Enterprise resource planning 

(ERP)
 Enterprise resource
planning (ERP)
Enterprise Resource Planning
Enterprise resource planning (ERP) is an integrated
computer-based system used to manage internal and external
resources including tangible assets, financial resources,
materials, and human resources.
 Enterprise resource
planning (ERP)
Enterprise Resource Planning
 It is a software architecture
 Purpose is to facilitate the flow of information between all business functions
inside the boundaries of the organization
 Manage the connections to outside stakeholders.
 Built on a centralized database and normally utilizing a common computing
platform,
 ERP systems consolidate all business operations into a uniform and enterprise
wide system environment.
 History
 The term "Enterprise resource planning" originally derived from Manufacturing
Resource Planning (MRP II) that followed material requirements planning (MRP).
MRP evolved into ERP when "routings" became a major part of the software architecture
and a company's capacity planning activity also became a part of the standard software
activity.
 The ERP was first employed by research and analysis firm Gartner Group in 1990.
 ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K
problem in their legacy systems. Many companies took this opportunity to replace such
information systems with ERP systems.
 ERP II, a term coined in the early 2000s, is often used to describe what would be the next
generation of ERP software. This new generation of software is web-based and allows
both employees and external resources (such as suppliers and customers) real-time access
to the system's data

 
What is ERP used for?
 Components in detail………..
 Transactional Backbone
 Financials
 Distribution
 Human Resources
 Product lifecycle management
 Advanced Applications
 Customer Relationship Management (CRM)
 Supply chain management
 Purchasing
 Manufacturing
 Distribution
 Warehouse Management System
 Management Portal/Dashboard
 Decision Support System
Commercial applications
 Manufacturing  Engineering, bills of material, scheduling,
capacity, workflow management, quality control, cost management,
manufacturing process, manufacturing projects, manufacturing flow
 Supply chain management  Order to cash, inventory, order entry,
purchasing, product configuration, supply chain planning, supplier
scheduling, inspection of goods, claim processing, commission
calculation
 Financials  General ledger, cash management, accounts payable,
accounts receivable, fixed assets
 Commercial applications
Financials  General ledger, cash management, accounts
payable, accounts receivable, fixed assets
Project management  Costing, billing, time and
expense, performance units, activity management
Human resources  Human resources, payroll, training,
time and attendance, rostering, benefits
Data services  Various "self-service" interfaces for
customers, suppliers, and/or employees
Access control  Management of user privileges for
various processes
 Why implement an ERP System?
 To support business goals
 Integrated, on-line, secure, self-service processes for
business
 Eliminate costly mainframe/fragmented technologies
 Improved Integration of Systems and Processes
 Lower Costs
 Empower Employees
 Enable Partners, Customers and Suppliers
 How should we implement ERP Systems?
 People
 Project Structure
 Should be aligned to processes
 Process
 Implementation Process (outlined in detail)
 Adapt your processes to those of the ERP.
 Technology
 Hardware
 Software
 Integrated Systems
 Process
Design
 Prepare various functional reports - specifies current scenario and wish
list
 Prepare Design document which specifies how the system is going to
work
 Prepare test scripts to be followed on system testing
 Map out the interface paths to various modules

Challenge : INFORMATION SHARING - Availability of staff

 Process
Transition
 Train users on their specific areas
 Assist in test data compilation and system testing by users
 Finalise the Live system and captured opening balances

Challenge : USER RESISTANCE Understanding and acceptance

Data preparation
 Technology
 Technology is an enabler, not the driver (it is there to assist
the organisation to achieve business goals)
 It is a means to an end, not the end itself. Business’s must
use the latest technology or refine their existing technologies
to allign with the implementation of ERP within an
organisation.
Different phases of ERP
 Preevaluation Screening
 Evaluation Package
 Project Planning
 GAP analysis
 Reengineering
 Team training
 Testing
 Post implementation
 Pre-selection Process

Package Evaluation

Project Planning

Gap Analysis ReEngineering Configuration

Implementation Testing End- user Training

Team Training

Going Live

Post – implementation
Phase
ERP Implementation Life Cycle
Pre evaluation screening
 Decision for perfect package
 Number of ERP vendors
 Screening eliminates the packages that are not at all
suitable for the company’s business processes
 Selection is done on best few package available.
Package Evaluation
 Package is selected on the basis of different parameter.
 Test and certify the package and also check the
coordination with different department
 Selected package will determine the success or failure of
the project.
 Package must be user friendly.
 Regular up gradation should available.
 Cost must be within the pre decided budget limits.
Project planning
 Designs the implementation process.
 Resources are identified.
 Implementation team is selected and task allocated.
 Special arrangement for contingencies.
Gap analysis
 Most crucial phase.
 Process through which company can create a model of
where they are standing now and where they want to go.
 Model help the company to cover the functional gap
ReEngineering
 Implementation is going to involve a significant change in
number of employees and their job responsibilities.
 Process become more automated and efficient.
Team Training
 Takes place along with the process of implementation.
 Company trains its employees to implement and later, run
the system.
 Employee become self sufficient to implement the software
after the vendors and consultant have left.
Testing
This phase is performed to find the weak link so
that it can be rectified before its implementation.
Going Live
 The work is complete, data conversion is done, databases
are up and running, the configuration is complete & testing
is done.
 The system is officially proclaimed.
 Once the system is live the old system is removed
End User Training

 The employee who is going to use the system are identified

and trained.
Post Implementation
 This is the maintenance phase.
 Employees who are trained enough to handle problems
those crops up time to time.
 The post implementation will need a different set of roles
and skills than those with less integrated kind of systems.
Architecture of ERP
 Advantage of ERP Systems
What benefit How
 Reliable information access  Common DBMS, Consistent and
accurate data, improved reports.
 Modules access same data from the
 Avoid data and operations redundancy
central database, avoids multiple data
input and update operations.
 Delivery and Cycle time reduction
 Minimizes retrieving and reporting
delays
 Cost reduction  Time savings, improved control by
enterprise-wide analysis of
organizational decisions.
 Easy adaptability
 Changes in business processes easy to
adapt and restructure.
 Advantage of ERP Systems
 Improved scalability  Structured and modular design
with "add-ons"
 Improved maintenance
 Vendor supported long term
contract as part of the system
procurement.
 Global Outreach

 Extended modules such as CRM

 E-Commerce, E-Business and SCM

 Internet Commerce, Collaborative culture.

 Disadvantages of ERP Systems
Disadvantages How to overcome
 Time consuming  Minimize sensitive issues, internal politics and
raise general consensus.

 Cost may vary from thousands of dollars to

 Expensive millions. Business process re-engineering cost
may be extremely high.

 The architecture and components of the

selected system should conform to the business
 Conformity of the modules processes, culture and strategic goals of the
organization.

 Single vendor vs multi-vendor consideration, options

 Vendor dependence for "best of breeds", long term committed support.
 Disadvantages of ERP Systems
Disadvantages How to overcome
 Feature and complexity  ERP system may have too many
features and modules that the user
needs to consider carefully and
implement the needful only.

 Look for vendor investment in R&D,

 Scalability and global outreach long term commitment to product and
services, consider Internet-enabled
systems.

 Extended ERP capability  Consider middle-ware "add-on"

facilities and extended modules such
as CRM and SCM.