Enterprise resource planning (ERP) is an integrated software solution that coordinates all resources, information, and activities needed to complete business processes. ERP aims to integrate core corporate functions like finance, manufacturing, distribution, human resources, etc. under a common database and software platform. ERP evolved from materials requirement planning (MRP) systems of the 1970s and manufacturing resource planning (MRP II) systems of the 1980s. A typical ERP package solution has modules for sales, marketing, distribution, manufacturing, finance, personnel, maintenance, purchase, and inventory management. ERP implementation promises benefits like seamless integration, order tracking, cost control, and competitive advantage but also risks like high costs and customization issues. Careful

1. UNIT – IV
Enterprise Resource Planning
Course: MBA-II
Subject: EWIS

2. Enterprise
Resource
Planning

3. What is ERP?
•facilitates company-wide integrate information systems,
covering all functional areas.
• Performs core Corporate activities and increases customer
service.
“ERP” is an enterprise wide information system designed to
coordinate all resources, information and activities needed to
complete business processes.”
ERP is a solution, which

4. ERP - Definition and Focus
“Software solution that addresses the Enterprise
needs,taking a process view ofthe overall organization to
meet the goals,by tightly integrating all functions and
under a common software platform”.
Focus:- Main focus is on resource management within
constraints to maximize the return on investment.

5. Why ERP?
For Management – to know what is happening
in the company
One solution for better Management
For cycle time reduction
To achieve cost control & low working capital
To marry latest technologies
To shun the geographical gaps
To satisfy the customers with high expectations
To be Competitive & for survival

6. 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)
2000 onwards – ERP II – Collaborative Commerce
(Extending ERP to external business entities)

7. ERP PACKAGE DESIGN
 It is built on the principle of “best practices”.
 The user of the package is to choose the best one which is close to the
requirement.
 Customization is not advisable to maintain software integrity. It could be
required in extreme cases when user’s function or features is absent in the
package.
 ERP implementation achieves:-
 Seamless integration among different functional areas.
 Design engineering support to make best.
 Order tracking
 Receivable, credit management linked order execution.
 Managing inter-dependencies of complex processes.
 Accounting and measuring the progress and performance with respect
to resource planned and consumed.

8. A TYPICAL ERP PACKAGE SOLUTION
HAS FOLLOWING MODULES:-
1. Sales, marketing and distribution.
2. Manufacturing
3. Stores management
4. Finance
5. Personnel
6. Maintenance
7. Purchase, Inventory
8. Planning and Control.

9. ERP – Expectations
Integrating all the functions
Integrating the systems running in all the locations
Transparency of information using a single
data source across the organization
Software must be responsive
Modular
Flexible
Easy to add functionalities
Provide growth path

10. ERP Product selection Phase
 ERP Team formation for selection
 Appointment of Consultants [if needed]
 Scoping study
 Product selection
 Implementation partners selection
 Hardware/Communication cost estimation

11. Product Selection - Parameters
 Reputation of the ERP product
 No.of installations in the geographical
vicinity
 % of the overall functional availability
 Customization possibilities
 After sales support
 Your investment plan & budget
 Implementation partner’s track record

12. 5 Strategic Requirement Levels
 Functionality
Technology
Vendor
Support
Cost
Goal: To select the Most Suitable Software Package SolutionGoal: To select the Most Suitable Software Package Solution
ERP Product selection Criteria

13. Preparation Phase
 Framing ERP Implementation Strategies
 Functional & IT team formation
 Training on ERP functions & features
 Scope finalization
 Action plan to resolve the gaps

14. Pitfalls & Points of concern
 Costly comparing to custom-built options
 Lot of hidden costs
 Chances of cost & time overrun are high
 Compulsion to pay for redundant modules/features
 Vigorous involvement of all during implementation
 Non-availability of special practices like Customer
Complaint, Logistics
 Linking historical data – offline & painful
 The requirement of Change Management is a must
 Dependency on outsiders is high
 IT department – Poor grip on the Implemented systems

15. Critical Success Factors for ERP
 The firm & approach of the Management
- on adapting the ERP product driven
methodologies
- on customization
- on monetary commitments
 The dedicated Team
 Good Training
 Strict adherence to the Project schedules
 Right technical infra-structure

16. Building ERP using Ext. sources - Steps
1.1. Software vendor selectionSoftware vendor selection
2. Detailed study by the vendor
3. Scope & platform finalization
4. Freezing the commercials
5. Development
6. Hardware addition/upgradation
7. Old master/transaction data migration
8. Parallel run with Integration & connectivity
check
9. Implementation
10.Maintenance

17. The following traits should be considered while
selecting the software vendor for building the ERP
application
 Technical expertise
 Domain knowledge
 Adequate manpower
 Project management skills
 Long existence in the field
 Extra skills [e-biz & workflow]
ERP Software - Vendor Selection

18. REFERANCES:
1)http://en.wikipedia.org/wiki/Enterprise_resource_planning
2) Enterprise Resource Planning – Concepts and Practice by Vinod
Kumar Garg and N K Venkitakrishnan, PHI
3) Concepts in Enterprise Resource Planning by Brand, Monk and
Wagner – Thomson Learning