BA7301 – ERP

Unit 1

1. What is ERP?
Enterprise resource planning (ERP) is business process management software that
allows an organization to use a system of integrated applications to manage the
business and automate many back office functions related to technology, services and
human resources.
2. What are the Big 5 s in ERP Market?
The big 5s in ERP market are:
 SAP
 People soft
 J.D.Edwards
 Oracle Apps
 BAAN

3. What are the myths of ERP?

The myths of ERP are:

ERP means more work and procedures

Properly implementing and managing an ERP system is not an easy task. The transition
period from the traditional system or manual processing to ERP is difficult as new skills
have to be learned; new procedures and processes have to be followed, and so on.
Many employees think that ERP will add more work, make the work more difficult and
will force unnecessary procedures. Transformation from the old system to the ERP
system is a difficult process. However, if the management and the implementation team
do their job properly, ensuring that the employees are told what to expect and given
proper training, then the transition can be smooth. Once the employees get used to the
new system, they will understand the potential benefits and the effort saved through
automation of talks and jobs. Today's ERP tools automate many of the repetitive,
monotonous and tedious procedures, tasks and processes thus making the life of the
employees a lot easier.

ERP is the sole responsibility of the management

Making an ERP system work is the responsibility of all the employees. It involves
virtually every department and every person within the company. The company
management is not responsible for the day-to-day operation of the ERP system. Their
main job is to create an organizational environment in which ERP can thrive - give ERP
the full backing of the management. They should also be involved in the development of
ERP policies, usage guidelines, allocation of budget, package selection and
appointment of competent professionals to implement and manage the ERP system.
Only when the ERP team has the full backing and support of the management, they will
be able to implement the system smoothly.

The management should monitor the implementation and operation of the system,
review the progress and status periodically and should take necessary corrective action,
if required. The management should also ensure that the ERP implementation team
gets the support and co-operation of all the departments, But, thinking that the ERP
system will succeed just because the management is fully committed to its
implementation and operation is one of the biggest mistakes that an organization can
make. In fact, it is the employees - the day-to-day users of the system - who will decide
the fate of the ERP system. If the employees are not fully appraised, trained, satisfied
and are not happy with the system and are not using it properly, then the ERP system
will be a failure.

ERP is just for the Managers/Decision-makers

The managers and decision-makers are the major users of the ERP system. They are
the people who benefit the most from the properly implemented ERP system. They will
have all the information they need at their fingertips for making informed decisions. The
quality of the decisions and the speed with which the decisions are made are
dramatically improved as the ERP systems provide high-quality, timely and relevant
information. But every employee in an organization benefits from the ERP system. An
ERP system gives the store clerk access to the inventory record and enables him to find
out the exact quality of an item. It allows the production supervisor to plan his activities.
It allows all employees to apply for leave, get loads approved, gets the travel expenses
reimbursed and so on.

But for making the best use of the information processing power of an ERP system the
users should be trained on how to make the best use of the various features available. If
people are ignorant about these, they will find it useless and if they are not properly
trained, they will find the experience frustrating and tedious. These people will not use
the ERP system or if forced will use it but not to its fullest potential. They will see ERP
as a waste of time and do it just because they are forced to do it. This hostility towards
ERP can be eliminated if the users are properly educated and make aware of the
benefits of the ERP system.

ERP is just for Manufacturing Organizations

This assumption is basically due to the way in which ERP was historically developed
from the methods of Material Requirement Planning (MRP) and Manufacturing
Resource Planning (MRP II), which are relevant to manufacturing organizations. In the
manufacturing industry, MRP became the fundamental concept of production
management and control in mid 1970s. At this stage BoM (Bill of Materials), which is
purchase order management that utilizes parts list management and parts development,
was the prevailing trend.

And this concept unfolded from order inventory management of materials to plant and
personnel planning and distribution planning, which in turn became MRP II. This
incorporated financial account, human resource management functions, distribution
management functions and management accounting functions and came to globally
cover all areas of enterprise mainstay business and eventually came to be called ERP.
But in reality the concept of enterprise-wide planning of resource is not limited to any
particular segment of industry.

ERP is just for the ERP implementation team

The ERP implementation team usually consists of outside consultants, vendor

representatives and select group of employees. But once the implementation and under
training is over, the consultants and vendor representatives will leave. Then it is the
responsibility of each and every employee of the company to use the ERP system
properly and to make the best use of the new features and facilities.

ERP slows down the organization

Before the advent and popularity of ERP tools, most business tasks were performed
manually and this was a time-consuming process. Often a lot of effort was duplicated.
The ERP system automated the information flow across departments thereby
eliminating duplication of efforts and faster and accurate results. In the case of an ERP
system, an order can trigger a host of events that will take care of the materials
procurement, production planning, invoice preparation, informing the suppliers, making
and collecting payments and so on

Today, the ERP system never functions in isolation. It is completely and seamlessly
integrated with the supply chain tools and techniques right from customer relationship
management to supply chain management to logistics management. This level of
automation has dramatically improved the response time of organization and has
helped them in serving the customers better. So an ERP system makes the
organization efficient and never slows it down.

ERP is just to impress customers

It is true that a properly implemented ERP system can help in serving the customers
better as it helps the organizations to react faster, respond better and deliver high-
quality products and services at astonishing speeds. This improved efficiency and
quality will go a long way in improving customer goodwill and customer relations. So
with an ERP system you get more satisfied customers, but that is only one of the
advantages of an ERP system.
ERP package will take care of everything

ERP is not a silver bullet or a cure-all. Yes, a properly implemented, operated and
maintained ERP system can dramatically improve productivity, automate tasks, reduce
wastage and improve profits. But an ERP system needs people to operate, use and
maintain it. If the employees are not interested in using the ERP system or are using it
improperly, if managers are not making use of the decision-making capabilities of the
system or if the system is not maintained properly, then the ERP will not deliver it
promises.

It is a fact that the ERP tools have evolved over-time and have now become very
sophisticated. Today's ERP tools automate most business function and processes thus
making the lives of the users a lot easier. But thinking that the ERP tools will take care
of everything can be a recipe for disaster. There are many business activities that need
human intervention and judgment. While the ERP tools make these jobs easier, there is
no substitute for human intelligence and decision-making.

One ERP package will suit everybody

There are hundreds of ERP tools available in the marketplace. These tools differ in
features, capabilities, size, functionality, price, technical support, customizability,
scalability etc. The organizations are also different from one another. Each has its own
characteristics and identity. Assuming that one tool will be suitable for all organization is
wrong. Selecting and purchasing an ERP tool without analyzing whether it is suited for
the organization will have disastrous consequences.

For an ERP implementation to be successful, the tool that is implemented should be

compatible with organizational culture, practices and procedures. So when purchasing
an ERP package proper attention should be given to the selection of a tool that is best
suited for the organization.

ERP is very expensive

ERP packages come in all shapes and sizes. The sophisticated and high-end ERP tools
are very expensive. ERP system needs people to manage it. Thus implementing and
managing an ERP system is an expensive affair. But these expenses should be
weighed against the benefits of the ERP system.

An efficient ERP system will increase the productivity of the human resources, shorten
development and change cycles, streamline the production process, reduce errors by
automating the monotonous and repetitive tasks, enable the better management of
projects by providing quality information, improve customer satisfaction by resolving
problems quickly and so on. When the benefits of the ERP system are considered, it
becomes evident that the money spend on ERP is well spent and the ERP system will
pay for itself.
Organization can succeed without ERP

Before the advent of ERP, organizations were run manually. So, do we need ERP in
order to succeed? If an organization is very small in size, caters to the niche market and
has very limited scope, then it can sometimes succeed without ERP. But today's
organizations are becoming large and the products are becoming more and more
complex in size, sophistication and technologies used. Also, a single group does not
necessarily build the different components of a product.

This is the era of multi-site, distributed production, where different groups situated in
different parts of the world develop the components of a system. In such a scenario,
managing the activities of an organization is a very complex task. If proper control
mechanisms and procedures are not in place, very soon the operations can get out of
control and products and organizations can fail.