Document Sample
Practical_A Powered By Docstoc
					              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                           Subject: ERP


Aim :- Introduction to ERP system and identification of ERP .

Information technology has transformed the way we live live in and the way we do business.
Since last decade, I.T. has made a drastic change in our life. As compared to earlier stage, when
computer was used just as a typewriter, nowadays users have become more intelligent and IT
literate. Now the user knows that a PC can do many more things rather then just typing a letter in
a word processing software or making balance sheets in excel. They expect more things out of
their PC. During this phase of industry, every one of us must have heard the word ERP in one or
the other form. It may be in title of any IT magazine or may be a point of discussion in any IT
Seminar or may be in an advertisement of big IT Company. Thus in any form, we all have been
through this word. In this short article, I'll try to concisely explain the basic yet important
concepts relevant to ERP.

    What is ERP?
        ERP is one of the most widely implemented business software systems in a wide variety
of industries and organizations. ERP is the acronym of Enterprise Resource Planning. ERP is just
not only software. ERP definition refers to both; ERP software and business strategies that
implement                                       ERP                                    systems.
         ERP stands for Enterprise Resource Planning. ERP is a way to integrate the data and
processes of an organization into one single system. Usually ERP systems will have many
components including hardware and software, in order to achieve integration, most ERP systems
use a unified database to store data for various functions found throughout the organization.
Enterprise resource planning (ERP) is a company-wide computer software system used to
manage and coordinate all the resources, information, and functions of a business from shared
data stores.

    ERP implementation utilizes various ERP software applications to improve the
      performance of organizations for
   1) resource planning,
   2) management control and
   3) operational control.

ERP software consists of multiple software modules that integrate activities across functional
departments - from production planning, parts purchasing, inventory control and product
distribution to order tracking. Most ERP software systems include application modules to
support common business activities like finance, accounting and human resources.

Name : Patel Ajay K.                       Batch:B3                              Roll No.:6741
              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                          Subject: ERP

    Origin of the term
       The initials ERP originated as an extension of MRP (material requirements planning then
       manufacturing resource planning). ERP systems now attempt to cover all basic functions
       of an enterprise, regardless of the organization’s business or charter. Non-manufacturing
       businesses, non-profit organizations and governments now all utilize ERP systems.To be
       considered an ERP system, a software package must provide the function of at least two
       systems. For example, a software package that provides both payroll and accounting
       functions could technically be considered an ERP software package.However, the term is
       typically reserved for larger, more broadly based applications. The introduction of an
       ERP system to replace two or more independent applications eliminates the need for
       external interfaces previously required between systems, and provides additional benefits
       that range from standardization and lower maintenance (one system instead of two or
       more) to easier and/or greater reporting capabilities (as all data is typically kept in one
       database).Examples of modules in an ERP which formerly would have been stand-alone
       applications include: Manufacturing, Supply Chain, Financials, Customer Relationship
       Management (CRM), Human Resources, Warehouse Management and Decision Support

    Overview
       Some organizations — typically those with sufficient in-house IT skills to integrate
       multiple software products — choose to implement only portions of an ERP system and
       develop an external interface to other ERP or stand-alone systems for their other
       application needs. For example, one may choose to use human resource management
       system from one vendor, and the financial systems from another, and perform the
       integration between the systems themselves.This is very common in the retail
       sector[citation needed], where even a mid-sized retailer will have a discrete Point-of-Sale
       (POS) product and financials application, then a series of specialized applications to
       handle business requirements such as warehouse management, staff rostering,
       merchandising and logistics.Ideally, ERP delivers a single database that contains all data
       for the software modules, which would include:

       Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality
       Control, Cost Management, Manufacturing Process, Manufacturing Projects,
       Manufacturing Flow

       Supply Chain Management
       Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain Planning,
       Supplier Scheduling, Inspection of goods, Claim Processing, Commission Calculation


Name : Patel Ajay K.                       Batch:B3                              Roll No.:6741
              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                          Subject: ERP

       General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed

       Costing, Billing, Time and Expense, Activity Management

       Human Resources
       Human Resources, Payroll, Training, Time & Attendance, Rostering, Benefits

       Customer Relationship Management
       Sales and Marketing, Commissions, Service, Customer Contact and Call Center support

       Data Warehouse
       and various Self-Service interfaces for Customers, Suppliers, and Employees

       Enterprise Resource Planning is a term originally derived from manufacturing resource
       planning (MRP II) that followed material requirements planning (MRP). MRP evolved
       into ERP when “routings” became a major part of the software architecture and a
       company’s capacity planning activity also became a part of the standard software
       activity.[citation needed] ERP systems typically handle the manufacturing, logistics,
       distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise
       Resource Planning or ERP software can aid in the control of many business activities,
       like sales, marketing, delivery, billing, production, inventory management, quality
       management, and human resource management.ERP systems saw a large boost in sales in
       the 1990s as companies faced the Y2K problem in their legacy systems. Many companies
       took this opportunity to replace their legacy information systems with ERP systems. This
       rapid growth in sales was followed by a slump in 1999, at which time most companies
       had already implemented their Y2K solution.ERPs are often incorrectly called back
       office systems indicating that customers and the general public are not directly involved.
       This is contrasted with front office systems like customer relationship management
       (CRM) systems that deal directly with the customers, or the eBusiness systems such as
       eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship
       management (SRM) systems.ERPs are cross-functional and enterprise wide. All
       functional departments that are involved in operations or production are integrated in one
       system. In addition to manufacturing, warehousing, logistics, and information
       technology, this would include accounting, human resources, marketing, and strategic

       ERP II means open ERP architecture of components. The older, monolithic ERP systems
       became component oriented.[citation needed]

Name : Patel Ajay K.                      Batch:B3                               Roll No.:6741
                Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

  Department: 7th I.T.                                                         Subject: ERP

         EAS — Enterprise Application Suite is a new name for formerly developed ERP systems
         which include (almost) all segments of business, using ordinary Internet browsers as thin

      History of ERP
          Enterprise Resource Planning (ERP) is the evolution of Manufacturing Requirements
         Planning (MRP) II in 1980s, which was mainly related to Manufacturing Industry and
         was designed to control manufacturing process and planning the required production with
         efficient output. Whereas MRP is the evolution of Inventory Management & Control
         conceived in 1960s, which was mainly designed for management of Stocks in any
         particular industry. ERP has expanded from coordination of manufacturing processes to
         the integration of enterprise-wide backend processes like production planning and
         scheduling of delivery. In terms of technology, ERP has evolved from legacy
         implementation to more flexible tiered client-server architecture.


 Implementation of DSS

  With the birth of electronic commerce and supply chains, the call centers and
  other business initiatives supported by the information technologies had been worried about
  finding applications that join to decode, interpret and take the opportunity to make good use of
  the risks that allows an organization to make decisions, or at least, feel accompanied in the
  making of decisions.
  since the enterprises are committed to finding applications to help the decision making, it is
  important to understand how the best decision comes up. There are many ways to give an answer
  to the goals ofbusiness, and one of them could be the way in which the pieces of software,
  hardware and human elements are related in a company, and the way in which its construction
  and purchase are defined in the case of software or hardware.

  Integrating elements of the business applications that can do this is not a new thing, but the
  focusing and priority of the tasks nowadays is designing a bridge between the data in real time
  and all the components through which the decisions are being based.

  Name : Patel Ajay K.                      Batch:B3                              Roll No.:6741
                 Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

   Department: 7th I.T.                                                             Subject: ERP

 Business Intelligence
   he management of the corporate development starts with a simple inquiry of their partners about
   the present status of the company. Unless there is a specific answer to show the real status of
   the same, it will also finish there. Enterprise Performance Management (EPM) appeared with the
   purpose to help to find a primary answer to that question. The Business intelligence solutions
   offer personalized control panels including graphics, drawings and diverse explanations that will
   be useful for managers to monitor the metrics that really are important.

 Characteristics:
   The majority of EPM systems executes in a very similar way. EPM solutions are built over the
   platform ofBusiness Intelligence (BI), leading the world, which offers a sight on real time of
   the development of theBusiness, reports and alerts through the Web, besides the capacity to
   navigate till the detail in a transparent way.

   The applications analytical corporate suite and the structure of the application offer a deep
   analytical content and the possibility to be adapted to the needs of a specific organization. This is
   helpful to handle and improve the whole performance of the organization, from the production
   plan to the executive offices.

 Competitive Advantages:
  EPM is the key for several processes. It is specially designed to focus and take advantages of
  realBusiness opportunities from any operating unit. In this way EPM optimizes
  the performance of the whole enterprise, whether it comes to factory workers or to high
  management levels.

   This system has all the necessary tools to analyze and even predict trading (or operating)
   incomes cycles, development of supply chains, carefully detailed customer behavior and many
   other options from a single navigation interface. EPM is the best way to make good use of your
   time by using the current resorts of the enterprise, through an standardized and
   flexible Business intelligence platform.

 Operation and Control

   The selection of the most suitable management system is it a difficult decision to make, but once
   it is decided, the next step is the operation and maintenance of ERP. It is necessary to know well
   all the capacities and abilities in order to exploit the system to its fullest extent. The very first
   decision that should be made is whether the system will be operated by the employees or by third
   The outsourcing means hiring an associate to administrate a technology environment, which is
   becoming most common nowadays. Many enterprises have been attracted by this option because

   Name : Patel Ajay K.                         Batch:B3                               Roll No.:6741
                Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

  Department: 7th I.T.                                                             Subject: ERP

  they do not need to establish a team, invest in training and furthermore suffer the constant
  replacement of persons. Some managers are worried about the ability to use outsourcing on big
  scale since Business sector areas could be related.

 E-Commerce
  Over the last few years, e-commerce has become a common activity for many companies. Some
  of them dived into this challenge without taking into account the cultural changes that the
  situation involved, as well as the infrastructure necessary to continue with the initial project.
  The first step to follow is to select an Internet service provider. While it could be possible to use
  a solution or your own development, it would need to cover the basic needs of a catalogue of
  products, shopping carts, methods of payment with secure transactions, as well as order
  processing. There are two factors that will directly influence your work, therefore, it is very
  important that you should have a reliable hosting provider and reliable means of distribution.

 Logistics
  The logistics management area covers the activities related to the physical flow of materials,
  semi-elaborated products, raw materials, and the acquisition by the initial providers from the sale
  to the consumers. This includes the storage, production and distribution of the products. The
  conception of the logistic environment in an integrated way is reached through the integration of
  all, and each of the activities that constitute it.

  Requirements and Target:
  In every commercial and logistic company, the specific ERP software for the commercial area
  entails efficient structuring of all the corporate processes. Therefore, a complete streamlining and
  drastic reduction of costs is important. All the shapes of commerce and distribution, as well as
  the whole organization of the different companies, are represented by a system in
  an integrated way.

  The heavy pressures exerted by the competition makes the concept of efficient logistic systems
  quite relevant. Besides, it is necessary to rely on services and additional provisions provided to
  clients, with the objective of creating a difference from the competitors. Likewise, most of the
  clients are expected to receive an additional service as an advantage (i.e. free shipping).

  The specific requirements of the commercial and logistics area are represented by ERP for all the
  shapes of Business: retail and wholesale stores, import and export stores, distribution and
  service, shipping and transport. The staggered and universal character of the system has the
  significant advantage that allows the wholesalers and retailers to find the right solution to their

  Also, the importation and exportation commerce has special answers for their needs. The

  Name : Patel Ajay K.                         Batch:B3                               Roll No.:6741
                Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

  Department: 7th I.T.                                                            Subject: ERP

  extension of different services offered to reinforce the orientation requirements of the clients are
  taken into account.

  A distribution for clients focus on the costs and the consistent integration of the internal and
  external, with centres of distribution, expedition and transport companies, as well as
  the integration in the global system. It has become a rule in Business that the success in
  commerce demands an integrated logistic.

 Cash Management
  Cash management is a fundamental application that allows you to manage your accounts. It
  includes banks, savings institutions and charge cards. All the appropriate functions are
  conveniently centralized in one location. The application provides facilities for accounting staff
  to receive payments, make deposits, print checks, record manual checks, record funds transfer
  and card charges, pay off charges and reconcile your cash accounts.
  Because moving cash management to an ERP system does not eradicate the need for integration
  with the outside world, it does not eliminate compatibility problems. Integration is complicated
  by the industry’s lack of standards. You can plug in a standard interface along the line and have
  it work, but they almost always have to be customized.

  Treasury workstations come with a general ledger interface, but you need a different interface for
  eachERP system, and then you have to customize the interface. This is because every company
  has      its     own       idea      of       how        things      should        be       done.

  ERP systems run an internal world in which the parts communicate instantly and seamlessly with
  each other. It offers treasury components to manage cash, deals and risk. The move of
  cash managementinto an ERP system might come as part of a reengineering project that goes
  after inefficiencies inaccounting practices.

 Manufacturers
     The management of the information is the key in any company. The manufacturing industry
     experienced the first systems created with the objective to integrate the details
     and information, and to organize the different productive processes with MRP (Materials
     Requirement Planning), which have developed what is now known as ERP, or Enterprise
     Resource Planning. These resources are fundamental to understanding
     how information technology has contributed to the competitive advantages of the industrial

 ERP implementation Life Cycle

  Name : Patel Ajay K.                        Batch:B3                               Roll No.:6741
              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                              Subject: ERP

       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

Name : Patel Ajay K.                         Batch:B3                                Roll No.:6741
              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                             Subject: ERP

       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. For more details on ERP training click here.


       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

   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

The Advantages and Disadvantages of ERP

There are a number of powerful advantages to Enterprise Resource Planning. It has been used to
solve a number of problems that have plagued large organizations in the past. At the same time,

Name : Patel Ajay K.                        Batch:B3                                Roll No.:6741
                Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

  Department: 7th I.T.                                                           Subject: ERP

  it is not without a number of disadvantages. Being able to weigh the two will allow a company to
  decide if this solution will properly meet their needs.

 Advantages of ERP:

  In the absence of an ERP system, a large manufacturer may find itself with many software
  applications that do not talk to each other and do not effectively interface. Tasks that need to
  interface with one another may involve:

        design engineering (how to best make the product)
        order tracking from acceptance through fulfillment
        the revenue cycle from invoice through cash receipt
        managing interdependencies of complex Bill of Materials
        tracking the 3-way match between Purchase orders (what was ordered), Inventory
         receipts (what arrived), and costing(what the vendor invoiced)
        the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular

  Change how a product is made, in the engineering details, and that is how it will now be made.
  Effective dates can be used to control when the switch over will occur from an old version to the
  next one, both the date that some ingredients go into effect, and date that some are discontinued.
  Part of the change can include labeling to identify version numbers.

  Computer security is included within an ERP to protect against both outsider crime, such as
  industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might
  involve a terrorist altering a Bill of Materials so as to put poison in food products, or other
  sabotage. ERP security helps to prevent abuse as well.

 Disadvantages of ERP:
  Many problems organizations have with ERP systems are due to inadequate investment in
  ongoing training for involved personnel, including those implementing and testing changes, as
  well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how
  it is used.

  Limitations of ERP include:

  Name : Patel Ajay K.                       Batch:B3                              Roll No.:6741
              Vishwakarma Govt. Engg. College,Chandkheda, Gandhinagar

Department: 7th I.T.                                                          Subject: ERP

      Personnel turnover; companies can employ new managers lacking education in the
       company's ERP system, proposing changes in business practices that are out of
       synchronization with the best utilization of the company's selected ERP.
      Customization of the ERP software is limited. Some customization may involve changing
       of the ERP software structure which is usually not allowed.
      Re-engineering of business processes to fit the "industry standard" prescribed by the ERP
       system may lead to a loss of competitive advantage.
      ERP systems can be very expensive to install often ranging from 30,000 to 500,000,000
       for multinational companies.
      ERP vendors can charge sums of money for annual license renewal that is unrelated to
       the size of the company using the ERP or its profitability.
      Technical support personnel often give replies to callers that are inappropriate for the
       caller's corporate structure. Computer security concerns arise, for example when telling a
       non-programmer how to change a database on the fly, at a company that requires an audit
       trail of changes so as to meet some regulatory standards.
      ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and
       business process of some companies—this is cited as one of the main causes of their
      Systems can be difficult to use.
      Systems are too restrictive and do not allow much flexibility in implementation and
      The system can suffer from the "weakest link" problem—an inefficiency in one
       department or at one of the partners may affect other participants.
      Many of the integrated links need high accuracy in other applications to work effectively.
       A company can achieve minimum standards, then over time "dirty data" will reduce the
       reliability of some applications.
      Once a system is established, switching costs are very high for any one of the partners
       (reducing flexibility and strategic control at the corporate level).
      The blurring of company boundaries can cause problems in accountability, lines of
       responsibility, and employee morale.
      Resistance in sharing sensitive internal information between departments can reduce the
       effectiveness of the software.
      There are frequent compatibility problems with the various legacy systems of the

The system may be over-engineered relative to the actual needs of the customer.

Name : Patel Ajay K.                      Batch:B3                                Roll No.:6741