Chapter: 1 Chapter: 1

Enterprise-An OverviewEnterprise-An Overview

• Que:- What is an Enterprise?

• Ans:- Defination:-An enterprise is group of people with a common goal which has certain resources at its disposal(control) to achive this goal.

People

Resources(People, money, energy, material, space, time) Goal & Objective

The Enterprise The Enterprise The Enterprise The Enterprise

•The Enterprise

• The enterprise act as single entitysingle entity.• This view (single entity) is different from traditional

approach.

• Traditional Approach:-

• The organization is divided in different units based on the functions they perform.

• Different units like

Manufacturing and production department Production planning department Purchasing department Sales& distribution department Finance department R&D department

• This departments are compartmentalized and have their own goal & objectives

• These departments function in isolation and have their own system of data collection & analysis.

• (Problem):- So the information that is created or generated by various departments are available to only top management and not to the other departments.

• Figure:-

Production Planning

Finance Marketing

R & D ProductionSales & Distribution

Org. where there is no little communication between departments

• So results,• Instead of taking org. towards the common goal the various

depts. end up pulling it in different direction.

• Because of only one department does not know what the other does.

• So departmental objective can be conflict.

• (Solution) In enterprise way , • the entire organization is considered as

system and all depts.. are sub-system.

• Information about all the aspects of the organization is stored centrally and is available to all depts..

• Figure:-

Production & Planning

Finance Marketing

R & D ProductionSales & Distribution

Central database

• Through transparency and information , departments will no longer be working in isolation.

• Each sub system knows what other are doing, why doing, & what should be done for common goal.

• ERP system helps to make easier by, Integrating the information system Enabling smooth & seamless flow of information

across departmental barrier Automating business process & function.

• Business function:-• Organization that make products to sell have following

functions: Marketing & sales Production & material managements Accounting & finance Human resources etc………….• Each function area comprises a variety of business

function and business activities.

• (Problem) Earlier business system ,• What happened in one functional area is not closely

related to what happened in others.• So one area’s information system has no impact on

other areas.

• Business process:-

• (solution) Recently organization has started term business process.

• Definition:- A business process is a collection of activities that takes one or more kinds of input and created an output.

• Used :- BP helps to manager to look their organization from a customer’s perspectives.

• Difference between Business function & Business process:-

• BP cuts across more then one BF to get the task done.• Example, There car was damaged during delivery so BF: - to accept the damage items. BP: - to repair or replace car.• For the company to provide satisfaction, it must sure that its

functional area of operation is integrated.• Sharing data effectively and efficiency between and within

functional area leads more efficient BP.• Information system can be designed so that accurate and timely

data are shared between functional area.• These system are called integrated(combine in to whole)

information system.

• Integrated Management Information:-– An information system is an open, purposive system

that produces information using the ‘input-process-output’ cycle.

– The minimal information system consists of three elements-people, procedures and data.

– People follow procedures to manipulate data to produce information.

– Today information system is an organized combination of people, hardware, software, communication, network and data resources that collects, collate (assemble), transforms, and disseminates in organization.

– Management information system also called information reporting systems.

– (Problem) These information system is that they operate at departmental level and they give only information that has been pre-defined.

– Each department have their own database and information, so these system produce various reports of varying detail that was specified when the system were built.

– This method of information of gathering , has major disadvantages.

– The people in one department does not know the information of other department.

– This system give only the information that they are designed to produce at the time they were built.

– So if manager want some information, its not in the reports, So these system are not helpful to them.

– So these integrated approach is required.(Lack,need,require).

– There are three fundamental characteristics of informations are accuracy, relevancy and timeliness.

• Business Modeling:-• Its first activity in any ERP project.• Definition:- A business model is representation of the

business as• one large system,• Showing the inter connections and• Interdependencies of• Various sub-system and business processes.• A business model consisting of the business process,

based on the organization’s goal, objectives and strategic plans.

• Based on the business model, the ERP system is developed with the aim of providing the required information and necessary assistance to the various individuals to perform their business process more effectively and more efficiently.

• In business modeling ,we model the business as an integrated system making the processes managing its facilities and materials.

• Information is very important resources and is very critical in managing all the other resources.

• A business model is a representation of the actual business what the various business functions

of organization are How they are related What their interdependencies are

and so on….. • A business model is usually represented in the graphical

form using flowcharts and flow diagrams.• From this model data model of the system is created.

• Integrated data model:-

• Most critical steps in ERP is creation of an integrated data model.

• All the employees from different departments get access to the data-integrated data.

• Company uses the integrated data for its analysis and decision-making.

• The information integrated and the process or procedure automation.

• The data model should reflect the entire org. and should successfully depict (showing) and integrated the data structures of the entire organization

Chapter – 2Chapter – 2

Introduction to ERPIntroduction to ERP

Introduction:-Introduction:-

ERP is an abbreviation for ERP is an abbreviation for

Enterprise Resource PlanningEnterprise Resource Planning It is the It is the techniquestechniques and and conceptsconcepts for integrated management for integrated management

resources to resources to improve the efficiency improve the efficiency of enterprise management.of enterprise management. ERP concepts are supported by ERP packages which are ERP concepts are supported by ERP packages which are

integratedintegrated (covering all the business functions). (covering all the business functions). ERP packages were targeted at the manufacturing industry.ERP packages were targeted at the manufacturing industry.

It consisted mainly of function for generally It consisted mainly of function for generally planning planning and and managingmanaging the core business the core business such assuch as

Sales managementSales management Production managementProduction management Accounting and financial Accounting and financial

management etc. management etc. But in recent years, many industries adopt this But in recent years, many industries adopt this

expansion of implementation on global level.expansion of implementation on global level.

ERP software is designed ERP software is designed to modelto model and and automateautomate many of the basic many of the basic processes of a company from processes of a company from finance to shop floorfinance to shop floor

With a goal of integrating information With a goal of integrating information Eliminating complexityEliminating complexity

(Advantage)(Advantage) ERP software is a mirror image of the major business ERP software is a mirror image of the major business processes of org. Such as customer fulfillment and manufacturing.processes of org. Such as customer fulfillment and manufacturing.

(dis advantage)(dis advantage)ERP system is worse becauseERP system is worse because The old code at the least was written specifically The old code at the least was written specifically

for the company and task.for the company and task.

ERP system produce the dramatic (impressive) improvements ERP system produce the dramatic (impressive) improvements and and

It is capable only when It is capable only when used to connect part of an organizationused to connect part of an organization and and integrate its various processes seamlesslyintegrate its various processes seamlessly (effortlessly). (effortlessly).

Que:-Discuss the common myths about ERP and find the solution?Que:-Discuss the common myths about ERP and find the solution? Ans:-Ans:- There are most common myths about ERP.There are most common myths about ERP.

ERP means more work and ProceduresERP means more work and Procedures ERP will make many employees redundant and joblessERP will make many employees redundant and jobless ERP is the sole (single) responsibility of the managementERP is the sole (single) responsibility of the management ERP is just for manager/Decision-makersERP is just for manager/Decision-makers ERP is just for manufacturing OrganizationsERP is just for manufacturing Organizations ERP is just for the ERP implementation teamERP is just for the ERP implementation team ERP slow down the organizationERP slow down the organization ERP is just to impress the customersERP is just to impress the customers ERP package will take care of everythingERP package will take care of everything One ERP package suit everybodyOne ERP package suit everybody ERP is very expensiveERP is very expensive Organizations can succeed without ERPOrganizations can succeed without ERP

ERP means more work and Procedures;-ERP means more work and Procedures;- Problem:-Problem:-

Properly implementing and managing an ERP is Properly implementing and managing an ERP is not an easy tasknot an easy task.. Many employees think that ERP will Many employees think that ERP will add more workadd more work, makes the work , makes the work

more difficultmore difficult and force and force unnecessary proceduresunnecessary procedures.. Transformation from the old system to the ERP system is a Transformation from the old system to the ERP system is a difficult difficult

processprocess..

Solution:-Solution:- Management and implementation team Management and implementation team do their job properlydo their job properly, ,

ensuring that the employees are ensuring that the employees are told what to expecttold what to expect and and given proper given proper trainingtraining, then transitions can be , then transitions can be smoothsmooth..

Once employees get used to the new system, they will Once employees get used to the new system, they will understand the understand the potential benefitspotential benefits and effort saved through the and effort saved through the automation of task automation of task and joband job..

ERP will make many employees redundant and ERP will make many employees redundant and jobless;-jobless;-

Problem:-Problem:- ERP system is that its implementation will make ERP system is that its implementation will make many jobs many jobs

redundantredundant because of the because of the automationautomation.. So it is possible that many employees will So it is possible that many employees will lose their jobslose their jobs..

Solution:-Solution:- ERP system ERP system create create the new job opportunities and the very same people the new job opportunities and the very same people

whose job were automated could be used to fill the new job position s whose job were automated could be used to fill the new job position s after giving them proper trainingafter giving them proper training..

So we can say that ERP is So we can say that ERP is a people systema people system made possible by computer made possible by computer

software and hardwaresoftware and hardware..

ERP is the sole responsibility of the management;-ERP is the sole responsibility of the management;- Problem:-Problem:-

Making an ERP system work is the responsibility of all the employees, Making an ERP system work is the responsibility of all the employees, departments and every person.departments and every person.

Then company management is not responsible for the day-to-day operation Then company management is not responsible for the day-to-day operation of the ERP systemof the ERP system

Their main job is to create an organizational environment in which ERP Their main job is to create an organizational environment in which ERP can thrive (increase).can thrive (increase).

They should also involve in the development of ERP policies, usage They should also involve in the development of ERP policies, usage guidelines, and allocation of budget, package selection and appointment of guidelines, and allocation of budget, package selection and appointment of component professionals to component professionals to implementimplement and and manage manage the ERP system.the ERP system.

.. Solution:-Solution:-

When the ERP team has the full backing and support of the management, When the ERP team has the full backing and support of the management, they will be they will be able to implement the system smoothlyable to implement the system smoothly..

The management should The management should monitor the implementation periodicallymonitor the implementation periodically.. It is the employees-the It is the employees-the day-to-dayday-to-day users of system- who will decide the users of system- who will decide the

fate of the ERP system.fate of the ERP system.

ERP is just for the manager /decision makers-ERP is just for the manager /decision makers- Problem:-Problem:-

The managers and decision makers are the major users of the ERP system.The managers and decision makers are the major users of the ERP system. They are the people who benefit the most from a properly implemented They are the people who benefit the most from a properly implemented

ERP system.ERP system. They will have the information they need.They will have the information they need.

Solution:-Solution:- The quality of decision and speed improved as the ERP system provide The quality of decision and speed improved as the ERP system provide

high quality ,timely and relevant information.high quality ,timely and relevant information.

Every employee in the organization benefits from the ERP system.Every employee in the organization benefits from the ERP system.

Best use of the information processing power of an ERP system the user Best use of the information processing power of an ERP system the user should be trained on how to make the best use of the various features should be trained on how to make the best use of the various features available.available.

ERP is just for Manufacturing Organizations:-ERP is just for Manufacturing Organizations:- Problem:-Problem:-

ERP was historically developed from the methods of ERP was historically developed from the methods of material requirement material requirement planningplanning (MRP) and (MRP) and manufacturing resource planningmanufacturing resource planning (MRP II). (MRP II).

In the manufacturing Industry, MRP became In the manufacturing Industry, MRP became the fundamental conceptthe fundamental concept of of production and at this stage BOM which is the purchase order management production and at this stage BOM which is the purchase order management that utilizes parts list management and parts development.that utilizes parts list management and parts development.

This incorporated (integrated) financial accounting, HR management This incorporated (integrated) financial accounting, HR management functions; distribution management function came to cover all areas of functions; distribution management function came to cover all areas of enterprise and came to be called ERP.enterprise and came to be called ERP.

Solution:-Solution:- The concept of enterprise-wide planning of resources The concept of enterprise-wide planning of resources is not limitedis not limited to any to any

particular segment of industry.particular segment of industry.

ERP is just for the ERP implementation ERP is just for the ERP implementation Team:-Team:-

Problem:-Problem:- The ERP implementation team usually The ERP implementation team usually consists of outside consists of outside

consultantsconsultants, , vendor representativesvendor representatives and and select group of select group of employeesemployees..

Once the implementation and user training is over, the Once the implementation and user training is over, the consultants and vendor representative consultants and vendor representative will leavewill leave..

Solution:-Solution:- It is It is the responsibility of each and every employeethe responsibility of each and every employee of the of the

company to use the ERP system properly and to make the best company to use the ERP system properly and to make the best use the new features and facilities.use the new features and facilities.

ERP slows down the organization:-ERP slows down the organization:- Problem:-Problem:- Before the advent (start) and popularity of ERP tools, most Before the advent (start) and popularity of ERP tools, most

business tasks were business tasks were performed manuallyperformed manually.. This was This was time consumingtime consuming process. process. Often a lot of effort Often a lot of effort was duplicatedwas duplicated.. Solution:-Solution:- The ERP systems The ERP systems automated the information flowautomated the information flow across across

departments thereby (in this manner) departments thereby (in this manner) eliminating duplicationeliminating duplication of efforts and of efforts and fasterfaster and and accurateaccurate results. results.

Today ERP system never functions in Today ERP system never functions in isolationisolation.. It is It is completelycompletely and and seamlesslyseamlessly integrated with the supply integrated with the supply

chain tools and techniques and also chain tools and techniques and also improveimprove the response time the response time of org..of org..

ERP makes the organizations ERP makes the organizations efficientefficient and never slows it and never slows it down.down.

ERP is just to impress customers:-ERP is just to impress customers:- Problem and solution:-Problem and solution:- It is true a properly implemented ERP system can It is true a properly implemented ERP system can help in servinghelp in serving the the

customers better as it customers better as it helps the organizationshelps the organizations to to react faster, response react faster, response betterbetter and and deliver high qualitydeliver high quality products and services at astonishing products and services at astonishing (amazing) speeds.(amazing) speeds.

This improved This improved efficiencyefficiency and and qualityquality will go a long way in improving will go a long way in improving customer goodwill (kindness) and customer relations.customer goodwill (kindness) and customer relations.

So with an ERP system you So with an ERP system you get more satisfied customersget more satisfied customers but, that is but, that is only only one of the advantagesone of the advantages of an ERP system. of an ERP system.

ERP package will take care of everything:-ERP package will take care of everything:- Problem:-Problem:- ERP is not a ERP is not a silver bulletsilver bullet or or cure-allcure-all (solutions-all). (solutions-all). If employees If employees are not interestedare not interested in using the ERP system or not using it in using the ERP system or not using it

improperly, if managers improperly, if managers are not makingare not making use of the decision making capabilities of use of the decision making capabilities of system or if the system in not maintained properly , then the ERP will not deliver it system or if the system in not maintained properly , then the ERP will not deliver it promises..promises..

Solution:-Solution:- ERP tool ERP tool automate automate most business functions and processes thus lives of most business functions and processes thus lives of

users users a lot easiera lot easier.. While the ERP tools make the jobs easier, there is no substitute(alternate) While the ERP tools make the jobs easier, there is no substitute(alternate)

for human intelligence and decision making.for human intelligence and decision making.

One ERP package will suit everybody:-One ERP package will suit everybody:- Problem:-Problem:- There are hundreds of ERP tools available which There are hundreds of ERP tools available which differdiffer in features, in features,

capabilities, size, functionality, price technical support, customizability, capabilities, size, functionality, price technical support, customizability, scalability etc.scalability etc.

One tool will be suitable for all organizations are One tool will be suitable for all organizations are wrong.wrong.

Selecting and purchasing an ERP tool without analyzing whether it is Selecting and purchasing an ERP tool without analyzing whether it is suited for the org. will have disastrous (unsuccessful) consequences (cost).suited for the org. will have disastrous (unsuccessful) consequences (cost).

Solution:-Solution:- For an ERP implementation to be successful, the tool that is implemented For an ERP implementation to be successful, the tool that is implemented

should be compatible (well-suited) with should be compatible (well-suited) with organizational cultureorganizational culture, , practicespractices and and proceduresprocedures..

So when purchasing an ERP package proper So when purchasing an ERP package proper attention should be given to attention should be given to the selection of a toolthe selection of a tool that is best suited for the organization. that is best suited for the organization.

ERP is very expensive:-ERP is very expensive:- Problem:-Problem:- ERP packages come in all shapes and sizes.ERP packages come in all shapes and sizes. The sophisticated (difficult) and high-end ERP tools are very expensive.The sophisticated (difficult) and high-end ERP tools are very expensive.

Thus implementing and managing an ERP system is an expensive affair Thus implementing and managing an ERP system is an expensive affair (business).(business).

.. Solution:-Solution:- An efficient ERP system will An efficient ERP system will increase the productivityincrease the productivity of human of human

resources, shorten development and change cycles, streamline the resources, shorten development and change cycles, streamline the production processproduction process, reduce errors by automating, reduce errors by automating the monotonous (dull) the monotonous (dull) and repetitive task, enable the better management of projects by providing and repetitive task, enable the better management of projects by providing quality information, improve customer satisfaction by resolving problems quality information, improve customer satisfaction by resolving problems quickly.quickly.

When the benefits of the ERP system are considered, it becomes evident When the benefits of the ERP system are considered, it becomes evident (clear) that the money spent on ERP is well spent and the ERP system will (clear) that the money spent on ERP is well spent and the ERP system will pay for itself.pay for itself.

Organizations can succeed without ERP:-Organizations can succeed without ERP:- Problem:-Problem:- Before the advent of ERP, organizations were run manually.Before the advent of ERP, organizations were run manually. If an org. is very small in size, caters (provide) to a niche (role) market and If an org. is very small in size, caters (provide) to a niche (role) market and

has very limited scope, then it can succeed without ERP.has very limited scope, then it can succeed without ERP.

If proper control mechanisms and procedures are not in place, so If proper control mechanisms and procedures are not in place, so operations can get out of control and products and org. can fail.operations can get out of control and products and org. can fail.

Solution:-Solution:- Org. become large and the products are becoming more and more complex in size, Org. become large and the products are becoming more and more complex in size,

sophistication and technologies used.sophistication and technologies used.

This is the era of multi-site, distributed production, where different groups suited in This is the era of multi-site, distributed production, where different groups suited in different parts of the world develop the components of a system.different parts of the world develop the components of a system.