INTRODUCTION TO ERP PRIMARY REFERENCES


By
Praveen Ranjan Srivastava
Lecturer (Computer Science)
Banasthali Vidyapith (Deemed University)
Banasthali-304002 (Rajasthan)
Phone : 01438-228787
E-mail : spraveen@banasthali.ac.in / pra_ranjan@rediffmail.com
 


Historical Context of ERP

Historically, companies created "islands of automation".  A hodge-podge of various systems that operated or managed various divergent business processes.  Sometimes these systems were integrated with each other and sometimes they weren't.  Sometimes they were loosely interfaced and sometimes they were more tightly interfaced. Most companies have failed to implement ERP packages successfully or to realize the hoped-for financial returns on their ERP investment. Companies have had similar difficulties with each new wave of information technology since the first mainframe systems.  It takes years to realize some envisioned IT-enabled changes in organizational processes and performance, and there are many ways to fail along the way.

Definition

An ERP can be defined as a system in which various functions of a company (accountancy, marketing, production) are connected each other's by the use of an information system centralized on the basis of a client/server configuration.

It is about the integrated management system of a company, built on an "integrated software package" skeletal. The term "ERP" (Enterprise Resources Planning) is drift from the "MRP" method (Manufacturing Resources Planning), a famous method that has been used for a long time in industrial management, for activities like production control. ERP tools like SAP R/3 or Oracle Applications propose a great number of modules:

    o Accountancy
    o Financial management
    o Commercial management
    o Human resources
    o Computer-assisted production control
    o Management of stocks
    o Etc.
     


This integration means that the useful data are stored in only one place:  For example, there is only one customer database for the commercial and invoicing functions, guaranteeing the absence of inconsistencies and removing the redundant seizures. ERP represents an organisational challenge, which must be prepared carefully.  It is necessary to preliminary define the Business Case and the impact of the project from these three points:

    o Human
    o Organisational
    o Economic

The implementation of a completely integrated system makes it possible to answer in a precise way and in real time to the questions like: "What happens if I decide to do this?" .For example, if a company receives an order of goods, it is possible to know almost instantaneously the consequences of this request on the outputs, on the needs for provisioning, on the required personnel to achieve this task, on the required times to satisfy this request, on the financing needs, the profitability of this operation, etc.

Characteristics of Enterprise Systems

  • Integration: seamless integration of all the information flowing through a company – financial and accounting, human resource information, supply chain information, and customer information.
  • Packages: Enterprise systems are not developed in house.
  • IS life cycle is different:

1. Mapping organizational requirements to the processes and terminology employed by the vendor and

2. Making informed choices about the parameter setting.

Organizations that purchase enterprise systems enter into long-term relationships with vendors. Organizations no longer control their own destiny.

  • Best Practices: ERP vendors talk to many different businesses within a given industry as well as academics to determine the best and most efficient way of accounting for various transactions and managing different processes.  The result is claimed to be "industry best practices".   The general consensus is that business process change adds considerably to the expense and risk of an enterprise systems implementation.  Some organizations rebel against the inflexibility of these imposed business practices.
  • Some Assembly Required: Only the software is integrated, not the computing platform on which it runs.  Most companies have great difficulty integrating their enterprise software with a package of hardware, operating systems, database management systems software, and telecommunications suited to their specific needs.
  • Interfaces to legacy systems
  • Third-party bolt-on applications
  • Best of Breed Strategy (American Standard, Starbucks)
  • Evolving:  Enterprise Systems are changing rapidly. 

Architecturally: Mainframe, Client/Server, Web-enabled, Object-oriented, Componentization (Baan).

  • Functionally: front-office (ie. sales management), supply chain (advanced planning and scheduling), data warehousing, specialized vertical industry solutions, etc.  

Why setting up an ERP system today?

The ERP contributes to certain improvements in the company. We do not set up any more an ERP by the simple need for improving the data-processing performance or to change the information system, or even by simple fashion effect, like that could be the case in the first client/server SAP versions, in 1992. From now, the installation meets an aim of added value. The objective can be:

    o Economic: Trying to reduce the maintenance cost or to improve a process.

    o Human: it touches various aspects, like the individual activity and performance of the concerned employees.

    o Organisational: it concerns, for example, the reduction processing or routing times of     information flows in the company.

What is ERP offering?

  • ERP is business process infrastructure
  • ERP is a software mirror image of the major business processes of a firm, such as customer order fulfillment and manufacturing.
  • ERP software automates and integrates the basic processes of a firm, from finance to the shop floor, and eliminates complex, expensive links between computer systems that were never meant to talk to each other.
  • ERP provides enterprise wide business process, information and data management
  • Stream-line and standard business processes and operating procedures
  • Provide interorganizational collaboration

The ERP, a basis for a simplified "workflow"

The modification of a significant process in an organization is generally reflected by transformations: software modification, new task scheduling (Workflow) for management, for the documents in circulation, etc. Many workflow tools are available to re-design and deploy processes in a very fast way, by the use of the Intranet, towards the workstations, which need some.

Here is an example: The discovery of a new profile of customers prone to certain breakdowns, in a mobile telephony maintenance call centre. This will suggest the maintenance centre to propose to these customers a new service, and for this reason, they will have, in a few days, to slightly modify the circuit that organize the tasks of the customer support team, with a new workflow for the document circulation, but also for the access, and the changes of some data in certain files, like the customer file.... Such modifications of the operational processes, which took months before, are increasingly easy to implement thanks to the workflow software, to their co-operation on the Internet with ERP tools and the other applications of the information system (in this example, this is the software for the customer relationship management). The ERP evolution is one of the links, which make possible this greater reactivity of the company, relating to processes as significant as the customer service. This revolution, which is born from the marriage between Internet and ERP systems, is only at its earlier stages.

Main ERP systems

SAP

Founded in 1979 by 5 IBM engineers in Germany, SAP is today the recognized leader among the E-business solutions editors between firms. With nearly a third of the market, it is the first ERP editor in the world and the 4th software publisher with manpower of 22 300 people in more than 50 countries. Among the 10 larger American companies, 8 use SAP software package. On the 10 American companies carrying out the highest benefit, 8 also chose SAP. SAP is in the stock market of Frankfurt and New York.

SAP R/3

The R/3 system is composed of functional modules corresponding to the company's activities. We can distinguish the following functional modules families:

SAP R/3 architecture is composed of 3 levels. SAP system is made of the whole servers assigned to only one database.
 


The RDBMS (Relational database management system) is stored on only one physical machine. It is on this level that the management of the physical data dictionary is carried out:

    o Data access (input/output routines)
    o Data physical update
    o Data validation

Oracle

Founded in 1977 and based in Redwood Shores in California, Oracle Corporation is the first software provider in the world for the information management, and the number two for software in general. Oracle proposes its databases, tools and software package, as well as the services associated with consulting, formation and support, in more than 145 countries throughout the world.

Oracle E-Business Suite includes more than 50 functional modules dedicated to the internal management of the company. The covered fields are Finance, Human Resources, Projects, Production, Logistics and the Warehouses.

People Software

PeopleSoft was created in 1987 in California the USA. Present in the majority of the large cities of the world, particularly in Europe and Asia, PeopleSoft is also in the trade market. Today, the company counts more than 8000 employees and more than 4600 customers in the whole world. Up to now, more than 4700 companies, distributed in 107 countries, use the PeopleSoft E-Business applications.

JD Edwards

J.D. Edwards is a company which counts more than 6000 customers. Founded in 1977 in Denver (Colorado, the United States), it supplies an integrated solution of Business to Business management that cover the fields of CRM, Supply Chain, the Business Intelligence, and ERP.

The J.D.Edwards integrated solution consists of a perfectly homogeneous set of application modules, supplemented by specialized modules intended for the trades of chemistry and oil, BTP or engineering. J.D.Edwards covers all the functional and operational fields in a company: countable and financial management, commercial and logistic management, production control, maintenance management…

Factors in ERP Success

Factors External to an Organization's Control

Starting conditions: Competitive position, industry, financial position, prior relevant experience, size, structure, and management systems

These conditions may change over the course of the implementation.

ERP Implementations are highly fluid and subject to radical and unforeseen changes.

An organization's goals and plans for the ERP system may not be realistic when viewed objectively in light of their starting conditions. 

Conclusion

I think that ERP system is the future of the information system technology, but for that it must evolve at the same time with the needs of the company, like the fact of adapting very quickly to the C-commerce, and not in 3 or 4 years. To arrive at such a result, it would be worth that the ERP software providers design their products in this way so it can be very easily updated, and this update should not be an investment so significant that the small businesses cannot face it. If the ERP developers don't want to kill their own business, it will be necessary that they conceive their systems in a little less commercial manner and that they aim more the effectiveness than the profit.
 


Praveen ranjan srivastava
Lecturer (Computer Science)
Banasthali Vidyapith (Deemed University)
Banasthali-304002 (Rajasthan)
Phone : 01438-228787
Email : spraveen@banasthali.ac.in / pra_ranjan@rediffmail.com
 

Source : E-mail February 14, 2004

 

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