A

STUDY REPORT

ON

“ENTERPRISE RESOURCE PLANNING”

SUBMITTED BY:- SANTU KUMAR PATEL(3510910688)

(M.B.A. 1ST Year, “L”)

SUBMITTED TO:- Mrs. C. JAYASHREE

(FACULTY OF MANAGEMENT)

SRM SCHOOL OF MANAGEMENT

SRM UNIVERSITY

1
 MEANING OF ERP
Enterprise resource planning (ERP) is a software architecture whose
purpose is to facilitate the flow of information between all business functions inside
the boundaries of the organization and manage the connections to outside
stakeholders.

The distributed design allows a business to assemble modules from

different vendors without the need for the placement of multiple copies of complex,
expensive computer systems in areas which will not use their full capacity.
Enterprise resource planning (ERP) is an integrated computer-based system used to
manage internal and external resources including tangible assets, financial
resources, materials, and human resources.

ERP systems now attempt to cover all core functions of an enterprise,

regardless of the organization's business or charter. These systems can now be
found in non-manufacturing businesses, non-profit organizations and governments.

The initialism ERP was first employed by research and analysis firm
Gartner Group in 1990 as an extension of MRP (Material Requirements Planning;
later manufacturing resource planningand CIM (Computer Integrated Manufacturing),
and while not supplanting these terms, it has come to represent a larger whole.

ERP software is multi-module application software that integrates

activities across functional departments, from product planning, parts purchasing,
inventory control, product distribution, to order tracking. ERP software may include
application modules for the finance, accounting and human resources aspects of a
business

MODULES OF ENTERPRISE RESOURCE PLANNING

(A) Manufacturing:- 
2
 Engineering, bills of material, scheduling, capacity, workflow
management, quality control, cost management, manufacturing process,
manufacturing projects, manufacturing flow

(B) Supply chain management:- 

Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain
Planning, Supplier Scheduling, Inspection of goods, Claim Processing,
Commission Calculation

(C) Order to cash:-

inventory, order entry, purchasing, product configurator, supply chain
planning, supplier scheduling, inspection of goods, claim processing, commission
calculation

(D) Financials:-
General ledger, cash management, accounts payable, accounts receivable,
fixed assets

(E) Project management:- 

Costing, billing, time and expense, performance units, activity
management

(F) 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.

(G)Data services:- 
Various "self-service" interfaces for customers, suppliers, and/or
employees

(H) Access control:- 

Management of user privileges for various processes

ERP SYSTEM EVOLUATION METHODOLOGY

A proper system selection methodology:-

To address the common mistakes that lead to a poor system selection. It

is important to apply key principles to the process, some of which are listed
hereunder:
3
  Objective decision process:-

"Choosing which ERP to use is a complex decision that has significant

economic consequences, thus it requires a multi-criterion approach." There are two
key points to note when the major decision makers are agreeing on selection criteria
that will be used in evaluating potential vendors. Firstly, the criteria and the scoring
system must be agreed in advance prior to viewing any potential systems. The
criteria must be wide-ranging and decided upon by as many objective people as
possible within and external to the enterprise. In no circumstance should people with
affiliations to one or more systems be allowed to advise in this regard.

 Full involvement by all personnel:-

The decision on the system must be made by all stakeholders within the
enterprise. "It requires top management leadership and participation it involves
virtually every department within the company". Representatives of all users should:

 Be involved in the project initiation phase where the decision making process
is agreed;

 Assist in the gathering of requirements;

 Attend the Vendor Demonstrations;

 Have a significant participation in the short-listing and final selection of a

vendor.

 Structured approach:-

The first step in selection of a new system is to adopt a structured approach

to the process. The set of practices are presented to all the stakeholders within the
enterprise before the system selection process begins. Everyone needs to
understand the method of gathering requirements; invitation to tender; how potential
vendors will be selected; the format of demonstrations and the process for selecting
the vendor. Thus, each stakeholder is aware that the decision will be made on an
objective and collective basis and this will always lead to a high level of co-operation
within the process

 Focused demonstrations:-

Demonstrations by potential vendors must be relevant to the business.

However, it is important to understand that there is considerable amount of
preparation required by vendors to perform demonstrations that are specific to a
4
business. Therefore it is imperative that vendors are treated equally in requests for
demonstrations and it is incumbent on the company [and the objective consultant
assisting the company in the selection process] to identify sufficient demonstrations
that will allow a proper decision to be made but will also ensure that vendors do not
opt out of the selection process due to the extent of preparation required.

IMPLEMENTATION
Businesses have a wide scope of applications and processes throughout
their functional units; producing ERP software systems that are typically complex
and usually impose significant changes on staff work practices. Implementing ERP
software is typically too complex for "in-house" skill, so it is desirable and highly
advised to hire outside consultants who are professionally trained to implement
these systems. This is typically the most cost effective way. There are three types of
services that may be employed for - Consulting, Customization, Support. The length
of time to implement an ERP system depends on the size of the business, the
number of modules, the extent of customization, the scope of the change and the
willingness of the customer to take ownership for the project. ERP systems are
modular, so they don't all need be implemented at once. It can be divided into
various stages, or phase-ins. The typical project is about 14 months and requires
around 150 consultants. A small project (e.g., a company of less than 100 staff) can
be planned and delivered within 3–9 months; however, a large, multi-site or multi-
country implementation can take years. The length of the implementations is closely
tied to the amount of customization desired.

To implement ERP systems, companies often seek the help of an ERP

vendor or of third-party consulting companies. These firms typically provide three
areas of professional services: consulting; customization; and support. The client
organization can also employ independent program management, business analysis,
change management, and UAT specialists to ensure their business requirements
remain a priority during implementation.

Data migration is one of the most important activities in determining the

success of an ERP implementation. Since many decisions must be made before
migration, a significant amount of planning must occur. Unfortunately, data migration
is the last activity before the production phase of an ERP implementation, and
therefore receives minimal attention due to time constraints. The following are steps
of a data migration strategy that can help with the success of an ERP
implementation:-

 Identifying the data to be migrated

 Determining the timing of data migration

 Generating the data templates

5
  Freezing the tools for data migration

 Deciding on migration related setups

 Deciding on data archiving

Process preparation:-

ERP vendors have designed their systems around standard business

processes, based upon best business practices. Different vendor(s) have different
types of processes but they are all of a standard, modular nature. Firms that want to
implement ERP systems are consequently forced to adapt their organizations to
standardized processes as opposed to adapting the ERP package to the existing
processes.[16] Neglecting to map current business processes prior to starting ERP
implementation is a main reason for failure of ERP projects. [17] It is therefore crucial
that organizations perform a thorough business process analysis before selecting an
ERP vendor and setting off on the implementation track. This analysis should map
out all present operational processes, enabling selection of an ERP vendor whose
standard modules are most closely aligned with the established organization.
Redesign can then be implemented to achieve further process congruence.
Research indicates that the risk of business process mismatch is decreased by:-

 linking each current organizational process to the organization's strategy;

 analyzing the effectiveness of each process in light of its current related

business capability;

 understanding the automated solutions currently implemented.

ERP implementation is considerably more difficult (and politically

charged) in organizations structured into nearly independent business units, each
responsible for their own profit and loss, because they will each have different
processes, business rules, data semantics, authorization hierarchies and decision
centers. Solutions include requirements coordination negotiated by local change
management professionals or, if this is not possible, federated implementation using
loosely integrated instances (e.g. linked via Master Data Management) specifically
configured and/or customized to meet local needs.

A disadvantage usually attributed to ERP is that business process

redesign to fit the standardized ERP modules can lead to a loss of competitive
advantage. While documented cases exist where this has indeed materialized, other
cases show that following thorough process preparation ERP systems can actually
increase sustainable competitive advantage.

6
Configuration:-

Configuring an ERP system is largely a matter of balancing the way

you want the system to work with the way the system lets you work. Begin by
deciding which modules to install, then adjust the system using configuration tables
to achieve the best possible fit in working with your company’s processes.

Modules — Most systems are modular simply for the flexibility of

implementing some functions but not others. Some common modules, such as
finance and accounting are adopted by nearly all companies implementing enterprise
systems; others however such as human resource management are not needed by
some companies and therefore not adopted. A service company for example will not
likely need a module for manufacturing. Other times companies will not adopt a
module because they already have their own proprietary system they believe to be
superior. Generally speaking the greater number of modules selected, the greater
the integration benefits, but also the increase in costs, risks and changes involved.

Configuration Tables – A configuration table enables a company to tailor a

particular aspect of the system to the way it chooses to do business. For example,
an organization can select the type of inventory accounting – FIFO or LIFO – it will
employ or whether it wants to recognize revenue by geographical unit, product line,
or distribution channel.

So what happens when the options the system allows just aren't good
enough? At this point a company has two choices, both of which are not ideal. It can
re-write some of the enterprise system’s code, or it can continue to use an existing
system and build interfaces between it and the new enterprise system. Both options
will add time and cost to the implementation process. Additionally they can dilute the
system’s integration benefits. The more customized the system becomes the less
possible seamless communication between suppliers and customers

Consulting services:-

Many organizations do not have sufficient internal skills to implement an

ERP project. This results in many organizations offering consulting services for ERP
implementation. Typically, a consulting team is responsible for the entire ERP
implementation including:-

1. selecting

2. planning

3. training

4. testing

7
 5. implementation

6. delivery

Examples of customization includes creating processes and reports for

compliance, additional product training; creation of process triggers and workflow;
specialist advice to improve how the ERP is used in the business; system
optimization; and assistance writing reports, complex data extracts or implementing
Business Intelligence.

For most mid-sized companies, the cost of the implementation will range
from around the list price of the ERP user licenses to up to twice this amount
(depending on the level of customization required). Large companies, and especially
those with multiple sites or countries, will often spend considerably more on the
implementation than the cost of the user licenses—three to five times more is not
uncommon for a multi-site implementation.

Unlike most single-purpose applications, ERP packages have historically

included full source code and shipped with vendor-supported team IDEs for
customizing and extending the delivered code. During the early years of ERP the
guarantee of mature tools and support for extensive customization was an important
sales argument when a potential customer was considering developing their own
unique solution in-house, or assembling a cross-functional solution by integrating
multiple "best of breed" applications.

"Core system" customization vs configuration:-

Increasingly, ERP vendors have tried to reduce the need for

customization by providing built-in "configuration" tools to address most customers'
needs for changing how the out-of-the-box core system works. Key differences
between customization and configuration include:-

 Customization is always optional, whereas some degree of configuration (e.g.,

setting up cost/profit centre structures, organisational trees, purchase
approval rules, etc.) may be needed before the software will work at all.

 Configuration is available to all customers, whereas customization allows

individual customer to implement proprietary "market-beating" processes.

 Configuration changes tend to be recorded as entries in vendor-supplied data

tables, whereas customization usually requires some element of programming
and/or changes to table structures or views.

 The effect of configuration changes on the performance of the system is

relatively predictable and is largely the responsibility of the ERP vendor. The
effect of customization is unpredictable and may require time-consuming
stress testing by the implementation team.
8
  Configuration changes are almost always guaranteed to survive upgrades to
new software versions. Some customizations (e.g. code that uses pre-defined
"hooks" that are called before/after displaying data screens) will survive
upgrades, though they will still need to be re-tested. More extensive
customizations (e.g. those involving changes to fundamental data structures)
will be overwritten during upgrades and must be re-implemented manually.

By this analysis, customizing an ERP package can be unexpectedly

expensive and complicated, and tends to delay delivery of the obvious benefits of an
integrated system. Nevertheless, customizing an ERP suite gives the scope to
implement secret recipes for excellence in specific areas while ensuring that industry
best practices are achieved in less sensitive areas.

Extensions:-

In this context, "Extensions" refers to ways that an ERP environment

can be "extended" (supplemented) with third-party programs. It is technically easy to
expose most ERP transactions to outside programs that do other things, e.g;-

 archiving, reporting and republishing (these are easiest to achieve, because

they mainly address static data);

 performing transactional data captures, e.g. using scanners, tills or RFIDs

(also relatively easy because they touch existing data);

However, because ERP applications typically contain sophisticated rules that control
how data can be created or changed, some such functions can be very difficult to
implement.

ERP-PRESENT TREND IN INDIA

The ERP market is dominated by two 500-pound gorillas, SAP and Oracle.
Or rather, Oracle is a 500-pound gorilla, and SAP is the veritable King Kong of the
ERP market.

Of the top 10 ERP vendors by total 2005 revenues, SAP hauled in a massive
$10.5 billion, to Oracle’s $4.6 billion. In contrast, the other ERP vendors are mere
also-rans: Infor, $1.6 billion; Sage Group, $1.4 billion; Microsoft, $855 million;
Lawson, $747 million.

Not only are Oracle and SAP the industry giants, “they’re tending to outgrow
the industry overall,” Hamerman says. It’s a clear case of the big getting bigger.

9
 These two giants have divergent strategies for growth. While Oracles’s growth
is through acquisitions, SAP is growing through a number of partnering and mid-
market strategies.

“Oracle’s future growth strategy, I think, is going to be dependent on

acquiring vendors that have a particular strength in an industry," Hamerman says,
noting Oracle's recent purchase of SPL, known for its utilities industry billing
software. In contrast, SAP’s strategy is “more around developing those capabilities
rather than acquiring them.”

However, the ERP vendor to watch is Microsoft, he says. “They’re really

investing heavily in product development. They’re innovating around usability, which
can be fairly compelling.”

Given that ERP is a $25 billion industry, Microsoft's market share is a

modest 4 to 5 percent, “but I do see them growing pretty rapidly.”

But for all the ERP vendors, growing by landing new contracts with large
enterprises is getting tougher. “In terms of large deals, it is very saturated at the high
end of the market,” Hamerman says.

Therefore, the big players are attempting to fish in smaller waters. While
most large enterprises have already chosen their ERP package, “The mid-market is
more competitive. There’s a lot of opportunity in the mid-market, and more players.”

The other format for recurring revenue, software as a service, SaaS, isn’t
working for the big players. “We don’t see SAP or Oracle getting much revenue that
way, in terms of the hosted subscription-based applications, but you see a number of
players, notably [Link] (in some other areas), who get substantial revenue
from the subscription model.”

DIFFERENT ERP SOFTWARE AND ERP VENDORS

ERP VENDORS:-

Vendors of popular ERP software include (sorted roughly according to worldwide

ERP related revenue).

There are many vendors:-

 SAP
 Oracle Applications
 Infor Global Solutions
 The Sage Group
 Microsoft
 Unit 4 Agresso

10
  CDC Software
 Lawson Software
 Epicor
 Visma
 Industrial and Financial Systems (IFS)
 Comarch
 QAD
 Consona Corporation
 COA Solutions Ltd
 NetSuite
 ABAS Software
 Ramco Systems
 [Link]
 Technology One
 Pronto Software

ENTERPRISE SOFTWARE:-

Enterprise software, also known as enterprise application software

(EAS), is software intended to solve an enterprise problem (rather than a
departmental problem) and often written using an Enterprise Software Architecture.

(A)Types of enterprise software:-

Enterprise software is often designed and implemented by an Information

Technology (IT) group within an enterprise. It may also be purchased from an
independent enterprise software developer, that often installs and maintains the
software for their customers. Another model is based on a concept called on-
demand software, or Software as a Service. The on-demand model of enterprise
software is made possible through the widespread distribution of broadband access
to the Internet. Software as a Service vendors maintain enterprise software on
servers within their own enterprise data center and then provide access to the
software to their enterprise customers via the Internet.

Enterprise software is often categorized by the business function that it

automates - such as accounting software or sales force automation software.
Similarly for industries - for example, there are enterprise systems devised for the
health care industry, or for manufacturing enterprises.

(B) Application software:-

Enterprise application software is application software that performs

business functions such as accounting, production scheduling, customer information
management, bank account maintenance, etc. It is frequently hosted on servers and
simultaneously provides services to a large number of enterprises, typically over a
computer network. This is in contrast to the more common single-user software

11
applications which run on a user's own local computer and serve only one user at a
time.

VARIOUS MODULES IN ERP FROM DIFFERENT VENDORS

As of 1998, according to Loizos, there were five leading ERP
vendors that accounted for 62 percent of the market:-

o SAP of Germany

o Oracle

o J.D. Edwards

o People Soft

o Baan of the Netherlands

For the most part, these vendors focused on large business

clients and concentrated on automating manufacturing, distribution,
human resources, and financial systems. The remaining 38 percent of
the ERP applications market was comprised of numerous smaller
vendors which served smaller business clients and focused on niche
applications.

Loizos outlined a series of factors for small businesses to

consider in choosing an ERP vendor.

FUTURE GROWTH FOR ERP

ERP calls for constant modifications and up gradations. ERP developers
are facing tremendous pressure both from vendors and companies. In this context it
becomes important to analyze the erp's trends and modalities

SOME OF THE RELEVANT ISSUES ARE AS FOLLOWS:-

12
Need based applications:-

Organizations had to implement ERP throught their systems irrespective

of the fact whether they help in all the functions or in one particular function. This
was proving to be a big hurdle to the firms. In addition this remained as the main
disadvantage or setback of ERP. They had to purchase the whole applications even
if it meant that most of them would be idle except for the core function.

The latest ERP software programs have overcome this menace. They
offer need based applications. The firms need not be worried even if these Software
Programs were not available. They were given the liberty to purchase and install
Software Programs pertaining to that particular function. This advantage has helped
to increase the scope of ERP not only among large firms but also small and medium
business as well.

Expenditures:-

ERP was a very costly affair. Thanks to the intrusion of internet and open
source applications. This has helped S.M.E.'S to enter the market of prospective
[Link] has not only widened the horizon of S.M.E.'s.

These large firms were not able to invest huge money in spite of
adequate funds. Now that the spending on ERP gets reduced there are no
hesitations to show the green signal for fear of heavy monetary outlay. It is
encouraging to notice the improving IT ERP trends.

Reduction in implementation time:-

ERP was discouraged by companies because they took such a long time
to get installed and set the whole process into action. Since this resource was spent
excessively there were chances for reduction in potential business and losing man-
hours.

The current day ERP applications are less complex to install and train.
This has reduced the amount of time spent on [Link] are thereby assured
of spending lesser time for ERP.

Open Source, Web enabled and wireless technologies:-

These are three important elements that have rejuvenated the functioning
of [Link] Source ERP has done away with the hassles of paying license fees
not only during installation but also whenever a modification is made. The company
is relieved from depending even for mince matters.

Web enabled ERP helps in making the enterprise operations go online.

Any stakeholder or third party can access the required information very easily and
that too by sitting anywhere in the world. This proves to be of great help especially
during emergencies when the details are to be sourced with immediate effect.

13
 Wireless ERP has helped organizations to make use of the
communication channels effectively and efficiently. It has made it possible for many
elements to operate in ERP which were otherwise not possible. Wireless ERP is
nothing but sharing enterprise information through devices like internet and other
devices making it possible for outsiders to access the same.

Conclusion:-

ERP trends reflect positive signals for the ERP vendors and companies
availing their service. It is important to remember the fact that both the vendor and
the company will be able to make use of any advantage (including the modern
facilities) only through proper coordination, teamwork and nurturing a cordial
atmosphere. Mere IT ERP trends will not help in this aspect.

14