ERP

ENTERPRISE RESOURCE PLANNING

AGENDA

• Introduction to ERP• Components/Modules of ERP• Implementation of ERP • Advantages,Disadvantages • Various Players • Future Growth • Business Case

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DEMANDS ON THE INDUSTRY

• Better products at lower costs• Tough competition• Need to analyze costs / revenues on a

product or customer basis• Flexibility to respond to changing

business requirements• More informed management decision

making

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WHAT ARE THE PROBLEMS??Unable to get

accurate, timely information

Applications not complete for existing

business practices

Modifications are time consuming or

not feasible

Solving these Problems will Keep

You Ahead Of Competition!!

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ERP - The Enabler

WHAT IS ERP?

ERP is a solution which

– facilitates company-wide integrated information systems, covering all functional areas

– performs core Corporate activities and increases customer service augmenting corporate Image

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DEFINITION OF ERP

Business solution that addresses all the needsof an enterprise with the process view of anorganization to meet the organizational goalsand integrate all the functions of theEnterprise.

BRIEF HISTORY OF ERP1960’s - Inventory control

1970's - MRP

1980's - MRP-II

1990's - ERP

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WHY ERP??

• For Management – to know what is happening in the company

• One solution for better Management• For cycle time reduction• To achieve cost control & low working capital• To marry latest technologies• To shun the geographical gaps• To satisfy the customers with high expectations• To be Competitive & for survival

GOAL OF ERP

To improve and streamline internal business processes, which typically requires reengineering of current business processes

ERP OPTIONS

• OPTION 1 – MAKE [Using Internal resources]

• OPTION 2 – BUY

• OPTION 3 – MAKE [Using External resources]

ERP : MODULES/COMPONENTS

ERP MODULES

• A massive software architecture• Suited for typically large enterprises• Envelops broad range of enterprise-wide

functions• Divided functionally into various modules for

flexibility and ease of use• Integration is the key to information centricity

BASIC ERP MODULES

• Finance module• Human Resource module• Production module• Purchasing module• Sales and Marketing module• Inventory module

Finance module

• Gathers financial data from various functional departments

• Generates financial reports• Functionality of general ledger, accounts

payables and receivables, treasury management etc.

Human Resource module

• Streamlines management of human resources and human capital

• Complete employee database from attendance to appraisals

• Integration with knowledge management systems for optimum employee expertise utilization

Production module

• Evolution of manufacturing requirements planning (MRP)

• Optimizes utilization of manufacturing capacity, parts, components and materials

• Uses historical production data and sales forecasting

Purchasing module

• Streamlines procurement of required raw materials

• Automates potential supplier identification, price negotiation, awarding purchase order to supplier

• Integration with production planning and inventory modules

Inventory module

• Facilitates processes of maintaining the appropriate level of stock in warehouse

• Identifying inventory requirements, setting targets, providing replenishment techniques and options, reconciling and reporting inventory status

• Integration with finance, sales and purchase modules enables executive level reports

Sales and Marketing module

• Order placement, order scheduling, shipping and invoicing

• May be closely integrated with ecommerce website of the organization

• Online store offering as part of Sales module• Integration with CRM supports lead

generation, direct mailing campaigns etc.

ERP IMPLEMENTATION

• Organizational Revolution

• Extensive Planning

• Reposition the company

• Transform business practices

ERP IMPLEMENTATION

• Role of Top management

– Well defined vision and clarity– Lead the change and guide the teams– Build cohesive team across borders– Ensure Organizational commitment

ERP IMPLEMENTATION

• Two Implementation Process

– Reengineer the company’s existing way of doing business to the best practices

– Customise the ERP software• Higher implementation costs• Maintenance costs/ Upgrade expenses

ERP IMPLEMENTATION

• Integration– Use of Middleware– Dependence on upgrades in ERP software– Rapid information flow– Ripple effect of mistakes– Monitor transactions and rectify mistakes– Awareness amongst employees for ensuring

proper information flow– Information sharing and control

ERP IMPLEMENTATION

• Consultants– ERP implementation requires following skills:

• Functional• Technical• Interpersonal

• Implementation time– Phase-in approach module wise– Average time is 14 months with 150 consultants– Depends upon

• Number of modules• Scope of implementation• Extent of customization• Number of interfaces

ERP IMPLEMENTATION

• Implementation Costs– Hiring Consultants– Retention of employees– Implementation time

• ERP vendors– Selection of suitable vendor– Track record, staff, global presence

ERP IMPLEMENTATION

• Employees selection– Internal experts aware of company’s processes

and industry practices

• Employee morale– Concerns are long working hours and stress– Support and motivation from top management required

ERP IMPLEMENTATION STAGES

• Analysis– Discussion with functional experts and preparing Project Scope

document• Design

– Prepare Functional report, Design document, Test scripts, Interface plan

• Build– System configuration

• Transition– Training users, Acceptance testing, Live system replication,

• Production– Data migration, Official handholding

ADVANTAGES OF ERP

Advantages

Efficient

Design engineering

Customer centric

Marketing strategies

Integration of Accounts

Complex Bill of

Materials

Protection against crimes

DISADVANTAGES OF ERPCost of technology

Prescribes industry standard procedures

Rigid in nature

Difficult to use systems

DISADVANTAGES OF ERP‘ weakest link ‘ problem

Compatibility problems

Switching costs high

Problems of shouldering responsibility

ERP Vendor Classification

Tier I Tier II Tier III

SAP Epicor Compiere

Oracle Infor Netsuit

Microsoft Dynamics

Sage Activant Soluntions Inc.

Market Share

SOURCE :http://panorama-consulting.com/resource-center/2010-erp-vendor-analysis/

SAP

• German for "Systems, Applications and Products"• Largest ERP provider• Targets large organizations• Significant presence in midsize organizations• Integrated industry centricity of its ERP offering is

key to SAP success in ERP• Two brands, one with the deepest functionality

available • Priced at higher end

SAP

• Latest offering - SAP ECC 6.0– SAP ERP Financials– SAP ERP Operations– SAP ERP Human Capital Management

• Companies using SAP- Intel, Chevron, NASA, Coca-Cola , P&G, Schlumberger, BHEL

Oracle

• World's second largest business applications maker

• Over 37,000 application customers• Four primary brands, two with deep

functionality• Different platform under each brand• A lot of standalone, unintegrated industry-

centric point products• Priced at the high end

Microsoft

• ERP darling for SMB (small and midsize business) organizations

• Multiple ERP products• Partners heavily with Microsoft developer

community• Covers breadth of the industry• MS/.Net/SQL technology • Low to moderately priced

Infor

• 3rd largest global ERP maker• Over 70,000 customers• Several different ERP systems• Strong distribution • SCM is a speciality• Partners heavily with IBM and IBM distributors• Low to moderately priced

Epicor

• Long history of reputable products• Over 20,000 customers, 140 countries, 30

languages• Several strong industry solutions• Good after sales support• MS/SQL/SOA technology• Lowest TCO (Total Cost of Ownership) and total

per user cost of software, services and maintenance for mid-size companies

Advantage ERP

Advantages of ERP

• Use of Spreadsheets made Obsolete• Real Time data made accessible• Allows quick decision making• Provides automated & up-to-date business

functionalities• Provides easy integration of legacy &

upgraded Business applications• Streamlines business operations

GHCL : ERP success story

• Business Process : Complicated that required co-ordinated planning,

scheduling & monitoring each stage of production

• Objective to incorporate ERP : To integrate various businesses & provide support

for decision making across all levels To automate & streamline transactional systems &

material resource planning, manufacturing & dispatch

Problems Faced by GHCL

• Spreadsheets were in use prior to ERP implementation to manage various stages of manufacturing

• No Real Time Data about Business operations was available

• Generating MIS reports on monthly stocks, quality, product planning & BOM took a lot of time

BENEFITS OF IMPLEMENTING ERP

• SAP’s mySAP incorporated by GHCL• check & monitor material consumption in any

department at plant level• Production plans of any department readily

available at any time• Daily production report directly generated &

made available• Production status of any sales order available with

the current status• Top management can retrieve any information at

any time through VPN connectivity

Benefits of ERP

• On- time delivery of orders to customers• Prompt availability of the status of order

placed to the customer• Enterprises becoming more time sensitive• Provides better marketing opportunities• Better decision making by the management

made possible• Inventory cost reduction

CHALLENGES POSED

Challenges

• Information Security Relevant authorisation provided• Cost of ERP All ERP companies targeting the Small & Medium Size

Business & developing applications that are efficient and cheap

• Impact of Recession Post-recession is the most aggressive growth phase companies strategize & incorporate changes for

Business betterment with future growth perspective

SMB - ERP

Success Stories

Secant Technologies

• A 4-crore Ludhiana company deployed ERP in 2005

• Local vendor, Disha Informatics implemented ERP

• Time taken : 8 months• Cost involved : Rs. 8.5 lakh• Impact: 50% y-o-y

SOURCE :http://www.channelbusiness.in

Veeras Infotek

• Based in Chennai, deployed Navision(ERP)• Helped evaluate employee performance• Cost involved: Rs. 10 lakh• Growth: Almost double in 3 years time

Source : http://www.channelbusiness.in

Analyzing SAP-ERP's success in TISCO

TISCO profile

• Founded in 1907

• Part of the Tata Group

• Leading steel giant in the country

TISCO profile

• Dedicated to –providing laudable services to the

stakeholders– improving on the quality– thriving for innovations and improvements

constantly

ERP Implementation

• TISCO deserves lot of credit for implementing ERP

• many organizations in the global level have given up the very idea of ERP– lots of failures associated– Implementation did in wrong manner have caused

havoc to organizations

• Choose ERP in the right time and implemented it in a proper manner

• Implemented it into the whole systems in one single spree

• Net results of their ERP software have been described to be path breaking and a trendsetting one

Why ERP in TISCO

• Two major problems– Not customer friendly– The systems were outdated and the modalities of

operation were too complex and not error free

The Process

Challenges–Had to choose top ERP software–8 months set for implementation was a

major challenge

• Business process was divided into two main segments– Core functions were denoted to be major ones– Supporting functions were named minor ones

• A plan of action on the proposed ERP's impact was drafted

• All efforts to ensure that the change did not produce any sort of resentment

The Outcome

• Produced in terms of financial technical and managerial parameters

• Effective handling and speed delivery resulted in greater sales

• Drastic fall in the amount owned to creditors• Increased the productivity

FUTURE MOVES

• Determined not to stop ERP or attain a saturation point

• Working on to improve and increase the scopes of ERP software

THANK YOU