Production Management II - wzl.rwth-aachen.de · Production Management II (Prof. Schuh) Business Engineering & System Selection Summary lecture 12: Today’s economy is undergoing
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6. Tools for an efficient selection of ERP systems
6.1 Software Selection with the IT-Matchmaker L12 page 56
7. Exercise
7.1 Question on Business Engineering E12 page 1
7.2 Question on system selection E12 page 10
lecture 12
L12 page II
Production Management II (Prof. Schuh)
Business Engineering & System Selection
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, handableproject-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.
lecture 12
L12 page III
Production Management II (Prof. Schuh)
Business Engineering & System Selection
Bibliographies lecture 12:
Martin, R. Wie Software wirklich Nutzen bringtLempp, P. Harvard Business Manager, Juni 2003, p. 71ffMauterer, H.
Müller-Stewens, G. Strategisches ManagementLechner, C. Schäffer-Poeschel Verlag Stuttgart, 2. Auflage, 2003
Österle, H. Business EngineeringWinter, R. Springer Verlag Berlin, 2000
Österle, H. Business Engineering – Prozeß- und SystementwicklungSpringer Verlag Berlin, 1995
VDI-Gem.ausschuß CIM CIM-ManagementRechnerintegrierte Konstruktion und Produktion Band 1VDI-Verlag Düsseldorf, 1990
VDI-Gem.ausschuß CIM Kommunikation und DatenbanktechnikRechnerintegrierte Konstruktion und Produktion Band 6VDI-Verlag Düsseldorf, 1991
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
new companies
make possible
represents overall concept
Annotations:
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.
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.
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
Annotations:
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 two companies. A variety of internet platforms allow an automatic process-flow on a basis of so-called „Collaborative Marketplaces“
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
-
Annotations:
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.
The most important aspect concerning transformation is that availability of a technichal and organizational networking infrastructure allows expanding the focus of transformation from the original area to the entire value-added network. Thereby huge potentials of optimization are made accessible and hence Business Engineering is a networked business architecture, which is optimized along the entire value-added chain.
Sustainable business success is achievable almost only through differentiation. It can be gained by tighter contacts to one’s clients compared to competitors, which is a wider range of services. Clients prefer self-contained solution, which can be integrated without problems. Per contra single products have to be combined and integrated by the clients themselves.
A proper example might be a retailer that does not only deliver memory chips for Nokia, but as well supports Nokia’s developers in choosing the appropriate product, operates a part-storage at Nokia, etc..
In order to keep costs for distributors low in spite of an increased level of services, core-competences of sub-distributors are involved and exchange of information is standardized if possible. Mostly distributors do not offer their services exclusively to a single integrator but produce so-called “Shared Services”. Scale effects are a basic factor of success for such service providers. Standardization on the side of IT is made possible by a “Business CollaborationInfrastructure.“
The Business Collaboration Infrastructure consists of „Business Bus“ and „eServices“. The variety of standards in business-, process- and application-levels as well as adequate software packages are building up a widely accepted infrastructure for business networks, in a meaning equal to the effects of street-density and road traffic regulations on today‘s traffic. These standards and the software associated to them are called “Business Bus”.
It is complemented by various basic services (eServices), which are independent from certain branches or customer-processes. Some of these basic services do have a mandatory structure and need to be realized by especially trustworthy and reliable institutions (“public services”).
- Basic services: deliver a technical infrastructure to be accessed by all other services
- Integration services: support coordination of processes between different companies,e. g. news-transport, identification of market participants, etc.
- Business Networking Services: needed for cooperation with other companies
- Information services: e. g. news or scientific reports
- Business Support Services: processes, which can be outsourced orbought by a company
Common characteristics of all services are that they mostly function on an electronical basis, thy can be used alone or bundled with other services, their components are highly standardized and their accounting mostly is autonomous.
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)
Annotations:
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.
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:
Annotations:
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.
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?
Annotations:
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.
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.
BCI = Business Collaboration Infrastructure, EAI = Enterprise Application Infrastructure
Bild 11
Annotations:
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 thereforemonitored. 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.
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).
Rollen auf Ebene Mitarbeiter Projektinitiator (R) Pilotpartner
Moderator (M) Externer Berater
Entscheider (E) Führungsebene Führungsebene
. . . . . . . . . . . . . . .
2. techniques
4. roles
Annotations:
Five elements of methods:
Meta-model: The meta-model is the data-model of Business Engineering. It describes single objects of configuration (e. g. process, task, customer, application) and relations among them.
Results: Business Engineering is result-oriented. Pure realization of activities does not implement success automatically. Every project-activity must lead to pre-defined results (mainly documents).
Techniques: Techniques guide the Business Engineer through formulation of results. They focus on crucial tasks.
Activities: A project consists of a sequence of activities (proceedings model), which are defined in the project plan resp. the activity plan. The techniques patronize the fulfillment of the activities.
Roles: Contributors of a project find themselves in certain roles, which are connected to corresponding tasks, competences and responsibilities. They can be the organizer programmer, project manager, user or project sponsor.
caption: SSW = standard software, ISW = individual software
Annotations:
Starting points are meta-models, which are defined for each type of element and for every level (business model, processes, applications, software).
Subsequently company-specific models are generated. On their basis conclusions for a good practice can be made. Furthermore reference models for every level can be deduced by means of creativity techniques and an analysis of weak spots.
In a next step a procedure model is based on reference models and Good Practices. This model gives advice for a consistent design of business models, processes and applications and assures a holistic approach.
The multinational company UNTEL AG predominantly sells hi-fi systems, DVD players, games, compact discs and similar products. Digitalization and the internet fundamentally change the rules within this branch. Therefore, UNTEL starts different projects to explore and build-up these new forms of business.
UNTEL establishes a subsidiary company, which exclusively focuses on the musical entertainment via the internet (for example cdnow.com, etc.). Within a project, new documents, similar to those above, for the planning and realization of the new business are generated.
Annotations:Several special tools for the management of Business Engineering are available:
Modeling of business processes: Outline of the operational and organizational structure. The method presented mainly focuses on the graphic visualization; The tools are limited to other methods and seldom contain procedure models. Examples: ARIS Toolset (IDS-Scheer) and Bonapart (proubis).
Project management: Planning and controlling of both financial and human resources of a project as well as reporting. Methods for certain problems are not available with these tools. Common products of this category are Project by Microsoft or SuperProject/Net by Computer Associates.
Method supported: Sporadically special tools for certain tasks are available. SAP offers AcceleratedSAP (ASAP) for an introduction of its ERP-software R/3, which offers a procedure model, techniques (tutorials, questionnaires, checklists) and templates in addition to the project management. Meanwhile special ASAP-versions for upgrade-projects, global roll-outs or introduction of special products are available.
Teamwork within a project: Partial support through special modules of document management-groupware-systems. Thereby activities, project results, references and employees can be administered and displayed for varying roles (project manager or collaborator). Examples are iTeam by Documentum or Opentext’s Livelink.
Along with leading companies the Institute of Information Management at the University of St. Gallen has been developing a number of methods for the last ten years. The IMG AG adapted and enhanced these methods and added additional ones: PROMET® is a set of modular-structured and problem- resp. solution-specific methods, which can be combined through defined interfaces.
The backbone of every transformation-project is formed by so-called core-modules. They cover the basic techniques for a continuous transformation from the strategy-level via the process configuration to the implementation of neworganizational solutions.
Supplement-modules provide thematically differing tasks, such as the development of business strategies, inter-business networking or the introduction of internet and intranet, with specific solutions.
The modules of a roadmap are combined and endorsed by procedure-models. A generic procedure-model describes the activities of a typical business engineering project.
Business Engineering does not only concentrate on the professional solution of a project, but also on the management of change with the same interest. Among other things it deals with the cost effectiveness of a solution (ROI analysis), with the project management and with the groups of interest (Stakeholder Map).
The analysis of cost effectiveness faces the entire expenses, which include not only IT-costs but as well personnel expenses for the change process, trainings, etc, to potential revenues. Mostly not all potential in cutting down can be accredited to the new system. Part of the revenues is not monetarily quantifiable very often.
Within each change project, the participants can be divided into patrons, opponents, supporters and unsteady persons. The stakeholder map is an important tool in visualizing and analyzing the participants and their relationships to each other.
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.
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.
Typical Challenges When Starting an ERP Implementation Project
Low Market Transparency
Where to get reliable informationon available systems?Are there alternatives to SAP?What are benefits of American ERP Systems?
Unrealistic Expectations
„The system has to be as powerful and convenient as the current one ...“Production scheduling has to be in real-time
Project ManagementDifficult
No support and commitment fromtop managementGoals and priorities are not clearand transparentPersonal interest conflict withproject interests
No Previous Experiencein ImplementingERP Systems
Which software functionalities areimportant, now and in future?Which approach: Fully integrated oradaptable, scalable core system?
3
Annotations:
Due to missing capacities and qualification of employees, small and medium enterprises have substantial problems when it comes to selecting and implementing an ERP System.
Characteristics of an ERP Selection and Implementation Project
High initial investment as well as high costs in subsequent
project phases!! Total benefit of an ERP implementation project is
difficult to quantify
Planning horizon is rather long-term!! Changes in products, processes,
and organisations occur more and more frequent
Companies have limited experience with ERP projects!! Requirements and expectations
are very high because the wholecompany is involved
ERP systems are complex products, expert advice is
often needed!! The multitude and heterogeneity of information sources
can cause confusion
Annotations :
An ERP project causes high capital outlays, which must be justified. The quantification of benefits can only be a rough estimate.
A normal lifecycle of an ERP system is usually 10-15 years. Accordingly, the software selection has to ensure, which future functionalities the system has to cover.
Ever shorter product life cycles, steadily changing processes and structures in the enterprise, have to be considered during the selction phase.
Product Modernisation • Complete (Re-) Development
• Partial Migration to New Technologies, e.g. Java
Decrease in Software Development Activities
• Partnerships with complementary and/or competingcompanies in order to enlarge product portfolio and customerbase
• Shift from a software developing company to a servicecompany, e.g. focus on implementation and consultingservices
Specialisation • Industry focus, e.g. textile, automotive or metal industry
• Specialised software modules, e.g. enterprise integration, middleware etc.
7
Annotations:
The differentiation strategies of individual system providers were: reduction of owndevelopment activities, specialization and product modernization. The productmodernization was characterised by the development of new systems or by the extension of systems around new functionalities and technologies.
The reduction of own development activities was achieved by co-operation withproviders of complementary or competitive systems.
Comparison of different selection and implementationapproaches and relevant criteria
Project without externalConsulting but internal team
Project with external consulting and internal team
Hiring experienced person for duration of the project
„Shake-Hands“
Approach
Project only with CIO (ChiefInformation Officer) no internal team
CriterionMinimisation of Risk
Consideration of major IT and business requirements
Consideration of company‘s„organizational behaviour“
Bottom-up approach, employeesatisfaction
Reduced cost of decision-making
Minimisation of project duration
fulfilled
partiallyfulfilled
( )( )
( )( )
( )( )( )
( ) ( )
14
Annotations:
The different approaches for the selection of an ERP system can be categorized alongdifferent criteria. In the context of a project without external consulting, the currentorganisational experience is essentially considered. Future requirements remainfrequently unconsidered.
The selection by the CIO without participation of a specialized team frequently leads to a high investment risk, since the acceptance among the coworkers represents a substantial aspect of a successful ERP implementation. Therefore, existingrequirements are not sufficiently considered during software selection.
Something similar applies to employee acceptance with appropriate experience and to the selection of any PPS /ERP system by "Shake Hands".
Projects with experienced consultants and with participation of a specialized teamensure a wide acceptance of the system as well as an appropriate minimization of risk. Due to the consulting costs, however, total costs increase.
1.2 Process and Structure Analysis1.1 Project Initiation
1.3 Process and Structure Optimisation
2.2 Final Selection2.1 Pre-selection
2.3 Final Contract Negotiation
1. Reorganisation
2. System Selection
Project Phases Work Blocks
3.2 System Implementation3.1 Realisation Preparations
3.3 Setting System into Service
3. Realisation 3PhasenPhasenKONZEPTKONZEPT
Annotations:
The selection and implementation of an ERP systems represent a major problem for most enterprises.
An established and well proven concept is the "3-Phases Concept” for the selection and implementation of standard ERP Systems", developed at the Research Institute for Operations Management at RWTH Aachen.
It has been applied in over 250 selection projects. The project structure covers the three phases reorganization, system selection and realization. Each phase of the concept is divided into three work blocks.
Steps and Activities during Business Process Reengineering
Project Initiation1.11.1 • Formulation of Objectives and Tasks• Definition of Project Scope•Project Team Set up • Project Management, Project Plan
Process and Structure Analysis1.21.2
ja
ja
ja1
5 6
2
3 4
• Analyze Order Processes• Analyze Information Flows and Organisational Structures• Analyze Planning and Control Procedures• Analyze Products and Information Flow Volumes and Quality• Determine and Prioritize Weak Points
Process and Structure Optimisation1.31.3 • Elaborate and Agree on a cross-department orderprocess concept
• Optimize order process• Determine first requirements regarding software support• Determine and Prioritize Improvement Activities
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 InputThrouput-
time
Nescad
Dakoda
InformationFlow
IT-Support
Week-Points
Department
Task
Additional-information
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
Annotations:
The analyses of processes and information flows is the starting point in the reorganisation phase. The use of modelling software is recommended (e.g. Visio, Bonapart, ARIS or Powerpoint).
Cross-departmental processes should also be taken into account. In the example, firstthe involved organisational units as well as the process steps are documented.
In parallel, weak points and lead times are analysed. Subsequently,improvementmeasures can be determined.
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
Annotations:
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.
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...
Annotations:
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.
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)
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Annotiations:
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).
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
Carry-out of System Tests with ERP-System-Suppliers
Annotations:
In the context of the final selection phase, the preferred systems must be analyzed, based on the specific requirements that were determined in the previous phase -reorganization.
The approach is based on the examination of so called business process scenarios.
The „screenplay“/“script“for the systematical test is a document that lists all requirements and allows to grade or rank the ERP system.
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 solutionto 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 benot sufficiently covered by the system.
The requirement posed is not fulfilled. The system does not offer any support
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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
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Grade
Annotations: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.
The system test offers the project members the possibility of grading the ERP system according to their requirements. 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 specificationdocument, which forms the basis for contract negotiations with the software provider.
The requirement specification document defines the actions needed of the software provider and form the basis for contract negotiation and makes it the legally binding document for all adjustments and additional programming, e.g. interfaces, to the ERP system.
If hardware is not available in the enterprise, there might be fees for leasing or hosting. In this case, as soon as the definition took place on a hardware set up, a hardware contract must be agreed on.
With conclusion of a contract also those achievements are to be documented, which must be provided by the enterprise, e.g. meeting rooms but also qualified personnel.
Specification and PriorisationOf Individual Requirements
Annotations:
The first work block of the implementation phase makes sure that the project teambecomes acquainted with the ERP system, on the basis of typical business processes.
Important organization objects in the context of a fine tuning are the business processes, the organizational structure, the work organization, the planning processesand production control concepts. A detailed conception helps avoid errors and securea successful implementation of the system.
In the phase of the adaption and configuration, the fine concept must be applied intothe practice. In order to cover the requirements, the software providers make use of tools that support the adaption of the system.
Adjustments, which can be only made by the system designer, is referred to as individual programming.
A set of different tests is run before ramping up the system to normal use by all users in the company.
Actualisation of Transfer Data and Puttinginto Services
Annotations:
In this phase, the ramp up from a hardward point of view is covered. Furthermore, training and briefing of the final users is carried out, therefore ensuring useracceptance. The training courses should take place if possible after a first datamigration and possible short time before the last-finite productive start of the system.
Data transfer from the old to the new system is a big issue. The following kinds of the data transfer can be differentiated: The interpretive, the automated 1:1 and the manualdata transfer. With the interpretive data transfer the meaning of the values of datafields is interpreted and illustrated in the new system. With the automated 1:1 assumption maximally an alignment of different data field designations is made. The data clearing can be made before or after the data transfer. With the manual datatransfer the data are revised if necessary during manual input.
Information Sources for the Pre-Selection of ERP-Systems
Market surveys and market guides
Web pages of software vendors
Journal articles
„Yellow Pages“ on the Internet
Other CompaniesAv
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Tim
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External Consulting Services
Trade fairs
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fulfilled
Partially fulfilled
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Web-based Platformssupporting the selection
Web-based Platformssupporting a bidding process
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Annotations:
The picture gives an overview over the degrees of assistance, which different sourcesof information for selecting an ERP system.
Internet-based selection and advertisement platforms, like the IT Matchmaker, offer a degree at assistance, which no other communication medium reaches.
Requesting companyplaces request on platformWorkflow for SelectionProcessCheck of Authenticity of Software VendorsControlled Access through User Management System
Private platforms, high quality of selection
Simple electronic addresslistingselection and establishment of contact isjob of the potential customerinformation limited
Elektronic Catalogs of Systems and Vendors
Open and Public Platformsfor RFP (Request for
Proposals)
Requesting companyplaces request on platformAny software providermay publish its requestRFP‘s and content are notcross-checked for eligibility
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Annotations:
Three concepts of a Internet-supported selection can be differentiated:
Electronic Catalogs of systems and vendors, open and public platforms for RFPs, as well as private platforms with high quality selection.
In the context of the information phase a requirement profile (RFP) should be providedon which the entire selection process bases.
The outcome of this phase is a set of three preferred systems or system providers, to which the final RFP is sent. The IT Matchmaker supports this process of RFP. Communication with the vendors runs in this communication phase in an anonymousway.
The whole process of receiving, analysing, checking and answering the RFP issupported by the internet platform, in order to simplify the evaluation for the companiesinvolved.
The market situation for ERP systems is characterized by a large heterogeneity. There are approx. 100 standard ERP systems in GermanyDifferences in software functionality are significantNot 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 processParticularly private platforms offer the possibility also to streamline the selectionprocess by providing a standard workflow and standardised communicationbetween potential customers and software providers
Foundation: Sept. 9th, 2000 as a spin-off by Forschungsinstitut fürRationalisierung at RWTH Aachen University (FIR e.V.)
Incorporators: Dr.-Ing. Dipl.-Wirt.-Ing. Karsten SontowDipl.-Ing. Peter Treutlein
Start of business: Sept. 1st, 2001Employees: 16 (07/2004)Products: Information and tools for a professional software-selectionBackground: 15 years of experience of FIR in market research, compilation of
market overviews as well as selection and implementation of software-solutions (> 250 projects)
Content: FIR e.V., RWTH Aachen / schwetz consulting / Universität Münster / i2s GmbH (CH) / Fraunhofer IPA
Security and efficiency during software-selection!
... through 100% of neutrality against providers!participation is open to all providerssame chances for each providerno recommendation of selection at all provider-neutral software-analysts and co-operation partner
... through high data qualitycontinuous checking of system-profilesResearch based on detailed, individualspecification sheetshigher level of detailingcontinuous market observation
... through a widespread tool-rangepractice-oriented templates for specification sheetsmarket overview at the push of a buttonanonymous and enclosed competitive biddingsanalysis- and decision support
... through consistent project managementdefined milestonesprecise resultssystematic prioritizationexplicit focusing
Which system suits your tasks best on behalf of functional range and investment volume?
organizational structures Bill of materials maintenance work schedule maintenance processing of ordersproduction planning purchasing storage cost accounting
Organizational analysis (where necessary re-organization)Organizational analysis (where necessary re-organization)Viewing the actual organizationDetermination of weak spotsDefinition of the target conceptAdapting the target concept to the organization
Viewing the actual organizationDetermination of weak spotsDefinition of the target conceptAdapting the target concept to the organization
Software-selectionSoftware-selection
Defining the requirements Pre-selectionFinal selection
Defining the requirements Pre-selectionFinal selection
ImplementationImplementation
Preparing stepsAdaptation and configuration of the softwareTrainingsImplementation within the pilot areaInitial operation
Preparing stepsAdaptation and configuration of the softwareTrainingsImplementation within the pilot areaInitial operation
... which should only be made on a solid basis!“Knowledge, one needs“ – specification and requirement sheets“Knowledge of who offers what” – market research and system tests“Knowledge of the costs” – open competitive bidding and comparison of the bids
Software-selection is an investment decision, ...Large project effortLong-ranging consequencesSignificant investment-risk
Approved tools and a qualified support help to avoid expenses and risks!Market-overviewsInternet platformsSpecialist counseling and research institutes