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ENTERPRISE SOFTWARE SYSTEMS : Concepts & Implementation Experiences. Session in Management Development Programme for Power Grid Corporation Indian Institute of Management, Lucknow December 2003. IN PERSPECTIVE .

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enterprise software systems concepts implementation experiences

ENTERPRISE SOFTWARE SYSTEMS:Concepts & Implementation Experiences

Session in

Management Development Programme for

Power Grid Corporation

Indian Institute of Management, Lucknow

December 2003

in perspective
IN PERSPECTIVE ...
  • “There is nothing more dangerous nor doubtful of success than implementation of a new system.”
    • Paraphrased from Machiavelli
  • “Computers make it easier to do a lot of things, but most of the things they make easier to do may not need to be done.”
    • Andrew Rooney, Journalist
  • “Technology is dominated by two types of people: those who understand what they don\'t manage, and those who manage what they don\'t understand.”
    • Putt\'s Law
information technology s roles in value chain management
INFORMATION TECHNOLOGY\'S ROLES IN VALUE CHAIN MANAGEMENT
  • Data Capture
  • Data Transmission
  • Data Organization & Display
  • Transaction & Business Process Execution
  • Planning & Decision Support
  • Creating New Business Models
slide4

Enterprise IT Applications

Enterprise Resource Planning

Supply Chain Planning

E Commerce

E Commerce

Customer Relationship Management

Logistics/Supply Chain Execution

CIM

Engg & Design

enterprise resource planning
ENTERPRISE RESOURCE PLANNING
  • A Short Definition
    • Software solutions for integrating and dynamically managing all the enterprise processes, functions and resources
enterprise software anatomy
ENTERPRISE SOFTWARE ANATOMY

W

O

R

K

S

&

B

A

C

K

O

F

F

I

C

E

F

R

O

N

T

O

F

F

I

C

E

C

U

S

T

O

M

E

R

E

N

D

S

U

P

P

L

I

E

R

E

N

D

Finance &

Accounts

Reporting

Applications

Sales &

Delivery

Central

Database

Operations/

Manu-

facturing

Service

Supply &

Inventory

Human

Resource

Mgmt.

enterprise resource planning contd
Enterprise Resource Planning (Contd)
  • More Specifically,
    • Integrated suites of business application software
    • Automate business functions (e.g. Manufacturing, Finance) and processes (e.g. Order Fulfillment)
    • Assist in planning, executing, coordinating, and monitoring entire enterprise
    • Keep track of transactions (computerized records of events), e.g., receipt of material or issue of a work order
    • Serve as data source/ backbone for other IT solutions (e.g., Supply Chain Management software)
    • Promise common database, application and user interface across the entire enterprise
order management in erp
ORDER MANAGEMENT IN ERP

For processing & fulfillment of customer orders through the enterprise

Sample Order Flow Process

Proposal

Promising

Commercials

Configure

Delivery

Billing

Collection

ERP Modules Involved

Sales &

Delivery

Production

Planning

Sales &

Delivery

Production

Planning

Sales &

Delivery

Sales &

Delivery

Financials

Materials

Management

Financials

Financials

why erp ceos perspective
WHY ERP: CEOs’ PERSPECTIVE
  • Improve information availability & accuracy (67%)
  • Improve management decision making (61%)
  • Reduce cost/ improve efficiency (51%)
  • Upgrade technology (38%)
  • Resolve a tactical issue e.g. Y2K (31%)
  • Grow Revenue (24%)
  • Not done it yet (15%)
  • Other (4%)
why not erp
WHY NOT ERP ?
  • Inflexibility to incorporate business peculiarities
  • Capabilities may be inferior to "best of breed"
  • Impose "Command and Control" structure
  • Difficult to "tinker" around, may even be discouraged
  • Expensive, and difficult to assess monetary payback
  • Long implementation periods
  • Availability of skilled personnel and support could be an issue
erp installation costs
ERP INSTALLATION COSTS
  • Major elements (with purely indicative ranges):
    • Computer hardware & infrastructure (15-20%)
    • Computer Software (10-15%)
    • Consulting Services (10-40%), depends on internal expertise
    • Internal implementation costs (15-50%), varies as above
    • Internal disruption costs (10-15%), through wasted time, business losses, delays etc.
  • Altogether may run into crores for large company-wide deployment
early erp s in india some reports
EARLY ERP’s IN INDIA:SOME REPORTS
  • Average implementation cost overrun ~ 178%
  • Average schedule overrun ~ 230% of original expectation
  • 55% of ERP implementation overrun on every sphere
  • The packages cost like hell, take ages to implement and at the end of the day deliver little.

(Adapted from a Gartner group study, 2001)

the erp scenario now
THE ERP SCENARIO NOW
  • More success stories, e.g.:
    • BPCL’s SAP R/3 implementation has resulted in annual savings of 40 crores (claimed)
    • Fosters India brought down inventory from 20 days to less than a week with QAD MFG/PRO etc.
  • Emergence of consultants implementing third party vendor solutions
  • Growth of e-business in India with ERP incorporating SCM and CRM
enterprise software in india
ENTERPRISE SOFTWARE IN INDIA
  • COMPANY L
    • Early adopter of IT as well as ERP
    • Low-end Mfg-Pro software
    • Strong Sales & Distribution capabilities
    • Less expensive to buy and implement
    • Fast implementation
    • Extensive Customisation, esp. Excise and Indian peculiarities
    • Hard-core Manufacturing (e.g. MRP) under-implemented
    • Now implementing Supply Chain Planning software
enterprise software in india16
ENTERPRISE SOFTWARE IN INDIA ..
  • CONTINENTAL PAINTS
    • Good homegrown ERP-like legacy software
    • Complex Supply Chain structure and decision-making
    • First adopted SCM software from i2 (first in India)
    • Implemented module by module, claimed complete in 6 months
    • Faster implementation and quicker payoffs than ERP
    • Later adopted SAP as well
enterprise software in india17
ENTERPRISE SOFTWARE IN INDIA ..
  • NATIONAL AUTOMOBILE COMPANY
    • IT-pushed MAPICS software in 1988 - only 10% utilised
    • Major BPR effort in early-mid 1990\'s
    • Changed to user driven team initiative
    • Massive computer literacy drive
    • SAP chosen and India version developed here
    • Five modules implemented in 3-phase approach
    • Much process adaptation, configuration, and add-ons
    • Several benefits in aggregate, but not appropriate to isolate benefits of ERP and BPR
enterprise software perils
ENTERPRISE SOFTWARE PERILS
  • HANUMAN INDUSTRIES
    • Delphi ERP package in 1997-98
    • Strong IT group, several legacy features better than ERP
    • At end of training, only 4 out of 40 persons trained on the software remained in the company
    • Software still unused ("yet to be implemented")
    • IT Head in-charge of project, left after a year and presently reported to be Delphi consultant in US
enterprise software in india19
ENTERPRISE SOFTWARE IN INDIA ..
  • GODREJ TELECOM
    • Mid-sized company, live on Baan in 122 days
    • Motivation: bottlenecks posed by stand-alone software, and change to Make-to-Order scenario
    • Foundation for Supply Chain Management & E-Business
    • HR Manager as Team Leader
    • Full-time team
    • No formal BPR, processes mapped to software models
    • Multi-level training and benefits explanation
    • ISO 9001 helped to create process orientation
    • Sacrosanct deadline
    • Total employee involvement, including CEO
enterprise software perils23
ENTERPRISE SOFTWARE PERILS ...
  • DELL COMPUTERS
    • Began SAP in 1994, abandoned in 1996
    • Business model changed from worldwide to segmented regional focus
    • SAP too monolithic to alter to business needs
    • Later, chose i2 for Materials Management, Oracle for Order Management, Glovia for Manufacturing
    • Implemented one piece at a time, each delivering quicker value than one huge ERP system
enterprise software perils24
ENTERPRISE SOFTWARE PERILS ...
  • FOXMEYER DRUG, USA
    • Filed for bankruptcy in 1996, citing failed ERP implementation
    • Claimed that system crippled the business - messed up orders and could handle max. 10,000 orders per night (manual system could apparently do up to 420,000)
    • Blamed SAP and Andersen Consulting, who allegedly claimed annual savings of $50 million
    • Dismissed as "preposterous" by SAP and Andersen
enterprise software perils25
ENTERPRISE SOFTWARE PERILS ...
  • ANOMYMOUS (from Wall Street Journal)
    • Project more challenging than beneficial
    • Considering human factors, functionality gaps, and costs incurred
    • Short in Systems and Process expertise
    • Under-estimated amount of business change required for implementation
    • Environment ill-defined for ERP
the value chain
THE VALUE CHAIN
  • Business is about creating value through products/ services
  • The process of creating these products/ services is the Value Chain
  • A collection of primary and supporting activities that result in customer and/ or business value
value chain perspectives
VALUE CHAIN PERSPECTIVES

Supply Chain View

Supplier

Manu-

facturer

Distri-

butor

Retailer

Customer

Order Flow View

Order

Design

Procure-

ment

Manu-

facturing

Delivery/

Service

Factory Material Flow View

Recei-

ving

Storage

Manu-

facturing

Ware-

housing

Shipping

supply chain challenges today
SUPPLY CHAIN CHALLENGES TODAY
  • Visibility into entire supply chain status
  • Instant recognition of end-item demand
  • Quick replenishment & order response
  • Network-wide, inter-process plan optimization
  • Quick replanning
supply chain planning software functionalities
SUPPLY CHAIN PLANNING SOFTWARE FUNCTIONALITIES
  • Forecasting & Demand Planning
  • Advanced Planning Systems
    • Supply/ Demand Chain Network Design
    • Supply/ Demand Chain Master Planning
    • Manufacturing Planning
    • Dynamic Manufacturing Scheduling
    • Sourcing/ Supply Planning
  • Enhanced Order Fulfillment
  • Collaborative Planning & Replenishment
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