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EVOLUTION OF ERP

 

In the ever growing business environment the following demands are placed on the industry:

 

·                     Aggressive cost control initiatives

·                     Need to analyse costs / revenue on a product or customer basis.

·                     Flexibility to respond to changing business requirements.

·                     More informed management decision making.

·                     Changes in the ways of doing business

 

The difficulty in getting accurate data, timely information and proper inerface of complex business functions have been identified as the hurdles in the growth of any business. Time and again, depending on the velocity of the growing business needs, one or the other applications and planning systems have been introduced into the business world for crossing these hurdles and acheiving growth. They are :

 

·                     Management Information Systems (MIS)

·                     Integrated Information Systems (IIS)

·                     Executive Information Systems (EIS)

·                     Corporate Information Systems (CIS)

·                     Enterprise Wide Systems (EWS)

·                     Material Resource Planning (MRP)

·                     Manufacturing Resource Planning (MRP II)

·                     Money Resource Planning (MRP III)

·                     The latest planning tool added to the above list is Enterprise Resource Planning

 

 

THE NEED FOR ERP

Most organisations across the world have realised that in a rapidly changing envirnoment, it is impossible to create and maintain a custom-designed software package which will cater to all their requirements and be up-to-date. Realising the requirement of user organisations, some of the leading software companies have designed Enterprise Resource Planning software which will offer an integrated software solution to all the functions of an organisation.

 

FEATURES OF ERP     

Some of the major features of ERP and what ERP can do for the business system are :

·                     ERP facilities company-wide Integrated Information System covering all functional areas like manufacturing, selling and distribution, payables receivables, inventory, accounts, human resources, purchases etc.

·                     ERP performs core activities and increases customer service, thereby augmenting the corporate image.

·                     ERP bridges the information gap across organisations.

·                     ERP provides complete integration of systems not only across departments but also across companies under the same management.

·                     ERP is the solution for better project management.

·                     ERP allows automatic introduction of the latest technologies like Electronic Fund Transfer (EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E-commerce etc.

·                     ERP eliminates most business problems like material shortages, productivity enhancements, customer service, cash management, inventory problems, quality problems, prompt delivery etc.

·                     ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving and refining business processes.

·                     ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes.

 

COMPONENTS OF ERP

To enable the easy handling of the system ERP has been divided into the following core subsystems: sales and marketing, master scheduling, material requirement planning, capacity requirement planning, bill of materials, purchasing, shopfloor control, accounts payable/receivable, logistics, asset management and financial accounting.

 

SUPPLIERS OF ERP

There are many numbers of ERP suppliers who are very active in the market. Some of the companies offering renowned international ERP products include: Baan, CODA, D&B, IBM,JD Edwards, Marcarn, Oracle, Peoplesoft, Platinum, Ramco, SAP, SMI and Software 2000.

 

BPR AND ERP

Business Process Reengineering (BPR) is a pre-requisite for going ahead with a powerful planning tool, ERP. An in-depth BPR brings out the deficiencies of the existing systems and attempts to maximise  productivity through restructuring and reorganising human resources as well as divisions and departments in the organisation.

 

BPR involves the following steps:

·                     Study the current system

·                     Design and develop new systems.

·                     Define Process, organisation structure and procedures.

·                     Develop customise software.

·                     Train people.

·                     Implement new system.

 

The principle followed for BRP may be defined as the USA principle - Understand, Simplify, Automate. This means understanding existing practices, simplifying the processes and automating the process.

 

Various Toolds used are:

 

Understand           Simplify                Automate

 

Diagramming         Eliminating            EDI

Story-boarding       Combining             ERP

Brain-storming       Rearranging

 

 

Selection of ERP

Once BRP is completed the next task is to evaluate and select a suitable package for implementation. Evaluation of the right ERP package is considered a crucial step.

 

Evaluation and selection involves:

·                     Checking whether all functional aspects of the business are duly covered.

·                     Checking whether all the business functions and processes are fully integrated.

·                     Checking of the latest infotech trends are covered.

·                     Checking whether the vendor has customising and implementing capabilities.

·                     Checking whether the business can absorb the cost.

·                     Checking whether the ROI is optimum.

 

IMPLEMENTATION OF ERP

Implementing an ERP package has to be done in a phase manner. A step-by-step method of implementing will yield a better result than a big-bang introduction. The total time required for sucessfully implementing an ERP package will be between 18 to 24 months. The steps involved in implemention of an ERP are project planning, business and operational analysis including Gap analysis, business process reengineering, installation and configuration, project team training, business requirement mapping, module configuration, system interfaces, data conversion, custom documentation, end-user training, acceptance testing, post implementation and audit support.

 

FOUR PHASES

These steps are grouped and sub-divided into four major phases - detailed discussions, design and customisation, implementation and production. The phases of implementation vis-a-vis their tasks and respective deliverables are discussed below:

 

Detailed Discussion Phase:

Task: Project initialisation, evaluation of current processes, business practices, set-up, project organisation.

Deliverables: Accepted norms and conditions, project organisation chart, identity work teams.

 

Design and Customisation:

Task: Map organisation, map business process, define functions and processes, ERP software configuration and build ERP system modifications.

Deliverables: Organisation structure, design specification, process flow diagrams, function model, configuration recording and system modification.

 

Implementation Phase:

Task: Create go-live plan and documentation, integrate aplications, test the ERP customisation, train users.

Deliverables: Testing environment report, customisation of test report and implementation report.

 

Production Phase

Task: Run trial production, maintian systems.

Deliverables: Reconciliation reports, conversion plan execution.

 

BENEFITS OF ERP

The benefits accruing to any business enterprise thanks to implementing the ERP are unlimited. According to companies like Nike, DHL, Tekronix, Fujitsu, Millipore and Sun microsystems, the following are some of the benefits they acheived by implementing the ERP packages.

 

·                     Gives Accounts Payable personnel increased control of invoicing and payment processing and thereby boosting their productivity and eliminating their reliance on computer personel for these operations.

·                     Reduce paper documents by providing on-line formats for quickly entering and retrieving information.

·                     Improves timeliness of information by permitting posting daily instead of monthly.

·                     Greater accuracy of information with detailed content, better presentation, satisfactory for the auditors.

·                     Improved cost control.

·                     Faster response and follow-up on customers.

·                     More efficient cash collection, say material reduction in delay in payments by customers.

·                     Better monitoring and quicker resolution of queries.

·                     Enables quick response to change in business operations and market conditions.

·                     Helps to acheive competitive advantage.