Databases for large scale integration

Focus on ERP projects

Enterprise Wide Applications

• As the name indicates…• Keywords:

– Integrated– Centralised – Best practice– Cross functional– “mega packages”– Costly (inc. hidden costs)– Highly complex– High impact on business

Definition

• No simple definition

• American Production and Inventory Control Society (APICS)

an accounting-oriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders

• Transaction-oriented / operational

Family of applications

• Enterprise Resource Planning systems

• Supply Chain Management

• Customer Relationship Management

• Other more specialised applications such as planning, warehouse management …

• Merging into ERPII / XRP –encompassing all aspects of the business

CRM Early 00’s

Sales Force AutomationContract ManagementCustomer Service & SupportMarketing AutomationDocumentation Management

SCMLogisticsElectronic InvoicingElectronicMarketplacesContract Management

Late 90’s

Early 00’sERP II Product Data Management Engineering Change Orders

New Product Introduction Collaborative Product Design

A Complete Family Tree

Time frame and key milestones

EOQ Safety Stock BOMP Work Orders

MRP

MRPII

ERP

ERM / ERPII

1950s

1965

1975

1990

2000

More functions becomeIntegrated in the process to add up to complete business solution

DeliverCustomerMakeSupplier

1950’s: unlimited demand

DeliverCustomerMake

Buy

Supplier

Plan

1960’s : inventory costs money!

DeliverCustomerMake

Buy

Supplier

Plan

MRP

1960’s : inventory costs money

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1970’s : first wave of integration

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1980’s : sales order processing

SOP

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

1990’s : back-office integration

ERP

Accounting & Finance Human Resources

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

2000’s : the extended enterprise

ERP

Accounting & Finance Human Resources

Service

CRM

SCM

MRP II

Sell

CustomerMake

Buy

Supplier

Plan

MRP

Deliver

ERP

Accounting & Finance Human Resources

Service

CRM

SCM

Design

ERP II

What’s next?

Goals of ERP implementations

• Standardisation / centralisation• Control – eg: integration of financial data• End fragmentation of legacy systems• More visibility on key processes• Optimisation / productivity gains• Competitive advantage?• Platform for other projects = infrastructure /

backbone• Mechanism for integration of latest technologies

(eg: RFID)

Other strong points

• No more uncoordinated applications – eg quality control

• No more re-keying

• Solution to reporting problems across the board

• “Sorting out” HR

• Harmonising nomenclatures – eg: product codes, inventory files …

Problems with ERP• Impact on business processes (eg: flexibility)• Understanding the “fit” problem• Doubtful benefits realisation (50% failure rate?)

– Measurability– True origin of benefits

• Impact on firm in wider sense– People– Clients / suppliers / partners…

• Cost / disruption factor– $– Time– Learning curve

• Coping with evolution (version control)

Gorry and Scott Morton (1971)

“The integrated management information systems ideas so popular in the literature are a poor design concept. More particularly, the integrated or company wide database is a misleading notion and even if it could be achieved, it would be exorbitantly expensive”

Gorry A. and Scott Morton. M. (1971) A Framework for Management Information Systems,Sloan Management Review, Fall, 55-70.

Dearden (1972)

“The notion that a company can and ought to have an expert (or a group of experts) create for it a single, completely integrated super-system - an MIS - to help it govern every aspect of its activity is absurd”

Dearden, A (1972) MIS is a mirage, Harvard Business Review, January / February

Preparing for the implementation

• Multi-disciplinary • Full time• Decision making power• Budget• Representative – team leads• Balance between allegiance to team and to area

of competence• Team spirit• Team awareness• Must have support from organisation

Business Integration

• Focus on end-to-end process rather than single activity– Cross functional– Multi-competence

• Reduced autonomy • Increased communication• Increased reliance on tools• Rationalisation of process?• Benefits do not accrue where the system is most

constraining

How it worksIn

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Workflow

Workflow

Workflow

Workflow

ERP

Module

ERP

Module

Traceability

Drill Down

Data Flow

Independent versus complementary integrationOne way versus two way integration+ see figure 16.4

How it worksIn

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Workflow

Workflow

Workflow

Workflow

Example of Business Integration

• MUTAIR case study• Meals for plane travelers• Before: quality / high value service

– Culinary business (chefs in toques)– Dedicated buying– Price not an issue

• After: commodity – Drastic price reduction– MRP type scheduling / purchasing

Mutair case study

• Process integration:– p/o, receiving, issue, inventory, invoicing, accounts

payable & accounts receivable– Bulk buying from agreed suppliers– Tough negotiation on price of RMs

• But, rationalisation does not always work– 80% of jobs are OK– Rest cannot be planned (delays, change of schedule,

special meals…)

• Dysfunctional use of system => dysfunctional ERP

What can go wrong

• Integrated systems rely on actors to “play the game”– Need good perception of system

• Here, actors impeded by system– Inaccurate data entry– Physical stock VS theoretical stock– Faxed P/Os post-entered / never entered (supplier does not exist)– Ghost deliveries reached the loading bay– Either goods sent back (no stocks)– or invoice cannot be reconciled (payment impossible)– Emergency orders must be entered somehow => wrong codes used

• Overall performance of the process decreases– May keep going at local level– But overall vision is totally inaccurate

• Might as well have implemented nothing

Where problems originate?

• In preparation phase for project• Lack of managerial awareness of risks /

opportunities• Lack of understanding of how to select software• Lack of vision of the business impact• Wrong scope (eg: areas pull out and weaken

project)• Not enough money for proper analysis• Wrong team (not at the right level / too militant)

Communication

• Political / change management dimension• Internal aspects

– Expected support (we need you!)– Properly justify project (?)– Explain change in roles– Give assurances (when possible)

• External aspects– Be upfront about new rules– Adopt participative approach?– Seek collaboration / leverage other firms’ systems

• Perception of system / team

Benefit realisation

• Only occurs when definitive targets sought• Only occurs if analysis was realistic and did not neglect

downsides• May be more intangible than measurable

– Head count– Upfront implementation cost– Length of learning curve– Investment may not be exhausted by current usage (stage 2 /

ERP2 etc…)

• Whose benefits are those anyway?!?!– Case of the multi-national– Case of a dominant coalition

Team Characteristics

• Typical size: 25 to 60+ FTE• Team leads: 10 to 20• Functional area experts• Special roles:

– Project manager– Integration manager– Data conversion and migration– Training manager– Hardware / IT specialist– Platform expert– Communication about project (internal & external)

Collecting requirements

• Interviews with key individuals• Observation of activities• Consultation of documentation• Surveys• Targets:

– Staff– Suppliers– Customers– Other constituencies when needed (eg: vendors…)

As-Is +New requirements

Overall Scope arbitration

• Time and cost often already decided• Time boxing used to segregate• Trade off with having to do it again next

year• Arbitrate between requirements

– Out of scope– Conflict between areas– Conflict with proposed project scope

• Steering committee (Director level)

The ITT

• Trade off between detail and speed of processing of information– Cover everything– Sample the functionality– Buy on faith

• Available in generic format (see handout)• But always better when tailor made to fit

business goals• See notion of fit in previous notes• Also prepare ITT to facilitate analysis• But some vendors will ignore the format

Comparing tenders

• Likely they all look good

• Need a rigid set of criteria to decide – Criteria– Type of criterion– Relative weight– Rules for computing overall score

• How many would you like to end up with?

• Decide on shortlist

Shortlisted firms

• On or off site presentation• Intense meeting• Any item unclear in ITT• Any contentious point

– User requirements– Price– Support / maintenance contract– Technical characteristics (eg: response time)

• Then leave lawyers finish it off• Don’t expect a clear cut answer• Recommend for board level decision

Next steps

• Agree on exact schedule• Freeze scope again• Schedule participation of all required users /

technical staff• Communicate communicate communicate• Run awareness workshops etc…• Negotiate re-skilling arrangements• Ring fence resources and budgets• Prepare for IMPLEMENTATION

Implementation phase

• Create fine configuration of package• Define roll out strategy• Schedule implementation in phases• Organise data loads• Go live (s)• Define criteria for ramp up period (duration

to full capacity)• Measure progress and report

ERP roll outs

• Core team (global)• Local implementation teams• Roll out step:

– Initial meeting with local pm– Local team set up– Bringing local team up to speed– Understand implications of template at local level – Create additional workarounds– Define criteria for acceptance / rejection of additional

demands

Factor Input values Decision Comment

1 - Scope Global / Local Only global changes will be considered

Global changes are implemented at local level

primarily

2 - Impact on Business High / Medium / Low Only high impact changes will be considered

Difficulty in ensuring consistent reporting of impact

2a – Savings Quantified Number of transactions * time saved per time interval

See point 9 below Full justification for perceived saving must be presented

3 - SAP standard functionality Yes / No Only standard functionality will be considered

Except for “must have” additions **

4 - Support Project Business objectives

Yes / No / Maybe Only unambiguous Yes will be considered

5 - Impact on project Yes / No Only changes without overall impact on the project will be

considered

Impact on Alliage project focuses on the impact on time of delivery of deliverables

6 - Risk High / Medium / Low Only low risk changes will be considered

trade off to point 4 above

7 – Change in SOP Yes / No / Minimal Only properly documentedAnd QMS approuved changes

Reference of QMS approuval document required

8 - Training Yes / No / Minimal Only changes with minimal training requirements

bullet points max

9 – Costs Number of man days IT Users QC

Project requirements to be checked against accumulated

usage of key resources.

In case where total resource usage goes beyond Alliage budget, steering committee may recommend scope enlargement in special cases

10 – Pay back / Return on Investment

Duration of payback period (comparison of 2 and 10)

Only changes that pay for themselves within 12 months

Also take intangible benefits into account

Training

– Design training courses and develop material

– Schedule training overall– Select and train trainers– Create facilities / sandpit– Book staff for training sessions– Coordinate training– Create assessment mechanism and

monitor progress

Data transfers into an application

• First time system implementation

• Data warehousing projects

• Database version upgrade

• ERP projects

• Move to new version

• Called a migration– From a manual system– From old to new system

Data transfers between systems

• Static data (eg. Customers)

• Dynamic data (eg. sales orders)– Additional problems with a live system

• Open items

• Balances

• Conversion or interfaces often required

Data Upload

• Several rounds:– Trials – Static data– Open items– Dynamic data - transactions– Balances

• Staging areas– Local initially– Then central area

• Upload into live system– Specific predefined sequence (RDB)– Extract, translate, load– Rental of platform specific tools from vendor

Go live

• A single point in time• First transaction routed through system –

eg sales order• In reality loads of data already in –

incremental approach• Plenty can still wrong although not right

away• Over first few weeks – ramp up to full

capacity

Post Go Live

• Team is disbanded– Back into business– Promoted– Next wave of roll out

• Structure is permanently altered – eg: shared services• ERP team put in place

– Data experts / maintenance– Application experts – on-going developments and fixes– Platform experts – uptime– Business analysts – look to future releases and future

requirements– Typical size 20 /25 staff full time for a multinational– Various names used – eg: knowledge centre

The story continues

• Dysfunctional ERP => uninstall

• Next phase in implementation – More modules– More sites– More interfaces to legacy systems

• Update to new version

• Merger and acquisition => change to other platform