ENTERPRISE RESOURCE PLANNING{ERP}

RASHMI VAISHYA

PGDBM-IROLL NO - 14

History of organizational systems

Calculation systems Functional systems

1950-80Single purposeEliminate tedious

human workExamples: Payroll,

General ledger, Inventory

Technology used: Mainframes, magnetic tapes, batch processing

1975-20??Use computers to

improve operationsApplications: HR,

order entry, manufacturing resource planning

Technologies: Mainframes, PC’s, LAN’s

Solution to disparate systems? Integration Consolidation Right-sizing Business Process Redesign Enterprise wide system

Problems with the above systems Sharing of data between systems Data duplication Data inconsistency Applications that don’t talk to one another Limited or lack of integrated information Isolated decisions lead to overall inefficiencies Increased expenses

Evolution of ERP

What is ERP??? An ERP system is an attempt to integrate all

functions across a company to a single computer system that can serve all those functions’ specific needs

“Integration” is the key word for ERP implementation

ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

ERP is a process of managing all resources and their use in the entire enterprise in a coordinated manner.

ERP System

Components of ENTERPRISE MANAGEMENT SYSTEMS (EMS)

What makes ERP different???

Integrated modules Common definitions Common database Update one module, automatically

updates others ERP systems reflect a specific way of

doing business Must look at your value chains,

rather than functions

Benefits of ERP• Improved speed and efficiency, integration, flexibility • More complete access to information• Use of latest technology with fewer errors • Help in integrating applications for decision making and

planning• Allow departments to talk to each other• Easy to integrate by using processed built into ERP software• Better Analysis & planning capabilities• Better management of resources reducing the cost• Customer satisfaction increase due to shorter delivery cycle• Business operations transparency between business

partners & customers• Lower total costs in the complete supply chain• Shorten throughput times• Sustained involvement and commitment of the top

management

ERP in Action

SalesInventoryProduction

Staffing

PurchasingOrder Tracking Planning

An ERP Example: Before ERP

Customers

CustomerDemographic

FilesSales Dept.

Vendor

OrdersParts

Accounting

AccountingFiles

PurchasingPurchasing

Files

Order is placed

with Vendor

Invoicesaccounting

InventoryFiles

Warehouse

Checks for Parts

Calls back “Not in stock”

“We ordered the parts”

“We Need parts #XX”

“We ordered the parts”

Sends report

Sends report

Sends report

Ships parts

An ERP Example: After ERP

Database

Customers Sales Dept.

PurchasingWarehouse

Accounting

Vendor

Inventory DataIf no parts,

order is placedthrough DB

OrdersParts

Order is submittedto Purchasing.

Purchasing recordorder in DB

Order is placedwith Vendor

And invoices accounting

Financial Data exchange;Books invoice against PO

Books inventoryagainst PO

Ships parts

Vendors

Total Revenues, 2000

SAP32%

Other36%

Oracle15%

Peoplesoft9%

J.D. Edwards5%

Geac Computer3%

Source: AMR Research, 2001

ERP Market

ERP Implementation Steps• A user meeting is arranged to explain the ERP & process of

implementation• The RDD & the DRDD is explained for understanding & approval• The resources to carry out the changes in the system• The DERP (Deviation ERP) solution is tested• The solution is tested on a sample data of substantial nature• The solution is then demonstrated to the users for their

understanding & confirmation• The users are trained to run the solution & resolve the difficulties

in operations of the system solution• The change over from the manual system to the ERP solution are

planned, taking care of cut off dates, the opening balances, the data transfers etc.

• Log book of system usage is kept to make note of problems, solutions, modifications

• The document is updated with changes • The system performance is checked• Review meeting with users

RequirementAnalysis: RDD

1

Gap analysisFor review

3

ERP productConfiguration

4

FunctionalImplementation

5

TechnicalImplementation

6

User trainingHand holding

TestingUser feedback

Review7

Fig: 9 steps is ERP implementation

Project & processReview

9

Implement fully8

Product mapping to RDD

2

How Do ERP Systems Work??

Hidden Costs of ERP• Training• Integration and testing• Data conversion• Data analysis• Consultants• Replacing best and brightest staff after

implementation• Implementation teams can never stop• Waiting for ROI• Post-ERP depression

Advantage How

Reliable information access Common DBMS, consistent and accurate data, improved reports.

Avoid data and operations redundancy

Modules access same data from the 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 How

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 and SCM.

E-Commerce, e-business Internet commerce, collaborative culture

Disadvantage How to overcome

Time-consuming Minimize sensitive issues, internal politics and raise general consensus.

Expensive Cost may vary from thousands of dollars to millions. Business process reengineering cost may be extremely high.

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

Vendor dependence Single vendor vs. multi-vendor consideration, options for “best of breeds,” long-term committed support.

Disadvantage How to overcome

Extended ERP capability Consider middle-ware “add-on” facilities and extended modules such as CRM and SCM.

Features and complexity ERP system may have too many features and modules so the user needs to consider carefully and implement the needful only.

Scalability and global outreach Look for vendor investment in R&D, long term commitment to product and services, consider Internet-enabled systems.

Survey of ERP implementation

sDone by

ittoolbox.com

Overview

• 375 IT and business professionals • 52% anticipate budget increases for

new ERP implementations/new modules

• SAP and PeopleSoft/J.D. Edwards were cited as the most popular ERP packages

• 46% indicated that the main challenge to successful ERP implementations was inadequate definition of requirements and resistance to change

How would you characterize your budget for new ERP implementations/new modules deployments for 2004

compared to your budget in 2003?

Who is directly responsible for determining your ERP

implementations/new modules deployments?

Who are the other key decision-makers/influencers in decisions to add new ERP packages/new modules?

Do you currently have an ERP package?

If your answer is "Yes", which ERP package(s) do you currently use?

Are you considering adding new modules to your existing ERP package?

If your answer is "Yes", which modules are you planning to add?

If you plan to deploy a new ERP package and/or add modules to your existing packages, when would this

implementation take place?

Who do you partner with for new ERP implementations and additions of new

modules?

What do you see as the main challenges to successful ERP implementations within your

organization?

QUESTIONS???

THANK

YOU!!