Enterprise Resource Planning(ERP)

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  • Hundreds of ERP vendors exist today. All claiming to have suitable and ideal solution for your company.
    It is better to have a limited number of packages that aare evaluated to less than five.
  • Enterprise Resource Planning(ERP)

    1. 1. Enterprise Resource Planning (ERP) Systems
    2. 2. What is ERP?  Enterprise resource planning (ERP) software is a set of applications that helps to automate different departments of an organization.  “Integration” is the key word for ERP implementation. ERP, Introduction, Scope and Benefits 2
    3. 3. W hat is ERP?  It may also integrate key customers and suppliers as part of the enterprise’s operation.  It provides integrated database and customdesigned report systems.  It adopts a set of “best practices” for carrying out all business processes. ERP, Introduction, Scope and Benefits 3
    4. 4. Problems with Non-ERP Systems In-house design limits connectivity outside the company  Tendency toward separate IS’s within firm  • lack of integration limits communication within the company Strategic decision-making not supported  Long-term maintenance costs high  Limits ability to engage in process reengineering  ERP, Introduction, Scope and Benefits 4
    5. 5. Traditional IS Model: Closed Database Architecture  Similar in concept to flat-file approach • data remains the property of the application • fragmentation limits communications  Existence of numerous distinct and independent databases • redundancy and anomaly problems  Paper-based • requires multiple entry of data • status of information unknown at key points ERP, Introduction, Scope and Benefits 5
    6. 6. Characteristics of an ERP System  Includes business management software that enables finance and human resources in a completely integrated fashion  Enables high levels of integration across business functions and units  Provides for widespread sharing of data from a single information repository  Drives extensive business transformation and change management efforts  Requires high levels of implementationand effort and support 6 ERP, Introduction, Scope Benefits
    7. 7. Why ERP  Integrate financial information  Integrate customer order information  Standardize and speed up operations processes  Reduce inventory  Standardize Human Resources information ERP, Introduction, Scope and Benefits 7
    8. 8. Potential Benefits of ERP  Internal Benefits • Integration of a single source of data • Common data definition • A real-time system • Increased productivity • Reduced operating costs • Improved internal communication • Foundation for future improvement ERP, Introduction, Scope and Benefits 8
    9. 9. Potential Benefits of ERP  External Benefits • Improved customer service and order fulfillment • Improved communication with suppliers and customers • Enhanced competitive position • Increased sales and profits ERP, Introduction, Scope and Benefits 9
    10. 10. ERP Functionality/Information Integration Through ERP -General Ledger -Accounts Receivable -Accounts Payable -Procurement -Fixed Assets -Treasury Mgmt -Cost Control -Grant Management -HR/Benefits Administration -Payroll -Self-service HR -eProcurement - Employee Self Service - e-Recruiting/e-Hiring - e-Filing - Citizen Access - Web-enabled transactions - e-Commerce Transaction Engine Core software that manages transaction flow among applications and handles tasks like security and data integrity Customer Relationship Mgt Data Analysis Decision support software that lets senior executives and other users analyze transaction data to track business performance Supply Chain Mgmt Planning, scheduling and fulfillment applications that address all procurement requirements across the enterprise ERP, Introduction, Scope and Benefits -Consistent user experience - Personalization of services - Realtime access- enterprise info 10
    11. 11. ERP Implementation Challenges  Focus on applications rather than business processes  ERP project management expertise  Scope and change management  Sub-optimization of system capabilities  Staffing and retaining full time project resources  Experienced implementation partners  Product maturity and limitations ERP, Introduction, Scope and Benefits 11
    12. 12. ERP Implementation Approaches  The big bang approach – install a single ERP system across the entire organization all at ones.  Phase out approach – install one or several ERP modules for phased implementation of key business processes. ERP, Introduction, Scope and Benefits 12
    13. 13. Company Management Go ahead Pre-Evaluation Screening ERP Vendors Package Evaluation Project Planning Gap Analysis Implementation Team Training Reengineering Testing Configuration End-User Training Going Live Post Implementation Phase ERP implementation Lifecycle ERP, Introduction, Scope and Benefits 13
    14. 14. ERP Implementation    ERP implementation lifecycle focus on the ERP project which is carried out to make ERP up and running. ERP project is likely to go through different phases like any other project. Most often these phases do not necessarily depend on one another in a sequence, i.e. one phase might start before previous phase has finished. ERP, Introduction, Scope and Benefits 14
    15. 15. ERP Implementation  The different phases of ERP implementation are:• Pre-evaluation Screening • Package Evaluation • Project Planning Phase • Gap-Analysis • Reengineering • Configuration • Implementation Team Training • Testing • Going Live • End-user training • Post – implementation ERP, Introduction, Scope and Benefits 15
    16. 16. Pre-evaluation Screening  When the company has decided to implement the ERP the search for the convenient and suitable ERP package begins. ERP, Introduction, Scope and Benefits 16
    17. 17. Package Evaluation The objective of this phase is to find the package that is flexible enough to meet the company’s need or in other words, a software that could be customized to obtain a ‘good fit’.  Once the packages to be evaluated are identified, the company needs to develop a selection criteria that will permit the evaluation of all the available packages on the same scale  ERP, Introduction, Scope and Benefits 17
    18. 18. Package Evaluation  Some important points to be kept in mind while evaluating ERP software include: • Functional fit with the company’s business • process. Degree of integration between the various components of the ERP system. ERP, Introduction, Scope and Benefits 18
    19. 19. Package Evaluation • Flexibility and scalability • Complexity • User friendliness • Quick implementation  It is better to have a selection committee that will do the evaluation process. ERP, Introduction, Scope and Benefits 19
    20. 20. Project Planning Phase This is the phase that designs the implementation process. Time schedules, deadlines, etc. for the project are arrived at.  The project plan is developed in this phase.  In this phase the details of how to go about the implementation are decided. The project plan is developed, roles are identified and responsibilities are assigned.  ERP, Introduction, Scope and Benefits 20
    21. 21. Project Planning Phase    The organisational resources that will be used for the implementation are decided and the people who are supposed to head the implementation are identified. The implementation team members are selected and task allocation is done. The phase will decide when to begin the project, how to do it and when the project is supposed to be completed. ERP, Introduction, Scope and Benefits 21
    22. 22. Project Planning Phase    The phase will also plan the ‘What to do’ in case of contingencies; how to monitor the progress of the implementation; The phase will plan what control measures should be installed and what corrective actions should be taken when things get out of control. The project planning is usually done by a committee constituted by the team leaders of each implementation group headed by CIO. ERP, Introduction, Scope and Benefits 22
    23. 23. Gap Analysis    This is the most crucial phase for the success of the ERP implementation. Simply it is the process through which companies create a complete model of where they are now, and in which direction they want to head in the future. The trick is to design a model which both anticipates and covers any functional gaps. ERP, Introduction, Scope and Benefits 23
    24. 24. Gap Analysis  Some companies decide to live without a particular function. Other solutions include: • Upgrade • Identify the third party product that might fill the gap • Design a custom program • Altering the ERP source code, (the most expensive alternative; usually reserved for mission-critical installation) ERP, Introduction, Scope and Benefits 24
    25. 25. Reengineering  This phase involves human factors.  In ERP implementation settings, reengineering has two connotations. The first connotation is the controversial one, involving the use of ERP to aid in downsizing efforts.  In this case ERP is purchased with aim of reducing the number of employees. ERP, Introduction, Scope and Benefits 25
    26. 26. Reengineering  Every implementation will involve some change in job responsibilities as processes become more automated and efficient.  However it is best to regard ERP as investment and costcutting measure rather than a downsizing tool.  ERP should endanger business change but not endanger the jobs of thousands of employee. ERP, Introduction, Scope and Benefits 26
    27. 27. Configuration  This is the main functional area of ERP implementation.  The Holy Grail (unwritten rule) of ERP implementation is, synchronising existing company practices with the ERP package rather than changing the source code and customising it to suit the company. ERP, Introduction, Scope and Benefits 27
    28. 28. Configuration  In this case business process have to be understood and mapped in such a way that the incoming ERP solutions match up with the overall goals of the company.  It is not required to shut down company operations while the mapping is in progress. ERP, Introduction, Scope and Benefits 28
    29. 29. Configuration  Using a prototype is a great idea (a simulation of the actual business processes of the company).  The prototype allows for thorough testing of the “to be” model in a controlled environment.  Configuring the system reveals both the strength and the weaknesses of the company business processes. It is important for the success of ERP implementation that those configuring the system are able to explain what won’t fit into the package where the gaps in functionality occur.  ERP, Introduction, Scope and Benefits 29
    30. 30. Implementation Team Training  Synchronously when the configuration is taking place, the implementation team is being trained.  This is the phase where the company trains its employees to implement and later, run the system. For the company to be self-sufficient in running the ERP system, it should have a good in-house team that can handle the various solutions.  ERP, Introduction, Scope and Benefits 30
    31. 31. Testing   This is the point where the real testing happens. The test cases must be designed to specifically to find the weak links in the system and these bugs should be fixed before going live. ERP, Introduction, Scope and Benefits 31
    32. 32. Going Live This is the phase where all technicalities are over, and the system is officially declared operational.  In this phase all data conversion must have been done, and databases are up and running; and the prototype is fully configured and tested.  The implementation team must have tested and run the system successfully for some time.  Once the system is ‘live’ the old system is removed and the new system is used for doing business.  ERP, Introduction, Scope and Benefits 32
    33. 33. End-User Training     This is the phase where the actual users of the system will be trained on how to use the system. Each group is given training on the new system. This training is very useful as the success of the ERP system is in the hands of end-users. The end-user training is much more important and much more difficult than implementation team training since people are always reluctant to change. ERP, Introduction, Scope and Benefits 33
    34. 34. Post – Implementation (Maintenance Mode)    This is the very critical phase when the implementation phase is over. There must be enough employees who are trained to handle the problem that might occurred when the system is running. There must be technical people in the company who have the ability to enhance the system when required. ERP, Introduction, Scope and Benefits 34
    35. 35. Major Challenges to ERP Implementation  Flexibility of software system upgrades  Implementation timelines  Availability of internal technical knowledge and resources  Education and training  Implementation  Resistance strategy and execution to change ERP, Introduction, Scope and Benefits 35
    36. 36. ERP Implementation - Key Enablers       The organization is prepared for the change. The executive leaders are active and visible in their support. The initiative is seen as a business imperative by the organization. The resources are available to conduct the project completely. A good packaged system is used and not customized. The user group is trained to use the software before it is implemented. ERP, Introduction, Scope and Benefits 36
    37. 37. Project Critical Success Factors Leadership commitment  Communication  Full-time staff  Professional project management  Phased implementation approach  Scope management.(The company should be clear of the need)  Business transformation and change management  Job-specific end-user training  Focused issue resolution  Post implementation support  ERP, Introduction, Scope and Benefits 37
    38. 38. Drawbacks of ERP systems   The success of the system is fully dependent on how the workers utilize it. • Employees must be properly trained, and companies do not think to invest much money on training. The thinking that goes along is that while at work the employees will be trained on own. One of the biggest challenge is customization. • Altough companies customize the ERP software according to the client need but some or the other issues always remain with the customization. ERP, Introduction, Scope and Benefits 38

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