ENTERPRISE RESOURCE PLANNING

INTRODUCTIO N

Erp Definition
ERP-Enterprise

Resource

Planning

ERP is a process of managing all resources and their use in the entire enterprise in a coordinated

Erp system:definition
ERP is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management

What makes Erp different Integrated modules.

Common definitions. Common database. Update one module, automatically updates others. ERP systems reflect a specific way of doing business. Must look at your value chains, rather than functions.

BENEFITS
Common set of data. Help in integrating applications for decision making and planning. Allow departments to talk to each other. Easy to integrate by using processed built into ERP software. A way to force BPR (reengineering). Easy way to solve Y2K problem.

EVOLUTION

 In

1990 Gartner Group first employed the acronym ERP as an extension of material requirements planning (MRP), later manufacturing resource planning and computerintegrated manufacturing. Without supplanting these terms, ERP came to represent a larger whole, reflecting the evolution of

all ERP packages were developed from a manufacturing core. Vendors variously began with accounting, maintenance and human resources. By the mid1990s ERP systems addressed all core functions of an enterprise. Beyond corporations, governments and nonprofit organizations

HISTORY
ERP is quite interesting and a broad topic. To summarize though: History MRP evolved from the 1960s need to manage demand and ordering. It did not look at timing, only need. MRP II was developed in the 1970s to bring both demand and time phasing of the demand into the planning process.

Accounting Management solutions where gaining strength. ERP, developed from earlier MRPII systems, were also integrated with financial applications to provide a complete solution to a company for managing their inventory, cash and people

ERP Implementatio n Fundamentals

Agenda
What is an ERP System? Why implement an ERP system? How should ERP systems be implemented? Conclusion Questions and Answers

What is an ERP System definitions

Simplistic Definition ERP - Enterprise Resource Planning Detailed Definition a business strategy and set of industrydomain-specific applications that build customer and shareholder communities value network system by enabling and optimising enterprise and interenterprise collaborative operational and financial processes

Historical system architectures

Historically, companies created islands of automation. A hodgepodge of various systems that operated or managed various divergent business processes. Sometimes these systems were integrated with each other and sometimes they werent. Sometimes they were loosely interfaced and sometimes they were more tightly interfaced.

What is an ERP Key Characteristics

Integration seamless integration of all the information flowing through a company financial and accounting, human resource information, supply chain information, and customer information.

What is an ERP Key Characteristics

Packages Enterprise systems are not developed inhouse IS life cycle is different
1. Mapping organisational requirements to the processes and terminology employed by the vendor and 2. Making informed choices about the parameter setting.

Organisations that purchase enterprise systems enter into long-term relationships with vendors. Organisations no longer control their own destiny.

What is an ERP Key Characteristics

Best Practices ERP vendors talk to many different businesses within a given industry as well as academics to determine the best and most efficient way of accounting for various transactions and managing different processes. The result is claimed to be industry best practices. The general consensus is that business process change adds considerably to the expense and risk of an enterprise systems implementation. Some organisations rebel against the inflexibility of these imposed business practices.

What is an ERP Key Characteristics

Some Assembly Required Only the software is integrated, not the computing platform on which it runs. Most companies have great difficulty integrating their enterprise software with a package of hardware, operating systems, database management systems software, and telecommunications suited to their specific needs. Interfaces to legacy systems Third-party bolt-on applications Best of Breed Strategy

What is an ERP Key Characteristics

Evolving Enterprise Systems are changing rapidly Architecturally: Mainframe, Client/Server, Web-enabled, Objectoriented, Componentisation Functionally: front-office (i.e. sales management), supply chain (advanced planning and scheduling), data warehousing, specialised vertical industry solutions, etc.

What is an ERP Key Characteristics

Some Assembly Required Only the software is integrated, not the computing platform on which it runs. Most companies have great difficulty integrating their enterprise software with a package of hardware, operating systems, database management systems software, and telecommunications suited to their specific needs. Interfaces to legacy systems Third-party bolt-on applications Best of Breed Strategy

Typical architectural components

Interaction Channels
Analytical Application s

Web Internet
Marketing Intelligence

Mobile Wireless
Sales Intelligence

e-Mail
Customer Intelligence

Call Center ICM/Telephony

Call Center Intelligence

Business Application s

Marketing

Sales eCommerce OSS

HR

Installed Base

Resources

Territories

Assignment Engine

CRM Tasks Notes Calendar 1-to-1 Fulfillment Foundation ETCA Escalations Interaction History Universal Work Q Business Foundatio Common Data and Object Models, Security, Interfaces, Globalisation n

Tech Stack

E-business Platform

Tech Stack - Internet Computing Architecture

2 Tier
Application
Application Application Application

X
Database
Application Application

3 Tier

Browser Java Browser

Application Server

Why implement an ERP System?

To support business goals

Integrated, on-line, secure, self-service processes for business Eliminate costly mainframe/fragmented technologies

Improved Integration of Systems and Processes Lower Costs Empower Employees Enable Partners, Customers and Suppliers

How should we implement ERP systems

Obtain the right mix of people, processes and technology!!

How should we implement ERP Systems?

People

Project Structure Should be aligned to processes

Implementation Process (outlined in detail) Adapt your processes to those of the ERP. Hardware Software Integrated Systems

Process

Technology

Process
1. Definition and Analysis Hold discussions with various functional personnel to establish the actual number of systems operating at client site, what they are used for, why and how often Produce the Project Scoping Document outlining current situation, proposed solution and budgeted time Challenge : REQUISITE EXPERTISE - No two clients are the same

Process
2. Design Prepare various functional reports specifies current scenario and wish list Prepare Design document which specifies how the system is going to work Prepare test scripts to be followed on system testing Map out the interface paths to various modules Challenge : INFORMATION SHARING - Availability of staff

Process
3. Build Configure system as per set up document specifications i.e. transfer conceptual model into reality Test system to verify accuracy (preliminary tests)

Challenge : TECHNICAL ENVIRONMENT - System functionality

Process
4. Transition Train users on their specific areas Assist in test data compilation and system testing by users Finalise the Live system and captured opening balances Challenge : USER RESISTANCE Understanding and acceptance data preparation

Process
5. Production Official hand holding Effectiveness assessment Business and Technical Direction recommendations

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

Conclusion

ERP systems provide a mechanism for implementing systems where a high degree of integration between applications is required The Business Case or Value Proposition for implementation must be outlined To successfully implement a proper mix of people, processes and technology should be maintained

METHODOLOGY

 ERP implementation

methodology involves the various processes and procedures, which constitute the condition or means for formulating the actual implementation of ERP projects.

 The

ERP implementation methodology includes extensive services from the vendor. It is important for the companies to analyze each ERP implementation method, since the risk of failure in ERP implementation is existent and can be a highly expensive ordeal.

Different approaches to ERP implementation

The

most potent one's is the socalled joint ventures with respective companies of the same industry. This method allows the company to begin ERP implementation process on its own or share all the responsibility with the partners.

This implies that it would be a shared platform where the files are shared with the joint venture company, as they will be a part of ERP implementation.

ERP implementation is also accomplished by basing all the implementation on the present needs and resources of the company. The company can first go for a total ERP system and then have the ERP implementation

It is important to choose appropriate software for generative ERP system implementation. The company must be able to utilize the software to its full potential, to have a successful ERP project.

SUCCESS FACTORS

The world of technology and business consulting is tainted by horror stories of ERP projects gone wrong. Companies such as Hershey's have had widely publicized lawsuits against ERP software vendors because of their failed implementations. In some extreme cases, these companies sue because they couldn't ship product or their entire

7 Keys of ERP Success Factors

So how does one increase the likelihood of ERP success and ERP benefits realization? Many assume success or failure is the fault of the software you purchase, but in reality, 95% of a project's success or failure is in the hands of the company implementing the software, not the software vendor. Here are seven ERP critical success factors that we have seen:

1. Focus on business processes and requirements first: Too often, companies get tied up in the technical capabilities or platforms that a particular software supports None of this really matters. What really matters is how you want your business operations to run and what your key business requirements are. Once you have this defined, you can engage in a more effective ERP software

2. Focus on achieving a healthy ERP

ROI(Return on Investment): This requires doing more than just developing a high-level business case to get approval from upper management or your board of directors. It also entails establishing key performance measures, setting baselines and targets for those measures, and tracking performance after go-live. This is the only way to maximize the business benefits of ERP.

3. Strong project management and

resource commitment: At the end of the day, your company owns the success or failure of a large ERP project, so you should manage it accordingly. This includes ensuring you have a strong project manager and your "A-players" from the business to support and participate in the project.

4. Commitment from company

executives: Any project without support from it's top-management will fail. Support from a CIO or IT Director is fine, but it's not enough. No matter how well-run a project is, problems arise (such as conflicting business needs), so the CEO and your entire C-level staff needs to be on board to drive some of these.

5. Take time to plan up front: An ERP

vendor's motive is to close a deal as soon as possible. Yours should be to make sure it gets done right. Too often, companies jump right in to a project without validating the software vendor's understanding of business requirements or their project plan. The more time you spend ensuring these things are done right at the beginning of the project, the less time you'll spend fixing problems later on.

6. Ensure adequate training and

change management: ERP systems involve big change for people, and the system will not do you any good if people do not understand how to use it effectively. Therefore, spending time on money on training, change management, job design, etc. is crucial to any ERP project.

7. Make sure you understand why you're

implementing ERP: This is arguably the most important one. It's easy to see that many big companies are running SAP or Oracle and maybe you should too, but it's harder to consider that maybe you don't need an ERP system at all. Perhaps process improvement, organizational redesign, or targeted best-of-breed technology will meet your business objectives at a lower cost. By clearly understanding your business objectives and what you're trying to accomplish with an ERP system, you will be able to make a more appropriate decision on

By ensuring you have these 7 keys of success factors in place, it will be much more likely to maximize the benefits of ERP.

WATS pitfalls a factor causing trouble in achieving a positive result or tending to produce a negative result;

Inadequate training

Success of any organization is dependent on various factors, like, skill and experience of the workforce, optimum utilization of resources and proper planning. A proper training in ERP is very important in order to make the system work correctly. Many companies try to save money by not providing enough expenses for ERP training of employees. This results in an inadequate cognizance of the particular ERP vendor package being used. Improper training may lead to mishandling of the technology by employees, which can result in the loss of valuable information.

Expensive software

ERP is a very expensive technology and the installation itself can dig a deep hole in the company's pocket. Its purchase basically depends on the scope of implementation, complexity of the departments and ERP vendors. Packaged ERP software may cost around a few million dollars. Besides ERP software, new computer hardware updated network equipment and security software are also required for the implementation of ERP systems. The costs of these hardware and software depend on factors, like, the number of modules and the platforms used.

Limited customization

The customization of an ERP setup is very limited, as it may involve changing of the entire ERP software structure. The flexibility of the setup is very much dependent on the brand of software being used. Some brands give a provision of extended customization and flexibility, which makes them more convenient to use, as compared to others. Often due to this the scope of implementation of ERP becomes too difficult and rigid, which hampers the specific work-flow of a business.

Interconnectivity of departments

The interconnectivity of the various departments within an organization is advantageous as well as disadvantageous. As we all know, a chain is as strong as its weakest link. With the implementation of ERP package, an inefficiency in one department may affect other participants. If one of the departments breaks down or becomes inefficient, it may adversely affect the efficiency of other departments.

Very high implementation time

The time required for the implementation of a complete ERP system is very high. This installation and training time may disturb the regular functioning of the organization and may pose a huge risk of loss of a potential business in that particular period. The complete installation may take a year or more, depending on the number of modules that have to be installed. This time is worth spending only if the whole new setup gives significant profits in terms of time and money.

MANAGEMENT CONCERNS

Many managers understand the risks involved with new software & put all their efforts into minimizing them. Many problems with a companys existing system are more related to inaccurate data than to faulty systems.

 Erp

implementations are highly complex, time-consuming & unpredictable in terms of cost. are many people,technological,business process,implementation & operational issues that increase the risk of erp implementation.

There

 People

issues are the most critical.

to a study conducted by Deloitte consulting, people issues are the key all along the way-before, during & after the erp implementation.

According

 Managers

need more focus On the decision-making & analysis features of the system.
everyone to understand what is going to be achieved with the

Educate

 Additional

education should include total quality management & change management strategies. The management & employees should be made aware of the benefits so that there are no over expectations.