IS373 Large Systems Implementation

Olayele Adelakun (Ph.D) Assistant Professor CTI Office: Room 735 CTI 7th Floor Phone: 312-362-8231 Fax: 312-362-6116 Email : yele@cs.depaul.edu Web: http://facweb.cs.depaul.edu/yele

Agenda
Course Overview
Expectation Introduction to Large Scale Systems

Course Overview
Objective Course Materials Grading Group Assignment

Course Objectives
Understand ERP implementation challenges
Key success factors in implementing large scale systems Impact of large scale system implementation on organizational success

Course Material
The Enterprise Resource Planning Decade: Lessons Learned and Issues for the Future by Frederic Adam and David Sammon ISBN:1591401887 Idea Group Publishing 2004 (302 pages) ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning by Thomas F. Wallace and Michael H. Kremzar ISBN:0471392014 John Wiley & Sons 2001 (372 pages)

Grading
Participation
Homework 1 Homework 2 Mid-term Paper Group presentation Group project paper Total

10%
10% due 2nd week 20% due 4th week 30% due 6th week 15% due 8th week 15% due 10th week 100%

Group Project
?

Question

Agenda
Course Overview
Expectation? Introduction to Large Scale Systems

Expectations?

Agenda
Course Overview
Expectation? Introduction to Large Scale System

Information Technology Challenges

Integrating Changing Technology Platforms
Administrative Framework Era I Regulated Monopoly Primary Target Organization Justification/ Purpose Productivity/ Efficiency Application Challenges

Era II

Free Market

Individual

Individual/Group Efficiency

Era III

Collaborative

Enterprise and Industry Integration

Value Creation

Large Systems / ERP Definitions

complex megapackages (Gable et al., 1997) designed to support the key functional areas of an organization. The American Production and Inventory Control Society (APICS) defines ERP as an accountingoriented information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders (Watson & Schneider, 1999). An ERP system can be thought of as a company-wide Information System that tightly integrates all aspects of a business. It promises one database, one application, and a unified interface across the entire enterprise Bingi et al., 1999 .

Large Systems / ERP Definitions

ERP links all areas of a company with external suppliers and customers into a tightly integrated system with shared data and visibility. ERP systems are designed to solve the problem of the fragmentation of information over many legacy systems in large business organizations (Chen, 2001, p. 374; Chen, 2001, p. 379) ERP plays a critical role in improving or reengineering outdated infrastructures, gaining tighter control over internal operations, and driving down costs enterprise systems (Davenport, 1998; Chen, 2001) and enterprise-wide Information Systems

The Value Chain

Support activities

Primary activities
Inbound logistics Operations Outbound logistics Marketing and Sales Service Corporate infrastructure Human resources management Technology Development Procurement Materials receiving, storing, and distribution to manufacturing premises Transforming inputs into finished products. Storing and distributing products Promotions and sales force Service to maintain or enhance product value Support of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Recruiting, hiring, training, and development Improving product and manufacturing process Purchasing input

RATIONALE FOR ERP SYSTEMS

One of the key reasons why managers have sought to proceed with difficult ERP projects is:
to end the fragmentation of current systems, to allow a process of standardization, to give more visibility on data across the entire corporation, to obtain competitive advantage (Sammon & Adam, 2000).

A seamless integration is essential to provide visibility and consistency across the enterprise.

Goals for Implementing Large Systems e.g. ERP

1. Integration of financial data
2. Standardization of manufacturing processes 3. Standardization of human resource information

Myth and Reality of ERP Benefit Realization

Business Benefits
A Framework of Business Benefits Dimension Subdimension Explanation

[1] Operational

1.1 Cost reduction 1.2 Cycle time reduction 1.3 Productivity improvement 1.4 Quality improvement 1.5 Customer services improvement

Because ERP systems automate business processes and enable process changes, one would expect ERP systems to offer all of these types of benefits.

Adapated from Shang and Seddon (2000)

Business Benefits cont.

[2] Managerial 2.1 Better resource management 2.2 Improved decision making and planning 2.3 Performance improvement With a centralized database and built in data analysis capabilities, it seems likely that ERP systems will provide informational benefits to management.

Business Benefits cont.

[3] Strategic 3.1 Support business growth 3.2 Support business alliance 3.3 Build business innovations 3.4 Build cost leadership 3.5 Generate product differentiation (including customization) 3.6 Build external linkages (customers and suppliers) 3.7 Worldwide expansion 3.8 Enabling e-commerce

ERP systems, with their large-scale business involvement and internal and external integration capabilities, could assist in achieving these strategic benefits.

Business Benefits cont.

[4] IT Infrastructure 4.1 Build business flexibility for current and future changes 4.2 IT cost reduction 4.3 Increased IT infrastructure capability ERP systems, with their integrated and standard application architecture, provide an infrastructure that could support this dimension.

Business Benefits cont.

[5] Organizational 5.1 Support organizational changes 5.2 Facilitate business learning 5.3 Empowerment 5.4 Build common visions 5.5 Change employee behavior 5.6 Better employee morale and satisfaction The integrated information processing capabilities of ERP systems could affect the establishment of organizational capabilities.

The ERP Market

Vendor
BAAN

Origin
Holland

Salient Features
An earlier ERP vendor

Oracle
PeopleSoft

US
US

A relatively newcomer, but quickly gaining share

Originally focused on HR management

SAP

Germany

The pioneer and largest firm

Internet emphasis

JDEdwards US

Table 3: ERP Software Market Growth Rates Growth Annual Revenue Rate (%) Reference

32
36-40

US$66.6 billion by 2003 (e)

US$70 billion by 2002 (e) US$1550 billion from 1999-2004 (e); eventual size of market to US$1 trillion (e)

Shakir, 2000
Shanks et al., 2000 Bingi et al., 1999

36
40

US$15.68 billion in 1997 (a) and US$72.63 billion by 2002 (e)

20,000 companies paying US$10 billion in 1997 (a) US$66 billion by 2003 (e) ERP revenue hit $16.6 billion in 1998 (a)

Holland et al., 1999 Holland & Light, 1999

Markus & Tanis, 2000 AMR Research, 1999 Oliver & Romm, 2000

Note: (e) = expected; (a) = actual

The ERP Market

SAP

SAP R/3 is composed of four major parts accounting, manufacturing, sales, and human resources containing more than 70 smaller modules work for multinational corporations due to the fact that it has a strong international appeal, with capabilities to support multiple currencies, automatic handling of country-specific tax laws and regulations, and legal and language needs The complete suite of SAP R/3 applications is available in 24 languages, including Japanese (Kanji) and other double-byte character languages Furthermore, SAP software is available for all types of industries and for every major market (SAP, 2003). R/3 is designed as an open standard (it can run on a variety of hardware and platforms and software environments), and it uses a thin client and a three-tier architecture, consisting of database, application, and presentation tiers

Three-Tier Client/Server Architecture

The ERP Market Support

ERP supports about 70-95% of a large organizational need The remaining 5-30%
Interfacing the ERP application with existing legacy systems using middleware, which adds to the complexity Interfacing ERP to third-party solutions. Writing custom software to extend functionality. Modifying the ERP source code directly.

Summary
1. ERP systems create a framework that will improve customer order-processing systems, which were neglected in recent years. ERP systems consolidate and unify business functions, such as manufacturing, finance, distribution, and human resources. ERP systems integrate a broad range of disparate technologies into a common denominator of overall functionality. ERP systems create a foundation on which nextgeneration applications can be developed.

2.

3.

4.

Agenda
Expectations?
Course Overview Introduction to Large Scale Systems