ERP note 1.1

Secretary’s New printer application

Transfer to Finance

Departmen

Transfer to Accounting Office

Transfer to Manager

Transfer to Accounting Office

Example: Before ERP Systems

Companies after ERP Systems

What is ERP? ERP is a software architecture that facilitates the

flow of information among the different functions within an enterprise. Similarly, ERP facilitates information sharing across organizational units and geographical locations.3 It enables decision-makers to have an enterprise-wide view of the information they need in a timely, reliable and consistent fashion.

• ERP provides the backbone for an enterprise-wide information system. At the core of this enterprise software is a central4 database which draws data from and feeds data into modular applications that operate on a common computing platform

• The system provides consistency and visibilityor transparency across the entire enterprise. A primary benefit of ERP is easier access to reliable, integrated information.

• Cisco Systems, for example, harnessed ERP to help it become the market leader in the global networking industry. Cisco’s ERP system was the backbone that enabled its new business modelGlobal Networked Businessbased on the use of electronic communications to build interactive, knowledge-based relationships with its customers, business partners, suppliers and employees. In the process, Cisco doubled in size each year and reaped hundreds of millions of dollars in both cost savings and revenue enhancements. Autodesk, a computer-aided design software company, reported a decrease in its order fulfillment times from two weeks to 24 hours after installing an ERP system. Similar examples abound in today’s business environment.5

The organization before ERP • Isolated Information

• Update issues Redundant• Inaccurate and different

• Different In the different databases• Can’t access information maintained by another department

ERP: Bringing the Organization Together• ERP – integrates

(or integrated set of IT systems) so that employees can make enterprise wide decisions by viewing enterprise wide information on all business operations ( enterprise wide information)

Keyword in ERP is “enterprise”

ERP systems focus on all processes, departments and operations for the entire enterprise

Enterprise Resource Planning• ERP systems

and correlates the data generating an enterprise wide view that is consistent and real-time. involved in sourcing, producing and delivering a company’s product

• Complete

• Real time

• Consistent

• O

Components of ERP Software

CORE ERP COMPONENTS• Accounting and finance component – manages

accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management

• Human resource component – tracks employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities

CORE ERP COMPONENTS

• Production and materials management component – handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control

Extended ERP Components• Extended ERP components include:

– Business intelligence• Tools to help analyze your business information and better

understand it so that you can better understand the business.

– Customer relationship management– Supply chain management

– E-business• E-logistics – manages the transportation and storage of goods• E-procurement – the business-to-business (B2B) purchase and

sale of supplies and services over the Internet

Concepts in Enterprise Resource Planning, Fourth Edition

Management’s Impetus to Adopt ERP (cont’d.)

Figure 2-2 Information and material flows in a functional business model

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Concepts in Enterprise Resource Planning, Fourth Edition

New Directions in ERP (cont’d.)

Figure 2-5 Modules within the SAP ERP integrated information systems environment (Courtesy of SAP AG)

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Concepts in Enterprise Resource Planning, Fourth Edition

Should Every Business Buy an ERP Package?

• Some of a business’s operations, and some segments of its operations, might not be a good match with the constraints of ERP

• Sometimes, a company is not ready for ERP• ERP implementation difficulties result when

management does not fully understand its current business processes and cannot make implementation decisions in a timely manner

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Concepts in Enterprise Resource Planning, Fourth Edition

What Return Can a Company Expect from Its ERP Investment?

• ERP eliminates redundant efforts and duplicated data; can generate savings in operations expense

• ERP system can help produce goods and services more quickly

• Company that doesn’t implement an ERP system might be forced out of business by competitors that have an ERP system

• Smoothly running ERP system can save a company’s personnel, suppliers, distributors, and customers much frustration

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ERP Risks (Costs)

Microsoft Business Solutions Great Plains Dynamics

Different phases of ERP

• Pre evaluation Screening• Evaluation Package• Project Planning• GAP analysis• Reengineering• Team training• Testing• Post implementation

Pre-selection Process

Package Evaluation

Project Planning

Gap Analysis Reengineering Configuration

Implementation Team Training

Testing End- user Training

Going Live

Post – implementation Phase

ERP implementation Life Cycle

Pre evaluation screening

• Decision for perfect package

• Number of ERP vendors

• Screening eliminates the packages that are not at all suitable for the company’s business processes.

• Selection is done on best few package available.

Package Evaluation

• Package is selected on the basis of different parameter.

• Test and certify the package and also check the coordination with different department

• Selected package will determine the success or failure of the project.

Cont.

• Package must be user friendly

• Regular up gradation should available.

• Cost

Project planning

• Designs the implementation process.

• Resources are identified.

• Implementation team is selected and task allocated.

• Special arrangement for contegencies.

Gap analysis

• Most crucial phase.

• Process through which company can create a model of where they are standing now and where they want to go.

• Model help the company to cover the functional gap

Reengineering

• Implementation is going to involve a significant change in number of employees and their job responsibilities.

• Process become more automated and efficient.

Team Training

• Takes place along with the process of implementation.

• Company trains its employees to implement and later, run the system.

• Employee become self sufficient to implement the software after the vendors and consultant have left.

Testing

• This phase is performed to find the weak link so that it can be rectified before its implementation.

Going Live

• The work is complete, data conversion is done, databases are up and running, the configuration is complete & testing is done.

• The system is officially proclaimed.

• Once the system is live the old system is removed

End User Training

• The employee who is going to use the system are identified and trained.

Post Implementation

• This is the maintenance phase.

• Employees who are trained enough to handle problems those crops up time to time.

• The post implementation will need a different set of roles and skills than those with less integrated kind of systems.