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ERP Introduction: ERP stands for Enterprise Resource Planning. ERP integrates various functions of an organization.

It addresses typical needs of a type of Organization. ERP implements core processes such as order processing, invoicing, BOM processing, preparation of Balance Sheet, Profit and Loss statement, Store & purchase, Payroll & HRD, Production Planning & Scheduling, Financial Accounting, Sales & dispatch, Marketing, Customer Relationship etc., that are common to all industry segments. Thus, it is a Package Software & not a Custom made software for a particular business.

Integration of various functions is ensured keeping in view the logic involved in the functions such as finance, HR, Materials etc and data redundancy is also nil. Integration is an extremely important part to ERPs. ERP's main goal is to integrate data and processes from all areas of an organization and unify it for easy access and work flow. Once the data is entered, it is available to all the modules. This process oriented system helps to ensure integrity and consistency of data. ERP is thus a general purpose software that takes care of all the typical business needs and also provides for customization to some extent. It takes advantage of the fact that the core processes of most organizations are by and large, the same. There has been a significant amount of uniformity, standardization and simplification of the core processes across the industry. Standard processes and procedures have seen a great level of standardization to suit International Trade. These developments permit companies in Germany and Netherlands to develop the world-class software that can be profitably used by a corporation in a developing country like India, as ERP software embeds these best practices inside their software. ERP software vendors also bring in world-class practices to any company that implements the ERP software as much effort goes into understanding business processes used by thousands of corporations worldwide. Thus, best business practices are automatically implemented through use of ERP. ERP uses thousands of software professionals who remain continuously focused to improve their ERP software product. No individual end user company can afford such large pool of software professionals. This is the secret of success of ERP. An ideal ERP system is a single database system that contains all data for various software modules. These software modules can include:

Manufacturing: Some of the functions include; engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etc. Financials: Accounts payable, accounts receivable, fixed assets, general ledger and cash management, etc.

This in turn may deprive the benefits of the best practices to that company. ERP provides an opportunity for a corporation to operate with dynamism to improve production. calls center support. However. commissions. many of these systems would not be able to communicate with one another or need to store or rewrite data to make it possible for cross computer system communication. There are many advantages of implementing an EPR system such as: • • • • • • The ability to easily share data across various departments in an organization A totally integrated system The ability to streamline different processes and workflows Improved efficiency and productivity levels Better tracking and forecasting Lower costs . An organization may adopt too much customization into ERP implementation and sticks to the rigid practices followed for decades in the specific company. Unfortunately. supply chain planning. order entry. etc. etc. This leads to nearly insurmountable problems of reconciling data locked up among the diverse systems. Projects: Costing. purchasing. These are the problems of islands of heterogeneous and incompatible information systems that were developed over the past several years in many organizations. ERP is only means and not an end by itself. suppliers and employees. the onus of profiting through these best practices entirely lies on the company which implements it. customer service and customer satisfaction by the use of world class business practices. Typical Scenario Before ERP: In a typical setup. data and database. activity management. training. service. Customer Relationship Management: sales and marketing. time and attendance. Data Warehouse: Usually this is a module that can be accessed by an organizations customers. various departments in an organization would most likely have their own computer system. etc. supplier scheduling. billing. claim processing. time and expense. customer contact. etc Supply Chain Management: Inventory. all aspects of an organization can work in harmony instead of isolated systems that need to be made compatible with each other even with different types of software used for different modules. This is the result of developing different modules as & when required on different platforms & software development systems.Human Resources: Benefits. When ERP system is implemented. payroll.

Customization is the job of fitting the ERP software to meet the demands of a particular organization. ERP implementation consultants are usually required for large organizations. ERP offers neither the range of functionality nor the comfort of familiarity that a custom legacy system can offer. There are basically three approaches to ERP implementation. there is a risk of the implementation getting out of control. No one within the company has any experience using it. processes & environment of the organization into the corresponding model of the organization that is embedded in the ERP software. Moreover. Technical support can be problematic. consulting services are required. This has the advantage of getting the full benefit of the integrated software across all functions of the organization. This may require significant changes in work practices. a suitable location in the organization. Therefore. A badly implemented ERP system which ultimately fails may cause irreparable damage to the working of an organization. or one can adopt customization. Implementing ERP System: A well-implemented ERP can translate to crores of rupees of saving for an organization. Initially. In this approach. Once the project team gets the system up and running and works out all the bugs. This would mean the mapping of the organizational structures.Financials.are implemented at the same time. Considering the wide scope of ERP systems. getting everyone to cooperate and accept a new software system at the same time is a tremendous effort. companies discard all of their legacy systems at once and install a single ERP system across the entire company. such as a branch office or Head office is chosen for implementation based on better resources. However. Support services are also usually required for trouble shooting and maintenance of the ERP system. called Big_bang. For initial stages of implementation. Customization services are also required to address additional needs of integration in a large organization. Logistics & HR. This is a kind of pilot installation in a particularly open-minded business unit where the core business of the corporation will not be disrupted if something goes wrong. ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.There can be some disadvantages such as: • • • • • • Customization in many situations is limited The need to reengineer business processes ERP systems can be cost prohibitive to install and run. the team begins . largely because the new system will not have any advocates. all relevant modules. • • In the first approach. so no one is sure whether it will work. for example . the implementation can be very complex.

The ERP system software can be configured to some extent to accommodate specific needs of an organization. This is customization. you will see value from the software. To get the most from the software. which will mean deep changes in long-established ways of doing business. such as financial bookkeeping. Thus. This is because the next release of ERP software obviously will not take into consideration various customized changes. which are. Thus. implementation of ERP in large organizations that do not share many common processes across business units. Many times. . some organizations implement ERP only in those functions. is done by a “Franchising Strategy”. across the enterprise. one is required to change the practice followed by the firm to suit the process native to the ERP software. initially. ship them and bill for them. It also impacts all other modules. If you use ERP to improve the ways people take orders. manufacture goods. you may not see any value at all. each business unit has a separate system and database. In most cases. and ERP asks them to change how they do their jobs. The systems link together only to share the information necessary for the company to get a detailed performance picture across all the business units. Another disadvantage of customization will be to deprive the benefit of world . The software is less important than the changes companies make in the ways they do business. considered to be of strategic importance. Customization Verses Changing Business Practices: • • • • Every business is different and is bound to have unique work methods that a vendor cannot account for when developing its software. Or else. whenever. Therefore. Implementation is many times done “Module wise”. In another approach. Individual modules are taken up for implementation in a phased manner depending on the criticality of applications. while linking common processes. you have to get people inside your company to adopt the work methods outlined in the software. If you simply install the software without changing the ways people do their jobs.• • setting up other units on ERP using the first implementation as a kind of in-house customer reference. Financial Module is implemented first. the ERP software is to be upgraded. or for processes that don’t vary much from business unit to business unit.class practice to the organization that is implementing ERP. A module taken up for implementation can be implemented across all locations or just at one location. Independent ERP systems are installed in each unit. one has to change the business process to accommodate the software. This is because Financial Modules provide the basic pulse of an organization. Customization is always outside the core of the ERP software. the customization exercise is required to be done again. People don’t like to change. Successful implementations of financials reinforces the faith of an organization in ERP.

This may involve many critical issues. The ERP software often brings the best practices from the industry. The core committee of ERP has to be constituted which needs champions who are knowledgeable and respected. Typically high end computer hardware is needed to implement ERP. RDBMS software such as IBM DB2. To benefit from such best practices. Oracle. such change must be managed. Managing change of such high order cannot be done without top management commitment. ERP software would need a high-end operating system that supports multi-tasking. An organization’s data in the legacy system needs to be migrated to the ERP system. That is the reason ERP needs top management commitment. applications server and presentation clients can be distributed over multiple machines running different operating system. Most of the ERP software today run on multiple platform and follow a client server architecture or Multi Tier Architecture where the data base server. these champions need to be spared for full time. These experts from outside. Preparing For ERP Implementation: • • • • ERP represents a major paradigm shift or change. the services of an implementation partner or consultant also become important. For successfully implementing ERP. After deciding on a particular ERP software. Change management is the key for the success of any ERP project. Informix & MS SQL Server today can support most ERP. these personnel are often impossible to spare. In this connection. Top management commitment should include the political will to implement such changes. not only bring software expertise with respect to particular ERP software. Migrating the data itself with the help of software tools may become a big and complicated exercise. Computer hardware requirements for the ERP systems have to be met. To provide scalability the operating system should support high-end processor features such as 64-bit support. Typically. it must be managed by the "indispensable" personnel. The core teem members must be drawn from the key functions and detained for ERP project implementation for a long period of six to nine months. multiuser application and multi-threading to support high performance. Data integrity and consistency can never be compromised.• The ERP processes have evolved over the past years of ERP implementation in some of the most well-managed corporations around the world. . ERP project cannot be managed by people who "can be spared". SMP support etc. To profit from ERP. Top Management commitment must ensure the release of such key people for the ERP core committee. but also bring the extra benefit from their vast prior experiences in other firms where they have implemented that particular ERP. High end UNIX & LINUX versions as well as Windows support ERP software of established vendors. existing business practices may have to be altered. For Data Management.

SAP ERP Operations & SAP ERP Corporate services. Project Management. There are other vendors also. SAP PLM ( Product Lifecycle Management). BAAN is now known as INFOR with the popular ERP solutions and other products also on the lines of SAP. but these three are the market leaders. ------------------------------------------------------------------------------------- . SAP ERP Financials. application servers could be running on Windows. SAP SRM ( Supply Relationship Management). SAP SCM ( Sypply Chain Management). the database can run under Unix operating system. Oracle products are : Oracle Peoplesoft Enterprize.For example. Human Capital Management. Customer Relationship Management. Oracle Financial Management. SAP ERP. ERP Software Vendors: World famous ERP vendors are SAP with a product line of CRM ( Customer Relationship Management). SAP ERP has componants as SAP ERP Human Capital Management. Supply Chain Management etc.