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2. 2
What is an ERP ?
Enterprise Resource Planning
Single software that runs Company-wide
– may need complementary software in a few areas which are
too specific or which it does not address
Addresses all major functional areas / processes of the company
– Continuously evolving to address newer areas and processes
Ready-to-use package from day one
Leading vendors
– SAP, Oracle (Applications), Peoplesoft, BaaN
3. 3
What is ERP?
- multi-module application software that helps organization
manage its core business
- product planning, inventory maintenance, supplier
interaction, order tracking, financial and HR management
- relational database system, client/server distributed
architecture
- business process analysis and retraining
- rich functionality across all areas
4. 4
Evolution of ERP
- 1960s: Inventory Management Control (IMC)
- 1970s: Material Requirement Planning (MRP)
- 1980s: Manufacturing Resources Planning (MRP-II)
- 1990s: Enterprise Resource Planning (ERP)
5. 5
ERP Definition
A Future proof software solution that addresses the
enterprise needs taking the process view of an
organization to meet the organizational goals tightly
integrating all functions of an enterprise
6. 6
Characteristics of ERP
Real time decision support
Fully integrated
Open system
Distributed yet integrated applications
Ease of use - personalization, browser based
Flexible / best business processes
comprehensive - all functionalities
Adaptability to latest technologies
Internet / web applications
7. 7
Why ERP? - A Typical IT Story
Financial AccountingFinancial Accounting
Procurement/StoresProcurement/Stores
Sales &Sales &
DistributionDistribution
HR/PayrollHR/Payroll
ManufacManufac
turingturing
CustomerCustomer
CareCare
1,000 island solution1,000 island solution
8. 8
A Typical IT Story
Financial AccountingFinancial Accounting
Procurement/StoresProcurement/Stores
BillingBilling &&
CustomerCustomer
CareCare
HR/PayrollHR/Payroll ProjectsProjects
MaintenanceMaintenance
and Servicesand Services
9. 9
Need for ERP
Integration of Business Processes
Online information at the corporate office
Standardization of systems across Locations
Reduce cash to cash cycle times
Faster Consolidation at Head office for statutory reporting
10. 10
ERP Position in
Process chain
S
U
P
P
L
I
E
R
Purchasing Production
MGMT.
Accounts Costing
Maintenance Quality
Sales
C
U
S
T
O
M
E
R
11. 11
Information and Goods Flow
Capacity resourcesCapacity resources
Capital resourcesCapital resources
long-termlong-term short-termshort-term
Material resourcesMaterial resources
Logistic processLogistic process
vendorvendor
productionproduction salessales
purchase orderspurchase orders
procurementprocurement
materialsmaterials
servicesservices
processesprocesses
productsproducts
servicesservices
sales orderssales ordersware-ware-
househouse
ware-ware-
househouse
clientclient
12. 12
Centralized Purchasing, Sales, Accounting for
Multi-country, Multi-divisional, Multi-product
Better Production Resources planning
Better Services Resources planning
Integration with all functionalities
Optimize the business processes
Have Real-time processing
Get up-to-date information on business
Why ERP?
13. 13
Incorporation of best business practices and
process orientation
Legacy systems are typically built around a fixed
business scenario.
ERP VS Custom Built
Applications
15. 15
SAP - The Company and its
Product R/3
Founded in 1972 by ex-IBM employees
HQ in Walldorf
64000 + installations
– 10 users to 10000 users
$ 3mn per day R&D expenditure
Indian operations from 1996
200+ Indian companies have implemented it
Market Share and Revenues are bigger than the next
three competitors combined!
16. 16
SAP R/ 3 ?
S-A-P (not SAP!): Systems Applications and
Products in Data Processing
R/3 : 3 tier architecture
Ready to Run Software
Most complex package
– 70,000+ tables, 120,000+ programs (Cryptic
German), 400+ authorization objects
Robust Design: wide compatibility for h/w, o/s, d/b
Designed using inputs from best of class companies
Extremely strong integration
17. 17
What SAP is not
A temporary solution
– It will be the main back bone around which all
future systems will be built
A planning and optimizing tool
– SAP’s strengths are in execution
– It does not choose the best / most optimized solution
18. 18
What SAP is not
A ‘do-it-your way’ software
– Large no. of options in configuration tables
– Limitations to going beyond these options
– Source Code cannot be touched - contractual implications
– ABAP Development possible in a few cases - technical restrictions in
trying ABAP in other cases
– System Performance issues
– Upgrades to newer versions may not support developments
Overall it is the best but not
– the best for ‘every’ feature
– better than existing systems for ‘every’ feature
A single burst effort
– sets the foundation for other Technology initiatives
19. 19
SAP R/3 Architecture
SAP R/3 works on Three Tier Architecture
User Terminal Application Server Database Server
Data Creation
Modification
Retrieval
Managing
User
Requests
Data Storage
20. 20
The Presentation Layer
collects user input and
creates process requests.
The Application Layer
uses the application logic of
SAP programs to collect and
process the process requests.
The Database Layer
stores and retrieves all data.
Communication
3-Tier Client/Server Architecture
22. 22
SAP - characteristics
Highly Integrated solution covering entire business processes
Technically capable of utilizing the network infrastructure
Open system to ensure freedom to choose
Provides multiple ways of configuring business processes
Solutions in areas where currently no systems
Workflow enabled business processes
Enables to exploit the power of Intranet and Internet
23. 23
Common SAP objectives
Cost Control & increased profitability
Increased productivity of all resources – man, material & money
Process Standardization
Transparency in operations, resulting in better communication
Shift from post-mortem scenario to predictive scenario
24. 24
Results of Integration
Focus on Business Processes
Elimination of Redundant Data (Common Constant Data)
Easier Corporate Consolidation
Better Managerial Control
Elimination of Interfaces
Faster reaction to changing structures
25. 25
Success factors for SAP
implementation
Top Management Commitment & communication down-the-
line
Empowerment
Change management
Training
Compliance to methodology
31. 31
Plant Maintenance (PM)
The PM application module supports planning, processing and completionThe PM application module supports planning, processing and completion
of the plant maintenance tasks.of the plant maintenance tasks.
– Helps keep track of maintenance cost and resourcesHelps keep track of maintenance cost and resources
– Provides information to facilitate decision-making about plant maintenanceProvides information to facilitate decision-making about plant maintenance
concernsconcerns
Key elements of the PM application include :Key elements of the PM application include :
– Processing of unplanned tasksProcessing of unplanned tasks
– Service managementService management
– Maintenance notification by date or countersMaintenance notification by date or counters
– Maintenance planningMaintenance planning
– Maintenance Bill of materialsMaintenance Bill of materials
– Plant maintenance Information systemPlant maintenance Information system
32. 32
Quality Management (QM)
The QM application module is a quality control and informationThe QM application module is a quality control and information
system supporting quality planning, inspection, and control forsystem supporting quality planning, inspection, and control for
manufacturing, costing, and procurementmanufacturing, costing, and procurement
Key elements of the QM application module are :Key elements of the QM application module are :
– Quality inspectionQuality inspection
– Quality planningQuality planning
– Quality Management Information System (QMIS)Quality Management Information System (QMIS)
33. 33
Production Planning (PP)
The PP application module is used to plan and control theThe PP application module is used to plan and control the
manufacturing activities of a companymanufacturing activities of a company
PP application module include :PP application module include :
– Bill of Material (BOM)Bill of Material (BOM)
– RoutingsRoutings
– Work CentersWork Centers
– Materials Requirement Planning (MRP)Materials Requirement Planning (MRP)
– Shop Floor Control (SFC)Shop Floor Control (SFC)
– Product costing, activity-based costingProduct costing, activity-based costing
– Discrete and Repetitive manufacturing / ProcessDiscrete and Repetitive manufacturing / Process
ManufacturingManufacturing
34. 34
Materials Management (MM)
The MM application module supports the procurement and inventoryThe MM application module supports the procurement and inventory
functions occurring in day-to-day business operations.functions occurring in day-to-day business operations.
Key elements of the MM application include :Key elements of the MM application include :
Materials procurement (purchasing)Materials procurement (purchasing)
Inventory managementInventory management
Reorder point processingReorder point processing
Invoice verificationInvoice verification
Material valuationMaterial valuation
Vendor evaluationVendor evaluation
External Services managementExternal Services management
Purchasing Information System (PurchIS) and InventoryPurchasing Information System (PurchIS) and Inventory
Controlling Information systemControlling Information system
35. 35
Financial Accounting (FI)
The Financial accounting module is designed for automated management andThe Financial accounting module is designed for automated management and
external reporting of general ledger, accounts receivable, accounts payable, andexternal reporting of general ledger, accounts receivable, accounts payable, and
other sub-ledger accounts with a user-defined Chart of Accountsother sub-ledger accounts with a user-defined Chart of Accounts
FI application module include :FI application module include :
– General ledgerGeneral ledger
– Accounts payableAccounts payable
– Accounts receivableAccounts receivable
– Special Purpose Ledger (FI-SL)Special Purpose Ledger (FI-SL)
– Legal consolidationLegal consolidation
– Accounting Information SystemAccounting Information System
36. 36
Controlling (CO)
The CO application module represents the company’s flow of cost and revenueThe CO application module represents the company’s flow of cost and revenue
CO is a management instrument for organizational decisionsCO is a management instrument for organizational decisions
CO application module include :CO application module include :
– Cost center accountingCost center accounting
– Product cost analysisProduct cost analysis
– Profit center accountingProfit center accounting
– Activity based costingActivity based costing
– Enterprise controllingEnterprise controlling
37. 37
Sales & Distribution (SD)
The SD application module helps to optimize all the tasks and activitiesThe SD application module helps to optimize all the tasks and activities
carried out in sales, delivery and billingcarried out in sales, delivery and billing
SD application module include :SD application module include :
–ContractsContracts
–Sales order processingSales order processing
–Delivery processingDelivery processing
–BillingBilling
–Sales Information systemSales Information system
38. 38
Information Analysis
Standard Reports
Flexible Analysis
Standard Analysis
– Logistics Information System ( LIS )
– Sales Information System ( SIS )
– Project Information System ( PIS )
ABAP/4 Query
Report Writer
Report Painter
ABAP/4 Development Workbench for programming
requirements
39. 39
SAP IMPLEMENTATION -
PHASES
Project Planning
Business Process Study & Analysis
Installation
Training
Business Requirement mapping
Configuration
Modifications / Interfaces
Data Conversion
Documentation
Testing
Go-Live
Post production support
41. 41
The SAP business process uses the following organizational
elements:
– Client
– Company Code
– Group Company
– Controlling Area
– Purchase Organization
– Plants
– Sales Organization
– Distribution Channel
– Division
– Sales Area
Organizational Elements
42. 42
Client - Characteristics
A Highest Hierarchical Level in SAP(e.g. a
corporation)
Used to Differentiate between a Development,
Quality Assurance, and Production System
within R/3
Common Set of Rules
Common Tables
Common Master Files
Common Data Bases
43. 43
Standardized data across the client
A vendor number and name is common
across the client
A customer is common across the client
A general ledger number and description is
common across the client
A material number and description is
common across the client
Client - Characteristics
44. 44
Company Code
A company code represents an independent balancing/legal
accounting entity, for example, a company within a corporate
group.
Balance sheets and profit & loss statements, required by law, can
be created at the company code level.
BALANCING / (LEGAL)BALANCING / (LEGAL)
ENTITYENTITY
==
Company Code ****
Assets Liabilities Revenues
- Expenses
Profit/Loss
45. 45
Controlling Area
The controlling area identifies a self-contained, organizational
element for which the management of costs and profits can be
performed.
Controlling Area
****
*********
Cost Centers
Company ****
Assets Liabilities Revenues
- Expenses
Profit/Loss
46. 46
Purchase Organization
•Responsible for procurement for one or more plants
•Responsible for negotiating pricing and delivery terms
with vendors
•Purchasing organization is assigned to A company
where inventory is legally tracked or costs are legally
incurred.
47. 47
Plant
•Usually a manufacturing facility, warehouse, or a location that
stocks , manages, and valuates inventory
•May be a physical site with multiple manufacturing/production lines
•May be multiple manufacturing/production lines at one physical site
•Can be a physical location(cost centers may or may not be associated
to a plant i.e. Administrative vs. Manufacturing cost centers)
•Links to production (PP), materials management (MM), and sales and
distribution (SD)
•A plant is assigned to a company
•Purchasing organization are assigned to plants.
49. 49
Logon to SAP System
SAPlogon.lnk
•Click on the SAP icon on the desk top
50. 50
Using SAP GUI
Title Bar
Tool Bar
Menu Bar
Screen Body
Input
Fields
Application Bar
Status Bar
51. 51
Getting into SAP System
• Enter the Client number
• Enter your user name
• Enter Your password
• And Press Enter Button
• Initial Screen will pop up
J.D. Edwards building accounting software for IBM. The company gradually added functions, its accounting software evolving to become a platform-independent ERP application that was in 1996 renamed OneWorld.
In June 2003, the J.D. Edwards board agreed an offer under which PeopleSoft would acquire J.D. Edwards, and the takeover was completed in July.
The agreement of this offer was followed by attempts from Oracle Corporation to take over the new enlarged PeopleSoft
In 2003, PeopleSoft performed a friendly merger with smaller rival J.D. Edwards software.
Beginning in 2003, PeopleSoft battled with Oracle over control of the PeopleSoft company. In June 2003, Oracle made a $7 billion bid ($19.50/share) to take over PeopleSoft, in what many describe as a hostile corporate takeover attempt. In February 2004, Oracle increased their bid to approximately $9.4 billion ($26/share), a 33% increase; this offer was also rejected forthwith by PeopleSoft's board of directors. Later that month, the U.S. Department of Justice filed suit to block Oracle, on the grounds that the acquisition attempt would break anti-trust laws; however, in September 2004, this suit was rejected by a U.S. Federal judge, who found that the Justice Department had not proven its anti-trust case.
Each Company code contains a balanced set of books. The Company codes being used at **** are: *****
Company Codes are required when running some report, posting journal entries and running some periodic and month-end jobs
Each Company code contains a balanced set of books. The Company codes being used at **** are: *****
Company Codes are required when running some report, posting journal entries and running some periodic and month-end jobs
Each Company code contains a balanced set of books. The Company codes being used at **** are: *****
Company Codes are required when running some report, posting journal entries and running some periodic and month-end jobs
***** currently is using one Controlling area ****
Data record containing master data, that is, data which remains unchanged over a reasonably long period of time.
A vendor master record contains the vendor's name, address and bank details.
Data record containing master data, that is, data which remains unchanged over a reasonably long period of time.
A vendor master record contains the vendor's name, address and bank details.
For our training purpose use the following data:
Client:800
User Name:Collect from Basis Person.
Password:*************
Language:EN
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