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ENTERPRISE

RESOURCEPLANNING(ERP)

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ContentsIntroduction

ERP-Definition

Evolution of ERP

Enabling Technologies

ERP Characteristics

Features of ERP

Benefits of ERP

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ContentsBusiness process reengineering

ERP Implementation

ERP Implementation methodology

Implementation guidelines

Post-Implementation

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Introduction

The ERP solutions seek to streamlineand integrate operation processes andinformation flows in the company to

synergize the resources of anorganization namely men, material,money and machine through

information

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Role of an auditorThe implementation of ERP package

need CA with functional skills for-evaluation

-BPR

-mapping

-report design

-ensuring business controls

-customization

-documentation

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ERP-Definition

An ERP is a fully integrated businessmanagement system covering allfunctional areas of an enterprise. It

organizes and integrates operationprocesses and information flows tomake optimum use of resources such

as men, material, money and machine

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Evolution of ERPIn the ever-growing business environment,the following demands are placed on theindustry

Aggressive cost control initiatives

Need to analyse costs/revenues

Flexibility to respond to changing businessrequirements

More informed management decision

makingChanges in ways of doing business

Difficulty in getting accurate data, timelyinformation and proper interface of

functions

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Business systems introduced

MIS

IIS

EIS

CIS EWS

MRP

MRP II

MRP III and

ERP

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Enabling Technologies-Advanced PCs

-C/S technology

-RDBMS

-Workflow-Work group

-Group ware

-EDI-Internet, Intranet

-Warehousing etc

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Why companies undertake ERP?

Integrated financial information

Integrate customer order information

Standardize and speed up

manufacturing processes

Reduce inventory

Standardize HR information

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What is BPR?

BPR is the fundamental rethinking andradical redesign of processes to achieve

dramatic improvement, in critical,contemporary measures of performancesuch as cost, quality, service and speed

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Business Engineering

It is the outcome of merging two concepts

namely Information Technology andBusiness Process Reengineering

Business Engineering is the rethinking of

Business Processes to improve speed,quality and output of materials or services.

The main point in business engineering is

the efficient redesigning of companysvalue added chains

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Business Engineering

Value added chains are a series ofconnected steps running through abusiness which when efficiently completedadd value to enterprise and customers

Information technology helps to developbusiness models which assist inredesigning of business processes

BE is the method of development ofbusiness processes according to changingrequirements

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Key planning and Implementationdecisions

ERP or Not ERP?

Follow softwares process orcustomize?

In-house or outsource?

Big bang or phased implementation?

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ERP Implementation methodology1.Identifying the needs for implementing

an ERP package2.Evaluating the AsIs situation

3.Deciding the Wouldbe situation

4.Reengineering the Business Process

5.Evaluating the various available ERP

packages6.Finalising of the most suitable ERP

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ERP Implementation methodology

7.Installing the required hardware andnetworks for the selected ERPpackage

8.Finalising the Implementationconsultants

9.Implementing the ERP package

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Identifying the needs

Why should an ERP package be

implemented?

Will it improve profitability?

Can the delivery time of products bereduced?

How does it improve customer

satisfaction?

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Identifying the needs

Will it help to reduce cost of products? How can it help to increase business

turnover and at the same time reduce

manpower? Will it be possible to reengineer the

business processes?

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Identifying the needs-otherrequirements

Need for quick flow of informationbetween Business partners

Effective MIS for quick decision making Elimination of manual working

High level of integration between

various business functions

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Evaluating the As Is situation-Listing of the functions

-Listing of the processes-Mapping the process to the functions

Total time taken by the business processes

Number of decision points existing in thepresent scenario

Number of Departments/Locations of

business processesThe flow of information and its routing

The number of reporting points currently

available

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Desired Would be situation

-Benchmarking is used to see that

processes achieved are the best inindustry

-it is done on various factors like cost,

quality, service

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Reengineering the businessprocess

Reduce the business process cycletime

To reduce the number of decisionpoints to a minimum

Streamlining the flow of information

and eliminating the unwanted flow ofinformation

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Evaluation of various ERP s

1.Flexibility

2.Comprehensive

3.Integrated

4.Beyond the company5.Best business practices

6.New technologies

7.Global presence of package

8.Local presence

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Evaluation of various ERPs

8. Market targeted by the package

9. Price of the package

10. Obsolescence of package

11. Ease of implementation of package12. Cost of implementation

13.Post - implementation supportavailability

Fi li i f ERP k

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Finalization of ERP package

Finalization of ERP package can be doneby making a comparison of criticalfactors through a matrix analysis

I ll i f H d d

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Installation of Hardware andNetwork

This work is carried out in a phasedmanner depending on the schedule ofimplementation and need of thehardware components

Fi li i h i l i

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Finalizing the implementationconsultants

-skill set

-Industry specific experience

-Cost of hiring the consultant

I l t ti f ERP k

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Implementation of ERP package Formation of team

Preparation of plan Mapping of Business Processes to

package

Gap Analysis i.e., deviation of existingprocesses from standard processes

Customization Development of user-specific reports

and transactions

I l t ti f ERP k

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Implementation of ERP package Uploading of Data from existing system

Test runs User Training

Parallel run

Concurrence from user

Migration to the new system

User documentation support System monitoring and fine-tuning

I l t ti id li

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Implementation guidelines1.Understanding the corporate needs

and culture of the organization andthen adopt the implement technique tomatch these factors

2.Doing a business process redesignexercise prior to starting theimplementation

3.Establishing a good communicationnetwork across the organization

I l t ti id li

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Implementation guidelines4.Providing a strong and effective

leadership so that people down the lineare well motivated

5.Finding an efficient and capable

project manager6.Creating a balanced team of

implementation consultants who can

work together as a team7.Selecting a good implementation

methodology with minimum

customization

I l t ti id li

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Implementation guidelines8.Training end users

9.Adapting the new system and makingthe required changes in the workingenvironment to make effective use of

the system in future

P t I l t ti

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Post-ImplementationA few of the popular expectations are:

an improvement in processes Increased productivity on all fronts

Total automation and disbanding of all

manual processes Improvement of all key performance

indicators

Elimination of all manual record keeping Real time information systems available to

concerned people on a need basis

Total Integration of all operations

P t I l t ti

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Post-ImplementationERP implementation also cause a host of

fears. Some of them are:

Job redundancy

Loss of importance as information is no

longer an individual prerogative Change in job profile

An organizational fear of loss of proper

control and authorization Increased stress caused by greater

transparency

Individual fear of loss of authority

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Risks and Governance Issues1. Single point of failure

2. Structural changes

3. Job role changes

4. Online, real-time

5. Change management

6. Distributed computing experience

7. Broad system access8. Dependency on external assistance9. Program interfaces and data conversions10.Audit expertise

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Why do ERP project fail sooften?

Lack of user acceptance

Difficulty to customize

Inadequate assessment by organization

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SAMPLE LIST OF ERP VENDORS

BAAN

BPCS

Mapics

MFG/Pro

Oracle Applications

Prism

R/3

System 21

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SAP Financials.

Controlling. Investment Management.

Treasury.

Integrated Enterprise Management. Sales and Distribution.

Production Planning and Control.

Materials Management Human Resources Management.

Internet and Intranet