ERP Marketplace and Marketplace Dynamics

ERP Market The ERP market is a very competitive and fast growing market. According to Research, the enterprise resource planning (ERP) market is experiencing double-digit growth in 2007, and is expected to continue to grow at an average of 10% over the next five years. The ERP market continues to benefit from a widespread acceptance of the idea that business must have integrated information systems to be competitive. SAP continues to be the biggest player in the market with an estimated 43% of the market share, or about $12.5 billion in revenue in 2006.

ERP Market The top players of the ERP market are SAP, Oracle, Sage Group, Microsoft Business Solutions, Infor Global Solutions, Geac, Intentia, QAD, Lawson Software, etc.The popular operating systems for ERP software are Windows and Unix. The most popular databases for ERP software are Oracle and MS-SQL Server.

ERP Market Share - Latest Data

SAPSap is Systems Applications and Products in Data processing.Founded in 1972 by a group of former IBM employeesSAP is the worlds leading provider of business software, SAP delivers products and services that help accelerate business innovation for their customers. Today, more than 82,000 customers in more than 120 countries run SAP applications from distinct solutions addressing the needs of small businesses and midsize companies to suite offeringsSAP serves as a standard in the industries like chemicals, customer products & oil.The SAP group has offices in more than 50 countries worldwide & employs a workforce of over 19300.

SAPSAPs ERP package comes in 2 versions i.e. mainframe version (SAP R/1 ,SAP R/2) & client server version (SAP R/3).(R-Real)With SAP, customers can install the core system & one or more of the fundamental components, or purchase the software as a complete package. for global organizations.SAP has developed extensive library of more than 800 predefined business processes.These processes may be selected from SAP library & can be included within installed SAP application solution to suit the user exact requirements.

Baan - The CompanyFounded in 1978 in the Netherlands5,500 employees worldwideAnnounced 20% headcount reduction in Oct. 98Revenues over $684 million in 19973,000 clients in 5,000 sites worldwide1997 ERP market share was 5%Sales strategy changed in 1997 to drive 50% of sales through channels and value-added resellers

Baan - The ProductBaanERPSales order managementrocurementInventoryWarehousingProject ManagementManufacturingBaanFrontOfficeSales ManagementMarketing ManagementCall CenterProduct ConfigurationBaanMaintenanceBaanServiceBaanCorporateOfficeAccountingFinanceHuman ResourceManagementBaanSCSSupply Chain ManagementDemand ForecastingManufacturing ExecutionBaanDEMseBaanEngineeringBaan-On-Board

Implemented Modules on Baan

OracleOracle is direct competition of SAP and is intent on snaring the lead from SAP. The latest moves of the software giant that include the acquisition of PeopleSoft and Siebel Systems allowed for Oracle to position its software well. This software is known for the flexibility it offers to customers.

OracleORACLE software runs on the network computers, work stations & micro computers, mini computers, etc.ORACLE 8i is the leading database for internet computing.ORACLE database ALLOWS the corporation to access on any data, on any service, over any network, from any client deviceOracle application consists of 45 plus software modules which are divided into following categories Oracle Financials Oracle Human Resource Oracle Projects Oracle Manufacturing Oracle Supply Chain Oracle Front Office

Microsoft Dynamics

This is another solid player when it comes to ERP and serves more than 80,000 customers. This ERP provider offers its end users with the Customer Relations Management software and the business solutions tools that can help facilitate the flow of communications from one business to the next or from a business to its captive consumers. If SAP is high end, then Microsoft ERP is packaged just a few levels below when it comes to cost.

ERP Scenario in Indian MarketIn India, the small and medium-sized businesses are the major force that pushes the growth.There is greater demand for componentized solutions with standard modules and specific functionality to address the unique processes.There is demand for customized solutions for sales and operations planning, tactical planning, demand management which are not served by traditional ERP systems.The major Indian ERP vendors are Ramco Systems, 3i Infotech, Godrej Infotech, Eastern Software Systems and Base Information, etc.The USPs of the Indian ERP vendors are competitive price points and higher return on investments. Indian players have products that are cheap, can be implemented quickly, are flexible and need lower IT dependence and support.Indian ERP vendors have a better understanding of the local landscape and are in a better position to provide solutions with the right mix of functionality, technology and pricing for the Indian customer.

ERP Scenario in Indian MarketSome of the first Indian companies to have adopted ERP practices are HLL, ONGC,ESSAR, Godrej Soaps, Cadburys, BASF, Telco, Maruti Udyog Ltd., Century Rayon, Citibank, ACC, ANZ Grindlays, German Remedies, Blue Star, Mahindra & Mahindra, Rallis India, Sony India Pvt. Ltd., Ceat Ltd., Indal, Ford Motors, Kirloskar, Knoll Pharmaceuticals, and Glaxo.

ERP Functional ModulesAll ERP packages contain many modules. The common modules which are available in almost all ERP software packages are as following:FinanceManufacturing & Production PlanningSales & DistributionPlant MaintenanceQuality ManagementMaterial Management

A/FCustomerHRSCMM/SPaymentsLegal requirements and job information, payroll and benefit expense dataInvoices and credit memosSales data and manufacturing cost analysisProduction plans, materials, and inventory dataSales order dataCost/profit analysisHiring needs and personnel information

What are the I/o ?Input for A/F include:Payments from customersAccount receivable dataAccount payable dataSales dataProduction and inventory dataPayroll and expense data

Output for A/F include:Payments to suppliersFinancial reportsCustomer credit data

The finance module of most ERP systems will have the following sub systems

1. Financial Accountingfor company wide control and integration of financial information that is essential to strategic decision making.It provides ability to centrally track financial accounting within an international framework of multiple companies, languages, currencies and charts of accounts.

Example of Financial Accounting

2. General LedgerThe GL is essential both to financial accounting system and to strategic decision making.The GL supports all the functions needed in a financial accounting system.This includes flexible structuring of the chart of accounts at group and company level, distributed application scenarios, real time simultaneous update of sub ledgers and the GL, elimination of time consuming, and parallel views of data in both GL and managerial accounting applications.

Example of GL

Example of GL

3. Accounts Receivables records all account postings generated as a result of Customer sales activity. These postings are automatically updated in the General Ledger .The Accounts Receivable Module also integrates with the General ledger, Sales and Distribution, and Cash Management Modules.

Example of Accounts Receivables

4.Account Payablerecords account postings generated as a result of Vendor purchasing activity.Automatic postings are generated in the General Ledger as well.Payment programs within SAP enables the payment of payable documents by check, EDI(Electronic Data Interchange), or transfers.

5. Asset Accountingfor companys fixed assets management.It is sub ledger to GL, providing detailed information on asset related transactions.SAP allows you to categorize assets and to set values for depreciation calculations in each asset class.Asset accounting also provides integration with plant maintenance for management of machinery and equipment, management of leased assets and assets under construction, and interactive reporting

6. Legal ConsolidationUsing different valuation methods , company can plan balance sheet strategies to suit its requirements.The sub system is closely linked to the financial accounting system, permitting direct data transfer from individual statements into the consolidated statements required by the lawThese statements provide an overview of the financial position of the company as a whole

7. Controllingcontrolling system gathers the functions required for effective internal cost accounting. It offers a versatile information system with standard reports and analysis path for the most common questions. In addition there are features for creating custom reports to supplement standard reports

SAP ERP financial business benefitsImprove financial and managerial reporting:SAP ERP Financials gives you the flexibility to report performance by business unit, organization, or cost center.Improve corporate performance:SAP ERP Financials provides the foundation to quickly read, evaluate, and respond to changing business conditions with accurate, reconciled and timely financial data.Achieve faster closes:With SAP ERP Financials, you can streamline accounting, consolidation, process scheduling, workflow, and collaboration.

SAP ERP financial business benefitsImprove corporate governance and transparency:SAP ERP Financials provides broader support of accounting standards, federal regulations, and improved administration of internal controls.Improve cash flow and liquidity:SAP ERP Financials automates dispute, credit, and collections management and offers electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.Optimize global cash management:With SAP ERP Financials, you can report, analyze, and allocate cash in real time, and establish in-house banks or payment center.

SAP ERP financial business benefitsImprove process integration between finance and treasury:With SAP ERP Financials, you can integrate risk and treasury transactions with core accounting and financial reporting processes.Reduce overall finance costs:SAP ERP Financials helps you operate effective shared-services, collaborate with customers or suppliers, and streamline operations to reduce costs and resource demands.

Companies with financial ERP modules

SAP Oracle E-Business suiteMicrosoft DynamicsJD Edwards

SAP FI/CO Module includes the following sub-modules

ORACLE 11I E-BUSINESS SUITE MODULE INCLUDES FOLLOWING SUB MODULES

Account ReceivableAccount PayableGeneral LedgerFixed AssetProcurement(Purchasing)Order ManagementFinancial AnalysisInventory ManagementReporting an using the DB

Finance ModuleA set of processes are required so that they can provide the financial information in the form that is required by the user, such financial solution is provided by the ERP package.The financial application component of the ERP provides us with the information of financial functionality across the different business area.The finance business of ERP also provides analysis support to the business.The finance module of the most ERP system will have the following subsystems:

Finance moduleFinancial Accounting (General Ledgers, Accounts Receivable / Payable, Fixed Asset Accounting)Investment Management (Investment Planning / Budgeting / Controlling)Controlling (Cash Management, Treasury Management)Enterprise Controlling (EIS, Business Planning and Budgeting)

1.FINANCIAL ACCOUNTING

1. The financial accounting system objective is to provide company-wide control and integration of financial information which is required for strategic decision making.2. The Financial Accounting Module of an ERP system, gives you the ability to centrally track financial accounting data within an international framework of multiple currencies, companies and languages. Eg: When raw material moves from inventory into manufacturing, the system reduces quantity values in inventory and subtracts value for inventory account in the balance sheet.

Financial Accounting ContGeneral LedgerAccounts Receivable / PayableAsset AccountingLegal Consolidation

2. ControllingThis module gathers the functions required for effective internal cost accounting.It offers a versatile information system, with standard reports and helps in analysis.Overhead cost controllingCost center accountingOverhead ordersActivity base costingProduct Cost ControllingCost Object Controlling