ERP&E-Bus

8/8/2019 ERP&E-Bus

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GMP Session 8

E- Business and ERP

Information System andInformation Technology

Strategy

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Session 8-1

E-Business andERP

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10 Driving Principles of the New Economy

MatterMatter It matters lessIt matters less

SpaceSpace Distance has vanishedDistance has vanished

TimeTime Its collapsingIts collapsing

PeoplePeople They are the crown jewelsThey are the crown jewels

GrowthGrowth Its accelerated by the networkIts accelerated by the network

ValueValue It rises exponentially with market shareIt rises exponentially with market share

EfficiencyEfficiency Infomediaries replace intermediariesInfomediaries replace intermediaries

MarketsMarkets Buyers are gaining dramatic new powerBuyers are gaining dramatic new powerand sellers new opportunitiesand sellers new opportunities

TransactionsTransactions Its a one on one gameIts a one on one game

ImpulseImpulse Every product is available everywhereEvery product is available everywhere

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E-Business : ³being´ vs ³doing´

E-Commerce : Marketing

Selling

Buying of productsand serviceson theinternet

E-Business is improving businessperformance throughconnectivity:

New technologies in the value chain

Connecting value chains across businesses

In order to :

Improve service/reduce costs

Open new channels

Transform competitive landscapes

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� Understand

Customers/

Markets

� Develop Marketing

Plans/Strategies

� Manage Productsand 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

� PerformProduction/

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

ManageCustomer

Service

ManageLogistics/

Distribution

ProduceProducts

ProcureMaterials/Services

ManageCustomer

Orders

PerformSales

DevelopProducts

PerformMarketing

Call Center Warehouse &

Logistics

IntegratedSupplyChain

E-ProcurementCall Center InternetSales

Component &Supplier

Management

InternetMarketing

Field ServiceShippingEDITechnology Enabled Selling

Customer Service

Order Management

SalesConfiguration

System

Customer Service

ERP

T he Business Value Chain

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Manage

Financials

Manage

Customer

Service

Manage

Customer

Orders

Procure

Materials/

Services

Produce

Products

Manage

Logistics/

DistributionCompany

Perform

Marketing

Develop

ProductsPerform

Sales

CustomersManage

Financials

Perform

Marketing

Manage

Customer

Service

Develop

Products

Perform

Sales

Manage

Customer

Orders

Procure

Materials/

Services

Produce

Products

Manage

Logistics/

Distribution

SuppliersManage

Financials

Perform

Marketing

Manage

Customer

Service

Develop

Products

Perform

Sales

Manage

Customer

Orders

Procure

Materials/

Services

Produce

Products

Manage

Logistics/

Distribution

Credit Application

Order

Status Inquiry

Carrier Status

Confirm Receipt

Payment

Instructions

Payment Advice

Invoice

Cash Mgt.

Taxes

Service

Support

Documents

Ship Notice

Notify Carrier

Carrier

Status

Leads Catalog

Pricing Quote Configure Order Ackn.

Credit Status Availability Order Status

Credit Application

Order

Status Inquiry

Carrier Status

Confirm Receipt

Payment

Instructions

Payment Advice

Invoice

Cash Mgt.

Taxes

Service

Support

Documents

Ship Notice

Notify Carrier

Carrier

Status

Catalog

Pricing Quote Configure Order Ackn.

Credit Status Availability Order Status

T he E-Business Value Chain

The E-Business enabled value chain increases competitiveadvantage by linking disparate organizations together to formcollaborative, interactive and pro-active environments.

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E-Facade or E-Business

Putting a Web site in front of lousy

processes merely advertises howlousy they are.

-Dr. Michael Hammer, 1999

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T he ³Make´ approach

Brief History Extensive in-house development

in 2GL and 3GL language

$ 2.7 trillion already invested

Advantages of in-house

development Tailored or customized systems

Constant in-house support

Non-availability of packagedsolutions

Disadvantages Difficulty in upgrading, enhancingor modifying to meet changebusiness needs

80% of s/w budget spent onmaintenance

Difficulty of maintaining isolatedsystems

The third party concept Companies relieved of

unnecessary expenditure in termsof employing skilled ITprofessionals

Many companies started providingcustom made software solutions

Advantages of the make approach Customized according to the

special needs of the company

Domain experts can be retained

as the specialized domainknowledge already built into thelegacy system can be transferredby third party tools

Established skill sets existingwithin the company can beexploited for custom software

development

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T he ³Buy´ approach

The changing scenario Early 1970s, some vendors started

selling packaged solutions

Early 1980s, many corporatesstarted buying packaged solutions

By 1995, the packaged corporate

application has become $ 15million industry

Corporates started looking forintegrated solutions as they beganto reorganize existing processesfor better performance

Popularity of packaged

solution Heavy cut down on in-house costs

Robust and well tested solutions

Corporates saw no gain inredesigning and redeveloping analready working software

Corporates could move easily toother inexpensive platforms

Benefits of distributed client / servercomputing

Aid in BPR by assisting in processimprovement

Drawbacks Does not handle niche domain

needs

Significant amount retraining of employees

Provisions for custom development within a wide framework of

enterprise wide package solutions,e.g., ORACLE Financials has acustom develop module for EnergyAccounting

Enterprise-wide packages should becustomized for targeted sectors,e.g. IS-Media, IS-Oil from SAP

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K ey Benefits of Enterprise Systems

Effectiveness of the business Improved Customer Service

Faster cycle time to market

Improved access to integrated information formore effective decisions(costs, profitability etc.)

Commonality of global information

Responsiveness to regulatory changes

Catalyst/enabler of (cross-functional)

organizational renewal Added business functionality

Logistics and Distribution Sales & Customer Service

Vendors Inbound Manufacturing Transportation Distribution Delivery Customer Consumer Logistics

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K ey Benefits of Enterprise Systems

Efficiency of the business

Reduced Costs of business operations Reduced inventories

Standardization of business processes across unit,across functions

Reduced cost of business informationmanagement (e.g., clerical cost of transactioninputs, cost of data reconciliation)

Integrate Supply Chain Management

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BASIC ASSUMP T IONS

1. Every company has certain

business information tasks-theseare facilitated by ERP

2. Web-based technology comprises

theelectronic portion, but ERPcomprises the enterprise portion

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BASIC ASSUMP T IONS

3. E-Business is best supported by a

well tuned ERP system4. No one path will lead to Success;each company needs to decide its

own strategy, in terms of bothERP implementation and e-business

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ERP/ E-Business Matrix No E-business Channel Value-Chain Indu

capabilities Enhancement Integration Transform

Greenfield

Nonintegratedsystems

Limited/Single-

Function ERP

Integrated Business-

Unit ERP

Integrated

Enterprise ERP

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E-BUSINESS OP T IONS

1. No E-Business Capabilities

2. Channel Enhancement

3. Value-Chain Integration

4. Industry Transformation

5. Convergence

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ERP OP T IONS

1. Greenfield

2. Nonintegrated Systems3. ERP by Function

4. ERP by Business Unit

5. Fully Integrated ERP

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ERP¶s FOCUS ON INTERNAL DATA,

INFORMATION, KNOWLEDGE

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COMMUNICAT ION WI TH EX T ERNAL S T AK E H OLDERS

ERP&E-Bus

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