ERP DefinitionERP Definition
ERP combines business processes/functions of variousERP combines business processes/functions of various
departments of an organization into a single, integrateddepartments of an organization into a single, integrated
software that runs off a single database so that all thesoftware that runs off a single database so that all the
departments can more easily share the information anddepartments can more easily share the information and
communicate with each other.communicate with each other.
• Speed and power of computingSpeed and power of computing
– Hardware (servers and disk) now cheap and fast – makes ERPHardware (servers and disk) now cheap and fast – makes ERP
– Happened in the 90s.Happened in the 90s.
• Increasingly complex business environmentIncreasingly complex business environment
– Organizational complexityOrganizational complexity
– Increasingly demanding customersIncreasingly demanding customers
– Increased competitionIncreased competition
• Increasingly sophisticated software needsIncreasingly sophisticated software needs
– ‘‘Legacy’ systems break under the strain of….all of the aboveLegacy’ systems break under the strain of….all of the above
Factors in development of ERPFactors in development of ERP
ERP MythsERP Myths
• means more work and proceduresmeans more work and procedures
• Will make many employees redundant and joblessWill make many employees redundant and jobless
• Is the sole responsibility of the managementIs the sole responsibility of the management
• Is just for the managers/ decision makersIs just for the managers/ decision makers
• Is just for manufacturing companiesIs just for manufacturing companies
• Is just for the ERP implementation teamIs just for the ERP implementation team
• Slows down the organizationSlows down the organization
• Is just to impress the customersIs just to impress the customers
• Will take care everythingWill take care everything
• Information integrationInformation integration
• Design engineeringDesign engineering
• Order trackingOrder tracking
• Protection against embezzlement and industrialProtection against embezzlement and industrial
• Reduces the burden of paperworkReduces the burden of paperwork
• Easy transactionEasy transaction
• Ensures efficient customer serviceEnsures efficient customer service
• Eliminates redundancy in data entryEliminates redundancy in data entry
• Suitable for global operationsSuitable for global operations
How does ERP create value?How does ERP create value?
• It integrates a broad range of business functionsIt integrates a broad range of business functions
• It allows diverse enterprises to standardizeIt allows diverse enterprises to standardize
• It stops dataIt stops data redundancyredundancy and synchronizationand synchronization
– Data stored in one placeData stored in one place
– ““One version of the truth”One version of the truth”
• It provides simultaneous access to real-time dataIt provides simultaneous access to real-time data
• It facilitates communication inside and outside theIt facilitates communication inside and outside the
• It provides a foundation for e-BusinessIt provides a foundation for e-Business
Functional areas of operationFunctional areas of operation
• Marketing and SalesMarketing and Sales
• Production and Materials ManagementProduction and Materials Management
• Accounting and FinanceAccounting and Finance
• Human ResourcesHuman Resources
Marketing and SalesMarketing and Sales
• Determine pricingDetermine pricing
• Take customer ordersTake customer orders
• Create sales forecastCreate sales forecast
Production and Materials ManagementProduction and Materials Management
• Need accurateNeed accurate
forecasts fromforecasts from
Marketing and SalesMarketing and Sales
• Compare costs withCompare costs with
Accounting and FinanceAccounting and Finance
• Record transactionsRecord transactions
• Summarize dataSummarize data
Human ResourcesHuman Resources
• Dehire (retire or fire)Dehire (retire or fire)
ERP IMPLEMENTATIONERP IMPLEMENTATION
LIFE CYCLELIFE CYCLE
Enterprise resource planningEnterprise resource planning
• ERP covers the technique and conceptsERP covers the technique and concepts
employed for the integrated management ofemployed for the integrated management of
business as a whole,business as a whole,
• ERP packages are integrated software packagesERP packages are integrated software packages
that support the above ERP concepts.that support the above ERP concepts.
Different phases of ERPDifferent phases of ERP
• Pre evaluation ScreeningPre evaluation Screening
• Evaluation PackageEvaluation Package
• Project PlanningProject Planning
• GAP analysisGAP analysis
• Team trainingTeam training
• Post implementationPost implementation
Gap Analysis Reengineering Configuration
Testing End- user Training
ERP implementation Life Cycle
Pre evaluation screeningPre evaluation screening
• Decision for perfect packageDecision for perfect package
• Number of ERP vendorsNumber of ERP vendors
• Screening eliminates the packages that are notScreening eliminates the packages that are not
at all suitable for the companyat all suitable for the company’’s businesss business
• Selection is done on best few packageSelection is done on best few package
Package EvaluationPackage Evaluation
• Package is selected on the basis of differentPackage is selected on the basis of different
• Test and certify the package and also check theTest and certify the package and also check the
coordination with different departmentcoordination with different department
• Selected package will determine the success orSelected package will determine the success or
failure of the project.failure of the project.
• Package must be user friendlyPackage must be user friendly
• Regular up gradation should available.Regular up gradation should available.
Project planningProject planning
• Designs the implementation process.Designs the implementation process.
• Resources are identified.Resources are identified.
• Implementation team is selected and taskImplementation team is selected and task
• Special arrangement for contegencies.Special arrangement for contegencies.
Gap analysisGap analysis
• Most crucial phase.Most crucial phase.
• Process through which company can create aProcess through which company can create a
model of where they are standing now andmodel of where they are standing now and
where they want to go.where they want to go.
• Model help the company to cover the functionalModel help the company to cover the functional
• Implementation is going to involve a significantImplementation is going to involve a significant
change in number of employees and their jobchange in number of employees and their job
• Process become more automated and efficient.Process become more automated and efficient.
Team TrainingTeam Training
• Takes place along with the process ofTakes place along with the process of
• Company trains its employees to implementCompany trains its employees to implement
and later, run the system.and later, run the system.
• Employee become self sufficient to implementEmployee become self sufficient to implement
the software after the vendors and consultantthe software after the vendors and consultant
have left.have left.
• This phase is performed to find the weak link soThis phase is performed to find the weak link so
that it can be rectified before itsthat it can be rectified before its
Going LiveGoing Live
• The work is complete, data conversion is done,The work is complete, data conversion is done,
databases are up and running, the configurationdatabases are up and running, the configuration
is complete & testing is done.is complete & testing is done.
• The system is officially proclaimed.The system is officially proclaimed.
• Once the system is live the old system isOnce the system is live the old system is
End User TrainingEnd User Training
• The employee who is going to use the systemThe employee who is going to use the system
are identified and trained.are identified and trained.
Post ImplementationPost Implementation
• This is the maintenance phase.This is the maintenance phase.
• Employees who are trained enough to handleEmployees who are trained enough to handle
problems those crops up time to time.problems those crops up time to time.
• The post implementation will need a differentThe post implementation will need a different
set of roles and skills than those with lessset of roles and skills than those with less
integrated kind of systems.integrated kind of systems.
• An organization can get the maximum value of theseAn organization can get the maximum value of these
inputs if it successfully adopts and effectively uses theinputs if it successfully adopts and effectively uses the