Chapter 1: ERP Overview Defining ERP

ERP is integrated information system built on a centralized database and

common computing platform helps in effective usage of enterprises resources,
facilitates the flow of information between all business functions of the
enterprise.

Enterprise: Any organization that has a set of common goals

Resource: Assets of the enterprise in the form of Man, Machine, Material
Planning: Planning for effective utilization of resources

Chapter 1: ERP Overview Why ERP

Four Major Drivers:

From Department To Enterprise

From Function To Process
From Functional Silos To Integrated Information System
From Departmental Database To Companywide Integrated Database

Chapter 1: Problems with Information Silos

Finance

Maintain
accounts /
Budgets
Produce reports
for own dept

Purchase /
Materials

Create Purchase
orders
Goods
movements
Produce reports
for own dept.

Sales

Create Sales
order / Quotation
Invoice
Produce reports
for own dept.

Production

Create
Production Plan
Do Production
Mgmt
Produce reports
for own dept

Problems with Information Silos

Duplication Of Data
No Integration between different Systems
No online updation of information

Human
Resource

Payroll process
Employee
database
maintenance
Produce reports
for own dept.

Chapter 1: ERPs bring Central Database and Integrated Information

System

Maintenance module
Helps in maintaining
equipments

Quality mgmt module

helps in quality inspection,
Sampling etc

Human resource module

helps in employee
Database maintenance
And payroll

Warehouse and
Transportation helps in
Managing transportation
And warehousing

ERP
Database

Procurement and
Materials module helps
In procurement and
inventory mgmt

Maintain all financial

transactions in finance
module

Sales module helps

in order entry, Pricing,
Quotation, Invoicing etc

Production module helps

In production planning
and execution

Chapter 1: History of ERP and Enterprise Applications

SCM
CRM
PLM
SRM

ERP
MRP II
MRP

Closed Loop MRP

60s-70s

70s 80s

80s Till Date

2000 Till Date

Time
Enterprise Applications = ERP, CRM, SRM, PLM, APS, EAM

Chapter 1: ERP Evolution - MRP

ERP systems evolved from MRP systems of 60s and 70s.

Advantages
Provides information on which items to buy or manufacture, how much quantity
and on which date.
Disadvantages
Do not look at available capacity while planning
Can not replan quickly
Not integrated with other organizational processes.

Chapter 1: ERP Evolution Closed Loop MRP

Closed Loop MRP was the next evolution after MRP which partially solved some
of the MRP issues.

Advantages
Does a manual feasibility check of MRP plan.
Provides alerts / triggers if the plan is not feasible.
Disadvantages
Can not replan quickly
Not integrated with other organizational processes.

Chapter 1: ERP Evolution MRP 2

MRP 2 systems were much more stronger compared to MRP / Closed Loop
MRP in terms of functionality. These systems were well integrated with several
organizational business processes and had multiple modules.

Advantages
Include processes for Business planning, Sales planning, Demand management
etc.
Helps in several supply chain execution processes (like Purchase and
Production order execution, Sales execution etc).
Disadvantages
Not fully integrated with all organization processes (like: HR)

Chapter 1: ERP Some Early History of few Leading ERPs

1972: Five engineers in Mannheim, Germany begin the company, SAP

with the idea of producing and marketing standard software for
integrated business solutions.
1975: Richard Lawson, Bill Lawson, and John Cerullo started Lawson
Software, a pre-packaged enterprise technology solutions as an
alternative to customized business software applications.
1977: Jack Thompson (J), Dan Gregory (D), and Ed McVaney (ED)
formed JD Edwards.
1978 Jan Baan begins The Baan Corporation that offered leading Baan
ERP for several years.
1987: PeopleSoft was founded by Dave Duffield and Ken Morris.

Chapter 1: ERP Benefits

Reduce cash to cash
cycle time

Best
Practic
e

Intra Organization
Communication

Improved Customer

Inter Organization

Service

Collaboration

Online Real time

Better Data Management

Information

Automate

Facilitates BPR

Transactions
Integration

Chapter 1: ERP Challenges

Implementation Challenges

Support / Maintenance Challenges

Scope Changes

Getting right people

Huge Budget

Managing multiple vendors

Long Timeline

Managing regular upgrades

Process redesign challenges

Technology Obsolence

Unrealistic expectation

Large application portfolio

Complex Interfaces

Managing transition
Realizing benefits

Managing People
Managing Change
Managing large project team
Managing employee retention and relocation
Top management support

Chapter 1: ERP Recent Trends

ERP vendors are moving into Enterprise Applications space
SME clients are everybodys focus
ERP vendors are going vertical i.e. building more industry specific extensions
New ERP deployment models are emerging in the form of SAAS, Cloud
Computing, Hosting etc
Continuous consolidation is going on in ERP vendor base
ERP upgrade is becoming a big business
Newer types of ERP projects are emerging Migration, Consolidation,
Harmonization etc.