New Development of ERP Systems

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New Development of ERP Systems

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1. New Development of ERP Systems Developed by Dr. Zinovy Radovilsky, Professor of Management and Finance California State University, Hayward All rights reserved Developed by Dr. Zinovy Radovilsky, Professor of Management and Finance California State University, Hayward All rights reserved

2. Presentation Overview What is ERP? Why Use It? Main ERP Systems Benefits and Issues Current and Future Development

3. ERP Importance One of the most important issues in information technology (IT) business today Provide integration of functions inside an organization and automation of business-related processes Serves as a backbone of modern e-commerce systems Experienced a significant growth in sales in the last decade of the 20th century $28Bln market in 2007 According to AMR Research, in 2006-2010, the market will grow at an average of 10 percent per year

4. How It Used to Be “Our sales guys can never make up their minds. They keep changing their product requirements on a daily basis. How can I ever manage my production under such a situation?” "Our manufacturing people are in a world of their own. They are more interested in reporting high capacity utilization, rather than meeting the delivery schedules committed to customers. We end up facing the flak with our customers” “I never seem to get the right information. Each department presents me their own picture. Which never matches another department's information. Am I supposed to spend all my time reconciling data, or take decisions!”

5. Enterprise Resource Planning (ERP) Integrated computer-based system Enterprise-wide information system The term “ERP” does not reflect actual capabilities of the system Enterprise – cross the enterprise boundaries Resource – not only resources are considered Planning – not only planning, other management functions Controlling Information sharing Organization Execution

7. ERP Principles Integration Unified enterprise view of the business common to all functions and departments A single logical database system operating on a common computing platform Automation Ability of an ERP system to automatically process business transactions and information

10. Other ERP Features Modularity Relational database Multiple users and locations Scalability Multiple implementation platforms

11. ERP Groups of Applications Supply Chain Management (SCM) Financials and Accounting Human Resource Management (HRM) Customer Relationship Management (CRM) Product Lifecycle Management (PLM )

12. ERP Applications Categories Core applications Traditional applications in current and old versions of the ERP software Applications’ enhancements/business intelligence Enhance and optimize business decisions and processes in each ERP group E-commerce applications Comprised of various applications of e-commerce

13. ERP Applications

14. ERP Applications

15. ERP Applications (Continued)

16. ERP Applications (Continued)

17. ERP Applications (Continued)

18. Top ERP Vendors

19. ERP Benefits 2007 survey of over 1,400 manufacturing companies showed that the best-in-class ERP implementations led to: 23.7% reduction of inventory costs 18.3% decrease in manufacturing operations costs 17.8% decline in administrative costs Median annual savings from a new ERP system is approximately $1.6 million

20. ERP Benefits Easier access to reliable information Automate tasks to perform various business functions Elimination of redundant data and software packages Improved communication between departments, internal and external organizations Better capabilities of forecasting, planning, scheduling, and control

21. Main ERP Issues ERP is a complex and rather rigid system Pushes the company toward generic processes established in ERP Redesign existing processes Requires thorough preparation and efficient management Require strong executive commitment Clearly developed education and training strategies Full communication of ERP plans ERP systems require virtually a life-changing experience For everybody involved Overcome traditional conservatism in utilizing a previously unknown computer system

22. ERP Costs and Problems Total cost of ownership (TCO) could be up to $400 million Average TCO Large companies around $85 mln Mid-size companies -- $8 mln Long implementation cycle 18-36 months Achieved ROI Only 39% of companies Numerous companies experience problems with ERP: Whirlpool, Hershey Foods, Allied Waste Industries, Volkswagen, W.L. Gore and Associates,

23. Modern Changes Many businesses have grown weary of big up-front investments in ERP applications Businesses seem to have learned from past mistakes Pay more attention to issues Keep costs more in line ERP vendors offer efficient and effective ways of ERP development

24. Current and New ERP Development Hosting solutions and software as a service (SaaS) Increased diffusion into small and mid-size enterprise (SME) market Continuous development of specialized (vertical) ERP systems Consolidation of ERP systems

25. ERP Hosting Solutions ERP hosting provider Manages, maintains, and monitors computer applications on behalf of its customers Assumes responsibility for networking infrastructure and hardware requirements May be also responsible for application maintenance and upgrades, training, technical support and overall systems management SAP certified 15 partner organizations for providing hosting solutions in the U.S. including: ATS Applications Management Service in San Ramon AT&T Capgemini, etc.

26. Software as a Service (SaaS) SaaS software delivery model Software company provides maintenance, daily technical operation, and support for the software provided to their client via the Internet (Web) Software can be delivered to any market segment including SME and large businesses Main option Software on-demand (SOD) Software On-demand (SOD) SOD vendor/provider owns the software and runs it on computers in its data center The customer does not own the software but rents it, usually for a monthly fee. The SOD provider offers to customers software specifically built for one-to-many hosting

27. ERP Hosting: Benefits and Requirements Benefits Various cost savings/cost reductions, (ROI) Fast implementation schedule Investment risks reduction Regular software upgrades/updates Companies can concentrate on their core competencies Requirements Guaranteed delivery (reliability of vendor) Quick implementation time Vendor’s reputation Financial stability, financial performance and results Scalability Appropriate security

28. SaaS Companies Salesforce.com On-demand CRM Sales Force Automation Marketing Automation Service & Support Analytics Data Quality Management Customized applications through AppExchange NetSuite.com Main products Accounting/ERP Accounting, Inventory, Payroll, Purchasing, Shipping CRM Sales Force Automation, Marketing Campaigns, Customer Support, Order Management E-commerce Web Store, Customer Portal, Vendor Portal

29. ERP for Midsize and Small Market Important direction of ERP development The number of SMEs significantly increased in the last ten years (1998-2008) Only about 33% of the midsize companies and 12% of small companies were using ERP system in 2007 Major ERP vendors developed a variety of lower-cost pre-packaged ERP solutions with appropriate functionality for SME Established special strategies and processes for rapid ERP implementation cycle

30. ERP for Mid-size and Small Market SAP In 2008 announced a new fast-start program for its SAP Business-All-in-One solutions The program offers midsize companies in the manufacturing, services, and trade industries pre-configured industry-specific processes to streamline and gain visibility into their core business operations Oracle Developed the Oracle Accelerate method to speed up ERP installations Availability of pre-packed ERP application bundles can be quickly implemented using Oracle Business Accelerators Comprised of a variety of implementation tools, templates, and process flows that facilitate the implementation process.

31. Continuous Development of Specialized ERP SAP Industry Solutions 25 different industries Aerospace, automotive, banking, chemicals, higher education, life sciences, telecommunications, etc. Oracle Industry Solutions 20 different industries Aerospace and defense, automotive, chemicals, communications, higher education, financial services, health sciences, high technology, insurance, etc. Specialized Modules Sustainability Production and Cost Optimization Mobile ERP

32. ERP Consolidation Oracle acquired several major competitors Agile Software (PLM) in 2007-2008 BEA (business intelligence) in 2007-2008 Retek (retail management) in 2005 Siebel (CRM software) in 2005 Hyperion Solutions (performance-management) in 2007 PeopleSoft (with J.D. Edwards) in 2004 Microsoft Dynamics Dynamics NAV (former Navision) Dynamics AX (former Axapta) Dynamics GP (Great Plains) Dynamics SL Dynamics CRM Dynamics SCM

33. ERP Education in Academia CSU system Several universities provide extensive ERP education Most famous – CSU, Chico Mega-hosting center for SAP Undergraduate and MBA program with SAP-based coursework CSU, East Bay Extensive coursework involving hands-on Oracle ERP experience Courses in Operations, Purchasing, Supply Chain Management, Accounting, and E-commerce Use latest release of Oracle E-business Suite – 12

34. Thank you! Q & A

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