13th July Introduction to ERP and SAP
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Transcript of 13th July Introduction to ERP and SAP
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Introduction to ERP Using GBI 2.1
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SAP ERP Agenda
Introduction to ERP Concepts
Introduction to SAP & How to Navigate
The Global Bike Company
Sales & Distribution
Materials Management
Production Planning
Financial Accounting & ControlHuman Capital Management
Warehouse Management
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SAP ERP Discussion Points? What is an ERP?
How it is different from Information Systems? At what level of IS the ERP works?
Why an organization should implement ERP system?
Why an Organization should implement and ERP if theyalready have functional systems?
What are some of the benefits that organizations derive byimplementing ERP?
What do you understand by legacy systems?
What do you understand by Best Practice Methodology?
What do you mean by a business process?
IS BPR necessary for ERP implementation?3
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SAP ERP Why ERP?
What are the Problems of LegacyApplications?
What are some of the problems ofBusinesses that are not on ERP?
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SAP ERP
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Problems of Legacy Systems Automates existing processes
Normally not driven by organization strategy and business vision. Develop one application at a time. No integration between
applications just transaction passing.
Decentralized applications.
Are relatively inflexible to accommodate changes in the businessenvironment.
Written in language / platform prevalent at the time ofdevelopment.
Up gradation to latest technology is difficult
Usually not well documented.
Maintenance is a problem largely because of poordocumentation and staff attrition.
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SAP ERP
What is a Business Process?
Why Integrated Systems needs tounderstand the concept of a BusinessProcess.
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SAP ERP Business Processes A business process is a collection of activities that
takes one or more inputs and creates an output thatis of value to the customer
The customer may be the traditional externalcustomer who buys the product or service, or aninternal customer (a colleague in anotherdepartment)
The business process view is the customers
perspective. The customer does not care that different functions
are involved in processing their order, and will nottolerate mistakes and delays caused by poorcoordination of business functions
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SAP ERP Process View of Business
Sale
s
Function
Accoun
ting
Function
Purchasing
Function
Produc
tion
Function
Logist
ics
Function
Material Order Process
Customer Order Process
A process view of business
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SAP ERP
9
Integration of Business Functions
Sharing data efficiently and effectivelywithin and between functional areas leadsto more efficient business processes
Information systems that share databetween functional areas are calledIntegrated Information Systems
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SAP ERP
Why ERP?
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SAP ERP Why ERP? Increasing the efficiency of information systems can
result in more efficient business processes, makinga company more competitive
Integrating information systems across functionalareas is a relatively recent phenomenon
Lack of integration can lead to costly inefficiencies
Errors from keying in the same data more thanonce
Lack of timely data due to periodic updatingbetween systems
Problems with data being defined differently in
different systems
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SAP ERP Why ERP? ERP systems can integrate a companys operations by
providing a company-wide computing environment that:
Includes a single database shared by all functions
Can deliver consistent data to all business functions inreal-time
ERP systems can dramatically reduce costs and increaseoperational efficiency
With ERP, IBM Storage Systems division
Re-prices inventory in 5 minutes instead of 5 days
Ships a replacement part in 3 days instead of 22 Checks customer credit in 3 seconds instead of 20
minutes
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SAP ERP
What is ERP?
How you define ERP?
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SAP ERP What is an Enterprise Resource Planning System?
An ERP System can be defined as amodularised, integrated, real time
information system with broad functional
scope responsible for the processing andmanagement of business transactions
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SAP ERP What is ERP?
Software tools
Manages business systems Supply chain, receiving, inventory, customer orders,
production planning, shipping, accounting, HR
Allows automation and integration of businessprocesses
Enables data and information sharing
Enterprise-wide system Introduces best practices
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SAP ERP Integrated Systems Approach
Common set of applications
Usually requires re-engineering businessprocesses
Better alignment Limited customization
Easier upgrades
Overcomes inefficiencies of independent
systems Integrated data supports multiple business
functions
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SAP ERP
Operations
OperationalManagement
Executive
Management
MiddleManagement
Finance SalesDistribution Production HumanResources
ERP System Drivers
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SAP ERP
Executive
Management
MiddleManagement
OperationalManagement
Operations
Finance SalesDistribution Production HumanResources
ERP System Drivers
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SAP ERP
Executive
Management
MiddleManagement
OperationalManagement
Operations
Finance
Sales
&Distribution
Production HumanResources
ERP System Drivers
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SAP ERP
Executive
Management
MiddleManagement
OperationalManagement
Operations
FinanceSales
Distribution Production HumanResources
ERP System Drivers
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SAP ERP ERP Drivers
Note: Based on multiple answers per respondent
6%
10%
11%
12%
15%
15%
19%
20%
21%
24%
26%
27%
37%
42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Unable to Support Growth
Inconsistent Processes
Obsolete Systems
Difficult to Integrate Acquisitions
Business Becoming Global
Unable to Implement New Business Strategies
Business Processes or Systems Not Integrated
Complex, Ineffective Business Processes
Not Responsive Enough to Customers
Cost Structure Too High
Poor Quality/Visibility of Info
Poor/Uncompetitive Performance
Disparate Systems
Systems Not Y2K Compliant
Program
Motivation
% Respondents
Source: Deloitte Consulting and Benchmarking Partners(Based on a study of 62 companies that have gone live with an ERP system)
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SAP ERP Enterprise Resource Planning Systems (ERP)
ERP systems are the result of business processengineering.
They are information systems that facilitate theflow of information between all functions within abusiness.
They organise and execute the millions oftransactions that are fundamental to many largebusinesses.
One huge database for storing transaction data. Eliminate many of the existing legacy systems.
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SAP ERP ERP Characteristics
Links all business processes automatically
Reduce inter-processing time (transactionsoccur one time at the source)
Maintain an audit trail of all transactions Utilises a common database
Perform internal conversions automatically (tax,foreign currency, legal rules for payroll)
Improve customer service by putting data at thefingertips of employees
Involve employees in the entire functional cycle
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SAP ERP ERP Evolution
1970s
AR
AP
GLPayroll
FMIS
HR
MRP11
DistributionScheduling
Planning
MRP
EDI
ERP
SCM
e-CommerceSFACRM
e-business
ERP
1980s 1990s 2000s24
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SAP ERP Evolution of ERP
1960s: software packages with inventorycontrol
1970s: MRP systems Production schedule with materials management
1980s: MRPII systems Adds financial accounting system
1990s: MRPII Integrated systems for manufacturing execution
Late 1990s: ERP Integrated manufacturing with supply chain
2000s: ERP II
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SAP ERP
ExecutiveManagement
MiddleManagement
Operational
Management
Operations
Finance
Sales&
Distribution
Production
HumanResources
ERP System
EnterpriseResourcePlanning
System
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SAP ERP
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Why clients buy ERP?
Corporate Initiatives Strategic initiatives
A requisite capability in a competitive global business
Operational initiative
A foundation for performance and cost improvementvia integration
Organizational initiative To initiate a major organizational change within the company
Technology IT is making the transition from a supporting operational
entity to becoming a strategic competitive tool.
Because others are buying it !!!
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SAP ERP
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Business process benefits clients expect from an ERPproject
Global process/ Product management Integrated Supply Chain Management
Leverage purchasing and vendor management
Order cycle time/ customer service improvement
Inventory reductions
Reduced information systems costs on an ongoing basis
Improved business management through worldwide
integration and information
Logistics and Distribution Sales & Customer Service
Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer
Logistics
10/16/2012
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SAP ERP Overall Business Benefits
Information Maximizes information throughput
Provides timely information
Integrates information throughout supply chain
Minimizes response time
Pushes decision making down to lowest levels
Reduces costs
Cuts inventory Improves operating performance
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SAP ERP Department Benefits
Sales Increased efficiency
Lower quotes, reduced lead time, improvedresponsiveness
Manufacturing Concurrent engineering Faster design and production
Data Service Accurate customer service history and warranty
information
Accounts Payable Suppliers paid accurately
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SAP ERP Systems Benefits
Eliminating legacy systems Reduces incompatible data
Can cause fragmentation
Allows sharing and monitoring of information across
organization Foundation of eBusiness
Back-office functions
Standardization
Helps obtain and maintain competitive advantage Improved interactions with customers and suppliers
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SAP ERP ERP Benefits
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
On-Time Delivery
Supplier ManagmentTransportation/Logistics
Maintenance
Financial Close Cycle
Order Management/Cycle Time
Procurement
Revenue/Profit
Cash Management
IT Cost Reduction
Productivity Improvements
Personnel Reductions
Inventory
Tangible
Be
nefits
% Respondents With Measurable Results
Anticipated
Actual
Time-basedbenefits have
exceeded originalexpectations
Source: Deloitte Consulting and Benchmarking Partners
(Based on a study of 62 companies that have gone live with an ERP system) 32
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SAP ERP ERP Implementation Budget
Design andimplementation
Software
Trainingand
change management
Hardware
Datacleansing
35%
35%
10%
10%
10%
Hammer 2000
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SAP ERP
SAPAN ERP.
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SAP ERP SAPSysteme, Anwendungen und Produkte in der Datenverarbeitung
(English: Systems, Applications, and Products in Data Processing)
Global concern with many companies
SAP AG
SAP America
SAP UK etc.
SAP Business Suite SAP Enterprise Resource Planning (SAP ERP)
SAP Supplier Relationship Management (SAP SRM)
SAP Customer Relationship Planning (SAP CRM)
SAP Supply Chain Management (SAP SCM) SAP Product Lifecycle Management (SAP PLM) etc.
SAP Business ByDesign
SAP NetWeaver
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SAP ERP Who is SAP?
SAP AG
Founded in Walldorf, Germany in 1972 Worlds Largest Business Software Company
Worlds Third-largest Independent Software Provider
Company Statistics Over 45,000 employees in more then 50 countries 1,500+ Business Partners
95,000+ customers in more then 120 countries
12 million users 100,000+ installations
Source: SAP AG website
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SAP ERP Integrated Business Solution Vendors
SAP
SAP Business Suite, SAP All-in-One, SAPBusiness ByDesign, SAP Business One
Oracle Applications
Oracle, JD Edwards, PeopleSoft, Siebel, Retek Microsoft Business Solutions
Dynamics: Great Plains, Navision, Axapta,
Soloman The Sage Group
Sage Software Accpac ERP, PeachTree
SSA Global Technologies - BAAN
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SAP ERP SAP Portfolio Strength World-wide usage
Designed to satisfy the information needs for all businesssizes (small local to large all international)
Multi-lingual
Multi-currency
Multi-balance (parallel G/L Accounting) Designed to satisfy the information needs for all industries,
e.g.
Automotive
Banking
Retail
Public Sector
Higher Education and Research etc.
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SAP ERP SAP Architecture
Client/Server Environment Client hardware/software environment that can make a
request for services for a central repository of resources
Server hardware/software combination that can provideservices to a group of clients in a controlled environment
Three Tier Structure GUI
Graphical User Interface or Web Interface
Application Server One or more, help distribute work load
Database Server
One single data repository
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SAP ERP History
SAP NetWeaver
SAP SCM
SAP PLM
SAPSRM
SAPCRMSAP ERP
SD
MM
PP
QM
PM
HR IS
WF
AM
CO
FI
PS
SAP R/3Client/Server
ABAPBasis
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SAP ERP R/2 Realtime 2
41
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SAP ERP R/3 Realtime 3
42
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SAP ERP SAP R/3 Enterprise
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SAP ERP SAP ERP 2005 (ECC)
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SAP ERP SAP Business Suite
SAP NetWeaver
SAP SCM
SAP PLM
SAPSRM
SAPCRM
SAP ERP
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SAP ERP SAP Software Applications
Solutions SAP ERP
SAP CRM
SAP PLM SAP SCM
SAP SRM
SAP BusinessObjects
Small & Medium Size Solutions- SAP All-in-One
- Business ByDesign
- Business One
Platforms
- SAP NetWeaver
- SAP Enterprise Services
Architecture
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SAP ERP SAP ERP Business Modules
Collections of logically related transactions
within identifiable business functions MM (Buy)
PP (Make)
SD (Sell)
FI and CO (Track)
HCM (People)
WM (Store) EAM (Maintain)
CS (Service)
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SAP ERP SAP ERP Core Applications
Logistics
Sales & Distribution
MaterialsManagement
Production Planning
Plant Maintenance Quality Management
Finance
Financial Accounting
ManagerialAccounting
Asset Management
Treasury
Human Capital Management
- Personnel Management
- Benefits
- Payroll
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SAP ERP SAP Industry Solutions
Aerospace & Defense
Automotive Banking Chemicals Consumer Products Defense & Security Engineering, Const. Healthcare
High Tech Higher Education Industrial Machinery Insurance Life Sciences Logistics Service Prod.
Media Mill Products
Mining
Oil & Gas
Pharmaceuticals
Postal Services Professional Services
Public Sector
Railways
Retail
Telecommunications
Utilities
Wholesale Distribution
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SAP ERP SAP ERP
Then Works with relational databases
8,900 relational tables
15,000 reports 12,000 screens
most users only interact with 10 screens
Now
37,000 tables50
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SAP ERP Example of How SAP Work
Step 1 : Brazilian retailer orders, via theInternet, 1,000 shoes from International ShoeCo. A sales rep takes the order, routes it toSAPs ordering module, SAP checks the
retailer credit, price, etc. The order isapproved.
Step 2 : Simultaneously SAPs inventorymodule checks the stocks and notifies the repthat half the order can be filled immediatelyfrom stock. The other half will bemanufactured and delivered in 5 days directly
from the factory in Taiwan.
E l f H SAP W k
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SAP ERP Example of How SAP Work
Step 3 : SAPs manufacturing module schedules
the production in Taiwan and instructs thewarehouse (in China) to ship the shoes to Braziland print up an invoice (in Portuguese).
Step 4 : SAPs human resources modulecalculates labor requirements. Due to a
shortage, the personnel manager in Taiwan isinstructed to get temporary workers.
Step 5 : SAPs material planning module notifiesthe purchasing manager about a shortage ofpurple dye. A purchase order is automaticallyissued.
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SAP ERP Example of How SAP Work
Step 6 : The customer logs on via theextranet to the companys sneakersdivision. He can see that 500 shoes wereshipped from the regional warehouse. This
is done with SAP tracing capabilities. Step 7 : Based on data from SAPs
forecasting and financial modules, the CEOcan determine both demand and profitability
per product. The financial module alsoconverts all foreign money to $U.S.,whenever needed