Enterprise Resource Planning

Learning Advisor
Prof Jyotiranjan Hota,
IBS Hyderabad
 Evolution of Enterprise Application
A method of using computer technology to plan for the
raw materials required for production in line with the
expected demand was developed(MRP) in Mid 1960s

A number of businesses had started using this method to

manage their inventory effectively by mid 1970s

Many companies realized the need for automation in their

capacity planning, production scheduling and shop floor control
functions in the 1980s which gives rise to MRP II with a central
database which recorded, generated and managed reports on
various activities

In late 1980s ,MRP II transformed into ERP where HR,Financial

accounting etc were integrated with MRP II
2000s Extended ERP
1990s

Enterprise Resource Planning

(ERP)
1980s

Manufacturing Resources Planning (MRP II)

1970s

Material Requirements Planning (MRP)

1960s

Inventory Control Packages

 ERP : An Overview

ERP is a software application that helps an organization

integrate various functions, make optimum utilization of
management resources and improve it’s process efficiency

Data entered in any one module is available to other

modules that need the data(Proves consistency and
Integrity of data)
 ERP Requires

 Strong executive support to implement

 Process approach rather than “silos”
 Change in business procedures (BPR)
 Change in organizational structure, culture, strategy
 Technology change
 ERP

 Difficult to install
 Very large and complex software
 Provides info about all aspects of the business --
worldwide
 Reduces inventory, waste
 Easy communication with customers, suppliers
 Before ERP

 Multiple systems, different interfaces, difficult to

extract info about customers, sales,...
 Hard to maintain, many languages, databases,
inconsistencies
 Can take weeks or months to obtain info about
customers, or where systems changes are needed
 After ERP

 Integrated systems
 Consistent interface
 One database
 Access to current data
 Improved planning capabilities
 Multinational capabilities
 System automatically:

 Schedules shipping
 Reserves material
 Orders parts from suppliers
 Schedules assembly
 Checks customer credit limit
 Updates sales & production forecasts
 Creates MRP & bill-of-material lists
 System automatically:

 Updates salesperson's payroll

 commission
 travel account
 Calculates product cost & profitability
 Updates accounting, financial records
 Why Enterprise Architecture
 IT costs too much
 Costs of managing complexity
 Eliminate redundancy
 Growing IT ecosystem
 Demanding rate of change
 Need for info sharing
 Outsourcing (BPO)
 Future-proofing

If you don’t have strong architecture strategy, everyone does their

own thing and you end up with six kinds of servers and (software)
platforms … you get silos of everything and that explodes your
costs”
Andy Miller VP of Technical Architecture, Corporate
Does Your IT Architecture Look Like…
Definition of Enterprise Architecture

The enterprise architecture is the organizing logic for a

firm’s core business processes and IT capabilities
captured in a set of principles, policies and technical
choices to achieve the business standardization and
integration requirements of the firm’s operating model.
 Enterprise Architecture Planning

 ERP Architecture is multi layered which communicates

and transact among the members of Supply Chain with
ease
 It’s comprises hardware layer, relational database
layer,database access layer and application software
layers)
 One of the first activities of ERP
 A ERP architecture ensures management that the ERP
system supports the business processes intended
 ERP Vendor Selection
Whether to buy a module or whole package ??
Features and benefits of ERP Implementation
outlined
Decision on evaluation team building with senior IT
Managers and
senior business managers
Invitation of bids from vendors by specifying
requirements
The vendors are asked to
Submit scope of their ERP Software
The Plan
Their methods of Implementation

The final vendor selection should take not more

than six months of the bid being announced
 After Bid….
 Commercial and Technical evaluation
Basis
 knowledge of vendor in the respective
industry
 Skill of the implementation team of vendor
 Past implementation history of vendor
 Now RFP is prepared with the help of consulting companies with
all aspects of ERP Selection criteria i.e
hardware,software,support,functionalities,implementation and
cost.
 Vendors are supposed to demonstrate how their product will meet
the objectives.Here the Evaluation team should be careful
enough .
 Next….

 A team of representatives collect the data of the

clients of the vendor
 Representatives meet the people of the clients and
collect their feedback on vendor and the service
provided by the vendor.
 These meetings normally excludes the vendors
 Contract is awarded on overall scores to a vendor
 ERP Implementation

 “As-is” Process Study

 “To-Be” Process Design
 Simulation
 Actual Implementation
 Factors responsible for successful ERP
Ipmlementation

 Understanding Corporate needs and Culture

 Complete Business Process Changes
 Communicate Across the Organization
 Strong Project Leadership
 Efficient and Capable Project Leader
 Balanced Teams
 Operational Advantages of ERP
Implementation

 Lead time Reduction

 Punctuality in Shipment
 Reduction in Cycle Time
 Improved Supplier Performance
 Flexibility and Reduction in Quality Cost
 Improved resource utility
 Reasons for Failure

 Cultural
 Lack of commitment of top management
 Political
 Failure to follow “proper” system selection
methodology
 Lack of sufficient implementation planning/ project
management
 Next Generation ERP…
 Provides IDSS and Integration capabilities
 Supported by SCP Systems
 SCP systems extracts data from each component
of supply chain & present it in a proper format that
helps the management understand the entire
market scenario & get a clear picture of where the
organization is heading
 Management can develop a production plan and
review it with the help of the SCP system
 SCP helps management to analyze the impact of a
plan across the supply chain as well as on the
customer demand
Thank You