Enterprise Resource Planning

Unit 1
 What is ERP??
• An enterprise is a group of people with a common goal,
having certain resources at its disposal to achieve this goal.
• In an enterprise way, the entire organization is considered
as one system and all the departments are its sub-systems.
• Enterprise Resource Planning (ERP) is a software system
that is used by organizations to manage and integrate the
important parts of the businesses.
• ERP integrate all the data at a central location so that all the
departments can easily share information and
communicate.
• An ERP system is a packaged business software system that
allows a company to “automate and integrate the majority
of its business processes, share common data and practices
across the enterprise, and produce and process information
in a real-time environment.
 Before ERP

Before an ERP system, there were different databases of different departments which they
managed on their own. The employees of one department does not know anything about
the other department.
 After ERP

After the ERP system, databases of different departments are managed by one system
called the ERP system. It keeps track of all the databases within the system. In this scenario,
employees of one department have information regarding the other departments.
 Features of ERP
• Financial Management: ERP systems are used to manage financial
transactions, produce financial statements such as balance sheets,
manage companies’ tangible and intangible assets, and track
money owned by and to the organization.
• Supply Chain Management: ERP systems help to monitor the
stock levels, track inventory movement, manage the movement of
goods, and automate the purchasing process.
• Human Resources: In an organization, ERP systems help to
manage employee records, automate payroll processing, and
manage recruitment and onboarding.
• Customer Relationship Management (CRM): ERP systems help in
sales automation, automate marketing campaigns, track customer
interactions, and improve customer satisfaction.
• Project Management: ERP systems support project planning and
scheduling, and monitor project time and expenses for accurate
cost estimation.
• Manufacturing: ERP systems help in production planning, list all
the raw materials required for product manufacture, and monitor
the production process.
 The Evolution of ERP
• In 1970s, Material Requirements Planning (MRP)
systems were introduced, which used a master
production schedule and a bill of materials file with
the list of materials needed to produce each item.
• In 1980s, MRPII systems were introduced which
included financial accounting system along with
manufacturing and materials management systems.
• During 1990s, ERP systems were introduced which
integrated all information flows in the company like
financial accounting, human resource, supply chain
management and customer information.
Timel Key
Description
ine Development
Material Requirements Planning (MRP) systems were introduced that were
1960 Beginnings
focussed on inventory management and production planning.

Material Requirements Planning (MRPII) is introduced with a few additional

1970 MRP Expansion manufacturing processes added to MRP such as capacity planning, shop
floor control, and quality management.

•This era marks the introduction of ERP which integrated various business
Introduction of functions like finance, HR, and procurement into a single system.
1980 ERP •Relational Databases were introduced that improved data storage and
retrieval.

Growth and •In this era there was a shift from Mainframe to Client-Server Architecture.
1990 Adoption •ERP systems became more customizable.

•ERP systems enabled remote access and cloud-based solutions.

2000 Web-based ERP •Emergence of SaaS (software as a service) ERP solutions offered lower
initial costs and easier maintenance.

Cloud and •There was widespread adoption of cloud-based ERP solutions.

2010 Mobile ERP •Mobile apps and mobile-friendly ERP interfaces were introduced.

•Integration of AI and ML in ERP systems for predictive analysis and

enhanced decision-making.
•Introduction of Blockchain Technology in ERP transactions enhanced
2020 Intelligent ERP security and transparency of the transactions.
 Benefits of ERPs
• Improved Efficiency: ERP systems reduce the manual effort and
risk of errors by automating repetitive processes.
• Integrated Business Processes: ERP systems streamline
operations by integrating various business processes and enable
seamless data flow across the departments.
• Reduced Redundancy: ERP systems eliminate duplicate data
entries and improve data integrity.
• Timely Data Access: ERP systems provide real-time data access,
thus helping in making timely and informed decisions.
• Reduced IT Costs: ERP systems consolidate IT systems, thus
lowering the infrastructure and maintenance costs.
• Maintain Compliance: It help to maintain compliance with
industry standards.
• Enhances Customer Service: ERP systems helps to improve service
delivery by providing quick access to customer information and
data.
 Weakness of ERPs
• 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.
• Complex Customization: Customizing an ERP system to meet the specific
needs of an organization can be complex and require specialized
knowledge. This can lead to delays and additional costs.
• Resistance to Change: ERP systems often require significant changes to an
organization’s processes and workflows, which can be met with resistance
from employees who are comfortable with existing practices.
• Data Security Risks: Centralizing sensitive business data in an ERP system
creates potential security risks, especially if the system is not properly
secured or if there are vulnerabilities in the software.
• Limited Flexibility: ERP systems are designed to provide standardization
and control, which can limit the flexibility of an organization to respond to
changing business needs and market conditions.
• Dependence on Vendor Support: Organizations that use ERP systems are
often heavily dependent on the vendor for support, maintenance, and
upgrades. This can create a risk of vendor lock-in and limit an organization’s
ability to switch to other systems or providers.
 ERP Modules

Each ERP module is designed for specific business functions, providing the data and
supporting the processes that will help those employees do their jobs.
Every module plugs into the ERP system, so the system provides a single source of
accurate data, even as the business adds new modules.
• Human Resource Management: The HRM module of the ERP system
keeps employees’ records with detailed information like
performance reviews. Detailed employee database is maintained
along with the details of salary, attendance, leave and appraisal/
promotion of each employee. It can also include Travel Expenses &
Reimbursement tracking. Employee Training tracking can also be
managed by ERP.
• Inventory Management: Inventory module facilitates processes of
maintaining the appropriate level of stock in a warehouse. The
activities of inventory control involves in identifying inventory
requirements, setting targets, providing replenishment techniques
and options, monitoring item usages, reconciling the inventory
balances, and reporting inventory status.
• Sales Module: Sales module implements functions of order
placement, order scheduling, shipping and invoicing. Sales module is
closely integrated with organizations' ecommerce websites.
• Purchase Module: It is also called as procurement module. It helps an
organization secure the materials or products it needs to manufacture
and/or sell goods. Companies can keep a list of approved vendors in this
module and tie those suppliers to certain items, helping with supplier
relationship management. The module can automate requests for a quote,
then track and analyze the quotes that come in.
• Finance & Accounting module: The whole inflow & outflow of money/capital
is managed by the finance module. This module keeps track of all
account-related transactions like expenditures, Balance sheets, account
ledgers, budgeting, bank statements, payment receipts, tax management,
etc. Financial reporting is an easy task for this module of ERP. Any Financial
data that is required for running the business is available with one click in
Finance module.
• Customer Relationship Management (CRM) module: CRM department is
helping to boost the sales performance through better customer service &
establishing a healthy relationship with customers. All the stored details of
the customer are available in the CRM module. CRM module helps to
manage & track detailed information of the customer like communication
history, calls, meetings, details of purchases made by the customer, contract
duration, etc.
• Production module: The production module helps
manufacturers plan production and make sure they have
everything they need for planned production runs, like raw
materials and machinery capacity. During the manufacturing
process, it can update the status of goods-in-progress and
help companies track actual output against forecasted
production. It also provides a real-time picture of the shop
floor, capturing information on items in progress and finished
goods. It can calculate the average time to produce an item
and then compare supply with forecasted demand to plan
adequate production.
• Supply Chain Management (SCM): A supply chain
management module tracks each step in the movement of
supplies and goods throughout the supply chain, from
sub-suppliers to suppliers to manufacturers to distributors to
retailers or consumers. It can also manage any materials or
products returned for refund or replacement.
ERP Life Cycle
 Pre Selection Screening
• Once the company has decided to go in for the ERP
system; the search for the perfect package starts. But
there are hundreds of ERP vendors all claiming to have
the solution that is ideal. Analyzing all the packages
before reaching a decision is not a viable solution. It is
also a very time consuming process. So it is a better
practice to limit the number of packages.
• Hence, the company must do a pre-evaluation screening
to limit the number of packages that are to be evaluated
by the committee. Not all packages can deliver 100% what
the company requires or demands. Each one of them has
its own strengths and weaknesses. The pre-evaluation
process must eliminate those packages that are not at all
suitable for the company's business processes.
• It is always better to find out how the different packages
are performing in environments similar to yours.
 Package Evaluation
• The evaluation/selection process is one of the most
important phases of the ERP implementation. Since,
the package that you select will decide the success or
failure of the project.
• ERP systems involve huge investments, once a package
is purchased, it is not an easy task to switch to another
one. So it is a 'do it right the first time' proposition.
• The selection process objective is not to identify a
package that covers each and every requirement (a
perfect fit). The objective of the evaluation process is
to find a package that is flexible enough to meet the
company's needs, or in other words, software that
could be customized to obtain a 'good fit'.
 Project Planning Phase
• This is the phase that designs the process of
ERP implementation. The time schedules,
deadlines, and so on for the project are
formulated. The project plan is developed.
• The organizational resources that will be used
for the implementation effort are decided. At
the same time the people who are supposed
to head the implementation are also
identified. The implementation team
members are selected and task allocation is
done.
 Gap Analysis
• This is the process through which organizations
create a complete model of where they are now,
and in which direction they want to head in the
future.
• It has been estimated that even the best ERP
package, custom tailored to a company's needs,
meets only 80% of the company's functional
requirements. The remaining 20% of these
requirements present a problematic issue for the
company's BPR (business process re-engineering).
 Reengineering
• The BPR approach emphasizes the human
element of necessary change within
organizations. This approach is generally more
time consuming.
 Configuration
• Configuring a company's system reveals not only the
strengths of a company's business process and most
importantly its weaknesses. It is vital to the health of
the company and to the success of the ERP
implementation that those configuring the system are
able to explain what will not fit into the package.
• Hence the prototype, for example a simulation of the
actual business processes of the company must be
used. The prototype allows for thorough testing of the
"to be" model in a controlled environment.
 Implementation Team Training
• Around the same time that the configuration i
s taking place, theimplementation team is
being trained, not so much how to use the
system,but how to implement it. This is the
phase where the company trains itsworkforce
to implement and later, run the system. The
ERP vendors and thehired consultants will
leave after the implementation is over.
 Testing
• You have reached a point where you are testing
real case scenarios. Once the system is
configured, you must come up with extreme-case
scenarios for example, system overloads, multiple
users logging on at the same time with the same
query, users entering invalid data, hackers trying
to access restricted areas and so on. The test
cases must be designed specifically to detect the
weak links in the system and these bugs must be
fixed before going live.
 Going Live
• On the technical side, the work is almost
complete. The process of data conversion is
done, databases are up and running. The
prototype functional side is fully configured
and tested, and ready to go operational. The
system is officially proclaimed operational.
• But once the system goes 'live', the old system
is removed, and the new system is used for
doing business.
 End-User Training
• This is the phase where the actual users of the system
will be given training on how to use the system. This
phase starts much before the system goes live.
• The employees who are going to use the new system
are identified. Their current skills are noted and based
on the current skill levels, they are divided into groups.
Then each group is given training on the new system.
• This training is very important as the success of the
ERP system is in the hands of the end-users. So these
training sessions must give the participants an overall
view of the system and how individual actions would
affect the entire system.
 Post-Implementation (Maintenance
Mode)
• Once the implementation is over, the vendors and
the hired consultants will go. To reap the full
benefits of the ERP system, it is very important
that the system must get enterprise-wide
acceptance. There must be enough employees
who are trained to handle the problems that
might crop-up.
• The training will never end. It is an ongoing
process. New people will always be coming in, and
new functionality will always be entering the
organization.
ERP Products
 1. SAP
• System Application and Product.
• SAP ERP made its first appearance in 1972, by five former IBM
engineers in Germany.
• Intended to create standard application software for real-time
business processing. Initially, they launched SAP with the original
SAP R/2 and SAP R/3 software where R stands for Real time.
• In 1992, SAP introduced a client–server architecture-based
product named R3. This was a shift from earlier products which
were mainframe-based architecture.
• SAP NetWeaver is the next product that came out from SAP, it
was platform independent and used service-oriented
architecture (SOA) i.e. can work with different technology from
different manufacturers, viz., Microsoft, Sun Microsystems and
IBM.
• SAP S/4HANA brings ERP to a new extend as it supports
advanced technologies like artificial intelligence (AI) and
Machine Learning (ML).
• SAP Business One product focused basically for
small scale businesses.
• With SAP structure, data centralization,
processing, visualization, and human resource
management becomes easy and efficient.
• SAP is a software solution for all-sized businesses
to manage trade operations and client
relationships. The SAP framework consists of
different completely coordinated modules.
• Basic functions of SAP include: Accounting and
Finance, SCM, Sales, Purchase, HR and CRM.
 2. PeopleSoft
• PeopleSoft Inc. was incorporated in 1987 in California, USA. In
2003, it acquired J.D. Edwards, and in 2005, PeopleSoft was
acquired by Oracle.
• PeopleSoft is well known for its client–server architecture-based
HRMS, CRM, financial management packages and Enterprise
Performance Management (EPM)
• PeopleSoft is a modular system, with each of its four modules sold
separately. This allows users to achieve a custom ERP solution that
is cost-effective and streamlined to feature only the tools that the
organization needs to find success.
• The PeopleSoft ERP platform includes the Kibana analytics
software designed to provide data visualizations that can be
leveraged to inform business decisions.
 3. Oracle
• Oracle was founded in 1977 in California.
• Oracle enterprise resource planning is the comprehensive
software that was used to manage business processes,
real-time reporting, and business applications.
• E-business suite is offered by Oracle as a corporate solution
to an organization.
• The suite consists of care business ERP, CRM, SCM, Oracle
Financials, Oracle HRMS, Oracle Sale
• Each product has several modules and each module can be
purchased separately.
• This reduces the cost of procurement and selective
implementation.
• Oracle Financials has the following modules: (1) asset
management, (2) cash management, (3) business intelligence
for financials, (4) general ledger, (5) payment management
(for multiple currency), (6) payables and (7) receivables.
• Similarly, Oracle SCM has the following modules: (1)
procurement, (2) planning, (3) logistics, (4) manufacturing,
(5) order management and (6) supply chain planning and
execution.
• The modules in Oracle HRMS are: (1) core HR, (2) payroll, (3)
Oracle time and labour, (4) Oracle learning management, (5)
self-service, (6) recruitments and (7) Oracle advanced
benefits.
• Oracle Cloud ERP is a cloud based ERP. This software is used
to manage the enterprise function including procurement
and project management. It include features like
Procurement, Accounting hub, Financials, Risk management,
Project management, AI apps for ERP, SCM (Supply chain
management), NetSuite.
 4. Microsoft Dynamics
• Microsoft Dynamics ERP has come a long way since its inception in 1998.
• The software has gone through several iterations and upgrades, with
each version offering improved functionality and features.
• Axapta (AX) : Axapta was first released in 1998 by a Danish company
called Damgaard Data. The software was designed for manufacturing and
distribution companies and was later acquired by Microsoft in
2002. Axapta was a robust ERP solution that offered a wide range of
features, including financial management, supply chain management,
and production management. However, the software was criticized for
being complex and difficult to implement.
• Microsoft Dynamics AX : In 2006, Microsoft released a new version of
Axapta called Microsoft Dynamics AX. The software was redesigned to be
more user-friendly and easier to implement. It also offered new features
such as business intelligence and advanced workflow
capabilities. Microsoft Dynamics AX was widely adopted by mid-sized and
large enterprises, particularly in the manufacturing, retail, and
distribution sectors. The software was also available in multiple
languages, making it accessible to businesses around the world.
• In 2011, Microsoft released Dynamics AX 2012, which brought significant
improvements and enhancements to the software. It introduced a role-based user
interface, making it easier for users to navigate and perform their specific tasks.
The new version also included features like enhanced business intelligence and
reporting capabilities, improved supply chain management, and expanded global
functionality.
• Microsoft Dynamics NAV : It was designed for small and medium-sized businesses
and offered features such as financial management, supply chain management,
and project management. Dynamics NAV offered robust financial management
capabilities, including general ledger, accounts payable and receivable, budgeting,
and fixed assets management. The supply chain management features of Dynamics
NAV facilitated efficient inventory management, procurement, and order
processing. Microsoft Dynamics NAV incorporated project management
functionality to help businesses effectively plan, execute, and monitor their
projects.
• Microsoft Dynamics GP : Microsoft Dynamics GP was originally developed by Great
Plains Software, a company that was acquired by Microsoft in 2001. It offered a
range of modules and features to support financial management, human
resources, supply chain management, and more.
• Dynamics 365 : In 2016, Microsoft announced the release of Dynamics 365, a new
cloud-based ERP solution. Dynamics 365 is designed as a scalable and flexible ERP
solution that caters to the needs of businesses of all sizes. Dynamics
365incorporates advanced technologies like artificial intelligence (AI) and machine
learning (ML). It offers a comprehensive set of features, including financial
management, supply chain management, project management, and customer
relationship management.