What is ERP?
Software solution that addresses all the
needs of an enterprise and integrates all the
functions of the enterprise.
Individual Department Systems
Integration through ERP
Life Cycle of ERP
Common examples includeCommon examples include
SAP, PeopleSoft, Baan andSAP, PeopleSoft, Baan and
What drives ERP ?
• Business issues
• Low Customer Satisfaction
• Business Development - new areas, products, services
• Ability to face competition
• IT issues
• Present Software does not meet business needs
• Obsolete hardware/software difficult to maintain
• Facilitates Company-wide integrated Information
Systems Covering all functional Areas.
• Performs core Corporate activities and increases
customer service augmenting Corporate Image.
• Organizes & Optimizes the data input
Evolution of ERP
1960’s - Systems Just for Inventory Control
1970’s - MRP – Material Requirement Planning
(Inventory with material planning & procurement)
1980’s - MRP II – Manufacturing Resources Planning
(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)
The USA Principle
• Understand, Simplify, Automate
ERP – Implementation Options
OPTION 1 – MAKE [Using Internal resources]
Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of the
in-house IT department
OPTION 2 - BUY
Going for Tailor-made ERP packages available in the market like
SAP, Oracle applications, Baan, PeopleSoft etc.
Inhouse Development OR ERP package
Project Development takes time . Ready made Projects.
Reinventing the wheel. Needs only customization
Process specific to your industry Best Business practices followed
Documentation may not be present Documentation is part of system
EDI implementation modifications EDI Compatible. Universally accepted
to be taken care of
Enterprise implementation is The package itself is designed as
difficult as each unit follows Enterprise Package.
different S/W option
Latest Developments to be studied Constant Updates on Technology
as and when they are introduced. and Processes assured
– General Ledger, Cash Management, Accounts Payable,
Accounts Receivable, Fixed Assets
– Costing, Billing, Time and Expense, Activity
• Human Resources
– Human Resources, Payroll, Training, Time &
• Customer Relationship Management
– Sales and Marketing, Commissions, Service, Customer
Contact and Call Center support
• Check whether all functional aspects of your
Business are covered
• Check whether all the business functions and
processes are integrated
• Check whether all latest IT trends are covered
• Check whether the vendor has customizing &
• Check the Service options available
• Check your purse & calculate ROI
• Determine the hardware required
• Fine tune the processes to be in line with those of
• Take Commitment from Management
• Implement Step-by-step rather than big-bang
Consider and Implement!
• The system can suffer from the "weakest link"
problem - an inefficiency in one department or at
one of the partners may affect other participants.
• Resistance in sharing sensitive internal
information between departments can reduce the
effectiveness of the software.
• Inadequate training to to end users. Many
companies cut costs by cutting user training.
• ERP systems can be very expensive to install.
Why ERP fails ?
• 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
• ERP systems find it difficult to adapt to the
specific workflow and business process of some
companies - this is cited as one of the main causes
of their failure.
• Systems can be very difficult to use
Why ERP fails ?