Hi

[Former Member]

hi,

what is used for ERP?

send me any idea.

thanks,

s.suresh

[Former Member · Accepted solution]

Hello Suresh,

ERP stands for Enterprise Resource Planning. ERP is a way to integrate the data and processes of an organization into one single system. Usually ERP systems will have many components including hardware and software, in order to achieve integration, most ERP systems use a unified database to store data for various functions found throughout the organization.

The term ERP originally referred to how a large organization planned to use organizational wide resources. In the past, ERP systems were used in larger more industrial types of companies. However, the use of ERP has changed and is extremely comprehensive, today the term can refer to any type of company, no matter what industry it falls in. In fact, ERP systems are used in almost any type of organization - large or small.

In order for a software system to be considered ERP, it must provide an organization with functionality for two or more systems. While some ERP packages exist that only cover two functions for an organization (QuickBooks: payroll & accounting), most ERP systems cover several functions.

Today's ERP systems can cover a wide range of functions and integrate them into one unified database. For instance, functions such as Human Resources, Supply Chain Management, Customer Relations Management, Financials, Manufacturing functions and Warehouse Management functions were all once stand alone software applications, usually housed with their own database and network, today, they can all fit under one umbrella - the ERP system.

Integration is Key to ERP's

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

Although the ideal configuration would be one ERP system for an entire organization, many larger organizations usually create and ERP system and then build upon the system and external interface for other stand alone systems which might be more powerful and perform better in fulfilling an organizations needs. Usually this type of configuration can be time consuming and does require lots of labor hours.

The 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

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 center support, etc.

Data Warehouse: Usually this is a module that can be accessed by an organizations customers, suppliers and employees.

ERP's Improve Productivity

Before ERP systems, each department in an organization 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.

Once an ERP system is in place, usually all aspects of an organization can work in harmony instead of every single system needing to be compatible with each other. For large organizations, increased productivity and less types of software are a result.

Implementation of an ERP System

Implementing an ERP system is not an easy task to achieve, in fact it takes lots of planning, consulting and in most cases 3 months to 1 year +. ERP systems are extraordinary wide in scope and for many larger organizations can be extremely complex. Implementing an ERP system will ultimately require significant changes on staff and work practices. While it may seem reasonable for an in house IT staff to head the project, it is widely advised that ERP implementation consultants be used, due to the fact that consultants are usually more cost effective and are specifically trained in implementing these types of systems.

One of the most important traits that an organization should have when implementing an ERP system is ownership of the project. Because so many changes take place and its broad effect on almost every individual in the organization, it is important to make sure that everyone is on board and will help make the project and using the new ERP system a success.

Usually organizations use ERP vendors or consulting companies to implement their customized 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 organization go live with their new system, with product training, workflow, improve ERP's use in the specific organization, 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 organization. Support Services- Support services include both support and maintenance of ERP systems. For instance, trouble shooting and assistance with ERP issues.

Advantages of ERP Systems

There are many advantages of implementing an EPR 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 organization

Improved efficiency and productivity levels

Better tracking and forecasting

Lower costs

Improved customer service

Disadvantages of ERP Systems

While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced:

Usually many obstacles can be prevented if adequate investment is made and adequate training is involved, however, success does depend on skills and the experience of the workforce to quickly adapt to the new system.

Customization in many situations is limited

The need to reengineer business processes

ERP systems can be cost prohibitive to install and run

Technical support can be shoddy

ERP's may be too rigid for specific organizations that are either new or want to move in a new direction in the near future.

<b>REWARD POINTS IF HELPFUL</b>

Regards

Sai

[iraladamodara_reddy · Accepted solution]

Hi dear all SAP gurus,

Pls dont give elabarte explanations like as above, if the information available in any web site, pls give the web address, the user can check if he really interested to learn/know on any basic issue( in general about SAP/ERPetc) etc)

You can help the user if he struck on some issue by giving right answer, not the general questions like this.

This forum is for real time users not the learners or new entrants.

Hope all my note this and act accordingly.

regards,

idr

[Former Member]

hi,

There are many different systems in a large company's "back office," including planning, manufacturing, distribution, shipping, and accounting. Enterprise resource planning (ERP) is a system that integrates all of these functions into a single system, designed to serve the needs of each different department within the enterprise. ERP is more of a methodology than a piece of software, although it does incorporate several software applications, brought together under a single, integrated interface.

An ERP system spans multiple departments in a corporation, and in some cases an ERP will also transcend the corporate boundary to incorporate systems of partners and suppliers as well, to bring in additional functions like supply chain management. Because it is so vast and all-encompassing, the ERP system goes far beyond being just a simple piece of software. Each implementation is unique and is designed to correspond to the implementer's various business processes. An ERP implementation can cost millions of dollars to create, and may take several years to complete.

An ERP system likely represents a company's largest IT investment, so some companies prefer to implement ERP in a more incremental fashion rather than all at once. Some ERP vendors provide modular software units together with a unified interface to allow for this gradual approach.

Regardless of how a company approaches it, ERP is sure to bring significant changes to how a company does business. It tinkers with the workflows, and alters long-standing processes. Companies often meet with resistance on the part of employees who are reluctant to let go of their proven methods. Employees may also fear for their jobs; since ERP makes such radical changes to business processes, it's not unusual for job descriptions to change or be eliminated altogether.

Once implemented however, the ERP system brings tremendous advantages. Because all systems are joined together, all departments can more easily share information. The workflow that takes place between departments can become much more automated, and ultimately, customers are better served because the individual using the customer-facing applications will have access to every bit of information regarding each relevant process. For example, someone in sales would easily be able to log into a single system to determine the status of a customer order that is still in manufacturing. All this comes at a cost though; training costs are high because employees must not only learn how to use new software, they must also learn new processes.

There are many reasons a company undertakes an ERP implementation. The ERP system integrates information, such as order information and financial data. It can speed up the manufacturing process by automating processes and workflow, and as a result, it also reduces the need to carry large inventories. Although the up-front costs may be enough to give the CFO nightmares, in the end, if implemented correctly, the rewards will give the company implementing the system a major competitive edge.

i hope that it is helpfull to you.

If more information see this path

http://www.wisegeek.com/what-is-enterprise-resource-planning.htm

regards,

reddy

[Former Member]

Hi All,

Reward if useful.

<b>About ERP</b>

Enterprise Resource Planning (ERP) systems integrate (or attempt to integrate) all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

MRP vs. ERP — Manufacturing management systems have evolved in stages over the past 30 years from a simple means of calculating materials requirements to the automation of an entire enterprise. Around 1980, over-frequent changes in sales forecasts, entailing continual readjustments in production, as well as the unsuitability of the parameters fixed by the system, led MRP (Material Requirement Planning) to evolve into a new concept : Manufacturing Resource Planning (or MRP2) and finally the generic concept Enterprise Resource Planning (ERP)[1]

The term ERP originally implied systems designed to plan the use of enterprise-wide resources. Although the initialize ERP originated in the manufacturing environment, today's use of the term ERP systems has much broader scope. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization's business or charter. Businesses, non-profit organizations, nongovernmental organizations, governments, and other large entities utilize ERP systems.

To be considered an ERP system, a software package must provide the functionality of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package.

However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance (one system instead of two or more) to easier and/or greater reporting capabilities (as all data is typically kept in one database).

Examples of modules in an ERP which formerly would have been stand-alone applications include: Manufacturing, Supply Chain, Financials, Customer Relationship Management (CRM), [[Human Resources]], Warehouse Management and Decision Support System.

Overview

Some organizations — typically those with sufficient in-house IT skills to integrate multiple software products — choose to implement only portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs. For instance, the PeopleSoft HRMS and financials systems may be perceived to be better than SAP's HRMS solution. And likewise, some may perceive SAP's manufacturing and CRM systems as better than PeopleSoft's equivalents. In this case these organizations may justify the purchase of an ERP system, but choose to purchase the PeopleSoft HRMS and financials modules from Oracle, and their remaining applications from SAP.

This is very common in the retail sector [citation needed], where even a mid-sized retailer will have a discrete Point-of-Sale (POS) product and financials application, then a series of specialized applications to handle business requirements such as warehouse management, staff rostering, merchandising and logistics.

Ideally, ERP delivers a single database that contains all data for the software modules, which would include:

Manufacturing

Engineering, Bills of Material, Scheduling, Capacity, Workflow Management, Quality Control, Cost Management, Manufacturing Process, Manufacturing Projects, Manufacturing Flow

Supply Chain Management

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

Financials

General Ledger, Cash Management, Accounts Payable, Accounts Receivable, Fixed Assets

Projects

Costing, Billing, Time and Expense, Activity Management

Human Resources

Human Resources, Payroll, Training, Time & Attendance, Benefits

Customer Relationship Management

Sales and Marketing, Commissions, Service, Customer Contact and Call Center support

Data Warehouse

and various Self-Service interfaces for Customers, Suppliers, and Employees

Enterprise Resource Planning is a term originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP).[2] MRP evolved into ERP when "routings" became a major part of the software architecture and a company's capacity planning activity also became a part of the standard software activity.[citation needed] ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management.

ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy systems. Many companies took this opportunity to replace their legacy information systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time most companies had already implemented their Y2K solution.[3]

ERPs are often incorrectly called back office systems indicating that customers and the general public are not directly involved. This is contrasted with front office systems like customer relationship management (CRM) systems that deal directly with the customers, or the eBusiness systems such as eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship management (SRM) systems.

ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and information technology, this would include accounting, human resources, marketing, and strategic management.

ERP II means open ERP architecture of components. The older, monolithic ERP systems became component oriented.[citation needed]

EAS — Enterprise Application Suite is a new name for formerly developed ERP systems which include (almost) all segments of business, using ordinary Internet browsers as thin clients.[citation needed]

Before

Prior to the concept of ERP systems, departments within an organization (for example, the human resources (HR) department, the payroll department, and the financials department) would have their own computer systems. The HR computer system (often called HRMS or HRIS) would typically contain information on the department, reporting structure, and personal details of employees. The payroll department would typically calculate and store paycheck information. The financials department would typically store financial transactions for the organization. Each system would have to rely on a set of common data to communicate with each other. For the HRIS to send salary information to the payroll system, an employee number would need to be assigned and remain static between the two systems to accurately identify an employee. The financials system was not interested in the employee-level data, but only in the payouts made by the payroll systems, such as the tax payments to various authorities, payments for employee benefits to providers, and so on. This provided complications. For instance, a person could not be paid in the payroll system without an employee number.

After

ERP software, among other things, combined the data of formerly separate applications. This made the worry of keeping numbers in synchronization across multiple systems disappear. It standardised and reduced the number of software specialities required within larger organizations.

[Best Practices

Best Practices were also a benefit of implementing an ERP system. When implementing an ERP system, organizations essentially had to choose between customizing the software or modifying their business processes to the "Best Practice" functionality delivered in the vanilla version of the software.

Typically, the delivery of best practice applies more usefully to large organizations and especially where there is a compliance requirement such as IFRS, Sarbanes-Oxley or Basel II, or where the process is a commodity such as electronic funds transfer. This is because the procedure of capturing and reporting legislative or commodity content can be readily codified within the ERP software, and then replicated with confidence across multiple businesses who have the same business requirement.

Where such a compliance or commodity requirement does not underpin the business process, it can be argued that determining and applying a Best Practice actually erodes competitive advantage by homogenizing the business as compared to everyone else in the industry sector.

Implementation

Because of their wide scope of application within a business, ERP software systems are typically complex and usually impose significant changes on staff work practices. Implementing ERP software is typically not an "in-house" skill, so even smaller projects are more cost effective if specialist ERP implementation consultants are employed. The length of time to implement an ERP system depends on the size of the business, the scope of the change and willingness of the customer to take ownership for the project. A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3 months; however, a large, multi-site or multi-country implementation may take years.

The most important aspect of any ERP implementation is that the company who has purchased the ERP solution takes ownership of the project.

To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting, customization and support.

Configuration

Configuring an ERP system is largely a matter of balancing the way you want the system to work with the way the system lets you work. Begin by deciding which modules to install, then adjust the system using configuration tables to achieve the best possible fit in working with your company’s processes.

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

Configuration Tables – A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. For example, an organization can select the type of inventory accounting – FIFO or LIFO – it will employ or whether it wants to recognize revenue by geographical unit, product line, or distribution channel. SAP’s R/3 system, one of the comprehensive and complex offerings on the market has over 3,000 configuration tables. Navigating them can be a formidable task. Dell computers, for example, took over a year to complete this.

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

Consulting Services

The Consulting team is typically responsible for your initial ERP implementation and subsequent delivery of work to tailor the system beyond "go live". Typically such tailoring includes additional product training; creation of process triggers and workflow; specialist advice to improve how the ERP is used in the business; system optimization; and assistance writing reports, complex data extracts or implementing Business Intelligence.

The consulting team is also responsible for planning and jointly testing the implementation. This is a critical part of the project, and one that is often overlooked.

Consulting for a large ERP project involves three levels: systems architecture, business process consulting (primarily re-engineering) and technical consulting (primarily programming and tool configuration activity). A systems architect designs the overall dataflow for the enterprise including the future dataflow plan. A business consultant studies an organization's current business processes and matches them to the corresponding processes in the ERP system, thus 'configuring' the ERP system to the organization's needs. Technical consulting often involves programming. Most ERP vendors allow modification of their software to suit the business needs of their customer.

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

Customization Services

Customization is the process of extending or changing how the system works by writing new user interfaces and underlying application code. Such customisations typically reflect local work practices that are not currently in the core routines of the ERP system software.

Examples of such code include early adopter features (e.g., mobility interfaces were uncommon a few years ago and were typically customised) or interfacing to third party applications (this is 'bread and butter' customization for larger implementations as there are typically dozens of ancillary systems that the core ERP software has to interact with). The Professional Services team is also involved during ERP upgrades to ensure that customizations are compatible with the new release. In some cases the functionality delivered via a previous customization may have been subsequently incorporated into the core routines of the ERP software, allowing customers to revert back to standard product and retire the customization completely.

Customizing an ERP package can be very expensive and complicated, because many ERP packages are not designed to support customization, so most businesses implement the best practices embedded in the acquired ERP system. Some ERP packages are very generic in their reports and inquiries, such that customization is expected in every implementation. It is important to recognize that for these packages it often makes sense to buy third party plug-ins that interface well with your ERP software rather than reinventing the wheel.

Customization work is usually undertaken as bespoke software development on a time and materials basis. Because of the specialist nature of the customization and the 'one off' aspect of the work, it is common to pay in the order of $200 per hour for this work. Also, in many cases the work delivered as customization is not covered by the ERP vendors Maintenance Agreement, so while there is typically a 90-day warranty against software faults in the custom code, there is no obligation on the ERP vendor to warrant that the code works with the next upgrade or point release of the core product.

One often neglected aspect of customization is the associated documentation. While it can seem like a considerable -- and expensive -- overhead to the customization project, it is critical that someone is responsible for the creation and user testing of the documentation. Without the description on how to use the customisation, the effort is largely wasted as it becomes difficult to train new staff in the work practice that the customization delivers.

Maintenance and Support Services

Once your system has been implemented, the consulting company will typically enter into a Support Agreement to assist your staff to keep the ERP software running in an optimal way. To minimize additional costs and provide more realism into the needs of the units to be affected by ERP (as an added service to customers), the option of creating a committee headed by the consultant using participative management approach during the design stage with the client's heads of departments (no substitutes allowed) to be affected by the changes in ERPs to provide hands on management control requirements planning. This would allow direct long term projections into the client's needs, thus minimizing future conversion patches (at least for the 1st 5 years operation unless there is a corporate-wide organizational structural change involving operational systems) on a more dedicated approach to initial conversion.

A Maintenance Agreement typically provides you rights to all current version patches, and both minor and major releases, and will most likely allow your staff to raise support calls. While there is no standard cost for this type of agreement, they are typically between 15% and 20% of the list price of the ERP user licenses.

Advantages

In the absence of an ERP system, a large manufacturer may find itself with many software applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve:

• design engineering (how to best make the product)

• order tracking from acceptance through fulfillment

• the revenue cycle from invoice through cash receipt

• managing interdependencies of complex Bill of Materials

• tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced)

• the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.

Change how a product is made, in the engineering details, and that is how it will now be made. Effective dates can be used to control when the switch over will occur from an old version to the next one, both the date that some ingredients go into effect, and date that some are discontinued. Part of the change can include labeling to identify version numbers.

Computer security is included within an ERP to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might involve a terrorist altering a Bill of Materials so as to put poison in food products[dubious – discuss], or other sabotage. ERP security helps to prevent abuse as well.

Disadvantages

Many problems organizations have with ERP systems are due to inadequate investment in ongoing training for involved personnel, including those implementing and testing changes, as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how it is used.

Limitations of ERP include:

Success depends on the skill and experience of the workforce, including training about how to make the system work correctly. Many companies cut costs by cutting training budgets. Privately owned small enterprises are often undercapitalized, meaning their ERP system is often operated by personnel with inadequate education in ERP in general, such as APICS foundations, and in the particular ERP vendor package being used.

• Personnel turnover; companies can employ new managers lacking education in the company's ERP system, proposing changes in business practices that are out of synchronization with the best utilization of the company's selected ERP.

• Customization of the ERP software is limited. Some customization may involve changing of the ERP software structure which is usually not allowed.

• Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.

• ERP systems can be very expensive to install often ranging from 30,000 US Dollars to 500,000,000 US Dollars for multinational companies.

• ERP vendors can charge sums of money for annual license renewal that is unrelated to the size of the company using the ERP or its profitability.

• Technical support personnel often give replies to callers that are inappropriate for the caller's corporate structure. Computer security concerns arise, for example when telling a non-programmer how to change a database on the fly, at a company that requires an audit trail of changes so as to meet some regulatory standards.

• ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure.

• Systems can be difficult to use.

• Systems are too restrictive and do not allow much flexibility in implementation and usage.

• The system can suffer from the "weakest link" problem—an inefficiency in one department or at one of the partners may affect other participants.

• Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications.

• Once a system is established, switching costs are very high for any one of the partners (reducing flexibility and strategic control at the corporate level).

• The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale.

• Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the software.

• Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and consolidation into a single enterprise may yield limited benefits.

• There are frequent compatibility problems with the various legacy systems of the partners.

• The system may be over-engineered relative to the actual needs of the customer.