Enterprise Resource Planning

1. “Enterprise Resource Planning (ERP)”

Introduction

Organizations with Legacy Systems :




Features of Legacy Systems:
·                     Automates running processes
·                     Normally not driven by organization strategy and business vision.
·                     Develop one application at a time. No integration between applications – just transaction passing.
·                     Decentralized applications.
·                     Are relatively inflexible to accommodate changes in the business environment.
·                     Written in language / platform prevalent at the time of development.
·                     Upgrade to latest technology is difficult
·                     Usually not well documented.
·                     Maintenance is a problem – largely because of poor documentation and staff attrition.

·                     Call for a Change

o                                Does in-house / outsourced development take care of business needs ?
o                                Is it possible to avoid this time consuming exercise of developing applications ?
o                                Is there a readymade solution available to help the process ?
o                                A green-field project – the best candidate to exercising this option.
o                                What is an ERP?

ERP is an integrated suite of software covering various organizational systems for companies across industries. They follow industry standards on software and connectivity and are deployable easily.
Main features of an ERP
§                                             Software package covering major organisational systems. All areas are integrated seamlessly
§                                             Are tested suite of programs.
§                                             General package applicable to most industries
§                                             Have best benchmarked processes.
§                                             Usually have a clear technology roadmap
§                                             Can be easily deployed but in the manner recommended.
§                                             Differs from tailor made systems
§                                                         Adopts standard processes. Does not allow changes to codes.
§                                                         Does not recommend frequent ad-hoc changes to process / data.
§                                                         Does not allow manipulation of records entered
§                                                         Insists on process discipline.
§                                                         Increasing Trend Towards Packaged Solutions
§                                                                     Let’s look at some societal changes
§                                                                                 Clothes – From stitching to ready-mades
§                                                                                 Food Items – Packed snacks, Ready to make food items, Spices etc.
§                                                                                 Housing/Offices - Ready to occupy flats / offices
§                                                                                 Furnishing - Modular furniture
§                                                                                 Benefits & How We Adapt
§                                                                                             Immediate availability
§                                                                                             Learn to live with standard features. We sacrifice some personal desires.
§                                                                                             Easy availability – many offers to chose from.
§                                                                                             Evolution of ERP Systems
off with MRP packages. Software packages for Finance, Material accounting were available separately.
§                                                                                                         Enhancement came in the form of MRP II, covering manufacturing too.
§                                                                                                         All enterprise resources got covered under ERP.
§                                                                                                         ERP II / Extended ERP came as enhancements. The scope was extended to cover all stakeholders.
§                                                                                                         Why ERP?
§                                                                                                                     Concentrate on core business with less dependence on software development
§                                                                                                                     Support global business
§                                                                                                                     Improve data integrity and organizational systems
§                                                                                                                     Improving decision support
§                                                                                                                     Enhancing efficiency through redefined processes.
§                                                                                                                     Popular ERP systems
·         Oracle Applications (+ PeopleSoft, JD Edwards)
·         SAP R/3
·         Baan
·         MFG Pro
·         RAMCO
·         Lots more …..some industry specific or solution specific ERPs.
·         Companies that deploy ERP
o        Large enterprises – Manufacturing, services, public sector, multi-nationals etc. Most have ERP deployed.
o        Medium sized companies – Have moved in aggressively – a promising area of business for ERP vendors.
o        Small sized organizations – Are increasingly viewing the solution. New products hit the market.
o        Management view of ERP
o        ERP - A Strategic Tool
§         ERP has to be viewed as a tool for business and not as a software tool needed for replacement.
§         Business drivers need to be clearly spelt out and documented.
§         ERP should be seen as a tool helping organization to grow or help enhance capability to compete in markets.
§         ERP - A Strategic Tool
§         Example – an automotive company looking at optimizing the supply chain and increased responsiveness to market.
§         Example – a company looking at replacing existing legacy systems and for an ROI on the investment made in ERP.