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Introduction to ERP

Definition of ERP

1.Software solution that addresses all the needs of an enterprise with the Process view of an

organization to meet the organizational goals and integrate all the functions of the enterprise.

2.ERP is a cross functional enterprise system driven by an integrated suite of software

modules that supports the basic internal business processes of a company

What is an ERP?

Facilitates Company-wide integrated Information Systems Covering all functional

Areas.

Performs core Corporate activities and increases customer service enhancing

Corporate Image.

Organizes & Optimizes the data input methodologies systematically.

Evolution of Business Applications

MIS – Management Information Systems

Decision Support – No

EIS – Executive Information Systems

Decision Support - Yes

CIS – Corporate Information systems

Decision Support – Yes

Evolution of Planning Systems

Materials Requirement Planning (MRP I)

Manufacturing Resource Planning (MRP II)

+

Evolution of ERP

ERP

MIS

EIS

CIS

MRP

I

MRP

II

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Inventory Management & Control-1960’s

Inventory Management and control is the combination of information technology and

business processes of maintaining the appropriate level of stock in a warehouse. The

activities of inventory management include identifying inventory requirements, setting

targets, providing replenishment techniques and options, monitoring item usages, reconciling

the inventory balances, and reporting inventory status.

Material Requirement Planning (MRP)-1970’s

Materials Requirement Planning (MRP) utilizes software applications for scheduling

production processes. MRP generates schedules for the operations and raw material

purchases based on the production requirements of finished goods, the structure of the

production system, the current inventories levels and the lot sizing procedure for each

operation

Manufacturing Requirements Planning (MRP II)-1980’s

Manufacturing Requirements Planning or MRP utilizes software applications for

coordinating manufacturing processes, from product planning, parts purchasing, inventory

control to product distribution.

Enterprise Resource Planning (ERP)-1990’s

Enterprise Resource Planning or ERP uses multi-module application software for improving

the performance of the internal business processes. ERP systems often integrates business

activities across functional departments, from product planning, parts purchasing, inventory

control, product distribution, fulfillment, to order tracking. ERP software systems may

include application modules for supporting marketing, finance, accounting and human

resources.

Cost of ERP

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Why ERP ?

Profitability

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For Healthy Operations

Integration of Systems across the Functional Departments in a Company as well as

across the Enterprise as a whole.

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Better Customer Service.

Introduction of Latest Technologies as and when they are ready for the Industry

acceptance.

Expertise database.

Avoids data redundancy.

Competition in the Market

Manufacturing Challenges.

Manufacturing Globally.

Distribution network spread.

New Product Introduction.

Lower manufacturing lead time.

Focus on industry markets.

Satisfying the needs of customers.

Develop specific business methods and processes.

Integration with third party products.

Demands on the Industry

Better products at lower costs.

Strong competition.

Need to analyze costs/ revenues on a product or customer basis

Flexibility to respond to changing business requirements

More informed management decision making.

Current System Problems ?

Unable to get accurate, timely information

Applications not complete for existing business practices

Modifications are time consuming or not feasible.

The ERP Market Sizing

Total ERP market revenue grew to over $28B in 2006, driven by a combination of strong

customer demand and leading vendors expanding their product portfollos through acquisition.

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ERP Vendors ranked by license revenue

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ERP Vendor license revenue share, 2006

Typical ERP Modules

Financial

General ledger

Accounts payable

Accounts receivable

Budgeting

Multi-currency

ERP SYSTEM

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Sales And Distribution

Quotation and order processing

CRM

Multi-stores

Credit management

Mobile sales

Purchasing

Procurement management

Inventory management

Multi-ware house

Manufacturing

BOM and MRP planning

Job manufacturing

Project costing

Advance manufacturing

Retail Operation

Point of sales

Batch and serial no tracking

Bar-coding

HRM

Time attendant

Payroll

HRM

Other Modules

Fixed assets

Business Intelligence

Service management

Other industry related modules

Broad Market Categorization for Business Software

Small Market

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SME

Mid Market

Enterprise

Small Market

Number of employees – up to 20

Number of Users – up to 5

Annual revenue – up to 100 million

SME

Number of employees – 20 to 100

Number of Users – 5 to 40

Annual revenue – up to 300 million

Mid Market

Number of employees – 100 to 1000

Number of Users – 40 to 250

Annual revenue – up to 1000 million

Enterprise

Number of employees – 1000+

Number of Users – 250+

Annual revenue – 1000 million+

Head Office – Germany

Clear Leader among fortune 1000, Global 5000 and Enterprises

Support for Different Verticals

Around 45,000 Customers in 120 Countries

SAP All in one, SAP Business One

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Head Office – USA

Number two in ERP Market

Around 37,000 Customers worldwide

Oracle E-Business, Oracle PeopleSoft, Oracle JD Edwards

Head Office – UK

Number three in ERP Market

5.7 Million Customers for its business software

Sage ERP X3, Sage MAS 500, Sage Evolution

Sage Accpac, Sage Line 500, Sage UBS

Head Office – USA

Forth largest ERP Manufacture

Vertical Oriented

70,000 Customers worldwide

SyteLine, BAAN, MEPICS

Head Office – USA

Among top 5

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Strong Manufacturing and Distribution capabilities

Around 83,000 Customers ERP Products

Dynamics, GP (Great Plane), NAV (Navision), AX (Axapta)

SELECTING ERP SYSTEM

FOR YOUR COMPANY

How to Select an ERP System

Chose an ERP selection project manager

Assess business features & functions need

Develop customized RFP for your organization

Distribute your RFP to software vendors

Rank vendor responses

Plan vendor demos

Schedule site visits

Consider other factors

ERP Vendor/ Product Selection

Corporate vision of supplier

Technology & system architecture

Product functionally

Product functionality

Product cost

Service & support

Supplier background

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Why ERP Implementations Fail

Selecting of vendor & consulting company

Lack of top management commitment

Inadequate requirement definition

Inadequate resources

Resistance to change

Poor project planning

Inadequate training & education

Unrealistic expectation of benefits an ROI

Benefits of ERP Systems

Improving integration, flexibility

Fewer errors

Improved speed and efficiency

More complete access to information

Lower total costs in the complete supply chain

Reduce stock to a minimum

Improve product quality

Provide more reliable delivery dates and higher service to the customer

Efficiently coordinate global demand, supply and production