enterprise resource plnning ERP vendors.pdf

ERP vendor

1. Sean Peasley
Deloitte & Touche
ISACA Spring Conference
April 26, 1999
Introduction to ERP:
Overview of ERP Systems

2. 2
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Objectives
n
To describe the key elements of each of the
major ERP systems which dominate the market.
n
To
g
ain a basic understandin
g
of the ERP
market.
n
To describe the key risks and control issues
surroundin
g
the implementation of major ERP
systems.
n
To provide an approach for establishin
g
a well
controlled environment.

3. 3
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Session Topics
n
Overview of ERP Packa
g
es
n
ERP Market Outlook
n
Key Risks and Controls
n
Controls Implementation Approach

4. 4
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Overview of ERP Packages

5. 5
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

SAP - The Company
n
Founded in 1972 in Waldorf, Germany
n
4th lar
g
est software supplier in the world
n
Revenues over $5 billion in 1998
n
SAP
g
rowin
g
over 40% a year
n
18,330 employees worldwide (9/98)
n
1997 market share was 31% of the worldwide
client/server enterprise application software
n
Over 9,000 installations at 6,000 companies with
more than 2,500,000 users in over 50 countries
n
An avera
g
e of 25% of revenue invested in R&D

6. 6
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Integrated turnkey solutions
Open systems
Client / server
architecture
Enterprise data
model
Extensive
functionality
Non-industry
specific
Multinational
SAP - The Product
© 1999 SAP America, Inc. All rights reserved.
R/3
FI
Financial
Accounting
CO
Controlling
AM
Fixed Assets
Mgmt.
PS
Project
System
WF
Workflow
IS
Industry
Solutions
MM
Materials
Mgmt.
HR
Human
Resources
SD
Sales &
Distribution
PP
Production
Planning
QM
Quality
Mgmt.
PM
Plant
Maintenance
New Dimension
Products

7. 7
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
SAP standard delivered automated enablers
– Document balancin
g
, database inte
g
rity, automatic
postin
g
, match codes.
n
SAP confi
g
urable enablers
– Credit checkin
g
, tolerances, document matchin
g
,
document blockin
g
, chan
g
e documents, release
strate
g
y
n
SAP Work Flow
n
Application Security
– Access definitions, transaction locks, user locks,
system parameters
n
Reports
– ABAP, ABAP Query, Report Writer
SAP - Control Features

8. 8
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

PeopleSoft - The Company
n
Revenues over $1.3 billion in 1998
n
2nd lar
g
est ERP supplier in the world
n
Growin
g
over 60% a year
n
7,000 employees worldwide
n
2,900 clients worldwide
n
1997 market share was 8.4% of total ERP
software license market
n
International
g
rowth and expansion will be focus
throu
g
h 2000

9. 9
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
HRMS
– Payroll, Benefits, Human Resources, Pension Administration,
Time & Labor
n
Accountin
g
and Control
– General Led
g
er, Payables, Receivables, Asset Mana
g
ement,
Projects, Bud
g
ets, Expenses, Cash Mana
g
ement
n
Treasur
y
Mana
g
ement
n
Materials Mana
g
ement
n
Suppl
y
Chain Plannin
g
n
Service Revenue Mana
g
ement
n
Procurement
n
Enterprise Performance Mana
g
ement
n
Pro
ject Mana
g
ement
PeopleSoft - The Product

10. 10
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
PeopleSoft delivered automated enablers
– Document balancin
g
, edits and validations
n
PeopleSoft confi
g
urable enablers
– Required fields, audit trails, trial mode vs. final mode,
workflow approvals, control data, correction access,
statistical auditin
g
, positive pay bankin
g
n
Application Security
– Menu/panel security, row level security, workflow
security, field security, preferences
n
Reports
– Query, PS/nVision, SQR
PeopleSoft - Control Features

11. 11
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Oracle - The Company
n
Founded in 1977
n
2nd lar
g
est software supplier in the world
n
Revenues over $8 billion in 1998
n
41,000 employees worldwide, 16,000 U.S.
– Reflects total company - not just applications business
n
More than 6,000 customers in 76 countries
n
1997 ERP market share was 8.3% of total ERP
license revenue
– 50% of applications revenue comes from services
n
Oracle’s applications license revenue is
g
rowin
g
at 18% a year; si
g
nificantly less than its rivals.

12. 12
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Financials
– Plannin
g
(G/L, Analyzer)
– Analysis
– Consolidation
– Expenditure Mana
g
ement
– Billin
g
and Cash Collection
– Cash Mana
g
ement
– Asset Mana
g
ement
n
Supply Chain
–Strate
g
ic Procurement
– Non-production Procurement
–Strate
g
ic Sourin
g
–Catalo
g
ue Mana
g
ement
Oracle - The Product
n
Projects
–Costin
g
– Billin
g
– Time and Expense
– Activity Mana
g
ement
Gateway
n
Human Resources
n
Materials
Mana
g
ement
– Inventory
–Purchasin
g

13. 13
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Manufacturin
g
– Factory & Item Definition
– Plannin
g
& Simulation
– Materials Mana
g
ement
– Production
– Cost Manag
ement
–Inte
g
rated Technolo
g
ies
Oracle - The Product

14. 14
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Oracle standard delivered automated application
enablers
n
Oracle standard delivered confi
g
urable enablers
n
Oracle “Work Flow” confi
g
urable enablers
n
Oracle “Alert” confi
g
urable enablers
n
Application Security
n
Reports
– standard delivered
– newly developed
Oracle - Control Features

15. 15
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Baan - The Company
n
Founded in 1978 in the Netherlands
n
5,500 employees worldwide
– Announced 20% headcount reduction in Oct. 98
n
Revenues over $684 million in 1997
n
3,000 clients in 5,000 sites worldwide
n
1997 ERP market share was 5%
n
Sales strate
g
y chan
g
ed in 1997 to drive 50% of
sales throu
g
h channels and value-added resellers

16. 16
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
BaanERP
– Sales order mana
g
ement
– Procurement
– Inventory
– Warehousin
g
– Project Mana
g
ement
– Manufacturin
g
n
BaanFrontOffice
– Sales Mana
g
ement
– Marketin
g
Mana
g
ement
– Call Center
– Product Confi
g
uration
n
BaanMaintenance
n
BaanService
Baan - The Product
n
BaanCorporateOffice
– Accountin
g
– Finance – Human Resource
Mana
g
ement
n
BaanSCS
– Supply Chain
Mana
g
ement
– Demand Forecastin
g
– Manufacturin
g
Execution
n
BaanDEMse
n
BaanEn
g
ineerin
g
n
Baan-On-Board

17. 17
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

ERP Market Outlook

18. 18
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

General Outlook Throu
g
h 2002
n
1997 worldwide enterprise applications market g
rew at 20.2% to $14.4 billion (licenses and
maintenance)
n
Top 10 ERP vendors
g
rowth rate was 32.9%
collectively and they have a > 40% share of the
total market
n
ERP industry remains healthy and
g
rowth rate
projections are 30-33% annually for the next 3-5
years
n
This represents a decline from the 60-100% g
rowth rates some vendors have experienced in
the past few years.

19. 19
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

A
gg
re
g
ate ERP Revenues
1997 1998 1999 2000 2001 2002
$14.4B $21.0 B $28.7 B $39.2 B $53.5 B $72.6 B
This estimate is by AMR Research in a November 1998 report
“Industrial Enterprise Applications Software Report, 1997-2002”

20. 20
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Growth Trends Throu
g
h 2002
n
Vertical focus
n
Down-market emphasis
n
NT server
n
Suite expansion
n
E-commerce and Internet
n
Channels
n
Euro/EMU
n
International expansion

21. 21
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Pressures Contributin
g
to ERP
Industry Decline Throu
g
h 2002
n
Asia economic concerns
n
Year 2000
n
Slow down in hi
g
h end of ERP market
n
Industry pricin
g
n
ERP stock valuations too hi
g
h
n
Earnin
g
s declines in ERP industry
n
Weakness in
g
lobal economy

22. 22
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Top 10 ERP Vendors
n
SAP
n
PeopleSoft
n
Oracle
n
Computer Associates
n
Baan
n
J. D. Edwards
n
System Software
Associates
n
Geac Computer
Corp.
n
IBM
n
JBA Holdin
g
s
Based on 1997 software license and maintenance revenues

23. 23
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Industry analysts and market analysts believe
these are the vendors to watch:
–SAP
– PeopleSoft
– J. D. Edwards
n
Oracle, Baan and a host of mid tier companies
will lose
g
round as the industry continues to
consolidate
n
Key difference - ability to execute!
Which Vendors Will Pull Away
From The Pack by 2000?

24. 24
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

ERP Leaders Throu
g
h 2002 Will
n
Develop an inte
g
rated application suite that is
business-centric yet flexible to clients’ needs
n
Move from the role of software provider to
business partner
n
Be able to offer service bureau and
outsourcin
g
operations (themselves or in
partnership) which will stimulate demand for
new solutions
n
Make packa
g
es easier to implement and
maintain

25. 25
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

SAP’s Focus Throu
g
h 2000
n
Continue to componentize R/3
n
Expansion outside of non-manufacturin
g
industries
–Retail
– Financial Services
– Public Sector and Hi
g
her Education
n
Manufacturin
g
industry se
g
ment specific
functionality
– Aerospace & Defense – Oil & Gas
–En
g
ineerin
g
& Construction Chemical
– Pharmaceuticals
n
Focus on post-implementation support and tools

26. 26
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Continued expansion for front office, supply
chain, business information warehouse
n
E-commerce
n
Small and mid-market expansion
n
Speed of implementation
–Tools
– Turn key solutions
n
Increased focus on trained and certified
consultants
g
lobally (internal services and
partners)
n
Outsourcin
g
SAP’s Focus Throu
g
h 2000

27. 27
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
The release of 7.5 will put PeopleSoft in the thick
of the ERP market share race
n
International expansion is key to increasin
g
market share
– Until recently PeopleSoft has been US-centric
n
Outsourcin
g
n
Continued expansion of partnerships with
g
lobal
systems inte
g
rators
n
E-commerce
PeopleSoft’s Focus Throu
g
h 2000

28. 28
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Vertical market focus will be:
–Hi
g
h Tech
– Consumer packa
g
ed
g
oods
– Automotive
–Ener
g
y and utilities
–Hi
g
her education
n
Continued investment in manufacturin
g
applications
PeopleSoft’s Focus Throu
g
h 2000

29. 29
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Complete reor
g
anization that be
g
an in sprin
g
of
1998
n
Retrainin
g
of 2,000 sales people to focus solely
on applications business
n
Multiple lan
g
ua
g
e support
n
Implementation of “Business OnLine” outsourcin
g
and application hostin
g
n
Development of a dealer network for the mid- market
n
Improve relationships with systems inte
g
rators
Oracle’s Focus Throu
g
h 2000

30. 30
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Industry focus will be:
– Telecom
– Consumer packa
g
ed
g
oods
–Ener
g
y
– Manufacturin
g
n
Expansion of technical architecture
n
Dominate the Asian market
Oracle’s Focus Throu
g
h 2000

31. 31
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Industry and Wall Street analysts are takin
g
a
“wait and see” position
n
Belief is if Baan’s recent reor
g
anization (Q4 98)
announcements yield results in the next 4-6
months then the company will weather the current
storm
n
Analysts say cause of Baan’s problems are:
– Baan is tryin
g
to establish untested, indirect sales
model
–Inte
g
ration of a number of acquired companies and
products
– General slow down in the market
Baan’s Future

32. 32
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

n
Belief is that traditionally Baan has been very de-
centralized but to resolve all of the current issues,
they need to centralize which will have a “drastic
and costly short-term effect” but ultimately it
should let Baan recover.
n
Continuin
g
to see stren
g
th in sales of
BaanFrontOffice Systems
Baan’s Future

33. 33
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Key Risks and Controls

34. 34
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Key Risks and Controls
n
Business Exposures
–Sin
g
le Point of Failure
– Reen
g
ineerin
g
or Business Process Redesi
g
n
– Extensive Expertise Required
n
Technical Exposures
– New Technolo
g
y Environment
– Inexperience with System and Technolo
g
y
–IS Or
g
anization Transition
n
Control Exposures
– Controls Not Implemented Durin
g
Implementation
– Difficult to Understand and Audit

35. 35
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Control Implementation Approach

36. 36
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

To ensure that controls are addressed during the implementation, ERP
control specialists should be dedicated:
Control Implementation Approach
More Desired
Less Desired
n
Internal Audit involvement in desi
g
n,
implementation and testin
g
n
Project team members desi
g
n,
implement and test while Internal Audit
performs periodic reviews
n
Internal Audit perform pre- & post-
implementation review of control
environment

37. 37
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Control Issues Durin
g
Implementation
n
Systems Development and Confi
g
uration
– Business Process Functionality Review
– Include Controls in Business Process Desi
g
n
– Develop Solutions to Control Weaknesses
–A
g
ree Controls with Functional Owners
n
System Implementation of:
– Access Security – Data Conversion Strate
g
y, Plan and Execution
– Automated Interfaces
– Chan
g
e Control (e.
g
., pro
g
rams, objects, tables)

38. 38
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems
Security - What to Cover
n
Access Privile
g
es = Job Responsibilities
n
Appropriate Se
g
re
g
ation of Duties
n
Sensitive Data is Protected
n
Third Party Access complies with Policies
n
User IDs Populated Appropriately
n
Consistent Security Namin
g
Conventions

39. 39
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems

Security - On
g
oin
g
Development
n
Identification and Suspension of little used User
ID’s
n
Users who terminate, transfer are immediately
identified and their accesses canceled
n
Documentation and Authorization of Chan
g
e
Requests for all security chan
g
es
n
Functional Access chan
g
es approved by Owners
before bein
g
activated in System

40. 40
© 1999 Deloitte Touche Tohmatsu. All rights reserved. fico.ppt
Overview of ERP S
y
stems
Data Conversion - Essential Controls
n
Strate
g
y, Plannin
g
, Identify Dependencies
n
Data Cleansin
g
of Predecessor Systems
n
Data Reconciliation and Validation Procedures
n
Parallel Maintenance of Master Files
n
Ownership and Si
g
n-Off of Converted Files
n
Internal Staff have Primary Responsibility -
Contract Staff work subject to additional validation
n
Special Controls for Automated and Manual
Conversions