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ERP Basics
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E
Organisation wide
Across all geographic
& functional divisions
R P
All Resources
Man
Money
Material
Machines
Planning
Means looking at the
long term view rather
than just current
Enterprise Resource Planning (ERP)
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Introduction to ERP
An ERP is a packaged business software system that allows
organization to
Automate and integrate the business processes
Share common data and practices across the enterprise
Produce and access information in a real time mode
Lays the foundation for intelligence, integration, extended
enterprise
Forms the basis for business growth and expansion
Enterprise Resource Planning
Most of the products are internet enabled
ERP systems typically feature workflow management, intelligence
and controls
Componentized architecture
Industry specific products are the reality
Fast becoming extended enterprise applications
E-business has made procurement and CRM as competitive edges
The present picture
ERP packages have evolved over decades and are currently classified through international research
Tier 1: Large enterprise, large user base, multi site, multi national implementation, group companies, complex business architecture, more inclusive products (SAP,
Oracle (+JD Edwards) , BaaN, Microsoft dynamics AX is in transition)
Tier 2: Limited sites and companies, less user base, module and industry focused products in mid-tier, limited geographical reach (QAD, Orion, Microsoft NAV,
Epicor Vantage, Marshall, IFS, Mfgpro)
Tier 3 & 4: Single site, accounting packages, start ups (Microsoft GP, Accpac, Peach tree)
Tier classification
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An ERP system is a packaged business software system that allows an organization to:
What is ERP?
Automate and integrate the majority of its business processes
Share common data and practices across the entire enterprise
Produce and access information in a real-time environment
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ERP is a combination of business management practice and technology, where Information technology integrates with organization's core business processes to
enable the achievement of specific business objectives. It is used to manage and coordinate the resources, information, and functions of a business from integrated
business application.
All the departments are being served by the same integrated application through one point of entry. Information need only be entered or updated once, reducing errors,
time and labor for reports, analysis, and planning and program management. Ultimately, time and resources are shifted to innovation, problem solving and enhances
service to customers rather than inputting, processing, organizing and verifying, leading to greater efficiency and saving potential.
Complete Suite of integrated application
Financial & Accounting
Materials Management
Production Planning
Order Entry
Purchasing
Financial Control
Distribution/Logistics
Asset Management
Quality Management
Human Resource Management
R&D Management
Single Database
Same Master data objects
Data integrity
Data sharing
Modular Structure
Similar Interfaces
Cross functional Reports
Cross functional Tracking
Cross functional workflows
Finance
HR
Purchase
Inventory Sales
Architecture
Legacy Applications Enterprise Resource Planning
Function specific Application
Different Technology
No integration
Redundant Data Entry
Function Specific Modules
Modules are fully integrated
Same technology platform
All modules use same master data
Data Sharing
What is ERP?
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Key dimensions of ERP
Reference data
One time entry
Non-transactional in nature
Key to the operation of business
Example: Item, Employees, Suppliers
Masters
Day to day entries
Refers master data
Example: Purchase Order, Goods
receipt note, Delivery Note
Transactions
Quick Search
Key (Input Parameter) Driven
Examples : Item Status Query,
Purchase Order Status
Query
Routine set of procedures to convert one
form to another,
Example : Month end Processing, Goods
Receipt Note Processing, Loan
Processing
Processing
The purpose is to inform
Example : Slow moving item report,
Monthly Receipts
Report
M
P
T
R
Q
The purpose provide hard copy to
acknowledge.
Example : Goods receipt note,
Payment voucher
Document Print
D
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Sample (Procurement) flow in ERP
Comparison Report
Material Requisition Purchase Requisition Enquiry to Supplier
Quotation from Supplier
Purchase Order Goods Receipt Note
Inspection
Purchase Order
Document Print
GRN Document Print
Payment Voucher
(Accounts Payables)
Excess/Shortage/Quality
Report
Payment Voucher
Approval
Approval
Approval Approval
Approval
Processing
Item
Master
Vendor
Master
Item Status
Create/
Refer
Create/
Refer
Query
GL
(Inventory goes up)
Liability for supplier is created
Approval
Liability is paid
Approval
M
Q M
T
T
T
T
T T
D
D R
T
R D
T
P
Transactional Flow
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Key benefits
Standardization of master data
Reduced redundant entries
Data sharing between modules
Increased access to available data for
decision making
Information
Cross functional MIS reporting
Cross functional performance
measurement
Better reporting, e.g. purchase
forecasting
Reports
Provides greater and effective control.
Approval and authorizations
Greater accuracy of information.
Controls
Timely information
Searching is faster
Faster response and follow up
Alerts, e.g. stock below lead time
quantity
Time
Improved vendor performance
Reduced response time
Improved efficiency
Increased flexibility
Improved over all accuracy
Intangible
Streamlined processes and workflows
Reduced direct cost
Reduced quality cost
Improved productivity levels
Improved resource utility
More
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Establish steering committee
Allocate resource
Share, communicate and market the
initiative within the company
Initiate & Plan
Collect data on current processes and
systems (ASIS preparation)
Changes to business process
Data Coding and Classification
Highlight objectives and issues
Document/reports gathering, submit
correction
Product & Process
Mapping
Support the implementing partner during
configuration process
Prepare participants for training
Prepare business test cases .
Configuration
Data Cleansing
Perform readiness check
Cut over preparation
Formulate go-live strategy
Go Live
Conduct user acceptance testing
IT team to perform network testing
Testing
Champions and support team of
functional and IT
Ensure availability of the participants
Training
ERP Implantation & Expectations
Expectations from participating teams & users
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Challenges
Inability to foresee all project related
risks.
Installing appropriate review
mechanism.
Risk
Unrealistic project plan
Initiate & Plan
Challenges
Communicating key expectations
Addressing business requirements with
least application customization
Managing change management
Risk
Poor scoping and documentation
Lack of assessment of process controls
Product & Process
Mapping
Challenges*
Risk*
Configuration
Challenges
Timely quality data migration
Installing back-up, contingency and
recovery plans
Risk
Datacenter availability
Completion of sub projects on time.
Go Live
Challenges
Testing all the business scenarios
Following testing plan
Risk
Missing long cycle cases like year ending
Testing
Challenges
Ensuring participants availability
Making users ready for the transformation
Risk
Inadequate training to key users
Improper support from implementer
Training
Key Implementation : Risk and Challenges
*Implementation partner activity
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Success factors
Establish Effective and Efficient Business Processes
Balance application functionality and process improvements with appropriate level of internal control
Provide effective application and infrastructure security to enhance business processes while protecting corporate information systems assets
Establish Data Integrity
Provide reliable data for accurate and complete financial reporting
Provide reliable data for sound business decision making
Provide reliable data to ensure the timely and efficient processing of transactions
Establish Financial Controls and Monitoring Procedures
Establish key project objectives
Define KPIs and metrics with clear targets
Quantify expected benefit from implementing an ERP system
Align processes with KPIs to achieve strategic benefits
Maintain costs
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Frequently asked questions
How to prepare an organization for ERP implementation?
What is an ERP project team?
Who are the project champions?
What is the role of implementation partner?
What is the role of process-modeling tools ERP implementation?
What are drawbacks of over customization?
Changing business practice to suit the ERP software rather than customizing the software?
How is "data migration" managed for ERP implementation?
What does "going live" mean?