Getting the most out of your ERP system

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Getting the most out of your ERP system The
Imperative for Collaborative ERP
cERP
Jay Srinivasan MSME, MSIE, MBA,
MS(Finance) Phone [phone]
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Discussion topics

• Definition of Collaborative ERP
• What it is ?
• Why it is needed
• Is it real or just another buzz word
• What internet internet based solutions are
  available to enable multi channel collaboration
• How ERP vendors define it ?
• How other vendors define it
• How can you leverage current infrastructure and
  integrate multi-platform solutions
• Stages in Enterprise life cycle
• cERP challenges
• Best practices approach
• Solution selection
• Implementation
• Lessons learned
• Maximizing Return on investment

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How I am doing with my ERP implementation
How do I integrate SAP system with Peoplesoft
Big5 are charging too much
What is my true ROI? How do I justify the budget ?
Do I convert the legacy system to new ERP system
Who really is my competition

Am Is promising too much
How do I convince my CEO ?
What if
Oh!No not another merger
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World of Acronyms and buzz words
MRP MRP II ERP Collaborative ERP ERP II
CSV
WWW
Firewalls
EDI
Bot
EFT
W3C
EPI
B B S
DNS
Efax
EDIFACT
Email
DISA
Homepage
HTTP
Encryption
Browsers
HTML
FTP
Cookie
SLIP
Website
Eform
FEDI
X12
ANSI
SHTTP
Digital Signature
Webform
UCSII
URL
SYN
Internet
IIOP
EM
CORBA
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New business models enabled by the internet
Collaborative ERP Next Buzz word ?
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What is Collaborative ERP ( cERP) ?

• Collaborative ERP is
• A cohesive framework to facilitate information
  exchange for doing business
• Applied across the extended enterprise...
• Using the Web
• The difference is the emphasis on sharing
  information with suppliers and customers using
  the Web

PeopleSoft, one of the largest ERP software
vendors is famous for inventing new terms for old
processes. The latest initiative is the
Collaborative Enterprise and it is actually a
suitable and descriptive phrase to replace ERP.
ComputerWorld Canada
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What is cERP? It is more than sharing data

• The mission of Collaborative ERP is to increase
  partnering between retailers and manufacturers,
  and manufacturers and their suppliers through
  co-managed processes and shared information.

Collaborative Planning provides an environment
forintegrating demand and supply side
processes inorder to achieve reduced inventory
levels, shortersupply chain cycle times and
reduced supply chaincosts.
A collaborative enterprise is certainly more
descriptive than an ERP. PeopleSoft describes
PeopleSoft 8 in terms of applications
collaborating with each other to produce the
information that businesses and governments need
to do their business. The collaborative part of
the version means that data is accessible from
any source, including a competitor's application.
The ones most often touted are archrivals Oracle
and SAP financials. It's not quite the principle
of "If you can't beat them, join them," it's more
like "We don't have to beat them, we'll just use
them."
ComputerWorld Canada
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What is ERP II ?

• ERP II, "an application and deployment strategy
  to integrate all things enterprise centric,"
• ERP II would take the ERP foundation and extend
  it outward, to position the enterprise in the
  supply and value chain.
• Deployment of ERP II could take place through a
  single vendor or a variety of best-of-breed
  application providers.
• open architecture and a vertical-specific
  functionality,"
• There's a lot of misinformation being thrown
  around in terms of what integration is in today's
  environment.
• when Gartner laid down the rules for identifying
  ERP II vendors, attributes had to include those
  old ERP functionalities. "When we said you have
  to have accounting, purchasing and order entry
  costing, it eliminated Siebel and i2 from being
  ERP II vendors
• As in movies, sequels don't work," says
  Chatterjee. "Just as ERP had a certain
  definition, Gartner is trying to say ERP II is
  the next 10 years. It's like Jurassic Park Three
  and Four."

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cERP Value Chain
cERP touches on every sector of the value chain
Manage Customer Service
Manage Logistics/ Distribution
Produce Products
Procure Materials/ Services
Manage Customer Orders
Perform Sales
Develop Products
Perform Marketing

• Understand Customers/ Markets
• Develop Marketing Plans/Strategies
• Manage Products and Services
• Develop/Maintain Pricing
• Plan/Manage Sales Channels
• Advertise/Promote Products/Service

• Research Products
• Design/Develop Products
• Design/Implement Manufacturing Processes
• Manage Product Configuration/Customization
• Plan/Schedule/Manage Product Introduction

• Sell Products
• Develop/Maintain Customer Relations

• Enter Orders/ Track Orders
• Invoice Customers
• Handle Inquiries/ Provide Support

• Develop Sourcing Strategies
• Select Suppliers
• Deliver Product
• Appraise Develop Suppliers
• Order Materials/ Services

• Schedule/Plan Production
• Manage Production Quality
• Perform Production/ Control Mgmt
• Produce Production Delivery
• Obtain/Install/ Schedule/ Perform Equip.
  Maintenance

• Manage Inbound Logistics
• Manage Warehouse
• Manage Distribution Operation
• Manage Outbound Logistics
• Manage Spare Parts
• Manage Inventory

• Manage Inquiries/Provide Support
• Handle Complaints/Warranty/Claims/Returns
• Measure Customer Satisfaction

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ERP Legacy of the 1990s - The extended Enterprise
Buy
Sell
Make/Add Value
Supply Chain
Demand Chain
Front/Back-Office Integration
It is generally unwise to blindly extend ERP
applications in an attempt to become EC solutions
Removing ERP application is certainly unnecessary
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Why cERP has become an imporant issue ?

• The focus on core competence and capital
  efficiency has driven dis-aggregation of the High
  Tech value

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Four Walls view of Enterprise Collaborative
ERP(cERP)
cERP is the Value Web Enabler
Service Providers
Indirect Supplier
Components Distributors
System OEM
Foundry
cERP
Raw Matl Supplier
Capital Equipment Mfr.
Value Web
Semicon IDM
End User
cERP
Contract Mfr. (CEM)
Sub-system OEM
Technology Resellers
Assembly Test Subcon
Fabless IP House
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This re-aggregation will realize major benefits
Benefits from re-aggregation
Potential results

• Collaborative design
• Initial price premium
• Jump start on market share

2-6 revenue growth
eDesign
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Characteristics of Product Data that form the
core for collaborative ERP
Product Data is unstructured Product Data is used
in highly iterative, creative processes Product
Data is generated and used in multiple places
cERP Enhanced Usage of Product Data
Current Usage of Product Data
Operations
Operations
Shop Floor
Shop Floor
RD
RD
cERP
Drawings
Drawings
Engineering
Engineering
Quality Data
Quality Data
Operations Planning
Operations Planning
SCM
ERP
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Typical high level process flow
Internal Business Processes
External Business Processes
External Business Processes
Specify Product
Design Product
Design Solution Set
Design Process
Forecast Demand
Demand Mgmt
Plan Demand
Solution Knowledge
Manufacture Rules
Design Supply Chain
Configure Product
Select Suppliers
Qualify Suppliers
Plan Production
Process Order
Forecast Materials
Website
Prepare Bid
Order Material
Master Prod. Scheduling
Plan Materials.
Relationship Represent.
Shop Floor Control
Plan Maintenance
Manage Imp- lementation
Shipping Orders
Schedule Transport
Order Maintenance
Equipment Control
Suppliers
Customers
Store Product
Product Packaging
Receive Material
Produce Product
Store Material
Ship Product
Capture Costs
Record Revenue
Record Liability
Process Invoices
Invoice Customer
Collect Revenue
Balance Close
Process Payment
Capture cash flow
Report Results
Product Material or Services
Other Information
Product Information
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Typical high level process flow - dependencies
Specify Product
Design Product
Design Solution Set
Design Process
Forecast Demand
Demand Mgmt
Plan Demand
Solution Knowledge
Manufacture Rules
Procurement
Design Supply Chain
Product Realization
Configure Product
Select Suppliers
Qualify Suppliers
Plan Production
Process Order
Forecast Materials
Advance Planning
CRM
Website
Prepare Bid
Order Material
Master Prod. Scheduling
Plan Materials.
Production Execution
Relationship Represent.
Shop Floor Control
Plan Maintenance
Logistics Management
Manage Imp- lementation
Shipping Orders
Schedule Transport
Order Maintenance
Equipment Control
Customers
Suppliers
Store Product
Ship Product
Product Packaging
Receive Material
Produce Product
Store Material
Capture Costs
ERP
Invoice Customer
Record Revenue
Record Liability
Process Invoices
Collect Revenue
Balance Close
Report Results
Process Payment
Capture cash flow
Product Material or Services
Other Information
Product Information
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cERP Value Chain

• Internet Marketing
• Broadvision
• Exchange Applications
• Open Market
• Prime Response
• Siebel
• Smart Technologies
• Trilogy

• Component and Supplier Management
• Aspect

• Internet Sales
• Broadvision
• Fischer Technologies
• Interworld
• Open Market
• Pandesic
• Smart Technologies
• Trade Ex
• The Vision Factory

• Order Mgmt
• Interworld
• Open Market
• Pandesic
• Siebel
• Smart Technologies
• Vantive
• Trilogy

• E-Procurement
• Aspect
• Actra
• Arriba
• Commerce One
• Crossroute
• Elcom
• Elekom
• Fisher Technologies
• Hatinger
• Trade Ex
• EDI
• Harbinger
• Sterling

• Electronic Supply
• Chain Plan Execute
• i2
• Manugistics

• Warehouse Logistics
• Crossroute
• i2
• Manugistics
• Pandesic Shipping
• FedEx
• UPS

• Call Center
• Siebel
• Vantive
• Field Service
• Siebel
• Vantive
• Customer Service
• Pandesic
• Siebel
• Smart Technologies
• Vantive

• Technology Enabled Selling
• Siebel
• VantiveSalesConfigurationSystem
• Calico
• Trilogy

• Call Center
• Siebel
• Vantive

ERP Peoplesoft , JD Edwards, Oracle,, SAP
ERP vendors are incorporating point solutions in
their portfolio
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10 stages of Enterprise Lifecycle
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Firms need enterprise backbone for collaboration

• General environment today
• Manufacturers have ERP deployed in multiple stand
  alone installations
• ERP data is not being used for collaboration
• Firms do not get partnering value from ERP
• Legacy of ERP splintered across the organization
• Splinted ERP prevents firms from sharing data
• Only 6 consider ERP systems very effective at
  helping them collaborate
• Employees are armed with operational insight
• Production material requirements
• Strategic supplier contacts
• Comprehensive order status
• Supply chain information is shared externally
  with the partners
• Available inventory
• Manufacturing constraints

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How should companies prepare for cERP?

• Assess readiness along several key dimensions
• Strategy--what is the value potential from
  collaboration, and what new KPIs are needed to
  track benefits?
• Process--does the company have a single operating
  forecast, and if so, how reliable is it? Do
  internal functions collaborate on the forecast,
  or does one functional area dominate?
• Organization--are people and processes organized
  to enable collaboration? Does the company
  go-to-market/buy via a customer account/item
  merchandise team structure?
• Technology--can forecasts be aggregated and then
  segmented by item/customer on both a national and
  local level?
• Initiate internal projects to clean up legacy
  processes, systems and data
• Internal integration of processes and information
  flows
• Agreement on a common (best) process model
• Data normalization
• Advanced planning and scheduling implementation
• Get started in pilots

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Cool thing to do But focus on
How do we make / save money or provide
competitve advantage
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Implementation priority segmentation
Customer segmentation forms the basis for
designing differentiated approaches to cERP
Highest priority Application
High and medium priority applications
HIGH
Depending on the priority of the application, the
approach to ERP implementation should vary
Return on investment
High and medium priority applications
Low priority Applications
LOW
LOW
HIGH
Complexity of application integration

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Return on investment - Realities

• Difficult to quantify in all modules of an ERP
  system
• Some of the so called savings may be considered
  subjective

Cost of inaction?
Source Forrester Research
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Sudden drop in passenger load in a particular
segment due to a major political event in that
region
Passenger Load analysis solution
What if Analysis For various options
Segment load analysis
No of flights To the region
Region
Profitability of The regional route
Competitive data for the route
flights
New flight schedule
Hub outbound Load data
Connecting Flights affected
Type of aircraft
Flight Frequency to the segment
Type of Aircraft and capacity
Flight frequency
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How cERP enable essential decision making to
maximize shareholder value.

• Supply Chain Analytics
• Product costing analysis
• Inventory analysis
• Process control analysis
• Scheduling analysis
• Throughput analysis
• Quality/ISO analysis
• Procurement analysis
• Warranty analysis
• Vendor/supplier analysis

• Customer Analytics
• Customer description
• Customer profitability
• Customer response
• Customer attrition/churn
• Cross sell/up sell
• Market trends
• Market preference
• Market campaign
• Click stream
• Real-time personalization
• Sales force efficiency

Strategic Analytics
Supply Chain Analytics
Customer Analytics

• HR / Workforce Analytics
• Compensation/incentive analysis
• HR management analysis
• Retention analysis
• Disability analysis
• Injury reporting analysis
• Regulatory reporting

HR / Workforce Analytics
Financial Analytics

• Financial Analytics
• Profitability analysis
• Cash flow analysis
• Risk analysis
• Hedging analysis
• Credit/collection analysis
• Tax reporting/analysis
• Shareholder value analysis
• Financial reporting

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Developing cERP capabilities requires a
step-by-step approach

• Technology providers are rapidly developing cERP
  offerings however, capabilities are not yet
  fully operational
• Initial efforts should focus on developing
  internal collaboration processes (operations,
  marketing and sales) with supporting KPIs
• Establish forecast approach, accountabilities and
  communication processes
• Develop metrics such as
• sales and order forecast accuracy
• stock to sales ratio
• purchase order fill rate percent (percent
  shipped and delivered on time)
• frequency of emergency or cancelled orders
• Implement internal collaborative processes,
  aligning individual objectives to performance
  measures
• Going forward, identify pilot partners to develop
  and refine collaboration processes and approach

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Lessons learned

• Speed is key
• Clear value proposition
• Anchor partners are critical
• Build critical mass quickly
• Understand your competencies
• Selection of alliances and service providers
• Launch infrastructure considering end game
• Tools are still evolving-dont substitute package
  selection for strategy
• Aggressive management of regulatory issues
• Be ready to change direction quickly

• Big is not always better
• Implement various modules in stages
• Avoid islands of automation
• Convert every legacy system to an ERP system
• Todays hype might be listed in tomorrows FD
  Company list
• Establish a sense of Urgency
• Create the platform for change (e-business)
• Empower broad-based action
• Generate short-term wins
• Establish transformation objectives

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It is a process and not an event
Thank You