ERP (ENTERPRISE RESOURCE PLANNING)

B Y
S U J E E T T A M B E
ERP
(ENTERPRISE RESOURCE
PLANNING)

History of organizational systems
 Calculation systems
 Functional systems
 Integrated systems

1. Calculation systems
 1950-80
 Single purpose
 Eliminate tedious human work
 Examples: Payroll, General ledger, Inventory
 Technology used: Mainframes, magnetic tapes,
batch processing

2. Functional systems
 1975-20?? (till date)
 Use computers to improve operations
 Applications: Human resources, order entry,
manufacturing resource planning
 Technologies: Mainframes, PC’s, LAN’s
 Typically contained within a department
 Islands of automation
 Applications independently developed and deployed
 Driving force: availability of mini-computers

Functional system applications
 Human resources System
 Accounting and finance systems
 Sales and marketing System
 Operations management System
 Manufacturing Systems

Problems with function based application
 Sharing of data between systems
 Data duplication
 Data inconsistency
 Applications that don’t talk to one another
 Limited or lack of integrated information
 Isolated decisions lead to overall inefficiencies
 Increased expenses

Solution to disparate systems ?
 Integration
 Consolidation
 Right-sizing
 Business Process Redesign
 Enterprise 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 Planning
 Support business through optimizing,
maintaining, and tracking business functions
 Broken down into business processes
HRM
Distribution
Financials
Manufacturing

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

WHY AN ERP SYSTEM?
 The new trend or ‘buzz word’
 Too many different systems – complex to
maintain
 Current systems not adequate
 Business 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:
 Functionality
 Reliability/ stability
 Cost
 Ease of use
 Ease of customization
 Ease of implementation
 Vendor reputation
 History – customer references
 Available resources
 ERP product knowledge, industry knowledge, business
knowledge

IMPORTANT READINESS FACTORS
 Structured ERP implementation strategy
Alignment of internal strategy with ERP vendor ‘s
implementation strategy
 Internal 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

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
 Finance
 Sales and distribution
 Manufacturing
 Human resource management
 Plant maintenance
 Quality management
 Materials 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 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

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.

ERP (ENTERPRISE RESOURCE PLANNING)

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