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ERP Implementation Lifecycle. Due care is taken to figure. the concept of Customer Relationship Management.Com. In recent times more and more organizations have started looking into ERP packaged solutions. beliefs. There are twelve chapters. This motivated us to prepare this textbook which focuses ERP both from the managerial and the technical points of view. even a beginner. A list of books. building packaged software using . The reasons for this shift are the inadequacy of the existing systems to address the changing business requirements and the organizations’ need to focus on the core business in today’s competitive environment. . objectives. this book is prepared and presented in such a way that everybody. This textbook Enterprise Resource Planning (ERP) . Then the evolution of the ERP system is discussed.Preface Enterprise Resource Planning (ERP) is primarily an enterprise-wide system. the need for an operating system to provide an efficient integrated system. Being the first edition. Customer Relationship Management (CRM). A few case studies are also included to enable the readers to get better understanding and better insight into the subject. ERP Modules. Though great care has been taken in editing this book.NET technology. The first chapter provides a brief introduction to ERP. research papers and websites that helped us to prepare this textbook is given in the references. They are: Evolution of ERP. values.NET Technology. constructing business models using Unified Modeling Language are all presented. There are only a few text books on ERP and all these textbooks are presented only from the managerial point of view. The book is targetted at the undergraduate and post-graduate students of any branch. Each chapter consists of review questions which are left to the readers as an exercise.Com/M. Business Modeling using UML and ERP Case Studies. an overview of ERP Vendors. the scope of Supply Chain Management in an integrated system. This textbook will cover the syllabus of the subject Enterprise Resource Planning (ERP) prescribed to the students of the following courses: B. Impact of Operating System on ERP. ERP is a packaged software and it needs to be addressed both from the view point of technology and of management. This is the significant feature of the book.A Managerial and Technical Perspective will address both managerial issues and technical issues along with some case studies.Sc/MBA/MCA/B. Then the various modules in an ERP software package. all the concepts and features behind ERP in this textbook. attitudes.Tech/M. ERP Software Selection. the various phases in ERP implementation. those who aspire to enter the field of Information Technology (IT) and get positioned as IT solution architect. Supply Chain Management (SCM). Business Analyst. I would wholeheartedly accept . This textbook is presented as follows. operating style and people who make the organization.E/B. Functional and Technical Consultants etc. will find it easy to have a quick glimpse of the various concepts associated with ERP. which encompasses corporate mission.

Rajaram.(vi) suggestions for improvement offered by the readers. friends and family. (Mrs. Head of the Department of Computer Science & Engineering and my colleagues of the TCE. Dr. New Delhi. Abhaikumar. V. Finally. S. The Madura College. Mr. Dr. Head of the Department of English. Madurai. Thiagarajar College of Engineering (TCE). Principal. I am thankful to New Age International (P) Limited. If you have the patience to go through all the chapters. I sincerely acknowledge the support extended by my father. Publishers. I am thankful to Professor V. R. I am hopeful that the purpose of the book would be served. Kannan. who is the motivating force behind this project. for their support and encouragement. Parthasarathy . My wholehearted thanks and acknowledgements are due in no small measure to Dr. Sankarasubramanian. Vice-Chairman & Correspondent of the College. Chairman. T.) Radha Thiagarajan. for his invaluable comments and suggestions during the preparation of this book.

.....................................4 Characteristics of ERP Systems ............... 32 4....................2 Human Resource Management (HR) Module ........................................................................................Contents Preface ...............................................................................................................................5 Critical Success Factors for ERP Implementation ...................................................................................................................................................................................................................... 32 Chapter-5 ERP Implementation .....................3 Materials Management (MM) Module . 40 5................................. 43 5............... 47 ............ 36 5...................................................3 Manufacturing Resource Planning (MRP II) ........... 23 3.... v Chapter-1 Introduction to ERP ............10 Change Management Issues .................. 38 5... 1 1.................................................................................................... 32 4................................................................................................7 ERP Implementation Strategy .....8 Phases in ERP Implementation .1 Approaches to Study ERP Implementation .....................2 1...............5 1...........................................................................................3 Methods in ERP Software Selection ........................................................ 14 Chapter-3 ERP Modules ......................................3 What do ERP systems cover? .................................................................................9 Benefits Realization in ERP Implementation ..........................................................................2 Different Perspectives in ERP Implementation .......7 Chapter-2 Evolution of ERP ... 31 4........................ 39 5........ 21 3.............................................................................................................................................................................................................1 Benefits of an ERP System ............................................... 47 5............................................................................. 40 5.............................................................................................................................................................................................. 17 3.....................................................4 Cost Benefit Analysis ........................................4 Sales and Distribution Module ...............................................4 Conceptual Framework of ERP ............................................................................................2 ERP Software Selection Criteria .....3 Minimizing Customization ....................6 Astonishing Facts in ERP Implementation .......................................................5 1......... 12 2............................................................................................................................................................................. 31 4.....................................................................2 Limitations of the ERP System .....................2 Material Requirements Planning (MRP) ......................... 36 5.................................... 10 2........................................................... 9 2........................................................5 ERP Software Selection Process ............. 18 3......................................................................................................................... 35 5..................................... 31 4................................................................................................................................................................ 10 2............................4 Challenges for Small and Midsize businesses today ........................1 Manufacturing Strategies ..................................................................................... 26 Chapter-4 ERP Software Selection ........................................... 41 5......1 Finance Module .....1 Issues in ERP Software Selection ...........................................................................................................................................................................................................................

..........1 SAP ......................................................................... 61 7.... 75 8................ 81 9........... 60 7................................................................5 System Software Associates (Ssa) ...............................................................................................................................................................................................................................................................................................6 Manag ing new ERP environment ............................................................................................................................................................................................3 J........ 51 6.................................................................................................................... 64 7......8 Features of CRM from SAP .................................NET Technology -.................................................3 Components of CRM ........ 66 Chapter-8 ERP and CRM ......................................1 Introduction to CRM ....................... 83 9......................... 94 10.................................................................................................. SCM and E-Business ..........................................................2 Need for CRM ..................................................................................................................................................................... 65 7......NET ....................................................... 68 8.................................2 Oracle Corporation ..... 84 9.....................(viii) Chapter-6 Impact of Operating System on ERP .........................................3...................................4 The Baan Co......................................................................7 Features of Dynamic CRM system ........2 Unix and Linux – An Overview ........................................1 Functions of an operating system .........................................................................................................1 Objectives of Supply Chain Management .............................................................................................. 72 8........................................................................................................6 MK Group/Acacia Technologies ................................................................................................................ 68 8... 95 10................... 70 8.........................4 The fusion of ................ Edwards ............................................................................4 Different Dimensions of CRM .................................................................................................. ........................................................................3 Linux in an ERP World ............................................. 56 Chapter-7 Supply Chain Management (SCM) .......11 ERP and SCM .......................A Comparison ..... 71 8................. 51 6............................................4 How ERP vendors view different operating system? ............... 65 7......................................8 Impact of ERP on SCM ..7 JBA International ............................................................................................................... 95 ... 53 6............6 Decision Making in Supply Chain Management ...............2 Computer-Integrated Supply Chain Management Systems ............... 91 10............................................................................. 82 9..... 69 8...............................................................................................................................................................................................................3 What makes a good ERP system? ...........................6 Data Mining and Data Warehousing in CRM ................................................... 59 7.........CRM Business Solution ..............................................An overview ........................................................2 Why .............................................................4 Elements in Supply Chain Management ...........................................................NET........................... 77 Chapter-9 ERP and ....1 ERP Users in Linux Environment ...................................... 94 10....................9 ERP.. 50 6...................................... 63 7.....................7 Supply Chain Management Model .............................................................................5 Roadmap to Better Supply Chain Management ..................... 73 8.....................6 An ERP product built using .................................................. 85 9................................................................ 82 9............ 59 7.......................................NET software is better software? ......10 SCM and IT ...............................................................................................A Discussion ...............5 Migrating the ERP from one operating system to another ......................5 CRM Environment ................D.............................3 CAD and CAM .................................................. 62 7............................. 94 10........1 .................................... 91 10...................... 60 7..9 An ERP............................................... 50 6.... 76 8................................................................................................................................................................................................................................ 61 7.................................. 86 Chapter-10 ERP Vendor ......... 56 6..................................................................................................NET technology on ERP ............NET technology and ERP .........5 Impact of ......................................................................7 Impact of operating system on ERP .................................................................... 54 6........................ 94 10........................................................................ 55 6........................................................................................................................

..................................................................................................................................................................................................... 123 12........................... 139 ...................................5 UML Class Diagrams ............................... 124 Acronyms and Abbreviations .................................................. 121 12....................................... 131 References .............................................................................................................. 101 Chapter-12 Business Modeling Using UML ............................................................8 10...13 Marcam Corp...................................................................................................................................2 Business Modeling with the UML .... 124 12............................................. 137 Index ....................4 UML Business Activity Diagram ................................................................................................................................ 97 Chapter-11 ERP Case Studies ................................................................... 96 QAD Inc............................................. 96 Compiere ................... 120 12.......................9 10........................................................................................................................................................................................................... ..............................................................................................................................................................................................................................................................................................................................................3 UML Business Use Case .........11 10..........................................12 10................................................ 127 Glossary ............................7 Application ........................../Mapics Inc......................................................... 120 12................... 122 12. ........ 123 12..........................1 Business Modeling .............................6 UML Sequence Diagram ...... 97 Ramco Systems .................................................. 95 Intentia ................................................................................................................................. 96 Intuitive Manufacturing Systems .........(ix) 10.......................................................................................................................10 10..


to improve the efficiency of an enterprise. building a single software program that serves the needs of people in finance as well as answering the needs of the people in human resources and in the warehouse. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments' particular needs. accounting and financial . a throwaway term. from the viewpoint of the effective use of management resources. In the beginning. • To describe the limitations of ERP.” EXPECTED OUTCOME The readers will be able to: ü Understand the concepts behind an ERP system. integrated software program that runs off a single database so that the various departments can more easily share information and communicate with one another. But remember the enterprise part. That integrated approach can have a tremendous payback if companies install the correct software.1 Introduction to ERP OBJECTIVE • To introduce the concept of Enterprise Resource Planning (ERP). production management. This is ERP's true ambition. and consisted mainly of functions for planning and managing core businesses such as sales management. they were targeted at the manufacturing industry. Enterprise Resource Planning (ERP) covers the techniques and concepts employed for the integrated management of businesses as a whole. Each of those departments typically has its own computer system optimized for the particular ways in which the department does its work. ü Visualize ERP as packaged software. Enterprise Resource Planning Software or ERP doesn't live up to its acronym. ERP packages are integrated software packages that support these ERP concepts. But ERP combines them all together into a single. ü Understand the information integration through the ERP system. • To describe “What an integrated system is. That is a tall order. • To describe benefits of ERP. Forget about planningit doesn't do much of that-and forget about resource.

As a result. For this reason.2 Enterprise Resource Planning affairs. In the case of large companies in particular. The reason why ERP packages are considered to be integrated is the automatic data updation that is possible among the related business components. based on that information. flexibly and in real time. The ERP vendors were very quick to realize that in order to grow and to sustain that growth. but also in terms of management. they . they are disconnected. the filing and analysis of data from a variety of dimensions. etc. and functions that comprehensively manage multiple locations of a company can be packaged and implemented automatically. since it becomes possible to carry out. accounting standards and so on can be covered in one system. information integration for better decision making. The perspective that ERP software is simply a means of cutting cost is still prevalent. For this reason. almost all of them were weak in terms of the communication and integration of information that transcended the different business functions. and so on. and carry out various types of management decisions in a timely manner. the data of related business functions are also automatically updated at the time a transaction occurs. The indirect benefits include a better corporate image. In this way. and one can say that it has major advantages. this flexibility is essential. not simply for development and maintenance. Another advantage is the boost to the planning functions. The direct advantages include improved efficiency. Different languages. The fourth advantage is the utilization of the latest developments in Information Technology (IT). improved customer goodwill.1 BENEFITS OF AN ERP SYSTEM Installing an ERP system has many direct and indirect advantages. one is able to give the decision makers the information they want. all of the collected transactional data become information that companies can use to support business decisions. thus enabling them to make better and informed decisions. However. customer satisfaction. it becomes possible to fully utilize many types of decision support systems and simulation functions. The following are some of the direct benefits of an ERP system: • Business Integration • Flexibility • Better Analysis and Planning Capabilities • Use of Latest Technology Integration is the first and most important advantage of implementing ERP. currencies. organizational resistance to ERP implementation has often been high. one is able to grasp business details in real time. To cope with company globalization and system unification. adaptation not only to the manufacturing industry. the timing of system construction and directives differs for each product and department/function and sometimes. Furthermore. and not all ERP implementation programs delivered the promised enterprise improvements. ERP software standardizes an enterprise's business processes and data. The second advantage of ERP packages is their flexibility within the business functions. 1. The software converts transactional data into useful information and collates the data so that they can be analyzed. By enabling the comprehensive and unified management of related business and its data. in recent years. faster response time to customer queries. it has become an obstacle in the shift to new product and business classification. Since conventional company information systems were aimed at the optimization of independent business functions in business units. In the case of ERP packages. etc. but also to diverse types of industry has become possible and the expansion of implementation and use has been progressing on a global level.

increased flexibility. keeping track manually of the lead-time for each and every individual item is practically an impossible task. etc. they quickly adapted their systems to take advantage of the latest technologies like open systems. The capacity planning features of most ERP systems offer both rough-cut and detailed capacity planning. In the case of make-to-order items. businesses are not limited to a single manufacturing method. The elapsed time between placing an order and receiving it is known as the lead-time. on-time shipment. The creation of an accurate. the cycle time is reduced not on shop floor. In the case of make-to-stock. and indeed wasteful. In earlier days.Introduction to ERP 3 had to embrace the latest developments in the field of Information Technology. In this era of just-in-time manufacturing. maintenance and expansion phases. How managers use information systems and information technology as strategic management methods is likely to become the turning point of the change. It is useless. the organization should have an efficient inventory management system. Cycle time is the time between receipt of the order and delivery of the product. if the capacity is insufficient or improperly planned. improved information accuracy and enhanced decisionmaking capability. it also affects customer service levels and customer good will. the items are already manufactured and kept in warehouses or with distributors for sale. achievable production schedule requires the availability of both material and capacity. not integrated. better customer satisfaction. Material Requirements Planning. even for the make-to-stock items. Waste not only raises costs. improved resource utility. to have financial resources tied up in material. For a company dealing with hundreds and thousands of raw materials and components. improved supplier performance. Internet/Intranet. The most important aspect to consider when installing an ERP system in a company is the attitude to reform of the employees at all levels of the company. Here. the ERP systems save time by integrating with CAD/CAM systems. reduction in quality costs. so as to enable the full use of these major features. However. which is integrated with the purchasing. Other benefits of an ERP system include reduction of lead-time. without modifying or reconfiguring the workplace or plant layouts. In order to reduce the lead-time. undertaking reforms to company structures and business processes. The system loads each resource with production requirements from Master Production Scheduling. such as make-to-stock or make-to-order. The ERP systems also have simulation capabilities that help the capacity and resource planners to simulate the various capacity and resource utilization scenarios and choose the best option. It is necessary to take note that casually proceeding with the implementation of ERP merely for reasons of system reconstruction is likely to result in turning the advantages into disadvantages. The ERP systems provide the freedom to change manufacturing and planning methods as needs change. Therefore. It is this flexibility that makes the incorporation of the latest technology possible during system customization. but during order fulfillment. reduction in cycle time. Companies must be able to deliver customer-specific products (make-to-order). but the reduction will be more in the case of make-to-order systems. . client/server technology. the knowledge of the exact lead-time for each and every item is of paramount importance for uninterrupted production. With ERP systems. electronic-commerce. It is this quick adaptation to the latest changes in Information Technology that makes the flexible adaptation to changes in future business environments possible. the cycle time used to be high. is the greatest task for companies that will use them. ERP includes many of the functions that will be necessary for future systems. and Shop Floor Control (detailed capacity planning). It can be reduced by the ERP systems. production planning and production departments. It plays a significant role in purchasing and inventory control. This was because the process was manual and if computerized.

track the status of the order and make the payment sitting at home. fitness for use. and this will go a long way in improving customer satisfaction. • Integrated modules. flexibility is the ability to produce in small quantities. • Vendor management. If the organization does not have an efficient and effective mechanism that enables it to give the decision-makers the right information at the right time. This means that the customer will get individual attention and the features that he/she wants. monitoring the vendor activities and managing the supplier quality. ERP solutions are designed to grow with the company. Unlike some stand-alone applications. They support the organization in its efforts to effectively negotiate. leaving us to start over from scratch with a new and different application. ERP packages support the benchmarking and use of optimal product design. The beauty of an ERP application is that it is a suite in which all work together--without this capability. • Functionality. on the one hand. or we may want to . We may not need all applications at once. and so on. All this is possible because of the use of the latest developments in Information Technology by the ERP systems. Since all the details of the product and the customers are available to the person at the technical support department. We have seen that in today's competitive business environment. and control procurement costs and schedules while assuring superior product quality. and a variety of country specific standards of quality assurance. Modularity comes to play mainly in how we purchase and implement our ERP system. The customer could get technical support by either accessing the company's technical support knowledge base (help desk) or by calling the technical support. the key resource of every organization is information.4 Enterprise Resource Planning ERP systems have proved that they can produce goods at the flexibility of make-to-order approach without losing the cost and time benefits of make-to-order operations. without spending more money or waiting for long periods. Also. customers can place the order. • Reliable service and support. Quality is defined in many different ways--excellence. they do not "top out" without transition paths to other solutions. or completely changing to adjust to new product designs. conformance to specifications. value for the price. root cause analysis. Flexibility is a key issue in the formulation of strategic plans in companies. and supports the external business processes the company engages in. with the introduction of the web-enabled ERP systems. The supplier management and control processes comprise of features that will help the organization in managing the supplier relations. on the other. This documentation supports the job functions of the quality assurance and production managers in validating the manufacturer's conformance to ISO 9000. ERP systems provide vendor management and procurement support tools designed to coordinate all aspects of the procurement process. Sometimes. flexibility means quickly changing something that is being done. thereby facilitating definition of repeatable processes. And there are some key traits in ERP solutions: • Scalability. process engineering. Good Manufacturing Practices (GMP) worldwide. and quality assurance data by all functional departments within the manufacturing enterprise. ERP relates to the software infrastructure that holds the entire company together internally. we can't have seamless business processes. and the continuous improvement of manufacturing methods. the company is able to provide better support to the customer. monitor. At other times. in order to produce a product mix that may better approximate actual demands and reduce work-in-progress inventories. then the chances of that organization succeeding in the next millennium are very remote.

• Repetition of Errors. • Inability to manage technology. The systems can be too expensive to install and maintain. APS (Advanced Planning & Scheduling) systems are “intelligent” (that is. • Inability to stop processing quickly. the system may suffer from "culture clash" consequences. The limitations and pitfalls of the Enterprise Resource Planning are as follows. they provide modeling and analysis capabilities for intelligent decision support). • Delivers requirements satisfactorily. rather than planning for what will be. resulting in an incremental addition of value over previous "legacy" point solutions.3 WHAT DO ERP SYSTEMS COVER? A fully integrated ERP system will satisfy the following features: • Reduces the complexity in the business processes. • While ERP systems integrate multiple business functions. their scope is limited to the single enterprise. so they fail to encapsulate the complexity required in cases where multiple courses of action are available.2 LIMITATIONS OF THE ERP SYSTEM ERP applications have succeeded in integrating data from multiple functional areas. However. This gap has to be filled. 1. In contrast to ERP systems. Some risks to watch out for in implementing an ERP system include: • User Resistance/Revolt . • Has common “ways of working” (uses standard processes for transactions). These systems can process orders. • Concentration of data. • Adheres to a common set of financial standards and product coding. • ERP systems allow an enterprise to design complex and sophisticated workflows. not intelligence based. This is cited as one of the main cause of their failure. they fit together and work automatically. but are far too rigid in their ability to continually reshape and restructure workflows as business challenges and opportunities arise. they lack the ability to expand their scope to multiple enterprises. 1.Introduction to ERP 5 deploy one application at a time. but they do not analyze business situations to provide insight into future courses of action. ERP is often seen as too rigid and difficult to adapt to the specific Workflow and Business process of some companies. . • Cascading errors. They are different from separate applications in that when more than one is implemented. Some of the shortcomings of the ERP software are given below: • ERP systems are basically meant for recording what has already happened. they are typically slow and they are transaction-based.Users who fear being downsized may sabotage the system. • Mismatch between ERP system and Organizational Culture--If a system attempts to implement best practices inappropriate to the organization. • Illogical processing.

sales and HR. All functional departments that are involved in operations or production are integrated in one system. sales. In today's computer world. across these functions. i. distribution. delivery. the definition of information systems has undergone a slight change. covers the main internal functions such as finance. marketing. across business units. across the world. People follow procedures to manipulate data to produce information. Today. ERPs are often called back-office systems indicating that customers and the general public are not directly involved. distribution. and human resources management. HR and other business functions with a single comprehensive database that collects data from and feeds data into modular applications supporting all the company's business activities. It is a set of application software that integrates manufacturing. hardware. Since many of these processes occur in common across various types of businesses. logistics. In the early days of business computing. purposive system that produces information using the 'inputprocess-output' cycle. This is an expensive approach. ERP systems typically handle the manufacturing. ERP is a packaged software solution that addresses the enterprise needs taking the process view of an organization to meet the organizational goals. Thus some ERP software cater to a wide range of industries from service sectors like software vendors and hospitals to manufacturing industries and even to government departments. billing. This is contrasted with front-office systems like customer relationship management systems that deal directly with the customer. inventory management. ERPs are cross-functional and enterprise wide information system. inventory. distribution. manufacturing. software. and communication networks and data resources. procedures and data. and strategic management. . warehousing. tightly integrating all functions of an enterprise. In addition to manufacturing. an information system is an organized combination of people.6 Enterprise Resource Planning • Integrated across a large portion of the organizations internal procedures. and shipping. shipping. An information system is an open. invoicing. this would include accounting. and accounting for a company. The minimal information system consists of three elements--people. finance. production. human resources. common reusable software may provide cost-effective alternatives to custom software. companies used to write their own software to control their business processes.e. Enterprise Resource Planning or ERP software can aid in the control of many business activities like sales.

Customizations make the software more unstable and harder to maintain when it finally does come to life. 4.”. for example. and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems. and often more sophisticated business solutions. Most vendors' ERP software is flexible enough for us to install some modules without buying the whole package. will just install an ERP finance or HR module and leave the rest of the functions for another day. including finance. they will resist using the software or will want IT to change the software to match the ways they currently do things. How does ERP software standardize the existing business processes? Why do ERP projects fail so often? “ERP has got nothing to do with planning. This is where ERP projects break down. a failure in the software can bring a company to a halt. 9. literally. these firms often have outdated or overloaded applications and need to invest in new technology to achieve or retain competitiveness in their markets.Comment. 2. Because ERP covers so much of what a business does. we have to get people inside our company to adopt the work methods outlined in the software. many small and midsize businesses are in need of upgrades. manufacturing and the warehouse. Finance. 3. What is ERP? Carefully examine the technological and nontechnological limitations of ERP software. except that now the software is linked together so that someone in finance can look into the warehouse software to see if an order has been shipped. Today. manufacturing and the warehouse. ERP is a set of best practices for performing different duties in a company. The horror stories we hear everyday about ERP can usually be traced to the changes the company made in the core ERP software to fit its own work methods. more or different software applications. REVIEW QUESTIONS 1. Many companies. 1. If the people in the different departments which will be using ERP don't agree that the work methods embedded in the software are better than the ones they currently use. .Justify.” Explain. 5.”. Is ERP packaged software? “ERP software is meant for manufacturing industries. Distinguish between conventional application packages and ERP packages. HR. Now.Introduction to ERP 7 ERP vanquishes the old standalone computer systems in finance. manufacturing and the warehouse all still get their own software. SUMMARY At its simplest level. 8. “ERP is known for information integration. 6. To get the most from the software.4 CHALLENGES FOR SMALL AND MIDSIZE BUSINESSES TODAY Smaller enterprises ducked the ERP wave of the mid--1990s and did not succumb to the cost structures or the risks that their larger brethren undertook. 7. more current or robust technology.

8 Enterprise Resource Planning 10. What are the issues to consider when we go for an integrated system? 11. What are the gaps in the development of packaged software? 13. How will you ensure that ERP software purchased will fit into your organization? 12.” . . etc) and identify their major functions. 16. Select an organization of your choice (say a school. What are the salient features of an integrated system like ERP? 17. college. software company. Now. Will ERP software eliminate clerical jobs? If so. “ERP is a catalyst of fundamental changes in organizations. How will you measure the performance of an organization before and after ERP implementation? Propose suitable metrics. develop a diagram that shows the information integration of the organization and propose an ERP solution.Comment. 15. how can the existing man power be effectively utilized? 14. Classify their functions into various modules.

One way of looking at ERP is as a combination of business processes and information technology. an American ERP system vendor. • To describe benefits of ERP. Edwards. Figure 1 shows the evolution of Enterprise Resource Planning (ERP). J. For instance. Figure 1 . from the procurement of supplies to shop floor control and financial accounting. Enterprise Resource Planning (ERP) and Supply Chain Management (SCM). JBA. EXPECTED OUTCOME The readers will be able to: ü Understand the concepts of Materials Requirements Planning (MRP). From a more strategic perspective. It provides the glue that binds management functions across geographic sites and complex heterogeneous networks.2 Evolution of ERP OBJECTIVE • To discuss the evolution of ERP. defines ERP as an umbrella term for integrated business software systems that power a corporate information structure. controlling a broad range of activities. Manufacturing Resource Planning (MRP-II). a British consulting firm.D. views ERP as a business approach that starts in the boardroom and permeates the entire organization.

In Make-to-Order system. packaging or finishing process are planned and stocked in anticipation of an order from the customer. A main purpose of MRP-II is to integrate primary functions (i. Optionally. Assemble-to-Order In Make-to-Stock. however. Customer orders can be filled from the existing stocks and the purchase orders are used to replenish those stocks. An MRP system is intended to simultaneously meet three objectives: • Ensure materials and products are available for production and delivery to customers. • Maintain the lowest possible level of inventory. The production department will keep track of the finished goods. In Assemble-to-Order system. the production process allows the user to complete the products before the receipt of an order from the customer. the customer demand is converted to a suitable assembly work order. They are: 1. Therefore. the Master Production Schedule (MPS) specifies the quantity of each finished product required in each planning period. Make-to-Stock 2. MRP is a technique for determining the quantity and timing for the acquisition of dependent items needed to satisfy master schedule requirements. The firm. all the components used in the assembly.10 Enterprise Resource Planning 2. MRP is continually evolving and expanding to include more business functions.2 MATERIAL REQUIREMENTS PLANNING (MRP) Material Requirements Planning (MRP) is a software based production planning and inventory control system used to manage manufacturing processes. The basic inputs for Material Requirements .e. which is then finished to the specifications of the customer. components and raw materials. The planning is primarily driven by forecasts of the features and models. • Plan manufacturing activities. MRP expanded from a material planning and control system to a company-wide system capable of planning and controlling virtually all the firm's resources. Marketing and Finance) and other functions such as personnel. In this system. planning is triggered to finish the items to the specifications of the customer. MRP is a production planning and control technique in which the MPS is used to create production and purchase orders for lower-level components. The final product is usually a combination of standard items and items custom designed to meet the special needs of the customer. In the 1970s. Upon receipt of the sale order. The receipt of order will initiate the assembly of products. 2. it is a set of time-phased requirements for end items. Production. back flushing provides efficient relieving of component inventory. engineering and purchasing into the planning process. the product is developed and delivered only when the customer places an order. Make-to-Order 3. This expanded approach was also fundamentally different from the original concepts of MRP. manufacturers began to use techniques such as MRP in recognition of the importance of the distinction between independent and dependent demand items. In the early 1980s. also needs a set of time-phased requirements for the parts and raw materials that make up those end items.1 MANUFACTURING STRATEGIES The following are the three manufacturing strategies in practice. In a typical manufacturing environment. delivery schedules and purchasing activities.


It allows these best-of-breed solutions to leverage the investments made in the ERP systems.D. Indeed. The very nature of the ERP system forces one to think process-wise. however. nine out of the top ten global computer companies. From a technical perspective. has been much more significant. ERP's impact. financial planning in dollars and has a simulation capability to answer "what-if" questions. and all of the top ten global chemical companies are using SAP’s R/3. It is intended to improve resource planning by expanding the scope of planning to include more of the supply chain than MRP-II. J. . each linked together: • Business planning • Sales and operations planning • Production planning • Master scheduling • Material requirements planning • Capacity requirements planning • Execution support systems for capacity and material Output from these systems is integrated with financial reports such as: • Business plan • Purchase commitment report • Shipping budget • Inventory projections in dollars In the 1990s.12 Enterprise Resource Planning 2. it addresses operational planning in units. In the following years. A recent survey by Fortune magazine revealed that seven out of the top ten global pharmaceutical and petroleum companies. Thus. ERP strives to plan and schedule supplier resources as well. The popularity of ERP systems started to soar in 1994 when SAP. companies began to pour billions of ERP systems offered by SAP and its major competitors such as Oracle. By the late 1990s. and partly explains the impressive ROI's achieved by these solutions. industry prognosticators were forecasting that the ERP market would sustain an industry growth rate of 30 to 40 percent. the key difference between MRP-II and ERP is that while MRP-II has traditionally focused on the planning and scheduling of internal resources. based on the dynamic customer demands and schedules. The number of local IT systems to be replaced by an integrated ERP system usually runs into the dozens upto a hundred or more in multinational companies. Edwards. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP. ERP systems can be instrumental in transforming functionally oriented organizations into process oriented ones. It is made up of a variety of functions. some of the unexpected benefits of ERP implementations may well stem from improved communication between different departments across business processes. MRP-II was further expanded into ERP. etc. rather than department-wise. Ideally.3 MANUFACTURING RESOURCE PLANNING (MRP II) Manufacturing Resource Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. a Germany based company. business areas. Baan. etc. ERP systems provide an enterprise transaction backbone that constitutes the glue between all kinds of best-of-breed solutions for specific processes. ERP can be seen as the logical extension of Material Requirements Planning (MRP) systems of the 1970's and of Manufacturing Resource Planning (MRP II) systems of the 1980's. released its next generation software known as R/3.

by means of a tool and/or processing medium of raw materials into finished goods for sale. Enterprise consensus is required to reengineer an organization's core business processes and to take advantage of the software. The benefit of such software is that it can speed decision making. Peoplesoft and Baan who between them enjoy greater than 60% of the total market. Globalization.000 companies world-wide paid $10 billion to ERP vendors. the Master Production Schedule (MPS) represents a plan for the production of all end-items over a given planning horizon. the MIP model aims to minimize the total cost of component & end-item inventory and backorders while keeping within available production capacity. deregulation and new technology are all interrelated business pressures. reduce costs and give managers control over the whole business.Evolution of ERP 13 In 1997 approximately 20. There are as many different methodologies for implementing ERP as there are consultants who will partner an organization through an ERP project. human resource. The capacity requirements of the MPS depend upon the MRP component production plan which in turn depends on the lot-sizes used in the MRP explosion. which were up by 40% from 1996. An ERP system links IT with a new. this may be due to poor cost and time estimation rather than a failure in project management. In this spirit. IT-enabled change is different from other forms of change in that technology. JD Edwards. Some industries. or intermediate processes involving the production or finishing of semimanufactures. with ERP software merely being an enabler of the change. The market is dominated by SAP. The actual benefits that can be achieved from a successful ERP implementation come from what is changed in the business and therefore ERP should be considered a business project rather than a technology initiative. balancing conflicting goals such as low inventories and efficient utilization of capacity. process oriented business model that is required in order for a business to remain competitive in today's unstable business environment. which were not present to the same extent in the 1970s and 1980s and are changing the competitive environment for organizations. the MPS has to be feasible so that components can be produced within the capacity available in each time period. It is clear that there is a role here for a planning tool that efficiently takes capacity and the MRP explosion into account at the same time. business processes and the organization must be integrated in order to achieve the goals expected from the technology. It is estimated that at least 90% of ERP implementations end up late or over budget. There is a growing recognition that business and IT strategies should be linked and a high degree of alignment created between them. It has been recognized that the track record for IT implementation is not good and it is believed that the benefits of IT are not being attained because investment is biased toward technology rather than managing changes in processes. Although handicraft production has been with us for many millennia. Software configuration is also more complex and intricate. organization structure and culture. However. As such. finance and supply chain management. It is a large branch of industry and of secondary production. modern-style manufacturing is generally regarded as beginning . In MRP systems. This forces the organization to undergo organization-wide reengineering. The decision variables are primarily the MPS production quantities. ERP software automates core corporate activities such as manufacturing. like semiconductor and steel manufacturers use the term fabrication. Implementing a fully integrated ERP system requires the organization to be process oriented and for all parts of an organization to adhere to the same precise processes. Manufacturing is the transformation. The very concept of ERP software being integrated makes it complex. Oracle. It specifies how much of each end-item will be produced in each planning period so that future component production requirements and materials purchases can be calculated using MRP component-explosion logic. but an MRP plan is also identified at the same time. MPS must be optimizers.

14 Enterprise Resource Planning around 1780 with the British Industrial Revolution. The arrival of ERP systems introduced a new software concept. Project Management 5. A data structure was added to the software packages. a central repository was developed to store transactions from one department that could automatically be used by another department. Production and Materials Management 4. Originally. Quality Management and Plant Maintenance 6. which eliminated the redundancy within organizations created by departmental software. ERP vendors are branching into new areas such as supply chain management (SCM). the term applied to commodities or artifacts which were “made by hand”. customer relationship management (CRM) and business intelligence (BI). 2. Figure 4 . Recently. HR Management 3. Instead of interfacing information between departmental systems. and subsequently around the world. While it remains a huge part of the modern world economyperhaps a quarter of aggregate world production of goods and services-many of the world's wealthier nations devote an ever smaller proportion of their workforce to manufacturing activity owing to relocation of enterprises to lower-wage countries and the rising proportion of economic activity devoted to service activity. Sales and Distribution. spreading thereafter to Continental Europe and North America. ecommerce.4 CONCEPTUAL FRAMEWORK OF ERP A typical ERP application supports cross-functional business processes by linking the following six primary business functions: 1. Accounting and Controlling 2.

Figure 4 shows the Conceptual Framework of ERP II. thus taking advantage of the technological innovations. Central Components • Enterprise Resource Planning (ERP) Corporate Components • • • • • • Supply Chain Management (SCM) Customer Relationship Management (CRM) Supplier Relationship Management (SRM) Product Lifecycle Management (PLM) Employee Lifecycle Management (ELM) Corporate Performance Management (CPM) Collaborative Components • Business-to-consumer (B2C) • Business-to-business (B2B) • Business-to-employee (B2E) • Enterprise Application Integration (EAI) The ERP market experienced a hype triggered by companies rushing to solve the Y2K problem. but after Y2K the ERP market soured. which originally named ERP. The relations between the following components are highlighted in the figure 4. The challenge of SCM is to integrate and to coordinate activities across organizational boundaries in order to manage the entire supply chain as a whole. (iii) The functions addressed within a domain. e-business and collaboration in the supply chain.Evolution of ERP 15 Supply Chain Management (SCM) is perhaps the most critical logistics issue in the majority of today's businesses. (ii) Its business domain. application and technology strategy. They are: (i) The role of ERP II. The ERP system provides a platform for SCM and businesses can adopt the new functions offered by the new generation of enterprise systems. (iv) The kinds of processes required by those functions. ERP II includes six elements that touch on business. These ERP II elements represent an expansion of traditional ERP and ERP II is essentially componentized ERP. (v) The system architectures that can support those processes and the way in which data are handled within those architectures. Back in those days the Internet boomed and the Gartner Group. Various enterprise systems (ES) and above all the most recent ERP systems from the major vendors include new technologies to integrate the supply chain. . redefined ERP into ERP II.

3. What are the inputs to MRP and MRP II? Propose a model to integrate ERP.16 Enterprise Resource Planning SUMMARY The fundamental structure of ERP has its origin in the fifties and sixties with the development of the early inventory control (IC) systems and bill of material (BOM) processors. How does ERP aid in better Supply Chain Management? What is Master Production Schedule? What are the functions of MRP and MRP II? How does the Bill of Materials influence MRP? What are the technical requirements of ERP? How is CRM related to ERP and SCM? Is ERP the same as SCM? Explain. What is the purpose of Bills of Materials? What will be the next evolution to SCM in your opinion? Explain. 5. REVIEW QUESTIONS 1. 8. SCM and CRM enabled with Internet. 9. 11. 10. therefore. 7. What is the origin of ERP? What are the pros and cons of MRP and MRP II? Compare and Contrast MRP and MRP II. ERP. 13. has evolved from its predecessors to play an integrated role in the creation of a value chain. Traditional MRP and MRP-II applications may not be up to the challenges presented by manufacturers seeking to capitalize on the competitive advantage offered by an integrated supply chain. The progress continued during the seventies and eighties with the development of the material requirement planning (MRP) systems and the manufacturing resource planning (MRP II) systems. 4. 6. 12. MRP MRP II ERP SCM ? . 2. 14.

sales. HR etc. less training and easy maintenance . All the ERP software is provided with either a single module or a set of modules based on the requirements of the client/customer. Then due customization is done to the selected module to meet the exact requirements of the customer. The important reasons for selecting a particular ERP module and not preferring a complete integrated system with all the ERP modules are as follows: • Cost reduction • Specialized module • Reduced project duration • Less risk • Reduced resistance to change • The possibility of purchasing different modules from different vendors • More features. If it decides to replace a part of its existing system. If the organization decides to completely replace its existing system with a complete integrated system it will pick up an ERP package with all functionalities. ü Effectively use ERP software through appropriate modules. Among the ERP vendors also. The number of modules will also vary from one ERP package to another. ü Utilize the functionality of various ERP modules.3 ERP Modules OBJECTIVE • To highlight the various modules in an ERP system. EXPECTED OUTCOME The readers will be able to: ü Understand the Business Environment. It all depends on the organization going for ERP implementation. This is how the ERP modules selection takes place. • To describe the functions of various ERP modules. there is huge competition in developing specialized individual modules with excellent features for all the functions of the organization like finance. then it will pick up the required ERP module enabled with the required functionality.

The size of the business and the importance of financial management of business go hand in hand.production. the statements of funds acquired. the nature of its business. production and quantitative methods. the ability of financial officers and the financial philosophy and so on. thus. production and marketing is necessary to understand the finance function of the business.1. Finance includes investment decision. accruing to shareholders which are in other words emphasis on total earnings per share. They are Finance Module. Since finance is a critical functional area. Figure 2 shows the organization of the financial management function in a large typical firm. the ultimate responsibility for carrying out financial management functions lies with the top management. In a similar way business requires finances to maintain its financial health. Financial management is an integral part of the overall management and is not a totally independent area. accounting. All aspects of the business may be broadly classified into finance. A knowledge of economics. Although the importance of the financial management depends largely on the size of the firm. the study of the finance of the business and the management of finances become significant. 3. Materials Management Module. economics. planning and the like. accounting. It also highlights the functions of financial management.1 FINANCE MODULE Finance pervades all activities of business . Financial management is concerned with not only the adequate acquisition of funds at the appropriate time but also its proper utilization in the interest of one and all. only indirectly related to day-to-day decision making by financial managers and are supportive in nature while economics and accounting are the primary disciplines on which the financial manager draws substantially. Blood is required to keep the human body in good health. It draws heavily on related descriptions and fields of study. The Wealth maximization brings in economic welfare to the shareholders. There are traditional and modern approaches to financial management. the exact nature of the organization of the financial management function differs from firm to firm depending upon factors such as the size of the firm. etc. production and marketing. The health of a business can be compared with the health of human beings. 3. The wealth maximization means maximizing the net present value. However. finance decision and dividend decision. namely. marketing. The marketing. marketing. . A knowledge of economics is necessary for financial managers to understand both the financial environment and the decision theories which underlie contemporary financial management. This information will help the finance manager to assess the past performance and the future directions of the firm. The output of the financial management is the financial statements such as the balance sheet. Profit maximization is the financial objective of the firm wherein it takes into consideration total operating profit. the type of financing operations. Hence. which is financial welfare only without considering the owners economic welfare which is ultimately objective of any shareholders. financial management is an integral part of the overall management of the firm. production and quantitative methods are. Financial management as an independent discipline has become important in recent years. the income statement.1 Financial Management and Other Related Disciplines Figure 1 shows the relationship of financial management with the Accounting and other disciplines. Human Resource Management (HRM) Module and Sales and Distribution Module.18 Enterprise Resource Planning In the following sections we will discuss the functionalities of some of the important and common ERP modules offered by all the ERP vendors.


The cost controlling subsystem of the Finance Module provides the necessary information to the top management at the right time. forecasting the business expenditure. trial balance.20 Enterprise Resource Planning 2. It monitors the accounting activities and controls it through proper measures. etc. Cost controlling 4. Planning and forecasting deals with preparation of budget. Cost controlling deals with controlling the cash flow. etc. depreciation. fixed asset. Every enterprise will be interested to find its financial position and operational results periodically. The main concern of the treasury management is with the financing activities of the firm. etc. decision making. etc. Planning and forecasting Accounting deals with ledger. risk management. and financial report of the company to top management. product cost and profitability analysis. The functions of the treasury management are: ( Financial report preparation i) (ii) Banking relationship (iii) Investor relationship (iv) Short-term and Long-term financing (v) Cash management (vi) Credit administration (vii) Investments and (viii) Insurance. the cash account is updated and we can find the balances every day readily. The report provided by the software on these two domains of financial management will help the top management in decision making and creates a path for the organization to move in the right direction and to improve its financial strength. This further helps to create quotations and order acceptance. Another advantage in the Finance Module of ERP software . risk planning. Treasury management 5. overhead cost. treasury management and cost controlling are very much essential. better business planning. The data initialization is done through voucher entry. risk analysis. This module provides a platform to get this information very easily and accurately. There is a facility for creating and deleting the entries. Investment management deals with investment planning. funds flow. accounts receivable and accounts payable. capital required. Once the data is entered. liabilities. The functions carried out by this module are: (i) Financial accounting (ii) Internal Auditing (iii) Tax calculation (iv) Introducing various cost control parameters and monitoring them (v) Preparation of Budget (vi) Planning for future investments (vii) Economic appraisal (viii) Controlling cash flow and funds flow (ix) Maintenance of accounts. Of all the subsystems of the Finance Module. Investment management 3. investment budgeting. balance sheet. monitoring the investment and controlling investment. and so on. simulation. funds management. Treasury management deals with cash management. etc.

ERP Modules 21 is that if an enterprise has multi-currency dealings one can monitor and record them separately. Many organizations prefer to replace their existing system by an HR module of ERP package. Planning in HR involves determination of personnel programmes and changes in advance that . They are: (1) Managerial functions (2) Operative functions. The finance module also accounts for quick and effective preparation of the payroll as and when there is a need. significant forecast of human resource requirements. The HR module aims at automating the Human Resource Management activities and helps the organization to have a continuous monitoring over thousands and thousands of their employees. and career advancement and so on. Human resources are heterogeneous. Several financial decisions are taken based on timely and reliable data. The significance of the finance module is that it helps the top management in evaluating their impact and provides suitable guidelines. the trial balance report can be generated any time. Planning 2. Human beings behave in widely different and complicated ways. The HR module can do wonders to the organization if it is used effectively. The finance module enables the top management for decision making. It provides the features to maintain the records. While ledger accounts are posted. Effective budgetary control can be maintained using this module.2 HUMAN RESOURCE MANAGEMENT (HR) MODULE An HR module is an important module in an ERP package. a good security system is available wherein data entered in computer cannot be accessed or modified without authorization.2. Controlling The Operative functions of HR involve the following: (a) Employment (b) Human Resource Development (HRD) (c) Compensation Planning is an outline of the future course of action. reduce the manpower in the HR team. processes and provides reliable information whenever required. It also enables the management to ascertain its financial status. Effective financial management also helps us to know where the money is due and payable which was very difficult in manual operations. appraising the employees. 3. 3. Failure to plan is equivalent to planning to fail. The Managerial functions of HR involve the following: 1. The break up of profit and loss can also be maintained and reports can be generated. training. The HR module of an ERP package also helps the organization to speed up the process. Organizing 3.1 Functions of HR Module Two kinds of functions are carried out by HR module. The advantage of Finance ERP Module is that the operating results of an enterprise can be ascertained department-wise and product-wise. effective decision making. This also helps in report to various agencies which are an obligation of the enterprise. The assets and liabilities can be measured through this module. and interface with financial management. Further. Hence the need for packaged software like the HR ERP Module which reaches the organization as a pack and provides all that it requires and deserves. Ratio analysis can be done as per the needs of the enterprise and the performance of the enterprise can be determined. Directing 4. The recorded transaction by virtue of the software gets posted automatically into the respective account heads in the ledger.


job search and acquisition of work experience. creative ability. etc of an applicant with a view to appraising their suitability to a job. educational facilities. performing jobs which would meet the needs of the organization and which would provide satisfaction for the individuals involved. selection. etc. human resource planning. HRM has changed from an inactive and problemsolving role to a strategic. inabilities to meet the deadlines and to provide smooth services to the suppliers . It covers functions such as job analysis. Performance appraisal is the symbolic evaluation of individuals with respect to their performance on the job and their potential for development. HRM takes more of a full service role providing employee support beyond pension planning and career development. internal and external experts. etc. hiring activities. focusing on the retention and development of the best human resources. records management. Today. attitude. the trend in project management is toward people management. people. Incentive is the process of formulating. and reporting and termination activities and their similar activities. Today. policies. and integrates different interest groups across locations. knowledge. Induction and orientation are the techniques by which a new employee is introduced to the practices. Fringe benefits include housing facilities. Job analysis is the process of study and collection of information relating to the operations and responsibilities of a specific job. HRM is being renewed in organizations and becoming one of the fundamental functions of project management. conveyance allowance. The main difficulties faced by these organizations are the poor maintenance of stock. skill. available at proper times. induction and internal mobility. etc. recruitment. based on present and future job and organizational requirements. Selection is the process of ascertaining the qualifications. Placement is the process of assigning the selected candidate to the most suitable job.ERP Modules 23 Employment is the first operative function of the HR module. With the arrival of ERP systems. Management development is the process of designing and conducting suitable executable development programmes so as to develop the managerial and human relations skill of employees. Traditional HR practices consisted of activities such as payroll. purposes. Nowadays. Implementing an ERP project involves numerous individuals. of the organization. Career Planning and Development is the planning of one's career and implementation of career plans by means of education.3 MATERIALS MANAGEMENT (MM) MODULE The Materials Management (MM) Module is the preferred module for most of the manufacturing companies than any other ERP module. changing and developing the skills. Human Resources Management (HRM) plays a strategic role in business. HRD is the process of improving. HR functions became fully integrated with the other operations of the organization. Training is a systematic process by which employees learn skills. knowledge. experience. aptitude. administering and reviewing the schemes of financial incentives in addition to regular payment of wages and salary. placement. abilities or attitudes to further organizational and personal goals. training. Human Resource Planning is a process for determining and ensuring that the organization will have an adequate number of qualified persons. Companies agree that people challenges are more difficult to manage than any technical difficulties they encounter. knowledge. The management provides social security to its employees in addition to the fringe benefits. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. 3. Nowadays.

maintenance affect the disposition. purchasing. Disposition facilitates the supply of material against expected demand and this acts as . preventing or minimizing large amounts of capital being blocked up for long periods and improving the overall capital turnover ratio. storing and controlling materials in an optimum manner so as to provide a predefined service to the customer at a minimum cost. production. product development (l) Make or buy decisions (m) Quality control for inspection (n) Disposal of scrap surplus and obsolete materials Materials Management is an area of management which helps the manager to improve the productivity of capital by reducing material costs. This information is the basis for planning supplies to meet future demand. The MM Module is the central point of operating logistics containing the essential integrated functions for: • Inventory management • Material requirements planning (MRP) • Purchasing • Warehouse management • Vendor evaluation • Invoice verification • Product costing Materials Management could be regarded as the function responsible for the co-ordination of planning. The MM Module of the ERP package is provided with all these features and helps the organization to have its inventory properly managed and monitored. Inventory planning is the information repository for all planned material transactions. who are the backbone of any manufacturing company. It has information on all expected receipts and demands. If Materials Management is done poorly then it has the potential to eat away a major portion of the capital of the company leading to a loss situation and eventually to winding up the company. sales. The Materials Management Module helps in Inventory planning. moving.24 Enterprise Resource Planning and to ensure proper service to the customers and so on. All material transactions that affect the stock either by inventory. the top management can take suitable steps to improve its position to retain suppliers and customers. purchase. sourcing. Based on the MM Module reports. The objective of the Materials Management module is: ( a) Reducing cost of material (b) Extending full support to suppliers (c) Ensuring right quantity. right quality and right price at right time for purchase (d) Effective controlling of inventories leading to release of working capital to other useful purposes without disturbing the production schedule for want of materials (e) Materials planning (f) Purchasing of materials (g) Receiving and warehousing (h) Store administration (i) Inventory control (j) Standardizing variety reduction (k) Simplification.

Adequate inventory of materials to maintain smooth flow of production operations and 3. handling and inspection. Using disposition the user can address the business needs like online stock availability. In (c) the internal structuring of the materials .B. etc. The objectives of effective inventory management are as follows: • Ensuring regular supply of materials to facilitate uninterrupted production • Maintaining adequate stocks of raw materials to meet situations of scarcity or mounting prices • Ensuring prompt delivery to the customer through ensuring adequate stock • Optimizing inventory ordering. The Inventory management of any enterprise needs to ensure the following: 1.C (Always Better Control) analysis of inventory items. spares. Keeping the money blocked in inventories at a reasonable level. Funds frozen in excessive stocks are denied for current operations which have to be finished by borrowing at substantial costs. viewing the demand and supply details for an item or variant.3. The Speculative motive is meant for utilizing the advantage of price fluctuations by increasing or reducing inventories. imported items. They are: (a) Preparing a list of classified items in inventories. They are: (a) Based on commodities (b) Based on locations (c) Based on functions In (a) the classification is based upon the nature of the items like raw materials. decentralized and the combination of the two. finished goods. Adequate inventories of finished goods to meet the demand for prompt customer services. Effective inventory management can be carried out by the following procedures. (c) Maintaining stock levels for all items. 3. 2. tend to move in proportion to the quantity of inventory holdings and excess inventories will necessarily depress the profits. These categories of costs known as 'carrying costs'. Extra inventories would involve additional storage space and extra costs on insurance.ERP Modules 25 an aid to JIT (Just-in-Time). All the organizations are striving to have a balance between inventory levels and customer satisfaction. They are: • Transactions motive • Precautionary motive • Speculative motive The transactions motive is to facilitate smooth production and sales operations. (d) Continuous process management and monitoring (e) Introducing evaluation process through inventory ratios. (b) A. In (b) there are two ways of organizing the materials department namely centralized. Inadequate levels of inventories can cause stoppages of production affecting sales and profits. earliest available date for a given quantity. carrying and stock-out costs There are three motives identified behind holding inventories. The Precautionary motive is meant for protection against unexpected changes in demand and supply.1 Organization of Materials Management There are three ways of organizing the materials department. Poor inventory management can cause much drain on profits.

In this process. This will result in proper balance of conflicting objectives of individual functions. Since most suppliers are also connected to the organization's system as soon as a purchase order or requisition is issued. It shows the relationship of the Sales and Distribution Module with the Materials Management Module and the Finance Module. (ii) purchase. etc. reduce the lead-times and make it possible for the organizations to have the items at the time they are needed. the product once billed. Inventory management is a continuous process. The organization needs to maintain its customers' details. the materials manager who is responsible for many interrelated functions is in a position to exercise control and to coordinate.26 Enterprise Resource Planning department is done keeping in mind the function to be carried out. Then. the supplier's system is updated with that information. the time saved is phenomenal. From figure 6. Inventory control is the process of maintaining the optimum needed quantity that is sufficient for smooth operation of the organization. he gets the quotation from the supplier. by virtue of their integrated nature and by the use of latest technologies. The Materials Management Module accounts for proper Inventory Management. All these activities will take place continuously and should be monitored and necessary directions have to be given to the concerned departments of the organization for smooth functioning of the sales and distribution process. vendor selection etc. the system also does that. Then the supplier delivers the product through the materials management department and billing is . ERP 'systems. issuing of purchase orders and payments happen through the system electronically. Once the items that are to be manufactured are identified. The key elements of the Sales and Distribution module are: ( Selling i) (ii) Shipping (iii) Billing of Product/Service to Customer (iv) Master Data Management (v) Customer's Order Management (vi) Pricing Strategies Figure 6 shows the activities involved in the Sales and Distribution Module. Hence the supplier knows what items are to be supplied and when. Then. the material management module will prepare purchase orders for each and every item taking into account the lead-times and when the items are required for production. it has to be properly delivered. he places an order with the supplier. In an integrated set up. 3. The set of events that takes place between a customer and a supplier is coined as Sales. Since activities like preparation of contracts. the shipping activity is linked to Materials Management and the billing is linked to the Finance Module. Based on the customer's order suitable purchase orders have to be placed to the suppliers at right time to ensure proper delivery to the customers. After scrutinizing the quotation. If the purchasing process has to go through the invitation of quotations. The three major processes involved in the Sales and Distribution Module are: [1] Sales [2] Shipping and [3] Billing. and once the production planning system has prepared a production plan. order details and supplier details. (iii) transport. Determining the cost of the product involves pricing strategies adopted by the company. we find that the customer first conducts an inquiry about a product. The basis can be (i) stores.4 SALES AND DISTRIBUTION MODULE The Sales and Distribution Module of an ERP package helps the organization to achieve its business targets through its key elements mentioned below.


It may also take orders that are expected within a short time from prospective customers. business practices and organizational structures. The Sales and Distribution module of the ERP package also accounts for forecasting the demand from the customers. we can classify a sales order from a customer as an abnormal sales order. there are one or more sales points for receiving customer orders from different geographical locations. planning pricing strategies and setting actual prices. Sometimes there can be a sudden rise in the demand for products. Such orders are termed as abnormal sales orders. The effective utilization of the Sales and Distribution module of the ERP package depends solely on how these people scrutinize the orders from the customers. . those applications typically support the operation processes of materials sourcing. Even though the orders are still in a planned stage. For manufacturers. Based on the importance of the customer also. These orders are segregated under the following types and sent to production as demands for the current period. SUMMARY ERP is very complex.28 Enterprise Resource Planning The task of the marketing manager is to make use of the Sales and Distribution Module of ERP package to decide the objectives of pricing. There could be more customers' orders than forecasts. Generally for a manufacturing organization. Sales team members may take all the orders that are almost finalized from the customers or expected to be finalized in the near future and raise sales orders from them. and product distribution. the Sales Department can give necessary directions to other relevant departments in the organization. Given their broad organizational and functional scope. They are firmed up once the users confirm their orders. The sales and distribution module of the ERP package will enable the top management evaluate the following: (1) Market penetration (2) Price stabilization (3) Market share (4) Profits maximization (5) Cash flow (6) Funds flow (7) Forecasting demand (8) Analyzing the market and (9) Discounts etc. Only based on this forecast. These orders may be given priority over the planned and firmed up sales orders. Pricing objectives provide guidance to decision makers in formulating price policies. they enable the top management for decision making at right time. It marries technology. The sales department receives orders from customers. the production department would make itself ready to service these demands. ERP systems are unlike any other contemporary commercial manufacturing applications. manufacturing planning. These are translated into sales demands and are placed on production. The planning done based on the sales forecast is used to service these demands. All these sales orders are routed to the production department. The role of the sales department is vital. as a subject. The Sales Department also classifies the orders from the customers to provide them better services and to retain the bulk orders from the customer and give them higher importance than the usual orders. ERP is software and not a business process or a set of business processes. Additionally. Although often presented as a single package. The most important objective of the companies is to have maximum profits. an ERP system is an envelope around numerous applications and related information. and Abnormal Sales Orders. ERP systems are commercially developed software applications that integrate a vast array of activities and information necessary to support business operations and operations planning at the tactical level. They provide transaction management from both the business perspective and a database perspective. Sales orders are usually classified as Normal Sales Orders.

What are the objectives of Inventory Management? 8. What are the functions of an HR Module? How does it execute the recruitment process? 12. Arrange the following modules of ERP software in terms of complexity. How does an effective Inventory Management system aid an organisation? 9. List the applications of Information Technology in Financial Management. cost. 2. What are the subsystems of an HR Module? Explain. 14. (a) Finance Module (b) HRM Module (c) Sales and Distribution Module (d) Materials Management Module . What is HRM? How does it differ from HRD? 10. What are the limitations of Finance Module? 19. What are the functions of the Finance Module? 5. What are the activities in the Sales and Distribution Module? 6. 18. 13. How does the Finance ERP module help the top management in decision making? 4. Name the various ERP modules and their significant features. Why are the HR module and the Finance Module of ERP package preferred mostly by the customers? 3. 11.ERP Modules 29 REVIEW QUESTIONS 1. What are the factors influencing customers while selecting an ERP module? 15. What is the role of Financial Manager in Management of Inventory? 20. Suggest suitable measures to evaluate a particular ERP module. features/ importance and percentage of usage. What are the major types of Financial Management decisions that business firms take? Explain. 16. What is Material Management? How does this module help the organization to increase its profitability? 7. What are the factors influencing the Sales and Distribution module? 17. Prepare guidelines for improving the functionality of the various ERP modules.

The customers are of the opinion that it is difficult to have a single vendor to provide solutions to all their businesses and hence the selection of ERP vendors includes the main criterion as the area of specialisation of the various ERP vendors. because they know this is a key business differentiation. as componentized products exhibit vastly superior adaptability characteristics demanded by the fast-moving e-business and e-commerce environments.4 ERP Software Selection OBJECTIVE • To highlight the issues in selecting an ERP software • To learn the guidelines in ERP software selection EXPECTED OUTCOME The readers will be able to: ü Address the challenges in ERP software selection ü Provide consultancy to customers in the process of ERP software selection ERP software selection has become a buzz word in the IT industry. This shows the competition that exists among various ERP vendors. and build their competitive edge solutions to fit their needs. But nowadays there are so many ERP vendors providing solutions to the companies at less cost. The service layers that many of the vendors have introduced to date will rapidly become inadequate. Tomorrow's customers will demand the ability to buy. Componentization will become a key business productivity action for suppliers and consumers in the application market. The application package vendors have started to respond to this challenge and those that are successful will in time become true component providers themselves. . There are customers doing different business and using different ERP products for each one of them. There is general agreement in the industry that software components will bring profound changes in the way that software is delivered. having rearchitected their products into sets or kits of components. Earlier there were only a few ERP vendors. Selecting the right vendor will solve most of the problems and will also help the customer to very easily get through the various phases of ERP implementation. Hence the question of selecting a right ERP vendor is becoming complex. reuse.

• Improved innovation capabilities. • Improved E-Commerce support and Improved Internet services. • Lack of better planning.ERP Software Selection 31 4. and nature of business process.1 ISSUES IN ERP SOFTWARE SELECTION The consultants have got a major role to play in selecting the ERP product offered by various ERP vendors. exact requirements. • Increased customer satisfaction. • Resistance to change. • Easy maintenance. • Higher software reliability. • Integration. these resource people's role is becoming mandatory. Based on the existing system. • Reduced customization. . The technical consultant takes up the role of resolving the technical defects arising during the ERP implementation. As the cost of the project is high and the volume of the project when compared to the traditional software project is high. • Increased number of ERP vendors. the ERP software selection will vary. The company deploys functional consultant and technical consultant in this process. project cost. There are numerous factors to consider while choosing an ERP product from an ERP vendor. more peopler at various capacities are deployed namely the solution architect. There are various reasons that make the ERP software selection process complex. In order to make the ERP software selection process simpler.2 ERP SOFTWARE SELECTION CRITERIA The ERP software selection criteria vary from one organization to another based on their size (small. • Operating system independency. Adaptability and Applicability of software. • Enabled with multi-lingual and multi-currency features. The functional consultant takes up the role of looking into the business processes of the organization going for ERP implementation. • Process improvement. 4. adaptability and flexibility of software. • Project cost. the functional consultant and the technical consultant. • Market position of vendor. • Highly user friendly. • Implementation of desired business processes. They are: • Lack of clarity about the customers' requirements. • Modular architecture of software. These people work together and ensure that the ERP product chosen for implementation will meet the challenges put forth by the customer and will serve their needs. • Complexity in the business processes. • Reduced cycle time and lead time. • Ergonomic software. medium and large). • Meeting Customer Needs. They are: • Increased transparency and better information flow. Upgradability.

because the team will not proceed if the analysis is unfavourable. It would do no harm to put in a fairly high estimate obtained by talking to any of the software companies. characterized by a strong focus on the IT and organizational department with only little participation of other internal departments and no employment of consultants. First there will be hardware and software costs. There will be a one time capital cost and an on-going annual fee for new releases.3 METHODS IN ERP SOFTWARE SELECTION There are four different ways by means of which an ERP product can be selected. such implementations fail to reap the benefits of the ERP system. 4. At this stage the choice of the system may not have been made. An allowance of 25% per annum of the start up training and education cost is a good estimate. Allowance should be made for external education and training in the initial phase. They are: 1. The decision is made taking into considerations the suggestions given by several departments of the organization whether they are going to be a user of the ERP system or not.Final selection. One more project team member is needed for every 200 employees. The fact is that success or lack of it has almost nothing to do with software. there will be an on-going cost of training new recruits and for adjusting the process as the business changes. indeed. Unfortunately. It all depends on the guidelines that we follow in selecting an ERP software package. This is one cost that is almost always overspent! One of the most common causes of delay is the decision on which software package to use. it is time to carry out a cost and benefits analysis. a project team of three people is necessary for companies with upto 300 employees. Phase 4 . Many companies start out with the intention of not having a full time project leader.Implementation planning. .Initial requirements. not a justification. It should be stressed that this is an analysis. Every effort should be made to resist the temptation to customize the package. Phase 2 . It would. As a rule of thumb. 3. Using a combination of all the three steps given above as when there is a need. be possible to change the current planning system for the new planning system without any additional costs. Many companies do not go any further than these costs to arrive at the cost of the project. There is a centralized type of selection process in place.4 COST BENEFIT ANALYSIS As soon as the top management is confident that they have a reasonable understanding of the new planning process in an overall sense. As well as the initial cost of education and training.Developing the short list of candidate solutions. The programming cost will depend on the size of the company.5 ERP SOFTWARE SELECTION PROCESS The ERP software selection process is divided into four phases: Phase 1 . 2. 4. The decision is made by top management with the inclusion of external consultants. 4. It should also be made clear that they will re-visit the analysis after the project is complete to ensure they have cashed all the benefits. Phase 3 .32 Enterprise Resource Planning 4. There will also be an ongoing maintenance cost to install the upgrades along with further customization. Finally there should be a miscellaneous allowance of about 10% of the cost so far.

When it's time to arrange for software demonstrations we take control from the beginning. or 100 functions must be included in the demonstration. availability of training. And after going through the first three phases. comes into play strongly here.ERP Software Selection 33 Phase 1 . The following factors are identified as the important factors influencing the ERP vendor selection. they will have a better understanding of their business processes and the challenges that lie ahead.Initial requirements We first want to get to know our team. The intent is to narrow the field from 10 candidates to 2-4. as we determine specifications to be used in selecting from the literally hundreds of ERP products available. availability of support. depending on the availability of our management staff and project team. These remaining 2-4 candidates will be the ones that will be scheduled for detailed demonstrations. Examples of qualitative factors could be: a number of installations of the product. Phase 3 could take between 1 and 2 months depending on how aggressively we go about demonstrations and negotiations. Phase 2 . and discuss the big picture concerning the project. negotiations take place. 75. Next. This profile will be used in later phases. (Source: ERP Vendors) Factors considered Functionality of the ERP package Vendor’s reputation Vendor’s ability to provide a complete solution Project costs Future software maintenance provided by the ERP vendor Percentage of importance 24 26 16 23 11 .Final selection Demonstrations are arranged and conducted. This puts us in control of the demonstration process. and the final selection is made. one can say with confidence that it will happen faster. The outcome for Phase 1 is the “Top Ten List”.Developing the short list of candidate solutions This phase helps us establish a list of high-level differentiators. safer and more accurately if suitable methods are used during the ERP software selection phase. The information gathered during these sessions is used to develop a profile of the requirements of our business. tour the plant. we administer a series of questionnaires and conduct interviews with our project team. This is a list of the ten ‘best’ ERP systems for our company. These differentiators will then be applied to all candidate solutions. Although no one can predict how long the ERP implementation will take. The great thing about this process is that. Phase 2 should take less than 1 month. We tell the vendor what functionality we expect to see demonstrated based on our high-level requirements. drawn from the critical requirements gathered during the questionnaire and interview process. it can be used to help us evaluate any software product. These will include quantitative factors. The requirements profile.Implementation planning Every software vendor has a plan to make their implementation succeed. as well as qualitative factors. once again depending on the availability of staff. established in Phase 1. etc. which will be used to compare the candidate solutions. after we have created our requirements profile. Phase 4 . drawn from more general concerns. Phase 1 should take less than 3 weeks. We can let it be known up front that our list of 50. Phase 3 .

What is cost benefit analysis? What are the different phases in ERP software selection? List the critical success factors in ERP software selection. What are the check points you have identified to ensure that you are on the right track during ERP implementation? . 12. 7. What are the different ways by which ERP software selection is carried out? What is meant by candidate solution? How will you identify it? What makes the ERP software selection process critical? What is the role of solution architect in ERP implementation? Visit the websites of a few ERP vendors and find out how they convince and impress their customers' during the ERP software selection process. it is suggested that the customers stick to the methods/guidelines generated through research conducted in this context and use it to reap the full benefits of ERP implementation. Both the role of functional and technical consultants seems to be of higher importance and holding knowledgeable consultants will hopefully provide solutions to so many issues discussed here. 9. As there are so many factors to consider in selecting an ERP package from an ERP vendor. 11. 6. 5. Further research is needed to detail the differences in the implementation process and the actual usage of the selected package later on. REVIEW QUESTIONS 1. Define the term "software". 3. we have highlighted the issues in selecting the right ERP package. Examine the role of technical and functional consultant in ERP implementation. If you happen to be the top management for an organization. 13. List the factors influencing the ERP vendor's selection. The ERP software selection also gets its importance from the view point of the cost benefit analysis. Thus it is evident that ultimately it is the right ERP team which is going to guide us starting from planning till implementation during the ERP project. 4. 8. We also find that the criteria for selection of a particular ERP system also show different priorities. list the factors and issues which you will consider while selecting an ERP package.34 Enterprise Resource Planning SUMMARY In this chapter. 10. 2. There are so many ERP vendors' available nowadays providing effective ERP solutions.

The rules for doing business are redefined. the planning and the IT systems themselves. Organizational change has always been the barrier for the application of new technology. The concept of implementation is ordinarily related to installation of hardware and software. In the world of ERP systems.5 ERP Implementation OBJECTIVE • To describe the different phases in ERP implementation. ü Turbo charge the ERP system. and meeting the desired business outcome. The practice of implementation of ERP systems is flooded with stories of devastating implementation. implementation means a continuous learning cycle where the organizational process supported by the ERP systems is gradually aligned with the business objectives. driven by the market dynamics but also by the new internal opportunities. This fact is supported by a number of surveys. where the system is becoming operative. Concurrently the business objectives are taken even further. In the company's view. • To discuss the issues and challenges in ERP implementation. “implementation” is often used as a term to describe a well-defined project spanning from the choice of the systems through the configuration and the training until going live. • To describe “What is customization in ERP?” EXPECTED OUTCOME The readers will be able to: ü Understand the ERP implementation lifecycle. ü Visualize ERP implementation from three perspectives-Organization. and at the same time. This raises a need for extending our understanding of the implementation process of the IT systems. we see increasing attention to the extended implementation process. the need for new business concepts have emerged and new business goals are changing the demand towards the organization. within the budget. Business and Technology. and the full yield cannot be expected unless new integrated work processes are implemented as well. This is in reality the vendors and the consultant's view on the implementation. the so called . It seems to be an accepted fact that ERP implementations never are on time.

2 DIFFERENT PERSPECTIVES IN ERP IMPLEMENTATION Now we shall discuss the ERP implementation from three different perspectives. regional office. An advantage of this approach is that the company gets the feedback on the installation of the new ERP system into one of their branches/offices and on this basis. training and BPR are deemphasized over the hard technical issues like project management. This approach will help the organization to reap the full benefits of the ERP system. the Materials Management module. This approach will enable the organization to reduce the cost of the project and risk factors also. As the organization is going to be completely replaced with a complete integrated system. In the ‘Location-wise’ approach. head office. when we use this approach. the company will be able to make its future decisions on further investments on the ERP project. [2] LOCATION-WISE APPROACH. say. This . configuration and IT architecture. of their choice to suit their organization. The comparies claim that change management. project duration. Going live is not the end of the ERP journey. the risk factors are also high. Hence due care is necessary to ensure that the ERP implementation goes successfully. After reviewing the existing system. exact requirements. zonal office. the risk factors are high when the new system fails. In the ‘Module-wise’ approach. [3] MODULE-WISE APPROACH. They are: [1] ‘BIG BANG’ APPROACH.1 APPROACHES TO STUDY ERP IMPLEMENTATION There are mainly three different approaches to ERP implementation. On the other hand. and it is more about people than about processes and technology. In the ‘Big Bang’ approach. They are: [1] Organizational perspective [2] Business perspective [3] Technological perspective Organizational Perspective The implementation of an ERP system is often said to be more organizational development than technological development. etc. Only 20% of the companies see Cost/Benefit analysis as a relevant activity and evidently 96% have difficulties in estimating the success of the project. etc. individual modules are considered for ERP implementation. the organization chooses a specific location. 5. This is why an understanding of the phenomena of implementation is an important issue in the industry. The duration of the project will also be considerably less as only a part of the organization is to be replaced by a new system. cost of the project. say.36 Enterprise Resource Planning “second wave”. the company shall decide to choose any individual module. The main positive results from the implementations are the foundation for improving the internal integration and the possibilities for business improvements. the Finance module. the organization decides to implement all relevant modules at the same time. This approach is also preferred by a few companies as they can bring in new business processes as well as refine their existing system through the installation of a complete integrated system. because all the required modules to reflect the business processes of an organization are included in this approach. 5. etc. the HR module.

This implies that seeing the implementation from a business perspective can be a valuable contribution in the process of getting an understanding of the complexity. representing another discourse than the ones existing in the organization. and thereby results in organizational changes. is therefore IT/IS strategies. Business Perspective The Implementation of ERP can change the processes and the organization. infrastructure. we will present the themes within CM we find valuable in relation to ERP implementation. which we want to elaborate on. . because when once set it can be almost impossible to change it. The implementation of ERP systems paves the way for a BPR. Required skills and competencies are different from what they were before the implementation. The architecture and infrastructure of the system has to do with how the IT systems should be designed and built and since the ERP system easily becomes a large infrastructure the architecture of the system should be sufficient. the architecture and the infrastructure. and is often neglected by companies when implementing ERP systems. BPR is not a process done without problems. but a clear definition is hard to find. Another issue within the organizational perspective is the understanding of the ERP system as an actor participating in the interaction within the organization. The implementation of ERP changes the organization. both radically and continuously. The power and culture are a part of the implementation context and an implementation cannot be fully understood separated from the context from which the system emerged. designed and built according to the vision of the organization or an IT/ IS strategy. the configuration and the customization of the systems and finally on how to organize the implementation before the system can go into operation. The implementation of ERP systems is done within companies which have visions. Technological Perspective The technological challenges when implementing ERP systems are great and an elaboration on what has been written about technological issues in regard to ERP implementation is believed to contribute to a better understanding of the complexity in ERP implementation. In relation to the technical set-up of the system Project Management is needed. The customization of the system can prolong the time it takes to set-up the ERP system. the organizational and the economical issues. The technological perspective will therefore elaborate on the system. configuration. and a critical evaluation of BPR will take place. customization. prioritized. The configuration of the systems can later on cause problems. The final issue within the business perspective. raise the costs and last but not least make the updating and collaboration with other systems more difficult. which implies that learning and knowledge are interesting issues to elaborate. Change management is often used in the literature. and the system can support those visions. and/or it can lead to completely new business.ERP Implementation 37 implies that seeing the implementation from an organizational perspective will contribute to a broader understanding of the implementation process. The term context will be used to cover the historical. This will be the final issue elaborated on in the technological perspective. Not all processes can be supported by the ERP system. The companies face challenges in regard to the architecture. Instead of giving a clear definition of the term. and the system itself. which means that other software applications are necessary to add to the system. This implies that the systems should be planned. The configuration of the system can then be a disabler for organizational change. Managing these changes or Change Management (CM) can be difficult.

in order to meet their specific business needs. Business sees the organization as something which should be modeled and managed to serve the processes. corporations are allowed to customize the deployment of the ERP platform to a sufficient level of detail. external help from consultants may be asked again. consultants are tailoring the system according to the blueprints. while employees keep conducting their usual business tasks. effort and possibly money. technical changes are costly and can lead to schedule slippage because they are complex and need significant testing. The team should never modify the base of the system. More drastic forms of customization are critical because changes move the system away from a packaged solution–and the organization away from the benefits it seeks to achieve. they may not even try to use the new system and continue to contact their business tasks with the proprietary systems previously employed. Organization sees the business as one contextual parameter of the organization. Business sees technology as a means to create competitive advantage. Employees may easily become afraid that they will not be able to understand and use the ERP platform. Since in such a case the impact on the organization's normal operation may be severe. As it is the case. Because of that. there isn't any way to postpone tasks such as calculation of the employees' overtimes. . the strategy and the overall business. In addition. Also.38 Enterprise Resource Planning Technology sees business as a set of performance objectives to be used as a design criterion for developing a purposive system. It is also highly possible that the end users would not even be able to work productively with the new system in a majority of cases. the team must reimplement them for each package release. although these measures are sometimes unavoidable. consultants are a unique source of information regarding the ERP platform. Problems that may occur can be summarized thus: During the customization stage. Organization sees the technology as a tool for automating working procedures. In the HR module for example. Effectively. In addition.3 MINIMIZING CUSTOMIZATION Customization is the core process for adjusting the software to fit the organization. the team should avoid more radical approaches such as building interfaces to legacy systems or adding bolt-on systems. After the blueprints creation. the limited training that would be offered during the training stage (the stage that follows customization) would not be able to cover all the ERP system details. something that will cost time. As in the blueprints creation stage. The underlying assumption is that a given organizational behavior can be designed using the proper mechanisms. they may become more afraid that they will not be able to finish a number of critical business tasks on time. Even worse. It would be best for employees to have the chance to take full advantage of them. Technology sees the organization as a structural parameter in the systems design. the customization phase of the ERP platform begins. In general. a number of problems exist here as well. important details that could be drawn from their knowledge are lost. mainly due to their experience. 5. which increases longterm maintenance costs. Employees due to their workload may not allow themselves to test the system at this preliminary stage and find customization problems or blueprints mistakes. A limited amount of available project time is again the big issue. fears such as the previously described ones may bring significant problems to the deployment phase since employees may not cooperate correctly with consultants. and effectively not allow payroll to pay on time. Through the customization procedure. As the employees are not allowed to devote the necessary time to cooperate with consultants.

and to plan any necessary changes in the audit approach.” they mean the back-office capabilities to manage human resources. There is a danger that errors in processing may be applied to a large number of transactions without being noticed. business intelligence. and testing of the control framework are the same.4 CHARACTERISTICS OF ERP SYSTEMS When most people refer to the “core” ERP applications or “modules. • With proper controls. 5. • Errors that might be observed in non-ERP systems may go undetected because of the reduced human involvement in computerized processing. in order to ensure an adequate audit trial. Therefore. PeopleSoft. may not take into account law legislation to its strictest limit. accounting and finance. but then. ERP . Effectively. that any problem concerning the ERP platform will not distract normal business operation and a good working system would be used to realize the business process. and SAP now provide much more– including modules for sales force automation. Although computer processing will usually be consistent. customer relationship management. Therefore. have deadlines to keep in order to honor the contract. • It is difficult to make changes after an ERP system has been implemented. evaluation. • In ERP systems. It is a strong case that customization errors would be discovered constantly. organizations in order to be able to operate in critical situations. This fact may tempt them to omit correcting errors that should be done in the system or in the blueprints. Sometimes.ERP Implementation 39 Consultants. in the business tasks that seem to be not very much in use. major ERP suites from Oracle. • Financial and business information is often generated automatically by ERP systems based on data previously entered. we should be aware of the organization's plans to introduce significant new systems or to make major modifications to existing systems. in order not to allow any project delays (of course they may come back to correct mistakes after the project end. and project-management functions. • It is advisable to review new systems or modifications before implementation so that a preliminary assessment can be made of the adequacy of control procedures. if the computer is incorrectly programmed. for example. there are some significant differences between ERP and non-ERP systems. without further human instructions. for example. These differences are: • In ERP systems. However. Non-ERP systems are subject to random human error. Common errors include minimal or no ERP customization at all. compliance tests may have to be structured differently in an ERP environment and the observation of the client's procedures may become more important. and supply chain management. the evidence of performance is indirect. after sales support if allowed will ensure. errors may still occur. Although the objectives of our review. For some other procedures. ERP systems can be more reliable than non-ERP systems. System limitations are an additional factor that may delay the project considerably. on their side. time would be on their side and the possibility of a negotiation about a small contract about customization may arise as well). certain control procedures leave no documentary evidence of performance. since customization is based on blueprints which are limited to the point of specifications that each employee had in mind at the particular time of the interview. it may be included in the program logic or in the operator's instructions. information is often recorded in a form that cannot be read without the use of a computer. manufacturing.

organizations prefer to replace legacy systems with enterprise resource planning systems. finance. One firm found that spending $30 million to implement SAP would meet their Y2K-compliance goals and also support future business needs.63 billion in 2002. human resource. or customer service. It was predicted that by 2000. These factors make ERP software integration complex. cost reductions. such as logistics. production scheduling. There are different approaches to ERP strategy ranging from skeleton implementations to full functionality. Others wanted to replace their aging IT infrastructure. while another had 14 bills of material. More specifically. Mergers and acquisitions had left them with an inefficient and unreliable collection of incompatible systems. According to AMR Research. and supply chain management. the ERP systems market was $15. ERP systems are now the most common IT strategy for all organizations. Ø Project Scheduling and Change Management. Ø Level of cooperation from the top management throughout the project. They also expected it to produce improvements in specific processes. These statistics clearly indicate a shift in the ERP market. Ø Resource availability. In .68 billion in 1997 and $72. such as manufacturing. For other companies. Most companies expected an ERP to reduce their operating costs. It appears easier to mould the organization to the ERP software rather than vice versa. This incompatibility made competing in a global environment almost impossible. ERP software automates core corporate activities. Ø Whether to go for a complete integrated system or to implement any one ERP module for the time being. Ø Whether all the business processes are well defined and could be delivered through the ERP system.5 CRITICAL SUCCESS FACTORS FOR ERP IMPLEMENTATION Companies are radically changing their information technology strategies by purchasing prepackaged software instead of developing IT systems in-house. There are also important differences in how organizations manage the gap between their legacy systems and the ERP business processes. There are mixed reports concerning the outcome of ERP projects. Ø Duration of the ERP project and expected service from the ERP system to the customers. because consensus is required from an entire enterprise to reengineer a core business process and take advantage of the software. For example. by incorporating best practices to facilitate rapid decision-making. Managers considering an ERP project should address the following issues: Ø Status of the company's legacy systems. two-thirds of all business software will be bought off the shelf. 5. and this framework has been designed to help management plan this difficult and complex task.6 ASTONISHING FACTS IN ERP IMPLEMENTATION Some companies implemented ERP software because they were concerned about Y2K Compliance. systems integration was the critical issue. Ø Impact of new ERP system on their business processes. batch-controlled type to complex integrated applications that perform a number of functions simultaneously. 5.40 Enterprise Resource Planning systems vary from the simplest. and greater managerial control. one company found that it had 23 different accounting systems.

Employees need training beforehand to understand how the ERP will change business processes. Most legacy transaction processing systems have linkages that serve as a bridge between systems. but they also make some assumptions about data flow through the system. It is not recognizing the environmental and human factors that cause failure in ERP implementation. management was more concerned about customer responsiveness. the management is usually anxious to declare victory and move on to other things. But ERP assume process integration. "Go away and let me do my job.7 ERP IMPLEMENTATION STRATEGY Now we will look into the ERP implementation strategy for small and medium sized companies. better management. System users control the access to the bridge and determine when and how systems share data. But the post-implementation stage is your opportunity to redesign and reengineer processes to make them more functional. • Lack of management commitment can occur because the top management has little understanding of information technology and the value it could bring to the workplace. an ERP is a commitment to a new way of doing business.ERP Implementation 41 other companies. implementing an ERP package gives the impression that it is the answer to their prayers because it promises so much-higher sales. It's hard for people to change from doing things they know well and are good at. The major reasons for failure of an ERP project are as follows: • Most companies experience failure in their implementation because they had ambiguous objectives and unclear expectations on what the implementation would bring to them. Figure 1 shows the performance of the organization before and after ERP implementation and the time taken to achieve the performance. going live usually is highly disruptive. They may want to change their technology platform but not their organizational processes. • If the project manager fails to persuade the resisting party into providing support or at least into remaining neutral during the project. and the project will fail. They may say. . For example. Management sometimes resists the process changes an ERP requires. • One of the key responsibilities of a project manager is to execute the project to its completion and meet deadlines through timely resolution of a multitude of conflicts. there will be constant introduction of issues and conflicts. Because ERP implementation is expensive. All ERP packages provide choices about how to configure the software. Throughout the stages of ERP implementation. Even with careful planning and training. expect to encounter resistance. This is different from traditional systems development in which you decide on processes and then build systems to support them. For many companies. you have to decide whether to accept these assumptions. During the design stage. implementing an ERP package could bring more headaches to the company because it may involve many internal changes that require new business processing and employees have a hard time breaking their old habits." But they need to know that's not going to happen. and users lose control over its flow. On the contrary. But process change is inevitable with an ERP because you have to fit the organization around the software. The system absorbs the data. Don't expect to implement the system and then go back to life as usual. 5. which actually increases resource requirements in some areas. sometimes processes that were automated become manual. and reduced cost. They wanted to standardize processes to ensure quality and predictability in their global business interests by reducing cycle times from order to delivery. Some of these changes could be viewed as hurting the business in the short run.

but the top management has to bring into their . Normally in case of small and medium sized companies. the employees will show resistance to use new systems like ERP software. experience. It is quite natural. To achieve successful ERP implementation. Deploying an ERP solution means that the company will no longer depend on existing business processes and will adopt new and improved methods and processes offered by the ERP system. As the system is capable of reducing the human resources. the project team must persuade the top management for their full support with the following guidelines in mind: 1. To consider the following factors for process innovation: ( a) Adding new business processes (b) Eliminating existing business processes (c) Modifying the business processes Figure 1 These three guidelines will help the organization to have a successful ERP implementation. applying these guidelines will help the company to identify the redundant processes. and the corresponding section head must submit the reasons for modification and the plan directly to the top management. or teamwork of the project team members impede progress. 3. the employees' may not like the system. which includes new business processes and require adequate training to carry out their operations. Thus we find that it is the sole responsibility of the top management to ensure that the different phases of ERP implementation go smoothly and successfully. The top management must declare that all departments unconditionally adopt the processes and functions provided by the ERP system.42 Enterprise Resource Planning • Inadequate levels of skill. refine the existing processes and modify the existing processes to get better features and value. 2. When a new integrated system is to be introduced. The top management must approve all major modifications to existing functionality.

identification of consultants. Planning is an outline about the future course of action. project duration. most probably the team will crash the various activities and compress the rest of the activities to meet the deadline fixed for going live. The different phases in ERP implementation are: • Project Planning • Identification of ERP Vendor • Evaluation of ERP Package • Gap Analysis • Reengineering • Customization • ERP Team Training • Testing the Product • Going Live • Training to End-Users • Maintenance Project Planning This is the first phase in the ERP implementation. technical and functional consultants. training. identification of ERP project team. change management. . budget. It is the sole responsibility of the top management to bring their employees into their fold and ensure that they feel comfortable with the new system. The top management cooperation and ability to execute decisions dynamically will help the implementation to go smoothly and healthily. maintenance. training requirements. project cost. This is the area where the project is getting weakened and starts reacting as and when the project is completed and delivered to the end-users. evaluating the package. etc. ERP team to be deployed from the organization. Also until adequate training is provided to the employees. Most of the projects fail as the project extends beyond the fixed date and deviates from the project schedule. (1) Analysis (2) Design (3) Coding and (4) Testing. ERP vendors in the market. suitability of the package to meet the requirements. It is the top management which will be the motivating force behind the ERP implementation. ERP packages available. The software exists as a pack and all that is required is to customize as per the requirements to some extent. In this phase the top management will prepare the project plan for ERP implementation. There is a statement "Failure to plan is equivalent to planning to fail".ERP Implementation 43 minds that the new system is meant for improving the performance of the organization and not for reducing the manpower. 5. This phase will provide the details on the commencement of the project. The planning must be done ahead of the implementation and the last minute preparation will not work out in case of the larger software projects like ERP software implementation. The most important aspects considered are identification of the ERP vendor who could deliver a right ERP package. the software is not going to be developed from the scratch.8 PHASES IN ERP IMPLEMENTATION The System Development Lifecycle (SDLC) used for developing a software consists of the following four phases. etc. In ERP implementation. it is difficult to reap the benefits of the new ERP system. The ERP implementation is different from the SDLC. Most of the ERP projects fail miserably because of poor planning and improper coordination from the top management. Whenever the project schedule is not maintained.

ability to deploy top class professional for implementation. Proper evaluation will lead to the identification of the right ERP package and will help the ERP team to carry all the rest of the phases in ERP implementation successfully. not all ERP implementations succeed fully. The factors to be considered in this process are: the organisation's readiness and willingness to change. It has to improve productivity and enhance the competitive edge by optimizing the use of resources. . which will slow down the project. review the results and take appropriate follow-up actions. competency development. The most common reason that companies walk away from multimillion-dollar ERP projects is that the software does not support one of their important business processes. which will mean deep changes in long-established ways of doing business and shake up important people's roles and responsibilities. A well-designed and implemented ERP system should help reduce the production manager's problem. Each and every vendor has his own way of developing packaged software and some of them are known for certain ERP modules also. data status and readiness. technical and business perspectives. "Understanding the problem" is the first phase in ERP implementation and the goal of this phase is to establish the foundation that permits the software package to be implemented in the best possible manner. Or they can modify the software to fit the process. Identification of ERP Vendor There are so many ERP vendors nowadays in the market. They are: [1] Reliability of the vendor [2] Ability to meet customer’s requirements [3] Functionality of the ERP package [4] Vendor’s reputation [5] Vendor’s ability to provide a complete solution [6] Project costs [7] Future software maintenance provided by the ERP vendor [8] Ability to handle customization [9] Project duration [10] Training facilities Evaluation of ERP Package This phase enables the top management and the ERP team to evaluate the ERP product from various ERP vendors from the organizational. The following factors are considered while choosing an ERP vendor. At that point they can change the business process to accommodate the software. However. Hence a tough competition exists and identifying the right ERP vendor will provide solutions not only to the business process of the organization but also will help the ERP team to carry out the ERP implementation successfully. The top management should involve itself in all the stages of the implementation of ERP. It is essential to have a 'road map' in mind in terms of how and when ERP would address each part of the organisation.44 Enterprise Resource Planning ERP has to provide timely and accurate production-oriented information for long-range planning and day-to-day operational planning and control. top management's commitment. Only then ERP will be effective in any organisation. It is necessary to understand the kind of business the company conducts and how the package will fit in with the business's processes. The role of technical and functional consultants will be on a large scale during this phase and the evaluation has to be done carefully. strategic planning and vision for the project.

designing a custom program and altering the ERP source code. After having completely studied the existing system. The additions of new processes. The customization process has to take into account the following parameters. because the packaged software is purchased and installed mainly to refine the existing business processes. End-users’ requirements 2. and to push ahead smoothly.ERP Implementation 45 Gap Analysis Gap Analysis is the step of negotiation between the company requirements and the functions a package possesses. 1. One of the most important members of the reengineering effort is the executive leader. In order for persons with differing viewpoints involved in a project to function as a team. Technical requirements of the product and 3. One of the main causes for the high degree of customization is the poor change management adopted by the company. Solutions for Gap analysis exist in different forms like identifying a third-party product that might fill the gap. the lower will be the benefits from the ERP system. most BPR projects cannot overcome the internal forces against them and will never reach implementation. contemporary measures of performance. quality. while giving direction on the whole. it is effective to invite outside consultants who can act as a neutral person to resolve conflicts and can push the project ahead. failing which the ERP product at one stage will be turning into a non-ERP product and the implementation will not help the organization to reap the full benefits of an integrated system. . Without the commitment of substantial time and effort from executive-level management. Michael Hammer defined Business Process Reengineering (BPR) as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical. the business process of the organization will be refined during the reengineering phase. The poor customization is another reason for ERP failure. Gap Analysis is a phase in the ERP implementation. Vision of top management. service. and the motivational power to make people follow. The higher the degree of customization. such as cost. and speed. elimination and/or modification of existing processes are all possible during reengineering phase. Figure 2 Reengineering and Customization Dr. The leader must be a high-level executive who has the authority to make people listen. where the organisation tries to find out the gaps between the company's existing business practices and those supported by the ERP package. Customization is the most important process which has to be executed very carefully. Resistance to change will always be there in any organization and it is the sole responsibility of the top management to ensure that the new systems like ERP software are deployed with little customization.

Each implementation project is different and will have its own characteristics. we have to get people inside our company to adopt the work methods outlined in the software. then they will resist using the software or will want IT to change the software to match the ways they currently do things. The Project Management Team comprises of the technical leader and the executive committee head. The team can also have a senior representative from the vendor's team. The executive committee head should monitor the implementation team's progress. Once the going live date is identified. Figure 3 Delivery and Going Alive After the reengineering and customisation phase. Once the product starts functioning the maintenance activity will also commence in parallel at the site of the organisation. These people are responsible for conducting the scheduled work. If the people going to use the ERP find that the work methods embedded in the software are not better than the ones they currently use. Higher customization will close the doors for the organization to enjoy these features of integrated software. communicating with the in-house team and the consultants.46 Enterprise Resource Planning standardize the existing system and to improve the overall performance of the organization. The product will be put into test to check for its consistency. the product will be delivered and the necessary training will be given to the end-users. This is where ERP projects break down. validating and verifying the requirements of the customers. . After a few months from the date of going live. the organisation will be able to reap the benefits of the ERP software. To get the most from the software. integrity. etc. This person should also ensure that the company personnel and the consultants are working together as a team. ERP Team Training Figure 3 shows the organization of the ERP Implementation team. the product will be getting ready for going live through the testing phase. and reporting to the executive committee. administering the project. reliability. assess the amount and quality of the contribution of the team members-and discuss the issues with the consulting team's head.

5. the employees will be able to fetch any data at any point of time at their door step and can make suitable decisions as and when there is a requirement. Every function that accesses the variable will be affected.10 CHANGE MANAGEMENT ISSUES Whenever a change has to be made. to reduce the lead time.ERP Implementation 47 5. Unlike the existing manual system with so many redundant processes. to meet the deadlines of customers' orders. Imagine modifying the value of a global variable. It will take some time and even a year to realize the benefits. This is the visible and tangible benefit an employee can expect from the ERP software immediately after its implementation. Unless care is taken to minimize the impact. Now. it is necessary to analyze its impact on various parts of the software. the employees can do wonders with it and can get data from the software at any point. Step by step as the days go the other benefits can be realized. the end users will be able to see the improved processes getting reflected from the ERP software. the end users will get the directions from their ERP software in the process of decision making. Once it is realized. the software may not behave as expected. Management of changes to . Change management is one of the core problems of software development. This is an added advantage in an integrated system. Only after passing through all these three levels. This will also help them to monitor a set of activities.9 BENEFITS REALIZATION IN ERP IMPLEMENTATION Figure 4 The end users will not be able to reap the full benefits of the ERP software immediately after the implementation. the middle and top levels of management are enabled with decision support system to make suitable decisions for the benefit of the organisation based on records and data available from the ERP system. to reduce the cycle time. Hence the employees will be visualizing the improvement in the existing business processes. Once an integrated system like ERP software is installed. to increase the speed of various tasks. At the second level. the new system will enable the end users to complete a particular process in a short time and even some of the procedures followed earlier could be avoided. the end users will be able to recognise the tangible and intangible benefits of ERP software. at any level from anywhere and can use it to arrive at a decision. All the existing processes will be pumped through ERP software only after complete refinement and re-engineering. When the end users are in the going live phase of the ERP implementation. this will help the organisation to take Information Technology (IT) to all their employees'. to eliminate the duplications and in total. the first and foremost realization of ERP implementation will be the automation of existing processes. At the third level.

it supports performing changes by different mechanisms like workspace control. to build derived versions. . But all of them lack sophisticated process support.48 Enterprise Resource Planning any software document means (1) managing the process of change as well as (2) managing all artifacts of an evolving software system. the lower will be the benefits from ERP system. It has to improve productivity and enhance the competitive edge by optimizing the use of resources. What is meant by customization? 10. which the organisations go through when they invest in. The management view of SCM focuses on the organizational and administrative aspects of SCM. As part of the overall management of a software project. How will you rate an ERP vendor? What are the factors considered? 6. How will you evaluate ERP software? 5. On a technical level."Comment. although some process-oriented features have sometimes been added. “The higher the degree of customization. and to construct consistent software configurations. and to perform changes in a controlled manner by introducing well-defined change processes. The technical view of Software Configuration Management (SCM) provides mechanisms and functions to control versions of software objects. ERP has to provide timely and accurate production-oriented information for long-range planning and dayto-day operational planning and control. process support is of growing interest in software configuration management. What is change management? 4. What is BPR? 3. SCM provides methods to handle change requests. long transactions. REVIEW QUESTIONS 1. What are the three approaches in ERP implementation? Explain them. How will you minimize the resistance and manage the process of change during ERP implementation? 2. We need to know more about the processes. Currently. SUMMARY The purpose of the ERP implementation is to shed light on the processes of an organisation in order to gain competitive advantages of new technologies and to improve the performance. What are the challenges and opportunities for small and medium sized companies when they go for ERP implementation? 9. 8. List the critical success factors for ERP implementation. The process focus allows us to say something about the plethora of problems and challenges that managers face and have to solve in order to gain sustained ERP advantages. nurturing and exploiting ERP systems. Furthermore. or sub-databases. 7. Both aspects serve as motivation for an integrated modeling approach to support process and configuration management in a process-centered software engineering environment. it supports monitoring the status of the software components.

22. Technology and Business. 16. What are some common pitfalls during an ERP implementation? How were these problems solved? How could they have been prevented? Which are the factors that mostly influence the ERP system? What are the effective strategies for addressing an organization's reluctance to embrace a new system? What key factors are transforming ERP systems and the solutions they are providing to clients? When can you say that the ERP implementation is done? . 15. 13. 21. 24. 20. 17. 25. 12. What are the responsibilities of top management in an ERP project? How will you ensure that the ERP package purchased will fit into your organization? What is gap analysis? How do you overcome gap analysis? Will ERP software enable the top management in decision making? How will you carry out identification of new processes and the implementation of them? How should the system be configured to be able to handle flexibility? What are the different phases in ERP implementation? Explain. 18.ERP Implementation 49 11. 14. 23. Which is the most crucial phase in ERP implementation? Why? What are the factors behind the failure of ERP projects? Select an organization of your choice and discuss its ERP implementation from three perspectives–Organization. 19.

An operating system is a software program designed to act as an interface between a user and a computer. and supervises the interaction between the system and its users. ü ERP software under different operating system environments. consisting of control routines for operating a computer and for providing an environment for execution of programs. Operating systems . The primary objective of an operating system is to increase the productivity of a process resource. • To describe the impact of operating system on ERP software. The operating system also forms a basis on which application software is developed and executed.1 FUNCTIONS OF AN OPERATING SYSTEM An operating system is expected to perform the various functions given below: (a) Command Interpretation (b) Peripheral Management (c) Memory Management (d) Process Management The CPU cannot understand the commands keyed in by a user. It is the function of the operating system to translate these commands into a language that the CPU can understand. manages system resources. The two services provided by an operating system are command-language users and systemcall users irrespective of the type of operating system being used. ü Scope for packaged software in migrating from one operating system to another. An operating system may be viewed as an organized collection of software extensions of hardware. • To discuss the issues in migrating from one operating system to another. 6. EXPECTED OUTCOME The readers will be able to address the following: ü What an operating system is. It controls the computer hardware.6 Impact of Operating System on ERP OBJECTIVE • To introduce the concept of operating system.

It is deployed in applications ranging from embedded systems to personal computers to supercomputers. Linux was originally developed for Intel 386 microprocessors and now supports all popular computer architectures. 6. The three components of Unix are kernel.Impact of Operating System on ERP 51 are of two types: single-user and multi-user. The entire ERP trend does pose some tough questions for Linux advocates. First of all. kernel. Unix was designed to be portable. for Linux to move from the web server to the application server environment. Multi-user operating system handles users as well as multiple devices simultaneously. the difficulty of installation was a barrier to wide adoption of Linux-based systems. utilities and application programs. The Unix file system has a hierarchical structure where the files can be stored under directories. etc. vendors and customers for building better and more accessible software. they see clear advantages for both their customers and themselves in adopting Open Source practices. It is unnecessary to file license numbers and enter them during installation. It is a multi-programming. command line interpreter. The current version of the system is 2. As more companies adopt ERP systems and insist that internal and public web content feed into the same enormous data stream.5.An overview Unix is a multi-user operating system and has a number of features that make it ideal as a multi-user operating system. Also.1c. Linux can provide various point solutions toward a more comprehensive ERP capability. treating devices and certain types of inter-process communication as files. In 1983. and system utilities. An example is Compiere. Such an operating system is more efficient and more sophisticated than a single-user operating system. Linux may be harder to push in the workplace. Unix provides a file system which allows us to group files in a convenient manner. multi-tasking and multi-user. Advantages include practical cost-effectiveness as well as global-scale cooperation between developers. In the past. personal computers that come with Linux distributions already installed are readily available from numerous vendors including large mainstream vendors like Hewlett-Packard and Dell. This quickly exposed several major security holes in the Unix architecture. hierarchical file system.3 LINUX IN AN ERP WORLD For those who are looking for inexpensive automation tools. Also. usually on departmental web servers. While some aspects of their ERP product suite may remain forever proprietary. The Unix systems are characterized by various concepts: plain text files. it will often need to go head-to-head . The major ERP vendor SAP believes that Linux and the Open Source movement will change the nature of all software development including their own. Unix provided the TCP/IP networking protocol on relatively inexpensive computers. Even complete ERP systems are beginning to be built in the Linux and Open Source communities. 6. Richard Stallman founded the GNU project which today provides an essential part of most Linux systems.2 UNIX and LINUX . but the process has been made easier in recent years. Many distributions are at least as easy to install as a comparable version of Windows. an open source ERP software application developed by Jorg Janke in 1999. but these trends are only now slowly beginning to permeate the rest of the software industry. time-sharing and multi-tasking system. which later resulted in the Internet explosion of worldwide real-time connectivity. Linux's infiltration into enterprise has often come at the departmental level. For organizing data on the disk. Linux users are accustomed to standards and a culture of software collaboration.

Impact of Operating System on ERP


edge. This is a strong argument for decentralized computing. If Linux is to use this argument, it will have to provide a powerful system for managing business rules and incorporating them into enterprise systems, as described in Figure 1. Note that once broken down to the departmental level, Linux has the capability and competitiveness to host all of the functions displayed. ERP is a very profitable business, in contrast to the plummeting margins in shrink-wrap software. Much of the recent effort in the Linux world has gone toward making Linux a feasible desktop replacement. To observers of modern enterprise-wide computing, this seems almost like misplaced energy. Intranets and other such developments are slowly turning front ends into commodities, and the real power is shifting from the client back to the server, although the server does not have to be as monolithic as a mainframe. It is important for Linux developers to turn their attention to the infrastructure which is increasingly being demanded by enterprise-class computing and the executives who demand it. To ensure the encouraging growth of Linux and the associated improvements in business attitudes toward information technology, developers would best address some of the needs of enterprise computing. Commercial developers will certainly fill in the gaps. Then perhaps the promise offered by the client/ server movement, more flexible and decentralized computing, will stand in a little less danger from huge, single-source ERP systems.

6.3.1 ERP users in LINUX environment
Linux is beginning to expand beyond its traditional role as an edge server into the core of the enterprise applications stack. Although Unix and Windows server will retain their majority share through at least the middle term future, evidence demonstrates conclusively that from the customer point of view the server operating system choice for ERP is now a three way race. The ERP partisans of Linux believe that the open source operating system has achieved rough technological parity with Unix and Windows Server. It runs on cheaper hardware than Unix and costs less to buy than Windows server. It is more secure than Windows server. It enjoys the active technical support and strategic commitment of such major vendors as IBM, Hewlett-Packard and Oracle. The belief among our respondents that Linux has fewer security vulnerabilities than the Windows server is also significant, although we note that there is no obvious technical reason why there should be a fundamental difference between the two operating systems, at least not over the long term. The security issues that have persistently dogged Windows appear in part to be a sociological phenomenon, driven by widespread anti-Microsoft sentiments in the hacker sub-culture sentiments that unfortunately motivate a criminal minority to put their animus into practice. Microsoft very rightly argues that security is everyone's concern and then goes on to suggest that as Linux market share grows it too is likely to be struck by hacker attacks. There are reasons cited by the ERP users for not considering Linux for their ERP stack. Some of them are really significant barriers to Linux growth. If the obstacles to Linux will diminish in importance, the result could very well be a pronounced acceleration in Linux adoption sometime between late 2005 and mid 2006. Some of the reasons cited by the ERP users regarding the usage of Linux are: • ERP users worry about the propriety of using "free" software to run their business. • Scalability of Linux, particularly for large back end transactional databases. • Linux sometimes has a higher total cost of ownership (TCO) than one would expect for a nominally free operating system, due to the high cost and relative scarcity of experienced Linux system administrators.

Impact of Operating System on ERP


center. The survey results showing the shares of the various operating systems among the ERP vendors determined by the Peerstone research group (www. are given above. Among the operating systems Unix, Windows and Linux, in 2004 Unix has performed well. Of course, the producers of each of these operating systems are releasing new versions with increased features to overcome the competition.

IT organizations face significant challenges and business requirements as they move key applications to new platforms. Enterprise resource planning systems bind together various company functions including human resources, inventories, and financials - while simultaneously linking the company to customers and vendors. The Migration of these systems poses specific issues for both the information technology organization and the business functions. Carrying out the process of migration in an ERP environment is a little bit tedious task and hence the different phases involved in the migration process have to be carefully executed. It requires cooperation both from the IT professionals and business analyst. There are various reasons for migrating from one operating system to another. There exists a huge competition among the various operating systems and new versions are being introduced every year. This brings the pressure among the ERP vendors to utilize the features of these new versions resulting in migration from one operating system to another. The six migration phases identified by the META group ( are: Ø Analysis of current systems, processes, staff requirements, and costs against business requirements and alternative solutions. Ø Definition of the scope and budget requirements of the ERP migration, taking into consideration the skill, process, and culture fit of existing and alternative technologies. Ø Coordination and completion of the migration effort up to the point of deployment including development, tuning and quality assurance. Ø The point of transition to the new ERP platform. Ø Ongoing management of the ERP system on the new platform. Ø Meeting Change Management requirements. The first and foremost step in the process of migration is to consider the overall organizational involvement in the ERP migration effort. The highest percentage of IT staff resources is committed during the deployment phase of migration. IT management stated that time requirements to manage the Unix platform took more staff time than preferred across the areas of support, training, performance monitoring and vendor management. After the migration, time savings were achieved in all areas. The average migration period was only about seven months, which is in line with expectations. In order to recommend ERP migration, each organization faces the need to justify its pursuit. The major reason is found to be the upgradation of ERP application, which stands as the key motivating factor behind this migration process. For the most part, the IT organization approaches justification of the migration from a technology-centric view, pointing at operational issues and outdated technology as primary motivators. The major reasons for migrating from one operating system to another from the perspective of IT professionals as found by META group is presented below:


REVIEW QUESTIONS 1. putting a ceiling both on growth and profitability. The ERP server operating system market is moving towards a permanent state of diversity where Unix. Why are ERP users choosing Linux? Compare and contrast any two operating systems of your choice and do a little bit of research on how they could influence an ERP system. new enterprise application installations. What is meant by migration? How is it carried out? . 3. as the evolution of ERP continues at a rapid pace. many customer-focused applications and analyses have begun moving from theory to implementation through creative.Impact of Operating System on ERP 57 Ø First. Then perhaps the promise offered by the client/server movement. Ø Finally. 2. Commercial developers will certainly fill in the gaps. 7. Is the operating system an issue from the customer's point of view? 6. Highlight the features of an operating system of your choice (say. Some of the ERP issues with respect to the operating system are discussed and it is hoped you will also agree that much research is still needed to better understand the ERP phenomenon from an operating system perspective. will stand in a little less danger from huge. but Linux competition will pressure its pricing model and its margins. 4. 5. Windows/Linux/Unix) from three perspectives namely business. SUMMARY With the increase in the tendency in the organizations to measure customer profitability and retain customers. developers would best address some of the needs of enterprise computing. The IT organization has seen improvements in many areas. while the business functions gain flexibility and cost savings in support of ERP systems. We find that the Linux will unquestionably be the fastest growing server operating system in the enterprise applications market for the future. To ensure the encouraging growth of various operating systems and the associated improvements in business attitudes toward Information Technology. Therefore. more flexible and decentralized computing. platform decisions add an additional dimension to consider for organizations that want to maximize ERP manageability and business impact. including performance and scalability. single-source ERP systems. organizational and technological. it is believed that Windows server will continue to hold its own. the existing Windows installed base itself. the Unix leavers. innovative and motivated organizations that aim to provide a tremendous and unbeatable strategic advantage. Windows server and Linux will have substantial user bases. What is an operating system? Examine the limitations of the migration process in an ERP environment. They are already leaning to Linux rather than Windows and Linux will probably make it impossible for Microsoft to recapture its lost ground here. Ø Second. Here. Both IT organizations and business units should plan to spend more time on migration projects.

Select an operating system of your choice and list its features. Do you really think that the operating system is an issue for packaged software like ERP? 12. 10. How will you measure the performance of ERP software under different operating systems? 13. Identify an ERP product which is using your operating system.) the ERP software. What are the salient features of the Linux operating system? 14. Evaluate the ERP product from the view point of an operating system and present the pros and cons of the ERP product. thereby making the users reap the full benefits of his product (i. (a) Customer (b) Competition (c) Performance (d) Technical issues 9. why? 11. Which of the following keeps a high pressure on the ERP vendor to migrate from one operating system to another? Justify.e. Discuss the impact created by the different operating systems on ERP software. the vendor must be able to customize his product and add better features. . will you recommend carrying out the process of migration from one operating system to another? If so.58 Enterprise Resource Planning 8. If you are an ERP vendor or ERP consultant. Based on your study.

7. One of the widely used paradigms is Supply Chain Management (SCM). SCM is helping companies make their own operations more efficient. However. order taking.7 Supply Chain Management (SCM) OBJECTIVE • To introduce the concept of Supply Chain Management (SCM). Supply Chain Management (SCM) is the practice of coordinating the flow of goods. Integrating operations from sourcing to customer via manufacturing. "At the highest level. there is a long list of benefits that can be derived through SCM. • To describe the modeling approaches in SCM. packaging. information feedback and the efficient and timely delivery of goods and services. ü Use ERP and SCM to generate optimal solution. services. For most businesses. lower development costs. EXPECTED OUTCOME The readers will be able to: ü Reap the benefits of an ERP system coupled with SCM. reduced inventories and assured delivery schedules.1 OBJECTIVES OF SUPPLY CHAIN MANAGEMENT • Decrease inventory cost by more accurately predicting demand and scheduling production to match it." said the President of a software company. information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. the ever-increasing expectations of the customer and the stiff competition among firms have resulted in the evolution of several new paradigms. warehousing. • To describe the benefits of SCM. This process includes order generation. the giant strides made in the field of Information Technology. distribution and retailing. rapid exchange of information. The rapid pace of today's business. and common business framework with partners. . availability of analytic and management tools. greater profitability and better customer service are important goals. These include faster time to market. SCM has emerged a powerful tool for a wide variety of manufacturing and service industries.

components. and provides tremendous flexibility in design. Manufacturers need to change focus from their computer-integrated manufacturing systems to computer-integrated supply chain management systems.60 Enterprise Resource Planning • Reduce overall production costs by streamlining production process and by improving information flow between enterprise. variety and speed. which form a supply chain. and tools across the manufacturing facility. Manufacturers can therefore shorten the time between product conception and product completion by integrating automated manufacturing process with the programmable design of a product. products. . It utilises software for automatic control of machine operations. which is able to respond quickly to changes. The parts. CAD technology therefore significantly reduces the time required for product design. assemble products. • Specialised robots to load and unload machine tools. finished and partly finished components. and outsource products/services to other companies. planning activities that influence the manufacture of a product such as production. materials and cash flow planning. IT helps to convey precise demand data from one member to another in the supply chain in a hierarchical manner. • Improve customer satisfaction by offering better quality. • A storage and retrieval system to organise storage space by providing high-rise and highdensity storage. to make their products cost effective. It is important for automation because it reduces production time and provides improved quality.3 CAD AND CAM The Computer-Aided Design (CAD) systems are interactive computer graphics systems used for product design. CAM can have on-line and off-line applications. Swift changes lead to cost reduction and increased profitability. Manufacturers (members of supply chain) need to concentrate on core competencies. Material transfer systems such as a network of Automated Guided Vehicles (AGVs) to move raw materials. or to perform manufacturing tasks like painting and welding. 7. suppliers and distributors. inspect parts.2 COMPUTER-INTEGRATED SUPPLY CHAIN MANAGEMENT SYSTEMS Information Technology (IT) plays a vital role in coordinating various activities between companies. work pieces. Manufacturers can therefore integrate themselves to the dynamics of the supply chain. The hardware used for automation is as follows: • Computerised Numerical Control (CNC) machine tools to manufacture individual parts of a product. They need to install programmable hardware. materials move downstream from the initial supply source to the end customers and the information moves upstream from the end customers to the initial supply source. Offline applications involve preparation of software for the above. Online applications involve control and integration of all operations on computer-controlled hardware for product manufacture. or systems can be simulated using an interactive computer animated model. and tools out of it. In a supply chain. • Automated Material Transfer System (AMTS) to move finished parts into Automated Storage and Retrieval System (ASRS) and various materials. 7. inventory. Computer-Aided Manufacturing (CAM) software integrates the operations of all computer-controlled machines.

shipping by air is generally fast and reliable. These decisions have a big impact on revenue. Shipping by sea or rail will likely be cheaper. (iii) Financial flow which consists of credit terms.Supply Chain Management (SCM) 61 7. suppliers and business partners. NET technology. especially for bulky goods and large quantities. 7. as well as customer returns. and the distribution of these finished products to customers. [4] Transportation How do materials. these determine the paths along which goods will flow. which plants will supply specific distribution centers. This framework needs to be more flexible than the traditional sequential. (ii) Information flow which involves transmitting orders and updating the status of delivery. and set safety stock levels. subassemblies and other goods on hand as a buffer against uncertainties and unpredictabilities. . to enable your supply chain and provide visibility of the business ecosystem. [2] Production An organization must decide what products to create at which plants. transformation of these materials into intermediate and finished products. (a) Supply Chain Networking This utilises the Internet and the new Microsoft. how goods will get to the final customer. [3] Inventory Each link in the supply chain has to keep a certain inventory of raw materials.5 ROADMAP TO BETTER SUPPLY CHAIN MANAGEMENT Managing the supply chain involves three main paths: (i) Product flow which includes the movement of goods from a supplier to a customer. But inventory costs money too. and so it's important to manage deployment strategies. For example. There are various elements influencing the SCM: [1] Location It's important to know where production facilities. parts. linear relationships and relies on the use of e-business tools to adapt to this networked dynamic model. Supply chain exists both in service and manufacturing organizations and the complexity varies from one industry to another. sometimes. in a collaborative environment with your customers. determine efficient order quantities and reorder points. payments and payment schedules. Shutting down an assembly plant because an expected part shipment doesn't arrive is expensive. Supply Chain Management falls into the following four main areas: with a number of sub headings that can be used alone or integrated. stocking points and sourcing points are located.4 ELEMENTS IN SUPPLY CHAIN MANAGEMENT A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials. but slower and less reliable. which suppliers will service those plants. So if you ship by sea or rail. parts and products get from one link in the supply chain to the next? Choosing the best way to transport goods often involves trading off the shipping cost against the indirect cost of inventory. and. costs and customer service. plus consignment and title ownership. you have to plan further in advance and keep larger inventories than you do if you ship by air.

This decision has long-term consequences. cost and level of service. which not only relies on the supplier becoming a partner. Since it governs the basic strategy for accessing customer markets it has an impact on revenue. Operational decisions are short-term decisions focusing on dayto-day decision making. (d) Supply Chain Co-ordination Supply Chain Co-ordination is primarily the conjoint of all the above elements in a collaborative framework with suppliers. lead time. but also relies on an integrated information network which allows the rapid evaluation of supplier performance. While policies that guide inventory management may be viewed as strategic decisions. day-to-day management of incoming and outgoing materials/products constitute operational decisions. Strategic decisions include the choice of production facilities and sourcing points. their efficient management is critical in SCM. Operational decisions include detailed production scheduling. purchasing and pricing decisions. Tactical decisions are resource allocation decisions over medium-term planning horizons. The four main areas of decision making in supply chain management are as follows: Step 1 The first step in creating a supply chain is the choice of the geographical placement of production facilities. 7. These decisions are closely linked to the inventory control decisions since the best choice of transport . “when to produce” and “how much to produce”.6 DECISION MAKING IN SUPPLY CHAIN MANAGEMENT Supply Chain Management can broadly be classified into strategic. Operational decisions are designed to effectively manage the product flow in the strategically planned supply chain. warehousing and distribution policies. procurement timing and pricing.62 Enterprise Resource Planning (b) Supply Chain Planning Supply Chain Planning allows us to synchronise our supply chain to leverage the best value for the business by optimising procurement. Step 3 The third step is to determine how the finished or semi-finished goods will be stored. (c) Supply Chain Execution Supply Chain Execution relies on the visibility through the supply chain of all components from supplier's inventory and delivery capabilities. quality control measures and workload balancing. stocking points and sourcing points. Strategic decisions are long-term decisions that are linked to top-level strategy and guide the supply chain policies from a design perspective. tactical and operational decision making. Step 2 The second step concerns classical production planning decisions such as “what to produce”. Step 4 The final step is the choice of the mode of transportation of the finished goods to the customer market. Since holding of inventories can cost anywhere between 20-40 percent of their value. to materials management. Tactical decisions concern aggregate production planning.


Enterprise Resource Planning

(c) Financial flows
It represents credit terms, payment schedules and consignment and title ownership arrangements. The network, in turn, is supported by three pillars:

(a) Processes
This embeds the firm's capabilities in logistics, new product development and knowledge management.

(b) Organizational structures
These encompass a range of relationships from total vertical integration to networked companies as well as management approaches and performance measurement and reward schemes.

(c) Enabling technologies
This include both process and information technologies.

First, we will look into the following key SCM issues for the coming years: 1. Further integration of activities between suppliers and customers across the entire supply chain. 2. On-going changes in the supply chain needs flexibility from IT. 3. More mass customization of products and services leading to increasing assortments while decreasing cycle times and inventories. 4. The locus of the driver's seat of the entire supply chain and 5. Supply chains consisting of several independent enterprises. It is identified that only a modest role exists for ERP in improving future supply chain effectiveness and a clear risk of ERP actually limiting progress in supply chain management. ERP seem to provide a positive contribution to the following issues only: 1. More customization of products and services 2. More standardized processes and information 3. The need for worldwide IT systems and 4. Greater transparency of the marketplace. The limitations of ERP systems in providing effective SCM support are as follows: 1. Insufficient extended enterprise functionality in crossing organizational boundaries, 2. Inflexibility to ever-changing supply chain needs, 3. Lack of functionality beyond managing transactions, and 4. Closed and non-modular system architecture. These limitations stem from the fact that the first generation of ERP products has been designed to integrate the various operations of an individual firm. In modern supply chain management, however, the unit of analysis has become a network of organizations, rendering these ERP products inadequate in the new economy. Thus we find that one should not expect too much from ERP for supply chain management in extended enterprises. ERP systems have become a de facto standard in business because they replace a patchwork of local legacy systems. But ERP systems were never designed just to support SCM and

collaborative opportunities with existing business processes and systems. Without integration between the software development lifecycle and the IT ERP capability • Effective portfolio and program management will remain elusive. strategic in nature. collaboration strategies could vary.66 Enterprise Resource Planning cover all the tools used to deliver software. across business units. Internet has reduced the costs of integrating. SCM affords forecasting and decision support. HR and other business functions with a single comprehensive database that collects data from and feeds data into modular applications supporting all the company's business activities. understand how the technological advances could be applied and build customized solutions. SCM spans the entire supply chain. Supply Chain Management (SCM) is the method of creating products for the end user. 7. sales. it is important that an enterprise adopts a portfolio approach to collaboration. reduce cost. transaction costs and redundancies. warehouses. transporters. The most significant impact of the internet has been to change the way enterprises relate to their trading partners and customers. responsive and collaborative supply chain. across the world. increases revenue. Within the same enterprise. perpetuating poor quality software. thereby enabling them focus on their core competencies. The key is to look deep within our own supply chain ecosystems. the manufacturing units. Various technology trends enable companies to realize this vision of a real-time. cycle time and inventories. SCM's optimize Processes. ERP excels in transaction management.A COMPARISON Enterprise Resource Planning (ERP) is a software solution that addresses the enterprise needs taking the process view of an organization to meet the organizational goals tightly integrating all its functions. It spans the suppliers of raw materials. ERP’s primary function is to generate transaction data whereas SCM can make sense out of the data to help you make decisions. An optimal IT solution for an optimal supply chain has to integrate decision-making processes. ERP links processes within the organization. This has forced enterprises to reevaluate their strategies. whereas SCM is constraint based and optimized. applicable to . Hence. • Development will continue in fragmented and nonstandard ways. Technologies that enable increased collaboration within and across businesses reduce integration costs. The new Internet enabled business model is based on collaboration. across these functions. Generic products only use information and insights publicly available or known and hence cannot be a source of competitive advantage. including project management packages. whereas ERP automates processes. distribution. processes and organizational structures in order to enable effective collaboration and move away from inefficient activities that do not add value. reliability and responsiveness. depending on the category of products it buys or sells. ERP Systems are linear and interactive. outsource non-core activities and build strong differentiators based on Quality of Service (QoS) parameters. ERP is a set of application software that integrates manufacturing. coordinating and transacting across organizations. • Deployment and software inventory processes will continue to be haphazard. finance. It is important to understand that a single company could adopt different strategies for the inbound supply chain and a separate strategy for outbound supply chain. choosing the set of tools most relevant to its supply chain ecosystem. retailers and finally selling. distributors. Managers can no longer abdicate the responsibility of leveraging IT for supply chains to products currently available in the market. and • Traceability between software projects and their delivered runtime code will remain weak. SCM differentiates the processes.11 ERP AND SCM .

What is SCM? Examine the limitations of SCM. It requires a break from a mindset that does not recognize globalization. enables decision support and is a bi-directional planning process whereas ERP is evaluative. It represents a thought process that emphasizes customer service. 2. accurate information to the manager's desktop to enable the correct decisions to be taken at the right time. 14. 5. Incredible as it may seem. In order to have a successful Supply Chain Management policy. 6. 3.Customers or Suppliers? How will you manage the flows in Supply Chain? What is the role of Information Technology in SCM? How will you achieve an Integrated Supply Chain? . 13. 16. 12. 10. 4. the role of IT in managing businesses or the importance of the customer. transaction focused and is a unidirectional process. 8. Prepare the roadmap to successful Supply Chain Management. 15. Name the elements of Supply Chain Management. What are the steps involved in the process of decision making in SCM? Explain briefly the Supply Chain Management model. Who are most benefited from SCM . SUMMARY Supply Chain Management is a paradigm that is popular in the business world today. SCM is prescriptive. 9. whereas ERP standardizes the processes. Computer-Integrated Supply Chain Management Systems provide the ability to deliver timely. SCM and E-Business. the retailer needs to be able to monitor key data historically in order to be able to forecast requirements that can be shared with suppliers and allow both parties to gain from planned economies of scale and reduced inventory costs. REVIEW QUESTIONS 1. Is ERP the same as SCM? How can Information technology be effectively used for SCM optimization? Distinguish between CAD and CAM. 11. Explain briefly Computer Integrated SCM. 7. What is the impact of ERP on SCM? Propose a model to reap the benefits of ERP. much of this has actually happened.Supply Chain Management (SCM) 67 more than one organization at a time. This has to be implemented in the knowledge that the organisation can generate Key Performance Indicators based on historical data that can be refined over time.

ERP systems may also support customer inquiries as to product lines and company capabilities as well as inquiries and negotiations for alternative supply arrangements. there are still a score of local players that are doing well in this market. The objective of any business done by an organization is to meet the requirements of the customers. during and after sales. their . The customers' details. ERP systems may support demand planning activities which make projections for existing products with target volumes and time requirements as well as projections for new products or product modifications. Sales with the most leading companies are very sluggish. SCM and CRM are the enlarged concept of ERP and they embrace a much broader sense of business management. focus has shifted from internal business process and resource integration to external sales. ERP systems always support customer orders for existing products. The objective of CRM is to add value for customers through those processes that involve direct contact with customers before. However. 8. their requirements. CRM encompasses marketing and sales activities related to the identification and characterization of markets. procurement and supplier resources. customer order changes and cancellations and inquiries about customer order status.8 ERP and CRM OBJECTIVE • To introduce the concept of Customer Relationship Management (CRM) • To describe the benefits of the CRM enabled ERP software • To highlight the features of CRM coupled with Data Mining and Data Warehousing EXPECTED OUTCOME The readers will be able to: ü Use CRM with the latest technologies ü Provide CRM consultancy to an organization ü Use CRM with ERP In today's business application market. the characterization of product opportunities within those markets that are consistent with the strategies and expertise of the enterprise and the development of those markets into a customer base that generates recurring demand for the products of the enterprise.1 INTRODUCTION TO CRM The customer is the backbone of any organization.

Customer relationships are vital business assets and the benefits of CRM to customers are increased convenience and speed of service and they help the organization to increase their ability to develop profitable customer-focused strategies. have to be taken care by the organization to get their goodwill. The fundamental theory behind CRM is to identify profitable customers. Maintaining a positive relationship with the customers is an essential element in any business. the organization can change their marketing strategy. The first and foremost step for establishing CRM lies in establishing the required changes and planning for their implementation. This enables the organization to analyze these data later. This theory is similar to relationship marketing but CRM adds the aspect of IT to implement relationship marketing. These new integrated systems are able to perform better than earlier as they take care of all the business operations. With this broader objective. Coupling CRM with other technologies like (Enterprise Resource Planning) ERP. Management Information System (MIS) and Decision Support System (DSS) will yield better results to the organization. SCM and so on. technical requirements. CRM is a strategy used to learn more about customers' needs and behavior in order to develop better relationships with them. the organization is interested to find what the exact requirements of the customers are. In other words. Customer relationships can be maintained effectively only if the organization is able to understand their requirements and meet their needs at the earliest. In fact the requirements of the customer are broadly classified as: (1) Normal requirements (2) Expected requirements and (3) Exciting requirements. This gives an accurate idea of which customers buy what. resource optimization and the customer. Besides retaining profitable customers. Customer relationships are at the core of business success. thereby the Customer Relationship Management (CRM) brings the company closer to the customer. etc. With an effective CRM strategy. An example of this would be supermarket discount cards. the CRM evolves and it improves marketing effectiveness. The organization wants to improve customer service which will subsequently improve customer satisfaction. Once this is done then the organization not only can retain the existing customers but also can gain new customers. and maximize their useful life span and the profits from them by establishing and fostering good relationships with them. CRM is nowadays coupled with the other systems like ERP. as these customers not only cause administrative hassle for the organization but also reduce its overall profits. The concept of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. attract and retain them. 8. Based on this analysis.ERP and CRM 69 expectations. CRM processes are designed to monitor all of the contacts between customers and companies. There are many goals that businesses have when implementing CRM techniques and applications. The business also wants to maximize revenue by advertising the right products to the right people. When a consumer scans the cards and then their items. the theory espouses removing unwanted customers from the organization. the items that the customers have bought are entered into a database. a business can increase revenues by: • providing services and products that are exactly what the customers want • providing better customer service • selling products more effectively • retaining existing customers and gaining new customers .2 NEED FOR CRM CRM works by gathering information about customers and analyzing the information collected. Supply Chain Management (SCM).

The analytical CRM will analyze the data and provide effective reports for decision making. value and profitability.70 Enterprise Resource Planning • providing guidelines to explore new marketing strategy • expanding the business and reaching all the customers through the web. The objective of Customer Relationship Management (CRM) is the optimization of profitability. Collaborative CRM deals with applications of collaborative services including email. It focuses the issue that not all the customers are equal and need priority while providing services to the deserving customers.3 COMPONENTS OF CRM Pleasing the customers has been the priority of most organizations. intranet. The following factors account for successful CRM implementation: • Developing a customer-focused strategy first before considering the kind of technology we need. Resource allocation for everything like maintaining sufficient product stock. satisfying customer demand and sufficient inventory for marketing direct mail promotions will eventually be important constraints to incorporate into any CRM system that is trying to optimize customer profitability. CRM aims at capturing pertinent data about the current and prospective customers. • Addressing the CRM system from three perspectives--Business. 8. their desire and the area where the company has to improve to fulfill the needs. • Ensuring that necessary data is available to make analysis and change the business strategy accordingly to meet the expectations of the customers. Technology and Customer. chat. The combination of CRM with ERP is also important. e-business and similar other vehicles driving the organization. Techniques like data mining and data warehousing are used to aid the CRM to analyze the collected data and generate reports to the top management. CRM is that face of business process that aims to establish enduring and mutually beneficial relationship with the customers in order to derive customer retention. e-commerce. This will involve integration of the front-office and the back-office of an organization. internet. It considers the automation of various business processes and providing a smoother interface among these processes. • Developing prototypes and making use of business models to understand the business processes effectively. This can be done once the company identifies the needs of the customers. These three . CRM entails acquiring and developing knowledge of one's customers and using this information across various touch points to balance revenue and profit with maximum customer satisfaction. • Ensuring that the CRM provides a scalable architecture framework. CRM provides a solution to address these points through the following components: (a) Operational CRM (b) Analytical CRM (c) Collaborative CRM The operational CRM looks at the business processes of an organization. e-communities. The company grows only if it has reliable customers and it is in the hands of the company to catch and retain valuable customers. This is the component of CRM which will help the organization to improve its system and provide better services to the customers. This will also help the organization to change its marketing strategy to improve the business. • Storing unwanted and useless data wastes time and money which CRM eliminates. websites. Executing this process is not such an easy task and those who have done that lead the market in the industry.

Technology and Customer. collection of data. The CRM is mainly established in an organization to bring the customers and organization into one fold. Data Warehousing and OLAP. introducing new latest technologies will require training to be given to the employees' and changing management is required to streamline the system and re-engineer the business process. Customer Relationship Management aims at improving the relationship of the customer with the organization. Business Perspective From the business perspective we find that the strategy of CRM must be identifying. The technology helps the CRM system to achieve information integration. locating valuable customers and above all keeping a database of customer information which is an asset to any organization. Technology forms the base for any system and if this technology is applied effectively the users can reap the full benefits of CRM. It is recommended to have medium-level use of Information Technology to analyze consumer patterns. It is necessary to bring into the minds of the employees that the customer is the inner core for any business. Recording the needs of customers alone is insufficient. customer segmentation and one-to-one marketing to generate win-win situations for both parties. Customer Perspective From the customer perspective. The existing CRM literature focuses heavily on the technology and business perspectives of CRM. the Customer Relationship Management (CRM) must be enabled with latest technologies like Data Mining.4 DIFFERENT DIMENSIONS OF CRM The CRM can be viewed from three perspectives namely Business. Usage of Information Technology with CRM will help both the organization and the customer. preparing reports. to estimate the required level of customization of products and services for the customers. organizations would need to pay attention to these interactions and understand what customers want to see in a CRM system. understanding and predicting consumer behavior to foster long-term profitable relationships. identifying the competitors. 8. From the organization point of view. analyzing the data. conveying it to the different levels of employees through proper channel and generating action plan to overcome the defects identified is the most essential and desired outcome of a successful CRM system. Technology Perspective From the view point of technology. predict the expectation of the customer. As customers develop loyalty and opinions of an organization through interactions with it.ERP and CRM 71 components of CRM not only help to retain the existing customers and add new customers. it aids the organization to define its marketing strategy. It requires that the changes in organizational structure is allowed for more value-adding interaction points for customers thereby bringing mindset changes like employee . the CRM stands focusing on all interaction points between the customer and the organization. analyzing it. The organization must use the CRM to identify the requirements of the customer. introducing new products. Yet the importance of the customer perspective of CRM cannot be neglected. pricing. providing suitable guidelines to the top management for decision making and so on. to design new business strategy and to evolve new marketing strategy. Customer perspective requires the CRM system to take into the services required by the customers. It also requires the organization to change the mindset of the employees to provide better services to the customers. Usage of Information Technology (IT) will bring greater impact of CRM on the customers.


Most organizations engage in data mining to do the following: (a) Discover knowledge (b) Visualize data (c) Correct data. channel and call to action. A data warehouse can be viewed as an information system with the following attributes: • It is a database designed for analytical tasks. It requires intelligent technologies and the willingness to explore the possibility of hidden knowledge that resides in the data. All can be tested or re-used. From this discussion on the CRM environment supported at the back-end by ERP. or fulfillments. The CRM Marketing features include analytics for measuring results and developing new strategies. offer. From the CRM point of view. intrinsic and bottom line value to the enterprise. content. "Triggers" automatically generates communication pieces.6 DATA MINING AND DATA WAREHOUSING IN CRM A data warehouse is a subject-oriented.ERP and CRM 73 SYSPRO CRM can develop. time-variant. execute and track marketing campaigns encompassing five components: target audience. integrated. The 3600 view of all contact touch-points coupled with the strategic advantage of an integrated solution deliver tangible. SYSPRO CRM is a critical link in enabling and empowering a true extended enterprise strategy. based on responses. it is identified that a perfect CRM system must possess the following properties: Ø Integrated Accessible Data Ø Eliminating Duplicate Data Entry Ø Automating and Increasing Productivity Ø Internet enabled and Wireless Access feature Ø Flexible Customization Ø Secure & User Focused Ø Scalable Ø Enabled with Dynamic Selling Tools Ø Scope for Easy Data Integration Ø Dynamic Sales Management Ø Automated Marketing Process Ø Integrated Knowledge Base Ø Complete Customer Service Ø Ability to manage Remote Users 8. CRM facilitates total collaboration of inside and outside sales teams and streamlines sales strategies to achieve sales objectives. using data from different applications • It contains current as well as historical data to provide a historical perspective of information • It contains a set of tables • Every query results often in a large result set and involves frequent full table scan and multitable joins Data mining is not specific to any industry. Data mining is the process of efficient discovery of nonobvious valuable patterns from a large collection of data. nonvolatile collection of data in support of management decisions. data mining applications include the following: • Retaining the existing customers and gaining new customers • Enhanced Sales and customer service • Effective marketing .

Implementing an analytical database using Data Warehouse and Online Analytical Processing (OLAP) technology in a CRM environment leads to: (a) Number of stakeholders and people affected (b) Many data sources (c) Different ways of doing business . Accordingly.74 Enterprise Resource Planning • Reduction of risk • All operations scanned for fraud detection There is an opportunity today given the new technologies like Data Warehousing with analytical extensions to refocus accounting systems to reflect what measures of performance are important to your organization. CRM involves building a relationship with your customers and prospects by understanding their needs and responding with products and services through multiple channels. Soon after the first users started entering data. The benefit of data mining is to turn this newfound knowledge into actionable results. including cluster analysis and neural networks. the next step is to mine the data and try to discover previously unknown patterns. CRM will thereby enable a targeted. The objective of this process is to sort through large quantities of data and discover new information. Data mining helps end users extract useful business information from large databases. more than double the number who considered it relevant in 2002. particularly in organizations that are organized along product lines rather than by customer. A Data Warehouse can also help a company to get a view of its entire relationship with a customer. both within and outside the organization. there is still no general problem solver for Data Warehousing in CRM. aligned to a customer's value. clean and store customer information for later analysis. Patterns uncovered in the data can be used to develop new marketing strategies. Once the data warehouse is built. profitable relationship with individuals and groups. Data warehouses are normally dedicated to 'off line' analysis and not the day-to-day processing of transactions. A survey conducted by the consultants reveals that 83% of clients in the IT industry are expected to have a data warehouse by 2008. Data mining comprises a range of data analysis techniques. It also allows an organization to track the history of its relationship with each customer and thereby increase its customer responsiveness. This can be revolutionary. allowing for segmentation and analysis of customer needs. Data mining is the process of finding trends and patterns in data. the key problems to be solved within such a CRM approach are: • Differentiation of customers • Focus on retaining existing customers • Maximizing customer lifetime value • Increasing customer loyalty Although several new technological solutions have been developed. mutually beneficial. such as increasing a customer's likelihood to buy or decreasing the number of fraudulent claims. analytical CRM was only a step away. focusing on individual customer demand. They contain existing customer transaction records and may also incorporate information from other sources. ongoing. The development of data warehouses is just one of the technological advances that have improved the ability of marketers to tailor marketing strategies to customers. and being based on an organization-wide database. Data warehouses collect. Most companies' CRM approaches are therefore characterized by understanding CRM as a longterm business strategy. preferences and behavior.

This target has been achieved by the Microsoft Dynamics CRM 3.7 FEATURES OF DYNAMIC CRM SYSTEM In this section. Decision is discussed to enable the readers to realize the better services and support extended by the CRM system. Evolutionary programming is that system which automatically formulates hypotheses about the dependence of the target variable on other variables.0. Your information technology (IT) staff can integrate Microsoft CRM with existing systems.0 was designed to give businesses what they want most in a CRM system–a customer relationship management that people will use. Customization is a major factor deciding the fate of a product. Best of all. Case based reasoning. Genetic algorithms and Nonlinear regression methods. mutation and natural selection. The purpose of a CRM system is to provide improved sales and customer service. Getting information out of Microsoft CRM is just as easy as putting it in. It is possible to export any subset of Microsoft CRM data to Microsoft Office Excel spreadsheet software for analysis. which are refreshed with current data every time they're opened. the Dynamic CRM product from Microsoft (www. Rule induction is based on the extraction of useful if-then rules from data based on statistical significance.ERP and CRM 75 (d) Diversification and acquisitions (e) Different possible views on customer data The most commonly used techniques in Data Mining are Neural networks.0 is enabled with the features sought by the customers. Nonlinear regression methods are based on a Non-Linear model which is an analytical model that does not assume linear relationships in the coefficients of the variables being studied. The Microsoft CRM has the following features: (a) Improved Microsoft Office Outlook integration (b) Creating sales and marketing campaigns fast (c) Helping your staff sell more while improving customer service (d) Easier customization (e) Drilling into the details fast The Microsoft Dynamics CRM 3. The genetics algorithm is a computer-based method of generating and testing combinations of various input parameters to find an optimal solution. It works the way your business does. Case based reasoning is used to forecast a future situation or to make a correct decision. You can create custom reports that are accessible from within Microsoft CRM through an e-mail subscription service.0 includes a built-in Service Scheduling and dispatch system that provides a centralized. Evolutionary programming. consolidated view of your professional service workers' calendars and schedules. Users can save frequently used reports. Rule induction. This will help the organization to maintain data integrity and data are secured. . Microsoft Dynamics CRM 3. Reduced customization will help the end users to reap the full benefits of a software product. The decision tree represents sets of decisions which will involve classification of data set. Your sales force can use Microsoft CRM without ever leaving Microsoft This method is also called the nearest neighbour method. Provision for changing the marketing strategy and enabling the sales under different patterns will help the organization to grow faster. 8. in the form of programs expressed in an internal programming language. security is well structured and users only have access to the data they're authorized to see. Microsoft CRM also provides a number of reports using Microsoft SQL Server Reporting Services as the underlying report engine. Neural network is a complex nonlinear modeling technique based on a model of a human neuron. Microsoft Dynamics CRM 3. The various methods involved here are genetic combination.

• A service calendar that allows service schedulers and dispatchers to schedule activities • Powerful reporting and analysis tools • Enabled with mobile support that allows field workers to get instant access to customer data from any personal digital assistant (PDA). It is a solution that can reliably enable customer-centric. The following are the features of Service Scheduling in Microsoft CRM: • Automating service scheduling and centralizing dispatching of resources and services • Enhancing productivity. optimization of resources and lower operational costs • Improving customer satisfaction through timely delivery of products • Keeping customers informed by setting initial expectations and keeping them apprised of scheduling updates if circumstances change • Adjusting resource assignments in real time to meet high priority requests Microsoft CRM lets the user work the way they want to work with features such as: • Allowing employees to easily pull information from Microsoft CRM into any other office applications such as Microsoft Excel spreadsheet software and Word • Quick and easy access to data without changing screens a number of times • Customized workspaces that allow users to The present section will address the features of CRM product from the major ERP vendor SAP (www. and managed from a central location • Complete view of customer information promotes better understanding of specific customer needs and other account-related issues • Automated routing and queuing of service requests is achieved using customizable workflow rules • Automatic responses to customer requests • E-mail management automatically records customer communications and associates e-mail messages with appropriate customer records • Service scheduling makes it easy to manage service resources and to better understand resource and equipment allocation. it gives us a 360-degree view across all customer touch . usage and effectiveness • Service contracts can be created. The solution enables integrated industry-specific processes to support customer-facing departments in marketing. In addition. specialized talents and capital resources and to promptly schedule service appointments for customers. laptop or browser The customer service module of Microsoft CRM includes the following features: • Customer service requests can be created.76 Enterprise Resource Planning Your service dispatcher and service delivery staff can use the Service Scheduling functionality to easily search for available time strengthening customer satisfaction. mySAP CRM is a CRM product from the major ERP vendor SAP. sales and service. assigned. and updated automatically 8.8 FEATURES OF CRM FROM SAP The previous section explained the features of the CRM product from Microsoft. Transforming the business into a customer-centric enterprise is essential to derive revenue and profit. Microsoft CRM 3. end-to-end business processes to deliver value around each customer. save and reuse favorite views of customer data without the distraction of unwanted information. accurate service to customers. maintained.0 helps you reduce resource inefficiencies and deliver prompt.

depot repair. Enables us to accomplish business objectives quickly mySAP Customer Relationship Management (mySAP CRM) includes the following functions to support core business processes in the following areas: • Marketing mySAP CRM provides comprehensive support for marketing resource management. mySAP CRM is enabled with the following features: 1. lead and opportunity management. The benefits of CRM enabled ERP systems are as follows: • Enhanced operational efficiency • Increased productivity . warranty and claims management. • Sales mySAP CRM empowers sales professionals with comprehensive support for sales planning and forecasting. and sales analytics. quotation and order management. segment and list management. invoicing and accounts receivable 2. • Service Transforms service into a profitable line of business with a broad range of functionality to enable customer service and support. Hence all the features of open source software are available in this ERP-CRM business solution. territory management. The ERP-CRM business solution provided by this company is named COMPIERE. campaign management. channel service and channel commerce.9 AN ERP. The CRM as an independent system has got only a few functions to carry out. • Channel management It optimizes the indirect channels with support for partner management. • E-commerce mySAP CRM delivers broad functionality to enable business processes in the areas of emarketing. incentive and commission management. the new business solution gets additional flavour and is able to meet the expectations of the customers.CRM BUSINESS SOLUTION In this section. This product is based on open source software. whereas after getting enabled with an integrated system like ERP. “How well can they see us?” The solution to these two questions will bring the company and the customer into the same circle and reduces the gap. trade promotion management. channel marketing. an ERP-CRM business solution provided by a company “compiere” (www. “How well can we see our customers?” and then.ERP and CRM 77 points. It orchestrates all customer-related tasks across departmental boundaries. e-service and e-analytics. and marketing analytics. channel service and service analytics. lead management. contract management. account and contact management. time and travel is presented. channel sales. An ERP-CRM business solution will address these two questions. shipping. It brings together all relevant sources of customer data across the enterprise for faster and better decision-making 3.compiere. e-selling. The goal is to achieve barrier-free visibility between the company and the customers. configuration. 8. seamlessly incorporating activities such as fulfillment. service-contract management.

SCM. Compiere provides multiple views of business information based on the transactions that have taken place.CRM Business Solution This section will address the technology behind ERP .CRM Business Solution with the help of open source software Compiere. They are: v Authentication The users are properly classified and separate user id and password are provided. The various functions of an ERP-CRM business solution found in the product compiere. The application was designed to be web hosted. It is an ERP-CRM business solution developed using J2EE. It is highly customizable and incorporates work rules that can be modified to meet particular business needs and practices.78 Enterprise Resource Planning • • • • • Reduced cost Easy to deploy Ability to push enterprise data to departments that have been isolated from ERP functionality Forecasting the demand for certain products Smooth interface among all the departments of an organization Technology behind ERP. invoicing and cash receipt and is also integrated with SCM and customer management. The product is enriched with easy customization by the customers as the business evolves. ERP and Online Analytical Processing (OLAP). invoice receipt and payment processing.CRM Business Solution The ERP-CRM business solution will have all the functionality required by the customers and completely integrated with one another for seamless transaction data flows. purchase order. The application integration modes considered by this product are as follows: • Data can be imported from XML. Compiere is an open source ERP software application with fully integrated CRM software solutions. a web based interface designed to reach our application from anywhere on the Internet and a high performance Windows application with a rich user interfaceallowing high speed data entry. v Requisition to pay It involves creating requisitions. The product can be installed on Windows or Linux systems. The product offers two parallel user interfaces: a browser based Dynamic Hypertext Markup Language (DHTML). It requires an oracle database installation. The database independence will reduce the system's cost of deployment. This ERP-CRM business solution provides integrated CRM. fixed records in specified formats • A scanner interface is provided for data entry and inventory transactions • Java Enterprise Edition Connectors are available for integrating EIS applications • Support Electronic Data Interchange (EDI) to execute various transactions • Easy customization through external development toolkits • Ability to develop your own information structure • Usage of SQL-based tools to generate custom reports Functions of ERP. v Quote to Cash It covers the business process for creating a quotation for a customer. order management. Partner Relations Management (PRM). The administrator will have control over all the users. . This product provides a combination front-office/back-office suite that offers sales and contact management and customer support capabilities.

v Partner relations management It connects different clients to each other. v Report generation It involves the generation of reports to analyze the performance and covers the costing and accounting dimension of the application. 8. How can CRM be effectively used with packaged software? "CRM is product oriented and not process oriented. ERP.". 2. suppliers. customer satisfaction and profit thereby improving the performance of the organization. data mining and data warehousing tools are used to increase customer value and help to initiate new opportunities. . For any business. CRM is the method through which businesses can connect with their customers and therefore serve them better. 7. 3. Distinguish between conventional application packages and CRM. 5. 6. Will CRM help the organization to standardize the existing business processes? Why do CRM projects fail so often? What are the three dimensions of a CRM system? Will CRM account for information integration? Explain. It is the sole responsibility of the organization to meet the requirements of the customer through latest technologies like CRM. allowing them to manage lead distribution and marketing expenses. requiring that every company continuously re-examine direction. REVIEW QUESTIONS 1. A CRM system will fail if corporate culture and organisation are not part of planning. etc. Customer expectations are increasing day by day and business services must increase along with these expectations. 4. analyzing and understanding customer data. v Internet enabled All the processes can be carried out by the users staying at any place at any time. SUMMARY Business moves at lightning speed today. partners–literally every variable and relationship that might lead to complacency. successful Customer Relationship Management Navigation is becoming increasingly important in today's competitive business world.ERP and CRM 79 v Customer service It forms part of all the business processes. Businesses with successful CRM strategy and applications will be able to record a large increase in sales.Comment. To manage these data efficiently. 9. strategies. What is CRM? Carefully examine the limitations of a CRM product. v Supply Chain Management It involves material management and smoothens the activities between suppliers and customers. Companies are increasing customer value through successfully gathering. It enables the system to have centralized services.

Describe the CRM environment with ERP as back-office and CRM as front-office. Study the operations of an organization of your choice and present your CRM Business Solution through business models. 20. Describe the features of SYSPRO's CRM product. What is Dynamic CRM? 16. What are the salient features of an integrated system like ERP enabled with CRM? 17. 19. 15. What are Data Mining and Data Warehousing? Explain it in the context of CRM environment. . What is the need for CRM? How was it managed by the companies earlier? 12. Identify the features that could be added to these products to provide better services to the customers. List the various CRM vendors and describe the significance of their CRM product.80 Enterprise Resource Planning 10. How can a CRM system be enabled with Internet? Propose a suitable architecture with its features. How does it handle remote users? 14. Compare the CRM from Microsoft and SAP. 13. 11. What are the advantages in choosing open source software for a CRM environment? 18.

9 ERP and . yet the activities must be managed as part of the complete transaction lifecycle. which is at the core of document technologies. “In this century. out to the extension. during the past decade. According to ERP vendors. • To describe the features of . Filling yet another gap is archiving. One of the most compelling reasons to marry ERP and document technologies is to link the internal (generally back-office) processes of ERP to the outside world. into the extended enterprise that requires us to work virtually. This means we need to move ERP. planning and collaboration take place before ERP comes into the picture. ERP may handle most transactions with aplomb. Expert opinion is that “Everybody in finance and accounting will have an SAP [ERP system] seat. yet keeping it accessible.” a CEO of an ERP vendor says.NET is. EXPECTED OUTCOME The readers will be able to: ü Understand the benefits of using . but the manager of engineering who reviews and approves purchase invoices for the department probably isn't going to be an SAP user. many of which . ERP focused inside the four walls of the enterprise.NET ü Visualize an ERP product build using .NET in ERP platform. connected to external organizations. and also all the processes of content management. but when problems do crop up. to create strategic partnerships. In some instances.NET OBJECTIVE • To explain what . These systems sometimes fail to include all the people who are part of a process. For instance. Business processes have many touch-points. ERP systems may not be able to access crucial documents needed to clear things up.NET ü Spell the impact of . but it's an incomplete solution.NET on today's business Enterprise resource planning (ERP) is designed to manage and automate vast swaths of business activity.NET • To illustrate the usage of . But even inside the boundaries of ERP. we will start to move out of the four walls. Many ERP users are finding archiving a valuable asset for offloading data. actual business practices do not always map precisely onto the ERP model.

” While Microsoft . . At the core of the .0.NET is a comprehensive family of products.NET SOFTWARE IS BETTER SOFTWARE? . and by empowering employees through access to information when and where they need it. and devices. processes.NET will become part of the Microsoft applications. it is the next-generation computing platform from Microsoft. to provide tailored solutions for organizations and individuals. The .NET you are choosing software systems to run your business that are more innovative and robust.NET Platform is as dramatic as the change from DOS to Windows. The software vendors that get in on the ground floor of this shift will have a huge advantage over the competition. 9.1 . president of Intuitive. less costly to administer. educated manufacturers will not buy an enterprise solution that is not one-hundred percent .” The expected impact on the manufacturing industry is significant. systems. people. In essence. and Web sites as services that share and combine information and functionality with each other by design.” There are many critical operations--human resources. Don Richardson. there are several specific benefits for the manufacturing industry: (a) promise of lower IT costs (b) new features that will allow manufacturing companies to leverage the Internet and (c) more efficient manufacturing software development.NET (pronounced “dot net”) is a completely new approach to how software will operate.NET evangelism at Microsoft Corp. and servers you already use today .NET is a huge global change. It is about 21MB in size. managing (servers). customer relations--that need to be connected to both structured ERP data and the unstructured realm of documents. using (building block services and smart clients) and experiencing (rich user experiences) XML Web services.NET-based. You can download the whole package free from Microsoft. on any platform or smart device. you will be installing Internet Explorer 6. by installing .NET is not another version of Microsoft Windows. The essence of Microsoft . Business benefits include increased integration through rapid development and deployment of business applications.82 Enterprise Resource Planning will not have access to the ERP system. It takes just a few minutes for your computer to join the .AN OVERVIEW . In fact.NET hype is a new layer of software that sits above the Windows . and installing it is about like installing a new version of Internet Explorer. email.2 WHY .NET is a relatively small bundle of software that you install on your computer.NET as “a set of software technologies designed to connect your world of information.NET TECHNOLOGY -. and Intuitive has been on board from the start. group manager of . supply chain management. faxes and Web content. further explains the significance of this new technology: “The change to the Microsoft . by choosing .as well as new products that extend XML Web service capabilities to all of your business needs. faster.NET. tools. safer and more secure.NET age.NET platform enables the creation and use of XML-based applications. Microsoft .” said Chuck Gillam. 9. creating new revenue streams by turning existing processes into XML Web services as well as finding new business by exposing those services. “Within two years. and easier to use. built on industry and Internet standards that provide for each aspect of developing (tools). Microsoft defines .

. shortened delivery times. These traits enable innovation in application development and deployment. install. In fact. Customer satisfaction should measurably increase based on improved on-time delivery. you'll also be able to focus on new business opportunities.NET provides a new set of tools and prefabricated components of unprecedented power that can be used to write a new type of software called "managed code. . Managed code side-steps the root causes of many of the bugs and security problems we suffer from today. it sidesteps the old Component Object Model (COM) -based mechanisms that allowed software packages to collide with and harm one another. . including a reduced time to close a fiscal period. etc. measurable financial benefits. there are many less tangible benefits. created from scratch. and lightweight. immediate management visibility into critical data elements. even in the first year. . By optimizing your manufacturing operations with ERP. It's faster. new toolsets and managed code are the key features of . This new . more expedient data entry across the board." Over time. Less code. both to leverage groundbreaking technologies such as XML and to eliminate the old inefficient internal layers that have been built up over the last 20 years in Windows software. And . smaller and lighter. Inventory carrying costs generally decrease substantially due to better planning. It stays together in one place rather than smearing itself all around our systems.NET platform is a better platform for building and running applications software than the Windows operating system that we know today.NET allows two versions of a managed code application to run side by side on the same computer without any interaction or conflict.3 WHAT MAKES A GOOD ERP SYSTEM? A good ERP system should be able to provide you with solid. faster development time. tracking and forecasting of requirements. providing you with the strategic advantage you'll need in the years ahead.NET.NET insulates software developers and computer users from the deficiencies and incompatibilities of operating systems. upgrade and (if necessary) remove from your computer. etc. but they will also be cheaper to own. Please note that it is important to select and use the right system for your business in order to achieve the full benefits of ERP. increased quality. Collections should be turned faster based on better visibility into accounts and fewer billing and/or delivery errors. more hacker-resistant.NET managed code is about better software. NET software minds its own business. And in doing so. speedy. 9.NET thus eliminates the need to remove an old version of a software product just to install and try out a new version. will not only be better software. In addition. Vendor pricing should decrease by taking better advantage of quantity breaks and tracking vendor performance. like Intuitive ERP. maintain. So applications written in managed code.NET is a completely new software technology. An ERP system provides the solid operational backbone manufacturers need to improve the volume of production and fulfillment of orders while reducing costs. managed code will become recognized as clearly superior because it • is more robust • is has side-by-side versions • is has better security • is has better connectivity • is faster software with easier deployment • has lower cost of ownership .NET 83 operating system. . Managed code is lean. Shop Floor down time should be minimized based on visibility into how to best schedule the floor. and easier to deploy.ERP and .

they're installed on a server. Unfortunately.NET versions of its family of .NET is a mammoth undertaking by the world’s largest software company.NET-this and . with many built-in features including Internet integration and features intended to enhance security. everything at Microsoft will quickly become .4 THE FUSION OF .NET presents a platform-independent target for software development. As the various Microsoft divisions jump on the bandwagon. Even web browser-based and Web Service applications need to be installed. like many of the Microsoft technical initiatives before it. It's all about how those rules are packaged and invoked within the system and how easily they are exposed to partner systems. While it is readily possible to put a modern face on old technology. base class library. It relies fully on software components and the component-oriented programming paradigm. and a machine-independent intermediate code known as the common intermediate language (CIL). These questions should be asked when you are shopping for your new system to allow you to learn the true nature of the technology you are purchasing. manufacturing. the shift in core thinking that is central to .NET-that. engineering. including a common type system.NET and the new standards-based world warrant a redesign of ERP systems from the ground up. As the licensee of an ERP software product. That’s why . accounting and finance. order processing. .84 Enterprise Resource Planning Modern software architecture for ERP is all about efficiently implementing business rules. The characteristic features of a perfect ERP system are given below: • 100% managed code • Standardized business rules • Bundle validation rules with processing rules • Dynamic choreography of business rules • Distributed processing • Readily customizable • Native support for standards-based connectivity • Loosely coupled • Expose a rich standards-based set of data to the outside world • Single focal point for inbound data • Provide event-based communication • Easy maintenance • Data integrity 9. One characteristic is common to all software: the software must be installed – somewhere. you are entitled to ask exactly what software components will be installed on your hardware systems.NET TECHNOLOGY AND ERP Today’s ERP systems integrate all business management functions. including planning. .NET are the common language infrastructure (CLI) and the common language runtime (CLR). This dilution of the message has already begun with Microsoft’s release of new . human resources and more. The two primary components of . inventory/ materials management. The CLI is a set of specifications for a runtime environment. It will impact all users of Microsoft products over the next few years as it ushers in a new wave of software innovation.NET may become lost in the marketing hype. the software installation process must land all the components of the software product on the target computer hardware. purchasing.

and order status analysis. As they saw it. Microsoft and its partners will release new versions of all the popular computer languages and compilers to support the CLR and Framework. The ongoing increases in computing power and connectivity. 9. Microsoft formed a grand plan to rework the core languages and tools used to develop Windows software. In the end. Microsoft aimed to leverage Windows to stake the high ground in the new computing landscape.NET world is a small chunk of exotic software called the Common Language Runtime (CLR) and a bundle of foundation components and basic services called the . The task for Microsoft and other software companies will be to recompile their applications using the new . While the public was being dazzled by new websites and the promise of dotcom business plans. the CLR and Framework provide the powerful infrastructure and rich set of built-in features necessary for objects to readily and securely communicate over the Internet.NET languages will be able to run on any operating system platform that supports the CLR and Framework. forming integrated planning webs across the supply chain. As soon as a Microsoft product becomes friendly with Extensible Markup Language (XML). it became clear to Microsoft that the Internet would change the computing landscape in a big way.NET 85 enterprise server products. The IL is then executed at runtime by the CLR. and order handling processes. In addition to the business pressures that most businesses are currently facing the technology environment in which businesses operate is also undergoing some fundamental transformations. . • Lower cost of system administration • Installed by Copying Files • Reach and Rich at the Same Time • Better internal systems through better tools Improvements in processing speeds will be particularly applicable to manufacturing planning.ERP and .NET and we will see a new wave of dynamic realtime simultaneous material and capacity planning that may span the boundaries of individual companies.NET label. Together. Old approaches to MRP and CRP concepts will yield to previously unthinkable computing power. software that operates independently on individual computers would give way to a future filled with cooperating applications running in a rich soup of web-based services. order promising. . in their chosen language are then compiled by the new . This year.5 IMPACT OF . and the desire for standardization are combining to create a tidal wave of fundamental change that will sweep over virtually every industry and change the underlying structures and assumptions of every business. Couple these advances with web services developed using . The epicenter of the . the architects at Microsoft were envisioning the next generation of Internet usage.NET TECHNOLOGY ON ERP In the mid-1990’s. The code they write. Objects written and compiled in one of these new . it seems to get the . Let’s consider the more specific benefits that .NET is intended to deliver and how the manufacturing industry in particular will benefit. The beauty is that software developers can continue to write software code in their favorite language.NET will enable blindingly fast executions of production planning. dynamic inventory status.NET compilers into a standard format called Intermediate Language (IL).NET tools and components and then enhance their applications to make use of the newfound freedom to roam the Internet landscape. the proliferation of devices. shop floor tracking.NET Framework.

This is an extended range of infrastructure services including a management portal supporting XML and SOAP. It also often involves technologies such as message queuing. application development involves the integration of existing applications such as email.NET supports high levels of integration with existing infrastructures and applications. This Management Platform for Windows consists of: • Microsoft Operations Manager.NET allows users to quickly establish connections and complete transactions that until now have required hours of time and the frustrating re-entry of data from one application to the next. You don't want to have to develop lots of new code. Instead.NET architecture frees users from the limitations imposed by the data silos that populate the Web today. A key premise of Microsoft . It also uses your existing hardware and supports scaling up and scaling out as your needs demand. A SOAP request includes all the information required to call a remote procedure over the Internet. Microsoft . Intuitive's enterprise solution is designed to deliver superior functionality. Enterprise Resource Planning (ERP) applications. which is a natural outgrowth of the increases in computing power. 9. Customer Relationship Management (CRM) systems. Companies must compete on their ability to adapt quickly to changing business conditions. Today. As firewalls are generally configured to allow HTTP requests to pass through. application development usually involves integrating existing applications. rapid implementation. Microsoft . created for the development of solutions that integrate with the . Since 1994.86 Enterprise Resource Planning Microsoft is creating the . dedicated to providing customers with software solutions that add value to their business. • . It is based on the XML Web services model.NET Management Services. • SOAP (Simple Object Access Protocol) is a protocol defining the way that applications (Web services) communicate with one another over the Internet. SOAP requests will also usually be allowed to pass through firewalls.A DISCUSSION Intuitive Manufacturing Systems offers intuitive and flexible enterprise solutions that help small and midsize manufacturers achieve greater operational efficiency and profitability by integrating business processes on an enterprise-wide level. It provides new technologies and develops existing ones.NET . high levels of usability and a technology standard that is unmatched in the industry.NET platform to help you transform your business to respond to these imperatives. Microsoft is providing the basis for managing distributed computing as an integral part of all Windows-hosted environments. components.6 AN ERP PRODUCT BUILT USING . The information on the ERP software “Intuitive ERP” presented below is found from their website . By enabling customers to better monitor and control their computing resources. and movement towards standards that characterize the whole technology industry. As a result managing integration is critical to its success. By allowing multiple secure data feeds to be merged into a single user interface the . mainframe applications.NET technology. connectivity. and Web services that you might develop using the Visual Studio. Intuitive has been a technology leader. an ERP product developed by Intuitive Manufacturing Systems called “Intuitive ERP” is discussed below. using HTTP as the transport protocol. and so on. It is transmitted to the server.NET is integrating applications.NET platform. This radically new approach to constructing applications illustrates a key concept. enabling you to draw upon the existing experience of your staff. To better understand an ERP product developed based on .

calculations. Intuitive ERP also takes advantage of the power and performance of common Microsoft desktop applications. This extremely easy reporting tool includes field layouts. CRM includes ability to create and track opportunities and prospects to manage all contacts and to integrate fully with Outlook. More importantly. Perhaps the most exciting of all is the new form layout.NET world. Report Wizard includes field layouts. and full visibility into the life of a product.ERP and . You can report on any field in any table without knowing a single query or table layout. Web Catalog allows orders to be placed over the internet.NET 87 www. The Intuitive ERP offers the following functions: Planning. Purchasing. The release of 6. Finance. "shop" for freight rates based on different carrier options.0 is built on Microsoft . Now that the architecture of Intuitive is complete in . Intuitive ERP's Microsoft .NET-based software technology marks a quantum leap forward in enterprise software. and more. The Freight Manager is integrated into scales and label printing as well to complete the suite of freight needs. This revolutionizes the user's experience with an extremely intuitive user interface.intuitivemfg. With each new release. and dramatic new functionality are available as each Intuitive function is adopted into the .NET format. a set of intuitive system tools restricts administration chores to an absolute minimum. The Intuitive ERP AlertMessenger tool allows you to automate the process of sending e-mails and/or on-screen messages to employees. more and more functionality is now offered in the new .NET architecture and includes Intuitive CRM.NET and ERP technology will enable dramatic changes in how commerce is conducted in the manufacturing industry. Intuitive ERP utilizes an automated deployment process that installs all server and client systems from a single CD-ROM. Manufacturing. The Intuitive ERP system provides an intuitive and flexible tool set that can handle all the frontoffice and back-office operations of a discrete manufacturing company. These exciting new forms are just the beginning of the functionality coming from Intuitive in the coming months. The freight management functionality allows customers to automatically calculate freight to enable the readers to get better clarity on ERP developed using .NET framework.0 laid the groundwork. The Ad Hoc Report Wizard offers another dimension of ease of use in reporting to our customers. Intuitive ERP v6. The new Service and Repair module allows for incident tracking. warranty tracking. customers.NET. presentation options. Exclusive use of Microsoft technology establishes a seamless interaction between all elements of the Intuitive ERP architecture. Service and Repair module. Source code for the software is included in the cost of the system. calculations and presentation options. speed. seamlessly integrating with Microsoft Office.NET technology. etc. Small and mid-sized manufacturing organizations will gain new competitive advantages as commercial enterprise software packages introduce new . Freight Management system and Ad Hoc Report Wizard. Intuitive ERP provides a rich. but also put out the first feature set in the . Coupled with the administrative tools from Microsoft.0.NETenabled features. and partners in response to specific events. Engineering. Internet Explorer for enterprise communication and access to the Internet. Any custom modifications are also automatically deployed. the fusion of . Ease of use.NET architecture is Intuitive ERP 6. Inventory. giving you full control over any customizations you might desire. Import Wizards quickly and efficiently load your legacy data into the Intuitive ERP database. The first ERP released on a 100 percent Microsoft . highly visual client user interface experience. Quoting/ . The familiar Windows interface reduces the learning curve and makes Intuitive ERP extremely easy to use.

and ship finished product. manages material and equipment capacity. views design and pricing changes automatically. • Quoting/Estimating Provides quotes and estimates to customers and automatically converts quotes to sales orders. maintains optimal inventory levels. traces defective parts to their original location/lot. custom-configured products. • Inventory Manages detailed inventory records. • Purchasing Manages procurement. enters and maintains complex sales orders or converts quotes directly to sales orders. and track time and attendance. • Quality Inspects incoming (purchased) and outgoing (manufactured) materials. analyzes material requirements. processes accounts payable and accounts receivable. Intuitive Forecasting.88 Enterprise Resource Planning Estimating. sells and delivers complex. track serial numbers. creates purchase orders or generates purchase orders from planned orders. and tracks and controls engineering changes. • Engineering Creates and maintains multi-level visual bills of material. copies and modifies existing items. Easily create new items (and associated bills of material and routings). controls production costs and scheduling. and performs cycle counting and physical inventories. manages requisitions. tracks material location/lot information. Project Management and Intuitive Mobile. Advanced Configurator. bills of material and routings on-the-fly. reconcile financial accounts. simplifies inventory transactions. automate frequently performed tasks. creates professional presentations with your financial statements. • Planning Generates plans on demand. These functions are described briefly below. Quality. Payroll/Human Resources. or quickly configure an item on-the-fly. compresses the quote to delivery cycle. maintains price matrices. AlertMessenger. designs routings and standard processes. inspects returned materials. organizes and maintains detailed vendor information. and maintains data on instruments and equipment. Return Material Authorization. Intuitive SPC (Statistical Process Control). and manages resource efficiency. labor and production costs. • Manufacturing Plans and schedules production enters and tracks work orders. • Finance Creates budgets and monitors cash flow. creates new items. and simplifies the collection and management of critical product data. Order Processing. monitors production status. and tracks material. and receives and inspects vendor shipments. • Order Processing Provides quotes and estimates. • Advanced Configurator Quotes. maintains a bid matrix. controls the shop floor. promises deliveries. manages product data. generates general ledger activities. utilize bar coding. ships and receives goods. .

NET will gain clear advantages. They will reduce their administration costs and solve old business problems in new and innovative ways.NET. and vision technologies. and processes payroll.NET makes is explicitly designed to enable the rapid development. • Intuitive Mobile Uses wireless handheld devices for shop floor and inventory transactions. and material review/return. Larger manufacturing organizations will apply their corporate IT muscle to leverage . and orchestration of any group of XML Web services and applications into a single solution. SUMMARY With . customers. Microsoft . benefit eligibilities and uses.NET 89 • Intuitive SPC (Statistical Process Control) Performs real-time Statistical Process Control at all inspection points throughout the system. and business applications intelligently interactive. • Intuitive Forecasting Generates forecasts based on usage data and multiple forecasting methodologies. and reports on progress billing. and analyzes forecasts compared to actual data. commissions and taxes.NET will be outstanding.NET will bring new competitive capabilities to smaller manufacturing organizations. allowing users to interact with their data through handwriting. • Project Management Establishes projects and master projects. data. Companies that quickly harness . integration. automatically de-books sales. the Internet becomes a platform for business.ERP and . . • AlertMessenger Maintains real-time workflow communication by automating customized messages to vendors and customers as well as employees for specific system events. • Payroll/Human Resources Manages your employees' salary and job histories. maintains a Project ID in multi-level manufacturing and procurement orders tied to a given sales order. including work-in-process. speech. purchasing. and creates customer credits and request and document RMA samples. The Microsoft . The opportunities and advantages for manufacturing companies and ERP software companies that embrace . on-screen messaging.NET addresses most of today's computing deficiencies to realize the vision of enabling access to all user's data and applications anywhere and from any device. reports on revenues. • Return Material Authorization Handles the return of materials.NET brings employees. associates Project IDs with all facets of the system. generates demand requirements based on forecasts. or pager. Businesses benefit from radically increased efficiency and productivity as . expenses and profit/loss for any project.NET in-house. via e-mail. .

5.90 Enterprise Resource Planning REVIEW QUESTIONS 1.NET to develop an ERP system.NET acts as a catalyst in the development of packaged software. 3. What about the failure of ERP projects with respect to .NET. 8.NET Technology? “The impact created by the fusion of ERP and . What are the characteristic features of a good ERP system? Determine your business needs and the appropriate solution both from a functional and a technological standpoint. 9. With which technology. will you proceed? Why? What are the issues to consider when we select a technology for a large scale project like ERP software development? Develop a list of technical ingredients of an ERP product based on . What are the specific benefits enjoyed by the manufacturing industry using ERP software based on .NET technology. 15. 4.” . Select an ERP vendor who could meet your challenges and add value to your business.NET? ".NET? Evaluate the features of an ERP product using .Comment.NET. 2. 12. 11. List the salient the features of . 13. How does the .Comment. 10. There are many ERP vendors available. 7. .NET based ERP system? Suppose you are provided with a few technologies including .NET? How is customization handled in .NET technology influence the business process reengineering? How do ERP vendors view the .NET on the manufacturing industry is significant." . 17. 16. 6. What is . 14. What are your suggestions and guidelines to the technical and functional consultants of ERP in the process of choosing a technology for developing ERP software? Provide guidelines to the customers/organizations to enable them to select a right ERP vendor/ERP system which will suit to their business best.

The main players in the ERP market are SAP. The next version of R/3 released recently is expected to be easier to install and use. SAP R/3 is based on a relational database system which serves as an integration platform for all components of SAP R/3. It operated in relative obscurity before introducing in 1993 its R/3 product. functions. material management. It integrates all business processes of a company and provides modules for finance. human resources. scalable. and effective software for enterprise resource planning (ERP) with a flexible. These programs include the expansion of R/3's supply-chain management functions and the broadening of its electronic commerce and internet capabilities. 10. SAP is the market leader and its ERP products are SAP R/2 for the mainframe environment and SAP R/3 for the client/server environment. EXPECTED OUTCOME The readers will be able to: ü Understand the features of ERP products from various ERP vendors. Applications and Products in Data Processing) has been selling manufacturing software for 25 years.1 SAP SAP (Systems. etc. Baan. mySAP ERP mySAP ERP (Source:www. Oracle. The technological breakthrough quickly propelled SAP to the number one spot in terms of ERP software sales. JD Edwards.10 ERP Vendors OBJECTIVE • To give an overview of the various ERP vendors and their products. and configuration tools to make R/3 easily adaptable to businesses in specific vertical markets. QAD. Note: The details on various ERP vendors presented here are compiled from various sources including the Internet and the ERP vendors' websites. SAP is launching several initiatives that are geared toward making its products more customer-focused. Hence. an overview of the various ERP vendors and the features of the major ERP vendor SAP's ERP product mySAP are discussed below. open technology platform that can . SAP also is developing business templates containing features. the first threetiered client/server enterprise resource planning (ERP) software to hit the market. SAP R/3 is the market leader for integrated business administration combines the world's most complete. etc. The main purpose of this presentation is to enable the reader to get a focus on the ERP market.

and treasury management. With mySAP ERP Human Capital Management (mySAP ERP HCM). financial supply chain. and reward individual and team contributions. reporting. financial reporting.92 Enterprise Resource Planning leverage and integrate SAP and non-SAP systems. mySAP ERP Financials powers the highest-performing finance organizations in the world. you can maximize the value of your most important asset--your employees--aligning their skills. enterprise wide functionality that • Automates HCM processes and seamlessly integrates them across global operations. mySAP ERP Financials provides industry-leading support for local market requirements. with business objectives. and corporate governance. and currencies. [a] mySAP ERP Financials mySAP ERP Financials provides a complete financial management solution for a broad range of industries. ensure the highest levels of business analysis and governance. unifies strategic action. mySAP ERP includes four individual solutions that support key functional areas: [a] mySAP ERP Financials [b] mySAP ERP Human Capital Management [c] mySAP ERP Operations [d] mySAP ERP Corporate Services mySAP ERP is enhanced by industry-specific features and best practices based on three decades of SAP experience. • Allows you to assign the right people to the right projects at the right time. develop and leverage their talent. performance management. The solution enables organizations to reduce total cost of ownership. you can find the best people. The solution provides integrated. analysis. languages. It's the leading enterprise software solution for accounting. Its scalable and open architecture is built for multinational organizations and connects financial management with existing business systems. You need to transform traditional HR functions into a comprehensive program for Human Capital Management (HCM). Robust financial and management reporting. measure. With mySAP ERP HCM. With mySAP ERP Financials. you need to align all corporate resources. including employees. maximize the impact of training efforts. • Provides real-time information access that accelerates workforce decision-making. It is a system that provides deep operational insight. you can transform finance from an administrative department into a strategic business partner. and benefit from a more flexible IT infrastructure that helps drive innovation. and measures results quickly. align their efforts with corporate objectives. It offers a unique advantage to companies by providing marketleading financial management tools that work harmoniously with your operational systems. and • Empowers employees to manage processes in a collaborative environment . The solution offers a depth of functionality in accounting. And mySAP ERP offers complete solutions designed to support international operations so that businesses can efficiently and successfully operate and compete on a global scale. plus internal controls and documentation of all financial processes and transactions. [b] mySAP ERP Human Capital Management To compete effectively. activities and incentives with business objectives and strategies. • Supports both employees and managers throughout the employee life cycle. achieve a faster return on investment. and retain top performers. mySAP ERP HCM also provides the tools to manage. It also supports a broad range of industry-specific processes and is compatible with all SAP industry solutions.

• streamline processes at warehouses and distribution facilities. With mySAP ERP Operations. rentals. enabling automation and process control to help you avoid vacancies and reduce the costs associated with real estate development. forecasting. and enabling continuous process improvements and faster response to new opportunities. regulatory requirements and best practices for more than 50 countries. monitor compliance with travel policies. in the following areas: • Real estate management--mySAP ERP Corporate Services supports the administration of commercial and residential real estate. as well as reduced financial and environmental risk. portals. • support the planning and deployment of assets. product development and manufacturing. • enable a collaborative project management environment that includes external parties to manage both simple and complex projects. and reduce order cycle times and excess inventories.ERP Vendors 93 Designed for global business. and tools that enable employees to do their jobs more effectively. It integrates with existing business systems and can be customized to meet your requirements. you can • convert time-consuming manual steps into streamlined.000 companies around the world rely on mySAP ERP HCM to manage more than 54 million employees. and sales and service. and • improve customer service and respond quickly to customer demand. and accounting. • Travel management--mySAP ERP Corporate Services helps you reduce costs. streamline travel administration processes. online processes to improve overall enterprise planning. The solution also provides powerful analytic tools for better decision-making. as well as innovative self-services and role-based functionality for increased productivity. and manage changes in compensation and pricing models from suppliers. manage assets over their complete life cycle. execution. Real estate management is enabled by the SAP Real Estate Management application. global distribution systems. You can tailor mySAP ERP Corporate Services to meet your requirements for transparency and control. • Project and portfolio management--mySAP ERP Corporate Services provides a flexible and comprehensive solution for managing a portfolio of projects--from strategic portfolio management to project planning. and travel agencies. It's no wonder more than 9. • extend collaboration with both customers and suppliers. and property management. mobile applications. • manage transportation and distribution efficiently. [c] mySAP ERP Operations mySAP ERP Operations provides an extensive operations solution for automating and streamlining procurement and logistics execution. . mySAP ERP HCM supports payroll functions. [d] mySAP ERP Corporate Services mySAP ERP Corporate Services supports and streamlines the administrative processes that are standard to most businesses--those business-critical support processes that you must execute with maximum efficiency and control. • enable enterprise-wide visibility. • provide personalized interfaces. and performance management--reducing planning cycles and lead times.

is historically stronger in manufacturing than in finance and so on. J. Released in April 1996. Since then Baan has established its presence in every possible sector of the manufacturing world. while its supply-chain initiative should help its overall manufacturing marketing efforts. delivering efficiencies that result from fewer product returns and improved asset utilization. which is based on a programming structure that J. Baan. Oracle expects the Windows NT announcement to enhance its efforts at winning more customers among the ranks of mid-sized manufacturers. health. and in the depth and breadth of its product offerings. the object-oriented version of BPCS. 10. . • Quality management--mySAP ERP Corporate Services enables a unified approach to total quality management.2 ORACLE CORPORATION Since introducing its first application modules approximately three years ago.D. That initiative is expected to begin showing results with the release of a full compliment of Java applets and a browser screen that will enable the use of J. Edwards' applications over the Internet. Windows NT and MVS.D.0. 10. rapidly changing EH&S regulations and their consequences across your organization. officially known as BPCS 6. a suite of supply-chain functions that includes a Web-enabled sales configuration. Edwards is now focusing on adding value to its product suites. The Baan Co. J. This branching out is directly attributable to the One World philosophy. Edwards now offers all its software products on multiple platforms--including Unix. Its Baan IV enterprise resource planning suite is used in the automotive industry.94 Enterprise Resource Planning • Environment. SSA shows great resilience by swiftly overcoming unanticipated problems with the revamped version of its widely known BPCS enterprise resource planning package. Baan also unveiled the first of its Web-based products.D. and safety (EH&S) management--mySAP ERP Corporate Services helps you manage complex. in addition to make-to-order and contract manufacturing companies. as well as various types of discrete manufacturers. has vaulted to the top of the manufacturing software market both in terms of revenues. primarily in terms of new functions.4 THE BAAN CO. Oracle Corp. EDWARDS Historically restricted to being an AS/400 shop. 10. by numerous process manufacturers. on the other hand. as well as a variety of databases. Baan's action over the last three years is clearly indicative of its desire to be the dominant force in the worldwide manufacturing software market.3 J. 10. Baan launched its quest for worldwide market dominance in 1994.D. Edwards calls configurable network computing (CNC).5 SYSTEM SOFTWARE ASSOCIATES (SSA) A company with a long history of success. easily surpassed its predecessors in terms of the number of functions and features offered.D. Oracle now has more than 35 modules covering every facet of enterprise computing-from manufacturing and production control to human resources and sales force automation functions. With the one world methodology gaining market acceptance. appears to subscribe to the adage that actions speak louder than words.

Prism. a broad-based system designed to handle a variety of manufacturing modes: CA-KBM. But this year. primarily a AS/400 based offering. In keeping with its customer-centric approach. These include CA-PRMS. application development tools. 10. In the enterprise resources planning arena. MK offers MK Manufacturing. The CA prefix has already been removed from the names of the products offered by the Manufacturing Knowledge. remains .ERP Vendors 95 But BPCS 6. MK Logistics. 10.0 lacked the horsepower necessary to drive the large networks on which many of its early customers wanted to run. Computer Associates (CA) had accumulated more than 500 software products covering every facet of business computing. System 21 is now available on the Unix and Windows NT platforms as well. and individual manufacturing and financial applications. customer service and logistics applications. has a history of setting trends. and MK Enterprise. and service management. Marcam is merely placing an official stamp on a business practice that it has been following for years. a comprehensive. databases. Marcam Corp. and CA-Warehouse Boss. Marcam recently combined the organizations that had managed its Prism and Protean processmanufacturing suites into a single business unit. footwear and apparel.7 JBA INTERNATIONAL JBA International has posted record revenues and corresponding profits. a 40-module package designed to run every aspect of a manufacturing enterprise. repetitive manufacturing environments. This is attributed to JBA's focus on meeting its customers' needs. The tools are in place to support those customers who cannot make the jump right away. particularly in the development of ERP solutions for process manufacturers. a complete set of manufacturing. which is designed for warehouse and distribution management functions. automotive. SSA expects most of its client base to make the switch to the object-based version of BPCS eventually. or MK Group. a suite of software modules primarily for discrete./MAPICS INC. Originally designed for IBM's AS/400.6 MK GROUP/ACACIA TECHNOLOGIES Following a buying binge that spanned much of the late 1980s and early 1990s. CA had enterprise applications. even though it will remain a wholly owned subsidiary of Computer Associates. knowledge-based package designed for engineer and make-to-order manufacturers. Acacia Technologies has taken control of all of CA's AS/ 400-based manufacturing and distribution packages. systems and network management programs. The technology piece starts with JBA's flagship System 21.8 MARCAM CORP. CA will officially drop the CA prefix from these product names to reflect Acacia's status as a separate business. the company decided to follow a broad industry trend and divide itself into two separate companies. JBA has equipped System 21 with a complement of market-specific solutions for key vertical markets like food and beverage. financial. which covers the full spectrum of warehouse management functions. In establishing distinct companies for its products aimed at process and discrete manufacturers. each year for the past 15 years. 10. the CA reorganization effort spawned two new business units designed to tackle the market for mid-sized manufacturers-loosely defined as companies with $50 million to $500 million in annual revenues.

an AS/400-based solution that Marcam purchased from IBM in 1993. food and beverage. Intentia has also managed to equip Movex with modules that meet the specific needs of various vertical markets. such as logistics. Intentia has built Movex into a 62-module package that addresses every aspect of a manufacturing operation--from actual manufacturing and production control to distribution. And it has continually broadened its products' technology offers intuitive and flexible enterprise solutions that help small and midsize manufacturers achieve greater operational efficiency and profitability by integrating business processes on an enterprise-wide level. financials. QAD Inc. and vendor/ supplier relations to QAD's product arsenal. object-oriented system that can run either single. Since 1994. QAD has established a sterling reputation in the marketplace by tailoring these products to run mixed-mode manufacturing companies in five key vertical markets: automotive. Such functions would provide a complement to the broad ERP functionality users now get from QAD’s MFG/PRO and MFG/NT suites. tentatively called On/Q. MAPICS. human resources and executive decision-support functions. including Unix. 10.9 INTENTIA Intentia has been experiencing rapid growth in USA and worldwide in recent years. This series of modules would extend the research of QAD's product offerings into the supply-chain.11 INTUITIVE MANUFACTURING SYSTEMS Intuitive Manufacturing Systems (http://www. It has clearly identified its target markets. QAD has dispatched its research and development team to work on a new product line.000 manufacturing sites around the world. currently running in more than 1100 process manufacturing sites worldwide. consumer packaged goods. On/Q which is built with object-oriented technology.or multisite installations on the Windows NT platform. MFG/NT is a full 32-bit. With the AS/400 as a primary operating platform. Among these benefits are rapid deployment and quick return on investment. electronics/industrial. is supposed to be a very broad and very deep product that provides benefits not often provided by standard enterprise resources planning offerings. rapid . It has concentrated on expanding the functionality of its products to meet the specific needs of companies in those markets. has been doing all the things that are essential for enterprise resources planning Software Company to sustain a healthy growth rate. with various versions of it operating in more than 14. is believed to be the most widely used manufacturing software in the world today. The verticals Intentia focuses on include process--industries like apparel. Intuitive’s enterprise solution is designed to deliver superior functionality.96 Enterprise Resource Planning Marcam’s flagship product. Novell and Windows NT. MFG/PRO is a multisite system that runs on either Unix or Novell Netware. dedicated to providing our customers with software solutions that add value to their business. For several years. The company’s package.intuitivemfg. food and beverage. as well as several discrete manufacturing industries. 10. 10. pulp and paper. order management. Movex. procurement. and medical/pharmaceuticals. While taking this broad approach to functionality. Each of these systems contains over three dozen modules covering various manufacturing and distribution management functions.10 QAD INC. offering its client/ server-based systems on a variety of platforms. Intuitive has been a technology leader. will add functions. advanced pricing.

Intuitive started from the ground up and spent 18 months designing a new architecture that takes full advantage of . Quite a few benefits come automatically with Open Source environment. iCustomer Web catalog. Compiere Inc. Ramco is a global provider of Enterprise Solutions and Services in key areas such as Manufacturing.12 COMPIERE The software Compiere was originally designed and written by Jorg Janke. support and documentation are available as extras if you need them. allows organizations to address their Unique & Next Practices over and above standard Best Practices.NET. Ramco Group has seen its turnover multiply ten-fold and also become one of India's most respected business groups.NET architecture and includes Intuitive CRM. Jorg has 20+ years experience in packaged ERP systems. Healthcare. Report Wizard includes field layouts. Inc. Service and Repair module. training. and to integrate fully with Outlook. XML. Current product has a pure . Intuitive develops full-integrated ERP software for discrete manufacturers. Ramco Systems is a part of the Ramco Group. the group employs over 7000 people. Freight Management system. older competitors. CRM includes the ability to create and track opportunities and prospects. USA. Intuitive is committed to making Intuitive ERP the first ERP software product on the market to be 100 percent “pure” . 10.NET. In 1982.ERP Vendors 97 implementation. calculations. Asset Management. developed using Ramco VirtualWorks®. Intuitive ERP v6. Only a goal of being a “pure” . Compiere. Highly respected for its consistent rewards to its shareholders. As a (profitable) Professional Open Source company it concentrates on providing “back office” services to its partners and users of Compiere. The group is one of the most efficiently managed Indian business houses with a track record of high and consistent profitability. Aviation. 10. Corporate Performance Management and . achieving international recognition for its quality products and services. and presentation options. Web Catalog allows orders to be placed over the Internet. Compiere is an Open Source software and by definition is free.NET. Compiere makes Fortune 500 functionality accessible to companies of all sizes.13 RAMCO SYSTEMS Founded in 1938. Established in 1989. To reach this goal. Ramco VirtualWorks is a Process to Application Platform that incorporates several breakthrough concepts (multiple patents filed). Banking & Financial Services. Implementation services. Ramco's Adaptive Enterprise Solutions. Compiere provides a comprehensive solution for small-to-medium sized enterprises (SME) in distribution and services on a global basis and covers all areas from customer management and supply chain to accounting. a Virtual Software Factory. Web Services and the new features of Microsoft SQL Server.0 is built on Microsoft . Trading & Logistics.NET. eGovernance. is a private company based in Portland. and Ad Hoc Report Wizard. high levels of usability and a technology standard that is unmatched in the industry. is an Oracle Certified DBA and Java Certified. Jorg founded his first company “SoftCream” developing and distributing an integrated retail solution. to manage all contacts. Ramco Group is a well-diversified industrial conglomerate. a first for an Indian Software company.NET managed code framework and 50% of the standard product functionality has been completely rewritten in . is the lead developer of the Compiere product and is solely funded by providing Support and Services for Compiere. but Compiere has significant product benefits over its traditional.NET solution will deliver to customers all the benefits of . Oregon.

Table 1 ERP Vendor SAP AG ORACLE PEOPLESOFT SAGE MICROSOFT BUSINESS SOLUTIONS OTHERS TOTAL MARKET SHARE 2002 Market share 25. Its software development practices are ISO 9001 Certified and Development Centers assessed at SEI CMMI-SW Level 5. Its customers include Citigroup. Conair. Europe. In the Factory Automation space. Schlumberger.9% 7. representing 70 industry segments. Bemis and more.6% 4. Intel. Tropical Cheese. Ramco has a global presence with 16 offices in 9 countries across USA. Revertex. It (Source: IJEIS International Journal) illustrates the “top 5” ERP vendors. CavinKare. Ramco provides Engineering Process Optimization solutions to the Cement. We find that ERP is an institutionalized component of enterprise infrastructure. Amara Raja Batteries. Madras Cements.700 professionals serving in 1.1% 100% 2001 Market share 24. Middle East and South Africa. eThekwini. ICICI. Savage Arms. Ericsson. Essex Crane. Radisson Edwardian. PHI. To conclude the discussion on enterprise systems we believe that ERP has evolved from being a state of the art technology towards being a state of practice. 2001 and 2002 market shares and we see one dominant actor. Thus we have got some new insight into the ERP market.98 Enterprise Resource Planning Human Resources Management. The implications to research are that the time is now ripe to rethink the concept of enterprise systems. MMTC.7% 7. Rakbank.000 customer locations across 40 countries.5% 5. MJB Wood. Asia-Pacific. AEC. Preferred Meals. Seagate. Ramco provides Converged Networking Solutions. GOAP.1% 7. Kardex. Swatch Group. Columbia Helicopters. The new package offered by the major vendors has been extended by adoption of the e-business technologies into the ERP systems.3% 100% . It is also a Siebel Alliance Partner and provides CRM implementation services to global customers. ICI. Chemical and Power sectors. Agilent. Ramco Systems is listed on BSE. NSE & MSE.9% 51. Information Security Services and total Contact Centre Solutions. Philips.6% 4.4% 4.0% 6. Ramco employs more than 1. Ruag Aerospace. Moser Baer. Reliance Energy.6% 50. a handful of major vendors and a large number of insignificant vendors. SUMMARY Table 1 shows the “Top 5” Worldwide ERP Software Application New License Revenue Market Share Estimates.

ERP Vendors 99 REVIEW QUESTIONS 1. . How does ERP vendor ensure reliability to their product? 6. Carefully examine the features of all the ERP vendors and rank them in the order of their strengths and weaknesses. 3. Project the market share of the top ERP vendors for the next five years. What is the role of an ERP vendor? 2. 5. 4. Suggest a methodology to enable the ERP vendors to measure the performance of their product. 7. What are the reasons for ERP failure? Propose suitable solutions. Name the various products of all the vendors and specify their pros and cons.

• To discuss how the various organizations utilizes the ERP solution. complex assemblies. CASE – 1 About the Company ABC Private Limited. Challenges faced by the Company ABC Private Limited provides an outsourcing solution to other manufacturing companies that do not want to tie up assets and overhead in electronics manufacturing.11 ERP Case Studies OBJECTIVE • To enable the readers to visualize ERP implementation. faced a daunting challenge. low volume circuit board assemblies. • To describe the challenges faced by the organization. . • To describe the benefits of ERP. Baan. The purpose of these case studies is to enable the reader to get hands on experience in various ERP projects. In a short period. Note: The case studies presented here are compiled from various sources including the Internet. but still need high quality. EXPECTED OUTCOME The readers will be able to: ü Understand the features of an ERP system. etc to get the details about their ERP product and its implementation in various organizations. an electronics contract manufacturer specializing in high mix. medical instruments. ü Understand how an ERP system can improve the performance of an organization. the ERP Vendors' Websites. and the websites of organizations who implemented the systems. the company needed to launch a brand new production facility and implement a business infrastructure that would support CRM. To meet the demands of manufacturers in the industrial systems. The readers are directed to visit the websites of all the major ERP vendors like SAP. Intuitive.

keep their own costs down and provide flexibility in meeting customer demands. ABC's 90 employees were experiencing growing pains. system scalability and technical support services. to pull it all together. Their decision is based on five major criteria: production and inventory control. functionality. 5. ease of use. Solution ABC Private Limited selected Intuitive ERP by Intuitive Manufacturing Systems for material planning. General ledger. 2. A team consisting of members of executive management and key personnel from materials and IT selected Intuitive ERP after reviewing several other ERP systems. What does a SWOT analysis reveal about ABC Private Limited? Is the company in your opinion in an attractive position and situation? Why or why not? Does the company require ERP software? How did the company select Intuitive ERP? Assess the performance of the company before and after ERP implementation. integration of accounting and manufacturing functions. to manage accounting and manufacturing activities. including integration of forecasts. Integrating accounting and manufacturing was also a high priority for the company. . manufacturing bottlenecks. The inventory and planning functions of Intuitive ERP. The ERP implementation was more focused towards quality and excellence. inventory and production management. shop floor scheduling and general accounting functions. Employee frustration over BOM inaccuracies created a tense working environment. procurement. And. they needed an infrastructure.ERP Case Studies 101 networking systems and telecommunications industries. ABC Private Limited built a state-of-the-art Surface Mount Technology (SMT) production facility in Bothell. ABC Private Limited has provided the agriculture.500 units a year. Washington. detailed MRP analysis. vendor management reporting and inventory control. Outcome of ERP Implementation Intuitive ERP implementation only took about 60 days. missed delivery dates and substandard productivity. material shortages. 3. 4. CASE – 2 About the Company Since 1985. REVIEW QUESTIONS 1. product costing capabilities and management reporting were all major requirements. Manufacturing approximately 2. construction and transportation industries with state-of-the-art trailer equipment. provided the information needed to make the right business decisions quickly and accurately. Those two elements enabled the company to be extremely efficient and provided the ability to respond quickly to customer needs. BOM (Bill of Material) inaccuracies created inventory discrepancies.

Now. improving stress levels throughout the plant. Financial Statements now reflect a more accurate view of sales growth and the resulting bottomline improvement. Intuitive ERP provided ABC’s engineers with the ability to create BOMs quickly and accurately. Inefficient use of machinery caused unnecessary shop floor bottlenecks. “Within a month we could see considerable improvements on shop floor flow.102 Enterprise Resource Planning Challenges faced by the Company ABC Private Limited needed an ERP package that provided accurate real-time information to keep up with the rapid sales growth. Additionally. Resulting financial statements did not accurately reflect a true picture of the company. The fully integrated functionality along with the layout of the user interface assured ABC Private Limited of a quick and easy learning curve. An inaccurately engineered Bill of Materials negatively affected the entire manufacturing process. Outcome of ERP Implementation After implementing Intuitive ERP.” he added. With accurate BOM information available. “All of our customers appreciate the increased reliability of delivery dates. creating consistent delinquent delivery dates. ABC’s management is now able to accurately track the health of their company with Intuitive ERP's reporting and Business Intelligence tools. A diligent reference review provided additional assurance of system reliability and support. dramatic improvements in inventory levels and production on the shop floor were possible. the reliability of delivery dates and the increased accuracy of the financials. With Intuitive ERP in place. Finished goods were not coming off the production line on time. The impact has also been felt at the higher levels of the organization. The production bottlenecks of the past have been eliminated. Delivery promises to our customers were not being met. As the company grew. ABC Private Limited delivery dates are now shorter and more reliable.” said the general manager of the company. ABC's problems were growing with it.” said the general manager of the company. The ease with which queries can be created and converted into Pivot tables or OLAP cubes is also a great feature. It was imperative for ABC Private Limited to implement a system capable of accurate and timely BOM creation. Improved inventory accuracy has resulted in reduced inventory shortages and the elimination of panic purchasing. . This created a tense work environment.” said the general manager of the company. customer complaints of delinquent deliveries have been dramatically reduced. both ABC's customers and employees have felt its impact. without an adequate business system. Implementing Intuitive ERP has helped ABC Private Limited to stabilize their growth. “We were experiencing a lot of frustration prior to implementation. This allowed ABC Private Limited to install an orderly release of work orders to the shop floor. making production more consistent. “Senior management is appreciative of the stability of production. Existing software did not provide ABC's engineers with an efficient method to create Bill of Materials. In addition to the operational benefits. ABC Private Limited enjoyed a reduction in the manufacturing cycle. they can focus on enabling new business and growth strategies. The general manager added that the reports that the system can generate are excellent. Inventory inaccuracy due to bad Bill of Materials led to material shortages and panic purchasing. Solution After three months of system evaluation the selection committee opted for Intuitive’s 100 percent Microsoft Technology-based solution.

they wanted an integrated enterprise resource planning (ERP) solution that would support their growth and address a number of operational problems. Adding more challenges to the project. medical device manufacturer XYZ Private Limited is a provider of Lacrimal Occlusion Therapies to physicians.D. ease of use. A successful ERP implementation. Challenges faced by the Company When XYZ Private Limited decided to replace their accounting and manufacturing systems. but also a plan. the core functionality relating to purchasing. Lacrimal Occlusion is a treatment for Dry Eye Syndrome and related Ocular Surface Diseases. Baan and J. 5.” said a Director of the company.ERP Case Studies 103 REVIEW QUESTIONS 1. “The company is looking at a return on investment of over 200 percent and we are very happy with the choice”. For XYZ Private Limited. After 15 years in business. XYZ Private Limited operates in a heavily regulated industry and has to comply with FDA Quality System Requirements (QSR). and for that matter a successful business. CASE – 3 About the Company Founded in 1984. deliver high quality products and empower employees. 3. 2. on-time delivery was slipping and a general lack of information was negatively impacting financial and operational performance. According to the Director of Operations for XYZ Private Limited. “Cost plus utility equals' value and Intuitive ERP from Intuitive Manufacturing Systems provided the best value by offering the right features at a very affordable price. he added. What is the primary objective of ABC Private Limited? What is the outcome of ERP implementation? What are the challenges faced by the company before ERP implementation? What are the features of ABC's ERP software? Assess the performance of the ERP software chosen by ABC with other ERP software. scalability and underlying technology. inventory was growing faster than revenue. “a vision without a plan is only an illusion. .” Any solution would ultimately have to support three important corporate objectives: the ability to rapidly respond to customer needs. ISO9000 requirements and European EN46001 requirements. materials management and sales operations had the most impact. The systems were judged based on overall functionality. Solution XYZ Private Limited looked at several ERP systems targeted at small and mid-sized manufacturers and systems from industry giants SAP. hospitals and distributors around the world. 4. not only requires a vision. Edwards.

real time connection to the system. they can make better decisions". the company has become very successful and continues to experience at least 10 percent revenue growth year to year. First. It was moving to a new facility and everything needed to come together at the right time without impacting revenue. After ERP implementation. financial performance and quality. 3. They included metrics for inventory. says a Director of the company. supplier performance. 4. Intuitive offers an option that gives users a direct. In the end." said the President of XYZ Private Limited. Significant improvements were realized in all areas. on-time supplier delivery performance has improved from 30 percent to more than 80 percent in less than a year. 2. "As the company grows. Total inventory. not just the management staff. How did the company choose Intuitive as their ERP software? . According to a Director of this company. On-time delivery improved from 75 to 99 percent. we see more and more benefits from the integrated solution Intuitive provides. implementation and maintenance of the system had to fit an environment with very little IT resources available. "We needed a system that would allow us to work any time of day. REVIEW QUESTIONS 1.104 Enterprise Resource Planning Outcome of ERP Implementation More than ten Key Performance Indicators (KPIs) were established to measure improvements. literally no modifications were required. Intuitive ERP implementation actually took only 45 days and required only one day of consulting services. 5. Implementation was dominated by two main factors. the company had a very aggressive timeline. from anywhere in the world. has declined from 90 days on-hand to 15 days on-hand. integrating sales forecasts and managing inventory in multiple locations became critical. The ERP implementation has given them much better visibility and allowed the suppliers to improve their own scheduling. Second. With in-house and external operations. XYZ Private Limited has geographically diverse operations and remote access has become an important part of the business. The management team can track and analyze the overall company performance from any country in the world. "If employees have access to the information." said a Director of the XYZ Private Limited. added the executive director of the company. including external locations. Evaluate the growth of the company after ERP implementation. All employees were asked to keep track of procedures and reports from their old system in case the new system did not meet all their needs. XYZ Private Limited believes strongly in empowering its employees. What are the critical success factors of ERP implementation? What is the feedback given by the director and the president of XYZ Private Limited? Propose suitable metrics for measuring the performance of ERP implementation. Financial and operational information is shared with all employees. Another area experiencing improvement has been supplier performance. Sales executives can review their account histories and have the ability to enter orders remotely. delivery. Unique for a company of its size.

and rework write-offs as well. Prior to implementation. The impact of the . accounting accuracy was poor and inventory turnover was exceedingly slow. Intuitive ERP's MRP and bill of material capabilities have provided material planners with a better view of requirements and more control over inventory management for the company's 4.500 bills of material. After implementing Intuitive ERP. the aerospace industry is also now able to offer just-in-time delivery of product without excessive inventory levels. Additionally. productivity was frequently impacted by stock outs on the production floor. allowing the company to improve cash management. Short implementation time was one key factor in the decision to go with Intuitive ERP. reduce scrap. Outcome of ERP Implementation One measure of the impact Intuitive ERP has had on the aerospace industry is the number of inventory turns they experience. Challenges faced by the Company As the aerospace industry began to experience rapid growth it realized they were facing a number of problems. The Location/Lot tracking option is critical to the aerospace industry. When the manual inventory management process and stand-alone accounting system failed to keep up with the company's growth. Online traceability proved to be beneficial recently when one of its customers received some products that failed upon assembly. the industry decided it was time to implement an integrated enterprise resource planning application.000 parts and 2. inventory turned over about twice per year. customized to specific job functions. with unique selection and sorting criteria. With the improved inventory management. The ERP team completed the system implementation in less than one month with only two days of consultation from an Intuitive implementation service provider (ISP). They had no clear view of product costs. It needed a system that could survive and thrive in an environment regulated by the Federal Aviation Administration (FAA). Intuitive ERP's use of 100 percent Microsoft technology provides users with a familiar interface and user-friendly architecture that can be easily managed and modified without specialized IT resources. the industry has been able to create additional reports easily. They selected Intuitive ERP from Intuitive Manufacturing Systems. Here even more impressive is the fact that within a month after implementation the employees were comfortably using the system without any major training. While standard Intuitive ERP reports satisfy most of their needs. Ease of customization and access to data were also issues for the team at the aerospace industry. Work order functionality and shop floor scheduling allow production controllers to better manage labor and equipment capacity and also react to changing customer needs without disrupting the entire factory. The aerospace industry was able to quickly trace the original lot and take corrective action to prevent the problem from recurring. as well as the optional modules for Shop Floor Control and Location/Lot Tracking for 25 concurrent users. inventory turns increased to six times per year.ERP Case Studies 105 CASE – 4 About the Company An aerospace industry decided to go for an ERP system. including general ledger material planning and procurement capabilities. Solution The aerospace industry moved forward implementing the core modules of Intuitive ERP. They found the root cause was a bad batch of adhesive that had degraded over time.

With customer satisfaction at risk and internal morale slipping. XYZ Private Limited has firmly established a reputation for high quality.” an employee said. “From an accounting point of view. Instead of enabling operational improvements. 2. 4. high performance products. we have been able to dramatically reduce the time it takes to close the books each month. “What used to be a painful three week ordeal is now easily completed in less than one week. REVIEW QUESTIONS 1. the management team at XYZ decided it was time to act. Prior to implementation. robotics. Since Intuitive ERP was implemented. XYZ's existing systems were impeding progress. aeronautics and biomechanics.” The accounting group also found that the financial drill down capabilities of Intuitive ERP provided a way to easily perform financial analysis and resolve issues. 3. . for example. Existing technology was causing missed deliveries and creating a high number of back orders. Does the aerospace industry really require an ERP system? What are the factors influencing the ERP software selection process? What is the impact created by ERP implementation in the aerospace industry? What sort of training is required to the employees of the aerospace industry to use ERP software? 5. During that time. With almost twenty years in business. Solution The decision to invest in a new system was not undertaken lightly.106 Enterprise Resource Planning implementation of Intuitive ERP was felt almost immediately. CASE – 5 About the Company XYZ private limited is a leading supplier of 3D/6D measurement products used in industries as diverse as image guided surgery. The company employs 90 and generates over $20 million in annual revenue. In accounting. it was nearly impossible to dig into the details of issues. the aerospace industry's sales revenues have doubled. operational benefits were apparent within the first month. List the features of Intuitive ERP in the context of the aerospace industry. Challenges faced by the Company XYZ Private Limited faced a challenge when rapid growth and aging technology threatened to stand in the way of company goals. production and administrative efficiencies have enabled the aerospace industry to maintain the same level of staffing–effectively doubling the sales per employee.

that number increased to twenty-five. XYZ Private Limited has experienced continued success in improving inventory management and increasing revenue. With the implementation of the Intuitive ERP. As the company grew. How did the production manager rate the Intuitive ERP software? 2. “The system is easy to modify and customize to make it work for your business. the company has found a way to increase the value they provide to customers while also improving financial performance. more sophisticated and accurate planning had been critical. Since implementation. Intuitive ERP's “ability to customize easily” made the implementation process go smoothly. and doing so without a lot of training. improving operations is more than just a way to reduce expenses. allowed the company to expand without worrying about putting constraints on their business infrastructure.” Ease of use and system scalability have been important in utilizing Intuitive ERP to improve operations. With some customers expecting shipment in early nine months and others expecting shipment in as little as nine days or even less. When the system was first implemented.” said the Production Manager. it was important that modification and customization could be done with limited resources. what we were buying and what was needed.” said the Production Manager. the company struggled to achieve even two inventory turns per year.ERP Case Studies 107 The company is a past winner of the Canada Export Award and the Global Traders Award. “Intuitive ERP was instrumental in assisting XYZ Private Limited to achieve the growth that we have seen over the past three years.” added the Production Manager. XYZ's revenue has increased from $10 million to over $20 million with little increase in inventory value. “We were able to better understand what was in stock. only five user seats were required. XYZ Private Limited was interested in upgrading their operations by leveraging Intuitive ERP's standard functionality but also had some unique conditions that required modification of the system. XYZ's selection of Intuitive ERP™ from Intuitive Manufacturing Systems was based on factors that directly supported corporate objectives. Prior to implementation. For XYZ Private Limited. He also added that “Improved planning has made a huge difference in improving delivery. With a relatively small IT staff. The addition of better planning capabilities had an immediate impact on labor and materials. The Material Requirements Planning and Forecasting capabilities of Intuitive ERP have allowed XYZ Private Limited to better service their customers. REVIEW QUESTIONS 1. Improvements in production control and inventory management have had a direct impact on customer delivery. Significantly increasing the number of users. . an improvement of almost 80 percent. Equally important was the system's level of ease of implementation and ease of use. Intuitive ERP provided a level of system functionality that could immediately improve inventory management and the expandability and flexibility to support XYZ’s growth. Outcome of ERP Implementation After implementing Intuitive ERP. According to the Systems Administrator for XYZ Private Limited. the company has reduced their order cycle time for their flagship product from four months to four weeks. Apply cost-benefit analysis to the ERP implementation of XYZ Private Limited. In addition. Inventory turns have now more than doubled and expectations are that the company will better that in the near future.

Using the Microsoft SQL Server as the database engine delivered the speed and robustness necessary for their mission-critical applications.” Outcome of ERP Implementation The company started module-wise implementation of Intuitive ERP in four phases. But with well as prepare them for ISO certification. their manual systems started breaking down. which were completed in just four months. 3) excellent support. “The learning curve for Intuitive ERP is reduced to well below that of other manufacturing . What are the various modules used in the ERP implementation of XYZ? 4. “We transformed the company from a practically nil computer culture to a total computerized system. and maintain. the United Kingdom and the United States. customize.108 Enterprise Resource Planning 3. interface. and top management had so little visibility to the manufacturing process they couldn't set pricing that was competitive. Discuss the pros and cons of ERP implementation in XYZ Private Limited from the view point of the employees. 2) an easy-to-use graphical interface. They had no centralized purchasing department or means of sharing information. CASE . Solution The company commissioned a comprehensive survey of the ERP market and Intuitive ERP software was selected for four major reasons: 1) a 100 percent Microsoft platform. It can be integrated seamlessly into any manufacturing environment and has a good scheduling flexibility and versatile options.” said the General Manager of the company. The consultants that evaluated Intuitive ERP concluded: “Intuitive ERP is easy to install. Hence the company decided to go for an ERP system. Germany. Delivery dates were missed because of lack of inventory control.from purchasing and inventory to manufacturing and planning . Challenges faced by the Company The Company needed a complete information system built around an ERP solution that would help manage every aspect of their manufacturing process . What are the challenges and opportunities of XYZ Private Limited? How did they manage them using ERP software? 5. It also has a definite ISO 9000 facilitation orientation. including Brazil. Intuitive ERP's graphical interface and integration with Microsoft Office and Access made it easy for staff-who prior to this had virtually no computer experience–to learn and use the new system.6 About the Company A Company has been exporting machines all around the world. So groups were paying different amounts for the same part from the same vendor. and 4) scalable open-architecture features that permitted the addition of users at any time.

he added. information on non-moving or slow-moving items and stock values was unavailable. producing parts to individual customer specifications and prints. sub-assemblies and final assemblies. • Planning has improved. etc. it was difficult to coordinate customer requirements and design changes with production and assembly functions to meet the manufacturing schedule. . With revenues exceeding $10 million. • Prior to Intuitive ERP. • Managers now have the most current inventory and costing models available to them at all times. With the new tools in place. 2. there is visibility of the cost of every purchased item. This has resulted in better price negotiation with suppliers resulting in a 20 percent price reduction. They are also able to monitor online the status of work orders for components.ERP Case Studies 109 systems because of graphical and interactive flow charts and complete context-sensitive online help”. online work order status monitoring. 3. the manufacturing inventory has been reduced by 20 percent. With the previous manual planning system. there had been virtually no inventory management. and so they can set competitive pricing that ensures profitability as well. online labor utilization. Implementing Intuitive ERP has led to the following advantages: • Intuitive ERP provides accurate data for making manufacturing decisions through reports that include online machine utilization. 5. 4. REVIEW QUESTIONS 1. How was the ERP software selection process carried out? What are the advantages the company enjoys due to ERP implementation? What were the problems faced by the company before ERP implementation? How did the consultants rate the Intuitive ERP software? What are the technical requirements in ERP implementation? CASE – 7 About the Company A leading producer of copper components and brazed copper assemblies for use in the air conditioning and refrigeration industries decided to go for ERP implementation. • With reports such as Purchase Price Variance. the company is a make-to-order shop with more than 150 employees. Now there is seamless coordination between all departments.

After a visit to Intuitive Manufacturing Systems. Within the first year of implementing Intuitive ERP. the management realized implementation and training would be quick and straightforward. Intuitive ERP gave the company the ability to view their shop floor load at any given point in time and allowed them to schedule hours by department. It was imperative for the company to view their shop floor load at any point in time. As a result. Additionally. Solution The management of the company contemplated rewriting their existing system in-house while they searched for other system solutions. The system previously used by the company did not assist managers in the preparation of consistent reports for scheduling purposes. The company was also moving their equipment away from manual operation toward automation and they required a system that could schedule efficiently and had machine loading capability. "To date. the company experienced a dramatic drop in overtime. rather than the entire shop. The company considers the Intuitive ERP a perfect fit to their business. the company faced a problem familiar to many manufacturers– scheduling. It is also a very flexible system." said the General Manager of the company. The company finds the ERP implementation to be a thorough system that considers the various ways of going about its business. the company was losing business. "New versions are always faster and more feature-rich. Define the business process of the company. and the ability to make modifications on their own convinced the management that Intuitive ERP would have a substantially lower total cost of ownership than any other system. Intuitive ERP enabled the company to prepare better reports. allowing the company to customize without compromising data. Outcome of ERP Implementation The company believed it was important for their own growth to be involved with the technology from the beginning. It is a dynamic system that can expand as the company grows. These factors. REVIEW QUESTIONS 1. coupled with the price. Because the Microsoft platform was already in place at the company and employees were accustomed to the interface. there has not been an upgrade made available that we have not considered taking the time to install as soon as we could. Customers were demanding shorter lead times and the company's existing ERP system was not capable of providing the information necessary to respond quickly. What made the company to go for an ERP system? .110 Enterprise Resource Planning Challenges faced by the Company Prior to implementing Intuitive ERP. Then they learned about Intuitive ERP from Intuitive Manufacturing Systems–an ERP software system that offered a 100 percent Microsoft solution. ease of maintenance and administration. the company determined the system functionality of Intuitive ERP would be a perfect fit for their business and licensed the Intuitive ERP base system with the Location/Lot Tracking and Shop Floor Control (SFC) options for 25 concurrent users. 2." he added. allowing them to determine where potential problems existed and to create corrective solutions on the production line before slowdowns occurred. whereas Intuitive ERP supports report consistency throughout the system.

more importantly. how will you carry out the ERP software selection process? 4. we needed to upgrade our business systems. labor and curing time. Work instructions are more clearly communicated. “We knew that if we were going to survive as a company. hand-made. but also a much better job of setting prices. The right kind of clay. If you happen to be a consultant. strong shop floor control features and the ability to easily make modifications. “Intuitive ERP enabled us to identify issues and make better product decisions. the integration of accounting and manufacturing information provided the company with new insights into product line profitability. salt-glaze pottery and tiles for commercial and residential use. Solution After mapping out company objectives and analyzing several ERP solutions.” said the President of the company. Intuitive ERP product costing capabilities have allowed the company to distribute costs more accurately across different products. CASE – 8 About the Company A company produces high quality. The cumulative impact of Intuitive ERP has been significant. The company decided to have an ERP system and purchased the Intuitive ERP software. experienced craftsmanship and the appropriate time in the kiln contribute to the end product–and the end cost. the accounting and manufacturing systems they had in place could not support their needs. the perfect glaze.” the general manager of the company added. the management team found it difficult to get the information they needed to make good business decisions. the company selected Intuitive ERP from Intuitive Manufacturing Systems.” said the President of the company. This not only allows the company to do a better job of product costing. 5. Manufacturing pottery and tiles is a delicate balance of materials. “The system is very straightforward and the data is now very accurate. The main criteria for selecting Intuitive ERP included integrated accounting and manufacturing functionality. List the various functions of the ERP system of the company. product costing capabilities. Outcome of ERP Implementation Prior to implementation of Intuitive ERP. Determining accurate costing had been a serious problem for the company prior to Intuitive ERP.ERP Case Studies 111 3. Challenges faced by the Company As the company grew. With Intuitive ERP. Perform the cost-benefit analysis and present your report to the company to enable it assess its performance. scheduling is more accurate. rescheduling can be done without . Company managers were able to see that one of their product lines was not pulling its weight and they made a decision to outsource that line so they could expand in other areas. and. There was no real integration of manufacturing data and accounting information.

Intuitive ERP Material Planning and Shop Floor Control capabilities have also had a major impact on quality and productivity at the company. One report provided by the ERP software provided information on production efficiency that gave the company greater insight into daily operations and helped identify opportunities for improvement. how will you carry out the ERP software selection process? Perform the cost-benefit analysis and present your report to the company to enable it assess its performance. 3. Data integrity was compromised due to a lack of system integration. Hence the company decided to have ERP software to improve their business. Now. List the various functions of the ERP system of the company. 2. and detailed routings have provided structure and discipline while adding flexibility at the same time. A second benefit is that fewer errors are made in the production of pottery and tiles and custom projects are handled with ease. The inconsistent data integrity created excess inventories. multi-level bills of material. 5. The result is two-fold. production delays and customer shipping delays. information is entered once and it is available throughout the system. 4. Define the business process of the company. What made the company to go for an ERP system? If you happen to be a consultant. It was also imperative to include a product configurator to ensure accurate production builds. This allowed the company to free a full-time employee for other duties. Challenges faced by the Company The company needed a fully integrated ERP package that would provide accurate real-time information and alleviate duplicate data entry.112 Enterprise Resource Planning completely disrupting the whole factory. Even more important for the company is the ability to make minor modifications without outside resources. The company's old process for manufacturing frequently required that data be entered two or three times. Developed solely with 100 percent Microsoft technology. Intuitive ERP is easy to implement and requires very little system administration. The lack of accurate builds resulted in the company having to give away . CASE – 9 About the Company Manufacturing approximately 800 make-to-order units a year. One of the reasons the company selected Intuitive ERP was the underlying technology. Intuitive's work order process. a company with 200 employees was conducting duplicate data entry to standalone sales order. MRP and financial systems. REVIEW QUESTIONS 1.

Fewer order entry errors have been a result of orders entered only once through the Advanced Configurator. From eliminating data entry to implementing configuration rules. the company has completely eliminated the duplicate entry of data. again resulting in inconsistent data integrity. How does the ERP software benefit the company? Is the ERP software meant for reducing clerical jobs and automating the business process? How did the company improve its financial position after the ERP implementation? Perform the feasibility analysis for deploying the ERP software and present your report. Materials Management section. Resulting inventory errors caused delays in both production and shipment to customers. 5. . an integrated enterprise system has provided the company with the opportunity to restructure its business for optimum efficiency and growth opportunity.” said the Manager. It is important to note that the company now has the ability to pull out any information needed. The visibility of information gives the company the ability to streamline their business processes.000. from one source. 3. REVIEW QUESTIONS 1. Intuitive ERP's ability to handle multi-currency and the flexibility of costing were also key considerations. “It allows us to set the rules necessary to make sure a configured unit can actually be built. The existing financials did not integrate with the other existing systems. The company expects to further optimize its BOMs in the future. which reduced 26. Outcome of ERP Implementation Intuitive’s Advanced Configurator provided the company the ability to create accurate bills of material. The loss of data integrity between the incompatible existing MRP system and existing Sales Order Entry system adversely affected purchasing. Develop a business model to reflect the business process of the company.000 lines of BOM down to 13. 2. By working with their local Intuitive representative. The integration of information has also resulted in operational benefits across the organization. the company's selection committee opted for the 100 percent Microsoft solution of Intuitive ERP. With the Intuitive ERP system integrating their sales. Additionally. The Advanced Configurator has also helped the company streamline production. 4. Intuitive ERP met 80 percent of the company's requirements out of the box with the lowest cost of ownership. system modifications were easily made to tailor the system to the company's particular requirements. finance.ERP Case Studies 113 options installed that were not selected. materials and production information. Solution After six months of system evaluation. for decision making. The fully integrated functionality along with Intuitive ERP's robust Advanced Configurator assured the company the ability to produce units accurately. of the company.

increase customer satisfaction. and is experiencing faster inventory turns. Implementing Intuitive ERP enabled the company to make a dramatic change to their business model. Solution After considering several mid-range ERP packages.85 million in revenue. and the functionality to enable a turnkey business strategy. they began entering one million dollars' worth of turnkey orders. after implementing a new business model and the Intuitive ERP system. Implementing Intuitive ERP was a significant step in the company's strategy to modernize their operations. With the infrastructure in place to keep up with new demand. the company has been able to reduce costs. and even send suppliers forecasts out to a year. implementing Intuitive ERP was more than just a way to increase revenue. the company's revenue exploded 471 percent to $12.89 million. planning and procurement features. up from thirty percent beforehand. . the company selected Intuitive ERP from Intuitive Manufacturing Systems. The company was also pleased with how smoothly Intuitive ERP data could be exported to Microsoft Excel or Word. instead of relying on customers to supply materials (as they had done in the past). They implemented Intuitive's Shop Floor Control module and now utilize bar coding in their operations. however. but their existing systems weren't expandable or comprehensive enough to support new business strategies and as a result the company couldn't keep up with growing demand. And. the company's revenue had been growing 30 to 40 percent a year. shorten cycle times. They have dramatically reduced lead times. Intuitive ERP's one hundred percent Microsoft technology infrastructure initially prompted company's decision to implement Intuitive ERP. The company can now use multi-level bills of material. in addition to assembling the products. The benefits of Intuitive ERP's Microsoftstandardized architecture include an extremely flexible and easy to use interface and integration with other Microsoft programs. They can now forecast demand to suppliers. For the company. In January of 2001. the company began to procure and manage their own materials with the planning and purchasing features of Intuitive ERP. Also important to the company was Intuitive ERP's high level of configurability and ease of modification. In addition to the operational and procedural benefits provided by Intuitive ERP.114 Enterprise Resource Planning CASE – 10 About the Company An electronics manufacturer earned $2. These kinds of benefits have resulted in increased profitability and have allowed the company to provide more competitive services to their customers. The company decided to update their technology using Intuitive ERP software. Just one year later. the most significant measure of the company's success with their new system was the quadrupling of the company's revenue in just one year. Intuitive ERP provided new ways for the company to improve their business processes. Challenges faced by the Company Before that 10 million-dollar increase in revenue. something they weren't able to do before. and increased on-time delivery to ninety percent. Outcome of ERP Implementation Other contributing factors included Intuitive's low total cost of ownership. These factors ensure efficient implementation and on-going management of the company's Intuitive ERP system.

Outcome of ERP Implementation CASE – 11 A company dealing with giant food and pharmaceuticals carried out its operations through its branches opened all over the world. What is meant by multi-level bills of material? What is the impact of the new ERP system over the employees of the company? What are the technical requirements for an ERP system? What is the purpose of Intuitive's Shop Floor Control module? Note: Read the following two cases (CASE 11 & CASE 12) carefully. Best known for its chocolate. distribution and accounting applications in the United States.ERP Case Studies 115 REVIEW QUESTIONS 1. Interestingly. the company sells thousands of other items. despite its size. Several years ago. coffee and milk products. Once this project is completed the company will be able to use sales information from retailers on a global basis to measure the effectiveness of its promotional . 1. The lack of standard business processes prevented the company from growing to a large scale though they had better resources. The company is working on extending its enterprise systems to all its facilities to make its 500 facilities act as a single-minded e-business. taking into account the local conditions and business cultures. 3. the company has had no corporate computer center. 4. The company had in 1999 revenues of $50 billion and more than 250. Europe and Canada. 20 main frames and 200 UNIX systems. For each case prepare a comprehensive report in the following format by addressing the review questions. it has had 80 different Information Technology units that run nearly 1000 IBM AS/400 midrange computers. Compare the existing system and proposed ERP system of the company. the company embarked on a program to standardize and coordinate its information systems and business processes. About the Company 2. the company's management has found that allowing these local differences created inefficiencies and extra costs that could prevent the company from competing effectively in E-Commerce. 2. Traditionally this huge firm has allowed each local organization to conduct business as it saw fit. Solution 4. 5. However. enabling observers to describe its infrastructure. The company initially installed ERP (Enterprise Resource Planning) software to integrate material. Challenges faced by the Company 3. most of which are adapted to fit local markets and cultures.000 employees at 500 facilities in 90 countries. To support this decentralized strategy.

supply chain management and business intelligence software. 2. 3. The team members’ roles were also shuffled. how. Training given to the end users was also insufficient. REVIEW QUESTIONS 1. The new system will allow each employee of the company to start work from a personalized webpage linked to his or her job function. What were the problems and issues that caused the company to choose an ERP system? How is the company managed by the top management in your opinion? Do you think it was appropriate for the company to distribute the decision making so widely? Why did the company’s enterprise system project encounter so many problems? What management. The problem started when the stakeholders of the company at abroad failed to realize how much the project would change their business processes. and when those changes would happen. They also agreed to educate those affected so that all employees would know not only what changes were taking place but also why. The lower level workers did not understand how to use the new system and did not understand the changes. Many of the employees’ do not want to learn new processes. As the implementation took place in full swing. accounts payable. sales and distribution modules. The company later contracted with a major ERP vendor to purchase and deploy the new version of their software. The company decided to create up to five computer centers around the world to run the new ERP package containing financial. All of these modules would be installed throughout every division of the company. the team failed to integrate the various modules completely. organization and technology factors contributed to those problems? 5. The employees' job is structured to conform to the "best practices" defined by the ERP software for 300 work roles. The team decided to use the following ERP modules: purchasing.116 Enterprise Resource Planning activities and reduce overstocking caused by letting products sit around too long on grocery shelves. The team also began taking repeated surveys of the effect of the project on employees and how they were dealing with it. production management. but it also will extend the ERP software to the web. what could you have done to implement the system successfully? . planning. financials. and their only hope was to call the project help desk. If you had been director of the company’s enterprise system project. accounts receivable. The ERP team then decided to halt the project. They needed to take care of all the employees' spread all over the world. The new system will not only standardize and coordinate the whole company's information systems and business processes. 4. At first the project team decided not to use supply chain software available with their ERP package because that module was brand new and appeared to be risky. The ERP implementation also suffered a lot due to change management and Y2K problem. Nobody had been prepared for the new ways of doing things. The process of ERP implementation continues. They could not reap the real benefits of an integrated software system.

It now has over 2. No standard or unifying process could be established to provide seamless integration. “It was easy for us to calculate the cost of the spares. purchase and spares) were not integrated with finance. the mechanism to integrate islands of computing was rather crude. there was no means of tracking these projects. The task was not easy. fertilizers. The Spares Sales Division of the company sells spares for steam turbines that are used in power plants of companies. and the systems were paper-based. The second area of concern was systems for tackling projects. While the range of applications covered almost every facet of business operations. the company has emerged as a leader in the Indian market for turbines rated at a capacity of up to 6 MW. In the absence of the engineer who attended to the last problem. This resulted in a great deal of resources being spent on reconciling functional figures. besides. in technical collaboration with the UK.3 version was used for accounting. carbon black. These applications (such as inventory. Since the shelf-life of the machines is highbetween 25-30 years-they need to be supported by new spares and maintained on a regular basis (at least every three months). etc. track projects online and estimate the total project cost.ERP Case Studies 117 CASE – 12 The ABC Private Limited was started in 1933. Tally 6. Other areas such as the number of complaints closed. it was difficult for us to calculate the travel expenses incurred while getting to the customers’ premises. the methodology was paper-based and depended on manual entries. It also makes high-speed gearboxes. Deploying SAP R/3 has enabled ABC Private Limited to control inventory costs. pig iron and sponge iron. sometimes an item was booked twice or it was difficult to trace where material was lying. The company now manufactures turbine models up to 15 MW. follow-up action could not be planned in advance. The cost of the project was the third area that the company wanted to calculate. petrochemicals. solvent extraction. spares changed were not recorded.” For over a decade the company spent money on in-house legacy applications prepared by a software company with Sybase on UNIX. Because of this. Occasionally. Since data was not available online the company could not analyze the root cause of the problem. but because of their longer shelf life (25-30 years). The director of the company explains. nor could the root cause of the problem be traced. These businesses directly depend on keeping their power plants available 24x7x365/ 6. It was necessary to determine how much the company was investing in a given project. An hour of downtime could cost them pots of money. Due to non-integration of data across various functions. With a production capacity of over 300 turbines a year. 80 to 90). In 1964 the company began manufacturing. paper. chemicals. Critical information such as the case history of spares at the customers’ premises was maintained manually. The company had to deal with a large number of items at a time (on an average. production planning. every application system became function-specific.500 installations across a range of industries including sugar. number of open complaints and preventive maintenance schedule were all paper-based. The first area of concern was customer support. Today it is a Rs:750 crore enterprise with diverse business lines. A purchase order is issued against each item/spare bought directly. . steam turbines for mill drives and power generation. the value of spares supplied during warranty conditions. There were three areas where the company wanted to improve.

000 items). scalable and integrated architecture based upon the best practices in the consumer products industry. cost accounting. Duplication of entries has stopped. From the time a tender is floated till the time an item is manufactured. We wanted to avoid unnecessary costs and delays. The modules picked were sales." says the director of the company. The company is now able to get to the root cause of a particular problem. the company can trace where its materials are lying in the factory. software. (iii) In-built features to support optimization of the supply chain. The company invested Rs 2 crore. it took five months for data conversion. the company started noticing the benefits. The company went live with the SAP R/3 on March 2003 after an implementation that took all of two years. this has led to a reduction in inventory cost. "It took time for SAP to understand our requirements and make adjustments accordingly. project systems. each item is tracked online on a project basis. the company is now able to track projects online and avoid duplication of entries in the bill of materials.000-70. financial. It was decided that the company would implement 11 modules taking the Big Bang approach. executive information. Hence SAP was the natural choice since we had plans to invest in a PLM and CRM solution soon after implementing ERP. The director of the company says: "Customization of the package meant shelling out more money and delaying the implementation. hardware. the company took a call on the modules it wanted to implement. i) (ii) Modular. Nearly 120 people from various departments (and their functional heads) were trained on the new SAP environment. thus helping to calculate the total cost of the project. The company took the decision to have an ERP system in place to solve business problems. Baan and Oracle were equally good. Due to a large inventory of bill of materials (60. After the first round of assessment. training and implementation of ERP software SAP. quality management.118 Enterprise Resource Planning In 1999. Baan and Oracle. Since data is now available online. we picked up 11 full-fledged modules to implement in one go instead of implementing fewer modules in phases. The core objective–to improve project systems. and leave behind follow-up instructions that need to be looked at during the next visit. and to analyse project costs. product planning. to identify the root cause of any problem and troubleshoot. including the cost of the package. which we wanted to avoid. project cost analysis and customer support experience–is already being attained. Besides. Three enterprise application software vendors were identified-SAP. The director of the company justifies the delay stating that the company is into the ETO (engineering to order) business. The company is now able to reduce inventory costs." SAP R/3 was identified as the ERP package that could provide the company with the following: ( Ability to provide full visibility of information as against pockets of information. rectify it. and hence decided to take the Big Bang route for implementation. we wished to deal with a company that could provide future upgrades and whose solution gelled with our future plans. workflow and payroll. richness in functionality (including India-specific requirements of excise and taxation). with the help of a software company. ABC Private Limited decided to go in for business process re-engineering to improve its customer support and project systems. The ERP . The implementation began in January 2001. the company was looking for a solution that needed the least amount of customization. customer support. Additionally. distribution. The first step of the implementation was to convert all existing data from the legacy applications into SAP's preferred format. The company no longer needs to overstock spares. Seven months into implementation. and very little has been done to understand its requirements. Although the solutions from SAP. and a growth platform.

10. 6. Perform Cost-Benefit Analysis and SWOT analysis for ABC Private Limited before and after ERP implementation and present a report. REVIEW QUESTIONS 1. How does the director of the company describe the benefits of their ERP implementation? Describe the business processes of the company using a business model. 7. warranty replacements and the like. 8.ERP Case Studies 119 implementation has helped the company to calculate the total lifecycle cost of a project. 5. How did the company choose SAP as their ERP software? What forced the company to go for ERP implementation? What is meant by customization in ERP? What is the significance of the Big Bang route of ERP implementation? How did the company improve its performance after ERP implementation? Describe the hardware and software configurations of the new system. 9. including travel trips to customer premises. 2. . 4. Discuss the existing system of ABC private limited. 3.

12 Business Modeling using UML OBJECTIVE • To briefly state the concept of Business Modeling • To give an overview of the Unified Modeling Language (UML) EXPECTED OUTCOME The readers will be able to: ü Understand the concepts behind a Modeling Language ü Develop Business Modules using the UML ü Execute Enterprise Modeling using the UML Enterprise Resource Planning (ERP) is an integrated system and business modeling forms the basis for packaged software like ERP. Using UML enhances communication between domain experts. Models are helpful to document and comprehend complexity. Business models provide ways of expressing the business processes in terms of business activities and collaborative behaviour. The underlying concept of ERP is based on the holistic nature of the organization. workflow specialists. from unstructured adhoc processes to precisely defined production processes. Whether we sell a Customer Relationship . 12. This requires a systemic perspective where the enterprise is not viewed as the sum of its component elements. thereby reducing the complexity of the business processes. In this chapter. Using the UML to build a Business Model provides ways of expressing the business processes in terms of business activities and collaborative behaviour. but the product of their interactions. software designers and other professionals with different backgrounds. Business processes are defined with varying degrees of flexibility and precision. A systems approach to business decisions is a prerequisite to ERP implementation. It is critical to understand how different decisions affect and influence one another. the business modeling using the Unified Modeling Language (UML) is discussed through UML diagrams. The Unified Modeling Language defines a standard notation for object-oriented systems.1 BUSINESS MODELING Business modeling is a technique to model business processes. The systems that we build are deployed into organisations that already have business processes in place.

A “thing” handled or used by business workers. Modeling the business is not something new. a Billing System. The Unified Modeling Language (UML) has been providing system architects. customer and the business analyst. A sequence of actions a business performs that yields an observable result of value to a particular business actor. By sharing a single notation and a single tool across system and business. 12. A collection of business workers. Reengineering can be executed and the existing system can be enhanced. Business entity Business use case Organizational unit . However. Used to structure the business model by dividing it into smaller parts. Table 1 that follows describes the business modelling notation and the icons used in the UML. or any other. Online Transaction Processing (OLTP) system. The UML is used to model a broad range of systems (software systems. analysed and understood by the ERP development team. relationships and business use case realizations and other organization units. billing a customer. It has the capability to provide all the details to the developer. databases. business analysts and system analysts can better communicate their needs.2 BUSINESS MODELING WITH THE UML One of the primary requirements to build a perfect integrated system like ERP is modeling the business processes and refining it. Otherwise only automation of the existing system will take place and no optimisation could be seen. Once business models are specified.Business Modeling using UML 121 Management System. that system will be used by an individual during the course of a specific task-interacting with a customer. business entities. The UML acts as an interface between the business analyst and the system analyst. looking for articles. with one consistent language for specifying. outside the business that interacts with the business. a Library Information System. Table 1 UML Business Modeling Notation Modeling Icon Name Business actor Business worker UML Definition Someone or something. hardware systems. Only if the existing business process is studied. constructing and documenting software systems. working on system analysis and design. Role or set of roles inside the business. a problem that frequently surfaces is how difficult it can be for business analysts to effectively communicate their findings to the system folks on the team. The business-specific icons help distinguish business elements from system elements in the visual models. Hence the needs for modeling language like UML which has all the features required to model a system. The end users cannot reap the benefits of packaged software. etc. real-time systems and real-world organisations). The UML possesses all the notations required to model a business process. One of the great benefits of business modeling is the possibility of eliciting better system requirements. which is the key to building a system that solves the customers' problems. A business worker interacts with other business workers and manipulates business entities. Online Analytical Processing (OLAP) system. visualising. establishing relationships between the system requirements and the business models enables business change to be incorporated in the definition of the system to build.

Each UML diagram provides a different view of the business as follows: Table 2 Use Case Diagram Activity Diagram Class Diagram Sequence Diagram Describes the business context Describes the business workflows Describes the static structure in the business Describes the interaction between a process step and other business objects 12.3 UML BUSINESS USE CASE The broad requirements of a business process may be elicited and documented with “use cases”.122 Enterprise Resource Planning The value of using the UML to model a business is to reuse an established standard notation (the UML) to provide a common language and potentially a common tool (a UML visual modelling tool) for all modeling needs. An actor. causes the system to perform its functions by means of use cases. The UML provides different diagrams. a business use case should also be directed to satisfy a business purpose. which is usually but not necessarily human. the process is initiated by a sales inquiry from a customer. Use Case models describe what is required of a system by defining how it will be used by external actors. This in turn may result in an order from the customer. In Figure 1. A business use case may be thought of as a collection of related process steps. to which the supplier responds with a quotation. and subsequent delivery and invoicing by the supplier. The process involves two distinct kinds of actors namely a customer and a supplier–who play different roles with respect to the process. Inquire Customer Role Quote Order Supplier Role Deliver Figure 1 Business Use Case . and actors may be thought of as the organisation roles that execute the process steps. Because a business process defines how a purpose is to be achieved.

A class diagram would be used to represent the organisation chart of a business (using organisation units and business workers) . Figure 2 Role Activity Diagram 12.e. Swimlanes show which business workers participate in the realisation of the workflow. Business class diagrams are used for two main purposes: • To show which business workers and business entities are collaborating to implement a business process • To show static structure and relationships among business entities. Each class in this diagram either represents a business worker (employee of the business) or a business entity (a 'thing' that the business manipulates). we note that the activities are assigned to roles that correspond to the actors in the use case diagram and are in swimlanes separated by the dashed vertical line.4 UML BUSINESS ACTIVITY DIAGRAM A Business Activity Diagram provides a graphical way to document a business workflow. A diagram that has activities partitioned between roles in this way is a role activity diagram. Roles and areas of responsibilities are documented as columns (UML swimlanes) in the activity diagram. From figure 2. It provides a way to visualise who interacts with whom and who is responsible for what.Business Modeling using UML 123 12.) to describe who is responsible for doing what in the business. It provides a simple and intuitive illustration of: • What happen in a workflow • What activities can be done in parallel? • Whether there are alternative paths through a workflow? Activity diagrams also describe the roles and areas of responsibilities in the business (i. The purposes of business class diagrams are to document the relationships between business workers and business entities.5 UML CLASS DIAGRAMS Business class diagrams document the internal structure of the business.



What is UML? List the various notations of the UML. defining the business processes. 8. “UML is process oriented and not product oriented. How do UML diagrams help you to identify the business objects of an organization? . What is a Class Diagram? Which of the UML diagrams describes the business processes? Explain. and so on. description of work flow. 4. bringing the development environment and the business environment into the same circle. 5. Is the UML a designing language OR a modeling language? Explain.126 Enterprise Resource Planning maintenance. 2. 7. 3. What is need for business Modeling? Explain the UML Sequence diagram for an Inventory Management system. fixing the roles of various actors. 11. REVIEW QUESTIONS 1. Is Enterprise Modeling same as Business Modeling? Explain. How will you ensure that all the business processes of an organization are included in a business modeling? 12. 9. 10. Apply the UML Business Case diagram to the sales and distribution process of an organization and explain its merits.”–Comment. 6.

Acronyms and Abbreviations API ATM ATO BAM BI B2B B2C BOM BPR C2B CTO C2C CAD CAM CASE CBD CBSE CGI CMM CMMI COM COQ CPM CRC CRM CSPM CSQA CSQE Application Programming Interface Automatic Teller Machine Assemble-to-Order Business Activity Monitoring Business Intelligence Business-to-Business Business-to-Consumer Bill of Material Business Process Reengineering Consumer-to-Business Configure-to-Order Consumer-to-Consumer Computer Aided Design Computer Aided Manufacturing Computer Aided Software Engineering Component Based Development Model Component Based Software Engineering Common Gateway Interface Capability Maturity Model Capability Maturity Model Integration Component Object Model Cost of Quality Critical Path Method Class Responsibility Collaborator Modeling Customer Relationship Management Certified Software Project Manager Certified Software Quality Analyst Certified Software Quality Engineer .

128 Enterprise Resource Planning CSTE DBA DBMS DES DDBMS DDL DES DFD DHTML DLL DML DRP DNS DOM DSN DSS ETO EDI EFT EII EFT EIA EIS ERP FTP FTR GIS GUI HTML HTTP IDC IIS ISDN ISO ISTQB IT KM JIT Certified Software Testing Engineer Database Administrator Database Management System Data Encryption Standard Distributed Database Management System Data Definition Language Data Encryption Standard Data Flow Diagram Dynamic Hypertext Markup Language Dynamic Link Library Data Manipulation Language Distribution Requirements Planning Domain Name System Document Object Model Data Source Name Decision Support System Engineer-to-Order Electronic Data Interchange Electronic Funds Transfer Enterprise Information Integration Electronic Funds Transfer Enterprise Integration Application Executive Information System Enterprise Resource Planning File Transfer Protocol Formal Technical Review Geographical Information System Graphical User Interface Hypertext Markup Language Hypertext Transfer Protocol Internet Database Connector Internet Information Server Integrated Service Digital Network International Organization for Standardization International Software Testing Qualifications Board Certified Information Technology Knowledge Management Just-in-Time Delivery .

Acronyms and Abbreviations 129 LAN MTO MPS MTS MIS MODEM MRP MRP-II NSP OLAP OSI PCMM PDT PDM PERT PSP PSPEC QFD QOS RAD RAID RDBMS RIP RIS RMMM SADT SAP SCM SCM SDLC SEI SGML SMS SQA SQL SRS SSL SOAP Local Area Network Make-to-Order Master Production Schedule Make-to-Stock Management Information System Modulator-Demodulator Materials Requirements Planning Manufacturing Resource Planning Network Service Provider On Line Analytical Processing Open System Interconnection People Capability Maturity Model Partition Description Table Product Data Management Program Evaluation and Review Technique Personal Software Process Process Specification Quality Function Deployment Quality of Service Rapid Application Development Redundant Arrays of Inexpensive Disks Relational Database Management System Routing Information Protocol Risk Information Sheet Risk Mitigation Monitoring and Management Plan Structured Analysis and Design Technique Systems. Applications and Products in Data Processing Supply Chain Management Software Configuration Management Software Development Lifecycle Software Engineering Institute Standard Graphic Markup Language Short Messaging Service Software Quality Assurance Structured Query Language Software Requirements Specification Secure Socket Layer Simple Object Access Protocol .

130 Enterprise Resource Planning SSPI STD TCL TCP/IP TQM TSL TSP UDP UML URL VAN VPN VRML WAN WMS WBS WML WMS XML XSL Statistical Software Process Improvement State Transition Diagram Transaction Control Language Transmission Control Protocol/Internet Protocol Total Quality Management Test Script Language Team Software Process User Datagram Protocol Unified Modeling Language Uniform Resource Locator Value Added Network Virtual Private Network Virtual Reality Model Language Wide Area Network Warehouse Management System Work Breakdown Structure Wireless Markup Language Warehouse Management System Extensible Markup Language Extensible Style Language .

They also provide an authentication method to verify that users requesting access to the computer system are really those whom they claim to be. BI applications include decision support systems. packaging or finishing process are planned and stocked in anticipation of an order from the customer. Bill of Material (BOM) – Bill of Material provides a hierarchical classification of the items which form a product. Business-to-Business E-Commerce (B2B) – Business-to-Business EC is an electronic trading where both the buyers and the sellers are organizations. contemporary measures of performance. statistical analysis. all the components used in the assembly. query and reporting. and speed. Business-to-Consumer E-Commerce (B2C) – Business-to-Consumer EC is a situation where a business is selling online to an individual consumer. BAM solutions can be used to alert individuals to changes in the business that may require action. analyzing. Biometric Controls – Biometric controls provide access procedures that match every valid user with a unique user identifier (UID). Business Activity Monitoring (BAM) –It deals with monitoring of all of an enterprise’s business processes and IT activities through the use of specialized software components. and providing access to data to help enterprise users make better business decisions. Assemble-to-Order (ATO) – In Assemble To Order system. Application Programming Interface (API) – The formally defined programming language interface between a program and its user. Business Process Reengineering (BPR) – Business Process Reengineering is defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical. Business models provide ways of expressing the business processes in terms of business activities and collaborative behavior. quality.Glossary Application Consolidation – It deals with merging two or more applications together to reduce the number of applications in an enterprise. Business Intelligence (BI) –Business intelligence is a category of applications and technologies for gathering. such as cost. forecasting and data mining. Business Model –Business modeling is a technique to model business processes. service. storing. online analytical processing. . Browser – It is a client program used to access the web and other internet resources.


Enterprise Resource Planning

Computer-Aided Software Engineering (CASE) – Computer-Aided Software Engineering tools assist software engineering managers and practitioners in every activity associated with the software process. Project managers and software engineers use CASE. Computer-Aided Design (CAD) – The Computer-Aided Design systems are interactive computer graphics systems used for product design. Computer-Aided Manufacturing (CAM) – Computer-Aided Manufacturing software integrates the operations of all computer-controlled machines. Change Management – Change management is one of the core problems of software development. Management of changes to any software document means (1) managing the process of change as well as (2) managing all artifacts of an evolving software system. Closed Loop MRP – It is a Materials Requirements Planning (MRP) process that uses capacity planning and feedback to improve the ability of the production system to complete work as per schedule. Consumer-to-Business (C2B)– This category includes individuals who sell products or services to organizations as well as individuals who seek sellers, interact with them, and conclude a transaction. Consumer-to-Consumer (C2C) – In this category, consumer sells directly to consumers. Examples are individuals selling in classified ads and selling residential property, cars, and so on. Configure-to-Order (CTO) – It is the convergence of Assemble-to-Order and Engineer-to-Order. This will simplify the order entry process and retain Engineer-to-Order easily. Customer Relationship Management (CRM) – The fundamental theory behind CRM is to identify profitable customers, attract and retain them, and maximize their useful life span and the profits from them by establishing and fostering good relationships with them. Customization – Customization is the core process for adjusting the software to fit the organization. Cycle time – Cycle time is the time between receipt of the order and delivery of the product. Data Encryption Standard (DES) – Data encryption standard is a published federal encryption standard created to protect unclassified computer data and communications. Data Dictionary – It is an organized listing of all data elements that are pertinent to the system, with precise, rigorous definitions so that both user and system analyst will have a common understanding of inputs, outputs, components of stores and intermediate calculations. Data Flow Diagram (DFD) – The data flow diagram enables the software engineer to develop models of the information domain and functional domain at the same time. The DFD takes an inputprocess-output view of a system. Data Integration (DI) – The process of combining two or more data sets together for sharing and analysis, in order to support information management inside a business. Data Mart – A database, or collection of databases, designed to help managers make strategic decisions about their business. Whereas a data warehouse combines databases across an entire enterprise, data marts are usually smaller and focus on a particular subject or department. Some data marts, called dependent data marts, are subsets of larger data warehouses. Data Mining – Data mining is the process of efficient discovery of valuable patterns from a large collection of data. It requires intelligent technologies and the willingness to explore the possibility of hidden knowledge that resides in the data.



Data Warehousing – A data warehouse is a subject-oriented, integrated, time-variant, nonvolatile collection of data in support of management decisions. Database – The Collection of data, usually referred to as the database, contains information about one particular enterprise. Decision Support System (DSS) – Decision support system is an information and planning system that provides the ability to interrogate computers on – ad hoc basis, analyze information and predict the impact of decisions before they are made. Distribution Requirements Planning (DRP) – Distribution Requirements Planning provides the capability to model distribution bills, and translates time-phased demand into supply requirements. E-Business – It is the entire transformation of the whole value chain of the business into an electronic form of business. E-Commerce becomes E-Business when a company connects its business system directly to its critical constituents. E-Commerce – Electronic commerce (E–Commerce) means doing business online or selling and buying products and services through web. Electronic Data Interchange (EDI) – Electronic Data Interchange is the electronic communication of transactions between organizations such as orders, confirmations and invoices. Enterprise Information Integration (EII) – An integration technology that pulls and combines data from multiple systems “real time”, without storing it on a disk, creating a “virtual” data warehouse; eliminating the need to store or move data. Electronic Funds Transfer (EFT) – Transferring funds from one account to another through Internet. Engineer-to-Order (ETO) – This process of manufacturing will involve developing any product as per the order at a price. Products are manufactured for each customer in ETO. Enterprise Application Integration (EAI) – Enterprise Application Integration is a pertinent approach to integrating core business processes and data processing in the organization. Enterprise Resource Planning (ERP) – The ERP package aims to integrate all key business activities through improved relationships at all levels to achieve a competitive advantage. ERP systems can be considered as an IT infrastructure with the ability to facilitate the flow of information between all business processes in an organization. Executive Information System (EIS) – An Executive Information System is an information system that consolidates and summarizes the ongoing transactions within an organization. Extranet – An Extranet is an extended intranet, which links the remote intranets, or individuals, over the virtual private network built on the internet. Firewall – Firewalls (software or hardware) protect a server, a network and an individual PC from attack by viruses and hackers. Forward Engineering – It not only recovers design information from existing software, but uses this information to alter or reconstitute the existing system in an effort to improve its overall quality. Gap Analysis – Gap Analysis is the step of negotiation between the company requirements and the functions an ERP package possesses.


Enterprise Resource Planning

Genetic Algorithm – It is referred as the optimization techniques that use processes such as genetic combination, mutation and natural selection in a design based on the concepts of evolution. Grid Computing – Grid computing is a model for allowing companies to use a large number of computing resources on demand, no matter where they are located. Information System – An information system is an open, purposive system that produces information using the ‘input-process-output’ cycle. Intelligent Agent – Intelligent Agents and their subset software agents are computer programs that help the users to conduct routine tasks, search and retrieve information, support decision making and act as domain experts. Internet – A collection of interconnected networks is called an INTERNET. Intranet – It is a corporate LAN (Local Area Network) or WAN (Wide Area Network) that functions with internet technologies behind the company’s firewall. Just-in-Time Delivery (JIT) – It refers to delivering the ordered items at a designated time. This is essential as it will aid the suppliers to go for Just-in-time manufacturing. Knowledge Management (KM) – Knowledge is a derivative of symbols, data, and information. Knowledge management is defined as the management of information and knowledge and their usage in organizational routines/processes within organizations. Lead Time – The elapsed time between placing an order and receiving it is known as the lead-time. Logistics – Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements. Make-to-Order (MTO) – In Make To Order system, the product is developed and delivered only when the customer places an order. Make-to-Stock (MTS) – In Make To Stock, the production process allows the user to complete the products before the receipt of an order from the customer. Management Information System (MIS) – Management information system is a computer–based system that optimizes the collection, collation, transfer and presentation of information throughout an organization through an integrated structure of databases and information flow. Master Production Schedule (MPS) – In a typical manufacturing environment, the Master Production Schedule specifies the quantity of each finished product required in each planning period; it is a set of time-phased requirements for end items. Materials Requirements Planning (MRP) – MRP is a technique for determining the quantity and timing for the acquisition of dependent items needed to satisfy master schedule requirements. Manufacturing Resource Planning (MRP II) – Manufacturing Resource Planning is defined as a method for the effective planning of all resources of a manufacturing company. Microsoft .NET – Microsoft defines .NET as “a set of software technologies designed to connect your world of information, people, systems, and devices”. Network Topology – It is the representation of physical connectivity of the computers.

Everyone involved in the software process participates in risk analysis and management. Software Configuration Management (SCM) – Software Configuration Management is an umbrella activity that is applied throughout the software process. and so on. Reverse engineering tools extract data. coding. At the software level. reengineering focuses on the business process with the intent of making changes to improve competitiveness in some area of business.Glossary 135 On Line Analytical Processing (OLAP) – It is used for applications such as product profitability. SCM is developed to identify change. Quality – Quality is defined in many different ways—excellence. conformance to specifications. Software Quality – Software quality is defined as conformance to explicitly stated functional and performance requirements. and implicit characteristics that are expected of all professionally developed software. Product Data Management (PDM) – This system allows us to create and maintain multiple revisions and versions of any design in the database. value for the price. Risk Management – Risk Analysis and Management are a series of steps that help a software team to understand and manage uncertainty. reengineering examines information systems and applications with intent of restructuring or reconstructing them so that they exhibit higher quality. consisting of control routines for operating a computer and for providing an environment for execution of programs. Software Engineering – It is a discipline that integrates process. development and support of computer software. Reverse Engineering – It is a process of design recovery. methods and tools for the development of computer software. fitness for use. Shopping Cart Technology – It is a virtual shopping cart that enables consumers to collect items as they browse an online sales site until they are ready to purchase the items. testing and maintenance. Simple Object Access Protocol (SOAP) – Simple Object Access Protocol is a protocol defining the way that applications (Web services) communicate with one another over the Internet. explicitly documented development standards. fault tolerance and recoverability Reengineering – The process of Reengineering normally occurs at two levels: At the business level. Software Project Management – It is an umbrella activity within software engineering. activity based costing. Software Quality Assurance (SQA) – Software Quality Assurance is an umbrella activity that is applied throughout the software process. . Reliability – The amount of time that the software is available for use as indicated by the following attributes: maturity. It begins before any technical activity is initiated and continues throughout the definition. Software Process – It is the step-by-step procedure to convert a problem definition into a software product. Operating System – An operating system may be viewed as an organized collection of software extensions of hardware. manpower planning and quality analysis. This procedure is divided into different stages such as requirements engineering design. architectural and procedural design information from an existing system.

services. workflow specialists. integrated management system for achieving customer satisfaction. Unified Modeling Language (UML) – Unified Modeling Language defines a standard notation for object-oriented systems. Total Quality Management (TQM) – Total Quality Management is both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. This gives us the type and the location of the resource. Supply Chain Management (SCM) – Supply chain management is the practice of coordinating the flow of goods. design and code generation. Software Testing – It is a critical element of software quality assurance and represents the ultimate review of specification. Web Engineering – It is the process that is used to create high-quality web application.136 Enterprise Resource Planning to control change. software designers and other professionals with different backgrounds. Uniform Resource Locator (URL) – It is a way of naming resources and is used mainly to link pages in the World Wide Web (WWW). Using UML enhances communication between domain experts. . It is a strategic. Warehouse Management System (WMS) – Warehouse Management System is software that integrates mechanical and human activities with an information system to effectively manage warehouse business processes and direct warehouse activities. Webcasting – It is an internet-based broadcasting of audio and video content. information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. to ensure that change is being properly implemented and to report changes to concerned member in the development team.

2003. Evans.therationaledge. 2005. 8. The Seventh World Multi-Conference on Systemics. Injazz J. Is Supply Chain Management the same as ERP. Enterprise Resource Planning Systems : A Research Agenda. Moller. W. Chen. 2001. Christopher S. 3rd International Conference on the Software Process. 2002. Project Management. 2003 2. A. . Hoffer. Springer. Holland. Introduction to Business Modeling with UML from www. Enterprise Modeling with UML. Nembhard.References 1. Componentizing the Enterprise Application Packages. David Sprott. Pernille Krammergaard & Charles Moller. International Journal of Enterprise Information System (IJEIS). Pan. Ltd. A Stage Maturity Model for Enterprise Resource Planning Systems Use. Customer Perspective of CRM Systems: A Focus Group Study. 2000. D. Software processes are Business Processes Too. Chris Marshall. Orlando. Business Process Management Journal. Communications of ACM. A Research Framework for Studying the Implementation of ERP systems. 7. Girish H. Farrington. Pender. 2001 5. 6. B. UML in an Instant. Proceedings of the 1999 Winter Simulation Conference 4. 2001 12. Experience Paper for the DMDW’2002 Workshop. The DATA BASE for Advances in Information Systems. 1994. Shan L. 15. Planning for ERP: Analysis and Future Trends. An Exploratory Case Study of Enterprise Resource Planning Implementation. WILEY. Majed Al Mashari. Martin Schwartz. 2001 3.Dreamtech India Pvt. Sturrock. 2000. 2002 13. International Journal of Enterprise Information System (IJEIS). Christopher P. 11. Cybernetics and Informatics.. T. Focusing the Customer: A Critical Approach Towards Design and Use of Data Warehousing in Corporate CRM. Proceedings of IRIS 23. Subramanian.. Addison-Wesley. Peter Henderson. Industrial Management & Data Systems.S. and 14. How i2 Integrates Simulation In Supply Chain Optimization. Springer. 2005. U. Thomas A. 10. Jim Ayers. C. H. 9. IEEE Computer Society Press. P. May 27. ERP II extended enterprise resource planning. 19. 29. Building Data Mining Applications for 26.metagroup. www. 2000 25. 27.informatica. 21. Financial Management. P K Jain.138 Enterprise Resource Planning www. Tata McGrawHill. 2001 18. 24. www.bitpipe. M Y . www. Tata McGraw-Hill. www. www.bizentro.

45 Cycle time 3 Data mining 73 Data warehouse 73 Decision Support System (DSS) 69 DHTML 78 Directing 22 Dynamic CRM 75 E-Business 65 e-commerce 14 E-Commerce 31 E-Commerce 65 Economic Order Quantity (EOQ) 11 EDI 78 Effective inventory management 25 EIS 78 Employment 23 Enterprise Resource Planning (ERP) 1 Enterprise Systems (ES) 15 ERM 65 .Index Accounting 19 AGVs 60 AMTS 60 Analytical CRM 70 Approach 36 APS 72 ASRS 60 Assemble-to-Order 10 BAAN 94 BIG BANG 36 BIG BANG APPROACH 36 Bill of Material (BOM) 11 Business 38 Business Activity Diagram 123 Business Integration 2 Business Modeling 120 Business Perspective 37 Business Process Reengineering (BPR) 45 Candidate solutions 32 CHANGE MANAGEMENT 47 Change Management (CM) 37 CHANGE MANAGEMENT ISSUES 47 CLI 84 CNC 60 Collaborative CRM 70 COM 83 Common Intermediate Language (CIL) 84 Common Language Runtime (CLR) 85 compiere 77 COMPIERE 97 Computer-Aided Design (CAD) 60 Computer-Aided Manufacturing (CAM) 60 Controlling 22 Cost Benefit Analysis 32 Cost controlling 20 CRM 68 Customer Relationship Management (CRM) 14 Customization 31 Customization 38.

EDWARDS 94 J2EE 78 Lead-time 3 Linux 51 LOCATION-WISE APPROACH 36 Maintenance 43 Make-to-Order 10 Make-to-Stock 10 Management Information System (MIS) 69 Manufacturing 13 Manufacturing Resource Planning (MRP II) 12 Marketing 6 Master Production Schedule (MPS) 10 Material Requirements Planning (MRP) 10 Materials Management (MM) 23 Memory Management 50 MODULE-WISE APPROACH 36 mySAP CRM 77 .D.140 Enterprise Resource Planning ERP environment 56 ERP IMPLEMENTATION 43 ERP Package 44 ERP software 2 ERP software 30 ERP software selection 30 ERP Software Selection Process 32 ERP systems 6 ERP Team Training 46 Extensible Markup Language (XML) 85 Failure 41 Finance 18 Finance Module 18 financial objective 18 GAP Analysis 45 HR module 21 HRD 21. 82.NET 81. 23 HTTP 86 Human Resource Management (HR) Module 21 Human Resources 6 Information System 6 Information Technology (IT) 65 INTENTIA 96 Intermediate Language (IL) 85 Intranet 70 INTUITIVE 96 Intuitive ERP 87 Inventory 11 Inventory management 25 Investment management 20 IT 60 J. 91 Objectives 25 OLAP 71 Online Analysis Processing (OLAP) 78 Operating System 50 Operational CRM 70 ORACLE 94 Organization 22 Organizational Perspective 36 Packaged Software 6 Peripheral Management 50 Personal Digital Assistant (PDA) 76 Planning 2 Planning 21 Planning and forecasting 20 PLM 15 PRM 78 Process Management 50 Profit maximization 18 Project Management 14 Project Management 89 Quality 4 Quality of Service (QoS) 66 RAMCO 97 .

Index 141 Recruitment 23 Reengineering 45 Requirements 32 Sales and Distribution 14 Sales and Distribution Module 26 SAP 51 Selection Criteria 31 SOAP (Simple Object Access Protocol) 86 Software Reliability 31 SPC 89 Supply Chain 61 Supply Chain Co-ordination 62 Supply Chain Execution 62 Supply Chain Management (SCM) 14 Supply Chain Model 63 Supply Chain Networking 61 Supply Chain Planning 62 SYSPRO CRM 72 System Development Lifecycle (SDLC) 43 Technological Perspective 37 Treasury Management 20 UML Class Diagrams 123 UML Sequence Diagram 124 Unified Modeling Language (UML) 120 Unix 51 Wealth Maximization 18 XML 78 XML 82 .

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