College of Engineering, Pune

REPORT ON

“ENTERPRISE RESOURCE PLANNING”

SUBMITTED BY

RAJESH SHYAMRAO KAJE

EN. NO. 30802009

B-TECH MECHANICAL ENGINEERING

 College of Engineering, Pune

INDEX

SR.NO. TOPIC PAGE NO.

01 Introduction 01

02 Origin of the term 02

03 Components of Enterprise Resource Planning 03

04 Implementation 04

05 Data Migration 05

06 Process Preparation 06

07 Consulting Services 07

08 Advantages 08

09 Disadvantages 09

10 References 10
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INTRODUCTION

Enterprise Resource Planning (ERP):

ERP is an integrated computer-based system used to manage internal and external

resources, including tangible assets, financial resources, materials, and human resources. Its
purpose is to facilitate the flow of information between all business functions inside the boundaries
of the organization and manage the connections to outside stakeholders. Built on a centralized
database and normally utilizing a common computing platform, ERP systems consolidate all
business operations into a uniform and enterprise-wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular
hardware and software units that provide "services" and communicate on a local area network. The
distributed design allows a business to assemble modules from different vendors without the need
for the placement of multiple copies of complex and expensive computer systems in areas which
will not use their full capacity.

ERP is principally an integration of business management practices and modern

technology. Information Technology (IT) integrates with the core business processes of a
corporate house to streamline and accomplish specific business objectives. Consequently, ERP is
an amalgamation of three most important components; Business Management Practices,
Information Technology and Specific Business Objectives.

In simpler words, an ERP is a massive software architecture that supports the streaming
and distribution of geographically scattered enterprise wide information across all the functional
units of a business house. It provides the business management executives with a comprehensive
overview of the complete business execution which in turn influences their decisions in a
productive way.

At the core of ERP is a well managed centralized data repository which acquires
information from and supply information into the fragmented applications operating on a universal
computing platform.

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ORIGIN OF THE TERM

The initialize ERP was first employed by research and analysis firm Gartner Group in
1990 as an extension of MRP (Material Requirements Planning; later manufacturing resource
planning) and CIM (Computer Integrated Manufacturing), and while not supplanting these terms, it
has come to represent a larger whole. It came into use as makers of MRP software started to
develop software applications beyond the manufacturing arena. ERP systems now attempt to
cover all core functions of an enterprise, regardless of the organization's business. These systems
can now be found in non-manufacturing businesses, non-profit organizations and governments.
To be considered an ERP system, a software package should have the following traits:

 Should be integrated and operate in real time with no periodic batch updates.

 All applications should access one database to prevent redundant data and multiple data
definitions.

 All modules should have the same look and feel.

 Users should be able to access any information in the system without needing integration
work on the part of the IS department.

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COMPONENTS OF ENTERPRISE RESOURCE PLANNING

 Transactional Backbone

 Financials

 Distribution

 Human Resources

 Product lifecycle management

 Advanced Applications

 Customer Relationship Management (CRM)

 Supply chain management software

 Purchasing

 Manufacturing

 Distribution (business)Distribution

 Warehouse Management System

 Management Portal/Dashboard

 Decision Support System

These modules can exist in a system or utilized in an ad-hoc fashion.

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IMPLEMENTATION

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

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

 consulting
 customization
 support

The client organization can also employ independent program management, business

analysis, change management, and UAT specialists to ensure their business requirements remain
a priority during implementation.

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DATA MIGRATION

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

1. Identifying the data to be migrated

2. Determining the timing of data migration
3. Generating the data templates
4. Freezing the tools for data migration
5. Deciding on migration related setups
6. Deciding on data archiving

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PROCESS PREPARATION

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

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

 Analyzing the effectiveness of each process in light of its current related business
capability;
 Understanding the automated solutions currently implemented.

ERP implementation is considerably more difficult (and politically charged) in organizations

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

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

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CONSULTING SERVICES

Many organizations do not have sufficient internal skills to implement an ERP project. This
results in many organizations offering consulting services for ERP implementation. Typically, a
consulting team is responsible for the entire ERP implementation includes…

1. Selecting
2. Planning
3. Training
4. Testing
5. Implementation
6. Delivery

of any customized modules. Examples of customization includes creating processes and reports
for compliance, additional product training; creation of process triggers and workflow; specialist
advice to improve how the ERP is used in the business; system optimization; and assistance
writing reports, complex data extracts or implementing Business Intelligence.
For most mid-sized companies, the cost of the implementation will range from around the
list price of the ERP user licenses to up to twice this amount (depending on the level of
customization required). Large companies, and especially those with multiple sites or countries,
will often spend considerably more on the implementation than the cost of the user licenses—
three to five times more is not uncommon for a multi-site implementation.
Unlike most single-purpose applications, ERP packages have historically included full
source code and shipped with vendor-supported team IDEs for customizing and extending the
delivered code. During the early years of ERP the guarantee of mature tools and support for
extensive customization was an important sales argument when a potential customer was
considering developing their own unique solution in-house, or assembling a cross-functional
solution by integrating multiple "best of breed" applications.

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ADVANTAGES

1. ERP systems connect the necessary software in order for accurate forecasting to be done.
This allows inventory levels to be kept at maximum efficiency and the company to be more
profitable.
2. Integration among different functional areas to ensure proper communication, productivity
and efficiency
3. Design engineering (how to best make the product)
4. Order tracking, from acceptance through fulfillment
5. The revenue cycle, from invoice through cash receipt
6. Managing inter-dependencies of complex processes bill of materials
7. Tracking the three-way match between purchase orders (what was ordered), inventory
receipts (what arrived), and costing (what the vendor invoiced)
8. The accounting for all of these tasks: tracking the revenue, cost and profit at a granular
level.

9. ERP Systems centralize the data in one place. Benefits of this include:

10. Eliminates the problem of synchronizing changes between multiple systems - consolidation
of finance, marketing and sales, human resource, and manufacturing applications
11. Permits control of business processes that cross functional boundaries
12. Provides top-down view of the enterprise (no "islands of information"), real time information
is available to management anywhere, anytime to make proper decisions.
13. Reduces the risk of loss of sensitive data by consolidating multiple permissions and
security models into a single structure.
14. Shorten production lead time and delivery time
15. Facilitating business learning, empowering, and building common visions

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DISADVANTAGES

1. Customization of the ERP software is limited...

2. Re-engineering of business processes to fit the "industry standard" prescribed by the ERP
system may lead to a loss of competitive advantage.
3. ERP systems can be very expensive (This has led to a new category of "ERP light"
solutions)
4. 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.
5. Many of the integrated links need high accuracy in other applications to work effectively. A
company can achieve minimum standards, and then over time "dirty data" will reduce the
reliability of some applications.
6. 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).
7. The blurring of company boundaries can cause problems in accountability, lines of
responsibility, and employee morale.
8. Resistance in sharing sensitive internal information between departments can reduce the
effectiveness of the software.
9. 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.

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REFERENCES

1. http://www.google.com
2. http://www.tech-faq.com/erp.html

3. http://www.executivebriefing-toc.com/erp.htm
4. http://en.wikipedia.org/wiki/Enterprise_resource_planning

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