Fundamentals of IT

and ERP
MODULE 3
ERP Overview : Definition:

 Enterprise resource planning (ERP) refers to a type of software that

organizations use to manage day-to-day business activities such as
accounting, procurement, project management, risk management
and compliance, and supply chain operations.
OR
 Enterprise resource planning – more commonly referred to as ERP – is
a software system used to manage and maintain the functions of a
business. The tasks are typically done in real-time.
Figure: ERP
 A complete ERP suite also includes enterprise performance
management, software that helps plan, budget, predict, and report
on an organization’s financial results. ERP systems tie together a
multitude of business processes and enable the flow of data
between them.
 By collecting an organization’s shared transactional data from
multiple sources, ERP systems eliminate data duplication and
provide data integrity with a single source of truth.
 ERP software is part of the IT sector, and because of its usefulness
and success, it is now considered a multi-billion-dollar industry.
 Furthermore, ERP systems support all aspects of financial
management, human resources, supply chain management, and
manufacturing with your core accounting function.
 ERP systems will also provide transparency into your complete
business process by tracking all aspects of production, logistics, and
financials.
 One of the most important needs it addresses is the need to
communicate all pertinent information to the many departments that
may require the data.
 Before an ERP system, there are different databases of different
departments which they managed by their own. The employees of one
department does not know about anything about other department.
 After ERP system, databases of different departments are managed by
one system called ERP system. It keep tracks of all the database within
system. In this scenario, employee of one department have information
regarding the other departments.
 Vendors of ERP:
Baan
JD Edwards
Oracle
PeopleSoft
SAP
Benefits of ERP
 This system helps in improving integration.
 It is the flexible system.
 There are fewer errors in this system.
 This system improved speed and efficiency.
 There is a complete access to information.
 This system helps in Shortening the throughput times.
 There is sustained involvement and commitment of the top management.
 Enhanced Decision-Making: ERP provides real-time access to critical business data, enabling
decision-makers to quickly identify and respond to issues, make informed decisions, and improve
business outcomes.
 Improved Collaboration: ERP facilitates collaboration and communication between different
departments and stakeholders, enabling them to work together effectively towards common
business goals
 Standardization of Processes: ERP ensures that business processes are standardized across the
organization
 ERP enables efficient management of resources such as personnel, equipment, and inventory,
 ERP is highly scalable and can be customized to meet the evolving needs of the business
 ERP systems can help businesses comply with regulatory requirements by providing accurate and
timely reporting
Limitations of ERP:

 Managers generate custom reports or queries only with the help from a
programmer
 There is no proper decision-making scenario i.e. this systems provide
only the current status, such as open orders.
 High implementation costs: Implementing an ERP system can be
expensive and time-consuming. It requires significant investment in
hardware, software, and personnel, as well as training and consulting
costs.
 Customizing an ERP system to meet the specific needs of an
organization can be complex
 Data security risks
 Organizations that use ERP systems are often heavily dependent on the
vendor for support, maintenance, and upgrades
Needs and Characteristics of ERP:
 Separate systems were being maintained during 1960/70 for traditional business functions like
Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain
Management. These systems were often incongruent, hosted in different databases and
required batch updates.
 Enterprise Resource Planning helps to streamline a business’s different sectors whether it’s a
mixture of finance, human resources, sales, manufacturing, logistics and more. Instead of
using multiple programs for all the different sectors of your business, an ERP system simply
allows for a business to operate in a one-stop-shop system.
 Systems like ERP, offer customizability to what your office actually needs to thrive. The size of
the system can change depending on your business as well as the modules you use to help
your operations.
 An integrated system to maintain and keep track of all of a business’s operations, a business
may be using multiple systems like CRM (customer relationship management) software, an
HR software, payroll software and so on. An ERP system can be customized to fit in all the
software in one place that will help run your business in one uniformed program. The system
Operates in (or near) real-time Depending on the job it is tasked with, most ERP systems run
on real time or close to real time. That means when inputting data, or maybe even doing
something as simple as an inventory check, the system will be up to date.
Needs and Characteristics of
ERP(cont.)
 Business Integration and Improved Data Accuracy: ERP system is
composed of various modules/ sub modules where a module
represents a particular business component. If data is entered in
one module such as receiving, it automatically updates other
related modules such as accounts This updating occurs at real time
i.e. at the time a transaction occurs. Since, data needs to be
entered only once at the origin of the transaction, the need for
multiple entries of the same data is eliminated.
 The various decision support tools like planning engines and
simulations functions form an integral part of an ERP system that
helps in proper utilization of resources like materials, human
resources, and tools.
Characteristics of ERP
 Modular Design - The modular design of an ERP system incorporates
distinct business modules such as manufacturing, financial,
accounting, and distribution. Each module takes care of various
functions of a particular section or department within your
organization. While these modules can operate separately, they are
integrated inside the ERP system to provide a seamless flow of data
and information between all modules.
 Central Common Database - Implementing a common centralized
database management system, which is also called a DBMS, is an
important characteristic of an advantageous ERP system. All data is
entered and stored only once and then utilized by all departments
simultaneously which helps eliminate data-entry errors and other
flaws associated with using a distributed database.
 Flexible and Open Database - Organizations are almost always
dynamic in nature, which is where ERP systems offer flexibility to
respond to the changing needs of the enterprise. These systems
have an open system architecture, allowing them to attach or
detach any module as and when required without affecting the
other modules.
 Automatic Generation of Information - An ERP system provides
business intelligence tools such as executive information systems,
easy warning systems, and more. These tools help manufacturing
operations to make data-based decisions that pertain to their
overall production process. All financial and business information will
be automatically generated from the data that is found in the
centralized database of the ERP system.
Role of Manager in implementing ERP issues and Benefits from ERP
implementation:

 ERP replacement: Any ERP replacement project will need to have a team involved in
selection and implementation of the ERP. That team will have a project manager, an
executive sponsor, several subject manager experts, one or more representatives from
the ERP vendor, and, your IT manager.. The reasons for replacing your ERP system
might be related to IT technology. If you can no longer buy a computer old enough to
run your legacy ERP on, that is one requirement to replace your ERP that is IT related.
 Your IT manager is a subject matter expert in much the same way as your accountant
or quality manager and has earned their role in the selection and implementation
team. Your IT manager is the one who can update your legacy ERP configurations. It is
possible that the legacy system can provide the needed results with a few updates
and no replacement is needed.
 Your IT manager should have insights into new developments in networking and cloud
connectivity and programming and can help evaluate whether a proposed ERP is up
to date and likely to stay that way for the foreseeable future.
Role of Manager in implementing ERP issues and Benefits from ERP
implementation(cont.):
Data transfer:
 Your new ERP will need much of the data contained in your legacy system, and that transfer will
be more complicated than simple cut and paste operations. Who has the skills to transfer that
data and to modify the transfers as testing reveals unexpected results. Your IT manager has.
 At your go-live moment, the last of the transactional data up to the deadline you set must be
transferred quickly and accurately as planned so the replacement ERP can work perfectly for all
users with little or no business downtime.
Executive Sponsor:
 It is important to have an executive sponsor to oversee the high-level ERP responsibilities of the
implementation project. They can either be an individual executive for a small to mid-sized
company or a group of senior individuals that make up an executive suite in the case of an
enterprise business. The responsibilities of the executing sponsor can include, but is not limited to:
 Communicating the issues faced by the company regarding business solutions to the consulting
partner or vendor.
 Establishing the vision and end-goals for the project and defining what a successful ERP Project
looks like.
 Reviewing the proposed solution by the ERP partner to ensure that the project is in alignment with
company's needs.
 Assessing and addressing project issues.
Role of Manager in implementing ERP issues and Benefits from
ERP implementation(cont.):

Change Management Team:

 The role of the internal change management team or individual change agent
is responsible for overseeing the ERP system changes, managing expectations,
and assisting with the knowledge transfer between the implementation partner
and the rest of the company.
 Setting up and maintaining realistic expectations of the ERP software needs with
the implementation partner and the executive sponsor during the change
management assessment.
 Obtaining buy-in approval and feedback from the rest of the company.
 Identifying early-users such as the super-user, and the technical or functional
team members from across the company, to test ERP software for the adoption
phase, communicate this feedback to the implementation partner or vendor.
 Consistently and constantly communicating ERP software changes, and
promotes the system to the future-end users and stakeholders.
 Aligning the ERP software change with the different company department’s
operational and training requirements.
Role of Manager in implementing ERP issues and
Benefits from ERP implementation(cont.)

Project Manager:
The internal project manager is responsible for driving the ERP
implementation within the organization.
 This involves working with the executive sponsor to facilitate the vision
for the project. Important responsibilities for the role include, but are not
limited to:
 Identifying key team members for the ERP software selection process,
implementation and go-live phase of the project.
 Helping to outline functional, non-functional and development
requirements.
 Managing the project budget and stakeholder expectations.
 Reporting the progress to senior management.
 Managing deadlines and overall project timeline.
 Emerging Trends of ERP Applications:
 An ERP software system is often one of the most significant investments a company will make. Not
only is it a major financial decision, but it’s also a practical one that can impact all parts of your
business, like human resources, accounting, manufacturing, marketing and more. Before
selecting a new system, buyers should research currently available solutions and ERP trends
coming down the pipeline
 Top Trends :
Cloud Deployment
The Internet of Things (IoT)
Personalized Solutions
Advanced Technologies
Digital Transformation and Ecommerce
Two-Tier ERP
Artificial Intelligence (AI)
Mobile ERP
Digital Marketing
3D Printing/Additive Manufacturing (Additive manufacturing is the process of creating an object
by building it one layer at a time)
Headless ERP(headless ERP model allows the processing power, data, and functionality of ERP
software to be accessed independently of the traditional ERP user interface).
What is a Modern ERP?

 ERP software launched in the ’60s and has received numerous modifications
since. Here are several characteristics of a modern ERP:

Cloud-Based:
 Unlike old legacy or on-premise systems, modern platforms are switching to the
cloud. The cloud enables vendors and resellers to host the program and client
information on third-party servers via the internet. No installations are required,
and you can access vital information on any device in any location. Most
buyers either work remotely or are always on the move. Mobile ERP helps you
keep tabs on different tasks and processes anywhere on phones, tablets, PCs
and other devices.
 Most systems offer affordable prices and subscription plans, especially for small
and mid-sized companies, depending on the vendor.
 Whether you’re looking to grow into a mid-size or enterprise-level business, most
applications scale as you add more employees, departments, machinery, etc.
Centralization:
 Keep all of your HR, manufacturing, accounting, customer relationship
management (CRM), supply chain management (SCM) and other sectors
unified in one system for accessible communication.
Applications of ERP:
 Every business and industry has its own unique set of requirements so
ERPs are designed to provide the robust foundation of a business
management solution, while allowing businesses to hand pick the
precise complementary software they need to add to make to their
solution ideally suited to their specific needs.
1.ERP applications in functional areas such as Human Capital
Management:
 Initially, ERP systems were developed to provide core data storage
for financial, CRM, manufacturing and supply chain data. Typically,
ERP systems also included some Human Resource data capacity,
but usually focused on payroll functions. For a variety of reasons,
however, HR Departments went their own way, seeking ‘best of
breed’ HCM solutions as HR requirements became more complex
and demanding.
 HCM or Human Resource Management Systems (HRMS) grew to include recruiting,
benefit administration, performance management and compliance aspects.
 A unified database also makes reporting and analysis richer and more in depth as
well as easier to run. Rather than reporting from a patchwork of disparate sources –
databases, files and spreadsheets – a single database makes report development
quicker and easier to maintain. This, in turn, makes data available to decision-makers
in closer to real time.
 ERP systems can access key HCM data to
Use employee and team performance to determine training needs and monitor results
to see if output increases.
Determine whether employee turnover rates in a particular region impact revenues,
Use HCM data on employee skills and certifications in bidding for new projects and
facilitate professional services automation in ERP, and
Incorporate workforce management functions like Time & Attendance into job costing
analysis.
HR can use ERP data to
Use relevant ERP data (margins, revenue, profit, time-to-cash) in performance reviews,
Include CRM data from customer support, professional service and sales to support
planning and training levels, and
Link payroll functions like expense reimbursement, asset assignment, and commissions
directly into ERP.