ERP
1
Evolution of Enterprise IT
1950s to 2010s
2
Evolution of Enterprise IT
Business Process
Reengineering
Online Transaction
processing
IT Dark
Age
Electronic Data
Processing
IT Dark
Digital
Age
Business
Electronic Data
Processing
E-Business
5
Business Process Reengineering
Ford s BPR of Procurement
Process in early 1980s
Head count was reduced
immediately from 500 to 125
in the a/p dept and further to
only 5-10 after a few years
who were needed for handling
exceptional situations.
M. Hammer and J. Champy, Reengineering the CorporationA Manifesto for Business Revolution, HarperBusiness, 1993.
6
BPR Methodology
Assess business strategies, set BPR objectives, and BPR Patterns
1
determine the scope of the process to reengineer. Study ERPs Quick Win
Conditional Branching
Describe the as-is process, analyze it to find Parallelization
2 Select and Learn ERPs
opportunities for radical improvements. Flattening and Empowerment
Select the best ERP Automation and Exception Handling
Set target goals and metrics, and design the to-be
3 Refactoring and Standardization
process so as to close the performance gap.
Fit-Gap Analysis Horizontal Integration
& Delta Design Downstreaming and Self-Service
4 Implement the to-be process. Upstreaming and Partner-Managed Process
ERP Implementation
Lean Process and Pull System
Intelligent Process
5 Roll-out and manage the to-be process.
Social Business Process
7
BPR Framework
Nine Boxes Model for Process Improvement
Process design, systems design and workspace Process ownership, process management,
Process Customer and business requirements
design and continuous improvement
Job specifications, performance metrics Job roles and responsibilities, skill requirements, Performance feedback, consequences,
Employee
and career development plans procedures, tools and training coaching and support
G. Rummler and A. Brache, Improving Performance: Managing the White Space on the Organization Chart, Jossey-Bass, 1990.
8
Business Process Standardization
B. Worthen, Nestle's ERP Odyssey, CIO magazine, May 15, 200, pp. 62-70.
9
Business Process Integration: BPR across Value Chain
Maintenance Installation Sales Manufacturing Supply Chain Engineering
F. McFarlan and B. DeLacey, Otis Elevator: Accelerating Business Transformation with IT, Harvard Business School, 2004.
10
Enterprise Architecture
11
Enterprise Architecture Maturity Model
Business
Business Logic Process
Component
Service
Data Access
Component Component
Database Database
Model-View-Controller Service-Oriented
Architecture Architecture
13
Cloud Services
SOA
Mobile UI
Business
Process
Service
SaaS
Component
Database
14
IoT and Digital Business
IoT Enterprise Services
(UI and REST API)
M. Porter & J. Heppelmann, How Smart, Connected Products are Transforming Competition, Harvard Business Review, Nov. 2014.
M. Porter & J. Heppelmann, How Smart, Connected Products are Transforming Companies, Harvard Business Review, Oct. 2015.
17
ERPaaS:
Evolution of SAP Business ByDesign,
SAP Cloud for Sales, Service,
Financials, etc.,
SAP Hana Cloud Integration,
Ariba, SuccessFactors
(2012)
E-Business Suite
On Web
(2002)
19
SAP Cloud & IoT
20
Understanding & Realizing Benefits of ERP
1950s to 2010s
21
Why so many ERP projects fail?
How often ERP projects fail?
FoxMeyer Drug, a $5B pharmaceutical company filed for bankruptcy due to a failed ERP system.
Boeing, Dell, Dow Chemical, Mobil Europe, Applied Materials, Hershey, Kelloggs all failed in ERP projects.
ERP failure rate is greater than 50%.
D. Bicknell, SAP to fight drug firms $500M suit over R/3 collapse, Computer Weekly, Sept. 3, 1998.
C. Escalle, et al. Enterprise Resource Planning (ERP): Technical Note, Harvard Business School Press, 1999. 22
Why so many ERP projects fail?
How can we avoid main causes of failure?
Business requirements for to-be processes and data must be defined during selection and refined through implementation.
Expected benefits must be quantified, key performance measures (KPIs) must be established, baselines and targets of those
measures must be set before and tracked after go-live.
In-house C-level executives (future process owners) and subject matter experts must be included, assess vendors demos related
to your business processes, and provide ongoing reviews of implementation in the ERP project.
Subject matter experts (SMEs) must be trained in ERP functionalities and the ERP implementation methodology adopted.
An ERP implementation partner must be carefully selected who has a good track record in your industry sector and has a
solid implementation methodology and competencies.
23
Why so many ERP projects fail?
How can we avoid main causes of failure?
Enough time and resources must be allowed for up-front business analysis, process reengineering, project planning, fit-gap
analysis and delta design.
ERP implementation of to-be processes, customizations, integrations with other software systems, and data migration must be
thoroughly tested using conference room pilots (CRPs) and software testing.
End users must be sufficiently trained in the new ERP system (preferably by in-house SMEs to totally eliminate the fear of
change), be given new job definitions and manuals, and be motivated to become productive with the new way of working--all
based on an effective organizational change management, communication and incentive plans.
An ERP journey must be planned as a long-term learning and improvement process to become a world-class process enterprise.
M. Hammer and S. Stanton, How Process Enterprise Really Work, Harvard Business Review, Nov.-Dec. 1999. 24
Realizing Benefits: Move your business to a strategic position
What is your business strategy? Strategic Position
Product/Service
Resources Business Processes Value Proposition Customer
Portfolio
Value
Process Proposition Customer
Upstream
Partners
Product / Service Downstream
Partners
Resource
Cost Revenue
25
Realizing Benefits: Optimize, standardize, integrate processes
Did you design business processes and data you want to execute to fulfill your business strategy?
Does any ERP fit your to-be operational and administrative processes? If yes, which fits best?
Are you ready to change your business processes to follow those processes embedded in ERP?
Do you prefer a full-fledged ERP from one vendor for ease of end-to-end process integration?
Are you willing to compose best-of-class ERPs and applications across different business functional areas?
Are you willing to use cloud ERP for administrative processes and/or for new digital business processes?
Are you going to install ERP in your data center or host it on IaaS?
26
ERP Trends
Postmodern ERP
27
Bimodal IT
Bimodal is the practice of managing two separate but
coherent styles of work: one focused on predictability; the
other on exploration.
Mode 1 is optimized for areas that are more predictable and
well-understood. It focuses on exploiting what is known, while
renovating the legacy environment into a state that is fit for
a digital world.
Mode 2 is exploratory, experimenting to solve new problems
and optimized for areas of uncertainty. These initiatives often
begin with a hypothesis that is tested and adapted during a
process involving short iterations, potentially adopting a
minimum viable product (MVP) approach.
Both modes are essential to create substantial value and drive
significant organizational change, and neither is static. Both
play an essential role in the digital transformation.
http://www.gartner.com/it-glossary/bimodal/
28
Postmodern ERP
Postmodern ERP is a technology strategy that automates and links administrative and operational business capabilities with
appropriate levels of integration that balance the benefits of vendor-delivered integration against business flexibility and agility. This
definition highlights that there are two categories of ERP strategy: administrative and operational.
Administrative ERP Strategy: This focuses on the administrative aspects of ERP, primarily financials, human capital management and
indirect procurement.
Operational ERP Strategy: product-centric industries such as manufacturing, distribution, retail, etc. are likely to use ERP for
operational areas, such as order management, manufacturing and supply chain, to maximize operational efficiencies. These
organizations can realize benefits from the integration between administrative and operational capabilities, for example, where
operational transactions that have a financial impact are reflected directly in the financial modules.
http://www.gartner.com/it-glossary/bimodal/
29
HOOF Models for ERP Implementation Scenarios
There are four possible long-range ERP scenarios: hybrid, on-premises, outsourced and flip (HOOF) models. On-premises monolithic
ERP reflects today's scenario for many organizations.
The hybrid, outsourced and flip scenarios involve a strategic move of some or all of the ERP functionality to the cloud and/or
services.
According to a survey in 2011, 59% used on-premise ERP, 24% used hybrid options, and 20% used SaaS.
Specialist SaaS
On-premises, monolithic,
single-instance ERP
Operational Administrative HCM, Procurement
ERP on IaaS
Gartner, Postmodern ERP: When Staying With On-Premises ERP Is the Right Choice, Sept. 1, 2016.
Panorama Consulting Solutions, Frequently Asked Questions about Cloud ERP, 2012. 30
Single-Instance ERP for Product-Centric Midmarket Companies
31
Cloud ERP
Attribute Description
Responsibility All technology infrastructure managed either in vendor's own data centers or those of a third party.
Vendor implements upgrades as part of the cloud service, not a third party or managed service provider.
Licensing and The cloud service is licensed on a subscription basis or metered pay for use.
technology All users have a standard contract and are provided with the same version.
The cloud service uses internet technologies such as REST and Web Services.
Computing resources are shared, scalable and elastic in near-real time, rather than based on dedicated infrastructure.
Customization Modification of source code is not possible.
Configuration via citizen developer tools and extension via PaaS (partner, vendor or user) is allowed.
Pace of A single code line is used for all customers of the cloud service to allow rapid deployment of new functionality by the vendor.
change Vendor delivers at least two upgrades per annum to all users of the cloud service, and controls the pace of the upgrade cycle.
Vendor must offer self-provisioning capabilities (at least for development and test instances) without its staff being involved.
Gartner, Market Guide for Product-Centric Cloud ERP Solutions, Feb. 3, 2017. 32
Cloud ERP for Product-Centric Companies
Gartner, Market Guide for Product-Centric Cloud ERP Solutions, Feb. 3, 2017. 33
ERP Implementation Methodology: SAP Activate
On-Premise / Agile
34
SAP Activate Methodology
https://go.support.sap.com/roadmapviewer/#/group/3DAE6BF3-610C-4FC5-83E9-D7595854F5F8/roadmapOverview/SUITEONPREMAGL
35
Prepare Explore Realize Deploy Run
Prepare Activities:
Define project goals, a high-level scope, and a project plan
Identify and quantify business value objectives
Secure executive sponsorship
Establish project standards, organization and governance
Define and secure approval for the implementation/upgrade
strategy
Define roles and responsibilities for the project team Project Training Strategy and Plan (team + key-users):
Validate the project objectives A comprehensive training strategy that provides all
Establish project management, tracking, and reporting team members with a phase-based learning path
mechanisms for value delivery for acquiring the skills and knowledge needed to
Develop a project team training strategy, and start project complete the project successfully.
team training This learning path leads to project readiness as
Document all initiation activities in the project charter well as certification on the specific applications
Pre-assemble (or establish) the project environment, the team members will be using.
infrastructure, and IT systems including SAP Solution Manager
Prepare for the Explore phase
36
Prepare Explore Realize Deploy Run
Explore Activities:
Prepare, setup and conduct solution validation
workshops Business Process #1 - n - Detailed Design:
Refine business requirements To design, in detail, the to-be business process
Identify master data and organizational requirements down to activity level (PL 3 - 5)
Confirm to be business processes To define user Stories and update product backlog
Define functional solution design, including a gap To describe gaps where the standard solution does
analysis in solution design workshops not cover all required functionalities.
Associate business requirements to the process
hierarchy and the solution components
Obtain business sign-off on delta requirements and
design documents
Collect end user information, analyzing learning needs,
and developing a learning deployment strategy
Establish project management, tracking, and reporting
for value delivery
37
Prepare Explore Realize Deploy Run
Realize Activities:
Establish the solution landscape
Implement the solution in the development environment using incremental build in
time-boxed iterations
Conduct overall end-to-end testing of the solution within the QA environment
Setup production environment
Prepare for data migration and data archiving
Conduct performance testing
Conduct project team and key user training
Finalize end user training materials and documentation
Track and report on value delivery
38
Prepare Explore Realize Deploy Run
Deploy Activities:
Resolve all crucial open issues:
Conduct system tests
Check that system management is in place
Proceed with cut-over activities, including data migration
Execute transition and cutover plans including organizational change management (OCM) plans
Complete all scheduled end user training
Identify and document all issues encountered in the transition to the new solution
Monitor business process results and the production environment
Establish OCC** or a extra-care center of excellence for support that provides:
Production support processes
Exceptional business monitoring processes
Extraordinary technical support
System enhancements
Track and report on value delivery
39
Workstreams
40
Application Design and Configuration
41
Implementation Team
42
Business Analysis
Business process, information and use case analysis and modeling
43
Business Analyst
Business Analysis is the methodical investigation, analysis, review and documentation of all or part of a business in terms of
business functions and processes, the information used and the data on which the information is based. The definition of
requirements for improving any aspect of the processes and systems and the quantification of potential business benefits. The
creation of viable specifications and acceptance criteria in preparation for the construction of information and communication
systems.
User Concept
Glossary Data Model Map
45
Business Analysis Method
46
Business Analysis Method
47
June.park@kaist.ac.kr https://www.linkedin.com/in/june-sung-park-a66683/
https://twitter.com/junesungpark https://www.facebook.com/JP.Institute.of.Software/
THANK YOU