Description
This is a presentation that includes the ERP selection criteria e.g. SAP,Oracle,i2,ramco etc.
AGENDA
• An Overview of ERP Package Evaluation
? The Need
? The Process
? The Issues
• Understanding ERP Package Evaluation using the example of ITC
? The Company-specific Needs ? The Selection Criteria ? Vendor Analysis
• Conclusions and Summary
? Recommendations ? Risks & Mitigation ? Benefits
THE PURPOSE OF ERP IN FMCG
A unified enterprise view of business that encompasses all functions and departments
An enterprise database where all business transactions are entered, recorded, processed, monitored and reported
ERP PACKAGE EVALUATION OVERVIEW
NEED OF AN ERP
BROAD AREAS
• Supply chain strategy • Supply chain integration • Inventory management • IT
TECHNICA L NEEDS
• Automation of functions in phase of reducing wastages and improve bottom line • To avoid duplication of data and provide data consolidation • Achieve commonality in language of system
BROAD FUNCTION AL NEEDS
• To improve planning and decision quality • Smoother coordination between businesses to improve efficiency • Quicker response time to customer demands and enquiries
ORGANIZATIONAL READINESS
• When ERP becomes part of any organization, there is going to be a
drastic change in the way of working
Server
• Depends on the number of potential users of the new system
• This phase involves making the organization prepared for this change
• Design Documents • Licenses required Readiness • Schematic • Compatibility with • Single Instance/ • Big Bang vs Phase Diagram/Flowcharts Incremental the current systems Multi Instance & in place File Servers • Change How does an organization create readiness… • Disaster Recovery Management • Hot Site (24 x 7) • RPO/RTO Team Place Infrastructure People Others • DRP Document Walkthroughs • Temporary Backups Training the Creating • Business Impact Awareness (simulation of the employees Analysis
INFRASTRUCTURE READINESS
ERP Architecture ERP Design ERP Deployment
Software
E.g. Dashboards, seating of the employees, etc
E.g. Desktops/ Laptops, LAN/ WAN, etc
products) E.g. The
communication strategy, policies on people staying late, etc
THE EVALUATION PROCESS…
Difficulties in Vendor Selection
• Time
KEY EVALUATION CRITERIA Why is selecting the right
? Information and manpower gathering can take
ERP packageof time enormous amount so important?
• •Cost Product Enormous amounts of resourcesEase of in
? Cost is always time and manpower terms of cash, on the higher side for any ERP
Future Road Map
• Vendor’s Vision • Technology Trends
Evaluation
Implementation
consumed • Finding objective data
• Service and Support
? decision • TheNear impossible task of finding objective • Functionality is mostly irreversible data • Ability to Execute
• Technical Architecture • Cost ?
The impact of an ERP is significant on • Process Changes • Lack of a structured Evaluation process the entire business
•
based on the RFPs received from the vendors
This may be caused due to the negligence of the
Required
decision Analysis • Cost-Benefit makers.
• Change Management
ERP PRODUCT SELECTION CRITERIA
Goal: To select the Most Suitable Software Package Solution
Functionality
5 Strategic Requirement Levels
Technology
Vendor
Support
Costs
8
ERP PACKAGE SELECTION
Steps involved…
Business Requirement
ERP(Packages Available)
Broad Assessment
Deep Dive
Best Fit
Important factors to be considered
•Understanding of the organization structure • Organizational challenges (competition, a pressing need to reduce cycle times, etc) • Due Diligence is of critical importance
DETAILED PACKAGE EVALUATION PROCESS
Define Requirements Go to the Market place Clarify the Requirements
Analyze Gaps
Interact with the vendors
Refine Vendor Inquiry
Negotiate Agreement
Execute Agreement
ERP PACKAGE SELECTION
Organization Structure
Reliable, Scalable
BESTSponsor(MD/CEO) FIT Available ? Manageable
Steering Team
Project Team
Business Need Business Requirement Adhoc Requirement Industry Specific
Invitees
ERP PACKAGE SELECTION
Vendor Selection
• Selection of vendors is critical for an organization since it has to be a strategic fit
• Due diligence is of prime importance at this stage. It gives the following benefits :? Enables us to conclude how the ERP fulfils specific needs ? How does the vendor support the organization
Knowledge Sharing Session
Typical Selection Flowchart
Finalize on ERP Vendor
Negotiate/Pricing Licensing : Tied/Not tied with revenue
RISKS & MITIGATION
• Total Cost of Ownership • Timelines • User Buy-in • Inadequate Selection • Low Top management Involvement
• Ineffective consulting services
• Poor Project Team Skills • Poor Leadership
• Inadequate Financial management
• Inadequate Strategic thinking & Planning
ITC AND THE PACKAGE SELECTION PROCESS
CURRENT SCENARIO @ ITC
• SAP R/3 5.0 – Enterprise Core Component
? Implemented in 2005
• SAP APO 4.1 – Supply Chain Management
? Implemented in 2007
? Support withdrawal
• Product Interchangeability Functionality
? Foods Business Division ? Demand Propagation, Distribution
ITC’s BUSINESS NEED & BUSINESS REQUIREMENT
Business Need Business Requirement • Address all the functional requirements, the critical or not so critical
• Manage complexity due to diversifying business lines • Managing scalability issues • Technology Obsolescence
Classification
• Must to have • Nice to have • Good to have
SPECIFIC FUNCTIONAL NEEDS IN ITC
Enterprise Management
• Product cost planning • Sales planning • Overhead cost management
Procurement of Stock material Internal Procurement
• Stock transfer
Manufacturing process
• Production planning and detailed scheduling • Contract manufacturing
Sales order processing
• EDI
SPECIFIC FUNCTIONAL NEEDS IN ITC
ITD – India Tobacco Division FBD – Foods Business Division Matches & Agarbatti Business Division
• Demand Planning • Raw material & Procurement Planning • Production & Distribution Planning • Regulatory Controls
• Production Planning – Pune & Jharkhand • Sub-contracting • Shelf Life Planning & Key Account Management • Promotion Planning
• Local Sourcing • Distribution Planning
SELECTION PARAMETERS
• • • • •
% of the overall functional availability Reputation of the ERP product Customization possibilities Implementation partner’s track record % of installations in your business sector Interfacing with other systems Vendor’s policy & practices Regarding updates, versions, etc
MUST TO HAVE
•
• •
GOOD TO HAVE
• Number of installations in the geographical vicinity • After sales support • Incremental Module addition
NICE TO HAVE
VENDOR ANALYSIS
SELECTION SELECTION SELECTION PARAMETERS PARAMETERS
VENDOR - ORACLE VENDOR - RAMCOI2 VENDOR - SAP VENDOR- SYSTEMS
Weight Weight
Weight
PARAMETERS
Reputation of the ERP product Reputation of the ERP product Reputation of the ERP product No. of installations in the No.of installations in the No.of installations in the geographical vicinity geographical vicinity geographical vicinity % of the overall functional % of the overall functional % of the overall functional availability availability
availability
Rating Rating
Rating
Factor Score Factor Score
Factor Score
20 20
20 5
97
7
180 140
140 30
5 5
76 8
6 7
35 30 40 120 90 105
105
15
15 15
86 7 66 7
7
7
Customization possibilities Customization possibilities
Customization possibilities
10
5
10 10
60 60 70
70
35
After sales support After sales support After sales support partner’s Implementation Implementation partner’s track Implementation partner’s track track recordrecord record % of installations in your % of installations in your % of installations in your business business sector business sector sector
Incremental Module addition Incremental Module addition Incremental Module addition Interfacing with other systems Interfacing with other systems Interfacing with other systems Interfacing with other systems Vendor’s policy & practices Vendor’s policy & practices Vendor’s policy & practices Vendor’s policy & practices regarding updates, versions, regarding updates, versions, etc rregarding updates, versions, etc regarding updates, versions, etc etc
5 5
88 7
87
6
40 40 35
80 70
60
10 10 5
10 10 10 10 5 5
87 7 77 6 7 77 6
6 6 8
80 70 70 3530 35 35 70 70 60
60 60 80
10
10 10 10 10
TOTAL TOTAL TOTAL
10 10
7 6
70 60
100 100
665 780
675 680
SUMMARY AND CONCLUSIONS
CONCLUSION
22
SUMMARY & RECOMMENDATIONS
SAP ECC – 5.0 to SCORES OF ALL VENDORS 6.0, SAP APO - 4.1 to 7.0
Better integration with other systems FACTOR SCORE VENDOR TOTAL
SAP • Peoplesoft for HR • ICH – Inventory Collaboration Hub ORACLE 780 675 680 665
Results from GAP Analysis
I2 • • • •
RAMCO
Workarounds Extension requirements Change(s) in business process if required as the ERP vendor SAP should be selected The extent of support available and needed further
SUMMARY & RECOMMENDATIONS Consignment processing
Foreign trade
Returns and Complaints
Returnable processing
Batch Recall
Cross Company sales order processing
BENEFITS
? On-line/real time information throughout
all the functional areas of an organization
? Data standardization and accuracy across the
enterprise
? “Best-practices" included in the applications ? The efficiency they force an organization to
undertake
? The analysis and reporting that can be used
for long term planning
doc_840573109.pptx
This is a presentation that includes the ERP selection criteria e.g. SAP,Oracle,i2,ramco etc.
AGENDA
• An Overview of ERP Package Evaluation
? The Need
? The Process
? The Issues
• Understanding ERP Package Evaluation using the example of ITC
? The Company-specific Needs ? The Selection Criteria ? Vendor Analysis
• Conclusions and Summary
? Recommendations ? Risks & Mitigation ? Benefits
THE PURPOSE OF ERP IN FMCG
A unified enterprise view of business that encompasses all functions and departments
An enterprise database where all business transactions are entered, recorded, processed, monitored and reported
ERP PACKAGE EVALUATION OVERVIEW
NEED OF AN ERP
BROAD AREAS
• Supply chain strategy • Supply chain integration • Inventory management • IT
TECHNICA L NEEDS
• Automation of functions in phase of reducing wastages and improve bottom line • To avoid duplication of data and provide data consolidation • Achieve commonality in language of system
BROAD FUNCTION AL NEEDS
• To improve planning and decision quality • Smoother coordination between businesses to improve efficiency • Quicker response time to customer demands and enquiries
ORGANIZATIONAL READINESS
• When ERP becomes part of any organization, there is going to be a
drastic change in the way of working
Server
• Depends on the number of potential users of the new system
• This phase involves making the organization prepared for this change
• Design Documents • Licenses required Readiness • Schematic • Compatibility with • Single Instance/ • Big Bang vs Phase Diagram/Flowcharts Incremental the current systems Multi Instance & in place File Servers • Change How does an organization create readiness… • Disaster Recovery Management • Hot Site (24 x 7) • RPO/RTO Team Place Infrastructure People Others • DRP Document Walkthroughs • Temporary Backups Training the Creating • Business Impact Awareness (simulation of the employees Analysis
INFRASTRUCTURE READINESS
ERP Architecture ERP Design ERP Deployment
Software
E.g. Dashboards, seating of the employees, etc
E.g. Desktops/ Laptops, LAN/ WAN, etc
products) E.g. The
communication strategy, policies on people staying late, etc
THE EVALUATION PROCESS…
Difficulties in Vendor Selection
• Time
KEY EVALUATION CRITERIA Why is selecting the right
? Information and manpower gathering can take
ERP packageof time enormous amount so important?
• •Cost Product Enormous amounts of resourcesEase of in
? Cost is always time and manpower terms of cash, on the higher side for any ERP
Future Road Map
• Vendor’s Vision • Technology Trends
Evaluation
Implementation
consumed • Finding objective data
• Service and Support
? decision • TheNear impossible task of finding objective • Functionality is mostly irreversible data • Ability to Execute
• Technical Architecture • Cost ?
The impact of an ERP is significant on • Process Changes • Lack of a structured Evaluation process the entire business
•
based on the RFPs received from the vendors
This may be caused due to the negligence of the
Required
decision Analysis • Cost-Benefit makers.
• Change Management
ERP PRODUCT SELECTION CRITERIA
Goal: To select the Most Suitable Software Package Solution
Functionality
5 Strategic Requirement Levels
Technology
Vendor
Support
Costs
8
ERP PACKAGE SELECTION
Steps involved…
Business Requirement
ERP(Packages Available)
Broad Assessment
Deep Dive
Best Fit
Important factors to be considered
•Understanding of the organization structure • Organizational challenges (competition, a pressing need to reduce cycle times, etc) • Due Diligence is of critical importance
DETAILED PACKAGE EVALUATION PROCESS
Define Requirements Go to the Market place Clarify the Requirements
Analyze Gaps
Interact with the vendors
Refine Vendor Inquiry
Negotiate Agreement
Execute Agreement
ERP PACKAGE SELECTION
Organization Structure
Reliable, Scalable
BESTSponsor(MD/CEO) FIT Available ? Manageable
Steering Team
Project Team
Business Need Business Requirement Adhoc Requirement Industry Specific
Invitees
ERP PACKAGE SELECTION
Vendor Selection
• Selection of vendors is critical for an organization since it has to be a strategic fit
• Due diligence is of prime importance at this stage. It gives the following benefits :? Enables us to conclude how the ERP fulfils specific needs ? How does the vendor support the organization
Knowledge Sharing Session
Typical Selection Flowchart
Finalize on ERP Vendor
Negotiate/Pricing Licensing : Tied/Not tied with revenue
RISKS & MITIGATION
• Total Cost of Ownership • Timelines • User Buy-in • Inadequate Selection • Low Top management Involvement
• Ineffective consulting services
• Poor Project Team Skills • Poor Leadership
• Inadequate Financial management
• Inadequate Strategic thinking & Planning
ITC AND THE PACKAGE SELECTION PROCESS
CURRENT SCENARIO @ ITC
• SAP R/3 5.0 – Enterprise Core Component
? Implemented in 2005
• SAP APO 4.1 – Supply Chain Management
? Implemented in 2007
? Support withdrawal
• Product Interchangeability Functionality
? Foods Business Division ? Demand Propagation, Distribution
ITC’s BUSINESS NEED & BUSINESS REQUIREMENT
Business Need Business Requirement • Address all the functional requirements, the critical or not so critical
• Manage complexity due to diversifying business lines • Managing scalability issues • Technology Obsolescence
Classification
• Must to have • Nice to have • Good to have
SPECIFIC FUNCTIONAL NEEDS IN ITC
Enterprise Management
• Product cost planning • Sales planning • Overhead cost management
Procurement of Stock material Internal Procurement
• Stock transfer
Manufacturing process
• Production planning and detailed scheduling • Contract manufacturing
Sales order processing
• EDI
SPECIFIC FUNCTIONAL NEEDS IN ITC
ITD – India Tobacco Division FBD – Foods Business Division Matches & Agarbatti Business Division
• Demand Planning • Raw material & Procurement Planning • Production & Distribution Planning • Regulatory Controls
• Production Planning – Pune & Jharkhand • Sub-contracting • Shelf Life Planning & Key Account Management • Promotion Planning
• Local Sourcing • Distribution Planning
SELECTION PARAMETERS
• • • • •
% of the overall functional availability Reputation of the ERP product Customization possibilities Implementation partner’s track record % of installations in your business sector Interfacing with other systems Vendor’s policy & practices Regarding updates, versions, etc
MUST TO HAVE
•
• •
GOOD TO HAVE
• Number of installations in the geographical vicinity • After sales support • Incremental Module addition
NICE TO HAVE
VENDOR ANALYSIS
SELECTION SELECTION SELECTION PARAMETERS PARAMETERS
VENDOR - ORACLE VENDOR - RAMCOI2 VENDOR - SAP VENDOR- SYSTEMS
Weight Weight
Weight
PARAMETERS
Reputation of the ERP product Reputation of the ERP product Reputation of the ERP product No. of installations in the No.of installations in the No.of installations in the geographical vicinity geographical vicinity geographical vicinity % of the overall functional % of the overall functional % of the overall functional availability availability
availability
Rating Rating
Rating
Factor Score Factor Score
Factor Score
20 20
20 5
97
7
180 140
140 30
5 5
76 8
6 7
35 30 40 120 90 105
105
15
15 15
86 7 66 7
7
7
Customization possibilities Customization possibilities
Customization possibilities
10
5
10 10
60 60 70
70
35
After sales support After sales support After sales support partner’s Implementation Implementation partner’s track Implementation partner’s track track recordrecord record % of installations in your % of installations in your % of installations in your business business sector business sector sector
Incremental Module addition Incremental Module addition Incremental Module addition Interfacing with other systems Interfacing with other systems Interfacing with other systems Interfacing with other systems Vendor’s policy & practices Vendor’s policy & practices Vendor’s policy & practices Vendor’s policy & practices regarding updates, versions, regarding updates, versions, etc rregarding updates, versions, etc regarding updates, versions, etc etc
5 5
88 7
87
6
40 40 35
80 70
60
10 10 5
10 10 10 10 5 5
87 7 77 6 7 77 6
6 6 8
80 70 70 3530 35 35 70 70 60
60 60 80
10
10 10 10 10
TOTAL TOTAL TOTAL
10 10
7 6
70 60
100 100
665 780
675 680
SUMMARY AND CONCLUSIONS
CONCLUSION
22
SUMMARY & RECOMMENDATIONS
SAP ECC – 5.0 to SCORES OF ALL VENDORS 6.0, SAP APO - 4.1 to 7.0
Better integration with other systems FACTOR SCORE VENDOR TOTAL
SAP • Peoplesoft for HR • ICH – Inventory Collaboration Hub ORACLE 780 675 680 665
Results from GAP Analysis
I2 • • • •
RAMCO
Workarounds Extension requirements Change(s) in business process if required as the ERP vendor SAP should be selected The extent of support available and needed further
SUMMARY & RECOMMENDATIONS Consignment processing
Foreign trade
Returns and Complaints
Returnable processing
Batch Recall
Cross Company sales order processing
BENEFITS
? On-line/real time information throughout
all the functional areas of an organization
? Data standardization and accuracy across the
enterprise
? “Best-practices" included in the applications ? The efficiency they force an organization to
undertake
? The analysis and reporting that can be used
for long term planning
doc_840573109.pptx