6_Guest Lecture_IBS Blr_ERP – A competitive advantage_Session II_2009
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Transcript of 6_Guest Lecture_IBS Blr_ERP – A competitive advantage_Session II_2009
ERP ERP –– A competitive advantageA competitive advantageConcepts – Session II9:00 am – 10:15amICFAI Business School – Executive MBA
Subhajit MazumderEmail: [email protected]
Views expressed are personal and do not include any point of view of the speaker’s organization
AgendaAgenda
� Summary of Session I� Concepts of integration� Implementation aspects� Competitive Advantage
Lets summarizeLets summarize
� Enterprise Resource Planning◦ Understanding of ‘enterprise’◦ Understanding of ‘resources’◦ Understanding of ‘planning’
� Traditional vs. ERP paradigms� Understanding of business modeling� Implementation lifecycle highlights� Some aspects of competitive advantage
ERP functional blocksERP functional blocks� Any ERP has more or less standard
functional coverage◦ Finance & Accounts◦ Materials mgmt. / Purchase / Inv. Mgmt.◦ Sales / Distribution◦ Production planning / Manufacturing◦ Maintenance / Service management◦ Quality mgmt.◦ HR / Payroll◦ Projects management◦ SRM / CRM◦ APS
ERP functional blocksERP functional blocks
Finance
Purchase / Inventory / Materials mgmt.Sales / Distribution
Production planning / operations
Maintenance / Service
CRM
SRM
HR / PayrollAPS
Concepts of integrationConcepts of integration� General Ledger (Financials module)
◦ Book of accounts◦ Principles of accounting like double entry,
going concern etc.� Concept of sub-ledgers
◦ Vendor / Creditors sub-ledger◦ Customer / Debtors sub-ledger◦ Item sub-ledger◦ Employee sub-ledger◦ Project sub-ledger◦ Asset sub-ledger etc.
Concepts of integrationConcepts of integration� Business event
◦ Translates into a business transaction◦ Could have financial implication or non-
financial implication◦ E.g. sales invoicing (billing)� Customer ledger impact� Financial ledger impact� Impact on item ledger (material valuation)
◦ E.g. new material configuration� Impact in material master� Impact in quality checking attributes
Concepts of integrationConcepts of integration
� All functional impacts◦ Have a cascading effect◦ Thus all functional requirements are
orchestrated◦ Including business event reversals◦ E.g. Credit memo� Impact on Customer ledger� Impact on Financial ledger� Impact on Item ledger
Typical ERP implementation Typical ERP implementation � Pre-Implementation stage
◦ Top management vision◦ Assessment of systems and processes◦ Decision to implement ERP◦ Decision to select appropriate ERP solution◦ Decision to select implementation approach◦ Decision to select implementation partner◦ Decision on scope of ERP◦ Budgetary sanction◦ Organizational commitment to the project
Typical ERP implementationTypical ERP implementation� Implementation
◦ Formation of cross-functional Core team◦ Setting project objectives, charter◦ Business process study: As-Is and To-Be◦ Configuration and Customization◦ CRP, UT, SIT, UAT◦ Data conversion and Opening balances
preparation◦ Training◦ Go-live
Typical ERP ImplementationTypical ERP Implementation
� Post implementation◦ Post go-live support◦ Data migration of historical data◦ ERP audits for risk & control◦ ERP implementation effectiveness audits◦ Rollouts◦ Upgrades
Implementation methodologiesImplementation methodologies
� ERP implementation methodologies◦ ERP product specific� E.g. for SAP its ValueSAP or ASAP
◦ ERP product – IP specific� E.g. for Accenture SAP delivery its ADM� For IBM SAP delivery its Ascendant
◦ Implementation methodology� Guides activities of the implementation� Directs the implementation plan and charter� Could be a critical success factor
ASAP methodologyASAP methodology
� Optimize SAP implementation� Templates, tools and methods drawn from
thousands of implementations
ASAP methodologyASAP methodology� Goal setting
◦ Project goals and objectives◦ Project charter
� Implementation Strategy◦ Finalize scope of work◦ Establish project organization◦ Assign resources
� Implementation sequence◦ Define project activities and sequence in detail
� Joint Team◦ Core team + Project team + Consultant team
� Sign-off
ASAP methodologyASAP methodology� Scope document� As Is business process study
◦ Workshops, Discussions
◦ Field study
◦ Identification of existing systems / data structures
� Business Blueprinting◦ Mapping business processes to SAP
� Gap Analysis◦ Gap analysis mutually resolved
� Core User Training� Sign-off
ASAP methodologyASAP methodology� Implement� As Is business process study
◦ Implement as per BBP
◦ Configuration and Customization
� CRP◦ Iterations of CRP
◦ Obtain feedback
� Sign-off
ASAP methodologyASAP methodology� Unit Testing
◦ Test within each business process
� System Integration Testing◦ Test the system cross-functionally
� User Acceptance Testing◦ Combined testing of all modules by end users◦ ATP and ATC
� End User Training� Cut Over Strategy & Opening balances upload
◦ Cut-over date◦ Opening balances preparation
� Sign-off
ASAP methodologyASAP methodology� Go live
◦ New system starts getting used
◦ Live transactions
� Continuous Change◦ Initial turbulence
◦ 24x7 helpdesk support
◦ SLA monitoring
◦ Stabilization period and Stabilization tests
◦ Post implementation reviews
◦ Upgrades
◦ Roll-outs
Implementation ChallengesImplementation Challenges� Project objectives and charter
◦ Unclear objectives of implementation◦ Unclear scoping / functional scope / geographical
scope� Team formation
◦ Client core team / business team◦ IP team ◦ Availability
� Training needs assessment ◦ Systems and ERP awareness◦ Adequacy / Appropriateness
Implementation ChallengesImplementation Challenges� Project management
◦ Client project management◦ IP project management◦ Independent program management� Change management
◦ New business process◦ New documents / new formats◦ New role◦ Communication needs throughout the project◦ Physical changes in business processes
Implementation ChallengesImplementation Challenges� Project management
◦ Client project management◦ IP project management◦ Independent program management� Change management
◦ New business process◦ New documents / new formats◦ New role◦ Communication needs throughout the project◦ Physical changes in business processes
Managing changeManaging change
ManufacturingManufacturing
As Is Business Scenario To Be Business Scenario- Conversant with As Is business
processes – the way they are carried out now
- Lack of systems / computerization – leads to manual activities, data entry into offline systems, duplication of work, process redundancies
- Lack of integration across departments and sections – lot of documents get generated to provide information linkage
- Need for change is felt by the end users themselves
- The concept of ERP (integration of business processes) with its underlying principles is already embedded
- The emphasis is on business processes and not IT systems
- The product is already ready for operation on Day 1, there is no need for “developing the system”
- There would be organizational changes – in roles and activities
- The implementation needs a joint team to be a success (Core Team + Project Team + Consultant Team)
Competitive AdvantageCompetitive Advantage
� Competitive advantage over others◦ To attract and retain business◦ Functional strategies are synergetic◦ Complement the corporate strategy
� Can be defined by◦ Service quality◦ Responsiveness / flexibility◦ Ability to satisfy customers’ needs and wants◦ Qualifiers vs. Order winners
Competitive AdvantageCompetitive Advantage
� Some specific examples of competitive advantage through ERP:◦ Order taking ability� Backorder visibility (online in the ERP system)� Product making capability known (product codes
and quantity structure)� Realistic delivery promise� Order costing & profitability (decision making)� Leads to greater customer satisfaction� Repeat business and assured revenue streams
Competitive AdvantageCompetitive Advantage◦ Production planning & scheduling� S&OP planning� MRP runs (regenerative and net change)� Detailed scheduling of work centers� Material flow planning� Leads to better utilization of production capacity /
facilities� Capable of re-scheduling priority orders if
necessary� Delivery reliability and speed
Competitive AdvantageCompetitive Advantage◦ Quality and Maintenance mgmt.� Quality inspection lots for incoming, WIP and
products� Maintenance leads to better quality
◦ Strategic sourcing� Advanced analysis of the procurement function� Economic Order Quantity / VMI