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ERP_MBA

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ERP_MBA

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covenantsenterprises
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ERP

This is common to retailers, where even a mid-sized retailer will have a


discrete Point-of-Sale (POS) product and financials application, then a series
of specialized applications to handle business requirements such as
warehouse management, staff rostering, merchandising and logistics.

Ideally, ERP delivers a single database that contains all data for the software
modules, which would include:
 Manufacturing Engineering, bills of material, scheduling, capacity,
workflow management, quality control, cost management,
manufacturing process, manufacturing projects, manufacturing flow
 Supply chain management Order to cash, inventory, order entry,
purchasing, product configurator, supply chain planning, supplier
scheduling, inspection of goods, claim processing, commission
calculation
 Financials General ledger, cash management, accounts payable,
accounts receivable, fixed assets
 Project management Costing, billing, time and expense,
performance units, activity management
 Human resources Human resources, payroll, training, time and
attendance, rostering, benefits
 Customer relationship management - Sales and marketing,
commissions, service, customer contact and call center support
 Data warehouse - and various self-service interfaces for customers,
suppliers, and employees
 Access control - user privilege as per authority levels for process
execution
 Customization - to meet the extension, addition, change in process
flow
Enterprise resource planning is a term originally derived from manufacturing
resource planning (MRP II) that followed material requirements planning
(MRP). MRP evolved into ERP when "routings" became a major part of the
software architecture and a company's capacity planning activity also
became a part of the standard software activity. ERP systems typically
handle the manufacturing, logistics, distribution, inventory, shipping,
invoicing, and accounting for a company. ERP software can aid in the control
of many business activities, including sales, marketing, delivery, billing,
production, inventory management, quality management and human
resource management.

ERP systems saw a large boost in sales in the 1990s as companies faced the
Y2K problem in their legacy systems. Many companies took this opportunity
to replace their legacy information systems with ERP systems. This rapid
growth in sales was followed by a slump in 1999, at which time most
companies had already implemented their Y2K solution.

ERPs are often incorrectly called back office systems indicating that
customers and the general public are not directly involved. This is contrasted
with front office systems like customer relationship management (CRM)
systems that deal directly with the customers, or the eBusiness systems
such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier
relationship management (SRM) systems.

ERPs are cross-functional and enterprise wide. All functional departments


that are involved in operations or production are integrated in one system. In
addition to manufacturing, warehousing, logistics, and information
technology, this would include accounting, human resources, marketing and
strategic management.
ERP II, a term coined in the early 2000's, is often used to describe what
would be the next generation of ERP software. This new generation of
software is web-based, and allowed both internal employees, and external
resources such as suppliers and customers real-time access to the data
stored within the system. ERP II is also different in that the software can be
made to fit the business, instead of the business being made to fit the ERP
software. As of 2009, many ERP solution providers have incorporated these
features into their current offerings.
EAS — Enterprise Application Suite is a new name for formerly developed
ERP systems which include (almost) all segments of business, using ordinary
Internet browsers as thin clients.

Best practices are incorporated into most ERP vendor's software packages.
When implementing an ERP system, organizations can choose between
customizing the software or modifying their business processes to the "best
practice" function delivered in the "out-of-the-box" version of the software.

Prior to ERP, software was developed to fit the processes of an individual


business. Due to the complexities of most ERP systems and the negative
consequences of a failed ERP implementation, most vendors have included
"Best Practices" into their software. These "Best Practices" are what the
Vendor deems as the most efficient way to carry out a particular business
process in an Integrated Enterprise-Wide system.

A study conducted by Lugwigshafen University of Applied Science surveyed


192 companies and concluded that companies which implemented industry
best practices decreased mission-critical project tasks such as configuration,
documentation, testing and training. In addition, the use of best practices
reduced over risk by 71% when compared to other software
implementations.
The use of best practices can make complying with requirements such as
IFRS, Sarbanes-Oxley or Basel II easier. They can also help where the process
is a commodity such as electronic funds transfer. This is because the
procedure of capturing and reporting legislative or commodity content can
be readily codified within the ERP software, and then replicated with
confidence across multiple businesses who have the same business
requirement.

Advantages of ERP
In the absence of an ERP system, a large manufacturer may find itself with
many software applications that cannot communicate or interface effectively
with one another. Tasks that need to interface with one another may involve:
 Integration among different functional areas to ensure proper
communication, productivity and efficiency
 Design engineering (how to best make the product)
 Order tracking, from acceptance through fulfillment
 The revenue cycle, from invoice through cash receipt
 Managing inter-dependencies of complex processes bill of materials
 Tracking the three-way match between purchase orders (what was
ordered), inventory receipts (what arrived), and costing (what the
vendor invoiced)
 The accounting for all of these tasks: tracking the revenue, cost and
profit at a granular level.
ERP Systems centralize the data in one place. Benefits of this include:
 Eliminates the problem of synchronizing changes between multiple
systems
 Permits control of business processes that cross functional boundaries
 Provides top-down view of the enterprise (no "islands of information")
 Reduces the risk of loss of sensitive data by consolidating multiple
permissions and security models into a single structure.
Some security features are included within an ERP system to protect against
both outsider crime, such as industrial espionage, and insider crime, such as
embezzlement. A data-tampering scenario, for example, might involve a
disgruntled employee intentionally modifying prices to below-the-breakeven
point in order to attempt to interfere with the company's profit or other
sabotage. ERP systems typically provide functionality for implementing
internal controls to prevent actions of this kind. ERP vendors are also moving
toward better integration with other kinds of information security tools.

Disadvantages of ERP

Problems with ERP systems are mainly due to inadequate investment in


ongoing training for the involved IT personnel - including those implementing
and testing changes - as well as a lack of corporate policy protecting the
integrity of the data in the ERP systems and the ways in which it is used.
Disadvantages
 Customization of the ERP software is limited.
 Re-engineering of business processes to fit the "industry standard"
prescribed by the ERP system may lead to a loss of competitive
advantage.
 ERP systems can be very expensive (This has led to a new category of
"ERP light" {Expand section} solutions)
 ERPs are often seen as too rigid and too 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.
 Many of the integrated links need high accuracy in other applications
to work effectively. A company can achieve minimum standards, then
over time "dirty data" will reduce the reliability of some applications.
 Once a system is established, switching costs are very high for any one
of the partners (reducing flexibility and strategic control at the
corporate level).
 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.
 Some large organizations may have multiple departments with
separate, independent resources, missions, chains-of-command, etc,
and consolidation into a single enterprise may yield limited benefits.
 The system may be too complex measured against the actual needs of
the customers.
 ERP Systems centralize the data in one place. This can increase the
risk of loss of sensitive information in the event of a security breach.
ERP Packages Feature Comparison
CIOs have expressed growing concerns over the Total Cost of Ownership
(TCO) of enterprise software and have highlighted costs as a contributing
factor in the decline of IT investments. As a result, software vendors are
trying to develop more structured "Ownership Experience" strategies and, in
some cases, have focused R&D efforts and resources on improving the
ownership experience for customers. In response to these executive
concerns, PeopleSoft launched its Total Ownership Experience (TOE)
initiative, followed by other major application vendors with varying kinds of
programs for, and degrees of success in, controlling costs and improving the
overall ownership experience.

We have considered and find in enterprise application software and every


phase of the ownership lifecycle has reviewed and evaluated key software
features that directly impact the ownership experience of enterprise
applications. Some of these feature sets included: advanced data loading
and moving during the implementation phase, task-oriented navigation for
the usability phase, and user-centric performance testing for the
maintenance phase. This research offered an objective assessment of these
detailed features, validated through in-depth interviews with the panel of
consulting experts distinguished by multi-vendor and multi-lifecycle
experience.

The resulting study provides a comparative, multi-vendor assessment across


the three major phases of the application lifecycle: implementation,
application usage, and ongoing support and maintenance. The players and
software versions evaluated in the study included:

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