ENTERPRISE RESOURCE PLANNING
(ERP)
Comprehensive Academic & Professional Study Notes
I. The Core Triad: People, Process, and Technology (PPT)
In an advanced organizational context, the PPT framework is an equilibrium model. If the balance
is lost, the system fails.
1. People (The Cognitive Layer)
• Involves Stakeholder Analysis and Competency Mapping.
• Primary risk: "Technical Debt" or "Skill Gaps" within the workforce.
• Requires the ADKAR model (Awareness, Desire, Knowledge, Ability, Reinforcement) for
change management.
2. Process (The Operational Layer)
• Focuses on Value Stream Mapping.
• ERPs are built on "Best Practices."
• Choice between Customization (expensive/high maintenance) or Business Process
Reengineering (BPR) (aligning workflows to software).
3. Technology (The Structural Layer)
• The enabler involving Service-Oriented Architecture (SOA).
• Includes hardware, middleware, and the Relational Database Management System
(RDBMS).
II. ERP Implementation: The Critical Path
Implementation is a multi-dimensional project management challenge.
• Planning & Package Selection: Defining functional requirements and selecting a vendor.
• Gap-Fit Analysis: Mapping business requirements against ERP features to identify custom
needs.
• Data Migration (ETL): Extract, Transform, and Load. Scrubbing legacy data for relational
integrity.
• Testing: Unit Testing, System Integration Testing (SIT), and User Acceptance Testing (UAT).
• Deployment Strategies:
◦ Big Bang: Instant transition (High risk, low cost).
◦ Phased Rollout: Module-by-module (Balanced risk).
◦ Parallel Running: Both systems run simultaneously (Safest, high cost).
III. Risk Management: Operational vs. Managerial
1. Managerial Risks (Strategic Level)
• Sunk Cost Fallacy: Persisting with failing projects due to high initial investment.
• Scope Creep: Uncontrolled changes leading to budget overruns.
• Vendor Lock-in: High switching costs giving the provider leverage.
2. Operational Risks (Execution Level)
• Data Integrity Issues: "Garbage in, garbage out" from inaccurate legacy data.
• System Downtime: Technical failures during transition halting production.
• Process Resistance: Employees using "workarounds" leading to fragmented data.
IV. ERP-Related Technologies (The Digital Ecosystem)
• OLAP (Online Analytical Processing): Multi-dimensional data analysis.
• In-Memory Computing: Using RAM for processing (e.g., SAP HANA) for real-time
analytics.
• SCM & CRM: Extensions for supplier and customer relationship management.
• Business Intelligence (BI): Dashboards for strategic forecasting.
V. Functional Modules of ERP
Module Core Functions & Details
Finance General Ledger, Consolidation (global books), and Treasury
Management.
Human Capital Payroll, recruitment, and Succession Planning.
(HCM)
Production (PP) Material Requirements Planning (MRP) and lead time calculation.
Sales & Distribution Lead-to-Cash cycle, pricing, shipping, and credit checks.
Inventory/WM Tracking stock across warehouses using RFID/Barcoding.
Procurement Vendor evaluation, Purchase Requisitions, and Invoice Matching.
Summary of Integration: The true power of ERP lies in Referential Integrity. When a sales
order is placed, inventory is earmarked, production schedules update, and finance records
revenue—all in real-time.
Detailed Academic Notes on ERP Systems