Faculty of Management Studies BHU

Write Up on Computer Application and Management Information System

Enterprise Resource Planning ERPs related technology, Its module and implementation

Submitted to
Dr. R.K. Prabhakar

Submitted by
Pushparaj Roll no. 33 MBA IB 3rd sem

ERP and related technology BPR

Business process re-engineering is the analysis and design of workflows and processes within an organization. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering is the basis for many recent developments in management. The cross-functional team, for example, has become popular because of the desire to re-engineer separate functional tasks into complete cross-functional processes. Also, many recent management information systems developments aim to integrate a wide number of business functions. Enterprise resource planning, supply chain management, knowledge management systems, groupware and collaborative systems, Human Resource Management Systems and customer relationship management.

MIS
Management Information System (MIS) is a system that provides information needed to manage organizations efficiently and effectively. Management information systems involve three primary resources: technology, information, and people. It's important to recognize that while all three resources are key components when studying management information systems, the most important resource is people. Management information systems are regarded as a subset of the overall internal controls procedures in a business, which cover the application of people, documents, technologies, and procedures used by management accountants to solve business problems such as costing a product, service or a business-wide

strategy. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. decision support systems, expert systems, and executive information systems.

DSS
decision support system (DSS) is a computer-based information system that supports business or organizational decision-making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance. DSSs include knowledge-based systems. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions. Typical information that a decision support application might gather and present are:

inventories of information assets (including legacy and relational data sources, cubes, data warehouses, and data marts), comparative sales figures between one period and the next, Projected revenue figures based on product sales assumptions.

EIS
executive information system (EIS) is a type of management information system intended to facilitate and support the information and decisionmaking needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization. It is commonly considered as a specialized form of decision support system (DSS) The emphasis of EIS is on graphical displays and easy-to-use user interfaces. They offer strong reporting and drill-down capabilities. In general, EIS are enterprise-wide DSS that help top-level executives analyze, compare, and highlight trends in important variables so that they can monitor

performance and identify opportunities and problems. EIS and data warehousing technologies are converging in the marketplace

2 Manufacturing perspective MRP and MRPII: General concepts Material requirements planning (MRP) and manufacturing resource planning (MRPII) are both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information. MRP is concerned primarily with manufacturing materials while MRPII is concerned with the coordination of the entire manufacturing production, including materials, finance, and human relations. The goal of MRPII is to provide consistent data to all players in the manufacturing process as the product moves through the production line. Paper-based information systems and non-integrated computer systems that provide paper or disk outputs result in many information errors, including missing data, redundant data, numerical errors that result from being incorrectly keyed into the system, incorrect calculations based on numerical errors, and bad decisions based on incorrect or old data. In addition, some data is unreliable in non-integrated systems because the same data is categorized differently in the individual databases used by different functional areas. MRPII systems begin with MRP, material requirements planning. MRP allows for the input of sales forecasts from sales and marketing. These forecasts determine the raw materials demand. MRP and MRPII systems draw on a master production schedule, the breakdown of specific plans for each product on a line. While MRP allows for the coordination of raw materials purchasing, MRPII facilitates the development of a detailed production schedule that accounts for machine and labor capacity, scheduling the production runs according to the arrival of materials. An MRPII output is a final labor and machine schedule. Data about the cost of production, including machine time, labor time and materials used, as well as final production numbers, is provided from the MRPII system to accounting and finance (Monk and Wagner).

DRP
Distribution involves a number of activities centered around a physical flow of goods and information. At one time the term distribution applied only to

the outbound side of supply chain management, but it now includes both inbound and outbound. Management of the inbound flow involves these elements:

Material planning and control Purchasing Receiving Physical management of materials via warehousing and storage Materials handling

Management of the outbound flow involves these elements:

Order processing Warehousing and storage Finished goods management Material handling and packaging Shipping Transportation

ERP module
Plant maintenance Master Machine Master Machine and its spares Master Transactions Machine Maintenance Entry Corrective Maintenance Preventive Maintenance Spare used Key MIS reports Machine Maintenance Report

Quality Management Quality Management in eresource ERP is 100% configurable module. This module allows a wide variety of characteristics and parameters to be specified in the stand inspection operation and maintain an extensive history to improve product quality and identify recurring problems. Eresource ERP Quality Management allows the quality department to define its own quality test cases required at different juncture of production, beginning from quality check required during the inward of raw materials. Further Quality Characteristics, parameters and expected results, under each quality process check can be configured without any programming assistance.

The material inspection sub system offers a wide range of capabilities for process supervision and control. These capabilities are fully integrated with the other modules such as purchasing, inventory management and shop floor control function to ensure that the right quality control procedures are followed. Capabilities include on-line maintenance of product specifications by production method and customer, event driven sample requests, sample login, test results entry; quality performance analysis and equipment calibration support is available in eresource ERP. Material management

Inventory ControlIdentify and track information on each standard part so you can make the best possible inventory management decisions. Tracking Material Lotsautomatically track raw materials, subassemblies and final assemblies to their origins. Shop Floor Data Collectionautomate the entry and enhance the accuracy of your daily labour, inventory transactions, and shipping and receiving with wireless bar coding technologies. Multi-Dimensional InventoryMeasure inventory in multiple dimensions and capture inventory transactions in alternative units of measure. Physical InventoryCollect, reconcile and post count quantities against on-hand inventory balances and generate general ledger transactions.

Advantages
1 information integration 2 design engineering 3 order tracking 4 protections against embezzlement and industrial espionage

Disadvantages
1 high cost 2 high training costs 3 improper utilization of system and its feature 4 customization

6 ERP vendor ERP Software Vendors Throughout the nineties, SAP has been the ERP market leader with the four other JBOPS vendors rounding out the top five.

SAP AG: The leading ERP package vendor, with a 32% market share in 1999, is SAP AG (SAP stands for Systeme, Anwendungen, und Prudukte in Datenverarbeltung or Systems, Applications and Products in Data Processing). SAP AG was founded in Germany in 1972 by five engineers who wanted to produce integrated business application software for the manufacturing enterprise. Seven years later, the company launched its first enterprise software, R/2, which was designed around a centralized, mainframe-based database. SAPs client/software product, R/3, was introduced in 1992 and quickly came to dominate the ERP software market.10 In 1999, SAP AG was the third-largest independent software vendor in the world, serving over 11,000 customers (with more than 20,000 installations) in over 100 countries. Leveraging its leading position in the ERP market, SAP developed vertical, industry-specific business solutions for 19 industries. These industry solution maps provide functionality from SAP and its partners for complete, end-to-end industry-specific processes.11 SAP followed the lead of focused niche players, and in 1999 it extended its ERP offering to include customer relationship management, data warehousing and supply chain management modules. SAP recast its entire set of offerings around the Internet, borrowing the business portal concept (called mySAP.com Workplace in SAP parlance) to organize all information around the users role in the enterprise, and adding functionality for business-to-business and business-to consumer electronic commerce. SAP

started the mySAP.com Marketplace, an electronic inter-company trading community for buying, selling and collaborating within and across Industries.

Oracle: The heavyweight of the database software market, Silicon-Valleybased Oracle is the worlds second largest software company. It has built a solid enterprise applications business, which accounted for $2.5 billion of the firms $9.3 billion 1999 revenues. Second to SAP in the enterprise software market, Oracle applications serve over 5,000 customers in 140 countries. Oracle has been a leader in refocusing its ERP solutions around the Internet, and it launched a barrage of electronic-commerce and Internet-based business-to-business software applications while the other JBOPS companies were slow to react to the changing marketplace. Further, Oracle was the first JBOPS Company to Integrate front-office applications with its ERP offering. PeopleSoft: Started as a software firm for human resource management in 1987,Pleasanton-based PeopleSoft gradually expanded its software to cater to other corporate functions. The companys revenues grew to $1.3 billion in 1998 up forty-fold from $32 million in 1992 (sales are expected to remain flat in 1999). PeopleSofts ERP system provides enterprise solutions for finance, materials management, distribution, supply chain planning, manufacturing and human resources. In 1996, PeopleSoft acquired Red Pepper, a producer of supply chain management software, and in 1999 it acquired Vantive for its customer relationship management offering. J.D. Edwards: Founded in 1977 by three partners from an accounting firm, Denverbased J.D. Edwards addresses business processes in finance, manufacturing, distribution/logistics and human resources, and

encompasses the entire supply chain from planning and scheduling through execution. Growing from $120 million in revenues in 1992 to $944 million in 1999, the software maker has served over 5,000 customers in over 100 countries. Its OneWorld system is considered to be more flexible than it has Competitors and the company made headway in smaller enterprises. And, rather than build its own customer relationship management system, J.D. Edwards developed tight integration with Siebels leading offering. Baan: The Baan Company was founded in The Netherlands in 1978 making financial software. Baans products have been simpler to use than SAPs, leading to the companys growth in the early nineties. Today, the company operates in 80 countries, serving more than 2,800 customers. Baans net revenues have increased from $47 million in 1992 to $736 million in 1998. The Baan Series is its primary enterprise system, which incorporates a variety of functionalities from sale order management and manufacturing To supply chain management. Since October of 1998, Baan suffered a series of setbacks including management turmoil, accounting irregularities, multiple-quarter losses and CEO turnover.12 choosing the right ERP package is not easy. The selection process starts with an identification of system scope, business objectives and business processes. Some ERP Packages provide better solutions in certain functional areas. For example, SAP began as manufacturing software and still excels along that dimension. Moreover, different ERP vendors have experience in different industries, and offer solutions that are geared to those industries. Figure 5 summarizes the recommendations of Benchmarking Partners consultants on industries that are well-served by the different ERP packages. The Leading ERP Package: SAP R/3 SAP R/3 is a general-purpose platform with options that enable it to be configured for the specific needs of each customer without changing the R/3 code. This does not mean that SAP R/3 is a plug-and-play solution. In order to implement SAP R/3, the system must be configured to specifically meet the organizations process requirements. This is a complex and lengthy process, which can take years to implement. The organization, the business process and all transaction details must be explicitly modelled and entered as settings in about 8,000 configuration tables.14 The user defines precisely her organizational units, processes, transactions, the different SAP R/3 screens, reports etc.SAP R/3 consists of modules (discussed in detail below) that may be used separately or bundled together. This enterprise system has an open architecture that allows third-party solutions providing other functionalitys to be bolted on to the SAP backbone. All the modules work in an integrated fashion, so different parts of the enterprise use the same data at the same time. The software can also link business processes between companies worldwide, for example between a supplier and a customer in different countries.

The SAP R/3 database integrates all data items, so entire processes use the same data, seamlessly passed from step to step. Consider, for example, how the order fulfilment process is managed by SAP R/3. As seen in Figure 6, when a customer inquires about a potential purchase (1), SAP R/3 creates a quote (2) Including price and delivery date. The quote takes into account what the system already knows about the customer (3), about the item and about inventory and materials availability (4), which are in the SAP R/3 database. As a result, the prices delivery times and delivery terms are based on up-to date information and may be specific to a customer or an order. If the customer accepts the quote, SAP records a sales order (5), including pricing and delivery terms. The order then goes into production, triggering the entire order fulfilment process. SAP automatically sends the relevant data where it needs to go, 15 so delivery can be Automatically scheduled (6). the customers credit limit can be automatically checked by The system and the collection process can be managed through the system as well. The modules are: SD - Sales and Distribution module supports sales and distribution processes, with functions for pricing, order processing and on-time delivery. It has a direct interface to the Materials Management (MM) and Production Planning (PP) modules described below. This enables an integrated process that involves checking customer credit, ensuring materials and production capacity are available to satisfy an order at the time it is placed, executing the order, and automating the billing process. This module also facilitates an analysis of sales and delivery performance using standard metrics that are defined within SAP R/3.

MM - Materials Management module is designed to support the procurement process and to optimize the logistics pipeline within the enterprise. It enables automated supplier evaluation and can lower procurement and warehousing costs with accurate inventory and Warehouse management, and integrates invoice verification. The module is designed to support foreign trade processing, such as customs declarations, as well. Tools for inventory control and purchasing information help to identify trends and developments. PP - Production planning module supports production planning, manufacturing processed execution, analysis and production control. This application covers the production process from the creation of master data to production planning, MRP, and capacity planning, right down to production control and costing. It supports a variety of manufacturing processes including repetitive, make-to-order and assemble-to-order Production. Quality management, laboratory information systems and data analysis functions are also available. FI - Financial Accounting module collects all the data relevant to financial accounting, from transactions to accounts, into an integrated General Ledger. It provides comprehensive, consolidated financial reports and ties together the different pieces of financial data, Accounts Payable, Accounts Receivable and Asset Management. It also provides an up-to-the-minute basis for enterprise-wide control and planning, giving a snapshot of the enterprise. The FI module supports international accounting standards Such as GAAP and IAS. CO - Controlling module includes a variety of planning and control tools for enterprise control systems, following a uniform system of reporting. It provides comprehensive reports to support most common cost-accounting problems, as well as the capability to put together additional reports. TR - Treasury module is a comprehensive solution for financial/treasury management. EC - Enterprise Controlling module continuously monitors metrics and performance indicators on the basis of specially prepared management information. IM - Investment Management provides integrated management of investment projects. Projects are tracked from planning through execution to settlement, including preinvestment analysis and depreciation simulation. PM - Plant Maintenance and Service Management module handles planning, control, and processing of scheduled maintenance, inspection, special maintenance, and service management. QM - Quality Management module monitors, manages and tracks all processes relevant to quality assurance along the entire supply chain, coordinates inspection processing and initiates corrective measures.

PS - Project System module coordinates and controls all phases of a project, in directs cooperation with Purchasing and Controlling, from quotation to design and approval, to resource management and cost settlement. The order process described above requires coordination between different modules of SAP materials management (MM), production planning (PP) and financial accounting (FI), which are fully integrated and use the same data throughout the process. 7 ERP implementation

Step 1. The Strategic Plan Providing the Rationale and Making the Business Case the purpose of this first step is to lay the groundwork and make the business case that will drive the ERP initiative enterprisewide. The campus Champions of the ERP process must step forward and provide support for the cause by ensuring and demonstrating that the ERP program of projects Meets the strategic objectives of the institution. Step 2. Assess the Readiness of the Institution Determining preparedness and Achieving Organizational Understanding Determining Preparedness Technical preparedness. Items to consider include the adequacy of network, servers, and client hardware and software platforms, not to mention the skill sets of the IT staff and the existing staffing levels of the IT department compared to what will be needed. Functional preparedness, that is, the adequacy of the experience, staffing, and skill sets of key functional departments on campus affected by the new ERP. Achieving Organizational Understanding An important outcome of a readiness assessment is to Achieve organizational understanding of what the Institution is about to do.

Step 3. Prepare for Vendor Selection Determining your Software Requirements and Documenting your Business Practices (1) Develop a list of the specific requirements you want in your ERP solution (2) Acquire a high level understanding of how you currently conduct your business practices that will be affected by the ERP solution. Step 4. Select your ERP Vendors Choosing Your Technology Partners These are ERP Providers and ERP Implementers. ERP Providers refer to the commercial software companies that sell licenses to use their software. These companies will also sell the technical and Functional training and consulting services necessary to get their software working at your campus. ERP implementers, on the other hand, refer to the various competing firms in the marketplace that specialize only in supplying the consulting and training you will need to implement the software that you have licensed from one or more of the ERP providers. Four key decisions must be made in the vendor selection step of the ERP process: 1. Using an ERP Implementer? 2. How many screening mechanisms will you use? The screening process can consist of one or more selection devices. The most popular screening mechanisms include a Request for Information, reference checks, site visits, and scripted demonstrations, unscripted Demonstrations, a Request for Proposal, a fitgap analysis, and oral presentations. 3. What decision-making process will you use? We favour a weighted-factor decision-making approach in which one or more decision criteria are selected and weighted a priori. All vendors are then scored on these criteria based on their performance on each of the Screening mechanisms used in the selection process. 4. Will you need the help of a vendor selection expert? Step 5. Plan the Implementation Preparing for Success Here are the major elements you must produce in the planning step of the ERP process: A project scope document which will specifically spell out the purpose, goals, rationale, budget, duration, and specific limits, or boundaries, of the implementation. A project timeline and project schedule, with an organized list of the hundreds of tasks that will be carried out, including an identified owner for each task and all the task dependencies linked with predecessor and successor tasks. The resulting project schedule should be comprehensive and include third-party software implementation tasks as well. A project organization, including project sponsor, a steering team, the implementation team, and the various functional and technical teams that will work with the ERP implementer to get the software adapted and Working on campus. A final project budget, which will include project costs such as software licenses, professional services consulting, staffing costs, third party software, and other categories of expenditures. A project risk analysis and list of critical issues that must be addressed. A project communication plan to include for each stakeholder group the following

Information: content of communication, types of communication, frequency of communication, methods of delivery, and whos responsible for each type of communication. A change impact analysis that will be used to help overcome resistance to change caused by the new software and the resultant changes in roles, business practices and university policies. A training plan that will include technical training needed to implement the software, functional training, end-user training, management training, and any teamwork or leadership development that will be needed to carry out the project successfully. A scope management process that will spell out in detail the steps to be taken to approve changes in project scope that may be proposed by stakeholders during the implementation phase. Step 6. Implement the ERP Solution Working the Plan Characteristics of Successful Implementations Many articles have been written about ERP implementations, and today there are known best practices. Chief among them are good communication, management of stakeholder expectations, a sufficient budget, adequate staffing, professional project management, functional ownership of the project, and a sound relationship with your technology partners. For a more detailed account of the top ten reasons ERP implementations succeed, consult the paper by Moore and Whiting. The Importance of Professional Project Management Step 7. Post Implementation Assessment Where are we Now? Lessons learned sessions should be carried out with project stakeholders regarding the completed implementation. The purpose of these sessions is to Decide on what was done well on the project and what could have been done better. These lessons learned can then be used to improve the Implementation of subsequent projects on campus, and can be used to improve the overall level of project management sophistication at the school. A formal assessment of the degree to which project objectives were met should be carried out. A sample of data that should be collected and analyzed include: satisfaction ratings of users, degree of expectation met by users, extent to which productivity and service objectives set forth were achieved, extent to which cost objectives were achieved, the degree of improvement in the quality And availability of management data from the new system, etc. We believe it is important to bring closure to the issues that provided the rationale, Purpose and direction for the ERP project in the first place. After some time has elapsed (say, a year after implementation), a good exercise is to check the extent to which the users of the software are aware of and are using functionality that is available to them. This is basically a fit-gap between the features of the software that are available to users and the features that are currently being used. Many times gains in process improvements can make by software features Those users are not aware of, even after using the product for a year. This exercise thus provides an opportunity for the school to increase services, Improve productivity, and get a yet greater return on its software investment.