Recent Developments in ERP

MANOJ V M
School of Management Studies CUSAT, Kochi 22 E-mail: vmmanoj.1986@gmail.com
Abstract: ERP helps to integrate the data in an organization under one common platform. The purpose behind is not only to ensure transparency but also to facilitate tracking down information regarding the status of a particular order or its dispatch and so on. If a company succeed in this it will definitely achieve ERP benefit. Roll No: 11, MBA (IB) Sem-4

Key Words: ERP, trends, development. . 1.0 INTRODUCTION

The evolution of the systems dates back to the year 1960 as per ERP history. The systems in the yesteryears were designed to assist the manufacturing process. The first software that was developed in this process happens to be MRP (material Resource Planning) in the year 1975.This was followed by another advanced version namely MRP2 which is the acronym for Manufacturing Resource planning. None of them yielded the benefit of ERP. ERP came into being with effect from 1990 though the fact remained that many people are of the opinion that ERP existed from the year 1960 in the form of MRP1 and MRP 2. In fact MRP II was more or less an ERP except for its inability to coordinate departments other than marketing. The whole period from the year 1960 is denoted as the age of ERP. The benefit of ERP was slowly felt from this stage onwards. An organization has to do meticulous planning, devise strategies before going ahead with ERP. ERP can cut down costs; improve the quality of working time and by and large. In short it helps in making the maximum use of technological advancements. For instance the executive in the Sales Department will be able to respond to a customer query immediately by making out the status of the product's delivery which would not have otherwise been possible but for the intervention of ERP in the organization. ERP has enabled organizations to do away with laborious and time consuming process. A strong understanding of ERP basics will help to know ERP benefits. A one phrase explanation for the impact of ERP would be "Simplifying Complex Process". 2.0 RECENT DEVELOPMENTS There have been a number of developments in the field of ERP Software. The significant development in global information technologies and the ever-intensifying competitive market climate have both pushed many companies to transform their businesses. Enterprise resource planning (ERP) is seen as one of the most recently emerging process-orientation tools that can enable such a transformation. Its development has presented both researchers and practitioners with new challenges and opportunities. A common observation on the future trends in ERP is its further expansion in scope. New integration technology such as software componentization,

Enterprise Application Integration (EAI), service-oriented architecture, web services etc are on a rise.

2.1 Need based applications

Organizations had to implement ERP throughout their systems irrespective of the fact whether they help in all the functions or in one particular function. This was proving to be a big hurdle to the firms. In addition this remained as the main disadvantage or setback of ERP. They had to purchase the whole applications even if it meant that most of them would be idle except for the core function. The latest ERP software programs have overcome this menace. They offer need based applications. The firms need not be worried even if these Software Programs were not available. They were given the liberty to purchase and install Software Programs pertaining to that particular function. This advantage has helped to increase the scope of ERP not only among large firms but also small and medium business as well.

2.2 Expenditure
ERP was a very costly affair. Thanks to the intrusion of internet and open source applications. This has helped S.M.E.'S to enter the market of prospective buyers. This has not only widened the horizon of S.M.E.'s but also increased the usage among large firms. These large firms were not able to invest huge money in spite of adequate funds. Now that the spending on ERP gets reduced there are no hesitations to show the green signal for fear of heavy monetary outlay. It is encouraging to notice the improving IT ERP trends.

2.3 Reduction in implementation time

ERP was discouraged by companies because they took such a long time to get installed and set the whole process into action. Since this resource was spent excessively there were chances for reduction in potential business and losing man-hours. The current day ERP applications are less complex to install and train. This has reduced the amount of time spent on ERP. Companies are thereby assured of spending lesser time for ERP.

2.4 Open Source, Web enabled and wireless technologies

These are three important elements that have rejuvenated the functioning of ERP. Open Source ERP has done away with the hassles of paying license fees not only during installation but also whenever a modification is made. The company is relieved from depending even for mince matters. Web enabled ERP helps in making the enterprise operations go online. Any stakeholder or third party can access the required information very easily and that too by sitting anywhere in the world. This proves to be of great help especially during emergencies when the details are to be sourced with immediate effect. Dependability, Convenience in reaching, Easy to use, integrating technology and manual Data in public domain are some of the features of WE-ERP. Web enabled ERP have

been citied as one of the important reason for ERP's dominance in the days to come. This system needs more development apart from the present changes Wireless ERP has helped organizations to make use of the communication channels effectively and efficiently. It has made it possible for many elements to operate in ERP which were otherwise not possible. Wireless ERP is nothing but sharing enterprise information through devices like internet and other devices making it possible for outsiders to access the same. Wireless ERP has a huge market potential. This is evident from the fact that big players like SAP and Peoplesoft have penetrated into the segment. 3.0 ERP EXTENDED BUSINESS FUNCTIONS ERP vendor packages began as the integrated packages for the core business. Apart from the core business functions such as Finance, Manufacturing, and Human resources now the ERP extended to business functions like 4.0 ERP II 4.1 FEATURES OF ERPII 4.1.1SPECIFIC COVERAGE TO INDIVIDUAL ELEMENTS Enterprise resource planning did not cater much to the individual elements. On the contrary it was focused more to macro parameters like departments, process and procedures. Since the micro elements escaped attention there was no proper remedy for the defects and even if they were implemented they were not highly effective. ERP II has some comprehensive features that not concentrates on individual elements but synergizes them and makes the functioning of the concerned wholesome component more meaningful. 4.1.2APPLICABLE TO ALL INDUSTRIES The concept of erp enjoyed wide applicability in the manufacturing sector. In addition Retail and distribution segments were benefited. They were also applicable to all industries and segments; however the benefits were not worth the investments. Rather they were uncalled for. This is not to say that erp was not suitable to other sectors. ERP lacked the facilities that were demanded by these sectors. Naturally they were reluctant to accommodate ERP. ERP II has overcome this drawback and thereby has made it available to all the sectors irrespective of the nature of business or volume of transactions. 4.1.3COVERS MORE FUNCTIONS Customer relationship management Supply chain management Sales-force automation E-commerce Business intelligence

ERP was designed to ease the conventional functions in an organization. If there were some new core functions they did not come under the scope of ERP. ERP still helped in facilitating the business process however the outcome was not to the desired extent. This limitation seemed to be a major handicap of ERP especially with the rapid transformations in the organizational structure and functions. ERP II has helped to remove this barrier by including maximum functions under its scope. It has not only facilitated in bring non conventional ,core and supportive functions but also the best practices but also the best practices followed in the industry, other industries and the practices that were solely dedicated to the concerned industry, 4.1.4 OTHER ADVANTAGES Some other advantages of ERP II include the manner in which it is employed in an organization and the facilities provided by the same. ERP is prone to make use of internet facilities. However they are not used to the maximum. On the contrary ERP makes a minimal use of them. However this is not the case with ERP II. ERP II has been able to draw maximum benefits from internet. Its contemporaries Wireless ERP and WEB enabled ERP have helped in making this possible in addition to the special features of ERP. The operation of ERP is more focused within the organization. It has a far reaching impact on external factors. On the contrary ERP II includes both internal and external factors. It remains internal even in the connection part. In the meanwhile every other area is given due importance when it comes to ERP II. 5.0 FUTURE OF ERP ERP evolved from manufacturing resource planning (which originated from material resource planning).The functioning of ERP has gained much prominence and utility with the intervention of web enabled and open source technologies. ERP II the latest advancement in ERP software deserves special mention. In this context it becomes important to analyze the direction in which ERP is geared to progress or will ERP diminish in the future etc 5.1 Current level ERP has undoubtedly become an important business application to all industries. It has almost become a must for all organizations irrespective of the type of business manufacturing or service .If companies feel that coordination and enterprise communication are their only problems they don't have any other alternative but to go for ERP, provided they want to make profits and remove the existing setbacks. Needles to say ERP has helped companies in monetary and nonmonetary aspects if they are keen in utilizing it to the core and take the necessary steps to overcome the setbacks. However ERP needs lot of improvement (this statement included the latest versions also).ERP is an effective application. It will be great if one can bring an ERP system that id devoid of the drawbacks from the existing ones. The latest intrusions namely open source and web enabled technologies has

increased the effectiveness of the application. However they are not enough (technically speaking).ERP applications should be designed to make the maximum use of internet so that the user can access data from any part of the world just by a click of the mouse. This has further deepened the future of ERP. ERP's future is yet to reach saturation. 5.2 Market forecasting Formerly ERP was purely restricted to fortune 500 companies, in the sense only they could afford to invest on them. This put the small and Medium Industries at a large disadvantage. They were not able to make use of the application to gain the necessary benefits. ERP's future seemed to be dooming on them. However this drawback has been removed after the intervention of open source facilities. The concept of outsourcing has helped in removing the difficulties faced by small and medium enterprises. Hence a large potential still exists in the S.M.E. market.

The ERP vendors can target this market effectively. However both the vendor and the companies in this segment have to remember that there are lot of competition in this sector and one is not likely to succeed unless he serves the best product. 5.3 The international Scenario, employment and Education ERP has thrown open opportunities for many companies to trade with foreign counter parts in the name of outsourcing, implementation and deployment of the existing ones. It has contributed lot to the economy .Academics also boast its own share of ERP relations.

It has promoted lot of employment and educational opportunities. India happens to be a key beneficiary in this aspect. 6.0CHALLENGES FOR THE FUTURE Need for implementing these applications. Often we hear questions like; My order process has changed. How long will it take IT to modify the software? 6.1 Functional gaps Even though packaged ERP systems provide off-the-shelf best practice solutions, they may not provide 100 percent support to all the features required for all the verticals. Also, there would be some regulatory requirements that need to be addressed in the applications as and when they are introduced by the regional or global bodies/authorities like new VAT regulations for Indian industries, the SOX compliance and so on. In addition, the customers will have some practices which they desire to retain, and hence customize the packaged ERP applications to their needs. That is why ERP vendors constantly face demands from their customers for handling generic, specific and regulatory requirements in their next releases. One of the key challenges for most of the ERP vendors is to provide the value addition to their active customers by providing these enhancements, both functional and usable, in their upcoming releases.

6.2 Complexity of integration Most of the customers presently have disparate applications on many technology platforms built with different tools, purchased from various vendors, and not working seamlessly. One of the major challenges of the IT managers is to make these applications integrate well. A study by AMR indicates that a demand-driven enterprise can further drive revenues and profitability; as those are based on aligning processes to sense and shape demand, and respond portably to a demand signal. By improving the critical business processes that increase responsiveness, speed, and agility, the Demand Driven Supply Network (DDSN) can directly impact the key drivers of financial performance: faster growth, higher profitability, and improved capitalization. Enterprises have to at every stage not only re-look into the process capabilities but also technology infrastructure that helps them get real-time information across their supply network. Software vendors have to look into solutions to embrace the DDSN concept and enable enterprises become more demand-centric. Analysts indicate that half of the companies do not have a clear visibility across their supply network in spite of having IT systems like ERP, SCM, PLM, CRM, and SRM as they lack proper integration of all of them. But within the next three years, 30 percent of the companies will move towards making their technologies work in collaboration with that of their business partners. Hence, the major challenge to ERP vendors lies in providing seamless integration between all their extended ERP applications, which can help the enterprises in being demand-driven organizations. 6.3 Service Oriented Architecture One of the key market trends is the technology transformation to service oriented architecture (SOA) which will have the largest effect on redefining the ERP market. As indicated by analysts, SOA will transform software from an inhibitor to an enabler of business change by 2015. SOA will shift revenue from packaged software to subscription services and from monolithic suites to composite applications. SOA is an approach to designing, implementing, and deploying information systems such that the system is created from components implementing discrete business functions. These components called services can be distributed across geography, and can be reconfigured into new business processes as needed. The services are loosely coupled allowing for more flexibility than older technologies with respect to re-using and re-combining them to create new business functions both within and across an organization. The business component architecture forms the foundation of its specialized versions: service oriented and event-driven architectures. SOA reduces complexity, eliminates point-to-point integrations and introduces flexibility through process-driven applications. This provides agility to meet the ever-changing needs of the plant, business unit, enterprise and the supply chain. It provides a controlled and secure environment to meet the requirements of regulatory issues. Most vendors today are in the process of transforming their technology architecture into SOA. 6.4 Vendor consolidation

Another important market trend that will be seen in late 2000 is the vendor consolidation. This consolidation among mid-market vendors will continue as per Forrester Research. Providing a strategic product direction will become important to the vendors to increase the comfort level for their existing customers and new accounts. The goal of most ERP vendors is to provide an enhanced value of the installed systems by bringing in real-value proposition to the existing as well as new customers through introduction of features that are functional, technical and usable. The technology transformation to SOA will bring more flexibility to the users in view of their ever-changing needs. Lowering the Total Cost of Ownership of ERP applications and reducing the complexity of IT infrastructure will become the primary focus both for vendors and customers.

7.0 TRENDS IN ERP

Following trends are reshaping ERP development and delivery approaches to great extent: Adaptability to the Internet: Need for internet enabling ERP solutions which provide anytime, anywhere access is a growing trend. This has led to the incorporation of internet capabilities to the ERP softwares by the ERP Vendors. Improvement on integration and flexibility: Integrating two applications from the same vendor is generally a challenge, but integrating applications from a variety of vendors is further difficult, which is major requirement for current ERP solutions. Organizations are using their expertise in XML, Web Services and other integration standards for development and integration of current ERP solutions with other applications in organizations. Now, its not necessary that we should buy the entire ERP applications suite, the users have the freedom to select the modules they require from the available ones and combine them to use them according to their needs. This saves the companies a lot of money previously spent in purchasing the different ERP softwares. Embracing e-business: Increasing demand for integration of e-business services such as CRM, Business Intelligence. E-Procurement and supply chain management solutions within ERP platform has led to the increase in the addition of new features to the ERP packages available in the market. Reaching out to new users: Need for using ERP data by multi-enterprise users, mobile users etc. The ERP software in hugely untapped .By developing softwares specific for the particular industry will enable the companies in tapping the hugely untapped ERP market. After Sale Service is to be increased in order to increase the market share in the Field of ERP Software.

8.0 CONCLUSION ERP trends reflect positive signals for the ERP vendors and companies availing their service. It is important to remember the fact that both the vendor and the company will be able to make use of any advantage including the modern facilities) only through proper coordination, teamwork and nurturing a cordial atmosphere. Mere IT ERP trends will not help in this aspect. The important factor is the role of the consultant. The consultants by virtue of their industry experience and package expertise can help set the expectations of users at various levels keeping in mind the

overall business objectives of the client. But it is also important to remember that a consultant is an external agent and all the business process of the organization is more akin to the management team and the users than the consultant. The consultant however, can work closely with key users, understanding their needs, analyzing the business realities and designing solutions that meet the basic objectives of the company.

They, then, have to impress upon the users that individual needs can be met by keeping the organization's needs in mind. It is the responsibility of the consultants and management team from the organization to guide them in this task and facilitate the overall implementation process. In essence, ERP implementation is predominantly a 'User Driven' project. And the latest trends and developments make it more popular amongst the users. The users, mainly the firms now look forward for more customized products that too with greater applications. Thus ERP has conquered the modern business world 9.0 REFERNCES 1. Atanu Ghosh, Trends in ERP market, http://www.nevaehtech.com/pdf/Trends%20in%20ERP%20Market.pdf downloaded on 20.03.2011 Anonymous, Features of ERP, http://www.ciol.com/cioltechportal/content/ERP/Features/2006/2060526420.asp downloaded on 20.03.2011 Anonymous, Sonata's SAP business: Helping companies define value proposition, http://www.siliconindia.com/shownews/Sonatas_SAP_business_Helping_companies_ define_value_pro position-nid-66286-cid-3.html downloaded on 20.03.2011 Anonymous, Enterprise Application Services, http://nspl.co.in/Enterprise-ApplicationServices/Enterprise-Application-Services%28ERP%29-India.html downloaded on 20.03.2011 Anonymous, ERP, http://ikf.co.in/erp_systems.asp downloaded on 20.03.2011 Anonymous, ERP solutions, http://www.soppnox.com/erp.asp?lid=1&seq=342 downloaded on 20.03.2011 Ekta Sehgal, What are the latest trends in ERP, http://toostep.com/insight/what-arelatest-trends-in-erp downloaded on 20.03.2011 Anonymous, The Future of ERP, http://www.expresscomputeronline.com/20060605/technology02.shtml downloaded on 20.03.2011 Raji. S, Open source ERP, Will it make traditional ERP irrelevant?, http://toostep.com/trends/open-source-erp-will-it-make-traditional-erp-irrelevnt downloaded on 20.03.2011 Anonymous ,2009 , ERP and CRM system , http://www.grabitech.se/erp_crm.htm downloaded on 16.3.2011 Anonymous , 2009 ,Technical aspects of CRM , http://www.exforsys.com/tutorials/crm/technical-aspects-of-crm.html down loaded on 17.3.2011 Anonymous , 2009 ,CRM solution ,http://www.crminfoline.com/ downloaded on 17.3.2011 Anonymous , 2006 ,Basics of CRM, www.advancedvoip.com/whitepapers/Basics%20of%20CRM.pdf downloaded on 20.03.2011

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