Enterprise Resource Management (EPP)

Unit:-1

Introduction of ERP
Enterprise resource planning (ERP) is business management software—usually a
suite of integrated applications—that a company can use to collect, store, manage and
interpret data from many business activities, including:
Product planning, cost
Manufacturing or service delivery
Marketing and sales
Inventory management
Shipping and payment
 ERP provides an integrated view of core business processes, often in real-time,
using common databases maintained by a database management system. ERP
systems track business resources—cash, raw materials, production capacity—
and the status of business commitments: orders, purchase orders, and payroll.
The applications that make up the system share data across the various
departments that provide the data. ERP facilitates information flow between all
business functions, and manages connections to outside stakeholders.

 Enterprise system software is a multi-billion dollar industry that produces

components that support a variety of business functions. IT investments have
become the largest category of capital expenditure in United States-based
businesses over the past decade. Though early ERP systems focused on large
enterprises, smaller enterprises increasingly use ERP systems.

 The ERP system is considered a vital organizational tool because it integrates

varied organizational systems and facilitates error-free transactions and
production. However, ERP system development is different from traditional
systems development.

 ERP systems run on a variety of computer hardware and network

configurations, typically using a database as an information repository.

Need of ERP
Separate systems were being maintained during 1960/70 for traditional business functions like
Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain
Management. These systems were often incongruent, hosted in different databases and
required batch updates. It was difficult to manage business processes across business
functions e.g. procurement to pay and sales to cash functions. ERP system grew to replace
the islands of information by integrating these traditional business functions.

The successful implementation of an ERP system will have many advantages, as

indicated below:
  Business Integration and Improved Data Accuracy: ERP system is composed of
various modules/ submodules where a module represents a particular business
component. If data is entered in one module such as receiving, it automatically updates
other related modules such as accounts payable and inventory. This updating occurs at
real time i.e. at the time a transaction occurs. Since, data needs to be entered only
once at the origin of the transaction, the need for multiple entries of the same data is
eliminated. Likelihood of duplicate/ erroneous data is, therefore, minimized. The
centralized structure of the database also enables better administration and security
provisions, which minimizes loss of sensitive data.
 Planning and MIS: The various decision support tools like planning engines and
simulations functions, form an integral part of an ERP system that helps in proper
utilization of resources like materials, human resources, and tools. Constrained based
planning help in drawing appropriate production schedules, thereby improving the
operation of plant and equipment. As a part of MIS, an ERP system, contains many
inbuilt standard reports and also a report writer that produce ad hoc reports, as and
when needed.
 Improved Efficiency and Productivity: In addition to provision of improved planning,
ERP system provides a tremendous boost to the efficiency of day to day and routine
transactions such as order fulfillment, on time shipment, vendor performance, quality
management, invoice reconciliation, sales realization, and cash management. Cycle
time is reduced for sales to cash and procurement to pay sequences.
 Establishment of Standardized Procedures: ERP system is based on processes of
international best practices, which are adopted by the organizations during
implementation. Department silos are purged, and maverick practices are done away
with. Because of top-down view available to management, chances of theft, fraud and
obsolescence are minimized.
 Flexibility and technology: Due to the globalized environment, where production
units, distribution centers, and corporate offices reside in different countries,
organizations need multi-currency, multi-language and multi-accounting modes, in an
integrated manner. These provisions are available in most of the ERP systems,
particularly in products offered by tier 1 and tier 2 vendors. ERP vendors are also quick
to adopt latest technologies, from mainframe to client server to the internet. Unlike a
bespoke system, Upgrading to latest technology for a running ERP system is
uncomplicated, involving mostly adoption of service packs and patches.

Advantages of ERP
ERP can improve quality and efficiency of the business. By keeping a company's internal business
processes running smoothly, ERP can lead to better outputs that may benefit the company, such as in
customer service and manufacturing.
ERP supports upper level management by providing information for decision making.
ERP creates a more agile company that adapts better to change. ERP makes a company more flexible
and less rigidly structured so organization components operate more cohesively, enhancing the
business—internally and externally.
ERP can improve data security. A common control system, such as the kind offered by ERP systems,
allows organizations the ability to more easily ensure key company data is not compromised.
ERP provides increased opportunities for collaboration. Data takes many forms in the modern
enterprise. Documents, files, forms, audio and video, emails. Often, each data medium has its own
mechanism for allowing collaboration. ERP provides a collaborative platform that lets employees spend
more time collaborating on content rather than mastering the learning curve of communicating in
various formats across distributed systems.
Disadvantages of ERP:
Customization can be problematic. Compared to the best-of-breed approach, ERP can be seen as
meeting an organization‘s lowest common denominator needs, forcing the organization to find
workarounds to meet unique demands.
 Re-engineering business processes to fit the ERP system may damage competitiveness or divert focus
from other critical activities.
ERP can cost more than less integrated or less comprehensive solutions.
High ERP switching costs can increase the ERP vendor's negotiating power, which can increase
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).
Harmonization of ERP systems can be a mammoth task (especially for big companies) and requires
a lot of time, planning, and money.

Growth of ERP
Growth Reasons for a New Manufacturing ERP System
There are lots of reasons that might make you consider implementing a new manufacturing
ERP system. If you're having problems with the following growth situations than it is
definitely time for new ERP software that better fits your needs.
Does your ERP solution offer simple implementation options for more efficient new
technologies and functionality, such as barcodes, warehouse management, and fixed
asset tracking?
Customers are attracted to easy solutions to their business needs and technology is developed
based on that need. If your ERP software doesn't allow your functionality to keep pace with
current technology and business options, then new customers will be hard to find.
Does your vendor still support your ERP software solution?
Many manufacturing and distribution ERP software solutions are no longer being supported
by their vendors. If you are not receiving the support to keep up with the market and if the
ERP software itself is not expanding to support your needs, then it's time to shop for a new
solution.
Are your business needs outrunning your ability to create your own custom solutions
and the standard ERP solutions are just not enough?
Sometimes business demands outweigh the ability to create your own custom ERP software
solutions. Often, a new ERP system will have the solutions that you need or will be willing to
work with you to develop supported solutions in the standard product that will fit the demand
for less than the cost of doing it yourself.
Are you expanding into multiple countries?
When businesses grow, they often expand into multiple countries. Many ERP systems can't
handle the globalization of the supply chain or business procedures. If this is the case, you
should be shopping for a new one.
Features of erp
The scale, scope, and functionality of ERP systems vary widely. However, most ERP
software features the following characteristics:

1. Enterprise-wide integration. Business processes are integrated end to end across

departments and business units. For example, a new order automatically initiates a credit
check, queries product availability, and updates the distribution schedule. Once the order
is shipped, the invoice is sent.
2. Real time (or near real time) operations. Since the processes in the example above
occur within a few seconds of order receipt, problems are identified quickly, giving the
seller more time to correct the situation.
3. A common database. A common database was one of the initial advantages of the ERP.
It allowed data to be defined once for the enterprise with every department using the same
definition. Individual departments now had to conform to the approved data standards and
editing rules. While some ERPs continue to rely on a single database, others have split the
physical database to improve performance.
4. Consistent look and feel. Early ERP vendors realized that software with a consistent
user interface reduces training costs and appears more professional. When other software
is acquired by an ERP vendor, common look and feel is sometimes abandoned in favor of
speed to market. As new releases enter the market, most ERP vendors restore the
consistent user interface.

The following diagram illustrates the features of ERP –

Mis Integration

ERP is an integrated, real-time, cross-functional enterprise application, an

enterprise-wide transaction framework that supports all the internal business
processes of a company.

It supports all core business processes such as sales order processing,

inventory management and control, production and distribution planning, and
finance.
Erp drivers

ERP drivers includes those issue which affect/influence organization‟s trade and stake holder‟s
value. There are internal and external both. Vendor needs to take care of many factors before selling
his services
a.Companies point of view
i. Contract
ii. Personnel process
b. Vendors‟ point of view
i. Marketing expenses
ii. Edge over competitors

Trends in ERP
To analyze the trends of ERP it is first important to look at the current state of
ERP Software industry. ERP software is used for CRM (customer relationship
management and SCM (supply chain management). Presently ERP companies
are trying to expand the capacity of their product that is why many of them are
catering to SMEs (small and medium enterprises) instead of large
organizations.

 Internet and e-commerce combined have both played an important role in
evolution of Enterprise Resource Planning. Companies are trying to combine
their supply chain management functions with the internet so that suppliers can
 also have easy access to information from anywhere in the world. ERP
software is integrating the business processes within a company; vendors are
working to merge the collaboration of suppliers, customers and employees that
work with them.

 Many ERP companies have started to focus on SME, they are providing tailor
made products and services vertically by reducing the cost and complexity of
implementation. The technologies continue to change, and companies must be
able to adapt to new technologies if they wish to remain competitive. Due to an
inevitable constant advance in technologies it can be difficult to judge which
direction certain vital business resources are going. Fortunately, enterprise
resource planning is relatively easy to project and can be predicted with some
measure of clarity.

 That's because the basic tenets of ERP systems are well-established and only
need to be converted to other kinds of devices to keep up with advances in
technology. In fact, while the underlying science behind ERP systems might be
above the heads of most of the population, the concept is relatively simple –
the more information that companies have at their disposal, the more educated
their decisions in the future will be. Here are some of the ways that data
recording and prediction will improve going forward.




 Customization

The type of customization that's on the horizon leans more towards the scope
of the systems, rather than the capabilities of enterprise resource planning
applications. In other words, no matter what the size and shape of a company
is, it will be able to affordably record whatever data is vital for its operations.
Many small and medium sized businesses already have the possibility to get a
 better handle on the materials that make them function, but soon almost any
company might be able to log important information.




 Social media integration

In the case of ERP systems, social media deems very important. Companies at
which employees aren't often face-to-face or familiar with one another might
have trouble sharing information and being more collaborative, the way that
the additional data ERP systems provide might require. However, when live
chat, video conferencing and business intranets are combined, it becomes a
simple matter for different departments to work together to use the data that
ERP programs provide to improve company operations. Every company needs
to maintain the ability to manage their ERP no matter what direction it may
lead to.

 Private clouds

At the moment, many companies are mulling a conversion to cloud enterprise
resource planning. Not all of them will go forward with such plans anytime
soon, but there will come a time when almost all information is remotely
stored. There is a point of diminishing returns at which local storage becomes
impractical and needlessly expensive, so it isn't just ERP technology that will
exist in the cloud – it will be almost all of it.



 Profile of the consultants’ team with the resume of each member

 Consulting fee and payment details

 Implementation methodology

 Time schedule and the implementation budget

 Terms and conditions of knowledge transfer and employee training

 List of deliverables (reports, manuals, knowledge bases etc)

 Project monitoring and status reporting systems.

ERP in India
Having ERP in India is like an investment that most business houses look up to. ERP or
enterprise resource planning can be defined as an integrated, multi-module system that
assimilates all the data and processes of an organization into a unified system. To attain this
goal, it is essential to strike a successful combination of both hardware and software.
The whole concept of enterprise resource planning originated in the large industrial types of
companies where the system was used to simplify their processes and workflow. However,
with the passage of time, ERP has evolved as a more comprehensive system and now it is
largely available to companies of all types and sizes. It serves and supports a wide range of
business functions like manufacturing, order entry, accounts receivable and payable, general
ledger, purchasing, warehousing, transportation and human resources.
The ERP Scenario in India
There are several positive and negative factors as far as the ERP scenario in India is
concerned. Though having ERP in companies of India mostly provides a profitable source of
income and quality customer service, there are several challenges to the introduction of ERP
in India. This includes change management, organizational intervention, replacing outdated
software, shifting from function view to process view, hiring ERP-literate staff and faith in
package software in the place of custom-built software.
Certain concerns that have never used ERP software are intimidated whereas some view ERP
as a takeover to there IS professionals. Most of the Indian corporations have large in-house IS
shops and they consider ERP as a threat to their very existence. Moreover, ERP places more
value on the domain knowledge of functions rather than IT skills. The communication
infrastructure needed to implement ERP are lacking in some of the indigenous companies.
In spite of all these, the growth of ERP in India is quite promising. Several well-known
business houses in India like Cadbury India, Mercedes Benz India, Siemens, Haldia
Petrochemicals, L&T, TISCO, and UTI use SAP while Kellogg’s India Ltd., Maruti Udyog
Ltd., Sony India Pvt Ltd. and CESC are Oracle users. India’s most valuable contribution to
ERP came in 1980s when the country launched the world class ERP product Marshall from
Ramco Systems, by using the technology of the 80’s. Marshall is the first successful large
scale software from India and several companies like HDFC Bank, Hyundai, Nestle Limited
and Standard Chartered Bank use this ERP package. Actually, this product is a formative
ERP called virtual splat. A virtual splat enables merging of accounting and manufacturing
practices in an easy-to-use, implemented package and is used by small start-up companies.
The benefits of ERP in India
ERP will provide the companies in India the facility to have information available freely, thus
making the generation of enquiry or report easier. These systems automatically adhere to
most of the standard company rules and compliances, making it easier for the organization to
follow. The developed performance modules help the businesses to develop refined analysis,
insights, and innovative schemes for improvement. ERP systems in India will also produce
more dynamic jobs and improved customer care service and it will also enhance product
values. As more and more Indian companies become accustomed to ERP, they can develop a
successful broader scale of products for consumers. Last but not the least, having ERP in
India implies not having to go and develop software products in foreign countries and
distributing them back to India.

Unit:-2
Communication in ERP Systems
Enterprise Integration Tools for ERP
Enterprise Resource Planning (ERP) is a process oriented
methodology which integrates systems used across different
departments of a company, enabling easy and uniform flow of
information under defined controls, aided by use of software
applications and defined best practices.

This article describes the tools used in ERP and their characteristics
for the various functions they cater to. To better understand the tools,
let’s begin with the functional requirements.

The tools fulfilling the ERP requirements:

To meet the needs of the above mentioned functional requirements,

the following tools and applications are mandatorily integrated into the
ERP system.

-Database Management / Data Warehouse / Information

Management Tools:

Data storage and information management with

established workflow across different departments and functions are
the backbone of any ERP system. Multiple solutions and tools are
available for data storage, which include relational databases from
companies like Oracle, Sybase, DB2 and open source free offerings
like Microsoft MySQL, PostgreSQL, Apache Derby, etc. Other
information management tools may include Content Management
Systems (CMS) and repository applications.
Depending upon the industry and required functions, an appropriate
one needs to be selected. A manufacturer may find a transactional
database like Oracle or MySQL to be more relevant as transaction-
based data moves through different statuses (from manufacturing to
inventory to order capture to sale to supply status). On the other hand,
an online content writing company may find a CMS repository system
with version control a better fit for their needs.

The database or repository can be either a single centralized one, or

multiple with automatic data flow from one database to the other. The
defined workflow ensures seamless data movement. Databases can
be hosted locally or remotely, or even in the cloud.

· Applications and interfaces with suitable permission

control:

Data storage and management requires read-only or editing access to

process the data. Once items are manufactured, they need to be
marked as ready inventory. The stock management department then
updates it as ready for sale. Following a purchase, the item should be
updated to sold status and so on. To accomplish this, easy to use
applications and interfaces make an integral part of any ERP system
which also has defined controls and permissions. For e.g., once an
item is marked as sold, only logistics department operators should be
able to update it further, while the ones from manufacturing or
inventory department should get a view only access.

Similarly, for a content writing ERP tool, once a writer submits the
content to the editor for review, only the editor should be able to
modify it, to avoid any duplication and content conflicts.

To enable such permission based controls, applications and

interfaces to be built in, any ERP solution which may be browser
based, desktop installations or tablet/mobile apps. A manufacturing
team at a stationary location will prefer a desktop based interface,
while a sales team constantly on the move will benefit from a browser
based interface or mobile app.

· Workflow Management Tool:

An ERP system constitutes of multiple modules and data repositories

where data updates and actions follow a logically defined sequence
based on the business needs. This constitutes the workflow. Workflow
can be thought of as the mind controlling the various body functions
(flow of blood, air, food and other supplies, body parts movement,
etc.). A clearly defined workflow with appropriate access at various
levels is the necessary part of any ERP solution.

Commonly used tools implemented within ERP framework

include AgiloftWorkflow,
WorkflowGen, Inceptico DMS, Intelex Business Management,
SimpleECM, etc.

· Reporting Tool / Dashboard:

Management level, department level, team level or individual level

report generation is another important requirement for an ERP
system. It is usually available in either a dashboard form (with a real-
time data view – showing such info as orders received but not yet
shipped, failed payments of the last week, etc.) or customizable
reports generated in common word- or data-editing applications like
spreadsheets.

Most reporting tools and dashboards operate in real-time (or with a

minimal time lag). Like the applications used by departments for data
updates, these reporting tools/ dashboard views are available as
browser based or desktop installations. They also include end-of-day
reporting features offering emailing of reports with
charts/graphs/tables as Microsoft Excel or Word attachments.

· Communication Tools:

Within any system working across multiple departments,

communication is mandatory. ERP systems facilitate this by offering
tools for action based automated mail generation, instant messaging,
chat or general broadcast features at individual and group levels. Say
once an order is marked as “Ready to Ship”, an automated mailer
should be triggered to logistics department to initiate the dispatch
process; Or if a pizza shop kitchen has developed a problem, a
general broadcast message can be sent to all other departments to
stop taking further orders.

Further instant messaging functions (like those from Lync, Chatter or

Yammer) are incorporated to enable easy and instant communication.
In addition to the above tools that are an integral part of any ERP
system, there are additional ones which can be integrated on an as
needed basis:

· Analytical Tools:

A lot of analytical tools can be integrated within ERP system for

business intelligence, predictive analysis, data mining and related
analysis. These analytical tools are used to get valuable insights for
creating strategic business decisions based on available data (like
tracking consumer behavior around holiday shopping, comparative
results for products in red colored shelf having more sales than those
in blue colored shelf, etc.)

· Resource Allocation & Task Scheduling Tools:

ERP systems can also integrate tools for allocating resources across
departments and tasks (for labor intensive industries). These tools
work on the simple principle of defined time taken by a task/project
against the resource availability schedule. On task completion, the
resource is automatically assigned a new task matching his skills, or
is put in a pool for the next assignment. Tools have functionality for
manual intervention at the supervisor level in case a task is delayed.
Benefits include clear visibility about current and future workload,
optimum resource utilization, exploring possibilities for automation, etc

Network structure of ERP System

Structure of an ERP software. The essence of ERP is the fundamental
approach which takes a holistic view of the subject. The traditional
application system, which the organizations generally employ, treats each
transaction separately.
Information technology is changing at a fast pace. Underlying ERP technology is needed to
keep pace with first changing IT scenario and should also be flexible to adopt ever changing
business scenario. ERP technical architecture basically defines layout of layers of application
deployment between servers and desktops, interfaces and software objects. ERP architecture
is no more meant to just provide technical functionality, user interface and platform support but
should be able to absorb emerging technologies. It should be expandable and maintainable to
meet future business needs such as business process changes, merger and acquisitions,
compatibility with future regulations etc.

Mainframe Era: During, 1980s, ERP systems were running on mainframe, capable of
supporting hundreds of users concurrently. Users were connecting to this monolith system
through dumb terminals (terminals without any memory or processing power), only to access
and input data. Concept of Graphic users Interface was still to come and only a few
knowledgeable users were comfortable with this set up.

Client Server: During 1990s, client server (C/S) ERP application became popular. PC
became powerful and provided a better user interface (UI), through Graphic Users Interface
(GUI). Mainframe computers were getting replaced by midrange system such as AS/400 or
powerful PC servers. PCs (clients), networked with server / cluster of servers, are known as
Client Server platform and have the following characteristic:

 Server hosts central database and application programme.

 PC Clients, provide input, request service from server, performs display and does some
processing.
 System functions are done in three logical layers i) Presentation layer-at client PC ii)
Application layer, executing instructions from users and transferring and receiving data
from database iii) Database layer for centrally managing data. Under C/S concept,
server denotes either a physical or a virtual server.
 Application programme and database may be hosted in a single server or in two
separate servers. For multi location or large systems, application program is divided in
a number of networked servers which enhance speed and reliability of the system.

Monolith system of mainframe era gave away to multilayered and decentralized architecture of
C/S. Consequently, ERP vendors started adopting more and more Object Oriented Program
(OO) and third / forth generation programming language (3GL/ 4GL). This componentized
development environment enables them to develop more modular solutions which can be
customized, tested, deployed and retrofitted easily and separately.

Web enabled ERP

Adoption of Internet technology allows access to an ERP system from anywhere anytime,
enabling new ERP functionalities like Sales Force Automation.

User Interface (UI) under a Client / Server system was normally a small software programme
which needed to be installed, maintained and updated, at each desktop. Carrying out this task
over a number of desktops located at various nodes of Wide Area Network, became a
cumbersome assignment. Consequently, the concept of Uniform Resource Locator (URL) was
adapted and internet browser was used to access server from client side. This development
eliminated the need of installing client program but made use of Java applets, which gets
downloaded whenever a connection is made by the client, through URL. This was the
beginning of adoption of internet technology by ERP systems.

Additionally, on server side, a new layer of web server (HTTP server) was added for
generating HTML pages, to respond to client instructions. A Caching server was, also, added
to improve speed and performance. Browser enabled client and additional layer of web
servers, provided the first step of web enablement of ERP solutions.

The next step of web enablement is to extend backend ERP system to the web so that mobile
workers, suppliers and vendors can access and collaborate through secured internet link. To
achieve this, ERP systems are needed to be redesigned and made compliant of standard like
Java 2 Enterprise Edition (J2EE). This is a time consuming work as traditional ERP systems
are complex, inflexible and developed on proprietary platforms and is progressing slowly.

An ERP workflow is a logical blueprint that describes how ERP applications

manage business processes. An ERP workflow: Provides real-time visibility
of operations. Gives business leaders a quick view of their global supply
chain. Helps identify challenges and opportunities, enabling you to make
faster business.
Enterprise Resource Planning (ERP) software includes powerful and strategic applications

that are used to manage information within an organization. The ERP workflows you

create with the help of ERP tools can integrate all the different facets of the company into a

comprehensive information system, that can be easily accessed by employees across the

organization.

While ERP workflows can seamlessly streamline business processes, they cannot automate

manual tasks, which is exactly where Kissflow, a workflow automation tool can help.

What is an ERP workflow?

An effective ERP solution helps you streamline tedious tasks, gives real-time visibility into

the inner workings of the business processes, and in turn makes your employees more

productive and efficient in their roles.

But most ERP solutions do not come with a native way to handle approval workflows

inside the product, so you must create one outside the system.

An ERP workflow is a logical blueprint that describes how ERP applications manage

business processes.

An ERP workflow:

 Provides real-time visibility of operations

  Gives business leaders a quick view of their global supply chain

 Helps identify challenges and opportunities, enabling you to make faster business decisions

 Streamlines and integrates tasks in the organization

 Allows access to company data from anywhere

 Makes collaboration easier

 Offers real-time analytics and reporting

The ERP process steps for creating a successful workflow

1. Identify the reason for ERP implementation

The first step of the process is to identify why you want to incorporate ERP as part of your

organization’s digital transformation initiative. If you wish to achieve greater work

efficiency or higher data security, you need to analyze your main goals from the ERP

perspective.

This will not only help you pick the right ERP tool, but it will also manage business

processes more efficiently and improve overall productivity.

2. Evaluate the scope

The features of the ERP tool that you require should be evaluated as well, especially if you

are looking to have more control over business processes and create transparency in daily

operations. Without an unclear definition of the ERP scope, you will be left with an ERP

workflow process that does not add any value to your business and becomes an extra

burden on your finances.

3. Migrate data
With the ERP tool picked out, it’s time to create an ERP workflow that connects all the

applications and processes in your organization. To migrate your data to a new ERP tool,

you need to first identify the data that has to be transferred and find a process to make the

transfer securely.

4. Add stakeholders

Add relevant people to the different parts of the ERP workflow. Each user can have

customized permissions to the workflow, depending on the responsibilities they have. The

users can also be allowed to submit data, view data, or approve/reject data.