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Introduction to
Enterprise Resource Planning
 Contents
Overview into reality
Why Enterprise Resource Planning?
Definition of ERP Systems
Evolution of ERP Systems
Concept of ERP Systems
Why ERP
Subsystems of ERP
Understanding ERP Implementation
Advantages & Disadvantages of ERP Systems
An ERP Business CASE
 Today’s Challenge

• How to provide necessary information

systems support in a timely fashion.
• A company loosing dollar a minute with
poor information systems can lose more
with inefficient information systems
 What drives the market?
• Challenges for manufacturing
– Global
– Distributed
– New Product introduction
• Specialization and focus on industry markets
– To satisfy the needs of customers (demand-driven)
– To develop specific business methods and processes
– Integration with third party products
 Business Environment
• Organizations must continually change to:
– Stay competitive
– Improve productivity
– Reduce employees
– Cut costs
– Improve customer service
– Improve quality
– Reduce time to market
– Reduce inventories
 Demands on the Industry
• Aggressive cost control initiatives
• Need to analyze costs/ revenues on a
product or customer basis
• Flexibility to respond to changing business
requirements
• More informed management decision
making
• Changing the ways of doing business
 What holds you back?
• Difficult to get accurate, timely information
• Applications mimicking existing business
practices
• Modifications are low and painful
• Bad interface
ERP helps
• ERP helps resolve
these issues
What is Enterprise software?
 Definition of ERP
Enterprise resource planning systems or
enterprise systems are software systems for
business management, encompassing modules
supporting functional areas such as planning,
manufacturing, sales, marketing, distribution,
accounting, financial, human resource
management, project management, inventory
management, service and maintenance,
transportation and e-business.
The architecture of the software facilitates
transparent integration of modules, providing
flow of information between all functions
within the enterprise in a consistently visible
manner.
Somers & Nelson (2003) has defined ERP systems
as
“ERP systems are the software tools used to manage
enterprise data. ERP helps organizations deal with supply
chain, receiving, inventory management, customer order
management, production planning, shipping, accounting,
HRM and other business functions”

According to Deloitte Consulting…

An ERP system is a packaged business software system
that allows a company to “automate and integrate the
majority of its business processes; share common data and
practices across the enterprise; and produce and access
information in a real-time environment”
 ERP Evolution

EDI e-Commerce
SFA e-business
CRM Web-based
Planning SaaS
Scheduling Cloud etc..
SCM
Distribution
MRP MRP II
Payroll HR
GL ERP
AP FMIS
ERP
AR
1970s 1980s 1990s 2000s
ERP Evolution
The Concept of ERP
 Integration
Why ERP?
• Complete Integration of Systems across the
departments in a company as well as across
the enterprise as a Whole.
• Only solution for better Project
Management
• Better Customer Service
• Expertise database
IT bridges Information gap
 ERP System Drivers
Executive
Management

Middle
Management

Operational
Management

Operations

Sales & Human

Finance Production
Distribution Resources
 Core subsystems of ERP
• Sales and Marketing
• Master Scheduling
• Materials Requirement Planning
• Capacity Requirement Planning
• Bill Of materials
• Purchasing
• Shop Floor Control
• Accounts Payable/Receivable
• Logistics
Understanding ERP
Integration of Information
Systems
How will it affect the information?
Re-engineering – a part of ERP
• Re-engineer process before going for
ERP
• Re-engineer during implementation of
ERP
• Re-engineer after implementing ERP
• Continuous re-engineering through
ERP
 ERP Selection
• Check whether all functional aspects of the
Business are duly covered
• Check whether all the business functions and
processes are fully integrated
• Check whether all latest IT trends are covered
• Check whether the vendor has customizing and
implementing capabilities
• Check your purse and calculate ROI
 How do we start for ERP?
• Ensure that Management is behind you
• Ensure that enough financial funds
• Identify core project Team, Project
Manager, Analysts and specialists from all
functional areas
• Evaluate and select ERP package
• Evaluate Implementation Partner
• Jointly make an implementation Plan
 How do we start for ERP?
• Present plan to Management Committee for
sanctions
• Present plan to Employee groups for
feedback
 Define requirements
• Check whether you have desired hardware
• Train ERP Team
• Analyze the existing Process
• Fine tune processes to be in line with those
of ERP defined
• Prototype and present
• Refine the prototype and freeze the
specifications
 ERP Implementation
• Commitment from Management
• From a task force with personnel from all
functional areas
• Take care of Hardware requirements
• Step-by-step rather than big-bang
introduction
• Be patient. ERP implementation takes time
 ERP Involves
• Project Planning
• Business and Operational Analysis,
including gap analysis
• Installation & Configuration
• Project Team Training
• Business Requirements Mapping to
Software
• Module Configuration
Contd…
• System Modification and Interfaces
• Data Conversion
• Custom Documentation
• End User Training
• Conference Room Pilot
• Acceptance Testing
• Production
• Post –Implementation Audit/Support
Advantages of ERP
Disadvantages of ERP
An ERP Case
 Business Process – Bicycle Company
Conventional Supply
Chain Suppliers Material

Information
Intra-company
Fabrication
Features:
• Independent
Assembly systems to manage
the interaction
between players in
the supply chain
Distributors
• Great operational
Retailers flexibility

Commercial • Problems in
forecasting,
Consumers Buyers transparency,
accuracy, speed
 Business Process – Bicycle Company
ERP Enabled Supply
Suppliers
Chain

ERP System
Intra-company Fabrication

Web-order Processor
Assembly
Consumers
Features:
Retailers • Integrated
information
• System optimization
Distributors possible
• Problems – inflexible
Material much more formal
infrastructure needed
Commercial Buyers to support the
Information systems