ERP

Contents Introduction Why ERP? Evolution of ERP Architecture of ERP Scope of ERP Benefits and Features of ERP Advantages and Disadvantages of ERP Companies implementing ERP

ERP – Introduction

PLANNING the RESOURCES of an ENTERPRISE

ERP is a way to integrate the data and processes of an organization into one single system with modules that support core business areas such as manufacturing, distribution, financials and human resources.

ERP captures data from historical activity and current operations . That data can be transformed into information that, along with external information, is useful in planning and controlling operations, and in developing business strategies.

ERP is evolving into a Multi-Module Application Software Package that automates inter-organizational business processes across the supply chain which involve business partners, suppliers, customers, and more.

ERP

What is ERP?

ERP is a solution, which facilitates company-wide integrated

information systems, covering all

functional areas. performs core Corporate activities and

increases customer service augmenting Corporate Image.

BEFORE ERP

Problems:

Delays, Lost Orders, Keying into different computer systems invites errors

AFTER ERP

Why ERP?

For Management – to know what is happening in the company. One solution for better Management. For cycle time reduction. To achieve cost control & low working capital. To Adopt latest technologies. To remove the geographical gaps To satisfy the customers with high expectations. To be Competitive & for survival.

Prime Reasons for Implementing ERP

Need for common platform

Process improvement.

Data visibility that could be used to improve operating decisions.

Operation cost reductions.

Increased customer responsiveness.

Improved strategic decision making.

Personal Improvement.

Evolution of ERP 1960’s - Systems Just for Inventory Control

1970’s - MRP – Material Requirement Planning (Inventory with material planning & procurement)

1980’s - MRP II – Manufacturing Resources Planning (Extended MRP to shop floor & distribution Mgnt.)

Mid 1990’s - ERP – Enterprise Resource Planning (Covering all the activities of an Enterprise)

2000 onwards – ERP II – Collaborative Commerce (Extending ERP to external business entities)

ERP TODAY Today’s focus seem more to be external as organizations look

for ways to support and improve relationships and interactions with customers, suppliers, partners and other stakeholders.

The increasing importance of E-Commerce and Globalization of business makes support of inter-organizational processes more important.

ERP helps Organization to improve competitiveness. increase profits. prosper in the global economy.

ERPII—The Future of ERP

ERPII is a business strategy and a set of collaborative operational and financial processes internally and beyond the enterprise.

These new business models reflect an increased business focus on external integration.

There is movement away from Client-Server System to Internet Based Architecture.

New Technologies in ERPII

E-Commerce (Electronic Commerce) M-Commerce (Mobile & Wireless Technologies) C-Commerce (Collaborative Commerce) Middleware Enterprise Portal Technologies Web Services RFID Analytical Capabilities (Data Warehousing & Data

Mining) CRM, SCM, SRM Knowledge Management Business Intelligence

Companies Implementing ERP

Maruti Asian Paints BSE/NSE Accenture

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Enterprise Systems Architecture (ESA) Model

Architecture categories

Two-tiers architecture

Three-tiers architecture

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Two-tiers architecture

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The server handles both application and database duties.

Two-tiers architecture Benefits

Easy-to-use and access to information and services Low cost in terms of infrastructure requirements High performance with a limited number of workstations

Drawbacks Inflexible in terms of adding more clients and software Requires expensive middleware for integration Changes or modifications in database affect applications Limited flexibility in moving program functionality from one

server to another

Three-tiers architecture

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•Data Tier (Data Management)•Business Tier (Business logic of functional modules)•Presentation Tier (End-User Interface—GUI)

Three-tiers architecture Benefits

End-users have access to ERP applications over the Web.

Easily integrate ERP applications with existing systems. Server-centric—No complex, expensive client software

installation. Client-centric—Architecture has better response time

because user requests are mostly processed on the client’s computer.

Web-based architectures also allow better system-to-system integration.

Drawbacks Client-centric architectures lack security

Scope of ERP

ERP covers a wide range of business and typically it fulfills all the business demand.

For customizing ERP completely, the users have to make some changes in the implemented service package. Here is a list of most of the services where ERP is vastly in use:

Production Department Supply Chain Management Financials Projects Human Resources Customer Relationship Management Data Warehouse.

Suppliers of ERP

Baan D&B IBM JD Edwards Oracle Peoplesoft Platinum Ramco SAP SMI Software 2000

Components of ERP

Sales and Marketing Master Scheduling Material Requirement Planning Capacity Requirement Planning Bill of Materials Purchasing Shop floor control Accounts Payable/Receivable Logistics Asset Management Financial Accounting

Features of ERP

ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.

ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes.

ERP bridges the information gap across the organisation.

ERP eliminates the most of the business problems

Business and Technical Benefits

Automation of business transactions

Flexibility in changing the system catering to newer business processes.

Coordination across business functions

Coordination across geographical distances resulting in better Managerial control

Consistent information and interface thus easier to understand and work in

Single system

Challenges of Enterprise Systems

• Difficult to build: Require fundamental changes in the Difficult to build: Require fundamental changes in the way the business operatesway the business operates

• Technology: Require complex pieces of software and Technology: Require complex pieces of software and large investments of time, money, and expertiselarge investments of time, money, and expertise

• Centralized organizational coordination and decision Centralized organizational coordination and decision making: Not the best way for the firms to operatemaking: Not the best way for the firms to operate

Advantages

Modular Approach Integration Efficiency Accuracy Decision Support Reduction in production and delivery

lead time.

Disadvantages

Expensive Not very flexible. Success depends on the skill and experience

of the workforce, including training about how to make the system work correctly.

Customization of the ERP software is limited. Risk of implementation failure. Difficulty integrating with other system.

Implementation of ERP Project Planning Business & Operational analysis including Gap analysis Business Process Reengineering Installation and configuration Project team training Business Requirement mapping Module configuration System interfaces Data conversion Custom Documentation End user training Acceptance testing Post implementation/Audit support

Cont. The above steps are grouped and sub-divided into

four major phases namely: 1)detailed discussions 2) Design & Customisation 3) Implementation and

4) Production

Detailed Discussion Phase

Task :- Project initialization, Evaluation of current processes, business practices, Set-up project organization Deliverables:- Accepted norms and Conditions,

Project Organisation chart, Identity work teams

Design and customisation Phase Task :- Map organisation, Map business process,

Define functions and processes, ERP software configuration and Build ERP system modifications. Deliverables :- Organisation structure, Design specification, Process Flow Diagrams, Function Model, Configuration recording and system modification.

Implementation Phase

Task :- Create go-live plan and documentation, Integrate applications, Test the ERP customisation, Train users

Deliverables :- Testing environment report, Customisation Test Report and Implementation report

Production Phase

Production Phase: Task:- Run Trial Production, Maintain Systems

Deliverables:- Reconciliation reports, Conversion

Plan Execution

CONCLUSION

Enterprise systems are evolving because organizations are changing.

To know what the future of ERP holds, one must look to the changing environment of business and changing business needs.

Systems will evolve to meet the business needs. Based on current trends, these will be increasingly inter-organizational and global.

Inter-organizational systems (ERPII) will pose challenges beyond the ones faced with ERP because of the need to integrate the diverse systems of different organizations.

Global supply chains mean inter-organizational systems that span different cultures and countries. That will bring even greater challenges due to cultural differences, legal issues, and more.