ENTERPRISE RESOURCE PLANNING (ERP)

By Rajat Jhingan

What is a ERP ?
ERP is an IT solution that is based on a single database so that the functionalities of various departments can be uniformly upgraded and shared . It is an integrated set of programs/data .. that can be used to better analyze the Resources(5M) . that an Enterprise/organisation/ Deptt. is using. to take better decisions for Planning and Implementation.

ERP GENESIS
Descended from Materials Management Systems from the late 1950s through the 1980s. In its initial form it handled functions of only:

Inventory Management Economic Order Quantity (EOQ) Calculation Work-Order / Bill of Materials Processing. Material Requirements Planning (MRP).

NOW ERP HANDLES

Organizations Front & Back Office Functions such as: Procurement Inventory Management Manufacturing Marketing & Sales Accounts Payable/Receivable Human Resources / Payroll Cash Management Budgeting Performance Reporting

ERP : One System One Answer

One System
ERP vanquishes the old standalone computer systems.

One Answer
ERP creates a single version of the data that cannot be questioned.

One Set of Transactions

An integrated computer system that can save time and increase productivity.

No Reconciliation
People in different departments all see the same information.

Why ERP Applications?

1.Shorten the time to integrate business solutions. 2.Buy vs. build functionality when possible. 3.Allow focus on core business functions . 4.Leveraging technology for a competitive advantage.

ERP
ERP integrates data derived from various functional systems in the organisations/ deptts and provides a unified and consistent view of the overall organisational situation in a very user-friendly way.
ERP applications typically Support mission-critical business functions With an external, customer facing component & r Transaction intensive

ERP [ Infrastructure Needed ]

Software tools for building, maintaining and using the data warehouse Hardware for Servers, Memory, I/O, Processing Power Communication Requirement (Network Accessories ) Database Designers, Administrators and Consultants Change-Mgmt Issues Meta Group.s study points that Average Total Cost of Ownership (TCO) of ERP installation is from $15 million (range: $300 million to $400K)

Typical ERP Architecture

3 Logical Layers :

1.Presentation layer 2.App layer 3.DB Layer

FEATURES OF PRESENTATION & APPLICATION LAYERS

Customizable Can be tailored to meet customer requirements Multi-platform support Accommodates heterogeneous computing environments Modular design Enables staged implementation and flexibility

Use of Data Warehousing in DB LAYER Implementation

1. The software is less important than the change to business processes. 2. This is not just an IT Project. 3. Process reengineering after the system is implemented can be more challenging than if there had been no system at all. 4. Transformational impacts will take 3 5 years to materialize. 5. A successful ERP implementation depends on staffing the project at the right level with the right skills. 6. Testing for agency interfaces tends to be underestimated for complexity, cost, and time.

CHANGE MGMT ISSUES: Points to Ponder

Main ERP Problem

Impossible to tune a packaged application ERP vendors do not allow tuning; limited to versions No visibility into the black boxes Changes introduce more problems like

HIDDEN COSTS COME FROM:

NEW TRAINING REQUIREMENTS INTEGRATION & TESTING PROBLEMS MULTI-MODULE CUSTOMISATION DATA CONVERSION HETROGENEOUS PLATFORMS COST OF CONSULTANTS SALARY COMPONENTS EVER ON-GOING PROCESS DIP IN PERFORMANCES

CHANGE OVER STRATEGIES

DIRECT CHANGEOVER( Top Support, committed People) STAGED CHANGEOVER (Independent PILOTs are tested & then bridges are built..v.Lengthy) MODULAR CHANGEOVER of just KEY PROCESSES such as only FINANCE

SOME COMMON VENDORS

SAP ORACLE BAAN PEOPLESOFT

SOME INSIGHT

SOME MORE INSIGHT

PURCHASE PRODUCTION MARKETING STORES PERSONNEL FINANCE ACCOUNTS PAYABLE ORACLE MANUFACTURING & FIXED ASSETS ORDER ENTRY & ACCOUNTS RECEIVABLE INVENTORY PAYROLL GENERAL LEDGER

Thank you