BY SUJEET TAMBE

ERP(ENTERPRISE RESOURCE

PLANNING)

INTRODUCTION AND HISTORY

History of organizational systems

Calculation systemsFunctional systemsIntegrated systems

1. Calculation systems

1950-80Single purposeEliminate tedious human workExamples: Payroll, General ledger, InventoryTechnology used: Mainframes, magnetic tapes,

batch processing

2. Functional systems

1975-20?? (till date)Use computers to improve operationsApplications: Human resources, order entry,

manufacturing resource planningTechnologies: Mainframes, PC’s, LAN’sTypically contained within a departmentIslands of automationApplications independently developed and deployedDriving force: availability of mini-computers

Functional system applications

Human resources SystemAccounting and finance systemsSales and marketing SystemOperations management SystemManufacturing Systems

Problems with function based application

Sharing of data between systemsData duplicationData inconsistencyApplications that don’t talk to one anotherLimited or lack of integrated informationIsolated decisions lead to overall inefficienciesIncreased expenses

Solution to disparate systems ?

IntegrationConsolidationRight-sizingBusiness Process RedesignEnterprise wide system

3) Integrated systems

Integrated systems or Enterprise Resource Planning System

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

“ ERP systems is a set of integrated business applications, or modules which carry out common business functions such as general ledger, accounting, or order management”.

What is ERP?

Enterprise Resource PlanningSupport business through optimizing,

maintaining, and tracking business functionsBroken down into business processes

HRM Distribution Financials Manufacturing

What makes ERP different ?

Integrated modulesCommon definitionsCommon databaseUpdate one module, automatically updates othersERP systems reflect a specific way of doing

businessMust look at your value chains, rather than

functions

Vendors

SELECTION OF AN ERP SYSTEM

WHY AN ERP SYSTEM?

The new trend or ‘buzz word’Too many different systems – complex to

maintainCurrent systems not adequateBusiness is growing and needs restructure

FACTORS TO CONSIDER IN SELECTION OF THE ERP SYSTEM

The organisation’s functional requirements Packaged software vs. developed software debate Identification of packages that can fit the needs of the

organisation Assessment of fit between needs and attributes of the

ERP package The organization readiness for ERP implementation

SEVEN IMPORTANT ERP PACKAGE ATTRIBUTES TO CONSIDER:

FunctionalityReliability/ stabilityCostEase of use Ease of customizationEase of implementationVendor reputation

History – customer referencesAvailable resourcesERP product knowledge, industry knowledge, business

knowledge

IMPORTANT READINESS FACTORS

Structured ERP implementation strategy Alignment of internal strategy with ERP vendor ‘s implementation

strategyInternal Project Planning

Committed project coordinators Team dynamics Communication lines

Business Process Engineering and Re-engineering Change Management Plan

Personnel skills requirements analysis skills development Organisational structure evaluation and optimisation

IMPORTANT FACTORS FOR ERP SELECTIONSS

Functional Requirements Packaged vs. Developed solution Identification of packages (ERP systems) that could fit with functional

requirements Assessment of fit with functional requirements. 7 criteria to consider:

• Functionality• Reliability/stability• Cost• Ease of use• Ease of customization • Ease of implementation• Vendor Reputation

IMPLEMENTATION OF ERP

What is ERP does?

ERP module corresponding to every department in the enterprise.

With these module ERP manager and coordinate all the resources, information and function of a business from shared data stored.

ERP provides a platform for communication and information exchange between various departments of the organization.

ERP makes this task easier.

How ERP implemented?

ERP is implemented either on a single server or be distributed across modular hardware or software.

When ERP is distributed across many systems, the different modules communicated with each other over LAN.

ERP uses centralized database and utilize common computing platform. ERP system platform all business operation on a uniform and enterprise

wide system environment. The time required to implement an ERP system depend on the size of

business, number of module, the extent of customization, the scope of the change and the willingness of the customer to take ownership for the project.

ERP systems are modular, so they don’t all need be implemented at once. The most important activity in successful implementation of ERP is data

migration i.e. transferring data to the ERP system.

Module in ERP

FinanceSales and distributionManufacturing Human resource management Plant maintenanceQuality managementMaterials management

Importance of ERP

ERP is very important in order fulfillment process of a company. For the reason, it is also referred to as back-office software.

It doesn’t handle the upfront selling process. But it takes a customer order and provides a software roadmap of automating the different step along the path to fulfilling it.

We can say that an ERP system gives all information required to complete the order for example. Customer credit rating and order history from the finance module, the company inventory levels from the warehouse module and the shipping dock’s trucking schedule from the logistic module.

Benefits of ERP

Common set of dataHelp in integrating applications for decision making

and planningAllow departments to talk to each otherEasy to integrate by using processed built into ERP

softwareA way to force BPR (reengineering)Easy way to solve Y2K problem

Advantage of ERP

ERP allows easier global integration (barriers of currency), exchange rates, language and culture can be bridged automatically.

Update only need to be done once to be implemented company wide.

Provide real time information reducing the possibility of redundancy errors.

Creates a more efficient work environment making it easier for employee to do their job which leads to effectiveness.

Vendors have past knowledge and expertise on how to best build and implement a system.

Why learn ERP?

We have to learn ERP because in future if we get to develop an ERP module or work on it, then we must understand the business needs that it is trying to fulfill.

When we clearly understand the functioning of a department in an enterprise, then we will be able to develop a module to automate it.

We also need to understand the interaction between modules.

Summary

ERP is companywide computer wide computer software system used to manage and coordinate all the resources, information and function of a business from shared data stored.

ERP is a software package consisting of various modules.Each ERP module corresponds to a department in an enterprise.ERP facilitates inter department communication within an

enterprise.ERP works on a centralized database. Information in this

database is available to the entire department and can also be updated by them.

THANK YOU