Introduction to ERP Using GBI 2.

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Agenda
to ERP Concepts
to SAP & How to Navigate

Introduction
Introduction The

Global Bike Company

Sales

& Distribution
Management Planning Accounting & Control

Materials

Production Financial Human

Capital Management

Warehouse

Management

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Discussion Points?

What is an ERP? How it is different from Information Systems? At what level of IS the ERP works? Why an organization should implement ERP system? Why an Organization should implement and ERP if they already have functional systems? What are some of the benefits that organizations derive by implementing ERP? What do you understand by legacy systems? What do you understand by Best Practice Methodology? What do you mean by a business process?
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IS BPR necessary for ERP implementation?

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Why ERP?

What are the Problems of Legacy Applications? What are some of the problems of Businesses that are not on ERP?

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Problems of Legacy Systems

Automates existing processes Normally not driven by organization strategy and business vision. Develop one application at a time. No integration between applications just transaction passing. Decentralized applications. Are relatively inflexible to accommodate changes in the business environment. Written in language / platform prevalent at the time of development. Up gradation to latest technology is difficult Usually not well documented. Maintenance is a problem largely because of poor documentation and staff attrition.
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What is a Business Process? Why Integrated Systems needs to understand the concept of a Business Process.

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Business Processes

A business process is a collection of activities that takes one or more inputs and creates an output that is of value to the customer The customer may be the traditional external customer who buys the product or service, or an internal customer (a colleague in another department) The business process view is the customers perspective. The customer does not care that different functions are involved in processing their order, and will not tolerate mistakes and delays caused by poor coordination of business functions

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Process View of Business

Customer Order Process

Accounting Function

Purchasing Function

Production Function

Material Order Process

A process view of business

Logistics Function

Sales Function

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Integration of Business Functions

Sharing data efficiently and effectively within and between functional areas leads to more efficient business processes Information systems that share data between functional areas are called Integrated Information Systems

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Why ERP?

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Why ERP?

Increasing the efficiency of information systems can result in more efficient business processes, making a company more competitive Integrating information systems across functional areas is a relatively recent phenomenon Lack of integration can lead to costly inefficiencies Errors from keying in the same data more than once Lack of timely data due to periodic updating between systems Problems with data being defined differently in different systems

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Why ERP?

ERP systems can integrate a companys operations by providing a company-wide computing environment that: Includes a single database shared by all functions Can deliver consistent data to all business functions in real-time ERP systems can dramatically reduce costs and increase operational efficiency With ERP, IBM Storage Systems division Re-prices inventory in 5 minutes instead of 5 days Ships a replacement part in 3 days instead of 22 Checks customer credit in 3 seconds instead of 20 minutes

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What is ERP? How you define ERP?

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What is an 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

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SAP ERP

What is ERP?

Software tools Manages business systems

Supply chain, receiving, inventory, customer orders, production planning, shipping, accounting, HR

Allows automation and integration of business processes Enables data and information sharing Enterprise-wide system Introduces best practices

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Integrated Systems Approach

Common set of applications Usually requires re-engineering business processes

Better alignment Easier upgrades

Limited customization Overcomes inefficiencies of independent systems Integrated data supports multiple business functions

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ERP System Drivers

Executive Management

Middle Management

Operational Management

Operations

Finance

Sales Human Production Distribution Resources

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ERP System Drivers

Executive Management

Middle Management

Operational Management

Operations

Finance

Sales Human Production Distribution Resources

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SAP ERP

ERP System Drivers

Executive Management

Middle Management

Operational Management

Operations

Finance

Sales Human Production & Resources Distribution

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ERP System Drivers

Executive Management

Middle Management

Operational Management

Operations

Finance

Sales Human Distribution Production Resources

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ERP Drivers
Systems Not Y2K Compliant Disparate Systems
37% 27% 26% 24% 21% 20% 19% 15% 15% 12% 11% 10% 6% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 42%

Poor/Uncompetitive Performance Poor Quality/Visibility of Info

Program Motivation

Cost Structure Too High Not Responsive Enough to Customers Complex, Ineffective Business Processes Business Processes or Systems Not Integrated Unable to Implement New Business Strategies Business Becoming Global Difficult to Integrate Acquisitions Obsolete Systems Inconsistent Processes Unable to Support Growth

% Respondents
Note: Based on multiple answers per respondent

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

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Enterprise Resource Planning Systems (ERP)

ERP systems are the result of business process engineering. They are information systems that facilitate the flow of information between all functions within a business. They organise and execute the millions of transactions that are fundamental to many large businesses. One huge database for storing transaction data. Eliminate many of the existing legacy systems.

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ERP Characteristics

Links all business processes automatically Reduce inter-processing time (transactions occur one time at the source) Maintain an audit trail of all transactions Utilises a common database Perform internal conversions automatically (tax, foreign currency, legal rules for payroll) Improve customer service by putting data at the fingertips of employees Involve employees in the entire functional cycle
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ERP Evolution
EDI e-Commerce SFA CRM SCM

e-business

Planning Scheduling Distribution MRP Payroll GL AP AR 1970s MRP11 HR

ERP FMIS 1980s 1990s ERP

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2000s

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Evolution of ERP

1960s: software packages with inventory control 1970s: MRP systems

Production schedule with materials management

1980s: MRPII systems

Adds financial accounting system

Integrated systems for manufacturing execution Integrated manufacturing with supply chain

1990s: MRPII Late 1990s: ERP 2000s: ERP II

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ERP System
Executive Management
Human Resources

Finance

Enterprise Resource Planning System

Middle Management

Operational Management
Sales & Distribution

Production

Operations
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Why clients buy ERP?

Corporate Initiatives
Strategic initiatives
A requisite capability in a competitive global business

Operational initiative
A foundation for performance and cost improvement via integration

Organizational initiative
To initiate a major organizational change within the company

Technology
IT is making the transition from a supporting operational entity to becoming a strategic competitive tool.

Because others are buying it !!!

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Business process benefits clients expect from an ERP project

Global process/ Product management Integrated Supply Chain Management Leverage purchasing and vendor management Order cycle time/ customer service improvement Inventory reductions Reduced information systems costs on an ongoing basis Improved business management through worldwide integration and information
Vendors Inbound Logistics Manufacturing Transportation Distribution Delivery Customer Consumer

Logistics and Distribution

Sales & Customer Service

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10/16/2012

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Overall Business Benefits

Information
Maximizes information throughput Provides timely information Integrates information throughout supply chain

Minimizes response time Pushes decision making down to lowest levels Reduces costs Cuts inventory Improves operating performance

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Department Benefits

Sales
Increased efficiency
Lower quotes, reduced lead time, improved responsiveness

Manufacturing

Concurrent engineering Faster design and production

Accurate customer service history and warranty information Suppliers paid accurately

Data Service Accounts Payable

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Systems Benefits

Eliminating legacy systems

Reduces incompatible data Can cause fragmentation

Allows sharing and monitoring of information across organization Foundation of eBusiness

Back-office functions

Standardization Helps obtain and maintain competitive advantage Improved interactions with customers and suppliers

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ERP Benefits
Inventory

Personnel Reductions Productivity Improvements IT Cost Reduction

Tangible Benefits

Cash Management Revenue/Profit Procurement Order Management/Cycle Time Financial Close Cycle Maintenance Transportation/Logistics Supplier Managment On-Time Delivery
0% 5% 10% 15% 20% 25% 30% 35% 40% Anticipated Actual

Time-based benefits have exceeded original expectations

45%

50%

% Respondents With Measurable Results

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

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ERP Implementation Budget

Design and implementation 35% Software 10% Hardware 10% Training and change management 35% Data cleansing 10%

Hammer 2000
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SAP AN ERP.

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SAP ERP

SAP

Systeme, Anwendungen und Produkte in der Datenverarbeitung (English: Systems, Applications, and Products in Data Processing) Global concern with many companies SAP AG SAP America SAP UK etc. SAP Business Suite SAP Enterprise Resource Planning (SAP ERP) SAP Supplier Relationship Management (SAP SRM) SAP Customer Relationship Planning (SAP CRM) SAP Supply Chain Management (SAP SCM) SAP Product Lifecycle Management (SAP PLM) etc. SAP Business ByDesign SAP NetWeaver

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Who is SAP?

SAP AG
Founded in Walldorf, Germany in 1972 Worlds Largest Business Software Company Worlds Third-largest Independent Software Provider

Company Statistics
Over 45,000 employees in more then 50 countries 1,500+ Business Partners 95,000+ customers in more then 120 countries 12 million users 100,000+ installations
Source: SAP AG website

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Integrated Business Solution Vendors

SAP
SAP Business Suite, SAP All-in-One, SAP Business ByDesign, SAP Business One

Oracle Applications
Oracle, JD Edwards, PeopleSoft, Siebel, Retek

Microsoft Business Solutions

Dynamics: Great Plains, Navision, Axapta, Soloman

The Sage Group

Sage Software Accpac ERP, PeachTree

SSA Global Technologies - BAAN

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SAP Portfolio Strength

World-wide usage Designed to satisfy the information needs for all business sizes (small local to large all international) Multi-lingual Multi-currency Multi-balance (parallel G/L Accounting) Designed to satisfy the information needs for all industries, e.g. Automotive Banking Retail Public Sector Higher Education and Research etc.

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SAP Architecture

Client/Server Environment
Client hardware/software environment that can make a request for services for a central repository of resources Server hardware/software combination that can provide services to a group of clients in a controlled environment

Three Tier Structure

GUI Graphical User Interface or Web Interface Application Server One or more, help distribute work load Database Server One single data repository

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History

SD

FI CO SAP PLM

MM
PP

SAP R/3
QM PM Client/Server ABAP Basis HR IS WF

AM PS

SAP SRM

SAP ERP

SAP CRM

SAP SCM

SAP NetWeaver

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R/2 Realtime 2

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R/3 Realtime 3

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SAP R/3 Enterprise

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SAP ERP 2005 (ECC)

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SAP Business Suite

SAP PLM

SAP SRM

SAP ERP

SAP CRM

SAP SCM

SAP NetWeaver

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SAP Software Applications

Small & Medium Size Solutions
- SAP All-in-One - Business ByDesign - Business One

Solutions
SAP ERP SAP CRM SAP PLM SAP SCM SAP SRM SAP Business Objects

Platforms
- SAP NetWeaver - SAP Enterprise Services Architecture

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SAP ERP Business Modules

Collections of logically related transactions within identifiable business functions

MM (Buy) PP (Make) SD (Sell) FI and CO (Track) HCM (People) WM (Store) EAM (Maintain) CS (Service)

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SAP ERP Core Applications

Human Capital Management
- Personnel Management - Benefits - Payroll

Logistics Sales & Distribution Materials Management Production Planning Plant Maintenance Quality Management Finance Financial Accounting Managerial Accounting Asset Management Treasury

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SAP Industry Solutions

Media Mill Products Mining

Aerospace & Defense Automotive Banking Chemicals Consumer Products Defense & Security Engineering, Const. Healthcare High Tech Higher Education Industrial Machinery Insurance Life Sciences Logistics Service Prod.

Oil & Gas

Pharmaceuticals Postal Services Professional Services Public Sector Railways Retail Telecommunications Utilities

Wholesale Distribution

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SAP ERP

Then Works with relational databases 8,900 relational tables 15,000 reports 12,000 screens most users only interact with 10 screens Now 37,000 tables

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Example of How SAP Work

Step 1 : Brazilian retailer orders, via the Internet, 1,000 shoes from International Shoe Co. A sales rep takes the order, routes it to SAPs ordering module, SAP checks the retailer credit, price, etc. The order is approved. Step 2 : Simultaneously SAPs inventory module checks the stocks and notifies the rep that half the order can be filled immediately from stock. The other half will be manufactured and delivered in 5 days directly from the factory in Taiwan.

SAP ERP

Example of How SAP Work

Step 3 : SAPs manufacturing module schedules the production in Taiwan and instructs the warehouse (in China) to ship the shoes to Brazil and print up an invoice (in Portuguese). Step 4 : SAPs human resources module calculates labor requirements. Due to a shortage, the personnel manager in Taiwan is instructed to get temporary workers. Step 5 : SAPs material planning module notifies the purchasing manager about a shortage of purple dye. A purchase order is automatically issued.

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Example of How SAP Work

Step 6 : The customer logs on via the extranet to the companys sneakers division. He can see that 500 shoes were shipped from the regional warehouse. This is done with SAP tracing capabilities. Step 7 : Based on data from SAPs forecasting and financial modules, the CEO can determine both demand and profitability per product. The financial module also converts all foreign money to $U.S., whenever needed