Production Management B – Spring Semester 2009 Business Engineering & Software Selection L12 P. 0 Lecture 12 Laboratory for Machine Tools and Production Engineering Chair of Production Engineering Prof. Dr.-Ing. Dipl.-Wirt. Ing. G. Schuh Chair of Production Management Prof. Dr.-Ing. A. Kampker Production Management B Lecture 12 Business Engineering & Software Selection Organisation: Dipl.-Kfm. Stefan Cuber Pontdriesch 14/16 Room 214 Phone: 47705-420 [email protected]
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Laboratory for Machine Tools and Production Engineering · L9 06.07.2009 Mr. Rauhut 0241 80 28206 L11 13.07.2009 Mr. Koch 0241 80 25321 L12 20.07.2009 Mr. Cuber (fir) 0241 47705-420
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Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 0
Lecture 12
Laboratory for Machine Tools and Production Engineering
Chair of Production EngineeringProf. Dr.-Ing. Dipl.-Wirt. Ing. G. Schuh
Chair of Production ManagementProf. Dr.-Ing. A. Kampker
Organisation:Dipl.-Kfm. Stefan CuberPontdriesch 14/16Room 214 Phone: [email protected]
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 1
Lecture 12
Index:
Index Page 1
Schedule Page 2
Target of this lecture Page 3
LectureIntroduction into Business Engineering Page 4
Web-based ERP-Selection Process in Comparison to Page 17
tradition methods
Summary and Conclusion Page 34
Questions Page 36
Bibliography Page 37
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 2
Lecture 12
Schedule:
No. Date Responsible
L1 27.04.2009 Mr. Rittstieg 0241 80 20396
L2 04.05.2009 Mr. Bartoscheck 0241 80 28203
L3 18.05.2009 Mr. Fuchs 0241 80 26265
L4 25.05.2009 Mr. Reil 0241 80 27964
L5 08.06.2009 Mr. Potente 0241 80 27387
L6 15.06.2009 Mr. Bauhoff (fir) 0241 47705-439
L7 22.06.2009 Mr. Hoeschen 0241 80 27382
L8 29.06.2009 Mr. Jung 0241 80 27392
L9 06.07.2009 Mr. Rauhut 0241 80 28206
L11 13.07.2009 Mr. Koch 0241 80 25321
L12 20.07.2009 Mr. Cuber (fir) 0241 47705-420
Customer Relations Management
Enterprise Ressource Planning I
Enterprise Ressource Planning II
Topic
IT in Production Management
Enterprise Ressource Planning III
Product Lifecycle Management II
Digitale Plant Planning and Simulation
Business Engineering - Method of selecting IT-Systems (Trovarit)
Supply Chain Management I
Supply Chain Management II
Product Lifecycle Management I
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 3
Lecture 12
Summary lecture 12:
Today’s economy is undergoing a transformation from the industrial to the information age. This transformation allows one to move the focus of transformation from its original area to the entire network of value selection.
Isolated IT-applications as a result of the tayloristic approach of functional fragmentation of the entire production process can be found prevalently. But, a continuous flow of information both within and far beyond the company is an existential premise for the company‘s future success. Hence, the introduction of IT-systems is being complicated by a huge number of interfaces, which in parts can be very complex. Communication is being alleviated through standards on the levels of business, process and application as well as adequate software-solutions.
“Business Engineering“ characterizes as the design for companies of the information-age. Since transformation applies to complex man-machine-systems, a limitation to the technical aspect of change is not sufficient. Introducing an IT-system is more likely an organizational than a technical problem.
Making the transformation fast and safe as well as minimizing expenses is the approach in Business Engineering. Hereby transformation becomes directable: It strips transformation down to projects, a project down to a professional outline and to the direction of change. In turn the professional outline is stripped down to the levels strategy, process and system. Small, handable project-activities with clearly defined results in form of documents are generated.
During the selection and implementation of standard ERP systems three phases can be distinguished:
• Reorganisation: Project Initiation, Process and Structure Analysis, Process and Structure Optimization
• System Selection: Pre-selection, Final Selection, Final Contract Negotiation
• Realization: Realization Preparations, System Implementation, Setting System into Service.
The selection of an ERP System is expediently supported by the internet platform “IT-Matchmaker”.
Professional Change Management and consequent controlling of implementation are elementary premises for a successful implementation IT-systems.
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 4
IT-Innovations force companies of the industrial age to change
Bild 1
Business Engineering
IT-innovationsinformation technique
construction technique
applications electronic services
preparation, structuring and
use of information
business-knowledge
methods of Change Management
business architecture of the information age
companies of the industrial
age
understand
transformation
understand support
restructured companies
make possible
represents overall concept
Notes:
Today’s economy is undergoing a transformation from the industrial to the information age. Especially innovations from the sector ‘information- and communication-technology’ („IT-innovations“) allow new business-solutions, new services, products, processes, companies and branches. New forms of leadership and coordination replace conventional forms of organization.
The transformation with its technical and socio-economic aspects is by far too eminent and complex to be intuitively and uncoordinatedly created by a single isolated person on basis of minor basic rules.
In order to open up business potentials of IT-innovations, teams, which are based on a division of labor, must look into technologies, strategies, processes and applications minutiously and professionally. Such proceedings and the existence and usage of appropriate procedure models, methods and tools characterize disciplines in the field of engineering.
“Business Engineering” characterizes as the design of companies of the information-age. As the transformation concerns complex man-machine-systems, it is essential not just to focus on the technical and professional aspects of change. Knowledge of business and IT are being brought together and connected to all aspects of the transformation, leading from means of representation to procedure models and cultural as well as political aspects.
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Nowadays one will not find companies operating without computer support. Since the 50s computer-based information processing has become a determined part in producing companies.Today complete process chains of producing companies are being supported by information technologies. There are appropriate IT-systems for nearly each task: Beginning design and development supported by several CAD-systems and simulation tools, to the administration department and services, which e. g. may offer long-range services for products or telemetric services. Masses of data are stored and maintained in complex data- and transaction-systems.
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 7
Integrating IT-Systems into a company‘s process network
Bild 3
Pictures: SAP AG, Hasso Plattner, Technologie integrierter Informationssysteme, 2001
1.Integration into processes within the company
2.Integration into processesexceeding the borders ofthe company
CollaborativeMarketplace
Notes
In the past the organization of data processing ensued the organization of the production. Thereby it accorded to the tayloristic approach of functional separation of the entire producing processes.
One result is an infrastructure of optimized functional subareas, which can still be found today in sub-optimum processes of the entire company. Isolated applications only allow a certain effort in maintaining competitive ability. A continuous flow of information is an existential premise for a company‘s success.
Therefore IT-systems need to be integrated into the company’s processes. In advance these processes are to be optimized, as systematization comes before automization to ensure the company’s success. A large number of new systems, such as SCM-systems, optimize workflows far beyond the borders of departments or processes.
Due to today‘s tight networking among companies, the next step is to integrate IT-systems into processes exceeding the borders of the company. Very often this interconnection cannot just be found among twocompanies. A variety of internet platforms allow an automatic process-flow on a basis of so-called „Collaborative Marketplaces“
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 8
RAO = Raw material, auxiliary material, operating material, subassemblies
purchasing
merchandise planning
-
sales planning
production
product concept
-
ex stock
processing of orders
-
cost accounting
-
Human Ressources
auditing
financial accounting
-
billing
bill order
intakeorder intake
stock value
working hours
plan orderproduction order
work plansbill of materials
calculation
accountinggoods issue
costs
delivery date
customer-specificqualities
requ
est f
or d
eliv
ery
plan
bre
ak
capa
citie
s
orde
r
orde
r
avai
labl
e qu
antit
y
with
draw
al R
AO
approved job
cash
sal
es
-
outstanding money
liabi
litie
s
finan
cial
-stat
emen
t
production planning
-
Notes:
A large exchange of data can be found between the separate elements of a process. This needs to be beard in mind while integrating the information technology into processes.
Each source of information needs to be kept in mind, data-structures are to be created accordingly and interfaces need to be defined and implemented. Data, wich is generated within single processes, must be accessible to other areas and systems.
The realization of interfaces during implementation of IT-systems is highly complex and laborious – whether adjustments of standard systems or individual solutions are concerned. In many cases a main part of the software investment is needed here.
Defining standards of communication drastically eases this challenge. Especially among inter-companies-exchange it initializes a cost-effective linking of processes.
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Example: Balancing bills supported by using the Business-Bus
Bild 7
Business Bus
distribution
sales
planning
offsetting
supplier customer
auditing
-online billing
payment and liquidation
eService
Bill Presentment & Payment-Processes
distribution
negotiation
information
payment(2)
(3)
(4)
(5)
(1)
Notes:
The payment of a service is electronically monitored by a neutral instance. The advantage is maximum security both for customer and supplier: paying in advance a customer can be sure to get his money back, if he is not satisfied with the product delivered. The supplier has the guarantee to be paid as long as his delivery is correct.
For example, this service is offered by eBay.
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IT-architectures: today‘s systems have a flexible structure
Bild 8
presentation & - logic logic of usage data
presentation & - logic logic of usage
Core System
Client / Server - SystemClient Server
data
Tripartite system architecture
presentatationWebclient
presentation logicWebserver
presentation presentation logicClient
applicationsserver (ORB)
logic of usage
CORBA JAVA .NET
data
data
Server
Server
Software
IT-technologies:
Notes:
Basically IT-systems consist of four core-components:
- Presentation: Graphic output of the software-surface, e. g. windows, buttons, etc.
- Presentation logic: Data preparation for the presentation, e. g. calculation of diagrams
- Logic of usage: Functionality, e. g. interpretation of total turnover
- Data: Storing information, e. g. figures, texts, etc.
Most of today‘s IT-systems used in producing companies are client server based. Innovative software solutions have a tripartite structure and enable a dynamic exchange of software components.
The tripartite system architecture practically is the technical basis for the Business Collaboration Infrastructure. At the same time, it is the most flexible solution for networks, as old core components can be separated to several servers. Future dominating IT-technologies to realize this architecture are Corba, Java and Microsoft‘s upcoming .NET initiative.
Application Service Provider (ASP) use this architecture as well. These service providers have application logic and data servers in their computer-pools, while the customer is remotely accessing data from the distance and uses and pays functions simply by needs.
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Chances and risks during implementation of IT-systems
Bild 9
+ Chances - Risks
Accelerated processesIncreased flexibilityIncreased qualityImproved productsGeneral access to knowledgeStandardized, where applicable automated data transferCost saving
IT-implementation is more an organizational than a technical challenge!
Remodeling of processesIncreased need of trainingIncreased burden on employees Unpredictable interfacesLoss of customized solutions along with implementation of standard softwareEnsured “capacity to act” of the company during implementationDependency on external partnersOversized startup costs
What is being implemented and when? Standard software or individual development?Are goals and potentials as a matter of fact achieved?
Notes:
The transformation from the industrial to the information age is a gigantic challenge for industry and society. Thousands of projects a year bring up new or improved business solutions. But not every project is succesful. According to an analysis carried out by Cambridge Technology Partners, 95% of more than 600 IT-projects did not work to their satisfaction.
IT-systems promise to open up a wide range of new potential within companies. But very often chances face risks, which are hardly planable in advance. Implementation does not only mean implementation of a software system: Processes and structures need to be optimized and oppositions and fears need to be reduced.
Mostly things cannot be done at once. Graduated schemes have to be developed in analogy to priorities and possibilities. A decision between customizing a standard software or implementing an individual solution is to be made: Guaranteed quality and functionality of standard software are facing the expenses to customize the product and limited possibilities.
Thus introducing an IT-system is more an organizational than a technical problem since processes need to be customized and systems chosen – based on the fact that priorities are set by the company‘s main strategy. A professional Change Management becomes necessary as a result of the reconfiguration of processes along with direct and intensive involvement of employees.
Furthermore controlling has a decisive role in every project to guarantee a prompt achievement of the company‘s objectives.
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Business Engineering & Software Selection L12 P. 12
What leads a project to success? Project Management, Know-how, Technology, Change Management? Restriction of the project‘s complexity, splitting it into manageable parts and a systematic proceeding, which connects the single results, eminently raise a project‘s chances of success.
Main views of change processes are the professional dimension and the politic-cultural dimension. The professional dimension focuses on methods and models of the technological observation, which include developments of strategy, process and system. So-called “human factors“, such as motivation and management, behavior, communication or proportions of power are objectives of the politic-cultural dimension.
Business Engineering splits transformation into projects (within the project portfolio), a project into the professional concept and the management of change. The professional concept then is split into the levels ‘strategy’, ‘process’ and ‘system’. Doing so, Business Engineering creates small, hand able results in form of documents. Finally a procedure model connects these activities to an appropriate order within the project‘s plan.
Business Engineering aims at making the transformation fast and safe and minimizes the effort needed. It makes the transformation guidable.
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The Business Engineering Model shown is meant to be a framework. Its aim is to help the Business Engineer understand single projects and project activities in the entire context.
Most of the time the process of Business Engineering is initiated by IT-innovations, sometimes as well by changes of the general framework, branches, markets, customer behavior and the change of values. As a consequence the process is based on methods and models of the IT- and technology-managements in their early stages.
At the level of strategy the business architectures, models and strategies are therefore monitored. This part of Business Engineering is based on methods and models of strategic management (see lectures PM I L11 and L12).
Having formulated appropriate strategies and specification of the business model, appropriate business processes and finally appropriate information- and communication-systems for systematically supportable parts of the process are developed in a next step (see lectures PM I L9 and L10 for the modeling of companies and processes).
The complexity of transformation requires an engineering-, method- and model-based procedure. Networked business architectures and the possibility to direct business models either to production processes or to customer processes mark this complexity. Innovations only become effective when being implemented within strategy-, process- or system-levels. Doing so, the information und communication techniques bring along restrictions, which need to be beard in mind at all levels.
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Basic principles of the Method Engineering help making projects more stringent. The figure above shows the meta-model of Business Engineering. It contains essential objects and their connections.
Business Engineering acts on the assumption of the problem-independent meta-model, which then is specifically being adapted to the problem. Methods consist of five elements: meta-model, results, techniques, activities and roles.
The question of Stakeholder Value come to the foreground at the same time, which is a criterion for a business solution. On the strategy-level business logic defines factors for success, which are to be consulted on all levels for measurement of the project- and business-successes. An important part of this is the consideration of cost effectiveness, for example in form of Return on Investment (ROI).
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At the changeover from one epoch to the other fundamental alteration occurs. Withal the intensities of the activities and the moral within a company act differently.
Five stages, which cause different activities, can be distinguished in the design of change. The entire cycle describes a perennial process:
Sensitization: An early cultural change among a minority, which considers its own form of management as not contemporary, initiates the process. At first stakeholders are identified and a gross concept is developed.
Prelude: The change process is being discussed and the adequacy is justified. A climate of priority is created and the organization of change is established.
Roll-Out: First euphoria has faded, rejection comes up and requires an active debate. It is aimed at bundling energies to realize the change. The determination to the intention needs to be demonstrated and the employees concerned need to adapt the change and become an active part of it („issue ownership“).
Process of steadiness: At first, laborious success must not be wasted, but needs to be saved sustain ably and its cultural consolidation needs to be pushed. As moral is on a low it needs to be forced to change by the highest effort. Due to a multitude of parallel projects the change has to be sustained by several key personalities. It is shown, whether the change has been successful or not.
Consolidation: The process needs to be entirely concluded, experiences need to be evaluated and the organization of the project needs to be dissolved. Everyday life arises from the special program.
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Often the consistence of implementation is crucial for success or failure of an IT-introduction. In many cases only a small part of all possible potentials is achieved with the start of the new IT-solution. It is not until a continuous optimization of the new processes and the new systems that an IT-solution unfolds its complete range of possibilities.
Blind activism harms the project. Therefore the management needs to concentrate on goals with the highest benefit and must fully activate its employees. In order to realize this, goals need to be set consequently and lastingly realized in a sustainable way.
This can be achieved by appropriate methods within the different stages of a project:
Methods of resolution for the given tasks are rated in an audit by the management. A solution is selected and the appropriate realization is initiated.
A Balanced Scorecard helps tracking the course of realization (cp. PM I lecture 1). It even helps tracking down the strategy and goals to single areas and employees. In terms of selected key figures and corresponding methods each employee is pointed up his role in and contributions to the process of realization with individual aims.
By means of the controlling of finance values (cp. PM I, lecture 1) the prosperousness of the IT-project for the company can be judged retroactively.
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Fehlende zeitliche Abhängigkeitzwischen den Arbeitsplänen
AV
Kalkulationsdateneingehalten?
21
- Kalkulationsdaten
Ggf. Korrektur derStücklisten und
Zeichnung
AV, KS- Geänderte Stückliste
an EDV- Geänderte Zeichnung
- Stücklisten- Zeichnung
ja
nein
Laufkarte in Neuenkirchengleich Entnahmekarte
WT: ReferenzierungBaugruppenliste zu
Kurz-LV fehlt teilweise
2 - 6Wo.
DLZ Output EDVBemerkung InputThroughput-
time
Nescad
Dakoda
InformationFlow
IT-Support
Weeknesses
Department
Task
additionalinformation
Manuelle Erstellungder Arbeitsplankonzepte
- Erstellung der komplettenFertigungsunterlagen fürden Vorrichtungsbau(Rheine)
Fehlende Kopplung mit dem Strukturplan
Fehlende Prüfung aufvollständige Vorgaben
Guter Zugriffauf archivierteArbeitspläne
Arbeitstechnische Opti-mierung der Stücklisteund Zeichnung zu spät
Notes:
The analyses of processes and information flows is the starting point in the reorganisation phase. Theuse of modelling software is recommended (e.g. Visio, Bonapart, ARIS or Powerpoint).
Cross-departmental processes should also be taken into account. In the example, first the involvedorganisational units as well as the process steps are documented.
In parallel, weak points and lead times are analysed. Subsequently,improvement measures can bedetermined.
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Periodical testing of the collected dataon site by FIR-engineersPeriodical testing of the collected dataon site by FIR-engineers
Quarterly conducted marketresearch to collect generaldata from 230 ERP-System suppliers
Quarterly conducted marketresearch to collect generaldata from 230 ERP-System suppliers Evaluation of the grade of
functionality of ERP-SystemsEvaluation of the grade offunctionality of ERP-Systems
Validation Completeness
Data Collection Data Usage
Actuality Indepen-dency
TROVARIT AG:
Technology-Provider
TROVARIT AG:TROVARIT AG:
Technology-Provider
ITIT--MatchmakerMatchmaker
Notes:
The market for ERP systems is observed and analyzed for over 20 years by FIR. Since May 2000, market survey is published by the IT Matchmaker (www.it matchmaker.com) the Trovarit AG, a spin off of the FIR.
The IT Matchmaker is an internet platform which supports an online, web-based selection of enterprise software solutions (e.g. ERP systems).
Up to 1.500 respectively 2,200 characteristics are seized in a standard catalog for each system. The processes of data acquisition, control/data examination as well as data use are arranged in such a manner that the topicality, the validity and the completeness of the collected data are ensured.
Production Management B – Spring Semester 2009
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Future Trends -System Functionalities in ERP-Systems
FutureTrendsE-Business-
Functionalities
Web-Shop, Content managementSpare part ordering and associated services via Inter-Front-end...
Mapping of ComplexOrganisation Structures
Item Data Management in Multi-Site Production CompaniesMaterials Management in Multi-Site Production CompaniesSales Planning in Decentralised Sales Organisations...
Constraint-based Delivery Date Calculation (Available to Promise)Simultaneous Production Planning in Real-Time...
Workflow undEvent Control
Workflow Support for indirect Departments (e.g. Engineering)Integration of E-Mail in the Workflow...
Notes:
The increasing requirements on the part of the enterprises regarding the optimization of the enterprise-internal and external business processes led to new trends with ERP systems.
The illustration of complex organisational structures supports the job execution over several production sites, up to complex distribution structures. APS (Advanced Planning) functionalities improve current, MRP–based ERP systems.
A Workflow possible and an event support makes the inclusion and co-ordination of all coworkers concerned by a business transaction within shortest time.
E-Business-functionalities make an efficient completion possible of business processes including the Internets as communication medium.
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IT consultancies and Sales partners – Additional Dimension to ERP Selection and Implementation
ERP Systems(approx. 100 Standard-ERP-Systems on the
German market)
IT consultancy(approx 5000 different IT consultanciesand Sales partners for ERP systems)
Industry
Examples: ERP Software Providers and number of IT consultancies
SAP: approx. 100 (only Germany)ABAS: 27 (Europe)
NAVISION: 97 (only Germany)
27
Notes
In the context of a selective procedure not only the software providers have to be considered, but additionally a multiplicity of associated system implementation partners or IT consultancies. The IT consultancies differ e.g. by a different industry experience, by different pre-setting of the ERP system (pre-customized).
Production Management B – Spring Semester 2009
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Quality and Availability of Professional Consultants
Quality und Responsiveness of Support
...
Market Position and Stability of System Vendor
Management Board of the System Vendor
R&D PotentialStrategy of the System Vendor (e.g. Industry focus)...
Match of “System Philosophy” and Corporate PhilosophyModernity of System TechnologySystem Flexibility Previous System Implementations with other Clients...
Aachen Model of PPC
Notes:
Production Management B – Spring Semester 2009
Business Engineering & Software Selection L12 P. 30
2-Day Workshops with Software Providers (System Demonstration)
Create Checklist- Requirements, Questions- Sample Data
„Script“ for the Test
Grade Significance Characteristic
The system offers a better solution to the requirement as expected.
The requirement posed is fully fulfilled. Functionality is suitable
The fulfilment of the requirements is acceptable. However weaknesses exist
The requirement posed is fulfilled insufficient. Crucial points of the requirement can be not sufficiently covered by the system.
The requirement posed is not fulfilled. The system does not offer any support
1
2
3
4
5
The system fulfills demanded functionality in the standard
The system will offer functionality at the time of the introduction in the standard.
Functionality can be covered after slight adjustment
Functionality can be provided, however major programmingrequired
A system adjustment to the requirements is not possible
A
B
C
D
E
Graded by User Company Graded by Software Vendor
30
Grade
Notes:At the beginning of the test, an agenda is established containing some introductory information.
The agenda for the system test is organized around two parts:
1) Total „screenplay“/“script“
This includes the core processes e.g. from purchasing, production to sales. For each core process the company or team evaluates:
• Which information must be available in the system?
• How many graphical user interfaces have to be called in order to obtain the necessary information?
• which information must be entered into the system, e.g. selection lists, plausibility checks, assistance during the input etc.,
2) Individual „screenplay“/“script“
This part includes specific and detailed requirements and questions that have to be answered in the system test.
A final section contains question about previous experiences of the software provider in implementation projects or necessary adjustments of the software.
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The system test offers the project members the possibility of grading the ERP system according to theirrequirements. These requirements are demonstrated during the system test by the software provider.
The evaluation follows a uniform evaluation guideline (see also previous slide).
The total ranks of the systems are determined by taking into consideration different criteria, i.e. functionality, cost, ease of use etc.
The results of the system test are consolidated in a requirement specification document, which forms thebasis for contract negotiations with the software provider.
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Summary and ConclusionThe market situation for ERP systems is characterized by a large heterogeneity. More than 150 standard ERP systems exist in Germany
Differences in software functionality are significant
Not only the right system, but the also the adequate implementation partner is a criteria in the selection process
– In Germany, around 5.000 of these implementation partners exist!
Internet platforms can support the software selection process
Particularly private platforms offer the possibility also to streamline the selection process by providing a standard workflow and standardized communication between potential customers and software providers
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Lecture 12
Questions:• What are the central elements to be taken into account in a it-system
selection process?
• Who should be involved in a software system selection process?
• Which points should be clarified before a ERP-system selection?
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Lecture 12
Bibliography:
Martin, R; Lempp, P.; Mauterer, H.: Wie Software wirklich Nutzen bringt. Harvard Business Manager, Juni 2003, S. 71ff