DBA 7304 - Enterprise - Resource Planning

ENTERPRISE RESOURCE PLANNING
SYLLABUS
UNIT-I
Introduction: Overview of enterprise systems – Evolution - Risks and benefi ts - Fundamental technology - Issues to be
consider in planning design and implementation of cross functional integrated ERP systems.
UNIT-II
ERP Solutions and Functional Modules: Overview of ERP software solutions- Small medium and large enterprise
vendor solutions, BPR, Business Engineering and best Business practices - Business process Management. Overview of
ERP modules -sales and Marketing, Accounting and Finance, Materials and Production management.
UNIT-III
ERP Implementation: Planning Evaluation and selection of ERP systems-Implementation life cycle - ERP
implementation, Methodology and Frame work- Training – Data Migration. People Organization in implementation-
Consultants, Vendors and Employees.
UNIT-IV
Post Implementation Maintenance of ERP: Organizational and Industrial impact; Success and Failure factors of and
ERP Implementation.
UNIT-V
Emerging Trends on ERP: Extended ERP systems and ERP add–ons -CRM, SCM, Business analytics etc- Future trends
in ERP systems-web enabled, Wireless technologies so on.
ENTERPRISE RESOURCE PLANNING
SCHEME OF LESSONS
Page No.
UNIT I
Lesson 1 Introduction to Enterprise Resource Planning 7
UNIT II
Lesson 2 ERP Software Solutions 25
Lesson 3 Business Process Reengineering 40
Lesson 4 Modules of ERP 61
UNIT III
Lesson 5 ERP Implementation 79
Lesson 6 ERP Framework: Process and People 97
UNIT IV
Lesson 7 Post-Implementation of ERP 113
Lesson 8 Success and Failure of ERP Implementation 128
UNIT V
Lesson 9 Emerging Trends in ERP 145
Lesson 10 Business Analytics and Future Trends in ERP 169
Model Question Paper 195
Lesson 1 - Introduction to Enterprise Resource Planning
Notes
UNIT I
LESSON 1 - INTRODUCTION TO ENTERPRISE
RESOURCE PLANNING
CONTENTS
Learning Objectives
Learning Outcomes
Overview
1.1 Enterprise Resource Planning (ERP)
1.1.1 Objectives of ERP
1.1.2 Evolution of ERP
1.1.3 Risks of ERP
1.1.4 Benefits of ERP
1.2 ERP Fundamentals of Technology
1.2.1 Issues to be Consider in Planning Design
1.3 Implementation of Cross-functional Integrated ERP System
Summary
Keywords
Self-Assessment Questions
Further Readings
LEARNING OBJECTIVES
After studying this lesson, you should be able to:
 Understand the concepts of enterprise systems
 Describe the fundamental of technology
LEARNING OUTCOMES
Upon completion of the lesson, students are able to demonstrate a good
understanding of:
 basics of enterprise resource planning
 analyzing objectives and evolution of enterprise resource planning
ANNA UNIVERSITY 7
Enterprise Resource Planning
Notes  explain ERP fundamentals of technology

 list out issues to be consider in planning design
 implementation of cross-functional integrated ERP system
OVERVIEW
The evolution of Enterprise Resource Planning (ERP) will be viewed as a
watershed event in the application of information technology to manage
business. It is a software-driven business management system that helps to
integrate all functions of a business. It is complex and expensive and may call
for major changes in the process. It is making significant improvement in the
way companies are being managed. The potential benefit of using ERP is huge.
However, some companies did not get the desired result.
In this lesson, you will learn about the enterprise systems and fundamental of
technology. You will be introduced to the in-depth of ERP.
We advise you, that learn this lesson carefully it will give you a better
understanding of the present scenario of the ERP in business environment.
1.1 ENTERPRISE RESOURCE PLANNING (ERP)

ERP may be defined as an enterprise-wide set of forecasting, planning and
scheduling tools, which links customers and suppliers into a complete supply
chain, employs proven process for decision making, and co-ordinates sales,
marketing, operations, logistics, purchasing, finance, product development and
human resources. In essence, ERP replicates and integrates business process,
shares common data and practices across the entire enterprise and produces and
accesses information in a real time environment. Organization is a combination
of processes.
It may transcend organizational or functional boundaries. The material and
information undergoes various transformations through these processes, until
they are transformed into output(s) of value to customer.
Example: A process of ordering goods from supplier, typically involves

multiple organizations/functional areas, including supplier organizations,
purchasing, receiving, accounts payable and customers.
Traditional application systems were usually concerned with the transaction of
tasks of a process in specific functional areas. They store data, process them
and present them in the appropriate form whenever requested by the user.
However, there is no link between the application systems being used by
different functional areas.
An ERP system replicates or models flows through the process. As the material
or information flows across the processes, a large number of data is generated
as a result of diverse transactions. All information is recorded in a relational
8 ANNA UNIVERSITY
database consisting of hundreds of tables. As such it presents a common, Notes

logically single database system for the whole organization. Thus, ERP
promises the seamless integration of all the information pertaining to finance
and accounting, human resource, customer etc., flowing through an
organization. The recorded information is available for retrieval in real time.
The information is used by the managers of various levels for the purpose of
monitoring and control of production system.
1.1.1 Objectives of ERP

 Provide support for all variations of best business practices
 Enable implementation of these practices with a view towards enhancing
productivity
 Empower the customer to modify the implemented business processes to
suit their needs.
1.1.2 Evolution of ERP
ERP is an outcome of 40 years of trial and error. It has evolved as a strategic
tool because of continuous improvement in the available techniques to manage
business and the fast growth of information technology.
Prior to 1960s, business had to rely on the traditional ways of inventory
management to ensure smooth functioning of the organization. These theories
are called classical inventory management of scientific inventory control
methods. The most popularly known amongst them is EOQ (Economic Order
Quantity).
In this method, each item in the stock is analyzed for its ordering cost and the
inventory carrying cost. A trade off is established on a phased out expected
demand of one year, and this way the most economic ordering quantity can be
decided. This technique in principle is a deterministic way of managing
inventory.
Along with EOQ, various inventory models such as fixed order quantity,
periodic order method, optional replenishment method, etc., were in practice
earlier. These theories were very popular in pre-MRP era.
The evolution of ERP can be classified into four stages:
Material Requirement Planning (MRP)

In 1960s, a new technique of Material Requirements Planning, popularly
known as MRP, was evolved. This was a proactive manner of inventory
management. This technique fundamentally explodes the end product demand
obtained from the Master Production Schedule (MPS) for a specified product
structure (which is taken from Bill of Material) into a detailed schedule of
purchase orders or production orders, taking into account the inventory on
hand.
ANNA UNIVERSITY 9
Notes MRP is a simple logic but the magnitude of data involved in a realistic
situation makes it computationally cumbersome. If undertaken manually, the
entire process is highly time-consuming.
It used master schedules (what are we going to make?), the bill of material
(what does it take to make it and in what sequence?) and inventory records
(what do we have?) to determine future requirements (what do we have to get
and when?)
MRP successfully demonstrated its effectiveness in:
 Reduction in inventory
 Reduction in production
 Reduction in delivery lead-times by improving co-ordination and avoiding
delays
 Making commitments more realistic
MRP did not take into account other resources of an organization.
Closed-loop MRP
MRP proved to be a very good technique for managing inventory, but it did not
take into account other resources of an organization. This led to the birth of a
modified MRP logic, popularly known as closed loop MRP. It emerged in
1970s. In this technique, the capacity of the organization to produce a
particular product is also taken into account by incorporating a module called
Capacity Requirements Planning (CRP).
In this, additional planning functions of sales and operations (production
planning and master production scheduling) were included. Also, a feedback
loop is provided from CRP module to MPS to check if enough capacity is
available to produce. Once the planning phase is complete and the plans have
been accepted as realistic and attainable, the execution function comes into
play.
Manufacturing Resource Planning (MRP II)

In 1980s, the need was felt to integrate the financial resource with the
manufacturing activities. From this evolved an integrated manufacturing
management system called Manufacturing Resource Planning (MRP II).
MRP II is known to be a direct growth and extension of closed-loop MRP.
Some of the additional features are as follows:
 Business planning and execution support systems for capacity and
materials, which include manufacturing control functions of input-output
measurement, detailed scheduling and dispatching, as well as delay reports
from both the plant and suppliers, supplier scheduling and so on.
10 ANNA UNIVERSITY
 Financial interface: This translates the operating plan (in physical units) Notes
into financial terms.
 Simulation capability: The ability to ask "What if?" questions and to
obtain actionable answers in both units and dollars.
MRP II did not address other functions like human resource

management, marketing, logistics, etc. Also, it is not concerned with
customers and suppliers.

Transition from MRPII to ERP happened during 1980-90. The basic MRP II
system design was suffering from a few inherent drawbacks such as limited
focus to manufacturing activities, assumption of the mass or repetitive
production set ups, and poor budgetary and costing controls.
The shortcomings of MRP II and the need to integrate new techniques led to
the development of a total integrated solution called ERP, which attempts to
integrate the transactions of the organization to produce the best possible plan.
Today there are further developments in the ERP concept and evolution
web-based ERP. Its add-on features are:
 It includes all functional areas of an enterprise, including purchasing,
product development, operations, logistics, finance, sales and marketing
 It also extends its coverage to customer and supplier, thus bringing the
entire supply chain in its fold.
1.1.3 Risks of ERP

Important risks related with ERP include:
 How much standardization in business process?
For having a close fit between ERP system and the business process, we
have the following options:
(a) Change the business process
(b) Change ERP system
(c) Do both i.e., adopt a hybrid approach
With the option (a), the firm may not gain competitive advantage as the
competitors may adopt the same. With the option (b), the opportunity to
standardize processes and to use the best solutions offered by ERP is lost.
Hence, experts suggest adopting option (c). However, there is some
difficulty associated with this option. The firm faces the additional
responsibility of updating the package whenever its newer version comes.
ANNA UNIVERSITY 11
Notes  Whether to adopt a single vendor's offering to cover the entire enterprise or
to adopt a "best in breed" approach in which separate software packages are
selected for each process area and integrate with one another?
 Staffing model to be used for the project: ERP implementation projects are
long and intense. Projects need best people drawn from current business on
full time basis for long period. This action may have negative effect on the
current business. Also, there is another issue of reintegration of the
employees back into the business after the implementation of the project.
Both the issues are to be addressed beforehand.
1.1.4 Benefits of ERP

ERP systems offer many advantages:
 ERP system streamlines the information flow in large business
organizations by integrating the flow and having a single database to
achieve the following:
 Solve the problem of fragmentation of information: Every big company
collects, generates, and stores vast quantity of data. Data is kept in
separate computer systems, each housed in separate locations. Each
provides good support for a particular business activity. But in
combination, they put a heavy drag on business productivity and
performance.
 Integrate information across the organization: Collects data from and
feeds data into modular applications supporting various business
activities. When new information is entered in one place, related
information is automatically updated.
 Provide direct access to a wealth of real time operating information
resulting in dramatic gain in productivity and speed.
 ERP helps to deliver product on time, quickly and economically and
enables organizations to deal with constant change in the manufacturing
world.
 They support customer relationship management, supplier relationship
management, advanced planning system, business information
warehousing, etc.
Example: Auto desk, leading maker of computer aided design software.

Delivery of an order to customer reduced from 2 weeks to 24 hours in 98% of
cases.
Example: IBM’s storage system device, Replacement time of a part

reduced from 22 days to 3 days and reduced the time to complete a credit
check from 20 minutes to 3 seconds.
12 ANNA UNIVERSITY
Business benefits of ERP system can be summarized as follows: Notes

 Improvement in operational efficiency lower cost (raw material, labour,
maintenance), higher through put (improved delivery, reliability, reduced
cycle time) and improved quality (improved reliability, reduced defects/
errors).
 Reengineering of business process following best practices
 Easy and timely access to information to managers for better decision
making
 Better organizational communication with customers and suppliers
From the above, it may be seen that ERP offers several benefits. However, it
carries some risks.
Dell Computer found that its system would not fit the new, decentralized
management.
Further, it has been identified two reasons for such debacles. These
include: Improper implementation of ERP system, which is complex pieces
of software and requires large sum of money, time and expertise, and
establishing fit between system output and business need.
Learning Activity
Select any organisation of your choice, study its ERP systems and
their activities and prepare a short report of your understanding
about the ERP systems of that organization.
1.2 ERP FUNDAMENTALS OF TECHNOLOGY

The new era of PC, advent of client server technology and relational database
management system (RDBMS) have contributed to the ease of development of
ERP system. Three-tier client/server configuration consists of the core, the
application server and the front-end servers. The core of the system is a high-
speed network of database server, designed to efficiently handle a large
database. The application servers which consist of modules related with
various processes are networked around database. The user communicates with
the application servers through the front-end server, which are the PCs.
The companies, implementing ERP have multiple locations of operation and
control and hence need online transfer of data across locations. Other enabling
technologies including workflow, work group, groupware, Electronic Data
ANNA UNIVERSITY 13
Notes Interchange (EDI), Internet, intranet, data warehousing, etc., facilitate this
transfer.
The ERP field can be slow to change, but the last couple of years have
unleashed forces which are fundamentally shifting the entire area. According to
Enterprise Apps Today, the following new and continuing trends affect
enterprise ERP software:
 Mobile ERP: Executives and employees want real-time access to
information, regardless of where they are. It is expected that businesses will
embrace mobile ERP for the reports, dashboards and to conduct key
business processes.
 Cloud ERP: The cloud has been advancing steadily into the enterprise for
some time, but many ERP users have been reluctant to place data cloud.
Those reservations have gradually been evaporating, however, as the
advantages of the cloud become apparent.
 Social ERP: There has been much hype around social media and how
important – or not – it is to add to ERP systems. Certainly, vendors have
been quick to seize the initiative, adding social media packages to their
ERP systems with much fanfare. But some wonder if there is really much
gain to be had by integrating social media with ERP.
 Two-tier ERP: Enterprises once attempted to build an all-encompassing
ERP system to take care of every aspect of organizational systems.
But some expensive failures have gradually brought about a change in
strategy – adopting two tiers of ERP.
ERP Vendors
Depending on your organization's size and needs there are a number of
enterprise resource planning software vendors to choose from in the large
enterprise, mid-market and the small business ERP market.
Large Enterprise ERP (ERP Tier I)
The ERP market for large enterprises is dominated by three companies: SAP,
Oracle and Microsoft.
Mid-market ERP (ERP Tier II)
For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and
IFS.
Small Business ERP (ERP Tier III)
Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and
Activant Solutions round out the ERP vendors for small businesses.
14 ANNA UNIVERSITY
Database Systems Notes

As data is a very significant resource, it requires tough, protected, and easily
obtainable software that can collect and utilize it fast. A substantial and a
consistent database is the solution to these requirements DBMS (database
management system) as one software and a group of software applications that
are used to manage the formation, preservation, and the utilization of a
database. Establishments are permitted to formulate databases for different
applications. DBMS provides permission to several users to make use of same
database simultaneously. DBMS offers resources for handling the access of
data and imposing data integrity. Also it allows database to recover after
collapsing and the data is restored from backup. In addition, DBMS maintains
the security of the database.
There are various ERP vendors available today. Some of them

include: SAP, People soft, JD Edward, Geac and others. These vendors
offer slightly differing features to their products; still major modules are the
same in all of the products.
1.2.1 Issues to be Consider in Planning Design

The following issues should be considered in planning design:
 Emergence of a service oriented architecture: Here, individual
components of application modules are called for specific jobs and once the
job is complete, they are released.
 Data warehousing and data mining: Data from ERP systems are stored
using a logic map. These data are explored using various analytical
algorithms and tools for the purpose of analysis and decision-making.
 ERP vendors may incorporate additional functional niches such as
customer’s relationship management, supplier relationship management,
etc.
 Product data management: This module deals with the storage of
technical drawings of parts and their upgraded or modified versions. The
relevant drawings can be retrieved quickly. This helps to develop new
products.
1.3 IMPLEMENTATION OF CROSS-FUNCTIONAL

INTEGRATED ERP SYSTEM
With the industrial revolution, the size of the organization grew and it was not
possible for a single individual to carry out all the jobs. Job was divided into
various categories execution, supervision, managerial, support (sales,
marketing, maintenance, human resource, materials management and so on). In
due course, the division of job led to specialization fictionalization. Functional
ANNA UNIVERSITY 15
Notes departments took birth. Evolution of ERP followed the growth of the firm.
Application module was created to cater to the needs of a functional
department. These functional applications were extended and integrated over
the years.
SAP R/3, a product of SAP AG, and the market leader in the segment offers
the following four modules: financial accounting, human resources,
manufacturing and logistics, and sales and distribution. The software is
designed to operate in a three-tier client/server configuration. The R/3
application is fully integrated so that data is shared between all applications.
The modules are designed around industry's best practice. In many cases, a
firm wishing to use SAP needs to change its practices to suit the SAP system.
The four modules of R/3 in terms of functionality are briefly discussed below:
Financial Accounting
This module includes three major categories of functionality needed to run the
financial accounting for a company financial (FI), controlling (CO), and asset
management. FI includes accounts payable, accounts receivable, general ledger
and capital investment.
The controlling category includes costing: cost centre, profit centre, and
enterprise accounting and planning, internal orders, open item management,
posting and allocation, profitability analysis etc.
The asset management category includes the ability to manage all types of
corporate assets, including fixed assets, leased assets and real assets etc.
Human Resources (HR)

This segment includes a full set of capabilities needed to manage, schedule,
pay and hire the people who make a company run. It includes payroll, benefits
administration, applicant data administration, personnel development planning,
work force planning, schedule and shift plan, time management and travel
expenses accounting.
Manufacturing and Logistics

It can be divided into five major segments:
 Materials Management (MM)
 Plant Maintenance (PM)
 Quality Management (QM)
 Project Management System (PS)
 Production Planning Control
Each segment is divided into a number of components.
16 ANNA UNIVERSITY
Cost and Sales Distribution (SD) Notes

This module provides customers' management, sales order management,
configuration management, distribution, export control, shipping and
transportation management, and billing, invoicing, and rebate processing.
Learning Activity
Select any organisation of your choice, study its ERP functions
and ERP integration with other departments and prepare a short
report of your understanding about it.
Bolhoff Fatenings
Bolhoff Fastenings Takes Stock of its India Operations with Sage

Accpac
Bolhoff Fastenings India Pvt. Ltd. is a wholly owned subsidiary of Bolhoff
Germany, a leading supplier of fastening, assembly and systems technology
and products having presence in over 30 countries across the globe. While
the company headquarters manufactures the products, the Indian subsidiary
is involved in import and sale of fasteners and assembly products to
automobile majors, automobile ancillary units and industrial machinery
majors and vendors, through their head office in Delhi and their branch
offices and representatives in Bangalore and Pune. Since their inception in
India in February 2007, the company has been witnessing growth and
expansion in its business and is now actively looking at making inroads into
the industrial infrastructure and government sectors. “As our customer base
grew in size and the orders became more complex and random, we needed
robust, modular and scalable financial and operations software that could
tightly bind the various aspects of our business together and evolve as per
our requirements,” says Mr Jagdish Keswani Managing Director, Bolhoff
Fastenings.
Challenge
Tracking of inventory status across multiple warehouses, Manual counting
and valuation of large number of very small products, Visibility into credit
history during repeat customer billing, Generation of monthly reports
comprising of data from multiple databases in the prescribed International
format.
Solution
Sage Accpac ERP, a highly scalable and modular application provides real
time inventory control and visibility. It also supports multiple currencies
Contd...
ANNA UNIVERSITY 17
Notes and features a strong reporting tool. Modules are closely interlinked with
each other so that a small change in one module results in a corresponding
change in the related fields of the other modules as well.
Result
Real time view of stock availability and customer credit history has resulted
in reduced errors and reorders during the sales process. Reports are
generated automatically in the required format using predefined formulas.
Consolidated view of company finances enables better budgetary
estimations.
Customer Summary
Industry – Trading & Distribution
Users – 3 concurrent users
System – Sage Accpac
General Ledger
Accounts Payable
Accounts Receivable
Order Entry
Purchase Order
Transactional and Optional fields
Multicurrency
Bolhoff and Sage – The Perfect Match
The Managing Director of Bolhoff was very clear about the features he
wanted in the ERP product to address his requirements and when he came
across Sage Accpac through Across Domain, the solution implementation
partner, he was immediately interested. Sage Accpac is a highly scalable
and modular ERP application that provides robust financial & accounting
support and real time inventory control and visibility. It also supports
multiple currencies, features a strong reporting tool and comprises of
modules that are very tightly integrated with each other so that a small
change in one module results in a corresponding change in the related fields
of the other modules as well. Guided by its strong product understanding
and domain knowledge, Across Domain, the implementation partner for the
project, was able to understand Bolhoff’s unique requirements and then
carry out a live system demonstration to highlight the strengths of Sage
Accpac.
Bolhoff decided to implement a 3-user package of Sage Accpac comprising
of System Manager, General Ledger, Accounts Receivable, Accounts
Contd...
18 ANNA UNIVERSITY
Payable, Order Entry, Purchase Order, Transactional and optional fields, Notes
multicurrency as the major modules.
Real time Inventory Control
Bolhoff’s India operations are headquartered in New Delhi with branch
offices in Bangalore and Pune. Products imported from the parent company
arrive at the head office where the purchase order is generated, wherefrom
they are allocated to multiple locations for warehousing and storage. “Since
the variety of products is very large and some of the products have very
small physical dimensions, manual counting and valuation of stock, tracking
of inventory status and material movement across multiple warehouses
would be near impossible leading to errors and delays in order fulfilment,”
opines Jagdish. “Sage Accpac offers us a real time view into stock
availability so that we can accept sales orders only if the stock situation is
satisfactory and reorder if the level is below economic order quantity. Once
the order is booked it automatically moves to shipment wherein the ordered
quantity is deducted from the stock and the invoice is generated.” Sage
Accpac also allows personnel to identify and distinguish slow moving
goods and take a definite action such as sale or return with them and also
maintain separate stock of samples and saleable products.
Complete View of Customer Details
Since Bolhoff has quite a number of repeat customers, a complete view of
the customer history, special rates offered and credit limit status is essential
at the time of order processing and fulfilment. Featuring a concept of
approval and sub approvals in the case of customers who have exceeded
their credit limit, Sage Accpac requires the approval of the senior executive
for such orders to proceed to shipment, thereby saving time and removing
scope for errors and reorders. Sage Accpac also prevents sale of samples
during stock crunch and helps in generating inventory turnover ratio report
comprising of information on which items were stocked, what price it was
sold at and which customer it was sold to. Sage Accpac also helps in
supplier management and day-today profitability and margin calculation.
Easy Reporting at your Fingertips
Being a global company, Bolhoff’s India operations head needed to provide
monthly reports comprising of balance sheet, profit and loss and budget
analysis in the required International format to the parent company. “We
needed a multi-currency, multi-language accounting software with a strong
reporting tool that could be customized according to pre-set parameters, and
which could generate reports in the required format automatically using
predefined formulas,” shared Jagdish. Financial reporter, the reporting tool
in Sage Accpac, is capable of incorporating predefined formulas to
dynamically extract data from the database to generate reports in the
required format. This solves Bolhoff’s MIS related issues of collating data
from multiple sources and presenting reports on operating costs, net
Contd...
ANNA UNIVERSITY 19
Notes monthly sales, stock and total outstanding balance in predefined

international formats. Easy to use and format, it also provides the Managing
Director with instant visibility into the company’s profit & loss and
operating costs for any given month, on the basis of which he can estimate
budgets for the future.
Grows with your Business
Describing his company’s growth over the last year, Jagdish says, “In the
beginning we were primarily catering to a small base of repeat customers.
However with the growth of the company, the customer base expanded and
the ratio of repeat billing came down. As the billing became more random
and complex and the number of financial transactions increased, we needed
a scalable and modular financial application that would grow with us. A
sophisticated and robust operating and accounts system, Sage Accpac ERP
has a modular structure, which allows you to implement only the modules
and options you need today and build out your financial system by adding
on more options later.”
Questions
1. Comment on the problem faced by the Bolhoff. How the ERP solutions
did have provided the solution for their problem?
2. If you were in Mr Jagdish’s place, what strategies you would have
adopted to cope up with the problem and strengthening the business?
Source: http://www.sagesoftware.co.in/CaseStudieDetail.aspx?CaseStudyId=3
1. A process is a set of logically related tasks that

consumes one or more inputs and creates an output.
2. In case of single vendor strategy, functionality is well
integrated. Best in breed potentially offers greater
flexibility, but integration and vendor relationship
become complex.
SUMMARY
 ERP may be defined as an enterprise-wide set of forecasting, planning and
scheduling tools, which links customers and suppliers into a complete
supply chain, employs proven process for decision making, and
co-ordinates sales, marketing, operations, logistics, purchasing, finance,
product development and human resources.
 In essence, ERP replicates and integrates business process, shares common
data and practices across the entire enterprise and produces and accesses
information in a real time environment. Organization is a combination of
processes.
20 ANNA UNIVERSITY
 A process is a set of logically related tasks that consumes one or more Notes
inputs and creates an output.
 It may transcend organizational or functional boundaries. The material and
information undergoes various transformations through these processes,
until they are transformed into output(s) of value to customer.
 Traditional application systems were usually concerned with the
transaction of tasks of a process in specific functional areas.
 They store data, process them and present them in the appropriate form
whenever requested by the user. However, there is no link between the
application systems being used by different functional areas.
 An ERP system replicates or models flows through the process. As the
material or information flows across the processes, a large number of data
is generated as a result of diverse transactions.
 All information is recorded in a relational database consisting of hundreds
of tables. As such it presents a common, logically single database system
for the whole organization.
 ERP promises the seamless integration of all the information pertaining to
finance and accounting, human resource, customer etc., flowing through an
organization.
 The recorded information is available for retrieval in real time. The
information is used by the managers of various levels for the purpose of
monitoring and control of production system.
KEYWORDS
Enterprise Resources Planning: It may be defined as an enterprise-wide set of
forecasting, planning and scheduling tools, which links customers and
suppliers into a complete supply chain, employs proven process for decision
making, and co-ordinates sales, marketing, operations, logistics, purchasing,
finance, product development, and human resources.
Process: Process is a set of logically related tasks that consumes one or more
inputs and creates an output.
Material Requirement Planning (MRP): The first phase of ERP was born in
1960s. It used master schedules, the bill of material and inventory records to
determine future requirements.
Closed-loop MRP: Emerged in 1970s, in this, additional planning functions of
sales and operations (production planning, master production scheduling and
capacity requirement planning) were included.
Feedback Loop: Feedback loop is provided from CRP module to MPS to
check if enough capacity is available to produce. Once the planning phase is
complete and the plans have been accepted as realistic and attainable, the
execution function comes into play.
ANNA UNIVERSITY 21
Notes SELF-ASSESSMENT QUESTIONS

Short Answer Questions
1. Describe the enterprise resources planning.
2. Explain the process.
3. What is material requirement planning?
4. Explain the closed-loop MRP.
5. Describe the feedback loop.
6. Explain the cross-functional integrated ERP system.
7. Explain the cross-functional integrated ERP system with financial
accounting.
8. Explain the cross-functional integrated ERP system with human resources.
9. Explain the cross-functional integrated ERP system with manufacturing
and logistics.
10. Explain the cross-functional integrated ERP system with Cost and Sales
Distribution (SD).
11. Explain the emergence of a service oriented architecture.
12. Describe the data warehousing.
13. Explain the data mining.
14. Explain the data management.
15. Describe the product data management.
16. What is three-tier client/server configuration?
17. Explain how to solve the problem of fragmentation of information concept.
18. Describe the concept of integrate information across the organization.
19. ERP provide direct access to which kinds of information?
20. Explain the model flow of ERP.
Long Answer Questions

1. Explain the concepts of ERP in detail.
2. Describe the evolution of ERP in detail.
3. Explain the risk and benefits associated with ERP.
4. Explain the concepts of fundamental of technology and issues to be
considered in planning design in detail.
5. Describe the implementation of cross-functional integrated ERP system
with various departments of an organization.
22 ANNA UNIVERSITY
6. Prepare a short note of your understanding about the concepts of ERP. Notes
7. “At present scenario of the world economic environment companies are
using the ERP in their business functions.” Explain this statement with the
relevant company examples.
8. A business manager is asked to prepare an ERP planning for their
organization, how would you assist him to prepare their ERP planning?
Support your answer with the relevant company examples.
9. Analyse the risk, benefits associated with the ERP systems and prepare a
short note on ERP that ERP is good for organization or not.
10. Prepare a detailed note on the cross-functional integrated ERP system of an
organization. Your report must be based upon a company of your choice.
FURTHER READINGS
Mishra Rajendra, (2008), Materials management, Excel Books,

New Delhi
Kumar Dharmindra & Gupta Sangeeta, (2009), Management
Information Systems, Excel Books, New Delhi
Leon Alexis, (2008), ERP Demystified, Tata McGraw Hill, New
Delhi
Harwood Stephen, (2003), ERP: The Implementation Cycle,
British Library
ANNA UNIVERSITY 23
Notes
24 ANNA UNIVERSITY
Lesson 2 - ERP Software Solutions
Notes
UNIT II
LESSON 2 - ERP SOFTWARE SOLUTIONS
CONTENTS
Learning Objectives
Learning Outcomes
Overview
2.1 ERP Systems
2.1.1 Information System Technologies
2.1.2 ERP Software Solutions
2.2 Small or Medium and Large Enterprise Vendor Solution
2.2.1 ERP Solutions for Small and Medium Sized Businesses
2.2.2 Criteria for Selection
2.2.3 ERP and Large Organization
2.2.4 Real and Unreal
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the concepts of ERP software solutions
 Describe the small, medium and large enterprise vendor solution
LEARNING OUTCOMES
understanding of:
 basics of ERP systems
 determine solutions of ERP software
 explain small or medium and large enterprise vendor solution
 analyzing ERP and large organization
ANNA UNIVERSITY 25
Notes OVERVIEW
Let us first review the previous lesson where you studied about the concepts of
Enterprise Systems and also learnt about the ERP fundamentals of technology.
In this lesson, you will understand the overview of ERP software solutions. At
the end of the lesson, you will learn about the small, medium and large
enterprise vendor solution.
understanding of the present scenario of the ERP software solutions. This
lesson will help you to understand the concepts of the small, medium and large
enterprise vendor solution.
2.1 ERP SYSTEMS

Enterprise Resource Planning (ERP) systems which are coming into vogue are
built with the vision to provide businesses with an integrated information
system. These systems implement business processes within the organisation to
achieve synergy in operation across various business units. The challenge for
ERP systems is to set up and integrate information resources across
geographically spread business units, to enable optimisation across the
organisation. Even though a multitude of technologies is involved in building
ERP systems, the implementation and post-implementation maintenance
should be made simple. Towards this objective, it is imperative that the ERP
systems satisfy some basic requirements of the customer.
ERP systems provide support for all variations of best business

practices and enable implementation of these practices with a view towards
enhancing productivity.
2.1.1 Information System Technologies

Information systems technologies are evolved from mainframe based
computing through the client server era, to where we are now heading - the
Internet era. These distinct phases are marked by parallel development in
hardware technologies. Client server era began when computing power
delivered at desktop machines increased manifold and matched mainframe-
computing power. These technologies limited the availability of information
services to users within an organisation. The Internet era has brought in the
ability to deliver information around the globe. This is made possible with
advancements in communication infrastructure.
With the arrival of the Internet, the biggest challenge facing ERP vendors is to
address the global access issues and deployment of information systems that
26 ANNA UNIVERSITY
will cater to intra-organisation and extra-organisation needs effectively. Over Notes

and above these challenges ERP systems need to leverage these technologies to
deliver complete (best business practices), usable (high productivity) and
adaptable (easy installation and post implementation maintenance) business
systems.
The user interface implemented using graphical user interface techniques is
deployed on client machines. Powerful server machines host the databases and
business logic written as server procedures. The databases are built using
relational database technology. Business logic is split depending on the product
architecture to be executed on the client, server or both.
With suitable communication infrastructure, these systems could be deployed
in a distributed environment and business processes may span across multiple
geographical locations. As an example, a purchase request could be raised at a
plant location to be processed by purchase department located miles away from
the plant.
The technologies deployed have allowed the ERP vendors to meet the requisite
objectives. Relational database systems have enabled the vendors to put in the
necessary flexibility in terms of business logic and data structures to support
parallel business practice implementations. Graphical user interfaces support
the usability aspect of business systems by providing intuitive and consistent
user interface. Object oriented development practice employed in building
graphical user interfaces has enabled the vendors to provide for easy
customisation and extension of interface components to accommodate
additional data entry. These technologies in general have allowed the users to
design the system in such a way that installation, customisation and extensions
are possible in shorter periods.
2.1.2 ERP Software Solutions

An Enterprise Resource Planning (ERP) system is an organizational and
management solution based on information technology towards challenges and
problems in the business environment.
The software solutions that apply ERP systems are: Database systems,
Communication protocols and User interface framework. These are discussed
as follows:
Database Systems
The current generation of database systems are based on relational technology
(RDBMS). These database systems support querying using standard query
language known as Structured Query Language (SQL). Business logic which
specifies the set of actions that need to be performed (such as check stock
situation and update inventory) is written using SQL and is invoked when user
performs an action. These database systems support access of multiple
ANNA UNIVERSITY 27
Notes distributed data sources and allow synchronising of data manipulation across
these sources.
ERP systems built on this technology will support organisations with the need
to setup distributed systems with less dependence on a central information
resource location. Use of standard query language will enable organisations to
perform post implementation maintenance with confidence since the systems in
place are not tied to proprietary languages. The skill needed to do this activity
will not be at a premium in the market place. Saleability issues are addressed
since sizing of hardware may be done to cater to the business process activities
performed at a specific location. Addition of new location(s) will not lead to
disruption at other locations.
Communication Protocols
The clients and servers in an ERP are connected on a communication
backbone. The protocols employed standardise the way data exchange takes
place across the network. Database systems employed at servers and the
processes on the client, use this protocol to send and receive data over the
network. Database protocols are specific to the database management systems
employed.
Since database systems employ common relation technology, the

data exchange is based on a common Open Data Base Connectivity
(ODBC) standard.
Most of the ERP systems use this to integrate client software with the business
logic procedures present on the server. Since communication protocols are
standardised, organisations can leverage advances in communication
infrastructure without worrying about the information systems that are
supported.
User Interface Framework

User interface component of an ERP generally follows Graphical User
Interface (GUI) approach. Use of GUI-based user interface enhances the
usability of ERP systems. GUI standards are derived to provide the best
application ergonomics with proper design. Interface elements applied in a
consistent manner greatly improves usability and helps in user training.
The operating systems environment of the client (such as Windows NT and
Windows 95) provides the graphical user environment. User interface for ERP
products conforms to the standards recommended by the operating system
vendors. This ensures minimum discomfort for users when they move from a
standard desktop application (such as MS Word and MS Excel) to the business
system application.
28 ANNA UNIVERSITY
Notes
Learning Activity
Select any organisation of your choice, study their working
software which is based on the ERP and prepare a short report on
your understanding about software solutions based on the ERP
systems of that organization.
2.2 SMALL OR MEDIUM AND LARGE ENTERPRISE

VENDOR SOLUTION
ERP is needed by all. One problem faced by Indian organisations is the mass
exodus of trained IT professionals. The acutely affected ones are the small to
medium enterprises most of which are left with one man ERP departments!
This makes it necessary for such enterprises to go for an ERP production than
attempt an in house development.
A misnomer that has gained acceptance in the recent past is that ERPs are
meant for large organisations and small to medium companies cannot afford
them. This statement is only partly true. The ERPs marketed are expensive and
smaller organisations cannot afford them. However, this does not mean that the
small and medium industries do not need an ERP. In fact, there is a greater
need for information integration in small and medium sized organisations
which lack the money power and business resilience of large enterprises. The
need of the hour is to provide micro ERPs, i.e. near ERP capabilities build into
a product and sold at an affordable price, including implementation.
In recent years, most ERP system suppliers have increased their focus on small
or medium sized organizations. There are some reasons for this trend including
a saturation of the market as most large organizations have already
implemented an ERP solution, increasing possibilities and need for the
integration of systems between organizations and the availability of relatively
inexpensive hardware. Given this development, it seems necessary to
understand the ways in which small or medium sized differ from large
organizations and the resulting consequences for ERP system selection and
implementation.
A major problem faced by Indian enterprises today is the lack of

integration of data amongst different functions like finance, production,
material and sales.
This can be attributed mainly to the fact that personal computers were installed
by individual departments over a period of time to perform departmental task
and no serious attempt was made to integrate them. It is common to find
companies having computers in stores, but not connected to the finance
department. As a result, finance will enter data again in their financial
ANNA UNIVERSITY 29
Notes accounting system and a host of people will be spending their time trying to
reconcile the statements from the two departments!
In the early days when the enterprises were small, organisations had
a customer focus. As they grew, they created different functions to manage
the system more efficiently. Unknowingly, this created barriers amongst
different functions and led to problems like: The CEO has to struggle hard
through many review meetings to simply get to know the true status of key
performance factors.
2.2.1 ERP Solutions for Small and Medium Sized Businesses

As sales of ERP systems to large manufacturing companies began to slow,
some vendors changed their focus to smaller companies. The overall market
for ERP systems grew 21 percent in 1998, despite the fact that sales to
companies with greater than $1 billion in revenues declined 14 percent during
the same period. "ERP applications are no longer just the stuff of huge
corporations,"
"While billion-dollar manufacturing companies are now completing their ERP
implementations, mid-size customers—witness to the improved business
processes of manufacturing market leaders—are beginning to refine their own
operations. Invariably the most substantial reason for companies to implement
ERP is that without it, staying competitive is a practical impossibility. The
business world is moving ever closer toward a completely collaborative model,
and that means companies must increasingly share with their suppliers,
distributors, and customers the in-house information that they once so
vigorously protected."
Of course, small and medium-sized companies—as well as those involved in
service rather than manufacturing industries—have different resources,
infrastructure, and needs than the large industrial corporations who provided
the original market for ERP systems. Vendors had to create a new generation
of ERP software that was easier to install, more manageable, required less
implementation time, and entailed lower start-up costs.
Many of these new systems were more modular, which allowed installation to
precede in smaller increments with less support from information technology
professionals. Other small businesses elected to outsource their ERP needs to
vendors. For a fixed amount of money, the vendor would supply the
technology and the support staff needed to implement and maintain it. This
option often proved easier and cheaper than buying and implementing a whole
system, particularly when the software and technology seemed likely to
become outdated within a few years.
30 ANNA UNIVERSITY
ERP is not only for large organizations. As SMB operations become more Notes
complex, it is essential for the software solutions to evolve and also become
more complex, making the adoption of a comprehensive ERP system a
necessity.
2.2.2 Criteria for Selection
Small and medium enterprises should look for and demand that they get a
software package which meets the following criteria:
Company Goals and Objectives
The primary reason to change to a new ERP system is to support your
company’s goals. Every company has different objectives. Some examples
might be:
 Growth goals: Can I double my business with the resources that I have?
 Efficiency goals: Can I task and process redundancy, so that each element
needs to occur just once, and multiple tasks can be folded together?
 Speed to market goals: Can I bring my product to market faster, satisfying
all regulatory requirements, and thereby gain market share faster?
Functional Software Requirements

Sure, all companies share general operations: accounting and marketing, for
example. But in terms of function, your specific industry will dictate the
details. The needs of your company will govern the features that are most
important to you.
Be mindful of all the functions that occur in an average business

day, and aim to review all the areas on the list even if your current processes
are currently being done.
Costs
Be sure to include the following components:
 Software cost. It is widely considered to be a weak link in Software Project
Management. It requires a significant amount of effort to perform it
correctly.
 Annual support cost. Be sure to understand how the fee can escalate.
 Implementation costs. Be sure to ask for a detail statement of work so you
can compare hours by phase and the hourly rate for the different.
Consultant to be put on the project.
 Hardware costs. Include the servers, but also any infrastructure upgrade
requirements, and any shop floor or mobile devices planned.
Always consider the costs affordability while selecting an ERP system.
ANNA UNIVERSITY 31
Notes Domain Knowledge of Suppliers

It is important that the software developer or supplier knows your industry and
is willing to implement the software for you. If you are a manufacturing
enterprise, buy the software from people who have the experience in
manufacturing industries.
Local Support
Low-end software packages developed abroad and sold in India are not likely
to be adequately supported with regard to implementation. The buyers must
know that an ERP or MRP is not the same as ‘Window 95’. For effective
implementation, such packages will need lot more support from vendors both
in terms of IT expertise and domain knowledge.
Technically Upgradeable
Ensure that the suppliers undertake to upgrade the products to make best use of
technologies which are likely to become available in the future. With the
advent of internet, intranet, EDIs, ability to upgrade oneself is important.
Obviously, no supplier will do it for free. But a contract that binds the supplier
to do it for an annual cost of say 15% of the software is indeed worthwhile.
Uses Latest Technology

It is useful to choose a product which is designed based on object-oriented
technology and graphic user interfaces. These are easy to implement, user
friendly and amenable to modifications in future.
2.2.3 ERP and Large Organization

India is a country that boasts of five decades of domestic manufacturing, easy
availability of skilled workers and English being the accepted business
language. It is also a country where the first MRP-II, ERP systems made their
entry over a decade ago. And yet, the market penetration of ERP is estimated at
a piddling 6 per cent! And if it were not for the last two years, when the market
is estimated to have grown by 75 per cent, this percentage would have been
even smaller. And just how small it is, is indicated by the fact that in absolute
value terms the market is expected to be around ` 1200 crore by year 2020.
ERP and High Cost

Certainly, ERP systems do not come cheap but the investment needs have to be
weighed against benefits and the opportunity cost of not implementing. Most
companies which have done this exercise say that without their ERP system
their very competitiveness would be under threat. Unfortunately, ERP vendors,
in their anxiety to create the largest possible market space for themselves,
responded by slashing prices to correct this anomaly. In fact, a better part of
1997 and 1998 was spent by vendors trying to outdo each other by exploring
new depths in product pricing. As a consequence, they are losing out on the
32 ANNA UNIVERSITY
opportunity of educating Indian corporate on correctly evaluating the need for Notes
ERP.
ERP and Lack of Backup

The feeling is that there are not enough people out there who know enough
about these systems. So, the customers fear that there may not be adequate
service and support both during and post implementation. However, over the
years, ERP vendors have created a network of distributors and system
integrators, while simultaneously increasing the number of consultants. Also,
newer technologies and improvements in communications have given ERP
vendor’s unconventional yet effective methods of servicing customers.
Example: Most ERP vendors host a web site where software patches to
the most oft reported problems are listed. Customers need only download the
desired ‘fix’, install it and run it. In fact, most vendors are well geared to sell,
implement and service customers. Yet even these capabilities have not brought
a rush of new ERP customers.
ERP and Benefits

Recently in an ERP seminar, a company using an ERP system shared its
experience. The presenter, the General Manager for materials, described the
ERP system thus: “It is a damsel during evaluation, transforms into an elephant
during implementation and finally a dinosaur after some time.” Clearly, this
organisation did not reap the benefits of the ERP system. Does it mean that this
is the case rather than the exception? No, simply because in an implementation
one has to go through a formal review, make out an accurate estimate of the
cost and a list of realistic benefits.
Companies which fail to do all this often find their ERP implementation not
succeeding. The above-mentioned company did not go through the above
process and paid for it. Unfortunately, such misadventures are amplified and
lead to wrong conclusions about ERP systems.
Example: Here it would be pertinent to look at the usage of ERP

systems in America. There is much to learn from their experience.
Organisations in America have used integrated software solutions for three
decades. First they used timeshare systems for data processing jobs, e.g., trial
balances, payroll, etc. Then they moved to host-based systems, running both
batch and rudimentary online application, like material management,
purchasing, financial accounting and distribution.
India, in contrast, is a first-time user market. Computer applications are not a
pervasive way of doing business. Even today state excise authorities (with
jurisdiction over liquor and tobacco) refuse to accept excise returns in any
format other than manual registers. EDI is not an established data interchange
ANNA UNIVERSITY 33
Notes practice in trade. Electronic payments are not legal. One estimate puts India’s
PC penetration at 0.7 per one thousand people.
Historically organisations in India did not invest in commercial information
systems. Rather, the in-house EDP team wrote applications to handle
departmental functions like financial accounting, payroll and finished goods
tracking. The cash outflow to acquire such systems was only the cost of
development tools. The costs of labour, time overruns, poor quality, and
multiple rewrites were not factored into the total cost. So when the ERP
systems entered, companies made the mistake of comparing the cost of
‘in-house’ systems and the ERP systems.
2.2.4 Real and Unreal

The implementation of an ERP system is a project which means an appraisal
should be done before management sign-off. The perceived benefits,
commitment of management time, roles and responsibilities, are some aspects
that need to be reviewed, agreed and communicated prior to the start of the
project. The misconceptions about ERP systems and lack of awareness are
another chief factor for the low penetration of ERP systems in India. On
another plane, India is not integrated into global markets.
Example: Our currency is non-convertible, our stock exchanges are not

in any global alliance, we do not have a patent regime, and our labour laws are
archaic. Yes, the economy has been ‘opened up’ but not enough. Foreign
investors still face daunting procedures for approvals. Few joint ventures are
crafted to exploit any tangible business strengths of the Indian partner; instead
foreign investors too often tie up with Indian promoters and let them handle the
bureaucracy, labour, regulatory agencies and politicians. The playing field in
India is slanted in favour of domestic industry. Companies continue to thrive
on protectionist barriers-to-entry and labour-rate arbitrage. Only when faced
with intense competition (the kind that throws people out of business) will
organisations respond: with new products, with better distribution channels,
with true customer service. And that is when organisations will need timely,
accurate information to support the changes in business. So, the absence of a
stimulus to change is another factor limiting wider acceptance of ERP systems
in India.
It is not cost, availability, service-standard, or risk of ERP systems that limit its
acceptance and hence level of penetration. Rather, it is the non-pervasive IT
culture, the absence of external stimuli to change and the lack of awareness.
Acceptance of ERP will raise once these factors change.
34 ANNA UNIVERSITY
Notes
Learning Activity
Prepare a detailed note on your understanding about the ERP in
small, medium and large organizations in India. Support your
report with industries’ examples.
ABC Cellular
A
BC Cellular is a subsidiary of ABC Communications, a global
wireless communications company serving 6.7 million customers
worldwide in the areas of cellular, paging, Personal
Communications Services (PCS) and Global star satellite system markets.
Problem
ABC financial analysts, located in different functional groups in five
geographic regions, were missing access to the same data, as well as timely
access to information. Dated budget and actual numbers for each business
unit resided in seven different systems, separating critical components of the
P&L and inhibiting analyst’s ability to assess results. To further complicate
matters, analysts in the field could not go to one universal place to retrieve
the data themselves they relied on the home office to deliver it.
Solution
Set some critical financial objectives to help it to remain competitive in the
increased market share. ABC chose Oracle Corporation’s Online Analytical
Processing (OLAP) tools to better control costs, analyse performance,
evaluate opportunities and formulate future direction. And to improve the
basis for making decisions quickly and accurately with real-time, consistent
data; to improve cost control and to simplify and shorten the budgeting
process.
Implementation
ABC Cellular looked at two other vendors before choosing Oracle, but
could provide neither user with the hands-on ability to consolidate budgets,
include actual in the process or do what-if scenarios online. Air Touch
Cellular’s parent company also had a proven, successful record of
accomplishment with other Oracle applications and a corporate initiative to
make Oracle the vendor of choice.
Oracle provided on-site expertise in the product, the concept and the
business to create a user-friendly system. The project came in on time and
within budget, with very few post-implementation issues. Completing the
entire implementation in eight months was quite a feat, given the many
Contd...
ANNA UNIVERSITY 35
Notes changes that occurred in that period, according to the company. Not only
did the company convert to a new system, it completely overhauled the
budget process and the P&L reporting format amid departmental and
company reorganisations.
Benefits
More than $8 million in hard and soft dollar savings reduced the length of
the budgeting cycle and the number of people involved in the process,
keeping the company financially competitive in a growing market. The
system now provides online, real-time access to information.
Now, analysts can individually access the same data warehouse for current,
real-time information for their analyses. This means the vice presidents
from each business unit in the division now have the data they need budget
or actual on a timely basis, thus, enabling business units to make better,
faster business decisions based on more accurate information. Their
increased understanding of the data helps them run their slices of the
business more effectively, because they can now make real-time, online
decisions that help them stay on budget or shift business direction.
Questions
1. Comment on the problem faced by the ABC Cellular. How the ERP
solutions did have provided the solution for their problem?
2. Analyse the above case study in your own words and prepare a detailed
note on it.
1. ERP systems that are currently available belong to the

client server era. These systems are built with a clear
separation of functional components.
2. As commercial systems evolved from material
planning (MRP) to manufacturing planning (MRP-II),
to finally enterprise planning (ERP), companies
continued incremental investment to bring in newer
system.
SUMMARY
 Enterprise Resource Planning (ERP) systems which are coming into vogue
are built with the vision to provide businesses with an integrated
information system.
 These systems implement business processes within the organisation to
achieve synergy in operation across various business units.
36 ANNA UNIVERSITY
 The challenge for ERP systems is to set up and integrate information Notes
resources across geographically spread business units, to enable
optimisation across the organisation.0
 Even though a multitude of technologies is involved in building ERP
systems, the implementation and post-implementation maintenance should
be made simple. Towards this objective, it is imperative that the ERP
systems satisfy some basic requirements of the customer.
 Information systems technologies are evolved from mainframe based
computing through the client server era, to where we are now heading - the
Internet era. These distinct phases are marked by parallel development in
hardware technologies.
 Client server era began when computing power delivered at desktop
machines increased manifold and matched mainframe-computing power.
These technologies limited the availability of information services to users
within an organisation.
 The Internet era has brought in the ability to deliver information around the
globe. This is made possible with advancements in communication
infrastructure.
 With the arrival of the Internet, the biggest challenge facing ERP vendors is
to address the global access issues and deployment of information systems
that will cater to intra-organisation and extra-organisation needs
effectively.
 Over and above these challenges ERP systems need to leverage these
technologies to deliver complete (best business practices), usable (high
productivity) and adaptable (easy installation and post implementation
maintenance) business systems.
KEYWORDS
Enterprise Resource Planning (ERP): ERP systems are coming into vogue
are built with the vision to provide businesses with an integrated information
system.
Information Systems Technologies: These technologies are evolved from
mainframe based computing through the client server era, to where we are now
heading - the Internet era.
Client Server Era: It began when computing power delivered at desktop
machines increased manifold and matched mainframe-computing power. These
technologies limited the availability of information services to users within an
organisation.
Internet Era: It has brought in the ability to deliver information around the
globe. This is made possible with advancements in communication
infrastructure.
ANNA UNIVERSITY 37
Notes Business Logic: It specifies the set of actions that need to be performed (such
as check stock situation and update inventory) is written using SQL and is
invoked when user performs an action.
Technically Upgradeable: It ensures that the suppliers undertake to upgrade
the products to make best use of technologies which are likely to become
available in the future.
SELF-ASSESSMENT QUESTIONS
1. Describe the enterprise resource planning (ERP) systems.
2. What is business processes?
3. What are the challenges for ERP systems?
4. What are the objectives of ERP systems?
5. Which support is provided by ERP systems?
6. Explain the ERP technologies.
7. Describe the information system.
8. What is client server era?
9. What is the internet era?
10. What is the internet?
11. What are the biggest challenges faced by the ERP vendors?
12. Explain the database.
13. What is business logic?
14. Explain the communication infrastructure.
15. What is relational database system?
16. What is graphical user interfaces?
17. What is structured query language (SQL)?
18. Explain the communication protocols.
19. What are the criteria for selection of ERP system?
20. Explain the domain knowledge of suppliers.

1. Explain the concepts of ERP software solutions in detail.
2. Describe the various ERP technologies in detail.
38 ANNA UNIVERSITY
3. “ERP is needed by all”. Explain this statement with relevant example in Notes
detail.
4. What are the criteria for selection of ERP system in small and medium
organizations? Describe it in detail.
5. Explain the concepts of ERP and large organization.
6. Explain how ERP is related to the high cost for large organization.
7. Describe the concepts of ERP and lack of backup.
8. Explain the various benefits offered by the ERP for large organization.
9. Describe the concepts of real and unreal ERP of large organization.
10. Suppose you are a manager of a company, you are asked to prepare an ERP
requirement plan for the company. How you will prepare your report?
What are the points you will consider while making an ERP plan for your
organization?
FURTHER READINGS
Diwan Parag & Sharma Sunil, (2000), Enterprise Resource

Planning, Excel Books, New Delhi
Arora Ashok & Bhatia Akshaya, (2010), Management Information
Systems, Excel Books, New Delhi
Grant Gerald G. (2003), ERP & Data Warehousing in
Organizations: Issues and Challenges, IRM Press, UK
Kremzar Michael H. & Wallace Thomas F, (2001), ERP: Making
It Happen: The Implementers' Guide to Success with Enterprise
Resource Planning, John Wiely & Sons. Canada
ANNA UNIVERSITY 39
Notes
LESSON 3 - BUSINESS PROCESS
REENGINEERING
CONTENTS
Learning Objectives
Learning Outcomes
Overview
3.1 Business Engineering
3.1.1 Best Business Practices
3.2 Business Process Management
3.2.1 Business Process Management Techniques
3.3 Business Process Reengineering
3.3.1 Implementation of BPR
3.3.2 Reengineering Structure
3.3.3 Change Management and BPR
3.4 BPR Role in ERP Implementation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the concepts of Business Engineering
 Describe the Business Process Management
 Explain the concepts of Business Process Reengineering
LEARNING OUTCOMES
understanding of:
 basics of business engineering
 analyzing best business practices
40 ANNA UNIVERSITY
Lesson 3 - Business Process Reengineering
 concept of business process management Notes

 explain business process management techniques
 identifying business process reengineering
 explain implementation of BPR
 determine change management and BPR
 explain BPR role in ERP implementation
OVERVIEW
Let us first review the previous lesson. You have studied about the concepts of
overview of ERP software solutions. At the end of the previous lesson, you
have studied about the small, medium and large enterprise vendor solution.
In this lesson, you will understand the business engineering and the best
business practices. At the end of the lesson, you will learn about the business
process reengineering and business process management.
understanding of the present scenario of the business engineering and process
reengineering. This lesson will help you to understand the concepts of the
business process management.
3.1 BUSINESS ENGINEERING

Engineering business processes is paramount for businesses to stay competitive
in today's marketplace. Over the last 10 to 15 years, companies have been
forced to improve their business processes because customers are demanding
better and better products and services. There are a large number of suppliers
in the marketplace to choose from (hence the competitive issue for businesses).
Many companies began business engineering process improvement with a
continuous improvement model. This model attempts to understand and
measure the current process and make performance improvements accordingly.
Figure 3.1 illustrates the basic steps. You begin by documenting what you do
today, establish some way to measure the process based on what your
customers want, do the process, measure the results, and then identify
improvement opportunities based on the data you collected. You then
implement process improvements and measure the performance of the new
process. This loop repeats over and over again, and is called continuous
process improvement. You might also hear it called business process
improvement, functional process improvement, etc.
Document Identify and

Establish Follow Measure
the as is implement
measures process performance
process improvement
Figure 3.1: Continuous Improvement Model
ANNA UNIVERSITY 41
Notes This method for improving business processes is effective to obtain gradual,
incremental improvement. However, over the last 10 years several factors have
accelerated the need to improve business processes. The most obvious is
technology. New technologies (like the Internet) are rapidly bringing new
capabilities to businesses, thereby raising the competitive bar and the need to
improve business processes dramatically. Another apparent trend is the
opening of world markets and increased free trade. Such changes bring more
companies into the marketplace, and competing becomes harder and harder. In
today's marketplace, major changes are required to just stay even. It has
become a matter of survival for most companies.
As a result, companies have sought out methods for faster business process
improvement. Moreover, companies are looking for breakthrough performance
changes, not just incremental changes, as envisaged earlier. Because the rate of
change has increased for everyone, few businesses can afford a slow change
process. An approach for rapid change and dramatic improvement that has
emerged is Business Process Reengineering (BPR).
In today's ever-changing world, the only thing that does not change is 'change'
itself. In a world it is increasingly driven by the three Cs: Customer,
Competition and Change. Companies are on the lookout for new solutions for
their business problems. Recently, some of the more successful business
corporations in the world seem to have hit upon an incredible solution.
3.1.1 Best Business Practices

The ERP packages come with a repository of options for various business
processes. With hundreds of many year efforts and experience gained from
studying organisations from almost all industries across the world, the ERP
vendors have acquired the expertise to encode the ‘best practices’ for various
business processes. The user organisation has the choice of selecting the most
suitable option for each of their business processes.
The task of process selection is far trickier than it sounds. An organisation
looking mainly to automate its processes would simply map its current
processes on the package. Its approach would be quite different from an
organisation which is aiming for process improvement. Such an organisation
again has two options. It can undergo a process improvement or a BPR
exercise first and go ahead with ERP implementation later.
Pure BPR
With pure BPR, business processes are reengineered into an ideal form. While
standard packages are usually still chosen to support these new processors,
inevitably they require modifications and some custom development to achieve
the best fit.
Each modification of a package detracts from its value. Moreover,
modifications cost time and money and are not usually supported by the
42 ANNA UNIVERSITY
package vendor. Even worse, upgrades to the basic package are then often Notes
impossible to apply. As more upgrades become available, support for the
original package eventually stops. The traditional approach to BPR is still valid
as is the choice of packaged software, even if it is being used as a starting point
for large-scale customisation. Pure BPR can produce excellent results.
Channelled BPR
Channelled BPR, in contrast, begins with a strategic choice of software
package based on a high-level requirement and selection exercise, for example,
a conference room pilot. Business processes are then designed around the
known capabilities of the package. While businesses are inclined to believe
that they have a greater understanding of their needs than any software vendor
does, today’s modern packages are the result of intensive research and
development, drawing on experience of best business solutions in a wide range
of industries. If carefully chosen, they cannot only fulfil most business
requirements but also provide a broader view of what is possible.
The choice of package to support business processes, which by their nature run
across different functions, in different departments, is relatively small. It is
limited to those which are fully integrated. Even so, no two packages are
identical in their capabilities.
Some initial work is necessary to choose the best package based on a
company’s vision and business needs. The BPR team can then use process
models contained in the package as a tool to design business processes that
exploit the strengths of the software and meet business needs.
Example: Leading software packages from SAP, Baan or SSA, already

have well-developed business process options that are documented and
modelled. They might support a centralised purchasing function as well as one
with devolved responsibilities.
Advantages of Channelled BPR

The advantages of channelled BPR are as follows:
 It saves time and effort in modelling the new processes since they are
already detailed and documented by the package supplier.
 This helps to maintain the momentum of a BPR exercise which is crucial.
 Too often traditional BPR projects flounder in the early stages because the
ideal processes developed on high cannot be accommodated by the
software. Then processes have to be reworked until a technical solution is
at least feasible.
 Channelled BPR results in the implementation of standard facilities within
the software package.
ANNA UNIVERSITY 43
Notes  Even if the fit is not perfect, relatively few modifications or custom
developments are needed. The benefits in terms of maintaining the software
are obvious.
Pure ERP
Pure ERP approach implies mapping the organisation’s current processes onto
the package. The emphasis is not on arriving at a ‘to-be’ process model as a
result of the business vision and strategy. The process selection exercise boils
down to finding out the closest match to what the organisation is doing at that
point in time. The willingness to change the processes is quite low. However,
the sheet integration of work across the organisation that the package brings in
can deliver certain benefits, although not substantial, to the organisation. The
very fact that the enterprise wide data is available opens the possibility of
better decision-making.
3.2 BUSINESS PROCESS MANAGEMENT

Business process management is the ensemble of activities of planning and
monitoring the performance of a process. Especially in the sense of business
process, often confused with reengineering. Sometimes, process management
includes reengineering or reengineering includes process management.
Business process management is the application of knowledge, skills, tools,
techniques and systems to define, visualize, measure, control, report and
improve processes with the goal to meet customer requirements profitably. It
can be differentiated from program management in that program management
is concerned with managing a group of inter-dependent projects. But from
another viewpoint, process management includes program management.
Process management is primarily about the prevention of errors. It provides a
foundation for building quality into production by eliminating errors at source.
This is a major criterion, covering a great deal of ground. It starts with the
conversion of customer requirements into design features and then winds its
way through process-quality assessment and control and the quality of support
services and suppliers. Improving business processes is paramount for
businesses to stay competitive in today’s marketplace. Here are some
arguments to justify the view:
 Over the last 10 to 15 years companies have been forced to improve their
business processes because we, as customers are demanding better and
better products and services and if we do not receive what we want from
one supplier, we have many other to choose from.
 New technologies are rapidly bringing new capabilities to businesses,
thereby raising the competitive bar and the need to improve business
processes dramatically.
44 ANNA UNIVERSITY
 Another apparent trend is the opening of world markets and increased Notes
trade. Such changes brig more companies into the market place and
competing becomes harder and harder.
 In today’s marketplace, major changes are required to just stay even. It has
become a matter of survival for most companies. Moreover, companies
want breakthrough performance changes, not just incremental changes and
they want it now.
As a result, companies have sought out methods for faster business process
management. Many companies have benefited by methods like process of
reengineering. There is saving of time, effort and money along with increased
efficiency.
Example: IBM Credit Corporation cut the process of financing IBM

computers, software and services from seven days to four hours by rethinking
the process. Originally, the process was designed to handle difficult
applications and required four highly trained specialists and a series of hand
offs. The actual work took only 1 to 5 hours; the rest of the time was spent in
transit or delay. By questioning the assumption that every application was
unique and difficult to process, IBM Credit Corporation was able to replace the
specialist by a single individual supported by a user friendly, computer system
that provided access to all the data and tools that the specialists would use.
3.2.1 Business Process Management Techniques

Process management should be a proactive task of management in a
competitive world. The process management had started back in 1900s when
Taylor announced his scientific management principles. One of the principles
states: Science, not a rule of thumb. Science is a body of knowledge evolved
by inquiry. Business process management techniques are many and some of
them are given below.
5W 2H Method
Questioning and old ways lead to new ideas. The simple approach to
questioning is - 5W2H:
 What is being done?
 Why is this necessary?
 Where is it being done?
 When is it done?
 Who is doing it?
 How is it being done?
 How much does it cost now?
ANNA UNIVERSITY 45
Notes On-the-job creativity is every body’s property and many people have
discovered it can pay to sit back and think of new methods of doing things.
Work Simplification
Work can be simplifies removing unnecessary elements in method and
motions. Helpful tools are:
 Motion study
 Method study
 Gantt chart
 Efficiency principles
Kaizen Method
Kaizen focuses on small gradual and frequent improvements over the long term
with minimum financial investment.
Hoshin Kanri
Hoshin Kanri is a process improvement technique that unites an organization to
reach a single goal. There are four aspects that are tackled in this process
improvement method. The first is that the organization must focus on
achieving a single goal. When the goal is determined, it must be conveyed to
all the leaders in the organization. The leaders are then going to plan and
brainstorm different ways on how to achieve the goal that was set. The whole
organization then joins in to help achieve their goal.
Performance Improvement
Process improvement or project improvement deals with the analysis of the
output of an organizational process. The process quality is then changed in
order for the output to increase and improve. This is similar to benchmarking,
but instead of comparing the quality to society’s norm, the quality of the output
is compared to the previous output from the organization. By doing this, the
organization is sure to achieve or know the best technique to use for maximum
productivity.
Theory of Constraints
The Theory of Constraints is a method that helps organizations to achieve their
objectives. This method is carried out with the help of five focusing steps. The
first one is to identify the constraint or the factor that is preventing the
organization from reaching its goal. The second is to think of ways to use the
constraint to your advantage. The third is to unite the entire organization to be
able to take advantage of the constraint. The fourth is to increase the constraint,
and the fifth is to repeat the first focusing step if the constraint has changed.
46 ANNA UNIVERSITY
Stretch Goal (Six Sigma) Notes

The Six Sigma process improvement technique deals with improving the
quality of the output. This is done by removing factors that may add to errors
in the end product. Key people are then chosen to improve the process and
eliminate the errors in production. The people chosen are experts in their field,
so they are sure to eliminate the cause of error.
Example: Some companies like Motorola use defects per units as

quality measure throughout the company.
A concept known as six sigma refers to allowing a maximum of

3.4 defects per million units produced.
For instance, the goals are set in different areas as follows:

 Improve product and service quality ten times by the end of next year.
 Improve product and service quality at least 100 times by the end of second
year.
 Achieve a culture of continuous improvement to assure customer
satisfaction.
 Achieve ultimate goal of zero defects in everything done.
Learning Activity
Select any organisation of your choice, study their functional
aspects of organizational ERP system and their best business
practices and management and prepare a short report on your
understanding about it.
3.3 BUSINESS PROCESS REENGINEERING

Reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical, contemporary
measures of performance such as cost, quality, service and speed. The
keywords in the preceding definition are the italicized ones.
BPR advocates that enterprises go back to the basics and re-examine their very
roots. It does not believe in small improvements. Rather, it aims at total
reinvention. As for results, BPR is clearly not for companies who want a 10%
improvement. It is for the ones that need a tenfold increase.
BPR relies on a different school of thought than continuous process
improvement. In the extreme, reengineering assumes the current process is
irrelevant it does not work, it is broke, forget it. Start over. Such a clean slate
ANNA UNIVERSITY 47
Notes perspective enables the designers of business processes to disassociate

themselves from today's process, and focus on a new process.
BPR focuses on processes and not on tasks, jobs or people. It

endeavours to redesign the strategic and value-added processes that
transcend organizational boundaries.
In a manner of speaking, it is like projecting yourself into the future and asking
yourself: what should the process look like? What do my customers want it to
look like? What do other employees want it to look like? How do best-in-class
companies do it? What might we be able to do with new technology?
Such an approach is explained below. It begins with defining the scope and
objectives of your reengineering project, then going through a learning process
(with your customers, your employees, your competitors and non-competitors,
and with new technology). Given this knowledge base, you can create a vision
for the future and design new business processes. Given the definition of the
"to be" state, you can then create a plan of action based on the gap between
your current processes, technologies and structures, and where you want to go.
It is then a matter of implementing your solution.
Scope of Learn Create

Plan Implement
improvement from new
transition
Project others process
Figure 3.2: BPR

Thus, the extreme contrast between continuous process improvement and
business process reengineering, lies in where you start (with today's process, or
with a clean slate), and with the magnitude and rate of resulting changes.
Some areas where changes can be brought through BPR are:
 Organization Structure
 Management System
 Employee Responsibilities
 Performance Measurement
 Incentive System
 Skill Development
 Use of IT
 Process Change
 Technology
48 ANNA UNIVERSITY
3.3.1 Implementation of BPR Notes

Implementation of BPR involves several steps and these steps can be explained
under phases of implementation. Basically, there are four phases of BPRE
namely, Preparation phase, Planning phase, Design phase and Evaluation
phase. Each phase with steps involved in respective phases is explained below.
Phase I: Preparing for Change

 Top management explores the reengineering process
 Educate management on the reengineering process and the needs to
change
 Create a reengineering steering committee
 Develop an initial action plan.
 Prepare the workforce for involvement and change
Phase II: Planning for Change

 Create a vision, mission and guiding principles
 Identify core competencies
 Develop a vision statement
 Develop a mission statement
 Determine the guiding principles
 Develop a 3-5 year plan
 Conduct a current business review
 Determine the external environment factors
 Conduct an internal health review
 Complete business-as-usual forecasts
 Conduct a gap analysis
 Develop a 3-5 year strategic plan
 Develop yearly operational or breakthrough plans
 Develop operational objectives
 Organize resources
 Rank potential changes in order of priority
 Develop yearly operational plans and budgets
 Apply and evaluate operational plans
ANNA UNIVERSITY 49
Notes Phase III: Designing the Change

 Identify the current business processes
 Determine the critical organizational processes
 Measure the critical processes
 Rate the process performance
 Identify opportunities and processes to be re-engineered.
 Establish the scope of the process-mapping project
 Identify the process stakeholders
 Create the project's mission and goals
 Structure and select team members
 Develop a work plan.
 Map and analyse the process
 Depict the process in a flow chart
 Depict the process in a an integrated flow chart
 Complete the process mapping worksheet
 Complete the process constraint analysis
 Compete the cultural factor analysis
 Create the ideal process
 Describe the ideal process on paper
 Compare the current process to the ideal process
 Assess the gaps.
 Test the new process
 Develop the pilot objectives
 Develop the pilot measures
 Gain agreement and approval form stakeholders
 Conduct a pilot test of the new process
 Assess the impact of pilot test.
 Implement the new process
 Develop the implementation action plan
 Execute the plan.
50 ANNA UNIVERSITY
Phase IV: Evaluating the Change Notes

 Review and evaluate measures
 Has the steering committee evaluated the results?
 Revise the three to five-year strategic plan, if necessary.
 Repeat the yearly operational/breakthrough planning cycle.
3.3.2 Reengineering Structure

Organizations are human systems and their system structure includes the work
culture, beliefs, and mental models of their leaders and members. Changing
organizational behaviour requires changing the belief system of its personnel.
Organizational performance ultimately rests on human behaviour and
improving performance requires changing behaviour. Therefore, organizational
restructuring should have as a fundamental goal the facilitation of clear, open
communication that can enable organizational learning and clarify
accountability for results.
Since the world is continuously changing, organizational

restructuring and learning is necessary to stay up to date. Leaders should
periodically examine the organizational structure of their enterprise to
assure that it continues to provide an environment for organizational
learning.
Symptoms indicating the need for reengineering structure are as follows:

 Accountability for results are not clearly communicated and measurable
resulting in subjective and biased performance appraisals.
 Parts of the organization are significantly over or under staffed.
 Organizational communications are inconsistent, fragmented, and
inefficient.
 Technology and/or innovation are creating changes in workflow and
production processes.
 Significant staffing increases or decreases are contemplated.
 Personnel retention and turnover is a significant problem.
 Workforce productivity is stagnant or deteriorating.
 Morale is deteriorating.
 New skills and capabilities are needed to meet current or expected
operational requirements.
ANNA UNIVERSITY 51
Notes
Common Pitfalls of BPR are: BPR cannot solve all the problems
and hence it can be considered as a solution for all the organizational
problems; BPR may face many difficulties in implementation; Stiff
resistance may come from staff as it involves radical changes in structure,
processes, methods etc. and resistance to change is a common phenomenon
in all organizations; BPR relies heavily on IT and it may need heavy
investment in software and hardware.
3.3.3 Change Management and BPR

BPR involves bringing in radical changes in organizational processes, methods,
structure, etc. Change makes people uncomfortable and thus any BPRE
initiative in organizations will result in stiff resistance from its employees who
may be influenced by change. Managing change usually requires a well-
defined process. Change management process helps to define the steps
necessary to achieve the desired changes and desired outcomes. The change
management process is the sequence of steps or activities that a change
management team or project leader would follow to apply change management
to a project or change. The most effective and commonly applied change, most
change management processes contain the following three phases:
 Phase 1 – Preparing for change (Preparation, assessment and strategy
development)
 Phase 2 – Managing change (Detailed planning and change management
implementation)
 Phase 3 – Reinforcing change (Data gathering, corrective action and
recognition)
Thus, BPRE requires successful change management process and any BPRE
failure may be due to lack of planning and failure to plan the change and
implement it.
Learning Activity
Prepare a detailed note on your understanding about the BPR in an
organization. Support your report with an industrial example.
3.4 BPR ROLE IN ERP IMPLEMENTATION

Processes, organization, structure and information technologies are the key
components of BPR, which automates business processes across the enterprise
and provides an organization with a well-designed and well-managed
information system. While implementing ERP, the organizations have two
options to consider.
52 ANNA UNIVERSITY
Either the organization must reengineer business processes before Notes

implementing ERP or directly implement ERP and avoid reengineering.
In the first option of reengineering business processes, before implementing
ERP, the organization needs to analyze current processes, identify non-value
adding activities and redesign the process to create value for the customer, and
then develop in-house applications or modify an ERP system package to suit
the organizations requirements. In this case, employees will develop a good
sense of process orientation and ownership.
This would also be a customized solution keeping with line of the
organization's structure, culture, existing IT resources, employee needs and
disruption to routine work during the change programmer likely to be the least.
It could have a high probability of implementation. The drawback of this
option is that the reengineered process may not be the best in the class, as the
organization may not have access to world-class release and best practices.
Moreover, this may be the only chance to radically improve in the near future
and most attention should be paid while choosing the right ERP. Also,
developing an in-house application or implementing a modified ERP is not
advisable.
The second option of implementing ERP package is to adopt ERP with
minimum deviation from the standard settings. All the processes in a company
should conform to the ERP model and the organization has to change its
current work practices and switch over to what the ERP system offers. This
approach of implementation offers a world-class efficient and effective process
with built-in measures and controls, and is likely to be quickly installed.
But if the employees do not have good understanding of their internal customer
needs or current processes, or if these processes are not well defined and
documented, then it is quite possible that while selecting the standard process
from the ERP package, employees may not be able to perceive the difficulties
likely to be encountered during the implementation stage. Employees would
lack process ownership and orientation. Other than technical issues, issues like
organization structure, culture, lack of involvement of people etc. can lead to
major implementation difficulties, and full benefits of standard ERP package
may not be achieved. It may lead to a situation where the organization may
have to again reengineer its processes. This could be a very costly mistake.
There is also a third option of reengineering business process during
implementation of ERP. But it does not considered to be a practical option and
is likely to cause maximum disruption to existing work. It should not be
forgotten that during BPR and ERP initiatives, routine work is still to be
carried out and customers need to be served.
ANNA UNIVERSITY 53
Notes
BPRE at Income Tax Department
Background and Need for the Project

Collection of Direct Taxes which is administered by the Income Tax
Department (ITD for short) has been growing at a very fast pace in recent
years. Direct taxes collections in Financial Year 2007-08 stood at
` 3,14,468 crore as against ` 48,280 crore in the Financial Year 1997-98.
Similarly, the taxpayer base has also expanded and the number of tax payers
at the beginning of FY 2007-08 stood at 3 crore. This scenario coupled with
globalization of the world economy, reduction of trade barriers and
technology-enabled methods of conducting business has redefined the
performance expectations from the ITD posing a challenge to its capacity
and functioning as an efficient organization. A need was thus felt to
critically review the existing functioning of the Income Tax Department.
The Hon'ble Finance Minister in his budget speech of 2006 announced that
IT Department will undergo business process re-engineering. A Directorate
of BPR was accordingly created in May 2006 headed by an officer of the
rank of Director General of Income Tax. Through a global tendering
process, M/s PricewaterhouseCoopers was appointed as external consultant
for the BPR project. The Business Process Re-engineering exercise was
conducted by the BPR Directorate with the objective of enabling the ITD to
deal with the challenges emerging from the new work environment.
Objectives of the Project
In recent years, the Income Tax Department has taken a number of
initiatives and implemented projects aimed at providing better taxpayer
service, reducing compliance burden on taxpayers and improving
enforcement. While these initiatives have benefited the taxpayers, there
remained severe operational bottlenecks and fundamental issues of aligning
people, processes and technology. The BPR project was conceptualized
with the prime objective of identifying the bottlenecks and providing
solutions in the form of redesigned processes which are simpler, efficient
and will harness the advantages of the upgraded information technology
which is being acquired.
The main objectives of the BPR project can be summarized as under:
 Re-evaluation of all current processes to remove the redundant and
obsolete processes and redesign or create new processes which are more
efficient and maximize use of resources to produce the best results.
 Identification of stake holder’s needs and the ways in which the
organization can meet them especially taxpayer's needs for information,
Contd...
54 ANNA UNIVERSITY
convenience of filing tax returns and documents, payment of taxes and Notes
speedier issue of refunds.
 Use best and leading practices of other organizations to develop
milestones, objectives, targets to benchmark organizational
performance.
 Increase alignment between people, processes and technology.
 Enhance employee involvement, skills and organizational creativity.
Short Description of the Project
The project commenced on 1st May, 2007 and was completed with
finalization of 18 reports covering more than 2,000 pages within a
timeframe of eight months.
As a preparatory exercise prior to the BPR project, awareness was created in
the organization through several meetings held with employees as well as
their associations/unions. The desire for change was clearly evident during
these interactions. This exercise was aimed at creating a larger ownership
thereby ensuring support and involvement an essential element for the
success of such a mammoth exercise. Outreach initiatives also included
setting up of Internet discussion forums/blogs to encourage participation
and sharing of ideas. In all, approximately 840 departmental personnel from
Chief Commissioners to Group C employees were consulted and
participated in the exercise. Besides, a specially designed HR questionnaire
was administered to 896 departmental persons to elicit their views. Further,
voice of customer (VoC) survey was conducted at 12 stations in which a
specifically designed questionnaire was administered to 754 taxpayers of
different categories and tax consultants.
The study was focused on the key strategic areas of tax administration
namely pre-assessment, assessment, and post-assessment and
appellate/dispute avoidance as well as key enabling processes such as
information technology, human resources, infrastructure, etc. The BPR
project was undertaken in two phases 'As-is' study phase and 'To-be' model
stage and was conducted at 15 locations which included metros (Delhi,
Mumbai and Kolkata), mid-size cities (Hyderabad, Nagpur, Patna, Bhopal,
Mysore, Lucknow, Guwahati, Ludhiana and Shillong) and moffusil areas
(Hajipur, Mandya and Itarsi).
The success of the project depended on ensuring that correct facts were
captured during the 'As-is' study as only then correct solutions could be
found. To dispel any apprehensions in the minds of the employees about the
aim of the exercise, it was made clear during the field study, that the
exercise conducted was neither an inspection nor audit nor was it for
individual fault-finding.
Contd...
ANNA UNIVERSITY 55
Notes The 'As is' processes study was conducted by using check-lists to gather
factual data from study of files, registers and records as well as
questionnaires to elicit responses from various stakeholders. These checklist
and questionnaires were prepared and validated through participation of a
large number of departmental officers from across the country. The ‘As’ is
study phase included mapping of existing processes in the department and
was followed by a gap analysis to identify problem areas and bottlenecks.
The best global practices in the area of tax administration were also studied.
All the above were incorporated in re-designing the processes and
suggesting 'To-be' models. Detailed To-Be models and recommendations
have been prepared in respect of the following:
 Bulk Operations Division including Regional Processing Centre
 Facilitation Centres and Receipt and Despatch Units
 Changes to PAN/TAN Issuance and Management
 Assesses Tax Credit Accounting System
 Core Processes Redesign – Assessment
 Core Processes Redesign – Post-assessment
 Core Processes Redesign – Appellate
 Risk Assessment System
 Knowledge Management System
 Record Management System
 Human Resources and Infrastructure
 Grievance Redressal Management
 Change Management
Outcomes
The business process re-engineering of the Income Tax Department is first
such project initiated by the Government of India where a comprehensive
study of such a large department has been undertaken and changes have
been recommended taking a holistic view of the department that would
fundamentally change the way the department functions in as much as all
activities which do not require exercise of discretion in individual cases and
are amenable to large scale automation will be dealt by Bulk Operation
Division(BOD) where there will be no taxpayer interface. The creation of
BOD would help in reducing the pressure on the inadequate manpower and
infrastructure across various ITD offices by leveraging economies of scale
and technology, thereby de-cluttering the office of the Assessing Officers
and enabling them to better perform their compliance functions.
Contd...
56 ANNA UNIVERSITY
Whereas all the recommendations made in the BPR report cannot be Notes
summarized here, some of the recommendations focused around taxpayers'
services and revenue augmentation are highlighted here:
Recommendations Focused on Taxpayer Services
 Setting up a Directorate of Taxpayer Services to address the issues of
taxpayer grievances and education
 Additional channel for filing tax returns/documents at Facilitation
Centres
 Ensuring that correct details payments are recorded and credited to
taxpayer's account
 Effective recording/tracking of all taxpayer communications
 Ease of payment of taxes through ATM for individuals
 Call-centres to deal with taxpayer queries
 Automatic updating of address from returns in PAN/TAN database
 Functional segregation-IT enabled processes to ensure quicker
processing/issue of refunds
 Use of SMS for information dissemination to taxpayers
 Better infrastructure facilities for taxpayer in ITD offices like waiting
lounge, drinking water, hygienic toilet, etc.
Recommendations Focused on Revenue Augmentation
 Detect stop filers and non-filers through use of 3rd party and TDS data
 Non-intrusive measures such as sending pre-populated returns to the
taxpayer in cases of clear and apparent mismatch of information given
in the return and those available with the ITD to be settled by accepting
payment of tax plus penal amount. Similarly, for a limited number of
cases falling in a small band below the risk score at which cases are
selected for scrutiny
 Work-flow based system of working with no option at any level to work
manually
 Robust risk profiling system for selection of cases for scrutiny
Questions
1. Study the above case carefully and prepare a short note on the
organizational, multiple and complex functions performed by its
judicial.
2. Analyse the above case study in your own words and prepare a detailed
note on it.
ANNA UNIVERSITY 57
Notes
1. Reengineering is the radical redesign of the business
process to achieve dramatic improvement in critical
areas of performance.
2. An ERP implementation involves installing the
software, moving your financial data over to the new
system, configuring your users and processes, and
training your users on the software.
SUMMARY
 Engineering business processes is paramount for businesses to stay
competitive in today's marketplace.
 Over the last 10 to 15 years, companies have been forced to improve their
business processes because customers are demanding better and better
products and services.
 There are a large number of suppliers in the marketplace to choose from
(hence the competitive issue for businesses). Many companies began
business engineering process improvement with a continuous improvement
model. This model attempts to understand and measure the current process
and make performance improvements accordingly.
 New technologies (like the Internet) are rapidly bringing new capabilities
to businesses, thereby raising the competitive bar and the need to improve
business processes dramatically.
 Another apparent trend is the opening of world markets and increased free
trade. Such changes bring more companies into the marketplace, and
competing becomes harder and harder.
 In today's marketplace, major changes are required to just stay even. It has
become a matter of survival for most companies.
 As a result, companies have sought out methods for faster business process
improvement. Moreover, companies are looking for breakthrough
performance changes, not just incremental changes, as envisaged earlier.
Because the rate of change has increased for everyone, few businesses can
afford a slow change process.
 An approach for rapid change and dramatic improvement that has emerged
is Business Process Reengineering (BPR).
 In today's ever-changing world, the only thing that does not change is
'change' itself. In a world increasingly driven by the three Cs: Customer,
Competition and Change.
 Companies are on the lookout for new solutions for their business
problems. Recently, some of the more successful business corporations in
the world seem to have hit upon an incredible solution.
58 ANNA UNIVERSITY
KEYWORDS Notes
Process Management: Process management is the application of knowledge,
skills, tools, techniques and systems to define, visualize, measure, control,
report and improve processes with the goal to meet customer requirements
profitably
Process Innovation: A process innovation is the implementation of a new or
significantly improved production or delivery method. This includes significant
changes in techniques, equipment and/or software
Business Process Re-engineering: The fundamental rethinking and radical
design of business processes to achieve dramatic improvements in critical
contemporary measures of performance such as cost, quality, service and
speed.
Reengineering: It is the radical redesign of the business process to achieve
dramatic improvement in critical areas of performance.
Business Process Management: It is the application of knowledge, skills,
tools, techniques and systems to define, visualize, measure, control, report and
improve processes with the goal to meet customer requirements profitably.
Kaizen Method: This method focuses on small gradual and frequent
improvements over the long term with minimum financial investment.
1. Explain the Kaizen method.
2. Describe the business process management.
3. What is reengineering?
4. Describe the concepts of business process re-engineering.
5. What is process innovation?
6. What is process management?
7. What is innovation?
8. Explain the three Cs concept.
9. Explain engineering the business processes.
10. What are the basic steps of the business engineering processes?
11. Explain the concepts of breakthrough performance.
12. Describe the pure BPR.
13. Explain the channelled BPR.
14. What are the advantages of channelled BPR?
15. What is pure ERP?
ANNA UNIVERSITY 59
Notes 16. Who provides a foundation for building quality into business?
17. Explain the 5W 2H method.
18. Describe the work simplification.
19. Write a short note on Hoshin Kanri.
20. What is the theory of constraints?

1. What is BPRE? Why is it needed?
2. What is the difference between continuous improvement and BPRE?
3. Explain the steps in implementing BPRE.
4. What are pitfalls of BPRE?
5. Explain the relation between BPRE and change management.
6. What is the meaning of restructuring an organization? Why is it needed?
7. Discuss different areas where BPRE can be used.
8. Discuss the symptoms of organization which indicates the need for
reengineering its structure.
9. Explain the concepts of the business engineering in detail. Support your
answer with the relevant examples.
10. Describe the concepts of best business practice in ERP and the business
process management. Support your answer with the relevant examples.
FURTHER READINGS
Manjunath V S & Nagalingappa G, (2010), Total Quality

Management Text & Cases, Excel Books, New Delhi
Khalil Tarek, (2009), Management of Technology, Tata
McGrawHill, New Delhi
Murthy C.S.V., (2006), Technology Management, Himalaya, New
Delhi
Narayanan V.K. (2009), Managing Technology and Innovation for
competitive Advantage, Pearson, Delhi
Krishnamacharyulu CSG & Ramakrishnan Lalitha, (2008),
Management of Technology, Himalaya, New Delhi
Rastogi P.N. (2003), Managing Creativity, Macmillan India Ltd,
Delhi
60 ANNA UNIVERSITY
Lesson 4 - Modules of ERP
LESSON 4 - MODULES OF ERP Notes
CONTENTS
Learning Objectives
Learning Outcomes
Overview
4.1 ERP Modules
4.1.1 Characteristics of ERP Modules
4.2 Sales and Marketing in ERP System
4.2.1 Subsystems of Sales and Marketing ERP System
4.2.2 Advantages of Sales and Marketing ERP Software
4.3 Accounting and Finance in ERP System
4.3.1 Subsystems of Finance and Accounts in ERP Systems
4.3.2 SAP ERP Benefits in Accounting and Finance
4.4 Production Module in ERP System
4.4.1 Sub-modules of Production
4.4.2 Benefits of ERP in Production Module
4.5 Material Management Module in ERP System
4.5.1 Subsystems of Material Management
4.5.2 Benefits of ERP in Material Management
4.6 Purchase Module in ERP System
4.7 Inventory Control Module
4.8 Human Resources Module
4.8.1 Subsystems of HR Module
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the various functional modules of ERP
ANNA UNIVERSITY 61
Notes  Recognize the inter-relationships among business process supporting sales

and marketing, accounting and finance and production management
LEARNING OUTCOMES
understanding of:
 basics of ERP modules and explain its characteristics
 analyzing subsystems of sales and marketing ERP system
 identifying subsystems of finance and accounts in ERP systems
 list out benefits of ERP in production module
 determine material management module in ERP system
 recall purchase module in ERP system
 analyzing inventory control module and human resources module
OVERVIEW
The earlier lesson gave us learnings on business process reengineering. The
different phases of BPR. How does it really help in business? The activities
that takes place in reengineering process.
In this lesson, you will understand the various FRP modules available. A
detailed explanation to Accounting and Finance module, Sales and Marketing
module and Production module and their characteristics.
4.1 ERP MODULES

ERP software is made up of multiple enterprise software modules that are
individually purchased as per the specific needs and technical capabilities of
the organization. Each ERP software presents the major functional module.
Common ERP modules include inventory control, product distribution,
material purchasing, order tracking, finance, accounting, marketing and HR.
Organizations generally implement ERP modules, as they are economical as
well as technically feasible.
4.1.1 Characteristics of ERP Modules

 It is efficient and easy to use.
 It is scalable.
 It is easily compatible with CRM working.
 It is common database that supports all the modules.
62 ANNA UNIVERSITY
Notes
HR
Finance
Production
Planning
Functional
Modules Marketing
Purchase
Inventory Sales
control
Figure 4.1: ERP Characteristics
ERP is business management software that helps the companies to

manage their data. It is an integrated view of core business activities.
Selecting an ERP system that is best for your organization and

implementing and operating it in most efficient manner is a difficult task
and chances of failure are very high.
4.2 SALES AND MARKETING IN ERP SYSTEM

Traditionally, sales and marketing software supports operational and
management control processes including contract management, sales analysis,
sales management and forecasting. The difference between the traditional and
ERP sales and marketing system is that, ERP modules provide integrated
marketing support systems which includes order files and sales files. It also
consists of CRM, which gives information about the previous experiences of
people and the payment details.
Within this ERP module, firstly a customer places an order and then the sales
order is recorded. The system schedules shipping and works backward from
the shipping date to reserve the materials to order parts from suppliers and to
schedule manufacturing. The module checks the credit limit and creates the bill
of materials. Then the commission of salesperson is updated and products cost
and profits are calculated. After all these steps, the accounting data is updated
which includes balance sheets, accounts and other financial information.
ANNA UNIVERSITY 63
Notes
Customer Create Picking with
Order Deliveries transfer order
(Warehouse)
Packing Shipping Goods issue

documents
Update stock
post ledger
Figure 4.2: ERP Module
4.2.1 Subsystems of Sales and Marketing ERP System

 Pre-sales: Informing the customer about the price quote.
 Sales order processing: Determines the sales price, order quantities are
recorded, checking the customer credit limit.
 Inventory sourcing: Checking the inventory to know whether it is
available for delivery on time.
 Delivery: Gods are released from the warehouse, packed and shipped.
 Billing: uses sales order data to create invoice, increases accounts
receivable and updates accounts.
 Payment: Takes in the payment, reduces the account receivable with the
payment of amount.
The main aim is to signify sales process, manage inventory, and keep an access
to payments. The sales and marketing provides the benefit of standard codes, a
standard document, and audit trail and data integration.
4.2.2 Advantages of Sales and Marketing ERP Software

Table 4.1: ERP Software
Features Benefits
Standard codes Each customer is allotted with a standard code.
Common database There is a database that supports all the modules.
Standard documents A standard document number is maintained which is passed throughout the
transaction process including shipping, accounts etc.
Audit trails To track a partial shipment, partial payment, returns, a standard document
number helps.
Data integration Helps in integrating data, i.e. sales record with accounting records.
64 ANNA UNIVERSITY
Notes
Marketing resource management helps in analysing, planning,

developing, implementing and measuring all marketing activities to
maximize the efficiencies of your available resources and gain visibility
and control into your marketing processes.
4.3 ACCOUNTING AND FINANCE IN ERP SYSTEM

An ERP (Enterprise Resource Planning) finance module is a software program
that helps gathering financial data and generates reports such as ledgers, trail
balance data, overall balance sheets and quarterly financial statements.
ERP is a powerful tool that helps you to consume lesser time in accounting
processes, manage complex finances and comply with regulations.
4.3.1 Subsystems of Finance and Accounts in ERP Systems

 Financial Accounting: To control and integrate the financial information
that is essential in decision making. It helps in tracking financial
accounting with foreign companies, languages, currencies and accounts.
Example: When raw materials from inventory into manufacturing,

the system reduces quantity values in inventory and simultaneously
subtracts values for inventory accounts in balance sheet. Most financial
accounting modules comply with international accounting standards such
as GAAP and IAS.
 General Ledger: It plays a key role to financial accounting and strategic

decision making. It has a feature that is designed to meet the budgeting and
ANNA UNIVERSITY 65
Notes processing needs. It includes the flexible structuring of accounts chart for
groups and companies.
The key factor is it helps to maximize the efficiency and accuracy of
financial data.
 Accounts Relievable: In Accounts receivable system you can easily get to

know the customers sales information and their outstanding balances.
Accounts Relievable allows to apply cash for outstanding invoices and
create recurring charges for quick invoice every month. It also integrates
with the general ledger, sales and distribution and cash management
systems.
 Accounts Payable: The accounts payable includes accounting features that

controls cash flow process and helps you save money. It consists of library
where accounting and reporting features help in rapid entry of invoices
flexible cash and full check of reconciliation. With this tool, it is easier to
keep a track record of your payments and reduce the bad debts. Payment
66 ANNA UNIVERSITY
programs in SAP let the payment of payables do by checks, EDI (electronic Notes
data transfer) or any other transfers.
 Asset Accounting: It is a sub ledger to general ledger, which provides
detail information on assets related transactions. SAP helps you to
categorize the assets and calculate asset depreciations. It provides
integration with plant maintenance for management of equipment s and
machinery. Management of assets on lease, assets under construction and
interactive reporting.
 Legal Consolidation: This system is similar to financial accounting system
allowing data transfer directly from individual statements to consolidate
statements by law. This gives a view to financial statement of the company
as whole.
 Controlling: This system holds the information required for effective
internal costing. It is a versatile information system with standard reports
and analysis path. If you want, you can create a custom report too.
4.3.2 SAP ERP Benefits in Accounting and Finance

 Improves financial and managerial reporting: SAP ERP gives you a
flexibility to report performances of business.
 Improves corporate performance: It allows you to adapt quickly to the
changing business conditions with accurate and timely financial data.
 Improves cash flow and liquidity: It helps in accelerating and managing
cash flows.
 Achieve faster closes: It allows you to save time in accounting,
consolidation, workflow and process scheduling.
 Improves process integration between finance and treasury: With this
SAP, you can integrate the risks and treasury transactions operations.
 Reduces overall finance costs: Helps you to operate effective shared
services and save operations time to reduce costs and resources demand.
Learning Activity
Finance is one of the most important function areas of an
organization. Take a treasury department of any organization
and study how ERP helps in easing their data and what all
software can be used for it.
4.4 PRODUCTION MODULE IN ERP SYSTEM

Production includes inputs, outputs, by-products and overheads. It is designed
of the needs of manufactures and industries. It helps in optimization of
manufacturing capacity, components, parts and material resources using
ANNA UNIVERSITY 67
Notes historical production of data and sales forecasting. It helps in production

planning, taking orders and delivery products to customers.
4.4.1 Sub-modules of Production

 Materials and capacity planning: The planning systems of ERP packages
are designed to provide the responsiveness your company needs to meet
those customer requirements. The planners can stimulate alternative plans;
gaining the information they need for finding what is their requirement.
 Shop floor control: Process reengineering efforts and the elimination of
waste have necessitated greater reliance upon powerful, user friendly,
flexible shop floor planning and control systems. This feature also gives the
shop scheduler, the ability to reprint the shop packet and to reflect new
material allocations that correct previous shortages
 Quality management: This systems allow a wide variety of characteristics
and parameters to be specified in a test and inspection operations and
maintain an extensive history to improve product quality and identify
recurring problems
 Cost management ERP packages provide extensive cost information at
several levels that have businesses identify drivers and reduce product cost.
As per your choice you can opt the costing method that best reflects your
company’s business. FILO (Last in First out) FIFO (First in first out),
moving average unit or lot costing methods can be assigned by items.
Many vendors all support Activity Based Costing (ABC) with activities
visibility by cost object as well as cost for user defined groupings such as
departments.
 Engineering change control: The first step to shorter product development
activities. Engineering Data Management is designed to help your company
trim data transfer time, reduce errors and increase design productivity and
acts as a link to engineering and production information.
 Engineering data management: By using Engineering Change control,
business can give effective control over engineering change orders.
 Configuration management: The Configuration management helps
reducing order cycle time by elimination of the lengthy engineering review,
typically associated to determine feasibility and the costs associated with
the configured end item. This reduction is achieved by creating a flexible
user-defined knowledge base that is accessed by a powerful analytic
engine.
 Tooling: For many manufacturers, ensuring that proper tooling is available
is difficult for production schedules as the availability of material.
The ERP system extends capacity and inventory management to include these
valuable resources.
68 ANNA UNIVERSITY
4.4.2 Benefits of ERP in Production Module Notes

 Operational level is systematic and easy to maintain.
 Implementation of this module makes planning of production easier.
 It is easy to monitor the shop floor activities.
 It helps in consumption of various resources accurately.
Table 4.2: Benefits from ERP
Source: Aberdeen Group, June 2010
4.5 MATERIAL MANAGEMENT MODULE IN ERP

SYSTEM
This module facilitates the process of maintaining the appropriate level of
inventory in a warehouse. This helps in identifying the inventory requirements,
reconciling the inventory balances and reporting inventory status. Its
integration with other modules allows generating executive level reports.
The following figure shows the sequence in material management:
Purchasing Receiving Inspect
Material Planning Raw materials stores
Issues
Customers Production
department
Distribution Shipping
Finished Components
store
Figure 4.3: Sequence in Material Management
ANNA UNIVERSITY 69
Notes 4.5.1 Subsystems of Material Management

 Prior Purchasing Activities: Complete cycle of bid invitation, award
contracts, acceptance of services.
 Vendor Evaluation: This helps in procurement and making the best use of
material and service. Quality check (40%), reputation and service (35%)
and price (25%)
 Invoice and material verification: It links the material management,
financial accounting and controlling components. It does not handle the
payments or invoices; just the information regarding material invoices is
passed for further processing.
 Purchasing: Purchasing the materials in advance that meet the need of
production and buying the optimum quantity of products.
 Inventory Management: To manage stocks on value, keep updating the
inventory and carrying out physical inventory. Most inventory management
system supports various inventory methods like inventory sampling,
periodic inventory, cycling inventory etc.
Calculate Inviting
Requirements. Quotations
Quotation
Evaluation
Selection of the
Vendor
Award Contracts
Figure 4.4: Cycle of Bid Invitation
4.5.2 Benefits of ERP in Material Management

 It has lowered the material cost.
 Indirect costs are controlled.
 Inventory loss risk is minimized.
 Control of manufacturing cycle.
 Improvement of delivery product.
Learning Activity
Try to find how the material management module of ERP is
helping the publishing houses.
70 ANNA UNIVERSITY
4.6 PURCHASE MODULE IN ERP SYSTEM Notes

ERP Purchasing module streamline procurement of required raw materials. It
automates the processes of identifying potential suppliers, negotiating price,
awarding purchase order to the supplier, and billing processes. Purchase
module is tightly integrated with the inventory control and production planning
modules. Purchasing module is often integrated with supply chain management
software.
Features of Purchasing Module

 Streamlines purchase and process cycles
 Detailed Supplier/Subcontractor/Service Provider database
 Capturing materials requirement
 Automatic firing of purchase requisitions based on MRS
 Quotations from various suppliers
 Recording Payment terms in PO
 Excise consideration in Purchase and Process Orders
 PO authorization
 PO amendments with complete amendment history
 Order cancellation and order closing
 Multiple delivery schedules
 Quality inspection of goods
 Quotation validity
 MIS for vendor evaluation based on quality, price & delivery time
 Subcontracting – generation of process orders
 Multiple indents for multiple items in a single PO
 Purchase order processing
 Purchase order entry with item details and other details like taxes,
discounts, extra charges like freight, P&F, octroi etc.
 Flexibility to generate Purchase Order in domestic and foreign currency
 Advance adjustments
 Purchase bill with updating of GL and purchase book
 Service contracts, Service Bills, Service indents and PO
 Value based approval of indents
 Bill of Entry
ANNA UNIVERSITY 71
Notes  Complete import functionality with handling of custom details - Purchase

Bill for import, Excise consideration in imports
 Reports for Order tracking for complete control on the procurement cycle
ERP Purchasing module aims at making available the required materials of the
right quality, in the right quantity, at the right time and at the right price, for the
smooth functioning of the organization. All purchasing and subcontracting
activities such as inviting quotations, supplier evaluation, placing purchase
order, order scheduling and billing are covered in this module. Import of goods
is also handled by the system.
4.7 INVENTORY CONTROL MODULE

Efficient inventory management should be able to rapidly respond to customer
requirements; at the same time should be flexible enough to undertake any
corrections when required, and do the so without adversely affecting
operational efficiencies. The e-resource ERP Inventory Management module
offers effective features to minimize warehousing costs and to optimize storage
needs in line with the requirements at hand.
The e-resource ERP inventory management modules offers a host of advanced
warehousing features such as modification, balancing, transfer, and reverse
operations. Many features including management of multiple storage centres
and locations, specialised inventory management features (serial numbers,
batch tracking, and special stock), which are part of a diverse capability in
inventory management, are included as standard functionality within the
e-resource ERP Inventory Management module.
Inventory management within the e-resource ERP system provides a high
degree of flexibility for handling complex storage needs, and assures
continuous update of warehouse inventory through multiple inventory methods
and different types of auditing. All materials input and output transactions are
fully automated due to the seamless integration with other associated modules
within the system. This also enables efficient, prompt and trouble-free
inventory transactions within enterprises.
Keeping track of your stock

The high level of integration found within the e-resource ERP system provides
end-users with the highest level of visibility into materials transactions within
their enterprise, and assures the accuracy of the data relating to the inventory
within the warehouse.
Inventory management assumes significant importance in a highly integrated
supply chain and the module facilitates accomplishment of organizational
objectives including cost efficiency and enhanced customer loyalty by
rendering superior visibility and streamlined processes. The activities of
inventory control involves in identifying inventory requirements, setting
72 ANNA UNIVERSITY
targets, providing replenishment techniques and options, monitoring item Notes

usages, reconciling the inventory balances, and reporting inventory status.
Integration of inventory control module with sales, purchase, finance modules
allows ERP systems to generate vigilant executive level reports.
4.8 HUMAN RESOURCES MODULE

ERP contains the full set of capabilities needed to manage, schedule, pay and
hire people who make the company run. It includes payroll, benefits
administration, applicant data administration, personnel development planning,
work-force planning, schedule and shift planning, time management and travel
expense accounting.
Since the structure of most companies shifts frequently, one of the functions in
the human resources category provides the ability to represent organisational
charts and organ grams, including organisational units, jobs, positions,
workplaces and tasks. Thus, you can represent and plan matrix organisations,
split responsibilities and temporary project groups.
Capturing data from the human resource module, the ERP business workflow
system provides management with the ability to define and manage the flow of
work required in a cross-functional business process.
It provides support for a variety of HR tasks, including benefits, training,
recruiting and compliance. The module offers a flexible design that lets users
select their own database platform, including SQL or MSDE (Microsoft
Desktop Engine). It includes powerful reporting and analysis tools that provide
customized insight on almost any HR issue. Hundreds of standard report
templates are included. An integrated database is designed to feed a steady
flow of information to managers and staff.
Human resource management is an essential factor of any successful business.
4.8.1 Subsystems of HR Module

The various subsystems under HR module are:
 Personnel management: Personnel management includes numerous
software components, which allow you to deal with human resources tasks
more quickly, accurately and efficiently. These components can be used
not only as part of the company wide ERP solution but also as stand alone
systems.
Example: HR master data, personnel administration, information

systems, recruitment, travel management, benefits administration and
salary administration.
 Organizational management: This module will assist you in maintaining
an accurate picture of your organizations structure, no matter how fast it
ANNA UNIVERSITY 73
Notes changes. In many cases, graphical environments make it easy to review any
moves, additions, or changes in employee positions.
Example: Organizational structure, staffing, schedules, job

descriptions, planning scenarios and personnel cost planning.
 Payroll Accounting: The payroll accounting system can fulfill the payroll
requirements and provide you with the flexibility to respond to your
changing needs. Most payroll accounting systems give you the options and
capabilities to establish business rules without modifying the existing
payroll.
Example: Gross/net accounting, history function dialogue

capability, multi currency capability and international solutions.
 Time management: It is a flexible tool designed to handle complicated
evaluation rules to fulfill regulatory requirements and determine overtime
and other time related data. The time evaluation component stores your
organizations business rules and automatically validates hours worked and
wage types.
Example: Shift planning, work schedules, time recording and

absence determination.
 Personnel development: Effective personnel development planning
ensures that the goals of the organization and the goals of the employee are
in harmony. The benefits of such planning include improvements in
employee performance, employee potential, staff quality, working climate
and employee morale.
About the Case: ABC
A
BC is the international consumer-financing subsidiary of XYZ. It
supplies credit cards, sales financing, personal loans, mortgages,
insurance products and a host of other financing vehicles to
customers across the world.
With assets approaching $15 billion in 1998, ABC is also in the business of
acquiring other companies, at the rate of nearly one, every quarter.
Industry: Financial Services
Solution Area: Assimilating its new businesses into its global financial
accounting systems, standardising the financial practices and procedures in
the process.
Contd...
74 ANNA UNIVERSITY
Problem: Acquiring business and integrating it effectively into the global Notes
family of ABC, so that they have a clear structure, common back-office
operations. From a financial accounting and reporting standpoint, this
means operations that are centralised, consolidated and managed in a unique
manner, on a unique platform, with a standard set of policies and procedures
that will meet the local regulatory requirements.
Solution: Implementing Oracle Financials as its central global financial
accounting and reporting strategy. Oracle solution was chosen after its
ability to support multicurrency capability, Euro functionality, Year 2000
compliance, OLAP capability and revaluation of non-US currencies to the
US dollar was proven.
Implementation: ABC set off with a clear definition of what the customer
wants to achieve. The project management team, supported by Price
Waterhouse Coopers, applied rigorous review standards to ensure that the
organisation respected strategic goals set at the project’s inception. It made
sure the right skills were available in-house, either through the IT group or
through the finance group.
In addition to Oracle Consulting, ABC worked with Price Waterhouse
Coopers to help understand some of the global challenges in financial
accounting, reporting and business-decision support and to identify the
critical functionality ABC required. The plan, as far as finance systems go,
is to deploy Oracle Financials to its entire global finance businesses and
where appropriate and desired, support colleagues in other XYZ Capital
businesses in doing likewise. Part of the effort is to consolidate the back-
office finance operations around the world.
ABC has given businesses active on Oracle General Ledger—in Norway,
Denmark, Sweden, Germany and Australia. They are in the middle of the
deployment phase of pulling people onto the General Ledger, Payables and
Assets modules. Through the deployment, they are undergoing a major
process improvement as well, so that they not only have a common platform
but also have some homogeneity of process. Their deployment project will
continue for the next 12 to 18 months, as they move the system out to all
additional existing businesses in the UK, Japan, the Czech Republic,
Hungary, Switzerland, France, Poland, etc.
Benefits: As they deployed the applications in Norway and Denmark, they
went from 55 days to 4 days. They just deployed the system in Sweden and
have not done a close there with Oracle yet. ABC also deployed in Australia
and went from a close cycle of about 14 days down to 6 days. The intent is
to bring the closing cycle down at least to 3 days, with the future
expectation of shortening the cycle even more.
Contd...
ANNA UNIVERSITY 75
Notes Questions
1. Analyse the case study and write down your observations in about 100
words.
2. What are the major issues faced by them? What benefits have they
attained through ERP?
1. ERP software (or enterprise resource planning

software) is an integrated system used by organizations
to combine, organize and maintain the data necessary
for operations.
2. SAP Materials Management (MM) is a component of
the SAP ERP Central Component (ECC) that helps
businesses support procurement and inventory
functions.
SUMMARY
 ERP is software made up of many software modules. Common modules
include inventory control (material management), sales and marketing,
finance, order tracking, production distribution and HR.
 The difference between the traditional and ERP sales and marketing system
is that, ERP modules provide integrated marketing support systems which
includes order files and sales files. ERP marketing supports leads
generation, campaigns, direct mailing and more.
 The first step is placing an order and then the sales order is recorded. The
system schedules shipping and works backward from the shipping date to
reserve the materials to order parts from suppliers and to schedule
manufacturing. The module checks the credit limit and creates the bill of
materials. Then the commission of salesperson is updated and products cost
and profits are calculated. After all the steps followed accounting data is
updated which includes balance sheets, accounts and other financial
information
 Finance module can helps in gathering financial data from various financial
departments and generate valuable financial report of financial statements.
 Inventory module optimizes all purchasing processes with workflow driven
processing functions, enables automated supplier evaluation, lowers
warehousing costs with accurate inventory and integrates invoice
verification.
 Production module helps in utilization of material capacity, components
and material resources, historical production data and sales forecasting.
76 ANNA UNIVERSITY
KEYWORDS Notes
CRM: Customer relationship management is a system to manage company’s
interaction with their current and future customers.
Legal Consolidation: The finance department of a corporation uses legal
consolidation to consolidate numbers from its subsidiaries and produce
consolidated financial statements of this group of legal entities at the end of a
financial period.
Sales Forecasting: This is the process of estimating what your business sales
are in future.
Audit Trails: Most accounting systems and database management system use
this component. It is useful for maintaining security and recovering lost
transactions.
SAP: SAP is the enterprise software that helps to manage business operations
and customer relations.
ABC Costing: An activity based costing (ABC) system recognizes the
relationship between activities, costs and products, and through this
relationship, it assigns indirect costs to products.
1. Name the various ERP systems.
2. What is the function of finance ERP module?
3. What are the subsystems in material management module?
4. How does material management different from production management?
5. What are the steps that need to be followed for placing an order?
6. Write down the characteristics of ERP modules.
7. Explain the general ledger as a subset in ERP module.
8. What is the benefit of using production planning module?
9. How material management does helps in organization?
10. Mention HR module subsystems.
11. ERP is effective than the traditional methods. Justify.
12. What is the function of accounts payable in finance system of ERP?
13. What is the role of invoice and material verification in ERP software?
14. Explain purchasing module in ERP.
15. How is sales and marketing integrated with finance system?
ANNA UNIVERSITY 77
Notes 16. How is ERP significant in inventory management?

17. What are the various softwares for ERP modules?
18. What is the main aim of using sales and marketing module in ERP?
19. What do you understand by shop floor control?
20. How vendor evaluation does helps?

1. Explain the finance and accounts module.
2. Discuss the brief explanation of HR module in ERP.
3. What are the various steps to follow while ordering? Explain with the help
of diagram.
4. Out of all the modules discussed which is the most important and why?
5. Do each of them is inter-linked with one another? Justify your answer with
an example.
6. Explain the benefits of SAP in finance.
7. How is accounts payable different from accounts receivables?
8. Explain the production planning in ERP.
9. Why is it important to use ERP in today’s time?
10. Do you think big organization uses this module? Find a company that
incorporates them all.
FURTHER READINGS
Carol A Ptak and Eli Schragenheim (2010), ERP: Tools,

Techniques, and Applications for Integrating the Supply Chain,
CRC Press.
V. Narayanan (2009), Implementing SAP ERP Financials, Tata
McGraw-Hill Education.
Ray, (2011), Enterprise Resource Planning.
Alexis Leon (2008), Enterprise Resource Planning, Tata McGraw-
Hill Education.
Mary Sumner (2008), ERP, Pearson education.
78 ANNA UNIVERSITY
Lesson 5 - ERP Implementation
Notes
UNIT III
LESSON 5 - ERP IMPLEMENTATION
CONTENTS
Learning Objectives
Learning Outcomes
Overview
5.1 Software Selection of ERP
5.1.1 Selection of ERP
5.1.2 Planning of ERP
5.1.3 Criteria for Selecting ERP Software
5.2 Implementation Strategies
5.3 Implementation Lifecycle
5.4 Implementation Methodology
5.4.1 People Involved in the ERP Implementation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Discuss the Selection Criteria for ERP
 Understand the Steps to be taken while its Implementation
 Know the Different Strategies and Methodology for Implementing ERP
LEARNING OUTCOMES
understanding of:
 recall software selection of ERP
 analyzing criteria for selecting ERP software
ANNA UNIVERSITY 79
Notes  determine implementation strategies

 design and explain implementation lifecycle
 explain people involved in the ERP implementation
OVERVIEW
The earlier lesson was all about the various ERP modules. What all areas does
ERP have eased our task for its management. The benefits it has provided in
different aspects and what is the system that is followed under those modules.
In this lesson, you will understand how ERP is implemented. This lesson, also
provide us the procedure of its selection and the steps taken to implement. The
implementation strategies that is important to keep in mind. People who play a
key role while implementation of ERP. Therefore, here we start with the
leanings.
5.1 SOFTWARE SELECTION OF ERP

Software selection is a topic in which the process, methods and tools are
applied by organizations in order to decide which software they should choose
from the wide range of available solutions on the market. Such decisions
should be taken very carefully, as the adoption of software solutions is having
an important impact in the medium and long term. This is related to purchase
and operating costs, and also the way the software is helping the company to
build competitive advantage.
5.1.1 Selection of ERP

The selection of a software application can be understood as one of the steps to
the process of software acquisition by the company. This wider process
includes the stages of planning, information search, pre-selection, evaluation,
choice and negotiation. During the planning process, the acquisition team is
formed. This team takes issues that are related to the other stages. During the
information search stage, information about technologies and vendors is found
and screened and its sources are evaluated. During the pre-selection process, a
shortlist of right vendors and technologies is created. The elements of the list
are evaluated in the next stage, which incorporates vendor, functional and
technical evaluation. The choice stage is the result of the evaluation process. A
final recommendation is made, followed by a negotiation process, which is
concluded by a final contract.
5.1.2 Planning of ERP

The planning activity involves the definition of requirements and the
identification of selection/valuation criteria, both, which are relevant for the
software selection process.
80 ANNA UNIVERSITY
ERP software thus is a very complex and the most difficult software Notes
application to select. The acquisition of this type of software package is a high
expenditure activity likely to consume a significant portion of an
organization’s budget.
Therefore, the definition of appropriate selection criteria plays a key role in the
acquisition of ERP software.
Acquisitions have high-level risks and a wrong decision can affect

the organization as a whole, in several different areas and on several
different levels even to the point of endangering its existence.
5.1.3 Criteria for Selecting ERP Software

All evaluation methods rely on the application of evaluation criteria as basis
for selection; based on the values obtained by the candidate software packages
for each criterion, an aggregate score can be calculated, which is used for the
ranking of candidates. The most used technique is AHP – Analytical
Hierarchical Process, in which the criteria are structured as a hierarchy, and
specific weights are defined for each level in the hierarchy.
The criteria used for ERP software selection are presented by following six
categories:
 Functionality – the coverage of functional requirements,
 Technical architecture – technical requirements, including integration with
existing systems
 Cost – both for implementation, maintenance and further adaptation/
extension
 Service and support levels provided by the vendor
 Ability to execute
 Vision
While finding and selecting ERP software, the following main functions should
be considered: Customer and Order Management, Purchasing Control,
Production Schedule, Ingredient List, Inventory Management, Interface with
CMMS system, Reporting and Analysis, Integration with Accounting System,
Payroll and HR (Human Resources).
ANNA UNIVERSITY 81
Notes
The software evaluation process contains number of factors that

can be considered in specifying the application software. These factors are:
general requirements, administration and security, reporting, Web access
and integration, vendor characterization and cost (of the software and
associated support and services).
The general requirements are related to:

 Operating System – requirement for a particular operating system
 Database format – requirement for a particular database system
 Data import or export – the capabilities of export or import data in/from
other software packages.
 Filtering and searching friendliness (this applies to database software) –
existence of several optional ways of finding data that the users will need.
 User configurability of tags and labels
 Handling of links to ancillary information – the system should meet the
requirements with respect to its handling of links and hyperlinks to external
records and information.
 Graphical, hierarchical data structure database systems, which display a
graphical representation of a hierarchical structure (parent/child
relationships), are generally preferred.
 Regulatory compliance support, in user industry there are statutory
standards to which the software must comply.
 Additional database software required. Some applications require that
licenses are purchased for additional database software.
The administration and security requirements are related to:
 Ease of use: Administration of the security features of some software
systems can be very complex. The application should have useable
administration module.
 Tabular selection: Many security modules offer a table of functions for
which permission can be granted to each user or group. This is done by
checking or ticking the relevant permissions boxes for each user or group.
 Password: Users should be allocated passwords. This is not necessarily
done on an individual basis.
Example: It may be enough for all people doing the same job and in
the same section to have the same password.
82 ANNA UNIVERSITY
 Individuals and group settings it should be possible to set up individual Notes

users ID's as well as user groups. This allows users who require the same
access level to be placed in the same group.
 Audit trail: An administration audit trail should be required, which can
provide traceability to individuals for all changes to the administration and
security module.
 Customization: Application customization should be easy for the
administrator.
Example: Configuration of screens and user configurable data

should be intuitive and not requiring a high level of IT knowledge.
Reporting requirements are related to:

 Ease of access to reports: It should be easy to access reports and find them
on the system.
 Data export capability: Many systems provide a data export facility.
Example: To allow exporting data to MS Excel.

 Customizable reports: Customizable reports allow the user to change
existing reports. This is much easier that creating reports from scratch.
Web Access and Integration

 Purchase or rent: Who owns the software? This is an important factor as
some web based systems can be purchased and installed on your own
Intranet. Others are rented and installed on the vendor's servers.
 Data ownership: Is there any ambiguity with respect to the ownership of
the data?
 Functionality: Due to limitations in the programming of web browser
based systems some of these packages have limited functionality.
 Cost analysis: The cost of renting software and buying a web based
package for installation on your Intranet should be compared.
 Internet access: Do all the PC's in a web based system already have
Internet access, if not how much will it cost?
Vendor Characterization
 Stability: Each vendor's stability must be assessed. How long have they
been in business? How long have they been selling the software’s? When
this application was first developed
 Professionalism: To know each vendor for the professionalism displayed
in dealing with the client’s inquiry and in demonstrating their products.
ANNA UNIVERSITY 83
Notes  Service level agreement: They should be assessed on the basis of the level
of future service and support that they offer. Do they provide telephone
support at the times you require it?
 Provision of customization: If the application can be customized, each
vendor should be assessed for the service they offer in this and costs
involved.
 Customer base: Till now how many has been sold and knowing who his
customers are?
Costs
 Cost of software: Assessing the application for total cost of the
configuration and number of users required.
 Cost of hardware: The total cost of any additional hardware required to
make the implementation work with the application.
 Potential future costs: Assessing potential for significant future costs.
 Implementation cost: Installation of the software and consultancy.
 Training cost: Training costs involved in implementing the application
 Cost of customization: Assessing the application for any costs involved in
customizing it for your requirements.
Learning Activity
Using your search engine find about IBM that how and what
factor they considered while selecting ERP software.
5.2 IMPLEMENTATION STRATEGIES

The most important factor that decides the success of an ERP implementation
is the transition strategy.
Example: Big bang, Phased, Parallel, Process Line and Hybrid

strategies. The three pillars of ERP implementation are People, Process and
Technology.
 Big Bang Implementation: In this strategy industries layout a magnificent
map for their ERP implementation. The installation of ERP systems of all
modules happens across the entire organization at once. The big bang
approach reduces the integration cost in the condition of thorough and
careful execution. This method is dominated by ERP implementations and
it partially contributed to the higher rate of failure in ERP implementation.
All the business functions performed in the inheritance system across the
entire enterprise are concurrently transferred to the new legacy system
84 ANNA UNIVERSITY
during a period of one day or a weekend. But now a day’s industries are Notes
wavering to use big bang approach as it consumes too many resources to
support the go-live of the ERP system. Success in using the big bang
approach comes with careful preparation and planning prior to using big
bang. But many industries struggle to decide whether the big bang
approach is the right selection or not.
 Phased Transition Strategy: The phased approach, implements one
practical element at a time. Autonomous modules of ERP systems are
installed in each unit, while integration of ERP modules is done at later
stage of the project. This has been the most commonly used method of ERP
implementation. Each business unit may have its own “instances” of ERP
and database. Modular (phased) implementation reduces the risk of the
installation, customization and operation of ERP systems by reducing the
scope of the implementation. The unbeaten implementation of one module
can help the overall success of an ERP project. The interface programs that
are used in this strategy bridge the gap between the inheritance ERP system
and the new ERP system until the new ERP system becomes fully
purposeful. This strategy is often used in situations that not have strong
centralized synchronization in the ERP project.
 Parallel Implementation: The parallel approach keeps both the inheritance
system and the new ERP system active concurrently for a length of time
The amount of time for which both the systems are in operation ranges
from one day to several months and may be to years. Portions of the same
functional business areas (including software) such as finance,
manufacturing, marketing etc. are operating at the same time for both the
legacy and ERP systems. An advantage to the parallel strategy is that it has
good improvement options in case something goes off beam. Because both
the inheritance ERP system and the new ERP system are in function at the
same time for a particular module, the industry’s business processes will
not be broken up if the new ERP system breakdowns. The parallel
approach also provides the most sensible number-to-number comparisons
to authenticate that the new ERP system is performing the necessary
business process flows. This strategy is best suited for mission critical
situations that cannot survive a major break down of an ERP system.
 Process Line Transition Strategy: The process line transition strategy
breaks the implementation strategy to handle similar business process flows
or product lines. Using the process line strategy, the first product line and
related assets go first in making the transition from the inheritance system
to the new ERP system. Once this transition is achieved successfully, the
second product line is moved from the inheritance system to the new
system. This success helps to build industrial faith in the new ERP system,
increasing its overall prospect of success. Due to the achievement of the
first process line, resources are loaned to the more complicated and
challenging process lines.
ANNA UNIVERSITY 85
Notes  Hybrid Transition Strategy: It is the combination of the implementation

strategy like process line, phasing and parallel implementation strategy.
The complexity of a hybrid strategy varies tremendously depending upon
the state. Small single-site ERP implementations tend to have simpler
hybrid strategies than those used by large conglomerate corporations with
many dissimilar environmental locations. Many implementations use
hybrid strategies because they are flexible in adapting as per the specific
needs of the situation. With the hybrid strategy, industries can exclusively
adjust implementations for their needs.
5.3 IMPLEMENTATION LIFECYCLE

ERP implementation lifecycle focus on the ERP project which is carried out to
make ERP up and running. ERP project is likely to go through different phases
like any other project.
There is no clear line separating these phases and in many cases one phase
begins before the previous phase is complete. Different phases of the ERP
implementation are: pre-evaluation screening, package evaluation, project
planning phase, gap analysis, re-engineering, customization, implementation
team training, testing, going live, end user training and post implementation.
Figure 5.1: Phases of the ERP Implementation

 Pre-evaluation screening: When the company has decided to implement
the ERP the search for the convenient and suitable ERP package begins.
There are hundreds of ERP vendors of all sizes and shapes all claim to have
a solution that is ideal for the organization. It is better to limit the number
86 ANNA UNIVERSITY
of packages that are evaluated to less than five. Getting help from external Notes
consultants and most importantly finding out what package is used by
similar companies helps.
 Package evaluation: The objective of this phase is to find the package that
is flexible enough to meet the company’s need or in other words, software
that could be customised to obtain a ‘good fit’.
 Important points to be kept in mind while evaluating ERP software
includes: functional fit with the company’s business process, degree of
integration between the various components of the ERP system,
flexibility and scalability, complexity, user friendly, quick
implementation, ability to support multi-site planning and control,
technology; client/ server capabilities, database independence, security.
 Total costs, including cost of license, training, implementation,
maintenance, customization and hardware requirements.
 Project Planning Phase: The implementation of team members leads to
task allocation. This is the phase that designs the implementation process.
Time schedules, deadlines, etc. for the project, are arrived at. The project
plan is developed in this phase. In this phase, the details of how to go about
the implementation are decided. The project plan is developed, roles are
identified and responsibilities are assigned.
The organisational resources that will be used for the implementation are
decided and the people who are supposed to head the implementation are
identified. The implementation team members are selected and task
allocation is done.
 The phase will decide when to begin the project, how to do it and when
the project is supposed to be completed.
 The phase will also plan the ‘What to do’ in case of contingencies; how
to monitor the progress of the implementation;
 The phase will plan what control measures should be installed and what
corrective actions should be taken when things get out of control.
 The project planning is usually done by a committee constituted by the
team leaders of each implementation group headed by CIO.
 Gap analysis: This is the most crucial phase in the success of the ERP
implementation. In simple terms, this is the process through which
companies create a complete model of where they are now and where they
want to be. The trick is to design a model, which both anticipates and
covers any functional gaps. It has been estimated that even the best ERP
package, custom tailored to companies needs meet only 80% of the
functional requirements. The remaining 20% of these requirements present
a problematic issue for the company’s BPO. One of the most affordable,
albeit painful, solutions entails altering the business to “fit’ the ERP
ANNA UNIVERSITY 87
Notes packageSome companies decide to live without a particular function. Other

solutions include:
 Upgrade
 Identify the third party product that might fill the gap
 Design a custom program
 Altering the ERP source code, (the most expensive alternative; usually
reserved for mission-critical installation)
 Re-engineering: In this phase that human factors are taken into account.
This phase involves human factors. In ERP implementation settings,
reengineering has two connotations. The first connotation is the
controversial one, involving the use of ERP to aid in downsizing efforts.
In this case ERP is purchased with aim of reducing the number of
employees. The second use of the word ‘reengineering’ in the ERP field
focuses on the Business Process Reengineering (BPR). The BPR approach
to an ERP implementation implies that there are two separate, but closely
linked implementations on an ERP site:
 Technical Implementation
 Business Process Implementation
The BPR approach emphasizes the human element of necessary change

within organisations. This approach is more time consuming and has
received a lot of criticism for creating a big budget and extended projects.
But those who support it argue that you cannot ignore human element.
 Customization/Configuration: This is the main functional area of ERP
implementation.The Company should know which processes to change in
the process of implementation. In this case business process has to be
understood and mapped in such a way that the incoming ERP solutions
match up with the overall goals of the company. It is not required to shut
down company operations while you do a mapping process. ERP vendors
are constantly making efforts to lower configuration costs. Strategies that
are currently being done include automation and pre-configuration.
Example: SAP for instance, has pre-configured industry specific

templates that can be tweaked for each individual company (Accelerated
SAP or ASAP solution). Sage MAS 500 ERP system provides a set of
customization tools which includes a software development kit and
customize
 Implementation Team training: Synchronously when the configuration is
taking place, the implementation team is being trained. This is the phase
where the company trains its employees to implement and later, run the
system.
88 ANNA UNIVERSITY
How to implement it? For the company to be self-sufficient in running the Notes
ERP system, it should have a good in-house team that can handle the
various situations. Select employees with the right attitude who are willing
to change, learn new things, not afraid of technology and good functional
knowledge.
 Testing: In this phase, we test real case scenarios. The system is configured
and now you can come back with extreme case of system overloads,
multiple users logging in at the same time with the same query, users
entering invalid data, hackers trying to access restricted areas and so on.
The test cases are designed specifically to find weak links in the system and
these bugs should be fixed before going live.
 Going Live: This is the phase where all technicalities are over, and the
system is officially declared operational.
This is the phase where ERP is made available to the entire organization. On
the technical side the work is almost complete: data conversion is done,
databases are up and running and on the functional side, the prototype is fully
configured and tested and ready to go operational. Once the system is “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 trained on how to use the system. This is based on how to use the
system. This phase starts much before the system goes live.
The participants are given overall view of the system and how each
person’s action will affect the entire system.
 In addition to these general topics, each employee is trained on the job
or tasks that he/she is supposed to performance the system goes live.
 The employees who are going to use the new system are identified and
their skills are noted.
 Based on their skill levels are divided into groups.
 Then each group is given training on the new system.
 This training is very useful as the success of the ERP system is in the
hands of end-users.
 The end-user training is much more important and much more difficult than
implementation team training since people are always reluctant to change.
 Post Implementation (O&M): Once the implementation is over the
vendors and consultants are free to go. This is the very critical phase when
the implementation phase is over.
 There must be enough employees who are trained to handle the
problem that might occur when the system is running.
 There must be technical people in the company who have the ability to
enhance the system when required.
ANNA UNIVERSITY 89
Notes  There should be people within the company who have the technical
prowess to make the necessary enhancements to the system as and
when required.
 Living with ERP systems will be different from installing them.
 Projects for implementing the ERP systems get a lot of resources and
attention.
 However, an organisation can only get the maximum value of these
inputs if it successfully adopts and effectively uses the system.
 ERP implementation: It is ‘do-it–right-the-first-time’ kind of project
implementation methodology. This helps to change the way people have
been doing things. It is natural to resists ERP because it is human nature to
resist changes. Making people accept ERP and implementing it is a tough
task because of the people around who believes that ERP causes additional
work and more documentation. ERP project is complex and lengthy project
that enquires a vast amount of resources (money, personnel, hardware,
software, communications networked).
The ERP implementation steps are: pre-evaluation screening,

package evaluation, project planning phase, gap analysis, re-engineering,
customization, implementation team training, testing, going live, end user
training, post implementation.
5.4 IMPLEMENTATION METHODOLOGY

Strategy: Option is available for those organizations having multiple sites to
implement first at one site as pilot project. Implementing ERP in a pilot project is a
good idea because it will give implementation team a feel for the issues in an
actual implementation, the peculiarities of the organization, its work environment
and so on. When incremental approach is used, all ERP modules are not
implemented in one-step. The different modules are introduced one by one.
Plan: The implementation plan documents includes the who, what, why, where,
when, and how of the project. The plan provides a guide to the project and is used
to monitor progress. Special packages are available such as Microsoft Project.
These hold lot of details about the project, enable different views of the project
such as time scale or critical path, and facilitate the reporting of many different
issues, e.g. costs, resource usage and overdue activities.
Cost: The total cost of ERP ownership includes the cost of packaged software,
hardware, professional services (for ongoing maintenance, upgrades and
optimization) and internal costs. The cost of packaged software depends on the
implementation (the number of ERP modules and the number of end-users),
complexity of software and ERP vendors. Implementation of ERP systems
requires purchase of new computer hardware, systems software, network
equipment and security software.
90 ANNA UNIVERSITY
Implementation enquires the services of professionals who would help in Notes

customization, integration, data conversion, data migration, testing and training. In
areas where the costs are likely to arise, consideration should be given to
hardware, operating system, database license fee, core software license fee,
additional module license fee, additional seat license fee, third party software
license fee, integration of third party software, software customization, project
management, consultancy, training, living and travel expenses, software
maintenance or warranty renewal and upgrades. For cost and it is common to
provide yearly maintenance cost to be 10% of the initial cost outlay.
For cost, a long term perspective needs to be kept in mind, a time

horizon about five years.
Performance Measurement: We know about three performance related
measures costs; time and benefits, one more are deliverables. The use of
deliverables provides the opportunity to assess the effectiveness.
Problem resolution: It is desirable that there is an agreed procedure for
recording issues and their resolution.
System Issues: Tasks will be identified on the project plan but those involved
will normally be the IT systems personnel.
ERP implementation Methodology by Vendors and Consulting firms: They
range from vendor specific methodologies, such as “Accelerated SAP(ASAP)”
to consulting firm product such as “The TotalSolutions”from Ernst & Young
LLP and the “Fast track work plan” from Delotite & Touche
ERP Implementation – The Hidden Costs: In addition to budgeting for
software costs, financial executives should plan for consulting, process rework
(BPR), integration testing, etc. underestimate the price of teaching users their
new job processes. Fail to consider data warehouse integration requirements.
A successful training will account for a minimum 10-15% of the total budget.
It will be a good idea to identify the trainers early while the implementation
and make them part of implementation team, so that they will have an
experience and will know the ‘big picture’. ERP implementation team
members should not be sent back to their previous job as they are valuable. Just
writing reports to pull information out of new ERP system will keep the project
team busy for almost a year. And it is in the analysis and insight – that
companies take their money back on an ERP implementation.
Strategy, Plan, Costs, Performance Measurement, Problem

Resolutions, System Issues, ERP methodology by Vendors, Unexpected
Costs. These together contributes to the methodology in ERP
implementation.
ANNA UNIVERSITY 91
Notes 5.4.1 People Involved in the ERP Implementation

Every implementation project needs a sponsor say CEO or MD. The executive
committee or steering committee formulates long term goals, objectives and
strategies regarding their implementation of the ERP system in the company.
The EC is headed by CEO and there are other senior level managers and
departmental heads. The project manager is the person who is responsible for
transmitting the vision and goals in reality. The implementation team or the
work team selects employees from the company in addition to vendor
representatives and consultants. Functional managers take care of day to day
operations of their functional areas, they should have strong conceptual skills
of understanding the ERP project and how it relates to the business. Functional
participants have a limited role in the implementation of the project; they
answer questions, and review the training programs and business process flows
that are proposed in the new software. Consultants can act as project manager,
team leader, team member, service representative and end user. Package
vendor are responsible for fixing any problems in the software that the
implementation team encounters and as trainer to end users/ key users. End
users are the general mass of people who will use the new ERP system.
Learning Activity
Pick up an organization using SAP software and try to know how
SAP has provided benefit to them since their traditional ways.
Premier Well-Being Firm Streamlines Processes Through

Oracle
Client
Herbalife is one of the largest premier health and well-being companies
headquartered in Southern California, US, and has retail sales of over US$
1.3 billion.
Business Need
Herbalife had periodic new product releases and there was a need for an
efficient tool to predict demand for new products. Herbalife also wanted to
provide a single platform for supply chain planning across product
categories, and enable system-driven accounting and booking from sub-
ledgers to general ledger globally. They also sought to migrate to a cost-
effective Linux operating system from the existing HP UNIX platform.
Herbalife already had Oracle ERP Release 11.0.3 Inventory and Planning
Modules for its supply chain operations and Oracle ERP Release 11i
Contd...
92 ANNA UNIVERSITY
financial modules of GL, AP and FA, implemented by Infosys earlier. Notes

Herbalife partnered with Infosys for implementing Oracle Applications
R11.5.9.
Infosys Solution
The Infosys approach to implement the Oracle Application R11.5.9 reduced
process complexities and achieved process efficiencies for Herbalife. This
resulted in better supply chain planning, which in turn reduced stock-outs
and improved inventory turns. Infosys also improved the efficiencies of
warehouse operations through automation by RF devices in key European
warehouses.
Migration from HP UNIX to LINUX (for both applications and database)
was a challenge, which was made simpler by our approach. The latter
helped in reducing the system’s maintenance cost for Herbalife. We
upgraded existing interfaces in the Oracle 11.0.3 system to seamlessly
integrate with legacy systems.
Benefits
The Infosys solution helped Herbalife in adhering to uniform practices for
supply chain planning and procurement. It also enabled system-driven
accounting globally by setting up a multi-organization environment with
each country having its own charts of accounts. Overall, we streamlined the
manufacturing, distribution, procurement, and financial accounting
processes for Herbalife.
Questions
1. Do you think implementing Oracle application helped Infosys? How it
can be?
2. What was the basic business need of herbal life?
1. Enterprise resource planning (ERP) systems are a

valuable tool for any organization, and they can have
an impact on every single part of your business. These
highly sought after enterprise applications help manage
activities including planning, research & development,
purchasing, supply chain management, sales and
marketing.
2. Once the ERP technology and ERP system software is
ready, data must be entered and/or moved into the
system’s database.
ANNA UNIVERSITY 93
Notes SUMMARY
 Software selection is a topic in which the process, methods and tools are
applied by organizations in order to decide which software they should
choose from the wide range of available solutions on the market.
 The selection of a software application is as one of the steps to the process
of software acquisition by the company. This wider process includes the
stages of: planning, information search, pre-selection, evaluation, choice
and negotiation.
 While finding and selecting ERP software, the following main functions
should be considered: Customer and Order Management, Purchasing
Control, Production Schedule, Ingredient List, Inventory Management,
Interface with CMMS system, Reporting and Analysis, Integration with
Accounting System, Payroll and HR (Human Resources).
 Different phases of the ERP implementation are: pre-evaluation screening,
package evaluation, project planning phase, gap analysis, re-engineering,
customization, implementation team training, testing, going live, end user
training, post-implementation.
 The most important factor that decides the success of an ERP
implementation is the transition strategy. Some of them are Big bang or
Phased or Parallel or Process Line or hybrid.
 An ERP implementation is a big project for any company to take ahead,
whether it is a small business or a large global corporation. Every project
has different challenges and requires a strategic approach. If managed
properly, project will be well worth the time, money and resources you
have invested.
KEYWORDS
AHP – Analytical Hierarchical Process: It is a process in which the criteria
are structured as a hierarchy, and specific weights are defined for each level in
the hierarchy.
Phased implementation: Independent modules of ERP are installed in each
unit whereas; integration of ERP modules takes place at a later stage.
Parallel Implementation: This approach keeps new ERP system and legacy
system both active simultaneously for a period of time.
Gap Analysis: This is the process through which company create a complete
model of where they are now and where they want to be. The trick is to design
a model, which both anticipates and covers any functional gaps.
Re-engineering: It aims to help organizations fundamentally rethink how they
do their work in order to dramatically improve customer service, cut
operational costs, and become excellent competitors.
94 ANNA UNIVERSITY
Accelerated SAP (ASAP): It is a proven implementation methodology for Notes

mySAP.com. It was released in 1997 and has been used in more than 1,000
projects, and more than 18,000 SAP and partner consultants have been trained
in ASAP.
1. Why is planning important in ERP implementation?
2. Why is evaluation of ERP?
3. Why is it important to select an appropriate ERP?
4. Who are the people involved in selection?
5. What are the steps of lifecycle of ERP?
6. What contributes to the total costs?
7. What are the different phases of ERP implementation?
8. What are the implementation strategies?
9. On what basis would you decide to select ERP software?
10. What are the general requirements for ERP selection?
11. Is it important to choose the vendor wisely? Why?
12. What do you understand by ERP implementation?
13. What are the expected costs a company can expect in future?
14. Why is it important to train implementation team?
15. Which technique is most used in ERP?
16. How training the employees in ERP would be beneficial?
17. What are the factors affecting vendors characterization?
18. Define pre-evaluation screening.
19. Mention three pillars of implementation.
20. Explain gap analysis.

1. Explain the lifecycle process of implementation.
2. Discuss the implementation methodology.
3. Explain how planning, selection and evaluation of ERP software are done
with the help of an example.
4. What are the strategies to be kept in mind for ERP implementation?
ANNA UNIVERSITY 95
Notes 5. Describe Package Evaluation.

6. Why is it necessary to evaluate the ERP system?
7. What are the administration and security requirements and reporting
requirements for selecting ERP software? Explain with examples.
8. Do you think people play a key role implementation? Explain.
9. Describe the criteria for selecting ERP software.
10. What are the general requirements of selecting ERP software? Explain with
the help of examples.
FURTHER READINGS
Bret Wagner, Ellen Monk (2008), Enterprise Resource Planning.

Williams (2008), Implementing SAP ERP Sales & Distribution.
S. Parthasarthy (2007), Enterprise Resource Planning (ERP): A
Managerial and Technical Perspective, New Age International.
Carol A Ptak and Eli Schragenheim (2010), ERP: Tools,
CRC Press.
Jean Cunningham and Duane Jones (2007), Easier, Simpler,
Faster: Systems Strategy for Lean IT, Productivity Press.
96 ANNA UNIVERSITY
Lesson 6 - ERP Framework: Process and People
LESSON 6 - ERP FRAMEWORK: PROCESS AND Notes

PEOPLE
CONTENTS
Learning Objectives
Learning Outcomes
Overview
6.1 ERP Implementation: The Hidden Cost
6.2 Training
6.3 Data Migration
6.4 People Organization in Implementation
6.4.1 Vendors
6.4.2 Consultants
6.4.3 Employees – The End Users
6.5 Suggested Framework
6.5.1 Readiness to Change
6.5.2 Pressures to Perform
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the ERP Hidden Costs
 Describe the Common Costs that Overruns the Budget
LEARNING OUTCOMES
understanding of:
 basics of ERP implementation
 determine training and data migration
ANNA UNIVERSITY 97
Notes  analyzing people organization in implementation

 how to use suggested framework
OVERVIEW
The earlier lesson gave us the learning’s ERP, planning, evaluation and
selection of ERP systems. What way can we implement the ERP software,
what are the types of strategies of implementation.
In this lesson, you will learn about the details of the ERP implementation hidden
costs details. The earlier lesson introduced to implantation methodologies. The
lesson continues to discuss the extended version of hidden costs.
6.1 ERP IMPLEMENTATION: THE HIDDEN COST

ERP software promises great benefits. However, there are cases in ERP even
though you plan well but the budget is exceeded. In this lesson, we will study
the areas the managers miss to account for in their budgets. On the other hand,
we can say the hidden costs of implementation.
Some companies purchase ERP software to reduce their costs. The objective is
to integrate company wide information.
There is cost that is being ignored while budgeting for the ERP software. But,
following are the eight areas, which are most likely to overrun the budget:
 Training
 Customization
 Integration and testing
 Data Conversion
 Data Analysis
 Consultants
 Brain Drain (employee turnover)
 Continuing Maintenance
No, we will be discussing training, data migration, vendors and consultant in
details as they are the most common factors that exceed the ERP budget.
6.2 TRAINING
Training is the unanimous choice of experienced ERP implementation as the
most elusive budget. Training costs is not overlooked but yes, it is
underestimated. It is expensive, as workers have to learn new set of processes.
98 ANNA UNIVERSITY
Notes
Example: A receiving clerk who accepts shipment of raw materials.
With ERP package like SAP clerks now becomes an accountant because clerk
now knows how to enter inventory in live system.
Training is the first thing from which budgets are squeezed, a mistake most
implementers make. The training budget can be 10% or more of the total cost
of the project. Users are trained how to use an ERP system is a mix of
technology, processes and domain area content in order to provide a context for
the system. It is always better to train on the concepts first and then show the
end users how to use the system. Other formats used include training over the
internet, computer based training, and self-study. One approach that is
consistently used involves designating a member (or group of members) of the
organization as “super user or champions” who can then be responsible for
training others. The variety of training formats available is amazing – on site
training, web based virtual classrooms, computer-based training, knowledge
warehouses, video courses, self-study books, context sensitive help screens etc.
Pre implementation training is organized for the project team and the system
administrators. The focus of the project team will be on understanding the
functionality of the software. Training on such subjects as best practices,
process mapping, training skills and documentation may be provided by the
vendor. The end users and managers are trained during implementation and
after implementation. Some areas that will be relevant to everyone are ERP
basics, business processes, changed business procedures, automation of tasks
by ERP, and fundamentals of computer usage like passwords, encryption,
security etc.
“Scrimp on training expenses, pay the price later.”
6.3 DATA MIGRATION

Shifting data from the old ERP system to new ERP system costs money. For
doing this new ERP packages are requires. So, as a result they underestimate
the costs of the move.
Data migration is the process of translating data from one format to another.
Data migration is the process of moving required (and most often very large)
volumes of data from existing systems to new systems. Existing systems can be
anything from custom built IT infrastructures to spreadsheets and standalone
databases. Extracting and cleansing data from existing system can be the single
largest task in the project. The wizards in data migration tools make tasks like
loading the data from the existing system, reviewing for quality, accuracy and
completeness and then importing the data directly into ERP database. Two
primary methods are used for migrating data from the legacy systems to the
ANNA UNIVERSITY 99
Notes new ERP, which are database manual and electronic method. In electronic
method, some type of database conversion process is used.
This process can range anywhere from true source code development to
complex copy utilities. We start with raw data in a legacy system such as
inventory item master file. Using data migration tools and programs, we come
up with a migration strategy to export data to the new ERP system.
If the existing legacy data is uploaded to the new ERP system

with inaccurate, inconsistent and missing information, users will
experience significant inefficiency and will not reap maximum return from
the ERP investment.
6.4 PEOPLE ORGANIZATION IN IMPLEMENTATION

6.4.1 Vendors
Vendors are the people who develop the ERP packages, they spend a large
amount of time and effort in research & development to create the package
solution that is flexible, efficient and easy to use. However, now-a-days the
ERP have all features and function, which can satisfy the need of all the
business data. The ERP vendors spent a huge amount of money also so that
they can become experts and develop a flexible, efficient and user-friendly
ERP package. The model for developing ERP package by vendors is illustrated
in Figure 6.1.
Source: Enterprise resource planning, by Parag Diwan and Sunil Sharma
Figure 6.1: Vendors Model of ERP
Roles of Vendors
They are as follows:
 The vendor should supply the product and its documentation immediately
after the contract has been signed.
100 ANNA UNIVERSITY

 The vendor is responsible to repair the errors, which are found during the Notes
implementation process, so it becomes necessary that the vendor should be
constantly in touch with the implementation team.
 The vendor has to provide the training to the company’s users or
employees and the people who are involved in the implementation process
of the software.
 The vendors training should be able to explain how the package works,
what are major components, how the data and information flows across the
system, etc.
 The vendor has to give the project support function and has to take care of
the quality control factor with respect to how the product is implemented.
 The vendors have to participate in all the phases of the implementation
process in which he gives advices, answers to technical questions about the
product and technology.
 In case, there is a gap between the package and the actual business process
then it is the job of a vendor to customize the software and make necessary
modifications.
Learning Activity
Consult a vendor of ERP and find out the various marketing and
sales domain ERP system popular in the industry.
6.4.2 Consultants
The primary role of an ERP consultant is to guide an organization through
transition to an ERP system. An ERP consultant represents a contractor, firm
or team of consultants that include project management, technical and
functional resources.
They have a lot of experience of implementation and know various methods
that will ensure successful implementation. The only limitation with consultant
is they are very expensive. They have to make a plan to carry the activities in
the proper direction during the implementation process.
Category of Consultants
 Management consultants: Business consultants are professional people
who develop the different methods and techniques to deal with the
implementation process and with the various problems that will be
produced during implementation. They focus primarily on function of
management as it relates to the organization of resources and business
process flows. They are experts in the area of the administration,
management and control activities.
ANNA UNIVERSITY 101

Notes  Application consultant: They are people who focus on the process of
communicating, teaching, demonstrating, and configuring software for the
business process flows.
 Technical consultants: They are consultants who deal with technical issues
such as database conversions, source code modifications, operating
systems, software installations.
As the consultants are expensive, the company should formulate a plan
regarding optimum utilization of the money spent on consultants.
Example: A specified number of the company’s staff should be trained

for a certain specific level.
CONSULTANTS WHO ARE RESPONSIBLE TO IMPLEMENT THE PROJECT
CLEAR CUT IDEA
TELLS THE CHANGE MUST BE MADE SO THAT WITH HIS DECISISON CHANGES ARE MADE
HE IS RESPONSIBLE FOR ADMINISTRATION OF THE PHASES
Source: Enterprise resource planning, by Parag Diwan and Sunil Sharma
Figure 6.2: Model for Consultants in ERP
Role of Consultants
It is described as follows:
 They alert the companies’ management about the actions and decisions to
be taken.
 They consultant have to guarantee the success of the project and should be
able to show the results like reduction in cycle time, increased response
time, improved productivity, etc. so that the customer is satisfied.
 They are responsible for the administration of all the phases of the
implementation so that all the activities are occurring at the scheduled time
and the desired level of quality is achieved with effective participation of
all the personnel.
102 ANNA UNIVERSITY

 They add value to the project as they provide knowledge about the Notes
packages and the implementation process, which in turn provides the
practical experience to the employees.
 The consultants should create a knowledge base and train the people so that
the knowledge stays in the organization when the consultants leave the
project
 They should strive to improve the company’s business processes so that the
software package can be used as it was originally intended by its
developers.
 There are other tasks performed by the ERP consultants. They:
 Maintain technical documents on the projects.
 Analyze business requirements.
 Prepare the functional specifications for ERP program development.
 Perform Gap analysis and related studies.
 Assess the competence level of the users of the ERP system.
 Perform Product design and operations review.
 Identify requirements of the users of the ERP system.
 Interact with other modules consultants
Choosing a lesser known ERP package to avoid premium priced

consultant will not help.
6.4.3 Employees – The End Users

 Employees are the people who use the ERP system once it has been
developed.
 Employees perform the functions, which are automated by the ERP system.
 The employees should be given the training as to how use the various
functions that are automated in the software.
 There is a fear among the employees of unemployment if they are not
trained properly on all the upcoming software.
 The end users who are the employees are provided with the skills set and
more opportunities to work in a challenging environment using the modern
technologies.
 They also analyse and provide the suggestion where they can perform
customization.
ANNA UNIVERSITY 103

Notes  They should be able to balance their loyalty to the client and the project.
 They should have a clear context and scope of the work so that they can
provide the management with the decisions taken for implementation
process.
Example: The recent research on SAP end-user training suggested

that enterprises should allocate 17 percent of the total cost of an ERP
project to training. Gartner research recognized training as the top priority,
and suggested that companies that budget less than 13 percent of the
implementation costs for training are three times more likely than
companies that spend 17 percent or more to see their ERP projects run over
time and over budget.
Learning Activity
Visit an ERP solution company and find out how relevant are the
advancements taking place in the upgradation of these systems.
6.5 SUGGESTED FRAMEWORK

Based on this study, a framework can be suggested to assist an organisation as
to whether ERP, BPR or just an IT solution aimed at automation is the most
suitable option for it. The framework proposes that an organisation can map
itself on a grid of ‘pressures to perform’ on ‘Y’ axis and ‘organisational
readiness to change’ on ‘X’ axis. Then the resulting location of an organisation
on this grid will point to the most logical choice.
6.5.1 Readiness to Change

Both ERP and BPR basically lead to changes, albeit of varying degree, in an
organisation. Therefore, an organisation’s readiness to change becomes the
most important criteria on this grid. Organisations, like people, like to work in
the universe they are comfortable. Unless, an organisation on its own feels the
need to change, prescribing a strong dose of BPR or ERP would only result in
strong side reactions. The organisation’s readiness to change can be measured
in terms of various parameters.
 Top Management Initiative: Is the top management pro-change or
anti-change, does it encourage innovation?
 Organisation Culture and Management Style: Is it a family-run business
with old traditions or is it managed on professional terms, are the
employees empowered and is the decision-making participative or
authoritative?
104 ANNA UNIVERSITY

 Organisational Structure: Is the communication across the hierarchy or is Notes

it up and down the hierarchy? Does the organisation believe in team
approach and how is the performance of employees measured?
 Relationship with Workforce: What is the level of job motivation, what are
the current skill-sets possessed by the employees and what are the new
ones required?
 Financial Health: How is the profitability, i.e., cash position of an
organisation? A cash-strapped company can hardly dream of expensive
solutions like ERP or BPR?
 Legal Shackles: They are mostly valid for governmental or semi-
governmental organisations.
6.5.2 Pressures to Perform

Any business decision should be justified by a relevant need. Sometimes the
decisions are forced on an organisation because of outside pressures on it.
Business is always defined from ‘outside in’—by customers, competitors and
complementors. If the business environment is in a flux, an organisation must
respond and change in order to maintain or elevate its performance level. The
pressures to perform can both be external or internal.
 External: These include factors like competitive positioning, structural
changes in the industry, changes in regulatory structure, threat of ending
special privileges, shortened product and technology life cycles. There is
also a danger of oversupply or challenge to create demand.
 Internal: These include factors like increase in business complexity,
changes in strategic aspects like product portfolio and market segment and
increase in workforce turnover and other labor problems.
The parameters for ‘pressures to perform’ can be evaluated in terms of market
share/value leadership, share price, industry trends like mergers and
acquisitions, profitability, product obsolescence rate, manpower attrition rate
and so on. ‘Pressures to perform’ lead to need for change. So, the grid
translates into cross-matching the need and willingness to change for an
organisation.
If both are low or moderate, the organisation can afford to work with custom-
developed systems for its various functions. The main thrust is automation of
work and the organisation can think in terms of linking these localized systems
as a step towards better performance. If both the need and willingness are high
for an organisation, then BPR, in its true radical sense, is the most logical
option. Quite a few governmental organisations are facing sudden increase in
pressure to perform as a result of economic liberalisation and drying up of
subsidies. But unless they rate high enough on the readiness scale, they cannot
think in terms of a BPR solution.
ANNA UNIVERSITY 105

Notes Organisations facing high pressures should opt for an ERP solution with
strategic focus on cost-cutting, if they are not yet ready for change. The ERP
package will help them to cut wasteful expenditure and inefficient buffers built
in their supply chains. The package will enable them to maximise out of their
current resources and thus become ‘lean’ to compete.
On the other hand, organisations, which are willing to change, can strategically
use the ERP package to widen the competitive gap between them and their
competitors. The ERP package helps them to have better control over their
business activities and endows them anticipatory skills via proactive decision-
making capabilities. Organisations can establish a solid information
infrastructure and can focus on elevating their performance. The benefits can
be better relationship with suppliers and customers leading to sharing of
production plans to reduce lead times to minimal levels or preparing the
organisation to rapidly expand the business or even go for related
diversification of business. An organisation can focus on its core capabilities
and can groom them more.
The rating of parameters on this grid is a tricky issue. A lot of work needs to be
done in this regard. Apart from some readily quantifiable parameters like
market share or profitability or share price, others have to be looked at in more
qualitative terms. The mapping exercise should be done in close consultation
with the top management of an organisation, with individual perceptions
playing an important role. But again, the outside consultants can be of vital
importance in arriving at a more realistic picture.
The parameters for ‘pressures to perform’ can be evaluated in

terms of market share/value leadership, share price, industry trends like
mergers and acquisitions, profitability, product obsolescence rate,
manpower attrition rate and so on. ‘Pressures to perform’ lead to need for
change.
Fujitsu’s Timely Delivery and High-quality Service Enable Us

to Have Faster ROI from SAP Implementation
Customer
Ciracasindo Perdana has been dedicated to beverage system business for the
last 20 years, dealing with the production and distribution of high-end
beverages brands such as SUNFRESH Natural Fruit Juices, DOUWE
EGBERTS Coffee and EQUAL Sweetener to entertain hospitality industry,
including star hotels, restaurants, cafés, industrial catering, retail outlets like
Contd...
106 ANNA UNIVERSITY

Hypermart, Carrefour, Ranch Market, Kem Chicks, etc. In addition, it Notes

supports beverages companies such as Arnott’s, Garuda Food, Tang Mas,
Orang Tua, etc. The company has wide-ranging products and packaging
with about 150 items in total, and currently operates sales offices in 6
different regions from Jakarta to Ujung Pandang.
Challenge
Ciracasindo has been applying business software system since 2003. As the
company’s business grows, the need for a more comprehensive set of
enterprise resources planning (ERP) system increases. The current system
cannot handle high capacity and the company’s growing expectation due to
it is limited capacity and non-integrated nature.
Furthermore, overcapacity in the current database system results in loss of
valuable data. Adding more resources to operate and manage existing
system has caused inefficiency and high cost. In overall, Ciracasindo has
faced the risk of business disruption that will potentially hamper the
company’s effort to achieve goals and objectives. Then, a project was
initiated with strategic objective to provide speedy and on-time reporting,
increase data accuracy, and reduce resources. Ciracasindo opted for SAP to
help it achieve these objectives. The company also expected an experienced
partner to realize business improvement from SAP implementation in faster
manner.
Solution
Fujitsu provides Ciracasindo with SAP consultation and implementation
services. Fujitsu Indonesia was selected amongst two other local vendors
and a Singapore-based system integrator. “We take Fujitsu’s vast experience
and customer reference in implementing SAP projects into account. As a
company, Ciracasindo and Fujitsu have a similar business, which will help
understand our challenges and requirements,” said Syarief Hubeis, Director
PT Ciracasindo Perdana. “It turned out that Fujitsu’s services have exceeded
our expectation, as they have a solid, dedicated team, active participation,
high curiousity and persistence to complete the job”.
Benefit Products and Services
 SAP implementation project was delivered in just six months, resulting
in faster return-on-investment (ROI) from SAP implementation.
 Accurate data and speedy reporting that is really helping business users.
 SAP helps to reduce resource usage significantly up to 30%.
 Financial reports are ready at any time since the first day of the month.
 SAP Business One
 Fujitsu Consultation and Implementation Services
Contd...
ANNA UNIVERSITY 107

Notes Benefit
Ciracasindo began the project with selection process in which it took no
involvement from independent consultant. Hubeis noted that the spread and
in-depth operation were really challenging during the selection of software
system to support the overall management of the company.
“The speed, the accuracy and the cost of information become an essence.”
The selection process took over one year, before management decided to
embark on SAP Business One. “There were three candidates, but we
selected SAP because it has already had many customer references and deep
experience in the food industry,” explained Hubeis. “Considering the
importance of SAP to our business, we need someone to implement the
system as quickly as possible so we can soon experience the benefit.”
Several challenges during the project includes requirement to change coding
on item codes and group, restructure the Chart of Account and improve
business operation flow. Moreover, the project team has to deal with multi-
location coordination. “With help from Fujitsu team, we succeed in
managing these challenges and deliver the project quickly,” said Hubeis.
With the close collaboration between Ciracasindo and Fujitsu team, the SAP
implementation project was delivered in just six months, from head office to
branch offfices. Hubeis noted the delivery time help Ciracasindo experience
the benefit of SAP implementation sooner. “We now have accurate data and
speedy reporting process that is really helping our business users.
Additionally, we can also reduce resource usage significantly up to 30% and
financial reports are ready since the first day of the month, every time.” In
the future, Hubeis said Ciracasindo is planning to expand its SAP
implementation to Inventory Management, particularly production
scheduling, transportation between warehouse, control distribution and
product expiration rate (shelf time) per lot. “We are looking forward to have
Fujitsu as our reliable partner in this SAP journey. Fujitsu’s timely and
quality service enables us to have faster ROI (return-on-investment) from
SAP implementation.”
Conclusion
Ciracasindo’s business is growing faster than their existing system can
handle. To cope with more complex operations and future business
direction, the company requires major overhaul in their system and the more
modern SAP was selected as Ciracasindo’s new business enabler. The
company needed to implement complete range of SAP modules as quickly
as possible to experience the business benefits sooner. As SAP Global
Partner, Fujitsu was brought in to assist Ciracasindo with consultation and
implementation services. Fujitsu’s deep expertise and vast experince help
the project completed on time resulting in lower resources usage, better
reporting and most important of all, faster ROI.
Contd...
108 ANNA UNIVERSITY

“We are looking forward to have fujitsu as our reliable partner in this sap Notes
journey”
Fujitsu will continue to support Ciracasindo in implementation of future.
About Fujitsu
Fujitsu Indonesia was established in 1995 under the name of PT. Fujitsu
Systems Indonesia. Headquartered in Jakarta and a number of service
centers in Jakarta & Surabaya also more than 20 authorized service
providers across Indonesia, Fujitsu Indonesia has a vision to become a
leading provider in IT, communications and customer-focused business
solutions.
Questions
1. Analyse the case. What was the need for ERP?
2. How has it helped them?
1. The price of ERP implementation cannot be calculated

on a flat rate basis like any other software available in
the market.
2. Data migration is categorized as storage migration,
database migration, application migration and business
process migration. These scenarios are routine IT
activities, and most organizations migrate data on a
quarterly basis.
SUMMARY
 The areas which are most likely to overrun the ERP budget are Training,
Customization, Integration and testing, Data Conversion, Data Analysis,
Consultants, Brain Drain (employee turnover), and Continuing Maintenance.
 Users are trained how to use an ERP system is a mix of technology,
processes and domain area content in order to provide a context for the
system. It is always better to train on the concepts first and then show the
end users how to use the system.
 Data migration is the process of translating data from one format to
another. Data migration is the process of moving required (and most often
very large) volumes of data from existing systems to new systems.
 Vendors are the people who develop the ERP packages, they spend a large
amount of time and effort in research and development to create the
package solution that is flexible, efficient and easy to use.
ANNA UNIVERSITY 109

Notes  Business consultants are professional people who develop the different
methods and techniques to deal with the implementation process and with
the various problems that will be produced during implementation.
 Employees are the people who use the ERP system once it has been
developed. Employees perform the functions, which are automated by the
ERP system.
KEYWORDS
Data Migration: Data migration is the process of translating data from one
format to another. Data migration is the process of moving required (and most
often very large) volumes of data from existing systems to new systems
Customization: Customization of ERP happens when one or more business
process are easily not supported by ERP, and then you decide to make your own.
Integration and Testing: Integrating ERP with other enterprise software for
making their potential use.
Brain Drain: ERP best used when staff supports. But there are chances it
leaves due to change technology.
Legacy Data: It is a collection of the documents drawings and artefacts, which
relates to historical background.
1. What are the areas, which overrun the budget of ERP?
2. What is training?
3. Why is training important for ERP systems?
4. What are different types of training format available?
5. What is data migration?
6. Define vendors.
7. Define consultants.
8. What are the roles of vendors?
9. What are the roles of consultants?
10. Who are the end users of ERP packages?
11. Describe briefly vendor model of ERP.
12. Describe briefly consultant model of ERP.
13. What is the limitation of using consultants in ERP systems?
14. What is the most important task of data migration?
15. What are the two primary methods used for migrating data?
16. What should the training of the ERP module include first for better
implementation of the processes?
110 ANNA UNIVERSITY

17. How can we make migration strategy to export data to the new ERP Notes
system?
18. What does a vendor do if there is a gap between ERP package and actual
business?
19. How can ERP consultants add value to the project?
20. What are the roles of employees in an automated ERP system?

1. Some companies purchase ERP software to reduce their costs. But still they
generally overrun with their budget. Explain the areas in detail where do
the companies lack.
2. Explain the importance and process of training required in companies using
ERP systems.
3. Why is ERP system important in migrating data from old to new systems?
Explain the process.
4. Explain the vendor’s model process with the help of diagram and
examples.
5. Explain the consultant model diagram with the help of examples.
6. Differentiate between consultants and vendors.
7. Differentiate between vendors and end users.
8. Explain the relationship between consultants and the end users of ERP system.
9. Discuss the framework of ERP.
10. Discuss the people who are involved in implementation of ERP.
FURTHER READINGS
Khalil Tarek (2009), Management of Technology, Tata

McGrawHill, New Delhi.
Murthy C.S.V. (2006), Technology Management, Himalaya, New
Delhi.
Narayanan V.K. (2009), Managing Technology and Innovation for
Competitive Advantage, Pearson, Delhi.
S. Parthasarthy (2007), Enterprise Resource Planning (ERP): A
Managerial and Technical Perspective, New Age International.
Carol A. Ptak and Eli Schragenheim (2010), ERP: Tools,
CRC Press.
ANNA UNIVERSITY 111

Notes
112 ANNA UNIVERSITY

Lesson 7 - Post-implementation of ERP
Notes
UNIT IV
LESSON 7 - POST-IMPLEMENTATION OF ERP
CONTENTS
Learning Objectives
Learning Outcomes
Overview
7.1 Maintenance of ERP
7.2 Organizational and Industrial Impact of ERP
7.2.1 Large Organizations Impact of ERP
7.2.2 Business Realization
7.2.3 Assigning Responsibility Matrix
7.2.4 Approach Selection
7.2.5 Communication, Communication, Communication
7.2.6 Crafting the Project Crew
7.2.7 Change Management
7.2.8 Industrial Impact of ERP
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Know how maintenance of ERP takes place
 Understand the Organizational and Industrial Impact of ERP
LEARNING OUTCOMES
understanding of:
 how to do maintenance of ERP
 determine organizational and industrial impact of ERP
ANNA UNIVERSITY 113

Notes  recall large organizations impact of ERP

 how to assign responsibility matrix
 explain crafting the project crew
 analyzing industrial impact of ERP
OVERVIEW
In the previous lesson, you had studied about the ERP implementation,
methodology and framework, training, data migration, people organization in
implementation – Consultants, Vendors and Employees.
Maintenance is about changes which are to be made to the existing business
processes. Such changes can be enhancements or improvements in
functionalities of the processes in modern times; back-office automation has
been revolutionized through ERP systems, inter-linking each and every
operation of the company. Diversity and complexity of tasks can be reduced
through the integration of ERP with several processes. In this way,
management officials can monitor the significant performance of business
concern and can check whatever updates have been made to the system.
Organizations and industries installing ERP systems have made their
functioning much easier as it reduces time and effort in handling huge volumes
of multiple tasks.
In this lesson, you will learn about the maintenance of ERP and the
organizational and industrial impact of ERP.
7.1 MAINTENANCE OF ERP

For smooth functioning, ERP system regularly needs maintenance. As per the
changing situations in the organization, ERP plan needs thorough revision and
update.
The review comments and recommendations should be included into the
system. Also, ERP system requires effective tuning as the employees become
familiar with it. When an ERP system reaches a stable state, considerable
action should be taken for improving the performance.
Other areas which need maintenance are ERP tools. Regular contact is to be
built by the project manager with the vendors in order to inspect whether any
upgrades or updates are available. All patches and upgrades need installation in
order to make sure that the tools are working at their maximum efficiency.
Maintenance of ERP systems involves the following:
 Customization: It means changes which are being made on ERP
functionality in comparison to configuration switches.
 Extension: The changes which have been made through ERP system is
present in
114 ANNA UNIVERSITY

 Custom-code “add ons” – Sometimes, it is coded in a vendor based Notes

language such as SAP’s ABAP/4.
 Third-party vendor “bolt-ons”
 Systems of legacy
 Modification: Changes that have been made to the code of ERP itself
either by the vendor or the user.
Example: Data maintenance through ERP with software to manage

product, pricing and vendor data helps the companies in:
 Reducing business risk with the increase in accuracy and authenticity of
business data.
 Strengthening the norms with constant, updated data and an audit trail
for easy reporting.
 It is easy and quick to view and update price, costs, and margins for
products to purchase, bought and sold.
 It arranges and view the requirements of customer and vendor data
instead of IT requirements.
New fresher courses should be given time-to-time to employees on

the new functionality that gets added with each new upgraded. The training
documentation should be updated so that is should be in proper coordination
with the procedures and processes.
Learning Activity
Analyse the maintenance of ERP systems in Indian railways.
7.2 ORGANIZATIONAL AND INDUSTRIAL IMPACT OF

ERP
7.2.1 Large Organizations Impact of ERP
Though there is no formal data available, going by market feel, there are as
many (if not more) small and mid-sized companies that invest in ERP solutions
as large corporations. More to the point is the fact that the investment in ERP
systems as a percentage of annual sales is more or less constant, showing that
smaller companies invest fewer rupees in installing ERP systems. The mid-
sized customers have varied reasons for investing in ERP. Some of them are:
ANNA UNIVERSITY 115

Notes  Need to crash the ‘order-to-cash’ cycle time

 Need to optimise finished goods distribution
 Need to close the books in a stipulated time
 Need to give sales people accurate despatch information.
The common denominator there was that an ERP system linked the
organisation and provided the capabilities to achieve business objectives. So, in
actuality, there is no correlation between the size of an organisation and its
readiness for an ERP system. Hence, it is not truly an impeding factor in so far
as ERP systems penetration is concerned.
7.2.2 Business Realization

The pilot of the organisation i.e., the CEO, must insist upon benefits from the
ERP team that would be felt as a onetime measure and those on a recurring
basis. The costs of the entire initiative must also be calculated— on a capital
and a revenue basis. The system must be positioned as a tool and an enabler to
achieve organisational mission and objectives. These desired outcomes, in turn,
should be articulated in a business case.
Example: A CEO should ask, during the course of project appraisal, the
following questions for a clear understanding and communication of needs and
expectations from the new proposed system:
1. Create a base case of annual savings from cost cuts that could be made
without the ERP system in place.
2. Create an ERP case of annual savings that could be made with the ERP.
This should include savings that do not depend on ERP.
3. Subtract the base case savings from the ERP case savings on an annual
basis, (i.e., step 1 savings from step 2 savings) and calculate the NPV of the
residual cash flow. A positive NPV will indicate that you should proceed
with the deployment of the ERP.
4. If step 3 produces a positive NPV, conduct a sensitivity analysis to ensure
that the business case is strong enough to withstand time overruns and cost
overruns.
5. Back allocate all ERP system deployment costs to individual business units
so that they can factor them into their planning. Ensure that each unit is
held responsible for producing the promised results.
7.2.3 Assigning Responsibility Matrix

Getting an enterprise system up and running is only the beginning. To ensure
that the system will meet the organisation’s business objectives, the CEO and
the apex management must establish key matrices and assign key process
owners specific responsibility for achieving the benefits. The top management
116 ANNA UNIVERSITY

must also assign individual responsibilities for achieving the benefits. An Notes
organisation’s motive could be achieving better quality (less scrap, fewer
returns, lower warranty costs etc.). Others may set faster product development
times, improved customer satisfaction, more accurate order fulfilment or faster
delivery times as benefit goals.
1. Government Government
1.1 1.1 1.2 1.3
1.2
1.3 Shareholders
2. Shareholders 2.1 2.2
2.1 Regular dividends
2.2 Long-term growth Executives
3. Executives 3.1 3.2
3.1 Low-cost/high-volume
strategy
3.2 Customers
4. Customers 4.2 4.3
4.1 Customers orders 3 2
4.2 Interchangeability 2 Employees
5. Employees 5.1 5.2
5.1 Avoid last-minute 1
scrambling
5.2 Overtime 1 Suppliers
6. Suppliers 6.1 6.2
6.1 Stable market for 3
components
6.2 Low inventory 2
requirements
Identify the stakeholders and their requirements. Use the genetic stakeholders’ list and their requirements to help you think through
the specific requirement areas of your specific stakeholders. This is just a starter list and is not intended to be all inclusive. Discuss
these requirements with the members of your organization who face these issues in their own jobs. Compile and list all
requirements in the vertical column of the matrix. Expand the list of requirements as needed.
Applying the matrix to hierarchy of stakeholder problems… the matrix will allow you to identify if, in a given situation, there are
conflicts between the requirements of the various stakeholders. You can use the center section to evaluate each requirement against
every other requirement and identify the severity of that conflict at the intersection of the two requirements. In the example, note
that the customers’ need for customized orders (4.1) conflicts strongly with the supplier’s requirement for stable component orders
(6.1); the three at the intersection of these requirements indicates a high level of conflict.
Figure 7.1: Assignment Responsibility Matrix of a Company

Apart from the hard benefits that he is likely to earn and a case for ROI, the top
management should also look at the security of the investments and the rate of
obsolescence. One cannot expect to be technology proof in the current state of
technological boom, but, all the same one should ensure that it does not
become a losing proposition either. One way to do it is by ensuring that the
product in a few years will be supported by evolving standards, the technology
upgradation and change management.
Example: A case in point is the argument on proprietary versus open

systems. Selection of the IT framework, though highly technical and subjective
must be delved into by the top management for a comfort on future
investments (in the long-term). The CIO of the organisation should provide a
clear IT strategy for the organisation to the top management.
ANNA UNIVERSITY 117

Notes 7.2.4 Approach Selection

A very critical decision here is whether one should go the big-bang way or the
incremental route. In weighing this, a lot has to do with culture and politics of
the organisation. In some organisations, lots of small success is needed to build
up the case. Here, the organisation might opt for the incremental approach. The
consensus between the top management and the middle management is of
utmost importance.
An issue that should be addressed early in the stages of the ERP initiative is the
approach to BPR. The top team must understand that enterprise packages are
customisable, but only within limits. The ERP applications already have a
gamut of standard and best-practices incorporated by design. They also assume
standardisation of business processes across the enterprise. A sound approach
is to develop a philosophy at the outset of the project about the level of
reengineering and package changes needed and then communicate that
philosophy to the project team. The best known method is to reengineer
processes concurrently with implementation, up to a point.
7.2.5 Communication, Communication, Communication

Deployment of the ERP is a tricky job as it involves a whole variety of people
with different attitudes, all interacting or rather trying to communicate at the
same time. A whole lot of personal goals surface during this period—
Example: For instance, operational and tactical staff, whose interests

were earlier trampled by the IT staff, tries to settle scores. Hence, it becomes
imperative that the key stakeholders in the initiative agree upon the project
plan at the beginning of the project. The project plan should also clearly
mention dates for steering committee meetings, etc. and these meetings must
be used by the top management as a platform to communicate the original
vision, the mission, the strategies and objectives of the project. Continuously
re-emphasising the message helps in reducing the chances of “straying off”
from the target objectives, as well as the target dates.
The success of the ERP initiative, on the softer side, can be attributed to two
things. First, in all communications about the project, there is need of a
practice of tying central messages and specific department objectives and
needs back to the overall organisation. Second, a regular mix of efforts to
include everything from conducting workshops, publishing newsletters and
holding focus groups to organising lunch time discussions and traveling road
shows; each designed to suit different stages across the implementation life
cycle.
We should explicitly, candidly and constantly communicate the business case
and realities, including goals, timetable and expectations. An organisation
which implements ERP should have a well-laid out communications plan, even
when the initial project charter is being discussed. The communications plan
118 ANNA UNIVERSITY

should mention the message that needs to be transpired in a one-to-many Notes

matrix. A message can have more than one audience to be impacted. An
audience could reap a set of benefits and a benefit could involve multiple risks.
The time frame of the message to transpire should also be established in the
matrix. This includes top down as well as bottom up information flow and
communication channels.
Steering committee meetings are usually the starting point for the top
down approach whereas brain storming sessions are of the bottom up
approach. The execution and the timing of the communications plan are
extremely important.
7.2.6 Crafting the Project Crew

Selecting the right project leader is as important as selecting the right product.
Core team leadership is a full time assignment. Team leader is like an engine of
the train who should know the business well and have across functional
experience. He should also be politically savvy, have credibility within the
organisation and be a good communicator and of course, be from the functional
side of the business and not the hard-core IT manager.
The members must have some cross-functional knowledge. Creative thinking
must be an integral part of the member’s thinking curriculum. The member
must have some benchmarking experience and above all, must be a team player
and participant who know the rules of the game.
A lot of good and creative people don’t like to be pulled out of their jobs to
serve on an ERP team. The challenge is to convey not only how important the
team’s work is to the company but the invaluable career enhancement benefits
that accrue to each member as a result of his involvement. If attracting the best
and brightest people in the organisation to the team is important to successful
implementation, so are their motivation and their retention.
7.2.7 Change Management

The enterprise systems are all about the enterprise and not about systems. So, a
top management leader can play a critical role in effective change management
and implementation of an enterprise system. However, a lot of people feel that
the chief executive officer isn’t always the best choice.
The higher up the organisation we go, the more risk we run that
the champion’s involvement will be delegated.
ANNA UNIVERSITY 119

Notes An executive who delegates leader’s role won’t be seen as a winner. The
support of a leader doesn’t replace the need to sell to other members of top
management the benefits of the system. It has to be done early and often by
using multiple approaches. All senior managers in the organisation should be
able; not only to support the enterprise system project, but also to pass what
one executive dubbed ‘the elevator test’. In the time it would take to reach the
10th floor, every manager should be able to clearly explain to any employee
who asks (as they enter the elevator on the ground floor) why the organisation
is doing what it is doing. The explanation provided must be reasonably
consistent across the organisation. Every employee in an organization needs to
evaluate, assess, design, implement and manage the changes made in people,
processes and systems tools in every department.
Figure 7.2: Change Management Model of an IT Company

Because of the large range and magnitude of alterations that are required, ERP
demands fundamental shifts in assumptions, beliefs, day-to-day behaviours and
positive attitudes throughout the organisation. For many organisations, the
level of centralisation required to standardise operations comes as a surprise.
For others, the biggest leap is the necessity for each person to have a basic
understanding of the overall organisational system rather than just their piece
of it. In each case, organisations find that just as they begin to address the
demands they anticipated, they are engulfed by a second wave of implications
that they had not anticipated.
Unless the organisation is prepared to come to a dead stop while putting the
new system in place, people must maintain performance levels while preparing
to shift to the new system. The level of effort required continues to escalate
throughout the process and typically does not diminish for a substantial period
after the conversion.
120 ANNA UNIVERSITY

Notes
When the demands are placed on top of an already-high workload,
the resulting strain leads to decreased output, increased turnover, delays in
work in process and negative attitudes towards the organisation
If issues related to increased workload are not managed effectively and

resistance is driven underground, the resulting problems can be very costly to
the organisation in terms of quality and productivity.
7.2.8 Industrial Impact of ERP

It’s the company that can partner with the customer to determine what to offer
and then use its manufacturing and operational strengths to offer it better and
faster than its rivals.
Customer Focus
Four elements compose customer synchronised resource planning (CSRP).
Optimise Operations: CSRP begins with efficient execution of Enterprise
Resource Planning (ERP), particularly in two critical areas.
First, ERP is a framework and proven set of tools that tightly integrates the
core execution operations of the enterprise. It establishes a systematic,
measurable methodology. This is critical and powerful to CSRP, because once
a business methodology is defined; process improvements can be identified,
executed and repeated on a predictable basis.
Second, if ERP make-to-order manufacturing applications are implemented,
the required procedures are in place to manufacture customised products.
Providing cost-effective, customised solutions is a critical component of CSRP.
Customer Organisation Relationship

This is the heart and breakthrough element of CSRP. Synchronising an
organisation’s customers and customer-centric departments with its resource
planning and execution provides the ability to achieve long-term competitive
differentiation. It allows manufacturers to move beyond how to manufacture,
to understanding what products to make, what services to offer and how to
provide customised product offerings. Why are manufacturers not currently
customer-synchronised or customer-focused? Customer information and
knowledge is not integrated with mainstream business planning systems. There
is no concrete and actionable way to move customer knowledge effectively
throughout the organisation.
The judgement on what is truly required — what works and what doesn’t —
exists with the customer.
Coupling this information tightly with production and fulfilment is paramount.
ANNA UNIVERSITY 121

Notes Open Technologies

Fifteen years ago, mainframe and host-based technologies were in their prime.
Machine requirements drove software development. In 1980s, application
developers began using new operating systems that could scan multiple
hardware environments. The age of UNIX and open solutions began. Today,
with the proliferation of PCs, manufacturers can quickly and costs effectively
introduce new technologies and applications to satisfy broad based needs.
The obvious next step is to open systems and latest technologies to integrate
and combine departmental information so that the development of strategic
initiatives like CSRP is actionable, repeatable and affordable. This necessitates
a move away from proprietary systems, including proprietary ERP solutions.
Matching Customer Needs

This is the payoff! Once the organisation has optimised operations, integrated
the customer, implemented open technology architecture and refocused on
customer driven operations, a virtual organisation exists. Answering the
customer-focused questions posed earlier becomes easy now. What products
do my most profitable markets want? I know this, so I track it, act on it and
focus on it in every department.
How do I make products and services more profitable? My customer service,
marketing, sales, R&D, finance and field service departments know what the
customers want the most. They design, build, reengineer or partner with
suppliers to offer profitable, customised offerings. My infrastructure makes this
possible.
Learning Activity
Analyse the ERP implications of any IT industry of your own
choice.
Impact of ERP Software at a renowned International Food

Products Company in India
Client Introduction
The Client is an Indian subsidiary of a renowned international Food
Products Manufacturer Company. The company has focused to serve the
new generation with its varied range of food products. Company uses the
technology of its parent company for manufacturing of its products. They
are solely responsible for Sales & distribution of their Products across India
through a C&F set up.
Contd...
122 ANNA UNIVERSITY

Need for an ERP Notes

Earlier the Client was using an outsourced network for Sales and
Distribution of their Products in India. They always had a great control over
the quality of their products but had little control over their distribution
network. That was the reason behind their strong willingness and objective
to start their own sales and distribution channel and manage it using an
integrated ERP system. With its own Sales network, they would have better
control on Sales related information based on which better forecasts and
fulfilment can be achieved. However to manage this vast distribution
network they needed an ERP with complete integration of back-
end processes.
Before ebizframe was implemented they were using well-known software
for Accounts and Sales related activities to maintain their own records. But
the software was not able to meet their needs. The Procurement,
HR/Payroll, Production planning and Control and some of the other
activities were mostly manual. It was a tedious job for them to perform
month end related all activities such as Sales analysis, Sales closing, Salary
processing etc. Even the material procurement to meet on-time requirements
of the production department was getting increasingly difficult with the
growth in Business.
Benefits Achieved
After implementation of ERP Software in India, Client has got very good
control on its Sales and Distribution operation along with the Backend
operation at Plants and offices. The Servers are hosted at their Head office
and their entire distribution channel and their other offices access the
software over a secure VPN. This helps provide completely online
information on their Sales and Distribution operations at any point of time.
The system is also accessed online by the factory resulting in increased
coordination between the Sales and the Manufacturing operations. The
Stock Transfer cycle has been completely automated. Definition of Credit
Controls have helped control receivables and helped achieve better Credit
management. Now the Receipts of Leakage and Damaged (L&D) stocks are
well controlled so as to have accountability of even single unit of product.
Overall ERP Software has helped company in India to streamline its
operations and manage it from a Central Location. The information from
Operations required by the decision makers was available to them at their
fingertips. The software helped the company manage their Sales and
Distribution operations better by quickly providing the vital information and
analytics to the Senior and Top Management. Better control on the
inventory, purchase and production processes helped the client improve the
coordination between the Sales and Manufacturing and also helped cut
down the inventory and order processing significantly.
Contd...
ANNA UNIVERSITY 123

Notes Questions
1. Discuss the problems faced by the client before the installation of ERP
systems.
2. Explain the after-effects of ERP on the client’s functioning system.
Source: http://www.essindia.com/about-us/resources/181-implementation-of-ebizframe-erp-at-a-renowned-
international-food-products-company-in-india-
1. Customer synchronised resource planning integrates

this critical customer information directly into the
manufacturer’s planning and delivery processes,
shifting the focus of the enterprise from production
planning to customer planning.
2. Change management is the process, tools and
techniques to manage the people side of change to
achieve the required business outcome.
SUMMARY
 For smooth functioning, ERP system regularly needs maintenance. As per
the changing situations in the organization, ERP plan needs thorough
revision and update.
 Maintenance of ERP systems consists: customization, extension and
modification.
 The investment in ERP systems as a percentage of annual sales is more or
less constant, showing that smaller companies invest fewer rupees in
installing ERP systems.
 The pilot of the organisation i.e., the CEO must insist upon benefits from
the ERP team that would be felt as a onetime measure and those on a
recurring basis. The costs of the entire initiative must also be calculated—
on a capital and a revenue basis. The system must be positioned as a tool
and an enabler to achieve organisational mission and objectives. These
desired outcomes, in turn, should be articulated in a business case.
 To ensure that the system will meet the organisation’s business objectives,
the CEO and the apex management must establish key matrices and assign
key process owners specific responsibility for achieving the benefits. The
top management must also assign individual responsibilities for achieving
the benefits. An organisation’s motive could be achieving better quality
(less scrap, fewer returns, lower warranty costs etc.).
 The enterprise systems are all about the enterprise and not about systems.
So, a top management leader can play a critical role in effective change
management and implementation of an enterprise system.
124 ANNA UNIVERSITY

 It’s the company that can partner with the customer to determine what to Notes
offer and then use its manufacturing and operational strengths to offer it
better and faster than its rivals.
 Synchronising an organisation’s customers and customer-centric
departments with its resource planning and execution provides the ability to
achieve long-term competitive differentiation.
KEYWORDS
Maintenance of ERP: For smooth functioning, ERP system regularly needs
maintenance. As per the changing situations in the organization, ERP plan
needs thorough revision and update.
Steps in maintenance of ERP: Maintenance of ERP Systems consists:
customization, extension and modification.
Large organization impact of ERP: The investment in ERP systems as a
percentage of annual sales is more or less constant, showing that smaller
companies invest fewer rupees in installing ERP systems.
Business Realization: The pilot of the organisation i.e., the CEO must insist
upon benefits from the ERP team that would be felt as a onetime measure and
those on a recurring basis. The costs of the entire initiative must also be
calculated— on a capital and a revenue basis. The system must be positioned
as a tool and an enabler to achieve organisational mission and objectives.
These desired outcomes, in turn, should be articulated in a business case.
Assigning Responsibility Matrix: To ensure that the system will meet the
organisation’s business objectives, the CEO and the apex management must
establish key matrices and assign key process owners specific responsibility for
achieving the benefits. The top management must also assign individual
responsibilities for achieving the benefits. An organisation’s motive could be
achieving better quality (less scrap, fewer returns, lower warranty costs etc.).
Change Management: The enterprise systems are all about the enterprise and
not about systems. So, a top management leader can play a critical role in
effective change management and implementation of an enterprise system.
Industrial Impact of ERP: It’s the company that can partner with the customer
to determine what to offer and then use its manufacturing and operational
strengths to offer it better and faster than its rivals.
Customer-Organizational Relationship: Synchronising an organisation’s
customers and customer-centric departments with its resource planning and
execution provides the ability to achieve long-term competitive differentiation.
ANNA UNIVERSITY 125

Notes SELF-ASSESSMENT QUESTIONS

1. “For smooth functioning ERP system regularly needs maintenance”.
Discuss.
2. Describe the steps for maintenance of ERP systems.
3. What is customization?
4. Define ‘extension’ as a maintenance part of ERP.
5. Define ‘modification’ as a maintenance part of ERP.
6. State an example of maintenance of ERP.
7. Explain the large organization impact of ERP.
8. What is business realization in context to ERP?
9. Give one example of business realization in relevance to ERP.
10. How responsibility matrix is assigned in context to organizational impact
of ERP?
11. What is the approach selection of organization for ERP?
12. State the impact on communication through ERP.
13. “Selecting the right project leader is as importance as selecting the right
product”. How it can be done through ERP?
14. How change management takes place through ERP?
15. What do you mean by industrial impact of ERP?
16. How do industries focus on customers with the help of ERP?
17. State the customer-organization relationship in context to ERP.
18. Describe open-technologies in context to ERP.
19. How customer needs are matched with the help of ERP?
20. Define customer synchronized resource planning (CSRP).

1. How maintenance of ERP takes place? Explain the steps involved with
examples.
2. “Though there is no formal data available, going by market feel, there are
as many (if not more) small and mid-sized companies that invest in ERP
solutions as large corporations”. Discuss the organizational impact of ERP.
126 ANNA UNIVERSITY

3. “The pilot of the organisation i.e., the CEO must insist upon benefits from Notes
the ERP team that would be felt as a onetime measure and those on a
recurring basis”. Explain business realization with examples.
4. How assignment of responsibility matrix takes place with the help of ERP?
5. What kind of approach selection do the organizations use for ERP?
6. “Deployment of the ERP is a tricky job as it involves a whole variety of
people with different attitudes, all interacting or rather trying to
communicate at the same time”. How communication takes place in the
organization with the help of ERP?
7. How project crew is selected in organizations with the help of ERP?
8. “The enterprise systems are all about the enterprise and not about systems”.
Explain change management in organizations in context to ERP?
9. Describe the role of open technologies in context to ERP.
10. Explain the industrial impact in context to ERP with examples.
FURTHER READINGS
Alexis, Leon (2007), ERP demystified, 2nd edition, Tata McGraw-

Hill.
Vaman, Nathan, Jagan (2008), ERP in Practice, Tata McGraw-
Hill.
Jaiswal, Mahadeo and Vanapalli (2009), Enterprise Resource
Planning, MacMillan, India.
Summer (2008), Enterprise Resource Planning, Pearson
Education.
Ray, Rajesh (2011), Enterprise Resource Planning – Text and
Cases, Tata McGraw-Hill.
ANNA UNIVERSITY 127

Notes
LESSON 8 - SUCCESS AND FAILURE OF ERP
IMPLEMENTATION
CONTENTS
Learning Objectives
Learning Outcomes
Overview
8.1 Successful Factors of ERP Implementation
8.1.1 Integration is the Key to ERP
8.1.2 ERP Improves Productivity
8.1.3 Services Provided at the Time of Implementing ERP System
8.1.4 Advantages of ERP Systems
8.1.5 Benefits of an ERP System in an Organization
8.1.6 Industry-wise Advantages
8.1.7 Advantages in Different Departments of a Corporate Entity
8.1.8 Other Benefits of the ERP System
8.1.9 ROI and Cost Savings
8.2 Failure Factors of ERP Implementation
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Gain knowledge about the Successful Factors of ERP Implementation
 Understand the Failure Factors of ERP Implementation
LEARNING OUTCOMES
understanding of:
128 ANNA UNIVERSITY

Lesson 8 - Success and Failure of ERP Implementation
 explain successful factors of ERP implementation Notes

 list out advantages of ERP systems
 identifying benefits of an ERP system in an organization
 determine advantages in different departments of a corporate entity
 explain failure factors of ERP implementation
OVERVIEW
In the previous lesson, you had studied about the maintenance of ERP,
organizational and industrial impact relating to ERP.
Success of any organization or corporate entity depends on the proper
integration of all the business processes. Timely flow of necessary information
at required destination is a sure shot way of achieving success. Productivity
will only be improved when business processes are streamlined as well as
corporative employees in effectively handling it. In absence of any factor of
ERP implementation, leads to failure of any processes involved.
In this lesson, you will learn about successful factors of ERP implementation
and failure factors of ERP implementation.
8.1 SUCCESSFUL FACTORS OF ERP IMPLEMENTATION

Here, we will be discussing several factors determining success of ERP
implementation.
8.1.1 Integration is the Key to ERP

Integration is an extremely important part to ERPs. ERPs main goal is to
integrate data and processes from all areas of an organisation and unify it for
easy access and work flow. ERP usually accomplishes integration by creating
one single database that employs multiple software modules providing
different areas of an organisation with various business functions.
Ideal ERP System

An ideal ERP system is when a single database is utilized and contains all data
for various software modules.
These software modules can include:
 Manufacturing: Some of the functions include; engineering, capacity,
workflow management, quality control, bills of material, manufacturing
process, etc.
 Financials: Accounts payable, accounts receivable, fixed assets, general
ledger and cash management, etc.
 Human Resources: Benefits, training, payroll, time and attendance, etc.
ANNA UNIVERSITY 129

Notes  Supply Chain Management: Inventory, supply chain planning, supplier

scheduling, claim processing, order entry, purchasing, etc.
 Projects: Costing, billing, activity management, time and expense, etc.
 Customer Relationship Management: Sales and marketing, service,
commissions, customer contact, calls centre support, etc.
 Data Warehouse: Usually, this is a module that can be accessed by an
organisation’s customers, suppliers and employees.
8.1.2 ERP Improves Productivity

Before ERP systems, each department in an organisation would most likely
have their own computer system, data and database.
Unfortunately, many of these systems would not be able to communicate with
one another or need to store or rewrite data to make it possible for cross
computer system communication. For instance, the financials of a company
were on a separate computer system than the HR system, making it more
intensive and complicated to process certain functions.
With the ERP system in place, all the aspects of an organisation

work in harmony instead of every single system needing to be compatible
with each other. For large organisations, increased productivity and less
types of software are a result.
8.1.3 Services Provided at the Time of Implementing ERP System

There are three types of professional services that are provided when
implementing an ERP system; they are Consulting, Customization and
Support.
 Consulting Services: Usually consulting services are responsible for the
initial stages of ERP implementation, they help an organisation go live with
their new system, with product training, workflow, improve ERP’s use in
the specific organisation, etc.
 Customization Services: Customization services work by extending the use
of the new ERP system or changing its use by creating customized
interfaces and/or underlying application code.
While ERP systems are made for many core routines, there are still some
needs that need to be built or customized for an organisation.
 Support Services: Support services include both support and maintenance
of ERP systems.
130 ANNA UNIVERSITY

Notes
Example: Troubleshooting and assistance with ERP issues
8.1.4 Advantages of ERP Systems

There are many advantages of implementing an ERP system; here are a few of
them:
 A totally integrated system
 The ability to streamline different processes and workflows
 The ability to easily share data across various departments in an organisation
 Improved efficiency and productivity levels
 Better tracking and forecasting
 Lower costs
 Improved customer service
8.1.5 Benefits of an ERP System in an Organization

 It can reach more vendors, producing more competitive bids and widening
participation in government contracts, lowering the cost of products and
services purchased.
 Significant paper and postage cost reductions as part of the yearly savings.
 Faster product/service look-up and ordering, saving time and money.
 Automated ordering and payment, lowering payment processing and paper
costs
 Fast access to detailed account histories, providing more abundant
information and improved planning and analysis
 Ability to distribute, receive an award contracts out for bid much faster.
Wider participation by city purchasing entities, multiplying cost

savings and management improvements, and offsetting system operation
costs are also the benefit of an ERP System in an organization.
8.1.6 Industry-wise Advantages

Manufacturing Sector ————————— Speeding up the whole process.
Distribution and retail Stores ————— Accessing the status of the goods
Transport Sector ——————————————— Transmit commodities
through online transactions.
Project Service industry ——————— Fastens the compilation of reports.
ANNA UNIVERSITY 131

Notes 8.1.7 Advantages in Different Departments of a Corporate Entity

 The accounts department personnel can act independently. They don’t have
to be behind the technical persons every time to record the financial
transactions.
 Ensures quicker processing of information and reduces the burden of
paperwork.
 Serving the customers efficiently by way of prompt response and follow
up.
 Disposing queries immediately and facilitating the payments from
customers with ease and well ahead of the stipulated deadline.
Figure 8.1: CRM-Front Office and Back Office Integration

 It helps in having a say over your competitor and adapting to the whims
and fancies of the market and business fluctuations.
 The swift movement of goods to rural areas and in lesser known places has
now become a reality with the use of ERP.
 The database not only becomes user-friendly but also helps to do away
with unwanted ambiguity.
 In short, it is the perfect commercial and scientific epitome of the verse
“Think Local. Act Global”.
 ERP helps to control data and facilitates the necessary contacts to acquire
the same.
132 ANNA UNIVERSITY

8.1.8 Other Benefits of the ERP System Notes

 Real time information throughout entire company.
 Better visibility into the performance of operational areas.
 Data standardization and accuracy across the enterprise. Single version of
“The Truth!”
 Best-practices or proven methodologies are included in the applications.
 Creates organisational efficiencies.
 Allows for analysis and reporting for long-term planning.
8.1.9 ROI and Cost Savings

Here are some areas to look for possible ROI:
 Reduce Inventory through better visibility and efficiency.
 Savings through the reduction in duplicated efforts.
 Reduction in non-value added activities (lean processing).
 Higher utilization of employees (less transactional, more analytical).
 Improvement in decision-making through more accurate and real-time data.
Example: Following are some successful cases of ERP implementation:

FedEx Air Company (FedEx)
Company Profile
FedEx air company (FedEx Express), is known as the world’s largest Express
company, located in 220 countries and regions for providing fast, reliable and
timely Express transportation service. The package delivery of FedEx on each
working day accounts to more than 3.2 million in the world with more than
138000 employees and 50000 delivery points, 671 aircraft and 41000 vehicles.
The company is operated globally through the FedEx Ship Manager at
Fedex.com for making close proximity with its more than 100 customers via
electronics communications link. The total turnover turns out to be US $ 29
billion in 2004.
ERP Implementation Situation of FedEx Air Company
The provision of already used modules by the Oracle of ERP products includes
PeopleSoft asset management, accounting general ledger management,
financial management, human resources management, electronic procurement,
spending report, inventory management, project cost accounting and many
other. The company began implementing the PeopleSoft accounting general
ledger and asset management module in the year 1997. There was a major
upgradation after two years and in 2004, there were 12 PeopleSoft modules in
the whole system. Similar examples were to be seen at FedEx’s domestic and
international operations, cooperation services and transportation. At present
there are more than 20000 users of Fedex.
ANNA UNIVERSITY 133

Notes Del Monte Foods Company

Company Profile
Del Monte Foods, headquartered in San Francisco is a famous canned fruits
and vegetables enterprise distributors. It operates through 8500 full-time
employees and has more than 9800 seasonal part-time employees in its
locations at America, South America, Canada, Mexico and the Philippines. It
recorded its total turnover of US $3 billion in 2004.
ERP Implementation Situation of Del Monte Foods Company
The company is an adopter of SSA Provider of ERP products. Since 2003, Del
combined itself with the food companies when after several small companies
started implementing their ERP Systems based on IBM AS / 400 server and
DB2 database of the first instances. It then replaces the in different operating
platform systems before the operation of the old system. The number of users
accounts to more than 1200 in today’s times.
DaimlerChrysler (DaimlerChrysler)
Company Profile
In July 1998, the merger of companies with the German Daimler Chrysler
came into existence. In November 1997, the merged company of New York’s
stock got listed in Frankfurt, Germany. Pre-merger was seen as Daimler
company to be a manufacturer of the world’s senior cars and the market leader
of supplying 6 tons trucks. The three large car company of Chrysler in the
United States were ranked third, in the minivan market leading position.
Employing 384723 people, the combined company is considered to be the
world’s third largest car manufacturer in the world. The total turnover of 142.1
billion euros were recorded in 2004.
ERP Implementation Situation of DaimlerChrysler
With the adoption of SAP ERP products, the company proposes for the
implementation of other modules including finance, manufacturing and
logistics management. Before and after 1998, the German Daimler Chrysler
before its merger have implemented R / 3 financial management module. Post-
merger, this module is still in use independently. In 2002, the Mercedes started
separating the implementation of SAP manufacturing and logistics module and
the division of the 100 a SAP module which accounts to more than 320
installation points, including 11 countries of Asia with a SAP. Afterwards, they
are still in the promotion of their ERP SAP modules in 15 European countries,
in which many of them are using SAP R / 3 module. The number of users, at
presents accounts to more than 50000 worldwide
134 ANNA UNIVERSITY

Colgate-palm Company (Colgate-Palmolive) Notes

Company Profile
Colgate-palm is one of the world’s top consumer products company situated at
New York, USA,. It has a wide presence in more than 200 countries with
regions settting up their branch companies or offices. It comprises of a total of
40000 employees. The company has a wide presence in oral care, personal
care, household care and pet food service providers ensuring a high quality for
its consumers. Some of the most familiar global famous brands to the
consumers are Colgate, palm, clean teeth white, Ajax, Protex, Fab, Irish
Spring, Mennen and Science Diet, and so on. Since, 1930s the company has its
presence in several European countries and the seeks for continuously to
foreign business expansion. By the end of 2003, it proposed to file for its
operations in 70 countries around the world. An annual turnover of US $10.6
billion was recorded in 2004.
ERP Implementation Situation of Colgate-palm Company

An adopter of SAP ERP Systems, Colgate company has implemented
successfully its modules including supply chain management, customer
relationship management, supplier relationship management, human resources
management, financial management, integrated application, order processing
procedure management, materials management, production management list,
self-service and other employees. The company’s ERP implementation which
was started in 1996 had already completed 2 times overall upgradation.
Currently, it includes the SAP R / 3 series, mySAP senior schedule plans and
optimization, CRM, SAP portal and mySAP Business Warehouse (Business
Warehouse). They are in Europe, North America, South America, South Asia
Pacific with its branches. The Hill Science Diet brands have implemented the
R / 3 series. Further, the global human resources management got implemented
and SAP business warehouse at present holds more than 6 TB storage (note: 1
TB is equivalent to 1024 GB) customer data. Currently, there are more than
15000 customers using ERP systems.
Learning Activity
Analyse the successful factors of ERP implementation in any
organization of your choice.
8.2 FAILURE FACTORS OF ERP IMPLEMENTATION

ERP implementation fails to meet the business objectives.
1. Failure in cross-representation agreement on enterprise based business
processes. For working on a common information system across the
organization, all users across the organization must adopt, abide and
support common work methods backed up by the application. Any
ANNA UNIVERSITY 135

Notes departmental line of business which prefers not to conform, stress politics
over process or get involved in sub-optimization becoming the weak line
which in turn break the chain and delivering the enterprise-wide system
ineffective.
2. Shortfall of visible, vocal and meaningful executive sponsorship. While
there aren't many projects without executive sponsors anymore, there are
ineffective executive sponsors in abundant. Executive sponsors cannot
side-line themselves; they must surely, vocally and actively describe
leadership, dedicated to the project and support of project team members at
every step. They must quickly involve themselves to resolve troubles and
master the projects for taking it forward.
3. Lack of formal and disciplined project management. The execution of a
mission critical business system is not the time for pointing out the project
management for the first time. Experienced project managers pulling their
skills, their experience and a proven project management discipline in order
to lead projects as per the plan and towards predicted success.
4. Estimating team-turnover of core staff. Losing an executive sponsor or
project manager can obstruct the progress of a project. Losing these roles
multiple times or replacing lost roles with less capable replacements lead to
increase in risk and disrupt loss on the project.
5. Inability to identify and lowering the risks or remedy incidents which in
turn expand. Project risks and red flags normally result throughout the
project, however, if the project manager or project team don't notice or act
upon these issues until last of the project duration. The obstacles often
surmount and become ever more difficult to resolve.
Poor training, implementation project teams and outside

consultants are popular for short-changing user training.
6. At the time of cost cutting sessions, training is one of the first tasks to do.
No one should fall into these traps. Training is essential to pull the system
capabilities and realize the potentials. Training updates in at least short
bursts are suggested after every new session upgrade.
7. Perturbed user adoption. There are few systems that advocates with the
execution of a new information system and getting users who accept a new
system is a big challenge. Clubbing the normal anxiety linked with change
along with an ignorance for the new system and a nervousness from only
finishing a minimal training program and user fears can heighten if not
proactively grounded. Not only there are user fears to change in but at
times the new system doesn't get tuned to mature like the previous system
so users sometimes feel as though they are initially taking a step backward.
Proactive change management is the best instrument to direct user adoption
challenges.
136 ANNA UNIVERSITY

Notes
There is too much customization of software. For many
companies the ERP software is seen as too rigid or restrictive.
8. For answering to a lack of anticipated flexibility by customizing the

software before thorough investigating re-configuration options, business
process work around or an interim trial period before dedicating to
customization can breach the integrity of the software, delay project
progress, resulting in heavy costs and levy significant risk for success of
the project.
9. Project is seen in terms of "IT" project. Business system implementations
should be initiated and driven by business leaders. While IT resources are,
in clear terms, core participants, ERP systems should not be seen as IT
projects.
10. Not a main cause for project failure, delays in project also happens due to
dirty data. Many organizations do not set ample of time for data cleaning
and are not receptive of their poor data quality until they extract that data
for import into the new system. There is a delay that happens close to the
beginning of the implementation project, many a times lies on a serious
path and therefore many a times pushes back all other tasks for the
remainder of the project.
Example: Following are some failure cases of ERP implementation:
Hershey’s Blunder
Company Background
The chocolate business which was started by Mr. Milton S. Hershey in 1876
and the Hershey Company got established in 1894. It is known to be one of the
leading manufacturers of chocolates in North America. It’s sales accounts to
roughly 80% chocolates and 20% non-chocolates and its competitors include
Mars, Nestle, Russell Stover, Palmer and Nabisco.
ERP Implementation
 Hershey’s management gave approval to a project named Enterprise 21
during late 1996.
 For managing integration among three systems, Hershey selected SAP’s
R/3 ERP software, Manugistic’s SCM Software and Seibel’s CRM
Software and IBM Global Service.
 The costing for overall projects were US 410 Million.
 The implementation time was recommended for the project was 4 years and
Hershey requested for 2.5 years because of impending Y2K problem.
ANNA UNIVERSITY 137

Notes  Instead of phased approach, Hershey decided to go with Big Bang

Approach
Impact of Hershey’s ERP Failure

 As Hershey could not be able to fulfil its committed date of delivery,
problems relating to order fulfilment, processing and shipping started
occurring.
 Several distributors of Hershey who had ordered the products could not
supply them to the retailers in time thereby, losing their credibility in the
market.
 Product inventory lot had got accumulated and by the end of September
2000, the inventories were 25% more than the inventories during previous
year.
 After Hershey’s announcement in the market relating to problems occurred
due to breakdown of the newly installed computer systems, Hershey’s
stock price got plunged by 8% within a single day.
 Failure of Hershey for implementing the ERP Software in time costed the
company US $ 150 million in sales. In 1999 annual report, it was shown
that the profits for the third quarter 1999 dropped by 19% and sales
declined by 12%.
Reasons of Hershey’s ERP Failure
 Implementation schedules were over-squeezing
 Big-Bang Approach was selected instead of Phased Approach
 It committed mistake to sacrifice systems testing for the sake of
expediency.
 There were cut-over activities and Going-Lines were scheduled in course
of the busiest business periods of Hershey.
Nike’s Supply Chain Issues

Company Background
Nike is an American multinational corporation that is involved in the design,
development, manufacturing and worldwide marketing and selling of footwear,
apparel, equipment, accessories and services. It was founded in January 25,
1964 as “Blue Ribbon Sports” by Bill Bowerman and Phil Knight with its
headquarters situated near Beaverton Oregon, in the Portland metropolitan
area. The company is known as one of the world’s largest suppliers of atheletic
shoes and apparel and is a major sports equipment manufacturer with revenue
in excess of US $24.1 billion in its fiscal year 2012(ending May 31, 2012).
138 ANNA UNIVERSITY

Implementation of Nike’s ERP Notes

Nike had implemented a new demand-planning software solution without
testing it and everything went wrong.
Reasons for Nike’s ERP Failure
 Nike had spent $400 million dollars for updating their supply chain system
and ERP implementation dated back in 2000 and 2001.
 They got 20 percent dip in their stock, $100 million dollars in lost revenues
and a countless of class action lawsuits which came out to be a sudden
shock for the Nike company.
Impact for Nike’s ERP Supply-chain Failure
 Instead of helping Nike to match their supply with demand and contracting
their sneaker manufacturing cycle. The resultant was that they ended up
ordering low-selling sneakers rather than high demand ones leading to
collapse of their supply chain.
Hewlett Packard’s Disaster

Company Background
Hewlett-Packard company or HP is an American multinational information
technology corporation having its headquarters in Palo Alto, California, United
States. It was founded in January 1, 1939 by William Bill Redington Hewlett
and Dave Packard. It offers hardware, software and services to consumers,
small & medium sized businesses (SMBs) and large enterprises including
customers in the government, health and education sectors.
Implementation and Reason for Failure of Hewlett Packard’s ERP Systems

The company had installed smaller ERP systems integrating other systems
across North American divisions into a single centralized ERP Systems.
Impact for Failure of Hewlett Packard’s ERP Systems

Integrating all the North American divisions into a single centralized system
costed heavily to the company $160 million dollars in backlogged orders and
lost revenues which stood out to be more than five times what the project was
estimated to cost in 2004.
The US Navy’s $1 Billion Dollar Blunder

Implementation of the Navy’s ERP Systems
The company had installed four different ERP pilot projects since 1998 and
these were based on SAP AG Software.
ANNA UNIVERSITY 139

Notes Reasons for Failure of United States Navy ERP Systems

The incompatibility and redundancy of all the four systems installed by the
company failed to fulfil the requirements of the Navy.
Impact of Failure of United States Navy ERP Systems
Major investment of $1 billion dollars into four different ERP pilot project
systems got wasted. The only cost of money spent on purchasing the programs
came under the history of ERP implementation failures.
Learning Activity
Analyse the failure factors of ERP implementation in any
organization of your choice. Discuss the improvement strategy in
their processes.
HP ERP Failure
Introduction
 When HP announced that their revenue for 3rd quarter from its
Enterprise Servers and Storage (ESS) segment had gone down by 5% to
$3 bn.
 Reasons stated for the downfall was due to migrating to a centralized
ERP in one NA division.
 Total financial impact of the failure was around $160 million
 This loss was more than 5 times the cost of implementing ERP.
Background
 HP is an American multinational corporation headquartered in Palo
Alto, California, US.
 Provides products, technologies, software, solutions and services to
consumers including government, health and education sectors.
 Stanford engineers Bill Hewlett and David Packard started HP in
California in 1938 as an electronic instruments company
 First product was a resistance-capacity audio oscillator, an electronic
instrument used to test sound equipment.
ERP Implementation
 HP implemented mySAP ERP
 HP started their migration of data with SAP into mySAP ERP.
Contd...
140 ANNA UNIVERSITY

 After two months, the result of the migration had decreased revenues Notes
 SAP had already roll out the application 4 times and this roll out was
number 5
 Gilles Bouchard became the CIO and Executive Vice-president (EVP)
of global operations at HP. He was made responsible for both the supply
chain and ERP software implementations.
Reasons of Failure
 HP revealed that there was execution problem and there was no fault of
SAP in it.
 There were small technical glitches but the main issue was contingency
planning, which was not addresses properly.
 The other issues were like:
 Data Integration Issues
 Demand Forecasting Problems
 Poor planning and Improper Testing
Impact of ERP Failure

 The ESS divisions order system became unstable due to problems with
data integrity and a simultaneous increase in demand for HPs Standard
Servers.
 This technical glitch led to improper routing of orders and caused
backlogs to escalate
 Analysts commented that the Companies culture did not support the
much active involvement of employees also Co. ignored valuable
suggestion from employees.
 Many Vice-President had joined the rival Co. and also many employees
had a fear of been laid off.
Questions
1. What learning you could derive from HP’s failure of ERP implementation?
2. According to you, how can HP solve its problem of execution and
technical issues relating to ERP?
Source: http://www.slideshare.net/TarvinderSingh5/case-study-on-erp-failures
1. ERP is suitable for global operations as it encompasses

all the domestic jargons, currency conversions, diverse
accounting standards, and multilingual facilities.
2. More efficient operations allow for increase in ability
to process transactions (added capacity) in order to
improve cost savings.
ANNA UNIVERSITY 141

Notes SUMMARY
 Integration is an extremely important part to ERPs. ERPs main goal is to
integrate data and processes from all areas of an organisation and unify it
for easy access and work flow.
 An ideal ERP system is when a single database is utilized and contains all
data for various software modules.
 With the ERP system in place, all the aspects of an organisation work in
harmony instead of every single system needing to be compatible with each
other. For large organisations, increased productivity and less types of
software are a result.
 There are three types of professional services that are provided when
implementing an ERP system; they are Consulting, Customization and
Support.
 It can reach more vendors, producing more competitive bids and widening
participation in government contracts, lowering the cost of products and
services purchased
 ERP is suitable for global operations as it encompasses all the domestic
jargons, currency conversions, diverse accounting standards, and
multilingual facilities.
 Savings through the reduction in duplicated efforts by using ERP.
 ERP implementation fails to meet the business objectives in terms of
failure in cross-representation agreement on enterprise based business
processes.
KEYWORDS
Integration: Integration is an extremely important part to ERPs. ERPs main
goal is to integrate data and processes from all areas of an organisation and
unify it for easy access and work flow.
Ideal ERP System: An ideal ERP system is when a single database is utilized
and contains all data for various software modules.
ERP Improves Productivity: With the ERP system in place, all the aspects of
an organisation work in harmony instead of every single system needing to be
compatible with each other. For large organisations, increased productivity and
less types of software are a result.
Services provided at the time of implementing ERP System: There are three
types of professional services that are provided when implementing an ERP
system; they are Consulting, Customization and Support.
142 ANNA UNIVERSITY

Benefit of an ERP in an Organization: It can reach more vendors, producing Notes

more competitive bids and widening participation in government contracts,
lowering the cost of products and services purchased
ERP Suitable for Global corporations: ERP is suitable for global operations
as it encompasses all the domestic jargons, currency conversions, diverse
accounting standards, and multilingual facilities.
Cost Savings through ERP: Savings through the reduction in duplicated
efforts by using ERP.
Failure factor of ERP Implementation: ERP implementation fails to meet the
business objectives in terms of failure in cross-representation agreement on
enterprise based business processes.
1. State any two successful factors of ERP implementation.
2. “Integration is an extremely important part to ERP”. Discuss the statement.
3. What is an ideal ERP system?
4. How ERP improves productivity?
5. What kind of services is provided at the time of implementing ERP
system?
6. What are the benefits of an ERP system in an organization?
7. Discuss advantages of implementing ERP on industry basis.
8. State the advantages of ERP implementation of a corporate entity.
9. What are the other benefits of ERP system?
10. Discuss ROI and cost saving approach of implementing ERP which have
been built up by several organizations.
11. Discuss at least five failure factors of ERP implementation.
12. What is consulting service?
13. Define customization service.
14. What is the support services provided at the time of ERP implementation?
15. Discuss software modules which can be included in manufacturing
concern.
16. Discuss software modules which can be included in financial concern.
17. Discuss software modules which can be included in human resources
concern.
ANNA UNIVERSITY 143

Notes 18. Discuss software modules which can be included in supply chain
management concern.
19. In what sense software modules get implemented in projects, customer
relationship management and data warehouse of business organization?
20. State any four failure factors of ERP implementation.

1. “Integration is the key to ERP”. Discuss. What is an ideal ERP system?
2. Discuss the successful factors of ERP implementation.
3. “ERP improves productivity”. How? What kinds of services are provided at
the time of implementing ERP systems?
4. Differentiate between consulting services and customization services. Also,
describe support services.
5. Discuss the benefits of an ERP system to organization and industry.
6. Explain the advantages in different departments of a corporate entity,
7. Explain other benefits of ERP system. What are the possible areas to look
for improving ROI in an organization?
8. “Lack of formal and disciplined project management is one of the failures
of ERP implementation”. Discuss the statement.
9. “Perturbed user adoption is one of the failures of ERP implementation”.
Discuss the statement.
10. What are the failure factors of ERP implementation?
FURTHER READINGS

Hill.
Education.
Ray, Rajesh (2011), Enterprise Resource Planning – Text and
Cases, Tata McGraw-Hill.
Hill.
144 ANNA UNIVERSITY

Lesson 9 - Emerging Trends in ERP
Notes
UNIT V
LESSON 9 - EMERGING TRENDS IN ERP
CONTENTS
Learning Objectives
Learning Outcomes
Overview
9.1 Extended ERP Systems
9.2 ERP Add ONS-CRM and SCM
9.2.1 ERP on CRM
9.2.2 Advantages of ERP on CRM
9.2.3 CRM Software in India
9.2.4 ERP on SCM
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the extended ERP Systems
 Explain ERP add ons-CRM and SCM
LEARNING OUTCOMES
understanding of:
 concept of extended ERP systems
 explain ERP add ons-CRM and SCM
 analyzing advantages of ERP on CRM
 determine CRM software in India
ANNA UNIVERSITY 145

Notes OVERVIEW
In the previous lesson, you had studied about success factors of ERP
Implementation and failure factors of ERP Implementation.
Market requires the pressures of cost and quality control as well as
differentiation which are core factors in pushing companies re-examine
organizational processes through the latest technological solutions.
With the implementation of extended ERP systems a company not only
achieves several competitive advantages, it also accommodates its
organizational objectives in real time for responding quickly to market
variations and the needs of customers and suppliers.
In this lesson, you will learn about the extended ERP systems and ERP add
ons-CRM, SCM.
9.1 EXTENDED ERP SYSTEMS

ERP or enterprise resource planning is a software that allows business
processes in finance, manufacturing, distribution, sales and other fields.
Extended ERP comprises of other software and business processes.
1. Customer Relationship Management: CRM involves software linked with
business processes for automating sales force and call centres. Minimal
integration is required in ERP and CRM.
2. Product Lifecycle Management: Product Lifecycle management software
deals with design, regulation, production, distribution and field service
activities that focus on the changes in a product throughout its life cycle.
On the basis of the industry, PLM software covers more business processes
or confined to design and engineering functions.
3. Supply Chain Management: Supply chain management software involves
the software for planning and controlling the steps in manufacturing and
distribution process which includes tracking outside companies’ handling
of products. SCM also involves logistics and warehousing business
processes.
4. Integration Requirements: On the basis of the industry and operating
requirements, ERP, CRM, PLM and SCM will need different degrees of
integration. If the software is obtained in an integrated way, these costs get
reduced. If extensive, there will be an issue on integration costs when any
one software area is upgraded by the original vendor. Depending on the
industry they serve, extended ERP involves more software and processes.
5. ERP for Pharmaceuticals: With the launch of eGMP compliant ERP
solution, eresource ERP has been equipped with highly regulated ERP
solution for Pharmaceuticals industry. Pharmaceutical ERP, compliance
with GMP & FDA requirement are considered as majorly important.
146 ANNA UNIVERSITY

Companies are yet to tackle the practical implementation of 21 CFR Part II, Notes
since its launch. Eresource ERP is a user friendly compliant to all statutory
regulation and is quickly to implement.
Pharmaceutical Industry comes under the category of Batch Process
Manufacturing. Forecasting becomes simpler with the help of eresource
ERP. It is an effective end-to-end business integration solution. Eresource
ERP is designed keeping in view operational efficiency of the industry.
Operational efficiency needs a system that directs every aspect of business.
It helps in cost cutting, allow quick market presence of the product,
improving customer relation and complying with regulations.
Quality control section with its integrated refined Quality Control/Module
which not only supervise quality by control plans in purchasing and
production but also gives real-time process capability index for quick
review.
6. ERP for Fleet Management: With the introduction of eresource’s Fleet
Management ERP, this user-friendly business application has helped many
small and medium sized fleet management organizations for achieving a lot
of benefits and to grow into full-fledged, profit-making enterprises.
It is such elaborated and well integrated software for Fleet and Transport
Industry. Eresource ERP for fleet management helps in the growth of
business with a surety on return on investment.
In terms of operational mode, with the help of eresource ERP one can
manage their Fleet and Transport business with efficiency. Regardless of
fleet’s strength, it offers solution for all the vehicle operations, trucks, cars
or any other commercial vehicles.
Through eresource ERP one can overcome overhead expenses, unexpected
break-fix situations and downtime due to failed fleet vehicles and
equipment. It also serves as a handy resource for fleet maintenance history,
fuel usage, and driver details also and one can easily manage areas like
insurance, asset management, tire management, inventory management, LR
management as well as expenses correlating with functioning for the fleet
of motor vehicles and other mechanical assets.
Eresource ERP for fleet management is a strong configuration management
system that is built on master configuration, which enables one to easily
create individual vehicle configurations and maintenance plans.
7. ERP for SMEs: For running smooth course of operations of small
businesses customers, eresource ERP has come up with an ERP solution
specially for its Indian manufacturers. Eresource ERP iSE, an ERP for
Small and Medium Enterprises is affordable, easy to implement and
allowing the SME to concentrate on growth and improving their business
instead of worrying about software.
ANNA UNIVERSITY 147

Notes For the growth of small and medium enterprise businesses and to earn a
better return on investment, eresource ERP for SME is designed for
implementing an appropriate resource planning systems.
Eresource Infotech by far has implemented eresource ERP for SME
module for 25 customer locations. The core operational factor for SME is
to increase operational efficiency, reduce cost of production, supply chain
management and to deliver products to its customers. Therefore, the
cheaper rate of eresource ERP provides convenience even to very small
industrial units to afford. The modules for eresources ERP includes – sales
and distribution module, purchase and supplier module, inventory and
material management module, production and shop floor management
module, total quality management, excise management, accounts and
finance management and human resource management.
8. ERP for Printing and Packaging Industry: The challenges occurring in
this industry are: managing the cost, optimum allocation of machine,
indefinite delivery time, shorter fluctuating demand cycles, high raw
material costs and low-price competition, last but not the least is the
complex production processes. In order to meet those challenges, eresource
ERP came into existence, hence, providing Printing and Packaging ERP
software solutions.
Eresource's Industry-specific ERP solution for Printing industry looks after
the production processes including Master Plate Making, Cutting, Printing,
Varnish, Powdering, Punching, Wrapping, Pre Lamination, Stamping,
Efluting, Embossing, Pasting and many other dynamics.
Being a web based ERP solution provider, the major benefits of eresource
ERP lies in with its real time capabilities and its ability to see the
happenings going on in the company and all its branches across different
geographical locations. For Printing and Packaging business, eresource is a
ready tool that helps in visibility of all the company’s information at just
one central sceen.
Eresource ERP is the solid operational backbone provider of these
businesses. The system allows the businesses to function effectively that
will able to improve their volume of production and fulfillment of orders
while reducing costs.
9. ERP for Plastic Industry: Requirement of scalability and flexibility in the
ERP system would allow plastic manufacturing companies to adapt to
different business dynamics which can correctly and successfully be
charted out through eresource ERP. It is specially designed for Plastic
Manufacturing Industry. Eresource understands the distinctive challenges
plastic manufacturers confronts routinely either from fluctuating raw
material, availability of raw material for production purpose, proper
management of Plastic waste and to make available skilled and trained
labourers.
148 ANNA UNIVERSITY

For meeting out the equal number of challenges faced by every plastic Notes
industry, eresource industry solution is being developed for national and
international use that maps all the business processes.
Eresource's Industry-specific ERP solution for Plastic Industry takes care
of the production processes including Injection molding , extruders, film
and bag processors, blow molders, thermoforming, and compounder. The
main focus is in defining products as per the plastic specific relevant
processes that are truly structured efficiently for determination of extrusion
specific Bill of material and all the production parameters and cost
elements. Eresource ERP needs to be designed as per specific industry
needs keeping its functioning in mind.
10. ERP for Trading: Eresource ERP system allows predictable business
performance by enabling actionable information to every decision maker in
the enterprise. The technology offers a novel range of monitoring, trending,
forecasting, reporting, and analyzing capabilities within a single
architecture to allow everyone to make better business decisions every day,
and drive business performance goals. Eresource ERP provides an end-to-
end solution which organizes every phase of businesses from order
management, operations, supply-chain and logistics, to documentation,
accounting and business intelligence reporting.
Eresource Trading ERP systems comprises of Sales (Order Processing,
Invoicing, Accounts Receivable), Purchase (Order Processing, Invoicing,
Accounts Payable), Inventory (Goods Receipt, Warehouse Movement,
Dispatch) and Excise for Traders Financial Accounting etc. eresource ERP
has equipped many customers across the world by providing excellence,
building and delivering enterprise solutions. The primary purposes of
eresource ERP is to provide strategic insight, to inculcate the ability of
differentiation, increasing productivity and providing necessary flexibility
in attaining success.
Integration with ERP is usually necessary to eliminate redundant

information and processes. Integrated software sold and supported may
reduce proceeding maintenance costs.
Learning Activity
Analyse the extended ERP systems in Banking sector.
ANNA UNIVERSITY 149

Notes 9.2 ERP ADD ONS-CRM AND SCM

Customer relationship management is concerned with the relationship between
the organization and its customers. Customers are the lifeblood of any
organization be it a global corporation with thousands of employees having a
multi-billion turnover, or a sole trader with a handful of regular customer base.
Customer relationship Management (CRM) is an essential part of the modern
business management. Customer Relationship Management is the process of
managing detailed information about individual customers and carefully
managing all customer ‘touch points’ to maximize customer loyalty.
CRM technologies are enabled by systems architecture with three

distinct pieces of software functionality: operational, analytical and
collaborative.
Operational functionality includes integration of front and back office products
and activities. Analytical functionality relies on a CRM implementation that
keeps data in consolidated databases, making data collection and analysis much
easier. Collaborative functionality: CRM creates multiple customer touch point
opportunities by enabling various communications channels.
Figure 9.1: Elements of CRM
9.2.1 ERP on CRM

For attaining desired success, organizations attempt to achieve increased sales
performance, superior customer service and improved customer relationship
management. For achieving objectives, solutions which provide rapid access to
150 ANNA UNIVERSITY

centralized customer information are highly needed. Accessibility of detailed, Notes

up-to-date communication history is also needed to encourage customer and
client relationships, close sales and streamline all customer contact activities.
9.2.2 Advantages of ERP on CRM

1. Communication with other areas of the system provides you with clear
insight about the customer.
2. To maximize opportunities and to maintain high value customers advances
revenue and profits.
3. It provides value added services which allows you to stay ahead of your
competitors.
4. It prepares your employees with a deep insight of the customer’s needs.
5. Customer experience gets organized through quick problem resolution
6. Repeated access of customer information over and over again is being
provided.
Example: Eresource ERP CRM Software for successful customer

interaction.
The module of eresource ERP CRM software in India provides better
information about your customers and incorporates several features such as
activities, history, related contacts, addresses of your customers and their
relations with your competitors. The database structures are flexible enough
that allow you whatever information you would like to keep on your customer
and maintains such kind of information for future reference.
The eresource ERP Module also provides control and organization of overall
sales process, from offer to invoice or bill. It motivates your sales force by
giving details such as status of inventory, predicted costs and delivery time,
risk status, habits and special demands and trades during previous periods at
the time of offer stage.
The eresource ERP CRM module also provides an effective and efficient
complaint management tool which includes repairs processing and document
management.
9.2.3 CRM Software in India

The module of CRM in ERP or CRM Software has numerous potential benefits
to offer.
 CRM software is useful for targeting customers, retention of better
customers and increase in sales.
 CRM Software modifies the business processes by focusing on sales,
marketing and better customer service. For deriving full benefits from
ANNA UNIVERSITY 151

Notes CRM Software, the application should be used as a combination of people

processes instead a narrowly define IT application. When with combined
with rest of the modules, CRM software becomes more powerful in a full-
fledged ERP system.
Figure 9.2: Sales and Operational CRM through ERP
Example: Sales and Operational CRM Technologies through ERP

 Sales management ERP CRM System: It automates each phase of the
sales process which helps individual sales representatives for
coordinating and organizing all of their accounts.
 Contact management ERP CRM System: Customer contact information
is being maintained by this system which identifies prospective
customers for future sales.
 Opportunity management ERP CRM System: Sales opportunities are
targeted by this system which includes finding new customers or
companies for future sales.
 When web and web-based business applications (such as eresource ERP)
started becoming popular, organization in all industrial segments was able
to truly personalize their relationships with customers. With the integration
of CRM software in an ERP system, it allows the companies to strengthen
their relationships with customers, who will then achieve lifetime value
from present customers and to keep strategic plans in place for going after
lifetime value for new customers in new markets.
 The focus of customer is always the first rank among the basic principles of
eresource’s CRM software. It can bring multiple advantages to the user by
using eresource ERP systems with its CRM Module. By integrating
eresource ERP with an effective CRM software helps the ability of the
organization to give due care to what the customer is communicating in a
152 ANNA UNIVERSITY

systematic way. CRM software allows faster response to customer requests, Notes
and increases the service quality offered to the customers.
 Without the integration of CRM software with ERP system, is not
sufficient for catering the present needs of any organization. There arises a
need for CRM software’s integration with ERP systems for a continuous
improvement. An ERP system after its implementation should be flexible
and should have the basic infrastructure like CRM Software that enables
you to keep pace with the revisions made in the business processes through
a healthy customer relationship. In addition, working with ERP system
integrated with CRM software is one of the core factors for the success of a
business process.
 The top priority of the organizations should be to make their customers
happy and satisfied and consider them as the biggest asset for focusing on
their needs further. In order to carry our this prime objective, there must be
the existence of an efficient CRM software in their ERP systems and
eresource ERP outstand the top ERP Software available in India that meet
all your requirements.
9.2.4 ERP on SCM
Effective Business Control

Enterprise Resource Planning (ERP) is an effective and powerful tool for
management and controlling business processes. ERP vendors talk about the
tangible and intangible benefits that can be achieved by using ERP, but fall
short to emphasise on the key advantages i.e., effective monitoring and control
by adapting to the changing environment rapidly using ERP.
When we talk about effective monitoring and control, it refers not to the
employee but to the process. If you review our history, it is evident that early
businesses used to survive primarily due to effective monitoring and control of
key parameters of business i.e., sales, cost of production, inventory and
profitability.
Due to diversification, complexity in business and inability to

control and coordinate various cost functions manually, the focus was lost
somewhere down the line.
Now that we are facing intense competition, the same philosophy is being
endorsed. But this time the difference is that technology is being used as an
enabler to focus on these parameters and various tools and philosophies are
being adapted to focus on the basic requirements of a profitable organisation.
Early business organisations were fundamentally family business units. The
small amount of manufacturing carried on was primarily done by artisans
ANNA UNIVERSITY 153

Notes working alone. Key management positions were held by family members. The
business used to work well and the key to success was daily control on:
 Sale of what was produced
 Procurement of what was required
 Payable and receivables
 Daily profits
Figure 9.3: ERP on Supply-Chain Management

In today’s business parlance, it could be termed as daily sales target, minimum
inventory of finished goods and raw material, daily cash flow management and
daily profits.
As the demand of goods started increasing, these organisations started to
expand and diversify to meet the customer needs. It became more and more
difficult to manage and control. Then the concept of scientific management
spread throughout industry which resulted in a modified and enlarged
bureaucracy form. Businesses were still owned by family members and the
focus was still the same, i.e., daily control on sales, cost of production,
inventory and profitability.
Example: PARTA system was the controlling factor for any Birla
organisation in India.
The parta system was developed with the concept of setting the yearly and
monthly budgets and the performance of the company was measured daily,
based on the standards established in the parta system. It was an effective and
powerful tool for controlling and managing the business as all the vital
information regarding costs of production, sales and inventory was available to
make strategic decisions.
Then businesses started diversifying and processes and products started getting
more and more complex. Organisations started setting annual and monthly
154 ANNA UNIVERSITY

targets and performance was being measured on a monthly basis. This resulted Notes
in hockey-stick phenomena where the focus was to meet the targets at the end
of the month. As a result, companies ended with maximum sales, maximum
production, maximum overtimes and maximum collections during the last
week of the month. The effect of this phenomenon was increased work in
process inventory, lower machine and resource utilisation, poor on-time
deliveries, premium freights, erratic cash flow and so on.
Demand-Supply Gap Filling

The definition and usage of the term, supply chain, depends on the practical
scope of the parties using it.
Figure 9.4: Supply-Chain Flows

Supply Chain: For automotive suppliers, the supply chain horizon reaches the
end customer, but in practice this is limited to the point of prime customer –
the assembler. For suppliers, the chain between factory and dealer/customer
cannot be a real supply chain issue because, when the assembly parts are
delivered, suppliers can be influenced by the following steps in the chain.
Demand Chain: For importers and dealers, it is essential to fulfil customer
requirements regarding reliable and short delivery dates, while the head-office
role is to control and optimise the vehicle stock in the chain (i.e., keep it as low
as possible). Tier one and two suppliers are not part of this area of the demand
chain. For these reasons, it becomes necessary to make a distinction between
demand chain and supply chain.
Scope: The focus areas for the two chains are different. The supply chain
focuses on tier one and lower suppliers up to the assembler. The demand chain
focuses on all parties between the assembler and customer/dealer.
Basic Principles: Delivery Date and Order Volume

The basic principles between both the chains are different. While the supply
chain is very much focused on lean production (efficiency) and flexibility up to
the assembler, based on fixed, large amount schedules, the demand chain is
focused on lean distribution and flexibility to the end customer, based on
variable individual schedules.
ANNA UNIVERSITY 155

Notes In the demand chain, the delivery data to the end customer is not defined by the
end customer, but based on constraints in the production plan and distribution
network by the head office organisation. Via a forward calculation the delivery
date for an end customer can be calculated. Achieving delivery dates of few
days for a new vehicle customer order will be very difficult to achieve.
Therefore, it is common that the car seller will calculate for himself what a
possible delivery date could be and give that information to the end customer.
Decoupling Demand and Supply

In the automotive industry, supply chain and demand chain will be de-coupled.
This is because a mechanism is needed to balance the volumes required in the
demand chain and the volumes planned and available in the supply chain.
When volumes have been allocated, an order slotting process will take place at
the individual car level. Based on the position of the customer order in this
slotting process, (in factory stock, on ship at importer or at dealer), a delivery
date can be given.
Of course, it would be for the benefit of the industry to work on fluent
mechanisms between demand chain and supply chain, but as long as factories
have capacity restrictions and end customer demand is unpredictable, the
mentioned allocation mechanism should be in place.
In practice, the supply chain view is limited in area so only a very few people
can really oversee the total chain head quarter function. This means that
discussions in general can only be held for parts of the chain. To ensure that
one of the areas is not forgotten or under emphasised, it becomes useful to split
the two. At certain moments in time, it will be necessary to discuss the
mechanism of how to link supply chain and demand chain as effectively as
possible for the volume allocation — the basic principle for the assembler.
In this process, it will also be necessary to set up a mechanism to support the
end customer orders, so that every party, especially in the demand chain,
knows about the given commitment to the customer and will operate in line
with this commitment.
What is Supply Chain?
By following the explanation above, it is possible to see that the following
should be included in this area: tier 3 suppliers, tier 2 suppliers, tier 1 suppliers,
assemblers, headquarters and logistic service providers.
156 ANNA UNIVERSITY

Notes
Figure 9.5: Conceptual Diagram of Supply-Chain

The targets that these parties strive for can be defined as follows:
 Improve efficiency (stock and labour reduction)
 Deliver the large volume components just in time to the next party in the
chain.
Some characteristics in this automotive supply chain are as follows:
 Assembler takes the lead
 Flexibility expected from suppliers is growing
 Long term relationships between assemblers and suppliers become more
intensive
 Continuous pressure on cost reduction
 Reduction of number of tier one suppliers
 Increase of value added logistics functions.
What is Demand Chain?

In the demand chain, the parties playing a role between factory and consumer
dealers are assemblers, distribution centres, headquarters, importer, dealer and
consumer. Targets in the demand chain can be described as follows:
 Reduce vehicle stock
 Provide reliable lead times
 Provide short lead times.
ANNA UNIVERSITY 157

Notes
Figure 9.6: Demand-Chain of a Company

Some characteristics of the automotive demand chain are as follows:
 The Internet provides customer influence transparently on the chain
 Balance between flexibility, responsiveness and low inventory is a major
challenge
 OEM headquarter takes the lead
 Country/continental specific logistics are needed to take advantages of
local factories
 IT solution for transparency over the chain is challenging operation.
Demand and Supply Chain Coordination

To be competitive in lead times and accurate about delivery dates of vehicles to
the end customer, it is important to have the mechanisms in place to balance
demand and supply. The following functions must be created in the
headquarter organisation to balance these two chains:
 A mechanism is needed to allocate forecast sales volumes within the
defined production capacities.
 A capacity check for volumes and critical components should take place on
line for a dealer to provide a reliable delivery date to the customer when he
visits the showroom.
158 ANNA UNIVERSITY

 Based on the confirmed delivery dates promised to the end customer, all Notes
parties in the logistic pipeline (from assembler to dealer) must be informed
about which orders need to reach the next stage at which moment.
 All parties in the logistic pipeline must have transparency regarding the
status and the number of vehicles available in different statuses.
 All parties must be able to inform the central pipeline when vehicles come
into a delayed condition due to damage, hold or delayed shipments.
 All parties must have the chance to recognise delayed vehicles and must
have a mechanism in place to take action to give priority to these vehicles.
 Headquarters must have a function to inform dealers/customers about
customer orders which will be delivered later than promised.
 All logistics parties must have a performance indicator programme in place
so that continuous improvement can be made.
Transparency: The Starting Point

As a first step in getting control over the chains, it is essential to achieve
transparency over the chain. Which goods and how many are where and at
which moment? Does everyone measure the same way? Do the right measuring
points exist to follow the goods? Are hands over points in operations and
systems in line?
All of these questions need to be answered internally before this information
can be shown to external parties, such as customers.
At present, there are often inconsistencies in the required data and

providing reliable lead times/delivery dates is impossible.
It is essential that one party in the chain is responsible for the chain
organisation. A critical success factor is to set up a strategy to convince other
parties in the chain that a win-win scenario becomes likely if all parties become
involved in getting the supply and demand chain up and running.
In the automotive industry, the supply chain is mainly in the hands of the
assembler who decides the production volumes for the supply chain. Whereas
in the automotive demand chain, the headquarters organisation is responsible
for the coordination between sales and production, becomes the best party to
take this initiative. However, in industries where there is less integration
between parties in the demand and supply chain, it will be even harder to
implement the chains.
ANNA UNIVERSITY 159

Notes
Learning Activity
Analyse the supply chain management through ERP by Mother
dairy.
Emil Pharmaceuticals Pvt. Ltd. Improves Capacity Planning

and Increases Production with Integrated ERP System
“We are into Manufacturing and marketing of allopathic formulations in

various dosage forms viz., Tablets, Capsules, Oral liquids, Dry powders,
Creams, Ointments & Gels.
The new ERP system implemented in your organization is much more
accurate providing what we need that too when we needed. For Emil, the
eresource ERP system has proved to be an ideal solution in meeting its
specific batch manufacturing requirement, more importantly the GMP
standards that eresource has in their system. Since the introduction of
eresource ERP, jobs are carried smoothly and extremely satisfying way. The
best part is the after sales support module included in the system. ”
Tushar Korday
What is Emil Pharmaceuticals Pvt. Ltd.
Founded in 1989-90, Emil's principal business is developing, manufacturing
and marketing of allopathic formulations in various dosage forms viz.,
Tablets, Capsules, Oral liquids, Dry powders, Creams, Ointments & Gels.
Headquartered in Mumbai, the financial capital and hub of pharmaceutical
industry in India, Emil markets products in India as well as in African
markets. In the last 15 years, Emil has also established itself as a reliable
and cost-efficient contract manufacturer of integrity for leading
multinational and Indian companies to produce quality products for their
Indian and international markets. EMIL also manufactures ayurvedic/herbal
and veterinary formulations.
Challenge
The Client being a leading manufacturer and exporter of Pharmaceutical
Products and has a wide span of Departments and different processes which
though functioned under the best Management and Supervision but due to
improper integration of Resources and poor correlation it often suffered
disruption in work processes and produced difficulties in maintaining the
statutory requirements. Lack of co-ordination also lead to unusual problems
in smooth functioning between manufacturing processes and amongst
various departments. There were separate channels of separate processes
Contd...
160 ANNA UNIVERSITY

that caused increased input of work with reduced efficiency in functioning Notes
and prolonged functioning of normal processes that prevented the optimum
utilization of resources.
They were faced with the challenge of surviving and succeeding in an
environment that has become more complicated and uncertain, and one that
is characterised by rapid developments in science and technology, and
organisational change. From the standpoint of the pharmaceutical industry,
the impetus for change is the result of a combination of political, economic,
technological and social factors; all of which have helped redefine the
dynamics of this particular industry.
Over the past number of years, the growth of the worldwide pharmaceutical
industry has been slower than the increases in Research (R) and
Development (D) costs, and this has led to a cost-earnings differential that
cannot be sustained indefinitely. Firms have found it increasingly difficult
to sustain historical levels of growth principally because of two converging
factors. First, the earnings of the pharmaceutical industry are being
increasingly squeezed between pricing constraints due to government
policies and generic competition; and second, through the rising costs of R
and D due to increasing legislative requirements and growing technological
sophistication. As a consequence of these pressures on pharmaceutical
earnings, combined with that of rising R and D costs, pharmaceutical firms
have been forced to adopt a number of cost containment measures in
addition to those pertaining to the safety and efficacy of drugs. The need to
demonstrate 'value' to the consumer has now become imperative.
Traditionally, the pricing methods adopted in the former producer-driven
environment for pharmaceuticals was essentially based on what was
considered to be 'fair returns' for the high costs and risks associated with
innovation. Today however, much of that has changed. The deregulation of
generic products has helped to bring about a much greater acceptance of
product substitution, which in turn has led to changes in consumer choice--
an event that has acted as a catalyst for change within the marketplace.
Therefore rather than being producer-driven, the market for pharmaceuticals
today is essentially customer-led. Price has become the key indicator of how
the marketplace truly values the products that are discovered, marketed and
sold. Consequently the price that a company charges for a product is the
culmination of every decision made along the chain of discovery from
discovery through to marketing. Therefore in order to be able to survive this
challenging environment, pharmaceutical companies can no longer permit
their internal processes to determine price levels, as this has now become
the privilege of the customer.
The demand for innovation in an increasingly complex, global business
environment has necessitated new approaches to organization because the
requirements for success in the marketplace have changed in a number of
profound ways. In addition to demands for efficiency, quality and
Contd...
ANNA UNIVERSITY 161

Notes flexibility, pharmaceutical companies are also required to simultaneously

cut costs, improve standards of quality, shorten product development times,
and introduce innovative products that customer’s value. As a result,
companies have been forced to re-examine every aspect of how their
businesses are implemented and conducted, and this has given rise to a
number of important issues that question the long-held and accepted ways
of managing pharmaceuticals. It also raises a number of critical questions
that are pertinent to five key areas of business.
The discovery, development and marketing of new pharmaceutical products
are the essence of the research-based pharmaceutical industry. As a result of
the transformation toward a customer-led marketplace, important issues
have been raised which present a number of challenges for many
pharmaceutical companies. Of greater significance is the issue of cost.
The total cost of bringing a new product to market from discovery through
to launch, including the cost of capital with a risk premium and the cost
associated with failures, is estimated to be approximately $500 million, over
a 10-12 year period. Of this total, around 30 per cent of the costs are
concentrated in exploratory research while the remaining 70 per cent are
invested in subsequent development phases. At the same time, the
percentage of money spent on innovation has been increasing steadily from
around 6 per cent in the 1960s to approximately 20 per cent by the late
1990s.
Both the increased cost together with the growing quantity of resources
being invested in pharmaceutical innovation is due to a combination of
factors other than inflation. Traditionally, the rate of growth of the firm has
been linked to new product introductions, as it was believed that increased
investment in innovation generally guaranteed more novel products.
Furthermore, the shift from acute to chronic therapy has increased the
complexity of research as well as the regulatory approval process. Demands
for regulatory data have almost doubled since the mid-1980s thus increasing
the time it takes to get a product to market. In addition, companies with low
levels of new product innovation have spent vast amounts of capital in an
effort to secure future sources of revenue.
The Solution “eresource”
Eresource, proved to be the best possible ERP solution to overcome the
challenges faced by this client. The client was provided with an application,
through which under a single point, there was integration of all its resource
to improve and optimize their utility.
Eresource ERP provided a platform where at a single juncture all the
processes and essential functional activities were taken care of.
A clear advantage to the web-based eresource ERP is that remote users like
executives and sales reps can access the company system with any browser,
Contd...
162 ANNA UNIVERSITY

which is much more convenient than going through standalone computer Notes
configured for Terminal Services. It also eliminates the need of upgrading
of your network and other computer peripherals. Eresource ERP’s fast and
quick on-time implementation method helps the client commence their
business operation through the system as per planned time schedule which
ultimately helps all their business operations.
eresource, ERP is a next-generation enterprise resource planning solution
that powers your core business functions, including analytics, human capital
management, financials, operations, and corporate services. It delivers
industry-specific capabilities that let you seamlessly integrate key business
processes from end to end. And because it’s highly scalable and adaptable,
it gives you the option to incrementally add the right mix of customer
relationship management, supply chain management, or product life-cycle
management solutions as your business evolves over time.
Why eresource ERP?
Web-based eresource ERP solution, simplifies back-office process
automation for mid-sized and growing business. It provides real-time
information about finance, order management, purchase, inventory,
employee management, e-commerce and much more. With web-based
eresource ERP solution, you can accelerate business cycles, improve
productivity and reliability, and provide higher levels of service to
customers, suppliers and partners. This web-based ERP solution improves
business among customers, suppliers and partners through self-service
portals, providing for lead management, shipment tracking, bill payment
and more. Eresource ERP for Pharmaceuticals provides a wide range of
information technology solutions for pharmaceuticals, insurance,
manufacturing, retail and distribution. The process of eresource solutions is
SEI CMM Level 5 compliant.
Eresource ERP for Pharmaceuticals is a powerful end-to-end collaborative
business integration solution for the pharmaceuticals business.
Pharmaceutical industry is highly regulated. Good Automated
Manufacturing Practice (GAMP), Code of Federal Regulatory (CFR) of
US – FDA, ICH, MCA and other such regulatory bodies impose guidelines
from time to time. eresource ERP for Pharmaceuticals increases the
effectiveness and improves the efficiency of the processes and streamline
internal operations. Whether you need to increase your market share or be
more profitable, eresource ERP for Pharmaceuticals solution can help you
achieve your goals and bring significant return on your investment. With
eresource ERP for pharmaceuticals, you get years of domain expertise built
into our solution from the insights of experts who have worked with leading
names in the pharmaceuticals business. Eresource ERP for Pharmaceuticals
addresses all aspects of the pharmaceuticals process.
Contd...
ANNA UNIVERSITY 163

Notes Questions
1. Analyse the challenges faced by the company and solutions that have
been undertaken.
2. How far implementing eresource ERP stands successful? Discuss.
Source: http://www.eresourceerp.com/Pharmaceutical-erp.pdf
1. Eresource ERP provides constant and readily available

customer and prospect data, which allows you to
manage pre-sales activities, perform computerized
sales process, deliver constant customer service, assess
sales and service successes and to determine trends,
problems and opportunities.
2. In the supply chain, the delivery date demanded by the
assembler is fixed and based on just-in-time principles.
Via backward calculation the delivery dates can be
calculated for the suppliers in the chain, assuming that
suppliers in most cases do not have restrictions on
flexibility. This calculation will be done in general for
large volume orders, based on determined production
volumes for a month, week or day.
SUMMARY
 ERP or enterprise resource planning is software that allows business
Extended ERP comprises of other software and business processes-CRM,
PLM, SCM, Integration requirements, Pharmaceuticals and Fleet Industry.
 Customer Relationship Management is the process of managing detailed
information about individual customers and carefully managing all
customer ‘touch points’ to maximize customer loyalty.
 In ERP on CRM, for attaining desired success, organizations attempt to
achieve increased sales performance, superior customer service and
improved customer relationship management. For achieving objectives,
solutions which provide rapid access to centralized customer information
are highly needed. Accessibility of detailed, up-to-date communication
history is also needed to encourage customer and client relationships, close
sales and streamline all customer contact activities.
 CRM software in India is useful for targeting customers, retention of better
customers and increase in sales.
 Enterprise Resource Planning (ERP) is an effective and powerful tool for
management and controlling business processes. ERP vendors talk about
the tangible and intangible benefits that can be achieved by using ERP, but
164 ANNA UNIVERSITY

fall short to emphasise on the key advantages i.e., effective monitoring and Notes
control by adapting to the changing environment rapidly using ERP.
 The basic principles between both the chains are different. While the
supply chain is very much focused on lean production (efficiency) and
flexibility up to the assembler, based on fixed, large amount schedules, the
demand chain is focused on lean distribution and flexibility to the end
customer, based on variable individual schedules.
 In the automotive industry, supply chain and demand chain will be de-
coupled. This is because a mechanism is needed to balance the volumes
required in the demand chain and the volumes planned and available in the
supply chain.
 In Demand and Supply Chain Coordination in order to be competitive in
lead times and accurate about delivery dates of vehicles to the end
customer, it is important to have the mechanisms in place to balance
demand and supply.
KEYWORDS
Extended ERP Systems: ERP or enterprise resource planning is software that
allows business processes in finance, manufacturing, distribution, sales and
other fields. Extended ERP comprises of other software and business
processes – CRM, PLM, SCM, Integration requirements, Pharmaceuticals and
Fleet Industry.
Customer Relationship Management: Customer Relationship Management is
the process of managing detailed information about individual customers and
carefully managing all customer ‘touch points’ to maximize customer loyalty.
ERP on CRM: For attaining desired success, organizations attempt to achieve
increased sales performance, superior customer service and improved customer
relationship management. For achieving objectives, solutions which provide
rapid access to centralized customer information are highly needed.
Accessibility of detailed, up-to-date communication history is also needed to
encourage customer and client relationships, close sales and streamline all
customer contact activities.
CRM Software in India: CRM software is useful for targeting customers,
retention of better customers and increase in sales.
Effective Business Control of ERP on SCM: Enterprise Resource Planning
(ERP) is an effective and powerful tool for management and controlling
business processes. ERP vendors talk about the tangible and intangible benefits
that can be achieved by using ERP, but fall short to emphasise on the key
advantages i.e., effective monitoring and control by adapting to the changing
environment rapidly using ERP.
ANNA UNIVERSITY 165

Notes Basic Principles - Delivery Date and Order Volume: The basic principles
between both the chains are different. While the supply chain is very much
focused on lean production (efficiency) and flexibility up to the assembler,
based on fixed, large amount schedules, the demand chain is focused on lean
distribution and flexibility to the end customer, based on variable individual
schedules.
Decoupling Demand and Supply: In the automotive industry, supply chain and
demand chain will be de-coupled. This is because a mechanism is needed to
balance the volumes required in the demand chain and the volumes planned
and available in the supply chain.
Demand and Supply Chain Coordination: To be competitive in lead times and
accurate about delivery dates of vehicles to the end customer, it is important to
have the mechanisms in place to balance demand and supply.
1. What do you mean by extended ERP Systems?
2. Define Product Life-Cycle Management.
3. Write short note on ERP for pharmaceuticals.
4. Write a short note on ERP for fleet management.
5. “CRM technologies are enabled by systems architecture with three distinct
pieces of software functionality”. What are they?
6. Write a short note on ERP on CRM.
7. Discuss the advantages of ERP on CRM.
8. What are the numerous potential benefits of CRM software in India?
9. “ERP is an effective and powerful tool for management and controlling
business processes”. How it takes place? Give example.
10. Discuss the demand-supply gap filling in context to ERP on SCM.
11. What are the three tiers involved in Supply Chain?
12. What is demand chain?
13. What do you mean by demand and supply chain coordination?
14. “As a first step in getting control over the chains, it is essential to archive
transparency over the chain”. Discuss the statement.
15. How demand and supply gets de-coupled?
16. State the basic principles of delivery data and order volume in SCM.
17. Define CRM.
166 ANNA UNIVERSITY

18. Define SCM. Notes

19. What kind of integration requirements takes place in extended ERP
systems?
20. Give an example of ERP on SCM.

1. “ERP or enterprise resource planning is software that allows business
Extended ERP comprises of other software and business processes”.
Discuss the statement with extended ERP systems.
2. What are the extended ERP systems that are built on pharmaceuticals and
fleet management?
3. “For attaining desired success, organizations attempt to achieve increased
sales performance, superior customer service and improved customer
relationship management”. Explain this statement with ERP on CRM. Give
suitable examples.
4. “The module of CRM in ERP or CRM software has numerous potential
benefits to offer”. Explain.
5. “Enterprise Resource Planning (ERP) is an effective and powerful tool for
management and controlling business processes. ERP vendors talk about
the tangible and intangible benefits that can be achieved by using ERP, but
fall short to emphasise on the key advantages i.e., effective monitoring and
control by adapting to the changing environment rapidly using ERP”.
Discuss with effective business control of ERP on CRM.
6. Explain the demand and supply gap filling and basic principles of delivery
date and order volume in relevance to ERP on SCM.
7. Differentiate between demand and supply chain. What are the demand and
supply considerations?
8. Explain the extended ERP systems on CRM and SCM.
9. Explain the integration requirements in context to extended ERP systems.
10. Explain the de-coupling of demand and supply in relevance to ERP on
SCM.
ANNA UNIVERSITY 167

Notes FURTHER READINGS
Ray, Rajesh (2011), Enterprise Resource Planning, Tata McGraw

Hill Education.
Hill.
Hill.
Education.
168 ANNA UNIVERSITY

Lesson 10 - Business Analytics and Future Trends in ERP
LESSON 10 - BUSINESS ANALYTICS AND Notes

FUTURE TRENDS IN ERP
CONTENTS
Learning Objectives
Learning Outcomes
Overview
10.1 Business Analytics through ERP
10.1.1 Streamlining Business Process through ERP
10.1.2 How to Model?
10.1.3 ERP System Architecture
10.1.4 System Administration
10.1.5 Business Workflow
10.1.6 Correction and Transport System
10.2 ERP Systems
10.2.1 Web Enabled
10.2.2 Future Trends in ERP – Web Enabled
10.2.3 Other Future Trends of ERP – Web Enabled
10.3 Future Trends in Wireless Technologies of ERP
10.3.1 Convergence of Internet and other Wireless Technologies
Summary
Keywords
Further Readings
LEARNING OBJECTIVES
 Understand the Business Analytics of ERP
 Know about the Future Trends in ERP Systems
 Identify the Future Trends in Wireless Technologies of ERP
ANNA UNIVERSITY 169

Notes LEARNING OUTCOMES

understanding of:
 recall business analytics through ERP
 design ERP system architecture
 explain correction and transport system
 determine web enabled future trends in ERP
 analyzing future trends in wireless technologies of ERP
 identifying convergence of Internet and other wireless technologies
OVERVIEW
In the previous lesson, you had studied about the extended ERP Systems and
ERP add ons-CRM, SCM.
Business analytics makes widely use of data, statistical and quantitative
analysis, explanatory and predictive modelling and fact-based management to
propel decision making. It is closely interlinked with management science. It is
useful as an input for decision making or may operate fully as automated
decisions. It is dependent on adequate volumes of high quality data. The
tedious task in assuring data quality lies in integrating and reconciling data
across various systems and then to decide what subsets of data to make
available. The future trends of ERP web enabled systems leads to different
business analytics at variable times.
In this lesson, you will learn about the business analytics through ERP, future
trends in ERP Systems-web enabled, wireless technologies and so on.
10.1 BUSINESS ANALYTICS THROUGH ERP

Let us first understand what is business analytics?
Business Analytics means the skills, technologies, applications and practices
for constant repeated exploration and investigation of past business
performance for achieving new insight and drive business planning. Business
analytics aims in developing new ideas and understanding of business
performance based on data and statistical methods. It answers the questions
such as:
1. Why did it happen?
2. Is there any possibility of happening again?
3. What will happen if we change x?
4. What extra data tell us which never came into our mind?
170 ANNA UNIVERSITY

Notes
Example: Business Analytics:
1. Using data mining – exploration of data for finding new patterns and
relationships.
2. Using statistical analysis, quantitative analysis – it explains the reasons for
the occurrence of certain kind of result
3. A/B testing, Multivariate testing – These methods are used to experiment
for testing previous decisions.
4. Predictive modelling, Predictive analytics – These methods are used to
forecast future results.
Companies prefer to use business analytics which are committed in

making data-driven decisions.
Using ERP in Business Analytics is directed to facilitate the business with the
following services:
 To understand the most profitable customers
 To understand the company’s inventory worth
 To estimate which items are left in the inventory
 For identifying the type of products and services which have the best
margin growth.
 To understand the performance of the company at all business levels.
10.1.1 Streamlining Business Process through ERP

The approach to going for an ERP solution is linked with overall business
analytics planning and requires the development first of a business model
comprising the core business processes or activities of the business. This is a
diagrammatic representation of the business as one large system showing the
interconnection and sequence of the business subsystems or processes that it
comprises. The approach to accomplish this is depicted in Figure 10.1. The
arrows denote that the planning to arrive at the process is accomplished from
the top down while the business analytics implementation is from the bottom
up. Based on the long-range plans of the business, its strategy and objectives, a
business model comprising its business processes is developed. These
processes are managed and controlled by various individuals and the groups in
various organisations.
ANNA UNIVERSITY 171

Notes
The ERP is developed to provide the required logistic support to the

organisation to manage the processes that are part of the business model. The
database supports and drives the ERP.
Thus, we can model a business as an integrated system making the processes
managing its facilities and materials as its resources. Information, though not
described as a resource, is vital in managing all other resources and can,
therefore, be added as a resource while showing the concept of a business as a
system.
Business Strategy
Business Model
Business Processes
Process Information, Decision Support,

Organisations
breakdown Workflow Automation
MIS
Database
Figure 10.1: Building on Business Analytics
10.1.2 How to Model?

The easiest way to understand the processes that underline a business
management information system is to use a generalised example. The example
we use here is a typical company in the manufacturing business. The type of
company is relatively unimportant as the general principles of business process
analysis and classification and the methodology of looking at a company’s
information system to support a series of interlocking subsystems are
universally applicable. We now build a business model of generalised
manufacturing company at the highest level of abstraction.
The business model actually consists of two major elements:
 A blueprint describing various business processes and their interactions and
 An underlying data model.
172 ANNA UNIVERSITY

Commitments
Commitment
Collec t order Verify product Cre dit Vendo r Orders data Obtain verbal data Purchase Close out
inf ormation Orders num be rs and Orders authorization selection comm itments order p ur cha se
stock availability Cre dit preparation order
sta tus
Rejected and
Produc t/pric e partia lly filled
inform atio n orders Produc t data
Ord ers
Requests, vendor Add purchase or ders Invoices/

Customer Accepted or der s data product Verify packing slips
Reje cte d orde rs notification rec eipts
availa bilities
sr e dr o es a hcr u P
Bac k orde rs,
Notification Rejected orders
Orders re ceived
DATA BANK
Produc t/p ric es
Delete purc hase orders
Customer s
New orde rs
Order infor mation Statements and
Filled orders, inv oice/packing Bac k orders
invoic es
slips, customer s orders Accounts receivables
In voicing data Rec eipt data
Shipm ents Valid ata
Fill orde rs Customer orde rs, invoic es inventory Inventory Cre ate payable ve ndo r rec eipts payments Vendors
data Purchase re quests
Filled orders
Invoices
Shippers
Accounts Payme nt data
Customer s Vendo rs
Produc ts
Purchase orders
Vendor orders Rec eipts
Accounts pa yable
Reorder Anticipated purchase s Eliminate payable s Vendor Payme nts
stock Purchase comm itme nts payments
Inventory data Cash foreca sts
Purchase data
Other da ta Payroll
Invoices General ledger
Emp loyee m aster Foreca sts
Orders
Employee Inventory data, receivables
Invoices/pac king slips salary data data payable s data, other
data, pa yro ll da ta
In voice Cash
preparation foreca sting
Rec eivables da ta Transa ctions
Managers
Shipment data shippin g altern atives
Payroll
ANNA UNIVERSITY
Non-ac count pur cha ses, account purchases Ma intain
general
Edited data Wages and ledger
salaries
sr e d ni mer r o st ne met at S
In ternal repor ts
Ship goods to Edit and record Pre par e Selected data Pre par e
customer s rec eivables sta tem ents reports
data and rem inders Employee s
Stockh olders
Payme nts External reports
Figure 10.2: Working of Business Analytics

Notes
173
Notes An example of the blueprint of the business model is shown in Figure 10.2
This diagram could provide an illustration of the interrelationships between
various processes carried out by a firm.
The blueprint shows how the various processes interchange information with
each other as well as with the underlying data model. This representative
blueprint along with Table 10.1 giving details of processes and Table 10.2
giving details of entities in the data model forms the input to various
implementation methodologies such as enterprise modelling of Baan and
ASAP of SAP. The representative blueprint explained in Tables 10.1 and 10.2
can be used as a ‘template’ or reference model by various companies to list
their processes and data entities and then subsequently modified to suit their
specific nature and requirements.
Table 10.1: Representative List of Various Core Processes in a Manufacturing Company
Process Description
Forecasting Normally shows sales, fund flows, etc. over a long period of time, like say,
the next ten years.
Fund management Determines the necessity of funds and the way to raise these funds. May also
consider the uncertainty and risk factors. Often, some type of simulation
along with ‘what if’ type of analysis is also undertaken.
Auditing Inspection that determines whether things are working according to the
organisational guidelines.
Product planning Decides the product line, a complicated and unstructured process and charts
the product growth cycle.
Place planning Concerns decisions about how the product is distributed. Also includes
examining the impact of technology such as EDI. Sets procedures for
determining effectiveness of the distribution channel.
Promotional planning Consists of personnel, selling and advertising. Includes selling a product with
a sales force.
Price planning Determines the prices at which products are offered. Involves application of
technology to pricing support such as commercial database services. Also
includes feedback and sensitivity analyses.
Budget allocation Using computerised algorithms to estimate desirable mix of the funds
allocated to various functions.
Product design This process finalises the design and technical specifications of the product
using approaches such as CAD and CAE.
Facilities design Includes plant layout, assembly line planning and working out facilities to
manufacture the product.
Production This is the process of making new products from
scheduling MRP
Material requirement raw materials and generally includes production
determination scheduling and requirement planning. Also includes a wide variety of
activities in monitoring and planning of actual production.
Quality control This process takes care of activities that ensure that the final product is of a
satisfactory quality. It is concerned with identifying the existing quality gaps
as well as preventing future quality problems. It involves the use of Statistical
Quality Control (SQC) as well as Statistical Process Control (SPC).
Contd…
174 ANNA UNIVERSITY

Order information This process deals with the collection of order information from customers by Notes
collection various means such as mail, phone, fax or on regular-demand and time-period
bases.
Verification of orders Includes verification of product number and descriptions for accuracy. Also
determines whether an order can be filled or not and advises the customer
regarding order acceptability.
Credit authentication Depending upon order value, method of payment and credit status of
customer, the order is approved or otherwise even though accepted as valid.
Customer notification Informs customers about order status, integrating customers into order-
processing systems and the use of EDI, etc.
Filling orders Involves filling of new orders, as well as back orders from available stock.
Deals with various procedures regarding ‘how’ and ‘what’ of matching order
quantity and stock levels. Generation of packing slips.
Reordering stock Optimises inventory-holding stocks. Decides when to order and how. It is
very crucial from the point of view of integrating suppliers into the inventory
system.
Invoice preparation Creates invoice. Also includes preparation of statement for accounts
receivable.
Shipping goods to Deals with activities starting from packing of goods in inventory to final
customers loading for transportation. It should provide for a proper shipping method and
suitable shipping instructions.
Receivable data Editing and recording of this process consists of editing customer’s purchase
transactions including packing slips, invoices, statements, etc. It also credits
payments. Preparing outstanding statements and reminders. Consists of
producing information on current and past due accounts and analysing sales
patterns. Keeps track of outstanding balances.
Selecting vendors Researches for vendors and is mainly concerned with selection of vendors
based on cost, quality and other advantages.
Obtaining order Deals with floating of requests for purchases to obtain customer quotation.
commitments The most important aspect of this process is negotiations with vendors to
arrive at mutually agreed terms and conditions.
Preparing purchase Includes carrying out of all necessary documentation for purchases.
orders Increasing trend to use document management and image processing systems
and EDI.
Receiving shipments Main activities in this process are to receive and to accept or reject goods that
vendor’s ship.
Validate payments Deals with validating invoices and statements against actual receipt of goods
and agreed terms and conditions.
Payments to vendor Includes preparation of payment schedules based on cash forecasting.
Optimisation of this function may have a dramatic effect on the company.
Cash forecasting Posting of transactions from various other processes. Ensures proper
recording of revenues and expenses.
Payroll This process produces pay checks. Should also produce data for tax purposes
and keep track of various deductions such as loans, insurance, etc.
ANNA UNIVERSITY 175

Notes Table 10.2: Representative List of Entities Forming Data Model in a

Manufacturing Company
Process Description
External data Consists of all important entities outside the firm that interact with it
such as consumers, suppliers, competitors and distributors. Also
includes predictive data regarding economy and future events occurring
in external environment, labour and RM availability scenario.
Internal data Data generated from the firm’s transaction processing system, internal
forecasts or parameters monitored.
Transaction processing This data includes day-do-day operations as well as those involving
data revenues and expenses. Also, sales data that result from specific mix of
products.
Internal forecast data Normally includes planning data such as expected expenses from each
of the functional areas as well as sales and revenue projections from the
marketing department.
Funding data Includes information on specific sources of funds as well as availability,
terms and conditions, financial obligations and so on.
Portfolio data Includes the current portfolio of securities held by the firm as well as
their prices in the financial market.
Government regulations Mostly government regulations pertaining to what business firms can
and what they cannot do.
Strategic plan Includes the current portfolio of securities held by the firm as well as
their prices in the financial market.
Marketing research data Mainly consumer related data that can be used to support marketing
decisions, e.g., result of surveys.
Marketing intelligence Includes information about strategies of competitors. It is mostly semi-
data structured data collected through the media and commercial database
services.
Production data Shop floor data on production processes including standards and actuals
of time and material resources concerned.
Inventory data Includes inventories of raw materials, goods-in-process and finished
goods.
Vendor data Includes sources, prices and lead times, ratings for raw material and
services. It also includes products offered by vendors and their prices.
Personnel data Mostly includes profiles of employees, their skill levels, experience and
past performance on various assignments.
Union data Data on regulated pay scales, hiring, firing and warning conditions.
Labour data Data about labour market, sources and prices for various skills and their
availability.
Engineering specification Includes how products can be built on standards, components and
manufacturing process, drawings and libraries of specifications.
Internal marketing data Includes internal forecasts department-wise, work centre-wise for
production purposes and marketing specified standards on products.
Sales forecast Product-wise, period-wise forecast for various products sold by the
company.
Production capacity Data about installed and available capacities of various means of
production.
Contd…
176 ANNA UNIVERSITY

Production schedule Time-based plan giving details of how products or services are going to Notes
be made available.
Inventories Availability of all possible resources, e.g., materials in manufacturing, or
seats in an airline. Does not necessarily include physical resources.
Warehouse capacity data Data about storage capacity and distribution channels where goods or
services can be stored. May be national as in case of airline seats.
Inventory Data about availability of RM, WIP and finished goods along with
reorder level and reorder quantity and also on anticipated availability
and commitments.
Shippers data Data about agencies involved in transportation and clearing of goods
along with their service capabilities and reach.
Purchase commitments Data about specifications and features of various products or services
marketed by the company.
Payroll data Data about salaries, tax deductions, statutory forms and other
deductions.
General ledger Integrated transaction data from payroll and account receivable. Account
payable. It is the basis for budgeting and planning data.
General ledger Integrated transaction data from payroll and account receivable. Account
payable. It is the basis for budgeting and planning data.
10.1.3 ERP System Architecture

All the ERP packages have some core technology which is defined as the
technical premise on which the ERP system is built—the total system
architecture. It includes the client/server structure, the network and the
hardware platform. It also includes issues of scalability, the database engine
and performance management. Most ERP packages are hardware vendor
neutral and will run in a wide variety of environments, from a small Windows
NT application up to massively parallel systems.
The system manager will find several online help documents to aid in the
development of an optimally functioning system. All of these documents are
available in CD/ROM format, primarily Windows-based.
The system manager will need to decide, based upon projections of throughput
and response time, how to distribute the system. The purpose is to divide up
the most time-intensive uses of the system to balance the load.
Example: Background processing might be moved to its own server.

The system manager will plan and monitor the distributed system to maximise
performance and availability. The database server will prove to be the
bottleneck for throughput. It should be loaded with the database, shared files,
the update server, the message server and the lock server. Other functions that
can be offloaded should be offloaded.
10.1.4 System Administration

The smallest ERP application may run on a single server and support a modest
number of terminals. The database may run on a separate machine, or again, in
ANNA UNIVERSITY 177

Notes the simplest circumstance, the server and the database machine may physically
be the same equipment. Within that machine, the database and the applications
server will logically be different entities.
Stopping the central ERP System assumes that all processes have ended
normally. When there are several instances, each must be stopped individually.
An instance is a specific application of ERP, complete with its set of servers,
which share a common profile. During the process of implementing ERP,
project teams will generally establish up to three instances to separate test
systems from actual production systems.
Stopping an instance does not automatically shut down the database system.
Processes are shut down in parallel rather than sequentially. It may be
necessary to stop the system during an upgrade or for a full backup, but not
always.
Example: In some cases, it is possible to block to a certain database to

do a backup. When the backup is complete, the system manager can initiate a
roll forward, applying any transactions that occurred during the back up to the
actual database.
Starting up the ERP system requires that you start the database and the
application servers, including the gateway server, the system logging process
and the spool system transfer process. The gateway server opens connections
between the application and the communications protocol. The logging process
maintains records of system errors and is essential for debugging problems.
The spool system transfer process will pass files for printing, faxing or output
to the correct host spooler. The host spooler, in turn, knows which device
(specific printer for instance) is to be activated.
Starting up the system may be accomplished for the entire system or for a
single host system. The start-up profile can be accessed from any application
server and can be used to indicate exactly what is being started up.
System security is always a concern for the systems administrator, who must
maintain records (located in the user master records file) of approved users
having various levels of security. You may add additional password checks to
increase security. Additions of this nature are maintained whole even when
new releases are implemented. Individual users will have differing access
privileges.
Example: One user may be allowed to only read information about a

particular customer, while another may be allowed to add or change
information for that customer. It is possible to separate privileges so that one
person may enter the access information but is not able to activate it, while
another may activate but not edit the information.
178 ANNA UNIVERSITY

The systems manager will need to activate a system of tracing access to Notes
programmes.
Trace files are written by the individual host system processes.

The data are used only in the event of problems in the system that require
the manager to know exactly which transactions were executed and which
were not.
A table is a matrix that describes a relationship between sets of data. A domain
describes the value range for a certain field.
Example: Value Range - A discount schedule

A field is a subset of a table. Each entry in a table (a customer, for example)
contains a set of fields (name, address, type of customer, etc.). The type of
customer might be coded to indicate the appropriate value in the discount
schedule. The field itself may be made up of one or more data elements.
Tables are the features mentioned most often by those who have implemented
this system. They are defined differently by different people. Tables contain
various types of information and can both manage data and carry out control
functions.
There are three major types of tables—system configuration tables, control
tables and application data tables. All are defined in the data repository. These
are the tables that define the structure of the system. A table exists to define
table types and another exists to define objects used for transport. Customers
do not change these tables. Other system configuration tables identify
peripherals such as printers. These are set up and maintained by the IS
department.
To customise the system, the project team will use both control tables and
application data tables. Control tables define functions that guide the user in his
or her activities.
Example: A control table might be set up to require that a customer

service representative enter a line item to reference the material master data
before a purchase order is accepted. Control tables contain the structure of the
company, including such data as company codes, which plants are related to
which companies within the corporate structure, which sales organisations
relate to which products and which storage locations hold certain products.
This is the central repository of the company hierarchy which must be
determined prior to installation and configuration.
Application data tables are divided into two main types—transactions and
master data files. Both are updated using the appropriate ERP applications.
Transaction tables are the largest since they contain the daily operations data
ANNA UNIVERSITY 179

Notes such as orders, payments received, invoices and shipments. Master data files
describe sets of basic business entities such as customers, vendors, products,
materials and the like. There are also master data files that contain static data
such as zip codes.
Application data table, for example will be surrounded by a layer of tables,
each of which represents an attribute of the customer, pricing schedule,
discounts, location of warehouses that supply the customer and so forth. The
sub tables can be thought of as fields in a record. The value of a table structure
is that similar tables, such as types of customer (government, key accounts, and
retail customers) will apply to all customers and thus, are identified only once
and referenced via elements in the file for each customer.
A material master table may contain descriptive text, the title of the material
and engineering data, for example. It has a layer of tables that apply to a plant
defining the procurement data, minimum order quantities and persons
authorised to order. Another layer related to the materials master table will
provide the warehousing information. The user may obtain different views of
these related tables for sales, inventory or accounting purpose.
10.1.5 Business Workflow

The Business Workflow feature allows the project team to provide procedural
automation of the steps in a business process. It can provide suggestions to the
end users regarding tasks that must be done and can track work that has been
accomplished. Sales managers, for example, can easily track number of orders
and status of the individual orders. Orders will (presumably) flow through the
system faster because of the prompts the system provides to individuals.
Managers can assign tasks based on capacity competency and skills and can
reassign work if necessary, due to illness or special assignments. The business
workflow feature is linked to the organisation structure and tasks are tied to
position descriptions and responsibilities.
10.1.6 Correction and Transport System

The Correction and Transport System (CTS) manages changes to the system
and provides the capability of moving these changes from one system to
another. Any change to an object receives a correction number. ERP defines
objects as groups of data like screens, help text, dynamic programmes and
application for programmes. CTS propagate these changes from one instance to
another or when the system receives an upgrade (see Figure 10.3).
D evelopment Production
CTS
Instance Instance
Figure 10.3: Correction and Transport System
180 ANNA UNIVERSITY

10.2 ERP SYSTEMS Notes

In the present scenario, technical jumps attained at the level of cloud
computing and mobile devices as tablets and smart phones, as well as the fast
development seen in social networks. All these force the employers to think of
making use of the technology in best possible manner. These trends contribute
to make ERP systems at par with the requirements of business and making it
fun to use all its capabilities to take advantage of technical and make plans to
keep pace with this objective.
10.2.1 Web Enabled

Business applications specializing in their respective domains might not be
suited in a native web environment. This means that some technology is being
used by the application that is not offered via web based protocols, or that the
application was written for previous support of direct database connectivity for
speed. These applications get directly loaded onto the user’s PC through a set
up program. Some people purchase the software and load it onto their PC’s
while some have installed their own websites. These applications function well
in single user environments or for enterprise environments where the
application is specialized.
Companies are disregarding their legacy system of simply using Internet for
interacting with other processes. They have turned towards Web enabled,
integrated ERP systems. These integrated systems have become a part of their
overall business strategy which leads to connectivity between an enterprise
with its suppliers, customers and transform the whole value chain.
10.2.2 Future Trends in ERP – Web Enabled

Future Trends in ERP can be visualized as follows:
1. Cloud ERP
2. Open Source ERP
3. Mobile ERP
4. Social ERP
5. Data
Cloud ERP
Allows the companies to access data over the Internet.
It includes cloud computing models such as:
 Public Cloud
 Private Cloud
 Hybrid Cloud
ANNA UNIVERSITY 181

Notes Integration of Cloud-based ERP services, both with other clouds and with
installed ERP systems. As per need –basis, more and more companies have
started consuming ERP services through the cloud.
Interoperability between cloud services will remove the requirement of
companies to install middleware and programming for making third-party
module work with present ERP systems. With the trend moving from CAPEX
to OPEX and from on-site to off-site, ERP in the cloud facilitates managed
service businesses that allow them to focus on their core activities.
Listing out cloud-computing services:
 Software as a Service (SaaS)
 Platform as a Service (PaaS)
 Infrastructure as a Service (IaaS)
Interoperability between cloud services will eliminate the need for companies
to install middleware and programming to make third-party modules work with
existing ERP systems.
Figure 10.4: Cloud Computing Services
Open Source ERP for SaaS

 It involves Upfront Costs such as
 Free licensing fees
 Customization, training, data migration and configuration
 It includes On-going Costs
You need to pay to the provider till the contract lasts.
 It includes Ease or Speed in Implementation
It can be implemented in just a few hours whereas customizations, training
and data migration takes weeks or months.
182 ANNA UNIVERSITY

 It involves flexibility Notes

Reducing the amount of flexibility
Open Source ERP

It includes customization
 Less customizable solutions are SaaS.
 Multi-tenant enables the customer to gain access to the sourcecode.
It provides Support
Provider is needed who can understand both the software and the service
delivery.
It includes new Features and updates
New features and updates are available without a schedule of upgrades or bug
fixes.
Open Source ERP involves security. It requires careful

management in order to ensure proper security access and process
management
Mobile ERP
Breaking down of information into archives through mobile technologies,
leading to real-time data sharing. Provision of 24 × 7 anytime, anywhere
accessibility of data will further better decision making process, extending
across all the departments of an organization.
 Better decisions can be made everywhere
 Valuing rapid time
 To extend mobile analytics all the way and beyond your organization.
 Building Visual Analysis for next generation
 New On-demand and Cloud Solutions
Social ERP
 Ability to capture the decision
 Relevant information provider
 Ability to leverage the network
 To assemble collaboration and business intelligence
 Allow real-time social analysis
 Collaboration can be captured at all points in the information supply chain.
ANNA UNIVERSITY 183

Notes Data
Simplification of data input by installing sensors throughout the enterprise that
automatically collects different kind of data.
 Wide Data and Business Intelligence (BI)
 It allows BI for in-memory solutions
 It allows BI for real-time operational systems, Internet activity, or
streaming data
 Huge volumes of data and Storage
 Virtual data centres
Learning Activity
Point out the various features of Android application in mobile
phones. Analyse its usefulness in terms of integrating social
connectivity between individuals.
10.2.3 Other Future Trends of ERP – Web Enabled

1. Markets should concentrate on SMEs with the availability of ERP to the
cloud systems.
2. It becomes easier to use ERP Systems, while the cloud, mobile devices and
social media will have an effect on products on offer to manufacturers.
3. Simplification of ERP can be done in respect of the deployment of the
system and to align it with the business processes of the organization. It can
be done through
4. Easy installation of ERP and its rapid consumption. As market doesn’t
wish to consider these big, costly, mono monolithic implementations of
traditional ERP.
5. Fine user interfaces (UIs) which have been particularly designed for user
roles and user groups, from the workers on the factory floor to front-line
employees to executives in the C-suite.
6. UI’s as it grows fastly to modify the ways input, process and retrieve data.
7. Voice recognition for search features – a new way of user experience.
8. Advanced analytics will get continue to be produced by vendors which, in
turn, will help companies to have better, rapid access to the increasingly
huge amounts of data that is collected by ERP systems.
 Influential impact on analytics by wide data, which are data sets that
have grown Very large for commonly used software tools for capturing,
managing and processing expediently.
184 ANNA UNIVERSITY

Notes
Example: A big data engine has been released by SAP very
recently which is called HANA that combines in-memory analytics
with high-performance processing.
 Another important trend for the future of ERP is predictive analysis,
such as recommendation engines, enabled by faster analytics which
leads to better business decisions made faster.
 Completion of reports now in a matter of minutes which were earlier
been taken more than a day to process.
 More accurate decisions can be taken through advanced analytics which
are based on near real-time information, such as how many units need
to be manufactured or how much inventory needs to be replenished.
9. Another global trend also affects the evolution of ERP: sustainability.
ERP’s can go –green in two ways:
 Companies can use their ERP system for tracking data which is related
to its ecological impact.
 Companies prefer to use virtualization methods to make ERP, a running
green-technology.
10. Reduction in ERP downtime due to data storage at multiple sites for
preventing time lags.
This way ERP can replace a committed sustainability system. With
virtualization, a company can combine ERP applications on fewer servers that
make a more energy efficient ERP system. ERP moving to the cloud makes for
a greener ERP for the same reason.
10.3 FUTURE TRENDS IN WIRELESS TECHNOLOGIES

OF ERP
Wireless ERP has helped organizations for making use of the communication
channels effectively and efficiently. Now it becomes possible for many
elements to operate in ERP, which was not possible earlier. Wireless ERP is all
about sharing enterprise information through devices like Internet and other
devices which makes it possible for outsiders for the same access.
Internet extends help to organizations for integrating data and processes across
all functional departments.
Companies that wish to move into a net economy have started to emerge and
concentrate on multi-enterprise systems integration and growth. They are
constructing strategic partnerships with major infrastructure providers like Sun,
IBM and Microsoft for continuous integration of their ERP systems to achieve
internal and external performance target. Major ERP vendors like Oracle,
SAP, BAAN, JD Edwards and i2 are continuously upgrading and releasing
integrated ERP/e-business suites for assisting an open, collaborative and
competitive business environment.
ANNA UNIVERSITY 185

Notes Wireless ERP is advancement to core ERP applications and systems for
facilitating interactions with this information to mobile sales force and
customer service personnel from anywhere, at any time.
 It provides products such as Xora Platform 3.0.
 For Vendors
 SAP
 PeopleSoft
 Sonic Software and Xora Inc. are developing software products that
will integrate with supply chain systems. Sonic Air provides a wireless
messaging software-Sonic MQ e-business messaging middleware
server. Remote access software is being built up by Xora.
 Sonic is in collaboration with GE Global Exchange Services and
Commerce one also.
 Ironside
 Using XML in B2B communications will enable a series of new
relationships between companies, vendors, suppliers and customers. It
has therefore, become a standardized feature for exporting data from
application suites and developer tools by using XML.
Example: IBM converts generic XML information into device –

specific formats which can be useful on wireless devices.
 Outsourcers, ERP vendors and e-business infrastructure providers’
partnership together for providing more robust, measurable and
compatible e-business platforms for the companies.
Example: A strategic alliance between Sun and AOL with Price

water house coopers in providing technology and services that allow
companies to build critical e-business solutions. It will leverage
investments in SAP R/3. Netscape Application Server for R/3 has
provided a stable infrastructure for Web Solution (iPlanet) that enables the
customers for obtaining SAP system in a secure manner (iPlanet, 2000).
 For Customer Profiles
 World Commerce Online Inc. It offers its offers its customers
(agricultural consortiums and flower consortium, a fruit consortium)
web-based wireless interface to its ERP system. This is based on Xora
technology.
 Intertape Polymer Group, Montreal, PQ, Canada- It employs PalmVII
PDAs for allowing its sales force to retrieve customer information
wirelessly. They use Ironside's eWireless platform.
186 ANNA UNIVERSITY

Notes
Example: Customer Profile – Lamson and Sessions
Manufacturing ERP
Company
Lamson & Sessions - an electrical manufacturer and distributor, based in
Cleveland, Ohio
Business and Technology Problem
SAP Inventory management application (receiving, shipping and order
fulfilment) under SAP R/3 version 3.1 did not permit users to retrieve
information using Symbol handheld devices and its Spectrum24 wireless LAN.
Only a more recent version of SAP 4.6 offers this support.
Technology Solution
The customer employed a consulting company and developed an interim
custom solution that bypasses the middleware but using SAP's console
function. Now the factory workers can retrieve his information from their
handheld devices in real-time fashion. It will then, increases accuracy of data
input as well as its timeliness.
SAP had released SAPConsole, a tool-kit that bar-code-allows any part of
SAP's enterprise software. This enables any SAP graphical interface to text
interface. Unfortunately, SAPConsole requires SAP version 4.6 - an expensive
upgrade for Lamson & sessions at this stage. Custom software solution cost the
company approximately $750,000 to one million dollars.
The customer gave justification on investment which is based on improving
order fulfilment and faster shipment.
10.3.1 Convergence of Internet and other Wireless Technologies

With the convergence of the Internet and other wireless technology, users now
operate Web enabled ERP systems anywhere and at any time through the use
of newer and easy-to use devices like personal digital assistants (PDAs), smart
phones, in-devices and biometric tools.
Example: Leveraging a company’s ERP with a personal digital

assistant by an accounting manager who is out of town for reviewing financial
reports and providing directions to his juniors. He/She can log in to the system
by using his/her fingerprint or voice.
Learning Activity
Analyse the convergence of Internet with smart phones. Point out
relevant applications to be used in smart phones.
ANNA UNIVERSITY 187

Notes
Business Analytics of Bajaj Electricals
B ajaj Electricals, a known name in consumer electronics for almost

65 years in India, was confined to legacy systems for most of their
business processes.
This was causing hindrance to core business operations, as growth was fast
but the legacy systems weren't able to support it. At places, these systems
were more than 12 years old and it was becoming costly and difficult to
maintain them. Even the supporting technology platforms had become out-
dated. Hence it was decided by the management to initiate a project that will
focus towards improving business processes with IT systems. They decided
to implement ERP, SCM, CRM & BI applications together with complete
integration taking a big-bang approach. The Oracle Business suite of
applications was selected for implementation, and the project was named
'Project SMILE.' This is an acronym for the objectives to be achieved:
 S – Simplify the business processes
 M – Migration to newer technologies
 I – Innovative and Integrated Business applications
 L – Create learning orientation across the organization
 E – to make entire organization Effective and Efficient.
Before implementation of this project, inefficient processes resulted in
revenue loss as there were no forecasting or planning tools available. Plus,
legacy systems were not built to support current business processes. These
challenges were overcome by implementation of the following products:
Oracle E-business Applications (ERP), Oracle Siebel CRM Applications,
Oracle Demantra, Demand Management Tool for demand forecasting, and
on top of these apps, business intelligence solutions like Oracle Daily
Business Intelligence and Oracle Business Intelligence Enterprise Edition
for Sales Analytics, Dashboards & Reporting (OBI) were also implemented.
Mr Siddhartha Kanodia, Executive VP & Head Corporate Service said
"Project SMILE was not just a plain vanilla ERP implementation. Besides
financials, it involved implementing and planning of CRM tools such as
Demantra, Advanced Supply Chain Planning and Siebel CRM. This called
for a huge change initiative and I am proud to say that the entire operations
team at Bajaj Electricals embraced the changed processes and leveraged the
planning tools extremely well. The support from the IT team also was more
than commensurate to make this a possibility".
Post deployment, the company has been able to get the investment payback
achieved within the first year, and just from the savings coming out from
Contd...
188 ANNA UNIVERSITY

one module called Siebel Dynamic Pricing Module. The company can now Notes
make right items available at the right time with Advanced Supply Chain
Planning solution, which has reduced the overall inventory in the pipeline
and also improve the company's ability to service customer orders. The
overall inventory losses have been brought down by 2% due to this.
Questions
1. Highlight the challenges faced by Bajaj Electricals before
implementation of Project SMILE comprising of ERP, SCM, CRM and
BI applications.
2. How do they overcome those challenges for streamlining their business
processes?
3. Draw a business analytics framework for Bajaj Electricals.
Source: http://www.dnserp.com/bajaj.htp m#sthash.G17Zs98c.ZlLmHkgo.dpbs
1. The central system configuration consists of an

application server, a message server, a gateway server
and the database system. These three servers are
generally combined at the server layer and addressed
by the desktop or presentation layer.
2. The data repository provides current information to
language interpreters, report functions and screen
generators, as well as to certain help tests. The rules
for structuring this information are consistent with the
concepts of the relational data model using tables,
domains and fields.
SUMMARY
 Business Analytics means the skills, technologies, applications and
practices for constant repeated exploration and investigation of past
business performance for achieving new insight and drive business
planning. Business analytics aims in developing new ideas and
understanding of business performance based on data and statistical
methods.
 The approach to going for an ERP solution is linked with overall business
analytics planning and requires the development first of a business model
comprising the core business processes or activities of the business.
 All the ERP packages have some core technology which is defined as the
technical premise on which the ERP system is built—the total system
architecture. It includes the client/server structure, the network and the
hardware platform. It also includes issues of scalability, the database
engine and performance management.
ANNA UNIVERSITY 189

Notes  The smallest ERP application may run on a single server and support a
modest number of terminals. The database may run on a separate machine,
or again, in the simplest circumstance, the server and the database machine
may physically be the same equipment. Within that machine, the database
and the applications server will logically be different entities.
 Tables are the features mentioned most often by those who have
implemented this system. They are defined differently by different people.
Tables contain various types of information and can both manage data and
carry out control functions. There are three major types of tables—system
configuration tables, control tables and application data tables. All are
defined in the data repository.
 The Business Workflow feature allows the project team to provide
procedural automation of the steps in a business process.
 Business applications specializing in their respective domains might not be
suited in a native web environment. This means that some technology is
being used by the application that is not offered via web based protocols, or
that the application was written for previous support of direct database
connectivity for speed. These applications get directly loaded onto the
user’s PC through a set up program. Some people purchase the software
and load it onto their PC’s while some have installed their own websites.
These applications function well in single user environments or for
enterprise environments where the application is specialized.
 Wireless ERP is advancement to core ERP applications and systems for
facilitating interactions with this information to mobile sales force and
customer service personnel from anywhere, at any time.
KEYWORDS
Business Analytics: Business Analytics means the skills, technologies,
applications and practices for constant repeated exploration and investigation
of past business performance for achieving new insight and drive business
planning. Business analytics aims in developing new ideas and understanding
of business performance based on data and statistical methods.
Streamlining Business Process through ERP: The approach to going for an
ERP solution is linked with overall business analytics planning and requires the
development first of a business model comprising the core business processes
or activities of the business.
ERP System Architecture: All the ERP packages have some core technology
which is defined as the technical premise on which the ERP system is built—
the total system architecture. It includes the client/server structure, the network
and the hardware platform. It also includes issues of scalability, the database
engine and performance management.
190 ANNA UNIVERSITY

System Administration: The smallest ERP application may run on a single Notes
server and support a modest number of terminals. The database may run on a
separate machine, or again, in the simplest circumstance, the server and the
database machine may physically be the same equipment. Within that machine,
the database and the applications server will logically be different entities.
Tables defined in data Repository: Tables are the features mentioned most
often by those who have implemented this system. They are defined differently
by different people. Tables contain various types of information and can both
manage data and carry out control functions. There are three major types of
tables—system configuration tables, control tables and application data tables.
All are defined in the data repository.
Business Workflow: The Business Workflow feature allows the project team
to provide procedural automation of the steps in a business process.
Web-enabled ERP Systems: Business applications specializing in their
respective domains might not be suited in a native web environment. This
means that some technology is being used by the application that is not offered
via web based protocols, or that the application was written for previous
support of direct database connectivity for speed. These applications get
directly loaded onto the user’s PC through a set up program. Some people
purchase the software and load it onto their PC’s while some have installed
their own websites. These applications function well in single user
environments or for enterprise environments where the application is
specialized.
Wireless ERP: Wireless ERP is advancement to core ERP applications and
systems for facilitating interactions with this information to mobile sales force
and customer service personnel from anywhere, at any time.
1. What is business analytics?
2. State the examples of business analytics.
3. What kind of services business can get facilitated with by using ERP in
business analytics?
4. How business processes can get streamlined through ERP? Explain with
diagram.
5. How to model business processes through ERP?
6. Give any four representative lists of various core processes in a
manufacturing company.
7. Give any four representative lists of entities forming data model in a
manufacturing company.
ANNA UNIVERSITY 191

Notes 8. What do you mean by ERP system architecture?

9. What do you mean by system administration in ERP?
10. Define tables. What are the three major types of tables that are defined in
data repository?
11. What is a material master table?
12. What do you mean by business workflow?
13. How correction and transport system manage changes to the system?
14. What do you mean by web-enabled ERP system?
15. State future trends of web-enabled ERP systems.
16. What are cloud ERP and open-source ERP?
17. Discuss at least five other future web-enabled trends of ERP.
18. Define wireless ERP. Give examples.
19. What kind of Wireless technologies are used in ERP?
20. What do you mean by convergence of Internet with other wireless
technologies?

1. Explain business analytics through ERP with examples. How does business
streamline their business processes through ERP?
2. Explain working of business analytics with flowchart diagram. Highlight
twelve representative lists of various core processes of a manufacturing
company.
3. Explain ERP architecture with system administration.
4. “A table is a matrix that describes a relationship between sets of data”.
Explain different types of tables that are defined in data repository with
examples.
5. “The Business Workflow feature allows the project team to provide
procedural automation of the steps in a business process”. Discuss this
statement. How correction and transport system manage changes to the
system? Explain with diagram.
6. “Business applications specializing in their respective domains might not
be suited in a native web environment”. Discuss future trends of
web-enabled ERP systems with examples.
7. Discuss other future trends of web-enabled ERP system.
8. How do wireless technologies of ERP help vendors and customers in
managing their profiles?
192 ANNA UNIVERSITY

9. “Wireless ERP has helped organizations for making use of the Notes
communication channels effectively and efficiently”. Explain future trends
in wireless technologies of ERP.
10. Explain Convergence of Internet and other Wireless technologies with
examples. Discuss mobile ERP, social ERP and data-input as future trend
of web-enabled ERP.
FURTHER READINGS

Education.
Hill.
Ray, Rajesh (2011), Enterprise Resource Planning, Tata McGraw
Hill Education.
Hill.
ANNA UNIVERSITY 193

Notes
194 ANNA UNIVERSITY

Model Question Paper

Reg. No.:
M.B.A. DEGREE EXAMINATION

Third Semester
DBA 7304— ENTERPRISE RESOURCE PLANNING
(Common to all Branches)
(Regulations 2013)
Time: Three hours Maximum: 100 marks
Answer ALL questions.
PART A – (10 × 2 = 20 marks)

1. Define ‘Enterprise Resource Planning’ (ERP).
2. What do you understand by the term ‘Closed-loop MRP’?
3. What is ‘Business Logic’ in ERP perspective?
4. List out the common sub-systems of a HR Module of an ERP system.
5. What do you understand by ‘Analytical Hierarchical Process’?
6. What is ‘Data Migration’ process of an ERP system?
7. List out the steps involved in the maintenance of the ERP Systems.
8. When does an ERP system is considered as an ‘Ideal ERP System’?
9. Why the Demand Chain and Supply Chain has to be decoupled?
10. What is Business Analytics?
PART B – (5 × 13 = 65 marks)
11. (a) Discuss elaborately the ‘evolution phases’ of Enterprise Resource Planning (ERP) right from
1960s to till date. (13)
Or
(b) Explain the following with suitable examples wherever necessary:
(i) Risks and benefits of ERP for Firms. (7)
(ii) Cross Functional Integrated ERP Systems. (6)
12. (a) Explain the various criteria to be met and possessed by an ERP system, when proposed for the
small and medium enterprises. (13)
Or
ANNA UNIVERSITY 195


(i) Material management module of an ERP system (components). (7)
(ii) Business process management techniques. (6)
13. (a) Using a flow diagram, explain the various ‘Phases’ involved in the ERP implementation life
cycle. (13)
Or
(b) Explain with suitable examples, the eight areas in which the hidden costs are incurred leading to
budget overrun, while implementing ERP. (13)
14. (a) Explain the following with suitable examples wherever necessary:
(i) Industrial impact of ERP (Elements and sub-elements). (6)
(ii) Maintenance of ERP (Steps and components). (7)
Or
(b) With relevant points and suitable examples, describe the various factors and sub-factors that
determine the success of ERP implementation. (13)
15. (a) Explain the following with suitable examples wherever necessary:
(i) ERP for fleet management and trading domains (key features). (7)
(ii) Benefits of ‘CRM Software’ as a module of CRM in ERP. (6)
Or
(i) ERP system architecture. (6)
(ii) Future trends in web-enabled ERP. (7)
PART C – (1 × 15 = 15 marks)
16. (a) Glomove is a Singapore based premier MNC, Involved in the design, manufacturing, global
marketing and selling of its high demand products such as Footwear, Sports shoes, apparels,
equipment etc right from 2006. This profit making firm decided to adopt ERP in 2014 and fully
implemented the ERP system by 2015 in its many modules say CRM, Manufacturing, HR.
SCM, FICO etc by renowned ERP Vendors. Initially ERP was seen as a success, but of late
especially after July 2016, the firm’s customer attrition, operating cost etc are increasing
whereas the sales volume has come down. Having invested huge capital in ERP implementation
and maintenance the firm is now puzzled and want to identify the probable failure factors
responsible for this ERP debacle. The firm has approached you and in your assumed role as a
ERP Management Consultant prepare and present the firm with a ‘Generic Report’
incorporating the most probable factors, possible avenues (both Internal and external) along
with any other solid reasons for the ERP failure, as identified by you. You may assume relevant
data for this case, but the same needs mention in the report. Justify your report with valid points
as well as your valuable suggestions for the Firm to overcome the debacle.
196 ANNA UNIVERSITY

Or
(b) You have recently joined as Technology Consultant in a leading Chennai based automobile firm
that manufactures various models of passenger Cars and three wheelers right from 2007. This
profit making firm plans to streamline its main business process, i.e., its manufacturing process
through ERP adoption. Now, your GM instructs you to prepare and present a ‘Manufacturing
Process cum Data Model’ for your firm, which will be treated as a Blueprint for streamlining
your firm. Your ‘Process cum Data Model’ should provide the following:
(i) Representative list of various core processes and their brief description in an ideal
automobile manufacturing company like your firm and
(ii) Representative list of various Entities and their brief description, for forming a ‘Data
Model’ that is suitable for a manufacturing company like your firm. Justify your report
with charts providing valid information on processes and relevant Data.
ANNA UNIVERSITY 197

DBA 7304 - Enterprise - Resource Planning

Uploaded by

Copyright:

Available Formats

DBA 7304 - Enterprise - Resource Planning

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

DBA 7304 - Enterprise - Resource Planning

Uploaded by

Copyright:

Available Formats

ENTERPRISE RESOURCE PLANNING

Notes  explain ERP fundamentals of technology

1.1 ENTERPRISE RESOURCE PLANNING (ERP)

Example: A process of ordering goods from supplier, typically involves

database consisting of hundreds of tables. As such it presents a common, Notes

1.1.1 Objectives of ERP

Material Requirement Planning (MRP)

MRP did not take into account other resources of an organization.

Manufacturing Resource Planning (MRP II)

MRP II did not address other functions like human resource

Enterprise Resource Planning

1.1.3 Risks of ERP

1.1.4 Benefits of ERP

Example: Auto desk, leading maker of computer aided design software.

Example: IBM’s storage system device, Replacement time of a part

Business benefits of ERP system can be summarized as follows: Notes

1.2 ERP FUNDAMENTALS OF TECHNOLOGY

Database Systems Notes

There are various ERP vendors available today. Some of them

1.2.1 Issues to be Consider in Planning Design

1.3 IMPLEMENTATION OF CROSS-FUNCTIONAL

Human Resources (HR)

Manufacturing and Logistics

Cost and Sales Distribution (SD) Notes

Bolhoff Fastenings Takes Stock of its India Operations with Sage

Notes monthly sales, stock and total outstanding balance in predefined

1. A process is a set of logically related tasks that

Notes SELF-ASSESSMENT QUESTIONS

Long Answer Questions

Mishra Rajendra, (2008), Materials management, Excel Books,

2.1 ERP SYSTEMS

ERP systems provide support for all variations of best business

2.1.1 Information System Technologies

will cater to intra-organisation and extra-organisation needs effectively. Over Notes

2.1.2 ERP Software Solutions

Since database systems employ common relation technology, the

User Interface Framework

2.2 SMALL OR MEDIUM AND LARGE ENTERPRISE

A major problem faced by Indian enterprises today is the lack of

2.2.1 ERP Solutions for Small and Medium Sized Businesses

Functional Software Requirements

Be mindful of all the functions that occur in an average business

Notes Domain Knowledge of Suppliers

Uses Latest Technology

2.2.3 ERP and Large Organization

ERP and High Cost

ERP and Lack of Backup

ERP and Benefits

Example: Here it would be pertinent to look at the usage of ERP

2.2.4 Real and Unreal

Example: Our currency is non-convertible, our stock exchanges are not

1. ERP systems that are currently available belong to the

Long Answer Questions

Diwan Parag & Sharma Sunil, (2000), Enterprise Resource

 concept of business process management Notes

3.1 BUSINESS ENGINEERING

Document Identify and

Figure 3.1: Continuous Improvement Model

3.1.1 Best Business Practices