Points to be covered….

• ERP system Architecture. • Infrastructure Requirements. • Critical Success Factors for ERP. • Comparative study of available commercial

ERP packages. • ERP implementation strategies. • Reasons for ERP failures and remedies.

ERP Systems Architecture

ERP Systems are based on 3-tier architecture:• Presentation Layer• Application Layer• Database Layer

Tech Stack - Internet Computing Architecture

DatabasDatabasee

XApplicatioApplicatio

nn

ApplicationApplication

ApplicationApplication

ApplicationApplication

ApplicatioApplicationn

ApplicatioApplicationn

BrowserBrowser

BrowserBrowser

JavaJavaApplication Application

ServerServer

ApplicatioApplicationn

ApplicatioApplicationn

2 Tier

3 Tier

Three – Tier Architecture

SAP basic architecture – can be browser access through SAP portal as well

Typical architectural components

E-business PlatformTech Stack

CRMFoundation

WebInternet

Mobile Wireless e-Mail Call Center

ICM/TelephonyInteractionChannels

Common Data and Object Models, Security, Interfaces, GlobalisationCommon Data and Object Models, Security, Interfaces, Globalisation

E-Business Foundation

MarketingMarketing SalesSales eCommerceBusiness Applications

MarketingIntelligence

SalesIntelligence

CustomerIntelligence

Call CenterIntelligence

AnalyticalApplications

Interaction History Universal Work Q

1-to-1 Fulfillment

Assignment Engine

EscalationsTCA

Installed Base

Tasks Notes

Resources

Calendar

Territories

OSS HR

Basic architecture

Infrastructure

• This involves the facilities and equipment you need to perform effectively.

• Start by determining and providing what is needed.

• Also review the infrastructure requirement regularly.

• Standard require providing resources necessary for achieving conformity of product requirements.

The infrastructure may include:• Building, workspace and associated utilities• process equipment (both hardware and software)• supporting services (such as transport,

communication or information systems)

Prepare a list of infrastructure facilities in the organization such as

• list of machines, • list of fire extinguishers, • list of material handling equipments / devices, • list of measuring instruments. • Also identify if preventive maintenance is required, • and if required prepare list of activities along with

periodicity (preventive maintenance plan).

Benefit of Preventive Maintainance

• Perform preventive maintenance as per preventive maintenance plan. Though standard does not demand records, keeping records of maintenance activities (preventive or breakdown) will help organizations in

• identifying occurrence of a problem before hand • and initiate preventive actions by either

– modifying the preventive maintenance plan or – replacing the equipment / device. – This will also help in identifying future resource needs.

IT Infrastructure

• IT Infrastructure is concerned with the hosting of the ERP system, including hardware, software, staffing, training, processes leading to scalability, high availability, survivability, throughput.

• Infrastructure team is formed.• There is the team leader for IT Infrastructure.

• Infrastructure – the structure beneath a structure

• IT infrastructure is the implementation of your organization’s architecture

IT Infrastructure Objectives• Standard personal productivity tools aligned with ERP

system• Standard messaging system aligned with ERP system• Standard multi-dimensional database management

system and relational database management system aligned with ERP system

• Standard desktop hardware and operating systems aligned with ERP system

• Standard server hardware and operating systems aligned with ERP system

• Standard network hardware and operating systems aligned with ERP system

• Least total cost of IT infrastructure ownership

Infrastructure Design Principles• High functionality throughout• High availability• High throughput• High survivability• High security• Plan for upgrades, maintenance and the unexpected• Consistent approach to development, deployment,

operations and support• Strong relations with infrastructure vendors• Strong relations with consortium members• UF will own and operate its infrastructure• Costs – hardware, software, personnel, training, other – in

keeping with the principles

Infrastructure Design – Process• Select infrastructure partners• Select infrastructure design partners• Plan infrastructure deployment including

sizing• Organize for the work• Acquire infrastructure components• Deploy according to principles• Resize as needed

Prime Factors for choosing an ERP System

Conformity of the modules The architecture and components of the selected

system should conform to the business processes, culture and strategic goals of the organisation.

Strength of the key modules Strength of the modules in which an organisation

is interested should be considered.

Prime Factors for choosing an ERP System

Scalability and global outreach Look for vendor investment in R&D, long-term

commitment to product and services.

Customer References in the similar industry

Key Factors for Successful ERP Implementations

Training Comprehensive training of customer resources Succession planning from resources Strict adherence to the Project schedules Right technical infra-structure

Strong Monitoring Quality Control at each phase of the project. Using monitoring tools for evaluation of quality of

work and project progress.

Commitment of Top Management

Drive also come from top for ERP implementation Dedicated Project Team Motivation and incentive for employees based on

performance. Quick decision making. Capabilities of the software development vendor Scope & Expectations finalization towards meeting

the ERP concepts

Key Factors for Successful ERP Implementations

Critical success factors in ERP implementation projects

Over the past several years considerable research has been published on CSFs in ERP implementation. Fourteen CSFs were mentioned by majority of authors:

Top management support and involvement

Top management support is critical because top managers have to make fast and effective decisions, resolve conflicts, bring everyone to the same thinking to promote company-wide acceptance of the project, and build co-operation among the diverse groups in the organization.

Clear goals, objectives and scopeClearly defined business and strategic objectives

are in the most cases very important critical factor. Having a clearly defined vision and mission, and a formulation of the right policies and strategies, serves as the blueprint for organizational success.

Clear goals and objectives should be specific and operational and have to indicate the general directions of the project. They should also provide a clear link between business goals and IS strategy. Well-defined objectives help to keep the project constantly focused, and are essential for analyzing and measuring success.

Project team competence and organization

Selecting and motivating the right employees to participate in implementation processes is critical for the implementation’s success. Teams must consist of the right mix of business analysts, technical experts, and users from within the organization and consultants from external companies, chosen for their skills, past accomplishments, reputations, and flexibility.

User training and education

A lack of user training and understanding of how ERP systems work appears to be major reason for many problems and failures in ERP implementation. Several authors highlight cases of inadequate training. If the employees do not understand how a system works, they will invent their own processes using the parts of the system they are able to manipulate. The full benefits of ERP is not realized until end users are using the new system properly.

Business process reengineeringDespite ERP systems are essentially developed as instruments for improving business processes such as manufacturing, purchasing, or distribution and are built around best practices in specific industries, they may not necessarily fit an organization’s business. ERP implementation is a matter of transforming business practices. So implementing an ERP system involves reengineering the existing business processes to fit best business practices.

Change managementThe existing organizational structure and

processes found in most companies are not compatible with the structure, tools, and types of information provided by ERP systems. These changes needed may significantly affect organizational structures, policies, processes, and employees and can cause resistance, confusion, redundancies, and errors if not managed effectively. Many ERP implementations fail to achieve expected benefits in part because companies underestimate the effort involved in change management.

Effective communicationThe importance of communication across

different business functions and departments is well known in the information technology implementation literature, because communication has a significant impact on the process by minimizing possible user resistance.

Communication has to cover the scope, objectives, and tasks of an ERP implementation project. Effective communication is required in project teams and within the organization (i.e. weekly team meetings, postings on the company intranet etc.)

User involvementBecause ERP systems cross functional and departmental boundaries, cooperation and involvement of all people in the organization are essential. Because there is always threat to users’ perceptions of control over their work involving users in defining organizational information system needs can decrease their resistance to ERP systems. Users often perceive their role in ERP implementation as central in their judgment about new system.

Data analysis and conversionThe quality of pre-existing data and information systems is very important factor in successful ERP implementation. If problems with data are not solved in old legacy systems they will hardly be solved during ERP implementation and therefore the quality of implemented system will be questionable. Data problems could even rise because modules in ERP solution are interlinked.

ConsultantsThe success of a project depends strongly on the capabilities of the consultants because the consultants are the only one with in-depth knowledge of the software. Consultants provide a very valuable service by filling gaps, providing expertise, and thinking out-the-box. They are specialized and can usually work faster and more efficiently than others involved in the implementation process.

Project managementERP projects are huge, complex, and risky, so effective project management is crucial. Approximately 90% of ERP implementations are late or over-budget, which may be due to poor cost and schedule estimations or changes in project scope.

Project championProject champions or sponsors are individuals who have a clear understanding of what is going on; they are very critical to implementation success. Champions ideally should have experience in previous implementation efforts to manage conflicts that arise before and after implementation. Project champions perform the crucial functions of transformational leadership, facilitation, and marketing the project to the users. Project champions play a critical role in the acceptance of the technology and he/she is usually at senior management level so they have the authority to make substantial organisational changes occur.

Architecture choice (package selection)All ERP packages have limited capabilities. Some packages are more suited for larger companies while others fit smaller firms better. Some packages have become a “de facto” standard in certain industry. Some have a stronger presence in certain parts of the world. To increase the probability of success, management must choose software that most closely fits its requirements.

Minimal customizationMost companies significantly underestimate the effort required for code modification. Vendor’s code should be used as much as possible, even if this means sacrificing functionality, so upgrades from release to release can be done easily. Therefore, every modification request should be carefully evaluated and approved, or rejected, after considering all the options.

ERP MARKET

Some of the top-tier ERP vendors are SAP-AG, BAAN, PeopleSoft, Oracle Application and J.D.Edwards. These companies are covering the major ERP market revenue.

ERP Market Share

Comparative Modules

SAP Oracle PeopleSoft JDEdwards

SD Marketing, Sales Supply chain Order management

MM Procurement Supplier relationship Inventory, procurement

PP Manufacturing Manufacturing mgmt

QM Enterprise perform Technical foundation

PM Service Enterprise service

HR Human Resources Human capital mgmt Workforce management

FI Financials Financial mgmt sol. Financial management

CO Time & Expense mgmt

AM Asset Management Enterprise asset mgmt

PS Projects Project management

WF Order Management

Contracts Subcontract, real estate

0

10

20

30

40

50

60

S A P

Peoplesoft

OTHERS

Many benchmark comparisons and white papers rate S A P as superior product. Though they

are Criticized for high T C O. Overall they enjoy a high Market Share of nearly 50 % in

the

Engineering Industries / AUTO Sector as shown above.

RATING COMPARISON IN TERMS OF SWOT ANALYSIS IS ENCLOSED FOR SAP / Peoplesoft

ERP : Comparison between S A P / Peoplesoft

Source : CIO magazine

Alternatives & SWOT analysis

Functionality / SWOT

In-House ERP

Packaged (SAP / Peoplesoft)

Remarks

High IntegrationWeb/ Net EnableWorkflow enabledWorld Class Bench Mark / Business

Process

Weak Strong Packaged ERP is better

T C O( total cost

of ownership) Strong Weak In House ERP

less by 75 %, in terms of TCO

BI Capability ( Business Intelligence)

Weak Strong Opportunity in SAP

Attrition Weak Weak Common ThreatOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESSOTHER THAN A HIGH TCO … PACKAGED ERP IS SUPERIOR FOR BUSINESS

ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS

CRITERIA PARTICULARSS A P PeopleSoft REMARKS

a) STRENGTHTRACK RECORD 8 6 SAP Market presence for over 14 yrs.MARKET SHARE- AUTO SECTOR 8 6Bench mark World class PROCESS 8 7Product Enhancements 8 7

WEB Services / Web enabled process 7 8Peoplsoft developed in WEB SPHERE

SW24x7 World wide product support 8 6 SAP is rated better

b) WEAKNESSConfiguration Complexity 6 7 Peoplesoft Relatively simplerSkills Availability / Attrition 5 5 Common ProblemHIGH TCO / AMC COST 5 7 SAP is more expensive

SWOT ANALYSIS RATING ( 1 to 10 )

ERP : S A P / Peoplesoft – Comparison SWOT ANALYSIS

c) OPPORTUNITY S A P Peoplesoft RemarksIndustry Vertical Solution 7 5 S A P is rated betterBusiness Intelligence feature 7 5 …do…

d) THREATAcquisition threat 8 2 Peoplesoft taken over by Oracle

Support withdrawal / product fading 8 5Peoplsoft product support withdrawal a

distinct possibility

AGGREGATE RATING 93 76

NETT RARING ( 1 to 10 SCALE) 7.2 5.8Source : IDC BENCH MARKS

S A P (VS) PEOPLESOFT

** SAP has offered to transfer ‘FREE OF COST’ unutilized / excess licenses available

at ‘ HM-CCP’, to other divisions. This would be beneficial in terms of TCO.,and saves

COST.

** Recent take over of “PEOPLESOFT” by ORACLE, would mean that the Commitment for

Product Support and enhancement would suffer as ORACLE may pursue their own range

of “ORACLE ERP ‘. This would be a definite RISK in the long term period, for customers of

‘PEOPLESOFT’ and fading of this product range by ORACLE may be a distinct possibility.

We also have positive feedback in terms of Product Support Commitment by S A P

from HM-CCP and regular Product enhancements by S A P.

Overall the above SWOT analysis makes S A P a preferred choice.

ERP : S A P / Peoplesoft – Comparison / SWOT

Let’s See in Brief About Few Companies

SAP AG:COMPANY PROFILESAP (System Applications & Products in data processing) .

SAP is the world's leading provider of business software, SAP delivers products and services that help accelerate business innovation for their customers. Today, more than 82,000 customers in more than 120 countries run SAP applications – from distinct solutions addressing the needs of small businesses and midsize companies to suite offerings for global organizations.

SAP defines business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, and supplier relationship management

• SAP AG was founded in 1972 by five German engineers with IBM in Mannheim, Germany; and is one of the top most ERP vendors providing the client server business application solutions.

• SAP serves as a standard in the industries like chemicals, customer products, oil & high technology. The SAP group has offices in more than 50 countries worldwide & employs a workforce of over 19300.

• SAP’s ERP package comes in 2 versions i.e. mainframe version (SAP R/2) & client server version (SAP R/3).(R-Real)

• With SAP, customers can install the core system & one or more of the fundamental components, or purchase the software as a complete package.

PRODUCTS & TECHNOLOGY• SAP has developed extensive library of more than 800

predefined business processes. • These processes may be selected from SAP library & can be

included within installed SAP application solution to suit the user exact requirements.

• SAP software has special features like, linking a company’s business processes & applications, & supporting immediate responses to change throughout different organizational levels & real time integration.

• Also, the new technologies are available regularly to cop-up with the changes of the new business trends.

• The international standards have been considered while designing the software like support of multiple currencies simultaneously, automatically handles the country specific import/export requirements

• The modules of R/3 can be used individually as well as user can expand it in stages to meet specific requirement's

R/2 in the Late 1970s

In 1978 SAP began developing, and the following year released, R/2 (R for "real-time"), a mainframe-based, standard business software suite in which Integrate able modules for accounting, sales and distribution, and production enabled customers to consolidate their financial and operational data into a single database and eliminate costly paperwork and data entry. Because the modules were self-standing, businesses could select only those they needed, which could then be further customized to their unique requirements.

R/3 Development in the 1980s

• As R/2's potential began to peak in the mid-1980s, Plattner and company's former employer, IBM, announced a new "system applications architecture" (SAA) technology Seeing the ramifications of such integrity ability for its own products, in 1987 SAP began developing R/3 for use in the decentralized, non-mainframe computing environment known as client-server. In client-server arrangements, data is processed not by a single costly mainframe but by many cheaper networked "server" computers, which display their data on flexibly arrange able PCs called "clients." While R/2 focused on providing data processing solutions for static, individual functions of business operations, such as inventory tracking or shipping, R/3 was designed to allow a business to view its entire business operation as a single integrated process in which data entered into any single application in the system would simultaneously be registered in every other.

Introduction of R/3 in the 1990s

• After five years in development, R/3 had been launched with the expectation that it would complement R/2's multinational-oriented niche by extending SAP's reach into the mid-sized, less mainframe-dominated business software market. Unexpectedly, however, R/3's release coincided with a growing trend toward corporate downsizing, and even SAP's largest customers began eyeing R/3 as a less labor-intensive replacement for R/2. R/3 was suddenly hot, and virtually overnight SAP had translated its reputation as Germany's wunderfirma to the global stage.

SAP R/3 • SAP R/3 is a computer system that is designed to support complete business management tasks of a corporation, company or institution. SAP R/3 is used in business systems to handle invoice payment, production resource management and financial account control. These specific tasks are accomplished by employing application modules, often described with acronyms such as MM (materials management) and SD (sales and distribution).

• Modules process information through each and every component of the organization, using one secure R/3 system to share relevant information between parts of the organization, keeping the corporation up-to-date on latest technology and data information. A common database is employed among each of the mid-sized to large-size corporations that utilize R/3. R/3 may also be used by small business, allowing business to prosper without having to worry about changing systems.

• An additional benefit to using SAP R/3 is that it combines with a corporation’s previously existing computer system. R/3 uses the ABAP/4 programming language and allows for the possibility of several computers of differing manufacturers to conjoin into one solid working database, operating in the open system or client/server environments. SAP R/3 is a Windows and Menus driven application containing graphical objects.

• The R/3 system provides a flexible organizational structure.

• It can connect all the business processes together & every employee could have fast access to the required information.

• The in house staff can do work easily with reference ABAP/4R development workbench, which is an integral part of R/3. R/3 application modules are either used alone or in combination with other solutions.

R/3 APPLICATION MODULE:

• Following are some R/3 modules:– Financial Accounting: it collects & controls the data relevant to

financial accounting. It provides reports & documentations & comprehensive information.

– Treasury: this module provides a complete solution for efficient financial management. Treasury module helps in ensuring the liquidity of your company worldwide structures, the asset profitability & minimizes risks.

– Controlling: This module has a uniform reporting system for company wide controlling with all procedures & controls content of the company’s internal processes.

– Enterprise Controlling: This module has been designed to monitor the company’s success factors & performance indicators on the basis of management information.

– Investment Management: This module offers integrated management & processing of investment measures. This also participates in pre investment analysis, depreciation simulation. Investment management monitors the projects from planning to settlement.

– Production Planning: this provides all types of manufacturing strategies, from repetitive MTO & ATO, through processes, lot & MTS manufacturing, to integrated supply chain management.

– Material Management: It manages the purchasing processes with workflow driven processing functions. This also handles warehouse management & integrates invoice verification.

– Plant Maintenance & Service Management: this allows the planning, control & processing of the inspection, maintenance, damages & service management.

– Quality Management: this offers all processes relevant to your quality assurance along with supply chain, co-ordinates inspection processing & integrates laboratory information systems.

• R/3 also provides its applications in HR managements, project management, sales & distribution with all standard business processes & functionality.

Some of the main advantages of using SAP R/3 are listed below:

• The R/3 software package is designed to allow businesses to effectively and efficiently operate a variety of business processes within a single integrated information system.

• The software is customizable using SAP's proprietary programming language, ABAP/4. R/3 is scalable and highly suited for many types and sizes of organizations and runs on six different platforms.

SAP’s partnership with technology, service companies, hardware manufactures & database providers helps to provide a complete business solution.

This client/server solution is infinitely expandable & can be used with anywhere between 30 & several thousand end users. This ensures that R/3 can always grow with the growing requirement of company.

BAAN :- Company profile

• Baan company was founded in Netherlands in 1978 by brothers Jan and Paul Baan..

• The BAAN Company is the leading global provider of enterprise business software.

• The BAAN company products reduce complexity and cost, improve core business processes, are faster to implement and use, are more flexible in adapting to business changes.

• The products offered by the company supports several business tools. The tools are based on multi-tier architecture.

TECHNOLOGY AND PRODUCTS1. The BAAN products are having open component architecture.2. The special feature of BAAN product is the use of BAAN DEM

(Dynamic Enterprise Modeling).3. Baan DEM provides a business view via a graphical process/model

based views.4. BAAN products has multi-tiered architecture for maximum and

flexible configuration.5. The application supports the new hardware, OS, networks and user

interfaces w/o any modification to the application code.6. The Baan series based products include :

- BAAN Enterprise Resource Planning.- BAAN Front Office.- BAAN Corporate Office Solutions.- BAAN Supply Chain Solutions.

7. The main advantages of Baan series-based family of products are the best in class components version independent integration and evergreen delivery.

BAAN ERP MODULES

• BAAN ERP is a proven enterprise resource planning s/w application.

• It is fully integrated and provides all the functionality which is required across the enterprise.

• BAAN ERP consists of a number of interdependent components that can be deployed to meet business needs.

• The flexibility with BAAN ERP allows customers to maximize the benefits of both best in class solution and a fully integrated high performance system.

• BAAN ERP includes the following components –

1. Manufacturing Module: This includes bills of material, cost price calculation, shop floor control, material requirement planning, etc.

2. Finance Module:

This includes accounts payable, accounts receivable, cash management, fixed assets, etc

3. Project Module:

This includes project budget, project definition, project estimation, project planning, etc

4. Distribution Module: This includes sales management, purchase management and warehouse management.

BAAN ERP TOOLS

• BAAN ERP Tools can be described as a computing platform that provides independent, flexible, open and distributed computing and development environment.

• The open architecture of the BAAN ERP Tools make it possible to –– Quickly react to the changes that take place in the market, in-turn

change the s/w configuration.– Develop the BAAN product in such a way that it is independent of

third party product such as hardware, OS and DB.– Easily integrated with third party product.– Gives customer specific solutions.