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ERP Implementation

in VIT

Kanu Priya
Mohammed Naufal


ERP is an acronym that stands for Enterprise Resource Planning. ERP is

a package software solution that addresses the enterprise needs of an
organization by tightly integrating the various functions of an organization
using a process view of the organization. It is a package software and not a
custom made software for a specific firm.It gives a company an integrated real-
time view of its core business processes.
The term ERP originally implied systems designed to plan the use of
enterprise-wide resources.Although the initialism ERP originated in the
manufacturing environment, today's use of the term ERP systems has much
broader scope. ERP systems typically attempt to cover all basic functions of an
organization, regardless of the organization's business or charter. Businesses,
non-profit organizations, nongovernmental organizations, governments, and
other large entities utilize ERP systems.
It is the technological backbone of e-business,an enterprisewide
transaction framework with links into different units in the company.ERP
includes in its breadth all the resource planning for the enterprise including
product design, information warehousing, material planning, capacity planning
and communications system, to name just a few.
ERP integrates the functional modules tightly. It is not merely the import
and export of data across the functional modules. It integrates all data and
processes of an organization into a unified system. A typical ERP system will
use multiple components of computer software and hardware to achieve the
integration. The integration ensures that the logic of a process that cuts across
the function is captured genuinely. This in turn implies that data once entered in
any of the functional modules is made available to every other module that
needs this data. This leads to significant improvements by way of improved
consistency and integrity of data.

Comaparing to its previous softwares, ERP uses the relational databases,

fourth generation languages, integrated computer-aided engineering tools such
as product data managers(PDM), and open-system portability to integrate
systems such as advanced planning and scheduling(APS), finite scheduling
systems, and manufacturing execution systems(MES).The APS tools that are
part of a fully integrated ERP system provide excellent “what if” scenarios for
the manager to determine the most beneficial mix of orders and customers.
ERPs are often incorrectly called back office systems indicating that
customers and the general public are not directly involved. This is contrasted
with front office systems like customer relationship management (CRM)
systems that deal directly with the customers, or the eBusiness systems such as
eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship
management (SRM) systems.
Modules in ERP
Ideally, ERP delivers a single database that contains all data for the
software modules, which would include:
Engineering, Bills of Material, Scheduling, Capacity, Workflow
Management, Quality Control, Cost Management, Manufacturing
Process, Manufacturing Projects, Manufacturing Flow.
Supply Chain Management:
Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain
Planning, Supplier Scheduling, Inspection of goods, Claim Processing,
Commission Calculation.
General Ledger, Cash Management, Accounts Payable, Accounts
Receivable, Fixed Assets.
Costing, Billing, Time and Expense, Activity Management.

Human Resources:
Human Resources, Payroll, Training, Time & Attendance, Benefits.
Customer Relationship Management:
Sales and Marketing, Commissions, Service, Customer Contact and Call
Center support.
Data Warehouse:
and various Self-Service interfaces for Customers, Suppliers, and

Why ERP?
Corporations go for ERP either to solve the existing problems or to
explore new opportunities. Actually these two approaches are negative &
positive approach respectively. One aspect of the negative approach forces some
corporations to go for ERP to solve their Y2K problem. This is particularly true
of those corporations that are heavily dependent on legacy systems running on
old main frames. The second aspect of the negative approach is to get over the
problems of islands of heterogeneous and incompatible information systems
that were developed over the past several years in many organizations.
Functional IS modules representing areas such as Finance, Marketing, HR, and
Production in these organizations would be running on diverse hardware and
software platforms leading to nearly insurmountable problems of reconciling
data locked up among the diverse systems. From a positive perspective many
organization look at the great opportunity provided by ERP software that lead to
almost instant access of transactional information across the corporation. Such
an information rich scenario permits organization to reduce inventory across
multiple units/ departments/ plants; reduce cycle times from weeks to hours;
and improve customer satisfaction by orders of magnitude. All these translate to
increased profitability or increase in market share and in turn much larger
market capitalization. However ERP is only means and not an end by itself.
ERP provides an opportunity for a corporation to operate as an agile entity to
improve production / operation, customer service and customer satisfaction. The
creative ingenuity of an organization to drive towards these corporate goals
determines the extent of success an ERP implementation can deliver.

Prior to the concept of ERP systems, departments within an organization

(for example, the human resources (HR) department, the payroll department,
and the financials department) would have their own computer systems. The HR
computer system (often called HRMS or HRIS) would typically contain
information on the department, reporting structure, and personal details of
employees. The payroll department would typically calculate and store
paycheck information. The financials department would typically store financial
transactions for the organization. Each system would have to rely on a set of
common data to communicate with each other. For the HRIS to send salary
information to the payroll system, an employee number would need to be
assigned and remain static between the two systems to accurately identify an
employee. The financials system was not interested in the employee-level data,
but only in the payouts made by the payroll systems, such as the tax payments
to various authorities, payments for employee benefits to providers, and so on.
This provided complications. For instance, a person could not be paid in the
payroll system without an employee number.
But after the introduction of ERP, the ERP software, among other things,
combined the data of formerly separate applications. This made the worry of
keeping numbers in synchronization across multiple systems disappear. It
standardised and reduced the number of software specialities required within
larger organizations.
An ERP software package matures over time with additions of new
modules and functionality by the software vendors. The continuing
developments in ERP software, including web-enabled modules and e-business
software suites,have made ERP more flexible and user-friendly, as well as
extending it outward to a company’s business partners.

Evolution of ERP

ERP Growth Rings





Beginning of
Data Base
ERP (Enterprise Resource Planning) is the evolution of Manufacturing
Requirements Planning (MRP) II. From business perspective, ERP has
expanded from coordination of manufacturing processes to the integration of
enterprise-wide backend processes. From technological aspect, ERP has evolved
from legacy implementation to more flexible tiered client-server architecture.
1. Bills of material processor(BOMP):
BOMP is the combination of information technology and business
processes of maintaining the appropriate level of stock in a warehouse. The
activities of this processor include identifying inventory requirements, setting
targets, providing replenishment techniques and options, monitoring item
usages, reconciling the inventory balances, and reporting inventory status.

2. Material requirement planning:

MRP1 is the predecessor of enterprise resource planning application. ERP
has become the talk of the day not only with regards to management and
information systems but also for the whole business.

When there is much hype around it is also equally important to trace the
origin of ERP and its Predecessors.MRP1 the acronym of material resource
planning was the first business application that set foot in the ERP family. The
credit of computerizing the business processes solely goes to MRPI.MRP1
functioned with the objective of increasing the business profit by enriching the
business. It is important to know the problems faced by companies before
understanding how Material resource planning solved them. MRP software was
a boon to companies facing troubles in production. MRP planning facilitated the
functions of the software.

Predicting the demands in advance

Companies were able to turn raw material into finished products easily
even without any technical backups. Companies could not engage in mass
production schedule for fear of decline in the customers demand. Hence they
suffered from some limitations like not being able to predict the demand
properly. If they produced more and the demand was loss the surplus amounted
to loss. On the other hand if they engage in lower production scale when the
demand is really high it will affect their business and potential loss. There
seemed to be no end due to these discrepancies.

Purchasing Raw materials

The question of allocating raw materials and scheduling their purchase
turned out to be another headache. If companies were unable to predict sales it
would neither be logical to expect them to decide the exact quantity of raw
materials required for production. If they bought excess it was a mere waste .on
the other hand deficit purchase affected sales.

Dr Joseph Orlicky invented MRP1 in the year 1960.This system
comprised a computer that helped to compute the exact quantum of raw
materials and sales. This point proved to be the start for integrating IT with
manufacturing Systems. Ever since they have become inseparable after
advancements in the name of MRPII and ERP while the latest one being
ERPII.MRP planning is the crux of MRP software.

Nature of functioning
MRP1 works like a simple mathematical formula. If all the inputs are fed
in one end and the calculations are applied the output is received at the other
end. Input here reefers to the quantity of raw materials and expected demand
along with minute details of resources like Period, optimum production
capacities and the current level of stocks. This will be processed by the system
.It will then let the user to know the steps that should be taken for achieving the
said production limits and there ends the troubles. MRP software solved all the
problems related to production. MRP planning was helpful to a great extent in
this aspect.

MRP's application in the working environment is wide in nature. It just
doesn't limit to production. It can calculate each and everything related to
production. The functioning of MRP1 is quiet diverse and it can be put to use in
many industries.

3. Manufacturing resource planning (MRP II):

MRP was in existence right from the year 1960. MRP II otherwise
referred to as manufacturing resource planning enabled to overcome the setback
of MRPI the acronym of material resource planning.
The analysis of MRP 1 reveals that it is made on the basis of finding out
the quantum of materials that have to be given inorder to gain the said optimum
productivity levels depending on other parameters like production capacity and
factors. The MRP systems were in existence before ERP technology was
MRP II was developed with all the features of MRP I .There were also
some other elements in addition to those contained in MRPI.

Key Elements
In addition MRP II boasts of the following four elements. These give the
added advantages and differentiate MRP I from MRP II.

The significant feature of MRP II is the fact that the lay man in the
industry will be able to realize its effects and hence be able to comment on the
working. Any process is bound to achieve progress if and only it receives
valuable criticism from reliable sources and more so preferably from end user.
MRP II capitalizes on this advantage mainly .This response is not restricted to a
particular section of employees. Everybody will be asked to pass their opinion
.The response will therefore include all the views. This will help greatly in
correcting the progress from one process to another. This is deemed to be
effective as it gathers the response and the necessary corrections are made then
and there. Still the MRP Systems cannot out beat ERP Technology.

Allocating reserves
The system of MRP helps to maintain a neat agenda for the manner in
which the resources are to be allocated without any confusions and khais. This
means everybody will know what is expected from them within the stipulated
deadline. Any discrepancy between the actual time taken and the one allotted is
likely to affect the effectiveness of this operation.

Matching the requirements

MRP helps in deciding the ideal software requirements of the company. It
is either calculated on the basis of minimizing investments or purchasing
products that render benefits for a particular time or selecting sets of products
based on the coincidence of factors among them.

Software extension programmes

MRPII buy itself composes of a numerous software program. These
software programs aid in the functioning of the business. They have been
manufactured with the intent to benefit the company in all possible ways. There
is lot of calculations involved with regards to these softwares.

MRP II has not yet lost popularity inspite of the intervention of
ERP.Many organizations still consider it as a part of the manufacturing process.
MRP systems are still in vogue in many industries and the manufacturing sector
deserves special credit in this aspect.
The success of MRP 2 is to be determined by a set of factors. Firstly
there should be cent percentage accuracy in the calculations that are performed.
These calculations determine the success of MRP 2 so as its workings. The
technique adopted to follow the operations is another factor that decides the
success of MRP.

Advantages of ERP:
There are a number of powerful advantages to Enterprise Resource
Planning. It has been used to solve a number of problems that have plagued
large organizations in the past.

1. Efficiency:
It should first be noted that companies that fail to utilize systems
such as ERP may find themselves using various software packages that
may not function well with each other. In the long run, this could make
the company less efficient than it should be.
2. Design process
There are a number of processes that a company may need to
integrate together. One of these processes is called design engineering.
When a company is in the process of designing a product, the process of
actually creating it is just as important as the end result. ERP can be
useful in helping a company find the best design process.
3. Order tackling
Another area where ERP can be useful is order tracking. When a
company receives orders for a product, being able to properly track the
orders can allow the company to get detailed information on their
customers and marketing strategies. If different software packages are
being used, this data may not be consistent.
4. Accounting application:
Perhaps one of the most important advantages of ERP is its
accounting applications. It can integrate the cost, profit, and revenue
information of sales that are made, and it can be presented in a granular
5. Manufacturing:
Enterprise Resource Planning can also be responsible for altering
how a product is manufactured. A dating structure can be set up which
can allow the company to be informed of when their product should be
updated. This is important, because it will allow the company to keep
better track of their products, and it can allow the products themselves to
be produced with a higher level of quality
6. Security:
Another area where ERP can be an indispensable tool is the area of
security. It can protect a company against crimes such as embezzlement
or industrial espionage.
Disadvantages of ERP:
However, with all the advantages that ERP offers, there are a number of
disadvantages as well.
1. High investment
One of the biggest disadvantages to this technology is the cost. At
this time, only large corporations can truly take advantage of the benefits
that are offered by this technology. This leaves most small and medium
sized businesses in the dark. A number of studies have shown that the
biggest challenges companies will face when trying to implement ERP
deals with investment.
2. Cost of training:
The success of the system is fully dependent on how the workers
utilize it. This means they must be properly trained, and a number of
companies have attempted to save money by reducing the cost of
training. Even if a company has enough money to implement ERP, they
may not be able to successfully use it if they do not have enough money
to train their workers on the process of using it.

3. Alteration:
Most ERP vendors will not allow the structure of the software to be
altered. One advantage to ERP is that making the necessary changes to
use it may actually make a company less competitive in the market. In
addition to the costs involved with implemented ERP and training
workers to use it, the ERP vendors may charge additional license fees,
putting a strain on companies that do not have enough resources to pay
for them.

Trends in ERP:

ERP is still evolving –adapting to development in technology and the

demands of the market. Four important trends are shaping ERP’s continuing
evolution: improvements in integration and flexibility, extensions to e-business
applications, a broader reach to new user and the adaption of new technology.

Flexible ERP:
First, the ERP software packages that were the mainstay of ERP
implementations in the 1990’s and were often criticized for their inflexibility,
have gradually been modified into more flexible products. Companies who
installed ERP systems pressured software vendors to adopt more open, flexible,
standards-based software architectures. This makes the software easier to
integrate with other application programs of business users, as well as making it
easier to make minor modifications to suit a company’s business processes.
Web-enabled ERP:
This is the second development in the evolution of ERP. The growth of
the internet and corporate intranets and extranets prompted software companies
to use internet technologies to build Web interfaces and networking capabilities
into ERP systems. These features make ERP systems easier to use and connect
to other internal applications as well as to the systems of a company’s business
Interenterprise ERP:
The Internet connectivity has led to the development of interenterprise
ERP systems that provide Web-enabled links between key business systems of a
company and its customers, suppliers, distributors and others. These external
links signaled a move towards the integration of internal-facing ERP
applications of supply chain management and company’s supply chain partners.
E-business suites:
All the developments have provided the business and technological
momentum for the integration of ERP functions into e-business suites. The
major ERP software companies have developed modular, Web-enabled software
suites that integrate ERP, customer relationship management, supply chain
management, procurement, decision support, enterprise portals, and other
business applications and functions. Examples include Oracle’s e-Business
Suite and SAP’s my SAP.

Implementation of ERP in VIT

Because of their wide scope of application within a business, ERP
software systems are typically complex and usually impose significant changes
on staff work practices. Implementing ERP software is typically not an "in-
house" skill, so even smaller projects are more cost effective if specialist ERP
implementation consultants are employed. The length of time to implement an
ERP system depends on the size of the business, the scope of the change and
willingness of the customer to take ownership for the project. A small project
(e.g., a company of less than 100 staff) may be planned and delivered within 3
months; however, a large, multi-site or multi-country implementation may take
The most important aspect of any ERP implementation is that the
company who has purchased the ERP solution takes ownership of the project.
To implement ERP systems, companies often seek the help of an ERP
vendor or of third-party consulting companies. These firms typically provide
three areas of professional services: consulting, customization and support.
Consulting Services:
The Consulting team is typically responsible for your initial ERP
implementation and subsequent delivery of work to tailor the system beyond
"go live". Typically such tailoring includes additional product training; creation
of process triggers and workflow; specialist advice to improve how the ERP is
used in the business; system optimization; and assistance writing reports,
complex data extracts or implementing Business Intelligence.
The consulting team is also responsible for planning and jointly testing
the implementation. This is a critical part of the project, and one that is often
Consulting for a large ERP project involves three levels: systems
architecture, business process consulting (primarily re-engineering) and
technical consulting (primarily programming and tool configuration activity). A
systems architect designs the overall dataflow for the enterprise including the
future dataflow plan. A business consultant studies an organization's current
business processes and matches them to the corresponding processes in the ERP
system, thus 'configuring' the ERP system to the organization's needs. Technical
consulting often involves programming. Most ERP vendors allow modification
of their software to suit the business needs of their customer.
For most mid-sized companies, the cost of the implementation will range
from around the list price of the ERP user licenses to up to twice this amount
(depending on the level of customization required). Large companies, and
especially those with multiple sites or countries, will often spend considerably
more on the implementation than the cost of the user licenses -- three to five
times more is not uncommon for a multi-site implementation.
Customization Services
Customization is the process of extending or changing how the system
works by writing new user interfaces and underlying application code. Such
customisations typically reflect local work practices that are not currently in the
core routines of the ERP system software.
Examples of such code include early adopter features (e.g., mobility
interfaces were uncommon a few years ago and were typically customised) or
interfacing to third party applications (this is 'bread and butter' customization for
larger implementations as there are typically dozens of ancillary systems that
the core ERP software has to interact with). The Professional Services team is
also involved during ERP upgrades to ensure that customisations are compatible
with the new release. In some cases the functionality delivered via a previous
customization may have been subsequently incorporated into the core routines
of the ERP software, allowing customers to revert back to standard product and
retire the customization completely.
Customizing an ERP package can be very expensive and complicated,
because many ERP packages are not designed to support customization, so most
businesses implement the best practices embedded in the acquired ERP system.
Some ERP packages are very generic in their reports and inquiries, such that
customization is expected in every implementation. It is important to recognize
that for these packages it often makes sense to buy third party plug-ins that
interface well with your ERP software rather than reinventing the wheel.
Customization work is usually undertaken as bespoke software
development on a time and materials basis. Because of the specialist nature of
the customization and the 'one off' aspect of the work, it is common to pay in
the order of $200 per hour for this work. Also, in many cases the work delivered
as customization is not covered by the ERP vendors Maintenance Agreement, so
while there is typically a 90-day warranty against software faults in the custom
code, there is no obligation on the ERP vendor to warrant that the code works
with the next upgrade or point release of the core product.
One often neglected aspect of customization is the associated
documentation. While it can seem like a considerable -- and expensive --
overhead to the customization project, it is critical that someone is responsible
for the creation and user testing of the documentation. Without the description
on how to use the customisation, the effort is largely wasted as it becomes
difficult to train new staff in the work practice that the customization delivers.
Maintenance and Support Services
Once your system has been implemented, the consulting company will
typically enter into a Support Agreement to assist your staff to keep the ERP
software running in an optimal way. To minimize additional costs and provide
more realism into the needs of the units to be affected by ERP (as an added
service to customers), the option of creating a committee headed by the
consultant using participative management approach during the design stage
with the client's heads of departments (no substitutes allowed) to be affected by
the changes in ERPs to provide hands on management control requirements
planning. This would allow direct long term projections into the client's needs,
thus minimizing future conversion patches (at least for the 1st 5 years operation
unless there is a corporate-wide organizational structural change involving
operational systems) on a more dedicated approach to initial conversion.
A Maintenance Agreement typically provides you rights to all current
version patches, and both minor and major releases, and will most likely allow
your staff to raise support calls. While there is no standard cost for this type of
agreement, they are typically between 15% and 20% of the list price of the ERP
user licenses.
There is no easy magic through which one can prepare an organization
for ERP implementation. Exposing the top management to the benefits of ERP
through the real world case studies, sharing of experience by other corporations
that have successfully implemented ERP and creation of awareness is the first
step. Convincing the top management to use a high risk, high reward scheme
such as ERP is a major challenge. Almost all the members of the organization
should get the excitement about ERP project implementation. Communicating
and sharing of the ERP vision is the most important organizational preparation
for a successful ERP implementation.
Features of ERP
Some of the major features of ERP and what ERP can do for the business
system are as below:
○ ERP facilitates company-wide Integrated Information System
covering all functional areas like Manufacturing, Selling and
distribution, Payables, Receivables, Inventory, Accounts, Human
resources, Purchases etc.,
○ ERP performs core Corporate activities and increases customer
service and thereby augmenting the Corporate Image.
○ ERP bridges the information gap across the organisation.
○ ERP provides for complete integration of Systems not only across
the departments in a company but also across the companies under
the same management.
○ ERP is the only solution for better Project Management.
○ ERP allows automatic introduction of latest technologies like
Electronic Fund Transfer(EFT), Electronic Data Interchange(EDI),
Internet, Intranet, Video conferencing, E-Commerce etc.
○ ERP eliminates the most of the business problems like Material
shortages, Productivity enhancements, Customer service, Cash
Management, Inventory problems, Quality problems, Prompt
delivery etc.,
○ ERP not only addresses the current requirements of the company
but also provides the opportunity of continually improving and
refining business processes.
○ ERP provides business intelligence tools like Decision Support
Systems (DSS), Executive Information System (EIS), Reporting,
Data Mining and Early Warning Systems (Robots) for enabling
people to make better decisions and thus improve their business

Cost of Implementing an ERP System:

ERP implementation cost can be divided into one-time costs and ongoing
annual costs. Both types of costs can be segmented into hardware, software,
external assistance and internal personnel.
Costs of implementing a new
ERP system


One-Time Costs
The cost of an ERP software package varies widely, ranging from
Rs.15,00,000 for micro-based packages to several million rupees for some
mainframe packages. The number of concurrent users generally drives the
software cost, so that smaller systems cost less. In addition to the ERP software
package, one-time costs may include systems software, development of
customized software, or integration with other applications.
Hardware selection is driven by the firm’s choice of an ERP software
package. The ERP software vendor generally certifies which hardware must be
used to run the ERP system. Hardware may need to be replaced or upgraded. As
a general rule, small-to medium size manufacturers already have
microcomputers and a local area network, so that a micro-based ERP system
build standards which requires a little additional investment in hardware.
External Assistance:
External assistance includes the consulting and training costs to
implement the ERP package. The software vendor, reseller, or independent
consulting group may provide external assistance. The amount of external
assistance required is dependent on several factors, such as the complexity of
the ERP package, the experience and knowledge of internal personnel, and the
extend to which external personnel are used in place of internal personnel to
implement the system.
Internal personnel:
Internal personnel time reflects the time commitments for the
implementation project team, the executive steering committee, the users in
various functional areas and MIS personnel. The time commitments include
training classes, development of internal procedures for using the system,
developing customized reports and applications, preparation of the data,
meetings with external consultant and team meetings. A general guideline for
internal personnel costs can also be expressed as a ratio with the ERP software
costs, where a typical ratio is 0.5 to 1.0.
The one-time costs for implementing an ERP system can be simplistically
estimated using typical ratios with ERP software costs.
Ongoing Annual Costs:
Ongoing software costs should include the annual customer support
agreement with the ERP software vendor. This customer support typically
provides telephone assistance and software upgrades and is priced around 15
percent to 20 percent of the software price. Upgrades to software releases are
also required.
The upgrade path for new releases of the ERP software package is
critical. New releases contain enhancements for functionality and bug fixes, and
ensure that the software runs on the latest technology platform. From the user’s
point of view, the upgrade path enables the manufacturer to take advantage of
hundreds of labor-years of development efforts undertaken by the ERP software
vendor with minimal investment. From the vendor point of view, it is much
easier to support users to the latest releases. However, user changes to sources
code and other user customizations can make it very expensive or even
impossible to upgrade.
Ongoing hardware cost will reflect new requirements specified by the
ERP vendor to run the software.
External assistance:
External assistance should be used as part of a continuous improvement
program to effectively use an ERP system application for running the company.
Training and consulting can focus on improved business processes, new or
poorly used software functionality, and training of new personnel. A phased
implementation approach requires additional assistance at each phase.
Additional customizations may be required, especially with evolving user
Internal personnel:
The implementation project team does not necessarily end its
responsibilities at time of system cut over. A phased implementation approach
and continuous improvement efforts will require ongoing time commitments.
Employee turnover and job rotation will also require ongoing training efforts.
The nature of the ERP software package typically mandates the number and
expertise of MIS personnel needed for ongoing support. This support may range
from a part-time clerical person to aa large group of MIS experts.
Replacing or Reimplementing an ERP system:
An investment analysis focusing on ERP benefits frequently applies to
those firms initially justifying an ERP implementation. It can also used to justify
a reimplementation when the initial efforts have failed to produce desired
results. The breakout box describing classifications of ERP success identifies
situations where the ERP implementation falls short of producing desired

Benefits of ERP in VIT:

Even though much of ERP success has been in facilitating operational
coordination across functional departments, successful implementation of ERP
systems benefit strategic planning and management control one way or other.
Some of the various benefits of ERP in VIT are as follows;
1.Help reduce operating costs:
ERP software integrates business processes across various departments
onto a single enterprise-wide information system. The major benefits of ERP are
improved coordination across functional departments and increased efficiencies
of doing business. The immediate benefit from implementing ERP systems we
can expect is reduced operating costs, such as lower stationary cost, and lower
help desk support costs.
2.Facilitate Day-to-Day Management:
The other benefits from implementing ERP systems are facilitation of
day-to-day management. The implementations of ERP systems nurture the
establishment of backbone data warehouses. ERP systems offer better
accessibility to data so that management can have up-to-the-minute access to
information for decision making regarding payment of wages. ERP software
helps track actual costs of activities and perform activity based costing.
3.Support Strategic Planning:
Strategic Planning is "a deliberate set of steps that assess needs and
resources; define a target audience and a set of goals and objectives; plan and
design coordinated strategies with evidence of success; logically connect these
strategies to needs, assets, and desired outcomes; and measure and evaluate the
process and outcomes." Part of ERP software systems is designed to support
resource planning portion of strategic planning. In reality, resource planning has
been the weakest link in ERP practice due to the complexity of strategic
planning and lack of adequate integration with Decision Support Systems

How to avoid ERP failures ?

The failures of ERP can be avoided by following the simple
ERP implementation techniques. They are discussed as
a,Phased-in approach:
Implementation of ERP should have a phased-in
approach. In other words, the applications must be installed by
taking one department at a time.
Ex; Russ Berrie & Co, basically a teddy bear maker had
failed installation of Packaged ERP applications but after rolling
out J. D. Edwards & OneWorld Xe suite of ERP. They succeeded.
The reason for the success was the following of phased-in
b,Estimation of the complex nature:
The Agilent technology, which is a multinational
communication & life sciences company had problems with ERP.
Initially they failed. But now they are stable. The reason behind
the failure was underestimation of the complex nature of ERP
implementation. So for successful implementation, there must
be a proper understanding of the complex nature of ERP
implementation process.
c,Involvement of affected employees:
Failure to involve affected employees in the planning
and development phases, were typical causes of failed ERP
projects. So there must be proper involvement of affected
employees in development and planning process of change
d,Slow process:
Whirlpool corporations is the world’s leading
manufacturer & marketer of home appliances failed in their ERP
implementation. The executives made a damaging business
decision by going live with SAP R/3 ERP applications on the 3
day labour holiday. There were many problems that were to be
addressed but everything was done too fast. Finally as a result
of this, there was a delay in shipment and Whirlpool lost a lot of
potential sales. So a slow process must be followed in
conversion process.
e,Effective testing:
When ERP is ready to be implemented, it must be tested
several times for any problems that may arise. And also there
must be proper conversion process & effective training must
done before implementing ERP.
The spectacular failures of ERP systems could have been
avoided if the above steps were followed.

Present scenario at VIT

Present Scenario at VIT

Interface Interface Interface Interface

Admiss Fee Attend Academic

ion structure ance updates
After implementing ERP


Ext Int Int Ext

Admission Fee Academic
Structure updates
T database N

Marks Attendance
Campus Solutions @ VIT




There are many challenges that have to be faced in ERP implementation.

These challenges are explained as follows :

1.Convincing people:
One of the most difficult challenge in ERP implementation is to convince
people of the change process .some people might feel insecure about their job in
order to make a successful ERP implementation we must convince people . This
can be done only when there is proper sharing and sharing of ERP vision.

2.Techno stress:
It is the technological term which means there is stress among the
employees due to the technology . the technology get updated now and then,
people must be aware it .so there is lot of stress among the people because of
technology . another form of techno stress is the drawbacks in a technology that
causes . so the management and organization must cop up with technostress.

3.High cost :
The implementation involves high cost . There is high risk involved in it
so a organization must be prepared to invast heavily and there must be prepared
commitment to the top management.
There is high risk in ERP implementation will cost an organization
heavily if it fails.
4.Return on Investment:
Critical success factor for ERP including readiness to invest in high risk ,
high reward project.
In the other words , a company must implement ERP only if it brings
high return . Therefore a company must seek high renewal process.
5. Downsizing:
Downsizing literally means to reduce the number of people who work in
a company. Depending on the requirement in a department , the number of
people can be reduced or increased . then leads to low morale among the

Founded in 1987 by David Duffield and Ken Morris, originally
headquartered in Walnut Creek, California, and eventually Pleasanton,
California, PeopleSoft's roots began with an idea Duffield had about a "Client-
Server" version of Integral Systems popular mainframe HRMS package. Once
Integral declined development and released Duffield to pursue this endeavor on
his own, PeopleSoft was born. In 2003, when the company acquired J.D.
Edwards, it decided to differentiate its former product line with those of
Edwards by renaming both products. In January 2005, PeopleSoft was acquired
in a hostile takeover by Oracle Corporation. This takeover was resisted, but
Oracle overcame the legal challenge and PeopleSoft ceased to be an
independent company, although its products continue to be used.
Product design
The whole software suite of PeopleSoft moved from the traditional client-
server based design to web-centric design, called PeopleSoft Internet
Architecture (PIA) with their version 8 releases. The end result was that all of a
company's business functions could be accessed and run on a web client. A
small number of security and system setup functions, though, still needed to be
performed on a fat client machine. The inherent nature of Internet-based
applications allowed for a straightforward transition from a client-server model .
One important feature of PeopleSoft's PIA is that no code is required on the
client - there is no need for additional downloads of plugins, or JVMs such as
the Jinitiator required for Oracle Applications.
The architecture is built around PeopleSoft’s own PeopleTools
technology. PeopleTools is a proprietary development platform (similar to a
4GL) created by PeopleSoft. This platform includes many different components
a developer theoretically needs to create an application including a scripting
language, design tools to define various types of metadata, standard security
structure, and batch processing tools. The metadata describes data for user
interfaces, tables, messages, security, navigation, portals, and so forth. The
benefit of creating their own development platform allowed PeopleSoft
applications to run on top of many different operating systems and database
platforms, It is not tied to a single database platform (though with the Oracle
takeover, it is possible this could change in the future). PeopleSoft
implementations exist or have existed on Oracle, Microsoft SQL Server,
Informix, Sybase, IBM DB2 (including its z/OS, Unix and OS/400 variants),
Oracle Rdb and HP AllBase/SQL.
All of PeopleSoft’s modules (Human Resources, Supply Chain,
Financials, CRM, etc.) are built with the PeopleTools technology. A benefit of
the technology is that all the code which makes up a module can be customized
to suit the owner’s business needs. An auxiliary product, PeopleCode, is an (ool)
object-oriented proprietary language used to express business logic for
PeopleSoft applications.
J.D. Edwards
In 2003, PeopleSoft performed a friendly merger with smaller rival J.D.
Edwards software. The former rival's similar product line was differentiated by
its target audience; mid-sized companies who could not hope to afford the
original PeopleSoft applications. J.D. Edwards product lines, formerly J.D.
Edwards World on the AS/400 and OneWorld was and continues to be
differentiated by its Configurable Network Architecture or CNC Architecture.
This architecture is designed to shield applications from both the operating
system of the database backend servers as long as some flavour of the SQL
language is used. Thus, IBM's DB2/UDB, Microsoft's SQL 2000 and Oracle's
databases are supported. J.D. Edwards also continued to support thousands of
customers on AS/400s running its original J.D. Edwards World or WorldSoft"
Likewise servers can run on a host of operating systems including Linux,
Windows and IBM's AS/400 operating system. In addition, PeopleSoft remains
committed to supporting J.D. Edwards's original AS/400-based World software,
also called WorldSoft, the old-style "green screen" application — the same
application which drove Duffield to branch out and create PeopleSoft in the first

Oracle Corporation
Beginning in 2003, PeopleSoft battled with Oracle over control of the
PeopleSoft company. In June 2003, Oracle made a $7 billion bid ($19.50/share)
in a hostile corporate takeover attempt. In February 2004, Oracle increased their
bid to approximately $9.4 billion ($26/share), a 33% increase; this offer was
also rejected forthwith by PeopleSoft's board of directors. Later that month, the
U.S. Department of Justice filed suit to block Oracle, on the grounds that the
acquisition would break anti-trust laws; however, in September 2004, the suit
was rejected by a U.S. Federal judge, who found that the Justice Department
had not proven its anti-trust case; in October, the same decision was handed
down by the European Commission. Though Oracle had reduced its offer to
$7.7 billion ($21/share) in May, it again raised its bid in November to $9.4
billion ($24/share), marking a 14% increase.
In December 2004, Oracle announced that it signed a definitive merger
agreement to acquire PeopleSoft for approximately $10.3 billion ($26.50/share).
In January 2005, Oracle made drastic cuts to the PeopleSoft ranks. Although
these cuts affected approximately 9% of the 55,000 staff of the combined
companies, they have maintained at least 90% of PeopleSoft's product
development and support staff.
After its acquisition of PeopleSoft, Oracle rebranded the original J.D.
Edwards products to once again include the J.D. Edwards name in order to
capitalize on the strong brand loyalty that was perceived to exist within the J.D.
Edwards user community. Thus, PeopleSoft EnterpriseOne was rebranded JD
Edwards EnterpriseOne and PeopleSoft World was rebranded JD Edwards
PeopleSoft has merged with Oracle and a new product Fusion is to be
released by Oracle in the near future. Oracle says Fusion will take the best
aspects of the PeopleSoft, JD Edwards and Oracle Applications and merge them
into a new product suite.
Oracle is, however, offering to maintain support for the existing Oracle
and PeopleSoft product lines for customers who wish to continue with what
they have. The line they are taking appears to be an attempt to prevent customer
defections to rival ERP vendors by making it attractive to retain current
applications or move to Fusion when appropriate.
PeopleSoft in use
PeopleSoft software has been successfully implemented by many of its
customers. However there have been several instances of litigation. As with any
ERP software, the implementation process (including analysis, planning and
development), performance (load) testing and various other types of software
testing is absolutely critical towards the success of the project.
Although Student Administration and Higher Education systems make up
only a small proportion of the company's user base, they seem to have attracted
a degree of adverse comment.
In 1997, Cleveland State University licensed PeopleSoft's software for
tracking student records. They initially had an implementation partner, Kaludis
Consulting Group Inc. After seven years of difficulties, CSU sued - initially
naming Kaludis, but later (after Kaludis countersued) naming PeopleSoft as the
main defendant and including Kaludis. The suit was for $510 million, claiming
breach of contract, fraud, negligent misrepresentation and four other counts. The
university claimed that software developed by PeopleSoft was missing specified
features, and as a result caused disruption to their admissions process.
PeopleSoft claimed that they had followed industry best practices. Court
documents available online show the case was settled in 2005. The settlement
agreement mentions a payment from Kaludis to CSU, as part of the settlement.
There is no mention of any payment by PeopleSoft.
In December 1999, seven of the eight "Big Ten" Midwestern universities
which licensed PeopleSoft's software wrote a joint, open letter to the PeopleSoft
CEO complaining about quality and performance issues.
The California State University system adopted PeopleSoft in the early
2000s. The university spent $500 million on this system in a process so
deficient that it resulted in an investigation and a rebuke by the state legislature.
The Report of the California State Auditor criticised the University, amongst
other things, for not having a business case for the implementation. When asked
why it never conducted a formal return-on investment analysis on the CMS
project, the university explained that the magnitude of potential savings
estimated by its consultants, IBM and Pacific Partners Consulting Group
(Pacific Partners), led them to believe that such a formal analysis was
Arizona State University, one of the largest universities in the western
region, recently migrated to an Oracle database and PeopleSoft solution.
PeopleSoft timeline
• 1987: PeopleSoft, Inc. founded by David Duffield and Ken Morris in
Walnut Creek, CA, USA.
• 1988: PeopleSoft HRMS released.
• 1991: Begins opening international offices.

• 1994: Public distribution of Distribution and Financials modules.

• 1995: Launch of Student Administration System.

• 1996: Releases Manufacturing and PeopleSoft 6, their first ERP package.

• 1997: PeopleSoft 7 is released within upgraded ERP modules.

• 1998: PeopleSoft 7.5 is released with improved client/server technology.

Acquired Intrepid Systems.
• 1999: Craig Conway named new CEO; release products to enable Internet
• 2000: Acquired Vantive Corporation.
• 2000: Deliver PeopleSoft 8 with an in-house application service provider.

• 2003: Acquired J.D. Edwards

• 2005: Acquired by Oracle Corporation.

• 2007: PeopleSoft HCM 9.0 is released.

Some Recommendations

The top 20 ERP implementation tips

1. Know your goals for your ERP implementation. Choose the product that
promises to meet those goals and put measurement tools and processes in place
to gauge your success. In particular set goals for performance, response time
and downtime.
2.Don't do any project without a plan, particularly an ERP project which
touches almost every part of your organization. Be sure to test, test, test, all the
way through. All of these things seem like 'nice-to-haves' rather than critical
elements in a project, but can make the overall project much more successful.
3. Involve users in your ERP project planning phase. The software is not going
to do you much good if you don't have employee buy-in.
4. Don't do the planning and implementation alone if you don't have the in-
house skills to make it happen. Determining which options and features to use
requires experience. If the in-house team doesn't have that experience finds a
local ERP expert who is trustworthy and who collaborates well with your team.
5. Be realistic in your cost projections. Double the consulting firm's estimate.
Be realistic about training costs. Even at the largest level, companies
underestimate the training costs.
6. Don't keep adding to your project. In the planning and evaluation stage,
people see the capabilities of products and want to use each new one they
discover. Commit to what you want to do initially. Get your return on
investment and then expand. Otherwise, you'll have a never-ending and
unsuccessful project.
To host or not to host?
7. If you'd prefer the hosting model for your ERP, then scrutinize your
application service provider (ASP) well. First of all, you must be able to trust
this ASP with your data. Find out if that hosting company provides cookie cutter
solutions or can customize the ERP suite to fit your needs. Many outsourcers
don't know enough about ERP to customize it. Then again, if a cookie cutter
solution is okay for you, then fine, use an outsourcer and you don't have to take
care of your ERP.
8.Hosting should take out a lot of internal costs of labor. It should save you
money…by spreading payments over a period of time. You should be paying
less over a period of time for hosting than you would do it yourself. If you're
not paying less, don't use an ASP, he said
9. Choose an ERP package that is industry-standards based. You don't want to
find yourself out on a limb with customers who can't interact with your
proprietary, out-of-standard implementation.
10. Look closely at maintenance costs. You can pay a great purchase price and
find that it costs a fortune to maintain.
11. Evaluate your processes and decide if changing them to fit a particular ERP
suite would be beneficial. Either you're looking for customization or going for
out-of-the-box. With the latter, people have to change how they do things in
order to conform to the package. That may work for a company that needs to
make changes anyway. Often, however, it's better to choose a suite that can
conform to your needs.
12. Discuss a vendor's stability with the vendor reps and outside experts. Find
out if the company is losing market share, which might make it a candidate for a
takeover or failure.
13. Whenever a company and its ERP package are acquired, it's not usually
good news for the customer. Often, the vendor is buying the client base and is
not that interested in the software itself. Instead, they'll try to get clients to move
to their own platform. In this situation, customers may have to migrate without
good business reasons.
14. Get empirical evidence of return on investment from the vendor and/or a
consultant. Also, simulate the ERP suite in your company and make your own
15. Get vendors to come clean about their upgrade cycles. Once they get you as
a customer, their goal is to sell you new features and upgrades. You want a
company that upgrades and adds necessary features and doesn't lock you into an
expensive upgrade cycle.
16. Find out how much customization assistance the vendor will offer. If you
customize the ERP package to fit your business scenarios without vendor
support, you can limit your support options from that vendor down the road.
17. Be efficient in contract negotiations. Don't spend too much time analyzing
details to the Nth degree. If vendor can answer 25 critical questions and give
most of what you want, you're going to be in good shape. Focus more on critical
items to get through negotiations more quickly.
18. You can't get everything you want. Do accept that there is always going to
be a functionality gap. Usually, you have to let 10% go. If the gap is more than
10%, keep shopping.
After the implementation
19. Pay attention to the quality of your data and the daily workflow. This is
especially important during the transition time after implementation and during
periods when your business is changing or growing. Watch for seasonal
variations, too. For example, Christmas can cause big jumps in data volume for
a retail company.
20. Don't sign up for long training sessions. Instead, do some initial, condensed
training on your own site, and then set up a regular class schedule that gives
users time to learn before they move on. By the time the class is over, the
trainees have forgotten the first half of the lessons.

The growing information needs of an enterprise make it imperative to

improve or replace old systems. Especially under the present Indian business
environment, where the globalization has been initiated, full convertibility is
coined, Infrastructure Projects are nearing completion, and it is expected that
the whole business system will undergo a major shift. Thus by being a
proficient ERP consultant, ERP will prove their commitment to the business
world and modern management.


 From CTS, VIT

 Maximizing your ERP system-HAMILTON
 Management Information Systems-O’Brien Marakas
 ERP tools,techniques,and applications for integrating the supply chain-
Carol A.Ptak