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Basics of ERP

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AGENDA
• What is ERP?
• Functional Area of ERP
• Common Features of ERP
• How can ERP improve a company’s business performance?
• Costs involved in implementing an ERP?

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What is ERP?
Enterprise resource planning (ERP) is business process management software that allows an
organization to use a system of integrated applications to manage the business and automate
many back office functions related to technology, services and human resources. ERP software
integrates all facets of an operation, including product planning, development, manufacturing,
sales and marketing.
ERP software is considered an enterprise application as it is designed to be used by larger
businesses and often requires dedicated teams to customize and analyse the data and to handle
upgrades and deployment. In contrast, Small business ERP applications are lightweight business
management software solutions, customized for the business industry you work in.
ERP (Enterprise Resource Planning) systems typically include the following characteristics:
• An integrated system that operates in (or near) real time without relying on periodic updates
• A common database that supports all applications
• A consistent look and feel across modules
• Installation of the system with elaborate application/data integration by the Information
Technology (IT) department, provided the implementation is not done in small steps

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Functional Areas of ERP
An ERP system covers the following common functional areas. In many ERP systems these are called and
grouped together as ERP modules:
• Financial accounting: General ledger, fixed asset, payables including vouchering, matching and payment,
receivables cash application and collections, cash management, financial consolidation
• Management accounting: Budgeting, costing, cost management, activity based costing
• Human resources: Recruiting, training, rostering, payroll, benefits, 401K, diversity management,
retirement, separation
• Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow management,
quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle
management
• Order Processing: Order to cash, order entry, credit checking, pricing, available to promise, inventory,
shipping, sales analysis and reporting, sales commissioning.
• Supply chain management: Supply chain planning, supplier scheduling, product configurator, order to
cash, purchasing, inventory, claim processing, warehousing (receiving, put-away, picking and packing).
• Project management: Project planning, resource planning, project costing, work breakdown structure,
billing, time and expense, performance units, activity management
• Customer relationship management: Sales and marketing, commissions, service, customer contact, call
center support - CRM systems are not always considered part of ERP systems but rather Business Support
systems (BSS).
• Data services : Various "self–service" interfaces for customers, suppliers and/or employees

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Common Features of ERP
Following are the common features of an ERP application. These can be combined/integrated depending on
ERP application provider.
• Transactional database
• Management portal/dashboard
• Business intelligence(BI) system
• Customizable reporting
• Resource planning and scheduling
• Analysing the product
• External access via technology such as web services
• Search
• Document management
• Messaging/chat/wiki
• Workflow management

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How can ERP improve a company’s business performance?
ERP can improve a company’s performance in following regards :-
• Shared, central, and validated data ensures that there is no any reconciliation requirement and a lot of
internal communications and confusions are saved that are common in companies not having integrated
system
• Business rule module ensures adherence to set business rules. Thus a purchase order will just not be
possible to release if it is exceeding budgetary constraints. No manual efforts are needed to observe this.
• ‘Instant Reporting’ and ‘Visibility into operations’ make operational decisions proactive and in time.
• Workflow and synchronization across departments reduce business cycle times. No ‘Follow-up’ or
‘Chasing’ is needed for a task. A time-based control on tasks can highlight delayed tasks immediately to
seniors.
• Connecting from anywhere makes transactions and business flows faster.
• Extended interfaces allow better communication and ‘Self service’ to business associates. Thus a customer
can view his own pending orders, dispatch details, statement of accounts etc. A field officer can log a new
order or a complaint over Internet. Inquiry, quotation, ordering, supply, purchase, - all can be done on web
with instant validation. This end-to-end synchronized approach puts the business operations at speeds like
never before. There is no back and forth communication.
• Capability to interface with compliant digital instruments facilitates easy capture of process data and
assists in automation.

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Costs involved in implementing an ERP?
During Implementation
• Hardware – servers
• Hardware – nodes
• Networking
• Communication infrastructure
• Web spaces and Internet services
• Operating system
• Database management system
• Office automation products
• Mail server
• Anti-virus tools
• Application software or the ERP itself
• Implementation charges - professional fees
• Time investment of staff in selection, interaction,
and implementation
• Training
• Data migration
Post implementation
• Systems administration
• Maintenance – the company has a complex and
costly animal to look after Upgrades
• Running rentals and communication costs
• Systems staff salaries
• Turnover of trained manpower – as their resume
looks like never before
• Post implementation – staff takes time to run
effectively in the new way
• Organizational restructuring as per the new
working style

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Advantages and Disadvantages an ERP?
Advantages of ERP System
• With Enterprise Resource Planning (ERP) software,
accurate forecasting can be done. When accurate
forecasting inventory levels are kept at maximum
efficiency, this allows for the organization to be
profitable.
• Integration of the various departments ensures
communication, productivity and efficiency.
• Adopting ERP software eradicates the problem of
coordinating changes between many systems.
• ERP software provides a top-down view of an
organization, so information is available to make
decisions at anytime, anywhere.
Disadvantages of ERP System
• Adopting ERP systems can be expensive.
• The lack of boundaries created by ERP software in a
company can cause problems of who takes the
blame, lines of responsibility and employee morale.

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Top ERP Trends
The ERP field can be slow to change, but the last couple of years have unleashed forces which are
fundamentally shifting the entire area. According to Enterprise Apps Today, the following new and continuing
trends affect enterprise ERP software:
1. Mobile ERP :- Executives and employees want real-time access to information, regardless of where they are.
It is expected that businesses will embrace mobile ERP for the reports, dashboards and to conduct key business
processes.
2. Cloud ERP :- The cloud has been advancing steadily into the enterprise for some time, but many ERP users
have been reluctant to place data cloud. Those reservations have gradually been evaporating, however, as the
advantages of the cloud become apparent.
3. Social ERP :- There has been much hype around social media and how important – or not -- it is to add to
ERP systems. Certainly, vendors have been quick to seize the initiative, adding social media packages to their
ERP systems with much fanfare. But some wonder if there is really much gain to be had by integrating social
media with ERP.
4. Two-tier ERP :- Enterprises once attempted to build an all-encompassing ERP system to take care of every
aspect of organizational systems. But some expensive failures have gradually brought about a change in
strategy – adopting two tiers of ERP.

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Top ERP Vendors
Depending on your organization's size and needs there are a number of enterprise resource planning software
vendors to choose from in the large enterprise, mid-market and the small business ERP market.
Large Enterprise ERP (ERP Tier I)
The ERP market for large enterprises is dominated by three companies: SAP, Oracle and Microsoft.
Mid Market ERP (ERP Tier II)
For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and IFS.
Small Business ERP (ERP Tier III)
Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and Activant Solutions round out the ERP
vendors for small businesses.

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ERP Base Modules(from wikipedia)

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