ENTERPRISE

RESOURCE
PLANNING (ERP)
Enterprise resource
planning (ERP)
Enterprise resource planning (ERP) is an
integrated computer-based system used to manage
internal and external resources including tangible
assets, financial resources, materials, and human
resources.
Enterprise resource
planning (ERP)
 It is a software architecture
 purpose is to facilitate the flow of information between all
business functions inside the boundaries of the organization
 manage the connections to outside stakeholders.
 Built on a centralized database and normally utilizing a
common computing platform,
 ERP systems consolidate all business operations into a
uniform and enterprise wide system environment.
 ERP system can either reside on a centralized
server
 distributed across modular hardware and software
units that provide "services" and communicate on
a local area network.
Origin/history
 MRP (Material Requirements Planning

 later manufacturing resource planning) and CIM

(Computer Integrated Manufacturing)

 The ERP was first employed by research and

analysis firm Gartner Group in 1990 
Components
 Transactional Backbone
 Financials
 Distribution
 Human Resources
 Product lifecycle management
 Advanced Applications
 Customer Relationship Management (CRM)
 Supply chain management
 Purchasing
 Manufacturing
 Distribution
 Warehouse Management System
 Management Portal/Dashboard
 Decision Support System

These modules can exist in a complete system or utilized in an ad-hoc fashion

Commercial applications
 Manufacturing  Engineering, bills of material, scheduling,
capacity, workflow management, quality control, cost
management, manufacturing process, manufacturing projects,
manufacturing flow
 Supply chain management  Order to cash, inventory, order
entry, purchasing, product configuration, supply chain
planning, supplier scheduling, inspection of goods, claim
processing, commission calculation
Commercial applications
 Financials  General ledger, cash management,
accounts payable, accounts receivable, fixed assets
 Project management  Costing, billing, time and
expense, performance units, activity management
 Human resources  Human resources, payroll,
training, time and attendance, rostering, benefits
 Data services  Various "self-service" interfaces for
customers, suppliers, and/or employees
 Access control  Management of user privileges for
various processes
 Why implement an ERP System?
 To support business goals
 Integrated, on-line, secure, self-service processes for business
 Eliminate costly mainframe/fragmented technologies
 Improved Integration of Systems and Processes
 Lower Costs
 Empower Employees
 Enable Partners, Customers and Suppliers
 How should we implement ERP Systems?
 People
 Project Structure
 Should be aligned to processes
 Process
 Implementation Process (outlined in detail)
 Adapt your processes to those of the ERP.
 Technology
 Hardware
 Software
 Integrated Systems
Process
1. Definition and Analysis
 Hold discussions with various functional personnel to

establish the actual number of systems operating at client

site, what they are used for, why and how often
 Produce the Project Scoping Document outlining current

situation, proposed solution and budgeted time

Challenge : REQUISITE EXPERTISE - No two clients

are the same
 Process
2. Design
 Prepare various functional reports - specifies current scenario and wish

list
 Prepare Design document which specifies how the system is going to

work
 Prepare test scripts to be followed on system testing

 Map out the interface paths to various modules

Challenge : INFORMATION SHARING - Availability of staff

Process
4. Transition
 Train users on their specific areas

 Assist in test data compilation and system testing by users

 Finalise the Live system and captured opening balances

Challenge : USER RESISTANCE Understanding and

acceptance
data preparation
Process
5. Production
 Official hand holding

 Effectiveness assessment

 Business and Technical Direction recommendations

Technology
 Technology is an enabler, not the driver (it is there
to assist the organisation to achieve business
goals)
 It is a means to an end, not the end
ERP LIFE CYCLE

 ERP lifecycle is in which highlights the different

stages in implementation of An ERP.
Different phases of ERP
 Pre evaluation Screening
 Evaluation Package
 Project Planning
 GAP analysis
 Reengineering
 Team training
 Testing
 Post implementation
 Pre-selection Process

Package Evaluation

Project Planning

Gap Analysis Reengineering Configuration

Implementation Testing End- user Training

Team Training

Going Live
Post – implementation
Phase
ERP implementation Life Cycle
Pre evaluation screening
 Decision for perfect package

 Number of ERP vendors

 Screening eliminates the packages that are not at all suitable

for the company’s business processes.

 Selection is done on best few package available.

Package Evaluation
 Package is selected on the basis of different parameter.

 Test and certify the package and also check the

coordination with different department

 Selected package will determine the success or failure of

the project.
Cont.
 Package must be user friendly

 Regular up gradation should available.

 Cost
Project planning
 Designs the implementation process.

 Resources are identified.

 Implementation team is selected and task allocated.

 Special arrangement for contegencies.

Gap analysis
 Most crucial phase.

 Process through which company can create a model of

where they are standing now and where they want to go.

 Model help the company to cover the functional gap

Reengineering
 Implementation is going to involve a significant
change in number of employees and their job
responsibilities.

 Process become more automated and efficient.

Team Training
 Takes place along with the process of implementation.

 Company trains its employees to implement and later,

run the system.

 Employee become self sufficient to implement the

software after the vendors and consultant have left.
Testing

 This phase is performed to find the weak link so that

it can be rectified before its implementation.
Going Live
 The work is complete, data conversion is done, databases
are up and running, the configuration is complete &
testing is done.

 The system is officially proclaimed.

 Once the system is live the old system is removed

End User Training

 The employee who is going to use the system are

identified and trained.
Post Implementation
 This is the maintenance phase.

 Employees who are trained enough to handle problems

those crops up time to time.

 The post implementation will need a different set of roles

and skills than those with less integrated kind of systems.
 An organization can get the maximum value of
these inputs if it successfully adopts and effectively
uses the system.
Advantage of ERP Systems
What benefit
 Reliable information access
 Avoid data and operations redundancy
 Delivery and Cycle time reduction
 Cost reduction
 Easy adaptability
How
 Common DBMS, Consistent and accurate
data, improved reports.
 Modules access same data from the central
database, avoids multiple data input and
update operations.
 Minimizes retrieving and reporting delays
 Time savings, improved control by
enterprise-wide analysis of organizational
decisions.
 Changes in business processes easy to adapt
and restructure.
Advantage of ERP Systems
 Improved scalability  Structured and modular design
with "add-ons"

 Improved maintenance
 Vendor supported long term
contract as part of the system
procurement.
 Global Outreach
 Extended modules such as CRM
and SCM
 E-Commerce, E-Business
 Internet Commerce, Collaborative culture.
 Disadvantages of ERP Systems
Disadvantages How to overcome
 Minimize sensitive issues, internal politics and
 Time consuming raise general consensus.

 Cost may vary from thousands of dollars to

 Expensive millions. Business process re-engineering cost
may be extremely high.

 The architecture and components of the selected

system should conform to the business processes,
 Conformity of the modules culture and strategic goals of the organization.

 Single vendor vs multi-vendor consideration, options for

 Vendor dependence "best of breeds", long term committed support.
 Disadvantages of ERP Systems
Disadvantages
 Feature and complexity
 Scalability and global outreach
 Extended ERP capability
How to overcome
 ERP system may have too many features
and modules that the user needs to
consider carefully and implement the
needful only.
 Look for vendor investment in R&D, long
term commitment to product and services,
consider Internet-enabled systems.
 Consider middle-ware "add-on" facilities
and extended modules such as CRM and
SCM.