ERPERP(Enterprise Resource Planning)(Enterprise Resource Planning)

Ryan LoughlinGustavo Rayo

Shannon VillarroelKhoung Nguyen

HTM 304Professor Fang Fang

May 10th, 2007

What is ERP?What is ERP?

An infrastructure that provides an overview An infrastructure that provides an overview about every function in the organization.about every function in the organization.

Provides a Cross-Functional, process view Provides a Cross-Functional, process view of the organizationof the organization

Developed in 1990Developed in 1990 First develop business model according to First develop business model according to

the essence activities and processes.the essence activities and processes.Draw interconnection of all subsystemsDraw interconnection of all subsystemsUnderlying data modelUnderlying data model

ERP SoftwareERP Software

Price is variablePrice is variable Specific softwares don’t implement fluently Specific softwares don’t implement fluently

with the businesswith the business Send a RFP (Request for Proposal) to Send a RFP (Request for Proposal) to

vendorsvendorsRank vendor responsesRank vendor responses

Outside firms assist in the managing, Outside firms assist in the managing, training and maintaining of the system and training and maintaining of the system and its employeesits employees

Who distributes ERP products? Who distributes ERP products?

There are numerous There are numerous different ERP vendors different ERP vendors in today's market.in today's market.

ExamplesExamples SAPSAP OracleOracle PeopleSoftPeopleSoft InvensysInvensys Etc…Etc…

Implementation of ERP Implementation of ERP Three major tasks that must Three major tasks that must

take place:take place:1.1. Determine the system that is Determine the system that is

currently functioning and currently functioning and specific ERP system the specific ERP system the company wishes to company wishes to implementimplement

2.2. Removing all inconsistencies Removing all inconsistencies within companywithin company

3.3. The implementation process The implementation process itself.itself.

Knowing what you wish to Knowing what you wish to achieve is the most important achieve is the most important part of ERP implementationpart of ERP implementation Without a specific and Without a specific and

consistent goal it is going to consistent goal it is going to be hard to implement the be hard to implement the system successfully system successfully

Always remember that the post Always remember that the post implementation process is just implementation process is just as criticalas critical Must not only create but Must not only create but

MAINTAIN the systemMAINTAIN the system Be alert for company changes Be alert for company changes

that could result in a system that could result in a system changechange

Why ERP (and why not)?Why ERP (and why not)?

Why?Why? Improves EfficiencyImproves Efficiency Reduces InventoryReduces Inventory Shortens Lead TimeShortens Lead Time Improved Customer Improved Customer

ServiceService Larger ProfitsLarger Profits Etc….Etc….

Why Not?Why Not? Hard to EstimateHard to Estimate

Underestimate Cost and Underestimate Cost and TimeTime

Implementation Process Implementation Process Painstaking and costlyPainstaking and costly

Systems Must Be Systems Must Be Specifically DesignedSpecifically Designed

Otherwise won’t work Otherwise won’t work properlyproperly

Maintenance CostMaintenance Cost Often High Often High

Real world implementation of ERPReal world implementation of ERP

Started Started implementation in implementation in 19961996

Took about 4 years Took about 4 years before the before the implementation implementation process could be process could be completedcompleted

Meet most of their Meet most of their ERP goals by the ERP goals by the year 2000year 2000

Texas Instruments Overview and Texas Instruments Overview and Goals Goals

Texas Instruments has:Texas Instruments has: 10,000 Employees10,000 Employees 45,000 Products45,000 Products 120,000 orders per month120,000 orders per month

$250,000,000 dollar $250,000,000 dollar budget for ERP budget for ERP implementationimplementation

Needed a information Needed a information technology system that technology system that could continually meet could continually meet customer and business customer and business needs. needs.

Specific Goals of ERP Specific Goals of ERP implementation into implementation into Texas Instruments:Texas Instruments: To evolve process that To evolve process that

support market trendssupport market trends Leverage E-commerce to Leverage E-commerce to

link customers to Texas link customers to Texas Instruments systemsInstruments systems

Base implementation on Base implementation on open hardware and open hardware and software systemssoftware systems

Results of ImplementationResults of Implementation Negative ResultsNegative Results

Productivity DipProductivity Dip Due to specific learning Due to specific learning

curves the productivity dip curves the productivity dip slightly in the initial phaseslightly in the initial phase

On time DeliveryOn time Delivery Did not achieve its goal of Did not achieve its goal of

on-time deliveryon-time delivery Due to market conditions Due to market conditions

TI booked more orders TI booked more orders then they could deliverthen they could deliver

Positive ResultsPositive Results A Global SystemA Global System

A single-instance, global A single-instance, global system has transformed system has transformed how TI does businesshow TI does business

Better ResponseBetter Response 70% of business was 70% of business was

conducted electronicallyconducted electronically Reduced order Reduced order

management costs by management costs by allowing all order accessallowing all order access

Inventory ReductionInventory Reduction Increased out put by 5-Increased out put by 5-

10%10% Thus reducing inventory Thus reducing inventory

by up to 15%by up to 15%

ConclusionsConclusions Set out to achieve three goals:Set out to achieve three goals:

Standardize process and information systemsStandardize process and information systems Integrate manufacturing, procurement and logistics to support market Integrate manufacturing, procurement and logistics to support market

trendstrends Provide product visibility to customers and suppliers via the internetProvide product visibility to customers and suppliers via the internet

All achieved and completed within four yearsAll achieved and completed within four years Received ComputerWorld Smithsonian Award for their efforts.Received ComputerWorld Smithsonian Award for their efforts. Achievements;Achievements;

System response time under three about 90% of the timeSystem response time under three about 90% of the time 10,000 internal users10,000 internal users 3,000 external users3,000 external users 120,000 processed orders120,000 processed orders 45,000 devices45,000 devices

City of San Diego … Time for a City of San Diego … Time for a Change?Change?

San Diego city San Diego city government:7th largest government:7th largest employer in the county employer in the county (11,000 employees, 22 (11,000 employees, 22 departments)departments)

The city’s IT is run by three The city’s IT is run by three different groups, with no different groups, with no specific one in chargespecific one in charge

An IT departmentAn IT department IT employees in different IT employees in different

departmentsdepartments San Diego Data Processing San Diego Data Processing

Corp.Corp.

Current system was Current system was designed in 1978designed in 1978

Numerous functions Numerous functions currently run independently currently run independently (i.e. accounting, human (i.e. accounting, human resources)resources)

SD Union Tribune audit SD Union Tribune audit findings: findings: current system current system defies efficiency and defies efficiency and accountability accountability

““a patchwork of mainframe a patchwork of mainframe computer programs, computer programs, incompatible software and incompatible software and outdated machines”outdated machines”

The Proposed Solution: ERPThe Proposed Solution: ERP Estimated Date of Full Installation: January 2009Estimated Date of Full Installation: January 2009 Software Being Considered: Oracle and SAPSoftware Being Considered: Oracle and SAP The Cost: $36.5 millionThe Cost: $36.5 million Loan: $29.5 million from IBM Credit, LLCLoan: $29.5 million from IBM Credit, LLC

Payable over 7 yearsPayable over 7 years Interest rate matching that of a 7-year treasury noteInterest rate matching that of a 7-year treasury note $7 million cash from existing funds$7 million cash from existing funds

Will It Work?Will It Work?

The acknowledged concerns:The acknowledged concerns: Cost overrunsCost overruns Lack of budget controlLack of budget control Shortage of staff to support implementationShortage of staff to support implementation Will it work as advertised?Will it work as advertised?

If a successful implementation were not If a successful implementation were not achieved, at whose expense would it achieved, at whose expense would it be??be??

Any….Any…. Questions?Questions?

Comments?Comments?

Concerns?Concerns? Constructive Criticisms? Constructive Criticisms?

If not….Thank You!If not….Thank You!