_ERP EVALUATION ERP evaluation refers to the systematic

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_ERP EVALUATION ERP evaluation refers to the systematic Powered By Docstoc
Enterprise resource planning (ERP) integrates internal and external management
information across an entire organization, embracing finance/accounting,
manufacturing, sales and service, etc. ERP systems automate this activity with an
integrated software application. Its purpose is to facilitate the flow of information
between all business functions inside the boundaries of the organization and manage
the connections to outside stakeholders.[1]

ERP systems can run on a variety of hardware and network configurations, typically
employing a database to store data.[2]

ERP systems typically include the following characteristics:

1.An integrated system that operates in real time (or next to real time), without relying
on periodic updates.[citation needed]

2.A common database, which supports all applications.

3.A consistent look and feel throughout each module.

4.Installation of the system without elaborate application/data integration by the
Information Technology (IT) department.[3]

#Functional areas:

2.General ledger, payables, cash management, fixed assets, receivables, budgeting,

3.Human resources

4.payroll, training, benefits, 401K, recruiting, diversity management

5.Manufacturing Engineering, bill of materials, work orders, scheduling, capacity,
workflow management, quality control, cost management, manufacturing process,
manufacturing projects, manufacturing flow, activity based costing, Product lifecycle

6.Supply chain management

7.Order to cash, inventory, order entry, purchasing, product configurator, supply chain
planning, supplier scheduling, inspection of goods, claim processing, commissions
7.Project management

Costing, billing, time and expense, performance units, activity management

8.Customer relationship management

Sales and marketing, commissions, service, customer contact, call center support

Data services

Various "self–service" interfaces for customers, suppliers and/or employees

9.Access control

Management of user privileges for various processes


Transactional database

Management portal/dashboard

10.Business intelligence system

Customizable reporting

External access via technology such as web services


Many organizations do not have sufficient internal skills to implement ERP. Typically, an
outside consulting team is responsible for the ERP implementation including selecting
the vendor, planning, training, configuring/customizing, testing, implementation,
delivery.Examples of other services include writing process triggers and custom
workflows; specialist advice to improve how the ERP is used in the business; system
optimization; custom reports; complex data extracts or implementing Business

Unlike most single–purpose applications, ERP packages typically include source code
and a vendor–supported development environment for customizing and extending the
delivered code.
The fundamental advantage of ERP is that integrating the myriad processes by which
businesses operate saves time and expense. Decisions can be made more quickly and
with fewer errors. Data becomes visible across the organization.

1.Sales forecasting, which allows inventory optimization

2.Order tracking, from acceptance through fulfillment

3.Revenue tracking, from invoice through cash receipt

4.Matching purchase orders (what was ordered), inventory receipts (what arrived), and
costing (what the vendor invoiced)

1.ERP systems centralize business data, bringing the following benefits:

2.They eliminate the need to synchronize changes between multiple systems—
consolidation of finance, marketing and sales, human resource, and manufacturing

3.They enable standard product naming/coding.

4.They provide a comprehensive enterprise view (no "islands of information"). They
make real–time information available to management anywhere, anytime to make
proper decisions.

5.They protect sensitive data by consolidating multiple security systems into a single

1.Customization is problematic.

2.Re–engineering business processes to fit the ERP system may damage competitiveness
and/or divert focus from other critical activities

3.ERP can cost more than less integrated and/or less comprehensive solutions.

4.High switching costs increase vendor negotiating power vis a vis support, maintenance
and upgrade expenses.
5.Overcoming resistance to sharing sensitive information between departments can
divert management attention.

6.Integration of truly independent businesses can create unnecessary dependencies.

7.Extensive training requirements take resources from daily operations.
#ERP                                                                     EVALUATION:
ERP evaluation refers to the systematic procedures followed to estimate the
performance of ERP in a company. This is not a one step process and it should be a part
of the organizational study and as well as be done from time to time.

The first thing in ERP evaluation is ROI. ERP is a very costly investment and it becomes
very important to check if the returns are satisfactory or justified for the costs involved.
ERP evaluation is dependent on several factors. As a matter of fact implementation of
ERP will eat up a large chunk of the organizations profits in many cases. The reason is
that ERP calls for change management and before the employees tune in to the new
atmosphere the company might have to lose several regular businesses. This will
certainly prove to be useful if only ERP satisfies the requirements of the company and is
able             to             compensate               on            this             loss.

Similarly lot of money is spent on implementing ERP and training the workforce to use
it. Apart from all this it has to be studies if ERP has facilitated smooth transaction of
business than ever. This is one of the most important parameter in assessment which
decides if ERP should be a part of the organization or if it should be given a go by.

First and foremost, the vendor should supply the product and its documentation as soon
as the contract is signed. Only after the software is delivered, can the company develop
the training and testing environment for the implementation team. The vendors are
responsible for fixing any problems in the software that the implementation team
encounters. So the vendor should have a liaison officer who should constantly interact
with the implementation team.

Another role the vendor has to play is that of the trainer - to provide the initial training
for the company's key users, people who will play lead roles in the implementation of
the system. These key users are the one who will define, together with the consultants,
how the software is to serve the company. In other words, it is these in-house functional
experts who will decide how the functionalities are to be implemented, as well as how
to use or adapt the product to suit the company's unique requirements.

So it is very critical that these key users are given a thorough training on the features of
the package. Vendor's training should achieve the goal of showing the key users how
the package works, what are the major components, how the data and information
flows across the system, what is flexible and what is not, what can be configured and
what cannot, what can be customized and what should not, what are the limitations,
what are the strengths and weaknesses and so on.
The role of the vendor does not end with the training. The vendor also plays an
important project support function and must exercise quality control with respect to
how the product is implemented. It is the vendors who understand the finer details and
functions of the product and can make valuable suggestions and improvements that
could improve the performance of the system.

ERP's scope usually implies significant changes to staff work practicesGenerally, three
types of services are available to help implement such changes—consulting,
customization, and support.Implementation time depends on business size, number of
modules, customization, the scope of process changes, and the readiness of the
customer to take ownership for the project. Modular ERP systems and can be
implemented in stages. The typical project for a large enterprise consumes about 14
months and requires around 150 consultants.Small projects can require months;
multinational and other large implementations can take years.Customization can
substantially increase implementation times.

Implementing ERP software can overwhelm inexperienced technicians. As a result,
hiring professionally trained consultants to implement these systems is common.
Consulting firms typically provide three areas of professional services: consulting,
customization, and support. The client organization can also employ independent
program management, business analysis, change management, and UAT specialists to
ensure their business requirements remain a priority during implementation.

Process preparation

Implementing ERP typically requires changing existing business processes.Poor
understanding of needed process changes prior to starting implementation is a main
reason for project failure. It is therefore crucial that organizations thoroughly analyze
business processes before implementation. This analysis can identify opportunities for
process modernization. It also enables an assessment of the alignment of current
processes with those provided by the ERP system. Research indicates that the risk of
business process mismatch is decreased by:

1.linking current processes to the organization's strategy;

2.analyzing the effectiveness of each process;

3.understanding exising automated solutions.ERP implementation is considerably more
difficult (and politically charged) in decentralized organizations, because they often have
different processes, business rules, data semantics, authorization hierarchies and
decision centers.This may require migrating some business units before others, delaying
implementation to work through the necessary changes for each unit, possibly reducing
integration (e.g. linking via Master data management) or customizing the system to
meet specific needs.

A potential disadvantage is that adopting "standard" processes can lead to a loss of
competitive advantage. While this has happened, losses in one area often offset by
gains in other areas, increasing overall competitive advantage.


Configuring an ERP system is largely a matter of balancing the way the customer wants
the system to work with the way it was designed to work. ERP systems typically build
many changeable parameters that modify system operation. For example, an
organization can select the type of inventory accounting—FIFO or LIFO—to employ,
whether to recognize revenue by geographical unit, product line, or distribution channel
and whether to pay for shipping costs when a customer returns a purchase


When the system doesn't offer a particular feature, the customer can rewrite part of the
code, or interface to an existing system. Both options add time and cost to the
implementation process and can dilute system benefits. Customization inhibits seamless
communication between suppliers and customers who use the same ERP system

Key differences between customization and configuration include:
1.Customization is always optional, whereas the software must always be configured
before use (e.g., setting up cost/profit center structures, organisational trees, purchase
approval rules, etc.)

2.The software was designed to handle various configurations, and behaves predictably
any allowed configuration.

3.The effect of configuration changes on system behavior and performance is
predictable and is the responsibility of the ERP vendor. The effect of customization is
less predictable, is the customer's responsibility and increases testing activities.

4.Configuration changes survive upgrades to new software versions. Some
customizations (e.g. code that uses pre–defined "hooks" that are called before/after
displaying data screens) survive upgrades, though they require retesting. Other
customizations (e.g. those involving changes to fundamental data structures) are
overwritten during upgrades and must be reimplemented.

5.Customization can be expensive and complicated, and can delay implementation.
Nevertheless, customization offers the potential to obtain competitive advantage vis a
vis companies using only standard features.
ERP systems can be extended with third–party software. ERP vendors typically provide
access to data and functionality through published interfaces. Extensions offer features
such as:

1.archiving, reporting and republishing;

2.capturing transactional data, e.g. using scanners, tills or RFID

3.access to specialized data/capabilities, such as syndicated marketing data and
associated trend analytics.

Data migration

Data migration is the process of moving/copying and restructuring data from an existing
system to the ERP system. Migration is critical to implementation success and requires
significant planning. Unfortunately, since migration is one of the final activities before
the production phase, it often receives insufficient attention. The following steps can
structure migration planning:[22]

1.Identify the data to be migrated

2.Determine migration timing

3.Generate the data templates

4.Freeze the toolset

5.Decide on migration-related setups

6.Define data archiving policies and procedures

Effective ERP requires that integrated management processes extend horizontally across
the company, including product development, sales, marketing, manufacturing, and
finance. It must extend vertically throughout the company's supply chain to include the
acquisition of raw materials, suppliers, customers, and consumers. The fundamental
purpose of ERP is to establish a process that links projected demand plans to supply
plans, so that the resources of manufacturers, their suppliers, and especially their
customers are utilized in the most efficient and cost effective way.

To do so requires a process for anticipating demand and planning and scheduling
resources in a manner that supports a company's strategic and financial goals. There are
five major elements in this:
                An integrated business operating process that links
                strategic plans and business plans to sales plans and
                operations plans.

                A people-driven process that is supported by a
                computer system.

                A formal resource planning process that involves all
                functions within a company.

                Defined   responsibilities        and    performance
                measurements for all functions in a company.

                Communications among all functions in a company as
                well as communications among all divisions and sister

Strategies must be tied to tactics, supply is resolved with demand, the financial system
is tied to the operating system, aggregate planning is translated into detailed planning,
and planning and execution are linked together via a two-way flow of information and a
spirit of cooperation among all functions.

ERP is a people process supported by the computer, rather than the other way around.
People -- and their behavior and discipline in utilizing the ERP process -- is vital. When
people understand how to utilize the ERP process, tools, and techniques, the data and
information will be highly accurate, and they will make sound decisions.

During the company existence a lot of information is accumulated and its volume
exponentially increases. Business processes’ dynamics sets to the managers more and
more shorter time for decision making. In these terms using of ERP-system is not just
desirable. The availability of suitable information system is a crucial factor for the future
company progress. The requirements to the ERP-system modules are growing up as
The system has to make business processes “transparent” to the governing body and
information form to allow a quick orientation in the main trends of the business.
The implementation of the marketing analysis module at a trade-oriented company is
of the great importance. Its main functionality has to include:
• Processing in Real-time – obtaining the “shot” of the relationships between the
company and the market at the present time;
• Generation of detailed information about the Sales History for any period of time;
• Stock items analysis – total information about sales, turnover and profit, “top”-
items, sales trends;
• Stock groups analysis –total information about sales generalized at stock group
• Clients analysis – total information about sales at a particular client level or sales
of the group of clients, trends in client’s behavior;
• Suppliers analysis – total information about sales of goods, provided from
• Regions analysis – total information about sales in geographic remote stores of
the company;
• Remote access to the system – remote operation with the integrated data base;
• Protection and Security – determine and control of different access levels to the
marketing information.

One of the most concerned ERP-system users are companies dealing with
automobile spare parts import and trade. On one hand their contractors abroad set the
necessity of a perfect organization. On the other hand the operation with a multitude of
clients, a huge nomenclature and the set of geographic remote stores necessitate the
implementation of a powerful information system. The presenting module Registry_M is
part of such ERP-system, which generates in real-time the necessary marketing analysis.

Nowadays, the existence and the progress of a trade-oriented company is impossible
without ERP-system and its marketing analysis module. The effective use of this
allows to be taken in time strategic and tactic control decisions with respect of:
• What to be supplied, who should be the supplier and when the orders to be
• In which region what to be sold, its price and when;
• Where there is a need the advertisement to be strengthened, goods from what
store to be transferred;
• Whish are the strategic clients and what is the amount of discount to be proposed
to the different clients.
• Which are the most important goods for the business, which are those that
generate the biggest profits and the sale of which items must be stopped.