Enterprise Management 1

Unit 1: Enterprise Management

Notes
Structure
1.1 Introduction
1.2 Enterprise Management
1.3 Components of Enterprise Management
1.4 ERP – A Manufacturing Perspective
1.4.1 ERP Systems Definition, Objectives, and Importance
1.4.2 Benefits and Challenges of Enterprise Systems
1.4.3 The Disadvantages of Enterprise Systems
1.5 ERP Modules and their Benefits
1.6 Characteristics of an ERP System Adoption and Implementation
1.6.1 Integration
1.6.2 The Nature of the Enterprise System Package
1.7 ERP Implementation Life Cycle
1.8 Role of Vendors, Consultants and Users
1.8.1 Role of the Vendors
1.8.2 Post ERP implementation
1.8.3 Role of Consultants
1.8.4 End-Users
1.8.5 The Need for ERP Software
1.9 ERP Markets and Future Directions
1.9.1 Significance of ERP Market
1.9.2 Participants in ERP Market
1.9.3 What is the reason for ERP market growth in India?
1.9.4 ERP for Small and Medium sized Market
1.10 Summary
1.11 Check Your Progress
1.12 Questions and Exercises
1.13 Key Terms
1.14 Further Readings

Objectives
After studying this unit, you should be able to:
 Explain enterprise management
 Describe the components of enterprise management
 Describe the definition, objectives, and importance of ERP systems
 Explain the ERP implementation life cycle
 Understand the ERP markets and future directions

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1.1 Introduction
Notes A scheme designed with the aim of helping small companies attract and retain key
employees by rewarding them with share options. Enterprise system is the overall
combination of computer hardware and software that a business uses to organize and
run its operations. For example, an integrated enterprise system will generally handle
more than one operation for a company to facilitate its business and management
reporting needs.
Enterprise systems are nowadays widely spread among different industries around
the world.
Although it is argued that enterprise systems increase firm performance, e.g., their
impact on innovation performance is at the moment only suspected. Enterprise Systems
(ES) are large-scale application software packages that support business processes,
information flows, reporting, and data analytics in complex organizations. While ES are
generally Packaged Enterprise Application Software (PEAS) systems they can also be
bespoke, custom developed systems created to support a specific organization's needs.
Types of enterprise systems include:
 Enterprise Resources Planning (ERP) systems,
 Enterprise Planning Systems, and
 Customer Relationship Management (CRM) software.
Although data warehousing or business intelligence systems are enterprise-wide
packaged application software often sold by ES vendors, since they do not directly
support execution of business processes, they are often excluded from the term.
Enterprise systems are built on software platforms, such as SAP’s Net Weaver and
Oracle's Fusion, and databases.
From a hardware perspective, enterprise systems are the servers, storage and
associated software that large businesses use as the foundation for their IT
infrastructure. These systems are designed to manage large volumes of critical data.
These systems are typically designed to provide high levels of transaction performance
and data security.
Vendors in this space include IBM, Oracle, HP and more.
 Application software
 Enterprise planning systems
 Enterprise resource planning
 Enterprise software
 Global Information Network Architecture
 Server (computing)
 Smarter Computing

1.2 Enterprise Management

The definition of what constitutes Enterprise Management depends largely on your
environment, but could include the following:
 Network Management & Monitoring
 Systems Management & Monitoring
 Database Management & Monitoring
 Application Management & Monitoring
 Application Integrations
 Incident Management

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 Notification Management & Strategy
 Performance Management
Notes
 Service Management
 Reporting
All of this depends on a number of factors, such as your environment, your
products, and the scope of what you are trying to achieve.

Network Management & Monitoring

The ability to monitor your network devices & network links is the foundation of any
Enterprise Management task. It is often overlooked or considered (assumed?) to be the
responsibility of another team within the organization. Despite this, network monitoring
is a relatively easy task given the appropriate focus, time & resources. This would
usually involve the identification & classification of network devices, configuration of
SNMP traps, loading & configuring MIB files, and then configuring the alerting
conditions with HP Open View. An effective Enterprise Management system must
include network management & fault reporting; otherwise the whole "enterprise"
monitoring concept is undermined. What is the point in monitoring thousands of
servers, all showing a status of "green" with no associated faults, if you’re underlying
network is down?

Systems Management & Monitoring

The monitoring of servers is critical to the success of any Enterprise Monitoring
strategy. The scope of this monitoring depends heavily on your environment, but you
might want to consider the monitoring of Windows, HP-UX, Solaris, AIX and Linux
platforms, both physical & virtual. Monitoring of servers will typically involve the
installation of HP Open View monitoring agents which pro-actively monitor the systems
according to well-defined & agreed monitoring baselines. Some examples of this are
the monitoring of file systems, disks, critical processes, important log files, as well as
availability monitoring of the servers themselves. All servers of importance should be
monitored effectively within your environment.

Database Management & Monitoring

Once you have your servers monitored using a well-defined and agreed strategy, the
next natural progression should be to start to consider the next tier, for example
databases such as MS SQL, Oracle, Sybase, or DB2. All critical databases should be
monitored to some degree, whether this is via in-house scripting and basic log
file/process monitoring, or via a more advanced/complete mechanism such as that
provided by the HP Open View Database Smart Plug-Ins (SPIs). You may also
consider integration with tools such as Oracle Enterprise Manager (Grid Control), but I
don't recommend this being the sole method of database monitoring for many reasons
(such as SPOF).

Application Management & Monitoring

Now that you have considered network devices, servers and databases, the next thing
to consider is application monitoring. This does not need to be complicated; it could
mean the monitoring of simple application processes, log files, or the running of scripts.
You should identify the critical applications in use within your organization (or consider
the top 5 initially) and engage with those teams to ascertain what level of monitoring
would be useful. If they can identify current issues, or where they have had
problems/outages in the past, this can help drive the requirements for providing some
basic, but ultimately proactive monitoring in the application space. Once you have
engaged with a team in this manner it might become apparent that more detailed
monitoring is required, which may involve using an HP Open View SPI module,
rd
integrating with a 3 party tool, or writing some more complex monitoring functionality.

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Application Integrations

Notes To further enhance your monitoring capability you might also consider integrating
applications within your environment into your Enterprise Monitoring system. For
example, where an application is already performing a monitoring function, you might
want these alerts integrated with your primary monitoring tool. This could take the form
of an application forwarding alerts into HP Open View, where the application is
providing additional benefits such as local suppression, correlation or enhanced
functionality. With any single-point integration you should always consider the risks
associated with such configurations and try and mitigate these where possible - single-
point integration can sometimes mean single-point-of-failure! An alternative integration
method can be to utilize a local monitoring agent (e.g. HP Open View), so that an
application agent sends alerts locally to the resident HP Open View agent, which in turn
alerts to your central monitoring console using standard mechanisms. The benefit of
this approach is that you can eliminate the single-point-of-failure scenario, and also
reduce network traffic. Examples of possible applications for integration are as follows:
Systems Insight Manager (Windows), EMC Control Centre (SAN), Cisco Call Manager
(Voice), Solar Winds (Networks), Oracle Enterprise Manager Grid Control (OEM). You
should investigate which applications are used in your company and review them
thoroughly.
Incident Management
Incident management, in the context of Enterprise Monitoring, relates to how alerts &
faults highlighted in the monitoring environment are escalated and recorded in your
incident management system (for example HP Service Centre, BMC Remedy, Service
Now). Once an alert from your monitoring environment is produced it should be
escalated to the incident management system so that a record is created for the failure
and the relevant team can update the trouble-ticket with information on cause, effect,
impact and resolution/remediation details (where possible). Initially this may be a
manual process of raising a trouble-ticket to the relevant system, but semi/full
automation should be considered to allow data centre operations teams to right-click to
raise trouble-tickets based on the alert. This could progress naturally to allow those
alerts destined for a trouble-ticket only (i.e. no callout required) to be raised as "auto-
tickets" - thereby ensuring tickets are created automatically, and reducing the need for
data centre operations teams to even see such alerts, thereby leaving them to
concentrate on the more critical issues. Once such a process is underway, tested and
working satisfactorily, you could then consider automating trouble-ticket generation for
all alerts seen by the data centre operations team, thereby reducing the chances of
alerts being missed. This should be a gradual, phased approach to ensure the entire
process works as your business requires.

Notification Management & Strategy

Once your Enterprise Monitoring solution has matured you may naturally consider the
use of a notification system. Support teams within your organization might also be
requesting this from an early stage, especially if you have improved the monitoring
capabilities for their particular domain! Your organization might have some form of
notification tool already is use within the business, so this should be investigated and
reviewed accordingly. Examples where this might be used include helpdesk & incident
management, Business Continuity Planning (BCP) and indeed, current or previous
monitoring systems. You might decide to leverage the use of the resident notification
tool (if it is fit for purpose), or you may consider a wider approach and review whether a
new system should be used, phasing out the old system in due course, to create a new
corporate notification system. From an Enterprise Monitoring point of view, you might
want to configure various HP Open View alerts to automatically notify teams using SMS
messages to mobile phones, pagers etc. It is also possible to configure responses from
such tools, so that the recipient can respond to the notification, escalate issues, or even
take remediation steps remotely. The benefits of automated notifications are numerous
- faster alerting of faults to the correct teams, improved accuracy of information received
(rather than a confusing telephone call), along with full auditing of the notification
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process itself. Any notification strategy should obviously be planned, agreed and
implemented in phases to ensure it delivers exactly what is required, and does not
become a burden on resources, whether IT or people-based. Notes
Performance & Capacity Management
Performance monitoring in this context does not simply mean monitoring servers for
CPU or disk utilization for example, it is more concerned with creating a function
whereby you can deliver performance data to teams if they require it. This could be in
the form of performance graphs/reports for reviewing testing cycle phases, for analysing
environments during major faults/incidents, or for providing data evidence to support
trending or capacity planning exercises. With the HP Open View monitoring agents,
they collect and store a core set of metrics by default, which can then be graphed using
tools like HP Open View Performance Manager. These tools are intended to be used
on ad-hoc basis, as and when the need arises to produce performance graphs or on-
demand reports.

Service Management
So often senior management are desperate for a Service Management view of their
environment. They are keen to be able to show the critical services within the
organization, and show alerts & status to indicate service health/degradation, but this is
sometimes considered prematurely. There is no benefit in showing services as "green"
(traffic light indicators are often a request!) if the underlying infrastructure components
are not managed and monitored completely and effectively. Showing a service as
"healthy" is inaccurate if you are not monitoring the network (or other critical
components). Once you have a mature Enterprise Management and monitoring
solution deployed, or at the very least the structure and plans to deliver such a solution,
then consideration can be given to providing a service management capability. There
are various tools that can help with providing a view of the health of your core business
services, but a very simple method is to utilize the data held within your incident
management system, and represent this data graphically. The benefit of using the
incident management system itself is that this will record alarms originating from your
Enterprise Monitoring solution (e.g. HP Open View Operations Manager) but will also
record incidents created from other sources, including those raised by clients and users.

Reporting
Reports are of no use if nobody is going to read them, but that does not mean reporting
should be dismissed out of hand. Effective reporting on metrics or KPIs can help
identify trends, show project benefits & ultimately justify projects & resourcing.
Examples of some useful types of reporting include incident reports (tickets per team,
for example), notification reports (frequency of out-of-hours callouts), performance &
capacity reports (CPU utilization, free disk space etc.) and ultimately service reports
(indicating service levels, SLAs etc.). Reporting is not something that may need to be
considered at the onset of an Enterprise Management program, but it should be
considered carefully and investigated completely when the requirement presents itself.

1.3 Components of Enterprise Management

ERP software is made up of many software components. Each component represents
the major functional area of the organizations.
 Financial Management Component
 Manufacturing Component
 Human Resource Component
 Materials Management Component
 Production Planning Component
 Plant Maintenance Component

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 Purchasing Component
 Marketing Component
Notes
 Sales and Distribution Component
1. Financial Management Component: This component is the core of the ERP
system. This gathers financial data from various functional departments and
generates valuable financial reports such as balance sheet, general ledger; trial
balance and quarterly financial statements. Financial accounting: fixed asset,
payables including vouchering, matching and payment, receivables cash application
and collections, cash management, financial consolidation
2. Manufacturing Component: This component provides the information needed for
the manufacturing process to take place. It contains number of manufacturing
methods, so that the organization can choose the best which fits for them.
3. Human Resource Component: This component streamlines the management of
human resources and human capitals. This component maintains an employee
database containing information about employees contact information, salary
details, attendance, performance evaluation and promotion details. This component
helps the management to make use of the employee’s best talent.
4. Materials Management Component: This component is used to maintain the
correct level of stock in the warehouse.
This helps to do the following tasks:
 Identifying inventory requirements
 Setting targets
 Monitoring item usage
 Inventory status report
5. Production Planning Component: This component provides knowledge for
planning the production process. For this it uses the previous production details;
stock in hand, materials stock etc.
6. Plant Maintenance Component: This component provides knowledge about the
technical and operational details about the machineries used for production. This
information helps to reduce the duration and cost of plant down time.
7. Purchasing Component: This component streamlines the process of getting the
required raw materials. It automates the process of identifying potential suppliers,
price negotiation, giving purchase order and billing process. This component is
tightly integrated with the materials management and production planning.
8. Marketing Component: This component shows the correct path for marketing the
product in the highly competitive market. This component has number of marketing
methods to implement in different areas.
9. Sales and Distribution Component: Revenues from sales are the life blood of any
commercial organization.
This component helps in order placement, order scheduling, shipping and invoicing.
It is also closely integrated with the organizations e-commerce web sites.
Enterprise Management System has the following modules:
1. Purchase Management System
2. Sales Management System
3. Inventory Management System
4. Accounts Management System
5. Asset Management System
6. HR Management System
7. Petty Cash Management System

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8. Office Management System
9. Production Management System
Notes
10. Customer Relationship Management System
All the above modules can work in decoupled manner or in an integrated manner.
1. Purchase Management System has the following features:
 Vendor Management System
 Purchase Requisition Module
 Enquiry Module
 Quotation Module
 Purchase Order Module o GRN Module
 Payment Module
2. Sales Management System has the following features:
 Customer Management System
 Quotation Module
 Sales Order Module
 Execute Order Module
 Delivery Module
 Confidential
2. Inventory Management System has the following features:
 Product Management
 Stock Opening Balance Management
 Stock in System Data feed from Purchase Management System
 Stock out System Data feed from Sales & Production Management System
 Stock Adjustment
 Stock Conversion
 Breakage/Damage Product Management
 Stock Transfer
3. Accounts Management System has the following features:
 Multi-Level Account Group module
 Chart of Accounts
 General Ledger Posting
 Trial Balance/P&L/Balance Sheet Report
4. Asset Management System has the following features:
 Asset Grouping Master
 Asset Master
 Location Master
 Asset Tagging Module
 Asset Warranty Tracker
 Asset AMC Tracker
 Asset AMC Renewal Tracker
 Sale of Asset
 Damage/write off asset

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5. HR Management System has the following features:

 Organizational Hierarchy Management o Recruitment Process
Notes
 Leave & Attendance System
 Payroll System Confidential
6. Petty Cash Management System has the following features:
 Tracking of each expenses based on expense group
 Branch wise, department wise and staff wise expense tracking
 Ledger based tracking on Staff Advance Payments & Expense Claims
 Posting to Accounts module
7. Office Management System has the following features:
 Internal Communication system
 Knowledge Base Management System
 Employee Training Process
 Task Assignment Activity Process
 User Activity log Process
8. Production Management System has the following features:
 Bill of Material
 Production Planning
 Production Scheduling
 Production Process
 Product Grading
 Production Report
9. Customer Relationship Management system has the following features:
 Lead/Potential Tracking System
 Lead/Potential Follow up
 Marketing Task Management System
 Post Sales
 Customer Relationship Module
 Case Management
 Communication History Tracker

Figure 1.1: ERP Modules

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1.4 ERP – A Manufacturing Perspective
Enterprise Resource Planning (ERP) is business management software—typically a Notes
suite of integrated applications—that a company can use to collect, store, manage and
interpret data from many business activities, including:
 Product planning, cost
 Manufacturing or service delivery
 Marketing and sales
 Inventory management
 Shipping and payment
ERP provides an integrated view of core business processes, often in real-time,
using common databases maintained by a database management system. ERP
systems track business resources—cash, raw materials, production capacity—and the
status of business commitments: orders, purchase orders, and payroll. The applications
that make up the system share data across the various departments (manufacturing,
purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information
flow between all business functions, and manages connections to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces
components that support a variety of business functions. IT investments have become
the largest category of capital expenditure in United States-based businesses over the
past decade. Though early ERP systems focused on large enterprises, smaller
enterprises increasingly use ERP systems.
The ERP system is considered a vital organizational tool because it integrates
varied organizational systems and facilitates error-free transactions and production.
However, ERP system development is different from traditional system development.
ERP systems run on a variety of computer hardware and network configurations,
typically using a database as an information repository. Enterprise system also known
as an enterprise resource planning system, an ERP system is a type of computer-driven
strategy that makes it possible to manage a wide range of company resources using a
single platform. Systems of this type are often focused on enhancing efficiency in
regard to managing any tasks associated with customer orders, beginning with the
receipt of those orders and ending with the successful delivery of the goods and
services ordered to the customer. In order to accomplish this goal, the ERP system
must have the ability to effectively manage the acquisition and usage of resources from
outside the business enterprise, as well as manage assets within the company
structure.

Figure 1.2: ERP System

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1.4.1 ERP Systems Definition, Objectives, and Importance

Notes According to Watson and Schneider ERP, system is a generic term for an integrated
enterprise computing system. A customized packaged software-based system handles
the majority of information systems requirements for an enterprise. ERP system is a
software architecture that facilitates the information flow among all functions within an
enterprise. It sits on a common database while being supported by a single
development environment. Typical modules of ERP system usually support
administrative functions for finance, human resources, production, logistics and sales,
and marketing.

Figure 1.3: Objectives of an ERP system

Many studies support importance of ERP systems in terms of its impact on
developing competitiveness of an enterprise since ERP is considered as a strategic
application that has effect on organizational success by supporting it is strategies. In
fact, researcher advocates that in the past few years, ERP has become a ‘must have’
system for improving almost every enterprise’s competitiveness.
The use of an ERP system is basis upon the concept that all business functions
have the ultimate goal of generating a return from the enterprise. In order to achieve
this goal, the company must produce goods and services that are attractive to
consumers and in turn generate sales. This means managing every component that has
to do with controlling production costs, the costs of raw materials, and even the
expenditures that are incurred in collecting customer orders and delivering those
products to customers in a timely manner. From this perspective, an effective ERP
system not only has the ability to aid in arranging the production process so that little to
no waste is produced, but also to manage every cost from the selection of raw materials
to the mode of delivery of the finished product to the customer.
At its best, an ERP system equips the business with a method of establishing
checks and balances that prevent wastes of company resources, whether those
resources be the materials used in the production process or the time invested by
employees in carrying out essential functions. At the same time, an effective ERP
system will make it possible to provide consumers with simple and efficient ways to
place orders. This often means the inclusion of automated features that allow
consumers to know when the order has been accepted and possibly provide periodic
updates on the order fulfillment process and even when the order is shipped and is
anticipated to be delivered. Many online businesses use comprehensive systems to

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provide this level of support to customers, even as those same systems keep costs
down and efficiency high within the structure of the business itself.
Notes
ERP (Enterprise Resource Planning) systems typically include the following
characteristics:
 An integrated system that operates in (or near) real time without relying on periodic
updates
 A common database that supports all applications
 A consistent look and feel across modules
Installation of the system with elaborate application/data integration by the
Information Technology (IT) department, provided the implementation is not done in
small steps.

1.4.2 Benefits and Challenges of Enterprise Systems

Enterprise systems also commonly known, as ES are comprehensive, large scale
application-software packages, which use powers of present day information technology
(IT) for supporting processes, reporting, data analysis and information flows. These IT
powers include data storage, computational, and data transmission and done between
and within complex organizations. Enterprise systems briefly known as packaged
enterprise application software (PEAS) systems and is a perfect combination of
adjectives, like “enterprise”, “packaged”, and “application”. Enterprise system is a broad
term and includes Enterprise resource planning (ERP), Supply Chain Management
(SCM) and Customer Relationship Management (CRM). Enterprise systems are usually
built on, software platforms like Oracle’s Fusion and SAP’s Net Weaver and is typically,
a relational database. There are many benefits of employing an enterprise system in an
organization.

Figure 1.4: Benefits of Enterprise Systems

Some of these benefits include:
1. Integrated organizational System: Enterprise system leads to the development of
an integrated system within the organization. This helps in streamlining of
organizational processes and work
2. Improved data entry: Due to the integration of all systems in an organization, there
is little or no entry of redundant data and processes throughout the system.
3. Incorporation of best practices: The establishment of the enterprise systems in
an organization results in the incorporation of best industry practices, leading to an
overall improvement in the working of the organization.
4. Flow of information: There is proper sharing of information across all departments
of an organization, leading to improved interdepartmental communication and better
employee performance.
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5. Improved Customer Satisfaction: As all employees have access to requisite

information, the workflow improves, resulting in on-time delivery of desired goods
Notes and services to the customers. The resultant improved quality and reduced delivery
times help in developing high customer satisfaction.
6. Reduced inventory costs: The incorporation of concepts like SCM, CRM and ERP
in enterprise system results in better planning, follow-up and forecasting of
requirements. This results in a reduced inventory cost.
7. Improved collections: Improved visibility into accounts and fewer billing and
delivery errors result in faster and improved collections.
8. Improved costing: The application of enterprise systems helps in the proper racing
of actual costs of all activities. This helps in performing activity based costing, which
is ultimately beneficial to the organization.
9. Improved planning: The management is able to get a consolidated picture of
inventory, sales, and receivables. This helps them in making better plans for the
working of the organization.
Although the employment of enterprise system involves a huge cost, its benefits
outweigh the cost incurred by an organization. Most big and small organizations of the
world have employed the enterprise system and are reaping the advantages associated
with it.

Operational Benefits
More and more organizations are seeking to integrate the core functions of their
business with technological advances. Enterprise systems facilitate this integration
process through a single software architecture that links all aspects of business to
function as one unit. Organizations continue to reap the benefits of enterprise systems,
but they also encounter challenges.
An integrated system reduces the time used in processing documents, such as
payrolls and other external documents. Information visibility and transparency within an
organization is a benefit that facilitates the different operations carried out by the
various departments.

Managerial Benefits
Managers find it less hectic to oversee operations and to ensure that key business
objectives are achieved through enterprise systems. Because they are able to access
information from a centralized server, managers find that the decision-making process
becomes more informed and yields better results.

Storage Challenges
Generally, enterprise systems have a lifespan of 10 to 20 years, after which point they
can be upgraded. Although this might seem like a long time, data within organizations
accumulates exponentially and may prove too difficult to manage and store using a
single software system. Data overflow and a subsequent slowdown in one department
will certainly have a ripple effect in other functions of an organization.

1.4.3 The Disadvantages of Enterprise Systems

Enterprise systems play important roles in large companies. These systems help
companies perform essential tasks, such as deciding the best ways of how to create
products, tracking orders, and incorporating profits, costs and revenues. Enterprise
systems are large-scale applications that allow companies to incorporate and organize
their business processes. These systems can make sure that all of the company's
departments can share vital information with each other. Although there are many
advantages for installing enterprise systems, there are some downsides.

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Costs
Implementing and managing enterprise systems can be expensive, especially for small Notes
and medium-sized businesses (SMBs). SMBs usually do not have the resources and
money. For example, companies need the right people to make sure that their data is
protected. Large companies can afford to hire the consultants who specialize in this
area. The costs to install enterprise systems, for multi-corporations, can range from
approximately £19,500 to £325 million. Another cost that companies face is licenses.
Companies purchase licenses in order to receive services, such as technical support or
getting software patches or upgrades. Finally, another cost can be where enterprise
systems cannot integrate with the company's legacy systems. Legacy systems are older
applications or computer systems that the company has been using for a long time.
These systems contain important data that the company that it still needs and uses. In
order to get the enterprise system to work with legacy applications, the company might
have to purchase new computers, servers, or applications. It might also have to hire
some additional consultants to complete this project.

Training and Turnover

If the enterprise system is to be successful in an organization, it must have employees
who know how to use it. The company must provide comprehensive training. However,
many companies have ignored this area because it is costly. Even if the employees
have been trained, they could leave the company, taking the knowledge with them.

1.5 ERP Modules and their Benefits

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.
In organization, ERP helps to manage business processes of various departments
& functions through centralized application. We can make all the major decisions by
screening the information provided by ERP.
There are many vendors in market which are providing traditional ERP solutions or
Cloud based ERP solutions. Though implementation platforms or technologies are
different, there are common & basic modules of ERP which can be found in any ERP
System. Depending on organizations need required components are integrated &
customized ERP system is formed. All the below mentioned modules can be found in
any ERP system:
 Human Resource
 Inventory
 Sales & Marketing
 Purchase
 Finance & Accounting
 Customer Relationship Management (CRM)
 Engineering/ Production
 Supply Chain Management (SCM)
Each component mentioned above is specialized to handle defined business
processes of organization. Let us go through the introduction of the various modules.

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Human Resource Module (HR)

Notes Human Resource module helps to HR team for efficient management of human
resources. HR module helps to manage employee information, track employee records
like performance reviews, designations, job descriptions, skill matrix, time & attendance
tracking. One of the important sub module in HR module is Payroll System which helps
to manage salaries, payment reports etc. It can also include Travel Expenses &
Reimbursement tracking. Employee Training tracking can also be managed by ERP.

Inventory Module
Inventory module can be used to track the stock of items. Items can be identified by
unique serial numbers. Using that unique numbers inventory system can keep track of
item and trace its current location in organization.
Exam you have purchased 100 hard disk, so using inventory system you can track how
many hard disks are installed, where they are installed, how many hard disks are
remaining etc.
Inventory module includes functionalities like inventory control, master units, stock
utilization reporting etc.
There may be integration of inventory module with purchase module of ERP.

Sales Module
Typical sales process includes processes like Sales queries & enquiry analysis &
handling, quotation drafting, accepting sales orders, drafting sales invoices with proper
taxation, dispatch/Shipment of material or service, tracking pending sales order. All
these sales transactions are managed by sales module of ERP. CRM module can take
help of Sales module for future opportunity creation & lead generation.

Purchase Module
As name indicates, purchase modules take care of all the processes that are part of
procurement of items or raw materials that are required for organization. Purchase
module consist of functionalities like supplier/vendor listing, supplier & item linking,
sending quotation request to vendors, receiving & recording quotations, analysis of
quotations, preparing purchase orders, tracking the purchase items, preparing
GRNs(Good Receipt Notes) & updating stocks & various reports. Purchase module is
integrated with Inventory module & Engineering/production module for updating of
stocks.

Finance & Accounting module

Whole inflow & outflow of money/capital is managed by finance module. This module
keeps track of all account related transactions like expenditures, Balance sheet,
account ledgers, budgeting, bank statements, payment receipts, tax management etc.
Financial reporting is easy task for this module of ERP. Any Financial data that is
required for running business is available on one click in Finance module.

Customer Relationship Management (CRM) module

CRM department is helps to boost the sales performance through better customer
service & establishing the healthy relationship with customers. All the stored details of
customer are available in CRM module.
CRM module helps to manage & track detailed information of the customer like
communication history, calls, meetings, details of purchases made by customer,
contract duration etc. CRM module can be integrated with Sales module to enhance
sales opportunities.

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Engineering / Production module
Production module is great help for manufacturing industry for delivering product. Notes
This module consist of functionalities like production planning, machine scheduling,
raw material usage, (Bill of material)preparation, track daily production progress
production forecasting & actual production reporting.

Supply Chain Management (SCM)

SCM module manages the flow of product items from manufacturer to consumer &
consumer to manufacturer.
Common roles involved are manufacturer, Super Stockiest, Stockiest, distributors,
retailers etc. SCM involves demand & supply management, sales returns & replacing
process, shipping & transportation tracking etc.
Today many SMBs face challenges in their process automation. ERP is the great
help for such organizations. ERP can efficiently streamline the business operations of
organization. Above introduction of modules can help you to choose & customize the
ERP modules depending on your organizations requirements.

Characteristics of ERP Modules

 It is efficient and easy to use.
 It is scalable.
 It is easily compatible with CRM working.
 A common database that supports all the modules.

1.6 Characteristics of an ERP System Adoption and

Implementation
It is very important to study about ERP adoption because problems in ERP projects
tend to accrue from improper strategic choices of enterprises in the adoption phase.
Further, it is in this phase that enterprises should ensure if the selected ERP systems
fits their business and its needs for information. In this regard, one of the participants in
survey research of claims that: having an ERP is much more than having another IT
tool rather, it is a decision on how to shape the organizational business.’
Enterprises that could pass the ERP adoption phase successfully view ERP system
as one of the most important innovations that lead an enterprise to realize substantial
tangible and intangible improvements in variant areas of their business. Nonetheless,
there have been a number of enterprises who experienced horror stories of failed or
out-of-control ERP projects that made them not to reap potential fruits of theses system
that, in fact were a profound motivation of their large investment on ERP projects. Such
results may cause decision makers to scrutinize more adaptability of target ERP
package with their business requirements.
On the other hand, implementation of ERP systems is not only an easy task but
also a costly and complex process demanding for considerable investment of time,
money and work force. It is a major project that require enterprises pay attention to the
interests, motivations, expectations, and actions of a variety of stakeholders including IS
professionals, senior management, business management, and external partners such
as vendors and consultants.
To the words of Davenport, technical challenges of ERP implementation, however
great, are not the main reason of enterprise systems failure rather the biggest problem
is that enterprises fail to reconcile the technological imperatives of the enterprise
system with the business needs of the enterprise itself. In this regard, study result of
shows that when a cautious, evolutionary, and bureaucratic implementation process is
backed with careful change management, network relationships, and cultural readiness
of an enterprise, it can lead that enterprise to a successful ERP project implementation.
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1.6.1 Integration

Notes Because modern technologies advance at a pace unequalled in time, IT staff and
managers must work to seamlessly integrate different technologies. This task is not only
about making sure that data transfers across the system can take place, but also that
the results of the data transfers have a purpose within the business.
However, having said that about integration, the technology models in place must
resonate throughout the business. Thus, one technology facet supports other facets,
which in turn, support the entire business organization.
Integration means that all technologies have a place and supporting purpose.

1.6.2 The Nature of the Enterprise System Package

Enterprise System software is not an in-house creation; rather it is a commercial
product that can be modified to suit the particular and unique needs of the business.
However, by using commercial products, the business acknowledges that there are
similarities between this business and others like it to form a cohesive industry. ES
Packages use software industry standards for business assurance.

Best Practices
Associated with the notion of software packages that support industry-wide operations,
this philosophy is affirmed with best practices. This means that a business operates in a
manner consistent with other organizations, and the software used is similar to that of
others. However, customization may be the rule of the day internally to meet specific
needs or operations. These become the best practices of the business, which are
unique and differentiate it from other, similar businesses. Best practices like the towers
show similarities but differences with other businesses.

Assembly Requirements
Unique but similar industry-wide business practices force enterprise systems to
customize their software efforts. While the software packages that work well for the
other similar businesses may also work with this one, modifications must take place to
make the fit occur. The requirements that a software package fit industry standards
exist, but it may not be so intact with the business at hand. Managers may have other
intentions for the software package. The requirements that a software package fit
industry standards exist, but it may not be so intact with the business at hand.
Managers may have other intentions for the software package.

1.7 ERP Implementation Life Cycle

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, post implementation.

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Notes

Figure 1.5: ERP Implementation Life Cycle

 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 of packages that are
evaluated to less than five. Getting help from external 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 customized 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
implementations are decided. The project plan is developed, roles are identified and
responsibilities are assigned.
The organizational 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.

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 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
Notes 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
package. Some 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
organizations. 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. How to
implement it? For the company to be self-sufficient in running the 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,

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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. Notes
 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.
 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 organization 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).
In 1990’s Microsoft had spent 10 months and $25 million to replace their 33 existing
systems in 26 sites with SAP. They claimed to have saved $18 million as a result of
using SAP software.
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.

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People involved in the ERP Implementation

Notes 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.
Steps in the Public Procurement Process
Public procurement the procurement process is considered to include contract
administration. On the other hand, contract administration and contract management
are treated as synonymous. To add to the confusion, sometimes the term contracting is
also thrown in, such that as practitioners we are left with an enormous confusion on
these terms.
To dispel some of the confusion, the public procurement process, as will be
explained here, ends with contract award, and anything after contract award is
considered contract administration. In future writings, the reason for this clear division
will be explained in detail. This does not in any way lessen the importance of contract
administration. As a matter of fact, the purpose of making a clear distinction is to give
more emphasis to the importance of contract administration, and also to clarify areas of
responsibility.
We find additional confusion in other writings, even procurement manuals, were the
procurement process is said to include inventory control and management, storage and
distribution, and even disposal—all functions which are more appropriately classified as
part of logistics, and even supply chain management, but not necessarily procurement.
So, in line with the above, the steps in the public procurement process are those
listed below and they will be addressed in more detail in future posts:
1. Requirement identification
2. Determining procurement method
3. Procurement planning and strategy development
4. Procurement requisition processing
5. Solicitation documents preparation and publication
6. Pre-bid/proposal meeting and site visit
7. Bid/proposal submission and opening
8. Bid/proposal evaluation
9. Contract award recommendation
10. Contract negotiations
11. Contract Award (signing)

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1.8 Role of Vendors, Consultants and Users
Initially, organizations were skeptical about ERP since they felt that their businesses Notes
were unique and their cultures different. As time passed and their business problems
became more pressing, they started looking at ERP as the panacea for their woes. In
their urgency, they were expecting miracles; unfortunately this doesn’t happen most of
the time, leaving users frustrated which in turn, lead to poor participation and costly
delays. It is important to understand that an ERP package cannot fit in completely with
the existing business practices of an organization.
The onus to appreciate this fact is on the users and they have to work with the
implementation consultants to adapt to the package.
Initially, organizations were skeptical about ERP since they felt that their business
were unique and their cultures different. As time passed and their business problems
became more pressing, they started looking at ERP as the solution for their woes. In
their urgency, they were expecting miracles. Unfortunately, this doesn’t happen most of
the time, leaving users frustrated which in turn, lead to poor participation and costly
delays. It is important to understand that an ERP package cannot fit in completely with
the existing business practices of an organization. The onus to appreciate this fact is on
the users and they have to work with the implementation consultants to adapt to the
package. In order to avoid setbacks in an EPR project, a consultant plays a useful role.
The consultants by virtue of their industry, experience and package expertise should
pitch in and set the expectations of users at various levels keeping in mind the overall
business objectives of the client. They can do so by working closely with key users,
understanding their needs, analyzing the business realities and designing solutions that
meet the basic objectives of the company. At this point, it is also important to
understand the distinction between the roles of the consultants and the users. It is the
users who will be driving the implementation and their active involvement at all levels
and across all business functions is absolutely critical. An ERP package is expected to
improve the flow of information and formalize all the business processes and workflow
that exist in an organization. Many users expect their workload to decrease after an
ERP implementation, but this may not always happen. The important thing to
understand is that the ERP package is an enabling tool to help the users do their job
better, which may call for additional efforts. If one has to have more information in a
system, it entails more work for some users, but the benefit is that this information if
properly stored, can fruitfully used by other users in making better decisions. As the flow
of information throughout the organization improves, the company starts performing
better, and this in turn benefits the users who have collectively improved their way of
working

1.8.1 Role of the Vendors

As soon as the company signs the contract, the vendors should supply the product and
its documentation. Once the software is delivered, the company can develop the
training and testing environment for the implementation team. The roles of the vendors
during and after implementation of ERP are:
 The vendor is responsible for fixing any problems in the software that the
implementation team encounters.
 The vendor should have a liaison officer to constantly interact with the
implementation team.
 The vendors provide initial training for the company’s key users. These key users
are the ones who will define, together with the consultants, how the software is to
serve the company.
 They are also called as in-house functional experts who decide how the
functionalities are implemented to adapt the product to suit the company’s unique
requirements. It is very important to provide these in-house experts a through
training on the features of the package.

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 Vendor’s training should include showing the key users how the package works,
what are the major components, how the data and information flows across the
Notes system, what is flexible and what is not, what can be configured and what cannot,
what can be customized and what should not, what are the limitations, what are the
strengths and weaknesses and so on.
 The objective of the vendor training is to show how the system works, not to show
how it should be implemented. This means that the vendor demonstrates the
product as it exists and highlights what are the possible options available.
 The company’s employees who are participating in the vendor training should try to
understand the characteristics of the package and the impact of the system on their
business processes. The trainees should use these training sessions to question
the vendor on all aspects of the system.
Now some of you might ask, we are hiring consultants who are experts in the
package so why can’t we get training from the consultants?
This is true. Most of the consultants are capable of providing sound training for the
packages. But we are hiring the consultants for implementing the system. However, the
consultants also have a role to play during this vendor training. They should participate
in the training sessions to evaluate how the users react to the reality that is starting to
take shape from the detailed presentations and demos. Consultants should also ask
questions that the vendors are trying to avoid and the users are unaware of. This is the
best way to present the real picture to the users and it will also prevent the vendors
from making false claims.
Vendors play an important role in project support function and exercise the quality
control with respect to how the product is implemented. It is the vendor who
understands the finer details and subtleties of the product and can make valuable
suggestions and improvements that could improve the performance of the system. It is
also in the best interests of the vendor that this participation continues, because if the
implementation fails, most of the blame will fall on the vendor. Also a successful
implementation means another satisfied client, improved goodwill and good referrals
and so on. So the vendor will continue to participate in all the phases of the
implementation, mostly in an advisory capacity, addressing specific technical questions
about the product and technology.

Whether to customize or not?

Vendors help to fill gaps between the package and the actual business processes. The
software might have to be customized to suit the company’s needs. Here, customizing
means altering the product so that it is suited for the company’s purposes. The choice
of whether to customize or not is the one that can have enormous impact on the project
and it often constitutes a point of conflict between the consultants and users. But if the
decision to customize has been taken, it is the vendor’s duty to carry out the necessary
modifications. This is because only the vendor knows the product well enough to make
the necessary changes without affecting the other parts. Moreover, the company should
get a guarantee (in writing) from the vendor that despite the customization, it will be
able to benefit from the future software improvements introduced by the vendor.
ERP integrates business process reporting for the different business divisions. It
creates transparent data exchange and facilitates timely and informed decision making
for senior managers. The successful implementation of the enterprise resource planning
software improves the management and planning of a business corporation. It
increases the performance of the organization. This increasing trend has enhanced the
value of ERP vendors in the market.
ERP vendors are continuing to expand market presence by offering new
applications. The top three players namely SAP AG, Oracle, Baan PeopleSoft account
for 64 per cent of the ERP market revenue.

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1.8.2 Post ERP implementation
After an ERP implementation, organization should not sit back and relax. Depending on Notes
the scope of the ERP implementation exercises, several options can be explored tom
further maximize the gains.
The first thing that an organization should look forward to, after an ERP
implementation, is improved morale of the workforce. Needless to say, it would have a
cascade effect in terms of increased productivity and better customer response.
On the monetary side, depending on the level of success, ROI should also be on
the way up. It is estimated that a well-managed ERP project can have up to 200percent
return on investment within a short period of time while a poorly managed ERP project
can yield a return on investment as low as 25 percent.
During the phase of minimization, organizations move closer to best practices.
Depending on the target environment design, which is governed by the ability to
change, this effort could be a natural extension of the ERP implementation or it could be
a separate project in itself. Process optimizations, and thus performance improvement,
are a continuous exercise.

Vendor Security Certification

 You should require the vendor to respond to these items in writing:

Must-Have Features
 The ERP system requires strong passwords.
 There is a low overhead and secure method to change passwords.
 Stored passwords are encrypted.
 There are no features of the ERP that require that users, no matter what their role,
be given access to the underlying database.
 The ID is not the SSN.

Roles can be tied to position categories

 Default roles can be established.
 Roles can be established that allow a user to process sensitive data in the ERP but
restrict that user from downloading the data.
 All data fields that are required by federal law to be protected come with encryption
enabled.
 All data fields that are required by federal law to be protected come with auditing
enabled.
 Data fields can be encrypted at the database level as well as at the form or table
level.
Reports are generated that show who has requested data exports that include sensitive
data, such as SSNs, credit card numbers, and so forth.

Desired Features
 Critical processes (payroll, grades) can be run first in audit mode.
 The institution can specify additional fields to have table lookups.
 The institution can specify additional fields to be encrypted.
 The institution can specify additional fields to have audit trails.
 The system prevents the creation of duplicate records during batch transactions.

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1.8.3 Role of Consultants

Notes Business consultants are professional who specialize in developing techniques and
methodologies for dealing with the implementation .They are the experts in the
administration, management and control of various problems that crop up during the
implementation. Each of them has many man-years of implementation experience with
various industries and would have time-tested methodologies and business practices
that ensure successful implementation. They are good at all phases of the
implementation lifecycle, right from package evaluation to end-user training. The only
problem with these business consultants is that they are very expensive. Many of the
big consulting firms invest a great deal of money in developing a range of consulting
services and assign many of their professionals to become specialists in the various
aspects of ERP packages and their implementation.
These firm develop an in-depth understanding of each product’s strengths and
weaknesses, work by the side of the ERP vendors to confirm that the vendor’s package
actually works, learn the tricks and techniques of the trade, find out the pitfalls and
mistakes that should be avoided and thus create a pool of experts who could handle the
ERP implementation without failure.
Thus, consultants are people who have made the business of ERP implementation
their business and have invested huge amount, of money and manpower for that
purpose. So when you want to get the services of these consultants, the first question
that will be asked is-"Are they going to be expensive?" The answer is a definite YES.
The consultants will be expensive, so the company will have to formulate a plan
regarding best optimum use of the money spent on consultants. If you study the
statistics, you can see that a well-selected, integrated system that was successfully
implemented and which is successfully working usually pays for itself in a relatively
short period–between 10 and 30 months. If you analyse the cost break-up, you will find
that the most expensive part of the implementation was the consultation charges. For a
typical ERP implementation, the cost of consultants is 1.5 to 3 times for every rupee
invested in the software product. Sounds amazing; but it is true and it is also true that
the software will pay for itself– the software cost, the consultant’s charges and other
expenses incurred during implementation–in the above mentioned period (10-30
months). But the catch is that the product has to be the right one and the
implementation has to be successful. That is why the expertise of the consultants
becomes invaluable and the money spent on good consultation is never wasted. So
finding the right consultants–people who have the necessary know-how, who will work
well with the company personnel, people who will transfer their knowledge to the
company’s employees and people who are available in case their services are required
again is very important.
The role of the ERP consultants is known to all of us as we have seen many of
them in action. The company places its trust in the consultants, that its business
objectives will be achieved. The consultants ensure the success of the project. This
produces quantifiable results to the satisfaction of the company management.
Consultants administer each of the phases of the implementation. This ensure that
the required activities occur at the scheduled time and at the desired level of quality with
effective participation of all those who must participate. The consultants are responsible
to convert the planned methodology into task and allocate right resource to complete
that task.
Consultants add value to the project. They bring the know-how about the package
and about the implementation–the know-how that is not included in the standard
documentation. This know-how (also known as practical knowledge) is derived from
their expertise which stems from practical experience. Thus by eliminating the trial-and-
error method of implementation, and by doing it right the first time, the consultants help
in saving huge amounts of money, time and effort.

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Enterprise Management 25
Consultants should remain impartial while questioning current company processes
in an effort to promote better businesses practices and better implementation results.
They should strive to improve the company’s business processes so that the software Notes
package can be used as it was originally intended by its developers. Refining the
company’s processes can only optimize the performance of the system and maximize
future user satisfaction. The consultants are also responsible for analyzing and clearly
addressing the customization issues.
ERP consultants show the advantages and drawbacks of each area to the
management and reach a consensus decision. Consultants need to balance their
loyalty to the client and the project with that of defending the package vendor, when
such defense is technically correct.
Consultant alerts the company management about actions and decisions to be
taken. This ensures that job will not be compromised and the implementation will not be
jeopardized. Once the project is complete, consultants will leave the company.
However, the knowledge of the project should remain within the organization. Hence,
consultants should train enough people in the organization so that the work they have
started is continued.
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.

1.8.4 End-Users
ERP end-users are the people who will be using the ERP system once it is
implemented. Most of the functions that the end users used to perform are being
automated by the ERP system. ERP system brings drastic transformation in the actual
work process which leads to change in old job descriptions.
It is human nature to resist change. Implementation of an ERP system brings
change in a very massive scale. Employees will fear that system will replace existing
jobs, as many functions will be automated. Also people will be afraid of the amount of
training they have to undergo and learning they have to do to use the new system. Job
profiles will change, job responsibilities will undergo drastic alterations, and people will
be forced to develop new skill sets. If these fears are not addressed and alleviated well
in advance, it will cause trouble for the organization.
The automation of the business processes, through technology, can eliminate the
jobs of many employees whose function it is to record, control, calculate, analyse, file or
prepare reports. Even though ERP systems eliminate many existing jobs, it creates
many new ones with more responsibilities and value addition. Employees get away from
the monotonous clerical work and transform themselves into highly valued individuals,
in a new and challenging working environment using modern technology. If the
company succeeds in convincing its employees to accept this fact and assist by giving
them proper training, then the major obstacle in the path of an ERP implementation is
solved.
For 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
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26 Enterprise Management

more likely than companies that spend 17 percent or more to see their ERP projects run
over time and over budget.
Notes
The impact of application on ERP end-user productivity is a complex undertaking
because of the wide range of business functions and user types who interact with such
systems. The business productivity framework is developed to measure how ERP end-
users feel system affects their personal productivity. This also develops an opportunity
to create a framework to evaluate new system.
 The Role of Strategy Consultants
 Role of HR Consultants
 Roles of Organizational Consultants
 Bridal Consultant Training
 Code of Ethics for Hot Dog Vendors
Enterprise resource planning software is a powerful application that integrates an
entire business' operations into a single place. ERP software can be both very
complicated and expensive, and many companies leverage outside help when they
purchase it. While it is sold by vendors, many companies also turn to ERP consultants
to help them decide which program to buy and to help them integrate it into their
businesses.

1.8.5 The Need for ERP Software

When companies started to computerize their operations, they would frequently
purchase different applications for each of their departments. Production departments
would purchase computerized manufacturing packages, warehouse managers would
purchase inventory management software and the accounting department would
purchase an accounts receivable package. ERP software integrates all of these
functions into a single, usually modular, application. This way, all of a company's
departments can share data. This ultimately allows the enterprise's resources to be
better managed and planned.
ERP consultants typically get involved with a company when it decides it needs to
implement ERP software. The consultant helps the company set specifications for the
ERP software so it can choose the right package and the right options within the
package. Consultants also help companies build plans for how they need to have their
ERP systems customized. When the basic decision making is done, the consultant can
also help the company negotiate with the vendor on the purchase of the software.
The ERP vendor is either the company that creates the software or a representative
of that company. It sells the software to the client. Usually, the vendor and its
representatives will spearhead the installation, provide initial training and work out any
initial bugs. The vendor also frequently takes care of implementing the customizations
that the company designed in tandem with its ERP consultant.
After-Sale Support
Comparing a vendor and a consultant's post-sale roles is like comparing a mechanic
and a driving instructor. The vendor may continue to play a role in keeping the nuts and
bolts of the system running. An ERP consultant, on the other hand, will help the
company use the software effectively. ERP consultants can help with melding a
business' processes with the way its ERP software operates. They can also train
workers on how to strategically use the software instead of just showing them which
buttons to press. Sometimes, they also help to integrate the software with remaining
legacy applications that don't fit into its framework.

1.9 ERP Markets and Future Directions

Enterprise resource planning (ERP) markets help businesses, as well as non-profits
and government agencies, increase productivity. ERP applications are information

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systems that bind closely various corporate functions, including human resources,
finance and inventory management, while enabling a company to efficiently manage its
customers and suppliers. The only thing constant is change & more so in the high Notes
speed world of technical innovations the question to be asked is whether these changes
can affect the ERP market?
The new cutting edge technologies like Internet commerce & EDI (electronic data
interchange) & the new business practices involving supply chain & customer self-
service provide a fresh threat to the ERP technology
New Markets
As large enterprises become saturated with new generation client/server ERP systems,
vendors are being forced to find new markets for their products. What they would be
doing is:
 Supplementing their direct sales force with reseller channels
 Lowering the entry price point of their software to make it financially viable
 Porting their products on platforms such as Microsoft Windows NT
New channels
Vendors such as SAP AG Inc., Oracle Corporation, & Baan co have been building
reseller channels – both in us & world wide.
This is because the future targets for these companies will be the smaller
businesses that are looking for the complete –one – stop shopping for their ERP
solutions
Faster Implementation methodologies
All ERP vendors have suffered from the perception that their software is difficult & costly
to implement. SAP has introduced a program called accelerated SAP or ASAP that
takes into account knowledge from thousands of R/3 implementations to date &
consolidates this expertise in a product called business engineer. This product helps the
implementation teams configure the sap modules to conform to the processing style of
some 100 business operating scenarios this helps reduce the sap implementation to
less than 6 months in many cases
Business models & BAPIs
Using products like Intellicorps live model, implementation teamscan review & simulate
changes to the SAP R/3 application reference model that provides views of r/3
processes, data models & functions. The reference model & any changes made to it are
stored in the live model repository
The ERP (Enterprise Resource Planning) market is a billion-dollar industry and
growing. Although specific numbers are hard to quantify, there is no question that a
significant percentage of the world's financial transactions touch an ERP (Enterprise
Resource Planning) system in one way or another. ERP (Enterprise Resource
Planning) vendors can he organized by tier, or vendor groupings based on certain
characteristics. There are various criteria for distinguishing between the three tiers. Tier
1 ERP (Enterprise Resource Planning) vendors sell ERP solutions to large,
multinational corporations with more than 1,000 employees and revenues greater than
$1 billion (collectively known as the enterprise space).

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Table 1.1: Characteristics of ERP Vendor Tiers

Notes Tier 1 Tier 2 Tier 3

High complexity Medium complexity Limited functionality
Highest cost of Medium cost of ownership Lowest cost of ownership
ownership
Many industry solutions Fewer industry solutions Fewest industry solutions
Large companies Mid-market companies Small to mid-sized
companies
Global functionality Global functionality Few locations
The ERP market is a very competitive and fast growing market. According to AMR
Research Inc., the leading industry and market analysis firm specializing in enterprise
application and enabling technologies, the Enterprise Resource Planning (ERP)
software market will grow at a compound annual growth rate of 37 per cent over the
next five years.

1.9.1 Significance of ERP Market

The ERP (Enterprise Resource Planning) market plays a key role not only in corporate
decision-making processes but also in global transactions. A company may be at a
competitive disadvantage if it cannot find adequate resource planning applications to
boost competitiveness and improve operating processes in the short and long terms,
according to CIO Magazine, an information technology publication. The ERP market is
a very competitive and fast growing market. According to AMR Research Inc., the
leading industry and market analysis firm specializing in enterprise application and
enabling technologies, the Enterprise Resource Planning (ERP) software market will
grow at a compound annual growth rate of 37 per cent over the next five years.
AMR Research attributes the continued growth to three primary factors.
These are: ERP vendors are continuing to expand market presence by offering new
application such as supply chain management, sales force automation, customer
support and human resources. To sustain their rapid growth, ERP vendors have to sell
more licenses into their installed base. Currently, ERP vendors will try to sell more
licenses into their installed base. Currently, ERP vendors have a 10-20 per cent
penetration (i.e. percentage of total employees currently using the ERP system). This
will grow to 40-60 per cent within the next five years. While ERP originated in the
manufacturing market, ERP usage has spread to nearly every type of enterprise
including retail, utilities, the public sector and healthcare organization. Most will
purchase new ERP system over the next five years, often for the first time.

1.9.2 Participants in ERP Market

ERP market participants vary by economic stature, industry and operating strategy,
notes CIO Magazine. Large organizations typically purchase ERP software with broad
applicability, including corporate fields such as accounting, finance, and human
resources management, sales and purchasing management. Smaller clients, however,
buy limited-scope resource planning software for operating needs.
The vendors in the ERP market are segmenting into two tiers and are focusing on
expanded product functionality, new target markets and higher penetration rates. The
top tier consists of five vendors- SAP AG, Baan PeopleSoft, Oracle Applications and
J.D. Edwards. These companies- The Big5-account for 64 per cent of the ERP market
revenue and have grown over the past year at a furious pace of 61 per cent. In addition,
Baan, J.D. Edwards, Oracle and People Soft are each expected to approach or exceed
$1 billion in total revenue in 1998, while SAP will approach $ 5 billion. One thing is

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clear; no one wants just ERP' anymore .The emerging trends in the enterprise
packaged application industry are its integration with new, cutting-edge technologies,
such as sales force automation (SFA) and customer management. Driven in part by the Notes
huge impact of Internet-based commerce, these new applications are leading to a
seeming divergence between so-called Back Office and Front Office functionalities. The
Indian scenario is slightly different, with the Indian ERP package-Ramco’s Marshal
Accounting for 9 % of the market share. According to the Data Quest Survey
(Dataquest April 15, 1999), in India also, SAP is the market leader with a 20 % market
share. While SAP R/3 and ‘QAD does MFG/PRO continue to dominate the Indian
Market Scene, there is also an undeniable presence of lesser known breeds like J.D.
Edwards and SSA’S BPCS. Other familiar stalwarts like Oracle Financials, Ramco
Marshal and Baanalso dominate the second and third rungs of the domestic ERP
market.

1.9.3 What is the reason for ERP market growth in India?

ERP market in India steadily growing for the last few years and the main reason for this
enormous growth can be attributed to the inability of order system to manage the
conversion to year 2000. There are also other factors such as industry best practices,
easy and faster implementation and good cost predictions.
Another factor behind the growth is that already existing clients acquire more
licenses and modules. The number of employees using the ERP system is increasing
and the ERP clients who have started with the basic modules are going for subsequent
applications. There is also a trend to replace customized system with standard
application packages, like an ERP system.
India is expected to present. According to observation made by some experts in the
field, the ERP market started showing solid organic growth since 2004 as IT spending
improved.
The Indian ERP market experienced CAGR (compounded annual growth rate) of
25.2 during the period of 2004-2009. The market was $83 million in 2004, and is
projected to be over $250 million in 2009, according to a research report.
It clarifies that manufacturers in India are increasingly implementing ERP solutions
to ensure that decision makers have the required information visibility across the value
chain.
Small and medium enterprises across industry verticals and micro verticals, such as
automotive, pharmaceuticals, and textiles, are leveraging ERP solutions to gain
sustainable competitive advantages.

1.9.4 ERP for Small and Medium sized Market

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,

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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
Notes 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
in comparison of buying and implementing a whole system, particularly when the
software and technology seemed likely to become outdated within a few years.
ERP is not only for large organizations. As SMB operations become more 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.
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. Costs
Be sure to include the following components:
 Software cost
 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.
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.
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Enterprise Management 31
Technically Upgradeable
Ensure that the suppliers undertake to upgrade the products to make best use of Notes
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.
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
Rs 1200 crore by year 2020.
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:
 Need to crash the ‘order-to-cash’ cycle time
 Need to optimize finished goods distribution
 Need to close the books in a stipulated time
 Need to give sales people accurate dispatch information.
The common denominator there was that an ERP system linked the organization and
provided the capabilities to achieve business objectives. So, in actuality, there is no
correlation between the size of an organization and its readiness for an ERP system.
Hence, it is not truly an impeding factor in so far as ERP systems penetration is
concerned.
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 opportunity of educating Indian corporate on
correctly evaluating the need for 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

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communications have given ERP vendor’s unconventional yet effective methods of

servicing customers.
Notes
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.
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 organization 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. Organizations 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.
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. Two out of three ERP deals in
America are replacement deals, where the new ERP system replaces the existing one.
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 practice in trade.
Electronic payments are not legal. One estimate puts India’s PC penetration at 0.7 per
one thousand people.
Historically organizations 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.
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
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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 Notes
business) will organizations respond: with new products, with better distribution
channels, with true customer service. And that is when organizations 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.

1.10 Summary
A scheme designed with the aim of helping small companies attract and retain key
employees by rewarding them with share options. Enterprise system is the overall
combination of computer hardware and software that a business uses to organize and
run its operations. The ability to monitor your network devices & network links is the
foundation of any Enterprise Management task. It is often overlooked or considered
(assumed?) to be the responsibility of another team within the organization. Despite
this, network monitoring is a relatively easy task given the appropriate focus, time &
resources. The monitoring of servers is critical to the success of any Enterprise
Monitoring strategy.
The scope of this monitoring depends heavily on your environment, but you might
want to consider the monitoring of Windows, HP-UX, Solaris, AIX and Linux platforms,
both physical & virtual. Monitoring of servers will typically involve the installation of HP
Open View monitoring agents which pro-actively monitor the systems according to well-
defined & agreed monitoring baselines. Once you have your servers monitored using a
well-defined and agreed strategy, the next natural progression should be to start to
consider the next tier, for example databases such as MS SQL, Oracle, Sybase, or
DB2. All critical databases should be monitored to some degree, whether this is via in-
house scripting and basic log file/process monitoring, or via a more advanced/complete
mechanism such as that provided by the HP Open View Database Smart Plug-Ins
(SPIs).
Enterprise system also known as an enterprise resource planning system, an ERP
system is a type of computer-driven strategy that makes it possible to manage a wide
range of company resources using a single platform. Systems of this type are often
focused on enhancing efficiency in regard to managing any tasks associated with
customer orders, beginning with the receipt of those orders and ending with the
successful delivery of the goods and services ordered to the customer. In order to
accomplish this goal, the ERP system must have the ability to effectively manage the
acquisition and usage of resources from outside the business enterprise, as well as
manage assets within the company structure.
According to Watson and Schneider ERP, system is a generic term for an
integrated enterprise computing system. A customized packaged software-based
system handles the majority of information systems requirements for an enterprise.
ERP system is a software architecture that facilitates the information flow among all
functions within an enterprise. It sits on a common database while being supported by a
single development environment. Typical modules of ERP system usually support
administrative functions for finance, human resources, production, logistics and sales,
and marketing.
The use of an ERP system is basis upon the concept that all business functions
have the ultimate goal of generating a return from the enterprise. In order to achieve
this goal, the company must produce goods and services that are attractive to
consumers and in turn generate sales. This means managing every component that has
to do with controlling production costs, the costs of raw materials, and even the

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expenditures that are incurred in collecting customer orders and delivering those
products to customers in a timely manner. From this perspective, an effective ERP
Notes system not only has the ability to aid in arranging the production process so that little to
no waste is produced, but also to manage every cost from the selection of raw materials
to the mode of delivery of the finished product to the customer.
Enterprise systems also commonly known, as ES are comprehensive, large scale
application-software packages, which use powers of present day information technology
(IT) for supporting processes, reporting, data analysis and information flows. These IT
powers include data storage, computational, and data transmission and done between
and within complex organizations. Enterprise systems briefly known as packaged
enterprise application software (PEAS) systems and is a perfect combination of
adjectives, like “enterprise”, “packaged”, and “application”. Enterprise system is a broad
term and includes Enterprise resource planning (ERP), Supply Chain Management
(SCM) and Customer Relationship Management (CRM). Enterprise systems are usually
built on, software platforms like Oracle’s Fusion and SAP’ s Net Weaver and is typically,
a relational database. There are many benefits of employing an enterprise system in an
organization.
Enterprise systems play important roles in large companies. These systems help
companies perform essential tasks, such as deciding the best ways of how to create
products, tracking orders, and incorporating profits, costs and revenues. Enterprise
systems are large-scale applications that allow companies to incorporate and organize
their business processes. These systems can make sure that all of the company's
departments can share vital information with each other. Although there are many
advantages for installing enterprise systems, there are some downsides.
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.
In organization, ERP helps to manage business processes of various departments
& functions through centralized application. We can make all the major decisions by
screening the information provided by ERP.
It is very important to study about ERP adoption because problems in ERP projects
tend to accrue from improper strategic choices of enterprises in the adoption phase.
Further, it is in this phase that enterprises should ensure if the selected ERP systems
fits their business and its needs for information. In this regard, one of the participants in
survey research of claims that: having an ERP is much more than having another IT
tool rather, it is a decision on how to shape the organizational business.’
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, post implementation.
Vendors play an important role in project support function and exercise the quality
control with respect to how the product is implemented. It is the vendor who
understands the finer details and subtleties of the product and can make valuable
suggestions and improvements that could improve the performance of the system. It is
also in the best interests of the vendor that this participation continues, because if the
implementation fails, most of the blame will fall on the vendor. Also a successful

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implementation means another satisfied client, improved goodwill and good referrals
and so on.
Notes
The role of the ERP consultants is known to all of us as we have seen many of
them in action. The company places its trust in the consultants, that its business
objectives will be achieved. The consultants ensure the success of the project. This
produces quantifiable results to the satisfaction of the company management.
ERP end-users are the people who will be using the ERP system once it is
implemented. Most of the functions that the end users used to perform are being
automated by the ERP system. ERP system brings drastic transformation in the actual
work process which leads to change in old job descriptions.
Enterprise resource planning (ERP) markets help businesses, as well as non-profits
and government agencies, increase productivity. ERP applications are information
systems that bind closely various corporate functions, including human resources,
finance and inventory management, while enabling a company to efficiently manage its
customers and suppliers.

1.11 Check Your Progress

Multiple Choice Questions
1. Which of the following statements about ERP systems is true?
(a) Most ERP software implementations fully achieve seamless integration.
(b) Some ERP software packages are themselves combinations of separate
applications for manufacturing, materials resource planning, general ledger,
human resources, procurement, and order entry.
(c) ERP systems are designed primarily for small businesses.
(d) Integration of ERP systems can be achieved in only one way.
2. Which of the following is FALSE with regard to an integrated enterprise information
system?
(a) An integrated enterprise information system is a set of communication channels
in a business organization.
(b) The goal of an integrated enterprise information system is to form one network
by which information is gathered and disseminated.
(c) Redundancy in an integrated information system can lead to data
inconsistency.
(d) Integration can be achieved in only one way.
3. Which of the following is used to solve the problem of stove piped departments?
(a) Encouragement of interdepartmental interactions.
(b) Reengineering of traditional departments and focus on workflow processes.
(c) Assign building space such that people in the same department are all in the
same physical location.
(d) Both A and B
4. Which of the following often result from reengineering?
(a) Streamlined workflow
(b) Reduced head count
(c) Consolidation of disparate information systems to eliminate duplication of efforts
in various activities
(d) All of the above
5. The monitoring of servers is critical to the --------of any Enterprise Monitoring
strategy

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(a) Success
(b) Victory
Notes
(c) Defeat
(d) Loss
6. Which of the following is false about the REA ontology?
(a) It attempts to eliminate stovepipes.
(b) It is based on a set of building blocks.
(c) It can be used by all enterprises and by all functional areas within an enterprise.
(d) None of the above.
7. Most failed ERP software implementations have been blamed on
(a) People Issues
(b) Technological software issues
(c) Hardware issues
(d) Both A and B
8. The redesign of business processes or systems to achieve a dramatic improvement
in enterprise performance is called:
(a) Reengineering
(b) Interruption
(c) Stove piping
(d) Intra-enterprise integration
9. Which of the following about the REA ontology is false?
(a) The REA ontology began as a generalized accounting model but has since
developed into enterprise ontology.
(b) The REA ontology encourages the use of artificial constructs, such as the many
artificial constructs included in SAP systems.
(c) REA ontology has the same objective of enterprise systems.
(d) The purpose of the REA enterprise ontology is to define constructs common to
all enterprises and to demonstrate how those constructs may be represented in
an integrated enterprise information system.
10. REA stands for
(a) Reality Exchange for Activities
(b) Reapplication of Enterprising Accounting
(c) Resources, Events, and Agents
(d) Resources, Events, and Applications

1.12 Questions and Exercises

1. What is ERP and its modules?
2. What are the benefits from ERP?
3. What is the ERP Implementation life cycle?
4. How long does an ERP implementation take?
5. What are the disadvantages of enterprise systems?
6. What makes ERP solution different from others?
7. Defined characteristics of an ERP system adoption.
8. What are the role of vendors, consultants and users?

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1.13 Key Terms
 ERP: Enterprise Resource Planning (ERP) is business process management Notes
software that allows an organization to use a system of integrated applications to
manage the business and automate many back office functions related to
technology, services and human resources.
 Database: A structured set of data held in a computer, especially one that is
accessible in various ways.
 Module: Each of a set of standardized parts or independent units that can be used
to construct a more complex structure, such as an item of furniture or a building.
 Vendor: In a supply chain, a vendor, or a seller, is an enterprise that contributes
goods or services. Generally, a supply chain vendor manufactures inventory/stock
items and sells them to the next link in the chain. Today, the terms refers to a
supplier of any good or service.
 Consultant: A consultant is a professional who provides professional or expert
advice in a particular area such as security (electronic or physical), management,
education, accountancy, law, human resources, marketing (and public relations),
finance, engineering, science or any of many other specialized fields.
 Organization: A social unit of people that is structured and managed to meet
a need or to pursue collective goals.
 Management: Management in businesses and organizations is the function that
coordinates the efforts of people to accomplish goals and objectives by using
available resources efficiently and effectively.
 Enterprise Project Management (EPM): EPM is the field of organizational
development that supports organizations in managing integrally and adapting
themselves to the changes of a transformation.
Check Your Progress: Answers
1. (b) Some ERP software packages are themselves combinations of separate
applications for manufacturing, materials resource planning, general ledger,
human resources, procurement, and order entry.
2. (d) Integration can be achieved in only one way.
3. (d) Both a & b
4. (b) All of the above
5. (a) Success
6. (d) None of the above
7. (a) People issues
8. (a) Reengineering
9. (b) The REA ontology encourages the use of artificial constructs, such as the many
artificial constructs included in SAP systems.
10. (c) Resources, Events and Agents

1.14 Further Readings

 Grant, David; Richard Hall; Nick Wailes; Christopher Wright (March 2006). "The
false promise of technological determinism: the case of enterprise resource
planning systems". New Technology, Work & Employment 21 (1): 2–15.
 Loh, Tee Chiat; Lenny Koh Siau Ching (September 2004). "Critical elements for a
successful ERP implementation in SMEs". International Journal of Production
Research 42 (17): 3433–3455.
 Head, Simon (2005). The New Ruthless Economy. Work and Power in the Digital
Age. Oxford UP. ISBN 0-19-517983-8.

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 Waldner, Jean-Baptiste (1992). Principles of Computer Integrated Manufacturing.

Chichester: John Wiley & Sons Ltd.
Notes  Clemons, E.K.; Kimborough (1986). "IS for Sustainable Competitive Advantage".
Information & Management 11 (3): 131–136.
 Shaul, L. and Tauber, D. 2013. Critical Success Factors in Enterprise Resource
Planning Systems: Review of the Last Decade. ACM Computing Surveys, 45(4), 35.
 Thomas H. Davenport, 1998. "Putting the Enterprise into the Enterprise System",
'Harvard Business Review', July–August.

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