Enterprise Solutions

Chapter 2 Enterprise Resource Planning

Enterprise Resource Planning

Enterprise Resource Planning ERP DEFINITION ENTERPRISE RESOURCE PLANNING SOFTWARE IS FULLY INTEGRATED BUSINESS MANAGEMENT SOFTWARE TO LINK BUSINESS PROCESS AUTOMATICALLY AND GIVE REAL TIME INFORMATION TO AUTHORIZED USER

Enterprise Resource Planning ERP DEFINITION: ERP (enterprise resource planning) is an industry term for the broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business.

Enterprise Resource Planning ERP integrates all facets of business including 1) Planning 2) Manufacturing 3) Sales Software applications have emerged to help business managers implement ERP in business activities such as Inventory Control, Order tracking, Customer service

Enterprise Resource Planning ERP finds useful application in human resource management ,warehousing. ERP implies the use of the Shelf packed Software rather than proprietary software written for one customer The cost of developing & maintaining ERP modules become cost prohibitive & Time Consuming

Enterprise Resource Planning ERP modules are generally expected to have the capability to interface with organizations own software Depending upon business requirement, ERP modules may be altered using vendor’s Proprietary tools ,Programming languages A good business strategy drives everything that comes in its way including its IT & IS resource

Enterprise Resource Planning What will ERP fix in my business?

There are five major reasons why companies undertake ERP. 1. Integrate financial information—;As the CEO tries to understand the company’s overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenue. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system.

Enterprise Resource Planning What will ERP fix in my business?

2. Integrate customer order information—;ERP systems can become the place where the customer order lives from the time a customer service representative receives it until the loading dock ships the merchandise and finance sends an invoice. By having this information in one software system, rather than scattered among many different systems that can’t communicate with one another, companies can keep track of orders more easily, and coordinate manufacturing, inventory and shipping among many different locations simultaneously.

Enterprise Resource Planning What will ERP fix in my business?

3.Standardize and speed up manufacturing processes—;Manufacturing companies— especially those with an appetite for mergers and acquisitions—often find that multiple business units across the company make the same widget using different methods and computer systems. ERP systems come with standard methods for automating some of the steps of a manufacturing process. Standardizing those processes and using a single,

Enterprise Resource Planning What will ERP fix in my business?

4. Reduce inventory—;ERP helps the manufacturing process flow more smoothly, and it improves visibility of the order fulfillment process inside the company. That can lead to reduced inventories of the materials used to make products (work-in-progress inventory), and it can help users better plan deliveries to customers, reducing the finished good inventory at the warehouses and shipping docks. To really improve the flow of your supply chain, you need supply chain software, but ERP helps too.

Enterprise Resource Planning What will ERP fix in my business?

5. Standardize HR information—;Especially in companies with multiple business units, HR may not have a unified, simple method for tracking employees’ time and communicating with them about benefits and services. ERP can fix that. In the race to fix these problems, companies often lose sight of the fact that ERP packages are nothing more than generic representations of the ways a typical company does business.

E R P Evolution ERP in manufacturing sector was primarily to address to know : 1) Stock of finished goods 2) Understand material movement In 1970 the focus of manufacturing systems shifted to MRP MRP Software applications have emerged to translate the Master Schedule built for the end products into Time phased net requirement

E R P Evolution In 1980 the concept of MRPII was evolved All the resources such as People, Infrastructure, Process to various user group necessitate planning & utilization of such resources MRP was further extended to cover areas like Engineering,Projects ,Management etc & led to what is known as ERP

E R P Need

E R P Market Leaders Top ERP Producers are 1) SAP 2) PAP 3) Baan 4)People soft 5) JD Edwards 6) SSA global Account for 65% of total global ERP Market The connectivity capability are web enabled to support there products Industry analyst expects that every major manufacturing company will buy the software

Changing Paradigm in ERP Information Technology is currently a continuous changing industry. There are many analysis who keeps track of the industry in terms of Strategy, Change, Direction, Adaptability Industry analyst expects that every major manufacturing company will buy the software ERP vendors are expected to put more efforts into e-Commerce,CRM Industry experts believe that a wide range of cost is incurred in training & maintaining ERP systems

Changing Paradigm in ERP ERP II involves Collaborative Commerce which enables business partners from multiple companies to exchange information posted on e Commerce exchanges ERP is an industry term for the broad set of activities supported by Multi module application software. ERP can also include application modules for Finance ,Human resources ERP is used for interacting suppliers

ERP for Small &Medium Business Enterprise ERP was always designed for large scale manufacturing industries covering heavy machineries, automobiles etc,This is because there are several components which are common for finished product. The next phase when business with all the big industry got saturated , Tier1 ERP vendors like SAP, Oracle , Microsoft and Tier2 vendors like SSA Global Technology, 3I InfoTech had to create new breed for the mid market ERP applications

ERP for Small &Medium Business Enterprise Smaller enterprises ducked the ERP wave of the mid 1990s and did not succumb to the cost structures or the risks that their larger brethren undertook. Now, these firms often have outdated or overloaded applications and need to invest in new technology to achieve or retain competitiveness in their markets, require a rapid time-to-implement any software applications, and demand a rapid return on their application investments.

ERP for Small &Medium Business Enterprise Today, many SMBs are in need of upgrades, more or different software applications, more current or robust technology, and often more sophisticated business solutions. SMB strategies today: •Improve existing methods for customer acquisition and retention. •Enhance research and development (R&D) capabilities. •Improve ability to hire and retain key talent.

Changing Technologies The invention of Microprocessor and complex data management into smaller chip have led to newer king of present computers Creation of modern programming language led to the advent of client server technology & scalable RDBMS. Porting the business system was challenging job because Transcription, Transportation , Transfer related errors ERP solutions have multiple locations of operations & control

Benefits of ERP 1) Reduction in inventory 2) Redeployment of personnel 3)Productivity improvement 4) Order management cycle improvement 5) Financial close/cycle reduction 6) IT cost reduction 7)Procurement cost reduction 8) Cash management Improvement 9) Transportation cost reduction 10)Hardware maintenance reduction 11) Software maintenance reduction 12) On line delivery improvement

Advantages w design engineering (how best to make the product) w order tracking from acceptance through fulfillment w the revenue cycle from invoice through cash receipt w managing interdependencies of complex Bill of Materials w tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced) w the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.

Disadvantages 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.

Disadvantages Customization of the ERP software is limited. Some customization may involve changing of the ERP software structure which is usually not allowed. wRe-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage. wERP systems can be very expensive to install. 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.

Disadvantages 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 nonprogrammer 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

Disadvantages Systems can be difficult to use. w The system can suffer from the "weakest link" problem—an inefficiency in one department or at one of the partners may affect other participants. w 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. w 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). w The blurring of company boundaries can cause bl i t bilit li f ibilit

Why do ERP projects fail so often? At its simplest level, ERP is a set of best practices for performing the various duties in the departments of your company, including in finance, manufacturing and the warehouse. To get the most from the software, you have to get people inside your company to adopt the work methods outlined in the software. If the people in the different departments that will use ERP don’t agree that the work methods embedded in the software are better than the ones they currently use, they will resist using the software or will want IT to change the software to match the ways they currently do things. This is where ERP projects break down.

Why do ERP projects fail so often? Political fights erupt over how—or even whether—the software will be installed. IT gets bogged down in long, expensive customization efforts to modify the ERP software to fit with powerful business barons’ wishes. Customizations make the software more unstable and harder to maintain when it finally does come to life. The horror stories you hear in the press about ERP can usually be traced to the changes the company made in the core ERP software to fit its own work methods. Because ERP covers so much of what a business does, a failure in the software can bring a company to a halt, literally.

Why do ERP projects fail so often? But IT can fix the bugs pretty quickly in most cases, and besides, few big companies can avoid customizing ERP in some fashion—every business is different and is bound to have unique work methods that a vendor cannot account for when developing its software. The mistake companies make is assuming that changing people’s habits will be easier than customizing the software. It’s not. Getting people inside your company to use the software to improve the ways they do their jobs is by far the harder challenge. If your company is resistant to change, then your ERP project is more likely to fail.

Characteristics of ERP 1) Modular 2) Easy to implement 3) Complete 4) Flexible 5) Seamless integration 6) Adequate 7) Uses ODBC 8) Business practices 9) Reliability 10) Accountability

ERP Modules A typical ERP product covers following major modules 1) Finance 2) Inventory 3) Sales 4) Purchase Each of these modules in turn cater to applications Related to Customer & vendor.

Reengineering & ERP ERP is a bundle of all the integrated process within an enterprise to carry out its business The ERP application may also enable Simulated condition before transaction occur to check if same could be confirmed or reworked The study of ERP revels the health check up of the business process& some of its Reengineering areas The user ,System & management are all benefited implementing ERP as saves time from multiple entry, Effect of posting, Reconciliation of transaction

Reengineering & ERP ERP enables enterprise to achieve world class performance by streaming its process & optimizing resources Since ERP gets the best out the available resources, it is very important to Reengineer, Stimulate, Interface the business processes before going for an ERP implementation. Reengineering makes it smooth to drive the ERP implementation program

Scope of an ERP Application The need of automation has made ERP implementation in India grow at faster rate Segments where ERP systems have been implemented include 1) Defense 2) Automotive manufacturing 3) Ancillary 4) Banking 5) Financial Services 6) Insurance

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Understanding Database Database is Important component behind every ERP ERP systems are optimized for rapid efficient transaction processing , not for compiling report data The structure of data within an ERP system generally prevents efficient reporting When we talk about Entity Relation model, one should be able to identify the types of relationship Cardinalities that exist between fields within a database

Relational Database The relational integrating rules along with there features play an important role in configuring the Database design The relational integrating rules along with there features play an important role in configuring the Database design Codd’s rules related to RDBMS & database design Features of RDBMS are 1) Data dictionary 2) Data update 3) Data Independence 4) Data updates 5) Features of primary key

Database Planning and Design In order to understand the database planning & design, one has to study 1) Requirements& scope, 2) Criteria for selecting a DBMS 3)Features of entity group 4) Attributes of entity 5) Cardinality of entities Issues concerning with data privacy & security are important phases in database planning & design

Oracle Data Structure In order to understand the database planning & design, one has to study 1) Requirements& scope, 2) Criteria for selecting a DBMS 3)Features of entity group 4) Attributes of entity 5) Cardinality of entities Issues concerning with data privacy & security are important phases in database planning & design

Oracle Data Structure Oracle database use tables for storing data Oracle data structure consists of 1) Creating table 2) Analyze tables 3) Retrieve information from tables Working with tables include 1) Deleting 2) Truncating 3) Dropping a column 4) Clusters 4) Dropping a row 5) Dropping a Table 6) Hash Clusters 7) Index clusters 8) Index organized table

Oracle Application Software & ERP Business Solutions: Oracle Financials Oracle Manufacturing Oracle HR Oracle CRM Oracle Supply chain Oracle Projects Business Intelligence & Analytic

Oracle Application Software & ERP Technology Solutions: Developer 2000/6i Designer 2000 SQL, PL-SQL SQL Net* Oracle Alerts/ Workflow Discover Data Base Administration 8/8I

Oracle Application Software & ERP Functional Solutions: Program Office Management Process Analysis & Configuration Infrastructure Development & Management User Procedures & Training Delivery Model · Oracle 11/11i Implementation with Data conversion/Interface/Enhancements · Migration / Upgrading of 10.7 to 11i · Implement New system 11/11i

SAP R/3 Retail organizational structure History of SAP R/3 The first version of SAP's flagship enterprise software was a financial Accounting system named R/1. (The "R" was for "resource"). This was replaced by R/2 at the end of the 1970s. SAP R/2 was a mainframe based business application software suite that was very successful in the 1980s and early 1990s. It was particularly popular with large multinational European companies who required soft-real-time business applications, with multi-currency and multi-language capabilities built in.

SAP R/3 Overview SAP R/3 is SAP's integrated software solution for client/server and distributed open systems. SAP's R/3 is the world's most-used standard business software for client/server computing. R/3 meets the needs of a customer from the small grocer with 3 users to the multi-billion dollar companies The software is highly customizable using SAP's proprietary programming language, ABAP/4. R/3 is scalable and highly suited for many types and sizes of organizations.

SAP R/3 Overview The R/3 architecture is comprised of application and database servers. The application servers house the software and the database servers handle document updates and master file databases. The system can support an unlimited number of servers and a variety of hardware configurations SAP R/3 is based on various hardware and software architectures, running on most types of UNIX, on Windows NT and OS/400. For SAP R/3 runs on several databases Oracle, Adabas D, Informix, DB2 for UNIX, DB2/400, Microsoft's SQL Server 6.0. For more info...see SAP R/3 Databases at SAP home page. Since R/3 foundation, SAP has made significant development and installed thousands of R/3 systems

SAP R/3 Overview

SAP R/3 Retail organizational structure With the advent of distributed client-server computing SAP AG brought out a client-server version of the software called SAP R/3 that was manageable on multiple platforms and operating systems, such as Microsoft Windows or UNIX since 1999, which opened up SAP to a whole new customer base. SAP R/3 was officially launched on 6 July 1992 SAP came to dominate the large business applications market over the next 10 years.

SAP R/3 Retail organizational structure SAP R/3 is arranged into distinct functional modules, covering the typical functions in place in an organization. The most widely used modules are Financials and Controlling (FICO), Human Resources (HR), Materials Management (MM), Sales & Distribution (SD), and Production Planning (PP). Those modules, as well as the additional components of SAP R/3, are detailed in the next section.

SAP R/3 Retail organizational structure Each module handles specific business tasks on its own, but is linked to the others where applicable. For instance, an invoice from the Billing transaction of Sales & Distribution will pass through to accounting, where it will appear in accounts receivable and cost of goods sold. SAP has typically focused on best practice methodologies for driving its software processes, but has more recently expanded into vertical markets.

SAP R/3 Retail organizational structure In these situations, SAP produces specialized modules (referred to as IS or Industry Specific) geared toward a particular market segment, such as utilities or retail.Using SAP often requires the payment of hefty license fees, as the customers have effectively outsourced various business software development tasks to SAP. By specializing in software development, SAP hopes to provide a better value to corporations than they could if they attempted to develop and maintain their own applications.

SAP R/3 SAP has several layers. The Basis System (BC) includes the ABAP programming language, and is the heart (i.e. the base) of operations and should not be visible to higher level or managerial users. Other customizing and implementation tools exist also. The heart of the system (from a manager's viewpoint) are the application modules. These modules may not all be implemented in a typical company but they are all related and are listed below:

SAP R/3 (Modules) EH&S Environmental Health & Safety Designed for the management of environmental regulatory information, particularly product safety data as required for Material Safety Data Sheets. EH&S has sub-modules of Product Safety, Dangerous Goods, Waste, Industrial Hygiene, and Occupational Health. FI Financial Accounting Designed for automated management and external reporting of general ledger, accounts receivable, accounts payable Cont….

SAP R/3 (Modules) The FI module has 8 sub modules: FI-GL General Ledger Accounting FI-LC Consolidation FI-AP Accounts Payable FI-AR Accounts Receivable FI-BL Bank Accounting FI-AA Asset Accounting FI-SL Special Purpose Ledger FI-FM Funds Management

SAP R/3 (Modules) CO Controlling Represents the company's flow of cost and revenue. It is a management instrument for organizational decisions. It too is automatically updated as events occur. The CO module has following sub modules: CO-OM Overhead Costing (Cost Centers, Activity Based Costing, Internal Order Costing) CO-PA Profitability Analysis CO-PC Product Cost Controlling

SAP R/3 (Modules) AM Asset Management Designed to manage and supervise individual aspects of fixed assets including purchase and sale of assets, depreciation and investment management. PS Project System Designed to support the planning, control and monitoring of long-term, highly complex projects with defined goals.

SAP R/3 (Modules) FS Insurance An integral part of mySAP ERP, SAP for Insurance enables insurance companies to handle customer and market requirements and simultaneously control profitability and economic viability.In Release 6.00, SAP for Insurance includes the following components FS-CD Collections and disbursements FS-CM Claims management FS-CS Commissions management FS-PM Policy management FS-RI Reinsurance management

SAP R/3 (Modules) IS Industry Solutions Combines the SAP application modules and additional industry-specific functionality. Special techniques have been developed for industries such as banking, oil and gas, pharmaceuticals, etc. As of Feb 2006, following Industry Specific Solutions are supported by SAP: IS-A Automotive IS-ADEC Aerospace and Defense IS-AFS Apparel and Footwear IS-B Banking IS-BEV Beverage

SAP R/3 (Modules) IS-CWM Catch Weight Management (Variable Weight Items such as Meats and Cheeses) IS-DFS Defense and Security IS-H Hospital IS-HER Higher Education IS-HSS Hospitality Management IS-HT High tech IS-M Media IS-MIN Mining IS-MP Milling (or IS-MILL) IS-OIL Oil IS-PS Public Sector IS-R Retail IS-REA Recycling Admin IS-SP Service Provider IS-T Telecommunications

SAP R/3 (Modules) IS-UIS-U Utilities HR Human Resources Complete integrated system for supporting the planning and control of personnel activities and HR module is sometimes equivalently referred as HCM (Human Capital Management). HR-PA Personnel Administration HR-PD Personnel Development HR-RC Recruitment PM Plant Maintenance

SAP R/3 (Modules) Equipment servicing and rebuilding. These tasks affect the production plans. MM Materials Management Supports the procurement and inventory functions occurring in day-to-day business operations such as purchasing, inventory management, reorder point processing, etc. QM Quality Management A quality control and information system supporting quality planning, inspection, and control for manufacturing and procurement. PP Production Planning

SAP R/3 (Modules) Used to plan and control the manufacturing activities of a company. This module includes; bills of material, routings, work centers, sales and operations planning, master production scheduling, material requirements planning, shop floor control, production orders, product costing, etc. SD Sales and Distribution Helps to optimize all the tasks and activities carried out in sales, delivery and billing.

SAP R/3 (Modules) Key elements are: pre-sales support, inquiry processing, quotation processing, sales order processing, delivery processing, billing and sales information system. SCM Supply Chain Management SEM Strategic Enterprise Management WM Warehouse Management

SAP R/3 (Modules) Subdivides the "Storage Location", which is used in the MM Module to define inventory values by location, into "Storage Types" and then into "Storage Bins". Control of stock to a physical level down to a warehouse bin. Placement and removal rules can be configured, stock counts can be done. HUM Handling Unit Management Used as a unique ID for each pallet of stock held in the warehouse. AF&R Advanced Forecasting & Replenishment Mostly referred to as Forecasting & Replenishment

Business Transformation Made Simple with SAP's Enterprise Resource Planning Software

Improve alignment of your strategies and operations. Enhance productivity and insight for your enterprise. That's the power you get with enterprise resource planning (ERP) software from SAP -- the power to adapt quickly to changing industry requirements. SAP ERP addresses the core business software requirements of the most demanding midsize and large organizations -- in all industries and sectors. SAP ERP includes four individual solutions that support key areas of enterprise resource planning:

Enterprise Resource Planning

Enterprise Solutions

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