This document discusses an Enterprise Resource Planning (ERP) system for a group consisting of 8 members with a common goal. It defines ERP as a business strategy and set of applications that optimize collaborative processes. The goal of the group's enterprise is to acquire, retain, and grow profitable customers. The document outlines the advantages and disadvantages of ERP, as well as steps to implement an ERP system and calculate its return on investment (ROI).

1. Group Members
Adeeti
Anjali Parate
Dhiraj Metrewar
Vishal Thakur
Hitesh Chawla
Rahul Nandi
Faraz R Siddiqui

2. What is ERP ?
..E..
An Enterprise is a group of people with a
common goal, which has certain resources at
its disposal to achieve that goal.
..R..
Resources included are money, and all other
things that are required to run the enterprise.
..P..
Planning is done to ensure that nothing goes
wrong.

3. In general ERP is :
“a business strategy and set of industry-
domain-specific applications that build
customer and shareholder communities
value network system by enabling and
optimizing enterprise and inter-
enterprise collaborative operational and
financial processes”
 (Source: Gartner’s Research Note SPA-12-0420)

4. Goal of ERP
The goal of our enterprise is simply to get, keep,
and grow customers.
GET
 Acquire profitable customers
KEEP
 Retain profitable customers longer.
 Win back profitable customers
 Eliminate unprofitable customers
GROW
 Up sell additional products in a solution
 Cross sell other products to customers
 Reduce service and operations cost.

5. Why ERP?
• ERP offers solutions for all business
functions
• Packages available for
organizations of all sizes and types
• Global nature (multi currency)

6. Steps to implement an ERP system :

7. Offices before ERP

8. Offices after ERP

9. Advantages of ERP
Integration
Efficiency
Cost reduction
Less personnel
Accuracy

10. Disadvantages
Take time to implement
Security issues

11. ROI in the context of ERP project
It represents metric of completed due
diligence and a time phase plan that
defines when money will be needed and
what for it will be used.
ROI calculation is made by dividing
monetary gain by amount spent.
http://www.managementstudyguide.com/return-on-
investment-in-erp-project.htm

12. Tangible benefits of ERP
Reduced level of inventories
Reduced material cost
Reduced labour cost
Improved Production
Reduction in the cost of after sales
services.

13. Intangible Benefits of ERP
Integration of information
Error reduction
Improved customer services
Establishment of standardized
procedures
Improved accounting control

14. Calculation of ERP
First step is to determine cost of various
components of the project such as consulting
fees, license fees, modification and
implementation cost, hardware cost etc.
Maintenance fees for a pre determined period
(say for three or five years) should be added
to arrive at Total Cost of Ownership over the
specified period.
The estimated expenditure should be time
phased over the period, used to calculate
TCO.

15. Calculation of ERP cont.
 Next step is the more difficult part which is to estimate
expected benefits over a period of time. For estimating
these figures, there should be wide consultation and
reference to statistics emanating from various survey
reports.
 Benefits will largely occur from the reduction of
inventory level, operation cost, labor cost and
improved production.
 Whereas the last three elements will have a direct
impact on profit and loss account, the reduction in
inventory will cause release of additional cash which
can be assigned to a yearly value of saving, based on
organization’s standard internal rate of return.

16. Benefits
Improved inventory management
Improved customer service
experience
Improved use of IT resources
Improved integration with
accounting
Improved Profitability

17. How do you begin to estimate the
anticipated ROI of an ERP
system?
What would be a reasonable
methodology?”

18. To answer this question, We would
look at five main factors to
estimate the ROI of an ERP
system:
1) IT costs,
2) productivity,
3) visibility,
4) risk
5) Audit and compliance impacts.

19. IT Costs: Hardware, replacement, personnel,
ongoing training, related services, software
and subscription costs all factor into your IT
costs.
Desired Productivity Impacts: The impact of
data errors due to an un-integrated system can
be costly, waste time, and is a very common
ROI component to consider.
Visibility Impacts: New ERP systems generally
provide better access to more reliable data,
which improves financial control.

20. Audit and Compliance Impacts: Improved
controls and repeatable processes increase
your ROI by lowering audit and oversight
costs.
Risk Impact: The cost of risk is often the
hardest to estimate.

22. Operational
Cost reduction (Labor, Inventory,
Administrative)
Cycle time reduction,
Productivity improvement
Quality improvement (error rate,
redundancy, accuracy, reliability)
Customer services improvement (ease of
data access for customer queries)

23. Managerial
Better resource management (Better workforce
management)
Improved decision making and
planning(reports, real-time use of data,
accessibility)
Performance improvement (financial,
operational efficiency, and effectiveness
management)
Standardization, compliance

24. Strategic
 Support business growth
(transaction volume, capacity,
capability, new functions)
Build cost leadership (economies of
scale, shared services)

25. IT Infrastructure
Build business flexibility for current
and future changes (integration with
other systems)
IT costs reduction (hardware, support
staff, etc)
Increased IT infrastructure capability
(standardized platform, performance,
reliability, availability, disaster recovery
etc)

26. Organizational
Support organizational changes
Facilitate Business learning (cross training of
employees)
Empowerment (accountability, value added
responsibility, users have ownership)
Built common visions (efficient
communications , collaboration)
Better Employee morale and job satisfaction
(improved skill levels)

27. Conclusion
Bit problematic particularly in
terms of unquantifiable figure
Enhance chance of successful
completion of project