ENTERPRISE RESOURCE PLANNING
Year/ Sem: II/III
Branch: MBA
Prepared by: Dr. L.SUBBURAJ, Asso prof/MBA
MBA– Enterprise Resource Planning
UNIT I – INTRODUCTION
Enterprise resource planning (ERP) is a 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 and development • 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 (manufacturing, purchasing, sales, accounting, etc.) that provide the data.[1] ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.[2]
Enterprise resource planning (ERP) is a method of using computer technology to link ... programs that integrated the various smaller systems used in different parts of a company. ... Some manufacturers had encountered implementation problems. .... leader for the project and select a dedicated, cross-functional project team.
Characteristics
ERP (Enterprise Resource Planning) systems typically include the following characteristics:
• An integrated system that operates in (or near) real time without relying on periodic
updates[citation needed]
• A common database that supports all applications • A consistent look and feel across modules
• Installation of the system with elaborate application/data integration by the Information
Functional areas[edit]
An ERP system covers the following common functional areas. In many ERP systems these are called and grouped together as ERP modules:
• Financial accounting: General ledger, fixed asset, payables including vouchering,
matching and payment, receivables cash application and collections, cash management, financial consolidation
• Management accounting: Budgeting, costing, cost management, activity based costing • Human resources: Recruiting, training, rostering, payroll, benefits, 401K, diversity
management, retirement, separation
• Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity,
workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management
• Order Processing: Order to cash, order entry, credit checking, pricing, available to
promise, inventory, shipping, sales analysis and reporting, sales commissioning.
• Supply chain management: Supply chain planning, supplier scheduling, product
configurator, order to cash, purchasing, inventory, claim processing, warehousing (receiving, putaway, picking and packing).
• Project management: Project planning, resource planning, project costing, work
breakdown structure, billing, time and expense, performance units, activity management
• Customer relationship management: Sales and marketing, commissions, service,
customer contact, call center support - CRM systems are not always considered part of ERP systems but rather Business Support systems (BSS).
• Data services : Various "self–service" interfaces for customers, suppliers and/or
employees ERP OVER VIEW
The ERP Department works to continually improve the financial and business processes of Broward County Public Schools. “ERP” is a term used in the business world to describe the efforts that help streamline business efforts across an entire organization. Four years ago we implemented a new SAP computer system to replace the outdated SAP HR/Payroll system, as well as other disparate financial systems that were more than three decades old. As part of our strategic plan, we re-examined and redesigned our existing processes in finance, human resources, payroll, purchasing, inventory and professional development around existing best practices. Using an integrated SAP system allows us to report the use of public funds both transparently and accurately. The seamless manner in which SAP was implemented takes on a far more significant meaning when taken in the context of the financial size of the District and the large number of modules (25) that we implemented:
Benefits Administration Business Intelligence Cash Management General Ledger Treasury Management Employee Self Service Funds Management Grants Management Human-Resources Administrative Services Integrated Planning (Budgeting) Inventory Management Learning Solutions Managers Self Service Materials Management/ Purchasing Accounts Payable Personnel Administration Personnel Development Position Budget Control Organizational Management Time-and Attendance Management Project Systems
Controlling Payroll Catalog Content Management Cross Application Time Sheet (Cats)
The ERP Department is focusing on enhancing the system to maximize its potential for proactive online processing of all transactions to eliminate paper. Evidence of this can be seen in the paperless alternatives offered to all employees such as opt out of receiving a printed pay advice/pay stub and direct deposit for mileage and travel reimbursements. In addition, paper was eliminated for forms for hiring, purchase orders for vendors and on-line catalog for items on contract
The major tasks of the ETS/ERP department are:
• Configuring changes in the SAP system to adhere to changes in law and union contracts • Configuring changes in the SAP system for new functionality and enhancements
• Applying and testing support packs from SAP to keep the system current • Updating system for changes in pay, employee work calendars and benefits
• Submitting payroll and employee information to the Department of Education and other
government agencies
• Assisting in the annual audit process by providing the auditors with various financial
system information
• Maintaining and configuring changes for other stand alone systems such as Compass
(workorders), PROP
(property and inventory), KRONOS (time keeping), Optispool (report depository) and a DOE charter school database
for staffing information and any applicable interfaces to SAP.
• Training of the users by preparing training material and conducting training sessions • Working with various departments such as HR, Benefits, EEO, ETS, HRD to prepare
communication material for their projects
• Implementing, administering, integrating, and maintaining multiple SAP systems,
• Maintaining SAP performance by monitoring SAP systems, planning and executing SAP
tuning strategies
• Maintaining security access to the system
• Preparing and maintaining all reports generated from the system data for the system users • Uploading budget data and working with the Budget Office during the annual budget
process
• Maintaining over 75 diverse webpages, 1000 associated documents, along with self help
and on-demand video tutorials.
• Evolution of ERP
• ERP is an outcome of 40 years of trial and error. It has evolved as a strategic tool because
of continuous improvement in the available techniques to manage business and the fast growth of information technology.
• Prior to 1960s, business had to rely on the traditional ways of inventory management to
ensure smooth functioning of the organization. These theories are called classical inventory management of scientific inventory control methods. The most popularly known amongst them is EOQ (Economic Order Quantity).
• In this method, each item in the stock is analyzed for its ordering cost and the inventory
carrying cost. A trade off is established on a phased out expected demand of one year, and this way the most economic ordering quantity can be decided. This technique in principle is a deterministic way of managing inventory.
• Along with EOQ, we find various inventory models such as fixed order quantity, periodic
order method, optional replenishment method, etc., which were in practice earlier. These theories were very popular in pre-MRP era.
• In 1960s, a new technique of Material Requirements Planning, popularly known as MRP,
was evolved. This was a proactive manner of inventory management. This technique fundamentally explodes the end product demand obtained from the Master Production Schedule (MPS) for a specified product structure (which is taken from Bill of Material) into a detailed schedule of purchase orders or production orders, taking into account the inventory on hand. MRP is a simple logic but the magnitude of data involved in a realistic situation makes it computationally cumbersome. If undertaken manually, the entire process is highly time-consuming.
• MRP successfully demonstrated its effectiveness in reduction of inventory, production,
and delivery lead times by improving coordination and avoiding delays, thus making commitments more realistic. MRP proved to be a very good technique for managing inventory, but it did not take into account other resources of an organization. In 1970s, this gave birth to a modified MRP logic, popularly known as closed loop MRP. In this technique, the capacity of the organization to produce a particular product is also taken into account by incorporating a module called capacity requirements planning (CRP).
• In 1980s, the need was felt to integrate the financial resource with the manufacturing
activities. From this evolved an integrated manufacturing management system called Manufacturng Resource Planning (MRP II).
• Transition from MRPII to ERP happened during 1980-90. The basic MRP II system
manufacturing activities, assumption of the mass or repetitive production set ups, and poor budgetary and costing controls.
• The shortcomings of MRP II and the need to integrate new techniques led to the
development of a total integrated solution called ERP, which attempts to integrate the transactions of the organization to produce the best possible plan. Today we see further development in the ERP concept and evolution web-based ERP.
Advantages & Disadvantages of ERP (Enterprise Resource Planning) Systems
By Rajesh K
In order to understand computer networks better, it would be helpful to have an overview of the applications running on the network. ERP or Enterprise Resource Planning is an important
enterprise application that integrates all the individual department functions into a single software application.
ERP Systems make it easier to track the workflow across various departments. They reduce the operational costs involved in manually tracking and (perhaps) duplicating data using individual & disparate systems. In this article, let us have a look at the advantages and dis-advantages of implementing ERP (Enterprise Resource Management) Software Systems.
Advantages of ERP (Enterprise Resource Planning) System:
1. Complete visibility into all the important processes, across various departments of an organization (especially for senior management personnel).
2. Automatic and coherent workflow from one department/function to another, to ensure a smooth transition and quicker completion of processes. This also ensures that all the inter-departmental activities are properly tracked and none of them is ‘missed out’.
3. A unified and single reporting system to analyze the statistics/status etc. in real-time, across all functions/departments.
4. Since same (ERP) software is now used across all departments, individual departments having to buy and maintain their own software systems is no longer necessary.
5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities, that can give overall insights on business processes and identify potential areas of problems/improvements.
6. Advanced e-commerce integration is possible with ERP systems – most of them can handle web-based order tracking/ processing.
7. There are various modules in an ERP system like Finance/Accounts, Human Resource Management, Manufacturing, Marketing/Sales, Supply Chain/Warehouse Management, CRM, Project Management, etc.
8. Since ERP is a modular software system, its possible to implement either a few modules (or) many modules based on the requirements of an organization. If more modules implemented, the integration between various departments may be better.
9. Since a Database system is implemented on the backend to store all the information required by the ERP system, it enables centralized storage/back-up of all enterprise data.
10. ERP systems are more secure as centralized security policies can be applied to them. All the transactions happening via the ERP systems can be tracked.
11. ERP systems provide better company-wide visibility and hence enable better/faster
collaboration across all the departments.
12. It is possible to integrate other systems (like bar-code reader, for example) to the ERP system through an API (Application Programing Interface).
13. ERP systems make it easier for order tracking, inventory tracking, revenue tracking, sales forecasting and related activities.
14. ERP systems are especially helpful for managing globally dispersed enterprise companies, better.
Disadvantages of ERP (Enterprise Resource Planning) Systems:
1. The cost of ERP Software, planning, customization, configuration, testing, implementation, etc. is too high.
2. ERP deployments are highly time-consuming – projects may take 1-3 years (or more) to get completed and fully functional.
3. Too little customization may not integrate the ERP system with the business process & too much customization may slow down the project and make it difficult to upgrade.
4. The cost savings/payback may not be realized immediately after the ERP implementation & it is quite difficult to measure the same.
5. The participation of users is very important for successful implementation of ERP projects – hence, exhaustive user training and simple user interface might be critical. But ERP systems are generally difficult to learn (and use).
6. There maybe additional indirect costs due to ERP implementation – like new IT infrastructure, upgrading the WAN links, etc.
7. Migration of existing data to the new ERP systems is difficult (or impossible) to achieve. Integrating ERP systems with other stand alone software systems is equally difficult (if possible). These activities may consume a lot of time, money & resources, if attempted.
8. ERP implementations are difficult to achieve in decentralized organizations with disparate business processes and systems.
9. Once an ERP systems is implemented it becomes a single vendor lock-in for further upgrades, customizations etc. Companies are at the discretion of a single vendor and may not be able to negotiate effectively for their services.
10. Evaluation prior to implementation of ERP system is critical. If this step is not done properly and experienced technical/business resources are not available while evaluating, ERP implementations can (and have) become a failure.
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What are the Risks When Adding an ERP System?
ERP, Enterprise Resource Planning, is a merger of business management and operations with modern technology. While ERP offers numerous benefits and can launch a company into the 21st century, there are many risks associated with ERP implementation. To properly implement ERP takes a lot of time, resources, training and patience, which is why understanding these risks is important to any business considering using ERP.
Inadequate Training
One of the biggest risks of using ERP is users who are inadequately trained in the use of the system. When the users (employees) don't know how to properly use the ERP software, two things may happen. First, they may reject it out of a lack of understanding. The other possibility is that the employees accept the system but use it incorrectly. This will lead to the entire ERP system not working nearly as effectively as it should.
Software Stability
Much like any other computer software, ERP software is subject to stability issues. A large portion of this risk can be avoided by properly researching and choosing a reputable ERP software developer with experience in developing solutions for companies in your field. This is precisely why an ERP system should go through rigorous testing before making the final
decision to go with said software. This, unfortunately, is a continual risk that could manifest years down the road when new, incompatible software or hardware is added.
Commitment
ERP solutions, when implemented properly, take a long time to get off the ground. ERP has to be properly selected, evaluated and tested, implemented and then used for a period of time before any clear positive results may be seen. It can become a very risky situation if the company isn't fully committed to seeing the entire process through.
Software Selection
Unfortunately, ERP solutions aren't one-size-fits-all. Good ERP software will be specifically designed for the industry or field it will be used in. This is crucial because if you have software incompatible with your business, you risk having a completely useless and even hindering ERP solution. Clearly defining what your company needs in an ERP system will greatly reduce the chance of your company running into this risk.
Approach
There are two common approaches taken when implementing ERP. The first is referred to as "The Big Bang" approach. This is where a company tries to implement an ERP solution quickly. Making so many changes to your company in such a short amount of time, though, leads to greater risk of something going wrong. Instead, consider phasing-in your ERP system. Implementation in phases allows you to pay close attention to one aspect of ERP implementation instead of trying to pay attention to many of them at once.
Small and medium enterprises (SME’s) are looking for a software solution which can help them manage all the aspects of their business comprising of sales , customer relationships , financial management and operations. Emergys ,a SAP Gold Partner, offers SME’s the flexibility they look for, as SAP Business One offers both on-premise and on-demand deployment.
RP for Small & Medium Enterprises
SAP Business One is an affordable, easy-to-use business management software designed specifically for small and midsize businesses. It enables you to manage your critical business functions across inventory, sales, purchase, logistics, production, service, financials and banking by integrating these functions into a single system. With SAP Business One, you have instant access to a complete and up-to-the-minute view of your business, enabling you to respond to customers faster and grow your business. SAP Business One also addresses the unique compliances of Indian businesses like taxes and other statutory requirements. Emergys uses the SDK (Software Development Kit) provided by SAP to customise the solution according to specific company needs. The kit can be used to make add-on enhancements in the business applications and tailor the solution as per the company needs. Our well-established SAP practice and status as a premium SAP partner provide us the leverage to offer implementation, re-implementation, customization, support and maintenance activities
for SAP Business One. The SAP Business One Team of Emergys comes with immense Domain knowledge cutting across Manufacturing, Distribution, Retail and Service Verticals
SAP Business One Key Features
• Meet growing business needs with an integrated yet affordable business management
software solution
• Access the right information to make key decisions • Minimize duplicate data entries, errors, and delays • Build and maintain closer customer relationships • Optimize cash flow for business needs
• 40+ country versions (Localization)
Why choose Emergys as your SAP Business One partner?
• Over 12 years of Experience
• Proven Implementations across leading market players in Manufacturing, Retail,
Distribution and Services
• Rated No.1 by SAP in SDN Network
• Strong Domain Knowledge (Manufacturing, Distribution, Retail, Professional Services) • Certified Consultants with Over 50+ Implementations
• Strong SDK team for Customizing SAP for clients business
• Expertise in Hub and Spoke model - Real time integration with Suppliers & Distributors • Proven Project and Quality Management processes
ERP & Supply Chain Management
A global market requires manufacturers and distributors to stay on top of the many demands throughout the entire supply chain. High productivity, operational efficiency, and reduced costs are all necessary components to stay competitive. This can only be accomplished by connecting partners, suppliers and customers into an integrated system providing control and agility to continuously innovate and grow your organization. ERP and SCM solutions help organizations track and analyze key information, improve productivity, and drive accurate decisions.
Organizations are now changing the way they conduct business by innovating new process and customer service practices. BI , CRM , SCM and ERP solutions are attaining a greater
significance. Mainward provides solutions that help integrate corporate finance, human resources, manufacturing and distribution, supply chain management and logistics execution, enabling organizations make more accurate management decisions.
At Mainward we help identify, quantify and assist in planning an ERP and SCM implementation process and scalable transformation. We provide strategies for implementing new technologies in warehousing, transportation and reverse logistics that can result in cost reduction and improved customer service. We help improve your procurement operations to achieve better prices, greater efficiency, tighter spend control and improved service levels.
Mainward´s integrated solutions will help you
• Improve business responsiveness and communications • Lower costs (operational and IT infrastructure)
• Employ state-of-the-art supply chain planning methods • Improve logistics planning
• Improve decision-making and strategy • Achieve strategic procurement solutions
• Achieve transformation and operations expertise • Integrate all enterprise solutions
By evaluating the needs and demands of customers and suppliers, Mainward can assist organizations in identifying areas that can achieve savings. We also help improve supplier management and development by creating performance-based measurement programs. Such programs are designed to create strong relationships with suppliers and improve collaboration in terms of reducing cycle times and the cost of materials and services.
We provide consulting and systems integration services to help solve supply chain planning and execution processes
Consulting and Systems Integration Services
• Fulfillment Management
• Collaborative Vendor Managed Inventory (VMI) • Sales and Operations Planning
• Order Management
• Manufacturing Planning and Scheduling • Supplier Collaboration
• Procurement Management
• Network Design and Optimization • Track and Trace
By leveraging our vertical industry-based expertise and full suite of services, Mainward can assist customers in identifying and augmenting specific collaborative behaviors to ensure they reap the full benefits of their ERP & SCM solution.
Web-enabled ERP
ERP applications are an integral component of any information architecture and today's application system are required to address more than the processes taking place within the walls of an enterprise, they must be able to address the players and processes involved in an extended enterprise that reaches customers, partners, suppliers and employees worldwide.
ERP vendors and developers must move to integration models, based on industry accepted standards and non-proprietary application programming interfaces (APIs). Web services promise
to play a large role in this new integration model, enabling ERP functionality to be fully leveraged using industry standard technologies.
Within almost every industry there are business requirements to lower costs, increase revenue and improve operation efficiencies. In order to achieve these goal companies must connect internal groups, extend processes to partners, expand business opportunities and reduce transaction costs.
These business requirements can only be met by technologies that are cost-effective, flexible and agile. The technologies must support automated collaboration, real-time integration, secure interactions and low-cost coupling.
The new business models are forcing organizations to accelerate the business reengineering initiatives they undertook when they first began to implement ERP systems decades ago. To maintain competitive advantage, almost all companies must now be able to conduct their business on-online as part of an increasingly internet-based global economic community.
As we all know, the Web has improved performance and productivity, enabled collaboration, dismantled trade barriers and created an enormous range of global opportunities. As a result of the Web's burgeoning adoption and success as a means of conducting business, productivity has increased tremendously; however, the lack of interoperability has been frustrating to many. Organizations must provide customers, employees, suppliers, distributors and numerous other parties with the information they need, when they need it. As a result, business systems and processes can no longer remain isolated and disparate. Business success now requires better performance from easier application integration.
Systems must share information internally with other applications as well, externally through Web applications, business-to-business (B2B) exchanges and value-added networks. These exchanges and transactions must be real-time, on-line and immediate - i.e. conducted anytime, anywhere and without compromise to security or transaction integrity.
Through the use of Web enabled services, the cycle time between buying and replenishment can be greatly reduced and the potential for errors virtually eliminated.
Advancement of wireless technology in ERP has given it a boost that has made ERP a big solution provider to the companies working in different sectors. Today the effect of ERP on the market is immense due to the use of wireless technology that gives it the reach beyond geographical locations and has made data communication and integration faster and reliable in real time. With the advent of wi-fi internet connections and offices, web enabled mobile devices and laptops ERP application and its features can be used and accessed from any where. Manufacturing companies working from many locations with their head office, manufacturing units, warehouses and sales offices at different locations ERP application alone would have made a little difference in reducing the pile of problems they faced, but with the use of wireless technology in integrating ERP applications, the data transfer and its availability to all the
concerned departments with in the organization and outside organization has solved chunk of their problems. Manufacturing company management is now aware of the stocks in the warehouse, production status of any product, shipping details, deal status and various other set of information, crucial for decision making, at their laptops with out any delays due to far locations. Compliance of best practices and company policies are much easier today with advancement of wireless technology in ERP. Sales force of any company of any sector gets access to relevant data and status of the customer from any where which helps them in closing the deals faster. Distribution companies whether small or big can have 24x7 working with e-commerce feature only possible with wireless technology in ERP. Maintenance of web store can be automated with out any human intervention to avoid delays and wastage of man power. Self service options provided to customers or possible customers not only improve customer satisfaction but save valuable man hours of the front office which can be utilized for more productive work than simply providing price and warranty details.
Today large organizations have global headquarters working with many headquarters in different countries connected by servers through wireless technology. These organizations rely for their decisions on their ERP which provides them with updated data to give real picture irrespective of the geographical location of the point of data entry. The advancement of wireless technology only has made ERP application capable of providing such facilities to its users. Like any other technology wireless technology also has some problem areas which are to be taken care of. With the use of wireless technology privacy becomes of utmost significance, whenever the real data is brought under the public domain it becomes literally impossible to maintain privacy from the third party. More security features are desired, to maintain privacy of the companies using ERP with wireless technology. More and more alternates shall be used for data transfer and integration as they may be helpful in the case of emergency when any system crashes down. But there are no two opinions on the fact that advancement of wireless technology has taken ERP applications few steps ahead in providing solutions to their users.
Cloud ERP is an approach to enterprise resource planning (ERP) that makes use of cloud computing platforms and services to provide a business with more flexible business process transformation.
Enterprise resource planning is an industry term for the broad set of activities that helps a business manage the important parts of its business such as purchasing and inventory management. ERP applications can also include modules for the finance and human capital management aspects of a business.
To some industry experts, the promise of cloud computing is that it will provide an opportunity for business to completely transform how it uses and pays for information technology. For example, cloudsourcing legacy ERP applications might eliminate the need for a business to purchase the necessary server and storage hardware and maintain it on site which, in turn, has the potential reduce operational expenditures (OPEX). Other industry experts, however, point out
that the problems associated with ERP software deployments -- such as integration problems between ERP modules and a company’s legacy systems -- would simply transfer to the cloud. The hope is that ERP software developed specifically for cloud computing environments will include new feature sets that were simply not possible using old technology. Until then, cloud ERP is seen as being good for startup organizations and new business divisions within an existing company.
Cloud computing is a general term for anything that involves delivering hosted services over the Internet. These services are broadly divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). The name cloud computing was inspired by the cloud symbol that's often used to represent the Internet in flowcharts and diagrams.
A cloud service has three distinct characteristics that differentiate it from traditional hosting. It is sold on demand, typically by the minute or the hour; it is elastic -- which means that a user can have as much or as little of a service as they want at any given time; and the service is fully managed by the provider (the consumer needs nothing but a personal computer and Internet access). Significant innovations in virtualization and distributed computing, as well as improved access to high-speed Internet and a weak economy, have accelerated interest in cloud computing. A cloud can be private or public. A public cloud sells services to anyone on the Internet. (Currently, Amazon Web Services is the largest public cloud provider.) A private cloud is a proprietary network or a data center that supplies hosted services to a limited number of people. When a service provider uses public cloud resources to create their private cloud, the result is called a virtual private cloud. Private or public, the goal of cloud computing is to provide easy, scalable access to computing resources and IT services.
What is Extended ERP
Extends the foundation ERP system’s functionalities such as finances, distribution, manufacturing, human resources, and payroll to customer relationship management, supply chain management, sales-force automation, and Internet-enabled integrated e-commerce and e-busines
Enterprise Systems in Small and Medium-Sized Enterprises
Enterprise systems (ES), also known as enterprise resource planning (ERP) systems, are large, complex, highly integrated information systems designed to meet the information needs of organizations and are, in most cases, implemented to improve organizational effectiveness (Davenport, 2000; Hedman & Borell, 2002; Markus & Tanis, 2000). These are comprehensive, fully integrated software packages supporting automation of most standard business processes in organizations including extended modules such as supply chain management (SCM) or customer relationship management (CRM) systems. ES applications connect and manage information flows across complex organizations, allowing managers to make decisions based on information
that accurately reflects the current state of their business (Davenport & Harris, 2005; Davenport, Harris, & Cantrell, 2002). In a more integrated and global market, extended ES offers new functions and new ways of configuring systems, as well as web-based technology to establish the integrated, extended business enterprise (Shanks, Seddon, & Wilcocks, 2003). The market for ES continues to grow despite much speculation on its future in the post millennium era. Although most large enterprises have completed their ES implementations by now, the ES market continues to grow in the small and medium-sized enterprises (SME) sector. A number of research studies have been conducted to establish and understand the critical success factors for ES implementations (e.g., Allen, Kern, & Havenhand, 2002; Bancroft, Sep, & Sprengel, 1998; Holland & Light, 1999; Parr & Shanks, 2000; Plant & Willcocks, 2006; Sarker & Lee, 2000; Scott & Vessey, 2002; Skok & Legge, 2001; Sumner, 1999; Yang & Seddon, 2004). However, there has been little research that examines ES implementation at the strategic decision-making process level (Viehland & Shakir, 2005) and compares current implementations in the SME sector with earlier implementations in the large organizations. The purpose of this study is to examine the current ES implementations scenario in New Zealand. The main objectives of this study are to explore what is a typical case of ES implementation and to understand how current implementations in the SME sector differ from the earlier implementations in the large enterprise sector. The study does so through a practitioners’ perspective, with interview data collected from ES vendors, ES consultants, and IT research firms who are actively engaged in ES implementation. This approach differs from the organizational approach usually found in the literature. This is a replication study following a similar approach used by Shakir (2002), who also investigated aspects of ES implementation in the NZ vendor-and-consultant community. The focus of that study was to identify key drivers influencing ES adoption and implementation (e.g., Shakir and Viehland, 2004) whereas the focus of the current study is to understand how current implementations in the SME sector differ from the earlier implementations in the large enterprise sector. The current study extends and builds upon existing ES research.
Semi-structured interviews were conducted with key players of ES implementations in New Zealand including ES vendors, ES consultants, and IT research firms to explore the current ES implementation scenario. Several measures such as the number of users, modules implemented, cost of implementation, number of sites/locations where implemented, industry type, organization size, implementation phases, time to implement, implementation partners, and levels of customization were discussed to understand a typical case of ES implementation and current implementation practices. The empirical findings are analyzed and reported in this paper. This study has been conducted in a New Zealand (NZ) context which can be extended to show current trends worldwide.
1. Define ERP.
Enterprise Resource Planning (ERP) covers the techniques and concepts employed for the integrated management of businesses as a whole, from the viewpoint of the effective of management resources, to improve the efficiency of an enterprise.
2. What is an Enterprise?
An enterprise is a group of people with a common goal, which has certain resources at its disposal to achieve that goal. When used generically, an enterprise is defined as the
aggregate of all functional elements participating in a business process improvement action, regardless of the organizational structure housing those functional elements. It is a complete business consisting of functions, divisions or other components used to accomplish specific objectives and defined goals.
3. What are the main misconceptions about ERP?
• First is that ERP is a computer system. Even though computers and IT are integral parts of an ERP system, ERP is primarily an enterprise-wide system, which encompasses corporate mission, objectives, attitudes, beliefs, values, operating style and people who make the organization.
• Second is ERP is for manufacturing organizations alone. This assumption is basically due to the way in which ERP was historically developed from the methods of Material Requirements Planning (MRP) and Manufacturing Resource Planning (MRP II) which are relevant to manufacturing organizations. MRP became the fundamental concept in 1970s. At this stage BOM (Bill of materials) was the prevailing trend. It further got unfolded as ERP II and now it has resulted in ERP, which is the concept of enterprise-wide planning of resources and is not limited to any particular segment of the industry.
4. What are ERP packages?
ERP packages are integrated (covering all business functions) software packages that support the ERP concepts. ERP software is designed to model and automate many of the basic processes of a company, from finance to the shop floor, with the goal of integrating information across the company and eliminating complex, expensive links between computer systems that were never meant to each other.
5. Who are the main players in the ERP market?
SAP AG, PeopleSoft, Oracle, Baan, JD Edwards, QAD, Ramco, IFS, DataWorks etc. 6. When do the ERP system’s set of generic processes produce dramatic improvements?
ERP software is a mirror image of the major business processes of an organization, such as customer order fulfillment and manufacturing. Its success depends upon reach – a circumscribed ERP system isn’t much better than the legacy system it replaces. ERP system’s set of generic processes produce the dramatic improvements they are capable of, only when used to connect parts of an organization and integrate its various processes seamlessly.
7. What are the reasons for the explosive growth of the ERP market?
• They enable improved business performance by achieving: cycle-time reduction, increased business agility, inventory reduction, order fulfillment improvement etc. • They support business growth requirements.
• ERP systems provide flexible, integrated, real time decision support.
• ERP packages can now be afforded by even small and medium sized businesses and offers increased functionality at a reasonable cost.
• They help companies in supporting new products and new customers by meeting their global requirements, including multiple languages and currencies.
8. What are the direct benefits of ERP systems? • Business Integration
• Flexibility
• Better analysis and planning capabilities • Use of latest technology
9. Why is it said that ERP systems are flexible?
Different languages, accounting standards can be covered in one system, and functions that comprehensively manage multiple locations of a company can be packaged and can be implemented automatically. To cope with company globalization and system unification, this flexibility is essential.
10. What is cycle time?
Cycle time is the time between receipt of the order and delivery of the product. 11. What is Business Integration and how do the ERP systems achieve it?
The reason why ERP packages are referred as being integrated is the automatic data updation (automatic data exchange among applications) that takes place between related business components. Since conventional company information systems were aimed at the optimization of independent business functions in business unite, almost all were weak in terms of communication and integration of information that transcended in different business functions. In case of ERP packages, the data of related business functions is also automatically updated at the time a transaction occurs. For this reason, one is able to grasp business details in real time, and carry out various types of management decisions in a timely manner, based on that information.
12. What are the factors that are critical for the success of the ERP implementation? • Selection of the right package
• Commitment of top management
• Participation and dedication of the system’s future users • Backing, support and cooperation of the IS/IT personnel
• Development of interfaces with current operational systems and with those under development
• Effort of consultants, who have respect for the company’s know-how and work culture
• Spirit and collaboration on the part of all
13. How do conventional application packages and ERP packages differ?
• First, ERP packages cannot have only individual business functions such as accounts and inventory, but also the entire range of main business functions necessary for the company’s operations
• Second, ERP packages are targeted at everything from small businesses to the largest organizations, and that they can be composed of a highly flexible decentralized database and an information system cluster linked by a network
• Third, is global adaptation, represented by ERP packages’ multilingual and multi-currency capacity.
14. What are the limitations of ERP?
• Managers cannot generate custom reports or queries without help from a programmer and this inhibits then from obtaining information quickly, so that they can act on it for competitive advantage
• ERP systems provide current status only, such as open orders. Managers often need to look past the current status, to find trends and patterns that aid better decision-making
• The data in the ERP application is not integrated with other enterprise or division systems and does not include external intelligence
15. What is BPR?
BPR or Business Process Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.
16. What is MIS?
MIS or Management Information System is a computer based system that optimizes the collection, collation, transfer and presentation of information throughout an organization through an integrated structure of databases and information flow.
17. What are the main characteristics of MIS?
• MIS supports the data processing functions of transaction handling and record keeping
• MIS uses an integrated database and supports a variety of functional areas
• MIS provides operational, tactical an d strategic levels of the organization with timely information
• MIS is flexible and can be adapted to changing needs of an organization 18. What is DSS?
DSS or Decision Support System is an information and planning system that provides the ability to interrogate computers on an ad-hoc basis, analyze information and predict the impact of decisions before they are made. A DSS is a cohesive and integrated set programs that share data and information.
19. What is EIS?
EIS or Executive Information System is an information system that consolidates and summaries the ongoing transactions within an organization. It should provide management with all the information it requires, at all times, from internal as well as external sources. A successful EIS is easy to use, flexible and customizable.
20. What is OLAP?
OLAP or On-Line Analytical Processing is a decision support software that allows the user to quickly analyze information that has been summarized into multidimensional views and hierarchies. These multidimensional views are supported by multidimensional database technology and provide the technical basis for the calculations and analysis required by Business Intelligence applications.
UNIT II – ERP IMPLEMENTATION
1. What are the different phases of ERP implementation? • Pre-evaluation screening
• Package evaluation • Project planning phase • Gap analysis
• Reengineering • Configuration
• Implementation team training • Testing
• Going live • End user training • Post-implementation 2. What is gap analysis?
Gap analysis is the most crucial phase for the success of the ERP implementation. It is the process through which companies create a model of where they are now, an din which direction they want to head in the future. The trick is to design a model which anticipates and covers any functional gaps. It is true that even the best ERP package, custom tailored to a company’s needs, meets only 80% of the company’s functional requirements.
3. What are the general four phases of an ERP implementation? • Understanding the problem
• Defining solutions • Getting down to work • Going live
4. Give the hidden costs in ERP implementation? • Training
• Integration and testing • Data conversion • Data analysis • ERP consultants
5. State the main members of an implementation team. • Executive committee
• Project management team • Work team
• Technical support team • Administrative support team
6. What are the skills the people who implement the ERP should possess? • Knowledge of how to organize and run a project of this magnitude
• Enough experience in handling problems and issues that arise during the implementation
• Good people skills and excellent training skills • Good leadership skills
7. Who are vendors and give their role?
Vendors are people who have invested huge amounts of time and effort in research and development to create packaged (ERP) solutions. First and foremost, the vendor should supply the product and its documentation as soon as the contract is signed. Next the vendor should impart training to its clients’.
8. Who are business consultants and specify their role?
Business consultants are professionals who specialize in developing techniques and methodologies for dealing with the implementation and with the various problems that will crop up during the implementation. Consultants should guarantee the success of the project and should be able to satisfy the company management with its needs. They should add value to the project.
9. State some key points of the contract with the vendor, which should be addressed. • Value of the software and conditions of payment
• List of deliverables (software, documents etc.) • Cost of implementation training
• Cost of end-user training • Annual maintenance fee • Warranty or guarantee terms
10. State some key points of the contract with the consultant, which should be addressed. • 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
11. What is a data warehouse?
A data warehouse is a database designed to support decision-making in an organization. It is updated batch-wise and is structured for fast online queries and summaries for managers. Data warehouses can contain enormous amounts of data.
12. What is data mining?
Data mining is the process of identifying valid, novel, potentially useful and ultimately comprehensible knowledge from databases that is used to make crucial business decisions. 13. What is supply chain?
A supply chain is a network of facilities and distribution options, that performs the functions of procurement of materials, transformation of these materials into intermediate an finished products, and the distribution of these finished products to customers.
14. What is SCM?
SCM or Supply Chain Management is a generic term that encompasses the coordination of order generation, order taking and offer fulfillment/distribution of products, services or information.
15. Why is the pre-evaluation screening required?
There are hundreds of vendors claiming a solution that is ideal for your company. Analyzing these packages, though a time-consuming process would give a viable solution needed.
16. Define action plan.
A document used to guide the implementation of business process improvements. It contains tack assignments, schedules, resource allocations, assignments and evaluation criteria.
17. What is an activity?
A named process, function or task that occurs over time and has recognizable results. Activities use up assigned resources to produce products and services. Activities combine to form business processes.
18. Define BOA.
BOA or Bill of Activity is the listing of activities involved in the production of a certain output, together with the number of times each component activity is performed.
19. What is BOM?
BOM or Bill of Materials is a list of direct materials required to manufacture a given product or provide a given service.
20. Who are BPR professionals?
BPR professionals are individuals necessary for a Business Process Reengineering effort. Five distinct skill areas have been identified as being essential to the task. They are: functional experts, strategic planners, data and process modelers, cost analysis and Functional Activity Coordinators (FAC).
UNIT III – BUSINESS MODULES
1. Define business.
Business can be defined as the activities of individuals or groups that are involved in developing, producing and distributing the goods and services needed to satisfy other peoples’ needs.
2. What are the three resources of business? Land, labour and capital
3. State the various business modules in ERP system. • Human resources
• Finance • Manufacturing • Plant maintenance • Sales & distribution • Materials management
• Production planning
4. State the finance modules in most ERP systems. • Financial accounting
• Investment management • Controlling
• Treasury
• Enterprise controlling 5. Write about financial accounting.
It provides company wide control and integration of financial information that is essential to strategic decision making. It gives the ability to centrally track financial accounting data within an international framework of multiple companies, languages, currencies and charts of accounts.
6. What is General ledger?
General ledger is essential both to the financial accounting system and to strategic decision making. It provides document parking, posting, reporting and an integrated financial calendar for automating periodic activities.
7. What is asset accounting and legal consolidation?
Asset accounting manages the company’s fixed assets, whereas legal consolidation permits direct data transfer, from individual statements into the consolidated report.
8. What is cost centre accounting?
Cost center accounting analyses where overheads occur within the organization. Costs are assigned to the sub-areas of the organization where they are originated.
9. What is EIS?
EIS or Executive Information System is an information system that consolidates and summaries the ongoing transactions within an organization. It should provide management with all the information it requires, at all times, from internal as well as external sources. A successful EIS is easy to use, flexible and customizable.
10. State some major subsystems of manufacturing module. • Material and capacity planning
• Shop floor control • Quality management
• JIT / Repetitive manufacturing • Cost management
• Tooling
11. What are the various subsystems in HR module? • Personnel management
• Organizational management • Payroll accounting
• Time management • Personnel management
12. What are the various subsystems of a plant maintenance module? • Preventive maintenance control
• Equipment tracking • Component tracking
• Plant maintenance calibration tracking • Plant maintenance warranty claims tracking
13. What are the main modules of Materials Management module? • Pre-purchasing activities
• Purchasing • Vendor evaluation • Inventory management
• Invoice verification and material inspection 14. State the sub activities in pre-purchasing.
• Requirements calculation • Requisition for quotations • Vendor ratings
• Quotation evaluation • Vendor selection • Contracts
15. What is meant by CAQ and CIQ?
CAG means Computer Aided Quality management and CIQ means Computer Integrated Quality management.
16. State the functions of quality management module. • Quality planning
• Quality inspection • Quality control
17. Give some sales related business transactions.
• Sales queries, such as inquiries and quotations • Sales orders
• Outline agreements, such as contracts and scheduling agreements • Delivery / shipment
• Invoicing / billing • After sales support
18. What are the basic functions in sales order processing? • Inquiry handling
• Quotation preparation and quotation
• Contracts and contract management (order management) • Monitoring the sales transactions
• Checking for availability
• Transferring requirements to materials planning (MRP) • Scheduling the delivery
• Checking credit limits • Invoicing / billing
• Creating printed or electronically transmitted documents 19. What are the subsystems in a sales and distribution module?
• Master data management • Order management • Warehouse management • Shipping • Billing • Pricing • Sales support • Transportation • Foreign trade
20. State the components of a warehouse management application. • Inventory planning
• Inventory handling
• Intelligent location assignment • Inventory reporting
• Inventory analysis • Lot control
• Distribution data collection
UNIT IV – THE ERP MARKET
1. Who are the main players in the ERP market?
SAP AG, PeopleSoft, Oracle, Baan, JD Edwards, QAD, Ramco, IFS, DataWorks etc. 2. What is SAP?
SAP means Systems Applications and Products in Data Processing. 3. State the versions of SAP’s ERP package.
• Mainframe version (SAP R/2) • Client/server version
4. What are the three different layers of SAP R/3? • Database layer
• Application layer • Presentation layer
5. State about the three layers of SAP R/3.
• Database layer – resides on central severs or mainframe host computers
• Application layer – holds the processing logic of the system, preparing and formatting data for individual offices or departments
• Presentation layer – handles all the tasks related to the presentation of data, including user interfaces that enable easy access to complex applications and data
6. What are the general R/3 modules? • Financial accounting • Treasury • Controlling • Enterprise controlling • Investment management • Production planning • Materials management
• Plant maintenance and service management • Quality management
• Project system • Sales and distribution
• Human resources management 7. Write about SAP’s business engineer?
Business engineer delivers a complete toolkit that greatly facilitates the implementation of R/3 and the engineering of your business processes. It ensures quick and high quality customization of R/3.
8. State some areas of business management solutions, provided by PeopleSoft. • HR management
• Accounting and control • Treasury management • Performance management • Project management • Sales and logistics • Materials management • Supply chain planning
• Service revenue management • Procurement
9. What are four strategies incorporated by PeopleSoft implementation toolkit? • Geographical
• Departmental
• Core and support process • No phasing
10. What is BaanDEMSE?
BAAN – Dynamic Enterprise Modeling Strategy Execution 11. What are the ERP modules of BaanERP?
• Manufacturing module • Finance module • Project module • Distribution module
12. What is the “THREE I” philosophy? • Integrity
• Innovation • Initiative
13. Give some categories of Oracle software applications. • Oracle Financials
• Oracle Human Resources • Oracle Projects
• Oracle Manufacturing • Oracle Supply Chain • Oracle Front Office
14. What is the flagship product of QAD? MFG/PRO
15. What is SSA?
SSA means System Software Associates 16. What are the six key goals of SSA?
• Best client satisfaction • Single image worldwide
• Enterprise solutions leadership • Proven leading technology
• Highly skilled and motivated professionals • Strong financial results
17. What is lead time?
The elapsed time between placing an order and receiving it is known as the lead time. 18. What is Extended ERP?
Extended ERP is a set of enterprise modeling tools for effective implementation. It is a concept promoted by Baan for rapid, flexible and quality implementation of ERP systems. 19. What is product flexibility?
Product flexibility is the ability of the operation to efficiently produce highly customized and unique products.
20. Who is the leader in the ERP market and what are its products?
SAP AG is the market leader and its ERP products are SAP R/2 for the mainframe environment and SAP R/3 for the client/server environment.
UNIT V – ERP (PRESENT AND FUTURE)
1. What does BIS allow? • Customer service
• Manufacturing and purchase • Sales
2. What are the general traditional business processes? • Fulfillment
• Payment • Procurement • Replenishment
3. State the steps in retail fulfillment process. • Initiate order
• Verify identity or payment • Arrange drop shipment • Acknowledge order • Track order status
4. State the steps in corporate procurement process. • Initiate requisition
• Verify item data
• Transmit purchase order • Confirm receipt
• Track purchase status
5. State the steps in inventory replenishment process. • Item reorder limit reached
• Purchase order approved • Item shipped
• Item received • Payment received 6. What is the use of SET?
Secure Electronic Transaction (SET) protocol addresses the vulnerability in Secure Socket Layer (SSL) by providing an encrypted channel between the customer and the bank. 7. State some ERP vendors and their products.
• SAP AG - R/3
• Oracle Corporation - Oracle Applications
• JD Edwards World Solutions Co. - OneWorld
• PeopleSoft Inc. - PeopleSoft
IT705 – Enterprise Resource Planning
(16 Marks)
UNIT I – INTRODUCTION
1. What is ERP? Give an overview. • ERP
• Reasons for growth of ERP market • Advantages
• Problem areas
• Future of ERP packages
2. What is an Enterprise? Give an overview. • Enterprise
• Integrated management information • Role of enterprise
• Business modeling • Integrated data model 3. What are the benefits of ERP? • Reduction of lead time • On-time shipment • Reduction in cycle time • Better customer satisfaction • Improved supplier performance • Increased flexibility
• Reduction in quality costs • Improved resource utility
• Improved information accuracy and decision making capability 4. Write about the related technologies of ERP?
• BPR
• Data mining • OLAP • SCM
5. What are the phases of BPR?
• Begin organizational change
• Building the reengineering organization • Identifying BPR opportunities
• Understanding the existing process • Reengineering the process
• Blueprint of the New Business System • Perform the transformation
UNIT II – ERP IMPLEMENTATION
1. What are the different phases of ERP implementation? • Pre-evaluation screening
• Package evaluation • Project planning phase • Gap analysis
• Reengineering • Configuration
• Implementation team training • Testing
• Going live • End user training • Post-implementation
2. What are the general four phases of an ERP implementation? • Understanding the problem
• Defining solutions • Getting down to work • Going live
3. Give the hidden costs in ERP implementation? • Training
• Integration and testing • Data conversion • Data analysis • ERP consultants
4. State the main members of an implementation team. • Executive committee
• Project management team • Work team
• Technical support team • Administrative support team
5. State some key points of the contract with the vendor, which should be addressed. • Value of the software and conditions of payment
• List of deliverables (software, documents etc.) • Cost of implementation training
• Cost of end-user training • Annual maintenance fee • Warranty or guarantee terms
UNIT III – BUSINESS MODULES
1. State the various business modules in ERP system. • Human resources
• Finance • Manufacturing • Plant maintenance • Sales & distribution • Materials management • Quality management • Production planning
2. State the finance modules in most ERP systems. • Financial accounting
• Investment management • Controlling
• Treasury
• Enterprise controlling
3. State some major subsystems of manufacturing module. • Material and capacity planning
• Shop floor control • Quality management
• JIT / Repetitive manufacturing • Cost management
• Tooling
4. What are the basic functions in sales order processing? • Inquiry handling
• Quotation preparation and quotation
• Contracts and contract management (order management) • Monitoring the sales transactions
• Checking for availability
• Transferring requirements to materials planning (MRP) • Scheduling the delivery
• Calculating pricing and taxes • Checking credit limits
• Invoicing / billing
• Creating printed or electronically transmitted documents 5. What are the main modules of Materials Management module?
• Pre-purchasing activities • Purchasing
• Vendor evaluation • Inventory management
UNIT IV – THE ERP MARKET
1. What are the general R/3 modules? • Financial accounting • Treasury • Controlling • Enterprise controlling • Investment management • Production planning • Materials management
• Plant maintenance and service management • Quality management
• Project system • Sales and distribution
• Human resources management
2. State some areas of business management solutions, provided by PeopleSoft. • HR management
• Accounting and control • Treasury management • Performance management • Project management • Sales and logistics • Materials management • Supply chain planning
• Service revenue management • Procurement
3. What are the ERP modules of BaanERP? • Manufacturing module
• Finance module • Project module • Distribution module
4. Give some categories of Oracle software applications. • Oracle Financials
• Oracle Human Resources • Oracle Projects
• Oracle Manufacturing • Oracle Supply Chain • Oracle Front Office
5. What are the six key goals of SSA? • Best client satisfaction • Single image worldwide
• Enterprise solutions leadership • Proven leading technology
• Strong financial results
UNIT V – ERP (PRESENT AND FUTURE)
1. What are the general traditional business processes? • Fulfillment
• Payment • Procurement • Replenishment
2. State the steps in retail fulfillment process. • Initiate order
• Verify identity or payment • Arrange drop shipment • Acknowledge order • Track order status
3. State the steps in corporate procurement process. • Initiate requisition
• Verify item data
• Transmit purchase order • Confirm receipt
• Track purchase status
4. State the steps in inventory replenishment process. • Item reorder limit reached
• Purchase order approved • Item shipped
• Item received • Payment received
5. State some key points of the contract with the consultant, which should be addressed. • 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
