Enterprise Resource Planning

Enterprise Resource Planning
What is ERP?
 Short for enterprise resource planning, a

business management system that integrates
all facets of the business.
 As the ERP methodology has become more
popular, software applications have emerged
to help business managers implement ERP in
business activities.
Advantages of ERP
 Integrate Financial Information
As the CEO tries to understand the company’s overall
performance, he may find many different versions of the truth.
Finance has its own set of revenue numbers, sales has
another version, and the different business units may each
have their own version of how much they contributed to
revenue.
ERP creates a single version of the truth that cannot be

questioned because everyone is using the same system.
Advantages of ERP
 Integrate Order Information
ERP systems can become the place where the customer order
lives from the time a customer service representative receives
it until the loading dock ships the merchandise and finance
sends an invoice. By having this information in one software
system, rather than scattered among many different systems
that can’t communicate with one another, companies can keep
track of orders more easily, and coordinate manufacturing,
inventory and shipping among many different locations
simultaneously.
Advantages of ERP
 Integrate and Optimize Manufacturing Processes
Manufacturing companies—especially those with an appetite
for mergers and acquisitions—often find that multiple business
units across the company make the same widget using
different methods and computer systems. ERP systems come
with standard methods for automating some of the steps of a
manufacturing process. Standardizing those processes and
using a single, integrated computer system can save time,
increase productivity and reduce headcount.
Advantages of ERP
 Reduce Inventory
ERP helps the manufacturing process flow more smoothly,
and it improves visibility of the order fulfillment process inside
the company. That can lead to reduced inventories of the
materials used to make products (work-in-progress inventory),
and it can help users better plan deliveries to customers,
reducing the finished good inventory at the warehouses and
shipping docks. To really improve the flow of your supply
chain, you need supply chain software, but ERP helps too.
Advantages of ERP
 Integrate HR Information
Especially in companies with multiple business
units, HR may not have a unified, simple method for
tracking employees’ time and communicating with
them about benefits and services. ERP can fix that.
Cost Factor
 ERP is a very costly option.
 Generally The ERP costs depends on:
– No of divisions
– No of modules
– Integration with the existing systems
– Change in processes
 Thumb rule: ERP costs around six times the total cost
of software.
 According to a study done by the Meta Group, the avg.
cost or ERP implementation was - $15,000,000.
Hidden Costs
 Training
 Integration & Testing
 Customization
 Data migration
 Increased staff competency
 Non-stop Implementation
 Waiting for ROI (at-least a year till the benefits start
becoming visible)
 Adaptation to new processes.
Return of Investment
 ROI isn’t always in Hard Cash form

 Set clear of self serving claims of ROI
Problems in ERP
 Exst. (Inadequate) processes not modified.
 Orgs. Ill-prepared to meet the best practices in
ERP
 Inexperienced consultants
 Poor pre-implementation planning
 IT personnel more involved in technical
aspects of the system
 IT Technology change
ERP Realities
 Its not magic. ERP solves problems through good
planning, effective implementation and appropriate use
 Technology can’t make up for flawed business strategy
 Define BS to gain competitive advantage
 Acquire robust and flexible ERP to adapt to your
business needs
 Have implementation lead by senior (functional)
executives
Disadvantages of ERP
 Success depends on the skill and experience of the
workforce, including training about how to make the
system work correctly.
 ERP systems can be very expensive to install and
maintain.
 Technical support personnel often give replies to callers
that are inappropriate for the caller's corporate structure.
 ERPs are often seen as too rigid, and difficult to adapt to
the specific workflow and business process of some
companies - this is cited as one of the main causes of their
failure.
 Systems can be difficult to use.
 The system can suffer from the "weakest link" problem
- an inefficiency in one department or at one of the
partners may affect other participants.
 Once a system is established, switching costs are very
high for any one of the partners
 The blurring of company boundaries can cause
problems in accountability, lines of responsibility, and
employee morale.
 Resistance in sharing sensitive internal information
between departments can reduce the effectiveness of
the software.
 There are frequent compatibility problems with the
various legacy systems of the partners.
 The system may be over-engineered relative to the
actual needs of the customer.
 Personnel turnover.
ERP Phases
 Adoption Decision,
 Acquisition,
 Implementation,
 Use and Maintenance,
 Evolution, and
 Retirement phase.
Work-Plan
– Project Management which includes project organization, risk
management, planning, monitoring, communications, budgeting,
staffing, and quality assurance;
– Information Technology Architecture which includes hardware and
network selection, procurement, installation, operations, software
design, development, and installation;
– Process and Systems Integrity which includes security and audit
control;
– Change Leadership which includes organizations design, change
readiness, policies and procedures, and performance measurements;
– Training and Documentation which includes training design and
delivery for project team, management, end-users, operations, and
helpdesk
ERP Implementation
 Phase I: Strategy & Planning

 Phase II: Blue printing & Design
 Phase III: Systems Configuration &
Implementation
 Phase IV: Data Migration
 Phase V: System Testing
ERP Implementation
 Phase 1 - Project Preparation

– Clear project objectives
– Company culture to accept change
– Framework for decision making process
– Organizational assessment
ERP Implementation
 Phase 2 – Business Blueprint

– Complete toolkit of pre-defined business processes
– Documentation and audit of business processes
– Visual model of the future business
 Phase 3 – Realization
– Baseline system is configured
– System is fine-tuned to meet the business
requirements
ERP Implementation
 Phase 4 – Final Preparation

– Necessary adjustments are made
– Final tests conducted
– End user training is completed
 Phase 5 – Go Live & Support
– Procedures and Measurements are developed to
review benefits
Thank You

Enterprise Resource Planning

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Enterprise Resource Planning

 Short for enterprise resource planning, a

ERP creates a single version of the truth that cannot be

 ROI isn’t always in Hard Cash form

 Phase I: Strategy & Planning

 Phase 1 - Project Preparation

 Phase 2 – Business Blueprint

 Phase 4 – Final Preparation

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