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Historical development
Historical
Initial Computer support to business
Easiest to automate payroll & accounting Precise rules for every case
Early 1970s
centralized mainframe computer systems MIS systematic reports of financial performance Variance analysis between budget and actual
MRP
Material requirements planning Inventory reordering tool Evolved to support planning MRPII extended to shop floor control
SAP Modules
SD
MM PP QM
PM
HR FINANCIAL FI CO
Plant Maintenance
Human Resources Financial Accounting Controlling
AM
PS R/3 INTERNAL WF IS
Asset Management
Project System Workflow: Industry solutions: prompt actions best practices
Comparative Modules
SAP
SD MM PP
Oracle
Marketing, Sales Procurement Manufacturing
PeopleSoft
Supply chain Supplier relationship
JDEdwards
Order management Inventory, procurement Manufacturing mgmt
QM
PM HR FI Service Human Resources Financials Asset Management Projects Order Management
Enterprise perform
Enterprise service Human capital mgmt Financial mgmt sol.
Technical foundation
Workforce management Financial management
CO
AM PS WF
Contracts
Industry-Specific Focus
Each vendor has turned to customized ERP products to serve industry-specific needs
Examples given from BAAN, PeopleSoft Microsoft also has entered the fray
Use reported - US
91.5% 89.2% 88.5%
Order Entry
Purchasing Financial Control Distribution/Logistics
87.7%
86.9% 81.5% 75.4%
92.4%
93.0% 82.3% 84.8%
Asset Management
Quality Management Personnel/HR Maintenance
57.7%
44.6% 44.6% 40.8%
63.3%
47.5% 57.6% 44.3%
R&D Management
30.8%
34.2%
Best-of-Breed concept:
Mabert et al. found only 40% installed system as vendor designed
50% used single ERP package; 4% used best-of-breed
Middleware
Third-party software
Integrate software applications from several vendors Could be used for best-of-breed Usually used to implement add-ons (specialty software such as customer relationship management, supply chain integration, etc.)
Customization
Davenport (2000) choices:
Rewrite code internally Use existing system with interfaces
Both add time & cost to implementation The more customization, the less ability to seamlessly communication across systems
Federalization
Davenport (2000)
Roll out different ERP versions by region Each tailored to local needs
Core modules shared some specialty modules unique
Used by:
Hewlett-Packard Monsanto Nestle
EXAMPLES
Dell Computers
Chose to not adopt
Dell Computers
Evaluation of SAP R/3
Rethinking
In 1996 revised plan Found SAP R/3 too inflexible for Dells new make-to-order operation Dell chose to develop a more flexible system rather than rely on one integrated, centralized system
Best-of-Breed
I2 Technologies software
Manage raw materials flow
Oracle software
Order management
Glovia software
Manufacturing control
Inventory control Warehouse management Materials management
SAP module
Human resources
Core Competencies
Glovia system interfaced with
Dells own shop floor system I2 supply chain planning software
Points
Demonstrates the need for speed
Prolonged installation projects become outdated Need to continue to evaluate project need after adoption
Tendency to stick with old decision But sunk cost view needed
Siemens Modules
FI CO AR AP MM PP QC Finance Controlling Accounts receivable Accounts payable Materials management Production planning Quality control
Implementation
To be led by users Project manager from User community Consultant hired for IT support
IS group only marginally involved
Project Progress
Oct 1996 Installed FI module Sep 1997 Installed other modules On time, within budget
Permanent Team
Made project team a permanent group Project manager had been replaced
2nd PM retained
Training
End users became more proficient with time
Average of 3 months to learn what needed
Operations
During first year
Major errors in ERP configuration Evident that users needed additional training New opportunities to change system scope suggested
Summary
Core idea of ERP complete integration In practice, modules used
More flexible, less risk Can apply best-of-breed concept
Ideal, but costly
Related concepts
Middleware integrate external software Customization tailor ERP to organization Federalization different versions of ERP in different organizational subelements