Erp Enterprise Resource Planning

What does a company’s strategy consist of ?
Company strategies concern,
• How to grow the business
• How to satisfy customers
• How to out compete rivals
• How to respond to changing in market conditions
• How to manage each functional piece of the business and develop
needed organizational capabilities
• How to achieve strategic and financial objectives

Introduction
Manufacturing Organizations are complex `Systems'
where the interactions between the various functions
Sales, Distribution, Manufacturing, Materials, Finance,
Human Resources, Maintenance have to be managed
towards a common purpose of delivering the customers
maximum value at the optimum price.
However, since most of these organizations have a
`Functional Structure', each function/department works
towards their own goals and objectives, rather than the
organizational goals.
These are the issues addressed by `Enterprise Resource
Planning' software solutions providing a common,
consistent system to capture data organization wide, with
minimum redundancy.

What is ERP?
ERP integrates the information across functions, and
provides a set of tools for planning and monitoring the
various functions and processes and ensuring progress
towards a common purpose
A business management system that integrates all facets
of the business, including planning, manufacturing, sales,
and marketing.
ERP helps business managers to implement ERP in
business activities such as inventory control, order
tracking, customer service, finance and human resources

MRP – the predecessor to and backbone of
MRP II
And
ERP
a joint effort between J.I. Case, a manufacturer
of tractors and other construction machinery, in
partnership with IBM.
Initial MRP solutions were big,
clumsy and expensive.(1960-1970)

How WIP could be improved by implementation of ERP (Work in
Process )
Without using of any integrated system
using of integrated system

Some Questions
What are the major types of systems in a business? What
role do they play?
How do information systems support the major business
functions?
Why should managers pay attention to business processes?

Major Types of
Systems
• Executive Support Systems (Executive Support Systems (ESSESS))
• Decision Support Systems (Decision Support Systems (DSSDSS))
• Management Information Systems (Management Information Systems (MISMIS))
• Knowledge Work Systems (Knowledge Work Systems (KWSKWS))
• Office SystemsOffice Systems
• Transaction Processing Systems (Transaction Processing Systems (TPSTPS))

Transaction Processing Systems (TPS):Transaction Processing Systems (TPS):
• Basic business systems that serve the operationalBasic business systems that serve the operational
levellevel
• A computerized system that performs and recordsA computerized system that performs and records
the daily routine transactions necessary to thethe daily routine transactions necessary to the
conduct of the businessconduct of the business

Executive Support System (ESS):
Strategic level
Inputs: Aggregate data
Processing: Interactive
Outputs: Projections
Users: Senior managers
Example: 5-year operating plan

Management Information System (MIS):
Management level
Inputs: High volume data
Processing: Simple models
Outputs: Summary reports
Users: Middle managers
Example: Annual budgeting

Decision Support System (DSS):
Management level
Inputs: Low volume data
Processing: Interactive
Outputs: Decision analysis
Users: Professionals, staff
Example: Contract cost analysis

Knowledge Work Systems (KWS):
Knowledge level
Inputs: Design specs
Processing: Modeling
Outputs: Designs, graphics
Users: Technical staff and professionals
Example: Engineering work station

(ESS)(ESS)
(MIS)(MIS)
(TPS)(TPS)
(KWS)(KWS)
With out any Integrated system

Supply
Chain management
6 level of sys.(ESS,MIS,TPS,…) +MRPII
Best Practice :
Comparing your process with similar processes
In higher companies
Enterprise resources planning software
ERP elements

ERP Software Companies
& Marketshares
SAP; 15,6
Peoplesoft;
4,9
Oracle ; 4,8
Baan; 3
CA; 3
JDE; 2,2
SSA; 2,1
GEAC; 2
IBM; 1,8
JBA; 1,7
Others ; 59
Software Market Share
SAP 15.6
Peoplesoft 4.9
Oracle 4.8
Baan 3.0
CA 3.0
JDE 2.2
SSA 2.1
GEAC 2.0
IBM 1.8
JBA 1.7
Others 59.0

Business Functions Potentially Supported by ERP
Financial Human Resources
Operations and
Logistics
Sales and
Marketing
Accounts receivable and
payable
Time accounting Inventory management Order
management
Asset accounting Payroll Materials Requirement
Planning (MRP)
Pricing
Cash forecasting Personnel planning Plant maintenance Sales
management
Cost accounting Travel expenses Production planning Sales planning
Executive information
systems
Project management
Financial consolidation Purchasing
General ledger Quality management
Profitability analysis Shipping
Standard costing Vendor evaluation

Modules Offered by Leading Vendors
Functional
Description
SAP Oracle People Soft JD Eswards
Records sales orders and
scheduled deliveries
,customer information
SD( Sales and Distribution) Marketing Sales Supply
Chain
Supply chain management Order management
Purchasing and raw
materials inventory,
work- in-process.
customer information
MM (Materials
Management
Procurement Supplier Relationship
Management
Inventory Management
Procurement
Production Planning
and scheduling actual
production
PP (production planning ) Manufacturing Manufacturing
Management
Product inspections
,material certifications
,quality control
QM (quality Management) Enterprise Performance
Management
Technical Foundation
Preventive maintenance,
resource management
PM (plant Maintenance) Service Enterprise Service
Automation
Recruiting, hiring
training ,payroll
,benefits
HR (Human Resources Human Resources Human Capital
Management
Workforce Management

Reasons for Implementing ERP-Rating 1(Not Important) to 5(very Important)
Reason United States Sweden
Replace legacy systems 4.06 4.11
Simplify and standardize systems 3.85 3.67
Improve interactions with suppliers & customers 3.55 3.16
Gain strategic advantage 3.46 3.18
Link to global activities 3.17 2.85
Pressure to keep up with competitors 2.99 2.48
Ease of upgrading systems 2.91 2.96
Restructure organization 2.58 2.70

Functional Description SAP Oracle People Soft JD Eswards
Internal management,
cost analysis by cost
center
CO (Controlling) Time and Expense
Management
Fixed-asset purchase
and depreciation
AM (Asset
Management)
Asset Management Enterprise Asset
Management
R&D ,construction,
marketing projects
PS (Asset
Management)
Projects Project Management
Contracts Subcontract
Management Real
Estate Management
Automate system, task –
flow analysis, Prompt
actions
WF (Workflow)
Best practices IS (Industry
Solutions)
Modules Offered by Leading Vendors

Relative ERP Module Use
Module Midwestern ERP Users Swedish ERP Users
Financial and Accounting 91.5% 87.3%
Materials management 89.2 91.8
Production planning 88.5 90.5
Order entry 87.7 92.4
Purchasing 86.9 93.0
Financial control 81.5 82.3
Distribution/logistics 75.4 84.8
Asset management 57.7 63.3
Quality management 44.6 47.5
Personnel/human resources 44.6 57.6
Maintenance 40.8 44.3
R&D management 30.8 34.2

Advantages and Disadvantages of Alternative ERP Development Methods
Method Advantages Disadvantages
Develop in-house Best fit with organizational needs Most difficult to develop
Most expensive
Slowest
In-house system
With vendor supplements
Gain commercial advantages
Combined with organizational fit
Difficult to develop
Expensive
slow
Best-of-breed
Customized vendor system
Theoretically while keeping
Retain flexibility while keeping
Vendor expertise
Difficult to link modules
Slow
Slower
Usually more expensive
Selected vendor modules Less risk
Relatively fast
Least expensive
If expand, long run time and cost higher
Full vendor system Fast
Less expensive
Efficient
Inflexible
Application device provider Least risk
Least cost
Fastest
Least subject to vendor change
At the mercy of ASP provider
No control
Subject to price increases

Expected ERP Project Installation Time Requirements
Installation Time United States Sweden
12 months or less 34% 38%
13 to 24 months 45 49
25 to 36 months 11 8
35 to 48 months 6 4
Over 48 months 2 1

ERP Installation Project Cost Proportions
Installation Cost Proportion
Project
Installation Cost
Proportion in United States
Cost Proportion
in Sweden
Software 30% 24%
Consulting 24 30
Hardware 18 19
Implementation team 14 12
Training 11 14
Other 3 1

A supply chain is characterized by the flow of materials and
information both within and between business entities including
suppliers, manufacturers and customers. The ultimate goal of
supply chain management is to meet customer’s demand more
efficiently. For a manufacturing company, it is to make the right
product, for the right customer, in the right amount, at the right
time.

ERP Implementation And Maintenance
ERP Systems Are Adopted In The Hopes That They Will Improve The
Performance Of An Organization On A Number Of Key Performance
Indicators , Such As Profitability , Efficiency , And Accuracy In
Information System Data And Reports . ERP Vendors Typically
Promise Gains Of 10 To 15 Percent In Revenue , Customer
Satisfaction , And Other Measures Of Value . The Effort Required To
Build These Systems Is Significant . Meta Group found that the
average ERP implementation takes 23 months with total Ownership
cost of $15 million .

Business Intelligence Systems And ERP
Enterprise Resource Planning Systems Offer Powerful Tools To Better Measure
And Control Organizational Operations . Many Organizations Have Found That
This Valuable Tool Can Be Enhanced To Provide Even Greater Value Though The
Addition Of Powerful Business Intelligence Systems . Business Intelligence In
This Context Is Supported By Sorting Data (Data Warehouse And Related
Systems) And Conducting Studies Using This Data To Solve Business Problems
( One Means To Do This Though Data Mining ) . One Of The Most Popular Forms
Of Data Mining In ERP Systems Is Support Of Customer Relationship
Management (CRM). Data Warehouses Are One Of The Most Popular Extensions
To ERP Systems , With Over Two-Thirds Of U.S. Manufacturers Adopting Or
Planning Such Systems ( And Slightly Less Than Two – Thirds of Swedish
Manufacturers doing the same ).
There Has Been Tremendous Progress In Computer Storage Of Data . Many
Applications Are Being Found For This new capacity . one major user of massive
storage capacity is ERP systems, witch have large storage requirements due to
their comprehensive nature .

Data Mining Overview
Data Mining Overview Refers To The Analysis Of The Large Quantities Of Data
Stored In Computers . For Example , Grocery Stores Have Large Amounts Of Data
Generated By Purchases . Bar Coding Has Made Grocery Checkout Very
Convenient . Grocery Stores And Other Retail Stores Are Able To Quickly Process
Purchases , And Use Computers To Accurately Determine Product Prices . These
Same Computers Help The Stores With Inventory Management By
Instantaneously Determining The Quantity Of Items Of Each Product On Hand .
Stores Can Also Apply Computer Technology To Contact Their Vendors So That
They Do Not Run Out Of Items . Computers Allow The Store’s Accounting System
To More Accurately Measure Costs And Determine The Profit That Store
Stockholders Are Concerned About . All Of This Information Is Available Based
Upon The Bar Coding Information Attached To Each Product . The Benefits Of
Bar Coding Encompass For More Than Faster Checkout Service . The Entire
Business Management Process Can Use The Information Generated .

ERP And Supply Chains
Supply Chain Are Collections Of Organizations That Work Together To
Provide Raw Materials That Are Converted Into Products And Delivered
To Retail Outlets Where Customers Can Obtain Them . In The Past ,
Monopolies Would Sometimes Seek Vertical Integration So That They
Could Control The Entire Supply Chain ( Standard Oil Went A Long Way
Toward Total Vertical Integration ; Steel Companies Also Attained At
Lest Something Approaching It ) . The Dutch East India Companies Are
An Early Example Of A Global Supply Chain . Military Logistics Systems
Are The Epitome Of Supply Chain Is Control And Efficiency . Today‘S
Companies Gain Efficiency Through A Higher Degree Of Specialization .
This Appears In Various Forms , Including Outsourcing . The Idea
Behind Outsourcing Is That There Are Specialists Throughout The
Supply Chain Who Can Do A Better Job Of The Specific Function They
Perform .

In
cr
ea
se
d
In
cr
ea
se
d
D
ec
re
as
ed
In
In
cr
ea
se
d
In
cr
ea
se
d

•The growing information needs of an enterprise make it imperative
to improve or replace old systems.
•Especially under the present business environment, where the
globalization has been initiated, full convertibility is coined.
•Infrastructure Projects are nearing completion, and it is expected
that the whole business system will undergo a major shift.
Conclusion
•Implementation of ERP solutions is one of the largest
drivers of growth in the consultancy business.
•The introduction of such a large and complex software like
ERP, enables an organization to integrate their
manufacturing, finance and marketing operations at all
levels, is in itself a challenge, since it calls for technical and
functional skills and a change in user mindsets.

Enterprise Resource
Planning
(ERP)

Presentation - Flow
ERP – General Concepts
ERP based applications - Options
Building ERP solutions using Internal Sources
Adapting Tailor-made ERP Solutions
Developing ERP applications using External Sources





Brainstorming on the Options

ERP – General Concepts
 What is ERP?
 The Current Scenario
 Why ERP?
 Definition
 Evolution
 Expectations
 BPR & ERP
 BPR – The Steps
EnterpriseResourcePlanning

What is ERP?
facilitates company-wide integrated
information systems, covering all
functional areas
performs core Corporate activities and
increases customer service augmenting
Corporate Image
ERP is a solution, which

The Current Scenario
Islands of Information
Difficult to get timely & accurate information
Heterogeneous Hardware & Software
platforms & practices
Poor connectivity between different
organizational locations
Sticking with obsolete technology
Resist to change
Lack of proven man-power to develop
integrated software

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

ERP - Definition
“Software solution that addresses the
Enterprise needs, taking a process view of
the overall organization to meet the goals,
by tightly integrating all functions and
under a common software platform”

Evolution of ERP
1960’s - Systems Just for Inventory Control
1970’s - MRP – Material Requirement Planning
(Inventory with material planning & procurement)
1980’s - MRP II – Manufacturing Resources Planning
(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)
2000 onwards – ERP II – Collaborative Commerce
(Extending ERP to external business entities)

ERP – Expectations
Integrating all the functions
Integrating the systems running in all the locations
Transparency of information using a single
data source across the organization
Software must be responsive
Modular
Flexible
Easy to add functionalities
Provide growth path

BPR & ERP
Just automating the existing business practices
will not help ERP to achieve the anticipated results
because, OO + NT = EOO
Business Process Re-engineering [BPR] brings out the
deficiencies of the existing setup
BPR and ERP will give way to implement new
systems and the long pending improvements in the
existing systems
BPR may be time consuming but the scope can be
restricted & controlled by the Management
BusinessProcessRe-engineering

BPR - Steps
Step 1 Step 2 Step 3
Understand Simplify/Improve Automate
Understand the
existing
systems
associated with
all the
functionalities
Draft & frame the
possibilities & ways
to simplify or
Improve or eliminate
the processes
Implement
with the help
of ERP
BusinessProcessRe-engineering

ERP – Options
OPTION 1 – MAKE [Using Internal resources]
Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of the
in-house IT department
OPTION 2 - BUY
Going for Tailor-made ERP packages available in the market like
SAP, Oracle applications, Baan, PeopleSoft etc.
OPTION 3 – MAKE [using External resources]
Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of a
software solution provider

Building ERP solutions
using
Internal Sources

ERP – Building using Internal
resources – The Facts
 Lack of adequate & qualified manpower
 Not driven with clear focus on expectations,
time & cost
 Poor software project management
 Lack of seriousness with the Management & the
IT Team
 High employee turnover
 Lot of schedule gaps during Project execution
 Normally project life is more
 Frequent change in the scope with the approval
of the Management

Tailor-made ERP solutions
 About this option
 Execution Phases
 ERP product selection phase
 Product selection - Parameters
 Preparation Phase
 ERP product acceptance - Options
 Gap Analysis
 Production Phase
 Implementation Phase
 Post-Implementation Phase
 Pitfalls & Points of Concern
 Critical Success factors
Tailor-madeERPsolutions

About
Generalized off the shelf application s/w packages
Modules based on rich functionalities for all business
functions
User tested with lot of installations
No lead time requirement for software development
Tuned for more users/networks with adequate & in-
built security
Parameterized for flexibility
Can sit on latest hardware & software platforms
Upgradation of functionalities with version control

Execution phases
 ERP product selection
 Preparations
 Production
 Implementation
 Post-Implementation

ERP Product selection Phase
 ERP Team formation for selection
 Appointment of Consultants [if needed]
 Scoping study
 Product selection
 Implementation partners selection
 Hardware/Communication cost estimation

Product Selection - Parameters
 Reputation of the ERP product
 No.of installations in the geographical vicinity
 % of the overall functional availability
 Customization possibilities
 After sales support
 Your investment plan & budget
 Implementation partner’s track record

Technology
Support
Costs
5 Strategic5 Strategic
RequirementRequirement
LevelsLevels
Functionality
Goal:Goal:
To select theTo select the
Most Suitable SoftwareMost Suitable Software
Package SolutionPackage Solution
Vendor
ERP Product selection Criteria

Preparation Phase
 Framing ERP Implementation Strategies
 Formation of Apex & Steering committees
 Functional & IT team formation
 Training on ERP functions & features
 Scope finalization
 GAP analysis
 Action plan to resolve the gaps

ERP product acceptance -
options
1. Adapting directly, all the functions available in
the ERP Product [Applicable for startup companies]
2. Change the way the firm does the business to fit
the product [Compromising]
3. Customize the ERP product to suit the business
Processes. [Customization]

GAP Analysis
This is the process to identity the gaps by mapping
the expectations of the company with the
capabilities of the ERP product
Results of Gap Analysis
Directly Supported
Workaround suggested
Extension required
Change in business process – suggested
Not full supported
Manual – not under the scope of ERP

Production Phase
 Installing the software & hardware
 Tuning the software to meet the
customization needs
 Master & Control data arrival as per
the Product data structures
 Location & people specific roles & rights
allocation for module access & security

Implementation Phase
 Conference Room Pilot [Parallel run]
 Resolving the Parallel run issues
 Training the end users
 Live run

Post-Implementation Phase
 Regular monitoring
 Tuning [hardware/software] for patching
the performance issues
 Maintenance

Pitfalls & Points of concern
 Costly comparing to custom-built options
 Lot of hidden costs
 Chances of cost & time overrun are high
 The Level of customization/Indianization
 Compulsion to pay for redundant modules/features
 Vigorous involvement of all during implementation
 Non-availability of special practices like Customer
Complaint, Logistics
 Linking historical data – offline & painful
 The requirement of Change Management is a must
 Dependency on outsiders is high
 IT department – Poor grip on the Implemented systems

Critical Success Factors
 The firm & optimistic approach of the Management
- on adapting the ERP product driven methodologies
- on customization
- on monetary commitments
 The dedicated Team
 Good Training
 Strict adherence to the Project schedules
 Right technical infra-structure
 Change Management
?

Custom-built
ERP
Solutions
using external resources

Building ERP using Ext.sources
 About this option
 The Principle!
 The Steps
 Why?
 Points of Concern
 Software Vendor selection
 Critical Success factors

About
Here the whole package is designed & built
 by keeping a specific enterprise & its business
Practices in mind
 by incorporating the improvements/additions
 with due integration
 without compromising or changing the current way
of doing the business and
 providing flexibility to accommodate your business
fluctuations
Custom-BuiltERPsolutions

The Principle!
The best as seen elsewhere, need not be the
the best for you.
What is your best is what
can be successfully implemented

The Steps
1. Software vendor selection
2. Detailed study by the vendor
3. Scope & platform finalization
4. Freezing the commercials
5. Development
6. Hardware addition/upgradation
7. Old master/transaction data migration
8. Parallel run with Integration & connectivity check
9. Implementation
10. Maintenance

Why?
 Very economical while comparing the cost of implementing
tailor-made ERP solutions
 Less prone for hidden-cost hits
 The company can opt for its choice of Hardware, Software &
communication platforms based on the skill availability
 The company and the software vendor have the direct
relationship during the project execution. The proximity
would be high & convenient.
 IT department has good control over the Project
 What is required only would be considered under the scope –
No redundancy

Why? - Cont.
 The requisite flavor of E-Biz & work-flow components
can be embraced towards value edition
 The existing practices & applications can be tuned and
linked with the proposed package
 Maintenance & improvements are easy & less costlier.
Even IT team can maintain the setup after getting the
source code

Points of Concern
 Software development vendor selection
 Requirement/scope finalization [high chances of
retaining the islands as it is]
 Less chances of Value addition
 Not time tested
 Chances of Prolonged project duration

The following traits should be considered while selecting the software
vendor for building the ERP application
 Technical expertise
 Domain knowledge
 Adequate manpower
 Project management skills
 Long existence in the field
 Extra skills [e-biz & workflow]
Software Vendor Selection

The Critical Success Factors
• Clear Vision & support of the Management
• Capabilities of the software development vendor
• Scope & Expectations finalization towards
meeting the ERP concepts
• Strict implementation schedules & periodical
monitoring
• The involvement of the IT & functional teams

Key Process
Integration
via ERP
Key Process
Integration
via ERP
Product
Lifecycle
Management
Product
Lifecycle
Management
Supply Chain
Management
Supply Chain
Management
Customer
Management
Customer
Management
Supplier
Collaboration
Supplier
Collaboration
Design
Partners
Design
Partners
Consumers
and Channels
Consumers
and Channels
Beyond ERP

Thank You
http://www.VelocitaWeb.com

Erp Enterprise Resource Planning

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (9)

Similar to Erp Enterprise Resource Planning

Similar to Erp Enterprise Resource Planning (20)

Erp Enterprise Resource Planning