ERP note 1.1
Example: Before ERP Systems
Transfer to
Accounting Office
Secretary’s New printer
application
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 decisionmakers to have an enterprise-wide view of the
information they need in a timely, reliable and
consistent fashion.
• ERP provides the backbone for an enterprisewide 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 visibility or
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 model Global Networked Business based
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
Management’s Impetus to Adopt ERP
(cont’d.)
Figure 2-2 Information and material flows in a functional business model
Concepts in Enterprise
Resource Planning, Fourth
Edition
14
New Directions in ERP (cont’d.)
Figure 2-5 Modules within the SAP ERP integrated information systems
environment (Courtesy of SAP AG)
Concepts in Enterprise
Resource Planning, Fourth
Edition
15
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
Concepts in Enterprise
Resource Planning, Fourth
Edition
16
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
Concepts in Enterprise
Resource Planning, Fourth
Edition
17
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
Implementation
Team Training
Testing
Going Live
Post – implementation
Phase
ERP implementation Life Cycle
Configuration
End- user Training
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.