INTRODUCTION TO ENTERPRISE RESOURCE

PLANNING
Enterprise resource planning [ERP] is very beneficial to any organization.
To cover all areas of enterprise and maintain business properly, ERP packages are
invented .the ERP covers techniques and concepts, employed for the integrated
management of business as a whole, from the effective use of management
resources to improve the efficiency of an enterprise.
Previously ERP package were used for Manufacturing industries and
covering the functions of planning and managing business, for Ex: sales
management, production management, accounting and financial affairs, etc only.
But now –a-days ERP covers not only manufacturing industries but also diverse
type of industries. Expansion, Implementation and Use of ERP has been
progressing in global level ERP provides considerable benefits to business
organization.
WHAT IS ERP
ERP is commercial software package promising the seamless integration of
all the information following through company. Ex: financial and accounting
information, supply chain information, customer information and human resource
information.
ELEMENTS OF ERP
 At a generic level, ERP has some common elements. They are as follows:
1. The centralized database shared by different business application
function.
2. Appropriate interface with customer, employees, suppliers, managers
and shareholders.
3. Transaction processing and reporting layers for the information
system setup in an organization.

REASONS FOR THE GROWTH OF ERP

There are some reasons for the explosive growth of ERP market and ERP
vendors. Following are the benefits which are reasons for the growth of ERP.
BENEFITS OF ERP:
There are so many benefits which organizations get through the use of ERP.
Following are some TENGIBLE benefits of ERP which have participated in its
rapid growth.
1. REDUCTION IN LEAD TIME:
By the use of ERP, organization can reduce its leading time.
2. REDUCTION IN CYCLE TIME:
We can reduce the cycle time by the use of ERP.
3. ON TIME SHIPMENT:
In any business we can make any shipment or consignment on time or
before time.
4. INCREASE OF INVENTORY:
We can increase the inventory or stock by use of ERP.
5. DOUBLED BUSINESS:
Business can be doubled or expand by the use of ERP.
6. ELIMINATES LIMITATIONS:
 It eliminates limitations in legacy system (century dating, inflexibility
to change, etc) by the use of ERP.
Apart from the above tangible benefits there are some INTANGIBLE
benefits that cause the growth of ERP system. They are as follows:
1. CUSTOMER SATISFACTION:
In any business and for any product customer satisfaction is
necessary. It is necessary to satisfy the customers need. It is possible with
the help of ERP.
2. INCRESE FLEXIBILITY:
In most of business “Flexibility” is quite important. The Manager
should also be flexible in their working. This flexibility is increased with
the help of IT, by using ERP.
3. BETTER ANALYSIS & PLANNING CAPABILITIES:
In any business analysis and planning or decision making are one of
the important elements which can be made better and effective with the
help of ERP.
4. REDUCTION IN QUALITY COST:
The implementation of technology helps a lot in reducing the quality
cost.
5. PROPER UTILISATION OF RESOURCES:
To utilize all the resources properly we can use IT and ERP. As
resources are very important, it helps to make proper utilization of
resources.
6. IMPROVED INFORMATION ACCUERACY:
The information requires to perform a particular task should always
get updated. Lots of improvements are needed in any information. The
accurate information can be improved by use of ERP.
 The latest technologies like Client server architecture, open system
technology provides integration capabilities to entire enterprise system. It
brings Supplier and Customer Together, by ensuring smoother flow of
information at all levels and other parts of the organization.
ERP helps to make the decision at right time and by the right person as
the entire organization shows the same information and views. This provides
powerful support to the decision making.
VARIOUS MODULES OF ERP
ERP solutions consist of functions like customer order processing,
execution, customer service functions, financial application, manufacturing
application, material application, human resource application etc. Various ERP
vendors are there in the market providing different modular structures for their
ERP solutions.
Though the vendors are different there are some common elements in ERP
architecture like centralized common database shared by different modules,
provides appropriate interface with customers, suppliers, employees, shareholders.
Some common modules are enlisted below.
 SERVICE
 SALES AND MARKETING
 DISTRIBUTION AND TRANSPORTATION
 MANUFACTURING
 MATERIALS
 FINANCE AND ACCOUNTING
 QUALITY
 PLANT MAINTAINANCE
 HUMAN RESOURCE etc.
THE ADVANTAGE OF ERP
The ERP packages promise the seamless integration of all information
flowing through an organization; they are becoming the fastest growing software’s
in the world. The ERP vendors like SAP, ORACLE, BAAN, QAD, [Link]
and PeopleSoft are in demand for their packages. The main task of the ERP system
is to deliver products to the companies to manage their internal and external
function efficiency. There are several other advantages of adopting the ERP
system; few of them are as follows:
1. IMPROVED EFFICIANCY:
This is achieved by reduction of cycle time, inventory reduction, order
fulfillment, improving support to supply chain, management, etc.
2. BUSSINESS INTEGRATION:
ERP packages are integrated. i.e. Exchange of data among related business
components is possible. In the large companies timing of system construction,
directive differs for each product and department function.
3. BETTER DECISION MAKING:
The decision making procedure become easier because of highly structured
programmed process. These processes governs day to day operations and produces
reports in structured form, which are further used by top management of
organization to meet with its basic goals and objectives and to monitor the whole
organization.
4. QUICK RESPONSE TIME TO CUSTOMERS:
The system is easy to operate so, that not much computer skills are required
to handle the operations. Because of its comprehensive nature the system avoids
unnecessary duplications and redundancy in data gathering and storage. Thus the
response time to customer is reduced.
 5. BUSINESS INTEGRATION:
ERP creates the common database across the organization which is used by
various departments within the organization. The ERP supports the flow of
information within department automatically. This business integration capability
makes it easy to group business details in real time and carry out various types of
managements decisions in time.
6. ANALYSIS AND PLANNING CAPABILITIES:
Though different types of decisions support systems and simulation function,
ERP makes the analysis of data easier. The DSS also supports the middle and top
management for tactical and strategic planning.
7. TECHNOLOGY SUPPORT:
Utilization of latest development in information technology is quickly
adapted by the ERP packages. Distributes system, open system, client server
technology, internet, intranet, E-commerce, CALS (Computer aided Acquisition
and Logistic Support) are some examples of flexible environment adopted by ERP.
The ERP packages itself design in a way that they can incorporate with latest
technology even during the customization, maintenance and expansion phases.
AN OVERVIEW OF ENTERPRISES
In enterprises, raw materials moves through a process and transformed into
usable products. Similarly, in an information system, data are supplied to a system
(input), it is proceed and transformed into information (output). Through the ERP,
technology transforms the data that are available in the enterprise in usable
information.
ORGANIZATION OR ENTERPRISE:

An organization or enterprise is a group of people working together with a

common goal, which has resources at its disposal to achieve that goal. The
organization or an enterprise is having some internal and external functions and
several information levels according to its function.
 The four levels of information system that exist in a business are,
operational, transaction processing (lower level), tactical planning and
management control (middle level), strategic planning (top level).
The organization is divided into different units based on these functional
levels, for example, manufacturing or production management, sales and
distribution, inventory, billing, collection, paying etc.
These functional levels are information generators for the enterprise. These
levels are to meet internal reporting. There are several external reporting agencies
like central, state and local government stockholders, vendors, advertising,
customers; unions provide enterprise the external reporting required.
ERP and Related Technologies
ERP systems provide separate integrated business solutions into a single
application. However, it has several Limitations like:
1. Without the help of programmer managers can not generate custom reports
or queries and cannot obtain the information quickly. i.e. it cannot maintain
the competitive advantage.
2. ERP system provides current status only but managers also need the past
status to find the trends and the patterns that helps in decision making.
3. The data in the ERP packages are integrated with other enterprises or
decision system and does not include external intelligence.

To overcome these limitations of ERP packages, there are several

technologies introduced. Some of these technologies are:
1. BPR (Business Process Reengineering)
2. MIS (Management Information System)
3. DSS (Decision Support System)
4. EIS (Executive Information System)
5. SCM (Supply Chain Management)
 ERP IMPLEMENTATION

ERP implementation project has to go through different phases. One phase

will start before the previous is completed, but the logical order is followed.

Generally companies go through implementation like, business units,

different modules or manufacturing location. Thus at any given time more than one
of the phases may be operational. The different phases of implementation of ERP
are given below.

1. Pre-selection screening.
2. Package evaluation.
3. Project planning.
4. Gap analysis.
5. Reengineering.
6. Configuration.
7. Implementation team training.
8. Testing.
9. End user training.
10. Going live.
11. Post implementation.
1. Pre-selection screening:
After deciding to go in for ERP system, organization starts its search
for perfect package. As choice is vast with hundreds of ERP vendors in the
market, with perfect and ideal business solution, analyzing all solutions is
practically difficult. To avoid the confusion in decision, the number of
packages that are evaluated is limited to five or less. Analyzing only five out
of so many is not time consuming and also practically possible.
a) Company should do the pre-evaluable screening to limit the number of
packages that are to be evaluated by top level management.
b) All packages are not equal i.e. each has some strengths and weakness.
The pre-evaluation screening eliminates those packages which are not
suitable for company’s business process.
c) Each ERP package goes out of the experience or opportunity of a group
of the people, working in a specific business, who created system that
could deal with certain business segments. Some ERP packages are
stronger in a certain areas, than others and each one is trying to add
functionality in areas they have been lacking e.g. PeopleSoft is in HR and
less so in manufacturing. Been is stronger in manufacturing than in
finance.
2. Package Evaluation:
As the package once is selected decides the success or failure of the
project and also involves huge investments, package evaluation becomes
very important phase of ERP implementation. There should not be any
chance of changing or switching from one package to another i.e. do it right
the first time will be the motto of implementation throughout each package.
 In this phase, while making decision, analysis team should keep few
things in mind that are, every package is not perfect. The objective of the
selection is not, to identify a ‘perfect fit’ package but ‘a good fit’ package.
Once the package is evaluated, the company needs to develop a selection
criteria which permits the evaluation of all the available packages on the
same scale.
3. Project Planning Phase:
This phase designs the implementation process. It gives the details of
time schedules, deadlines etc. in this phase plan is developed, roles are
identified and responsibilities are assigned. This decides when to begin the
project, how to do it and when supposed to be completed.
Planning phase also supports with control measures to be installed and
corrective action to be taken when things are out of the control.
4. Gap Analysis:
This is the most crucial phase for the success of the ERP
implementation. In this process company create a complete model where
they are and in which direction they want to head in future. This helps to
design a model which anticipates and covers any functional gap.
5. Reengineering:
In this phase human factors are taken under consideration. This
involves two different connotations,
a) First involves the use of ERP to aid in downsizing efforts, i.e. reducing
significant number of employees. As process become more automated
and efficient, the job responsibilities change according the changes. In
this, ERP is treated as, investment as well as cost cutting measure rather
 than a downsizing tool. Reengineering should not be responsible of
downsizing and it should justify by purchase of an ERP package.
b) The second use of the reengineering or BPR, in the ERP field refers to an
ERP implementation model initially designed and used with success by
‘Big Six’ consulting firms. The BPR approach implies two separate but
closely linked implementations involved on an ERP site that are, a
technical implementation and a business process implementation.
As ERP market ships to the mid-market and as all implementations
are becoming cost sensitive, the BPR approach has come under some real
scrutiny.
6. Configuration:
Configuration is the main functional area of ERP implementation
configuring a company’s system of reveals not only the strengths of
company’s business process but also its weakness.
The organization should know which processes have to change in the
ERP implementation. This helps to find out ‘what will work and what do
not’. The consultant should interact with company’s employees who know
the actual business process deeply.
If large implementation is taking place turn the functional
configurations care split into different areas within company. Now a days by
creating a custom preconfigured ERP module for particular industry, one can
save time and money.
7. Implementation Team Training:
This is the phase where the company trains its employees to
implement and later to run the system. Here team is being trained, how to
implement system rather than how to use the system.
 As the organization changes, job responsibilities also changes. After
the reconfiguration of the system, it is required to train the people. The ERP
vendors and hired consultant will leave after the implementation but to
become self-sufficient company has to train its in-house employees.
Company should select those employees who have right attitude i.e. people
who are willing to change, learn new things and not afraid of technology and
good functional knowledge.
8. Testing:
This is the phase where actual system will be tested before successful
implementation. The system is configured and come up with extreme-
scenarios, system overloads; multiple used logging in at the same times with
the same given user enters invalid date hackers trying to access restricted
areas and so on.
The test cares must be designed specially to find the weal links and to
the system and hugs should be fixed before going live.
9. Going Live:
In this, the system is officially proclaimed operational simultaneously
implementation team is testing it and running it successfully for some time.
But once the system is live, the old system is removed and the new system is
used to carry on the business.
10. End User Training:
This is the phase where actual user of the system will be given
training on how to use the system. It starts much before the system goes live.
The employees who are going to use new system are identified.
Bases on their current skills they are divided into groups. Then each
group is given trading on the new control measures to be installed and
corrective action to be taken when things are out of the control system. This
training is very important as success of ERP system is in the hands of end
user.
11. Post Implementation:
Post implementation is very critical. Once implementation is over, the
consultants and vendors will leave and to get the full benefits of ERP system
there should be enough employees who are trained to handle the problems
that might crop-up. There should be people in organization who have
technical knowledge to make necessary enhancement to the system
whenever required.
The system must be upgraded as new technology or version is
introduced. In this phase organization could think in terms of incremental
benefits of new enhancements.
The post-ERP company requires a different set of roles and skills than
those with less integrated kinds of system. Everyone who uses the system
needs to be trained. It is on-going process as new people are always coming
in and new functionality will always be entering in the organization. These
activities are successfully handled in the maintenance mode or post-
implementation phase.
FURTURE DIRECTION IN ERP
New Market:
1. Supplementing direct sales with reseller channels.
2. Software offerings to appeal on the basis of reduced functionality.
3. Improving the implementation methodology for faster development.
4. Removing the entry price to make it financially viable.
5. Using the platforms such as MS Windows NT.
Faster Implementation Methodologies:
As to implement the whole business it has to go through reengineering
process. This may cause the complete change in business model working
previously and thus also find it difficult to implement. Sometimes only 10-
15% of the implementation takes years to complete and by the times
implementation cost may increase.
To make the implementation of packages more convenient, the ERP
vendors are searching for faster implementation methodologies e.g.
Accelerated SAP (ASAP) is a program introduced by SAP.