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Keyur D Vasava Pharmacy+MBA Dist.

Narmada
"ACCEPT EVERYTHING ABOUT YOURSELF -- I MEAN EVERYTHING, YOU ARE YOU AND THAT IS THE BEGINNING AND THE END -- NO APOLOGIES, NO REGRETS." ( 14/03/12)

(ERP)-SEM-IV (GTU) Enterprise Resource Planning


Module I!!!

26-03-2012

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1. ERP INTRODUCTION, BENEFITS, ORIGIN


Enterprise resource planning (ERP) systems integrate internal and
external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders.

Characteristics ERP (Enterprise Resource Planning) systems typically include the following characteristics:
An integrated system that operates in real time (or next to real time), without relying on periodic updates. A common database, which supports all applications. A consistent look and feel throughout each module. Installation of the system without elaborate application/data integration by the Information Technology (IT) department

Origin of "ERP"
In 1990 Gartner Group first employed the acronym ERP[ as an extension of material requirements planning (MRP), later planning and computer-integrated manufacturing. Without supplanting these terms,

ERP came to represent a larger whole, reflecting the evolution of application integration beyond manufacturing. Not all ERP packages were developed from a manufacturing core. Vendors variously began with accounting, maintenance and human resources. By the mid1990s ERP systems addressed all core functions of an enterprise. Beyond corporations, governments and nonprofit organizations also began to employ ERP systems.

Components

Transactional database Management portal/dashboard Business intelligence system Customizable reporting External access via technology such as web services Search Document management Messaging/chat/wiki Workflow management

Implementation

Process of Implementing

Step 1. The Strategic Plan Providing the Rationale and Making the Business Case Step 2. Assess the Readiness of the Institution Determining preparedness & Achieving Organizational Understanding

Step 3. Prepare for Vendor Selection -Determining your Software Requirements and Documenting your Business Practices

Step 4. Select your ERP Vendors -Choosing Your Technology Partners

Step 5. Plan the Implementation -Preparing for Success

Step 6. Implement the ERP solutionWorking the plan

Step 7. post implementation -Where are we Now

ERP's scope usually implies significant changes to staff work processes and practices. Generally, three types of services are available to help implement such changesconsulting, customization, and support. Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise consumes about 14 months and requires around 150 consultants. Small projects can require months; multinational and other large implementations can take years. Customization can substantially increase implementation times

Three most common mistakes of ERP Implementation

Focusing on Technology There is no evidence anywhere in the history


of IT that software alone will solve a business problem.

Ignoring the importance of requirement definition many companies


try to adopt ERP system which doesnt fit to business requirement which generally lead to project failure.

Jumping from the Requirement definition to the development


phase Most of projects have to deliver the system in the timeline, thus
they may skip some important implementation steps. For example, Project manager may skip the change manage process which may create users resistance to new system and lead to project failure.

Benefits Benefits & Challenges of ERP:


As the example of Colgate-Palmolive has just shown ERP systems can generate significant business benefits for a company. Many other companies have found major business value in their use of ERP in several basis ways. Quality & Efficiency: ERP creates a framework for integrating and improving a companys internal business processes that results in significant improvements in the quality and efficiency of customer service, production, and distribution. Decreased Costs: Many companies report significant reductions in transaction processing costs and hardware, software, and IT support staff compared to the nonintegrated legacy systems that were replaced by their new ERP systems. Decision Support: ERP provides vital cross-functional information on business performance quickly to managers to significantly improve their ability to make better decisions in a timely manner across the entire business enterprise.

Implementing ERP systems breaks down many former departmental and functional walls of business processes, information systems, and information resources. This results in more flexible organizational structures, managerial responsibilities, and work roles, and therefore a more agile and adaptive organization and workforce that can more easily capitalize on new business opportunities.

Common set of data Help in integrating applications for decision making and planning Allow departments to talk to each other Easy to integrate by using processed built into ERP software A way to force BPR (reengineering) Easy way to solve Y2K problem

Advantages

Better corporation Improve customer goodwill Customer satisfaction Business Integration Flexibility Better Analysis and Planning Capability

Use of Latest Technology

The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization. Tasks that benefit from this integration include: Sales forecasting, which allows inventory optimization Chronological history of every transaction through relevant data compilation in every area of operation. Order tracking, from acceptance through fulfillment Revenue tracking, from invoice through cash receipt Matching purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced) ERP delivers a single database that contains all data for the software modules across an entire company. People in different departments all see the same information and can update it. Computer security is included within an ERP system to protect against both outsider and insider crime ERP systems tie together varied processes using data from across the company. For instance, a typical ERP system manages functions and activities as different as the bills of materials, order entry, purchasing, accounts payable, human resources, and inventory control, to name just a few of the modules. ERP software combined the data of formerly separate applications. This made the worry of keeping information in synchronization across multiple systems disappears. It standardized and reduced the number of software specialties previously required. ERP systems allow companies to replace multiple complex computer applications with a single integrated system. ERP systems replace two or more independent applications and eliminate the need for external interfaces previously required between systems and provide additional benefits that range from standardization and lower maintenance to make reporting capabilities easier.

ERP systems centralize business data, bringing the following benefits:


They eliminate the need to synchronize changes between multiple systemsconsolidation of finance, marketing and sales, human resource, and manufacturing applications They bring legitimacy and transparency in each bit of statistical data. They enable standard product naming/coding. They provide a comprehensive enterprise view (no "islands of information"). They make realtime information available to management anywhere, any time to make proper decisions. They protect sensitive data by consolidating multiple security systems into a single structure

Disadvantages

Customization is problematic. Reengineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities ERP can cost more than less integrated and/or less comprehensive solutions. High switching costs associated with ERP can increase the ERP vendor's negotiating power which can result in higher support, maintenance, and upgrade expenses. Overcoming resistance to sharing sensitive information between departments can divert management attention. Integration of truly independent businesses can create unnecessary dependencies. Extensive training requirements take resources from daily operations. Due to ERP's architecture (OLTP, On-Line Transaction Processing) ERP systems are not well suited for production planning and supply chain management (SCM)

Reasons for the Growth of ERP


Improved business performance. Support business growth requirement To provide flexible, integrated, real-time decision support To eliminate limitation in legacy systems

2. EVOLUTION
Evolution of ERP

AND

STRUCTURE:

The history of ERP can be traced back to the 1960s, when the focus of systems was mainly towards inventory control. Most of the systems software were designed to handle inventory based in traditional inventory concepts. The 1970s witnessed a shift of focus towards MRP (Material Requirement Planning).

This system helped in translating the master production schedule into requirements for individual units like sub assemblies, components and other raw material planning and procurement. This system was involved mainly in planning the raw material requirements.

Then, in 1980s came the concept of MRP-II i.e. the Manufacturing Resource Planning which involved optimizing the entire plant production process. Though MRP-II, in the beginning was an extension of MRP to include shop floor and distribution management activities, during later years, MRP-II was further extended to include areas like Finance, Human Resource, Engineering, Project Management etc.

This gave birth to ERP (Enterprise Resource Planning) which covered the cross-functional coordination and integration in support of the production process. The ERP as compared to its ancestors included the entire range of a companys activities. ERP addresses both system requirements and technology aspects including client/server distributed architecture, RDBMS, object oriented programming etc.

Evaluation Criteria
1. Some important points to be kept in mind while evaluating ERP software include 2. Functional fit with the Companys business processes. 3. Degree of integration between the various components of the ERP system 4. Flexibility and scalability 5. User friendliness 6. Ease of implementation 7. Ability to support multi-site planning and control 8. Technology - client/server capabilities, database independence, security 9. Availability of regular upgrades 10. Amount of customization required 11. Local support infrastructure 12. Reputation and sustainability of the ERP vendor 13. Total costs, including cost of license, training, implementation, maintenance, customization and hardware requirements.

ERP is a method for effective planning and control of all resources needed to
take, make, ship and account for customer orders in a manufacturing, distribution or Service Company.

ERP is a way to integrate the data and processes of an organization into one single system.

ERP systems will have many components including hardware and software, in order to achieve integration

ERP systems use a unified database to store data for various functions found throughout the organization.

An ERP system has a service-oriented architecture with modular hardware and software units or "services" that communicate on a local area network.

The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed

EVOLUTION OF ERP

OR
The Evolution of Information Systems
ERP system was not feasible until the 1990s

Evolved as a result of
Development of hardware and software technology needed to support the system Computers have gotten smaller and faster Moores Law - Performance doubled with each new generation of computers - Every 18-24 months the # of transistors on a computer chip doubled

Proliferation of personal productivity software

Development of a vision of integrated information systems As PCs gained popularity, managers became aware that important business information was being stored on individual PC/s, but there was no easy way to share the information electronically. Servers became more powerful and less expensive and provided scalability Possible to view ERP systems as an extension of MRP II (Manufacturing Resource Planning)

ERP Software Emerges

SAP
Formed in 1972 by five former IBM systems analysts System analyze und Programmentwicklung Systems Analysis and Program Development

R/3
Released in 1992 Designed using an open-architecture Allows all business areas to access the same database, eliminating redundant data and communication s lags

The Significance and Benefits of ERP Software and Systems


Allows easier global integration Barriers of currency exchange rates, language and culture can be bridged automatically Eliminates updating and repairing many separate computer systems Allows management to manage operations, not just monitor them Makes the organization more responsive when change is required

ERP INVOLVES
Project Planning Business & Operational Analysis, including Gap Analysis Business Process Re-engineering (BPR) Installation & Configuration Project Team Training Business Requirements Mapping to Software Module Configuration System Modification and Interfaces Data Conversion Custom Documentation End User Training Conference Room Pilot Acceptance Testing Production Post-Implementation Audit/Support

Reasons for Failure


Cultural Lack of commitment of top management Political Failure to follow proper system selection methodology Lack of sufficient implementation planning/ project Management

3. CONCEPTUAL MODEL

OF

ERP

4. SCENARIO
ERP in India

AND

JUSTIFICATION

OF

ERP

IN

INDIA

Until recently Indian organizations were in a sellers market and operating in a regulated environment. They grew by managing the environment, rather than innovating and improving internal efficiencies. The customer was taken for granted and quality was available only at a premium. With globalization and gradual lifting of regulation, there is a paradigm shift in running the business.

Indian companies now need to increase customer focus, improve speed of delivery, be cost competitive and provide value for money (improved quality at lower price). Indian companies therefore need to implement ERP systems for improving their business processes and becoming more competitive in the global environment. Though ERP implementation is costly and time consuming, it has several benefits which will help recover these costs in the long run.

According to NASSCOM, during the year 1998-99, the Indian ERP market has been estimated at R5200mn compared to Rs2800mn in the previous year i.e. a growth of 85%yoy. The growth in the export market was far higher and more than doubled during the same time period. According to the NASSCOM, by the end of FY2001-02, the total Indian ERP market is expected to multiply by nearly 4 times and reach Rs65bn compared to Rs13.4bn in 1998-99.

5. VARIOUS MODULES

OF

ERP

I.HUMAN RESOURCE MODULE


Human resource management is an essential factor of any successful business.

The various subsystems under HR module are:

Personnel management: (HR master data, Personnel administration, information


systems, recruitment, travel management, benefits administration, salary administration)

Organizational management: (Organizational structure, staffing, schedules, job


descriptions, planning scenarios, personnel cost planning)

Payroll Accounting: (Gross/net accounting, history function dialogue capability, multi


currency capability, international solutions)

Time management: (Shift planning, work schedules, time recording, absence


determination)

Personnel development: Career and succession planning, profile comparisons,


qualifications assessments, additional training determination. Training and event management.)

A.PERSONNEL MANAGEMENT
Personnel management includes numerous software components, which allow you to deal with human resources tasks more quickly, accurately and efficiently. You can use these components not only as part of the company wide ERP solution but also as standalone systems.

i.

Personnel Administration

Information is no longer owned by specific departments, but is shared by multiple entities across an organization. This eliminates duplicate entries reduces the chance for error and improves data accuracy.

ii.

Employee master data

Human resource module has a centralized database with integration to multiple components for processing employee information. The system provides tools to save time and help you tailor the system to fit your needs. The HR module contains features for storing any desired information about your employees. Most systems have the facility to scan the original documents for optical Storage.

The HR Information system displays graphical information such as organization charts or employee data. The system can produce charts and reports-both standard and customer defined.

iii. Recruitment management


This function helps in hiring the right people with the right skills. Reducing the cost of recruiting and hiring new employees is a challenge for the HR professional, who is responsible for placing people in the right job, at the right time, and with the right skills and education. These requirements are fulfilled only through effective automation of the entire recruitment process. The recruitment component is designed to help meet every facet of this challenge like managing open positions/requisitions, applicant screening, selection and hiring, correspondence, reporting and cost analysis.

iv.Travel Management

This module helps you in processing the travel expenses effortlessly, in several currencies and formants. HR Travel management allows you to process a business trip from start to finish-from the initial travel request right through to posting in financial accounting and controlling. This includes any subsequent corrections and all retroactive accounting requirements. Travel management automatically calculates the tax. It automatically processes credit card transactions for a particular trip. You reimburse costs incurred during a trip through a payroll accounting, accounts payable accounting or by data medium exchange. In addition, Travel management provides multiple report formats. You can enter receipts in any currency and then print reports in your native currency.

B.ORGANIZATIONAL MANAGEMENT
This module will assist you in maintaining an accurate picture of your organizations structure, no matter how fast it changes. In many cases, graphical environments make it easy to review any moves, additions, or changes in employee positions.

C. PAYROLL ACCOUNTING
The payroll accounting system can fulfill the payroll requirements and provide you with the flexibility to respond to your changing needs. Payroll accounting should address payroll functions from a global point of view. You should be able to centralize your payroll processing, or decentralize the data based on country or legal entities. Most payroll accounting systems give you the options and capabilities to establish business rules without modifying the existing payroll. Many systems have the features to remind you when transactions are due for processing. With payroll accounting, you have the ability to tailor the system to your organization requirement. With country specific versions of payroll accounting, you can fulfill language, currency and regulatory requirements.

D. TIME MANAGEMENT
It is a flexible tool designed to handle complicated evaluation rules to fulfill regulatory requirements and determine overtime and other time related data. The time evaluation component stores your organizations business rules and automatically validates hours worked and wage types.

Shift Planning
Shift planning module helps you to plan your workforce requirements quickly and accurately. You can plan your shifts according to your requirements taking into consideration all criteria, including absences due to leave or sickness, and employee requests for time off. Shift planning keeps you informed at all times of any staff excess or deficit. Another advantage of shift planning is that it enables you to temporarily assign an employee or employees to another organizational unit where they are needed, allowing for a temporary change of cost centre.

E. PERSONNEL DEVELOPMENT

Effective personnel development planning ensures that the goals of the organization and the goals of the employee are in harmony. The benefits of such planning include improvements in employee performance, employee potential, staff quality, working climate and employee morale.

i.

Training and Event Management

A good HR system will have scheduled seminars, training courses and business events. On completion of a training course, appraisal forms can be automatically issued. Appraisals can be carried out for instructors, attendees, business events and training courses.

II.PLANT MAINTAINENCE MODULE


The achievement of world class performance demands delivery of quality products expeditiously and economically. Organizations simply cannot achieve excellence with unreliable equipment. Machine breakdown and idle time for repair was once an accepted practice. Times have changed. Today when a machine breaks down, it can shut down the production line and the customer's entire plant. The Preventive Maintenance module provides an integrated solution for supporting the operational needs of an enterprise wide system. The Plant maintenance module includes an entire family of product covering all aspects of plant/ equipment maintenance and becomes, integral to the achievement of process improvement. The major subsystems of a maintenance module are : Preventive Maintenance Control. Equipment Tracking. Component Tracking. Plant Maintenance Calibration Tracking. Plant Maintenance Warranty Claims Tracking.

C.QUALITY MANAGEMENT MODULE


The quality management module supports the essential elements of a system. It penetrates all processes within an organization.

The task priorities, according to the quality loop, shift from production (implementation phase) to production planning and product development (planning phase), to procurement and sales and distribution, as well as through the entire usage phase. It handles the traditional tasks of quality planning, quality inspection and quality control. The quality management modules internal functions do not directly interact with the data or processes of other modules.

QUALITY MANAGEMENT MODULE FUNCTIONS:


The quality management module fulfills the following functions:

QUALITY PLANNING: Management of basic data for quality planning and inspection
planning, material specifications, etc.

QUALITY INSPECTION: Trigger inspections, inspection processing with inspection


plan selection and sample calculation etc.

QUALITY CONTROL. Dynamic sample determination on the basis of the quality level
history, quality management information system for inspections and inspection results and quality notifications, etc.

D.MATERIAL MANAGEMENT MODULE:


The material management module optimizes all purchasing processes with workflowdriven processing functions, enables automated supplier evaluation, lowers procurement and warehousing costs with accurate inventory and warehouse management and integrates invoice verification. The main module of material management are as follows: i. Pre- Purchasing Activity. ii. Purchasing. iii. Vendor Evaluation. iv. Inventory management. v. Invoice verification and material inspection.

E.MANUFACTURING MODULE:
A good manufacturing system should provide for multi mode manufacturing applications that encompass full integration of resource management.

These manufacturing applications should allow an easier exchange of information throughout the entire global enterprise, or at a single site within a company. The manufacturing module should enable an enterprise to marry technology with business processes to create an integrated solution. It must provide the information base upon which the entire operation should be run. It should contain the necessary business rules to manage the entire supply chain process whether within a facility, btwn facilities or across the entire supply chain.

Major subsystem of the manufacturing module


Materials and capacity planning Shop floor control Quality management JIT/repetitive manufacturing Cost management Engineering change control Engineering data management Configuration management Tooling Serialization/lot control

6. ADVANTAGE

OF

ERP.

The advantages of ERP


Installing an ERP system has many advantages -both direct and indirect. The direct advantages include improved efficiency, information integration for better decision making, faster response time to customer queries, etc. The indirect benefits include better corporate image, improved customer goodwill, customer satisfaction, and so on.

The following are some of the direct benefits of an ERP system:


1. 2. 3. 4. Business Integration Flexibility Better Analysis and Planning Capabilities Use of Latest Technology.

1. Business Integration: The first and most important advantage lies in the promotion of
integration. The reason why ERP packages are considered to the integrated, is the automatic data updating (automatic data exchange among applications) that is possible among the related business components.

Since conventional company information systems were aimed at the optimization of independent business functions in business units, almost all were weak in terms of the communication and integration of information that transcended the different business functions.

In the case of large companies in particular, the timing of system construction and directives differs for each product and department/ function and sometimes, they are disconnected. For this reason, it has become an obstacle in the shift to new product and business classification.

In the case of ERP packages, the data of related business functions is also automatically updated at the time a transaction occurs. For this reason, one is able to grasp business details in real time, and carry out various types of management decisions in a timely manner, based on that information.

2. Flexibility: The second advantage of the ERP packages is their flexibility. Different
languages, currencies, accounting standards and so on can be covered in one system, and functions that comprehensively manage multiple locations of a company can be packaged and implemented automatically. To cope with company globalization and system unification, this flexibility is essential and one can say that it has major advantages, not simply for development and maintenance, but also in terms of management.

3. Better Analysis and planning Capabilities: Yet another advantage is the boost to the
planning functions. By enabling the comprehensive and unified management of related business and its data, it becomes possible to fully utilize many types of decision support systems and simulation functions. Furthermore, since it becomes possible to carry out, flexible and in real time, the filing and analysis of data from a variety of dimensions, one is able to give the decision-makers the information they want; thus enabling them to make better and informed decisions.

4. Use of Latest Technology: the fourth advantage is the utilization of the latest
development in information Technology (IT). The ERP vendors were quick to realize that in order to grow and to sustain that growth; they had to embrace the latest developments in the field of information technology. Therefore, they quickly adapted their systems to take advantage of the latest technologies like open systems, client/ server technology, Internet/Intranet, CALS (Computer- Aided Acquisition and Logistics Support), electroniccommerce, etc.

It is this quick adaptation to the latest changes in the Information Technology that makes the flexible adaptation to changes in future business environments possible. It is this flexibility that makes the incorporation of the latest technology possible during system customization, maintenance and expansion phases.

Module II!!!
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1. BUSINESS PROCESS RE

ENGINEERING

What is Business Process Reengineering?


An organizational change method used to redesign an organization to drive improved efficiency, effectiveness, and economy.

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.

BPR is not? Automation Downsizing

Outsourcing

Business process re-engineering (BPR) began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. A key stimulus for re-engineering has been the continuing development and deployment of sophisticated information systems and networks. Leading organizations are becoming bolder in using this technology to support innovative business processes, rather than refining current ways of doing work

Business Process Re-engineering (BPR) is basically the fundamental re-thinking and radical
re-design, made to an organization's existing resources. It is more than just business improvising.

Types of Business Process


Business processes are sequences and combinations of business activities. They break into:

External Process: (Operational)


Customer facing processes that deliver products and services of Value to the Customer examples: Get Order Develop Product Fulfill Order Support Product

Management Process:
Processes controlling and coordinating the organization's activities to ensure that business objectives are delivered. o Examples:

Make Strategy Set Direction Manage

Support Processes:
Processes provide infrastructural and other assistance to business processes. o Examples: IT Financial Systems HR Systems

Basic elements of business process:


Motivation to perform Data gathering, processing and storing Information processing Checking, validating and control Decision making Communication

Five Areas of Improvement by BPR


a. Strategy and Business Plans b. Organization Structure c. Business Process d. Business Information Technology e. Organization Culture

BPR Targets
Customer Friendly: One of the main goals of introducing BPR is to get a Competitive Edge and that can only be gained by providing the customers more than what the others in the market are asking for.

Effectiveness: How effective is the product or service that the business or manufacturing company providing the customer? Efficiency: How efficient is the company that is manufacturing the product before introducing it to the market to maximize costs? This is one of the key categories that is believed to be more important than any others.

The Principles of Business Reengineering Process point of View

Externally, focus on end customers and the generation of greater value for customers. Give customers and users a single and accessible point of contact through which they can use whatever resources and people are relevant to their needs and interests. Internally, focus on activities which deliver value to customers. Encourage learning and development by building creative working environments. Concentrate on flows and processes (including communication) through the organization. Remove non-value added activities Undertake parallel activities Speed up response and development times Concentrate on outputs rather than inputs Give priority to the delivery of value rather than the maintenance of management control. Keep the number of core processes to a minimum (approx. 12). They all should be directed to external customers. Ensure that continuous improvement is built into implemented solutions.

Human & Organizational Point View

Network related people and activities. Virtual corporations are becoming commonplace in some business sectors. Implement work teams and case managers extensively throughout the organization. Move discretion and authority closer to the customer,

Re-allocate responsibilities between the organization, its suppliers and customers. Encourage involvement and participation. This requires error-tolerant leadership. Ensure people are equipped, motivated and empowered to do what is expected of them. Where ever possible, people should assume full responsibility for managing and controlling themselves. This requires planning skills. Work should be broadened without sacrificing depth of expertise in strategic areas. Avoid over-sophistication. Don't replace creative thinking with software tools. Build learning, renewal, and short feedback loops into business processes.

Organizational change tools may include:


Activity based costing analysis Base lining and benchmarking studies Business case analysis Functionality assessment Industrial engineering techniques Organization analysis Productivity assessment Workforce analysis

Others, as needed (e.g., human capital tools)

BPR Flowchart

Difference & Similarity between BPR and TQM


Both TQM and BPR share a cross-functional orientation. TQM focuses on incremental change and gradual improvement of work processes and outputs over an open-ended period of time. BPR seeks radical redesign and drastic improvement of processes a bounded time frame.

Process Improvement (TQM) versus Process Innovation (BPR) From Davenport


Process Improvement TQM
Level of Change Starting Point Frequency of Change Time Required Participation Typical Scope Risk Primary Enabler Type of Change Incremental Existing Process One-time/Continuous Short Bottom-Up Narrow, within functions Moderate Statistical Control Cultural

Process Innovation BPR


Radical Clean Slate One-time Long Top-Down Broad, cross-functional High Information Technology Cultural/Structural

Problems
The biggest problem that businesses usually face with BPR is overzealous expectations. BPR is a business tool with a high price and gradual returns. BPR is quoted as having a 30% success rate due to the time and cost involved. BPR has been used by corporations as an excuse for job cuts which has tarnished the name with employees. Specifically, in 1995, Pacific Bell called for 10,000 job cuts, followed by Apple Computer Incorporated. Both used the word reengineering to explain the job cuts. In addition, Michael Hammer and James Champy have admitted that in their book they did not take into account the human constituent of the business process. In late 1996, Dr. Hammer made a confession on the Wall Street Journal where the article read: "Dr. Hammer points out a flaw: He and the other leaders of the $4.7 billion re-engineering industry forgot about people. I wasn't smart enough about that,' he says. I was reflecting my engineering background and was insufficient appreciative of the human dimension. I've learned that's critical. Sometimes BPR implementation was based on generic best practices by a business, not specific to a particular company. One example of using a generic idea to a particular company would be the implementation of a $28,000.00 voicemail system at Winguth, Dohahue and Co., which was later scrapped because of the computer generated voice which sounded a little too cold and clients were tired of going through all the menu prompts to reach the desired person.

BPR is also time sensitive. In the case of Metropolitan Life, some claim that their bankruptcy was caused by their failure to switch from filing cabinets of customer files and records to a database system. With every new process implementation there is a security issue, like in the case of Equifax, where people's identities were stolen. eBay was down for 15-hours because the company decided to test a new system, which was a part of the eBay reengineering process, that they had hoped would help the company be more efficient and also provide quality service to the customers.

The future
Six Sigma and Total Quality Management (TQM) are terms often confused with BPR, and are not its replacements. All are change initiatives, with the main difference being BPR is focused on radical, "big bang" change, and Six Sigma and TQM both focused on continuous, incremental improvement. In order to reanalyze BPR, it is being replaced by Business Process Management (BPM). BPM is presently taking a similar road toward many failures by focusing too heavily on automation and failing to consider people in processes.

Process of BPR Exercise:


o o o Recast people organization into process organization Segregate process by customer type-internal and external Identify process by: o Impact on customer o High decision incidence o High information exchange o High incidence of checks, control and validations o High knowledge base Determine the value to the customer in terms of: o Price/Cost o Quality o Service o Delivery Identify the enablers of redesigning Set a benchmark for achievement Rank the process by: o Feasibility o Cost o Impact on value to the customer Appoint the team for each process Monitor the process of re-engineering

o o o

o o

Reengineering Recommendations
BPR must be accompanied by strategic planning, which must address leveraging IT as a competitive tool. Place the customer at the center of the reengineering effort -- concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service. BPR must be "owned" throughout the organization, not driven by a group of outside consultants. Case teams must be comprised of both managers as well as those will actually do the work. The IT group should be an integral part of the reengineering team from the start. BPR must be sponsored by top executives, who are not about to leave or retire. BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of "limbo". BPR must not ignore corporate culture and must emphasize constant communication and feedback.

Common Problems with BPR


Process under review too big or too small Reliance on existing process too strong The Costs of the Change Seem Too Large BPR Isolated Activity not Aligned to the Business Objectives Allocation of Resources Poor Timing and Planning Keeping the Team and Organization on Target

2. DATA

WARE

HOUSING

AND

DATA MINING

What is Data Warehousing?


A single, complete and consistent store of data obtained from a variety of different sources made available to end users in a they can understand and use in a business context.

A process of transforming data into information and making it available to users in a timely enough manner to make a difference

Evolution
60s: Batch reports hard to find and analyze information inflexible and expensive, reprogram every new request still inflexible, not integrated with desktop tools query tools, spreadsheets, GUIs easier to use, but only access operational databases

70s: Terminal-based DSS and EIS (executive information systems) 80s: Desktop data access and analysis tools

90s: Data warehousing with integrated OLAP engines and tools

Data Warehouse: a centralized data repository which can be queried for business
benefit.

Data Warehousing makes it possible to


extract archived operational data overcome inconsistencies between different legacy data formats integrate data throughout an enterprise, regardless of location, format, or communication requirements incorporate additional or expert information

Very Large Data Bases Terabytes -- 10^12 bytes Wal-Mart -- 24 Terabytes

o o o o

Pet bytes -- 10^15 bytes Geographic Information Systems Exabytes -- 10^18 bytes National Medical Records Zettabytes -- 10^21 bytes Weather images Zottabytes -- 10^24 bytes Intelligence Agency Videos

Data Warehousing -- It is a process


Technique for assembling and managing data from various sources for the purpose of answering business questions. Thus making decisions that were not previous possible A decision support database maintained separately from the organizations operational database

A data warehouse is a
subject-oriented integrated time-varying non-volatile Collection of data that is used primarily in organizational decision making.

Data Warehouse Architecture

Data Warehouse for Decision Support & OLAP


Putting Information technology to help the knowledge worker make faster and better decisions

Which of my customers are most likely to go to the competition? What product promotions have the biggest impact on revenue? How did the share price of software companies correlate with profits over last 10 years?

Decision Support
Used to manage and control business Data is historical or point-in-time Optimized for inquiry rather than update Use of the system is loosely defined and can be ad-hoc Used by managers and end-users to understand the business and make judgements

Application Areas

Why Separate Data Warehouse?


High performance for both systems DBMS tuned for OLTP access methods, indexing, concurrency control, recovery Warehousetuned for OLAP Complex OLAP queries, multidimensional view, consolidation. Different functions and different data Missing data: Decision support requires historical data which operational DBs do not typically maintain Data consolidation: DS requires consolidation (aggregation, summarization) of data from heterogeneous sources

Data quality: different sources typically use inconsistent data representations, codes and formats which have to be reconciled

12 Rules of a Data Warehouse


Data Warehouse and Operational Environments are Separated Data is integrated Contains historical data over a long period of time Data is a snapshot data captured at a given point in time Data is subject-oriented Mainly read-only with periodic batch updates Development Life Cycle has a data driven approach versus the traditional processdriven approach Data contains several levels of detail Environment is characterized by Read-only transactions to very large data sets System that traces data sources, transformations, and storage Metadata is a critical component Source, transformation, integration, storage, relationships, history, etc Contains a chargeback mechanism for resource usage that enforces optimal use of data by end users

Data Warehouse Design Process


Top-down, bottom-up approaches or a combination of both Top-down: Starts with overall design and planning (mature) Bottom-up: Starts with experiments and prototypes (rapid) Waterfall: structured and systematic analysis at each step before proceeding to the next Spiral: rapid generation of increasingly functional systems, short turn around time, quick turn around Typical data warehouse design process Choose a business process to model, e.g., orders, invoices, etc. Choose the grain (atomic level of data) of the business process Choose the dimensions that will apply to each fact table record Choose the measure that will populate each fact table record

From software engineering point of view

Three Data Warehouse Models


Enterprise warehouse collects all of the information about subjects spanning the entire organization a subset of corporate-wide data that is of value to a specific groups of users. Its scope is confined to specific, selected groups, such as marketing data mart Independent vs. dependent (directly from warehouse) data mart Virtual warehouse A set of views over operational databases Only some of the possible summary views may be materialized Data Mart

Data Mining
Generally, data mining (sometimes called data or knowledge discovery) is the process of analyzing data from different perspectives and summarizing it into useful information information that can be used to increase revenue, cuts costs, or both. Data mining software is one of a number of analytical tools for analyzing data. It allows users to analyze data from many different dimensions or angles, categorize it, and summarize the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases.

Data, Information, and Knowledge Data


Data are any facts, numbers, or text that can be processed by a computer. Today, organizations are accumulating vast and growing amounts of data in different formats and different databases. This includes: operational or transactional data such as, sales, cost, inventory, payroll, and accounting nonoperational data, such as industry sales, forecast data, and macro economic data meta data - data about the data itself, such as logical database design or data dictionary definitions

Information The patterns, associations, or relationships among all this data can provide information. For
example, analysis of retail point of sale transaction data can yield information on which products are selling and when.

Knowledge
Information can be converted into knowledge about historical patterns and future trends. For example, summary information on retail supermarket sales can be analyzed in light of promotional efforts to provide knowledge of consumer buying behavior. Thus, a manufacturer or retailer could determine which items are most susceptible to promotional efforts.

Four Phases of Data Mining


Data Preparation Identify the main data sets to be used by the data mining operation (usually the data warehouse) Data Analysis and Classification Study the data to identify common data characteristics or patterns Data groupings, classifications, clusters, sequences Data dependencies, links, or relationships Data patterns, trends, deviation Knowledge Acquisition Uses the Results of the Data Analysis and Classification phase Data mining tool selects the appropriate modeling or knowledge-acquisition algorithms Neural Networks Decision Trees Rules Induction Genetic algorithms Memory-Based Reasoning Prognosis Predict Future Behavior Forecast Business Outcomes 65% of customers who did not use a particular credit card in the last 6 months are 88% likely to cancel the account.

What can data mining do?


Data mining is primarily used today by companies with a strong consumer focus retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact

on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data. With data mining, a retailer could use point-of-sale records of customer purchases to send targeted promotions based on an individual's purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments. For example, Blockbuster Entertainment mines its video rental history database to recommend rentals to individual customers. American Express can suggest products to its cardholders based on analysis of their monthly expenditures. WalMart is pioneering massive data mining to transform its supplier relationships. WalMart captures point-of-sale transactions from over 2,900 stores in 6 countries and continuously transmits this data to its massive 7.5 terabyte Teradata data warehouse. WalMart allows more than 3,500 suppliers, to access data on their products and perform data analyses. These suppliers use this data to identify customer buying patterns at the store display level. They use this information to manage local store inventory and identify new merchandising opportunities. In 1995, WalMart computers processed over 1 million complex data queries. The National Basketball Association (NBA) is exploring a data mining application that can be used in conjunction with image recordings of basketball games. The Advanced Scout software analyzes the movements of players to help coaches orchestrate plays and strategies. For example, an analysis of the play-by-play sheet of the game played between the New York Knicks and the Cleveland Cavaliers on January 6, 1995 reveals that when Mark Price played the Guard position, John Williams attempted four jump shots and made each one! Advanced Scout not only finds this pattern, but explains that it is interesting because it differs considerably from the average shooting percentage of 49.30% for the Cavaliers during that game. By using the NBA universal clock, a coach can automatically bring up the video clips showing each of the jump shots attempted by Williams with Price on the floor, without needing to comb through hours of video footage. Those clips show a very successful pick-and-roll play in which Price draws the Knick's defense and then finds Williams for an open jump shot.

How does data mining work?


While large-scale information technology has been evolving separate transaction and analytical systems, data mining provides the link between the two. Data mining software analyzes relationships and patterns in stored transaction data based on open-ended user queries. Several types of analytical software are available: statistical, machine learning, and neural networks. Generally, any of four types of relationships are sought:

Classes: Stored data is used to locate data in predetermined groups. For example, a
restaurant chain could mine customer purchase data to determine when customers visit and what they typically order. This information could be used to increase traffic by having daily specials.

Clusters: Data items are grouped according to logical relationships or consumer


preferences. For example, data can be mined to identify market segments or consumer affinities.

Associations: Data can be mined to identify associations. The beer-diaper example is


an example of associative mining.

Sequential patterns: Data is mined to anticipate behavior patterns and trends. For
example, an outdoor equipment retailer could predict the likelihood of a backpack being purchased based on a consumer's purchase of sleeping bags and hiking shoes.

Data mining consists of five major elements:


Extract, transform, and load transaction data onto the data warehouse system. Store and manage the data in a multidimensional database system. Provide data access to business analysts and information technology professionals. Analyze the data by application software. Present the data in a useful format, such as a graph or table.

Different levels of analysis are available:

Artificial neural networks: Non-linear predictive models that learn through training
and resemble biological neural networks in structure.

Genetic algorithms: Optimization techniques that use processes such as genetic


combination, mutation, and natural selection in a design based on the concepts of natural evolution.

Decision trees: Tree-shaped structures that represent sets of decisions. These


decisions generate rules for the classification of a dataset. Specific decision tree methods include Classification and Regression Trees (CART) and Chi Square Automatic Interaction Detection (CHAID) . CART and CHAID are decision tree techniques used for classification of a dataset. They provide a set of rules that you can apply to a new (unclassified) dataset to predict which records will have a given outcome. CART segments a dataset by creating 2-way splits while CHAID segments using chi square tests to create multi-way splits. CART typically requires less data preparation than CHAID.

Nearest neighbor method: A technique that classifies each record in a dataset based
on a combination of the classes of the k record(s) most similar to it in a historical dataset (where k 1). Sometimes called the k-nearest neighbor technique.

Rule induction: The extraction of useful if-then rules from data based on statistical
significance.

Data visualization: The visual interpretation of complex relationships in


multidimensional data. Graphics tools are used to illustrate data relationships.

Data-mining techniques
The following list describes many data-mining techniques in use today. Each of these techniques exists in several variations and can be applied to one or more of the categories above.

Regression modelingthis technique applies standard statistics to data to prove or


disprove a hypothesis. One example of this is linear regression, in which variables are measured against a standard or target variable path over time. A second example is logistic regression, where the probability of an event is predicted based on known values in correlation with the occurrence of prior similar events. Visualizationthis technique builds multidimensional graphs to allow a data analyst to decipher trends, patterns, or relationships. Correlationthis technique identifies relationships between two or more variables in a data group. Variance analysisthis is a statistical technique to identify differences in mean values between a target or known variable and nondependent variables or variable groups. Discriminate analysisthis is a classification technique used to identify or discriminate the factors leading to membership within a grouping. Forecastingforecasting techniques predict variable outcomes based on the known outcomes of past events.

Cluster analysisthis technique reduces data instances to cluster groupings and then
analyzes the attributes displayed by each group. Decision treesDecision trees separate data based on sets of rules that can be described in if-then-else language. Neural networksneural networks are data models that are meant to simulate cognitive functions. These techniques learn with each iteration through the data, allowing for greater flexibility in the discovery of patterns and trends.

Major Issues in Data Warehousing and Mining


Mining methodology and user interaction Mining different kinds of knowledge in databases Interactive mining of knowledge at multiple levels of abstraction Incorporation of background knowledge Data mining query languages and ad-hoc data mining Expression and visualization of data mining results Handling noise and incomplete data Pattern evaluation: the interestingness problem Efficiency and scalability of data mining algorithms Parallel, distributed and incremental mining methods Handling relational and complex types of data Mining information from heterogeneous databases and global information systems (WWW) Issues related to applications and social impacts Application of discovered knowledge Domain-specific data mining tools Intelligent query answering Process control and decision making

Performance and scalability

Issues relating to the diversity of data types

Integration of the discovered knowledge with existing knowledge: A knowledge fusion problem Protection of data security, integrity, and privacy

3. ONLINE ANALYTIC PROCESSING (OLAP)


What Is OLAP?
Online Analytical Processing - coined by EF Codd in 1994 paper contracted by Arbor Software* Generally synonymous with earlier terms such as Decisions Support, Business Intelligence, Executive Information System OLAP = Multidimensional Database MOLAP: Multidimensional OLAP (Arbor Essbase, Oracle Express) ROLAP: Relational OLAP (Informix MetaCube, Microstrategy DSS Agent)

The OLAP Market


Rapid growth in the enterprise market 1995: $700 Million 1997: $2.1 Billion 10/94: Sybase acquires ExpressWay 7/95: Oracle acquires Express 11/95: Informix acquires Metacube 1/97: Arbor partners up with IBM 10/96: Microsoft acquires Panorama

Significant consolidation activity among major DBMS vendors

Result: OLAP shifted from small vertical niche to mainstream DBMS category

Strengths of OLAP
It is a powerful visualization paradigm It provides fast, interactive response times It is good for analyzing time series It can be useful to find some clusters and outliers Many vendors offer OLAP tools

OLAP Is FASMI
Fast Analysis Shared Multidimensional Information

Online Analytical Processing Tools


DSS tools that use multidimensional data analysis techniques Support for a DSS data store Data extraction and integration filter Specialized presentation interface

Need for More Intensive Decision Support 4 Main Characteristics


Multidimensional data analysis Advanced Database Support Easy-to-use end-user interfaces Support Client/Server architecture

Relational OLAP
Relational Online Analytical Processing OLAP functionality using relational database and familiar query tools to store and analyze multidimensional data Multidimensional data schema support Data access language & query performance for multidimensional data Support for Very Large Databases

Typical OLAP Operations


Roll up (drill-up): summarize data by climbing up hierarchy or by dimension reduction from higher level summary to lower level summary or detailed data, or introducing new dimensions Drill down (roll down): reverse of roll-up

Slice and dice project and select

Pivot (rotate) Reorient the cube, visualization, 3D to series of 2D planes.

Other operations drill across: involving (across) more than one fact table drill through: through the bottom level of the cube to its back-end relational tables (using SQL)

OLAP Server Architectures


Relational OLAP (ROLAP) Use relational or extended-relational DBMS to store and manage warehouse data and OLAP middle ware to support missing pieces Include optimization of DBMS backend, implementation of aggregation navigation logic, and additional tools and services greater scalability

Multidimensional OLAP (MOLAP) Array-based multidimensional storage engine (sparse matrix techniques) fast indexing to pre-computed summarized data

Hybrid OLAP (HOLAP) User flexibility, e.g., low level: relational, high-level: array

Specialized SQL servers specialized support for SQL queries over star/snowflake schemas

4. PRODUCT LIFE CYCLE MANAGEMENT(PLM)

INTRODUCTION
All products and services have certain life cycles. The life cycle refers to the period from the products first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to the company that introduced it into the market. Since an increase in profits is the major goal of a company that introduces a product into a market, the products life cycle management is very important. Some companies use strategic planning and others follow the basic rules of the different life cycle phase that are analyzed later. The understanding of a products life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the products success or failure.

PART 1: PRODUCT LIFE CYCLE MODEL DESCRIPTION


The products life cycle - period usually consists of five major steps or phases: Product development, Product introduction, Product growth, Product maturity and finally Product decline. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor. These phases can be split up into smaller ones depending on the

product and must be considered when a new product is to be introduced into a market since they dictate the products sales performance.

1. PRODUCT DEVELOPMENT PHASE


Product development phase begins when a company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product. A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins. During the product development phase, sales are zero and revenues are negative. It is the time of spending with absolute no return.

2. INTRODUCTION PHASE
The introduction phase of a product includes the product launch with its requirements to getting it launch in such a way so that it will have maximum impact at the moment of sale. A good example of such a launch is the launch of Windows XP by Microsoft Corporation. This period can be described as a money sinkhole compared to the maturity phase of a product. Large expenditure on promotion and advertising is common, and quick but costly service requirements are introduced. A company must be prepared to spent a lot of money and get only a small proportion of that back. In this phase distribution arrangements are introduced. Having the product in every counter is very important and is regarded as an impossible challenge. Some companies avoid this stress by hiring

external contractors or outsourcing the entire distribution arrangement. This has the benefit of testing an important marketing tool such as outsourcing. Pricing is something else for a company to consider during this phase. Product pricing usually follows one or two well structured strategies. Early customers will pay a lot for something new and this will help a bit to minimize that sinkhole that was mentioned earlier. Later the pricing policy should be more aggressive so that the product can become competitive. Another strategy is that of a pre-set price believed to be the right one to maximize sales. This however demands a very good knowledge of the market and of what a customer is willing to pay for a newly introduced product. A successful product introduction phase may also result from actions taken by the company prior to the introduction of the product to the market. These actions are included in the formulation of the marketing strategy. This is accomplished during product development by the use of market research. Customer requirements on design, pricing, servicing and packaging are invaluable to the formation of a product design. A customer can tell a company what features of the product are appealing and what are the characteristics that should not appear on the product. He will describe the ways of how the product will become handy and useful. So in this way a company will know before its product is introduced to a market what to expect from the customers and competitors. A marketing mix may also help in terms of defining the targeted audience during promotion and advertising of the product in the introduction phase.

3. GROWTH PHASE
The growth phase offers the satisfaction of seeing the product take-off in the marketplace. This is the appropriate timing to focus on increasing the market share. If the product has been introduced first into the market, (introduction into a virgin1 market or into an existing market) then it is in a position to gain market share relatively easily. A new growing market alerts the competitions attention. The company must show all the products offerings and try to differentiate them from the competitors ones. A frequent modification process of the product is an effective policy to discourage competitors from gaining market share by copying or offering similar products. Other barriers are licenses and copyrights, product complexity and low availability of product components. Promotion and advertising continues, but not in the extent that was in the introductory phase and it is oriented to the task of market leadership and not in raising product awareness. A good practice is the use of external promotional contractors. This period is the time to develop efficiencies and improve product availability and service. Cost efficiency and time-to-market and pricing and discount policy are major factors in gaining customer confidence. Good coverage in all marketplaces is worthwhile goal throughout the growth phase.

Managing the growth stage is essential. Companies sometimes are consuming much more effort into the production process, overestimating their market position. Accurate estimations in forecasting customer needs will provide essential input into production planning process. It is pointless to increase customer expectations and product demand without having arranged for relative production capacity. A company must not make the mistake of over committing. This will result into losing customers not finding the product on the self.

4. MATURITY PHASE
When the market becomes saturated with variations of the basic product, and all competitors are represented in terms of an alternative product, the maturity phase arrives. In this phase market share growth is at the expense of someone elses business, rather than the growth of the market itself. This period is the period of the highest returns from the product. A company that has achieved its market share goal enjoys the most profitable period, while a company that falls behind its market share goal, must reconsider its marketing positioning into the marketplace. During this period new brands are introduced even when they compete with the companys existing product and model changes are more frequent (product, brand, and model). This is the time to extend the products life. Pricing and discount policies are often changed in relation to the competition policies i.e. pricing moves up and down accordingly with the competitors one and sales and coupons are introduced in the case of consumer products. Promotion and advertising relocates from the scope of getting new customers, to the scope of product differentiation in terms of quality and reliability. The battle of distribution continues using multi distribution channels2. A successful product maturity phase is extended beyond anyones timely expectations. A good example of this is Tide washing powder, which has grown old, and it is still growing.

5. DECLINE PHASE
The decision for withdrawing a product seems to be a complex task and there a lot of issues to be resolved before with decide to move it out of the market. Dilemmas such as maintenance, spare part availability, service competitions reaction in filling the market gap are some issues that increase the complexity of the decision process to withdraw a product from the market. Often companies retain a high price policy for the declining products that increase the profit margin and gradually discourage the few loyal remaining customers from buying it. Such an example is telegraph submission over facsimile or email. Dr. M. Avlonitis from the Economic University of Athens has developed a methodology, rather complex one that takes under consideration all the attributes and the subsequences of product withdrawal process.

Sometimes it is difficult for a company to conceptualize the decline signals of a product. Usually a product decline is accompanied with a decline of market sales. Its recognition is sometimes hard to be realized, since marketing departments are usually too optimistic due to big product success coming from the maturity phase. This is the time to start withdrawing variations of the product from the market that are weak in their market position. This must be done carefully since it is not often apparent which product variation brings in the revenues. The prices must be kept competitive and promotion should be pulled back at a level that will make the product presence visible and at the same time retain the loyal customer. Distribution is narrowed. The basic channel is should be kept efficient but alternative channels should be abandoned. For an example, a 0800 telephone line with shipment by a reliable delivery company, paid by the customer is worth keeping.

PART 2: ANALYSIS OF PRODUCT LIFE CYCLE MODEL


There are some major product life cycle management techniques that can be used to optimize a products revenues in respect to its position into a market and its life cycle. These techniques are mainly marketing or management strategies that are used by most companies worldwide and include the know-how of product upgrade, replacement and termination. To comprehend these strategies one must first make a theoretical analysis of the model of product life cycle. In the mid 70s the model of product life cycle described in Part 1, was under heavy criticism by numerous authors. The reasons behind this criticism are described below: o The shift changes in the demand of a product along a period of time makes the distinction of the product life cycle phase very difficult, the duration of those almost impossible to predict and the level of sales of the product somewhat in the realm of the imagination. There are many products that do not follow the usual shape of the product life cycle graph as shown in fig. The product life cycle does not entirely depend on time as shown in fig. 1. It also depends on other parameters such as management policy, company strategic decisions and market trends. These parameters are difficult to be pinpointed and so are not included in the product life cycle as described in Part 1.

The model of product life cycle also depends on the particular product. There would be different models and so different marketing approaches. There are basically three different types of products: a product class (such as cars), a product form (such as a station wagon, coupe, family car etc of a particular industry) and a product brand of that particular industry (such as Ford Escort). The life cycle of the product class

reflects changes in market trend and lasts longer than the life cycle of the product form or brand. In the other hand the life cycle of a product form or brand reflects the competitiveness of a company (i.e. sales, profits) and therefore follows more closely the product life cycle model.

PART 3: PRODUCT LIFE CYCLE TECHNIQUE EXAMPLE : PRODUCT

CANNIBALISM
Product cannibalization occurs when a company decides to replace an existing product and introduce a new one in its place, regardless of its position in the market (i.e. the products life cycle phase does not come into account). This is due to newly introduced technologies and it is most common in high tech companies. As all things in life there is negative and positive cannibalization. In the normal case of cannibalization, an improved version of a product replaces an existing product as the existing product reaches its sales peak in the market. The new product is sold at a high price to sustain the sales, as the old product approaches the end of its life cycle. Nevertheless there are times that companies have introduced a new version of a product, when the existing product is only start to grow. In this way the company sustains peak sales all the time and does not wait for the existing product to enter its maturity phase. The trick in cannibalization is to know when and why to implement it, since bad, late or early cannibalization can lead to bad results for company sales.

1. UNFAVORABLE CANNIBALIZATION
Cannibalization should be approached cautiously when there are hints that it may have an unfavorable economic effect to the company, such as lower sales and profits, higher technical skills and great retooling. The causes of such economic problems are given bellow. The new product contributes less to profit than the old one: When the new product is sold at a lower price, with a resulting lower profit than the old one, then it does not sufficiently increase the companys market share or market size. The economics of the new product might not be favorable: Technology changes can force a product to be cannibalized by a completely new one. But in some cases the loss of profits due to the cannibalization is too great. For example a company that produced ready business forms in paper was forced to change into electronic forms for use in personal computers. Although the resulting software was a success and yield great profits, the sales of the paper forms declined so fast that the combined profit from both products, compared to the profits if the company did not cannibalize the original product showed a great loss in profits.

The new product requires significant retooling: When a new product requires a different manufacturing process, profit is lower due to the investment in that process and due to the write-offs linked to retooling the old manufacturing process. The new product has greater risks: The new product may be profitable but it may have greater risks than the old one. A company cannot cannibalize its market share using a failed or failing product. This can happen in high-tech companies that do not understand enough of a new technology so that to turn it into a successful and working product. As a result a

unreliable product emerges and replaces a reliable one, that can increase service costs and as a result decrease expected profits.

2. OFFENSIVE CANNIBALIZATION STRATEGIES


Cannibalization favors the attacker and always hurts the market leader. For companies that are trying to gain market share or establish themselves into a market, cannibalization is the way to do it5. Also cannibalization is a good way to defend market share or size. A usual practice is the market leader to wait and do not cannibalize a product unless it has to. It is thought that a company should acquire and develop a new technology that will produce a newer and better product than an existing one and then wait. Then as competitors surface and attack market share, cannibalization of a product is ripe. Then and only then quick introduction of a new product into the market will deter competition, increase profits and keep market share. But this strategy does not always work since delays will allow the competition to grab a substantial piece of the market before the market leader can react.

3. DEFENSIVE CANNIBALIZATION STRATEGIES


Controlled cannibalization can be a good way to repel attackers as deforesting can repel fire. A market leader has many defensive cannibalization strategies that are discussed bellow. Cannibalize before competitors do: Cannibalization of a companys product(s) before a competitor does, is a defensive strategy to keep the competitor of being successful. Timing is the key in this strategy. Do it too soon and profits will drop, do it to late and market share is gone. Introduction of cannibalization as a means of keeping technology edge over competition: A good strategy is for a company that is the market leader, to cannibalize its products as competitors start to catch up in terms of technology advancements. (For example Intel Corporation cannibalized its 8088 processor in favor of the 80286 after 2 years, the 80286 in favor of the 386 after 3 years, the 386 in favor of the 486 after 4 years, the 486 in favor with the Pentium after another 4 and so on). So the market leader dictates the pace and length of a products life cycle. (In the case on Intel the replacement of 486 to Pentium took so long because competitors had not been able to catch up).

Management of cannibalization rate through pricing: When cannibalization of a product is decided, the rate at which this will happen depends on pricing. The price of the new product should be at a level that encourages a particular mix of sales of the old and new product. If the price of the new product is lower than the price of the old then cannibalization rate slows down. If the opposite happens then the cannibalization rate is increased. Higher prices in new products can reflect their superiority over the old ones. Minimization of cannibalization by introducing of the new product to certain market segments: Some market segments are less vulnerable to cannibalization to others. This is

because there is more or less to lose or gain for each of them. By choosing the right segment to perform the cannibalization of a product a company can gain benefits without loses and acquire experience on product behavior.

PART 4: PRODUCT LIFE CYCLE IN RESPECT TO THE TECHNOLOGY LIFE CYCLE


As a new technology matures so is the product or service that uses this technology. The change that occurs during a technology life cycle has a unique reflection on the customers and so on the product life cycle. In the early days of a new technology, early adopters and technology enthusiasts drive a market since they demand just technology. This drive and demand is translated as the introduction phase of a new product by many companies. As technology grows old, customers become more conservative and demand quick solutions and convenience. In this case a product usually enters in the realm of its growth and as time passes its maturity. Fig. 2: Change in customers as technology matures

The chasm shown in the graph above depicts the difference between the early and late adopters. Each needs different marketing strategies and each is translated to a products different phase of its life cycle. One should note that the late adopters hold the greatest percentage of customers in a market. This is why most products begin their life cycle as technology driven and change into customer driven as time passes by. A good example of this is the computer market. In one hand customers ask for ease of use, convenience, short documentation and good design. On the other hand customers rush out to purchase anything new regardless of its complexity. This is why companies6 in the computer industry withdraw their products long before they reach their maturity phase. This is the moment that a product reaches its peak i.e. the time that both early and late adopters buy the product.

PART 5: USE OF PRODUCT MANAGEMENT FOR SUCCESSFUL PRODUCT LIFE CYCLE


Product management is a middle level management function that can be used to manage a products life cycle and enables a company to take all the decisions needed during each phase of a products life cycle. The moment of introduction and of withdrawal of a product is defined by the use of product management by a Product Manager. A Product Manager exists for three basic reasons. For starters he manages the revenue, profits, forecasting, marketing and developing activities related to a product during its life cycle. Secondly, since to win a market requires deep understanding of the customer, he identifies unfulfilled customer needs and so he makes the decision for the development of certain products that match the customers and so the markets needs. Finally he provides directions to internal organization of the company since he can be the eyes and ears of the products path during its life cycle. To improve a product success during each of its phase of its life cycle (development - introduction growth maturity decline), a product manager must uphold the following three fundamentals. Understand how product management works: When responsible for a given new product, a product manager is required to know about the product, the market, the customers and the competitors, so that he can give directions that will lead to a successful product. He must be capable of managing the manufacturing line as well as the marketing of the product. When the product manager has no specific authority over those that are involved in a new product, he needs to gather the resources required for the organization to meet product goals. He needs to know where to look and how to get the necessary expertise for the success of the product. Maintain a product / market balance: The product manager as the person that will make a new product to work, needs to understand and have a strong grasp of the needs of the customer / market and therefore make the right decisions on market introduction, product life cycle and product cannibalization. To achieve the above he must balance the needs of the customers with the companys capabilities. Also he needs to balance product goals with company objectives. The way a products success is measured depends on where the product is in its life cycle. So the product manager must understand the strategic company direction and translate that into product strategy and product life cycle position. Consider product management as a discipline: Managing a product must not be taken as a part time job or function. It requires continuous monitoring and review. Having said that, it is not clear why many companies do not consider product management as a discipline. The answer lies in the fact that product management is not taught as engineering or accounting i.e. does not have formalized training.

The Benefit of PLM


It is a common production system, with common computer technology for information storage and retrieval. In theory any employee, in any department can look at data

created by another department or group. The information is archived and valid for the life of the product It is a concept that should induce ethical behavior in terms of up graded products and hopefully will drive social responsibility in the areas of innovation, design, manufacturing, quality, and disposal

The Scope of PLM

Module III!!!
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ERP MARKETPLACE

AND

MARKETPLACE DYNAMICS

1. MARKET OVERVIEW

Enterprise Resource Planning or ERP is an industry term for integrated, multi-module application software packages that are designed to serve and support multiple business functions. An ERP system can include software for manufacturing, order entry, accounts receivable and payable, general ledger, purchasing,

warehousing, transportation and human resources. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. ERP modules may be able to interface with an organization's own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor's proprietary tools as well as proprietary or standard programming languages.

Some of the top-tier ERP vendors are SAP-AG, BAAN, PeopleSoft, Oracle Application and J.D.Edwards. These companies are covering the major ERP market revenue. SAP (System Applications & Products in data processing). SAP is the worlds leading
provider of business software, SAP delivers products and services that help accelerate business innovation for their customers. Today, more than 82,000 customers in more than 120 countries run SAP applications from distinct solutions addressing the needs of small businesses and midsize companies to suite offerings for global organizations. SAP defines business software as comprising enterprise resource planning and related applications such as supply chain management, customer relationship management, and supplier relationship management SAP AG was founded in 1972 by five German engineers with IBM in Mannheim, Germany; and is one of the top most ERP vendors providing the client server business application solutions. SAP serves as a standard in the industries like chemicals, customer products, oil & high technology. The SAP group has offices in more than 50 countries worldwide & employs a workforce of over 19300. SAPs ERP package comes in 2 versions i.e. mainframe version (SAP R/2) & client server version (SAP R/3).(R-Real) With SAP, customers can install the core system & one or more of the fundamental components, or purchase the software as a complete package.

PRODUCTS & TECHNOLOGY


SAP has developed extensive library of more than 800 predefined business processes. These processes may be selected from SAP library & can be included within installed SAP application solution to suit the user exact requirements.

SAP software has special features like, linking a companys business processes & applications, & supporting immediate responses to change throughout different organizational levels & real time integration.

Also, the new technologies are available regularly to cop-up with the changes of the new business trends. The international standards have been considered while designing the software like support of multiple currencies simultaneously, automatically handles the country specific import/export requirements

The modules of R/3 can be used individually as well as user can expand it in stages to meet specific requirement's

BAAN: - Company profile


Baan company was founded in Netherlands in 1978 by brothers Jan and Paul Baan.. The BAAN Company is the leading global provider of enterprise business software. The BAAN company products reduce complexity and cost, improve core business processes, are faster to implement and use, are more flexible in adapting to business changes. The products offered by the company supports several business tools. The tools are based on multi-tier architecture.

TECHNOLOGY AND PRODUCTS


1. The BAAN products are having open component architecture. 2. The special feature of BAAN product is the use of BAAN DEM (Dynamic Enterprise Modeling). 3. Baan DEM provides a business view via a graphical process/model based views. 4. BAAN products has multi-tiered architecture for maximum and flexible configuration. 5. The application supports the new hardware, OS, networks and user interfaces w/o any modification to the application code. 6. The Baan series based products include : BAAN Enterprise Resource Planning. BAAN Front Office. BAAN Corporate Office Solutions. BAAN Supply Chain Solutions.

7. The main advantages of Baan series-based family of products are the best in class components version independent integration and evergreen delivery.

BAAN ERP MODULES


BAAN ERP is a proven enterprise resource planning s/w application. It is fully integrated and provides all the functionality which is required across the enterprise. BAAN ERP consists of a number of interdependent components that can be deployed to meet business needs. The flexibility with BAAN ERP allows customers to maximize the benefits of both best in class solution and a fully integrated high performance system. BAAN ERP includes the following components

Manufacturing Module:
This includes bills of material, cost price calculation, shop floor control, material requirement planning, etc.

Finance Module:
This includes accounts payable, accounts receivable, cash management, fixed assets, etc

Project Module:
This includes project budget, project definition, project estimation, project planning, etc

Distribution Module:
This includes sales management, purchase management and warehouse management

BAAN ERP TOOLS


BAAN ERP Tools can be described as a computing platform that provides independent, flexible, open and distributed computing and development environment.

The open architecture of the BAAN ERP Tools make it possible to Quickly react to the changes that take place in the market, in-turn change the s/w configuration. Develop the BAAN product in such a way that it is independent of third party product such as hardware, OS and DB. Easily integrated with third party product. Gives customer specific solutions.

ORCALE CORPORATION:-Company profile


Oracle Corporation was founded in the year 1977 and is the worlds largest s/w company and the leading supplier for enterprise information management. This is the first s/w company to implement internet computing model for using the enterprise s/w across the entire product line. It provides databases and relational servers, application development, decision support tools and enterprise business applications.

TECHNOLOGY
ORACLE software runs on the network computers, work stations & micro computers, mini computers, etc. ORACLE 8i is the leading database for internet computing. ORACLE database ALLOWS the corporation to access on any data, on any service, over any network, from any client device. ORACLE Warehouse Technology Initiative (WIT) is one of the fastest flowing & comprehensive programs in the data warehousing industry which provides the customers a complete data warehousing solution. ORACLEs integrated Business Intelligence Solutions provides us with a solution to deliver powerful processing capabilities to the user anywhere in the enterprise at anytime. Oracle business intelligence family product includes: Oracle report Oracle enterprise reporting tools Oracle discoverer Ad-Hoc Queries and analysis tools Oracle online analytical processing engine, etc.

MODULES OF ORCALE APPLICATIONS:


Oracle application consists of 45 plus software modules which are divided into following categories Oracle Financials Oracle Human Resource Oracle Projects Oracle Manufacturing Oracle Supply Chain Oracle Front Office

ORACLE FINANCIAL
This application transforms a finance organization into a strategic force and also helps to access the financial management functions. By working with these applications the companies can work globally, lower the administrative cost & improve the cash management. It also provides strategic information to make timely & accurate decisions.

ORACLE PROJECTS
These applications improve operational efficiency by providing an integrated project management environment that supports the full lifecycle of a project and increases the revenue growth and profitability.

ORACLE SUPPLY CHAIN


This application manages the supply chain process by providing a single integrated environment. It helps in effective partner collaboration & supply chain optimization capabilities. It helps in increasing market share while improving customer service & minimizing the cost.

ORACLE FRONT OFFICE


These applications provide a better understanding for customer relationships, their values & profitability These applications increase top line revenues & maintain customer satisfaction & retention

It also helps to attract and retain profitable customers through deployment channels including mobile & call centre.

ORACLE HUMAN RESOURCE


This application helps in managing the human resources which directly improve profitability and contribute to competitive advantage It also helps in the ability to hire motivate & retain the most capable working force and also helps in providing comprehensive and up-to-date information.

ORACLE MANUFACTURING
Oracle manufacturing application enables the companies to achieve market leadership by becoming more CUSTOMERS responsive & efficient. This module also supports the companies to increase revenue, profitability & customer loyalty by capturing the demand & planning the manufacturing process in an efficient way

PEOPLESOFT: - Company profile


PeopleSoft Inc. was established in 1987 to provide innovative software solutions that meet the changing business demands of enterprises worldwide. It employs more than 7000 people worldwide.& the annual revenue for the year 1998 was $ 1.3 million. PeopleSofts mission is to provide innovative software solutions that meet the changing business demands of organizations worldwide. PeopleSoft develops markets and supports enterprise-wide software solutions to handle core business functions including human resources management, accounting and control, project management, treasury management performance measurement and supply chain management. PeopleSoft provides industry-specific enterprise solutions to customers in select markets, including communications, finance services, healthcare, manufacturing, higher PeopleSoft products support clients running, Microsoft Windows and popular Web browsers, as well as a range of mainframe, midrange and LAN relational database server platforms. PeopleSoft solutions run on a variety of leading hardware and database platforms, including Compaq, Hew let-Packard, IBM, Sun Microsystems, Informix, Microsoft SQL Server, Sybase, DB2 and others. PeopleSoft delivers Web-enabled applications, workflow, online analytical processing (OLAP) etc.

The PeopleSoft application serves the whole business management solutions, commercial solutions & industry solutions.

The PeopleSofts business management solutions are in the areas given below: Human Resources Management Accounting and Control Treasury Management Performance Measurement Project Management Sales and Logistics Materials Management Supply Chain Planning Service Revenue Management Procurement

JD EDWARDS: COMPANY PROFILE:


On March 17, 1977 J.D. Edwards was formed, by Jack Thompson, Dan Gregery & EdMc Vaney. In early years J.D. Edwards designed software for small & medium sized computers. In 1980s it focused on IBM system/38. As the company began to outgrow, its headquarter in Denver, opened branch offices in Dallas & Newport Beach, California, Houston, San Francisco & Bakenfield. And then internationally expanded its Europe headquarters in Brussels & Belgium. As it grew it became obvious that servicing a large number of customers was creating a challenge By the mid of 1980s, J.D Edwards was being recognizes as an Industry-leading supplier of application software for the highly successful IBM AS/400 computer. Today J.D Edwards is a publicly traded company that has more than 4700 customers with sites in over 100 countries & more than 4200 employees.

J.D Edwards emphasizes on the following three matters:

Solution: JD Edwards offers a balance of technology & service options tailored


by the unique industry & its processes. This allows JD Edward to ensure timely implementation & outgoing quality of the solution.

Relationships: With JD Edwards, you have a partner committed to ushering


you through changes in the business & technology.

Value: JD Edwards provides with an appreciating software asset one with the
potential to increase in value over the lift of your business.

TECHNOLOGY
As the business grew company adapted new technology & instead for small computer application; it started to design enterprise-wise software. JD Edwards is a leading provider of integrated software for distribution, human resource, finance, and manufacturing & SCM. These software's are operated in multiple computing environments & also JAVA & HTML enabled.

QAD: -Company Profile


It was found in 1979. The companys products include MFG/PRO, service/support management and decision support. QAD offers a variety of supply chain and enterprise resource planning s/w products to manufacturing industries. It optimizes the enterprise by increasing the speed of internet processes and synchronizing the business operations. It is available in 26 languages and supports multiple currencies. It has an easy-to-understand graphical interface.

The MFG\PRO is one of the software, product offered by QAD, which provides multinational organization with integrated Global Supply Chain Management Solution. It helps the organization to achieve and maintain competitive advantage and synchronizes the distributed operation which balances the supply and demand across multiple sites.

SSA:-COMPANY PROFILE:
System Software Associates, Inc. (SSA) was founded in 1981. It has branches in more than 91 countries & more than 2000 employees. SSA has BPCS client/server V6 technology is implemented in more than 1000 industrial sector firms in over 4000 sites worldwide. SSAs vision is to be the best global partner to the worlds industrial companies. To achieve competitive advantage for clients through ERP system, SSAs follows its Mission Statement 1981.

The statement has six key goals. They are:


Best client satisfaction: this means that the company wants their clients to achieve the greatest possible business benefits from their relationship with SSA. Single image worldwide: this means that the client gets the same high level of support & expertise all around the world. Enterprise Solution Leadership: it means that the company is focused on building & delivering solutions, which bring together the entire enterprise. Proven leading Technology: this means that every piece of technology applied by SSA will already be proven for high transaction volume enterprise-wide applications. Highly skilled & motivated professional: it means that SSA is committed on having the best professionals & resources in the application software business. Strong financial results: this means that SSA can continue to invest in the improvements of its software & professionals & will be a stable partner in the long run.

1. MARKETPLACE DYNAMICS
Marketplace Dynamics

2. THE

CHANGING

ERP MARKET.

Changing Indian ERP scenario

SOME of the first Indian companies to have adopted ERP practices are HLL, ONGC, ESSAR, Godrej Soaps, Cadburys, BASF, Telco, Maruti Udyog Ltd., Century Rayon, Citibank, ACC, ANZ Grindlays, German Remedies, Blue Star, Mahindra & Mahindra, Rallis India, Sony India Pvt. Ltd., Ceat Ltd., Indal, Ford Motors, Kirloskar, Knoll Pharmaceuticals, and Glaxo. First tier companies (those with a turnover greater than Rs.10 billion) implement ERP to increase internal efficiency and external competitiveness. Once ERP is established at this level, these large companies begin to desire similarly increased efficiency from their suppliers. Hence, second tier companies are pressured to implement ERP, and a trickle-down effect ensues. Powered by the axiom that a chain is only as strong as its weakest link, Indian industry quickly has recognized that in order to work at maximum efficiency, ERP must be implemented at all levels. Initially, the majority of ERP solutions have been marketed to companies with greater than Rs. 2 billion, and generally, according to industry reports, the total cost of deploying ERP has ranged between 1 and 2 percent of companies' gross sales. Lower cost solutions are available for comparatively smaller sized companies. Though the market seems to be very encouraging for ERP implementation, the timeframe for deployment may be an issue. However, since many companies that have not yet implemented ERP are leaders in their markets, it reasonably can be assumed that they will go for it within next five years. In fact, the ERP market should grow at a rate somewhere near the industrial growth rate.

Some industry categories, such as Automotive, Steel, Consumer Durables, Engineering, and Textiles have shown a very high ERP penetration. This means that these categories represent the greatest potential markets in next two years - other industries will follow. Figure 1 illustrates the market across various industries.

Survey of Industry ERP Implementations


ERP implementations completed between 1995 and 1998 in India can give a sense of specific hurdles that companies may encounter in ERP deployment. Several companies were surveyed, and numerous ERP professionals were interviewed in order to assess the state of ERP in India. The results indicate that Indian companies are moving forward with ERP implementation primarily in response to thrusts from parent collaborators, to revamp in order to meet

increased load, or to reduce lead times and inventory levels, and improve customer satisfaction. Resistance to change - in the form of fear of the unknown, reluctance to learn new techniques, or IT department reluctance to change due to attachment to its product was a major hurdle faced during many ERP implementations. Additionally, the duplication required in the initial stage, and the intense pressure exerted on manpower proved to be problematic, as did the level of customization necessitated by disparities between company requirements and solutions offered by ERP software. This problem is diminishing due to advances in the software facility models. Cost overruns also proved to be a pervasive problem with ERP implementations. Since most consultants charge on a man-hour basis, project time overruns substantially inflate incurred costs. To avoid this problem, top management must develop the necessary commitment to ERP, and all employees should be prepared for the change before the ERP implementation process is started. This model should help to eliminate needless project time and cost ballooning.

ERP in the Service Sector


Transportation, medical care, hospitality, courier service, telecommunication, banking and financial services, and entertainment represent the major components of India's service sector, and on probing into the various needs of these groups, it becomes apparent that the courier, transportation, and entertainment industries do not have specific current needs for ERP. Banking and telecommunication each have very specialized requirements that the manufacturing-inclined software solutions on the market would not effectively address. The same holds true for the medical care and hospitality industries. The service sector has the potential to become an important ERP market within a few years. At this time ERP implementation in the services sector is very limited - only a few hospitals and banks have done small-scale experiments. New software and processes will need to be developed to meet the specific demands of the service industries, so ERP players should begin now to prepare themselves for the tremendous potential of this future market.

*ERP- FUNCTIONAL MODULES: 3. INTRODUCTION, FUNCTIONAL MODULES


OF

ERP SOFTWARE

Organizations are implementing Enterprise Resource planning system to streamline their internal business process and for smooth flow of data between the different functional departments like inventory, purchase, production, accounts, etc. The different functional modules of the ERP software look after the respective functional department.

Some of the functional modules in the ERP are as follows: 1. Production Planning Module: The Enterprise Resource Planning
system has evolved from Material Resource Planning which was used for the manufacturing requirements of the companies. ERP is more robust software for production planning as it optimizes the utilization of the manufacturing capacity, material resources and the parts using production data and sales forecasting.

2. Purchasing Module: This module aids in streamlining the


procurement of required raw materials. It is integrated with the inventory control and production planning modules and often with the supply chain management software. This module automates the process of identifying potential suppliers, supplier evaluation. It is used for automation and management of purchasing .

3. Inventory Control Module: This module aids in managing the


company's resource inventory and the product inventory. It helps in handling the replenishment of the product and maintenance of the stock levels of the products. The inventory control module monitors the inventory stock present at the different locations like at the warehouse, office and stores. The module can manage the inventory of raw materials used for product planning. It enables the company to plan the future production and keep a stock of products which go below critical level.

4. Sales Modules: This module automates the sales tasks,


customer orders, invoicing and shipping of products. It is integrated with the company's ecommerce websites and many vendors provide with online storefront as a part of this module. The sales department is an important area for the organization.

5. Accounting and Finance Modules: Accounting and finance are


the core areas of an organization. This module interacts with the other functional modules to collect the financial data for the general ledger and other financial statements of the company.

6. Human Resource Module: This can be used as an independent


module. It is used for integrating the recruitment process, payroll, training and the performance evaluation process. The module

handles the history of the employee, tracks the employees laid off and aids in rehiring of the employees.

7. Manufacturing Module: This module includes product designing,


bills of material, cost management, workflow, etc.

8. Marketing Module: The ERP marketing module supports lead


generation and the promotional activities.

Each of these above functional modules of ERP software plays


an important role. The organizations can choose to implement some of the modules or all according to their requirements. The companies opt for the modules which are technically and economically feasible to them. These modules streamline the flow of the communication across the company by integrating the various functional departments. The enterprise resource system is bound with all these functional modules. These distinct yet seamlessly integrated modules cover most of the functional needs of an organization. The functional modules of ERP software help to achieve efficiency of operations, cost savings and help to maximize the profits.

OR
Functional Modules:
1. FI/CO (Finance & Controlling ) 2. HR (Human Resource) 3. PP (Production Planning) 4. MM (Material Management ) 5. SD (Sales & Distribution ) 6. PM (Plant Maintenance) 7. PS (Project System) 8. QM (Quality Management) 9. BIW (Business Information Warehousing)

New Dimension:
1. CRM (Customer Relationship Management)

2. SCM (Supply Chain Management) 3. SEM (Strategic Enhanced Management) 4. APO (Advanced Planner Optimizer) 5. EP (Enterprise Portal) 6. SRM (Supplier Relationship Management) 7. XI (Exchange Infrastructure)

Techno-Functional Modules :1. ABAP + HR 2. ABAP + SD 3. BIW (Business Information Warehouse)

Dual Modules: 1. SD + CRM 2. PP + MM 3. FICO +SD 4. HR + SD 5. HR + CRM

4. INTEGRATION
What Is ERP Integration?

OF

ERP

ERP stands for Enterprise Resource Planning. It is a complete business software solution and a software product that can be implemented across the company incorporating all aspects of the enterprise. During the last twenty years, ERP has been implemented by a large number of Fortune 500 companies.

There are two components which form an important part of the concept of ERP system integration. They are compatibility and compliance. An ERP solution should be capable of integrating in the current information technology infrastructure of the organization. If a solution requires massive upgrades, then it is not the right solution intended.

An organization which is supposed to be deployed with ERP solutions should already possess a base level information technology infrastructure. For example, the production monitoring solutions, inventory keeping etc. are all the base level information technology infrastructures. When the ERP solution is deployed in the organization, it should have the capability to interface with the already existing solutions. If this integration does not take place, then there is no point to engaging in the entire process of ERP deployment. They should have the capacity to communicate with each other and should function as one solution instead of two different ones. This ability of the system to interface with the different solutions is known as compatibility.

If there is no proper compatibility, it is the end of the ERP implementation. A proper compatible system is the secret for a successful ERP implementation. Only when the system integrates with the current infrastructure, would it be able to understand what is happening. When the ERP system integration takes place in the right manner, it is very possible to monitor the status of every component of the work flow.

If there is no proper ERP integration, the data would have to be exchanged manually between the ERP system and the current infrastructure in place. This would lead to numerous problems due to data not being properly exchanged between the two solutions. If there is mutilation or loss of data during the time of export, it would lead to too many complications and as a result, the organization would undergo severe loss. It is a major challenge for many companies to get their applications to work with each other. Unless there is seamless integration of ERP with other systems, the benefits of an ERP application is limited. In the present day, it is an undeniable fact that the performances of many organizations have been enhanced due to the application of ERP software packages.

When an ERP software package is developed, adequate care is taken to ensure that maximum level of ERP integration takes place. To ensure that the ERP integration takes place in the right manner, it is vital that proper testing is carried out before deployment.

An Enterprise Resource Planning software product is capable of integrating multiple business applications with each application representing a specific business area. It is a product capable of great depth in a specific application or area while still being part of the overall bigger picture. These applications update transactions and process them in

real time. Due to this, effortless integration and communication between areas of a business is achieved. For example, a sales order can be created and the update order value in a sales information structure can be viewed immediately without having the necessity to wait till the end of the day or the end of month processing to take place.

The cornerstone of an ERP product is its ability to be configured to meet the specific needs of any business. This can be achieved by customizing or adapting the system as per the business requirements, and this involves the process of mapping the ERP to business process. A business process, for example, would be a sales order creation or creation of delivery etc. The process of mapping ERP to a business process is normally time-consuming and expensive. It requires full understanding of the business process procedures, finding a solution in ERP that would meet these requirements and then customizing the solution within the system.

5. SUPPLY

CHAIN AND

CUSTOMER RELATIONSHIP

APPLICATIONS.

Supply chain management (SCM)

Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed). As a solution for successful supply chain management, sophisticated software systems with Web interfaces are competing with Web-based application service providers (ASP) who promise to provide part or all of the SCM service for companies who rent their service.

Supply chain management flows can be divided into three main flows:

The product flow The information flow The finances flow

The product flow includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs. The information flow involves transmitting orders and updating the status of delivery. The financial flow consists of credit terms, payment schedules, and consignment and title ownership arrangements. There are two main types of SCM software: planning applications and execution applications. Planning applications use advanced algorithms to determine the best way to fill an order. Execution applications track the physical status of goods, the management of materials, and financial information involving all parties. Some SCM applications are based on open data models that support the sharing of data both inside and outside the enterprise (this is called the extended enterprise, and includes key suppliers, manufacturers, and end customers of a specific company). This shared data may reside in diverse database systems, or data warehouses, at several different sites and companies. By sharing this data "upstream" (with a company's suppliers) and "downstream" (with a company's clients), SCM applications have the potential to improve the time-to-market of products, reduce costs, and allow all parties in the supply chain to better manage current resources and plan for future needs. Increasing numbers of companies are turning to Web sites and Web-based applications as part of the SCM solution. A number of major Web sites offer e-procurement marketplaces where manufacturers can trade and even make auction bids with suppliers.

Customer Relationship

A Customer Relationship Management system may be chosen because it is thought to provide


the following advantages: Quality and efficiency Decrease in overall costs Decision support Enterprise ability Customer Attentions Increase profitability.

Customer Relationship Management Applications

Gives you a complete information of customer data and interactions

Enhances customer satisfaction and maximizes profits Continuous and consistent customer dialogue based on real-time information Manages present and prospective customers equally and effectively Facilitates sales team to take orders from the customers Availability of the complete purchase history for the customers Availability of features like automatic up-sell and cross-sell capabilities Automatic and accurate tracking of commissions Provides accurate forecasts Can view the ROI and true marketing effectiveness

While strong vendors are present in certain segments of the CRM market, no one vendor offers a complete, best-of-breed CRM package providing all functions, for all channels, for every industry. One of the myths is that the technology is complete says Julie Fitzpatrick, senior vice president of marketing for Chicago-based loyalty. companies need to understand how they are going to do what the technology cant do, such as having a data model to store information about the relationship - actionable data about the relationships The upshot: you will probably need to acquire your CRM applications piece by piece out of sheer necessity, although multi-function software suites are a popular choice to get started. To make sense of the bewildering array of vendors, applications, and technologies, start by thinking about the users of the CRM application:

Employees -this is where client/server-based CRM solutions started in the mid1990s, focused on automating internal sales, service, and marketing processes. Customers -If customers want to serve (or sell) themselves via the Web, why not? The flood of business applications is testimony to this hot trend. Partners - often overlooked in the ecommerce hype, indirect sales channels are still vital. Partner Relationship Management (PRM) applications serve these users. Next, consider the functions or processes involved in the customer relationship lifecycle:

Marketing- targeting prospects and acquiring new customers through data mining, campaign management and lead distribution. Sales - closing business with effective selling processes, using proposal generators, configurations, knowledge management tools, contact managers, and forecasting aids. Ecommerce - in the Internet age, selling processes should transfer seamlessly into purchasing transactions, done quickly, conveniently, and at the lowest cost. Service - handling post-sales service and support issues with sophisticated call center applications or Web-based customer self-service products.

Module IV!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

1. ERP IMPLEMENTATION BASICS


Why implement an ERP System?
To support business goals Integrated, on-line, secure, self-service processes for business Eliminate costly mainframe/fragmented technologies

Improved Integration of Systems and Processes Lower Costs Empower Employees Enable Partners, Customers and Suppliers

How should we implement ERP Systems?


People Process Implementation Process (outlined in detail) Adapt your processes to those of the ERP. Hardware Software Integrated Systems Project Structure Should be aligned to processes

Technology

Process 1. Definition and Analysis


Hold discussions with various functional personnel to establish the actual number of systems operating at client site, what they are used for, why and how often Produce the Project Scoping Document outlining current situation, proposed solution and budgeted time

Challenge: REQUISITE EXPERTISE - No two clients are the same 2. Design


Prepare various functional reports - specifies current scenario and wish list Prepare Design document which specifies how the system is going to work Prepare test scripts to be followed on system testing Map out the interface paths to various modules

Challenge: INFORMATION SHARING - Availability of staff 3. Build


Configure system as per set up document specifications i.e. transfer conceptual model into reality Test system to verify accuracy (preliminary tests)

Challenge: TECHNICAL ENVIRONMENT - System functionality 4. Transition


Train users on their specific areas Assist in test data compilation and system testing by users Finalise the Live system and captured opening balances

Challenge: USER RESISTANCE Understanding and acceptance


data preparation

5. Production
Official hand holding Effectiveness assessment Business and Technical Direction recommendations

ERP systems provide a mechanism for implementing systems where a high degree of
integration between applications is required The Business Case or Value Proposition for implementation must be outlined To successfully implement a proper mix of people, processes and technology should be maintained

The normal steps involved in implementation of an ERP are as below:

-Project Planning -Business & Operational analysis including Gap analysis -Business Process Reengineering -Installation and configuration -Project team training -Business Requirement mapping -Module configuration -System interfaces -Data conversion -Custom Documentation -End user training -Acceptance testing -Post implementation/Audit support

The above steps are grouped and sub-divided into four major phases namely

1) detailed discussions, 2) Design & Customization, 3) Implementation and 4) Production. The phases of implementation vis--vis their tasks and respective deliverables are as below:

Detailed Discussion Phase: Task: - Project initialization,


Evaluation of current processes, business practices, Set-up project organization Deliverables:- Accepted norms and Conditions, Project Organization chart, Identity work teams

Design and customization Phase: Task: - Map organization, Map business process,
Define functions and processes, ERP software configuration and Build ERP system modifications. Deliverables: - Organization structure, Design specification, Process Flow Diagrams, Function Model, Configuration recording and system modification.

Implementation Phase: Task: - Create go-live plan and documentation, Integrate


applications; Test the ERP customization, Train users Deliverables: - Testing environment report, Customization Test Report and Implementation report

Production Phase: Task: - Run Trial Production, Maintain Systems Deliverables:Reconciliation reports, Conversion Plan Execution

2. ERP IMPLEMENTATION LIFE CYCLE


ERP covers the technique and concepts employed for the integrated management of
business as a whole, ERP packages are integrated software packages that support the above ERP concepts. ERP lifecycle is in which highlights the different stages in implementation of An ERP.

Different phases of ERP


Pre evaluation Screening Evaluation Package Project Planning GAP analysis Reengineering Team training

Testing Post implementation

Pre evaluation screening


Decision for perfect package Number of ERP vendors Screening eliminates the packages that are not at all suitable for the companys business processes. Selection is done on best few PACKAGES available.

Package Evaluation

Package is selected on the basis of different parameter. Test and certify the package and also check the coordination with different department Selected package will determine the success or failure of the project. Package must be user friendly Regular up gradation should available. Cost

Project planning
Designs the implementation process. Resources are identified. Implementation team is selected and task allocated. Special arrangement for contingencies.

Gap analysis

Most crucial phase. Process through which company can create a model of where they are standing now and where they want to go. Model help the company to cover the functional gap

Configuration
IMPORTANCE OF CONFIGURATION This is the main functional area of the ERP implementation. Business processes have to be understood & mapped in such a way that they arrived solution matches with the overall goals of the company.

Reengineering
Implementation is going to involve a significant change in number of employees and their job responsibilities. Process BECOMES more automated and efficient.

Team Training
Takes place along with the process of implementation. Company trains its employees to implement and later, run the system. Employee become self sufficient to implement the software after the vendors and consultant have left.

Testing
This phase is performed to find the weak link so that it can be rectified before its implementation.

Going Live
The work is complete, data conversion is done, databases are up and running, the configuration is complete & testing is done.

The system is officially proclaimed. Once the system is live the old system is removed

End User Training


The employee who is going to use the system are identified and trained.

Post Implementation
This is the maintenance phase. Employees who are trained enough to handle problems those crops up time to time.

The post implementation will need a different set of roles and skills than those with less integrated kind of systems. An organization can get the maximum value of these inputs if it successfully adopts and effectively uses the system.

3. ROLE

OF

SDLC/SSAD

System Development Life cycle (SDLC)


What is a SDLC and why do we need that?

System - an organized collection of independent tasks and processes that is designed to work
together in order to accomplish specific objectives. The processes and tasks typically receive input(s) from and provide output(s) to other processes and tasks and even other systems. The tasks and processes may or may not be supported by automation

SDLC refers to a methodology for developing systems. It provides a consistent framework of


tasks and deliverables needed to develop systems. The SDLC methodology may be condensed to include only those activities appropriate for a particular project, whether the system is automated or manual, whether it is a new system, or an enhancement to existing systems. The SDLC methodology tracks a project from an idea developed by the user, through a feasibility study, systems analysis and design, programming, pilot testing, implementation, and post-implementation analysis. Documentation developed during the project development is used in the future when the system is reassessed for its continuation, modification, or deletion.

SDLC Phases
Phases in SDLC are Planning, Analysis, Design, Implementation, and Maintenance/Sustainment/Staging

Project planning, feasibility study: Establishes a high-level view of the intended


project and determines its goals.

SDLC Planning Phase


Identify, analyze, prioritize, and arrange IS needs

1-11

2005 by Prentice Hall

Systems analysis, requirements definition: Refines project goals into defined


functions and operation of the intended application. Analyzes end-user information needs.

SDLC Analysis Phase


Study and structure system requirements

1-12

2005 by Prentice Hall

Systems design: Describes desired features and operations in detail, including screen
layouts, business rules, process diagrams, pseudo code and other documentation.

Implementation (Development): The real code is written here.

Integration and testing: Brings all the pieces together into a special testing
environment, then checks for errors, bugs and interoperability. Acceptance, installation, deployment: The final stage of initial development, where the software is put into production and runs actual business. Maintenance: What happens during the rest of the software's life: changes, correction, additions, and moves to a different computing platform and more.

Types of SDLC models Once upon a time, software development consisted of a programmer writing code to solve a problem or automate a procedure. Nowadays, systems are so big and complex that teams of architects, analysts, programmers, testers and users must work together to create the millions of lines of custom-written code that drive our enterprises.
The oldest of these, and the best known, is the waterfall: a sequence of stages in which the output of each stage becomes the input for the next. These stages can be characterized and divided up in different ways, including the following:

But It Doesn't Work!


The waterfall model is well understood, but it's not as useful as it once was. The problem is that the waterfall model assumes that the only role for users is in specifying requirements, and that all requirements can be specified in advance. Unfortunately, requirements grow and change throughout the process and beyond, calling for considerable feedback and iterative consultation. Thus many other SDLC models have been developed.

To manage this, a number of system development life cycle (SDLC) models have been created:

waterfall, spiral, rapid prototyping, RUP (Rational Unified Process) and incremental etc.

Life Cycle Models


Rqts Defn Prel Dtl Impl I&T Dsgn Dsgn O&S

System A

Determine objectives, alternatives, constraints.

Risk/Analysis

Prototype

Waterfall
Plan next phase.
I&T

Build Unit Test AT

Spiral

O&S

Develop, verify next level product.

System Rqts Defn

Rqts Defn

Prel Dtl Impl I&T Dsgn Dsgn Rqts Defn

O&S

Part 1

Final Sys I&T

O&S

System A

Prel Dtl Impl I&T Dsgn Dsgn Rqts Defn

O&S

Part 2 (+Part 1) Part 3 (+Part 1 + Part 2)

Incremental

Prel Dtl Impl I&T Dsgn Dsgn

O&S

One description of a product life cycle may not be adequate. Therefore, the organization may define a set of approved product life-cycle models.
6/3/2005 Page 4

Spiral model - The spiral model emphasizes the need to go back and reiterate earlier stages
a number of times as the project progresses. It's actually a series of short waterfall cycles, each producing an early prototype representing a part of the entire project.

This approach helps demonstrate a proof of concept early in the cycle, and it more accurately reflects the disorderly, even chaotic evolution of technology.

Rapid Prototyping - In the rapid prototyping (sometimes called rapid application development)
model, initial emphasis is on creating a prototype that looks and acts like the desired product in order to test its usefulness. The prototype is an essential part of the requirements determination phase, and may be created using tools different from those used for the final product. Once the prototype is approved, it is discarded and the "real" software is written.

Incremental - The incremental model divides the product into builds, where sections
of the project are created and tested separately. This approach will likely find errors in user requirements quickly, since user feedback is solicited for each stage and because code is tested sooner after it's written.

Iterative models - by definition have an iterative component to the systems development. It


allows the developer to take a small segment of the application and develop it in a fashion that, at each recursion, the application is improved. Each of the three main sections: requirements definition, system design, and coding and testing are improved with each cycle through the process.

Rational Unified Process


In its simplest form, RUP consists of some fundamental workflows: Business Engineering: Understanding the needs of the business. Requirements: Translating business need into the behaviors of an automated system. Analysis and Design: Translating requirements into software architecture. Implementation: Creating software that fits within the architecture and has the required behaviors. Test: Ensuring that the required behaviors are correct, and that all required behaviors are present. Configuration and change management: Keeping track of all the different versions of all the work products. Project Management: Managing schedules and resources. Environment: Setting up and maintaining the development environment. Deployment: Everything needed to roll out the project.

Role of Testing in SDLC


Let us take (RUP) SDLC model developed by IBM to understand the role of testing in depth. Rational Unified Process (RUP) has 4 different phases viz. inception, elaboration, construction and transition phases. When we compare RUP with the traditional SDLC model, inception phase is similar to analysis phase, elaboration is same as design phase, construction phase is similar to implementation and transition phase is similar to deployment and maintenance. In most of the industries, as part of the RUP process, JAD (Joint application Development) sessions are

conducted. These sessions give an opportunity for all teams to present their ideas and document them. Testing team generally gets involved in the inception phase, depending on the schedule. As you see the figure above, Test shows different inclination and declination. Inclination emphasizes the increased role of the testing team and declination emphasizes the decreasing role.

Inception phase: In this phase, a tester will get a chance to understand the purpose of this
project. Generally the information is documented by the architecture team in the ARF (Architectural reference document). Data architects, Information architects, System architects are the key players in this phase.

Elaboration phase: In this phase, a tester will get a chance to understand how the project is
designed and what all the systems are getting upgraded or downgraded based on this project. This is a major phase, where the entire design of the project is documented in the JAD sessions in the Business Requirement document (BRD), System requirement document (SRD), Product requirement document (PRD), Business use cases (BUC) and System Use cases (SUC). Architects, Business analysts, Project management, Development, Testing, Production support teams etc attend the JAD sessions to give sign-off on these documents, once they are completely documented. Business use cases describe the business process of the project. System use cases describe about a system, which is impacted by the project.

Construction phase: In this phase, developers have a major role of constructing the system
based on the design accepted during the JAD sessions. A tester has to follow closely with the development team to understand different changes considered by the development. There is always a possibility that the development can miss, misinterpret the design documents, in this case, a tester can always escalate the issue to the concerning developers to resolve the issue. Technical design documents (TDD), Interface specification documents (ISD), Software architecture documents (SAD) etc are generated in this phase to document the development process. During the same phase, testing team needs to develop the high level scenarios (HLS) based on the BRD, SRD, TDD, PRD, BUC, SUC, SAD, ISD. Each high level scenario can have one or more test cases. A tester must make sure that all the requirements are traced to a test case thru a QA matrix. Though its not compulsory to write test cases based only on these documents and there is always a possibility of missing some of the functionality, so we have to write test cases based on all possible sources of the latest updated information (latest signed-off updated documents). In many of the projects I have worked, sometimes I had to write test cases based on the verbal information given the development, sometimes on viewing the data flow diagrams and process flow diagrams. In this, phase, testing will have a major role for performing System testing, integrated system testing.

Transition phase: In this phase, the system/software whatever it is designed is ready to roll
out for production. In most of the industries, IT always rolls out the product slowly like 5% every week for a certain period until the 100% is in production. In this, phase, testing will have a major role for performing regression testing. Roll out is done by moving the newly written code into a staging environment, where we test the product and raise the defects. Once the entire code is in the staging environment and it is stable. This code will be moved

into production. However, there is always a chance of defects/bugs arising in this stage. Regression testing will identify any defects occurring due to the already existing code.

ROLE

OF

SSAD

Structured Systems Analysis and Design: an organizational process used to develop


and maintain computer-based information systems (both business and systems professionals participate in SSAD).

4. OBJECT ORIENTED ARCHITECTURE

Object-oriented architecture is a design paradigm based on the division of


responsibilities for an application or system into individual reusable and self-sufficient objects, each containing the data and the behavior relevant to the object. An object-oriented design views a system as a series of cooperating objects, instead of a set of routines or procedural instructions. Objects are discrete, independent, and loosely coupled; they communicate through interfaces, by calling methods or accessing properties in other objects, and by sending and receiving messages. The key principles of the object-oriented architectural style are:

Abstraction. This allows you to reduce a complex operation into a generalization that
retains the base characteristics of the operation. For example, an abstract interface can be a well-known definition that supports data access operations using simple methods such as Get and Update. Another form of abstraction could be metadata used to provide a mapping between two formats that hold structured data.

Composition. Objects can be assembled from other objects, and can choose to hide
these internal objects from other classes or expose them as simple interfaces. Inheritance. Objects can inherit from other objects, and use functionality in the base object or override it to implement new behavior. Moreover, inheritance makes

maintenance and updates easier, as changes to the base object are propagated automatically to the inheriting objects. Encapsulation. Objects expose functionality only through methods, properties, and events, and hide the internal details such as state and variables from other objects. This makes it easier to update or replace objects, as long as their interfaces are compatible, without affecting other objects and code. Polymorphism. This allows you to override the behavior of a base type that supports operations in your application by implementing new types that are interchangeable with the existing object. Decoupling. Objects can be decoupled from the consumer by defining an abstract interface that the object implements and the consumer can understand. This allows you to provide alternative implementations without affecting consumers of the interface.

Common uses of the object-oriented style include defining an object model that supports
complex scientific or financial operations, and defining objects that represent real world artifacts within a business domain (such as a customer or an order). The latter is a process commonly implemented using the more specialized domain driven design style, which takes advantage of the principles of the object-oriented style. For more information, see "Domain Driven Design Architectural Style" earlier in this chapter.

The main benefits of the object-oriented architectural style are that it is:

Understandable. It maps the application more closely to the real world objects,
making it more understandable. Reusable. It provides for reusability through polymorphism and abstraction.

Testable. It provides for improved testability through encapsulation. Extensible. Encapsulation, polymorphism, and abstraction ensure that a change in the
representation of data does not affect the interfaces that the object exposes, which would limit the capability to communicate and interact with other objects. Highly Cohesive. By locating only related methods and features in an object, and using different objects for different sets of features, you can achieve a high level of cohesion.

Consider the object-oriented architectural style if you want to model your application based on real world objects and actions, or you already have suitable objects and classes that match the design and operational requirements. The object-oriented style is also suitable if you must encapsulate logic and data together in reusable components or you have complex business logic that requires abstraction and dynamic behavior.

5. CONSULTANTS
DEFINITION:
Business consultants are professional people who develop the different methods & techniques to deal with the implementation process & with the various problems that will crop up during implementation. They are experts in the area of the administration, management & control activities. They have experience of implementation & various methods that ensures successful implementation. The only limitation with consultant is they are very expensive. They consultants have to make the ERP implementation for an organization as their own business. They have to make a plan to carry the activities in the right direction during the implementation process. Since they are expensive the company should formulate a plan regarding best optimum utilization of the money spent on consultants.

ROLE OF CONSULTANTS
The consultants are involved in the implementation process of the organization. They consultant should guarantee the success of the project and should be able to show the results such as reduction in cycle time, increased response time, improved productivity, etc to the satisfaction of the customer. They are responsible for the administration of all the phases of the implementation so that the activities occur at the scheduled time and at the desired level of quality with effective participation with all those who must participate. They add value to the project as they provide knowledge about the packages & the implementation process which gives the employees the practical experience

ERP Consultancy

VARs, business partners, consultants


The emergence of third parties to interface between a software developer and clients is not new. The bureau of the 1970s and 1980s ran specific applications on their systems on behalf of clients. Payroll was a common application. During the 1990s, as more and more clients acquired their own computing facilities, a new breed of third party emerged the Facilities Manager. They took over the running of all or part of the clients IT function. This was called out-sourcing. The perceived advantage of this was that it reduced the cost of owning

and running IT equipment. Although the client owned the equipment, the Facilities Manager had the pool of expertise that could be called upon as required. As well as allowing the client to concentrate on his business, it averted growth in the number of expensive IT personnel. Around 1998, the phrase Application Service Provider (ASP) emerged. ASP is a term that appears to accommodate any third party who is involved in one or more activity relating to the marketing, selling, installation, customization, implementation, running, maintenance and support of an application and the infrastructure upon which it runs. Whilst some provide the full service, others are more focused. These include System Integrators (SIs) and Value Added Resellers (VARs). When dealing with a SI or VAR, the client would purchase the software license from the application software developer and purchase implementation and post implementation support from the SI or VAR. In practice, many SIs or VARs act as a one-stop-shop, providing hardware, software, implementation, training, customization and support. The main distinction between a SI and a VAR is that the latter adds value primarily through software customization activities. However, this raises the question of who has ownership of the customized portion of the software? It is not uncommon to find both SIs and VARs in partnership with ERP software developers. The advantage is that it provides the developer with additional implementation capacity as well as allowing the developer to gain access to markets that are geographically beyond his reach. They have played a significant role in the growth of a number of ERP vendors including SAP. The danger, from a clients perspective, is that the partner may not have the requisite expertise of the vendors application or technology. In this situation, the nature of the relationship between the developer and the third party is important. This relationship can vary from weak agreements to strong partnerships and needs to be investigated during the selection process. If problems arise, then their resolution may be slowed while they decide who is responsible for dealing with them.

An alternative option open to the client is to use an independent consultancy to assist with the implementation. Whilst the consultants may have valuable business
and implementation experience, the Consultant may be unfamiliar with the application.

A relatively new concept is that of the data centre. Reminiscent of the bureau, this provider owns both application and infrastructure. The client, instead of experiencing the up-front costs traditionally associated with an application, pays a monthly rent for use of specific functionality. This can be accessed through a dumb terminal. As well as bringing the cost of an ERP application within the reach of smaller businesses, this approach is viewed as the future of business computing.23 However, various concerns have been voiced. These include security, data ownership, service reliability and

responsiveness. Whilst still a very immature market, as it develops, these issues should be addressed. One third parties who provide a specialized service is the Enterprise Application Integrator (EAI). Unlike the SI and VAR, the EAI is unlikely to support the implementation itself. Instead, the EAI provides integration tools (middleware) that ease the integration of different systems. The technology is relatively immature and there are questions about how this sector will develop. The introduction of a third party into the equation introduces another variable to be managed. However, it can be argued that the use of a Service Level Agreement (SLA) can reduce the likelihood of dispute. A SLA defines the acceptable levels of performance and responsibilities for the key activities provided by the service provider. Issues likely to be included are responsiveness, reliability and the meeting of deadlines. Where penalty clauses are attached then compensation may be obtained if performance is not attained. Sample SLAs can be found at the website www.techrepublic.com.

6. VENDORS

AND

EMPLOYEES.

DEFINITION:
Vendors are the people to develop the ERP packages, they spent a huge amount of time & effort in research & development to create the package solution that is flexible, efficient and easy to use. Now, these days the ERP have all features & function which can satisfy the need of all the business data. The ERP vendors spent a large amount of money so that they can become experts, to develop a flexible, efficient & easy to use ERP package.

ROLES OF VENDORS:

The vendor should supply the product & its documentation as soon as the contract is signed. The vendor is responsible to fix the errors which are found during the implementation process, so it becomes necessary that the vendor should be constantly touched with the implementation team.

The vendor also has to provide the training to the companys user & also to the people who are involved in the implementation process of the s/w. The vendors training should explain how the package works, what are major components, how the data & information flows across the system, etc.

The vendor gives the project support function & also takes care of the quality control factor with respect to how the product is implemented.

The vendors participate in all the phases of an implementation in which he gives advices, answers to technical questions about the product & technology.

In case, there is gap between the package & the actual business process then it is the job of a vendor to customize the s/w & make necessary modifications.

Roles & Responsibilities of Employees 1.Do Early Homework: Every employee is responsible for understanding the work allotted and
determining if it is appropriate for him. He/she should make sure whether he/she has mastered the skills required to perform the task completely. If he/she is not sure about how to handle the work allotted to them they should talk with their superiors and get suggestions and directions in fulfilling the work allotted to him/her. This will help the employee in building good relations with not only their superiors also with their colleagues.

2. Plan with the Manager: Having a proper work schedule or time table for the work allotted
to the employee helps the employee in Time Management and reaching the deadlines in time Also, when a new work is allotted

3. Use Available Resources and take responsibility: The employees should have sense of
responsibility towards the resources of the Organization. As a part of the Organization every employee is equally responsible for the long life of the existing resources, for which smooth usage and suggestions for usage is required, which in case is not provided should be requested for.

4. Participation: Active listening and participation in teams will ensure that all employees
become good team players and work with unity towards common goals of the Organization. Whenever a new work is being allotted all the Employees should be eager enough to take the initiative rather than trying to avoid newer tasks. This will facilitate in employees learning new skills and reaching the Organizational goals with much effectiveness. 5. Be Punctual And Regular: The Prime responsibilities of every employee must be Punctuality and Regularity. You can be better organized by being punctual and regular. Unwanted and unexpected work delays can be dealt effectively.

6. Cleanliness is Next To Godliness: One should maintain the cleanliness of their desk, and
also premises of the Organization. If you and your premises are clean you will find it more encouraging to work and also it is convenient to work for other employees.

7. Washroom: Please use the washrooms bearing in mind that you are not the only person who
is using it. See to it you dont spill the water across the wash basin when you are using it same with the premises of wash room. Health and Hygiene of you and others should be your prime concern.

8. Cost Effectiveness: The employees should develop the habit of cost saving work style and
put stress on waste control methods with maximum output.

9. Creative Thinking and Suggestions: The employee should always think upon the
improvement of work efficiency and organizational development

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!The end!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Keyur D vasava.