1.

Introduction

Enterprise Resource Planning (ERP) is an integrated computer-based

system used to manage internal and external resources, including
tangible assets, financial resources, materials, and human resources.
Its purpose is to facilitate the flow of information between all business
functions inside the boundaries of the organization and manage the
connections to outside stakeholders. Built on a centralized database
and normally utilizing a common computing platform, ERP systems
consolidate all business operations into a uniform and enterprise-wide
system environment.

ERP is a way to integrate the data and processes of an organization

into one single system. Usually ERP systems will have many
components including hardware and software, in order to achieve
integration, most ERP systems use a unified database to store data for
various functions found throughout the organization.

The term ERP originally referred to how a large organization planned to

use organizational wide resources. In the past, ERP systems were used
in larger more industrial types of companies. However, the use of ERP
has changed and is extremely comprehensive, today the term can
refer to any type of company, no matter what industry it falls in. In
fact, ERP systems are used in almost any type of organization - large or
small.

In order for a software system to be considered ERP, it must provide

an organization with functionality for two or more systems. While some
ERP packages exist that only cover two functions for an organization
most ERP systems cover several functions.

1
Today's ERP systems can cover a wide range of functions and integrate
them into one unified database. For instance, functions such as human
resources, supply chain management, customer relations
management, financials, manufacturing functions and warehouse
management

Functions were all once stand alone software applications, usually

housed with their own database and network, today; they can all fits
under one umbrella - the ERP system

2
2. ERP implementation life cycle

ERP lifecycle is in which highlights the different stages in

implementation. There are different stages of the ERP implementation
that are as give below:

 Pre evaluation screening

 Evaluation package
 Project planning
 Gap analysis
 Reengineering
 Team training
 Testing
 Post implementation

1. Pre evaluation screening

Once the company has decided to go for the ERP system, the search
for the package must start as there are hundreds of packages it is
always better to do a through and detailed evaluation of a small
number of packages, than doing analysis of dozens of packages. This
stage will be useful in eliminating those packages that are not suitable
for the business process.

2. Evaluation package

This stage is considered an important phases of the ERP

implementation, as the package that one selects will decide the
success or failure of the project. Implementation of an ERP involves
huge investments and it is not easy to switch between different
packages, so the right thing is ‘do it right the first time’. Once the
packages to be evaluated are identified, the company needs to

3
develop selection criteria that permit the evaluation of all the available
packages on the same scale.

3. Project planning

This is the phase that designs the implementation process. It is in this

phase that the details of how to go about the implementation are
decided. Time schedules deadlines, etc for the project are arrived at.
The plan is developed, roles are identified and responsibilities are
assigned. It will also decide when to begin the project, how to do it and
it completion. A committee by the team leaders of each
implementation group usually does such a planning.

4. Gap analysis

This is considered the most crucial phase for the success of erp
implementation. This is the process through which the companies
create a complete model of where they are now, and in which direction
will they opt in the future. It has been estimated that even the best
packages will only meet 80% of the company’s requirements. The
remaining 20% presents problematic issues for the company’s
reengineering.

5. Reengineering

It is in this phase that human factors are taken into consideration.

While every implementation is going to involve a significant change in
number of employees and their job responsibilities, as the process
becomes more automated and efficient, it is best to treat ERP as an
investment as well as cost cutting measure.

4
6. Team training

Training is also an important phase in the implementation, which takes

place along with the process of implementation. This is the phase
where the company trains its employees to implement and later, run
the system. Thus, it is vital for the company to choose the right
employee who has the right attitude- people who are willing to change,
learn new things and are not afraid of technology and a good
functional knowledge.

7. Testing

This is the phase where one tries to break the system. One has
reached a point where the company is testing the real case scenarios.
The system is configured and now you must come up with extreme
cases like system overloads, multiple users logging on at the same
time, users entering invalid data, hackers trying to access restricted
areas and so on. This phase is performed to find the weak link so that
it can be rectified before its implementation.

8. Post implementation

One the implementation is over, the vendor and the hired consultants
will go. To reap the fruit of the implementation it is very important that
the system has wide acceptance. There should be enough employees
who are trained to handle problems those crops up time to time. The
system must be updated with the change in technology. The post
implementation will need a different set of roles and skills than those
with less integrated kind of systems.

5
3. Functional modules of ERP software

ERP software is made up of many software modules. Each ERP

software module mimics a major functional area of an organization.
Common ERP modules include modules for product planning, parts and
material purchasing, inventory control, product distribution, order
tracking, finance, accounting, marketing, and HR. Organizations often
selectively implement the ERP modules that are both economically and
technically feasible.

ERP Production Planning Module

In the process of evolution of manufacturing requirements planning

(MRP) II into ERP, while vendors have developed more robust software
for production planning, consulting firms have accumulated vast
knowledge of implementing production planning module. Production
planning optimizes the utilization of manufacturing capacity, parts,
components and material resources using historical production data
and sales forecasting.

ERP Purchasing Module

Purchase module streamline procurement of required raw materials. It

automates the processes of identifying potential suppliers, negotiating
price, awarding purchase order to the supplier, and billing processes.
Purchase module is tightly integrated with the inventory control and
production planning modules. Purchasing module is often integrated
with supply chain management software.

ERP Inventory Control Module

6
Inventory module facilitates processes of maintaining the appropriate
level of stock in a warehouse. The activities of inventory control
involves in identifying inventory requirements, setting targets,
providing replenishment techniques and options, monitoring item
usages, reconciling the inventory balances, and reporting inventory
status. Integration of inventory control module with sales, purchase,
finance modules allows ERP systems to generate vigilant executive
level reports.

ERP Sales Module

Revenues from sales are live blood for commercial organizations. Sales
module implements functions of order placement, order scheduling,
shipping and invoicing. Sales module is closely integrated with
organizations' ecommerce websites. Many ERP vendors offer online
storefront as part of the sales module.

ERP Market in Module

ERP marketing module supports lead generation, direct mailing

campaign and more.

ERP Financial Module

Both for-profit organizations and non-profit organizations benefit from

the implementation of ERP financial module. The financial module is
the core of many ERP software systems. It can gather financial data
from various functional departments, and generates valuable financial
reports such balance sheet, general ledger, trail balance, and quarterly
financial statements.

ERP HR Module

7
HR (Human Resources) is another widely implemented ERP module. HR
module streamlines the management of human resources and human
capitals. HR modules routinely maintain a complete employee
database including contact information, salary details, attendance,
performance evaluation and promotion of all employees. Advanced HR
module is integrated with knowledge management systems to
optimally utilize the expertise of all employees.

8
4. ERP vendors
ERP solution vendors are innumerable in terms of service and
efficiency. Choosing the right ERP vendor for the company is not an
easy decision.

The following are the points that have to be taken into

consideration.

Practical demonstrations
The company has to witness the proceedings directly. It is not possible
for them to have an idea of his services unless they experience it. The
decision making authority should even be willing to travel to the
vendor's premises in order to expect the standards, norms and similar
features. The company must initially choose few players from ERP
vendors list.

Competitive edge

As told in the beginning ERP vendors are far in number. The company
has to look for the extra feature of one vendor when compared with
the other. This will not only help him in deciding the right person but
also lead to competition among vendors and the resultant
improvement in terms of the quality in products and services. Both
ways will only result in the expansion of ERP vendors list.

On the basis of study

The company usually makes a study to determine the choice of the

ERP vendor. This study is a major deciding factor though the fact
remains that the results of these studies will be applicable only if they

9
are done properly. The company must make the use of the results in
choosing the ERP vendor because it will not be proper to go for the
market leader (among ERP vendors) if the studies proves otherwise or
they don't meet the requirements of the company. The popularity of
ERP software vendors does not necessarily speak for service in relation
to the needs and business of the company. The top service provider in
ERP vendor list need not necessarily be the apt person for your
company.

Vendor’s credibility
The company must have a fair idea of the vendor's stake in the
market. This will come in handy to know the pros and cons in choosing
that particular vendor .a look at his background, previous experiences,
clientele will enable them to decide if that particular vendor is suitable
and apt to offer services to them. His credibility will have a say on the
fortune of ERP supposedly to be implemented in the company. At the
same time it is not advisable to go for the best vendor in the market as
said earlier for his services might not be the apt one for the company.
It is very important to analyze the vendor's credibility with respect to
the area of service where the company desires to implement ERP. Such
an evaluation will add value and meaning in terms of making the
decision of choosing the ERP vendor.

Flexibility of the vendor

It is very important for the company to choose a vendor who will hear
and implement their suggestions. It is not possible to expect them to
dance to the whims and fancies of the ERP vendor. The company
should heed to the words of the ERP vendor in terms of technical
aspects and expertise. They have to work in coordination and draft
solutions. It will help them to achieve mutual benefits. On the other

10
hand the vendor also must extend cooperation in terms of accepting
the views of the company and clarifying issues.

5. ERP advantages and disadvantages

Advantages
In the absence of an ERP system, a large manufacturer may find itself
with many software applications that cannot communicate or interface
effectively with one another. Tasks that need to interface with one
another may involve.

• ERP systems connect the necessary software in order for

accurate forecasting to be done. This allows inventory levels to
be kept at maximum efficiency and the company to be more
profitable.
• Integration among different functional areas to ensure proper
communication, productivity and efficiency
• Design engineering (how to best make the product)
• Order tracking, from acceptance through fulfillment
• The revenue cycle, from invoice through cash receipt
• Managing inter-dependencies of complex processes bill of
materials
• Tracking the three-way match between purchase orders (what
was ordered), inventory receipts (what arrived), and costing
(what the vendor invoiced)

11
 • The accounting for all of these tasks: tracking the revenue, cost
and profit at a granular level.

ERP Systems centralize the data in one place. Benefits of this include:

• Eliminates the problem of synchronizing changes between

multiple systems - consolidation of finance, marketing and sales,
human resource, and manufacturing applications
• Permits control of business processes that cross functional
boundaries
• Provides top-down view of the enterprise, real time information is
available to management anywhere, anytime to make proper
decisions.
• Reduces the risk of loss of sensitive data by consolidating
multiple permissions and security models into a single structure.
• Shorten production lead time and delivery time
• Facilitating business learning, empowering, and building common
visions

Disadvantages

• Customization of the ERP software is limited...

• Re-engineering of business processes to fit the "industry
standard" prescribed by the ERP system may lead to a loss of
competitive advantage.
• ERP systems can be very expensive
• Many of the integrated links need high accuracy in other
applications to work effectively. A company can achieve
minimum standards, then over time "dirty data" will reduce the
reliability of some applications.
• Once a system is established, switching costs are very high for
any one of the partners.

12
 • The blurring of company boundaries can cause problems in
accountability, lines of responsibility, and employee morale.
• Some large organizations may have multiple departments with
separate, independent resources, missions, chains-of-command,
etc, and consolidation into a single enterprise may yield limited
benefits.

6. Conclusion

The growing information needs of an enterprise make it imperative to

improve or replace old systems. Especially under the present business
environment, where the globalization has been initiated, full
convertibility is coined. Infrastructure projects are nearing completion,
and it is expected that the whole business system will undergo a major
shift. Implementation of ERP solutions is one of the largest drivers of
growth in the consultancy business. The introduction of such a large
and complex software like ERP, enables an organization to integrate
their manufacturing, finance and marketing operations at all levels, is
in itself a challenge, since it calls for technical and functional skills and
a change in user mindsets.

13
7. Bibliography

ERP: the implementation cycle - by Stephen Harwood

E-business and ERP: rapid implementation and project

planning - by Murrell G. Shields

http://en.wikipedia.org/wiki/enterprise_resource_planning
http://www.erpwire.com/erp-articles/erp-implementation-life-cycle.htm
http://www.sysoptima.com/erp/erp_modules.php
http://www.erpwire.com/erp-articles/erp-vendors.htm
http://www.sap.com/solutions/business-suite/erp/index.epx

14