Enterprise Resource

Planning as a business
solution (ERP)

Prepared by : Ibrahim M. Eltahhan.

. ٩ ‫ رقم‬، ‫إبراهيم محمد الطحان‬

Prepared for : Dr. Mohamed Samir.

Production Eng. Dept. , Alex. Univ. , Egypt.

April , 2016.


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Contents :

• Abstract .
• ERP systems ( modules , system characteristics ) .
• 5 Steps To Successful ERP Implementation.
• Cost & time.
• ERP vendors.
• Lesson learnt from Nestle case study.
• Egyptian market.
• Future of ERP.
• Conclusion.


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Abstract
Enterprise resource planning (ERP) systems, if implemented correctly, have shown that a
firm can gain strategic and tactical advantages over their competition who do not
implement such systems. How- ever, with failure rates estimated to be as high as 50% of
all ERP implementations, companies can be negatively impacted by a poorly performing
ERP system. The research on ERP has focused on events leading to the selection,
evaluation, and implementation of the ERP system.

So in this report , the ERP- interested reader will oppose to an overview of what is ERP ,
the advantages & disadvantages ? , and how he will implement it ? , who are the vendors
especially in the egyptian market? & what is the trending future of ERP ?


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ERP systems ( Information Sharing )
When you look to a mature company
like "Nestle" which manages 447 factory
around the world , we should wonder
how it manages ??! , so an info. Sharing
system is used as an open source
integrates the all organization together ,
solving the miscommunication problem
, as statistical studies indicates that :
60% of the organization's problems is a
miscommunication not a technical
issue.
So here comes the role of the ERP
SYSTEMS.

So Enterprise resource planning (ERP) is a category of business-management software—

typically a suite of integrated applications—that an organization can use to collect, store,
manage and interpret data from many business activities.

ERP provides an integrated view of core business processes, often in real-time, using
common databases maintained by a database management system.

ERP systems track business resources—cash, raw materials, production capacity—and

the status of business commitments: orders, purchase orders, and payroll. The
applications that make up the system share data across various departments
(manufacturing, purchasing, sales, accounting, etc.) that provide the data.

ERP facilitates information flow between all business functions, and manages connections
to outside stakeholders.

The ERP II role expands traditional ERP resource optimization and transaction
processing. Rather than just manage buying, selling, etc.—ERP II leverages information in
the resources under its management to help the enterprise collaborate with other
enterprises.
ERP II is more flexible than the first generation ERP. Rather than confine ERP system
capabilities within the organization, it goes beyond the corporate walls to interact with
other systems. Enterprise application suite is an alternate name for such systems.

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ERP modules ( functional areas )

Vendors of ERP systems provides the system for industry specific or for a general
purpose , & each contains no. of modules ,from which the organization can buy the
proper modules suited their business model

An important feature of the modules is that data entered in one module is automatically
routed to other modules, so all data is immediately updated and available to all functional
areas.

ERP modules:-

But the ERP II modules contains

a larger scale of
info sharing exceeds the
organization borders to
suppliers & customers ,
even to other collaborate
organizations.
That integrated approach can have a

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tremendous payback if companies install the software correctly.

Take a customer order, for example; Typically, when a customer places an order, that
order begins a mostly paper-based journey from in-basket to in-basket around the
company, often being keyed and rekeyed into different departments’ computer systems
along the way. All that lounging around in in-baskets causes delays and lost orders, and
all the key- ing into different computer systems invites errors. Meanwhile, no one in the
company truly knows what the status of the order is at any given point because there is no
way for the finance department, for example, to get into the warehouse’s computer system
to see whether the item has been shipped. “You’ll have to call the ware- house,” is the
familiar refrain heard by frustrated customers.

But,
It should be noted that implementations are costly and time consuming, often lasting
many years, and require extensive employee training throughout the organization.
The following reading provides additional insight into ERP.

Because The important thing is not to focus on how long it will take— real
transformational ERP efforts usually run between one to three years, on average—but
rather to understand why you need it and how you will use it to improve your business.

System Characteristics

Mainly contains Transactional database & dashboard ( KPIs )

ERP (Enterprise Resource Planning) systems typically include the following

characteristics:

• An integrated system that operates in (or near) real time without relying on
periodic updates.
• A common database that supports all
applications.
• A consistent look and feel across
modules.
• Installation of the system with
elaborate application/data
integration by the Information
Technology (IT) department,
provided the implementation is not
done in small steps.


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 5 Steps To Successful ERP Implementation
( by Sean W. O’Donnell , President of Datacor, Inc., a company specializing in software Using
more than 26 years of experience)

Choosing an ERP solution that meets your specific business requirements will enable you
to have a smoother implementation. If the software package is written for your industry,
you won’t have to custom design a solution. Customized solutions are time consuming to
implement and add unnecessary cost. One of the top reasons ERP implementations fail is
because the software doesn’t meet basic industry specific business requirements.
However; purchasing an ERP application is only half the battle. A well designed
implementation plan is the key to success.

The 5 steps are :

1. Strategic planning.
2. Procedure review.
3. Data collection & clean-up.
4. Training & testing.
5. Go live & evaluation.

1. STRATEGIC PLANNING
• Assign a project team.
• Examine current business processes and information flow.
• Set objectives.
• Develop a project plan

Project team: Assign a project team with employees from sales, customer service,
accounting, purchasing, operations and senior management. Each team member should
be committed to the success of the project and accountable for specific tasks, i.e.
developing a timeline, finalizing objectives, formulating a training plan. Make sure you
include first line workers as well as management on your team. Base the selection on the
knowledge of the team not status of the employee.

Examine current business processes: Have the team perform an analysis on which
business processes should be improved. Gather copies of key documents such as invoices,
batch tickets and bill of lading for the analysis. To start the team discussion, consider
questions such as: Are your procedures up to date? Are there processes that could be
automated? Are personnel spending overtime processing orders? Does your sales force
and customer service personnel have real-time access to customer information? The team

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members should also conduct interviews with key personnel to uncover additional areas
of improvement needed.

Set objectives: The objectives should be clearly defined prior to implementing the ERP
solution. ERP systems are massive and you won’t be able to implement every function.
You need to define the scope of implementation. Ideally, the scope should be all inclusive.
But practically, it is very difficult to implement. Examples of objectives would include:
Does the solution reduce backlogs? Can the solution improve on-time deliveries? Will you
be able to increase production yields?

Develop a project plan: The team should develop a project plan which includes
previously defined goals and objectives, timelines, training procedures, as well as
individual team responsibilities. The end result of the project plan should be a “to do” list
for each project team member.

2. PROCEDURE REVIEW
• Review software capabilities.
• Identify manual processes.
• Develop standard operating procedures

Review software capabilities: Dedicate 3-5 days of intensive review of the software
capabilities for the project team. Train on every aspect of the ERP software to fully educate
the team on capabilities and identify gaps. Determine whether modifications are needed
prior to employee training.

Identify manual processes: Evaluate which processes that are manual and should be
automated with the ERP system.

Develop standard operating procedures (SOPs): for every aspect of your business. These
procedures should be documented. Make sure that you modify the document as your
SOPs change. This is a huge task, but it is critical to the success of your implementation.
Examples of SOPs:
• How do you handle global price changes?
• What are the processes for inputting new customer records?
• How do you currently handle the paperwork on drop shipments?
• How do we add a new product or formula?

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3. DATA COLLECTION & CLEAN-UP
• Convert data.
• Collect new data.
• Review all data input.
• Clean-up data.

Convert data: You can’t assume 100% of the data can be converted as there may be
outdated information in the system. Determine which information should be converted
through an analysis of current data.

Collect new data: Define the new data that needs to be collected. Identify the source
documents of the data. Create spreadsheets to collect and segment the data into logical
tables (Most ERP systems will have a utility to upload data from a spreadsheet to their
database).

Review all data input: After the converted and manually collected data is entered into the
ERP database, then it must be reviewed for accuracy and completeness. Data drives the
business, so it is very important that the data is accurate.
Data clean-up: Review and weed out unneeded information such as customers who
haven’t purchased in a while or are no longer in business. Now is the time for improving
data accuracy and re-establishing contact with inactive customers.

4. TRAINING AND TESTING

• Pre-test the database.
• Verify testing.
• Train the Trainer.
• Perform final testing.

Pre-test the database: The project team should practice in the test database to confirm that
all information is accurate and working correctly. Use a full week of real transaction data
to push through the system to validate output. Run real life scenarios to test for data
accuracy. Occurring simultaneously with testing, make sure all necessary interfaces are
designed and integration issues are resolved to ensure the software works in concert with
other systems.

Verify testing; Make sure the actual test mirrors the Standard Operating Procedures
outlined in step 2, and determine whether modifications need to made.

Train the Trainer: It is less costly and very effective if you train the trainer. Assign project
team members to run the in-house training. Set up user workstations for at least 2 days of
training by functional area. Provide additional tools, such as cheat sheets and training

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documentation. Refresher training should also be provided as needed on an ongoing
basis.

Final Testing: The project team needs to perform a final test on the data and processes
once training is complete and make any needed adjustments. You won’t need to run
parallel systems, if you have completed a thorough testing.

5. GO LIVE AND EVALUATION

• Develop a final Go-Live Checklist.
• Evaluate the solution.

Sample Final Go Live Countdown Checklist Sample:

• Physical inventory process is complete.
• Beginning balance entry procedures are developed for all modules.
• Any transition issues are addressed.
• Documents & modifications are tested thoroughly.
• Executives and departments heads are fully trained.
• Vendor is available for go-live day.
• Users will have assistance during their first live transactions.

Evaluation:
Develop a structured evaluation plan which ties back to the goals & objectives that were
set in the planning stage. In addition, a post-implementation audit should be performed
after the system has been up and running for the first week for reconciliation purposes
and three to six months following to test whether or not the anticipated ROI and business
benefits are being realized. Comparing actual numbers with previously established
benchmarks will reveal if the software tool does what it is intended to do - add value to
the business. It is important to periodically review the system's performance to maximize
ROI.

"Finally,You will hit bumps in the road and you need to be patient. Upper management
and project team members should be committed for the company to realize the benefits of
successful ERP".


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Cost & time
The only way to get a complete and accurate quote on the total cost of your ERP project is
to work with a local ERP expert, called a partner or a VAR (value added reseller). But
sometimes you need a way to estimate the costs in the beginning stages of your research
to determine if it makes sense to continue the evaluation process.

The main Four Costs of a Complete ERP Project:

The mistake many companies make when initially trying to estimate the cost of an ERP
project is only paying attention to the actual software license cost:

• Software License Fees

• Maintenance Fees
• Hardware
• Implementation Services

Conducting a cost-benefit analysis for ERP

Potential costs of ERP initiatives:

In terms of ERP costs, businesses need to consider:

• Acquisition – how much will it cost

to deploy the ERP solutions required
to improve the quality and
accessibility of your management
information, and then draw insight
from the data? Is there a need to
invest in new hardware to support the
functionality of ERP solutions?

• Customization – how much will

your firm need to spend
implementing solutions to fit your
business model, and those of any
individual divisions or subsidiaries
requiring their own tier of ERP? New
ERP solutions will need to be
integrated with existing systems.

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• Testing – where ERP solutions are being deployed, the technology partner will be
required to carry out technical tests to ensure the user will benefit from full functionality.
This may also require some involvement from your staff, taking them away from their
normal work duties.

• Upgrades – how much will it cost to conduct periodic ERP reviews, and carry out any
upgrades that may be required over time? How much will it cost to add extensions to the
system to increase functionality?
• Conversion – how much will it cost to convert files to the new ERP system, and
consolidate management information on the news platform? What will be the financial
impact of phasing out old procedures and legacy solutions?

• Personal Development – how much will it cost to reorganize your workforce, update
manual processes and train employees to use the new ERP solutions? Consider the need
to deliver ongoing support to the workforce, with regular training rather than a one-off
introductory session.

• Unforeseen expenditure – there are always likely to be some costs which cannot be
budgeted for when revising operational processes and introducing a new way of working.
Costs need to be considered on a monthly and yearly basis, in a bid to establish a best and
worst-case scenario for spending on ERP. This provides a benchmark for projecting return
on investment, and establishing the economic benefits likely to be delivered through an
ERP upgrade.

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Potential benefits of ERP initiatives
ERP processes can offer a number of benefits to organizations, including:

• Streamlined procedures – the use

of ERP solutions and streamlined
resource management processes can
help simplify procedures, helping to
reduce re-work and manual
handling costs.

• Greater intelligence – decision

makers can monitor performance in
individual departments and across
the organisation as a whole, and
consider the inter-dependence of
different areas. Integrated data
supports effective decision making
processes.

• Increased productivity – manual tasks can be automated, helping to increase speed of

delivery, boost accuracy and reduce the pressure on employees. Key workers can focus on
value adding tasks, enabling them to boost productivity and output.

• Greater reliability – ERP systems can flag up inaccuracies and errors, allowing
decisions to be based on more relevant and accurate data. As such, firms are able to reach
the most desirable outcome more frequently, which should help achieve efficiencies and
boost customer engagement.

• Improved reporting – benchmarking is easier, as ERP systems make it simpler to record

and report data across a range of tangibles. Monitoring business processes becomes easier,
enabling earlier troubleshooting.

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ERP Vendors
Now with the ERP marketplace become crowded with more and more players entering
the market and the competition increasing, today's ERP packages have features and
functionality to cater to the needs of businesses in almost all sectors.

ERP vendors spend crores of rupees in research and come up with innovations that make
the packages more efficient, flexible and easy to implement and use. Also, with the
evolution of new technologies the vendors have to constantly upgrade their products to
use the best and latest advancements in technology.

Choosing the right software vendor goes beyond evaluating software functionality. There
has been a gradual movement among a handful of the largest software vendors to take a
one-size-fits-all posture. Some vendors believe functionality ratings are no longer
important since all software systems are beginning to look alike. While appearances may
tend to support this theory, reality paints a different picture.

ERP Software Vendors by High Level Functional Capability :-

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ERP Software Vendors by High Level Functional Capability:


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Case studies

Case of "Nestle"
●In 2000, Nestlé SA signed a 280 million US dollars contract with SAP to install an
ERP system for its global enterprise

●The Switzerland-based consumer goods giant intends to use the SAP system to
help centralize a conglomerate that owns 200 operating companies and subsidiaries
in 80 countries

●Speculation focused on how the process will affect the corporate culture, which is
decentralized, and tries to centralize it which was risky (how to manage change?)

●Nestlé learned the hard way that an enterprise wide resource planning involves
much more than simply installing software, it is more changing the way people
work (planning and implementation)

●Initially, Nestlé was a collection of independently operating brands, however in

1991, the brands were unified and reorganized into Nestlé
●SAP Proposal - One Nestlé, Under SAP (1997)
One Nestlé was to reflect the goal of transforming the separate brands into one
highly integrated company with a set of best practices that would become common
work procedures for every Nestlé division (all divisions would give up their old
approaches and accept the new One Nestlé way)

●Data was an important factor to be complied from each division in order to

implement a common structure across the company. SAP system would be
customized around uniform business processes

●Initial SAP would include 5 modules: purchasing, financial, sales and

distribution, accounts payable and accounts receivable and the supply chain. Each
would be deployed across every Nestlé division

●It is important to note that the process installation was faced with resistance at all
levels and chaos was diffused across the company. The problem was the lack of
involvement of direct supervisory levels

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●Workers did not understand the new system, could not use it and did not even
understand the new processes. The case also applied to divisional executive. No
one was interested anymore to know how the new processes will function
(turnover among employees reached 77%)

●Upon ERP implementation technical problems start to emerge (integration not

complete among divisions)
oExample: A salesperson giving a valuable customer a discount rate and entering
into the new system will not be identified by the accounts receivable department.

●Change of project management in 2000

●Working on integration points and improving system based on initial feedback

and internal testing (employees feedback)

●Decision made was to start all over and re-visit all new processes starting with the
business requirements rather than trying to fit the project into the desired shape;
this time supervisory levels and management involvement was key

●Employees involvement and feedback was also a determining factor in processes

development

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Egyptian market

Vendors

ZAD is a leader provider , also ALMOTAKAMEL is a provider for medium-size

copmanies as well.

ZAD Solutions Inc

ZAD Solutions is a leading Web Applications

development company with strong focus on
service quality and client satisfaction.

The company provides Odoo (OpenERP) is an open source comprehensive suite of

business applications including Sales, CRM, Project management, Warehouse
management, Manufacturing, Accounting and Human Resources. Odoo (OpenERP) has
separate client and server components.

Odoo (OpenERP) at a glance

Open Source: Odoo (OpenERP) is committed to Open Source Business Model. The
software is published under the AGPL license.

Complete: Odoo (OpenERP) is a comprehensive suite of business applications including

Sales, CRM, Project mgmt., Warehouse mgmt., Manufacturing, Financial management and
Human Resources just to name a few. Over 700 Odoo (OpenERP) modules are available
on Launchpad

Modular: Odoo (OpenERP) unique modular approach allows customers to start with one
application and adds other modules later. Customers keep the benefits of integrated
software but avoid a “big bang” project.

Flexible: Odoo (OpenERP) allows you to customize the user interface and manage your
business processes in only a few clicks.

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No Lock-in: The same version of Odoo (OpenERP) can be used either On-site or Online.
We are committed to allowing customers choose what is best for them.

Affordable: The absence of license fees makes Odoo (OpenERP) very affordable. The
complete set of service we provide (On line and On-site) provide great value for
customers. We are the only vendor to guarantee migration services for a fixed fee.

& they provide a multiple modules for the clients :-

Also sufficient services are provided by the company :-

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ZAD is an ERP vendor & web developer for a lot of large companies like :-

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Future of ERP
Let’s start with some history. Gartner originally coined the term “enterprise resource
planning” back in 1990 to describe a new breed of integrated software suite. These suites
included software applications for:

• Material requirements planning (MRP)

• Manufacturer resource planning (MRP II)
• Core financials
• Human resources
• Customer relationship management (CRM)

Today, some commentators have proclaimed that ERP is “dead,” or that the end is at least
near. And a growing number of companies are now implementing alternatives to the
traditional one-stop shop offered by ERP systems.

These alternatives can include:

• Substituting a cloud deployment:, best-of-breed application for one of the existing

applications in the company’s ERP suite. For example, an organization might prefer to
use a more robust industry-standard CRM system, such as Salesforce (which can
integrate with most major ERP suites), instead of the CRM application bundled with
their ERP system.
• Using multiple ERP suites from different vendors, usually across different business
units or subsidiaries.
• Foregoing an ERP suite altogether and using only best-of-breed applications.

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Recently, these criticisms of ERP software have prompted new viewpoints among many
tech thought leaders. Enter the “postmodern” ERP system, defined by Gartner in 2014 as:

“A technology strategy that automates and links administrative and operational

business capabilities (such as finance, HR, purchasing, manufacturing and distribution)
with appropriate levels of integration that balance the benefits of vendor-delivered
integration against business flexibility and agility.”

Thomas Spol, senior director at PRO Unlimited, describes the postmodern approach
perfectly in an article for CIO Review:

“In the postmodern ERP world, the legacy ERP suite is deconstructed into a more [loose]
set of integrated business functions. The pieces make up the whole, rather than the whole
(or suite) comprising the pieces.”

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Conclusion
While ERP systems have the ``magic touch'' to dramatically enhance the performance of
many companies' business operations, they are also expensive, profoundly complex, and
notoriously difficult to implement. The chance of failure, therefore, has always been high.
In order to reap the potential benefits and avoid serious pitfalls, firms must truly
understand and address the planning issues.

Unlike the implementation of less sophisticated technological innovations such as

computer-aided design/manufacturing and manufacturing resource planning (MRP II),
business process reengineering is a unique planning activity in ERP projects. Unsuccessful
companies start their ERP implementation effort with automation, bypassing the critical
steps of understanding its business implications and simplifying or reengineering their
processes. There are many reasons for ERP implementation failure. Some lay heavy blame
on unreasonable expectations; others point to the lack of support from software and
hardware vendors.

The more that organizations learn about new business processes and enterprise systems,
the more they will recognize that the behavior changes needed to support the new way of
doing business are the most critical in providing ERP firms with unprecedented
competencies. After all, ERP-enabled business processes are designed to evolve and grow
in power for those organizations that take the time and effort to grow with them. The
rate at which organizations can continue to learn and modify their behavior as needed
may become the only sustainable source of competitive advantage in the near future.


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References

> Operation management , Stevenson .

> Wikipedia
>ZAD company's profile.
>Financial business articles.
>tech-wd.com
>Postmodern ERP article , forrest burnson.
> AUC articles .
>A Post-Implementation Case Study and Review of Enterprise Resource
Planning(ERP) ,muscattelo , parenta , USA
>panorama-consulting.com

CONTACT INFO.:
PED | ALEXANDRIA UNIVERSITY ABI KIR STREET, HADARAH 21544 ALEXANDRIA,EGYPT
IBRAHIM ELTAHHAN
[email protected]

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