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1.1 INTRODUCTION

. ERP is an abbreviation for Enterprise Resource planning

. ERP offers solutions for all business functions

' EY q a set of tools and processes that integrates departrnents and functions

across a company into onecomputer syste,,r. ----

' ERP integrates all business functions into a single, integrated software program

that runs on a single database so that the various deparhrents can more easilyshare information and communicate with each other.

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Information r through ERP System

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ERP is a method of effective planning of all the resources in an organi zaaon.

ERP is used for the effective use of management resources to improve the

efficimcy, productivity, and competitiveness of the organization.

ERP is an enterprise reengineering solution that uses new business computing

paradigms to integrate IT processes across a company,s division and

departments.

For each resource ERP can identify what is required, when it is needed and how

much is neede4 thus making the operation of the organization efficient and

effective.

Different ERP systems have bem made to facilitate organizations in Enterprise

Resource Plarrring. Leading ERP giants are Microsoff oracle, peoplesoft and IDEdwards, sAP AG etc. These systems link the order, inventory, sales, purchase,

manufacturing, supply chain and warehouse management modules in an

enterprise for better, fast and accurate information availability. t

1.2 IMPORTANCE OF ERP SYSTEMS

ERP is a Rising Need of Enterprises. is a strategic tool helping an organization to

gain and edge over its competitors by helping in successfully integrating its key

business operations, synchronizing, planning and optimizing the resources

available in the existing extremely competitive environment.

ERP systems makes the business process automated and more streamlined and

makes the organization more agile and competitive so that it can respond to the

changing customer needs and competition quickly and efficiently.

ERP has the effect of making an enterprise more time-sensitive.

1.3 CHARACTERISTICS OFERP SYSTEMS

1. lt affechs almost ail organiz4iions

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2. It forces the competif"ft" change their business strategies and processes

3. It influences business partners to become more competitive and agile

4. It improves the profits of the organizations engaged in implementation

consultancy

5. It helps the business process reengineering process

6. It enforces best practice business processes in organizations

7. lt fully utilizes the true potential of client/server computing and other latest

technologies

8. It changes the information systems function and iob profiles of ITprofessionals

9' It changes the nature of jobs in all functional business areas of the organization

10. It is very expensive and its implementation is very costly and risky

11. Its implementation is a long and complex project

12. It requires the cooperation of arl in the organization for succeed

1..4 ERP AND VALIIE CREATION

ERP changes the basic nature of orgatizations in a number of different ways:

1. It integtates the organizations' activities

2. It eliminates data redundancy

3. It prorrides accurate, timely, relevant and up-to-date information to the

decision makers

4. It provides on-Iine and real-time information

5. It enables better and faster deeision-making

6. It forces the use of best practices

7. It enabies organizational standardization

8. It eliminates information asymmetries

9. It a-llows simultaneous access to the same data for planning and control10. It facilitates inha-organization communication

11. It enables inter,organization collaboration

12' It enables the organization to be more agile and competitive.

1.5COMMON MYTHS ABOUT ERI'

1. ERP means more work and procedures

2, Et{P will make many employees redundant and iobless3. ERP is the sole responsibility of the management

4. ERP is just for the managers/ decision_makers

5. ERP is just for manufacturing organizations

6. ERP is justfor the ERp implementation team

7. ERP slows d_own the organjzation

8. ERP is just to impress customers

9. ERP package will take care of everything

10. One ERP package will suit everybody

11. ERP is very expe4sive

l2.Oryanizations can succeed without ERp

1.6 HISTORY OF ERP

' ERP is the evolutior, or M*rrfacturing Requirements pranning (MRp) II.

' From business perspective, ERp has expanded from coordination ofmanufacfuring processes to the integration of enterprise.wide backendProcesses.

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' From technological aspecf rERP has evolved from legacy implementati,on,to moreflexible tiered client-server architecfure.

The following table summarizes the evolution of ERP from 1960s to 1990s.

Timeline System Description

7960',s Inventory

Management &

Control

Inventory Management and control is the combination

of information technology and business processes of

maintaining the appropriate level of stock in a

warehouse. The activities of inventory management

include iclentifying inventory requirements, setting

targets, providing replenishment techniques and

options, monitoring item usages, reconciling the

inventory balances, and reporting inventory status.

7970',s Material

Requirement

Planning

(Ivffi.P)

Materials Requirement Planning (MRP) utilizes

software applications for scheduling production

processes. N{RP generates schedules for the operations

and raw material purchases based on the production

requirements of finished goods, ile structure of the

production system, the current inventories levels and

the lot sizing procedure for each operation.

1980',s Manufacturing

Requirements

Planning

(MRP rr)

Manufacturing Requirements Planning or MRP

utilizes software applications for coordinating

manufacturing processes, from product planning,

parts purchasing, inventory control to product

distribution.

19)0's Enterprise

Resource Planning

(ERP)

Enterprise Resource Planrring or ERP uses multi-

module application software for improving the

performance of the internal business processes. ERp

systems often integrates business activities across

functional departments, from product plarming, parts

purchasing, inventory control, product distribution,

fuUillment, to order tracking, ERP software systen.s

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may include application modules for supporting

marketing, finance, accounting and human resources.

1.7 REASONS FOR THE GROWTH OF ERP

. ERP improves business performance - cycle time reductio4 inventory reduction,

faster tesponse times, strearnlined and faster order fulfillment, etc,

. ERP supports business growth requirements - new products, product lines,

customers, multiple language and multiple currency support etc.

. ERP provides flexible, integrated, real-time decision support

. ERP eliminatm limitations in the legacy systems

. ERP takes advantage of the untapped mid-market of medium-srzed organizations

1.8 ADVANTAGES OF ERP

. Business integration - ERP packages integrates the infgmation processing and

automates data updating (automatic data exchange among applications) between

related business components.

. Flexibility - Diverse multinational environments such

accounting standards, etc. are covered in one system,

systems very flexible.

. Better analysis and planning capabilities - ERP systems enables the

compretrensive and unified management of related businesses and its data. This

unification makes it possible to fully utilize many types of decision support

systems and simul,ation functions.

. Use of latest technology - ERP vendors uses the latest developmente in the fietd

of information technology. This technolog5r adcption benefits the organizations

usirr-g iiie packages as thev get better products and with better capabilities.

as language, currency,

which makes the ERP

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1-9 LIMITATIONS OF ERP

ERP systems have three significant limitations:

1. Managers cannot generate custom reports or queries without help from a

programmer and this inhibits managers from obtaining information

quickly so that they can act on it for competitive advantage.

2. ERP systems provide current stafus only, such as open orders. Managers

often need to look past the current stafus to find trencls and patterns that

aid better decision-making.

3. The data in the ERP application is not integrated with other enterprises or

division systems and does not include external intelligence.

Overcoming the Limitations -

. There are m€rny technologies that help ERp systems to overcome the

limitations, that reduces its usefulness

These technologies, when used in conjunction with the ERp package will help in

overcoming the limitations of a standalone ERP system and thus help the

employees in making better decisions.

organizations are constanfly innovating methods to improve operational

efficienry, reduce costs, provide high-quality and personalized customer servicg

improve customer satisfaction and increase profit margins.

. ComPanies that use technology, integrate it into the core of their business

planning and are ready to face the challenge of conducting business in this

Internet age are called e-businesses.

1.1.0 SUCCESSFUL ERP IMPLEMENTATIONS

. conduct Gap analysis to find out company requirements and the

functions a package possesses.

Select experienced and professional consultants

Select the right package

. select employees with the right attitude for implementation team

. Ensure that knowledge transfer happens between consultants and

employees as well as between vendors and employees

. Ensute that there is enough in-house carnsultanb and integrators during

the operation and maintenance phase.

1.11 OVER EXPECTATIONS ABOUT ERP - REASONS FOR FAILED

IMPLEMENTATIONS

. Insufficientpre.implementationpreparation

. Lack of awareness among employees

. Lack of awareness among management about costs

1.12 PHASES OF ERPLIFE CYCLE

-Adoption decision:

This phase includes the definition of system requirements, its goals and benefits and an

analysis of the impact of adoption at a business and orgqnizational level.

Acquisition

This phase involves selecting the product that best fits the requirements of the

organization to minimize the need for customization-

Implementation

This phase deals with the customization or parameteilzation and adaptation of the ERp

package acquired, to meet the needs of the organization.

Use and maintenance

This phase censists of the use of the product in a way that retur1.ao expected benefits and

minimizes disruption.

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Evolution

in this phase, additional capabilities are integrated into the ERP system to obtain

additional benefits.

Retirement

When new tgchnologies appear or the ERP system or approach becomes inadequate to

the needs of the business, managers decide if they will substitute another information

system approach that is more adequate to the organizational needs of the moment.

2.1 INTRODUCTION

. An enterprise is a group

resources (people money,

achieve this goal.

. Examples: IBI\4, Ford, Tata Motors, Accenfure, Microso$ Indian Railways,

Ramu's Teashop, etc.

. The enterprise acts as a single entity.

. The resources are considered the inputs, and the attainment of the goals the

output of the process.

' The degree of success of the enterprise is often measured. by the ratio between

the outputs and inputs. This ratio is called productivity.

Role of Enterprise in ERP Implementation

ERP implementation projects an enterprise in its or,r,n right.

Common goal: successful implementation of the project

Resources: ERP package, hardware, money, peoplg etc.

People: Employees, management, consultants, ERp vendors, etc.

of people with a cortmon goal, which has certain

€nerglf, maErials, ipoce, time) at itsjisposal to

Enterprise

PeoPld :

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Organization's ResPonsibilities:

o Own and sponsor the ERP implementation project (usually done by the senior

managemmt)

Designate the right people to lead the project'

Select and assign the right people to the implementation team

Select the ERP package best suited for the organization

Make available the necessary infrastructure (resources)

Ersure top management support ancl participation

Manage package vendors and- external corrsultanLs

Manage and deal with empioyee resistance

Motivate the employees to change and to learn new technologies

Re-train and re-Iocate employees and ensure the complete participation

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Operate the ERP system in the best possible mElnner

Maintain the ERP system at its peak efficiency

Traditional Approach of an Organization

The organization is divided into different units based

perform - finance, manufacturing, production planning,

distribution, R&D, HR, etc.

The various departments have their own goals.

The different departments function in isolation and

collection & analysis systems.

The result is that, instead of taking the organization towards the common goal

the various departments end up pulling it in dilferent directions as one

department does not know what the other does and for what PurPose'

. So unless all the departments know what the others are doing and for what

pur'pose, the inter-deparhrrental conflicts will arise glus di.srupting the normal

functioning of the organization.

. The solution is to have a centralized inJormation storage and maragement

facility.

Enterprise Approach of an Organization

. In the enterprise rt'ay, the errtire organization is considered as a single system.

. Information about all the aspects of the organization is stored centrally and is

available to all departments, thus avoiding conflicts.

. ERP systems help to make this task easier by integrating the information

systems, enabling smooth and sea-urless flow of information across departrnental

barriers, and automating business Process and functions.

. ERP systems help the organization to work and move forward as a single entity.

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purchasing, sales and

have their own data

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Enterprise \May"..

Au Euierprise rt'here all Departrreuts lcron'rt:hat otlrels ale Doilr8

Traditional Organization

OrgaDizetion tghere there !s no or llttle Conrnlurlcatio$ lietrreelr Departine$ts

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Business Function

. Organizations that make products to sell have the following functional areas of

operation - purchasing, production and materials management, marketing and

sales, accounting and finance, human resources, etc.

. Each functional area comprises a variety of business functions and business

activities within that functional area of operation.

. Earlier business systems functioned in isolation. What happens in one functional

area was not communicated with other functions.

. 'Ihe information system of one function had no impact other functional areas.

. This mode of functioning caused many problems including disruption of the

functioning of the organization.

Business Process

. Business Process is a collection of interrelated tasks, which solve a particular

issue.

. There are three types of business processes-Management Operationaf and

Supporting

Management processes govern the operation of a system. Typical management

processes include " corporate governance" and "stfategic management".

Operational processes create the primary value stream and are part of the core

business. Typical operational processes are purchasing, manufacturing,

marketing and sales.

Supporting processes support the core processes. Examples include accounting,

recruitment, IT-support.

A business process can be decomposed into several subprocesses, which have

their own attributes, but a-lso contribuie to achieving the goal of the suPer-

process.

. The analysis of business processes typically includes the mapping of processes

and sub-processes down to activity level.

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Activities are parts of the business process that do not

making and thus are not worth decomposing such as

"prepare the invoice", "send the fax", etc.

include any decision

"anslyer the phone",

Business Function vs. Business Processes

' Recently organizations have started focusing on business processes rather than

business functions.

' A business process is a collection of activities that takes one or more kinds ofinput and creates an output that is of value to the customer.

' The difference between a BF and a BP is that a process cuts across more than one

busi:ress function to get a task don_e.

' Organizatiora are now trying to view their business operations from the

perspective of a satisfied customer.

' Sharing data effectively and efficienfly between and within functional area*s leads

to more efficient business processes.

2.2 INTEGRATED MANAGEMENT INFORMATION

Information Islands

No organization can function as islands of different departmenb.

AII the departments should have access to the organization,s information.. In today's competitive business environmen! the key resource of every

organization is information.

' If all the information islands, which are functioni.g in isolation, are integratedinto a single system, the impact of that would be dramatic.

' If ihe organization does not have an efficient and effective mechanism .rhen the. chances of that organization succeeding are very remote.

Integrated Inf ormation Systems

. Information is refined data.

. An information system is an open, purposive system that produces information

using the " input-process-output" cycle.

The minimal information system coruists of three elements - peopie, procedures

and data.

People follow the procedures to manipulate data to produce information.

Information systems can be designed so that accurate and timely data are shared

between functional areas. These systems are called integrated information

systems.

Information activities are find, create, Ieceive, acquirq monitor, classify,

safeguard, organize, use, publish, collaborate, disseminate, archive, dispose,

transfer, etc.

Management information system (MIS) produce information products that

support rnany of the day-to-day decision making needs of the management.

'I'he problem with traditional Mls is that they operate at a departmental level and

they give only information that has been predefined'

Traditional information systems fail to capture the information needs of the

entire organization as they concentrate on capturing departurent level

fu{ormation - isolated information gathering.

No decision-maker can take good decisions with the isolated inJormation that

they can get from the in-formation produced by individual departments.

For a company to provide customer satisfaction, it must make sure that its

functional areas of operation are integrated-one departrrent should know what

the other departments are doing.

For example the people in sales and marketing should know the up-to-date

details of the latest products, their prices, their feafures and so on so that they

can provide this information tc the customers.

Similarly, the people in the manufacturing plants should know which models are

being ordered in large quantities so that they can buy the necessary materials

and start manufacturing those items to deliver to the customers.

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. This type of inter-departrnental information sharing through the use of

integrated information systems will help the organizations in achieving customer

satisfaction while improving their productivity and efficiency.

Integrated Management Information system

Also called as lnformation reporting System

The three fundamental characteristics of information are accuracy, relevancy,

and timeliness.

To survive, the organization must always be on its toes, gathering and analyzing

the data-both internar and external. Aoy mechanism that will automate the

informafion gathertr'.g and aaalysis process rill enhance the chances of th.e

organization to beat the competition.

what is needed is a system is, that treats the organization as a single entity and

caters to the inJormation needs of the whole organization.

If this is possible, and if the information that is generated is accurate, timely and

relevant, then these systems will go a long wry in helping the organization to

realize its goals.

Integrated mtrnagement information provides the decision makers with accurate,

relevant, timely, and.up-to-the minute information so that they can make better

and informed decisions much faster.

Integrated management information will enable the organization to become

more competitive, agile and respond quickly to the changes in the business

environment, customer interests and trends.

2.3 BUSINESS MODELING

' Business modeling or creating a business model is one of the first activities in any

ERI' project. ERP systems shoulcl mirror the business processes.

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A business model is a representation of the business as one large system,

showing the interconnections and interdependencies of the various subsystems

and business processes.

Based on the organizatiorls goals, objectives and strategic plans, a business

model consisting of the business processes is developed.

Based on the blsiness model, the ERP systen is developed with the aim of

providing the required information and necessaiy assistance to the various

individuals to perform their business processes more effectively and efficiently.

The business is modeled as an integrated system.

Information is a very irr.portant resource and is very critical in managing all the

other resources.

The business model is usually represented in the graphical forur using flowcharts

and flow diagrams.

2.4 INTEGRATED DATA MODEL

The most critical step in the ERP implementation is the creation of an integrated

data model as all the employees from the different deparknents get access to the

integrated data and this will help in better decision making.

With the implementation of EI{P systems all the data will be from the integrated

database.

Maintaining and managing the integrated data constanfly updated and upto-

date is one of the biggest challenges of ERP implementation and to-operation.

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Real-rr.orlrl aud Btsiiress,Modd

The integrated database will reduce data redundancy and give all employees

access to the updated and up-to-the minute information about the entire

organization.

when designing the data model for the ERP system, the most important thing

that should be kept in mind is the information integration and the process/

procedure automation.

The data model should reflect the entire organization and should successfuIly

depict and integrate the data stuctures of the errtire organization.

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Irrtegrated Data Moclel

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Installing an ERP system has many advantages-both direct and indirect.

The direct advantages include improved efficiency, information integration for

better decision- making, faster response time to customer queries, etc.

The indirect benefits include better corporate image, improved customer

goodwiil, customer satisfaction and so on.

Some of the benefits are quantitative (tangible) while many others are qualitative

(intangible).

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The main benefits of the ERP system include

Inf ormation Inte gration

reduction of lead-time

on-time shipment

reduction in cycle time

b etter customer satisf action

improved supplier Performance

increased iiexibilitY

reduction in qualitY costs

improved resource utilitY

imprcved inforrr.ation acc'rrracy and enhanced decision making capability

Use of latest technologY

INFORMATION INTEGRATION

Promotion of integration has lot of advantages in ERP'

ERP systems are integrated because they have the ability to automatically update

data between related business functions and components'

Information updating happens instantaneously'

It leads to better decision making and routine problems

People involved in a project:are connected to each other'

It has tremendous potential for improving productivity'

REDUCTION OF LEAD-TIME

) The elap e leail-

time.

-- rn+ rnra in nrrrnhaei,.o I.D It plays a signi{icant role in purchasing and inventory contro'

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Squetky Wheel Prilrciple: - Buyers who expect the shortest lead-times complain

the loudest when deliveries are late and thereby receive the most attention from

suppliers. So the company should find out the minimum lead-time and should

attempt to correct supplier's delivery delays instead of automatically increasing

existing lead-times.

In order to reduce the lead-time, the organization should have an efficient

inventory managernent system, which is integrated with the purchasing,

production planning and production departments.

In this era, the knowledge of the exact lead-time for each and every item is of

paramount importance for uninterrupted production.

For a company dealing with hundreds and thousands of raw materials and

components, keeping track manually of the lead-time for each and every

individual item is practically an impossible task.

F The ERP systems help in automating this task and thus, make the ,inventoryr

m.Inagement more efficient and effective. Also since the ERP system is integrated

and the materials managertent module is integrated with other modules like

sales, marketing, purchasing, manuJacturing artd production planning, the

demand for a particular item can be known as early as an order is received.

ON -TIME SHIPMENT

) Companies must be able to deliver customer-specific products with the lead-

time.

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) Since different functions (purchasing, materials management, production

planning, plant maintenance, sales and distribution) are involved in the tim"ly

delivery of the finished goods to the customer, all the functions are integrated

and the procedures automated, the chances of errors are minimal and the

production efficiency will be high.

F By integrating the various business functions and automating the procedures

and tasks, the ERP systems ensure on-time delivery of goods to the customers.?

Si:rce ali the infarrnation is available to the management at Bte desired ievel of

detail, and since the system has exceptional handling features, the management

can keep track of things and can take corrective actions at the appropriate time.

REDUCTION IN CYCLE TIME

Cycle time reduction is one of the most important elements of successful

manuJacturing today.

More and more customers are demanding that manufacturers quickly respond to

their wants and needs, deliver perfect quality products on time. This trend,

which will continue, has led companies to focus more attention on their order-to-

delivery cycle time,

Cycle time is the time between receipt o t

can be reduced by the ERP systems.

Suppose a customer places an order. The order entry clerk has to check whether

the' order is available in the warehouse nearest to the customer. If it is not

available there, he will have to check whether it is available in any other

warehouse or with any of the distributors. Then he will have to process the

order, infornn the concerned warehouse or distributor to ship the item, and

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inform the finance department to raise the invoice, and so on. All this used to

take a lot of time-few days or sometimes even lveeks.

system checks the availability of the items. If it is not available with the nearest

manufacfurer, then the warehouse that is closest to the customer and which has

the item in stock is identified. The warehouse is informed about the order and

the shipment details are sent to the distribution module,which will perform the

necessary tasks, so that delivery is affected. This efficiency of EIIP systems helps ?

in reducing the rycle time.

3.4 IMPROVED RESOURCE UTILIZATTON

As manufacturing process become more sophishicated and as the philosophies of

eiimination of waste and constraint management achieve broader acceptance,

manufacturers place increased emphasis upon planning and controlling capacity.

The creation of an accutate, achievable production schedule requires the

availability of both material and capacity. It is useless, and wasteful, to have

financial resources tied up in material, if the capacity is iasufficient or

improperly planned. Waste not only raises costs, it also affects customer service

Ievels and customer goodwill.

The ERP systems have simulation capabilities that help the capacity and resource

planners to simulate the various capacity and resource utilization scenarios and

choose the Lrest option.

The efficient functioning of the different modules in the ERP system ensures that

the in-"'entory is kept to a minimum level, the machine down time is minimum,

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the goods are produced orrly as per the demand and the finished goods ate

delivered to.the customer in the most efficient way.

F Thus, the ERP systems help the organization in drastically improving the

capacity and resource utilization.

3.5 BETTER CUSTOMER SATISFACTION

D Customer satisfaction means meeting or exceeding the customers requirefent

for product or service.

) Assessment of the degree of satisfaction is usually made on three measures:

(1) whether the product ot service includes the feahrres that are most

important to the customer

(2) whether the company can respond to the customers demands in a

tim"ly mEurner

(3) whether the product or service is free of defects and performs as

expected.

ERP systems have proved that they can provide the customers with individual

attention and the feafures that they want, without spmding more money or

waiting for long periods.

Also the introduction of web enabled ERP systems, the customers can place

orders, track the status of order & make payment sitting at home .

The customer can also get technical support Since all the details of the product

and the customer are available to the person at the technical support department,

the company willbe able to bettet support the sustomer.

All this is possible because of the use of the latest developments in the IT by the

ERP systems and this improves customer satisfaction.

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3.6 IMPROVED SUPPLIER PERFORMANCE

F The quality of the raw materials or components and the capability of the vendor

to deliver them on time, are of critical importance for the success of any

organization.

) So, an organization needs to choose its suppliers or vendors very carefullrnnd

monitor their activities closely, so that the problems can be corrected before it can

disrupt the functioning of the comPany.

D To realize these benefits, corporations rely heavily on supplier management and

conttol system to help plan, manage and control the complex Processes

associated with global supplier partrerships.

D The ERP systems provide vendor management and procurement support tools

designed to coordinate aE aspects of the procurement process.

D Supplier quotations and contracts can be created to support the procurement of

all products and sewices required by the enterprise.

F They support the organization in its efforts to effectively negotiate, monitor and !

control procurement costs schedules while assuring superior product quality.

) The supplier management and control processes are comprised of features that

will help the organization in managing the supplier relations, monitoring the

vendor activities and managing the supptier quality.

D The Quality Management System in the ERP systems, provide all the tools

needed to implement total quality management programs within an

organization's procurement fu nction

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INCREASED FLEXIBILITY

Because competition is growing, the companies must learn to respond more

rapidly to customers' wishes as well as changes in the market'

They will need to design new products are redesign old products quickly'and

efficienfly. Only then will companies have the chance t€capitalize on

opportunities while they are available, The window of opportunity is often quite

small.

The manufaciuring process must be flexible enough to accommodate new

product designs with minimal disruption or time loss'

Flexibility is a key issue in the formulation of strategic plans rn companies'

some times flexibility means quickly changing something that is being done, or

completely changing to adjust to new product designs. At other times flexibility

is the ability to produce in small quantities in order to produce a product mix

that may better approximate actual demands and reduce work-in-progress.

ERP systems improves the flexibility of the manufacturing operations, but also

the flexibility of the organizatton as a whole.

A flexible orgarrization is one that can adapt to the changes in the environment

rapidly.

3.8 REDUCED QUALITY COSTS

Quality is defined in many different ways - excellence, conformance to

specifications, fitness fot use, value for the price, and so on'

ManuJachrring and desigr engineers are typically responsible for some of the

technological issues in the quality assurafice for products. Operation- managers

often conduct the analysis of quality-related costs, which is an imporiant task'

Strategic opportunities, ol threats, frequently motivate the launch of aggressive

quafity management initiativ es.

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Analyzing the cost of quality can provide the financial justification for

implementing them. Carefully planning quality improvement activities not only

improves quality, but lowers quality-related costs.

A typology of quality related costs are provided:

lnternal failure costs - Costs of scraps, rework, re-inspection, low

productionyield. ?External failure costs - Warranty claims, repairs and service costs

Appraisal costs - Cost of inspecting upon arrival, during manufacture, in

laboratory tests

Preaention costs - Design and development of new quality

equipment, evaluation costs of a new product or

service, training of quality personnel

F To achieve q.,ality levels, manufachrers must focus on identifying and

correcting defects in product designs and production methods.

D The ERP systems provide tools for implemmting total quality management

system and specification control systems within an organization.

F The Quality Management System in the ERP packages support the

benchmarking and use of optimal product design, process mgineering and

quality assurance data by all functional departments thereby facilitating

definition of repeatable processes, root cause analysis and the continuous

improvement.

) The Specification Control Systems in ERP packages offers approach for

documenting specifications and enable an organization to standardize and

simplify its quality assurance and control functions.

) 'Ihe ERP systems central database eiimiirates redundant specifications and

ensures that a single change to standard procedures takes effect immediately

throughout the organization.

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TMPROVED INFORMATION ACCURACY AND DECISION MAKING

CAPABILITY

F We have seen that in today's competitive business environment the key resource

of every organization is information.

enables it to give the decision makers the right information at the right time, then

the chances of that organization succeeding are vdry less. /F The thlee fundamental characteristics of information are accuracy, relevanry and

timeliness. The information has to be accurate, it must be relevant for decision

maker and it must be available when he needs it.

F To survive, tJ"-rive and beat the competition, the organization has to manage the

information.

) In order to manage the information, in order to deliver high quality information

to the decision makers at the right time, in order to automate the process of data

collection, collation and refinemenf organizations have to make fuIl potential use

of IT, in the best wdy possible. Any organization that has a mechanism to do so,

will always be one step ahead of the competition.

ERP is the central or the core component around which the various technologies are

integrated to build an organization that works at the speed and efficiencies of the

Internet age and where most processes are automated and things happen at Internet

speed.

ENABLIN G TECH}.IOLOGIES

Some of the technologies whicl when integrated with the ERP system-, will enable trre

companies to do business at Internet speed.

These technologies used are:

1. Business Process Reengineering (BPR)

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2. Management Information System (MIS)

3. Decision Support System (DSS)

4. Execution Information Systenr (EIS)

5. Data warehousing & data marts

6. Data Mining

7. On-line analytical processing (OLAP)

8. Supply chain management (SCM)

BUSINESS PROCESS REENGINEERING (BPR)

. BPR is the analysis and redesign of workflow within and between enterprises.

BPR promotes the idea that sometimes radical redesign and reorganization of an

enterprise (wiping the slate clean) was nece$sary to lower costs and increase

quality of service and that information technology was the key enabler for that

radical change.

o Hammer and Champy, the founders of this concept, suggested seven principles

of reengineering to streamline the work process and thereby achieve significant

Ievels of improvement in quality, time, management and cost.

. According to Hammer, lack of sustained management commitment and

leadership, unrealistic scope and expectations, and resistance to change

prompted management to abandon the concept of BPR and embrace the next

new methodology, Enterprise ftesoulce Planning (ERP).

Principles of reengineering

1. Organize around outcomes, not tasks.

2. Identify all the processes in an organization and prioritize them in order of

redesign urgency.

3. Integrate information processing work into the real work that produces the

hformation.

4. Treat geographically dispersed resources as though they were centralized.

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5. Link parallel activities in the workflow instead of just integrating their

results.

5. Put the decision point where the work is performed, and build control into

the process.

7. Capture information once and at the source.

4.2 MANAGEMENT INFORMATION SYSTEMS (MIS)

/MIS is a computer based system that optimizes the collection, collation, transfer

and presentation of information throughout an organization, tluough an

integrated structure of databases and information flow.

MIS -uses a::r integrated database and supports a variety of f,rr.ct'onal areas. The

integrated database of MIS enables greater flexibility in meeting the information

needs of the management.

MIS integrates the information flow betwem functional areas- accounting,

marketin g manufacturing, etc

MIS caters to the information needs of all levels of management.

MIS provides operational .,tactical and strategic levels of the organization

MIS is flexible and can be adapted to the changing needs of the organization.

4.3 DECTSTON SLTPPORT SYSTEM (DSS)

DSS are interactive information systems that rely on an integrated set of user-

friendly software and hardware tools, to produce and present information

targeted to support n-ranagement in decision making.

DSS facilitates flr-e decision rrraking process, helping ille decrsion mak-ers to

choose beiween alternatives.

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. DSS serve the management, operations, and planning levels of an organization

and help to make decisions, which may be rapidly changing and not easily

specified in advance.

. A DSS can help close the information gap and allow mangers to improve that

quality of their decisions.

. Examples of a decision support application are:

o inventories of information asseb

o comparative sales figures between one period and the next, /o projected revenue figures based on product sales assumptions.

. DSS are designed to support decision-making processes involving semi-

structured and unstrucfured problems.

4.4 EXECTJTIVE INFORMATION SYSTEM

. EIS is a decision support system especially made for senior level executives to

analyze, compale, and highlight trends in important variables so that they can

monitor performance and identify opportunities and problems-

. Top level executives and decision makers face many problems and pressures.

They have to make the right decisioru at the right time to take the company

forward.

. An EIS is concemed with how the decisions affect anentire organization.

. An EIS takes the following into considerations:

,/ The overall vision and mission of the company and the company

goals.

{ Strategic planning and objectives.

,/ Organizational sftucture,

r' Crisis management/ contingency plalrning.

{ Strategic control and monitoring of overall operations.

. Successful EIS are easy to use, flexible and customiiable and use the latest

technological innova tioru.

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4.5 DATA WAREHOUSING & DATA MARTS

, A datq warehouse is database designed to support decision making in an

organization.

. Data from the production databases are copied to the data warehouse so that

queries can be performed without disturbing the performance or the stability of

the production systems. I. Data warehouses contain a wide variety of data that present a coherent picfure of

business conditions at a single point in time.

. The term data watehousing generally refers to the combination of many ciifferent

databases across an entire enterprise.

. The primary concept of data warehousing is that the data stored for business

analysis can most effectively be accessed, by separating it from the data in the

operational systems.

. A ilata mart is a database, or collection of databases, designed to help managers

make strategic decisions about their business. Whereas a data warehouse

combines databases across an entire enterprisg data marts are usually smaller

and focus on a particular subject or department. Some data marts, called

dependent data marLs, a-re subsets of larger data warehouses.

4.5 DATA MINING

Data mining is defined as the process of identifying valid, novel, potentially

useful and ultimately comprehensible information from databases that is used to

make crucial business decisions.

Data mining is processing ihe data to idmtify patterns and estabiish

relationships. Data rnining is a class of database applications that look for hidden

patterns in a group of data that can tre u,sed to predict future behavior.

E

)Z

For example, data mining software can help retail companies find customers

with common interests. fhe term is commonly misused to describe software that

presents data in new ways-

True data mining software does not just change the presentation, but actually

discovers previously unknown relationships among the data. IData mining is popular in the science and mathematical fields but also is utilized

increasingly by marketers h'ying to distill useful consumer data from Web sites.

Data mrning techniques are used in a many research areas, including

mathematics, cybemetics, and genetics. Web mining, a qpe of data mining used

in customer relationship management (CRM), takes advantage of the huge

amount of information gathered by a Web site to look for patterns in user

behavior.

Data mining parameters include:

1. Association - Iooking for patterns where one event is connected to

another event

2. Sequence or path analysis - looking for patterns where one event

leads to another later event

3.Classification -looking for new patterns (May result in a change in

the way the data is organized but that's ok)

4. Clustering - finding and visually documenting groups of facts not

previously known

5. Eorecasting - discovering patterns in data that can lead to reasonable

predictions about the future .

4.7 ON - LrNE ANALYTICAL PROCESSTNG (OLAP)

. OLAP is a decision support software that allows the user to quickly analyze

information that has been summartzed into multidimensional .,,ielvs and

hierarchies.

. OLAP can be defined in five words - Fast Analysis of Shared Multi-dimensional

Information.

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OLAP is a category of software tools that provides analysis of data stored in a

database.

OLAP tools are used to perform trend analysis on sales and financial

information. They enable usets to drill down into masses of sales statistics in

order to isolate products that are the most volatile, IOLAP tools enable users to analyze different dimensions of multidimensional

data.

For example, it provides time series and trend analysis vielvs. OLAP often is

used in data mining.

The chief component of OLAP is the OLAP server, which sits between a client

and a database maxagement systems (DBMS). The OLAP server understan-ds

how data is organized in the database and has special functions for arralyzing'fie

data. There are OLAP servers available for nearly all the major database systems.

4.8 SUPPLY CHAIN MANAGEMENT (SCM)

Supply chain management (SCM) is the process of planning, implementin& and

controlling the operations of the supply chain as efficienfly as possible.

SCM spans all movement and storage of raw materials, work-in-process

inventory, and finished goods from point-of-origin to point-of consumption.

SCM is the oversight of materials, information, and finances as they move in a

process from supplier to manufacfurer to wholesaler to retailer to consumer.

SCM involves coordinating and integrating these flows both within and among

companies.

The ultimate goal of arry efiective supply chain management system is to reduce

inventory (with the assumption that products are availa-ble when needed).

A supply chain is a network of facilities and distribution options that performs

the functions of procurement of materials, transformation of these materials into

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intermediate and finished

proclucts to customers.

. Supply chains exist in both

the complexity of the chain

to {irm.

products and the distribution of these finished

service and manufacturing organizations, although

may vary greatly from industry to industry and firm

strategy, focusing on

to an orgarization's

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

o Customer relationship management is a corporate level

creating and maintaining relationships with customers.

o It is not a technology itself, but a holistic approach

philosophy, piacing the emphasis fumly on the customer.

. It governs an organization's philosophy at all levels.

o CRN{ systems are integrated end- to -end across marketing, sales artd customer

service.

. CRM system should identify factors important to clients, promote a customer -

oriented philosophy, adopt customer-based measures.

. CRM system develop end to - end processes to serve customets, to provide

customer support, to handle customer complaints, to track all aspects of sales,

to create a holistic view of customer's sales and service information.

. CRM applications track customer interests and requirements and buying habits

which can be used to target customers selectively.

r Repeat purchase rely on customer satisfaction, which in tum comes from a

deeper understanding of each customer and their infividual needs.

r CRM is an alternate to the "one size fits all" approach.

GEOGRAPHICAL INFORMATION SYSTEMS (GTS)

. Geographical information system is a computer - based tool for mapping and

analyzing that exists and events that happen on earth.

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o It integrates common database operations such as query and statistical analysis

and unique visualization and geographical benefits offered by maps.

. These abilities distinguish GIS from other inJormation systems and make it

valuable to a wide range of public and private enterprises for explaining

events, predicting outcomes and planning strategies

o The main functions of an organization like procurement, distribution, logistics

management etc to have critical geographic dimension.

. GIS gives power to create maps, integrate information, visualize scenarios, solve

complicated problems, present powerful ideas and develop effective solutions

like never before.

. GIS is a tool by in<iividuals and organizations, schools, governments and

business seeking innovative way to solve their problems.

INTRANETS AND EXTRANETS

o Intranets, extranets and e-commerce have in common the use of internet

prctocols to connect business users.

o Intranets are more localized and can therefore move data faster than more

riistributed extranets.

r The amount of control that the network managers can exert over users is

different for the three technologies.

. On an intranet, administrators c,rn prescribe access and policy for a fixed

group of users,

The company could write work flow applications that leverage the uniform

computing environment over which it exercises strong control.

On a business - to - business extranet, system architects at each of the

participating companies must collaborate to ensure a common interface and

consistent

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5,1. INTRODUCTION

Business Reengineering is the fundamental rethinking and radical r+design of business

processes to achieve dramatic improvementqQ@iUcal, contemporary measures ofperformance such ilgf UuatiW service and speed.

5,2 PHASES OF BPR

The tasks that experts agree upon to successfully perform BpR, can be grouped in toseven steps, or phases. All successful BPR projects begin with the most critical

requirement communication tfu ou ghout the organization

1. Begin organizational change

2. Building the reengineering organization

3. Identifying BPR opportunities

4. Understanding the erjsting process

5. Reengineer the process

5. Blueprint the new business system

7. Perform the transformation

PHASE 1 : BEGIN ORGANIZATIONAL CHANGE

. The fust step is to take a long hard look how the organization operates.

o The PurPose df analysis should be to deterrrine whether dramatic changes

are possible or marginal changes are needed, which involves lesser risk.

o Next step is to look for harmful operating prodedures, l1[, any within the

organization.

o The future vision of how the business must operate will serve as a clear and

concise guide lvith measurable goals tbr employees to focus on.

' Because an organization BPR can potentially rdtluire significant changes

throughout an organization, it must begin with a communication campaign

to educate all those who will be impacted by this change.

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\,. Communication to all levels of personnel must remain active from start to

finish keeping every one involved and working towards a common goal'

. Without a cornmon understanding about what is happening, confusion and

uncertainty about the future can result in resistance that is strong enough to

stop any re engineering work.

. In order for change to be embraced, every one must understand where the

organization is today, what it needs to change, and where it should be in

order to survive, thrive and beat the competition

PHASE 2 : BUILD THE REENGINEERING ORGANZATION

. Major activities of the phase are, eshblish a BPR organization structure,

establish the rotres fcr performing BPR and choose the personnel who will

reerrgineer it.

. One of the most important members of reengineering effort is lhe exec,utioe

leailer.

He must be a high level executive who has necessary authority to make

people listen and motivational power to make them follow'

Without the commitment of substantial time and effori from toP

xnanagerr,.ent, no BPR project can orJercome the internal folces and will never

reach implemenbabion. The executive leader usually appoints Process owners.

A process owner is responsible for a specific Process and the reengineering

effort focused on it.

The reengineering team must be small, usually five to ten people and as they

will be ones who diagnose the existing Process, and oversee the redesign and

implementation.

In some BPR initiative it is helpful to institute a steering committee, which

can controi the chaos by developing an overall reengineering strategy and

monitoring its progress.

I-rst1y a reengineering specialist or cor-rsultant can be an invaluable adclition.

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PHASE 3: IDENTIFY BPR OPPORTUNITIES

This phase consists of following activities

. Identify core/ high level processes

. Recognize potential change enabler

. Gather performance metrics within industry

. Gatlter performance metrics out side industry

o Select processes that should be reengineered

. Prioritize selected processes

. Evaluate pre existing business strategies

. Consult with customers for their desires

o Determine customer's acfual needs

. Formulate new process performance objectives

o Establish key process characteristics

o Identiff potential barriers to implementation

Picking a process which has high success potential and which can show success fast is

very important to build the necessary momentum and enthusiasm at all level of

organization

PHASE 4: UNDERSTANDING THE EXISTING PROCESS

The main activities of the phase are

o Understanding why current steps are performed

. Model the current process

o Understand how technology is currently used

o Understand how information is currently used

e Understand current organization structure

. Compare current process with the new objectives

Modeling current process heips to better understand the existing process, but also helps

with planning migration from the old to the new process and executing the physicai

kansformation of personlel, organizational strucfures, information requirements, and

how technology is used. Information that should be included in the models are process

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inputs (such as task times, data requirements, resources, demand etc) and process

outputs (such as data output cost, throughput, cycle time, bottleneck etc)

PHASE 5: RE-ENGINEER THE PROCESS

The major activities in this phase are

. Ensure the diversity of reengineering team

. Question current operating assumptions

. Brainstorm using change levers

. Brainstorm using BPR principles

. Evaluate the impact of new technologies

. Consider the perspectives of stakeholders

. lJse customer value as the focal point

The reer.gineering tear. should consist of designers and implementers and include both

insiders and outsiders of existing process. Have people who will be future process

owners or those responsible for future process. Brainstorming sessions are most

successful when the following BPR principles are corsidered.

. Severaliobs are combined into one

. Workers make decisions

. The steps is a process are performed in a natural order

. Processes have multiple versions

. Work is performed where it makes most sense

. Checks and controls are reduced

. A case manager provides a single point contact

. Hybrid centralized / decentralized operations are prevalent

During the brainstorming sessions, the Reengineering team must consider technologies

that are considered enablers of reengineeriog, ".g.. ERP qr/stems

. InternetTechnologies

. Distributed computing plafforms

. Client/ server architecture

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. Work flow automation technologies

. Groupware

It may be found at this stage that a new process simply will not fit into the current

organization without a new process - oriented organizational structure

PHASE 5: BLUEPRINT TIIE NEW BUSINESS SYSTEM

The activities of the phase are

. Define the new flow of work

. Model the new process steps

. Model the new information requirements

. Document the new organizational structure

. Describe the new technology specfications

. Record the new personnel management systems

. Describe the nern' values and culture required

Blueprints are detailed plans required to build something in accordance with the

desi gner's intentions.

Blueprinting involves modeling the new process flow and the information required to

support it.

Just as we modeled the "as-is" process and information requirements , we need to

create "tobe" models to illustrate how the work flow be different .

The information models, or data models, will indicate where the new process will use

information that is shared across functional areas of the business.

The blueprints should also contain models of redesigned organizational structure" This

chart rvill show the new process flow along with process team members, the process

owrrers, the case managers, and the process facilitatots.

The chart should also indicate parts of the organization, which interact with the process

personnel. [n addition detai]ed technology specifications that are required to support

the new process should be defined.

The redesign may require an entirely different culture or atmosphere, than what is

prevalent in the organization.

41.

PHASE 7: PERFORM THE TRANSFORMATION

The activities of the phase are

. Develop a migration strategy

. Create a migration action plan

. Develop metrics for measuring performance during implementation

. Involve the impacted staff

. Implement in an iterative fashion

. Establish the new organizational strucfure

. Asses current skills and capabilities of workforce

. Map new tasks and skills requirements to staff

. Re-allocater,vorkforce

. Develop a training curriculum

. Educate the staff about the new process

. Educate the staff about new technology used

. Educate management on facilitation skills

. Decide how new technologies will be introduced

. Transition to new technologies

. Incorporate prccess improvement mechanism

6.l INTRODUCTION

r A data warehouse is a database designed to support decision making in an

organization.

o Data from the production databasqs are copied to the data warehouse so that

queries can be performed without disturbing the performance or the stability ofthe production systems.

' The term Data Warehouse was coined by Bill Inmon in 1990, which he defined inthe foilowing way: "A warehouse is a subject-oriented, integrateri, time-variant

42

and nonvolatilq collection of data in support of management's decision making----

processrr.

. Data warehousing emphasizes the capture of data from diverse scurces for

useful analysis and access, but does not generally start from the point-of-view of

the end user or knowledge worker who may need access to specialized,

sometimes local databases. The latter idea is known as the data mart.

6.2 CONCEPTS & GOALS

o The primary concept of data warehousing is that the data stored for business

analysis can most effectively be accessed, by separating it from the data in the

operational systems.

o This separation allows business analysis and queries to be performed rrr.ithout

disturbing the performance or the stability of the production systems.

. The primary goals of a data warehouse are the following:

1. Provide access to the data of an organization

2.Data consistency

3. Capacity to separate and combine data

4. Inclusion of tools set up to query, Ntalyze and present

information

5. Publish used data

6. Drive business re.engineering

r Data from various online tuansaction processing (OLTP) applications and other

sources is selectively exkacted and organized on the data warehouse database

for use by analytical applications and user queries.

6.3 CHARACTERISTICS OF A DATAWAREHOUSE

Subject-oiented

The data in the data warehouse is organized so that all the data elements

relating to the same real-world event or object are linked together.

Non-oolatile

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Data in the data warehouse are never orrer-written or deleted - once

committed, the data are static, read-only, and retained for future

reporting.

lntegrateil

The data warehouse contains data from most or all of an organization's

operational systems and these data are made consistent.

Time-aaiant

The top-down design methodology generates highly consistent

dimensional views of data across data marts since all data marts are

loaded from the centralized repository. The up-front coet for

implementing a data warehouse using the top-do-nn nnethodclogy is

significant, and the duration oi time from the start of project to the point

that end users experience initial bendib can be substantial.

5.4 COMPONENTS OF DATA WARE HOUSE

The major components of a data warehouse architechrre are

. Summarized data (lightly summarized and highly summarized)

. Current detail

. Operational systems of reeord

. hrtegration and transformation Programs

. Data warehouse Architecture or Metadata

. Archives

Summarized data

Summarized data is classified into two :

Lightly surumeizeil and highly summarized.

. Lightly summarized data are the hallmark of the dw. all entelprise

elernents (departmen+.s) do not ha';e the sar'.e info requirement. So

effective data warehouse design provide for every enterprise element may

have access to both detail and summarized data but there will be much

less then total storing cunent detail.

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I

Highly SunmtrizedDala

Opsdixd@dlLcord

Hrrrbn,TrmNBrn

PrDgEs CrltlrDeLi

Highly summarized data are primary for errterprise o(esrtives. Highly

summarized can either come from the lightty summarized data used by the

enterprise element or from current details

Operational systems of record

A system of record is a source of the data that feed the data warehouse.

Data in data warehouse differ from operational system. Data in that they

can only be read not modified. Thus it is necessary that a data warehouse

be populated with higher quality data available that is data that are most

timely complete, accurate and have the best structured conformance to the

data warehouse.

Integrationy' Transformation prograrns

Even the highest quality operation data can't usually be copied as it is into

a data warehouse. Raw operational data are virfually unintelligible to

most users. As operational data item passes from their system to record

into a data warehouse integration and transforrration program convert

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them from application specification data into enterprise data .this

integration and transformation program perform functions such as

(i) Reformatting

(ii) Recalculating or nodifying key structures

(iii) Adding time element

(iv) Identifying default value

(v) Supplying logc to choose between multiple data sources

(vi) Summarizing and merging data from various sources.

Current detail

The heart of a data warehouse is its current detail, where the bulk of data

resides. Current detail comes Cirecfly from operational systems ar.d may

be storeci as raw data or as aggregations of raw data.

Data warehouse architecture or metadata

Metadata is the data about data and is used by data warehouse developers

to manage and control data warehouse creation and maintenance. To a

data warehouse usier, metadata is like a "cand catalog" of the subjects

available.

Archives

Data rrrarehouse architecture contains old data of significant continuing

interest and value to the enterprise. there is uzually massive amount of

data stored in the data warehouse archives with a lower incidence of

access. Archives data are most oftm used for forecasting and trend

analysis. An archive includes not only old data but they also include the

metadata that desctibes the characteristics of old data.

STRUCTURE OF DATA WAREHOUSE

Physical Data Warehouse

Physical database in which all the data for the Warehouse are stored,

along. with metadata and processing logic for scrubbing, organizing,

packaging and processing the detail data.

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Logical data Warehouse

AIso contains metadata, including enterprise rules processing logic for

scrubbing, organizirg, packaging and processing data, but does not

contain actual data. Instead, it contains the information necessary to access

the data whenever they reside. This structure is effective only when there

is a/.single source for the data and when the data in the source is accurate

and timely.

Data Mart

Data Mart is a subset of an enterprise - wide data warehouse, which

typically supports and enterprise element (department region, function,

etc.). As part of an iterative Data Warehouse development process/ an

enterprise build a series of physical (or logical) data marts over time and

links them via an enterprise - wide logical Data Waretrouse or feeds them

from a single physical warehouse.

6.6 DATA WAREHOUSE PROCESS

The five essential stages of the data warehousing Process are:

. Modeling data for the data warehouse

o Extracting data from operational databases

" Cleansing extracted data

o Transforming data into the warehouse model

. Loading the data into the data warehouse database

Stage L - Modeling data for the data warehouse

Because of the vast size of a data warehouse, the warehouse database

consists of de-normalized data.

Relational theory does not apply to a data warehousing system.

Wherever possible normalized tables pertaining to selected events May be

consolidated into de-norm alized tables.

Stage 2 - Exhacting data from operational databases

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The process of collecting data from operational databases, flat-files,

archives, and external data sources.

Snapshots vs. Stabilized Data: A key feature of a data warehouse is that

the data contained in it are in a non:volatile (stable) state.

Stage 3 -Cleansing extracted data

Involves fiitering out or repairing invalid data prior to being stored in the

warehouse.

Operational data are " dity' for many reasons: clerical, data entry,

computer program errors, misspelled names, and blank fields.

Also involves traruforming data into standard business terms with

standard data values

Stage 4 -Transforming data into the warehouse model

To improve efficiency, data is transformed into summary views before

they are loaded.

Unlike operational views, which are virtual in nature with underlying

base tables, data warehouse views are physical tables.

Stage 5 -Loading the data into the data warehouse database

Data warehouses must be created and maintairred separately from the

operational databases.

Internal Efficiency

Integration of Legacy Systems

ConsoUdation of Global Data

6.7 ADVANTAGES OF A DATA WAREHOUSE

More cost effective decision making

A data warehouse allows reduction of staff and computer resources

reqrrired to support queries and reports

Better enterprise intelligence

Increased quality and flexibility of enterprise analysis arises from high

quaiity data in the warehouse

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Enhanced customer service

Better customer relationships by correlating all customer data via a single

data warehouse architecfu re.

Business Reengineering

Allowing unlimited analysis of enterprise information provides an insight

into enterprise processes that yields breakthrough ideas for reengineering

those processes.

Information system reen gineering

Data warehouse development can be an effective first step in re-

engineering the enterprise's legacy systems.

5.8 TEN MISTAKES TO BE AVOIDED IN A DATA WAREHOUSE

PROIECT

. Starting a ware housing project without the right sponsorship and top

m;rnagement support

. Setting expectations that you can not meet and causing frustration to executives

at the moment of truth

. Pronnoting the value of their data warehouse with arguments such as "this will

help managers make better decisions ", which can back fire

. Loading the warehouse with information' just because it was available'

. Believing that data warehouse database design is the same as transactional

database design

. Choosing a data warehouse manager who is technology oriented rather than

user oriented

. Focusing on traditional internal record oriented data and ignoring the potential

value of external data and text, images , and potentially sound and video

. Delivering data overlapping and confusing definitions

. Believing the performance, capacity and scalability promises

. Believing that once the data warehouse is up and rulning, your problems are

finished

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Some challenges facing data warehouse could be described as follows

. Complex extract transformation and load characteristics including source vs

target, data foansfonrrations, transaction based loading

. Immense volume of daily data

. Load methodology (load control and auditing)

. Data warehouse recovery (load recovery)

. Data warehouse validation

. Data warehouse read performance including database structural design and

summarization

. Metadata management

6.9 USES OF A DATAWAREHOUSE

. Standard reports and queries

. Queries against summarized data

. Data Mining

. Interface with other data warehouses

7.1 INTRODUCTION

o Data mining has been defined as "the nontrivial extraction of imptci! previously

unknown, and potentially useful information from data" and "the science of

extracting useful information from large data sets or dafabases"

o Data mining, the extraction of hidden predictive information from large

databases, is a powerful new technology with great potential to help companies

focus on the most important information in their data warehouses.

o Data mining tools predict future trends and behaviors, allowing businesses to

make proactrve, knowledge-drivm decisions.

o The automated, prospective analyses offered by data mining move beyond the

analyses of past events provided by retrospective tools typical of ciecision

support systems.

50

o Data mining tools can answer business questions that traditionally were too time

consuming to resolve. They scour databases for hidden patterns, finding

predictive in{ormation that experts may miss because it lies outside their

expectations.

r Modern data mining systems self leam from the previous history of the

investigated system, formuiating and testing hypotheses about the rules, which

the system obeys,

7.2 EVALI=IION OF DATA MINING

o Data mining techniques are the result of a long process of research and product

development.

. This evolution began when business data was first stored on computers,

continued with improvements in data access, and more recently, generated

technologies that allow users to navigate through their data in real time-

o Data mining takes this evolutionary process beyond retrospective data access

and navigation to prospective and proactive information delivery.

o Data mining is ready for application in the business community because it is

supported by three technologies that are now sufficiently mature:

1. Massive data collection

2. Powerfu I multiprocessor computers

3. Data mining algorithms

. The evolution of data mining has the following phases:

1. Data collection (1960s)

2.Data access (1980s)

3. Data warehousing & decision support (1990s)

4.Data mining (1990s onwards)

7.3 KNOWIEDGE VERIFICATION AND DISCOVERY

. Traditions decision support systems (DSS) and executive information systems

(EIS) uses tools like queries, multidimensional analysis and visualization to

gather information.

51

-

o In the above tools, the user is guiding the information gathering and is

basically trying to find out the causes of problems. This kind of information

processing is known as knousledge anificatiotr.

. In the above cases, the amount of new information created is very little: the

user's hypothesis is either verified, or it is negated.

o The user processes the information by successive iterations upon examining the

results of query after query and linking the verified and refined hypotheses.

This is the essence of a verification model.

. Data mining uses a different model for the creation of information about data.

We call this the iliseoaery moilel.

r Data mining uses methodologies that can sift through the data in search of

frequently occurring patterns, detect trends, produce generalizations about the

data, etc.

. These tools can discover these types of information with very little (or no)

guidance from the user.

7.4 ADVANTAGES OF DATA MINING

Data mining derives its name from the similarities between searching for valuable

business informafion in a iarge database and mining a mountain for a vein of valuabie

ore. Both processes require either sifting through an immmse amount of material or

intelligently, probing it to find exactly where the value reside.

Tasks solved by Data Mining

Preilicting

A task of learning a pattern from examples and using the developed

model to predict future values of the target variable.

Classification

A task of finding a function that maps an exampie into one of several

discrete classes.

Detection of rclatiotts

52

A task of searching for the most influential independent variables for a

selected target variable

Erplicit Moileling

A task of finding explicit formulate describing dependencies between

various variables.

Clustuing

A task of identifying a finite set of categories or clusters that describe data.

Deoiation Detection

A task of deternrining the most significant changes in some key measures

of data from previous or expected values-

Given databases of sufficient size and quality, data mining technology can generate

new business opportunities by providing the following capabilities:

Automateil prcilictiott of trends anil behaviots

Data mining automates the process of finding predictive information in

large databases.

Automateil discoouy of preoiously unknoran palt*ns

Data mining tools sweep through databases and identify previously

hidden patterns in one steP.

Databases can be larger in both ilepth and bteailth

High performance data mining allows users to explore the full depth of a

database, without pre-selecting a sub-set of variables. The data *it ir,g

, databases contains larger samples (more rows) as they yield lower

estimation errors and variance, and allow users to make inferences about

small but important segments of a population.

7.5 TECHNOLOGIES USED IN DATA MINING

The most commonly used techniques in data mining are:

1. Statistics and Regression

2. Neural networks

3. Clustering

53

4. Rule induction

5. Evolutionary programming

6, Case-based reasoning (CBR)

7. Memory-based reasoning (MBR)

8. Decision trees

9. Link analysis

10. Genetic algorithms

11. Association rules

12. Non-linear regression methods

8"1 INTRODUCTION

o The term OLAP was coined by E.F.Cotid ll:.79DE., to refer to a type of application

that allows a user to interactively analyze data.

. OLAP is a class of applications that require multi-dimensional analysis of

business data.

multiple time periods, with the airt of uncovering the business information

concealed with-in t-he data.

OI-A.P systems enable managers and analysts to rapidly and easily examine key

pefformance data and perform powerfirl comparison and trend analyses, even

on very Large data volumes.

OLAP is used in a wide variety of business areas, including sales and marketing

analysis, financial reporting, quality tracking, profitability analysis, manpower

and pricing applications and many others.

OLAP is often ccnfused with data warehousing. OLAP provides the facility- to

'analyze the data ireld within the data warehouse in a flexible manner. Ii is an

integral component of a successful data warehouse solution; it is not in itself a

data n'arehousrng meth.odology or s,vstem.

OLAP is a method of analyzing data in a multi-dimmsional

54

-Fr

. OLAP uses a multi-dimensional view of aggregate data to provide quick access

to strategic information for further analysis.

8.2 RULES OF OLAP

Dr.E.F.Codd lists the 12 rules for OLAP systems.

The rules are given below:

1. Multidimensional conceptual views

This supports EIS "slice-and-dice" operatiorrs and is usually required in

financial modeling.

2. Transparency

OLAP systems should be part of an open system that supports

heterogeneous data sources. Further more, the md user should not have

to be concerned about the details of data access or conversions-.

3. Accessibility

The ALAP should present the user with a single logical schema of the

data.

4. Consistent reporting performance

Performance should degrade as the number of dimensions in the model

increases.

5. Client/server architecture

Requirement for open, modular systems.

6. Generic dimensionality

Not limited to 3 D and biased towards any particular dimension. 'A

function applied to one dimension should also be able to be applied to

another.

7. Dynamic sparse-matrix handling

Related both to the idea of nulls in relational databases and not to the

notion of compressing large files, a sparse matrix is one in which not

every cell contains data. OLAP systems should accommodate varying

storage and data-handling options.

tl

55

ET

B. Multi-user suPPort

OLAPsystems,likeElses,needtoSuppoltmultipleconcurrentusels,

including their individual views or slices of a common database'

9, Unrestricted cross-dimensional operations

Similar to rule 6; all dimensions are created equal and operations across

datadimensionsdonotresEictrelationshipsbetweencells.

10. Intuitive data maniPulation

Ideally, users shouldn't have to use menus or perform complex ultiple-

stepoperationswhenanintuitivedrag-arrd-dropactionwilldo.

11. Flexible rePorting

Usersshouldbeabletoprintjustwhattheyneed,andanychangestothe

underlying financial model should be automatically reflected in reports'

12. Unlimited dimensional and aggregation levels

Aserioustoolshouldsupportatleast15anpreferablyZ}dimensions

8.3 USES OF OLAPOLAP applications sPan a variety of organizational functions:

1. Finance departrnents use OLAP for applications such as budgeting'

activity based costing (allocations), financial performance analysis and

financial modeling.

2. Sales analysis and forecasting are two of the OLAP applications found in

sales deParhents.

3. Marketing departments use oLAP for market research analysis, sales

forecasting,promotionsanalysis,customeranalysisandmarket/customer

segmentation.

4. Ir{anufacturing oLAF applications include production planning and deject

analYsis.

OLAP transforms rart, data so that it refleClS the real dimensionality of the enterprise as

understood by th-g ;5s1.

lt\,

-

While OLAP systems have the ability to answer "who?" and "what?" questions, it is

their ability to answer "what 1f?" and "';vhy?" that sets them apart from data

warehouses.

A truly flexible data model ensures that OLAP systems can respond to changing

' b,rsiness requirements as needed for effective decision-making.

8.4 KEY FEATURES OF OLAP

. OLAP enables managers to model problems that would be impossible using less

flexible systems with lengthy and inconsistent response times.

. More controls and timely access to strategic information are equal to more

effective decision-making.

. OLAP enables the organization as a whole to respond more quickly to market

demands. Market responsiveness, in turn, often yields improved revenue and

profitability.

. Although OLAP applications are found in widely divergent functional areas,

th"y ,11require the following key features:

L. Multi-dimensional views of data

A multi-dimensional view of data provides more than the abitity to

"slice and dice"; it provides the foundation for analytical

I processing through flexible access to information.

2. Calculation-intensive capabilities

Analytical processing systems are judged on their ability to create

information from data. To perform complex analysis like trend

analysis, sales forecasting etc. OLAP applications should have

calculation intensive capabilities.

3. Time intelligence

True OLAP systems understand the sequential nature of time.

Concepts such as year-to-date and period over period comparisons

can be easily defined in an OLAP system.

8.5 DIFFERENT STYLES OF OLAP

57

. ',

The four major alternatives for implementing OLAP applications are:

1. Multi-dimensional OLAP

Multi-dimensional OLAP (MOLAP) is based on a multi-dimensional data

base architecture. MOLAP is suitable for applications requiring only pre-

defined analysis on multiple dimensions'

2. Hybrid OLAP

Hybrid oLAP products primarily integrate specialized multidimensional

data storage with relational database management technology. HOLAP is

bestsuitedtoapplicationsthatrequireheavyanaiysis,mustprovide

predictableresponsetimestoresourceintensivequeties,willhaveasmall

number of concurrent users'

3. Desktop OLAP

The desktop style of oLAP allows users to perform limited analysis,

directly against data held within a reLational database, while avoiding

many of the problems that affect the hybrid and relational OLAP styles'

The desktop oLAP is suitabie for an enterprise that wants to provide pre-

defined analysis capabiJities to business users without incurring the

higher purchase and maintenance cost of more functional products.

4. Relational OLAP

RelationalOLAP(ROLAP)jsthefastestgrowingareaofoLAP

technology, with new vendors entering the market at an accelerating pace'

The RoLAP is suitable for situations where users require uruestricted

analysis of a large volume of data'

. Supply chain management (rcM) is the oversight of matetials, informatio4 and

finances as they move in a Plocess from supplier to manufacturer to wholesaler

to retailer to consumer'

TNTRODUCTION

58

. SCM involves coordinating and integrating these flows both within and among

comparues.

. SCM enables collaboration, planning, execution and coordination of the entire

supply chain, empowering companies to adapt their supply chain processes to an

ever changing competitive environment.

r An SCM system ensures more visibility throughout the supply chairu fewer

surprises and less need to stock back up raw materials or finished goods.

o With better slmchronization across the entire supply chain, the business partrers

achieve the following major benefits:

1. Lower inventoties and therefore, lower financing costs

2. Shorter receivables cycles

3. Optimal use of resources, costly work forces and transportation

4. Faster response to market changes

5. Greater satisfaction and loyalty among customers

6. Greater profitability

. Strategists realized that delivering the right manpower and material on schedule

to just the right spot was the key to battlefield supremacy.

. Supply chain management is mainly a matter of building new communications

paths and interlocking feedback loops that help business parhrers share

i:rformation and ultimately, more fully trust each other to maximize the mutual

benefits.

r The SCM systems have become more efficient and intelligent with the use of

computers, artificial intelligence and other advancements in the field of

information techno logy.

o SCM solutions transform tradifional supply chains from linear, sequential steps

into an adaptive supply chain network in which communities of customer-

centric, demand driven companies share knowledge, intelligently adapt to

changing market conditions and proactively respond to shorter, less predictable

life rycles.

s9

II=-

. Today, almost all organizations-military, manufacturing, service industries,

retailers, and so on-use SCM systems to improve their efficiency and

effectiveness.

o All businesses that involve complex flows of material can take advantage of the

global optimization and efficient execution offered by scM systems.

9.2 ADVANTAGES OF SCM

Supply chain management mables:

Supply chain planning and collaboration

Supply chain planning functionality enables you to maximize return on

assets and ensures a profitable match of supply and demand'

Supply chain execution

scM enables you to carry out supply chain planning and generate high

efficiency at the lowest po*sible cost.

Supply chain visibility design and analytics

SCM gives you network-wide visibility across your extended supply chain

to perform skategic as well as day-te day planning.

Business benefits

SCM can help you transform a traditional linear zupply chain into an

adaptive network with the following bmefits:

1. Faster resPonse to changes in supply and demand

2. Increased customer satisfaction

3. Compliance with regulatory requirements

4, Improved cash flow

5, Higher margins

5. Greater synchronization with business priorities

___Y

UNIT II. ERP IMPLEMENTATION

Implementation Life Cycle - Implementation Methodolory -Hidden Costs Organizing Implementation Vendors,Consultants and Users - Contracts - Proiect Management andMonitoring

L. OBIECTTWS OE ERP TMPLEMENTATTON

Objectives are the major highJevel characteristics that can have a great impact upon the

success.

The objectives of ERP projects include characteristics such as

7. Speeil - The speed of the project is how much time the company would like to

take in implementing the system.

2. Scope - The scope of the project includes all of the functional and technical

characteristics that the company warts to implement.

3. Resources - Reources are everything that is needed to support the project including

people, hardware systems, software systems, technical support and

consultants.

4- Risk - The risk of a project is a factor that impacts the overall success of the

ERP implementation.

5. Complexity - Complexrty is the degree of dfficulty of implementing operating

and maintaining the ERP system.

6l

6. Benefits - Benefits are the extent to which the company will utilize functionality of

the ERP system for software development, maintenance and other

support activities.

The ERp implementation lifecycle follows a similar path to the software development

lifecycle. The stages can be defined as planning, evaluation, implementation,

integration, acceptance and maintenance. Companies that are undertaking ERP

implementation need to be aware of this when adoptit g u project management

framework.

Th_e different phases of tfre ERJ} rmplementadon are given below:

S.No Phase Description

t. Pre-evaluation screening The purpose of this phase is to eliminate those

packages that are not at all suitable for the

company's business Processes.

2. Package evaluation In this phase the ERP package that is best suited

for the organization is selected.

3. Project planning Phase

(-

In this phase the details of how to go about the

implementation are decided. In this phase the

time schedules, deadlines, etc. for the project,

are arrived at.

4. Gap analysis This is the process through which companies

create a complete model of where they are now

and where they want to be headed.

5. Reen-gineertn-g It is in this phase that human factors are ta.km

into account.

6 Configuration In this phase, the ERP is modified to suit the

business processes of the organization.

62

7. Implementation team

training

This is the phase where the company trains its

employees to implement and later run the

system.

8. Testing This is the phase were the system that is being

implemented is tested for any problems, bugs,

errors, etc.

9. Going live This is the phase where ERP is made available to

the entire organization,

1.0 End-user training This is the phase where the actual users of the

system will be given training on how to use the

system.

11. Post implementation This is the phase where the ERP system is used

for conducting the business.

2.1. PRE. EVALUATION SCREENING

. Pre-Evaluation Screening is the phase which starts when company decides to

go for an ERP System. The search for perfect ERP package starts.

. There are many ERP packages available. Analyzing all the packages and

deciding is not easy and it is a very time consuming process. So, it is better to

limit the number of packages to be evaluated (max 5).

. It is always better to do a thorough and detailed evaluation of a small number

of packages.

. Not all packages are same - each has its own r,l'eakness and strength. Some

packages can be good in some areas while in other sectors they may not.

. The pre-evaluation process should eliminate those packages that are not

suitable for the company's business processes.

. Once few packages are screened, detailed evaluation process starts.

63

2.2. PACKAGE EVALUATION

. The Package Evaluation/selection process is one of the most important phases

of the ERP implementation, because the package you seiect will decide failure

or success ofproject.

. Since ERP packages are so expensive, once purchased, it is not an easy task to

switch to another one. So, do it ight the first time.

. While making the analysis, the important point that should be kept in mind is

that, none of the ERP package is perfect.

. The objective of the selection process is to find whether it is a perfect fit or a

goodft.

D Perfect fit - To identify a package that covers each and every

iequiremerrt

F Good fit - To find a package, that is flexible enough to meet the

company's needs-

. Once the packages to be evaluated are identified, the company needs to

develop a selection criteria that will permit the evaluation of all the available

packages.

. Few important points to remember while evaluating the ERP software

includes

(l) Functional fit with the company's business processes

(ii) Degree of integration between the various components of the ERP

system

(iii) Flexibility and scalability

/irr\ Cnmnlowihr\" ,f

(") User friendliness

(vi) Quick implen-rentation

(vii) Abiiig to support multi-site planning and control

(viii) Teclurolory - client/ server capabilities, database independence,

64

security

(ix) Availability of regular upgrades

(x) Amount of customization required

(xi) Local structure inJrastructure

(xii) Availability of reference sites

(xiii) Total costs - including cost of license, training, implementation,

maintenance, customization and h/w requirements

2.3. PROTECT PLANNING PHASE

. This is the phase that designs the implementation process.

. In this phase detaiJs of how to go about implementation, schedules and

deadlines etc are decided.

. This phase will decide about when to begin, how to do it and when the project

is supposed to be completed and what to do whm things get out of control.

' r The project planning is usually done by a committee constituted by the team

leaders of each implementation group.

. Implementation team members are selected and their roles and

responsibilities are identified and assigned.

. This committee will meet periodically through out cycle to review process and

chart the future course of action.

2.4.GAP ANALYSIS

. Gap analysis is a phase in the ERP implementation, where the organization

tries to find out the gaps between the company's existing business practices &

those supported by the ERP package.

. This is the process through which companies create a complete model of where

they are now and where they want to head in the future.

65

. The main objective is to design a model, which both anticipates & covers .rny

functional gap.

' It has been estimated that even the best ERP package meets only 80% of the

company's fulctional gaps'

. One of the most affordable, but most difficult solution is to alter the business to

fit the ERP package.

. Another solution is that the company can simply agree to live without a

particular function.

. Other solutions include:

) Upgrading or updating the software (low cost but risky)

) Identifying a third-party product that might fill the gap

F Designing a custom Program'

F Altering the ERP source code.

2.5. RE-ENGINEERING

. It is in this phase that the human factors are taken into account-

. Reengineering has two different implications

. The L"t one is the involving the use of ERP to aid in downsizing efforts.

) There have been occasions where high level executives have

invoked the reengineering slogan and purchased an ERP package

with the aim of reducing number of employees.

. \Alhile every implementation is going to involve some change in job

responsibilities, so it is the best to treat ERP as an investment as well as

cost-cufting measure, rattrer than a downsizing tool.

. The 2.d use of the word re-engineering in the ERP field refers to an ERP

implementation model initially designed and .used.

66

. The BPR approach to an ERP implementation implies two separate, but

closely linked implementations involved on an ERP site i.e. a technical

implementation and a business process implementation.

. The BPR approach emphasis the human element of necessary changes

within the organization, which is generally more time consuming and has

received its share of criticism for creating bloated budgets & extended

projects.

" The ERP market shifts to a mid-market focus & as all implementation are

becoming more cost sensitive; the BPR approach has come under some real

rutiny.

2.6. CONFIGURATIO}']

. This is the main functional area of the ERP implementation.

. Business processes have to be understood and mappd in such a way that

the arrived solution matches with the overall goals of the company.

. Hencg a protoffie - a simulation of the actual business processes of the

company - will be used.

. The prototype allows for thorough testing of the 'to be' model in a

controlled environment.

. As the ERP consultanb configure and test the prototype, they attempt to

solve any logistical problems inherited in the BPR before the actual go-live

implementation.

. Configuri^g a company's system reveals not onJy the strengths of a

company's business process but also- & perhaps more importantiy- its

weakness.

. It is vital to the health of the company & to the success of the ERP

implementation that those configuring the system are able to explain what

won't fit into the package and where the gaps in functionality occur.

67

. ERP vendors are constantly striving to lower configuration costs. Current

strategies iflclude automation and pre-configuration' .

. A kind of question - .rnswer format can be used to find out the kinds of

business process information addressed through the configuration process.

. pre-configured tools can save time and money, but every business is unique

and unique configuration is needed for each proiect'

2.7. IMPLEMENTATION TEAM TRAINING

. This is the phase where the company trains its employees to implement and

later run the system.

. When the configuration is taking place, the implementation team is being

trained - not how to use the systeur, but how to implement it'

. 'Ihe ERp vendors and the hired consultants wilI Ieave after the

implementation is over.

. But for the company to be self sufficient in running the ERP system, it should

have a good in-house team that can handle the various situations.

. Thus, it is very vital that the company recognizes the importance of this phase

and selects those employees who have the right aftitude - people who are

willing to change, learn new things and are not afraid of technology and good

functional knowledge.

2.8. TESTING

. This is the phase where we try to break the systerr-

. Here we reach a point where we are testing real case scenarios.

. 'Ihe system is configured and now we must come up with extreme case

scenarios - system overloads, multiple users logging on at the same time with

the same query, users entering invalid data, hackers trying to access reskicted

areas and so on.

68

' The test case must be designed specifically to find the weak links in the systemand these bugs should be fixed before going live.

2.9. GOING LIVE

' On the technical side, the work is almost complete - data conversions is done,databases are up and running, and on the functional side, the prototype is fuIlyconfigured & tested and ready to go operational.

' The system is officially proclaimed operational, even though the implementationteam must have been testing it & running successfuIry for some time.

' But once the system is 'live', the o1d system is removed & the new system is usedfor doing business.

2.10. END USERTRNNING

The success or failure of an ERp system depends on how the act,al users usethe system.

This is the phase where the actuar users of the system wil be given trainingon how to use the system.

This phase starts much before fhe system goes live.The most successful implemented ERp packages fail due to lack of end usertraining.

ERP system changes the job descriptions of the people - so it is important toidentify the people who are going to use the system.

The current skills of the people are identified and they are divided intogrouPS.

Every group is provideC training on the new systeur-

The training section gives the overall view of the system

individual actions will be affecting the entire system.

'and how the

69

. Every employee is also provided with the training of the job profile which

he/she is going to perforur once the system goes live.

. The training session shouid address about the new technologies and how

people will be successful in making the change over.

2.11. POST IMPLEMENTATION (OPERATION & MAINTENANCE \4ODE)

. One important factor that should be kept in mind is that the post

implementation phase is very critical.

. Once the implementation is over the vendors and the hired consultants will

go.

. There should be people within the company who have the technical processes

to make the necessary enhancements to the system as and when required.

. The system must be upgraded as and when new versions or technologies are

introduced-

. Everyone who uses these systems needs to be trained on how they work, how

they relate to the business process and how a transaction ripples through the

entire company whenever they press a key.

. The training will never end; it is an ongoing process; new people will always

be conning in and new functionality will always be entering the organization.

. Living with ERP system will be totally differmt from installing them.

. Projects for implementing the ERP systems get a lot of resources and

attention.

. However, an organization can only get the maximum value of these inputs if

it successfully adopts and effectively uses the system.

Reasons for failure of ERP implementation

.! Lack of 'Iop }vlanagement buy-in, commitment and support

* Important planning and budgeting

* Use of wrong ERP tool

+ Lack of training

70

A Work culture of the organization

Lack of Top Management buy-in, commitment and supportThe top m€rnagement must be clearly convinced about the importance of ERp andhow ERP could be used as a competirive weapon and how the company can fail if anERP system is not available to manage and control the business operations.when the employees know that the ERp implementation has full managementbacking, they will also want the system to succeed. There will be a lot of issues likechange of procedures, reassignment of employees, etc. when the ERp svstem isimplemented.

If the management can assure the emproyees that their jobs are secure, thatassurance will ensure in employee co_operation.

The top managers shJu1d also talk to the employees regarding the benefits of theERP system and how the company can get ahead of the competition by reaping thebenefits of the system.

Important planning and budgeting

Before starting the ERP implementation project, detailed planning involving allthe major stakeholders is necessary for the success of the project.It is during this phase that the decisions regarding procedures to be followedtool to be bough! the budget to be alocated for implementation andmaintenance, etc. are decided.

If this planning is not done property; thm there is every chance that many factorswould be overlooked resulting in selecting the wrong tool, insufficient funds,and inadequate team members and so on. All these can Iead to the failure of thenroiecfr_-r---'

In order to avoid this, Lhe planning phase should be taken very seriously andmeticulous research should be done before taking any action. AIso, there should

I

71

be a provision m the plan to revise and update it as the implementation

progresses.

Use of wrong ERP tool

. ERP planning team should research the available tools, match them with the

organization's requirements, visit companies where the tools are installed to see

them in action, should discuss about end-user training, tool updates and

upgrades and soon.

. Only when all the members of the team are convinced that a specific tool is best

suited for tJre organization, the purchasing decision must be taken.

Lack of training

. ERP fails due to ignorance and fear-ignorance about the tool and fear of additional

work or unemployment. These factors can be corrected by giving ProPer training.

. The top management should address the employees' fear of losing their jobs, as the

tool automates manY tasks.

. ERP system is essential for the success of the organization in this highfy competitive

business environment. The ERP implementation team members, tool vendors and

external consultants should explain the objectives and goals of the ERP system, the

advantages on a day-to-day basis, how it reduces rework and defect sand so on.

. The in-house experts should hain the users in how to efficiently use the tool and

should explain to them how the ERP tools make their lives easier and help them

create high-quality products without chaos and confusion.

Work Culture of the Organization

. The work culture of the organization is very important for the success of ERP.

. If the organization has a workforce that is wrliing to learn new things anci change

to new technologies, then there will be no problems for ERP implementation.

72

But if the employees resist change and see the introduction of formal methods as

a means to assign accountability; they will perceive the new technology as

something negative. so, the basic mindset of the workforce needs to be changed.To change the employee mindset, the two critical factors required are topmanagement support and proper training.

3. IMPLEMENTATION METHODOLOGY

INTRODUCTION

. At the first glance, all implementation methodologies look very much alike.

' The company should look into minute details when comparing the differentmethodologies,

' The minute details include the conduct of the consultants during the presentationand the practical experience of the consultants in dealing with similar situationsbefore.

. If the consulting firm has practical experience, the methodology for theirrplen-tentation will have been adapted to include tasks or activities specificailytailored to the specific application berng an_alyzed.

. The most criiicai of phases of ihe ERp life cycle_

F adoption decision,

) acquisition,

) implementation,

) use and maintenarce,

) evolution and retirement.

Adoption decision

' In this phase., m;rnagers must question the need of a new ERp system whileseiecting the general information system approach that will best address theircritical business challenges and improve the organizational strategy.

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. This decision phase includes the definition of system requirements, its goals and

benefits and an analysis of the impact of adoption at a business and organizational

level.

Acquisition-. This phase involves selecting the product that best fits the requirements of the

organization to minimize the need for customization'

. A consulting company is also selected to help in the phases of the ERP life cycle

that follow, especially in the implementation phase'

. Factors such as functionality, price, training and maintenance services are analyzed

and the contractual agreements are defined.

. It is important to analyze the return on investment of the product selected.

Implementation-

. This phase deals with the custorrization or parameterization and adaptation of the

ERP package acquired, to meet the needs of the organization-

. This task is performed with the help of consultants who provide implementation

methodologies. Although training is present in all the phases, the largest training

investment is made during the implementation phase.

Use and maintenance

. This phase consists of the use of the product in a way that retums expected benefits and

minimizes disruption.

. Functionality, usability a.d adequary to the organizational and business Processes are

irnportant.

. Once a system is implemented it must be maintained. Because malfunctions have to be

corrected special optimization requests must be met and general systems

improvements have to be implemented.

Evolution

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' In this phase, additional capabilities are integrated into the ERp system to obtainadditional benefits.

Retirement

' When new technologies aPPear or the ERP system or approach becomes inadequate to

the needs of the business, managers decide if they will substitute another information

system approach that is more adequate to the organizational needs of the moment.

MANAGING THE IMPLEMENTATION

' The nature of the ERP implementation is such that it is best handled within a

project rnanagement context.

' The implementation invoives a series of activities ihat do not fit naiurally intothe normal business of rycle evmts. The activities are of finite duration.

' They have an end point, after which any future work should be added intonormal business activity.

It is multidisciplinary and team oriented.

It requires resource and development of specific skills.

Effective project management should have right environmenl

ORGANTZATION OF THE ERP PROJECT TEAM

' The person who manages the implementation is the project manager. The project

manager reports to a Steering Comrrittee, who reviews progress and resolves

any territoriaf resource or policy disputes. The CEO leads the steering committee

and sponsors the project.

. working for the project millager are the members of the project team, who

develop the processes using t-he new software. They then roll the new processes

out in readiness for go-live da-y, producing, documentation and training end-

users.

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The vendor will appoint one of its consultants to provide support to the project

manager/ manage the client account and coordinate other vendor resources.

Trainingisprovidedinthefirstinstancebythevendortotheprojectteam

through either the consultants or specialist trainers'

Once the project team have developed and proven the new way of doing things'

they produce the procedural documentation and train the end users'

IMPLEMENTATION STRATEGY

The implementation strategy should be based on

F Speed or urgency of implementation

) Availability of people for carrying out the implementation tasks

) Availability of time for training all users

) Cost

) Confidence in the new sYstem

D Disruption to oPerations

F Total timescale

IMPLEMENTATION PLAN

. Before implementing an ERP system in an organization or projecL it is very

crucial that implementation process be planned' Implementation planning

includes developing implementation strategy and implementation schedule and

organizing the implementation team.

. It should be realistic, otherwise if timescales are too short, potential disruption

will be built into the plan and if timescale are too long, the momentum can lost'

. The plan provides a guide to the proiect and is used to monitor progress. It

enables peopie carry out a set of interconnected tasks in a coordinated manner'

. Setbacks are highlighted and remedial action established. If necessary, dates are

rescheduled. Importantly, the plan communicated to all who need to know about

the project making them aware of progress and changes'

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-.......-

The implementation plan should address all concerns such as the existing

procedures, the effect the ERP implementation on the procedures, how it wilt

affect the employees, the work environment of the organizatiorL the ERP

awareness of the employees, creation of ERP user manuals and so on.

A project plan can be handwritten or produced using some comPutel

application. A spreadsheet offers simplicity and is readily available. costs,

resource usage and overdue activities'

The key concern is the amount of complexity to be organized, manipulated and

updated; a function of the amount of detail required. So it is necessary to what to

distribute and how.

Risk Assessment, Buriget, Cost

. Even the most detailed of project plans can go astray for events that could have been

anticipated and prevented and hence it is prudent to carry out a risk analysis.

. The aim of risk analysis is to anticipate possible problems, assqss their likelihood of

occurrence and their intensity of impact and finally, to establish how tl-rey can be

prevented or best handled il prevention is not possible'

. Risk assessmer'.t shculd. be carried out at the outset of the project a:r.d should be

regularly reviewed, revised and updated. Process developments and changes in project

conditions may raise the profile of risks that were previously viewed as insignificant.

. After the costs of the ERP implementation are identified (during the planning stage), a

budget is be established. The budget should have provisions for unanticipated

problems and unforeseen issues that are like$ to result in additional expendifure.

. The total cost of ERP ownership includes the costs of packaged software, hardware,

professional services (for ongoing maintenance, upgrades and optimization) and

ir-rternal costs (tlairrirtg cost, re-loca'uon costs, Cost of temporary employees, etc.)

. The costs of the ERP impLementation, operation and maintenance should be

budgeted and all budget should be reviewec and revised periodically.

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Performance Measurement

Performance measurements are carried out to measure the success of the ERP

implementation and the effectiveness of its operation. Three performance related

measures are costs, time and benefits.

. The project plan have detailed list of the tasks, the people responsible for each tasks

and the timeframe for the completion of the tasks. The proiect plan can be used to

measure the progress of an ERP implementation.

. For each step or series of steps of the implementatiory objectives can be defined

which, if achieved, represent progress. By achieving these deliverables there is less

likelihood of problems arising at a later date as a result of an earlier event.

. The four measurables - cost, time, benefits and deliverables are the measures for the

performance of an implementation'

. These measurables provide means to assess progress and attainnent which alone do

not determine success.

. Performance measurement only provide reference points for further action.

. Performance measurements are not a substitute for managing people in such a way

that they give their best and more.

Problems and System Issues

. During the implementation there will be many issues which are raised and which

will require resolution. The danger is that some of these issues, having been

identified are forgotten, only to surface at a later date, perhaps after the system is

live. Thus, it is desirable that there is an agreed procedure for recording issues and

their resolution.

. The technical issues include the installation and comrnissioning of both hardware and

software.

. Some of the technical issues are:

1. How does the system perform when the ERP application is under heavy use?

2. How quickly will storage space be consumed when the system is live?

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3, What is the back-up procedure?

4. Does the system lock and if so how is it unlocked?

5. Do the locations of PCs and printers require to be changed?

5. How are passwords managed?

T.whatuser menus need to be generated and how wil this be handled?

8. What is the disaster recovery procedure?

' The technical issues should be detected earlier and should be resolved as a smallproblem like lack of pre-printed stationary can prevent the system from operatingsmoothly.

ERF Implementation Methodologies by vendors and Consultants

' A meihodoiogy is a roadmap to an implementation. The purpose of a methodology isto deliver an implementation on time, according to specifications and within budget.

' Most vendors, especially in the software industr5z, have developed their ownmethodologies' Consulting companies also developed their own methodologies inrelation to a product.

' Some of the ERP implementation methodologies by vendors and consultants are:

1. Accelerated SAP (ASAP) from SAp

2. The Total Solution from Ernst & young LLp

3. Fast Track Workplan from Deloitte & Touch6

' Methodologies are expensive and even though methodologies are customized, theyare still roadmaps.

' An experienced project manager must manage the projects so that he can use themethodology to implement the ERP system in the best possible way axd in the bestinterests of the organization.

Accelerated SAprM (ASAP)

The ASAP Roadmap is a detailed project plan by SAp that describgs all activities in animplementation. It includes the entire technical area t(r support technical project

management and address things like interfaces, data conversions and authorizations

earlier than in most traditional implementations. The ASAP Roadmap consisb of five

phases:

1. Project preparation

2. Business bluePrint

3. Realization

4. Final preparation

5. Go-live and support continuous change

ASAP provides examples, checklists or templates as samples' They are used as a

starting point to avoid re-inventing the wheel. ASAP calls these things Accelerators.

Project preParation

proper piarming and organizational readiness assessment are essential and give rise to

the determination of the following:

1. Full agreement that all company decision-makers are behind the project

2. Clear project objectives

3. An efficient decision-making process

4. A company culture that is willing to accept change

ASAP's uses Project Estimator to guide the project team through a series of pre-defined

questions and drives interviews with senior executives and key operating managers

about their expectations of mySAP and the speed of its deployment.

Business blueprint

. During this phase training begins on mySAP's integrated business systems.

. Level 2 hands-on training provides a step-by-step education of mySAP business

, process skills.

. The business blueprint is a visual model of your business' future state,

. It will allow the project team to clearly define the scope, and only focus on the

mySAP processes needed to run the business.

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Realizatio

. I.-irst the baseline system will be configured.

' second' the system is fine-tuned to meet all of the business process requirements.since the initial configuration is based on the blueprint, the baseline system givesa real-worrd vierv of how the business transactions w,r acfuary run,

Final preparation

. The mySAp system should be fine_tuned.

' Necessary adjustments are made in order to prepare the system and the businessfor production start-up' Final system tests are conducted and end-user training iscompleted. Irritial audit procedures are developed.

Go-live and support

' Procedures and measurements are deveroped to review the benefits of themysAp inveshent on an ongoing basis. sAp support and services are providedto ensure that the system continues to run smoothly. The online service system(oss) provides erectronic support using a remote connection-. It is easy to usestore house of information defining what to do, who should do it and how Iong itshould ta-ke.

The Total solution

The five components are

The Value proposition

' This component builds the businms case. The key before any process can begin isto make sure it makes sound business sense.

' Reality check This component assesses an orgirnization,s readiness for change.sirr'ce many people oPPose change, it is something that needs to be anticipated.Status quo is easy; change is not.

' Aligned Approach The expec+;ations regarding derivering short_term and iong_term value are set. short-term as well as rong-term benefits are the key to ,ny

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proiectrs success. Even if change is uncomfortable for some, it is easier to accept if

progress is visible. In this approach, the following tasks are performed:

Evaluate alternatives to a comprehensive reengineering project.

Craft a "best-fit" approach that allows the implementation to proceed in well-

defined module

throughout the project so no surPlises surface at the end. This approach helps

keep the entire project on-time, on budget and on management's agenda for

success

. Success Dimension The right blend of people, skills, methods and management

is important to the project's success. The implementation team should include

people with skills in-process management, change management, knowledge

management and industry skills. Teamwork is very important.

. Delivering Value Measuring results and celebrating success. A project that does

not show measurable results throughout the process is going to flounder. People

will lose enthusiasm and the expectations of a new way of doing business

become just another broken promise

. The Fast Track Work plan

The five-phase Fast Track work plan with its specific activities helps achieve a

rapid high-quality business transformation:

. 1. Scoping and planning: project planning is initiated

. 2. Visioning and targeting: vision and targets are identified

. 3. Re-design: software design and development are started

. 4. Configuration: integration is planned

. 5. Testing and delivery: system is delivered

. Fast Track is designed to reflect and integrate decisions: regarding business re-

design, organizational change and performance, training, Process and systems

integrity, client/ server technologies and technical architectute. Fast 'Irack

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idenffies five areas (groups) as an individual thread to be woven into a cohesive

fabric through its five'phase work plan. The areas and a list of the functionsperformed are as follows:

1. Proiect management, which includes project organization, risk management,

planning monitoring, commu,ications, budgeting, staffing and quatityassurance

2' Information technology architecture, which includes hardware a11d networkselectiory procuremenf installation, operations, software desigo development

and installation

3. Process and systems integrity, which includes security and audit control

4. Change leadership, which includes organizations design, change readiness,

poticies and procedures and perforrrance measurements

5, Training and documentation, which includes training design and delivery forproject team, managemerrt end-users, operations and helpdesk

Although different companies find different hurdles and traps in the budgeting

process, those who have implemented ERp packages agree that some costs are

more commonly overlooked or underestimated than others.

The hidden costs of ERP implementation are:

1. Training

2. Customization

3. Integration and Testing

4.Data Conversion

5. Data Analysis

6. ERP Consultants

7. Brain drain (Employee Turnover)

8. Continuing Maintenance

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. To avoid getting blindsided by unexpected expenses, veterans recommend

assembling cross-functional teams to identify the costs up-front.

4.l TRAINING. Training is the unanimorrs choice of experienced ERP implementers as the most

elusive budget item.

. It is not so much that this cost is completely overlooked, as it is consistently

un'lerestimated.

. Training expenses are high because workers almost have to learn a new set of

processes, not just a new software interface. ERP is not so much about technology

implementation; it is a lot of work to setup the software.

. It forces to a huge amount of change management. And change management

appears in the budget on the training line.

. A successful training rvill account for a minimum of 70-75% of the total project

budget.

. Although training cannot be avoided, there are ways to keep its cost under

control.

. One way is to train an initial batch of employees who can then, in turn, train their

colleagues-'fhis solves two problems :

F The huge training costs of the consultants,

) Since training is by their own colleagues, there will be less resistance to

changes and people will be more ready to accept the new system.

4.2 CUSTOMIZATION

. Customization of the ERP system happens when it cannot support one or more

of the business processes and the company decide to make it do what it want.

" It has to be done all over again in the new version'

. The big chunk of costs for professional services is customization.

. The cost of customization can easily out-run the cost of packagecl ERF software,

but it is the customization of ERP software that makes an ERP a success or a

failure-

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4.3 INTEGRATION AND TESTING

' ERP systems will not demonstrate their full potential unless they are properlyintegrated with other enterprise software applications.

. There are three main areas that need integration:

D The integration of the various functional ERp modures

) The integration of ERP with other e-business software applications)' The integration of ERp with legary systems

' Most ERP packages are very complex systems. Interfacing with those systems is

not an easy task.

' Testing the links between ERP packages and other corporate software links thathave to be built on a case-by-case basis is another essential cost that is easilymissed.

' Most companies will have some system that will not fit into the ERp packages

functionality and which wilr have to be interfaced with the ERp package.

. In most cases such integration can be costly.

{t4 DATA CONVERSION

' It costs money to move corporate infonrration, including customer and supplierrecords, product design data and the like from old sisteurs to a new ERp system.

' Most data in most legacy systems is red.undant. But most companies seem todeny their data is useless until they actually have to move it to the newclient/sewer setups that popular ERp packages require.

' As a result, those companies are more likely to underestimate the cost of themove. But even clean data may demand some cost to match the process

modifications necessitated or inspired by the ERp implemmtation.4.5 DATAANALYSIS

' There is a misconception that the ERP vendors perpetuate that you can do aII theanalysis you will want within their product.

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. But often, the data from the ERP system must be combined with data from

external systems for analysis purposes.

. flsers with heavy analysis needs should include the most of a data warehouse in

the ERP budget and should do quite a bit of work to make it run smoothly.

4.6 ERP CONSULTANTS

. The cost of ERP consultants is a well-known fact. Like training exPenses, this cost

is hard to avoid.

. Choosing a lesser-known EI(P package to avoid premium priced consultants

won't necessarily help either.

. When users fail to plan for disengagement from the existing system, consulting

fees will overshoot the budget.

. To avoid this, companies should identify obiectives for which its consulting

partners must aim when training internal staff.

. It is a good practice to include performance metrics and time schedules for the

consultants.

' For example, a specific number of the company's staff should be trained to a

certain specified level in a particular time period.

4.7 BRArN DRAIN (EMPLOYEE TURNOVER)

. It is accepted that ERP success depends on staffing the project with the best and

brightest from the business.

. The software is too complex and the business changes too dramatic to trust the

project to just anyone-

. The bad news is that a company must be prepared to replace many of these

people when the project is over.

. Though the ERP market is not as hot as it once was, consulting firms and other

companies that have lost their best people.

. It is necessary to develop a retention bonus program and to create new salary

skucture for ERP veterans. If not the company has to hire consultants for twice

the amount of the salaries.

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4.8 CONTINLIING MAINTENANCE

. Most companies intend to treat their ERP implementations as they would do for

any other software project.

. Once the software is installed, the team and every one will go back to their

routine job.

. Every Person involved in the ERP is too valuable. Because they have worked

intimately with ERI', they know more about the sales process than the salespeople

do and more about the manufacturing process than the manufacfuring people do.

. Companies cannot affotd to send their project people back into the business

because there is so much to do after the ERP software is installed.

. ]ust writing reports to pull information out of the new ERP system will keep the

project team busy for at least a year.

5. ORGANIZING THE IMPLEMENTATION

ERP IMPLEMENTATION TEAM

. The ERP implementation is a joint effort of many groups of people. AII the

internal resources of the company should be organized for the successful

implementation of the ERP project.

. The petson who manages the implementation is the project manager. Project

m;rnager reports to an executive committee, who reviews progress and

resolves any territorial, resource or poliry disputes. CEO or MD leads

executive committee and sponsors the project.

. The project manager heads tJre project managerrent team which includes head

of the vendor representatives, the chief consultant and the work team leaders.

. The work teaut sets up infrastructure, produce documentation, and train

employees.

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The package vendor appoints one or more consultants to provide support to

the project manager, manage the client and account and coordinate the other

resources.

Venrlor consultanb ad.vise about the best working practices, software

functionality and assist the technical issues'

The company will need an owrler for the project to lead the implementation

(COO or CIO) and at-least one professional from each department to carry out

a specific project function'

T'hey are the key peopie who will make the ERP system acceptable to everyone

in their own departments.

It is the responsibility of the top management to see that the people who are

designated to the implementation team are not interrupted in any way or with

any other r,r'ork.

5.1 COMPOSITION OF THE IMPLEMENTATION TEAM

. The success of the implementation and the continued functioning of the system

will depend on the key people and their ability to grasp the new tasks and

technoiogies.

. For a company, employee loyalty is very important. The key members who are

assigned to the implementation team will suddenly find that the training and

experience that they have gained have dramatically increased their market value.

Hence the temptation for leaving the company fot higher salary will be there. So

while choosing the people for the implementation team, the company

uranagement should take these things into corrsideration.

. Once the ERP system is implemented, the current Processe-c and proceclrrres will

be replaced by new ones. The job descriptions responsibilities will change.

. The inJormation islands that existed throughout the company - in the form of the

clepartmental systerns and databases - will be replaced by a central database and

there rvill be information integration.

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An action taken by an employee can trigger a lot of procedures and affect a lot of

other functions - almost instantaneously.

The technology will bring with it a series of new concepts and resources that must

be mastered and correcfly used to get the best out of the ERp systems.

The format, the speed and the content of the management information systems

will change.

The decision-making processes will change as the decision-makers can get

accurate informatiorL in the form the want and when.they want it.

ERP packages will institute new business models and practices.

The company should depute its best and most efficient employees to the

implen-r en'r.a Eorr team.

The company should invest in these people and should create opportunities for

them to excel within the company so that they can grow with the company. These

are the people who are actually running the business.

The ERP implementation is a very complex and sophisticated project, which

rnrrolves technological as well as cultural changes.

who have an mind to new technologies and concepts ald w-ho love

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challenges and should be capable of working as a team.

These men will be pioneers and their ability to think quickly, improvise

effortlessly, innovate fast and act without hesitation is critical for the success of

the project.

5.2 ORGANiZATICN OF THE IMPLEMENTATION TEAMThe brganization chart of a typical implementation team is shown below. It consists of

the following people:

F Chief Executive Officer

F Executive Comir-.ittee

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) Project Manager

F Work Teams and knplementation Teams

) TechnicalSuPPortTeam

At the top is the Executive Commibtee headed by somebody from the top management'

Then there is the Project Management Team and the Technical and Administrative

Support Personnel followed by Work team.

Chief Executive Officer (CEO)

. The most senior role is that of the CEO. This person has two key responsibilities.

. The first is to promote the vision that has been achieved using the

implementation as the opportunistic catalyst for change. This vision depends

upon the individual and senior colleagues, for these colleagues will share and

make their own contribution towards this vision'

. The other responsibiiity is sponsorship of the project. This means that support is

given to the project in such e way that promotes its import€rnce, suPPorts the

position of the project manager, brings into line dissenting middle/senior

m;rnagers, acts as liaison or delegate and carries out any other activities that

ensures that the project does not flag, including replacing the project manager if

necessary.

. The CEO needs to ensure that the gap is bridged between speech making and

action if suspicion is to be avoided.

Executive Committee

. The executive comrnittee is a group of senior managers who represent the

interests of the company management and is headed by the person who is in

charge of the ERP project implementation.

. CEO or a very senior manager will be the sponsor for the ERP implementation.

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In the case of large corporations, the CEO or top management may not be

mernbers of the executive committee as they will be busy with strategic planning

and decision-making. In such cornpanies, the responsibility of EP.P sponsorship

will be entrusted to somebody in the top or middle managemenf usually to

somebody who reports to the CTO (chief technology officer) or CIO (chief

information officer).

The executive committee will consist of senior meLnagels of the organization.

The committee should also include the external consultant's representative.

A consultant from the package vendor should also be part of the committee to

establish the overall high-levei strategy of the ERP system in relationship to their

company anri to establish visions.

The responsibility of the project sponsor is to provide the full company backing

for the ERP implementation project.

The project sponsor serves as a source of motivational, inspirational and

sometimes financial support for the overall ERP project.

When there is more than one project sponsor (in the case of very large ERP

implementation projects), the distinction between project sponsor and executive

committee becomes clear-er as the communication channels becorne spiit betrrr,een

the sponsors.

In such cases, it is important that the project sponsors communicate with each

other, coordinating and creating consistent uniform messages to the executive

committee and others in the organization.

Their primary function is to make sure that everybody knows that ERP has

strong management backing and support, Also these people should have enough

authority (oi direct access to people who have authority) to make and implement

decisions that are required for ihe smooth progress of the implementation.

Contingerrcy plans shouiri be in place to ensure continuity in case the sponsor

leaves the oiganizatron or is un-atle to perform his function.

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. A second-in-command, who is part of the top managemmt and has sufficient

authority, must be elected and should be ready to take charge of things in the

absence or non-availability of the sponsor.

. The executive committee defines the o$ectives, monitors Progress and quickly

resolves the issues that are brought to their attention. They ensure that the

conditions are right for the implementation.

. They elirrrinate any possible conflicts of interest, which the project team members

may experience.

. The executive committee also ensures that comers are not cut for the sake of

convenience and are committed to removing any barriers that may hinder both

progress and the realization of benefits'

. The committee should be aware of, and adjust for possible discord between the

discipline of project management and its own management style, particularly if

project management is not a familiar practice within the organization.

. The executive committee is responsible for the monitoring and evaluation of the

project and its progress.

. The committee is the body that approves budgets and initiates corrective action

when things are not going according to plan. So, the committee should establish

a reporting and monitoring mechanism by which it wiII be kept abreast of

Progress.

. The monitoring mechanism should have facilities to alert the committee about

impending disasters and delays well in advance so that corrective and

preventive measures can be taken.

. The committee should meet at least once a week with a provision of emergency

meetings in case of emergencies. The project, rumager rqrorts to the executive

committee at the weekly business review meetings to enable the required

discussions to take place.

External Consultants

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o The role of the external consultants in the implementation is to advise the project

manager and the implementation team in all areas where there are no in-house

experts.

. The cost of using the external consultanb is a huge flow on the implementafion

budget and hence should be kept to a minimum.

' If the comPany is already using an ERP system or has previous experience inimplementing ERP systems or has employees who have the necessary expertise

then the number of external consultants could be limited to the minimum.. But in the case of companies who are doing the ERP implementation for the first

time and whose employees do not have much experience, it is absolutely

essentia-l to get professional help as otherwise the result can be failed

irrplententations, pooriy riesigned and implemented ERp system. so, the

principle should be use external experts when the company does not have in-house expertise, otherwise use the in-house experb.

Project Manager

. The pivotal role in an ERP implementation project is that of the project manager.

. The project manager is the catalyst making things happen.

. The project manager is also an administrator, keeping records about project

progless/ maintaining the project plan, handling correspondence and checking

invoices.

. Project manager's responsibilities vary widely depending upon how the ERp

team is forrred. All project m€magers are involved urith communication and

coordination of resources. Communications and coordination may include t^kirgERP team meeting notes, issue resolutiorl developing budgets and timelines,

performing updates for executive sponsors and steering committees and

docunentation.

. An ERP project manager must unclerstand both- the business and the technologl,.

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. An ERP project manager must understand the impact of the ERP

implementation on the business and work with business managers to ensure a

smooth transition from the "as-is" to the ''to be" buSiness operating envi-ronment.

Project managers are selected based on a variety of criteria including availability,

technical expertise, product knowledge, organizational knowledge, political

power, software knowledge, technology knowledge, cos! authority, availability,

people skills, communication skills, maturity, computer literacy and

organizational respect.

Good project managers have an adequate blend of management and leadership

skills.

Too often companies look to project m.magers to perform basic management

functions, such as scheduling and tracking issues related to an ERP project

without providing the necessary leadership skills.

A project meinager must be flexible enough to roll with the changes as the project

progresses, and not to lose it when unpleasant su4>rises popup-

He must be able to work with nearly every individual in the organization.

A strong project manager exercises authority and power over the people and

resources in and around the project.

Project managers use their authority and power in persuading others to

enthusiastically pursue the visions and missions related to the ERP project.

A combination of education, technical expertise and business knowledge allows

the ERP project managel to carry out the function of management related to the

project, These skill sets allow the ERP project managel to be more effective.

An ERP project manager must also be highly disciplined. He must be able to

clearly envision (visualize) the project end game, and then hold the entire

organizatron on the road that leads to that successtul end. This means bringing

other team members back on track when deviations occur or distractions arise.

He must also be willing to make tough decisions, and understand that those

decisions will upset some and please others.

94

. The project manager can become ineffective if there is no demonstrable support

from the top. The project mallager may require people over whom he has no

authority to do things. If the person is well liked then this may sWay people to

co-operate. Problems will arise in the case where members of the project team

split their time between their normal duties and those of the project. Operational

demands will prevail when it comes to deciding which takes priority.

Project Management Team

. The project management team is headed by the project manager and is

comprisecl of the technical leader(ieader of the external consultant team), the

vendoi, project managu and the i[rplementation team leaders.

. The project manager will report the project's progress, problems and other issues

to the executive committee.

. The project management team is responsible for conducting the scheduled work,

administering the project, communicating with the in-house team and the

consultants.

. The team members should monitor the implementatron teams' Progressr assess

tfre amount and quality of the contribution of the team members-both in-house

and consultants and resolve the issues that exist. Since the project management

team has the project manager, the consultant team's head the vendor team's

head and the work team leaders, most problems could be resolved at this level. If

any problems cannot be resolved at this level, then the project manager will step

up to the executive committee for resolution.

. The project management team should also ensure that the comPany personnel

and the consultants are .wcrking toge+.her as a team and that th.ere is full co-

opera-tion between the two grouPs.

. They are also responsible for ensuring that the consultants are transferring their

knowledge to the in-house team and aII the documentation is done properly.

95

The project management tearn should make sure that even after the external

consultants and vendor representatives leave, the system will run smoothly.

The project management team is comprised of the technical leader (leader of the

consultants (team) and the executive committee head, a senior representative

from the vendor's team.

These people are responsible for conducting the scheduled work, administering

the projec! communicating with the in-house team and the consultants, and

reporting to the executive committee.

The executive committee head should monitor the implementation team's

progress, assess the amount and quality of the contribution of the team members

(both in -house and consultants) and discuss the issue with the consulting team's

head.

This person should also ensure that the company personnel and the consultants

are working together as a team and there is full cooperation between the two

groups.

The same person is responsible for enzuring that the consultants are transferring

their knowledge to the in-house team and that all the documentation is being

done properly.

He/she should make sure that even after the consultants leave, the system should

be able to run smootlly.

Work Teams or Implementation Teams

. The work teams or implementation teams .ue composed of people who will

actually perform the tasks assigned in the project plan. These tasks range from

migrating the project information to the new system, to user training, to

monitoring the start-up of the new system.

. The people on this team should be the best in the company and should dedicate

their full-time and attention to the ERP implementation project.

96

The number of work teams in a project depends on the size and complexity of

the project and can vary from one to a dozen.

In the case of projects with more than one work team, each work tearn will be

allotted different areas of the ERP implementation.

Each work team will have a team leader who will report to the project manager.

The work team will perform all the day-to-day tasks of the ERP implementation

from installing the hardware, software, performing customizations if required,

documenting the procedures, conduct end-user training, etc.

The work team normally includes hired consultants and the in-house team.

These consultants should have a good understanding of the software that is

being implemented. That is wiry flrey are hired in the first place.

These consultants most certainly must have participated in the implementation

of similar projects before.

They help configure the software and serve as ongoing support for the rest of the

functional area.

The tean's job requires knowledge of the company's u,ork culture and

environmenf awareness of compary policies and regulations, good analysis

skills, team spiril a co-operative attj,f.rde, good communication skills, patierrce,

persistence, selJ-confidence and above all sound corunon sense.

The company's in-house team (work team members) consisbs of the people with

the knowledge of how the company works. They are the people who are going to

use and runthe system in the fufure.

The in-house team rnembers will be the first people to receive training on how to

operate the software. They must know how the system works in order to

evaluate the impact of the software on the company's current business processes.

They will also discuss with the consultanis and the package vendor the level of

customization that the product will require in order to function properly in the

company.

The work teams will do the testing of the system once the system is installed.

9',I

The work teams will also participate in the training of the end-users of the

system.

The in-house team will contain people from the company's various

functions/ departments. The work teams wiII also have hardware engineers who

will manage the technical requirements of hardware, network and software.

The work team leaders should hold regular meetings with their teart members in

order to bring the team togefher so that they are all aware of what is happenirg.

This is an opportunity for progless to be reviewed, for issues to be highlighted

and for problems to be shared.

They will also have regular meetings rt'ith the project managel to review the

profJress, resolve the problems and decide hon' to proceed.

Consideration should be given to the teams' work environment. The ideal setup

is a dedicated room where people can work undisturbed is called the war room,

which is a multi-functional dedicated area where team members can come to

train, hold meetings, perform testing and develop solutions.

The need for a war room incleases proportionally to the cortplexity of the

projecf the number of team members and the speed with which the system will

be installed.

Extremely rapid and smali installations generally go without a war room. Large

and complex installations alrrtost always have a war room. The war room should

have plenty of wall space so that charts can be hung on the walls. It should be

equipped with networked PCs, tables, shelving for documentation and flip

charts. Laptop links should be available so that consultants can link their

equipment into the network.

This room will serve as the nerve centre for the project. This room should not be

abandoned after the implementation is over.

It can serve as an operations room for continuous improvement teams and also

as a training venue for new recruits, those wishing to upgrade their skills or

those wishing to test out refinements to process.

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Technical Support Team

' The function of the technical support team is to create an environment that is

suitable for the implementation of the software.

' This team works very closely with the work team and takes care of issues like

data migratiorl data back-up and recovery, hardware infrastrucfure, performance

tuning of the databases and so on.

. In short, the technical support staff is responsible that the machines will be up

and nurning, the network is functional and the hardware condition for the rvork

team to implement the software package.

. These are the people who will be doing these activities once the implementation

is over an-d the system is live.

. They should interact with the consultants and the package vendor to assess

whether any special arr;Ingements or hardware or maintenance and back-up and

recovery procedures are requiled for the system.

Administrative support Team

. The job of the administrative support team is to make the life of a1l the others inthe implementation team easier, so that they can eoncentrate on their ta-sks a:rcl- be

more productive and efficient.

' They are resPonsible for making available workspace, conference rooms,

telephones, stationery and any other resources that is required by the project

team.

' The duties aiso include arranging meetings and conferences, informing the

people, taking photocopies of the documents, circulating them to the right people

and any oiher aciminiskative iasks ihat couid make the life of the work tearr-pacinr

HOW THE IMPLEMENTATIONTEAM WOR.I(S

99

. One of the main roles of the members of the executive committee is to check and

verify that the work that is being done js satisfactory and that the momentum,

morale and enthusiasm of the work team who are performing the tasks are

maintained.

. During executive committee meetings, the members should receiver ports and

other information from the project mallager as to how the work is progressing

and whether everything is going according to schedule.

. Before the implementation starts, the extemal consultants and comPany

representatives prepare a work plan. This plan details each and every activ5ty that

needs to be carried out and when they should be carried out.

The consultants should lead the Process of work plan preparation.

The in-house team should point out the issues that are specific to the comPany

and help the consultants create a realistic work plan.

The work plan or the project plan forms the basis for project tracking and

monitoring.

The project contains numerous activities, the person-hours required to complete

them, and the resources needed to perform the tasks.

The project ptan is often built using a project management package (such as MS

Irroject) that permits one to focus on planned activities from various perspectives-

the chronological sequence or timetable, specific activities and who is responsible

for them, the pre-requisites for carrying out a specific task, or a PERT chart of the

activities.

Preparing the project plan using such a tool helps improve the quality of the plan

and makes it easier to make changes and adjustments.

Once the project is under way the plan can be updated on a regular basis and the

"planned velsus actual" reports can be produced in varying detail and in varying

formats inciuding graphical ones.

The project management software can generate comparisons between ttre actual

and planned completion dates, expenses and so on. These software tools allow

100

responsibilities to be assigned to different persons and so it is easy to find out

rvho is lagging behind.

Keep in mind however, that irrespective of whether the plan is created manually

or by using a software package, all the parties involved-the executive committee,

the vendor, the consultants and the in-house team-should be in agreement with

the contents of the plan.

During the final stages of the projec! when the system is being tested the

committee might need to meet more frequently to discuss the various issues that

could arise.

It is the task of the project management tea-ur to report to the executive committee

and present the facts and figures.

Because these meetings are managerial in nature, the project management team

should prepare a presentation that describes the situation at a level of detail

appropriate to the audience.

Another objective of the executive committee meetings is to address the issues

that involve decisions by top managemc:nt.

The project m,rnagemmt team should circulatre details about the issues well inad','ance so that the ccr.mittee mernbers can do their home work and come

prepared for the discussions.

It is the duty of the project m€magement team to analyze alternative solutions and

their advantages, disadvantages and consequences and circulate them to the

committee members well in advance of the meeting. so, in nn ERp

implementation project, the work plan or the project plan is of paramount

importance. Adherence to the plan, along with constant monitoring and the

taking of appropriate corrective actions before the project gets out of controL willerrsure the success of the project.

The key players in project tracking and monitoring are the project management

team and the exectrtive comrr.it+ee.

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6. VENDORS, CONSULTANTS AND USERS

6.I INTRODUCTION

Why can't companies develop their own ERP Packeges?

. To develop an ERP package is a complex and time consuming activity which.)

requires 6 lot of skilled manPower and other resources'

. Many companies have personnel in their IT/IS department who can absorb

the necessary knowledge and who have experience in developing

sophisticated sYstems,

. The problem is that such specialized computer work is not the main business

of these companies. (

. They should be directing ail their available resources into improving their

own products or services so that they can remain competitive serve their

customers better and continue to grow.

equal in quality, scope, functionality or

S

These software firms can produce sophisticated packages and provide their

clients with products that allow them to maintain focus on their own chief

activities, thus improving revenues, profits and share-holder returns.

can't the

. To setup and im

out the

is not an easy task. We can also not

setup a tria-l and error method of implemmtation because a large amount of

investm.ents are involved.

ttnsequences of a failed ERP implementation will put the organization

out of business and also the ERP implementation process cannot go on for a

long period of time.

To successfully carry out the implementation within a reasonable timeframe,

(In-House Implementation - Pros & Cons)

102

i. The people who are given the job of implementing ERP package

should have good knowledge skills.

ii. They must be familiar with the ERP package and the technical

issues.

iii. They must have at least one year experience and hands-on practical

training.

. The people who are going to implement the ERP package should have the following

skills:-

Knowledge of how to organize & rurr a proiect:

He must have organization skills, project management skills, team management

skills and proiect management skills.

implementation:

During implementation, process problem such as cost ovefrun, time overrun

occurs it is very important to knory what kind of decisions are to be taken so that

there is success to the project.

Good people skills:

Whenever an ERP implementation takes place there is a fear in *.e mind of *.he

employees of unemployment, training, technology, so we must have good people in

the implementation team, so that they can handle such situations.

Good leadership skills:

During ERP impiementation we have to interact with a lot of people. So the

implementation team must have effective communication skills and good leadership

I stills.II nxcellenlhain:ngSkills:l-1 Orring ERP implementation we have to provide trairring at the various levels of the

organization. As the end users are handling the whole system, the success of ar,

ERP ir'.plementation is in their hands, so it is necessary that the implementatron

team must have excellent training skills.

103

If the company P1ans to do ERP implementation in-house?

. Hire experts & have them on the company roles or positions'

. This is expensive proposition as once the implementation is over, there is no

need to keep the experts in the business.

. Wastage of resources and spending a Iot of money on training

. It is better to give to those who are specialized into it and focus on comPany's

effort that how to manage after ERP implementation'

. Better to train employees during implementation - it will save money

5.2 VENDORS

. Vendors are the people who have developed the ERP packages.

. They are the people who have invested a huge amount of time and effort

in research & development to create the packaged solutions, that is flexible,

efficient and easY to use.

. Nowadays, the ERP packages have all the feahrres and functions, which

can satisfy the needs of all the businesses in all the sectors'

. AIso with the evolution of new technologies, the vendors have to

constantly upgrade their product to be able to use the best and latest

advancements in technologY.

Vendor and Vendor Management

. ERP implementation teams include vendor representatives.

r The vendor should supply the product and its documentation as soon as the

contract is signed.

. Once the contract has been exchanged the vendor will guide the project ma.nager

and his team through a series of events culminating in the use of the tooi.

r The vendor potentially has the upper hand in the client-vendor relationship. The

client, having signed the contract and perhaps having given a preliminary

104

payment will be reluctant to terminate the relationship should the vendor fail to

meet expectations.

Consultants may not be available due to split commitments. Software bugs may

not be fixed when required. Software links may simply not work. These all

contribute to delay. It is the project manager's task to manage this.

The vendor appoints, the vendor's project manager to provide support to the

project mzurager, advise upon and agree to the project plan, manage the client

account and coordinate vendor provided resources.

A procedure should be agreed between the two managers about how work done

by the vendor is to be authorized by the client.

The vencior's project manager wili be the first point of contact for resoiution of

problems whether they are technical, best practice related or to do with vendor

lnvolces.

Within the contract there should be a clause defining how problems are to be

handled and the timescale allowed. If problems are not resolved then an

escalation path should be defined ider.tifying the people to be contacted.

Communication should be backed-up in writrng. This redrrces the lil<elihood of

misunderstandings.

Only after the software is delivered can the company develop the training and

teting environment for the implementation team.

The vendor is responsible for fixing any problems that the implementation team

encounters in the software. So the vendor should have a liaison officer who

constantly interacts with the implementation team.

The vendor should provide a trainerto provide the initial training for the

company's key users and for the people who will play lead roles in the

inplementation of the system.

Vendor training should achieve the goal of showing the key users (in - house

e:<p€rts) how- ttre package works, what the major components are, how the data

and information flow across the system, what is flexible and what is not, what

105

can be configured and what c€ulnot, what can be customized and what should

not, the limitations, the strengths and weaknesses, and soon'

r The objective of vendor training is to demonstrate the product as it exists and

highlights the available options'

o The external consultants (or the package/ ERP expens) should participate in the

vend.or. Consultants should also ask questions that the vendors are trying to

avoid and the users are unaware of. This is the best way to present the real

picture to the users and will also prwmt the vendors from making false claims'

Role of the Vendor

. First arrd foremost, the vendor should supply the product and its documentation

as soon as the contract is signed'

. The vendor is responsible to fix the errors which are found during the

implementation process. so it becomes necessary, that the vendor should have a

liaison officer who should constantly interact with the implementation team'

. The vendor also has to provide the initial training to the company's key users and

also to the people who are involved in the inplemmtation Process.

. The vendors training should explain how the package works, what are major

components, how the data and information flows across the system, what is

flexible and what is not, what can be configured and what cannot, what can be

customized and what should not, what are the limitations, what are the strengths

and weaknesses and so on-

. The main objective of the vendor training is to show how the system works and

not to show how itis imPlemented'

. The vendor demonstrates the product as it exists and highlights what are the

possible oPtions available'

. The trainees should use these training sessions to question the vendor on all

aspects of the sYstem.

. The vendor gives the project support function and also takes care of the quality

control factor with respect to how the product is implemented.

106

e The vendors participate in all the phases of an implementation in which he gives

advices, answers to technical questions about the product and technology.

. In case, there is gap between the package and the actual business process then itis the job of a vendor to customize(alter to suit the company's purpose) the

product and make necessary modifications.

. It is the vendor who understands the finer details of the product and can make

valuable suggestions and improvements that could improve the performance of

the system

53 CONSULTANTS

. Business consultants are professional people who specialize in developing

techniques and methodologies to ded with the implementation and with the

various problems that will crop up during the irrplernentation.

. They are experts in the area of the administatiorl management and control

activities.

. They have experience of implementation and various methods that ensures

successfu I implementation.

. They will be good at all phases of the implementation lifecycle - from package

evaluation to end-user training.

. The only limitation with consultant is they are very er<pensive.

. The consultants have to make the ERP implementation for an organization as

their own business.

. They have to make a plan to carry the activities in the right direction during

the implementation process.

. Since they are expensive the company should formulate a plan regarding best

optimum utilization of the money spent on consultants.

Role of Consultants

. The consultants are involved in the implementatlon process of the organization.

101

They consultant should guarantee ihe success of the project and should be able to

show the results snch as reduction in cycle time, increased response time,

improved productivity, etc to the satisfaction of the comPany management.

They are responsible for the administration of all the phases of the

implementation so that the required activities occur at the scheduled time and at

the desired level of quality with effective participation with all those who must

participate. :

The consultants have to transform their approaches and methodologies into

detailed work plans. The methodology will have to be converted into tasks and

should be allocated to the right people. The time schedule for each phase and

each task has to be determined and the project plan has to be finalized.

They should add value to the project. They provide knowledge about the

packages and the implementation process, which gives the employees the

practical experience.

They will know what will work and what will not. Thus by eliminating the trial-

and-error method of irnplementation, and by doing it right the first time, the

consultants help in saving huge amounts of money, time and effort.

They should strive to improve the company's business Processes. Refining the

company's processes can optintize the performiulce of the system and maximize

future user satisfaction.

They should present the real picture to the users. They should ask questions that

the vendors are trying to avoid and &e users are unaware of.

The consultants are also responsible for analyzing and clearly addressing the

customization needs. It is the duty of the consultants to present the advantages

and drawbacks of each area and reach a good decision.

Maintaining technical documentation of the project is also the duty of the

consultant.

The consultant will leave once the project is complete but the knowledge of the

project must stay within the organization. So, the consuitant should crate a

r08

knowledge base and should train enough people so that the work they havestarted is continued.

5.4 END USERS

. End users are the people who use the ERp system once it has been developed.

' They are the people who will be doing the functions, which are being automatedby the ERP system.

' The fear among the employees of unemployment will be taken out with thetraining sections.

' The end user should be given the training as how to use the various functionsthat are automated in +Jre s/w.

r Thr€ erd users are provided with the necessary skills set and more opporfunities

to work in a challenging environment using the modem technologies.

' They also analyze and provide the suggestion where customization needs to takeplace.

. They should be able to balance their loyalty to the client and the project.

' They should have a clear-cut context and scope of the work so that they canprovide the management with the decision that is to be taken for tleimplementation process.

7. CONTRACTS WITH VENDORS, CONSULTANTS AND EMPLOYEES

' ConfoacLs are very important in an ERP implementation project- before, duringand after implementation.

. Contract is defined as an agreement between two or more people to dosomething, formally setforth in writing and enforccable by iaw.

109

. The company should sign a contract with the package vendor, the hardw'are and

peripheral vendors, the networking people, the consultants, the employees who

are being trained in ERP package implementation (not the end users) or the

employees who are part of the implementation team.

7.1 CONTRACT WITH PACKAGE VENDOR

. Most software vmdors w'ill have standard contracts, drafted by their legal

department. The contracting company should go through the contact and if they

find the terms and conditions agreeable, should sign the contract.

. In realiry, the contract signing process is not that much smooth. Many times, the

lavqrers from both sides may have to sit together and check out the differences.

. It is to be remembered that the relationship between the vendor anci the

contracting company is not a one time affair.

. The vendor should be made partner in the company's future plans.

. The vendor will be upgrading their product as advances are made in technology,

by adding new modules and features

. The contracting company, being an existing customer, should get benefit of these

updates. The contracting company should include all these things in their

contract.

. The major points that should be in the contract with the package vendor are:

1. Value of the software and conditions of payment

2. List of deliverables (software, documents, etc.)

3. Mode of delivery and installation help

4. Copyright and ownership issues

5. Software license

6. Third-party software compatibility, integration or interfacing and

integration support

7. Operating system

110

8. Hardware/ liabiliry

9. Conditions and concessions for acquiring complementary modules

10. Cost of increasing the number of end-users

11. Cost of implementation training

12. Cost of end-user training

13. Annual maintenance fee

14. Warranty or guarantee terms

15. Terms and conditions for the receipt of new versions, upgrades...

15. Details of technical support-on-site, telephonic and so on

17. Ter:grs and conditions for customization

18. The profile of the vendors team who will be assisting the company

in inplementation

19. Other specific responsibilities assigned to thevmdor

20. Cancellation of license

7.2 CONTRACT WITH CONSULTANTS

. The objective of the compaly is to make the ERP package work successfully as

documented.

. Consultants are another group of people in the ERp implementation project.

. The comPany erpects from the consultants is to make the project success by

eruuring that the implementation will be completed in time and avoid costs

overrun and the user haining will be done to everybody's satisfaction.

. The following are some of the points that should be included in the contract with

the consultants:

1. Profile of the consultant's team with resume of each merrber

2. Consulting fee and payment conditions

3. The time schedule and the implemurtation budget

4. The projected improvements in quantifiable terrrs and the time required for

showing the results

111

5. Implementation methodolo gy

5. Terms and conditions of knowledge transfer and employee training

7. Ijst of deliverables (reports, manuals, knowledge bases, etc.)

8- Other specific aciivities the consultants are supposed to do

9. Reporting mechanism to the company management

10. Project monitoring and status reporting systems

7.3 CONTRACT WITH EMPLOYEES

" An employee who have undergone ERP training will have increased market

value and would be able to find jobs in other companies that are willing to pay

more as the employee is already qualified and experienced.

. In order to avoid such situation, the company should ask the employees to sign a

contract before they are put on the implementation team and given training.

. The main clause of the contract with the employee should be that they should not

put the company in a position where the smooth running of the ERP system is

interrupted.

. The contract should make it mandatorv for employees who leave the company for

better opportunities that they should give advance notice and should train

another person to a level where he can handle the duties of the person leaving.

. The contract can also stipulate that no employee can leave the company in the

middle of the implementation project, whether it be his first or fifth,

. If the company can retain the employees by other means like offering attractive

salaries, stock options, challenging and comfortable work environment, etc., then

adopting such a strategy is a much better way than enforcing a contract.

8. pnoIECT MANAGEMENT & MONITORING

ERP Project Management Is The Key To Successful Implementation

. ERP systems have fundamentally changed the work of IT organizations.

112

The sheer size and complexity of ERp implementations makes managing these

projects dfficult. There are really two basic sides to ERp management - people

and Technology.

An ERP package touches the entire organization and can affect nearly every

employee.

It's also dfficult to get a clear vision of the technological portion of the

implementation because of the vast combination of hardware and software

involved.

8.1 ERP IMPLEMENTATION PROIECT

An ERP implementation project is complex in nature, involves a lot of people,

requires the coordinated effort of a number of groups, involves a lot of money

and has a long cono.pletion period (typically 10 - 1g months).

' To successfully implement an ERP systerr is a very difficult task and requires

huge efforts from all the stakeholders backed by efficient project management

and monitoring.

. The major problein areas for the ERp implementation project are:

1. Employee resistance and non_cooperation

2. Project size

3. Employee tumover

4. Risk managemmt

5. Unrealistic deadlines

6. Inadequate funding and resources

7 . Or gantzatronal po litics

8. Organizational culfure

9. Scope creep

10. Unexpected gaps

I 13

8.2 ERP PROJECT MANAGER

. The one person who shoulders the maximum responsibility in an ERP

implementation project is the project manager.

. 'Ihe single most decisive element of ERP success or failure is the knowledge,

skills, abilities, and experience of the project manager.

. The project manager is the key decision-maker in the ERP inplementation.

. An ERP project manager must understand both the business and the technology.

. The project manager must cope with thousands of parts.

. Whether implementing one module or multiple modules, he must ensure

consistency and full integration across the various subprojects, which is an

enormous effort.

. An ERP project manager must understand the impact of the ERP implementation

on the business, and work with business managers to ensure a smooth transition

from the "as is" to the "to be" business operating environment.

. A project manager must be flexible enough to roll with the changes as the project

progresses, and not lose it when unpleasant surprises pop up as they always do

during ERP implementations.

. They must be able to work with nearly every individual in the organizatioru from

the most technical IT staff or plant engineer, to the mailroom and building

maintenance staff.

. They must also possess the ability to learn extremely fast, because they will need

to understand business issues in areas of the organization with which they are

unlarrriliar.

. An ERF project manager must also be highly disciplined. They must be able to

clearly envision the project end game, and then hold the enfue organization to the

road that leads to that successfui end. This mean-s bringing other team members

back on track when deviations occur or distractions arise.

114

' They must also be willing to make tough decisions, and understand that those

decisions will upset some and please others. The project manager must be capable

of making defmding and standing by every decision.

. Qualities of project manager:

1. Team player

2. Should recognize individuals and their efforts

3. Abilify to inspire trust and commurricate the vision

4. Excellmt technical expertise

5. Computer skills

5- Good communication skills

7. Leadership qualities

8. Positive attitude

9. Capability to anticipate the probleurs and resolve them

10. Good listener

11. Leads by example

12. Excellent organizational knowledge

13. Ready to accept blame for his mistakes

14. should trust his subordinates and delegate work effectively

8.3 PROIECT MANAGEMENT

. Project management is key to a succesfirl implementation.

. Project management processes and tools are designed to

(1) keep the implementation on schedule,

(2) manage project costs,

(3) m-arrage the project vendors,

(a) help the company's avoid problems and ensure a successful

implementation or upgrade of enterprise resource planning

applications.

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Inadequate project management has played a major role in fuiled

implementations. A qualified, dedicated project manager is rule number one in all

ERP implementations

to a broad of activities in order to meet the requirements of a particular

project. (PMBOK - Project Management Body of Knowledge).

PMBOK identifies nine knowledge areas on which project m,rnagement is based.

The nine knowledge areas are:

1. Project Integration Management

1.1 Projoct Pli,n nev€fopment

1.2 Project trlan Execuiion

1.3 {n{Fgreted Chang* Conlrol

2. Project Scope Management

2"1 [nitieiion

2.2Seope Planning

2.3 ft:srre Dafailiriorr

2.4 Seopo Verillcation

2,5 6cope Clr*nge Conlrol

3. Project Time Management

3 1 ActiYity De"finition

3.2 Activity Sequerrcing

3 3 Activily Duraiion Estimating

3 ",t $eheduls D ev+loprzen t

3 5 Sched$!e Control

Project Cost Management

ii6

4.''l Ressurce fl fanoin g

4,2Co$t Estlrnatln*

4.3Cost Budgeting

4.4 Cosl 0ontro{

5. Proiect Quality Management

5-1 QudiEy Planning

5-2 Qudity Asruranco

5.3qudity Conho!

5. Project Human Resource Management

6. 1 Grga*isatimal Plwrning

6.2 Sta$l Acqutriton

8.3Toam Derreloprnent

7. Project Communications Management

?-t Comrnunbaliona planning

72 hilannaim Dlstrlbuttoft

7.3 Performence Reporfl ng

7.4 Adrn[nistrslirn

8. Project Risk Management

S.'t Rislr I dentificatio-B

8J Qu*ntit*riw Riek Anatysls

8.3 Risk Bsspoilaa Plannirrg

8-4 Risk M+nitufinE and CmtroE

9. Proiect Procurement Management

n7

9- j Procurerrr+nt Planning

9"? Solicttation Plannlng

9 3 Sdicitatian

9.4 Source Seleotion

0.f) Cofl tralct Atlrni nislrsti oo

Benefits

Organizations that implements the PMBOK methodology can expect the following

benefits:

. Improved productivity due to using a standard methodology.

. Increased project profitability due to improved project resources planning and

control.

. Reduced resources applied in non-value added projects.

. Standardize practices across departments.

. Standardized system across companies and industries.

. Its process-oriented methodology states the knowledge needed to manage the

lifecycle of any project, program and porffolio throughout their processes.

8.4 PROJECT MONITORTNG

. One of the main roles of the members of the executive committee is project

monitoring -that is to check and verify that the work that is being done is

satisfactory and that the momentum, morale and enthusiasm of the work team

who are performing the tasks is maintained.

. The key players in the project tracking and monitoring are the project

management team and the executive cornmittee.

. Before implementation starts the consultants and the company representatives

will sit together and prepare a work plan or project plan.

. The work plan contains numerous activities, the man-hours required to complete

them and the resources need perform the tasks.

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7

The work plan or the project plan forms the basis for project tracking andmonitoring.

All the parties involved-the executive committee, the vendor, the consultantsand the in-house team-should be in agreement with the contents of the plan.

The adherence to the plan, and constant monitoring and taking appropriatecotrective actions before the project gets out of control will ensure the success ofthe project.

' The frequency of monitoring by the executive committee depends on thesituation-

' If the comPany has really assigned its best personnel to do the job, then there willbe a natural monitoring of the project's daily activities.

The company professional assigrad to serve as the project owner or sponsor is inan ideal position to evaluate how things are going.

since the ERP implementation project runs into months, it is quite adequate thatthe executive committee meets once in a week or once in two weeks.

Another way is to setup milestones in the project plan and to have a meetingwhen the milestone,s planning completion date is over.

But there are no hard and fast rules regarding how frequmtly the executivecommittee should meet.

' During the final stages of the projecf when the system is being tested the

to discuss the various issues that

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I

. Since these meetings will be of a managerial nature, the project management team

should prepare a presentation that describes the sifuation at a level of detail

appropriate to the audience.

. It is a good idea that the material used in the presentation should also sewe to

document in the status of the project till that date.

. This is important because, in order to track the progress at fugue meetings, it may

become necessary to recall the issues presented in a previous meeting, so as to

explain why the evolution of the work has taken a particular note.

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PANIMALAR ENGINEERING COLLEGEDEPT. OF M.C.A

MC9285 ENTERPRISE RESOURCE PLANNING

PART - A

1-Define ERP.4nterprise Resource pranning (ERp) covers the techniques andconcepts en'.ploye.d for the integrated management of businesses as awhole' from the viewpointof the effec ve of manafementresources, to improvethe

efficienry of an enterprise2.What is an Enterprise?An enterprise is a group of people with a common goar, which has certainresources at its disposal to acfueve that.goal. I4trhen used gJnericaily, an enterprise isdefined as the aggregate of all functional elements pfrticipating in a brisinessprocess improvement action, regardless of the organizatiJnal structurehousing those functional elemenls. It is a comprete business consistingof functions, divisions or other c rmponents used to accomplish specificobjectives and defined goals.3. What are the main misconceptions about ERp?

'First i's that ERP is a contputer system.. Even though computers and IT are integralparts of an ER-P system,_ ERP is primarili, an-enterpiise-,ar.ide system, *friof",encompasses corpotate mission, objectives, attitudes, beliefs, valuo, op"rutir,g style anapeople who make the organization.' second is ERP * f:1

T11fficturing organizations alone. This assumption is basicallydue to the way in which ERP was hlstorically developed from the methods of MaterialRequirements Planning (MRp)and Manufacturing Re^source planning

Orfnf Ui*f.ri.f,are relevant to manufacturing organizations. MRP became the fundamentalconcept in 1970s. At this stage BoM (Bill of materials) was the pr""uiii"gtrend. It further got unfolded as ERp II and now it has resurted in ERp

4. What are ERP packages?ER" packages are_ integiated (covering all busof tware packages that support the ERp cor,.cipts, ERpto model and automate many of the basic processes of u .o-pshop floor, with the goal of integrating information across the companyand eliminating comprex, expensive hr-,k, b"t*een computer systems thath'ere never meant to each other

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5. Who are the main players in the ERP market?

sAP AG, Peoplesoft, oracle, Baan. JD Edwards, QAD, Ramco, IFS, DataWorks etc

5. when do the ERP system's set of generic Processesp ro duce dram atic imProvements?

Unp roftware is a mirror image of the maj or business processesof an organization, such as custorner order fulfillment and manufacturing-

Its success depends upoll reach - a circumscribed ERP system isn'tmuch better than the legacy system it replaces. ERP system's set ofgeneric processes produce the dramatic improvements they are capable of, only

when used to connect parts of an organization and integrate its various plocesses

seamlessly.7. What are the reasons for the explosive growth of the ERP market?

(i)They enable improved business performance by achieving: cycle'time reduction,

increased business agilrty, inventory reduction, order fulfillment improvement etc'

(ii) They support business growth requirements'(iii)ERP systems provide flexible integrated, real time decision suPPort

inf pu"t "gut can now be afforded by even small and medium sized

businesses and offers increased functionality at a reasonable cost.

(iv) They help companies in supporting new products and new customers by meeting

their global requirements, including multiple languages and currencie'

8. What are the direct benefits of ERP systems?

Business lntegration, Flexibility, Better analysis and planning capabilities, tlse of latest

technology.

9. Why is it said that ERP systems are flexible?

Different languages, accounting standards can be covered in one system, and functions

that comprehensively manage multiple locations of a company can be packagedand can be implemented automatically. To coPe withc o m p a n y globalization and system unification, this flexibility is essential

10. What is cycle time?

Cycle time is the time between receipt of the order and delivery of the product

11. What are the factors that are critical for the success of the ERP implementation?

Selection of the right package, Commitment of top management, Participation and

dedication of the system's future users, Backing, support and cooperation of the IS/ITpersonnel, Development of interfaces with current operational systems and with those

t22

under development, Effort of consurtants, who have respect for the company,sknow-how- and work cultule, spirit and collaboration on the part of all

12. How do conventionar apprication packages and ERp packages differ?

(i) First, ERP packages cannot have only individual business functions suchas accounts and inve,tory, but arso the entire range of mainbusiness functions necessary for thecompany's operations(ii) second, ERP packages are targeted at everything fromsmall businesses to the,largest organizations, and that they can be compJsed of ahighly flexible decentralized database and an information system cluster linkedby a network(iii) Third, is global adaptation, represented by ERP packages' multilingual and multi-currency capacity

13. I4rhat are +.he li:r.itations of ER.p?

(i) Managers cannot generate custom reports or queries without herpfrom a Programmer and this inhi:its then from oitaining informationquickly, so that they can act on it for compefitive advantages.

(ii) ERP systems provide current status onry, such as openorders' Managers often need to look past the current status/ to find trendsand patterns that aid better decision_makingl(iii) The data in the ERP application is noi integrated with other enterpriser division

systems and does not include external intetligence

u.rffinutis BpR?BPR or Business Process Reengineering is the fundamental rethinking and radicalredesign of business Processes to acl ieve dramatic improvements in critical,contemporary measures of performance such as cost, quality, service and speed15. Vf,hat is MIS?MIS or Management Information System is a computer based system that optim izesthe collection, coration, transfer and presentation ofinformation throughout an organization through an integratedstructure of databases and information flow.16. What are the main characteristics of Ir4IS?

(i) tvtts supPorts the data processing functions of transaction handling and recordkeeping(ii) MIS uses an integrated database and supports a variety of(iii) IvfIS provides operational, tacticai anI ev els of th e organizationwithtimelyinformation

functional areasd strategic

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(i") MISneeds of

ISan

flexible and can be adapted to changingorganization

17. What is DSS?DSS or Decision Support System is an information and planning system thatprovi des the ability to interrogate computers on an ad-hoc basis,analyze information and predict the impact of decisions before they aremade. A DSS is a cohesive and integrated set programs that share data andinformation.

18. What is EIS?

EIS or Executive Information System is an information systemthat consolidates and summaries the ongoing transactions within anorganization. It should provide management with all the information it requires, atall times, from internal as well as external sources. A successful EIS is easy tous7 flexible and customizable

/,Whatis OLAP?JOLAP or On-Line Analytical Processirg is a decision support software that allows

the user to quickly analyze information that has been summarizedinto multidimensional views and hierarchies, Thesemultidirm.ensional views are supported by multidimensional databasetechnology and provide the technicai basis for the calculations and analysis required byBusiness Intelligence application s.

2\/hatis a data warehouse?

A data warehouse is a database designed to support decision-making in anorganization. It is updated batch-wise and is structured for fast online queries andsummaries for managers. Data warehouses can contain sromrous amounts of data.

ztfrnaus data mining?Vata mining is the process of

comprehensible knowledgedecisioru.

identifying valid, novel, potentially useful and ultimatelyfrom databases that is used to make crucial busines

22. What is supply chain?A supply chain is a network of facilities and dishibution options, that performs thefunctions of procurement of materials, transformation of these materials intointermedi.ate an finished products, and the distribution of these finished products tocustomss

23. What is SCM?sCM or supply Chain Management is a generic term that encompasses thecoordination of order generation, order taking and offerf u I f i I lm. en t/ d i s tr i bu ti on of producb, services or infomution

t24

7

24. What are the different phases of ERp implementation?

(i) P ckageG"p Confi phase (iv)(viii) user tr m training

25. VWrat is gap analysis?Gup anarysis is the most crucial phase f or the successo f th e E R p imprementation. It fu al".pro."rr ail-"gr, *r,ich companies create amodel of where they are now, and in which dir""tioi tn"fwant to head in the future.The tnick is to design a model which anticipates ui-ra'"orr"rs any functionargaps. It is true that even the fst ERp package, c^ustom tailorea to a company,s needs,meets only 80%of the compaay,s functional re{uirements.

,^9 _1[a, are +.he g-*eral four phases cf an ERp implementation

3"#-*#t-tding the problem (ii) Defining

"olr'tio., liriy c"ni.g down to work (iv)

27. Give the hidden costs in ERp implementation?Training, Integration and testing, D^ata conversion, Data analysis, ERp consurtant

8. StaE the rrain members of animplemertation team.(i) Executive committee (ii) project management team (iii) work team(irz) Technical suppo rt team (v j A d minislati"

" r"ppo)*--"uoi

^ "

D.(i) ERPshouldPossess?

[1o,"*"*oo handrins ,,"0,"?,"SfliilHTif arise durins the(iii) Good people skills and excellent training skills(iv) Good leadership skills

30. Who are vendors and give their role?

Vendors are people who have invested huge amounts of time and effort inresearch- and developmentto create packaged 1r"nr; sotuioos. First and foremost, tt*vendor should supply fl're prroduct and ittocumerrtation as soon as tre contract is signed. Nextthe vendor should impart training to its clients

31. Who are business consultants and specify their role?

Business consultants aredeveloping techniques a-r.C

Ptofessionals who specialr:.2e inmethodologies for dealin; *i,h the

125

implementation and vvith the various ptoblems that will clop uP during the

implementation.Consultantsshouldguaranteethesuccessoftheprojectandshould be able to satisfy the company management with its needs' They should

add value to the Project.

32.StateSomek"ypointsofthecontractwiththevendor,whichshould be addressed-

value of the software and conditions of payment, List- of .deliverables

(softwarq

documents etc.), Cost of implementation training, Cost of end-user training' Annual

maintenance fee, Warranty or guarantee terms

33. state some key points of the contract with the consultant, which should be

addrcssed.profile of the consultants' team with the resume of each member, Consulting fee and

p"y*"".details,Imp,Timescheduleandtheimplementationbudget, Terms and transfer and employee training, List of

deliJerables (rePorb, ases etc)'

Project monitoring and status reporting systems

34. Why is the pre-evaluation screening required?

There are hund,reds of vendori ciaiming a solution that is ideal for

youlComPany.Analyzingthesepackages,trrougrratime<onsumingProcesswouldgive a viable solution needed'

35. Define action Plan

Adocumentusedtoguidetheimplementationofbusinessprocessimprovements'Itcontainstackassignments'schedules',"roor."allocations,assignmentsandevaluabioncriteria'

35. What is an activitY?A *u*"d process, function or task that occurs over time and has recognizable results'

Activities use up assigned resources to produce products and services'

Activities combine io formlosiness processes.18. Define BOA.BOA or BilI of Activity is

the listing of activities involved in-the production of acertain output, together

with thJ number of times each component activity is perfomred.

37. What is BOM?

BOM or Bill of Materials is a list of direct materials required to manufacture a given

product or Provide a given service

38. Who are BPR Professionals?

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BPR prof essionars are individuars necess ary f.or a Businessessential to been idenffied as being

data and strategic planners,

(FAC) I ActivitY Coordinators

39. Definebusiness.Busin as the activities of individuals orinvolv ducing and distributing the goods andsatisfy

tt0.I&ratare the lhree reources of business?Land, labour and capital

ce, Sales &plarrning

42. State the finance modules in most ERp systelns.Financial accounting, Investment management, Controlting, Treasury, Enterprisecontrolling

43. Write about financial accounting.It provides comPany wide control and integration of financial information that isessential to strategic decision making. It gives the ability to centralrytrack financial accounting data within an international framework of multiplecompanies, languagm, currencies and charts of accounts.

44. What is General ledger?General ledger is essential both to the financial accounting system and tostrategic decision making. It provides document parking, postirrg,-reporting and anintegrated financial carendar for automahng periodic acuvities.

45. What is asset accounting and legal consolidation?Asset acccunting manager ttre company's fixed assets, whereaslegal consolidation permitJ direct data transfer, from individual statementsinto the consolidated report.

46, What is cost Cerrfue accou,ntingfCcst center accounting anaryses where overheads occu_iwithin the organization Costs are assigned to the sub-areag ci theorganization where lirey are originated.

groups that areservices needed to

distribution

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47.What is EIS?

EIS or Executive Information System is an information systemthat consolidates and summaries the ongoing transactions within an

organization. It should provide management with all the information it requires, at

a[1imes, from internal as well as external sources. A successful EIS is easy to

use, flexible and customizable.

48. State some major subsystems of manu{acturing module'

Material anti capacity plaflning, shop floor contol Quality management, [T / Repetitive

manuf acturing, Cost mana gemenf Tooling

49. What are the various subsystems in HR module?persorurel management, otganizational management, Payroll accounting, Time

managemenf Personnel management

50. what are the yarious subsystems of a plant maintenance module?

Prevenbive mainterrance control, Equipment tracking, Component trackinp Plant

maintenance calibration tracking, Plant maintenance warranty daims tracking

51. what are the main modules of Materials Managementmodule?

Pre-purchasing activities, IfurchasinpVendoi evaluation, Inventory management

Invoice verification and material inspection

52. State the sub activities in pre-purchasing'Requirements calculation, Requisition for quotations, Vendor ratings

53. Who are the main players in the ERP market?

sAP AG, PeopleSoft, oracle, Baan, ]D Edwards, QAD, Ramco, [FS, DataWorksetc

54. Whatis SAP?

sAP means systems Applications and Products in Data Processing

55 . State the versions of SAP's ERP package..Mainframe version (SAP R/2) and Client/server version

56. What are the three different Iayers of SAP R/3?

Database layer, Application layer, Presentation layer

57 Expand the term'SAP'. What are SAP R/2 and SAP R/3?

128

was

rvermanvmorecompanies than R/2as, o.#*TH,;::iHilrIT sorution is avairabre to

58' what is impact of free open source software in ERp implementation?

Traditionally, ERp powerbrokers such asmarket with expensive proprietary softwmanufacturing fums to fall back on_ Insource RP software companies, witheme.rged with hopes of changing the ERapplication must:

. be distributed to anyone without restrictions.o make the source code available to users.. allow a modified version of

59. I4lhat are the reasons for explosive growth of ERp market?. To Support business growth requirements' To provide flexibre{Capable of being bent or flexed; pliable}, integrated,real_time decision support. To eliminate limitation in legacy systems' To take advantage of thg untapped mid-market (medium sizeorganizations)

60. List the ERP implement strategies.o Ptocess preparationo Configurationo Customizationo Extensionso Data migration

51' ERP is a catalyst of fundamentar changes in organization - Comment.

ERP causes fundamental changes in organizations because it requires businessmodels and process"iJgli redesigneduoa rt **tir,"a. This is required forfirms to have successful ERp.62. tl//hatis the significance of IT in ERp?

To reduce the amount of time taken to acquire and use information, to learn tomake decisions, to initiate action , to deproy'roorr.""*Jto r,norate.

63 . State about the three layers of SAp I{/3,

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. Database layer - resides on central severs or urainf rame

host comPutersj Appli*tion layer - holds the processing loglc of the system, preparing and formatting

data for individual offices or departments. Presentation layer - handlei all the tasks related to the presentation ofdata'including user interfaces that enable easy access to complex

applications and data

64. What are the general R/3 modules?.Financial accounting. Treasury. Controlling. Enterprise controlling

o Investmentmanagementr Production Planningr Materials managemento Plant maintenance and service management

o Quality management. Project system. Sales and distributiono Humanresourrcesmanagernst

65 Write about SAP's business engineer?

Business engineer d,elivers a complete toolkit that greatly facilitatesthe implemer*ation of R/3 and the engineering of your business Processes. It ensures

quick and high quality customjzation of R/366 . State some areas of business management solutions, provided by Peoplesoft'

. HR management, Aaounting and confrol Treasury managemort, Performance

management, Project *u.ug"*"nt, Sales and logistics, Materials management, Supply

chain planning, Service revenue maJragement, Procurement

67. What are four strategies incorporated by PeopleSoft implementation toolkit?

'GeograPhicai.Departmental. Core and support Process.No phasing

68. lVlrat is tJaanDEMSE?BAAN - Dynamic Enterprise Modeling Strategy Executionll. what are the ERP

modules of Baan ERP?.Manufacturing module.Finance module

"Project module

r30

ffi *_;&; -

.Distibutiqrmodule

59. Whatis the,,THREE I,, philosophy?lntegrity, Innovation, Initiative

,O: "y":g*e

categories of Oracle software applications..Oracle Finandials. Oracle Human Resources

'Oracle Projects.Oracle Manufacfuring.Oracle Supply Chain.Oracle FrontOffice

!l_Yl"t is the flagship product of eAD?MFG/PRO

72. WhatisSSA?SSA means System Software Associates

73. What are the six key goals of SSA?. Best client satisfaction

i**"worldwide rofessionars

T4t//hat is lead time?The elapsed time between placing an order and receiving it is known as the lead time.

75. Whatis Extended ERp?Extended ERp is a set of enterprise modeling toolsfor effective implementation. Ia r_r_1 concept-promoted by Baan forrapid, flexible and quality implerrentatiorofmpsysftil,s: r '

of the operation to efficiently produce highly cusbmized

77'who is the leadcr in the ERp market and what are its products?

SAP AG is the market leader "it i^t: ERp products are SAp R/2f o r th e mainframe environment and sAp R/3 for *,"

"ri*y"erver environment.

131

78 . What are quality - related costs?

Overhead costs, Activity based costs, Product cost, Costs of control, Costs of failureof control, Tangible costs, Intangible costs

79. Statehow Client\Server technology is used in commercial ERP packages.

To deliver self-service and e-commerce capabilities

80 .Brief about the role of System control Interfaces in an ERP packageSCI describes the interface of interfaces to a system or subsystem. The purpose of theSCI is to communicate all possible inputs to and all potential outputs from a systemfor some potential or actual user of the system.

81. What does BIS allow?Customer service, Manufacturing and purchase, Sales

82. What are the general traditional business processes?

Fulfillment, Payment, Procuremert Replarislunmt

83. State the steps in retail fulfillment process..Initiate order. Verify idenlQ' or paymertt.Anange drop shipment

'Acknowledge order. Track order stafus

84. State the steps in corporate procurement Process..lnitiate requisition.Verify item data. Tralsmit purchase order. Confirm receipt. Track purchase status

85. State the steps in inventory replenishment process..Item reorder limit reached.Purchase order approved.Item shipped. Item received.Payment received

132