SYLLABUS

ENTERPRISE RESOURCE PLANNING

Course Objective

This course aims to enhance the understanding of

the students with respect to the conceptual
framework and the technological infrastructure of
Enterprise Resource Planning. It also aims to
expose the students to the implementation issues
and future trends associated with ERP.
Unit I Overview of Enterprise Systems
Evolution Risks and benefits Fundamental
technology Issues to be considered in planning,
design and implementation of cross functional
ERP Systems
Unit II Overview of ERP Software Solutions
Small, Medium and Large Enterprise Vendor
Solutions Business Process Reengineering
Best Business Practices Business Process
Management Overview of Modules Sales and
Marketing Accounting and Finance Materials
and Production Management
Unit III Planning, Evaluation and Selection of
ERP Systems Implementation Life Cycle ERP
Implementation Methodology and Framework
Training Data Migration People and
Organization
in implementation Consultants, Vendors and
Employees
Unit IV Maintenance of ERP Organizational
and Industrial Impact Success and Failure
factors of ERP implementation Case Studies

Unit V Extended ERP Systems Customer

Relationship Management Supply Chain
Management Business Analytics Future trends
in ERP Systems Web Enabled Wireless
Technologies

References
Alexis Leon, Enterprise Resource Planning,
Second Edition, Tata McGraw Hill, 2008.
2. Alexis Leon, ERP Demystified, Edition, Tata
McGraw Hill, 2008.
3. Jagan Nathan Vaman, ERP in Practice, Tata
McGraw Hill, 2008
4. Mahadeo Jaiswal and Ganesh Vanapalli, ERP,
MacMillan India, 2006
5. Summer, Enterprise Resource Planning, Pearson
Education, 2006.
6. Vinod Kumar Grag and N K Venkitakrishnan,
ERP Concepts and Practice, Prentice Hall of
India, 2006.
1.

UNIT NO

CONTENT

PARTICULARS
I
Overview Of Enterprise System
II
Planning, Evaluation And Selection Of ERP System
III
ERP Software Solution
IV
Maintenance Of ERP
V
Extended ERP System

UNIT I
Overview Of Enterprise System

Organizations today depend on information

systems that help them carry out their operations
efficiently and reliably and keep information
updated and available. Some of these systems
have been developed internally and cover just a
small fraction of the organization's processes or
data. They are often not well integrated with
other systems and require a substantial amount
of manual work to complete the business
processes. Increasingly,

1.1

Overview of enterprise systems

however, large-scale standard packages are
replacing the smaller and specialized solutions.
From 1985 to 1997 the share of large
organizations using packaged enterprise systems
has risen from about 30% to 95%. When Hydro
Agri Europe introduced its SAP enterprise system
in 1999, it replaced around 120 applications that
were used all over Hydro's 17 sites in Europe.
Whereas the packages in the past were only used
by large organizations, we now have software
intended for small and mid-size companies as
well. A survey of European mid-size companies
shows that the adoption of packaged
enterprise systems increased from about 27% in
1998 to more than 50% in 2000. With the
introduction of light versions and accelerated
implementation tools in recent years this trend
has continued and few organizations are now
running their businesses without packaged

software.
An enterprise system is a packaged application
that supports and automates business processes
and manages business data. They come with preimplemented and customizable modules that
reflect best practice for common business
operations. Business data from different
functional areas are
integrated and kept consistent across the
organization. A characteristic of enterprise
systems is their complexities both in terms of
business data and in the way they affect the
organization's business practices and individual
work tasks. The term enterprise system is often
used synonymously with enterprise business
application or with the more restricted term
enterprise resource planning (ERP) system. We
will in this document base the discussion on ERP
systems, though the conclusions are equally valid
for other types of enterprise systems.
The idea of packaged enterprise software, thus, is
to develop a
solution that incorporates common tasks and data
in companies and reflect best practice in the
industry. Many of the modules of enterprise
systems are implemented in close collaboration
with industry partners to ensure that they provide
state- of-the-art functionality. In this way, the
package is applicable in most organizations, and
less efficient organizations can use it to raise the
standard of their internal business processes.

It is not just for automating tasks, but also for

streamlining or reengineering processes according
to what has proven successful in other
companies. The same information is
often needed in different departments of an
organization. When the purchasing department
acquires a new material, it needs information
about that material, about potential vendors, and
about how to allocate the costs of the material.
The finance department afterwards needs
information about the material and the vendor to
verify and pay the invoice they receive. The sales
department needs information about customers
rather than vendors, but must also be able to
relate revenues to the materials being sold. When
all the transactions are recorded in the General
Ledger, information about materials, invoices
and organizational units has to be made available
to the finance department. In the past, there
would be separate systems for each of the major
tasks to be carried out internally. This situation is
illustrated in Figure, where we can see how
different systems keep track of the same business
data and exchange information over batch
interfaces. The finance department, for example,
would have a General Ledger system, an
Accounts Receivable system, and an Accounts
Payable system, and all of them receive data from
other departments systems. Aggregated data
from the G/L system is then
exported to a separate reporting system at

regular intervals.
Each department defines its data according to its
own goals and priorities. They use the data for
different purposes and may end up with slightly
inconsistent records with partly overlapping
information. For example, the purchasing
department
needs the names and addresses of vendors, price
lists of all vendors products, and information
about the vendors deliveries and reliabilities. To
the finance department, a vendor is associated
with an account and linked to information about
its bank, payment conditions and other financial
data. Even if the same type of information is used
in different system, thus, the perspectives are
different and the records are not necessarily
compatible. In the past this led to departmental
software that each kept information about the
same entities. When information had to be
exchanged, like when the Accounts Payable
system was to
process invoices from purchasing activities,
information had to be transferred from one
system to another Since no system saw the
complete picture, the information maintained by
different systems was often inconsistent,
incomplete, and a different levels of granularity.
This was not necessarily problematic for the
departments themselves, but could cause
considerable problems when data about the
complete process was to be collected. Data had to

be reconciled manually every time data was

transferred between two systems. This was an
errorprone process, and the result was often
delays and erronuous data. The
whole concept of maintaining and using batch
interfaces was expensive and prevented the
organizations from working closely together to
carry out the complete business processes.
Enterprise systems provide an integrated and
harmonized view of business data across
organizational boundaries. All the relevant data is
stored centrally, and no duplicates are used by
locally developed systems. Instead of having a
range of business applications, we now have a
range of transactions in one enterprise system
that all access the same database. There is not
consistency issue, and all applications have
access to data that
is continuously updated and checked for
consistency and completeness. Data from new
transactions are immediately included in all the
reports available in the system. The data
dictionary provides a unified view of all the
relevant business data and gives the different
departments a common terminology.

1.2

Evolution
The evolution of ERP systems closely followed the
spectacular developments in the field of computer
hardware and software systems. During the
1960s most organizations designed, developed

and implemented centralized computing systems,

mostly automating their inventory control
systems using inventory control packages (IC).
These were legacy systems based on
programming languages such as COBOL, ALGOL
and FORTRAN. Material requirements planning
(MRP) systems were developed in the 1970s
which
involved mainly planning the product or parts
requirements according to the master production
schedule. Following this route new software
systems called manufacturing resources planning
(MRP II) were introduced in the 1980s with an
emphasis on optimizing manufacturing processes
by synchronizing the materials with production
requirements. MRP II included areas such as shop
floor and distribution management, project
management, finance, human resource and
engineering. ERP systems first appeared in the
late 1980s and the beginning of the 1990s with
the power of enterprise-wide
inter-functional coordination and integration.
Based on the technological foundations of MRP
and MRP II, ERP systems integrate business
processes including manufacturing, distribution,
accounting, financial,
resource management, management,
management, service maintenance, and
transportation, providing accessibility, visibility
and consistency across the enterprise. During the
1990s ERP vendors added more modules and

functions as add- ons to the core modules

giving birth to the extended ERPs. These ERP
extensions include advanced
human project inventory and
planning and scheduling (APS), e- business
solutions such as customer relationship
management (CRM) and supply chain
management (SCM). The Figure summarizes the
historical events related with ERP.

1.3

Risks and Benefits

Risks
Many managers understand the risks involved
with new software and put
all their effort into minimizing them. What many
fail to realize is the high risk associated with
existing applications that will be retained the
most onerous of these being bad data in current
system. One of the best hedges against risk is the
use of a proven methodology, which will ward off
risk, but a contingency plan is still absolutely
necessary. Organizations have faced disaster
unless the process is handled carefully. Example
are Harshey Foods installation of SAP AG, they
were three months late, thus missed busiest
business season of 1999, sales dropped by12.4%.
Whirlpool also had problems in its SAP
implementation, others were Dow Chemicals,
Boeing, Dell Computer , Apple Computer etc. the
only that differentiates successful and flawed or
failed implementations is the way in which risks

were anticipated, handled and mitigated. There

are three basic sides to ERP management,
People (69%), Processes (18%)
andTechnology (13%), and risk of ERP by
them are mentioned in brackets. The sheer size of
and complexity of ERP implementations makes
managing these projects difficult. Peopleemployees, management, implementation team,
consultants and vendors are most crucial factors
that decides the success the success or failure of
ERP system. Implementing an ERP system is a
change and it is human nature to resist change. It
is very important therefore, that users be won
over before implementing the system. The main
people issues are change management, internal
staff adequacy, project team, training, employee
relocation and re-training, staffing (including
turnover), top management support, consultants,
cost of ownership, discipline, resistance to
change.

Benefits

Quantifiable benefits involve

reductions in inventory and in material, labor and
overhead costs, as well as improvements in
customer service and sales . Improved planning
and scheduling practices typically lead to
inventory reductions to the order of 20% or
better. It provides on going savings of the
inventory carrying costs ( interest, cost of
warehousing, handling, obsolescene, insurance,
taxes, damage and shrinkage) also. At 10%

interest, the carrying cost s can be between 2530%. Improved manufacturing practices lead to
fewer shortages, labor savings may be 10%
reduction in direct and
indirect costs. Improved procurement practices
lead to better vendor negotiations for prices, say
5% or more reduction.ERP Systems provide
negotiation information, such as projected
material requirements by commodity group and
vendor performance statistics. Improvements in
customer service can lead to fewer lost sales and
actual increase in sales, say 10% or more.
Improved collections procedures can reduce the
number of days of outstanding receivables,
thereby providing additional available cash.
The intangible benefits of ERP:
With a common database from ERP,
accounting no longer requires duplicate files and
redundant data entry. Financial reports can be
easily customized to meets the needs of various
decision makers. Financial projections can be
based on detailed ERP calculations for future
requirements. ERP systems help establish realistic
schedules for production and communicate
consistent priorities so that every one knows the
most important job to work on at all times.ERP
helps sliminate many crisis situations, so that
people have more time for planning and quality. It
offers several advantages to the MIS function.
Other factors are lower
implementation and systems management costs,

lower production and business transaction costs,

lower cost of reporting, lower personnel costs,
lower business process change and enhancement
costs by using the modeling tools to manage the
business process and change part of
implementation project.
ERP success would include, particularly in the long
term, payback factors that are harder to quantify
and therefore, more often left out of ROI
equation, which have equal
importance. It
combination
architecture, functionality and active
of
is the right technology,
customer support that provides maximum
payback potential.
Improved integration as they have ability to
automatically update data between related
functions and components, leading to better
decision making
Reduction of lead time to correct supplier's
delivery and making inventory management more
efficient and effective
Improved resource utilization for
reducing forced outages, Renovation etc
Improved Supplier Performance: the quality of
raw materials (coal & oil) or components and
capability of the vendor to deliver them in time
are of critical importance for the success of the
organization

Increased flexibility to capitalize on

opportunities while they are available. To create a
flexible organization that can adapt to the
changes in environment rapidly.
Reduced Quality Costs: range of 20% of the cost
of units sent out. It includes internal failure costs,
external failure costs, appraisal costs and
prevention costs. ERP provides tools for Total
quality management programs within an
organization
Better analysis and planning capabilities
Improved information accuracy & decision
making capability
Use of Latest technology such as open systems,
client / server technology and internets /
intranets

1.4

Fundamental Technology
Enterprise Resource Planning (ERP) plays a critical
role in business, requiring people to have a
general understanding of the key components of
ERP to function well in any organization.
Businesses have been transitioning to computer
technology at an increasing rate since the advent
of the desktop computer in the early 80's. The
focus of computer technology in business has
always been to increase productivity through
information management. Since the introduction
of the Internet and advances in networking
technologies and software, businesses must
implement some form of computer technology to

automate common tasks like word processing,

accounting, and Internet access by employees, to
more advanced software applications covering all
or most of an organization's business processes.
These advanced software applications, generally
known as ERP,
capitalize on computer technology and enable
businesses to have detailed perspectives into a
wide range of business operations, allowing them
to share information quickly between
organizations, departments and personnel for
better management.
ERP is a loosely used term primarily describing
software but encompasses hardware and software
systems used by an enterprise to gather, store,
retrieve, and use information flows through an
enterprise. The term ERP, therefore, can apply to
a single microcomputer using an accounting
package (Quick Books for example) to track sales,
inventory, billing and
accounting, to more complex ERP systems that
automate business processes across the supply
chain from manufacturing, distribution, retail,
service and, ultimately, the customer, who may
be either downstream or upstream in the supply
chain. These functional abilities of ERP are
generally grouped into software categories known
as Supply Chain Management (SCM) and
Customer Relationship Management (CRM) and
can be implemented in small, medium, or large
businesses using various hardware and software

configurations. Complex ERP systems can be

designed (hardware and software architecture) to
service
large multi-national corporations using the
Internet, Intranets, and Extranets in their
business operations. An Intranet functions like the
Internet; however, it is limited to the organization
and its users and denies access to the public. An
Extranet, on the other hand, is a mechanism that
allows authorized persons to access portions of an
enterprise's Intranet (over the Internet) with a
username and password. For example, a
manufacturer may allow dealers to access their
Extranet to view product and pricing data,
proprietary information limited to authorized
dealers only.
ERP is an extremely complex subject best
understood by looking at the major components
of an ERP system including hardware, software,
and primary areas of concern for business owners
and managers. By looking at these major
components from a conceptual viewpoint, we can
side step technical jargon allowing for a greater
understanding of the purpose of ERP and its
importance in business and the workplace.

Hardware
The size of an organization dictates the type of
hardware used in an ERP system. For small
businesses, the hardware component of an ERP
system could be a single microcomputer or a few
microcomputers connected together over a local

area network (LAN). In the case of a small LAN,

one of the microcomputers would act as a server,
which is simply a dedicated computer with the
primary task of acting as a centralized data
warehouse where data is stored. The server
accepts data inputs, processes those inputs and
serves up data to other software applications,
or, provides output in various forms including
screen information, print output or other types of
digital output.
Typically, in larger ERP environments, an
enterprise will use a dedicated server, which, in
most cases, is a mini-computer . Mini- computers
have greater operating and storage capacity than
desktop computers and can service many users at
one time. Users access the server via either dumb
terminals (a monitor and keyboard) or a smart
terminal (a fully functional desktop
microcomputer) networked to the server via a
Local Area Network (LAN). How the server and
the new (or existing microcomputers, known as
legacy systems) are connected lays the
foundation for the hardware component of the
system
architecture. How these systems are connected to
the server and, to each other, form the topology
(or layout) of the system throughout an
organization. One of the primary concerns facing
many businesses; new computer hardware
acquisitions, has a twofold dimension; on one
hand, it is critical to acquire state of the art

computer equipment that will not become

antiquated quickly by changes in technology
while, on the other hand, attempting to interface
older, existing systems into the ERP system. This
is especially important if the existing legacy
systems perform many business processes,
making the
transition to ERP, and systems integration, more
complicated.
There are many technical issues involved with
hardware configurations, requiring the expertise
of Information Technology (IT) Specialists. Useroperators of an ERP system rarely deal with these
technical issues, have little or no input regarding
system configurations and rely on technical
support personnel to handle technical issues,
training, and support. In summary, the hardware
component of an ERP system is comparable to the
skeletal system of the human body; it is the
framework, or platform, which the software
rides
on and provides the interface for users
interaction.

Software
ERP software encompasses most business
processes and, according to the Department Of
Defense, U.S. Enterprise Solutions Competency
Center: The activities supported by ERP systems
include all core functions of an enterprise,
including
financial

resources
operations.
vendors are
products that provide specialized functionality to
augment the core, such as Advanced Planning
and
management, human management, and
Increasingly, ERP offering bolt-on
Scheduling (APS), and Customer Relationship
Management (CRM) .
ERP software design uses a best business
practices approach that helps ensure data
accuracy and integrity. For example, all
accounting software design forces users to enter
financial data according to the rules of generally
acceptable accounting practices (GAAP)
standards. This GAAP standard helps ensure that
financial statements and reports reflect the true
financial condition of an enterprise. Accounting
software achieves this conformity by controlling
the entry of financial information into the
software program. Similar types of strictstandards used in ERP software conform to
industry standard business practices throughout
the ERP software, including bolt on products.
According to author Jim Welch: Companies can
learn from lessons of past implementations. Many
programs were overly focused on IT functionality
at the expense of business process development.
As a result, their expected benefits were
compromised or delayed. Conversely, the best

performers ensured that process management,

governance, and other nontechnical issues were
addressed properly.
One of the primary considerations of ERP software
is whether a business's
processes and practices will conform to ERP
software (best business practices) standards
without radical modification of the software. This
can, and often does, mean that a business will
have to change its business processes to conform
to the software, rather than the reverse. This is
practical for a number of reasons; first, software
modifications can be cost prohibitive to smaller
companies and secondly, software modifications
can put data integrity at risk, jeopardizing the
very purpose of ERP. Additionally, software
modifications can make software upgrading, even
with the same vendors and software application
(ERP2.0 to ERP 2.1, for example), extremely
complex and costly.
One of the key considerations in selecting an ERP
software system is how well the business
processes will fit into the best business practice
standards of an ERP program and potential
integration with present and future bolt-on
programs. This is a complex issue well outside the
scope of this document and requires a thorough
analysis of the individual software packages on
the market in conjunction with senior
management working with IT consultants who
represent the ERP software vendors.

In summary, the software component of an ERP

system is the heart of business information and is
comparable to the arterial system of the human
body, data flows through it, the lifeblood of the
organization.

Software Vendors
The major players in ERP software are
Oracle/PeopleSoft and SAP and both companies
are highly respected in the ERP industry. While
there are competitors, these two companies
dominate the market with nearly 20 billion in
combined annual revenue, with Oracle at $10
billion and SAP at $9.7 billion. This does not mean
these two software companies
represent the best ERP solution for every
business. Indeed, one of the most important
elements of acquiring an ERP system is due
diligence to find the right application software for
the business, or, according to Dustin Alexander of
Global Shop Solutions; you can't invest too much
time in the evaluation process.
The selection of the software component (s) of an
ERP system is one of the single most important
issues facing a business considering an ERP
implementation. Most businesses do not have the
IT staff to oversee and manage the entire
acquisition process, which requires careful
management scrutiny from
many different angles to safeguard the IT
investment. Depending on the size and scope of
the ERP acquisition, a business can expect to

draw upon outside professionals to conduct a

variety of analyses including feasibility, business
process, and vendor/software performance.
Implementing an ERP solution in an organization
is a deep science requiring the best of business
and IT minds, working together to help ensure
the success of the project across a wide spectrum
of issues. Among these issues are functionality,
effectiveness, usefulness and user friendliness
with an eye on acquisition costs, phased
implementation, training, process transition, and
ongoing development that achieves the goals and
objectives of the organization.

Top Business Issues

There are many important issues facing a
business considering implementing ERP and
management must perform due diligence
throughout the process to safeguard against
system failure. Successful projects begin with a
well-written plan detailing each step of the
acquisition process in a way people can
understand so that management can take
ownership of the project and employees will use
the system.
Among these issues are contract negotiations
covering hardware and software, softwarelicensing agreements, modifications, upgrades,
technical support, service, training and assistance
transitioning people and processes. Further, the
business must establish a governance model to
control all aspects of an ERP systems

implementation with emphasis on business

process transition that address the organizational
needs and keep the business mission at the
forefront. Small, medium, and large businesses
use computer technology to manage their
businesses operations and streamline data flows
for better business management. Business
applications can be as simple as using Quick
Books to manage inventory, billing and other
financial processes, or very complex
systems
Solutions.
encompass
organizations and use a variety of hardware and
software configurations to support and automate
business operations.
known as Enterprise ERP systems can
departments or
Among the more complex systems, the use of
microcomputers, servers, operating systems, and
application software support the Internet,
Intranets, Extranets, local area networks (LANS)
and wide area
networks (WANS) to communicate and share data
between departments and organizations.
ERP is a complex but understandable topic that
plays a huge and growing role in business and
government, requiring people to have a greater
perspective into this technology and application in
the workplace. The three major components of an
ERP system are hardware, software and the

people who operate it. The important thing to

remember is that ERP is highly technical, and no
single person has all the answers when it comes
to implementing ERP systems. In order to ensure
the success of ERP implementation in enterprise,
many
qualified business, and IT professionals must
work together across a variety of disciplines to
maximize the potential for a seamless transition
to a digital enterprise.

1.5

Issues to be considered in
planning, design and implementation of cross
functional integrated ERP Systems
Implementing an ERP causes massive change that
needs to be carefully managed to reap the
benefits of an ERP solution. Critical issues that
must be carefully considered to ensure successful
implementation include commitment from top
management, reengineering of
the existing processes, integration of the ERP with
other business information systems, selection
and management of consultants and employees,
and training of employees on the new system.
CRITICAL IMPLEMENTATION CONCERNS

Even in a single site, implementing ERP means

Early Retirement Probably. An ERP package is so
complex and vast that it takes several years and
millions of dollars to roll it out. It also requires
many far-flung outposts of a company to follow
exactly the same business processes. In fact,
implementing any integrated ERP solution is not

as
much a technological exercise but an
organizational revolution. Extensive preparation
before implementation is the key to success.
Implementations carried out without patience and
careful planning will turn out to be corporate root
canals, not competitive advantage. Several issues
must be addressed when dealing with a vast ERP
system, and the following sections discuss each of
them in detail.

Top Management Commitment

The IT literature has clearly demonstrated that for

IT projects to succeed top management support
is critical. This also applies to ERP
implementations. Implementing an ERP system is
not a matter of changing software systems,
rather it is a matter of repositioning the company
and transforming the business practices. Due to
enormous impact on the competitive advantage of
the company, top management must consider
the strategic implications of implementing an ERP
solution. Management must ask several
questions before embarking on the project. Does
the ERP system strengthen the company's
competitive position? How might it erode the
company's competitive position? How does ERP
affect the
organizational structure and the culture? What is
the scope of the ERP implementation -- only a few
functional units or the entire organization? Are
there any alternatives that meet the company's

needs better than an ERP system? If it is a

multinational corporation, the management
should be concerned about whether it would be
better to roll the system out globally or restrict it
to certain regional units? Management must be
involved in every step of the ERP implementation.
Some companies make the grave mistake of
handing over the responsibility of ERP
implementation to the technology
department. This would risk the entire company's
survival because of the ERP system's profound
business implications.
It is often said that ERP implementation is about
people, not processes or technology. An
organization goes through a major
transformation, and the management of this
change must be carefully planned (from a
strategic viewpoint) and meticulously
implemented. Many parts of the business that
used to work in silos now have to be tightly
integrated for ERP to work effectively. Cutting
corners in planning and implementation is
detrimental to a
company. The top management must not only
fund the project but also take an active role in
leading the change. A review of successful ERP
implementations has shown that the key to a
smooth rollout is the effective change
management from top. Intervention from
management is often necessary to resolve
conflicts and bring everybody to the same

thinking, and to build cooperation among the

diverse groups in the organization, often times
across the national borders. Top management
needs to constantly monitor the progress of
the project and provide direction to the
implementation teams. The success of a major
project like an ERP implementation completely
hinges on the strong, sustained commitment of
top management. This commitment when
percolated down through the organizational levels
results in an overall organizational commitment.
An overall organizational commitment that is very
visible, well defined, and felt is a sure way to
ensure a successful implementation.

Reengineering

Implementing an ERP system involves

reengineering the existing
business processes to the best business process
standard. ERP systems are built on best
practices that are followed in the industry. One
major benefit of ERP comes from reengineering
the company's existing way of doing business. All
the processes in a company must conform to the
ERP model. The cost and benefits of aligning with
an ERP model could be very high. This is
especially true if the company plans to roll out the
system worldwide. It is not very easy to get
everyone to agree to the same process.
Sometimes business processes are so unique that
they need to be preserved, and
appropriate steps need to be taken to customize

those business processes. Hydro Agri North

America, Inc. implemented SAP R/3 in 1994, and
since then the company is fighting against the
integration SAP provides because some of the
company's processes are very unique. Trying to fit
the SAP mold resulted in a lot of pain and fewer
benefits. Now Hydro Agri will either build a
different front- end application or use a different
package whenever their processes clash with that
of the SAP. The companies also face a question as
to whether to implement the ERP software as is
and adopt the ERP system's built-in procedure or
customize the product to the specific needs of the
company. Research shows that even a best
application package can meet only 70 percent of
the organizational needs. What happens to the
rest? An organization has to change its processes
to conform to the ERP package, customize the
software to suit its needs, or not be concerned
about meeting the balance 30 percent. If the
package cannot adapt to the organization, then
organization has to adapt to the package and
change its procedures. When an organization
customizes the software to suit its needs, the
total cost of implementation rises. The more the
customization, the greater the implementation
costs. Companies should keep their systems as
is as much as possible to reduce the costs of
customization and future maintenance and
upgrade expenses.

Integration

There is a strong trend toward a single ERP

solution for an entire company. Most companies
feel that having a single vendor means a
common view necessary to serve their
customers efficiently and the ease of maintaining
the system in future. Unfortunately, no single
application can do everything a company needs.
Companies may
have to use other specialized software products
that best meet their unique needs. These
products have to be integrated along with all the
homegrown systems with the ERP suite. In this
case, ERP serves as a backbone, and all the
different software are bolted on to the ERP
software.
There are third party software, called middleware,
which can be used to integrate software
applications from several vendors to the ERP
backbone. Unfortunately, middleware is not
available for all the different software products
that are available in the market. Middleware
vendors concentrate only on the most popular
packaged applications and tend to focus on the
technical aspects of application interoperability
rather than linking business processes. Many
times, organizations have to develop their own
interfaces for commercial software applications
and the homegrown applications. Integration
software also poses other kinds of problems when
it comes to maintenance. It is a nightmare for IS
personnel to manage this software whenever

there are changes and upgrades to either ERP

software or other software that is integrated with
the ERP system. For every change, the IT
department will be concerned about which link is
going to fail this
time. Integration problems would be severe if the
middleware links the ERP package of a company
to its vendor companies in the supply chain.
Maintaining the integration patchwork requires an
inordinate and ongoing expenditure of resources.
Organizations spend up to 50 percent of their IT
budgets on application integration? It is also
estimated that the integration market (products
and services) equals the size of the entire ERp
market. When companies choose bolt-on
systems, it is advisable to contact the ERP
vendor for a list of certified third-party vendors.
Each year, all the major ERP vendors publish a list
of certified third-party
vendors. There are several advantages to
choosing this option, including continuous
maintenance and upgrade support.
One of the major benefits of ERP solutions is the
integration they bring into an organization.
Organizations need to understand the nature of
integration and how it affects the entire business.
Before integration, the functional departments
used work in silos and were slow to experience
the consequences of the mistakes other
departments
committed.

was rather
departments that made the mistakes had ample
time to correct them
The information flow slow, and the
before the errors started affecting the other
departments. However, with tight integration the
ripple effect of mistakes made in one part of the
business unit pass onto the other departments in
real time. Also, the original mistakes get
magnified as they flow through the value chain of
the company. For example, the errors that the
production department of a company made in its
bill of materials could affect not only the
operations in the production department but also
the inventory department, accounting
department, and others. The impact of these
errors could be detrimental to a company. For
example, price errors on purchase
orders could mislead financial analysts by giving a
distorted view of how much the company is
spending on materials. Companies must be aware
of the potential risks of the errors and take proper
steps, such as monitoring the transactions and
taking immediate steps to rectify the problems
should they occur . They must also have a formal
plan of action describing the steps to be taken if
an error is detected.
A proper means to communicate to all the parties
who are victims of the errors as soon as the
errors are detected is extremely important.
Consider the recent example of a manufacturing

company that
implemented an ERP package. It suddenly started
experiencing a shortage of manufacturing
materials. Production workers noticed that it was
due to incorrect bills of materials, and they made
necessary adjustments because they knew the
correct number of parts needed to manufacturer.
However, the company did not have any
procedures to notify others in case any errors
were found in the data. The domino effect of the
errors started affecting other areas of business.
Inventory managers thought the company had
more material than what was on the shelves, and
material shortages
occurred. Now the company has mandatory
training classes to educate employees about how
transactions flow through the system and how
errors affect the activities in a value chain. It took
almost eight weeks to clean up the incorrect bills
of materials in the database.
Companies implementing electronic supply chains
face different kinds of problems with integration
of information across the supplychain
companies. The major challenge is the impact
automation has on the business process.
Automation changes the way companies deal with
one another , from planning to purchasing to
paying. Sharing and control of information seem
to be major concerns. Companies are concerned
about how much information they need to share
with their customers and suppliers and how to

control the information. Suppliers do not want

their competitors to see their prices or order
volumes. The general fear is that sharing too
much information hurts
business.
controlling information,
are aware that it is difficult to control what they
own let alone control what they do not own.
Companies need to trust their partners and must
coordinate with each other in the
their Regarding companies
chain. The whole chain suffers if one link is slow
to provide information or access. The
management also must be concerned about the
stress an automated supply chain brings within
each organization. For instance, a sales
department may be unhappy that electronic
ordering has cut it out of the loop, while
manufacturing may have to adjust to getting one
week's notice to order changes and accommodate
those changes into its production orders.

ERP Consultants
Because the ERP market has grown so big so fast,
there has been a
shortage of competent consultants. The skill
shortage is so deep that it cannot be filled
immediately. Finding the right people and keeping
them through the implementation is a major
challenge. ERP implementation demands multiple
skills -- functional, technical, and interpersonal
skills. Again, consultants with specific industry

knowledge are fewer in number. There are not

many consultants with all the required skills.
Since the ERP market in the United States started
approximately five years ago (and is growing at
an astronomical rate), there are not many
consultants with three or more years of
experience. This has sent
the compensation for skilled SAP consultants
through the roof. One year s experience brings in
$70, 000 to $80, 000 annually. Three to five
years experience could command up to $200,
000 annually. One might find a consultant with a
stellar reputation in some areas, but he may lack
expertise in the specific area a company is looking
for. Hiring a consultant is just the tip of the
iceberg. Managing a consulting firm and its
employees is even more challenging. The success
or failure of the project depends on how well you
meet this challenge.

Implementation Time
ERP systems come in modular
fashion and do not have to be implemented
entirely at once. Several companies follow a
phase- in approach in which one module is
implemented at a time. For example, SAP R/3 is
composed of several complete modules that
could be chosen and implemented, depending on
an organization's needs. Some of the most
commonly installed modules are sales and
distribution (SD), materials management (MM),
production and planning, (PP), and finance and

controlling (FI) modules.

The average length of time for a typical
implementation is about 14 months and can take
as much as 150
consultants. Corning, Inc. plans to roll out ERP in
ten of its diversified manufacturing divisions, and
it expects the rollout to last five to eight years.
The length of implementation is affected to a
great extent by the number of modules being
implemented, the scope of the implementation
(different functional units or across multiple units
spread out globally), the extent of customization,
and the number of interfaces with other
applications. The more the number of units, the
longer implementation. Also, as the scope of
implementation grows from a single business unit
to multiple units spread out globally, the
duration of implementation increases. A global
implementation team has to be formed to prepare
common requirements that do not violate the
individual unit's specific requirements. This
involves extensive travel and increases the length
of implementation.
The problem with ERP packages is that they are
very general and need to be configured to a
specific type of business. This customization takes
a long time, depending on the specific
requirements of the business. For example, SAP is
so complex and general that there are nearly
8000 switches that need to be set properly to
make it handle the business

processes in a way a company needs. The extent

of customization determines the length of the
implementation. The more customization needed,
the longer it will take to roll the software out and
the more it will cost to keep it up-to- date. The
length of time could be cut down by keeping the
system plain vanilla and reducing the number of
bolt-on application packages that require custom
interfaces with the ERP system. The downside to
this plain vanilla approach is conforming to the
system's mold, which may or may not completely
match the requirements of the business.
For small companies, SAP recently launched
Ready-to-Run, a scaled- down suite of R/3
programs preloaded on a computer server. SAP
has also introduced AcceleratedSAP (ASAP) to
reduce implementation time. ERP vendors are
now offering industry-specific applications to cut
the implementation time down. SAP has recently
outlined a comprehensive plan to offer 17
industry-specific solutions, including chemical,
aerospace and defense, insurance, retail, media,
and utilities industries. Even though these specific
solutions would able to substantially reduce the
time to implement an application,
organizations still have to customize the product
for their specific requirements.

Implementation Costs
Even though the price of prewritten software is
cheap compared with in- house development, the
total cost of implementation could be three to five

times the purchase price of the software. The

implementation costs would increase as the
degree of customization increases. The cost of
hiring consultants and all that goes with it can
consume up to 30 percent of the overall budget
for the implementation. According to Gartner
Group, total cost of an outside SAP
consultant is around $1600 per day. Going for inhouse SAP-trained technologists creates its own
worries. Once the selected employees are trained
after investing a huge sum of money, it is a
challenge to retain them, especially in a market
that is hungry for skilled SAP consultants.
Employees could double or triple their salaries by
accepting other positions. Retention strategies
such as bonus programs, company perks, salary
increases, continual training and education, and
appeals to company loyalty could work. Other
intangible strategies such as flexible work hours,
telecommuting options, and opportunities to work
with
leading-edge technologies are also being used.
Many companies simply strive to complete the
projects quickly for fear of poaching by headhunting agencies and other companies.

ERP Vendors
As there are about 500 ERP applications available
and there is some company consolidation going
on, it is all the more important that the software
partner be financially well off. Selecting a suitable
product is extremely important. Gartner Group

has BuySmart program, which has more than

1700 questions to help a company choose a
suitable ERP
package. Top management input is very
important when selecting a suitable vendor.
Management needs to ask questions about the
vendor, such as its market focus (for example,
midsize or large organization), track record with
customers, vision of the future, and with whom
the vendor is strategically aligned. For a global
ERP rollout, companies need to be concerned
about if the ERP software is designed to work in
different countries. Also, the management must
make sure the ERP vendor has the same version
of the software available in all the countries the
company is implementing the system. Vendor
claims regarding global readiness may not be
true, and the implementation team may need to
cross-check with subsidiary representatives
regarding the availability of the software. Vendors
also may not have substantial presence in the
subsidiary countries. It is important to evaluate if
the vendor staffers in these countries are
knowledgeable and available. If there is a
shortage of skilled staff, bringing people from
outside could solve the problem, but it would
increase the costs of implementation.

Selecting the Right Employees

Companies intending to implement
an ERP system must be willing to dedicate some
of their best employees to the project for a

successful implementation. Often companies do

not realize the impact of choosing the internal
employees with the right skill set. The importance
of this aspect cannot be overemphasized. Internal
resources of a company should not only be
experts in the company's processes but also be
aware of the best business practices in the
industry. Internal resources on the project should
exhibit the ability to understand the overall needs
of the company and should play an
important role in guiding the project efforts in the
right direction. Most of the consulting
organizations do provide comprehensive
guidelines for selecting internal resources for the
project. Companies should take this exercise
seriously and make the right choices. Lack of
proper understanding of the project needs and
the inability to provide leadership and guidance to
the project by the company's internal resources is
a major reason for the failure of ERP projects.
Because of the complexities involved in the dayto-day running of an organization, it is not
uncommon to find functional departments
unwilling to sacrifice
their best resources toward ERP project needs.
However, considering that ERP system
implementation can be a critical step in forging an
organization's future, companies are better off
dedicating their best internal resources to the
project.

Training Employees

Training and updating employees on ERP is a

major challenge. People are one of the hidden
costs of ERP implementation. Without proper
training, about 30 percent to 40 percent of frontline workers will not be able to handle the
demands of the new system. The people at the
keyboard are now making important
decisions about buying and selling - - important
commitments of the company. They need to
understand how their data affects the rest of
company. Some of the decisions front-line people
make with an ERP system were the responsibility
of a manager earlier. It is important for managers
to understand this change in their job and
encourage the front- line people to be able to
make those decisions themselves. Training
employees on ERP is not as simple as Excel
training in which you give them a few weeks of
training, put them on the job, and they blunder
their way through. ERP systems are extremely
complex and demand rigorous
training. It is difficult for trainers or consultants to
pass on the knowledge to the employees in a
short period of time. This knowledge transfer
gets hard if the employees lack computer literacy
or have computer phobia. In addition to being
taught ERP technology, the employees now have
to be taught
responsibilities.
ERP systems you
being trained. Companies should provide

opportunities to enhance the skills of the

employees by providing training opportunities on
a continuous basis to meet the changing needs of
the business and employees.
are
their new With continuously

Employee Morale

Employees working on an ERP implementation

project put in long hours (as much as 20 hours
per day) including seven-day weeks and even
holidays. Even though the experience is valuable
for their career growth, the stress of
implementation coupled with regular job duties
(many times employees still spend 25 to 50
percent of their time on regular job duties) could
decrease their morale rapidly. Leadership from
upper management and support and caring acts
of project leaders would certainly boost the
morale of the team members. Other strategies,
such as taking the employees on field
trips, could help reduce the stress and improve
the morale.

1.6

Review Questions
1. Outline the Evolution of ERP Systems.
2. For IT projects to succeed top management
support is critical. Appreciate this statement in
the context of ERP.
3. Examines the risks associated with ERP
Systems.
Check your Progress:

Define an Enterprise System.

State some extension in Extended ERP.
State some people involved in ERP .
Expand SCM, CRM
State some business issues
pertaining to ERP.
1. An enterprise system is a packaged application
that supports and automates business processes
and manages business data. They come with preimplemented and customizable modules that
reflect best practice for common business
operations
1.
2.
3.
4.
5.

1.7

Answers to check your progress

2. Advanced planning and scheduling (APS), ebusiness solutions such as customer relationship
management (CRM) and supply chain
management
(SCM)
3. Employees, management,
implementation consultants and vendors
team,
4. Supply Chain Management, Customer
Relationship Management
5. Contract negotiations covering hardware and
software, software-licensing agreements,
modifications, technical support,
upgrades, service,
training and transitioning
processes
assistance people and

UNIT II
ERP Software Solution

2.1

Overview of ERP Software Solutions

Some organizations typically those with
sufficient in-house IT skills to integrate multiple
software products choose to implement only
portions of an ERP system and develop an
external interface to other ERP or stand-alone
systems for their other application needs. For
example, one may choose to use human resource
management system from one vendor, and the
financial
systems from another , and performthe
integration between the systems themselves.
This is very common in the retail sector, where
even a mid-sized retailer will have a discrete
Point-of- Sale (POS) product and financials
application, then a series of specialized
applications to handle business requirements such
as warehouse management, staff rostering,
merchandising and logistics.
Ideally, ERP delivers a single database that
contains all data for the software modules, which
would include:

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 Configurator, Supply Chain Planning,
Supplier Scheduling, Inspection of goods, Claim
Processing, Commission Calculation

Financials

General Ledger, Cash Management, Accounts

Payable, Accounts Receivable, Fixed Assets

Projects

Costing, Billing, Time and Expense, Activity

Management

Human Resources

Human Resources, Payroll, Training, Time &

Attendance, Rostering, Benefits

Customer Relationship Management

Sales and Marketing, Commissions, Service,
Customer Contact and Call Center support

Data Warehouse

and various Self-Service interfaces for Customers,

Suppliers, and Employees
Access control ; user privilege as per
authority levels for process execution
Customization; to meet the extension,
addition, change in process flow
Enterprise Resource Planning is a term originally
derived from manufacturing resource planning
(MRP II) that followed material requirements
planning (MRP). MRP evolved into ERP when
routings became a major part of the software
architecture and a company's capacity planning
activity also

became a part of the standard

software activity. ERP systems typically handle
the manufacturing, logistics, distribution,
inventory, shipping,invoicing, and accounting for a
company. Enterprise Resource Planning or ERP
software can aid in the control of many business
activities, like sales, marketing, delivery, billing,
production, inventory management,quality
management, and human resource management.
ERP systems saw a large boost in sales in the
1990s as companies faced the Y2K problem in
their legacy systems. Many companies took this
opportunity to replace their legacy
information systems with ERP systems. This rapid
growth in sales was followed by a slump in 1999,
at which time most companies had already
implemented their Y2K solution.
ERPs are often incorrectly called back office
systems indicating
that customers and the general public are not
directly involved. This is contrasted with front
office systems like customer relationship
management (CRM) systems that deal directly
with the customers, or the eBusiness systems
such as eCommerce, eGovernment,
eTelecom, and eFinance, or supplier
relationship systems.
ERPs are
enterprise
departments that are involved in operations or
production are integrated in one system. In

addition to manufacturing, warehousing, logistics,

and information technology, this would include
accounting,
human resources, and marketing, strategic
management.
ERP II means open ERP architecture of
components. The older, monolithic ERP systems
became component oriented.
management (SRM)
cross-functional and wide. All functional
EAS Enterprise Application Suite is a new name
for formerly developed ERP systems which include
(almost) all segments of business, using ordinary
Internet browsers as thin clients.
Prior to the concept of ERP systems, it was not
unusual for each department within an
organization to have its own customized computer
system. For example, the human
resources (HR) department, the payroll
department, and the financial department might
all have their own computer systems.
Typical difficulties involved integration of data
from potentially
different computer manufacturers and systems.
For example, the HR computer system (often
called HRMS or HRIS) would typically manage
employee information while the payroll
department would typically calculate and store
paycheck information for each employee, and the
financial department would typically store
financial transactions for the organization. Each

system would
have to integrate using a predefined set of
common data which would be transferred
between each computer system. Any deviation
from the data format or the integration schedule
often resulted in problems.
ERP software, among other things, combined the
data of formerly separate applications. This
simplified keeping data in synchronization across
the enterprise, it simplified the computer
infrastructure within a large organization, and it
standardized and reduced the number of software
specialities required within larger organizations.
2.2.1 Small Enterprises
Broadly speaking, these vendors fit Eric
Kimberling of Panorama, this tier constitutes a
healthy 36 percent of

2.2

Small, Medium and Large Enterprise Vendor

Solutions
the total ERP market. Part of the reason for
claiming such a large slice of the market is a
lower cost per project and faster payback time
compared to the upper tiers.
Tier III vendors typically obtain a payback period
of less than three years 76 percent of the time,
said
Kimberling. Average cost per project for Tier III
is $1.1 million.

Exact Globe ERP

Gartner named Exact Globe a niche player in its

latest ERP Magic Quadrant (MQ). Exact Globe is

aimed at light manufacturing, distribution or
is involved in service delivery. At its core is an
embedded document management system that
facilitates processes for money management,
order processing and production planning. Up-todate pricing in multiple currencies and languages
is one of the features.
It includes project management, financials,
document management, workflow management,
CRM, HR and inventory management. In addition,
its Synergy Web-based collaboration platform
consolidates everything into a single database.

Syspro ERP
Syspro is another ERP name that Gartner included
in its last MQ as a niche player.
Syspro version 6.1 introduced workflow services,
inventory optimization, process modeling and
more integrated analytics. The company focuses
in areas such as
medical devices, electronics, food, chemicals and
fertilizer manufacturing.
The company has been introducing a SaaS
product, and Syspro Version 7 is reported to be
due later in the
The company has been introducing a SaaS
product, and Syspro Version 7 is reported to be
due later in the year. Headquartered in South
Africa, Syspro offers a Microsoft.net-based
integrated supply chain suite encompassing ERP ,
analytics, e- commerce, CRM, and planning and

scheduling. Specific to the ERP portion, it includes

financials, distribution and manufacturing. A
reporting tool known as Syspro Reporting
Services (SRS) incorporates an embedded version
of Crystal Reports.

NetSuite ERP
While NetSuite didn't make it onto
the MQ, Gartner named the company as one of
the few pure SaaS ERP vendors and as a viable
option in certain cases.
With over 6, 600 customers, NetSuite offers
modules for financials, accounting, global
consolidation, purchasing, payrolls, orders
management, inventory control, material resource
planning (MRP), production planning, shop floor
control, engineering change control and employee
management. The company also integrates its
ERP suite with its CRM product. It characterizes
itself as providing an ERP cloud. The
company seems to be going after Microsoft's
Dynamics business, hoping to convert those users
to NetSuite.
Its real-time dashboard integrates business data
across departments and can be personalized for
each employee. It provides snapshots of sales
orders, commissions and forecasts, and a fast
way of analyzing data. It also makes ERP
accessible and easy to use for smaller firms by
using a web-based approach. According to
Panorama Consulting, NetSuite owns 2 percent of
the services ERP market.

Visibility ERP
According to Panorama Consulting, Visibility has a
1 percent ERP market share in manufacturing and
distribution,
communication,
transport. Known as Visibility.net, it is squarely
aimed at the ERP needs of complex product
manufacturers. It includes modules for
management, CRM, quotes, projects, costs, MRP,
product manufacturing, financials and supply
chain collaboration.
Most recently, it became available for use on the
Apple iPad. It deploys all functions, transactions,
reports, and
as well as in
energy
and
business intelligence analytical capabilities
through the iPad device.
2.2.2 Medium Enterprises
According to Gartner, the top five vendors in the
$20 billion ERP market are SAP, Oracle, Sage,
Infor and Microsoft. Sage ERP X3, which targets
the midmarket, has experienced 41 percent
customer growth in the last few years. That gives
the Sage Group more than six million customers
and 13, 400 employees worldwide. It can run on
various platforms and comes with a user interface
that incorporates data visualization,
personalization features and access to Microsoft

Office tools. The company touts fast

implementation and ease of use. It includes
analysis and reporting, financial accounting and
management control and operational
management (production, purchasing, sales, and
inventory.

Infor ERP

Infor is another of those that Gartner placed in

the top five. It offers four major ERP products;
Infor ERP LN is aimed at tier one down to midmarket customers. Infor ERP SyteLine is focused
on mid- to large- sized manufacturers. This is
a .Net solution that can be implemented onpremises, as a hosted solution, or by
subscription in the cloud. Infor ERP VISUAL
serves the small business market. Infor ERP
Adage is categorized as an advanced ERP solution
for process manufacturers.

Epicor ERP
While not among the top five revenue generators,
Gartner named Epicor as a visionary in a recent
Magic Quadrant for Midmarket ERP Companies.
Epicor's latest edition utilizes Web 2.0 concepts to
provide more collaboration features. It has been
sold to more than 1, 800 customers.
2.2.3 Large Enterprises
SAP ERP

SAP has been one of the big names in ERP for

decades, and is often credited with founding the
technology. Craig Himmelberger, director of

marketing for SAP's Business Suite, believes that

his company and Oracle are the top names in
ERP, and Gartner agrees, crediting them with
nearly 40 percent of the overall $20 billion ERP
market. According to Gartner, SAP had a 26
percent share of the ERP market in 2009, with
Oracle in second place at 12 percent. Sage, Infor
and Microsoft followed in the mid-single digits.
IBM
and others are attempting to build their portfolio
of business information and analytic tools to
provide complementary value-add, and niche
providers focusing on small areas of the ERP
landscape continue to try to catch on with varying
degrees of success, said Himmelberger .
Customers, however, appreciate simplified
application landscapes, and prefer consistent
technology for their ERP needs.
SAP ERP ( SAP.com/ERP ) is a suite comprising
full financials, human resources (HR), operations,
procurement, treasury and other business
functions. It offers a single technology stack via
NetWeaver that
supports ERP , CRM, BI, analytics, performance
management, governance, risk and compliance,
and other elements. The basic idea is to simplify
implementation and ongoing maintenance, and
lower total cost of ownership (TCO).
SAP's ERP architecture is completely real-time,
unlike other vendors who require batch postings
to transfer information between interfaced ERP

systems, said Himmelberger . A new feature

known as the Switch Framework enables users to
implement upgraded business features as
needed, without re- implementation or disruptive
system maintenance.
SAP doesn't focus on any specific verticals. It
tends to play well in just about all of them and
lists dozens of links to specialized ERP
implementations on its site.
SAP's ERP customer base is the largest and
broadest in the industry, said Himmelberger.
Recent growth continues to be double-digit, and
even higher in emerging economies.

Oracle E-Business Suite

Oracle offers an awful lot of ERP options. EBusiness Suite 12.1 spans all facets of ERP and all
industries. The latest release includes an
integrated portfolio of
business intelligence tools. It also offers complete
ERP suites from companies it acquired such as
PeopleSoft and JD Edwards.
And the company also has its Fusion Applications,
which are designed from the ground up using the
latest technology advances and incorporating best
practices gathered over the years from Oracle
customers. The plan is eventually to forge
everything into Fusion. But that may not happen
for some time. In the meanwhile, via its
Applications Unlimited program, Oracle has
committed to providing ongoing enhancements to
existing Oracle

applications for as long as customers desire them.

In today's economy, customers may not be
inclined to implement large- scale upgrades of
their core operational systems, said Bruce
Richardson, an analyst at AMR Research. The
ability to recognize rapid value in the near term
without requiring an upgrade could be viewed as
an effective way to build a strategic IT roadmap
and lay the groundwork for long-term success.

Microsoft Dynamics
Microsoft provides four main ERP products:
Microsoft Dynamics AX,
Microsoft Dynamics GP, Microsoft Dynamics NAV,
and Microsoft Dynamics SL
Recently, the company made several products
announcements: New development features for
NAV 2009 R2, the expansion of AX for Retail to 22
additional markets, the release of the Microsoft
Dynamics ERP two-tier connector, and the Global
Reporting Initiative certification for the
Environmental Sustainability Dashboard for
Microsoft Dynamics AX.
According to Guy Weismantel, director of ERP
marketing at Microsoft Dynamics, the company
focuses on a couple of areas. The first is the
needs of its largest customers, which are midsized enterprises and subsidiaries of global
organization in key verticals: retail,
manufacturing, professional services, public
sector and distribution. Next are those customers
that desire an ERP solution for improved financials

and operations, or who require ERP tailored to a

specific market.
Business software is often primarily a reactive
tool, detecting problems instead of emerging
trends, and complexity can slow the ability of
companies to make critically needed business
process changes, said Weismantel.
Business software should be a critical enabler,
facilitating decisions and proactively driving
change into practice, he said. Microsoft
Dynamics is committed to a vision of software
that fulfills this promise, evolving for a changing
world to enable the dynamic business.
The company has plenty in the pipeline. This
includes Microsoft Dynamics NAV 2009 R2,
Microsoft Dynamics GP 2010 R2 in the first half of
2011, Microsoft Dynamics SL 2011 in the second
quarter of 2011, and Microsoft Dynamics AX 6
sometime in 2011.

2.3

Business Process Reengineering

The globalization of the economy and the
liberalization of the trade markets have
formulated new conditions in the market place
which are characterized by instability and
intensive competition in the business
environment. Competition is continuously
increasing with respect to price, quality and
selection, service and promptness of delivery.
Removal of barriers, international cooperation,
technological innovations cause competition to

intensify. All these changes impose the need for

organizational transformation, where the entire
processes, and organization climate and
organization structure are changed. Hammer and
Champy provide the following definitions:
Reengineering is the fundamental rethinking and
radical redesign of business processes to achieve
dramatic improvements in critical contemporary
measures of performance such as cost, quality,
service and speed.
Process is a structured, measured set of activities
designed to produce a specified output for a
particular customer or market. It implies a strong
emphasis on how work is done within an
organization.

Objectives of BPR
When applying the BPR management technique to
a business organization the implementation team
effort is focused on the following objectives:
Customer focus - Customer service oriented
processes aiming to eliminate customer
complaints.
Speed - Dramatic compression of the time it takes
to complete a task for key business processes.
For instance, if process before BPR had an
average cycle time 5 hours, after BPR the average
cycle time should be cut down to half an hour.
Compression - Cutting major tasks of cost and
capital, throughout the value chain. Organizing
the processes a company develops transparency
throughout the operational level reducing cost.

For instance the decision to buy a large amount of

raw material at 50% discount is connected to
eleven cross checkings in the organizational
structure from cash flow, inventory, to production
planning and marketing. These checkings become
easily implemented within the cross- functional
teams, optimizing the decision making and
cutting operational cost.
Flexibility - Adaptive processes and structures to
changing conditions and competition. Being closer
to the customer the company can develop the
awareness mechanisms to rapidly spot the weak
points and adapt to new requirements of the
market.
Quality - Obsession with the superior service and
value to the customers. The level of quality is
always the same controlled and monitored by the
processes, and does not depend mainly on the
person, who servicing the customer.
Innovation - Leadership through imaginative
change providing to organization competitive
advantage.
Productivity - Improve drastically effectiveness
and efficiency.

BPR Implementation

BPR is world-wide applicable technique of

business restructuring focusing on business
processes, providing vast improvements in a
short period of time. The technique implements
organizational change based on the close
coordination of a methodology for rapid change,

employee empowerment and training and support

by information technology. In order to implement
BPR to an enterprise the followings key actions
need to take place:
Selection of the strategic (added- value)
processes for redesign.
Simplify new processes - minimize steps optimize efficiency -. (modeling).
Organize a team of employees for each process
and assign a role for process coordinator.
Organize the workflow - document transfer and
control.
Assign responsibilities and roles for each process.
Automate processes using IT
(Intranets, Management)
Extranets, Workflow
Train the process team to efficiently manage and
operate the new process
Introduce the redesigned process into the
business organizational structure
Most reengineering methodologies share common
elements, but simple differences can have a
significant impact on the success or failure of a
project. After a project area has been identified,
the methodologies for reengineering business
processes may be used. In order for a company,
aiming to apply BPR, to select the best
methodology, sequence processes and implement
the appropriate BPR plan, it has to create
effective and actionable visions. Referring to
vision we mean the complete articulation of the

future state (the values, the processes, structure,

technology, job roles and environment) For
creating an effective vision, five basic steps are
mentioned below.
The right combination of individuals come
together to form an optimistic and energized
team clear objectives exist and the scope for the
project is well defined and understood the team
can stand in the future and look back, rather than
stand in the present and look forward the vision is
rooted in a set of guiding principles. All
methodologies could be divided in general model
stages:
The Envision stage: the company reviews the
existing strategy and business processes and
based on that review business processes for
improvement are targeted and IT opportunities
are identified.
The Initiation stage: project teams are assigned,
performance goals, project planning and
employee notification are set.
The Diagnosis stage: documentation of processes
and sub-processes takes place in terms of process
attributes (activities, resources, communication,
roles, IT and costs).
The Redesign stage: new process design is
developed by devising process design alternatives
and through brainstorming and creativity
techniques.
The Reconstruction stage: management technique
changes occur to ensure smooth migration to the

new process responsibilities and human resource

roles.
The Evaluation stage: the new process is
monitored to determine if goals are met and
examine total quality programs.

2.4

Best Business Practices

1. Realize that not every company needs to
reinvent itself and needs BPR
2. Expect strenuous resistance and manage it
properly . Sell the change by constantly stressing
the positive aspects of the change and the
benefits to be derived by the employees and the
company
3. Surround the project with a sense of urgency,
since projects tends to die unless the need to
change is urgent and is constantly re-emphasized
4. Get the management to fully support the
project and have them make it clear that
everyone is expected to support the project
5. Keep the lines of communication with
employees open to prevent damaging and
inaccurate rumors and misunderstandings
6. Create an atmosphere of trust and
cooperation .Allay fears and provide assurances
that the company is genuinely concerned about
employees
7. Make sure the people who are effected by or
are going to use the new system are involved in
the change process
8. Staff the project with the best people and

provide them with resources they need to be

successful
9. Design the system with customer's point of
view, not from that of company . Eliminate
processes or steps that add no value to the
customer
10. Make sure employees are adequately trained
an how to use the new system
11. Be prepared to change company's culture and
its organizational structure, and re- organize the
information system function
12. Go for small success at first. Go for more
dramatic projects once
you have gained some experience in BPR

2.5

Business Process Management

Business process management (BPM) has
been referred to as a holistic management
approach to aligning an organization's business
processes with the wants and needs of clients. It
promotes business effectiveness and efficiency
while striving for innovation, flexibility, and
integration with technology. BPM attempts to
improve processes continuously. It can therefore
be described as a process optimization process.
It is argued that BPM enables organizations to be
more efficient, more effective and more
capable
functionally
hierarchical
approach.

critical to any organization, as they can generate

revenue and often represent a significant
proportion of costs.
As a managerial approach, BPM sees processes as
strategic assets of an organization that must be
understood, managed, and improved to deliver
value-added products and services to clients. This
foundation closely resembles other Total Quality
Management or Continuous Improvement Process
methodologies
of
change focused,
than a traditional management These processes
are
or approaches. BPM goes a step further by stating
that this approach can be supported, or enabled,
through technology to ensure the viability of the
managerial approach in times of stress and
change. In fact, BPM offers an approach to
integrate an organizational change capability
that is both human and technological. As such,
many BPM articles and pundits often discuss BPM
from one of two viewpoints: people and/or
technology.
BPM or Business Process Management is often
referred to as Management by Business
Processes. The term business can be confusing
as it is often linked with a hierarchical view (by
function) of a company. It is therefore preferable
to define BPM as corporate management through
processes. By adding BPM the second meaning of

Business Performance Management used by Pr

Scheer in his article Advanced BPM Assessment,
BPM can therefore be defined as company
performance management through processes .
And it's this
resolutely
definition
Dominique
Performance Through Business Processes defines
BPM as a management-through-processes
performance-oriented which is chosen here.
Thiault, in Managing
method which helps to improve the company's
performance in a more and more complex and
ever-changing environment. Management through
processes is a management method based on two
logical levels: process governance and process
management:
Process governance is all of the company's
governance activities which, by way of allocating
on the processes, work towards reaching its
objectives, which are both operational and
progress- related.
Process management is all the management
activities of a given process which work towards
reaching the objectives allocated for this process.

BPM Lifecycle

Business process management activities can be

grouped into six categories: vision, design,
modeling, execution, monitoring, and
optimization. Functions are designed around the

strategic vision and goals of an organization. Each

function is attached with a list of processes. Each
functional head in an organization is responsible
for certain sets of processes made up of tasks
which are to be executed and reported as
planned. Multiple processes are aggregated to
function
accomplishments and multiple functions are
aggregated to achieve organizational goals.

Design
Process Design encompasses both the
identification of existing processes and the design
of to-be processes. Areas of focus include
representation of the process flow, the factors
within it, alerts & notifications, escalations,
Standard Operating Procedures, Service Level
Agreements, and task hand-over mechanisms.
Good design reduces the number of problems
over the lifetime of the
process. Whether or not existing
processes are considered, the aim of this step is
to ensure that a correct and efficient theoretical
design is prepared.
The proposed improvement could be in humanto-human, human-to- system, and system-tosystem workflows, and might target regulatory,
market, or competitive challenges faced by the
businesses.
The existing process and the design of new
process for various application will have to
synchronise as such will not effect the business in

major outage. The business as usual is the

standard to be attained when design of process
for multiple systems is considered.

Modeling
Modeling takes the theoretical design and
introduces combinations of variables (e.g.,
changes in rent or materials costs, which
determine how the process might operate under
different circumstances).
It also involves running what-if analysis on the
processes: What if I have 75% of resources to
do the same task? What if I want to do the
same job for 80% of the current cost? .

Execution

One of the ways to automate

processes is to develop or purchase an application
that executes the required steps of the process;
however, in practice, these applications rarely
execute all the steps of the process accurately or
completely. Another approach is to use a
combination of software and human intervention;
however this approach is more complex, making
the documentation process difficult.
As a response to these problems, software has
been developed that enables the full business
process (as developed in the process design
activity) to be defined in a computer language
which can be directly
executed by the computer. The system will either
use services in connected applications to perform
business operations (e.g. calculating a repayment

plan for a loan) or, when a step is too complex to

automate, will ask for human input. Compared to
either of the previous approaches, directly
executing a process definition can be more
straightforward and therefore easier to improve.
However, automating a process definition requires
flexible and comprehensive infrastructure, which
typically rules out implementing these systems in
a legacy IT environment.
Business rules have been used by systems to
provide definitions for governing behaviour, and a
business rule engine can be used to drive process
execution and resolution.

Monitoring
Monitoring encompasses the tracking of individual
processes, so that information on their state can
be easily seen, and statistics on the performance
of one or more processes can be provided. An
example of the tracking is being able to
determine the state of a customer order (e.g.
order arrived, awaiting delivery, invoice paid) so
that
problems in its operation can be identified and
corrected.
In addition, this information can be used to work
with customers and suppliers to improve their
connected processes. Examples of the statistics
are the generation of measures on how quickly a
customer order is processed or how many orders
were processed in the last month. These
measures tend to fit into three categories: cycle

time, defect rate and productivity.

The degree of monitoring depends on what
information the business wants to evaluate and
analyze and how business wants it to be
monitored, in
real-time, near real-time or ad-hoc. Here,
business activity monitoring (BAM) extends and
expands the monitoring tools generally provided
by BPMS.
Process mining is a collection of methods and
tools related to process monitoring. The aim of
process mining is to analyze event logs extracted
through process monitoring and to compare them
with an a priori
process model. Process mining allows process
analysts to detect discrepancies between the
actual process execution and the a priori model as
well as to analyze bottlenecks.

Optimization

Process
retrieving
information
monitoring phase; identifying the potential or
actual bottlenecks and the potential opportunities
for cost savings or other improvements; and
then, applying those enhancements in the design
of the process. Overall, this creates greater
business value.

Re-engineering
When the process becomes too noisy and
optimization is not fetching the desired output, it

is recommended to re-engineer the entire process

cycle.
optimization includes process performance from
modeling or
BPR has become an integral part of organizations
to achieve efficiency and productivity at work.

Certification

Currently the certification is being offered by

Global Association for Quality Management
(GAQM) the Syllabus and Certificate is
recognized, approved and managed by the
International Accreditation Organization (IAO)

2.6

Overview of Modules

2.6.1

Sales and Marketing

It is important to know that the Sales module
which also known as
Customer Relation Management (CRM) in an ERP
system is the most important and essential
function for the existence of an organization.
Sales module in an ERP system manages the
functions of domestic and export sales of a
company. This is the module that maintains the
customer and product database.
Functions of sales module also includes the
interacting enquiries, order placement, order
scheduling and then dispatching and invoicing
form the broad steps of the sales cycle. Stock
transfer between warehouses is also covered by
this module. Apart from all these functions Sales
module also carry out

the task of providing analysis reports to guide

decision making and strategy planning.
Organizations always wanted to have a good and
fighting sales and marketing force to compete in
the market. A comprehensive sales and marketing
ERP module will help a company stay competitive
and streamline their sales and marketing
activities.
Sales and marketing module in an ERP system
allows activities such as contacting customers and
tracking of each customer orders right from
placing an order to dispatch of material for that
particular order and
customer . This module also helps allows sales
executives to contact customers and follow-up
each and every sales invoice and receive
payments for such invoices.
Another important aspect of sales module is it
allows management to monitor sales target
achieved by individual marketing personnel as per
the target planner for each marketing personnel.
This feature in of the sales module in the ERP
system enhances the working of the marketing
department and ensures personnel are not on the
right direction.
A good sales and marketing module also has
features to track lost orders
and identify the reasons for loosing those orders.
Business partners and franchises are a common
phenomenon in today's world. Latest ERP
software will associate marketing personnel to

their business partners and franchises and allow

them to track and monitor their performance.
ERP sales module can also track sales trends over
different periods and prepare the report, Sales
forecast can be made using this module as well as
provide all over sales and marketing activities of
the company.
The ERP module offers an effective customer
complaint management tool which also includes
repairs
processing and document management.
2.6.2 Accounting and Finance
This module of the software will take care of all
accounts related entries and their impact on the
whole system. How the finance comes and how it
is been utilised. Total flow of money (Cash/Bank)
and total expenditures will be reflected here. As
an after effect of this, the management will be
able to take their important financial decision,
Budgeting etc. They can come to know about
company's financial position at any point of time.
All sorts of important financial reports i.e.
Trial Balance, Trading A/c, Profit & Loss A/c,
Balance Sheet, Debtor's Balance, Creditors
Balance, Cash/ Bank Fund position and many
more are covered in this module.
The Accounting Module is completely Transaction
based unlike journal based. This implies most of
the accounting functions are handled through
relevant transactions in other Modules there by
saving lot of time. The Module contains complete

functionality required for any Accounting

Department right from vouchers to the Balance
Sheet and Profit and Loss Account.
Budgeting and Variance Analysis between
Budgeted and Actual figures helps in controlling
the Enterprise Expenses and Income efficiently.
The Module also includes Cost Centres, which is
completely flexible in terms of defining Cost
Centres and their components. Cost Allocations
for General Overheads can also be done on a predefined basis and required outputs could be
generated for analysis purposes. Outstanding of
Payables and Receivables with Ageing Analysis of
both debtors and creditors are some the features
of this module. Overall the module takes care of
complete functions of any Accounting
department.
2.6.3 Production Module
In the process of evolution of manufacturing
requirements planning (MRP) II into ERP, while
vendors have developed more robust software for
production planning, consulting firms have
accumulated vast knowledge of implementing ERP
production planning module. Production planning
optimizes the utilization of manufacturing
capacity, parts, components and material
resources using historical production data and
sales forecasting.
ERP production module will just handle a tiny
portion of production. The module begins with
Product

creation. There will be a component master and

stage master . This module is mainly designed to
monitor day-to-day production progress. On
completion of any work order information will be
passed on to despatch for delivery. Reports on
delivery schedule will be available in this module.
Production Planning helps an organization plan
production with the optimum utilization of all
available resources. Material Requirement
Planning is done based on the production advice
generated by the sales department. Feasibility of
production is evaluated using details like raw
material availability and
procurement time, machine availability and
capacity. A production schedule is generated for
all machines where the scheduling is done in an
optimized fashion based on the priorities of
production.

Main features of Production and

Production planning module:
Production module:

Process definition with inputs, outputs, byproducts and overheads

Definition of Bill of Material for all products up to
any number of levels
Planning based on customer wise production
advice and sales forecast
Material requirement planning: MRP based on
machine capacity
and availability, machine efficiency, raw material

availability, lead time - giving feasible quantity for

production
Production plan for machines with optimum
utilization of all available resources like raw
materials and machines
Option to revoke production plan to change
input parameters/ production priority/ quantity
using fresh production advice
Generation of production schedule for machines
detailing inputs and outputs
Analysis of machine efficiency and utilization
Automatic generation of MRS and purchase
requisitions on finalization of plan
Generation of process requisition for processes
that have to be subcontracted
Reserving quantity for production
Automatic generation of job orders for
production
Option to make daily plans for production

Production Planning module:

Process definition with inputs, outputs, byproducts and overheads
Definition of Bill of Material for all products up to
any number of levels
Planning based on customer wise production
advice and sales forecast
Material requirement planning: MRP based on
machine capacity
and availability, machine efficiency, raw material
availability, lead time - giving feasible quantity for
production

Production plan for machines with optimum

utilization of all available resources like raw
materials and machines
Option to revoke production plan to change
input parameters/ production priority/ quantity
using fresh production advice
Generation of production schedule for machines
detailing inputs and outputs
Analysis of machine efficiency and utilization
Production Planning helps an organization plan
production with the optimum utilization of all
available resources. Material Requirement
Planning is done based on the production advice
generated by the sales department. Feasibility of
production is evaluated using details like raw
material availability and procurement time,
machine availability and capacity. A production
schedule is generated for all machines where the
scheduling is done in an optimized fashion based
on the priorities of production.

2.7

Review Questions
1. Provide an overview of important modules in
ERP.
2. Explain BPR.
3. Elucidate the life cycle phases of BPR.
Check your Progress:

Name some ERP Solution for small enterprise

What are the leading two top ERP Organizations
in the large enterprises segment?
3. Define Reengineering.
1.
2.

What are the objectives of

BPR?
5. Differentiate process governance and process
management.
6. What are the stages in BPR lifecycle?
4.

2.8

Answers to check your progress

1. SysPro, NetSuite, Exact Globe
2. SAP, Oracle
3. Reengineering is the fundamental rethinking
and radical redesign of business processes to
achieve dramatic improvements in critical
contemporary measures of performance such as
cost, quality, service and speed.
4. Customer focus, Speed, Productivity, Quality,
Flexibility, Compression
5. Process governance is all of the company's
governance activities which, by way of allocating
on
the processes, work towards reaching its
objectives, which are both operational and
progress- related.
Process management is all the management
activities of a given process which work towards
reaching the objectives allocated for this process
6. Design, Modeling, Execution, Monitoring,
optimization, reengineering, certification

UNIT III
Planning, Evaluation And Selection
Of ERP System
Practically all evaluation methods rely on the

application of evaluation criteria as basis for

selection; based on the values obtained by the
candidate software packages for each criterion,
an aggregate score can be calculated, which is
used for the ranking of candidates. The most used
technique is AHP Analytical Hierachical Process,
in which the criteria are structured as a hierarchy,
and specific weights are defined for each level in
the hierarchy.

3.1

Planning, Evaluation and Selection of ERP

Systems
The criteria to be used for ERP software selection,
as presented in the literature, include several
categories of criteria. One such structuring,
includes six categories:
functionality the coverage of functional
requirements,
technical architecture technical requirements,
including integration with existing systems
cost both for implementation, maintenance
and further adaptation / extension
service and support provided by the vendor
ability to execute
vision
levels
Most authors also include the vendor evaluation
as a significant criterion. However, there is no
standard regarding the defined categories and
criteria. Further, a recommended set of criteria for
the selection of an ERP solution is presented.

When finding and selecting ERP software, the

following main functions should be considered:
Customer and Order Management, Purchasing
Control, Production Schedule, Ingredient List,
Inventory Management, Interface with CMMS
system, Reporting and Analysis, Integration with
Accounting System, Payroll and HR (Human
Resources).
The software evaluation process uses a number of
factors that can be consider in specifying the
application software. This factors are: general
requirements, administration and security,
reporting, Web access and integration, vendor
characterization and cost (of the software and
associated support and services).
General requirements are related to:
Operating System - requirement for a particular
operating system
Database format - requirement for a particular
database system
Data import or export the capabilities of export
or import data in/from other software packages.
The look and feel of the application
requirements for standard windows processes and
procedures?
Filtering and searching friendliness (this applies to
database software) existence of several optional
ways of finding data that the users will need.
Look-ups Look-ups are tables or drop down lists
that offer a selection of data to choose from when
using the system.

User configurability of look-ups and lists - the lists

and drop downs mentioned above to be user
configurable.
User configurability of tags and labels
Handling of links to ancillary information - the
system should meet the requirements with
respect to its handling of links and hyperlinks to
external records and information.
Required number of concurrent users. - does the
application support the required number of users?
Concurrent users are users that are logged on to
the system at the same time or not.
Archiving requirements. - archive the data for a
number of years.
Existence of barcoding, PDAs and remote devices
if are necessary.
Single or multi-site functionality the possibility
that the application support multi-site operation
or it will be installed on a single site
Graphical, hierarchical data structure - database
systems which display a graphical representation
of a hierarchical structure (parent/child
relationships) are generally preferred.
Regulatory compliance support if in user
industry are there any statutory standards to
which the software must comply
Ease of implementation the work required to
implement the software
Additional database software required - some
applications require that licenses are purchased
for additional database software.

System maintenance required

Paperless systems - most applications generate
paper reports or other hard copy.
Access to data from various areas - system users
may require to log on and input or check data
from any work station that has the application
installed.
Equipment history - display of equipment
maintenance history over
time should be easily achieved is an important
capability of software.
Simple login process - login should be achieved
quickly and effortlessly.
Speed of access and response time
Customizable screens - allow the administrator to
hide specific fields from defined users. This is not
a security function, but is only used to simplify
the screens for certain users, hiding those fields
that they do not use.
Resourcing - all software applications require
resources to keep them running and administer
them.
Alternative Languages the existence of the
support of alternative languages,
Administration and security requirements
are related to:
Ease of use - Administration of the security
features of some software systems can be very
complex. The application should have an usable
administration module.
Tabular selection - Many security modules offer a

table of functions for which permissions can be

granted to each user or group.
This is normally done by

checking or ticking the relevant permissions

boxes for each user or group.
Password - Users should be allocated
passwords. This need not necessarily be done on
an individual basis. For example it may be enough
for all people doing the same job and in the same
section to have the same pass-word.
Individuals and group settings it should be
possible to set up individual users ID's as well as
user groups. This allows users who require the
same access level to be placed in the same group.
Audit trail - an administration audit trail can be
required, that would provide traceability to
individuals for all changes to the ad-ministration
and security module.
Customization - Application customization
should be easy for the administrator. For example configuration of screens and user
configurable data should be intuitive and not
requiring a high level of IT knowledge.
Reporting requirements are related to:
Ease of access to reports - Reports must be
easily accessed and found on the system.
Data export capability - Many systems provide a
data export facility. For example they may allow
to export data to MS Excel.
Customizable reports - Customizable re-ports

allow the user to modify existing re-ports and

same them as additional reports. This is much
easier that creating reports from scratch.
Format of reports (graphical/ text) - What
functionality does
the application have with respect to its handling
of report output? Does it allow data to be
displayed graphically?

Web access and integration

Purchase or rent - Who owns the software? This

is an important factor as some web based
systems can be purchased and installed on your
own Intranet. Others are rented and installed on
the vendor's servers.
Data ownership - Is there any ambiguity with
respect to the ownership of the data?
Functionality - Due to limitations in the
programming of web
browser based systems some of these packages
have limited functionality.
Response Speed - Is the response time of the
software satisfactory?
Company stability - a mechanism should be in
place to recover the data if the vendor company
is going out of business.
Cost analysis In case of renting web based
software the cost against that of buying a web
based package for installation on
your Intranet should be assessed.
Internet access - Do all the PC's in a a web
based system already have Internet access, and if

not what will this cost?

Customization - Web based software must often
be used without customization. If this is the case,
will the application meet the requirements in its
standard form?

Vendor characterization
Stability - each vendor's stability must be
assessed. How long have they been in business?
How long have they been selling this
type of software? When this application was first
developed? How many local and inter- national
clients do they have for the application?
Professionalism - assess each vendor for the
professionalism displayed in dealing with the
client's inquiry and in demonstrating their
products.
Service level agreement - assess each vendor
for the level of future service and support that
they offer. Do they provide telephone support at
the times you require it? Do they provide online
help? What does it cost for the level of service
that you require?

Costs
Cost of software - assess the application for
total cost for the configuration and number of
users required
Cost of hardware - the total cost of any
additional hardware required to make the
implementation work with the application
Potential future cost - assess for potential for
significant future costs.

Implementation cost - installation of the

software and consultancy.
Training cost - assess for training costs involved
in implementing this application
Cost of customization - assess the application
for any costs involved in customizing it for your
requirements.

3.2

ERP Implementation Life Cycle

THE process of ERP implementation is referred as
d as ERP Implementation Life Cycle . The
following are the steps involved in completing the
lifecycle.

Shortlist on the basis of observation

Selecting an ERP package for the company can
nevertheless be compared with the process of
Selecting the right Person for the Right Job .
This exercise will involve choosing few
applications suitable for the company from the
whole many.

Assessing the chosen packages

A team of Experts with specialized knowledge in

their respective field will be asked to make the
study on the basis of various parameters. Each
expert will not only test and certify if the package
is apt for the range of application in their field but
also confirm the level of coordination that the
software will help to achieve in working with other
departments. In simple terms they will verify if
the synergy of the various departments due to
the advent of ERP will lead to an increased

output. A choice is
to be made from ERP implementation models.

Preparing for the venture

This stage is aimed at defining the

implementation of ERP in all measures. It will lay
down the stipulations and criteria to be met. A
team of officers will take care of this, who will
report to the person of the highest hierarchy in
the organization.

Gap Analysis

This stage helps the company to identify the gaps

that has to be bridged, so that the company
practice
becomes akin to ERP environment.
This has been reported as an expensive
procedure but it is inevitable. The conglomerate
will decide to restructure the business or make
any other alterations as suggested by GAP
analysis in order to make ERP user friendly. Click
here for a detailed study on GAP analysis. A
choice is to be made from ERP implementation
models.

Business process reengineering

Changes in employee rolls, business process and

technical details find place in this phase of
restructuring
most popularly referred as business process
engineering. For more details on BPR click here.

Designing the System

This step requires lot of meticulous planning and

deliberate action. This step helps to decide and

conclude the areas where restructuring have to
be carried on. A choice is to be made from ERP
implementation models.

In-house Guidance

This is regarded as a very important step in ERP

implementation. The employees in the company
are trained to face crisis and make minor
corrections as well because the
company can neither be at liberty nor afford the
bounty to avail the services of an ERP vendor at
all times.

Checking
This stage observes and tests the authenticity of
the use. The system is subjected to the wildest
tests possible so that it ensures proper usage and
justifies the costs incurred. This is seen as a test
for ERP implementation.

Preparing the employees to use ERP

The employees in the organization will be taught

to make use of the
system in the day to day and regular basis so as
to make sure that it becomes a part of the system
in the organization.

Post Implementation
The process of implementation will find meaning
only when there is regular follow up and proper
instruction flow thereafter and through the
lifetime of ERP. This will include all efforts and
steps taken to update and attain better benefits

once the system is implemented. Hence an

organization has to perform ERP implementation
safely and correctly.

Errors in ERP implementation

ERP implementation failure is a major concern for
companies. ERP implementation needs to be done
without allowing any scope for limitations and
mistakes. If it is not done perfectly then the
success of ERP system will remain a question
mark. The first and foremost factor that
discourages ERP in an organization is the
exorbitant costs and investment. The second one
is the drafting of an ERP implementation plan to
ensure ERP implementation success.

3.3

ERP Implementation Methodology and

Framework
There are critical issues that must be carefully
considered to ensure successful implementation
of an ERP system project. Based on the vast
literature review conducted on ERP system
implementation, this research has derived a
framework of ERP system implementation
depicted on Figure.
As the figure shows, there are critical factors
hypothesised to play a more overriding role in the
project of ERP implementation. On the other
hand, they should be ongoing throughout all
implementation's levels. These factors are change
management, monitoring and feedback, risk
management, communication, and training.

The figure also shows that the implementation

ERP system has been subdivided into three
levels: strategic, tactical, and operational. Each
level contains a number of critical factors. These
levels of implementation, however, are not
independent of each other and each
level should be used to drive to the next level, for
example, strategic level should be used to drive
to the tactical level, and each level has to be well
managed. Moreover, there is a direct relationship
between the implementation's levels at which a
decision is taken and characteristics of the
information required to support decision making.
FRAMEWORK ELEMENTS

Project Management
ERP implementation is challenging, costly, and
risky. Consequently, to achieve the desired
benefits, the ERP system implementation must be
carefully managed and monitored. It
is in this respect that project management
becomes important, if not crucial for success.
Project management deals with various aspects of
the project, such as planning, organisation,
information system acquisition, personnel
selection, and management and monitoring of
software implementation.

Project Schedule and Plans

Slevin and Pinto defined project schedule and
plans as the detailed specification of the individual
action steps required accomplishing the project's
goals. Sieber and Nah

suggested that if the project has failed, the fact

that not every detail of the plan was pursued be
typically used as the rationale for the project's
failure.

Monitoring and Feedback

Slevin and Pinto defined the monitoring and

feedback factor as the timely provision of
comprehensive control information at each stage
in the implementation process. This is one of the
project manager's fundamental tasks.

Risk Management
Risk management can decrease the number of
unexpected crises and
deviation from budget and schedule, providing
advance warning as problems begin to develop. It
is the competence to handle unexpected crises
and deviations from the plan. Any deviation from
the implementation project budget, schedule, and
defined project goals must be identified and
tracked carefully, with appropriate corrective
action taken.

Change Management
Cooke and Peterson identified change
management, in terms of adopting an ERP
system, as activities, processes, and
methodologies that support employee
understanding and
organisational shifts during the implementation of
ERP systems and reengineering initiatives. Many
ERP implementation failures have been caused by

the lack of focus on the soft issues , i.e. the

business process and change management.

Training

ERP systems are extremely complex systems and

demand rigorous training. Installing an ERP
software package without adequate end-user
preparation could yield to drastic consequences.
Inadequate or lack of training has been one of the
most significant reasons of many ERP systems
failure

Communication
Communication is one of the most challenging
and difficult tasks in any ERP implementation
project. Slevin and Pinto defined communication
as the provision of an appropriate network and
necessary data to all key factors in the project
implementation. Communication has to cover the
scope, objectives, and tasks of an ERP
implementation project.

Implementation Approach
The company has to take a fundamental decision
regarding the implementation approach and
clearly
select a focused path. There are aspects, such as
organisational structure, resources, attitude
toward change, or distance between the various
production facilities, that influence the company's
decision to select ERP system implementation
approach. Three main implementation
approaches: step-by- step, big bang, and roll-out

Welti. The roll-out approach, which may be

implemented as a step-by-step or big bang,
creates a model implementation at one site,
which is then rolled out to other.
However, small and medium size enterprise (SME)
cannot afford to spend years on a software
project
like large enterprise. Therefore, vendors and
consultants of ERP system have responded with
methods and tactics specifically designed to keep
ERP system projects moving. Most enterprises
now use a rapid implementation approach, e.g.
AcceleratedSAP, or ASAP. In this regards,
companies should consult with ERP software
package vendors and implementation partners to
understand more regarding specific details of
rapid methodology.

Final Preparation
Before going live on an ERP system, all necessary
adjustments, in order to prepare the system and
business
for production start-up, have to be made. The
system must be tested to make sure that it works
technically and the business process
configurations are practical.

Go Live

This is the final step of the ERP package

implementation; it is also referred to as going
into production . It has two major steps:
activating the system and transitioning from the
old system to the new system

3.4

Training
ERP training should address all aspects of the
system, be continuous and based on knowledge
transfer
principles wherever consultants are involved.
Welti cited that every level in the orgainsation
class and the various users require different
training. Several authors and practitioners agreed
that the proper training is one of the main critical
success factors.
Enterprise Resource Planning (ERP) solution
training is important equal to or placed little
above the evaluation and selection of an ERP
system itself. However, training is often the most
overlooked and underfunded portion of any largescale integration.
When the decision being taken to implement an
ERP system in an
organization, training session to the end-users
should be discussed and finalized in detail. As lot
of money and time is invested in this effort to
increase productivity, efficiency and out-put over
time from the end- users, it is very important to
pay much attention to the training to end-users
for the effectiveness of the system in the business
operations.
In a normal process, during the validation or
cost case phases of the ERP implementation,
companies determine the overall business goals.
The training goals also should be aligned during

one of these two phases. Insufficient training

could cause operational delays and an
impediment to realizing your business goals.
While implementing an ERP system the members
of the project team need to develop such
knowledge and skills that will enable them to
establish how to best use the functionality for the
operation and maintenance phase. Since the
members of the project team will become the
trainers of other employees, they need to develop
the skill to be able to formulate and deliver a
training course.
The users need to have the skill for using the
functionality relevant to their roles. They should
understand
the basic concepts of ERP and also how to
perform the day-to-day activities in the ERP
system. Others who require training include
managers, who should have at least an
appreciation of what the system does. Ideally, the
project manager should have a good
understanding of all aspects of the system so that
he can be effective in dealing with any issues
raised.
A select number of people will require more
specific technical training so that they can design
databases, write scripts, manage users, generate
reports and query the database for specific
requirements.
The system administrators need to be able to
setup the system and then maintain it. They will

require knowledge about how to handle system

security and deal with technical problems. They
will need to develop a level of understanding of
the functionality so that, at some stage after
implementation when the project team is
disbanded, they are able to manage the system
smoothly.
Additionally, over the period it can be expected
that the ERP tool will evolve to some degree along
with the company and projects that it serves.
From time to time it may be necessary to conduct
additional training sessions to keep everyone
abreast of the changes that have been
implemented.
It is common knowledge that successful training
is essential for facilitating adoption and for
minimizing IT support costs. IT departments have
the role of providing valuable guidance, even if
training is ultimately the responsibility of the
business unit. The foundation is established in the
requirements gathering and design phase of an
ERP System. However, the unfortunate trend in
short term cost cutting is to reduce or in some
cases, completely eliminate the training budget.
Embedded in that budget are skills training,
knowledge
acquisition and tuition reimbursement. When
organizations need to reduce their cost, they
usually will cut the training cost as it is considered
as an overhead costs. Training is often not
perceived as a high priority. However, training is

not a recreational luxury to be implemented

when times are good, but is an essential survival
tool when times are pretty rough. It is important
to maintain an ongoing assessment of the internal
training needs of the organization while
anticipating the changes in the external
environment that will dictate new skills and
knowledge. Defining an appropriate training
approach is
seen as an important factor contributing to
success of ERP systems. In practice, experiences
show inefficient or ineffective training method
could lead to decrease motivation to use the
system. Often ERP end-users are not system
analyzers, therefore, adequate training will foster
a positive attitude towards the business goal of
the system leading to user acceptance.
Training needs to use effectively Business
Processes and ERP Systems with the goal to
increase profit. However, on the other hand,
training people is also seen as a burden because
the available labor hours will
decreased which in turn will impact the profit rise.
The dilemma that most managers encounter is to
find the balance between budgets for training
verse the benefits.

3.5

Data Migration
At the end of 2009, Canadian airline Westjet
learned first-hand how data migration problems
can cripple operations. In this case, Westjet failed

to properly migrate some 840, 000 customer

transactions as it cutover to its new CRM and
online reservations systems. Consequently, its
online booking system repeatedly crashed upon
launch. These crashes led to an unanticipated and
unmanageable flooding of Westjet's call centers.
In fact, four months after the cutover nightmare,
call center wait times had still not been reduced
to pre-cutover levels. Further, Westjet estimated
that it would need six months to repair all of the
damage. The irony of the story is that the
problems occurred in the context of a new system
that was intended to improve Westjet's customer
service and reservations processes.
To avoid problems like the ones suffered by
Westjet and many others, the implementing
organization needs to execute on an actionable
data migration plan that deals with the
following: data cleansing, data conversion, static
data migration and dynamic data migration.
Here's a brief explanation of each of these
concepts.
Data Cleansing: Good, clean data is nonnegotiable. Data errors and redundancies
introduce risks of operational and reporting
problems and must be eliminated. Data can be
cleansed in any of the three following ways: in
the legacy IT or ERP system, in an intermediate
format (e.g. Excel), and in the new IT or ERP
application.
Data Conversion: Data has to be formatted to

meet the standards of the new system.

Conversion can be done manually or by an
automated program. If an automated program is
used, the programmers need to make sure that
the reformatted data records do not jeopardize
file system integrity.
Static Data Migration: Static data changes
infrequently. Examples include engineering
master files and price books. Given the stability of
this type of data, it should be migrated early on
so that the later focus can be
placed on the more challenging task of dynamic
data migration.
Dynamic Data Migration: Dynamic data refers
to volatile data. Examples include shop work
orders and accounts receivable open items. Given
the changeable nature of this type of data, it
should be migrated as late as possible. Late
migration helps ensure that the new system
includes the most up-to-date data. Transferring
changing data particularly when changes occur
during cutover is both difficult and risky.
With the data migration concepts under our belt,
we're ready to develop a migration plan-ofattack.

3.6

People and Organization in

implementation Consultants, Vendors and
Employees
Initially, organizations were skeptical about ERP
since they felt that their businesses were unique

and their cultures different. As time passed and

their business problems became more pressing,
they started looking at ERP as the panacea for
their woes. In their urgency, they were expecting
miracles, Unfortunately this doesn't happen most
of the time, leaving users frustrated which in
turn, leads
to poor participation and costly deIays. It is
important to understand that an ERP package
cannot fit in completely with the existing business
practices of an organization.
The onus to appreciate this fact is on the users
and they have to work with the implementation
consultants to adapt to the package. Initially,
organizations were skeptical about ERP since they
felt that their business were unique and their
cultures different. As time passed and their
business problems became more pressing, they
started looking at ERP as the solution for their
woes. In their urgency, they were expecting
miracles. Unfortunately, this doesn't
happen most of the time, leaving users frustrated
which in turn, lead to poor participation and
costly
delays. It is
to understand that an ERP
package cannot fit in completely with the existing
business practices of an organization. The onus to
appreciate this fact is on the users and they have
to work with
the implementation consultants adapt to the

package. In order to avoid setbacks in an EPR

project, a consultant plays a useful role. The
consultants by virtue of their industry, experience
and package expertise should pitch in and set the
expectations of users at various
important
to
levels keeping in mind the overall business
objectives of the client. They can do so by
working closely with key users, understanding
their needs, analyzing the business realities and
designing solutions that meet the basic objectives
of the company.
At this point, it is also important to understand
the distinction between the roles of the
consultants and the users. It is the users who will
be driving the implementation and their active
involvement at all levels and across all business
functions is absolutely critical. An ERP package is
expected to improve the flow of information and
formalize all
the business processes and workflow that exist in
an organization. Many users expect their
workload to decrease after an ERP
implementation, but this may not always happen.
The important thing to understand is that the ERP
package is an enabling tool to help the users do
their job better, which may call for additional
efforts. If one has to have more information in a
system, it entails more work for some users, but
the benefit is that this information if properly

stored, can fruitfully used by other users in

making better decisions. As the flow of
information throughout the organization
improves, the company starts performing better,
and this in turn benefits the users who have
collectively improved their way of working.

Role of the Vendor

As soon as the company signs the contract, the

vendors should supply the product and its
documentation. Once the software is delivered,
the company can develop the training and testing
environment for the implementation team. The
roles of the vendors during and after
implementation of ERP are:
The vendor is responsible for fixing any
problems in the software that the implementation
team encounters.
The vendor should have a liaison officer to
constantly interact with the implementation team.
The vendors provide initial training for the
company's key users. These key users are the
ones who will define, together with the
consultants, how the software is to serve the
company.
They are also called as in-house functional
experts who decide how the functionalities are
implemented to adapt the
product to suit the company's unique
requirements. It is very important to provide
these in- house experts a through training on the
features of the package.

Vendor's training should include showing the key

users how the package works, what are the 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 objective of the vendor training is to show
how the system works, not to show how it should
be implemented. This means that the vendor
demonstrates the product as it exists and
highlights what are the possible options available.
The company's employees who are participating
in the vendor training should try to understand
the characteristics of the package and the impact
of the system on their business processes. The
trainees should use these training sessions to
question the vendor on all aspects of the system.
Now some of you might ask, we are hiring
consultants who are experts in the package so
why can't we get training from the
consultants?
This is true. Most of the consultants are capable
of providing sound training for the packages. But
we are hiring the consultants for implementing
the system. However, the consultants also have a
role to play during this vendor training. They
should participate in the training sessions to
evaluate how the users react to the reality that is
starting to take shape from the detailed

presentations and demos. 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 it will also prevent the vendors from making
false claims.
Vendors play an important role in project support
function and exercise the quality control with
respect to how the product is implemented. It is
the vendor who understands the finer details and
subtleties of the product and can make valuable
suggestions and improvements that could
improve the performance of the system. It is also
in the best interests of the vendor that this
participation continues, because if the
implementation fails, most of the
blame will fall on the vendor. Also a successful
implementation means another satisfied client,
improved goodwill and good referrals and so on.
So the vendor will continue to participate in all
the phases of the implementation, mostly in an
advisory capacity, addressing specific technical
questions about the product and technology.

Whether to customize or not?

Vendors help to fill gaps between the package and
the actual business processes. The software
might have to be customized to suit the
company's needs. Here, customizing means
altering the product so that it
is suited for the company's purposes. The choice
of whether to customize or not is the one that can

have enormous impact on the project and it often

constitutes a point of conflict between the
consultants and users. But if the decision to
customize has been taken, it is the vendor's duty
to carry out the necessary modifications. This is
because only the vendor knows the product well
enough to make the necessary changes without
affecting the other parts.
ERP integrates business process reporting for the
different business divisions. It creates transparent
data exchange and facilitates timely and
informed decision making for senior managers.
The successful implementation of the enterprise
resource planning software improves the
management and planning of a business
corporation. It increases the performance of the
organization. This increasing trend has enhanced
the value of ERP vendors in the market.
ERP vendors are continuing to expand market
presence by offering new applications. The top
three players namely SAP AG, Oracle, Baan
PeopleSoft account for 64 per cent of the ERP
market revenue.

Post ERP implementation

After an ERP implementation,
organization should not sit back and relax.
Depending on the scope of the ERP
implementation exercises, several options can be
explored tom further maximize the gains.
The first thing that an organization should look
forward to, after an ERP implementation, is

improved morale of the workforce. Needless to

say, it would have a cascade effect in terms of
increased productivity and better customer
response.
On the monetary side, depending on the level of
success, ROI should also be on the way up. It is
estimated that a well managed ERP project can
have up to 200percent return on investment
within a short period of time while a poorly
managed ERP project can yield a return on
investment as low as 25 percent.
During the phase of minimization, organizations
move closer to best practices. Depending on the
target environment design, which is governed by
the ability to change, this effort could be a natural
extension of the ERP implementation or it could
be a separate project in itself. Process
optimizations, and thus performance
improvement, are a continuous exercise.
Vendor Security Certification
You should require the vendor to respond to these
items in writing:

Must-Have Features

The ERP system requires strong passwords.

There is a low overhead and
secure method to change passwords.
Stored passwords are encrypted.
There are no features of the ERP that require
that users, no matter what their role, be given
access to the underlying database.
The ID is not the SSN.

Roles can be tied to position categories.

Default roles can be established.
Roles can be established that allow a user to
process sensitive data in the ERP but restrict that
user from downloading the data.
All data fields that are required by federal law to
be protected come with encryption enabled.
All data fields that are required by federal law to
be protected come with auditing enabled.
Data fields can be encrypted at the database
level as well as at the form or table level.
Reports are generated that show who has
requested data exports that include sensitive
data, such as SSNs, credit card numbers, and so
forth.

Desired Features
Critical processes (payroll, grades) can be run
first in audit mode.
The institution can specify additional fields to
have table lookups.
The institution can specify additional fields to be
encrypted.
The institution can specify additional fields to
have audit trails.
The system prevents the creation of duplicate
records during batch transactions.

Consultants
Business consultants are professional who
specialize in developing techniques and
methodologies for dealing with the
implementation .They are the experts in the

administration, management and control of

various problems that crop up during the
implementation.. Each of them has many manyears of implementation experience with various
industries and would have time-tested
methodologies and business practices that ensure
successful implementation. They are good at all
phases of the
implementation lifecycle, right from package
evaluation to end-user training. The only problem
with these business consultants is that they are
very expensive. Many of the big consulting firms
invest a great deal of money in developing a
range of consulting services and assign many of
their professionals to become specialists in the
various aspects of ERP packages and their
implementation.
Thus, consultants are people who have made the
business of ERP implementation their business
and have invested huge amount, of money and
manpower for that
purpose. So when you want to get the services of
these consultants, the first question that will be
asked is- Are they going to be expensive? The
answer is a definite YES.
The consultants will be expensive, so the
company will have to formulate a plan regarding
best optimum use of the money spent on
consultants. If you study the statistics, you can
see that a well-selected, integrated system that
was successfully implemented and which is

successfully working usually pays for itself in a

relatively short periodbetween 10 and 30
months. If you analyse the cost break-up, you
will find that the most expensive part of the
implementation was the consultation charges. For
a typical ERP implementation, the cost of
consultants is 1.5 to 3 times for every rupee
invested in the software product. Sounds
amazing; but it is true and it is also true that the
software will pay for itself the software cost, the
consultant's charges and other expenses incurred
during implementationin the above mentioned
period (10-30 months). But the catch is that the
product has to be the right one and the
implementation has to be successful. That is why
the expertise of the consultants becomes
invaluable and
the money spent on good consultation is never
wasted. So finding the right consultantspeople
who have the necessary know-how, who will work
well with the company personnel, people who will
transfer their knowledge to the company's
employees and people who are available in case
their services are required again is very
important.

Role of the consultants

The role of the ERP consultants is known to all of
us as we have seen many of them in action. The
company places its trust in the consultants, that
its business objectives will be achieved. The
consultants ensure the

success of the project. This produces quantifiable

results to the satisfaction of the company
management.
Consultants administer each of the phases of the
implementation. This ensure that the required
activities occur at the scheduled time and at the
desired level of quality with effective participation
of all those who must participate. The consultants
are responsible to convert the planned
methodology into task and allocate right resource
to complete that task.
Consultants add value to the project. They bring
the know-how about the
package and about the implementationthe
know-how that is not included in the standard
documentation. This know-how (also know as
practical knowledge) is derived from their
expertise which stems from practical experience.
Thus by eliminating the trial-and- error method of
implementation, and by doing it right the first
time, the consultants help in saving huge
amounts of money, time and effort.
Consultants should remain impartial while
questioning current company processes in an
effort to promote better businesses practices and
better implementation results. They should strive
to improve the
company's business processes so that the
software package can be used as it was originally
intended by its developers. Refining the
company's processes can only optimise the

performance of the system and maximise future

user satisfaction. The consultants are also
responsible for analysing and clearly addressing
the customisation issues.
ERP consultants show the advantages and
drawbacks of each area to the management and
reach a consensus decision. Consultants need to
balance their loyalty to the client and the project
with that of defending the package vendor, when
such defence is technically correct.
Consultant alerts the company management
about actions and decisions to be taken. This
ensures that job will not be compromised and the
implementation will not be jeopardised. Once the
project is complete, consultants will leave the
company. However, the knowledge of the project
should remain within the organisation. Hence,
consultants should train enough people in the
organisation so that the work they have started is
continued.
There are other tasks performed by the ERP
consultants. They:
Maintain technical documents on the projects.
Analyse business requirements.
Prepare the functional specifications for ERP
program development.
Perform Gap analysis and related studies.
Assess the competence level of the users of the
ERP system.
Perform Product design and operations review.
Identify requirements of the users of the ERP

system.
Interact with other modules consultants.

End-Users

ERP end-users are the people who

will be using the ERP system once it is
implemented. Most of the functions that the end
users used to perform are being automated by
the ERP system. ERP system brings drastic
transformation in the actual work process which
leads to change in old job descriptions.
It is human nature to resist change.
Implementation of an ERP system brings change
in a very massive scale. Employees will fear that
system will replace existing jobs, as many
functions will be automated. Also people will be
afraid of the amount of training they have to
undergo and learning they have to do
to use the new system. Job profiles will change,
job responsibilities will undergo drastic
alterations, and people will be forced to develop
new skill sets. If these fears are not addressed
and alleviated well in advance, it will cause
trouble for the organisation.
The automation of the business processes,
through technology, can eliminate the jobs of
many employees whose function it is to record,
control, calculate, analyze, file or prepare reports.
Even though ERP systems eliminate many
existing jobs, it creates many new ones with more
responsibilities and value addition. Employees get
away from

the monotonous clerical work and transform

themselves into highly valued individuals, in a
new and challenging working environment using
modern technology. If the company succeeds in
convincing its employees to accept this fact and
assist by giving them proper training, then the
major obstacle in the path of an ERP
implementation is solved.
For example, the recent research on SAP enduser training suggested that enterprises should
allocate 17 percent of the total cost of an ERP
project to training. Gartner research recognized
training as the top priority, and suggested that
companies that budget less than 13
percent of the implementation costs for training
are three times more likely than companies that
spend 17 percent or more to see their ERP
projects run over time and over budget.
The impact of application on ERP end-user
productivity is a complex undertaking because of
the wide range of business functions and user
types who interact with such systems. The
business productivity framework is developed to
measure how ERP end-users feel system affects
their personal productivity. This also develops an
opportunity to create a framework to evaluate
new system.

3.7

Review Questions
1. Outline the role of consultants in ERP .
2. Proper training is one of the main critical

success factors. Justify the statement.

3. Elucidate the ERP Implementation lifecycle.
Check your Progress:

Audit Trail is a _______ requirement.

What are the elements of the
ERP Implementation Framework?
3. What is Data Conversion?
4. Give an example of dynamic data.
5. Give some suggestions for the help consultants
can offer during training.
1. Administration and security
2. Project Management, Project Schedule and
Plan, Monitoring, Feedback, Risk Management
3. Data has to be formatted to meet the standards
of the new system. Conversion can be done
manually or by an automated program. If an
automated
program is used, the
1.
2.

3.8

Answers to check your progress

programmers need to make sure that the
reformatted data records do not jeopardize file
system integrity.
4. work orders and accounts receivable open
items
5. participate in the training sessions to evaluate
how the users react to the reality, ask questions
that the vendors are trying to avoid and the users
are unaware of

UNIT IV Maintenance Of ERP

4.1

Maintenance of ERP

The ERP system needs regular maintenance in

order to function properly. The ERP plan needs
revision and updating as per the changing
situations in the organization. We have already
seen that the ERP system should be reviewed
regularly.
The review comments and suggestions should be
incorporated into the system. Also the ERP
system needs fine-turning as the employees
become familiar with it. Once the ERP system has
reached a stable state
necessary action should be taken to improve the
performance.
The ERP tools that are implemented are another
area that needs maintenance. The project
manager should be in regular contact with the
vendors to see whether any upgrades or updates
are available. All patches and upgrades should be
installed to ensure that the tools are working at
their maximum efficiency.
Employees should be given refresher courses on
the new functionality that gets added with each
new upgrade. The training documentation should
also be updated so that it is in sync with the
procedures and processes.
Maintenance, as you know, is about changes to
existing software products. Most such changes
are enhancements--improvements to the
functionality of the software, as opposed to repair
work to fix errors. There is a sort of 60/60 rule for
software maintenance and enhancements--

roughly 60 percent of the software dollar for a

given product is spent on its maintenance (the
figure varies from 40 to 80 percent), and 60
percent of the maintenance dollar is spent on
enhancement (as opposed, for example, to 17
percent being spent on correction).
Now we enter the ERP revolution.
For the past few years, it has been possible to
buy most so-called back office business
applications--largely, transaction processing
systems for such tasks as accounting,
manufacturing, or human resources- -off the shelf
as packaged products. Packages to do this
collection of work are generally referred to as
Enterprise Resource Planning (ERP) systems, or
sometimes, Enterprise systems. Most ERP
systems are huge because of the diversity of
tasks they must perform, the fact that they
integrate those tasks, and the flexibility they
must have to perform
those tasks at enterprises with vastly varying
needs.
Let's take a look at where maintenance and ERP
intersect. A colleague and an author conducted a
study of ERP users and their maintenance
processes and problems. As preparation for
asking the respondents questions about their ERP
maintenance, we presented them with some key
definitions. First, we offered definitions for
traditional business systems maintenance. We
defined maintenance of a traditional business

system as consisting of (at least) enhancement

(changes to the functionality/requirements of the
system) and correction (changes
made to correct errors in the system).
Then we offered comparable definitions for the
ERP setting. We defined maintenance of an ERP
system as consisting of (at least) the following:
Customization (changes made to ERP
functionality via internal configuration switches)
Extension: changes made via ERP system
exits to...
Custom-code add-ons (often coded in a
vendor- provided language such as SAP's ABAP/4)
Third-party vendor bolt- ons
Legacy systems
Modification (changes made to the code of the
ERP itself--either by the user or the vendor)
The underlying concern here was that, with the
large level of maintenance/enhancement needed
by traditional information systems, it might not
be possible to perform comparable changes to an
ERP. If that were the case, the longevity of use of
an ERP could be severely compromised.
We asked whether the respondents had made
changes to their ERP's
functionality since implementation (that is, during
the maintenance/ operational process). Every
respondent answered the question with a yes!
Clearly, at least at a superficial level, the
maintenance of an ERP can and will involve
change.

The next question was concerned with how those

changes were made. The answers showed that a
broad spectrum of change approaches had been
used. Everyone had done customization (using
configuration switches); all but one had done
extensions (half of those had done add-ons
and/or bolt-ons and/or linking to legacy code);
a third of the total had used the vendor-supplied
language to build extensions. Two- thirds of the
respondents had had modification performed
(changes to the ERP code itself), largely done by
the users themselves or (to an extent half that for
user changes) by the vendor of the ERP. (Note:
User package software modification is generally
considered to be a very bad practice.)
We then asked the respondents to compare the
ease of ERP changes with comparable changes to
a traditional, custom-built information system. A
third of the respondents chose not to express an
opinion on this matter (likely coming from the
user community instead of a
traditional IS background). Of the remainder--on
a 1-7 rating scale ranging from very much
easier through about the same to much
harder --the average response was 2.75. In
other words, the average response indicated that
ERP systems are perceived to be easy to change.
It would appear, at least based on the answers to
this question, that ERP maintenance may not be a
barrier to making system change happen. The
final two questions were forward-looking. We

asked the respondents if they believed that they

would be able to use their ERP system (including
any vendor updates) indefinitely without
requiring any (further) extensions or
modifications. Answers could range from yes,
absolutely through perhaps to no, something
must be done. The responses averaged 4.5,
indicating that respondents generally felt that
more changes would need to be made to their
ERP system. (Note: Users were more prone to say
something must be done than information
systems personnel.)
The final question asked To what extent do you
believe that making changes is a serious problem
of ERPs? The range of suggested responses went
from no problem to a problem to be worked
on to a serious problem (either now or in the
future). Responses averaged 2.8, and thus,
closer to no problem. (Note: Information
systems people were more likely to see change as
a serious problem than users.)
In spite of the fact that the respondents to this
survey have been using their system for a fairly
long time, there still seems to be ambivalence
about the difficulty of making business-driven
change to an ERP. That ambivalence persisted
even when we differentiated between information
systems respondents and users.
But the bottom line of the findings is this: ERP
enhancements at the user
level do happen, and, at least at this time, the

ERP change mechanisms seem adequate to

handle it. That's good news for companies using
ERP systems.
The following findings are the outcome of the
surveys conducted in the seven Indonesian
companies which have been implementing ERP.
The following table exposes the survey results
concerning the three variables involved in this
study: ERP implementation success, strategical
impact and tactical impact.

4.2

Organizational and Industrial Impact

The findings show that ERP implementation in
Indonesia have more significant impact on
tactical, instead of strategical. Data analysis
conducted using Spearman rank test (nonparametric) show that correlation between ERP
implementation
impact, yx1= 0.167 (not significant with
p<0.05). While the correlation between ERP
implementation and tactical impact, yx1= 0.813
(significant with p<0.01) . It reflects that most of
Indonesian companies only implement the
standard module of ERP which only supports core
business. On the other hand, the company did not
do an optimal
and strategical
business process improvement before they
implement ERP system. ERP system
implementation has been driven by technology
itself rather than an organization's business need.

That is the most reason why the ERP

implementation in Indonesia is only an impact on
tactical level. Gaining competitive advantage is
the most reason why the company is adopting
ERP system. But most of ERP implementations in
Indonesia cannot create a competitive advantage
for the companies. Therefore, it needs to do
business process reengineering and software
change in order to meet an organization's
business need. However, this approach has a risk
of being unsuccessful to the ERP implementation.
Other than that, the company also needs to
implement some modules that support
organization's strategic level (i.e. business
information warehouse (BW), business
intelligence (BI), Supply Chain Management
(SCM), Customer Relationship Management
(CRM), etc).
The implementation of specific modules in ERP
system is expected to be aligned with the
company's business strategy, so it can give
strategic benefit and sustain future business.
Other than implementing specific modules,
Business Process Reengineering (BPR) is also
needed
to optimize the current business process in order
to gain competitive advantage . BPR is rarely
taken by Indonesian companies, especially
government-owned ones. It is suspected that BPR
will create radical changes which will lead to the
reduction of employees.

Further , BPR will also change the company's

business processes which have been the path of
the company for years. Employees will have to
learn completely new things and this will lead to
the declining in the overall productivity. Those are
the reasons why Indonesian companies are
frightened in implementing BPR before
implementing ERP. According
to O'Leary, ERP implementation approach (BPR
drives ERP) is very risky. But if a company is
successful in implementing it, the company will
gain optimum benefit as well as competitive
advantage. The other approach that is often
adapted is ERP drives BPR. This approach adopts
the whole business process provided by ERP . This
approach has minimum risks. However, this ERP
system will only support the company's
operational or it will only give impact to the
managerial and operational (tactical) level.

Tactical Impact on ERP

Implementation
Other than the strategic impacts
discussed above, ERP implementation also gives
tactical impacts. These include managerial and
operational level in the organizational hierarchy.
As mentioned before, ERP implementation gives
more significant impact tactically than
strategically, with yx1= 0.813 (significant with
p<0.01) . The indicators used for measuring
tactical impact in this research core business
support, production cost reduction, operational

efficiency, good resource management, good time

management, productivity increase, human
resource development, skill development and
employee turnover.
Based on this study, we found that 83.33%
respondents agree that ERP system can support
core business; 66.67% agree that it can reduce
production cost; 99.94% agree that it can make
an operational efficiency; 88.89% agree that it
can make a good resource management; 83.33%
agree that it can make a good time management;
83.33% agree that it can increase productivity;
77.78% agree that it can improve human
resource development; 72.22% agree that it can
improve skill development; and 55.56% agree
that it can cause employee turnover. This
indicates that ERP implementation is used only to
improve the
organization's internal process instead of gaining
strategic benefit while in fact ERP offers more
than just that. ERP can promote business alliance
and business innovation, and it can create
product differentiation and product leading. The
reasons behind these findings are (1) the
companies are not ready to make big investment
for implementing all modules in ERP, including the
specific modules; (2) the companies are afraid to
fail in their implementation, so they choose to
implement the modules for supporting the core
business only; (3) the ERP implementations are
not driven by the organizations business needs,

but they are driven by the technology itself; (4)

there are other external factors which force the
companies to implement ERP, such as:
government policy, bank policy and political issue.
ERP can give both strategical and tactical impacts.
Strategical impacts will affect strategic things in
the company as well as the company's future
business. Tactical impacts will affect the internal
affairs of the organization, both on the
managerial and operational level. The study found
out that ERP implementation in Indonesia gives
more significant tactical impact rather than
strategical impact. By analyzing the data using
Spearman rank test, it is found that
the correlation between ERP implementation
success and strategical impact (yx1) = 0.167
(not significant with p<0.05), while the
correlation between ERP implementation success
and tactical impact is yx1= 0.813 (significant
with p<0.01). This shows that ERP
implementation in Indonesia acts only as a
support and a key operational instead of a means
of gaining competitive advantage and future
business.
First, we will revisit all the critical success and
failure factors (CSFFs)

4.3

Success and Failure Factors of ERP

Implementation
and how it classified of ERP implementation and
later , elaboration of all the CSFFs in detailed and

how important are they. A process theory

approach was used to classify the CSFFs
identified. The process theory focuses on the
sequence of events leading up to implementation
completion. Markus and Tanis identified the
following four phases in an ERP life cycle:
1. Chartering - decisions defining the business
case and solution constraints;
2. Project - getting system and end users up and
running;
3. Shakedown - stabilizing, eliminating bugs,
getting to normal operations;
4. Onward and upward - maintaining systems,
supporting users, getting results, upgrading,
system extensions.
The chartering phase comprises decisions leading
to funding of the ERP system project. Key players
in the phase include vendors, consultants,
company executives, and IT specialists. Key
activities include initiation of idea to adopt ERP,
developing business case, decision on whether to
proceed with ERP or not, initiation of search for
project leader/champion, selection of
software and implementation partner , and
project planning and scheduling. The project
phase comprises system configuration and rollout.
Key players include the project manager , project
team members (mainly from business units and
functional areas), internal IT specialists, vendors,
and consultants. (We will refer to this group of
people as the implementation partners.) Key

activities include software configuration, system

integration, testing, data conversion, training, and
rollout. In this phase, the implementation
partners must not only be knowledgeable in their
area of focus, but they must also work
closely and well together to achieve the
organizational goal of ERP implementation.
The shakedown phase refers to the period of time
from going live until normal operation or
routine use has been achieved. Key activities
include bug fixing and rework, system
performance tuning, retraining, and staffing up to
handle temporary inefficiencies. In this phase, the
errors of prior causes can be felt, typically in the
form of reduced productivity or business
disruption . Hence, it is important to monitor and
constantly make adjustments to the system until
the bugs are eliminated and the system
is stabilized. The onward and upward phase refers
to ongoing maintenance and enhancement of the
ERP system and relevant business processes to fit
the evolving business needs of the organization.
It continues from normal operation until the
system is replaced with an upgrade or a different
system. Key players include operational
managers, end users, and IT support personnel
(internal and external). Vendor personnel and
consultants may be involved when upgrades are
concerned. Key activities include continuous
business improvement, additional user skill
building, upgrading to new software releases, and

postimplementation benefit assessment.

ERP TEAMWORK AND COMPOSITION

ERP teamwork and composition is important

throughout the ERP life cycle. The ERP team
should consist of the best people in the
organization. Building a cross-functional team is
also critical. The team should have a mix of
consultants and internal staff so the internal staff
can develop the necessary technical skills for
design and implementation. Both business and
technical knowledge are essential for success. The
ERP project should be their top and only priority
and their workload should be manageable .Team
members need to
be assigned full time to the implementation. As
far as possible, the team should be co-located
together at an assigned location to facilitate
working together. The team should be given
compensation and incentives for successfully
implementing the system on time and within the
assigned budget The team should be familiar with
the business functions and products so they know
what needs to be done to support major business
processes. The sharing of information within the
company, particularly between the
implementation partners, and between partnering
companies is
vital and requires partnership trust. Partnerships
should be managed with regularly scheduled
meetings. Incentives and risk-sharing agreements
will aid in working together to achieve a similar

goal.
TOP MANAGEMENT SUPPORT

Top management support is needed throughout

the implementation. The project must receive
approval from top management and align with
strategic business goals. This can be achieved by
tying management bonuses to project success.
Top management needs to publicly and explicitly
identify the project as a top priority. Senior
management
must be committed with its own involvement and
willingness to allocate valuable resources to the
implementation effort. This involves providing the
needed people for the implementation and giving
appropriate amount of time to get the job done
Managers should legitimize new goals and
objectives. A shared vision of the organization
and the role of the new system and structures
should be communicated to employees. New
organizational structures, roles and
responsibilities should be established and
approved. Policies should be set by top
management to establish new systems in the
company. In times
of conflict, managers should mediate between
parties.
BUSINESS PLAN AND VISION

Additionally, a clear business plan and vision to

steer the direction of the project is needed
throughout the ERP life cycle. A business plan
that outlines proposed strategic and tangible

benefits, resources, costs, risks and timeline is

critical. This will help keep focus on business
benefits. There should be a clear business model
of how the organization should operate behind
the implementation effort. There should be a
justification for the investment based on a
problem and the change tied directly
to the direction of the company. Project mission
should be related to business needs and should
be clearly stated. Goals and benefits should be
identified and tracked. The business plan would
make work easier and impact on work.
EFFECTIVE COMMUNICATION

Effective communication is critical to ERP

implementation. Expectations at
every level
communicated.
communication,
expectations are critical throughout the
organization. User input should be managed in
acquiring their requirements, comments,
reactions
need to be Management of education and
and approval. Communication includes the formal
promotion of project teams and the
advertisement of project progress to the rest of
the organization. Middle managers need to
communicate its importance. Employees should
be told in advance the scope, objectives, activities
and updates, and admit change will occur .
PROJECT MANAGEMENT

Good project management is essential. An

individual or group of people should be given
responsibility to drive success in project
management. First, scope should be established
and controlled. The scope
must be clearly defined and be limited. This
includes the amount of the systems implemented,
involvement of business units, and amount of
business process reengineering needed. Any
proposed changes should be evaluated against
business benefits and, as far as possible,
implemented at a later phase. Additionally, scope
expansion requests need to be assessed in terms
of the additional time and cost of proposed
changes. Then the project must be formally
defined in terms of its milestones. The critical
paths of the project should be determined.
Timeliness of project and the forcing of timely
decisions
should be managed. Deadlines should be met to
help stay within the schedule and budget and to
maintain credibility.
PROJECT CHAMPION

Project sponsor commitment is critical to drive

consensus and to oversee the entire life cycle of
implementation. Someone should be placed in
charge and the project leader should champion
the project throughout the organization. There
should be a high level executive sponsor who has
the power to set goals and legitimize change.
Transformational leadership is critical to success

as well. The leader must

continually strive to resolve conflicts and manage
resistance.
APPROPRIATE BUSINESS AND LEGACY SYSTEMS

Appropriate business and legacy systems are

important in the initial chartering phase of the
project. A stable and successful business setting
is essential. Business and IT systems involving
existing business processes, organization
structure, culture, and information technology
affect success. It determines the IT and
organizational change required for success.
Success in other business areas is necessary for
successful MRPII implementations.
CHANGE MANAGEMENT PROGRAM AND CULTURE

Change management is important, starting at the

project phase and continuing throughout the
entire life cycle. Enterprise wide culture and
structure change should be managed. A culture
with shared values and common aims is
conducive to success. Organizations should have
a strong corporate identity that is open to
change. An emphasis on quality, a strong
computing ability, and a strong willingness to
accept new technology would aid in
implementation efforts. Management should also
have a strong commitment to use the system for
achieving business aims. Users must be trained,
and concerns must be addressed through regular
communication, working with change agents,
leveraging corporate culture and identifying job

aids for different users.

4.4

Case Studies
The two case studies have been described in the
following sub sections:
AIRFORCE

A team has been formed to study the current

Legacy system (EMDAD), it is a logistics system
(supply and maintenance), the team is
responsible to decide either to go with ERP or
not? After studying the current applications and
IT infrastructure, they decide to go with ERP.
Legacy system is not applicable any more in such
sensitive organization where the data must go
through on time with high accuracy. In addition,
the need of online report for the management is
one of the major trigger for going to implement
the ERP. The committee was formed but with top
management and starting the business study. the
project was a mega project and might cost a
hundreds of Millions in US Dolars, however, the
studying phase took two years due to team
manpower shortage and this leads to
management changes and lose of top
management support where the budget were
approved before was never given. It was a very
good experience to use all the available tools,
build the AS IS documents, Selection technology
(SAP, Oracle) after the AS IS. The trigger of
implementing the ERP in AirForce was due to
legacy system, where the Legacy system has the

following disadvantages:
loss of integrity of all systems
high cost of maintenance
weak of management report generation
live data availability is not existed (top
management request online report for making
decisions)
SAUDI TELECOM CO.

As a trend of the private and profitable companies

such as STC, which is the largest operator in the
Middle East is improving their business process
which will lead to cut the cost and increase the
company profit. However, the company decided to
go with self service internal systems which link all
the HR system under one application server (web
based). The team was formed and decided to go
with Oracle application since all the databases
and applications on the company is under Oracle
technology. From the figure ... you can see all the
layers and applications that the company wishes
to implement. Note that, most of these
applications were implemented and the project
was to implement the Self service application. The
team was study the market (benchmark) and
decided to go with minimum customization. The
committee was formed but on a middle
management level, the project was failed due to
the following reasons:
Lack of Management support Huge system
customization
Inadequate of the Company culture

4.5

Review Questions
1. Appreciate the role played by effective
communication as a success factor in ERP
implementation.
2. Examine the organizational and industrial
impact of ERP.
Check your Progress:

What are the four phases of ERP life cycle?

Bug Fixing is an activity of the ________ phase
of the ERP life cycle.
3. State any three success and failure factors in
ERP Implementation
1.
2.

4.6

Answers to check your progress

1.
1.

Chartering - decisions defining the business

case and solution constraints;
2. Project - getting system and end users up and
running;
3. Shakedown - stabilizing, eliminating bugs,
getting to normal operations;
4. Onward and upward - maintaining systems,
supporting users, getting
results, upgrading, system extensions.
2. Shakedown
3. top management, communication,
management, management
effective change project

UNIT V Extended ERP Systems

5.1

Extended ERP Systems

In recent days the concept of extended ERP

systems has evoked tremendous interest.
Following is a brief description of components of
Extended ERP:
Business intelligence - information that
people use to support their decision-making
efforts
CRM - involves managing all aspects of a
customer's relationship with an organization to
increase customer loyalty and
retention and an organization's profitability
SCM - involves the management of information
flows between and among stages in a supply
chain to maximize total supply chain effectiveness
and profitability
E-business - means conducting business on the
Internet, not only buying and selling, but also
serving customers and collaborating with business
partners
Gartner Inc defines CRM as A business strategy,
the outcomes of

5.2

Customer Relationship Management

which optimize profitability, revenue and
customer satisfaction by
organizing
segments,
satisfying
implementing
processes. By definition then CRM technologies
enable greater customer insight, increased

customer access, more effective interactions and

integration throughout all customer channels and
back office enterprise functions . CRM must be
seen as a combination of people, processes and
systems rather than as narrowly defined IT
application. There are three fundamental
components in CRM operational, analytical and
around fostering
customer customer and centric
behaviors, customer
collaborative For accomplishing desired success,
organizations continuously strive for increased
sales performance, superior customer service and
enhanced customer relationship management.
To achieve these objectives you need solutions
that provide rapid access to centralized customer
information. You should also be able to access
detailed and up-to-date communication history to
foster customer and prospect relationships, close
sales and streamline all customer contact
activities.
ERP offers consistent and readily available
customer and prospect
data, allowing you to manage pre- sales activities,
perform automated sales processes, deliver
consistent customer service, evaluate sales and
service successes and identify trends, problems
and opportunities.

Benefits at a glance

Interaction with other areas of the system, gives

you a clear view of the customer

Maximising opportunities and retaining high

value customers enhances revenue and profit.
Provides value-added services enable you to
stay ahead of your competitors.
Improves product development and service
delivery processes
Prepare your personnel with indepth knowledge customer's needs
of the
Organizes the customer experience through
quick problem resolution
Easy re-run of information over and over again

Successful customer interaction

The ERP CRM Software in India module helps

you know your customer better and includes
many features such as activities, history,
customer
related contacts, addresses of your customers
and their relations with your competitors. The
flexible database structures enables you whatever
information you would like to keep on your
customer and maintains such information for your
future reference. The ERP CRM module also
facilitates control and organization of entire sales
process, from offer to invoice. It empowers your
sales staff by providing details such as inventory
status, estimated costs and delivery time, risk
status, habits and special demands, and previous
trades during offer stage. The ERP CRM module
offers an effective customer complaint
management tool which also includes repairs

processing and document management.

CRM Software or the Customer Relationship
Management module in an ERP system has a
number of potential benefits. CRM Software helps
improved customer targeting, better customer
retention and increases sales.
The CRM Software can enhance a company's
business process by focusing on sales, marketing
and customer service. However, to enjoy the full
benefits from a CRM Software, the application
must be seen as a combination of people
processes and system rather than as a narrowly
defined IT application. CRM Software becomes
more powerful when it works in coordination with
rest of the modules in a full-fledged ERP system.
With the popularity of the Web and Web-based
business applications like ERP, organizations in all
industrial sectors were able to truly personalize
relationships with customers. CRM Software
integrated in an ERP system enables companies
to strengthen relationships with customers, who
ultimately achieve s lifetime value from current
customers and to put strategic plans in place to
go after
lifetime value for new customers in new markets.
Customer focus ranks first among the basic
principles of CRM Software. One can realize many
advantages brought on by the use of ERP systems
with its CRM module. Implementation of ERP with
its effective CRM Software integrated helps
organization ability to listen systematically to

what the customer is communicating. CRM

Software enables faster response to customer
requests, and increased quality in the services
offered to the customers.
As most of the ERP system today is integrated
with CRM Software, an
ERP system without CRM Software integrated is
not sufficient to meet the present needs of any
organization. For a continuous improvement,
need of CRM Software integrated in an ERP
system cannot be ignored. When an ERP system
is implemented it also must be flexible, and have
the basic infrastructure like CRM Software that
will allow it to keep pace easily with revisions in
the business processes through a healthy
customer relationship. Additionally, working
efficiently with an ERP system that is well
integrated with a CRM Software is one of the key
factors for success of a business process.
Organizations must consider their happy and
satisfied customers as the biggest asset and
satisfying them further must be the top priority in
their agenda. To effectively carry out this mission,
presence of an efficient CRM Software must be in
place in their ERP system.

5.3

Supply Chain Management

SCM is track proven technology applicable to
just about every company regardless of industrial
sector. It is also not magic. It is a series of
complex calculations that optimize enterprise

plans within a given set of constraints, backed by

fully integrated suite of financial,
distribution and HRM . Powerful tools are available
under the banner of supply chain planning (SCP)
and advance planning systems (APS).Other
functional developments have emerged .
maintenance, repair and overhaul (MRO) can deal
with large number of part numbers, small
quantities of each part and a myriad of suppliers
whether in hubs, multi site warehouses or
different inventory accounts within one location .
Replenishment systems can also be handled. The
SCM encompasses all activities relating to the
supply chain. This includes vendor selection,
negotiation, relations and performance.

Business benefits of SCM are:

Faster response to changes in supply and demand
Increased customer satisfaction (equity holders
and purchaser, employees etc)
Compliance with regulatory requirement
Improved cash flow Higher margins
Greater synchronization with business priorities
A supply chain is a network of facilities and
distribution options that
performs the functions of procurement of
materials, transformation of these materials into
intermediate and finished products, and the
distribution of these finished products to
customers. Supply chains exist in both service
and manufacturing organizations, although the
complexity of the chain may vary greatly from

industry to industry and firm to firm.

Below is an example of a very simple supply chain
for a single product, where raw material is
procured from vendors, transformed into finished
goods in a single step, and then transported to
distribution centers, and ultimately, customers.
Realistic
supply chains have multiple end products with
shared components, facilities and capacities. The
flow of materials is not always along an
arborescent network, various modes of
transportation may be considered, and the bill of
materials for the end items may be both deep and
large.
Traditionally, marketing, distribution, planning,
manufacturing, and the purchasing organizations
along the supply chain operated independently.
These organizations have their own objectives
and these are often conflicting. Marketing's
objective of high customer service and maximum
sales dollars conflict with manufacturing and
distribution goals.
Many manufacturing operations are designed to
maximize throughput and lower costs with little
consideration for the impact on inventory levels
and distribution capabilities. Purchasing contracts
are often negotiated with very little information
beyond historical buying patterns. The result of
these factors is that there is not a single,
integrated plan for the organization- --there were
as many plans as businesses. Clearly, there is a

need for a mechanism through which these

different functions can be integrated together.
Supply chain management is a strategy through
which such an integration can be achieved.
Supply chain management is typically viewed to
lie between fully vertically integrated firms, where
the entire material flow is owned by a single firm,
and those where each channel member operates
independently. Therefore coordination between
the various players in the chain is key in its
effective management. Cooper and Ellram [1993]
compare supply chain management to a wellbalanced and well-practiced relay team. Such a
team is more competitive when each player
knows how to be positioned for the hand- off. The
relationships are the strongest between players
who directly pass the baton, but the
entire team needs to make a coordinated effort to
win the race.

Supply Chain Decisions

We classify the decisions for supply chain
management into two broad categories -strategic and operational. As the term implies,
strategic decisions are made typically over a
longer time horizon. These are closely linked to
the corporate strategy, and guide supply chain
policies from a design perspective. On the other
hand, operational decisions are short term, and
focus on activities over a day-to-day basis. The
effort in these type of decisions is to effectively
and efficiently

manage the product flow in the strategically

planned supply chain.
There are four major decision areas in supply
chain management:
1. location
2. production
3. inventory and
4. transportation (distribution)
and there are both strategic and operational
elements in each of these decision areas.

Location Decisions

The geographic placement of production facilities,

stocking points, and sourcing points is the natural
first step in creating a supply chain. The location
of facilities involves a commitment of resources to
a long- term plan. Once the size, number, and
location of these are determined, so are the
possible paths by which the product flows through
to the final customer . These decisions are of
great significance to a firm since they represent
the basic strategy for accessing customer
markets, and will have a considerable impact on
revenue, cost, and level of service. These
decisions should be determined by an
optimization routine that considers production
costs, taxes, duties and duty drawback, tariffs,
local content,
distribution costs, production limitations, etc.
Although location decisions are primarily
strategic, they also have implications on an
operational level.

Production Decisions
The strategic decisions include what products to
produce, and which plants to produce them in,
allocation of suppliers to plants, plants to DC's,
and DC's to customer markets. As before, these
decisions have a big impact on the revenues,
costs and customer service levels of the firm.
These decisions assume the existence of the
facilities, but determine the exact path(s) through
which a product flows to and from these facilities.
Another critical issue is the capacity of the
manufacturing facilities--and this largely depends
the degree of vertical integration within the firm.
Operational decisions focus on detailed production
scheduling. These decisions include the
construction of the master production schedules,
scheduling production on machines, and
equipment maintenance. considerations include
balancing, and quality measures at a production
facility.

Inventory Decisions
These refer to means by which
Other workload control
inventories are managed. Inventories exist at
every stage of the supply chain as either raw
materials, semi- finished or finished goods. They
can also be in-process between locations. Their
primary purpose to buffer against any uncertainty
that might exist in the supply chain. Since holding
of inventories can cost anywhere between 20 to
40 percent of their value, their efficient

management is critical in supply chain operations.

It is strategic in the sense that top management
sets goals. However, most researchers have
approached the management of inventory from
an operational
perspective. These include deployment strategies
(push versus pull), control policies --- the
determination of the optimal levels of order
quantities and reorder points, and setting safety
stock levels, at each stocking location. These
levels are critical, since they are primary
determinants of customer service levels.

Transportation Decisions

The mode choice aspect of these decisions are the

more strategic ones. These are closely linked to
the inventory decisions, since the best choice of
mode is often found by trading-off the cost of
using the
particular mode of transport with the indirect cost
of inventory associated with that mode. While air
shipments may be fast, reliable, and warrant
lesser safety stocks, they are expensive.
Meanwhile shipping by sea or rail may be much
cheaper, but they necessitate holding relatively
large amounts of inventory to buffer against the
inherent uncertainty associated with them.
Therefore customer service levels, and geographic
location play vital roles in such decisions. Since
transportation is more than 30 percent of the
logistics costs, operating efficiently makes good
economic sense.

Supply Chain Modeling Approaches

Clearly, each of the above two levels of decisions
require a different perspective. The strategic
decisions are, for the most part, global or all
encompassing in that they try to integrate
various aspects of the supply chain.
Consequently, the models that describe these
decisions are huge, and require a considerable
amount of data. Often due to the enormity of
data requirements, and the broad scope of
decisions, these models provide approximate
solutions to the decisions they describe. The
operational decisions,
meanwhile, address the day to day operation of
the supply chain. Therefore the models that
describe them are often very specific in nature.
Due to their narrow perspective, these models
often consider great detail and provide very good,
if not optimal, solutions to the operational
decisions.
To facilitate a concise review of the literature, and
at the same time attempting to accommodate the
above polarity in modeling, we divide the
modeling approaches into three areas --- Network
Design, Rough Cut methods, and simulation
based methods. The network design methods, for
the most part, provide
normative models for the more strategic
decisions. These models typically cover the four
major decision areas described earlier, and focus
more on the design aspect of the supply chain;

the establishment of the network and the

associated flows on them. Rough cut methods,
on the other hand, give guiding policies for the
operational decisions. These models typically
assume a single site (i.e., ignore the network)
and add supply chain characteristics to it, such as
explicitly considering the site's relation to the
others in the network. Simulation methods is a
method by which a comprehensive supply chain
model
can be analyzed, considering both strategic and
operational elements. However, as with all
simulation models, one can only evaluate the
effectiveness of a pre-specified policy rather than
develop new ones. It is the traditional question of
What If? versus What's Best? .

Network Design Methods

As the very name suggests, these methods

determine the location of production, stocking,
and sourcing facilities, and paths the product (s)
take through them. Such methods tend to be
large scale, and used generally at the inception of
the supply chain. The earliest work in this
area, although the term supply chain was not in
vogue, was by Geoffrion and Graves. They
introduce a multicommodity logistics network
design model for optimizing annualized finished
product flows from plants to the DC's to the final
customers. Geoffrion and Powers later give a
review of the evolution of distribution strategies
over the past twenty years, describing how the

descendants of the above model can

accommodate more echelons and cross
commodity detail.
Breitman and Lucas attempt to
provide a framework comprehensive model
production-distribution system,
for a of a
PLANETS, that is used to decide what products
to produce, where and how to produce it, which
markets to pursue and what resources to use.
Parts of this ambitious project were successfully
implemented at General Motors.
Cohen and Lee develop a conceptual framework
for manufacturing strategy analysis, where they
describe a series of stochastic sub- models, that
considers annualized product flows from raw
material vendors via intermediate plants and
distribution echelons to the final customers. They
use heuristic methods to link and optimize these
sub- models. They later give an
integrated and readable exposition of their
models and methods in Cohen and Lee.
Cohen and Lee present a normative model for
resource deployment in a global manufacturing
and distribution network. Global after-tax profit
(profit-local taxes) is maximized through the
design of facility network and control of material
flows within the network. The cost structure
consists of variable and fixed costs for material
procurement, production, distribution and
transportation. They validate the model by

applying it to analyze the global manufacturing

strategies of a personal computer manufacturer.
Finally, Arntzen, Brown, Harrison, and Trafton
provide the most comprehensive deterministic
model for supply chain management. The
objective function minimizes a combination of
cost and time elements. Examples of cost
elements include purchasing, manufacturing,
pipeline inventory, transportation costs between
various sites, duties, and taxes. Time elements
include manufacturing lead times and transit
times. Unique to this model was the explicit
consideration of duty and their recovery as the
product flowed through different countries.
Implementation of this model at the Digital
Equipment Corporation has
produced spectacular results --- savings in the
order of $100 million dollars.
Clearly, these network-design based methods add
value to the firm in that they lay down the
manufacturing and distribution strategies far into
the future. It is imperative that firms at one time
or another make such integrated decisions,
encompassing production, location, inventory, and
transportation, and such models are therefore
indispensable. Although the above review shows
considerable potential for these models as
strategic determinants in the future, they are not
without their shortcomings. Their very nature
forces these problems to be of a very large scale.
They are often difficult to solve to optimality.

Furthermore, most of the models in this category

are largely deterministic and static in nature.

Rough Cut Methods

These models form the bulk of the supply chain

literature, and typically deal with the more
operational or tactical decisions. Most of the
integrative research (from a supply chain context)
in the literature seem to take on an inventory
management perspective. In fact, the term
Supply Chain first appears in the literature as
an inventory management
approach. The thrust of the rough cut models is
the development of inventory control policies,
considering several levels or echelons together.
These models have come to be known as multilevel or multi- echelon inventory control
models. For a review the reader is directed to
Vollman et al. Multi-echelon inventory theory has
been very successfully used in industry. Cohen et
al. describe OPTIMIZER, one of the most
complex models to date - -- to manage IBM's
spare parts inventory. They develop efficient
algorithms and sophisticated data structures to
achieve large scale systems integration. Although
current research in multi-echelon based supply
chain inventory problems shows considerable
promise in reducing inventories with increased
customer service, the studies have several
notable limitations. First, these studies largely
ignore the production side of the supply chain.
Their starting point in most cases is a finished

goods stockpile, and policies are given to manage

these effectively. Since production is a natural
part of the supply chain, there seems to be a
need with models that include the production
component in them. Second, even on the
distribution side, almost all published research
assumes an arborescence structure, i. e. each site
receives re-supply from only one higher level site
but can distribute to several lower levels. Third,
researchers have largely focused on the inventory
system only. In logistics-system theory,
transportation and inventory are primary
components of the order fulfillment process in
terms of cost and service levels. Therefore,
companies must consider important
interrelationships among transportation, inventory
and customer service in determining their
policies. Fourth, most of the models under the
inventory theoretic paradigm are very restrictive
in
nature, i.e., mostly they restrict themselves to
certain well known forms of demand or lead time
or both, often quite contrary to what is observed.

5.4

Business Analytics
Business analytics (BA) refers to the skills,
technologies, applications and practices for
continuous iterative exploration and investigation
of past business performance to gain insight and
drive business planning. Business analytics
focuses on developing new insights and

understanding of business performance based on

data and statistical methods . In contrast,
business intelligence traditionally focuses on using
a consistent set of metrics to both measure past
performance and guide business planning, which
is also based on data and statistical methods.
Business analytics makes extensive use of data,
statistical and quantitative analysis, explanatory
and predictive modeling, and fact- based
management to drive decision making . It is
therefore closely related to management science .
Analytics may be used as input for human
decisions or may drive fully automated decisions.
Business intelligence is querying, reporting, OLAP,
and alerts.
In other words, querying, reporting, OLAP , and
alert tools can answer questions such as what
happened, how many, how often, where the
problem is, and what actions are needed.
Business analytics can answer questions like why
is this happening, what if these trends continue,
what will happen next (that is, predict), what is
the best that can happen (that is, optimize).
Banks, such as Capital One, use data analysis (or
analytics, as it is also called in the business
setting), to differentiate among customers based
on credit risk, usage and other characteristics and
then to match customer characteristics with
appropriate product offerings. Harrah's, the
gaming firm, uses analytics in its customer loyalty
programs. E & J Gallo Winery

quantitatively analyzes and predicts the appeal of

its wines. Between 2002 and 2005, Deere &
Company
saved more than $1 billion by employing a new
analytical tool to better optimize inventory.

Types of analytics
Descriptive Analytics: Gain insight from
historical data with reporting, scorecards,
clustering etc.
Predictive analytics (predictive
modeling using statistical and machine learning
techniques)
Prescriptive
analytics recommend decisions using
optimization, simulation etc.
Decisive analytics: supports human decisions
with visual analytics the user models to reflect
reasoning.
Basic domains within analytics
Retail sales analytics
Financial services analytics Risk & Credit
analytics
Talent analytics
Marketing analytics
Behavioral analytics
Cohort Analysis
Collections analytics
Fraud analytics
Pricing analytics
Telecommunications
Supply Chain analytics

Transportation analytics
Contextual data modeling - supports the human
reasoning
that occurs after viewing executive dashboards
or any other visual analytics

History
Analytics have been used in business since the
time management exercises that were initiated by
Frederick Winslow Taylor in the late 19th
century. Henry Ford measured pacing of assembly
line. But analytics began to command more
attention in the late 1960s when computers were
used in decision support systems . Since then,
analytics have evolved with the development of
enterprise resource planning (ERP) systems, data
warehouses, and a wide variety of other hardware
and software tools and applications.
With the recent explosion of big data and intuitive
BI tools, data is more accessible to business
professionals and managers than ever before.
Thus there is a big opportunity to make
better decisions using that data to
drive incremental revenue, decrease cost and loss
by building better products, improving customer
experience, catching fraud before it happens,
improving customer engagement through
targeting and customization- all with the power of
data. More and more companies are now
equipping their employees with the know-how of
Business Analytics to drive efficiency in day-today decision making.

Challenges
Business analytics depends on sufficient volumes
of high quality data. The difficulty in ensuring
data quality is integrating and reconciling
data across different systems, and then deciding
what subsets of data to make available
Previously, analytics was considered a type of
after-the-fact method of forecasting consumer
behavior by examining the number of units sold
in the last quarter or the last year. This type of
data warehousing required a lot more storage
space than it did speed. Now business analytics is
becoming a tool that can influence the outcome of
customer interactions. When a specific
customer type is considering a purchase, an
analytics-enabled enterprise can modify the sales
pitch
to appeal to that consumer . This means the
storage space for all that data must react
extremely fast to provide the necessary data in
real- time.

Competing on analytics

Davenport argues that businesses can optimize a

distinct business capability via analytics and thus
better compete. He identifies these characteristics
of an organization that are apt to compete on
analytics:
One or more senior executives who strongly
advocate fact- based decision making and,
specifically, analytics
Widespread use of not only descriptive statistics,

but also predictive modeling and complex

optimization techniques
Substantial use of analytics across multiple
business functions or processes
Movement toward an enterprise level approach
to managing analytical tools, data, and
organizational skills and capabilities.

5.5

Future trends in ERP Systems

When looking at the future ERP- systems it is not
only the solution features that are worth looking
at,
also the ERP-system value-chain can be
interesting to look at. According to Johansson the
value-chain for ERP- systems covers at least
following three stakeholders; ERP-system
vendors, ERP- distributor and the ERP-system
customer . In this relation the question is how
these stakeholders different base for achieving
competitive advantage influences the
development of the future ERP-systems, but also
how the future ERP systems will influence on this
value-chain.
According to the resource-based view a resource
can provide an
organization with sustained competitive
advantage if the resource is valuable, rare and
costly imitate. When looking at the ERPsystem
value-chain there are no obvious conflicts in
competitive advantage between the three
stakeholders, since they operate in different

markets. The ERP-system vendor competes in the

ERP-system licenses market, the distributor
mainly competes against other distributors on
consultancy services and ERP-system add-ons,
while the end-customer competes in a market
entirely of its own. However, the in order to
compete in the market for
ERP-system the vendors strive at delivering ERPsystem functionality that meets the required
functionality in the end-customer organization.
Therefore the more the aforementioned misfit
gap
decreases, the more the ERP-systems vendors
intervene in the distributors market. You could
argue that this process is already happening to
some extent, when the ERP-system vendors
include new functionality in the ERP-system, that
earlier was covered as add-ons in the distribution
channel and when the ERP-system vendors makes
best practices packages supposed to enable
quicker implementation.
This is change to the benefit of the customer,
while the distributors will need to fight even
harder for the same business. In that sense the
entire quest for better ERP-systems can challenge
the current value- chain. To some extent the
distributing channel has to rely on the basic
thoughts among customer organizations that they
need to have a system that is not the same as
their competitors. The distributors receive their
competitive advantage by offering the end-

customers industry insights on how to maximize

the value of the ERP-system, which provides the
end-customers with competitive advantage in
their is
industry. In this regard it important to note, that
when it comes to the rareness aspect a non-rare
resource cannot provide an organization with
competitive advantage, but it can provide the
organization with a disadvantage if the
organization does not have this resource.
According to Karimi an organization can no longer
receive competitive advantage just by
implementing an ERP-system, but Johansson
suggest that not having an ERPsystem might be a
severe disadvantage for an organization.
However, the better packages the ERP-system
vendors are able to
deliver and the more the end- customers are
willing to accept these packages, the harder time
the distributors will face. Therefore it can be
argued, that the distribution channel finds no (or
at least lesser) point in developing more complete
ERP-systems. This paradox can very well be seen
in relation with the aforementioned contradictory
paradigms on whether ERP-systems should be
adjusted to the business processes of a company
or if the company should adopt the best practice
process inherent in the
ERPsystems represented with Johansson and
Millman accordingly.
In relation to the entire discussion on the

competitive advantage in the ERP-system valuechain Johansson & Newman states that:
The basic thoughts the different stakeholders in
the ERP value-chain have about competitive
advantage is that highly customised ERPs deliver
better opportunities for competitive advantage for
the delivering reseller in the ERP valuechain as
well as for the ERP end-user organisations while it
decreases the opportunity for ERP software
vendors to attain competitive advantage .
A great part of the theory used in this essay is
based on the work of
the 3gERP Project, whereinMicrosoft takes part
and brings the perspectives from an ERP-system
vendor. Another major player on the market for
ERP-system is SAP AG, especially with a wellknown footprint in the market for the largest
organizations, but also with a strategy of serving
smaller organizations. The directions that SAP AG
gives for the future of ERP- systems are therefore
also interesting to look at. At a recent
presentation on this topic Arne Andersen, Head of
Business, Solutions & Technology in SAP AG gave
some indications on what perspectives SAP AG
has for its
future solutions. One of the key messages was
that future development will be guided by
adoption of lean principles, which amongst other
are focusing very much on cross functional teamwork and involvement of user-groups in this
sense. This correlates very much with the

approach that Johansson and Bjorn-Andersen has

towards the gathering of business requirements.
The principles of team-work will decrease the risk
for misunderstandings that occur, when a
translator is brooking between those who gather
the requirements and those who develop, a
process
that is further improve the more the end-users
and customer organization are involved.
As for the features of the future ERP- systems
from SAP AG Andersen focused on goals such as
lowering total-cost-of-ownership through noninstallation packages based on best practice and
a flexible innovation process with releases of
building blocks rather than seldom releases of a
new entire suite that is well known for its costly
implementation. In that sense SAP AG's view on
the future ERP-systems relates well to the
component-based approach mentioned by Kumar
& Van
Hillegersberg. This component based or building
blocks metaphor approach can very well be
compared with the term service oriented
architecture.
It is worth mentioning that Andersen did not
mention anything about role- based ERP-systems
but emphasized on end-to-end processes.
Apparently there this seems to be in contradiction
to the work of 3gERP. However, in order to draw
this conclusion further analysis of the strategy of
SAP AG and the meaning of the term end-to-end

processes has to further examined and compared

to the perspectives from those of the 3gERP
Project.
Another apparent difference between SAP AG's
view of the future ERP- system presented by
Andersen and the view of the 3gERP Project is
that SAP AG has a strong focus on on- demandsolutions (solutions offered via the internet) also
known as software-as-a-service (SaaS), while this
has only briefly been mentioned in the literature
covered in this essay. This is not to say, that the
3gERP Project does not acknowledge or believe in
software-as-a-service as the delivery model,
however this part has not been covered much
yet.
ERP-SYSTEMS DELIVERED AS SOFTWARE-AS-ASERVICE

In short software-as-a-service is software

delivered as a hosted application from a vendor or
distributor that the end-costumer can access via a
browser . The SaaS- model enables the endcustomer organization to decrease the cost of
implementation, maintenance and the overall
administration of the application that furthermore
is independent of existing IT- infrastructure,
scalable and flexible. In that sense the endcustomer organization can focus on its core
business without worrying about technicalities
that will be handled by
the distributor. There are examples of successful
SaaS-vendors, eg. Salesforce.com, but when it

comes to ERP-systems delivered as Software- asa-Service there is not yet a solution that has had
a commercial breakthrough. However, as already
stated the SaaS-model is a key strategic area for
SAP AG and most likely also for other ERP-system
in
SaaS-model is interesting when the future of
ERPsystems, however there does not seem to be
much academic research published within this
area yet. When looking at the SaaS-model it
seems to challenges the distributors
vendors. The therefore of
researching
business in the ERP-system Value chain, since the
vendor can deliver solutions directly to the endcustomer and thereby bypass the distributor .
Therefore this future delivery model might change
the current ERP-systems value-chain. This might
not completely undermine the business for
distributors, as the future ERP-system value-chain
very well could include hybrid SaaS- solutions,
where the distributors offer the customized SaaSsolutions to the end customer. But if the SaaSmodel becomes successful it can very well
threaten the distributor's position. It could be
seen as a further enhancement of the best
practice
approach that undermines the competitive
advantage of the distributors. In that sense the
SaaS- model can be seen as a solution that favors
the best practice approach.

Web Based ERP is definitely a controversial

subject because it has its advantages and
disadvantages. Some argue that it doesn't
provide all the benefits and functionality of ERP
software, which might be true to some point.
Nevertheless, it seems like a great option for
small and midsized companies which don't have
the necessary resources to invest in

5.6

Web Enabled Wireless Technologies

ERP software. Web based ERP clearly provides
benefits for a business and it's up to the business
owner to decide if they are sufficient for the
activities he or she is conducting.
ERP was initially used only in the manufacturing
sector , but it then
being
developed and started implemented in companies
of all types because the benefits of automating
and integrating various business processes and
the activity of different functional departments
became clear for almost everybody. All the
company's departments are able to access
databases in real time and this leads to important
savings in what concerns money and time.
The greatest advantage of web based ERP
consists of the fact that it can be accessed
remotely from basically anywhere in the world
where there is internet connection and a
browser . Access can be ensured with or without
a password and communication is fast and

efficient. A manager or any other employee found

outside of the business premises can easily
exchange data with any of the company's
departments. This is highly beneficial for sales
person who usually work outside of the office.
Quick communication with the company enables
them to serve the customer faster and more
efficient
and it also simplifies their work a lot. Customers
complaints and requests, as well as orders, are
managed easier and the company's
responsiveness is increased. Managers will also
be able to control their business and to take
decisions in what concerns resource allocation or
other important aspects from wherever they are.
Another significant advantage that web based ERP
has is the fact that it requires no implementation
at all and this significantly cuts down the costs.
This is very important especially for small
companies which would like to benefit of an ERP
system but can't afford the implementation.
There is no software and no hardware needed
and the risk of failing in the implementation
process is eliminated. There is no point in
worrying about maintenance and up gradation
when using web based ERP and eventual
customization that you might want to do does not
interfere with your business processes. It is also
advantageous in what concerns training the
employees for using it, because this is far simpler
than if you were using ERP software.

Enterprising Resource Planning or ERP is going

places these days. It has become an integral part
of almost all business. So like the Wireless
Technology, its effectiveness has been proved
beyond doubt.
Advancement of Wireless Technology in ERP has
given a double advantage to the companies which
are using ERP for a long time. As Wireless
technology has its reach beyond any geographic
location and also its communication and data
transfer process is much faster. So it has become
the eye candy of every organization.
Today every offices use WIFI connections which
are free from the hassles of wired connections,
has been proved as the boon to the ERP users.
Like in any manufacturing company where head
office is in different location whereas warehouse,
sales office,
manufacturing unit are in different location. They
are now always connected through WIFI and can
keep all updated information about stocks,
product delivery sales process, workers time
schedules and also the profit margin. Previously
they all had to maintain piles of files and also
engage more people for the maintenance of those
files. But now they are saved from those tortures.
Now only a laptop is all they require with super
fast data communication process and they are
sorted from every problem.
With the advancement of wireless technology in
ERP, the company policies and sales volume has

increased. Now the sales team can gather any

data, any information about their target, all
figures and numbers are now with them always
due to super fast data transfer and they can just
take any crucial decision at any point of time just
by getting right facts and figures in order. The
increase of sales target, or widening the profit
margin can be easily calculated and therefore can
make a difference to the sales force. Also any
distribution companies can maintain E-commerce
feature with wireless technology and that too for
24X7.
Maintenance of customers who are the key aspect
of any business has
now become much easier than before. It's just a
matter of clicking of mouse. When there is a need
to contact any customer for better business, how
far he is, but he is always within reach through
emails, chats, and video conferencing. And from
the point of view of the customers, the self
service systems make them more comfortable for
any service or complain or suggestions, without
wasting time in front office for the same. It can
save a day for the better work in a productive
way.
All large companies these days do have global
headquarter, and business locations are in
different place.
So whenever there is a major decision making
issue like revenue generation, or may be product
supply or manufacturing problems or machinery

issues, they can take it with all the relevant data

available to them with all updated information, no
matter where they are located. Wireless
technology has crossed all geographical barriers.
But there is a flip side to the story. Like all other
technologies wireless technology has also come
under threat of piracy. As this is a very high
competitive world so it has become almost
impossible to avoid piracy when the real data has
been published.
But researches are going on to make the system
more secure and private, alternative measures of
transferring data and communication should be
approached. But in spite of these threats the
advancement of wireless technology in ERP has
taken a huge leap in the way of business process.

5.7

Review Questions
1. Examine the salient features of
Business Analytics.
2. Highlight the benefits of SCM.
3. Comment on the piracy threat
imposed by wireless technologies.
Check your Progress:

What is SCM?
Give any 2 benefits of CRM. 3. What is a supply
chain?
4. What is BA?
5. What is SaaS?
1. SCM involves the management of information
flows between and among stages in a supply
1.
2.

chain to maximize total supply chain effectiveness

and profitability
2. Interaction with other areas of the system,
gives you a clear view of the customer,
Maximising opportunities and retaining high

5.8

Answers to check your progress

value customers enhances revenue and profit.
3. A supply chain is a network of facilities and
distribution options that performs the functions of
procurement of materials, transformation of these
materials into intermediate and finished products,
and the distribution of these finished products to
customers
4. Business analytics (BA) refers to the skills,
technologies, applications and practices for
continuous iterative exploration and investigation
of past business performance to gain
insight and drive business planning
5. software-as-a-service is software delivered as a
hosted application from a vendor or distributor
that the end-costumer can access via a browser

Lessons Compiled By:

Mr. C. Suresh Kumar
Head, Dept. of Computer Science M.K.U. College,
Madurai 2.