cutover activities) to finalize your readiness to go live. The Final Preparation phase also
serves to resolve all critical open issues. On successful completion of this phase, you are ready to run your
business in your live SAP System.

Phase 5: Go Live & Support:

The purpose of this phase is to move from a project-oriented, pre-production environment to live
production operation. The most important elements include setting up production support, monitoring
system transactions, and optimizing overall system performance.
Configuration
Tailoring the SAP software
DOES NOT involve changes to the software code
Most configurations occurs during implementation
Modification & Enhancements
Changes to the software code
ABAP/4
Advanced Business Application Programming (ABAP)
This is not recommended.

NEW DIMENSIONS IN SAP

1. CRM
2. SCM
3. SRM
4. BIW
5. Net Weaver
6. SEM….

Avoiding the “Train Wreck” Pick the right system

Build a strong cross-disciplinary team at project start-up and foster them through project completion

Deal with organizational resistance quickly

Make decisions and manage change effectively

For more information on SAP pl. log on to http://help.sap.com

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