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Post-Modern

ERP

Dr. June Sung Park, KAIST | SEMAT Inc.


March 2017

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

Computerized Information Processing IT-Enabled Business Transformation


Mainframe Batch Online Client/Server Web Mobile Cloud IoT

1950 1960 1970 1980 1990 2000 2010 2020


3
Evolution of Enterprise IT

Cloud + Big Data + IoT


Driving Industry 4.0
Process Orchestration
SOA-Based
Process Integration
EA-Based
Business Process
Reengineering
Online Transaction
processing

IT Dark
Digital

Age
Business
Electronic Data
Processing

E-Business

Computerized Information Processing IT-Enabled Business Transformation


Mainframe Batch Online Client/Server Web Mobile Cloud IoT

1950 1960 1970 1980 1990 2000 2010 2020


4
Core Disciplines for Enterprise IT
Business-IT Alignment

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

Goals Design Management

Organization structure and overall business Performance review practices and


Enterprise Strategy, operating plans and metrics
model management culture

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

29 different vanilla prices As-is process analysis and


from the same vendor to-be process design

1997 1998 1999 2000 2001 2002

Sap implementation for $200M invested / $300M+


process standardization Go live failure due to paid off in the first year
rejection by LOBs

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

OTISLINE E*Direct E*Logistics


Business process re-engineering cross the
entire value chain of the company
5 times reduction of New-Equipment Order-
to-Hand-Over Cycle in 5 years, which used to
take 8-18 months
REM E*Service 80% reduction of Install-to-Maintain Costs
which used to consume 65M Person-Month X
$40/PM per year
Integration and automation of the workflows
and information flows across Sales, Factory
and Field Operations using Web technologies

1980s 1990s 2000s

F. McFarlan and B. DeLacey, Otis Elevator: Accelerating Business Transformation with IT, Harvard Business School, 2004.
10
Enterprise Architecture

Gartner EA Management Process Gartner EA Framework

11
Enterprise Architecture Maturity Model

Technical Architecture, SOA


BPR ITIL BPM, MDM

J. W. Ross, P. Weill and D. C. Robertson, Enterprise Architecture as Strategy, 2006.


12
Service-Oriented Architecture
Client-Server / Web
SOA/Web 2.0
UI Portal

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)

Airbus Internet Bosch IoT Application on


(MES, PLM, etc.) Tech Mahindra
IoT Application Platform
Sensor (Torque, Angle)
Microprocessor Log Data
Data Storage (Location,
Software Measurements, etc.)
OS
Actuator
Wi-Fi Cisco
Open API Location Service
Bosch Rexroth Bosch Backend
Cordless Nutrunner (B/OSS, ERP, etc.)
http://enterprise-iot.org/book/enterprise-iot/part-iii-detailed-case-study/background-information/track-trace-testbed/
15
IoT and Digital Business
Daimlers Car2Go is a free-floating car sharing system offering
flexible mobility with Smart Fortwo cars. IoT
Cars can be located and booked spontaneously via smartphone Customer Moovel Platform Application
app or the internet portal. Platform
Customers pay only for the rental time. Parking fees, fuel costs,
taxes and insurance are already included. LED
Daimler also launched an intermodal service through its Moovel RFID
Internet
Car Controls
transit platform that helps customers optimize their route using Mobile
different types of transport such as Car2Go, bike sharing, public Ticketing
transport and taxi using smart phone apps and a web portal. Transit Agencies IT
With the Moovel transit platform, transit agencies get real-time
access to a whole world of mobile ticketing, including mobile Smart Fortwo Car
sales, Smart Card management, real-time analytics, trip planning Business
and transaction data. RideTap Developer Portal Car Operation
Sharing Service
Remote Fleet Management
RideTap is a SDK available for developers who want to deep link
to car, bike, and ride-sharing services in their apps. IoT App Marketplace Daimler IT
Moovel-based applications integrate seamlessly into complex
backend environments, simplifying operations for transit agencies.
16
IoT and Digital Business
Smart, connected products substantially
changes the work of virtually every function
within the manufacturing firm. What is
under way is perhaps the most substantial
change in the manufacturing firm since the
Second Industrial Revolution more than a
century ago.

Michael Porter, Professor of Business Strategy


at Harvard Business School, 1947-

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)

Financial Accounting SOA: SAP NetWeaver


on Mainframe Process Orchestration,
R/3 on C/S
(1972) Enterprise Services
(1992)
(2004)

Mainframe Batch Online Client/Server Web Mobile Cloud IoT

1950 1960 1970 1980 1990 2000 2010 2020


18
SAP SOA
Process-driven composition of service, event and human task
Auto-generation of UI from the process model

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.

A backup plan must be established in case of failure.

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?

Do you prefer single-instance ERP to standardize your business processes?

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.

Big data analytics, IoT

Salesforce Automation, E-commerce

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

Midmarket: $200M-$2B revenues / 100-999 employees


Gartner, Magic Quadrant for Single-Instance ERP for Product-Centric
Midmarket Companies, Dec. 9, 2015.

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

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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.

SFIA Foundation, SFIA 6: The Complete Reference Guide, 2015. (https://www.sfia-online.org)


IIBA, A Guide to the Business Analysis Body of Knowledge v3, 20 (https://www.iiba.org) 44
Business Analysis Models
Process Model Use Case Model UX Model

Process Actor Use Case Actor Persona

I/O Info Process Activity Use Case User Story

Process Flow User Journey Map

Information Model Service Use Case Scenario

User Concept
Glossary Data Model Map

45
Business Analysis Method

46
Business Analysis Method

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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

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