Enterprise Resource Planning

Dr. Poonam Garg

Copyright Poonam Garg, IMT Ghaziabad 1

Course Objectives
 Understand how ERP is used to integrate business
processes; define and analyze a process; create a process
map and improve and/or simplify the process; apply the result
to an ERP implementation.

 Understand how the fundamental business processes interact

with SAP ERP in the functional areas of Sales and
Distribution, Materials Management, Production Planning, and
Financial Accounting & Controlling

Copyright Poonam Garg, IMT Ghaziabad 2

Text Books
 Text books:

 ERP Demystified
Alexis Leon
Reference books:
 Concepts in Enterprise resource planning
Ellen Monk
 Enterprise resource planning
C. S. V. Murthy
 ERP In practice
Jagan Nathan Vaman

Copyright Poonam Garg, IMT Ghaziabad 3

Subject Assessments

 Project/Report : 20%
 Lab Assignment : 10%
 Quiz : 20%
 Class Participation : 20%
 Final Test : 30%
ERPSyllabus.doc

Copyright Poonam Garg, IMT Ghaziabad 4

Discussion Questions
 Explain the information flow of a manufacturing organization
 What is ERP.
 How it is different from Information Systems?
 How is integrated information system better then departmental
information silos.
 At what level of IS the ERP works?
 Why an organization should implement ERP system?
 Why an Organization should implement ERP if they already have
functional systems?
 How does ERP facilitate seamless information flow? Explain with
an example.
 Difference between Plain vanilla and best of breed
implementation. Why it is advisable to go for vanilla
implementation
 How is process approach different from functional approach.
 What are the different alternatives for ERP implementation.
 What is tailor made ERP.
Copyright Poonam Garg, IMT Ghaziabad 5
 IS BPR necessary for ERP implementation? Can
organizations directly implement tailor made ERP and
avoid reengineering.
 What do you mean by a business process?
 How are the business process different from business
functions?
 What are some of the benefits that organizations derive
by implementing ERP?

Copyright Poonam Garg, IMT Ghaziabad 6

Before 1980
SP = CP + Profit
Effective
After 1980
Profit = SP - CP

if output >input then

business should run
Otherwise
close it

Copyright Poonam Garg, IMT Ghaziabad 7

`
 clip1.flv

Copyright Poonam Garg, IMT Ghaziabad 8

 SAP Enterprise System

Pen Incorporation
 Start-up company in the promotional
pen business
 Initially buys and re-sells different lines
of promotion pens
 Sells to both wholesale and retail –
procure and distribute
 Later acquires a production facility to
manufacture its own product – produce
and distribute
 SAP Enterprise System

Pen Incorporation Procure for Sales

Order
Pre-Sales Sales Accounts
Delivery Billing
Activity Order Receivable

Availability Goods to
Check Delivery

In Plant or Inventory General

Inventory Warehouse Postings Ledger
YES Accounts

NO Goods from
Purchase Order

Purchase Purchase Goods Invoice Accounts

Requisition Order Receipt Receipt Payable
 SAP Enterprise System

Pen Incorporated Produce for Sales

Order
Pre-Sales Sales Accounts
Delivery Billing
Activity Order Receivable

Availability Goods Issued

Check to Delivery

Plant or Inventory General

Warehouse Postings Ledger
YES
Accounts
Issue Goods
NO to Production Goods from
Order Production Order

Planned Production Completion Confirmation Accounts

Order Order Payable
Topics
 What is Enterprise Resource Planning (ERP)?
 Evolution Of ERP
 Need For ERP
 Selection process of an ERP package
 Features of ERP
 Components / modules of ERP
 Comparison of ERP products
 Technology requirements / infrastructure
 Pre requisites for effective ERP implementation :
 Implementation phases of ERP
 Post implementation plan
 Benefits of ERP

Ver.1.0 Slide 12
ERP Market
 One of the fastest growing markets in software
industry

 34.5% of companies with revenues over $1 billion

plan to purchase or upgrade

 $180 billion sales in 2004

 Maybe as much as $1 trillion by 2013

Copyright Poonam Garg, IMT Ghaziabad 13

ERP Systems
 Major investment
 Total implementation cost – up to 2-3% of
revenues ($100 million for a $5 billion company)
 Variety of business justifications
 Replace legacy systems
 Reduce cycle times
 Lower operating costs
 Enables better management decisions
 Real-time
 On-line

Copyright Poonam Garg, IMT Ghaziabad 14

Costs and Benefits
 Implementation can take up to 2 years

 Payback usually 6-30 months

 Savings based on 30% reduction in administrative

and IS costs

Copyright Poonam Garg, IMT Ghaziabad 15

What is Enterprise Resource Planning (ERP)?
 "ERP comprises of a commercial software package that promises the seamless
integration of all the information flowing through the company - financial, accounting,
human resources, supply chain and customer information.“ [T.J. Davenport, Harvard
Business Review, July-Aug., 1998]

$ $

HR Finance
Supply Chain
$
$
$
$

Accounts

Manufacturing

ERP
Inventory

Warehouse

$
$

$
Customer

Purchasing

Marketing
Quality Assurance

Ver.1.0 Slide 16
What is an ERP?
 Enterprise-wide system integrates the business
functions and processes of an organization.
 Integration of business functions into one seamless
application
 Produce, share and access information in Real-time
environment
 Helps the organization to run smoothly
 Usually runs on a RDBMS
 Replaces Countless Departmental and
Workgroup Information Systems

Copyright Poonam Garg, IMT Ghaziabad 17

What is an ERP?

Copyright Poonam Garg, IMT Ghaziabad 18

What is an ERP?

Copyright Poonam Garg, IMT Ghaziabad 19

ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales Human
Finance Distribution Production
Resources
ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales Human
Finance Distribution Production
Resources
ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales Human
Finance Distribution Production Resources
What is Enterprise Resource Planning (ERP)?

Business
Suppliers
Partners

SC
M M
PR

B2B exchanges/ Markets

Warehouses

Organization
Finance, Accounts, HR

Distribution Channels

Service Channels
ERP
CRM

Customer

Ver.1.0 Slide 23
What is Enterprise Resource Planning (ERP)?

Ver.1.0 Slide 24
What is Enterprise Resource Planning (ERP)?

Ver.1.0 Slide 25
Evolution of ERP

ERP
Enterprise
Resource
Planning (ERP)
$

$
Stage

Mfg.
Resource Planning
(MRP II)

Material
Requirement
Planning
(MRP)
Inventory
Control

Time

Ver.1.0 Slide 26
Evolution of ERP

1960’s - Systems Just for Inventory Control

1970’s - MRP – Material Requirement Planning

(Inventory with material planning & procurement)

1980’s - MRP II – Manufacturing Resources Planning

(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)

2000 onwards – ERP II – Collaborative Commerce

(Extending ERP to external business entities)
Need for ERP
The need for linkages between systems

•Overstocking at some
warehouses; under stocking $ $

at others Supply Chain

HR Finance

•Accounts receivables not $

$
$

claimed $

Accounts
•Payroll processing not
representing sales rep's Manufacturing

latest account wins

•Balance sheets do not show
proper depreciation of
? Inventory

assets Warehouse
•Underuse of Transportation
facilities $

$
$
Customer
•More inventory cycle times
Purchasing

Marketing
Quality Assurance

Ver.1.0 Slide 28
 Objectives of ERP Implementation
a) Business drivers:
 To streamline business processes.
 To get an integrated view of data.
 To ensure better monitoring of KPI’s.

b) Technology driver:
 To achieve a single technology platform.

29
Streamlined Business Processes
a. Financials and Accounting

b. Human Resource Management

c. Supply Chain Planning

d. Product Lifecycle Management

e. Procurement f. Manufacturing g. Fulfillment

h. CRM

Old flow (Illustrative)

New flow (Illustrative)

Increase in operational efficiency through

streamlined business processes.

30
An Integrated View of Data
a. Financials and Accounting

b. Human Resource Management

c. Supply Chain Planning

d. Product Lifecycle Management

e. Procurement f. Manufacturing g. Fulfillment

h. CRM

Real-time data for

quick business
decisions.

31
Better Monitoring of KPIs
a. Financials and Accounting

b. Human Resource Management

c. Supply Chain Planning

d. Product Lifecycle Management

e. Procurement f. Manufacturing g. Fulfillment

h. CRM

Support for Executive

Management.

32
A Single Technology Platform Across Cos.
Client Company - 1 Client Company - 2
a. Financials and Accounting a. Financials and Accounting

b. Human Resource Management b. Human Resource Management

c. Supply Chain Planning c. Supply Chain Planning

d. Product Lifecycle Management d. Product Lifecycle Management

g. Fulfillment g. Fulfillment
e. Procurementf. Manufacturing e. Procurementf. Manufacturing
h. CRM h. CRM

Single ERP
Technology
Platform

Centralized, scalable,
and easily
maintainable IT
infrastructure

33
Before/After ERP •Facilitates all business processes
and interconnects all the departments
of a company

•The silo effect

•Work duplication
•Lack of standardization
•Lack of vision
Copyright Poonam Garg, IMT Ghaziabad 34
Improving operational efficiency

Without ERP With ERP

Financial
Management
Business Efficiency
Decision
Making
Financial
Management
Reporting and
Controls Business
Decision
Making

Reporting and
Controls
Transaction
Processing
Transaction
Processing

Reduce time and resources spent on lower value-added activities while

increasing the level of involvement in business decision making

Copyright Poonam Garg, IMT Ghaziabad 35

Copyright Poonam Garg, IMT Ghaziabad 36
 ERP – Tangible Benefits
 Eliminates the duplication and redundancy in data .
 Improved business processes providing a competitive advantage.
 Better monitoring and quicker resolution of queries from within and outside.
 Availability of timely, accurate information with detailed content and better
presentation
 Reduction in paperwork because of online formats for entering and
retrieving information.
 greater and effective control on accounts payable through better invoicing
and payment processing.
 Improved supply- demand linkage with remote ___location and branches in
other country.

Copyright Poonam Garg, IMT Ghaziabad 37

ERP – Intangible Benefits
 Improved customer service and satisfaction
 Increased flexibility in operations
 Improved resource utility, reduced quality
cost and information accuracy.
 Improved decision making processes due to
availability of online information.

Copyright Poonam Garg, IMT Ghaziabad 38

Benefits of ERP

Ver.1.0 Slide 39
Benefits of ERP

Ver.1.0 Slide 40
Benefits of ERP

Ver.1.0 Slide 41
Disadvantages of ERP
 ERP implementation is very difficult.
There is a change in the way business is
done. From a business function
approach to a process approach.
 ERP systems are very expensive to
implement. Can take years and cost 10’s
of millions of dollars.

Copyright Poonam Garg, IMT Ghaziabad 42

Disadvantages of ERP
 It takes time to realize the benefits of an
ERP system.
 Forces people to change and change =
resistance:
 Share information that was once closely
guarded (i.e., “their information”).
 Make decisions they were never required to
make.
 Do things they were never required to do
before

Copyright Poonam Garg, IMT Ghaziabad 43

Disadvantages of ERP
 ERP systems are strategic solutions. In
essence some companies are betting
their future on a successful ERP
implementation.
 If the implementation fails, the
consequences to the company can be
terrible.
 Companies have gone out of business as
a result of a failed ERP implementation
effort.
Copyright Poonam Garg, IMT Ghaziabad 44
Risks in ERP Implementation

Ver.1.0 Slide 45
Risks in ERP Implementation

Ver.1.0 Slide 46
Client Server Principle

Copyright Poonam Garg, IMT Ghaziabad 47

ERP System Client/Server Configuration

Copyright Poonam Garg, IMT Ghaziabad 48

3-Tier Architecture of ERP Applications
 The 3-tier system is also a Client- Server Architecture.
 A 3-tier system logically consists of a front-end UI client, a server and
a back-end database. Minimally, the business logic and database is
located at the server and the UI process resides at the client.

Copyright Poonam Garg, IMT Ghaziabad 49

Processing User Request

Copyright Poonam Garg, IMT Ghaziabad 50

ERP Architecture
PCs, Laptops, etc. Browser Client

Network

Web Server
Internet
Presentation Transaction
Server

Application Application
Servers
Database
Database

Copyright Poonam Garg, IMT Ghaziabad 51

ERP Conceptual Areas
ERP Conceptual Areas

Basis Area Development Area

Application Area (1. A developer’s
(The technical
(Initiate and execute workbench
administration of
ERP transactions) 2. Create & Test
the system)
ABAP/4 programs)
(Functional)
(Authorizations/Ids/etc)
(Technical)

Copyright Poonam Garg, IMT Ghaziabad 52

Systems in ERP Transport Request

Development Quality Production

System System System
(DC) (QC) (IC)

Copyright Poonam Garg, IMT Ghaziabad 53

Systems in ERP Transport Request

Development Quality Production

System System System
(DC) (QC) (IC)

Sand Box
I&T
IDES

G. C U. T

Copyright Poonam Garg, IMT Ghaziabad 54

 ERP- Architecture (three main parts)
specific to particular Customer,
ERP is for multi locational, multi- taking care of specific
currencies, multi-countries, multi- requirements of its processes, its
languages distributed enterprise company policies, its report
requirements etc
application.

Customization
local taxes and other laws, local
currencies, local language user-
Localization interface

Standard
business Logic, Presentation layer and the
databases, which is common to all Countries, All
languages, All Currencies, All companies

Copyright Poonam Garg, IMT Ghaziabad 55

Typical REQUIREMENTS with ERP Architecture

• Independent of OS, Hardware

– Support to all major Operating Systems like Unix, MS-NT, all
Windows platforms

• Independent of Database and UI Interfaces:

- Supports all major Database Systems like Oracle, Informix, SQL

Server, DB2, Sybase
– User Interfaces:
Supports various Windows platforms, Browsers
• Open Communication Protocols: TCP/IP

Copyright Poonam Garg, IMT Ghaziabad 56

Typical REQUIREMENTS with ERP
Architecture
 Performance:

Good performance for processing and opening pages/ giving

outputs. However it depends on UI design, S/W
modularity, Inter-process communications etc

 Distributed System
- Different data/ Modules/ Transactions to be used at
different locations
- Disparate Operating Systems

 Security

- Data/ Processes for only authorized persons

- Sensitive Business data security from outsiders
Copyright Poonam Garg, IMT Ghaziabad 57
Typical REQUIREMENTS with ERP
Architecture
 Scalability:

@ Larger volume of Data / larger no. of users

@ Load balancing / Server Farm
@ Multi-language Support

 Flexibility

@ Ease of Change/ Update/ Replace

@ Integration to new Technologies (Bar Code/ RFID)

 Maintainability

@ Ease of decoding, debugging

@ Normally supported by different vendors
Copyright Poonam Garg, IMT Ghaziabad 58
 n-Layer common ERP Architecture

APPLICATION LOGIC ( Mfg., Procurement, W/H..)

APIs and Tools ( customize/ maintain)
ORACLE
Logic Layer
CLIENT SQL
V.M/C
UI DRIVER DATA BASE DRIVER Server

INFORMIX
Browser

DataBase Layer
VIRTUAL MACHINE
Present’n Layer
Windows
Variants
OS Driver
Unix
Variants

HARD WARES

Copyright Poonam Garg, IMT Ghaziabad 59

1. OS Driver: Operating System Driver, is a program , which identifies
from which OS the connection is made in the network (whether Unix,
Windows like MS-NT and accordingly manages the interactions (input/
output etc)

2. Database Drivers: This is a program, which identifies from which

database (Oracle 8i/ 9i or DB2 or MS-SQL etc) the data is coming and
accordingly manages the interactions including inputs/ outputs

3. UI Driver: User Interface Driver is a program which identifies from

which User Interface (Client program on the Client machine, or
browser etc) the interactions are taking place and accordingly
manages the interactions including inputs/ outputs

4. Application Logic layer: This layer has the main business logic
(depicting the functionalities of procurement, manufacturing, sales
and delivery etc). This layer also has the Tools and APIs, which are to
be used to make any modification, customization, maintenance of the
application.

5. Virtual machine: this set of middleware program layer manages the

package configuration, data dictionary, other layers of program,
program workflow, transaction completion etc of the various
processes.

Copyright Poonam Garg, IMT Ghaziabad 60

Typical ERP Integration with legacy
Applications

Managers & Stakeholders Enterprise

EDI/
Banks Gateway ERP System EAI Legacy
Finance Planning
Sales & Manufacturing
Delivery

EAI Front Shared Back

EAI
CRM Office Database office SCM
Inventory
Service and Supply
HRMS
EAI EAI
APO WMS
Employees
EAI

BI & Reporting Tools

Copyright Poonam Garg, IMT Ghaziabad 61

Typical ERP Modules

$
$
$
$

Sales & Distribution Quality Management

Finance and Accounts

$
$

Manufacturing Plant Maintenance

Material Management
Human Resources

Copyright Poonam Garg, IMT Ghaziabad 62

Typical ERP Supported Functions
Financial HR Logistics Sales & Mkt.

Accts receivable Time accounting Inventory Orders

Asset account Payroll MRP Pricing

Cash forecast Personnel plan Plant Maintenance Sales Mgt

Cost accounting Travel expense Prod planning Sales plan

Exec Info Sys Project Mgmt

Financial consol Purchasing

General ledger Quality Mgmt

Profit analysis Shipping

Standard costing Vendor evaluation

Copyright Poonam Garg, IMT Ghaziabad 63

 Alternative ERP Options

Method Advantages Disadvantages

In-house Fit organization Most difficult, expensive, slowest

In-house combine proven features Difficult to develop

+vendor supp. with organizational fit Expensive & slow
Best-of-breed Theoretically ideal Hard to link, slow, potentially
inefficient
Customize Proven features modified Slower, usually more expensive than
vendor system to fit organization pure vendor
Select vendor Less risk, fast, If expand, inefficient and higher
modules inexpensive total cost
Full vendor Fast, inexpensive, efficient Inflexible
system
ASP Least risk & cost, fastest At mercy of ASP
ERP vendor competitive positioning

Large
enterprise
SAP Oracle
mySAP EBS and
SSA
Business Enterprise Lawson Infor
Suite MBS /Intentia QAD
Oracle IFS
AX
Midmarket E1
Unit 4
MBS
Agresso
GP Epicor
MBS MBS Exact
SAP Sage NAV SL
Small Business Group NetSuite
business One

Source: Forrester Research Inc

Copyright Poonam Garg, IMT Ghaziabad 65

ERP Vendors
 There were five dominating ERP software suppliers:
SAP, Oracle, PeopleSoft, Baan and J.D. Edwards.
 They controlled more than 60% of the multi- billion
dollar global market.
 Each vendor had a specialty in one particular
module area such as
 Baan in manufacturing,
 PeopleSoft in human resources management,
 SAP in logistics, and
 Oracle in financials

Copyright Poonam Garg, IMT Ghaziabad 70

ITEC6620 70
SAP AG
 SAP AG (“Systeme, Anwendungen, und Produkte in
Datenverarbeitung”), or Systems, Applications and Products in
Data Processing
 In 1979, SAP launched SAP R/2, a mainframe-based ERP
 In 1992 SAP R/3 was launched based on client/server
 By 1999 SAP became the third largest software vendor in the
world and the largest in the ERP sector with a market share of
about 36% serving over 17,000 customers in over 100 countries.
 In 1999 SAP extended the ERP functions by adding CRM, SCM,
sales-force automation and data warehousing.
 SAP’s Internet-enabled ERP solutions are provided by the
recently launched ERP product called mySAP.COM

Copyright Poonam Garg, IMT Ghaziabad 71

ITEC6620 71
Oracle Corporation
 founded in 1977 in the USA, is best-known for its database
software and related applications and is the second largest
software company in the world after Microsoft.
 second to SAP in the enterprise systems category with over
5,000 customers in 140 countries.
 Oracles ERP system is known as Oracle Applications, having
more than 50 different modules in six major categories: finance,
accounts payable, human resources, manufacturing, supply
chain, projects and front office.
 Now taken over PeopleSoft and JD Edwards

Copyright Poonam Garg, IMT Ghaziabad 72

ITEC6620 72
PeopleSoft Inc.
 Started in 1987 in California, with specialization in
human resource management and financial
services modules.
 Enterprise solutions from PeopleSoft include
modules for manufacturing, materials management,
distribution, finance, human resources and supply
chain planning.
 One of the strengths of PeopleSoft is the recognition
by its customers that it is flexible and collaborative
 In 2005 PeopleSoft became a part of Oracle offering
PeopleSoft 9

Copyright Poonam Garg, IMT Ghaziabad 73

ITEC6620 73
J.D.Edwards
 founded in 1977 in Denver (cofounded by Jack Thompson, Dan
Gregory and C. Edward McVaney) with long experience of
supplying software for the AS/400 market.
 Its ERP product called OneWorld is “capable of running on
multiple platforms and with multiple databases, ... [and]
revolutionizes enterprise software by liberating users from
inflexible, static technologies
 The product includes modules for finance, manufacturing,
distribution/logistics and human resources, quality management,
maintenance management, data warehousing, customer support
and after-sales service
 Now a part of Oracle offering JD Edwards EnterpriseOne and JD
Edwards World

Copyright Poonam Garg, IMT Ghaziabad 74

ITEC6620 74
Baan
 Found in 1978 with expertise in software for the
manufacturing industry
 ERP solution areas that Baan covers include
finance, procurement, manufacturing, distribution,
integration and implementation, planning, sales,
service and maintenance, business portals,
collaborative commerce and business intelligence.
 Bought by Infor in 2006

Copyright Poonam Garg, IMT Ghaziabad 75

ITEC6620 75
Current Situation
 JD Edwards was merged with PeopleSoft
 Then PeopleSoft was merged with Oracle in 2005
 Baan was bought by Invensys (in 2000), then SSA
Global Technologies (in 2003) and changed the
name to SSA ERP
 SSA ERP was acquired by Infor in 2006
 Now 3 largest ERP companies:
 SAP : logistics
 Oracle : financial, HRM
 Infor: manufacturing

Copyright Poonam Garg, IMT Ghaziabad 76

ITEC6620 76
ERP Product evaluation
criteria
ERP Product evaluation criteria

 Functional fit with the company’s Business processes

 Degree of integration between the various components of
the ERP systems
 flexibility and scalability
 complexity; user friendliness
 Reputation of the ERP product
 Quick implementation; shortened ROI period
 Ability to support multi site planning and control
 technology; client/server capabilities, database independence,
security
ERP Product evaluation criteria
 Availability of regular updates
 availability of reference sites
 Total cost, including cost of license, training,
implementation, maintenance, customization,
and hardware requirement.
ERP Product evaluation Criteria
Goal:
Functionality
To select the
Most Suitable Software 5 Strategic
Package Solution Requirement
Levels Technology

Vendor

Support

Costs
Technology requirements/ Infrastructure

clip2.flv

Ver.1.0 Slide 81
Technology requirements/ Infrastructure

 Assessment of existing systems during the pre-implementation

planning
 Layout, configuration, setup and interoperability of hardware
components
 Networking issues

Workstation

Server Server
Firewall

Data
Laptop

Ver.1.0 Slide 82
Pre requisites for effective ERP implementation

 Business Process Reengineering (BPR)

 A fundamental rethinking and radical redesign of
business processes to bring about dramatic
improvements in performance – Michael Hammer
A
A

B B

C E
D
C D E

Ver.1.0 Slide 83
 Implementation phases of ERP: “4D Methodology”

 Discovery
 Design
 Development
 Deployment

Discovery Design Development Deployment

•System Appreciation •High level Design •Configuration using •Deployment on

•Scoping •Effort Estimates Tools Client's systems
•Workshops •Functionality Matrix •Coding and scripting •Integration with other
•Client Interviews •Project Plan •Presentation, apps
•Questionnaires •Presentation, Business and Data •Data migration
•Gap Analysis Business and Data build •QA testing
•Onsite design •Data migration •UAT
•Mostly Onsite •Product testing •Onsite
•Mostly Offshore

Ver.1.0 Slide 84
Implementation phases of ERP: “INTRAK” Methodology

Ver.1.0 Slide 85
Implementation phases of ERP: Offshorability
The degree of off-shoring for the implementation varies across the
stages and depends on the project environment and the risk
absorption capacity of the client and program management teams.
Phase Activities Organization Onsite Offshore
Risk
Requirement Review of As-Is Processes High  
Gathering
Review of Current System Landscape High 
Oracle Overview Training High 
Offshore-ability: Consolidation of Process Documents Low  
Approx 25%
Identification of High Level Gaps Low  
Process Standardization Workshop High 
To-Be Design Future State Process Documentation Low 
To-Be Process Finalization- Work Shop High 
Solution Option Document Preparation Low 
Offshore-ability:
Approx 25% Development and finalization of standards High  
Conference Room Pilot Preparation and Execution High  
(2 CRPs)
Incorporate CRP results into Global Design High 
Finalize and validate Interface, Customization and High  
Report Requirements
Data Migration Strategy Low  
Finalize Global Design Document High  

Ver.1.0 Slide 86
Implementation phases of ERP: Offshorability

Stage Activities Organization Onsite Offshore

Risk
Configuration and Development of Detailed Level design documents Low 
Development
Build and Unit Test Interfaces, Reports and Data Migration Low 
Scripts
Offshore-ability Configure and Test System Integration Environment High  
: Approx 50%
Data Migration dry run(Iterative Process) High  
Testing and Preparation of System Integration and User acceptance High  
Deployment testing scripts

User Training and User Acceptance Testing High 

Offshore-ability:
Approx 40% Data Migration on Production Instance High  
Cutover and Go Live Audit Activities High  
Support
Go Live High 
Offshore-ability: Post Go-Live Support High  
Approx 30%

Ver.1.0 Slide 87
Post Implementation Plan
KT (knowledge transfer) to the users Support and maintenance of the App

Upgrade roadmap Ongoing Business Process

Reengineering

V5 V 5.1 V6

Q1-2004 Q 2-2004 Q 3-2004

V 1.0 V 1.1 V2

Ver.1.0 Slide 88
 Introduction – ASAP Roadmap

In the following the roles and responsibilities within each phase of the ASAP roadmap will be
described.
The implementation roadmap has six phases:
1. Project Preparation The project is formally initiated, and planning is well under way.
2. Business Blueprint The project team gathers requirements and conducts the
conceptual design of the solution.
3. Realization The solution is built and the integration tested; performance tests
are planned.
4. Final Preparation End users are trained; this is the final check before the cutover to
the new system solution.
5. Go Live and Support The solution receives confirmation, ongoing support is in place,
and the project is closing.
© SAP AG 2009. All rights
reserved. / Page 89
6. RunSAP The operability of the solution is ensured.
 Phase 1 - Project Preparation
(Scoping & Planning)

Milestones & Key

Purpose Deliverables
Decisions
 Initial Planning and Preparation  Project Scope Defined  Corporate Review Completed
 Define the project goals, scope  Implementation Plan & Rollout  Scope Defined
and objectives Strategy  Project Team Staffed and Trained
 Identify, on-board and train Team  Detailed Scope Document  Project Team Organization,
Members  Costs and Benefits Validation Responsibilities and Location
 Project Standards  Roll-out Plan
 Project Infrastructure Mandates/Constraints
 Knowledge Transfer Approach  Policies for To Be Finance
Organization
 Implementation Workplan
 System Retirement
 Master Data Design
Objectives/Mandates/ Constraints
 Interface List
 Training Budget and Approach
 Testing Strategy
 Key Stakeholders for
 Data Cleansing Strategy Communications Identified
© SAP AG 2009. All rights
reserved. / Page 90  Implementation Plan in Place
 Phase 2 - Business Blueprint

Milestones & Key

Purpose Deliverables
Decisions
To create a body of work, know as  Project Plan Update  Completed and signed off Process
Business Blueprint that  Complete, documented and signed Design
 Aligns business requirements to off  Completed and signed off Solution
the SAP business model  Business Process Hierarchy Design
 Documents the TO-BE process and Design  Completed and signed off gap
models  Value Association on Process identification and resolution
 Describes the solution design Level  Phase Quality Assessment
 Identifies additional functional and  Solution Design  Communication Plan
technical requirements  Gap Identification and
 Obtains business sign-off on Resolution
requirements and design  Solution Landscape and
 Blueprinting is dedicated to Architecture
support value delivery  Assessment of Organization and
Business Process Changes
 Confirmation of Implementation
© SAP AG 2009. All rights reserved. / Page 91
Date
 Phase 3 - Realization

Milestones & Key

Purpose Deliverables
Decisions
 Build and Test a Complete  Test Data and Configuration  Project Team Trained (Realization)
Business and System Environment  Business Process Procedures  Final Design and Configuration
 Develop Training Material and End  Quality Assurance System  Integration Test
User Documentation Environment  End-User System Infrastructure
 Obtain Business Approval  Production System Environment  User Acceptance
 Develop and Test Interfaces,  Phase Quality Assessment
Conversions and Reports
 Readiness Review
 Evaluate and Enhance Security
and Controls
 End-User Training Material and
Plan
 End-User Training System
Environment
© SAP AG 2009. All rights  Data Conversion Plan
reserved. / Page 92  User Acceptance Test
 Phase 4 - Final Preparation

Milestones & Key

Purpose Deliverables
Decisions
 Prepare System for Production  Data Converted  Organizational Changes
Release  Cut-Over Plan Implemented
 Prepare the Internal and External  End-Users Trained  Go/No-Go Decision
Organization for Go-Live
 End-User System Ids Created
 System Support Organization in
Place
 Help Desk
 Technical Support
 Operational Production System
Environment

© SAP AG 2009. All rights

reserved. / Page 93
 Phase 5 - Go-Live and Support

Milestones & Key

Purpose Deliverables
Decisions
 Business Owns and Executes New  Live Production Environment  Go-Live
Business Processes and Systems  Operational Help Desk  Project Close
 Monitor Business Process Results  Cut-Over and Conversion
 Monitor Production Environment Activities Completed
 Establish Center of Excellence for  Post Go-Live End-User Training
Support and Enhancements  Updated Business Case
 Lessons Learned

© SAP AG 2009. All rights

reserved. / Page 94
 Phase 6 - RunSAP

Milestones & Key

Purpose Deliverables
Decisions
 Run implemented SAP solution  Assessment of Operation  Identification of Operation
 Optimize solution operation by Standards for optimize solution Standards for optimize solution
implementing SAP Operation operation operation
standards  Identify scope  Design, Setup and Operation of
 Setup project schedule for SAP Operations Standards
implementing  Tool implementation (mostly SAP
 For each relevant Operation Solution Manager scenarios for
Standard operation)
 Design of processes,
organization and roles,
blueprint for tool usage
 Setup of processes,
organization and roles, tool
setup
© SAP AG 2009. All rights  Transition into production incl.
reserved. / Page 95 training and rollout
SAP – A ERP Package
 About SAP

Systems
Applications
Products

in Data Processing

Founded in
Waldorf,Germany in
1972.
Evolution Of SAP Product Suite
 Clip3.flv

Copyright Poonam Garg, IMT Ghaziabad 100

First log on on SAP
Clip4.flv

Copyright Poonam Garg, IMT Ghaziabad 101

 SAP R/3
Integrated Comprehensive
solutions functionality
SD FI
Sales & Financial
Distribution Accounting
MM CO
Materials
Controlling
Mgmt.
PP AM
Open Production

systems
Planning
R/3 Fixed Assets
Mgmt.
Designed for
all types of
QM Client / Server PS
Project business
Quality ABAP/4
Client / server Mgmt. PM System
Plant WF
architecture Maintenance Workflow
HR IS
Human Industry India Version
Resources Solutions

Enterprise data model

Multinational
 Basis is the Foundation
Relational Enterprise
Database Network
Management
R/3
Client/Server
Performance SAP Kernel
and Tuning Data Repository Operating
Communications System
Processing Administration
Client/server
architecture
ABAP/4

Release & Change Application

Management Development
 R/3 System Client/Server Configurations
SAP R/3 System
Presentation Application Database
Central System

Distributed
Presentation

Two-tier
Client/Server

Three-tier
Client/Server

Multi-Layer
Cooperative
Client/Server
SAP ICON
SAP Logon Icon on your
Desktop

On Clicking the
SAPLogon Icon, the
SAP Logon Pad will
PopUp on your
desktop.
SAP Login Screen

Enter Client Number

User Name

Password
The Login Screen

Since the User

ID’s are common,
this information is
prompted. Always
Use the
highlighted option
to continue
SAP MAIN SCREEN

Menu Bar

Tool
Tool Bar
Bar
Button Bar
Insert/Overtype Indicator

Server
Status Bar
Message Bar SAP System ID
 Menu Button Bar

Allows
user to
choose
role- Push Role-based
based buttons to User Menu
Menu change Set Up
favorites
Return
to SAP Standard
Menu

Return to
User Menu
List Name Values Comments
System v57(1) (600) System (Session) (Client)
Client 600 An SAP system may have multiple clients
to allow development, testing, or training
access to multiple SAP applications. These
clients may be 100% identical or when
used for development may be different in
functionality. This ability of SAP allows the
project to build, develop, & test with ease.

User Imtg-adm1 SAP user logon ID

Program SAPLSMTR_NAVIGATION SAP GUI program running – this is the
program that puts the screen in front of
you to see.
Transaction SESSION_MANAGER Transaction code for the screen currently
visible.
Response time 422 ms This is the time that elapses from the point
that the SAP GUI client sends a request
and the moment the response is received
and displayed by the SAP GUI client.
Interpretation time 16 ms This is the duration from the time that the
SAP GUI client receives data from the
server and the moment when this data is
displayed. This, measures the health of the
SAP GUI client used for the test rather
than the performance of the SAP R/3
server.
Round Trips/Flushes 1/0 A round trip is the distance a TCP/IP
package has to travel from the browser to
the server and back. SAPGUI flushes
Copyright Poonam Garg, IMT Ghaziabad (ignores) any events when it is 110
communicating with the SAP System.
This is a typical SAP screen.
The exact information will
vary depending on the
transaction you are working
on
The Menu Bar appears at the top of every SAP screen. Just as with any
Windows program, the Menu Bar provides access to a variety of
functions within the program. These functions vary depending on the
current screen.
The Title Bar shows the name of the current screen.
Click Next to continue.
The Standard Toolbar
contains standard buttons
that enable you to navigate
through each transaction. The
same buttons are present on
every screen. However, not all
buttons work on all screens.
Active buttons are
highlighted. Inactive buttons
are grayed out.
The Standard Toolbar also
contains the SAP Command
Field.
The Command Field enables you to enter special codes to quickly perform
certain functions within SAP.
You will learn about how to use the Command Field in a later lesson.
The Application Toolbar is
located just below the Standard
Toolbar. It contains buttons
related to the specific screen and
transaction with which you are
working. These buttons vary
depending on the current screen.

Some buttons have text labels,

and others are identified with
icons only. If you are not sure
what a particular button does,
you can point the mouse at it
without clicking, and a button
label will appear.
The screen body is where SAP gives transaction information
A system field is a field the system uses to display information. You cannot
change the contents of a system field.
An Edit Field is a field in which you can enter or modify data.
The Status Bar, located at the bottom of the SAP window, displays system
messages and other session information.
Messages appear here. The status bar will flash and an icon will appear in
front of the message to call your attention to it.
 The session status display is located on
the right side of the status bar. The status
display can be hidden or displayed by
clicking the triangle to its left.
 Work Area

Entry Fields Mandatory Field

Radio Buttons Choice of one option
Check Boxes Choice of a number of
options
Buttons No Directly triggers a
function

ESU/CHD/BLR/07
ICONS

The Enter button (check) signals SAP that you have finished
entering information on a screen. Note that pressing the Enter
key on the keyboard has the same effect.

The Save button (floppy disk) saves the document you are
working with, along with any changes you have made.

The Back button (left arrow) takes you to the previous screen.

The Exit button (up arrow) exits the current menu or

transaction without saving data
ICONS

The Cancel button (letter X) cancels the transaction in which you are
working.
If you have entered information, the system will ask you to confirm that
you want to cancel, so that you do not accidentally lose data

The Print button (printer) prints the current document, screen, or report,
depending on the transaction in which you are working.

The Find button (binoculars) is used to search for text in the current
document, report, or list.

The Find Again button (binoculars with a +) looks for the next occurrence
of text in the current document, report, or list.
ICONS

The First Page button takes you to the first screen in a display list or
report.

The Page Up button takes you to the screen before the one that you are
viewing in a display list or report.

The Page Down button takes you to the screen after the one that you are
viewing in a display list or report.

The Last Page button takes you to the last screen in a display list or
report.

The New Session button (window with a *) creates a new SAP window,
so that you can work on more than one task at a time.
ICONS

The Create Shortcut button (window with an arrow) creates a shortcut

icon to the current transaction on your Windows desktop.

The Help button (question mark) displays descriptive information

about the field in which your cursor is located.

The Options button controls settings for SAP, including the

appearance and behavior of error messages and the cursor.
MESSAGE ICONS

Fatal error (program terminates)

Error message

Warning message

Information message
SAP TERMINOLOGY
TRANSACTION

A transaction is a task that

you perform in SAP.
Any time you view a report,
or create or display a
document,
you are running a
transaction.
 TRANSACTION CODE

Most transactions within

SAP are associated with a
four-character code called a
transaction code. This
transaction code can be
used in the command field
to jump directly to a
transaction without having
to follow the navigation
path.
MASTER DATA

Master data is important,

long-term data stored within
the SAP system.

Vendors, customers, plant

IDs, the chart of accounts,
and product numbers are all
examples of information
that is stored as master data
records
 DOCUMENT

A document is data created in

association with a particular
business event or transaction.

Sales orders, purchase orders,

material requisitions, and
general ledger postings are all
examples of documents stored
within SAP.

Every document created in SAP

is assigned a document number
that uniquely identifies it.
 CREATE TRANSACTION

A create transaction is one

that creates a document or
master data record from
scratch. Most create
transactions have
transaction codes ending in
"1". For example, the
transaction code for "Create
A Requisition" is ME51
CHANGE TRANSACTION

A change transaction is one

that allows you to modify an
existing document or
master data record. Most
change transactions have
transaction codes ending in
"2". For example, the
transaction code for
"Change A Requisition" is
ME52.
DISPLAY TRANSACTION

A display transaction is one

that allows you to view an
existing document or
master data record without
making changes. Most
display transactions have
transaction codes ending in
"3". For example, the
transaction code for
"Display A Requisition" is
ME53.
 POST

The act of saving a

document in SAP is also
called posting the
document.
 REQUIRED FIELDS

Some screens have edit

fields for which SAP needs
entries to properly process
the transaction. These fields
are called required fields.
You cannot complete the
screen or transaction until
you have entered a valid
value in each required field.

SAP marks required fields

with a checked box, as
shown.
SESSION

A session is an instance of
the SAP window. Multiple
sessions can be opened to
allow use of more than one
transaction at a time.
LOGGING ON & OFF

Identifying yourself, and

confirming your identify to
SAP so you can begin
working, is called logging
on. Shutting SAP down
when you are finished
working is logging off.
 USER ID

Your User ID is
the name you
use to identify
yourself to SAP
when you log on.
CLIENT
A client is a self-contained
unit within the R/3 System,
containing separate master
data and its own set of
tables. The client is selected
on the initial log on screen.

Typically a single client is

used for day-to-day
business use. Most SAP
customers set up additional
clients for development or
training purposes.
 USER ROLE

A user role is a collection of

transactions that together
are assigned to a user so
that they can perform a
certain job function within
SAP. Several job roles
together might be required
to complete a job function
 ABAP

The programming language of

SAP is called ABAP, short for
Advanced Business Application
Programming. All R/3
applications are written in
ABAP.

Many SAP clients develop

custom transactions and
reports using ABAP. It is an
accepted standard that custom
transactions are assigned a
transaction code that begins
with a Z(For TIL)
SAP – Business Side
Different Modules in SAP
FI Financial accounting

Controlling/Management
CO
accounting

Materials Management
MM
(Procurement)

SD Sales and
Distributions

PP Production Planning

QM Quality Management
QUESTIONS -?
Thank You!
 Colgate Case

Copyright Poonam Garg, IMT Ghaziabad 152

Colgate Brief History
 William Colgate established “Colgate” in
1806
 Mainly a starch, soap and candle
business
 Merger with Palmolive in 1928; Colgate-
Palmolive-Peet
 Corporate name changed to Colgate-
Palmolive in 1956

Copyright Poonam Garg, IMT Ghaziabad 153

Colgate Brief History (cont)
 Continuous growth
 Today $9.9 Billion company (2003)
 Operations in more than 200 countries
and territories
 Colgate is now recognized as one of the
leading manufacturers of oral care, dental
care, household surface care, fabric care
and pet nutrition products

Copyright Poonam Garg, IMT Ghaziabad 154

Colgate
 Divergence of operating platform
 Dozens of platforms
 Low IT skills/knowledge
 No one understood all of the legacy systems
 Each CIO for each country – very
decentralized IS organization – no
standards or best practices in place
 No centralized operation
 Decided to implement ERP software in
1999
Copyright Poonam Garg, IMT Ghaziabad 155
 Integration of Processes – Some
benefits
Activity Before After
Enter pricing data 5-80 days 5 min.
Customer credit check 15-20 min. automatic

Enter customer order 30 min. 5 min.

Customer billing inquiry 15-20 min. real-time

Ship replacement part 3-44 days 2 days

Credit returned item 1-5 months 5 days

Commit date for 2 hrs.-3 wks. real-time

delivery Copyright Poonam Garg, IMT Ghaziabad
Source: Hammer

156
Outcomes for Colgate
 Availability of information in real time
 Decision making made easy because
of availability of accurate and up-to-
date data
 Business process re-engineered and
in some cases different departments
consolidated into one
 Improved efficiency: about 30% for
the database applications and about
50% reduction in processing time

Copyright Poonam Garg, IMT Ghaziabad 157

Outcomes for Colgate Cont’d

 Colgate saved $225 million where as

target was $125 million.
 Datacenters shrinks to 1 (and one
backup) from 75
 Inventory reduce by 10%
 Facilitated move to eCommerce.

Copyright Poonam Garg, IMT Ghaziabad 158

ERP in …. IMT ?
 Why do you think the IMT would want to
implement an ERP system?
 What kinds of challenges would the IMT face
in implementing an ERP system?

Copyright Poonam Garg, IMT Ghaziabad 159

Copyright Poonam Garg, IMT Ghaziabad 160