PROJECT REPORT ON
“ERP Implementation”
SUBMITTED BY Yamini B. Asoor
SPECIALISATION: Systems
Business Definition for: ERP
Enterprise resource planning: a software system that coordinates every important aspect of an organization's production into one seamless process so that maximum efficiency can be achieved
ERP Implementation Life Cycle
The process of ERP implementation is referred as d as "ERP Implementation Life Cycle". The following are the steps involved in completing the lifecycle
Shortlist on the basis of observation
Selecting an ERP package for the company can nevertheless be compared with the process of "Selecting the right Person for the Right Job". This exercise will involve choosing few applications suitable for the company from the whole many.
Assessing the chosen packages
A team of Experts with specialized knowledge in their respective field will be asked to make the study on the basis of various parameters. Each expert will not only test and certify if the package is apt for the range of application in their field but also confirm the level of coordination that the software will help to achieve in working with other departments. In simple terms they will verify if the synergy of the various departments due to the advent of ERP will lead to an increased output. A choice is to be made from ERP implementation models.
Preparing for the venture
This stage is aimed at defining the implementation of ERP in all measures. It will lay down the stipulations and criterias to be met. A team of officers will take care of this, who will report to the person of the highest hierarchy in the organization.
Gap Analysis
This stage helps the company to identify the gaps that has to be bridged, so that the companys practice becomes akin to ERP environment. This has been reported as an expensive procedure but it is inevitable. The conglomerate will decide to restructure the business or make any other alterations as suggested by GAP analysis inorder to make ERP user friendly. Click here for a detailed study on GAP analysis. A choice is to be made from ERP implementation models.
Business process reengineering
Changes in employee rolls, business process and technical details find place in this phase of restructuring most popularly refered as business process engineering. For more details on BPR click here.
Designing the System
This step requires lot of meticulous planning and deliberate action. This step helps to decide and conclude the areas where restructing have to be carried on. A choice is to be made from ERP implementation models.
In-house Guidance
This is regarded as a very important step in ERP implementation. The employees in the company are trained to face crisis and make minor corrections as well because the company can neither be at liberty nor afford the bounty to avail the services of an ERP vendor at all times.
Checking
This stage observes and tests the authenticity of the use. The system is subjected to the wildest tests possible so that it ensures proper usage and justifies the costs incurred. This is seen as a test for ERP implementation.
The real test
At this stage the replacement takes place viz the new mechanism of operation and administration takes over the older one.
Preparing the employees to use ERP
The employees in the organization will be taught to make use of the system in the day to day and regular basis so as to make sure that it becomes a part of the system in the organization.
Post Implementation
The process of implementation will find meaning only when there is regular follow up and proper instruction flow thereafter and through the lifetime of ERP. This will include all efforts and steps taken to update and attain better benefits once the system is implemented. Hence an organization has to perform ERP implementation safely and correctly.
What are the steps to be taken to account the performance ERP software programs in your organization?
Enterprise Resource planning ERP definition is not a technical aspect. Enterprise resource planning is a huge investment on the part of company. Therefore it is necessary to ensure the accountability of the ERP vendor.
An understanding of ERP and language is must to follow ERP best practices. The ERP vendor cannot be blamed if the company does not follow the procedures correctly. On the contrary when his services are not up to the industry standards he has to be held responsible. But how to compute the services is another big question
Some of the steps that can be taken to compute are as underneath:
Preparations
The company should have a scale for evaluation right from the beginning stage. This will help them to progress further in due course of time .This is the primary step in the process .It includes everything is checking if the vendor has given the necessary supporting services to the company in the process of implementation installation training and relevant areas. This is very important because it forms the foundation for the ERP process in the company. One needs to be clear about ERP best practices for this.
Evaluating the work
This step concentrates on the core function. The company must periodically make a note of the work done. Any discrepancies will be brought to the vendor's notice immediately. The vendor should extend his full fledged cooperation in making sure that the work gets done as promised. Then only it is possible to scale ERP best practices. Incase there are some inherent errors or technical flaws in the company the ERP vendor can advise or suggest the company on how things are to be done. This step by and large helps the company to find out if the vendor stands up to the promise in terms of delivery. Understanding of ERP and language is a must.
Calculating ROI
ROI helps to directly account the performance of ERP software programs. In simple terms ROI calculates the returns from ERP software programs. When the returns are high or at least meets the expected and industry standards the performance of ERP software can be rated as "promising". The ROI on ERP will not be merely achieved by ERP implementation. The returns will be achieved only if the procedures are followed properly. But if the software fails to deliver the required results even after following the correct practices it shows lacuna on the part of ERP software. This will affect the rate of ROI as well.
Following contracts terms
The performance of ERP software can be gauged on the basis of its working in relation to the terms of contract. ERP software that accords to contractual terms in relation to working definitely indicates better performance than vice versa.
Compare ERP software on the 8 following criteria modules: 1. 2. 3. 4. 5. 6. 7. 8. 9. Finance Human Resources Manufacturing Management Inventory Management Purchasing Management Quality Management Sales Management Technology
Compare ERP on Financial Criteria
The finance section encompasses modules for bookkeeping and making sure the accounts are paid or received on time. How to compare ERP software on finance? Simple. Compare ERP software on the following financial criteria: 1. 2. 3. 4. 5. 6. 7. 8. 9. General Ledger Accounts Payable (A/P) Accounts Receivable (A/R) Fixed Assets Cost Accounting Cash Management Budgeting Financial Reporting Project Accounting
Compare ERP on Human Resources Management (HRM)
The section dedicated to human resources management (HRM) encompasses all the applications necessary for handling personnel-related tasks for corporate managers and individual employees. Modules will include personnel management, benefit management, payroll management, employee self service, data warehousing, and health and safety. How to compare ERP software on human resources management? Simple. Compare ERP software on the following HRMS criteria: 1. 2. 3. 4. 5. 6. Personnel Management Benefits Payroll Employee Self-Service Data Warehousing Health and Safety
Compare ERP on Manufacturing Management (Discrete and Process)
Manufacturing management (for both discrete and process manufacturing) encompasses a group of applications for planning production, taking orders, and delivering products to the customer. How to compare ERP software on manufacturing management? Simple. Compare ERP software on the following manufacturing management criteria. Because we want to compare ERP software systems on an apple-to-apple basis, we need to make a difference between discrete manufacturing and process manufacturing.
Discrete ERP
1. 2. 3. 4. Product Costing Shop Floor Control Production Planning Field Service and Repairs
Process ERP
1. 2. 3. 4. Product Costing Shop Floor Control Production Planning Formulas/Recipes
5. 6. 7.
Project Management Product Data Management (PDM) Product/Item Configurator
5. 6. 7. 8. 9.
Process Model (Formulas + Routings) Process Batch Control and Reporting Conformance Reporting Process Manufacturing Costing Material Management
Compare ERP on Inventory Management
Inventory management (IM) encompasses a group of applications for maintaining records of warehoused goods and processes movement of products to, through and from warehouses. How to compare ERP software on inventory management? Simple. Compare ERP software on the following inventory management criteria: 1. 2. 3. 4. 5. 6. 7. 8. Inventory Management On-line Requirements Processing Requirements Data Requirements Reporting and Interfacing Requirements (Inventory Management) Locations and Lot Control Forecasting Reservations and Allocations Inventory Adjustments
Compare ERP on Purchasing Management
Purchasing management encompasses a group of applications that controls purchasing of raw materials needed to build products and that manages inventory stocks. It also involves creating purchase orders/contracts, supplier tracking, goods receipt and payment, and regulatory compliance analysis and reporting. How to compare ERP software on purchasing management? Simple. Compare ERP software on the following purchasing management criteria: 1. 2. 3. 4. 5. 6. Vendor and Supplier Profile Supplier Rating and Profile Requisitions and Quotations Purchase Orders Prices and Discounts Vendor Contracts and Agreements
7. 8. 9.
Purchase Order Management Procurement Reporting, On-line Reporting Capability Repetitive Vendor Procurement
10. Procurement Receipts 11. Repetitive Vendor Procurement 12. Reporting
Compare ERP on Quality Management
Quality management encompasses applications for operational techniques and activities used to fulfill requirements for quality control, inspection plan creation, and management, defective item control and processing and inspection procedure collection planning. How to compare ERP software on quality management? Simple. Compare ERP software on the following quality management criteria: 1. 2. 3. 4. 5. 6. 7. 8. 9. Defective or excess material return processing must update on-hand Customer return file: awaiting disposition Damaged material—corrective action and failure analysis available to vendor online Inspection required indicator by supplier and by item Pre-inspection receipts registered as "inventory on hold" On-line inquiry of inspection and material review board (MRB) queue Validation against automated inspection criteria Inspection disposition with audit trail Disposition delinquency report
10. Quantity rejected 11. Reject reason codes
Compare ERP on Sales Management
Sales management encompasses a group of applications that automates the data entry process of customer orders and keeps track of the status of orders. It involves order entry, order tracing and status reporting, pricing, invoicing, etc. It also provides a basic functionality for lead tracking, customer information, quote processing, pricing & rebates, etc. How to compare ERP software on sales management? Simple. Compare ERP software on the following sales management criteria:
1. 2. 3. 4. 5.
On-line Sales Management Requirements Reporting and Interfacing requirements Available-to-Promise (ATP) Pricing and Discounting Customer Service and Returned Goods Handling Customer Relationship Management (CRM) and E-commerce Requirements
Compare ERP on Technology
The technology category defines the technical architecture of the ERP system, and the technological environment in which the product can successfully run. Criteria include product and application architecture, software usability and administration, platform and database support, application standards support, communications and protocol support and integration capabilities. Relative to the other evaluation criteria, best practice selections place a lower relative importance, on the product technology category. However, this apparently lower importance is deceptive, because the product technology category usually houses the majority of the selecting organization's mandatory criteria, which usually include server, client, protocol, and database support, application scalability and other architectural capabilities. The definition of mandatory criteria within this set often allows the client to quickly narrow the long list of potential vendors to a short list of applicable solutions that pass muster relative to the most basic mandatory selection criteria. During the process of ERP software selection, a great deal of attention is given to the functional capabilities of the software being evaluated. While this aspect is obviously important, ignoring the technical mechanisms by which the ERP software actually operates can be fatal to the ERP software solution selection project. How to compare ERP software on technology? Simple. Compare ERP software on the following technology criteria: 1. 2. 3. 4. 5. 6. Architecture User Interface Client and Server Platforms Application Tools Workflow and Document Management Reporting
Errors in ERP implementation
ERP implementation failure is a major concern for companies. ERP implementation needs to be done without allowing any scope for limitations and mistakes. If it is not done perfectly then the success of ERP system will remain a question mark. The first and foremost factor that discourages ERP in an organization is the exorbitant costs and investment. The second one is the drafting of an ERP implementation plan to ensure ERP implementation success.
Enhancement of ERP'S functions
Erg's scope gets wider as it is implemented in an organization. There is a call for including many tasks under the purview. This dilutes the ERP Existing system after modifying it a couple of times. Repeated change in configurations and systems will only add to the confusions. When the functions are operated by a machine it becomes increasingly difficult to make the necessary changes. These troubles arise when they are not foreseen and addressed in the implementation stage. They have to be given a place in ERP implementation plan. Organizational reaction to change Changes do happen quickly and immediately in the organization after ERP is implemented. But if there is no proper understanding of the process or mishandling of information, it will result in questioning the ERP process. If updating is not done in the machine it will only affect the business process and create unnecessary confusions. The changes don't happen all on a sudden in an organization and expecting it immediately will only cause needless disappointments. In spite of all this expecting every member in the organization to respond proactively will not happen. If that happens the chances of ERP implementation success are great. Inflating resources for ERP implementation The implementation time and money always exceeds the promises and stipulated deadline and amount. This makes companies to lose faith on ERP and ERP vendors. They think that ERP vendors overplay on the costs and time required but it is not so. Infact they are aware of it in the very beginning stage itself but have a different reason for concealing. They don't disclose it in the beginning because it would look like exaggerating. Infact no one would like to lose a prospective business and vendors are equally aware of the fact that "Truths are always bitter"! However many people mistake this to be the cause for ERP implementation failure. Organizations non adherence to the stated principles Organizations largely experience a wide gap between practices and preaching .Infact this has a negative effect on the entire business scenario itself. The voracity and impact of
loss could be greater and more devastating when this turns out to be true even in the case of ERP. Since ERP successful functioning is purely based on following the laid down procedures the lag could throw a serious challenge on ERP'S potential right from the stage of its implementation. Problem of Transformation due to ERP Employees find it hard to digest the transformations that place in an organization all on a sudden due to ERP implementation. Infact employees exhibit positive signs as everything goes right in the first place. But as one progresses he finds difficult to work as it gets more complex. The initial interest and expectation turns into apprehensiveness in due course of time. There is another category of people who did not encourage ERP right from the conceptualization stage. Their state of mind during these circumstances deserves no special mention.
The acronym "ERP"—for enterprise resource planning—was defined in 1990 by Gartner, Inc. (Stamford, CT). That was then. This is now. Gartner's Research Director in the Business Process and Applications Group, Brian Zrimsek, sees three major changes affecting ERP now: 1. Process extensions. "Today, ERP is still for the enterprise, but the enterprise is changing. It's becoming more virtual." Consider how the OEMs are outsourcing aspects of car design and the rise in contract manufacturing. Both of these business processes span physical enterprise boundaries. "ERP starts to struggle as you outsource more activities," says Zrimsek. The build/made items in ERP become bought/purchased items. The visibility that comes from routings, work-order statuses, and work-in-process data acquisition gets lost. Hence the drive for collaborative information systems among outsource partners. But remember, points out Zrimsek, "ERP wasn't built with the Internet in mind." 2. Verticalization of functionality. ERP was initially built for manufacturing and distribution. Now, fully integrated, feature-rich, ERP systems have extensions for supply chain management (SCM), customer relationship management (CRM), warehouse management, and several other business processes. Zrimsek has seen ERP deployed in just about all industry sectors; food, petrochemical, aerospace and defense, the armed services, and even the public sector. Consequently, ERP vendors are deepening the functionality of their systems to meet the needs of the target industries. 3. Architecture. Before client-server computing in the early 1990s, which was kind of the birth of ERP, resource planning systems were very monolithic. ERP deployments were basically mainframe deployments. Upgrading meant taking out the whole thing and putting in a new system. Today, users are loathe to pay 20% to 60% of what they paid in system implementation for upgrades/migrations. This is putting pressure on ERP vendors to provide software that is open, componentoriented, and migratable in pieces—thereby leaving existing, desired, ERP components (as well as SCM, CRM, etc.) in place and functional.
Add that all together and you see why Gartner is coining the term "ERP II" to label the "next act in the evolution of ERP, which expands beyond enterprise-centric optimization and transaction processing to a new focus on improving enterprise competitiveness." So, dismiss anything written erp's Evolution Into ERP II that ERP is dead. "It's not accurate to say there's nothing happening in ERP. There's lots happening. ERP is still growing and evolving," exclaims James Shepherd, Senior Vice President at AMR Research (Boston, MA). ERP is still doing what it's supposed to: provide a common database for an entire enterprise. "ERP is truly the enterprise backbone. That can't go away," says David Schaap, Product Marketing Manager for BRAIN North America, Inc. (Ann Arbor, MI). If anything, ERP is manufacturing's equivalent to Microsoft's Office Suite: lots of core functionality and changes that are far more incremental than they once were. Automotive ERP "What's new in ERP is no different than what has always been new in the product category currently known as ‘ERP,' formerly ‘MRP II' [manufacturing resource planning], formerly ‘MRP' [material requirements planning]: The difference has to do with what's being added to ERP," says Shepherd. That is, the scope, features, and functions of ERP continue to expand. Some of these, points out Shepherd, are invented by the ERP vendors; most are invented by small, niche vendors, later coopted by the ERP vendors. "That's progress as usual in ERP," Shepherd adds. And yet, ERP still doesn't fit automakers very well mainly because they have evolved their own way of doing business, which is sufficiently different than other industry sectors. However, ERP does fit the operations of the suppliers. Nowadays, suppliers are implementing ERP packages rather than writing their own systems or modifying "off-the-shelf" to some unrecognizable system state, as they did in the past. One key reason is that because automotive is a key target market for the ERP vendors; automotive-specific functionality is now the "price of admission." For example, look at Release Management from Oracle Corp. (Redwood Shores, CA). This module manages customer schedules, then reconciles demand with existing requirements. It posts shipping and sequence schedules, and generates updates to sales orders and forecasts. The module lets OEMs and suppliers automate the receipt and processing of inbound planning, shipping, and production sequence schedules. As necessary, the module generates exceptions if data is missing or invalid; valid schedules will continue to be processed. Once validated, customer schedules are archived and accessed by schedule history, original schedule date/quantity, associated sales order, and customer authorization information using the Release Management Workbench.
Several automotive companies require that trading partners use cumulative accounting; that is, send cumulative ship-to-date quantities or discrete requirement quantities with a cumulative total indicating what quantities are needed over the period. Oracle's erp Evolving Into Something More ERP's expansion today involves six elements that touch business, application, Release Management and technology strategies. converts these cumulative quantities into net quantities. This forecasted demand is reconciled with existing demand in Oracle Order Management and Oracle Planning. The reconciled customer demand goes to Oracle Shipping Execution, which manages picking, packing, and shipping inventory, as well as issuing the appropriate ship notice and invoice information through an EDI-related gateway to the OEM's trading partners. For non-Oracle users, Oracle's Trading Partner Architecture helps integrate trading partner-code to Oracle Release Management, Order Management, and Shipping Execution. Is this still ERP? Yes! The recently announced Rapid Planning Matrix (RPM) from SAP America, Inc. (Newton Square, PA), is an enhancement to the production planning and detailed scheduling in SAP's Advanced Planner and Optimizer (APO). That said, RPM is more an MRP engine. Running in main memory, RPM processes vast quantities of data and spits back the exact work content of sales orders per work area, including due-dates and line positions. It can explode 100,000. . .150,000. . .whatever, fully configured car sales orders in one to 1.5 hours, a process that could take up to 10 days in R/3. RPM lets companies run MRP after every shift, see demand for the next three to five weeks, and push consistent and accurate information down the supply chain. It also identifies potential bottlenecks and generates reliable delivery dates to users. This is crucial as automotive moves from a make-to-stock operation to build-to-order. This capability is also, says Juergen Helmle, SAP's Vice President of Automotive, the starting point of supply chain planning. "RPM is technically a part of our SCM product, not a part of R/3, but I would still call it a core ERP function."
The critical element of Gartner's ERP II vision is that various functions are SAP has also recently announced its Packaging integrated such that business processes will be executed seamlessly—really seamlessly! Logistics module. (Delphi and other automotive suppliers call this "Label Management.") This module manages packing instructions and multi-level packing bills of material. The module lets suppliers set packing instructions about what materials are to be packed in what type of container, and in what quantity. With this, suppliers can ship different part numbers in different containers—on the same pallet. Shipping palletized containers, even with mixed parts, saves in inventory and materials management on the shop floor. The module also manages returnable packaging, including monitoring the number of returnable packaging items in circulation.
Are these ERP functions? Yes, answers Helmle, even though it runs across material management, sales and distribution, and production planning. ERP II considerations There are a couple of ironies with ERP. The first revolves around the very issue of system complexity and the reality that software/systems integration is both difficult and expensive—COM, CORBA, Java, .NET, XML, and Web-based technologies notwithstanding. This reality, now more than ever, supports the argument for standardizing ERP, CRM, SCM, and the rest of the alphabet soup on one or two large ERP vendors, even if the resulting system is not "best of breed." Says Paul Hebeler, Oracle's Automotive Industry Director, "There has to be a compelling reason to going with multiple packages." (Hebeler also confirms that unlike the other major ERP vendors, Oracle plans to be the one-source provider for that alphabet soup of enterprise applications. "And don't forget, we have the database, too," he adds. When quizzed that supposedly no vendor can do it all, Hebeler responds, "That's probably true. It takes a special vendor.") Suggests BRAIN's Schaap, "People should still be asking their ERP providers to keep them current in terms of new industry mandates, which are constantly changing, and additional incremental functionality to address the changing market." The larger ERP vendors are more apt to do this, especially as mergers, acquisitions, and outright business failures take their toll on small ERP companies. On the other hand, a niche vendor might be better able to provide software for specific ERP-related (or soon-tobe ERP-related) tasks. This "bigger is better" approach to ERP has other ramifications. Vendors now have more "touch points" within the enterprise to sell ERP, whether that be manufacturing, finance, SCM, CRM, and so on. For customers, though, ERP is becoming—if it hasn't already—more unwieldy, more difficult, and more expensive as it tries to deal with the staggering complex problem of enterprise management. Despite the best of intentions, concludes Shepherd, "the problem of managing a business doesn't get any simpler. Now I have to sell my products 900 ways, I have to bring lots more new products to market in a week instead of years, and I'm global instead of local. It's a much more complex environment than it used to be."
Conclusion
ERP vendor has to address all these issues in order to ensure that there is ERP implementation success. If everything goes as per ERP implementation plan then there are no chances of ERP implementation failure.