Enterprise Resource

Planning Systems
(BCO6603)
Introduction

Staff

Paul Hawking

BCO6603 ERP Systems

Tanya Linden

Victoria University

Objectives

Deduce and analyse business information requirements related to

ERP systems

Assess and use various information gathering techniques for

eliciting user requirements and system expectations

Professionally demonstrate navigation and access to information

in an ERP system to assist decision making

Evaluate the essential functionality of ERP systems within varied,

specialised contexts

Critically review the potential impacts of ERP implementations.

Interpret and critique future trends of ERP systems and

associated technologies to address the increasingly complex and
evolving environments of businesses in local and global settings

BCO6603 ERP Systems

Victoria University

Assessment

Multiple Choice Tests (3)

30%

Management Case Study (in class)

Workshop Reports

20%

Research Report

30%

BCO6603 ERP Systems

20%

Victoria University

Resources

BCO6603 ERP Systems

Victoria University

Resources http://intranet.vu.edu.au/its/promo/studentemail/

BCO6603 ERP Systems

Victoria University

Its all about Integration

Paul Hawking

Business Integration
Enterprise Resource Planning Systems
Enterprise Resource Planning Systems
Implementation

Top 10 CEO Business Priorities, 2013

Rank

Top 10 Business Priorities

Increasing enterprise growth

Delivering operational results

Reducing enterprise costs

Attracting and retaining new customers

5
6

Improving IT applications and

infrastructure
Creating new products and services (innov.)

Improving efficiency

Attracting and retaining the workforce

Implementing analytics and big data

10

Expanding into new markets and

geographies

BCO6603 ERP Systems

Victoria University

Strategy and Business Processes

BCO6603 ERP Systems

Victoria University

Business Areas

BCO6603 ERP Systems

Victoria University

Business Processes

BCO6603 ERP Systems

Victoria University

Business Process Elements

Organisational Units responsible for managing the process
Sales Area
Distribution Channel
Transactions involved in the process
Sales Order Creation
Goods Issue
People
Sales clerk
Warehouse operator
Data
Master Data
Customer

Process Indicator

Material
Transactional Data
Sales Quantity
Sales Price
Documents
Sales order
Picking slip
Packing slip etc.

BCO6603 ERP Systems

Victoria University

Business Processes

BCO6603 ERP Systems

Victoria University

Business Processes

BCO6603 ERP Systems

Victoria University

Business Process Integartion - Areas

Sales

BCO6603 ERP Systems

Victoria University

Business Process Integration - People

Sales

People

BCO6603 ERP Systems

Victoria University

Business Process Integration - Decisions

Sales

People
Decisions
When can
we deliver?

Who owes
money?

What price
will we
charge?
Which
products do
I pack?

BCO6603 ERP Systems

How do we
make more
money?

What
products do
we order?

Victoria University

Business Process Integration - Data

Sales

People
Decisions
Data

When can we
deliver?

What price will

we charge?

Date

Product

Quantity

12/1/13

Red Bike

12

13/1/13

Blue
Bike

BCO6603 ERP Systems

Which products
do I pack?

Who owes
money?

What products
do we order?

Storage
Bin

Material

Quantity

24a

Red Bike

12

32b

Blue
Bike

How do we make
more money?

Date

Customer

1/12/13

Giant Cycles

1200

1/13/13

Chen Bikes

880

Victoria University

Business Process Integration - Software

Sales

People
Decisions
Data

When can we
deliver?

What price will

we charge?

Which products
do I pack?

Who owes
money?

What products
do we order?

Date

Product

Quantity

Storage
Bin

Material

Quantity

12/1/13

Red Bike

12

24a

Red Bike

13/1/13

Blue
Bike

32b

Blue Bike

How do we make
more money?

Date

Customer

12

1/12/13

Giant Cycles

1200

1/13/13

Chen Bikes

880

Software
Hardware
BCO6603 ERP Systems

Victoria University

Business Process Integration - Hardware

Sales

People
Decisions
Data

When can we
deliver?

What price will

we charge?

Which products
do I pack?

Who owes
money?

What products
do we order?

Date

Product

Quantity

Storage
Bin

Material

Quantity

12/1/13

Red Bike

12

24a

Red Bike

13/1/13

Blue
Bike

32b

Blue Bike

How do we make
more money?

Date

Customer

12

1/12/13

Giant Cycles

1200

1/13/13

Chen Bikes

880

Software
Hardware
BCO6603 ERP Systems

Victoria University

Business Process Integration Example

Sales

Procurement

BCO6603 ERP Systems

Victoria University

Procurement Process Integration Complexity

BCO6603 ERP Systems

Victoria University

Intel (1995) - Integration

SECURITY
HELP

RCC

ELECTRONIC
TRANSFER

DAISY

PRICE
BOOK

WMS

Configurator
CUSTOMER

EUC
EXTRACTS

PNA

SARP

PRICE

NOVA

AGREEMENTS

INFRASTRUCTURE

MDS
JAPAN
FORECAST

CWS

JAPAN
DAISY

STAR

JASTAR

PGS
JAPAN
PRICE
BOOK

DARE

ESTAR

PRICE
BOOK

A/ R

PMS

G/L

COMPONENTS
COST

NIMS
EUC
EXTRACTS

DATA
WAREHOUSE

DPA

A/ P

PRODUCT
CODE

AVAILABILITY

MAX

RST
EUC
EXTRACTS

DEMAND
FORECAST

OEM
QUOTE
EUC
EXTRACTS

DPA

EDI

EDI

CLS
AMAPS

GPS II
ISET

GIMS

MPS

BCO6603 ERP Systems

Victoria University

Victoria University eLearning

BCO6603 ERP Systems

Victoria University

Business Processes Integration

BCO6603 ERP Systems

Victoria University

Integration Problems

Data
9/11/2011
Last name
Field sizes

Process

Weekly vs Fortnightly
Workflow (goods receipt)
Payment (COD vs Account)

People

Application Screens
Information

BCO6603 ERP Systems

Victoria University

Problems with non integrated systems

Note: Based on multiple answers per respondent

(Delloite 1999)
BCO6603 ERP Systems

Victoria University

ERP Evolution
EDI

e-Commerce
SFA
CRM

e-business

Planning
Scheduling

SCM

Distribution
MRP

MRP11

Payroll

Human
Resources

General Ledger
Accounts Payable
Accounts Receivable

1970s
BCO6603 ERP Systems

Financial
Management
Information
System

1980s

ERP
ERP
1990s

2000s

Victoria University

Business Integration
Enterprise Resource Planning Systems
Enterprise Resource Planning Systems
Implementation

Enterprise Resource Planning (ERP) System

Sales

People
Decisions
Data

When can we
deliver?

What price will

we charge?

Which products
do I pack?

Who owes
money?

What products
do we order?

Date

Product

Quantity

Storage
Bin

Material

Quantity

12/1/13

Red Bike

12

24a

Red Bike

13/1/13

Blue
Bike

32b

Blue Bike

How do we make
more money?

Date

Customer

12

1/12/13

Giant Cycles

1200

1/13/13

Chen Bikes

880

Software
Hardware
BCO6603 ERP Systems

Victoria University

Enterprise Resource Planning System?

An ERP System can be defined as a

modularised, integrated, real time
information system with broad functional
scope responsible for the processing and
management of business transactions
(Hawking 2005)

BCO6603 ERP Systems

Victoria University

ERP Systems
Benefits

BCO6603 ERP Systems

Reduce system complexity

Best Practice business

processes

Improved integration

Standardised data formats

and definitions

interfaces

Reduced data redundancy

Legacy

Improved speed

Victoria University

BCO6603 ERP Systems

Victoria University

Raytheons Goals
Replace thirty year old non-integrated legacy systems
Obtain benefits of business process re-engineering
Use ERP to drive integration
One time entry and access to information
Facilitate achievement of Raytheon Aircraft Company five year
plan

$19.8 billion in revenues

More than 100,000 employees worldwide

BCO6603 ERP Systems

Victoria University

ERP Example
5,500 SAP users
6 countries
8 major business units
Over 40 key systems replaced, including
primary manufacturing support system,
corporate and field financial and purchasing
systems, marketing expense control systems,
and project management systems
7,500+ SAP transactions, 100+ reports, 150+
forms, 50+ interfaces to existing systems

BCO6603 ERP Systems

Victoria University

ERP System Benefits

Inventory
Personnel Reductions
Productivity Improvements
IT Cost Reduction
Tangible Benefits

Cash Management
Revenue/Profit
Procurement
Order Management/Cycle Time

Time-based benefits
have exceeded
original expectations

Financial Close Cycle

Maintenance
Transportation/Logistics
Supplier Managment

Anticipated

Actual

On-Time Delivery
0%

5%

10%

Source: Deloitte Consulting and Benchmarking Partners

(Based on a study of 62 companies that have gone live with an ERP system)

BCO6603 ERP Systems

15%

20%

25%

30%

35%

40%

45%

50%

% Respondents With Measurable Results

Victoria University

SAP R/3 Order Entry IBM Storage

Benchmarks - 110 days after production

Focus Area

9/1/93
Cycle Time

Reengineered
Target 10/1/93

SAP
Performance
01/20/95

Enter pricing data into system

5 - 80 Days

5 Minutes

5 Minutes

Check customer credit upon order

15 - 20 Minutes

Automatic

Automatic

Enter customer order in system

30 Minutes

5 Minutes

15 Minutes

% Manual order/ship to total # of orders/ships

Generate customer invoice after ship

2 - 23 Days

Respond to customer billing inquiry

15 - 20 Minutes

Ship evaluation unit from customer request

0%

0%

1 Day

8 Hours

Real Time

Real Time

3 - 30 Days

2 Days

2 Days

Ship repair/replacement part

3 - 44 Days

2 Days

3 Days

Credit returned drive

1 - 5 Months

5 Days

10 Days

2 Hrs 3 Weeks

Real Time

Obtain commit date for customer order

Unconstrained SJ manufactured drives
Allocated; non-SJ manufactured drives

BCO6603 ERP Systems

75%

Real Time
2 Hrs3 Weeks

Victoria University

Benefits Achieved

Davenport 2003
BCO6603 ERP Systems

Victoria University

Not all benefits achieved immediately

BCO6603 ERP Systems

Victoria University

BCO6603 ERP Systems

Victoria University

Business Integration
Enterprise Resource Planning Systems
Enterprise Resource Planning Systems
Implementation

ERP Implementation Budget

Design and
implementation
35%

Software
10%
Hardware
10%

Training
and
change management
35%

Data
cleansing
10%

Hammer 2000
BCO6603 ERP Systems

Victoria University

Lifecycle of ERP Implementations

Definition of Complete

Never Complete

49%

Go Live

34%

Stabilization Achieved

19%

Capabilities Realized

16%

Benefits Realized

10%

Legacy Turned Off

Funding Over

3%
1%
0%

10%

20%

30%

40%

50%

60%

% Respondents
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system)

BCO6603 ERP Systems

Note: Based on multiple answers per respondent

Victoria University

ERP Stabilisation

PriceWaterhouse Coopers 2012

BCO6603 ERP Systems

Victoria University

ERP Systems and Value Creation

Integrate

BCO6603 ERP Systems

Optimise

Informate

Victoria University

Why Companies Struggle with ERP Implementations

Technical Risks

Organisational Risks

Existing Technical infrastructure

Legacy systems

Executive support
Consultants

Operating/ Network systems

People issues
Upgrades

Business Risks
Choice of ERP
Insufficient resources
Implementation choices
Future partnerships

BCO6603 ERP Systems

Victoria University

ERP Vendors

BCO6603 ERP Systems

Victoria University

(Allied Market Research)

BCO6603 ERP Systems

Victoria University

WHY Study ERP Systems

Diffused many best
practices

Affects most major

corporations

Changed the nature of

information systems
function

Affects competitor
behaviour

Changed the nature of

jobs in all functional
areas
Costs are high

BCO6603 ERP Systems

Affects business
partners requirements
Changed the nature of
consulting firms
A tool for reengineering

Victoria University

Summary

http://www.youtube.com/watch?v=PVRgIXLWDHs
BCO6603 ERP Systems

Victoria University