ERP Systems

ERP systems can be broadly classified into three tiers based on the total cost of ownership (TCO), scalability, and functionality.

Tier 1: The main players in the tier 1 category are SAP, Oracle, Microsoft dynamics, and Infor. The tier 1 category for a long time has been a two horse race between SAP and Oracle. However, of late, Microsoft dynamics and Infor have been considered by many as tier 1 ERP systems, including Panorama consulting. The TCO is extremely high and revenue is typically measured in billions of dollars. These ERP systems are best suited for fortune 1000 companies which have a global presence. Implementing the ERP system is an extremely complex procedure and requires highly skilled professionals.

Tier 2: ERP systems which fall under this category are best suited for mid-size companies. Main players are Epicor ERP, Sage, Exact, IQMS. These systems are not as complex as tier 1 systems, but they are often robust and agile enough to fit the needs of mid-size organizations. Tier 2 vendors are usually limited number to a few number of countries or regions.

Tier 3: There are many players in the tier 3 category, and they are mainly suited for smaller than medium sized businesses. Revenues typically range from $10 million to $100 million. They have limited functionality and are often designed for a vertical industry.

http://www.compudata.com/difference-between-erp-tier-1-erp-tier-2-erp-tier-3/

https://www3.technologyevaluation.com/research/article/tier-1-vs-tier-2-vs-tier-3-erp-whats-the-difference-anyway.html

How the ERP system works in our production and ads posting process? When a production contract made between sales and customer, operation team would be noticed to do the further work. In the peek time, since the high volume of productions and posting jobs, it’s hard to finish the job on time, and more importantly, hard to trace the current status of a customer job. If six sales want to get the updated information of their orders’  production and posting ads, they have to communicate with the operation team personally, and cause unnecessary workload and pressure for the operation team. Sometimes the operation team cannot give you the exact time when ads are fully produced  and when ads are fully posted on metro. An ideal ERP system would be implemented historical  data and related models to calculate and offer those key information, which is more reliable that man made work. And sales can trace those numbers any time in the system. In another case, when an in-train ad is posted,  normally the operation team cannot give the sales the exact time when the train is out for operation (So that customer can check the ads or we can take the pictures for ads). An ideal ERP system would be linked to the metro operation system, so they would monitor every train’s activity: if the train is being repaired; how many times i would run today,  and how many passengers on that train.  It would help marketing team to precisely calculate target coverage of the ads in that train, to make a reliable after-ads report to the customer.

New enterprise software companies like Salesforce.com, Taleo, Workday, and others are disrupting the traditional ERP market by offering sophisticated, flexible, and easy-to-use applications. These systems are focused on specific functional areas: finance, procurement, supply chain, HR, sales and marketing.

Fitting in these applications into the legacy ERP system is what we call today “hybrid ERP”. The resulting ecosystem is a “fit-for-purpose hybrid ERP software” and it can have a multitude of combinations customized for the company’s needs.

Therefore, new operations are linked to the legacy ERP to form the Hybrid ERP:

• Web and mobile storefront
• Sourcing and vendor contract management.
• Contingent workforce management.
• Workforce management and recruiting.

Source:  Strategy& analysis

The Saleforces.com-like applications are incorporated into the hybrid ERP and are replacing the classic/traditional view of the system as organizations are becoming more flexible and more mobile. These new capabilities are integrated in the traditional ERP software ecosystem as “hybrid ERP” systems to enable specific functions needed by the evolution of certain processes. For instance, the human resources function because recruiting process is changing, and e-commerce to operate with greater agility and independence from old-style IT companies.

 

Source: PwC Hybrid ERP: New technology, new options.

The integration of the various business processes enables people and their departments to work effectively in their silos. To further enhance integration of business processes, the integration of on premise and cloud based systems are becoming more important as well. For example, the integration of cloud based CRM systems like Salesforce and on premise legacy ERP systems, can help increase the efficiency of a sales or marketing user. The ERP system integration market is expected to grow at a CAGR of 9% from now until 2019.

Having to deal with working with existing legacy ERP systems can also create problems for companies by limiting them from being able to adopt new modern capabilities that could help enterprise organizations. As a result, integration tools offered from companies like Adeptia, Atos, Coupa, and Mulesoft that make it easy to integrate on premise applications with cloud applications, have become popular. One new technology, that falls into this example and that can impact the effectiveness of ERP systems is machine learning. For example, machine learning can be applied to different departments and can use historical data to make predictions about future needs. It could make, for example, use historical data to make periodic sales predictions, which in one way as a result, could help in the material planning process. Machine Learning could also collect data points and give feedback on how effectively users are following custom workflows, allowing for custom workflows to become more efficient.

Sources:

http://it.toolbox.com/blogs/inside-erp/3-ways-machine-learning-improves-erp-71051

http://www.supplychaindive.com/news/erp-tech-dependence-innovation/430482/

http://www.openpr.com/news/382632/Global-ERP-System-Integration-and-Consulting-Market-to-grow-at-a-CAGR-of-9-over-Forecast-period-2015-2019.html

Processing the data in an integrated fashion can promote improvement of business performance. To achieve such an integration, you have to map data points that belong to specific business processes to the relevant databases. Carrying out this analysis in a systematic fashion lets you plan for the level of integration you want and select the technology to achieve it.

Store Your Data Where You Need It: Production staff use ERP systems for planning. While your integration can give employees broader access to data, it is more efficient to store it in the system where it is most needed while limiting data duplication as much as possible.

Mapping Order Processing: An important point of integration is in order processing. When you integrate the process, you map the required data between the CRM and ERP systems.  For example, the order entry employee might see a form populated with customer and order information from the CRM system and with information on inventory and production scheduling from the ERP system. The employee can schedule production and obtain a planned shipping date. When he submits the form, the details of the order are passed to the ERP database.

Data for Shipping and Invoicing: For simple processes where employee intervention is not required, you can automate the transfer of data. While the mapping, consisting of identifying the information to be transferred, is the most important part of the integration, you can avoid data duplication by transferring the location where the data is stored rather than the actual data.

Customer Service Records: You can carry out such mapping of data for other business processes in your company. For example, information on customer service is vital for ERP. information, such as warranty claims, defective product reports and customer complaints, are mapped to the ERP system. ERP has access to product-related information for quality assurance and continuous improvement. purposes. CRM stores customer-specific information.

http://smallbusiness.chron.com/map-business-processes-integrating-crm-erp-77332.html

Over the course of the quarter, we’ve seen how an EPP system integrates the various departments while maintaining silo walls within an enterprise. Having a successful system in place not only ensures effective data sharing, but also eliminates any inefficiencies in an enterprise’s day-to-day operations. Implementing an ERP system can be quite complicated, and there have been well documented cases of when implementations went over budget, over schedule, or did considerable business damage. One of my earlier blog posts covers some well known disaster stories.

While successfully completing an implementation is certainly a reason to celebrate. The work doesn’t end there. When your entire enterprise relies on the system for your financial and operational functions, how secure the system is becomes a top priority. In fact, a couple of months ago, the U.S. National Counterintelligence and Security announced that it will share classified security threat reports to critical telecommunications, energy, and financial businesses in the U.S. These threats target the supply chain by attempting to hack and manipulate ERP/supply chain software systems in order to disrupt and/or steal enterprise data.

While this piece of news sounds serious enough, there are some basic guidelines that all organizations can follow. Based on ERP Software Blog, below are some risks to watch out for and how to manage:

• Outdated and unsupported software. Using outdated software can lead to integration and compatibility problems, but not updating software also means that the system is open to software security vulnerabilities. Updating software as soon as new security patches become available makes it harder for hackers to gain entry.
• Technical personnel has access to make large scales changes to program behavior. Oftentimes, security is focused on external threats and end-user security and permissions. But controls should also be placed on the developers of the ERP software/system so that technical staff cannot make unauthorized changes that can drastically change the behaviors of the system or interfere with the business data.

According to the Council of Supply Chain Management Professionals, it incorporates “the planning and management of all activities involved in sourcing and procurement, conversion and logistics.” Three key features of a SCM system are:

Demand Management

Demand management helps companies and partners to focus on meeting the needs of customers, rather than the production process. By updating customer needs with partners and increasing their collaboration, companies can increase business opportunities for all members.

Communication

Effective communication enables all members in the chain to share the same demand and operational information, which keeps them informed of developments that affect their contribution. It also facilitates members to respond rapidly to new business opportunities, helping to get new products to market quickly.

Integration

Integrating supply chain processes helps each member reduce its inventory costs. According to a case study on the Wal-Mart by the University of San Francisco. Suppliers share up-to-date information on demand to route their products to Wal-Mart’s warehouses for onward shipment to stores with minimum time in inventory. This reduces Wal-Mart’s costs significantly, enabling them to offer customers highly competitive pricing. To achieve this level of integration, companies develop single information networks that enable all members to access and share supply and demand data securely.

Reference: http://smallbusiness.chron.com/four-elements-supply-chain-management-52355.html

In May 2004, HP wanted to centralize all of its disparate North American ERP systems onto one SAP system. The cost of the project was estimated to be around $30 million and the ERP problems cost HP $160 million.

Mistakes made by HP

1) When the system went live almost 20% of the customer orders were blocked and had to be entered manually. This was because of data modeling problems between the legacy and SAP system, and it resulted in a backlog of orders. The connection between the legacy and SAP system were tested for both orders with customization and without customization, and they worked fine. The mistake was that HP did not test the all the different customer configuration, and hence some of the orders went through and some did not.

2) Customer service representatives were not properly trained to use the new system which resulted in more dropped orders.

3) The demand for configure to order system was 35% more than what HP had predicted, because of which HP had to buy a new factory in Europe. HP tried speeding up the delivery process for the backlogged orders which further increased the delivery cost by 35 to 40 percent.

All these problems were minor problems which could have been handled by HP, but since they all occurred together it turned to be a huge problem.

http://www.cio.com/article/2439385/project-management/when-bad-things-happen-to-good-projects.html

 

 

When we were doing the “little game” during the classes this week, we carried out a whole business process from procumbent to production. It took entire 2 classes to finish one simple business process. So does erp really make our lives easier or harder?

The key factor is the automation. A lot of balancing, calculating in erp is automated to accelerate the business process. The advantages of automating workflows are that it often simplifies business processes by eliminating steps. With manual data entry and business processes, there are more checks and balances built into the workflow to eliminate errors. These additional steps not only slow business processes but also make them inefficient. With automated business processes, workflows are streamlined for greater operating efficiency and easier auditing.

Any data that is not automatically captured by the ERP system has to be entered manually or maintained separately for auditing and compliance, which creates added risk. Paper processes are prone to errors and harder to manage and track.

ERP systems integrate pertinent data and software systems for businesses so that employees, regardless of department, can access the information they need to do their jobs.

Reference:

Automating Business Processes Helps Improve Efficiency and Reduce Risk and Impact on The Bottom Line

https://www.oildex.com/about/news/automating-business-processes-helps-improve-efficiency-and-reduce-risk-and-impact-on-the-bottom-line/

How ERP Systems Can Automate Business Processeshttp://blog.icreon.us/launch/erp-systems-automate-business-processes

Kaiser Permanente is an integrated managed care consortium and the US’s largest not-for-profit health plan. As of December 31, 2015, Kaiser Permanente had 10.2 million health plan members, 186,497 employees, 18,652 physicians, 51,010 nurses, 38 medical centers, and 622 medical offices. 

Kaiser faced several issues in 2014. First, Affordable Care Act (Obamacare), increasing impact of consumerism, and decreasing reimbursements made it change its cost structure. Second, inventory is a problem within Kaiser. Inventory was driven by nursing at different locations. Nurse not only served patients but also search the needs of products. Moreover, recalled and expired products were discovered manually. Sourcing, distribution, and point of care acted independently. All these reasons drove it high inventory level but no one knew the exact number.

Transformation:

• It made a maintaining procedure cards. The list by doctor of all materials that doctor uses for particular procedures. This information will allow them to see variation of product usage across procedures and surgeons.
• Implement Oracle’s PeopleSoft Applications as ERP system: one item master and scanning process. These help them understand actual cost procedure, accurate inventory, replenishment, and recall management processes.
• Implement a consensus demand management process (Oracle’s Demantra): use science to set inventory level and forecast inputs (shipment history, operation room schedules, and external factors like seasonality and changes to insurance plans).