INTRODUCTION TO ENTERPRISE RESOURCE PLANNING

Enterprise resource planning [ERP] is very beneficial to any organization. To cover all areas of enterprise and maintain business properly, ERP packages are invented .the ERP covers techniques and concepts, employed for the integrated management of business as a whole, from the effective use of management resources to improve the efficiency of an enterprise. Previously ERP package were used for Manufacturing industries and covering the functions of planning and managing business, for Ex: sales management, production management, accounting and financial affairs, etc only. But now a-days ERP covers not only manufacturing industries but also diverse type of industries. Expansion, Implementation and Use of ERP has been progressing in global level ERP provides considerable benefits to business organization. WHAT IS ERP ERP is commercial software package promising the seamless integration of all the information following through company. Ex: financial and accounting information, supply chain information, customer information and human resource information.

ELEMENTS OF ERP At a generic level, ERP has some common elements. They are as follows: 1. The centralized database shared by different business

application function. 2. Appropriate interface with customer, employees, suppliers,

managers and shareholders. 3. Transaction processing and reporting layers for the information

system setup in an organization. REASONS FOR THE GROWTH OF ERP There are some reasons for the explosive growth of ERP market and ERP vendors. Following are the benefits which are reasons for the growth of ERP. BENEFITS OF ERP: There are so many benefits which organizations get through the use of ERP. Following are some TENGIBLE benefits of ERP which have participated in its rapid growth. 1. REDUCTION IN LEAD TIME: By the use of ERP, organization can reduce its leading time. 2. REDUCTION IN CYCLE TIME:

We can reduce the cycle time by the use of ERP. 3. ON TIME SHIPMENT: In any business we can make any shipment or consignment on time or before time. 4. INCREASE OF INVENTORY: We can increase the inventory or stock by use of ERP. 5. DOUBLED BUSINESS: Business can be doubled or expand by the use of ERP. 6. ELIMINATES LIMITATIONS: It eliminates limitations in legacy system (century dating, inflexibility to change, etc) by the use of ERP. Apart from the above tangible benefits there are some INTANGIBLE benefits that cause the growth of ERP system. They are as follows: 1. CUSTOMER SATISFACTION: In any business and for any product customer satisfaction is necessary. It is necessary to satisfy the customers need. It is possible with the help of ERP. 2. INCRESE FLEXIBILITY: In most of business Flexibility is quite important. The Manager should also be flexible in their working. This flexibility is increased with the help of IT, by using ERP. 3. BETTER ANALYSIS & PLANNING CAPABILITIES: In any business analysis and planning or decision making are one of the important elements which can be made better and effective with the help of ERP. 4. REDUCTION IN QUALITY COST: The implementation of technology helps a lot in reducing the quality cost.

5. PROPER UTILISATION OF RESOURCES: To utilize all the resources properly we can use IT and ERP. As resources are very important, it helps to make proper utilization of resources. 6. IMPROVED INFORMATION ACCUERACY: The information requires to perform a particular task should always get updated. Lots of improvements are needed in any information. The accurate information can be improved by use of ERP. The latest technologies like Client server architecture, open system technology provides integration capabilities to entire enterprise system. It brings Supplier and Customer Together, by ensuring smoother flow of information at all levels and other parts of the organization. ERP helps to make the decision at right time and by the right person as the entire organization shows the same information and views. This provides powerful support to the decision making. VARIOUS MODULES OF ERP ERP solutions consist of functions like customer order processing, execution, customer service functions, financial application, manufacturing application, material application, human resource application etc. Various ERP vendors are there in the market providing different modular structures for their ERP solutions. Though the vendors are different there are some common elements in ERP architecture like centralized common database shared by different modules, provides appropriate interface with customers, suppliers, employees, shareholders. Some common modules are enlisted below.
SERVICE SALES AND MARKETING DISTRIBUTION AND TRANSPORTATION

MANUFACTURING MATERIALS FINANCE AND ACCOUNTING QUALITY PLANT MAINTAINANCE HUMAN RESOURCE etc.

THE ADVANTAGE OF ERP The ERP packages promise the seamless integration of all information flowing through an organization; they are becoming the fastest growing softwares in the world. The ERP vendors like SAP, ORACLE, BAAN, QAD, J.D.Edwards and PeopleSoft are in demand for their packages. The main task of the ERP system is to deliver products to the companies to manage their internal and external function efficiency. There are several other advantages of adopting the ERP system; few of them are as follows:
1. IMPROVED EFFICIANCY:

This is achieved by reduction of cycle time, inventory reduction, order fulfillment, improving support to supply chain, management, etc.
2. BUSSINESS INTEGRATION:

ERP packages are integrated. i.e. Exchange of data among related business components is possible. In the large companies timing of system construction, directive differs for each product and department function.
3. BETTER DECISION MAKING:

The decision making procedure become easier because of highly structured programmed process. These processes governs day to day operations and produces reports in structured form, which are further used by top management of

organization to meet with its basic goals and objectives and to monitor the whole organization.
4. QUICK RESPONSE TIME TO CUSTOMERS:

The system is easy to operate so, that not much computer skills are required to handle the operations. Because of its comprehensive nature the system avoids unnecessary duplications and redundancy in data gathering and storage. Thus the response time to customer is reduced.

5. BUSINESS INTEGRATION:

ERP creates the common database across the organization which is used by various departments within the organization. The ERP supports the flow of information within department automatically. This business integration capability makes it easy to group business details in real time and carry out various types of managements decisions in time.
6. ANALYSIS AND PLANNING CAPABILITIES:

Though different types of decisions support systems and simulation function, ERP makes the analysis of data easier. The DSS also supports the middle and top management for tactical and strategic planning.
7. TECHNOLOGY SUPPORT:

Utilization of latest development in information technology is quickly adapted by the ERP packages. Distributes system, open system, client server technology, internet, intranet, E-commerce, CALS (Computer aided Acquisition and Logistic Support) are some examples of flexible environment adopted by ERP. The ERP packages itself design in a way that they can incorporate with latest technology even during the customization, maintenance and expansion phases.

AN OVERVIEW OF ENTERPRISES In enterprises, raw materials moves through a process and transformed into usable products. Similarly, in an information system, data are supplied to a system (input), it is proceed and transformed into information (output). Through the ERP, technology transforms the data that are available in the enterprise in usable information.
ORGANIZATION OR ENTERPRISE:

An organization or enterprise is a group of people working together with a common goal, which has resources at its disposal to achieve that goal. The organization or an enterprise is having some internal and external functions and several information levels according to its function.

The four levels of information system that exist in a business are, operational, transaction processing (lower level), tactical planning and management control (middle level), strategic planning (top level). The organization is divided into different units based on these functional levels, for example, manufacturing or production management, sales and distribution, inventory, billing, collection, paying etc. These functional levels are information generators for the enterprise. These levels are to meet internal reporting. There are several external reporting agencies like central, state and local government stockholders, vendors, advertising, customers; unions provide enterprise the external reporting required.

ERP and Related Technologies ERP systems provide separate integrated business solutions into a single application. However, it has several Limitations like: 1. Without the help of programmer managers can not generate custom reports or queries and cannot obtain the information quickly. i.e. it cannot maintain the competitive advantage. 2. ERP system provides current status only but managers also need the past status to find the trends and the patterns that helps in decision making. 3. The data in the ERP packages are integrated with other enterprises or decision system and does not include external intelligence. To overcome these limitations of ERP packages, there are several technologies introduced. Some of these technologies are: 1. BPR (Business Process Reengineering) 2. MIS (Management Information System) 3. DSS (Decision Support System) 4. EIS (Executive Information System) 5. SCM (Supply Chain Management)

ERP IMPLEMENTATION
ERP implementation project has to go through different phases. One phase will start before the previous is completed, but the logical order is followed. Generally companies go through implementation like, business units, different modules or manufacturing location. Thus at any given time more than one of the phases may be operational. The different phases of implementation of ERP are given below. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Pre-selection screening. Package evaluation. Project planning. Gap analysis. Reengineering. Configuration. Implementation team training. Testing. End user training. Going live. Post implementation.

1. Pre-selection screening:
After deciding to go in for ERP system, organization starts its search for perfect package. As choice is vast with hundreds of ERP vendors in the market, with perfect and ideal business solution, analyzing all solutions is practically difficult. To avoid the confusion in decision, the number of packages that are evaluated is limited to five or less. Analyzing only five out of so many is not time consuming and also practically possible. a) Company should do the pre-evaluable screening to limit packages that are to be evaluated by top level management. b) All packages are not equal i.e. each has some strengths and weakness. The pre-evaluation screening eliminates those packages which are not suitable for companys business process.
c)

the number of

Each ERP package goes out of the experience or opportunity of a group of the people, working in a specific business, who created system that could deal with certain business segments. Some ERP packages are stronger in a certain areas, than others and each one is trying to add functionality in areas they have been lacking e.g. PeopleSoft is in HR and

less so in manufacturing. Been is stronger in manufacturing than in finance.

2. Package Evaluation:
As the package once is selected decides the success or failure of the project and also involves huge investments, package evaluation becomes very important phase of ERP implementation. There should not be any chance of changing or switching from one package to another i.e. do it right the first time will be the motto of implementation throughout each package. In this phase, while making decision, analysis team should keep few things in mind that are, every package is not perfect. The objective of the selection is not, to identify a perfect fit package but a good fit package. Once the package is evaluated, the company needs to develop a selection criteria which permits the evaluation of all the available packages on the same scale.

3. Project Planning Phase:

This phase designs the implementation process. It gives the details of time schedules, deadlines etc. in this phase plan is developed, roles are identified and responsibilities are assigned. This decides when to begin the project, how to do it and when supposed to be completed. Planning phase also supports with control measures to be installed and corrective action to be taken when things are out of the control.

4. Gap Analysis:

This is the most crucial phase for the success of the ERP implementation. In this process company create a complete model where they are and in which direction they want to head in future. This helps to design a model which anticipates and covers any functional gap.

5. Reengineering:
In this phase human factors are taken under consideration. This involves two different connotations, a) First involves the use of ERP to aid in downsizing efforts, i.e. reducing significant number of employees. As process become more automated and efficient, the job responsibilities change according the changes. In this, ERP is treated as, investment as well as cost cutting measure rather than a downsizing tool. Reengineering should not be responsible of downsizing and it should justify by purchase of an ERP package. b) The second use of the reengineering or BPR, in the ERP field refers to an ERP implementation model initially designed and used with success by Big Six consulting firms. The BPR approach implies two separate but closely linked implementations involved on an ERP site that are, a technical implementation and a business process implementation. As ERP market ships to the mid-market and as all implementations are becoming cost sensitive, the BPR approach has come under some real scrutiny.

6. Configuration:

Configuration is the main functional area of ERP implementation configuring a companys system of reveals not only the strengths of companys business process but also its weakness. The organization should know which processes have to change in the ERP implementation. This helps to find out what will work and what do not. The consultant should interact with companys employees who know the actual business process deeply. If large implementation is taking place turn the functional configurations care split into different areas within company. Now a days by creating a custom preconfigured ERP module for particular industry, one can save time and money.

7. Implementation Team Training:

This is the phase where the company trains its employees to implement and later to run the system. Here team is being trained, how to implement system rather than how to use the system. As the organization changes, job responsibilities also changes. After the reconfiguration of the system, it is required to train the people. The ERP vendors and hired consultant will leave after the implementation but to become self-sufficient company has to train its in-house employees. Company should select those employees who have right attitude i.e. people who are willing to change, learn new things and not afraid of technology and good functional knowledge.

8. Testing:

This is the phase where actual system will be tested before successful implementation. The system is configured and come up with extremescenarios, system overloads; multiple used logging in at the same times with the same given user enters invalid date hackers trying to access restricted areas and so on. The test cares must be designed specially to find the weal links and to the system and hugs should be fixed before going live.

9. Going Live:
In this, the system is officially proclaimed operational simultaneously implementation team is testing it and running it successfully for some time. But once the system is live, the old system is removed and the new system is used to carry on the business.

10.

End User Training:

This is the phase where actual user of the system will be given

training on how to use the system. It starts much before the system goes live. The employees who are going to use new system are identified. Bases on their current skills they are divided into groups. Then each group is given trading on the new control measures to be installed and corrective action to be taken when things are out of the control system. This training is very important as success of ERP system is in the hands of end user.

11.

Post Implementation:

Post implementation is very critical. Once implementation is over, the consultants and vendors will leave and to get the full benefits of ERP system there should be enough employees who are trained to handle the problems that might crop-up. There should be people in organization who have technical knowledge to make necessary enhancement to the system whenever required. The system must be upgraded as new technology or version is introduced. In this phase organization could think in terms of incremental benefits of new enhancements. The post-ERP company requires a different set of roles and skills than those with less integrated kinds of system. Everyone who uses the system needs to be trained. It is on-going process as new people are always coming in and new functionality will always be entering in the organization. These activities are successfully handled in the maintenance mode or postimplementation phase.

FURTURE DIRECTION IN ERP

New Market:
1. Supplementing direct sales with reseller channels. 2. Software offerings to appeal on the basis of reduced functionality. 3. Improving the implementation methodology for faster development. 4. Removing the entry price to make it financially viable. 5. Using the platforms such as MS Windows NT.

Faster Implementation Methodologies:

As to implement the whole business it has to go through reengineering process. This may cause the complete change in business model working previously and thus also find it difficult to implement. Sometimes only 1015% of the implementation takes years to complete and by the times implementation cost may increase. To make the implementation of packages more convenient, the ERP vendors are searching for faster implementation methodologies e.g. Accelerated SAP (ASAP) is a program introduced by SAP.