Khagendra Project

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ENTERPRISE RESOURSE MANAGEMENT

MBA

2010

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ENTERPRISE RESOURSE PLANNING

Code No.: 536122

A Seminar Report submittedinpartial fulfilmentoftherequirement

Fortheawardofthedegreeof

Masterof Business Administration (MBA)

NAME:-KHAGENDRA KUMAR CHOUHAN

Session: 2010-2011

Guided by:

Vandita jain

Lecturer,

RITEE, Raipur

Departmentof Management

Raipur Institute Of Technology

Near MandirHasaud,ChhataunaCampus, Raipur (C.G.) 492101


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DECLARATION

I am khagendra kumarchouhan studentof Raipurinstituteoftechnology,raipur(c.g.) Forthe

sessionof 2010-2012,hereby declarethat,this seminarprojectreportonEnterprise Resourse

Management .

Is prepared,inalieu ofacompulsory paperto be submitted forthepartial fulfillmentofmaster f

business administration,is my originalwork.

Alltheinformationanddatagivenintheprojectis authentictothe bestofmy knowledgeand

taken fromreliable sourcees.

Place:

Date: (KHAGENDRA KUMAR C HOUHAN)

MBA-1ST

semester


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CERTIFICATE

This is tocertifiedthat Mr.KHAGENDRA KUMAR CHOUHAN studentofraipurinstituteof

technology, MBA 1ST Semesterhas successfully completedthe seminarreportonknowledge

management,inpartial fulfillmentofofrequirement forthe awardof MBA Degreeprescribed by

theChhattisgarh Swamivivekanand Technical University, Bhilai.

This reportis recordofauthenticwork carriedout by the studentduringtheacademic

year 2010-2012.

Signature Si gnature

(Internalguide) (ExternalGuide)


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ACKNOWLEDGEMENT

Itgives meimmensepleasuretoconvey my heart feltappreciationtotheinstitution. I

sincerely thanks RITEE forprovidingmewithadequate knowledgetotakeonthis comlex

butintrestingtask.

I wuldrememberm sincerethanks to .whohave been beenextremly

helpfulandco-operativeto sharewithmeinformationandtime. I wouldalsoextendmy

depestgratitudeand sincerethanks to Miss Vandita Mam forhis kindco -operationand

helpduringtheprogress oftheproject.

Finally, I wouldnot beableto finishmy reprtwithoutthe supportofmy

parents,friends..I thank them fromthecoreofmy heart.

Mr.KHAGENDRA KUMAR CHOUHAN

MBA 1ST

Semester


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TABLE OF CONTENTS

Sl. No. Topic Pageno.

1 Preface

2 Executive summary

3 Introduction

4 Evolutionof ERP

5 Advantages & disadvantages of ERP

6 Trends in ERP

7 Implementationof ERP in VIT

8 Costofimplementingan ERP

9 Challenges inimplication

10 People soft

11 Conclusion

12 References

13 Bibliography


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EXICUTIVE SUMMARY

The term ERP originally implied systems designed to plan the us e of

enterprise-wide resources.Although the initialism ERP originated in the

manufacturing environment, today's use of the term ERP systems has much

broader scope. ERP systems typically attempt to cover all basic functions of an

organization, regardless of the organization's business or charter. Businesses,

non-profit organizations, nongovernmental organizations, governments, andother large entities utilize ERP systems.

It is the technological backbone of e-business, an enterprise wide

transaction framework with links into different units in the company.ERP

includes in its breadth all the resou rce planning for the enterprise including

product design, information warehousing, material planning, capacity planning

and communications system, to name just a few.

An ERP software package matures over time with additions of new

modules and functionality by the software vendors. The continuingdevelopments in ERP software, including web-enabled modules and e-business

software suites, have made ERP more flexible and user -friendly, as well as

extending it outward to a companys business partners.


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CHAPTER 4: METHODOLOGY

This chapter will set the methodological frame for the current study. It will provide an

understanding

of the grounds on which the study analyses the research object. This is done by discussing the

nature of the research subject the organizational change in the police reform. This chapter

discusses the nature of the research object with regards to how research can gain access to

organizational change, knowing fully well that research data in studies of this nature cannot be

collected from the field like picking strawberries. This chapter describes how the research goes

about gaining knowledge of the research subject and further discusses how the study analyzes the

organizational change which given its nature cannot be taken into a lab to determine its nature or

be

punched into a calculator to see if it measures up to standard.

The discussions on methodology in the following will evolve around and answer to the three

methodological questions which Egon G. Guba (1990) poses:

1. Ontological: What is the nature of the knowable? Or, what is the nature of reality?

2. Epistemological: What is the nature of the relationship between the knower (the inquirer)

and the known (or knowable)?

3. Methodological: How should the inquirer go about finding out knowledge?

These questions will be discussed throughout the chapter. Yet not with the rigidity of Guba (1990)

given the nature of the current thesis and the research study. The scientific theory position in the

current thesis will be discussed and framed in the chapter without labeling the research with a

particular paradigmatic tradition.25

The chapter sets out by describing the nature of change management in the police reform as a

research object. Then it describes the methodology which has been used in the research to gain

knowledge of the research subject. These operational methodological concerns then lead to a

discussion on how to draw research based conclusions and a further discussion on the usefulness

of

these conclusions to theory as well as practice


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Introduction

ERP is an acronym that stands for Enterprise Resource Planning. ERP is

a package software solution that addresses the enterprise needs of an

organization by tightly integrating the various functions of an organization

using a process view of the organization. It is package software and not custom

made software for a specific firm. It gives a company an integrated real-time

view of its core business processes.

The term ERP originally implied systems designed to plan the us e of

enterprise-wide resources. Although the initialism ERP originated in the

manufacturing environment, today's use of the term ERP systems has much

broader scope. ERP systems typically attempt to cover all basic functions of an

organization, regardless of the organization's business or charter. Businesses,

non-profit organizations, nongovernmental organizations, governments, and

other large entities utilize ERP systems.

It is the technological backbone of e-business, an enterprise wide

transaction framework with links into different units in the company.ERP

includes in its breadth all the resource planning for the enterprise includingproduct design, information warehousing, material planning, capacity planni ng

and communications system, to name just a few.

ERP integrates the functional modules tightly. It is not merely the import

and export of data across the functional modules. It integrates all data and

processes of an organization into a unified system.A typical ERP system will

use multiple components of computer software and hardware to achieve the

integration. The integration ensures that the logic of a process that cuts across

the function is captured genuinely. This in turn implies that data once entered inany of the functional modules is made available to every other module tha t

needs this data. This leads to significant improvements by way of improved

consistency and integrity of data.


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Comparing to its previous softwares, ERP uses the relational databases,

fourth generation languages, integrated computer -aided engineering tools such

as product data managers(PDM), and open-system portability to integrate

systems such as advanced planning and scheduling(APS), finite scheduling

systems, and manufacturing execution systems(MES).The APS tools that arepart of a fully integrated ERP system provide excellent what if scenarios for

the manager to determine the most beneficial mix of orders and customers.

ERPs are often incorrectly called back office systems indicating that

customers and the general public are not directly involved. This is contrasted

with front office systems like customer relationship management (CRM)

systems that deal directly with the customers, or the eBusiness systems such as

eCommerce, eGovernment, eTelecom, and eFinance, or supplier relationship

management (SRM) systems.

Modules in ERP

Ideally, ERP delivers a single database that contains all data for the

software modules, which would include:

Manufacturing:

Engineering, Bills of Material, Scheduling, Capacity, Workflow

Management, Quality Control, Cost Management, Manufacturing

Process, Manufacturing Projects, Manufacturing Flow.

Supply Chain Management:

Inventory, Order Entry, Purchasing, Product Configurator, Supply Chain

Planning, Supplier Scheduling, Inspection of goods, Claim Processing,

Commission Calculation.

Financials:

General Ledger, Cash Management, Accounts Payable, Accounts

Receivable, Fixed Assets.

Projects:

Costing, Billing, Time and Expense, Activity Management.


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Human Resources:

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

Customer Relationship Management:

Sales and Marketing, Commissions, Service, CustomerContact and Call

Centre support.

Data Warehouse:

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

Employees.

Why ERP?

Corporations go for ERP either to solve the existing problems or to

explore new opportunities. Actually these two approaches are negative &

positive approach respectively. One aspect of the negative approach forces

some corporations to go for ERP to solve their Y2K problem. This is

particularly true of those corporations that are heavily dependent on legacy

systems running on old main frames. The second aspect of the negative

approach is to get over the problems of islands of heterogeneous andincompatible information systems that were developed over the past several

years in many organizations. Functional ARE modules representing areas such

as Finance, Marketing, HR, and Production in these organizations would be

running on diverse hardware and software platforms leading to nearly

insurmountable problems of reconciling data locked up among the diverse

systems. From a positive perspective many organization look at the great

opportunity provided by ERP software that lead to almost instant access of

transactional information across the corporation. Such an inform ation rich

scenario permits organization to reduce inventory across multiple units/departments/ plants; reduce cycle times from weeks to hours; and improve

customer satisfaction by orders of magnitude. All these translate to increased

profitability or increase in market share and in turn much larger market

capitalization. However ERP is only means and not an end by itself. ERP

provides an opportunity for a corporation to operate as an agile entity to


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improve production / operation, customer service and cus tomer satisfaction. The

creative ingenuity of an organization to drive towards these corporate goals

determines the extent of success an ERP implementation can delive r.

Prior to the concept of ERP systems, departments within an organization

(for example, the human resources (HR) department, the payroll department,

and the financials department) would have their own computer systems. The HR

computer system (often called HRMS or HRIS) would typically contain

information on the department, reporting structure , and personal details of

employees. The payroll department would typically calculate and store pay

check information. The financials department would typically store financial

transactions for the organization. Each system would have to rely on a set of

common data to communicate with each other. For the HRIS to send salaryinformation to the payroll system, an employee number would need to be

assigned and remain static between the two systems to accurately identify an

employee. The financials system was not interested in the employee-level data,

but only in the payouts made by the payroll systems, such as the tax payments

to various authorities, payments for employee benefits to providers, and so on.

This provided complications. For instance, a person could not be paid in the

payroll system without an employee number.

But after the introduction of ERP, the ERP software, among other things,combined the data of formerly separate applications. This made the worry of

keeping numbers in synchronization across multiple systems disappears. It

standardised and reduced the number of software specialities required within

larger organizations.

An ERP software package matures over time with additions of new

modules and functionality by the software vendors. The continuing

developments in ERP software, including web-enabled modules and e-business

software suites, have made ERP more flexible and user -friendly, as well as

extending it outward to a companys business partners.


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Evolution of ERP

P

RP

RP

RP

ERP

ERP G owth Ring

ginning of

Hi a hi al

Data a

ERP (Enterprise Resource Planning) is the evolution of Manufacturing

Requirements Planning (MRP) II. From business perspective, ERP hasexpanded from coordination of manufacturing processes to the integration ofenterprise-wide backend processes. From technological aspect, ERP hasevolved from legacy implementation to more flexible tiered client -serverarchitecture.

1. ill of mat ial p o o ( P):

BOMP is the combination of information technology and business

processes of maintaining the appropriate level of stock in a warehouse. The

activities of this processor include identifying inventory requirements, settingtargets, providing replenishment techniques and options, monitoring item

usages, reconciling the inventory balances, and reporting invento ry status.


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2. M teri l requirement pl nnin :

MRP1 is the predecessor of enterprise resource planning application. ERPhas become the talk of the day not only with regards to management andinformation systems but also for the whole business.

When there is much hype around it is also equally important to trace theorigin of ERP and its Predecessors.MRP1 the acronym of material resourceplanning was the first business application that set foot in the ERP family. Thecredit of computerizing the business processes solely goes to MRPI.MRP1functioned with the objective of increasing the business profit by enriching the

business. It is important to know the problems faced by companies beforeunderstanding how Material resource planning solved them. MRP software wasa boon to companies facing troubles in production. MRP planning facilitated thefunctions of the software.

Predictin the dem nds in dv nce

Companies were able to turn raw material into finished products easilyeven without any technical backups. Companies could not engage in massproduction schedule for fear of decline in the customers demand. Hence theysuffered from some limitations like not being able to predict the demandproperly. If they produced more and the demand was loss the surplus amountedto loss. On the other hand if they engage in lower production scale when thedemand is really high it will affect their business and potential l oss. There

seemed to be no end due to these discrepancies.

Purchasin R aw materials

The question of allocating raw materials and scheduling their purchaseturned out to be another headache. If companies were unable to predict sales itwould neither be logical to expect them to decide the exact quantity of rawmaterials required for production. If they bought excess it was a mere waste .onthe other hand deficit purchase affected sales.

MRP1

Dr Joseph Orlicky invented MRP1 in the year 1960.This system

comprised a computer that helped to compute the exact quantum of rawmaterials and sales. This point proved to be the start for integrating IT withmanufacturing Systems. Ever since they have become inseparable afteradvancements in the name of MRPII and ERP w hile the latest one beingERPII.MRP planning is the crux of MRP software.


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Nature of functionin

MRP1 works like a simple mathematical formula. If all the inputs are fedin one end and the calculations are applied the output is received at the otherend. Input here reefers to the quantity of raw materials and expected demandalong with minute details of resources like Period, optimum production

capacities and the current level of stocks. This will be processed by the system.It will then let the user to know the steps that should be taken for achieving thesaid production limits and there ends the troubles. MRP software solved all theproblems related to production. MRP planning was helpful to a great extent inthis aspect.

Applications

MRP's application in the working environment is wide in nature. It justdoesn't limit to production. It can calculate each and everything related toproduction. The functioning of MRP1 is quiet diverse and it can be put to use in

many industries.

3. Manufacturin resource plannin (MRP II):

MRP was in existence right from the year 1960. MRP II otherwisereferred to as manufacturing resource planning enabled to overcome the setbackof MRPI the acronym of material resource planning.

The analysis of MRP 1 reveals that it is made on the basis of finding outthe quantum of materials that have to be given inorder to gain the said optimumproductivity levels depending on other parameters like production capacity and

factors. The MRP systems were in existence before ERP technology wasinvented.

MRP II was developed with all the features of MRP I .There were alsosome other elements in addition to those contained in MRPI.

Key Elements

In addition MRP II boasts of the following four elements. These give theadded advantages and differentiate MRP I from MRP II.

Response

The significant feature of MRP II is the fact that the lay man in theindustry will be able to realize its effects and hence be able to comment on theworking. Any process is bound to achieve progress if and onl y it receivesvaluable criticism from reliable sources and more so preferably from end user.MRP II capitalizes on this advantage mainly .This response is not restricted to aparticular section of employees. Everybody will be asked to pass their opinion.The response will therefore include all the views. This will help greatly in


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correcting the progress from one process to another. This is deemed to beeffective as it gathers the response and the necessary corrections are made thenand there. Still the MRP Systems cannot out beat ERP Technology.

Allocatin reserves

The system of MRP helps to maintain a neat agenda for the manner inwhich the resources are to be allocated without any confusions and khais. Thismeans everybody will know what is expected from them within the stipulateddeadline. Any discrepancy between the actual time taken and the one allotted islikely to affect the effectiveness of this operation.

Matchin the requirements

MRP helps in deciding the ideal software requirements of the company. Itis either calculated on the basis of minimizing investme nts or purchasingproducts that render benefits for a particular time or selecting sets of products

based on the coincidence of factors among them.

Software extension pro rammes

MRPII buy itself composes of a numerous software program. Thesesoftware programs aid in the functioning of the business. They have beenmanufactured with the intent to benefit the company in all possible ways. Thereis lot of calculations involved with regards to these softwares.

Popularity

MRP II has not yet lost popularity inspite of the intervention ofERP.Many organizations still consider it as a part of the manufacturing process.MRP systems are still in vogue in many industries and the manufacturing sectordeserves special credit in this aspect.

The success of MRP 2 is to be determined by a set of factors. Firstly

there should be cent percentage accuracy in the calculations that are performed.

These calculations determine the success of MRP 2 so as its workings. The

technique adopted to follow the operations is another factor that decides the

success of MRP.


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Advantages of ERP

There are a number of powerful advantages to Enterprise Resource

Planning. It has been used to solve a number of problems that have plagued

large organizations in the past.

1. Efficiency:It should first be noted that companies that fail to utilize systems

such as ERP may find themselves using various software packages thatmay not function well with each other. In the long run, this could makethe company less efficient than it should be.

2.Design process

There are a number of processes that a company may need tointegrate together. One of these processes is called design engineering.When a company is in the process of designing a product, the process ofactually creating it is just as important as the end result. ERP can beuseful in helping a company find the best design process.

3. Order tacklingAnother area where ERP can be useful is order tracking. When a

company receives orders for a product, being able to properly track theorders can allow the company to get detailed information on theircustomers and marketing strategies. If different software packages arebeing used, this data may not be consistent.

4. Accounting application:Perhaps one of the most important advantages of ERP is its

accounting applications. It can integrate the cost, profit, and revenue

information of sales that are made, and it can be presented in a granular

way.

5. Manufacturing:Enterprise Resource Planning can also be responsible for altering

how a product is manufactured. A dating structure can be set up which

can allow the company to be informed of when their product should be


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updated. This is important, because it will allow the company to keep

better track of their products, and it can allow the products themselves to

be produced with a higher level of quality

6. Security:Another area where ERP can be an indispensable tool is the area of

security. It can protect a company against crimes such as embezzlement

or industrial espionage.

Disadvantages of ERP:

However, with all the advantages that ERP offers, there are a number of

disadvantages as well.

1. H

igh investment

One of the biggest disadvantages to this technology is the cost. At

this time, only large corporations can truly take advantage of the benefits

that are offered by this technology. This leaves most small and medium

sized businesses in the dark. A number of studies have shown that the

biggest challenges companies will face when trying to implement ERP

deals with investment.

2. Cost of training:The success of the system is fully dependent on how the workers

utilize it. This means they must be properly trained, and a number of

companies have attempted to save money by reducing the cost of training.

Even if a company has enough money to implement ERP, they may not

be able to successfully use it if they do not have enough money to train

their workers on the process of using it.

3. Alteration:Most ERP vendors will not allow the structure of the software to be

altered. One advantage to ERP is that making the necessary changes to

use it may actually make a company less competitive in the market. In

addition to the costs involved with implemented ERP and training


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Web-enabled ERP:

This is the second development in the evolution of ERP. The growth of

the internet and corporate intranets and extranets prompted software companies

to use internet technologies to build Web interfaces and networking capabilities

into ERP systems. These features make ERP systems easier to use and connectto other internal applications as well as to the systems of a companys business

partners.

Interenterprise ERP:

The Internet connectivity has led to the development of interenterprise

ERP systems that provide Web-enabled links between key business systems of a

company and its customers, suppliers, distributors and others. These external

links signalled a move towards the integration of internal -facing ERP

applications of supply chain management and company s supply chain partners.

E-business suites:

All the developments have provided the business and technological

momentum for the integration of ERP functions into e -business suites. The

major ERP software companies have developed modular, Web -enabled

software suites that integrate ERP, customer relationship management, supply

chain management, procurement, decision support, enterprise portals, and

other business applications and functions. Examples include Oracles e -Business Suite and SAPs my SAP.


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Implementation of ERP in VIT

Because of their wide scope of application within a business, ERP

software systems are typically complex and usually impose significant changes

on staff work practices. Implementing ERP software is typically not an "in -

house" skill, so even smaller projects are more cost effective if specialist ERP

implementation consultants are employed. The length of time to implement an

ERP system depends on the size of the business, the scope of the change and

willingness of the customer to take ownership for the project. A small project(e.g., a company of less than 100 staff) may be planned and del ivered within 3

months; however, a large, multi-site or multi-country implementation may take

years.

The most important aspect of any ERP implementation is that the

company who has purchased the ERP solution takes ownership of the project.

To implement ERP systems, companies often seek the help of an ERP

vendor or of third-party consulting companies. These firms typically provide

three areas of professional services: consulting, customization and support.

Consulting Services:

The Consulting team is typically responsible for your initial ERP

implementation and subsequent delivery of work to tailor the system beyond

"go live". Typically such tailoring includes additional product training; creation

of process triggers and workflow; specialist advice to improve how the ERP is

used in the business; system optimization; and assistance writing reports,

complex data extracts or implementing Business Intelligence.

The consulting team is also responsible for planning and jointly testing

the implementation. This is a critical part of the project, and one that is often

overlooked.

Consulting for a large ERP project involves three levels: systems

architecture, business process consulting (primarily re -engineering) and


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technical consulting (primarily programming and tool configuration activity). A

systems architect designs the overall dataflow for the enterprise including the

future dataflow plan. A business consultant studies an organization's current

business processes and matches them to the corresponding processes in the ERP

system, thus 'configuring' the ERP system to the organization's needs. Technicalconsulting often involves programming. Most ERP vendors allow modification

of their software to suit the business needs of their customer.

For most mid-sized companies, the cost of the implementation will range

from around the list price of the ERP user licenses to up to twice this amount

(depending on the level of customization required). Large compa nies, and

especially those with multiple sites or countries, will often spend considerably

more on the implementation than the cost of the user licenses -- three to five

times more is not uncommon for a multi-site implementation.

Customization Services

Customization is the process of extending or changing how the system

works by writing new user interfaces and underlying application code. Such

customisations typically reflect local work practices that are not currently in the

core routines of the ERP system software.

Examples of such code include early adopter features (e.g., mobility

interfaces were uncommon a few years ago and were typically customised) or

interfacing to third party applications (this is 'bread and butter' customization for

larger implementations as there are typically dozens of ancillary systems that

the core ERP software has to interact with). The Professional Services team is

also involved during ERP upgrades to ensure that customisations are compatible

with the new release. In some cases the functionality delivered via a previous

customization may have been subsequently incorporated into the core routines

of the ERP software, allowing customers to revert back to standard product and

retire the customization completely.

Customizing an ERP package can be very expensive and complicated,because many ERP packages are not designed to support customization, so most

businesses implement the best practices embedded in the acquired ERP system.

Some ERP packages are very generic in their reports and inquiries, such that

customization is expected in every implementation. It is important to recognize

that for these packages it often makes sense to buy third party plug-ins that

interface well with your ERP software rather than reinventing the wheel.


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Customization work is usually undertaken as bespoke software

development on a time and materials basis. Bec ause of the specialist nature of

the customization and the 'one off' aspect of the work, it is common to pay in

the order of $200 per hour for this work. Also, in many cases the work delivered

as customization is not covered by the ERP vendors Maintenance Agreement,so while there is typically a 90-day warranty against software faults in the

custom code, there is no obligation on the ERP vendor to warrant that the code

works with the next upgrade or point release of the core product.

One often neglected aspect of customization is the associated

documentation. While it can seem like a considerable -- and expensive --

overhead to the customization project, it is critical that someone is responsible

for the creation and user testing of the documentation. Withou t the description

on how to use the customisation, the effort is largely wasted as it becomes

difficult to train new staff in the work practice that the customization delivers.

Maintenance and Support Services

Once your system has been implemented, the consulting company will

typically enter into a Support Agreement to assist your staff to keep the ERP

software running in an optimal way. To minimize additional costs and provide

more realism into the needs of the units to be affected by ERP (as an added

service to customers), the option of creating a committee headed by the

consultant using participative management approach during the design stagewith the client's heads of departments (no substitutes allowed) to be affected by

the changes in ERPs to provide hands on management control requirements

planning. This would allow direct long term projections into the client's needs,

thus minimizing future conversion patches (at least for the 1st 5 years operation

unless there is a corporate-wide organizational structural change involving

operational systems) on a more dedicated approach to initial conversion.

A Maintenance Agreement typically provides you rights to all current

version patches, and both minor and major releases, and will most likely allow

your staff to raise support calls. While there is no standard cost for this type of

agreement, they are typically between 15% and 20% of the list price of the ERP

user licenses.

There is no easy magic through which one can prepare an organization

for ERP implementation. Exposing the top management to the benefits of ERP

through the real world case studies, sharing of experience by other corporations


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that have successfully implemented ERP and creation of awareness is the first

step. Convincing the top management to use a high risk, high reward scheme

such as ERP is a major challenge. Almost all the members of the organization

should get the excitement about ERP project implementation. Communicating

and sharing of the ERP vision is the most important organizational preparationfor a successful ERP implementation.

Features of ERP

Some of the major features of ERP and what ERP can do for the businesssystem are as below:

o ERP facilitates company-wide Integrated Information Systemcovering all functional areas like Manufacturing, Selling anddistribution, Payables, Receivables, Inventory, Accounts, Humanresources, Purchases etc.,

o ERP performs core corporate activities and increases customerservice and thereby augmenting the Corporate Image.

o ERP bridges the information gap across the organisation.o ERP provides for complete integration of Systems not only across

the departments in a company but also across the companies un derthe same management.

o ERP is the only solution for better Project Management.o ERP allows automatic introduction of latest technologies like

Electronic Fund Transfer (EFT), Electronic Data Interchange

(EDI), Internet, Intranet, Video conferencing, E -Commerce etc.o ERP eliminates the most of the business problems like Material

shortages, Productivity enhancements, Customer service, CashManagement, Inventory problems, Quality problems, Promptdelivery etc.,

o ERP not only addresses the current requirements of the company but also provides the opportunity of continually improving andrefining business processes.

o ERP provides business intelligence tools like Decision SupportSystems (DSS), Executive Information System (EIS), Reporting,

Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their businessprocesses


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Cost of Implementingan ERP System:

ERP implementation cost can be divided into one-time costs and ongoing

annual costs. Both types of costs can be segmented into hardware, software,external assistance and internal personnel.

Costs ofimplementing a new

ERP system

Reengineering

43%

One-Time Costs

Software:

The cost of an ERP software package varies widely, ranging from

Rs.15, 00,000 for micro-based packages to several million rupees for some

mainframe packages. The number of concurrent users generally drives the

software cost, so that smaller systems cost less. In addition to the ERP software

package, one-time costs may include systems software, development of

customized software, or integration with other applications.

ardware:

Hardware selection is driven by the firms choice of an ERP software

package. The ERP software vendor generally certifies which hardware must be

used to run the ERP system. Hardware may need to be replaced or upgraded. As

a general rule, small-to medium size manufacturers already have


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microcomputers and a local area network, so that a micro-based ERP system

build standards which requires a little additional investmen t in hardware.

External Assistance:

External assistance includes the consulting and training costs toimplement the ERP package. The software vendor, reseller, or independent

consulting group may provide external assistance. The amount of external

assistance required is dependent on several factors, such as the complexity of

the ERP package, the experience and knowledge of internal personnel, and the

extent to which external personnel are used in place of internal personnel to

implement the system.

Internal personnel:

Internal personnel time reflects the time commitments for theimplementation project team, the executive steering committee, and the users in

various functional areas and MIS personnel. The time commitments include

training classes, development of internal procedures for using the system,

developing customized reports and applications, preparation of the data,

meetings with external consultant and team meetings. A general guideline for

internal personnel costs can also be expressed as a ratio with the ERP software

costs, where a typical ratio is 0.5 to 1.0.

The one-time costs for implementing an ERP system can be simplisticallyestimated using typical ratios with ERP software costs.

Ongoing Annual Costs:

Software:

Ongoing software costs should include the annual customer support

agreement with the ERP software vendor. This customer support typically

provides telephone assistance and software upgrades and is priced around 15

percent to 20 percent of the software price. Upgrades to software releases are

also required.

The upgrade path for new releases of the ERP software package is

critical. New releases contain enhancements for functionality and bug fixes, and

ensure that the software runs on the latest technology platform. From the u sers

point of view, the upgrade path enables the manufacturer to take advantage of


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hundreds of labour-years of development efforts undertaken by the ERP

software vendor with minimal investment. From the vendor point of view, it is

much easier to support users to the latest releases. However, user changes to

sources code and other user customizations can make it very expensive or even

impossible to upgrade.Hardware:

Ongoing hardware cost will reflect new requirements specified by the

ERP vendor to run the software.

External assistance:

External assistance should be used as part of a continuous improvement

program to effectively use an ERP system application for running the company.

Training and consulting can focus on improved business processes, new or poorly used software functionality, and training of new personnel. A phased

implementation approach requires additional assistance at each phase.

Additional customizations may be required, especially with evolving user

sophistication.

Internal personnel:

The implementation project team does not necessarily end its

responsibilities at time of system cut over. A phased implementation approach

and continuous improvement efforts will require ongoing time commitments.

Employee turnover and job rotation will also require ongoing training efforts.

The nature of the ERP software package typically mandates the number and

expertise of MIS personnel needed for ongoing support. This support may range

from a part-time clerical person to a large group of MIS experts.

Replacing or Reimplementingan ERP system:

An investment analysis focusing on ERP benefits frequently applies to

those firms initially justifying an ERP implementation. It can also used to

justify a reimplementation when the initial efforts have failed t o produce desired

results. The breakout box describing classifications of ERP success identifies

situations where the ERP implementation falls short of producing desired

benefits.


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Benefits of ERP in VIT:

Even though much of ERP success has been in fac ilitating operational

coordination across functional departments, successful implementation of ERP

systems benefit strategic planning and management control one way or other.

Some of the various benefits of ERP in VIT are as follows;

1.Help reduce operating costs:

ERP software integrates business processes across various departmentsonto a single enterprise-wide information system. The major benefits of ERP

are improved coordination across functional departments and increasedefficiencies of doing business. The immediate benefit from implementing ERPsystems we can expect is reduced operating costs, such as lower stationary cost,and lower help desk support costs.

2.Facilitate Day-to-Day Management:

The other benefits from implementing ERP systems are facilitation ofday-to-day management. The implementations of ERP systems nurture theestablishment of backbone data warehouses. ERP systems offer betteraccessibility to data so that management can have up-to-the-minute access toinformation for decision making regarding payment of wages . ERP softwarehelps track actual costs of activities and perform activity based costing.

3.Support Strategic Planning:

Strategic Planning is "a deliberate set of steps that assess needs andresources; define a target audience and a set of goals and objectives; plan anddesign coordinated strategies with evidence of success; logically connect thesestrategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes." Part of ERP software systems is designed to support

resource planning portion of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration with Decision Support Systems(DSS).


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How to avoid ERP failures?

The failures of ERP can be avoided by following the simple ERP

implementation techniques. They are discussed as follows;

A, Phased-in approach:

Implementation of ERP should have a phased-in approach. In other

words, the applications must be installed by taking one department at a

time.

Ex; Russ Berrie & Co, basically a teddy bear maker had failed

installation of Packaged ERP applications but after rolling out J. D. Edwards

& One World Xe suite of ERP. They succeeded. The reason for the success

was the following of phased-in approach.

B, Estimation of the complex nature:

The Agilent technology, which is a multinational communication &

life sciences company, had problems with ERP. Initially they failed. But now

they are stable. The reason behind the failure was underestimation of the

complex nature of ERP implementation. So for successful implementation,there must be a proper understanding of the complex nature of ERP

implementation process.

C, Involvement of affected employees:

Failure to involve affected employees in the planning and

development phases, were typical causes of failed ERP projects. So there

must be proper involvement of affected employees in development and

planning process of change management.

D, Slow process:

Whirlpool corporations is the worlds leading manufacturer &

marketer of home appliances failed in their ERP implementation. The

executives made a damaging business decision by going live with SAP R/3

ERP applications on the 3 day labour holiday. There were many problems


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that were to be addressed but everything was done too fast. Finally as a

result of this, there was a delay in shipment and Whirlpool lost a lot of

potential sales. So a slow process must be followed in conversion process.

E, Effective testing:

When ERP is ready to be implemented, it must be tested several times

for any problems that may arise. And also there must be proper conversion

process & effective training must done before implementing ERP.

The spectacular failures of ERP systems could have been avoided if

the above steps were followed.

Present scenario at VIT

Inter ace Inter ace Inter ace Inter ace

Present cenario at VIT

iss

ionee

str ct re

tten

ancearks cade ic

dates


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Ca us Solu ions @ VIT

ADMINI-

STRATION

FINANCIALSEXTERNAL

ASSOCIATION

ACADEMIC

CHALLEN ES IN ERP IMPLEMENTATION:

There are many challenges that have to be faced in ERP implementation.

These challenges are explained as follows:

1. Convincing people:

One of the most difficult challenge in ERP implementation is to convince

people of the change process .some people might feel insecure about their job in

order to make a successful ERP implementation we must convince people . This

can be done only when there is proper sharing and sharing of ERP vision.


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PEOPLESOFT

History

Founded in 1987 by David Duffield and Ken Morris, originally

headquartered in Walnut Creek, California, and eventually Pleasanton,

California, PeopleSoft's roots began with an idea Duffield had about a "Client-

Server" version of Integral Systems popular mainframe HRMS package. Once

Integral declined development and released Duffield to pursue this endeavour

on his own, PeopleSoft was born. In 2003, when the company acquired J.D.

Edwards, it decided to differentiate its former product line with those of

Edwards by renaming both products. In January 2005, PeopleSoft was acquired

in a hostile takeover by Oracle Corporation. This takeover was resisted, but

Oracle overcame the legal challenge and PeopleSoft ceased to be an

independent company, although its products continue to be used.

Product design

The whole software suite of PeopleSoft moved from the traditional client -

server based design to web-centric design, called PeopleSoft Internet

Architecture (PIA) with their version 8 releases. The end result was that all of a

company's business functions could be accessed and run on a web client. Asmall number of security and system setup functions, though, still needed to be

performed on a fat client machine. The inherent nature of Internet-based

applications allowed for a straightforward transition from a client -server model.

One important feature of PeopleSoft's PIA is that no code is required on the

client - there is no need for additional downloads of plugins, or JVMs such as

the Jinitiator required for Oracle Applications.

The architecture is built around PeopleSofts own People Tools

technology. People Tools is a proprietary development platform (similar to a

4GL) created by PeopleSoft. This platform includes many different components

a developer theoretically needs to create an application including a scripting

language, design tools to define various types of metadata, standard security

structure, and batch processing tools. The metadata describes data for user

interfaces, tables, messages, security, navigation, portals, and so forth. The

benefit of creating their own development platform allowed PeopleSoft


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applications to run on top of many different operating systems and database

platforms; it is not tied to a single database platform (though with the Oracle

takeover, it is possible this could change in the future). PeopleSoft

implementations exist or have existed on Oracle, Microsoft SQL Server,

Informix, Sybase, IBM DB2 (including its z/OS, Unix and OS/400 variants),Oracle Rdb and HP AllBase/SQL.

All of PeopleSofts modules (Human Resources, Supply Chain,

Financials, CRM, etc.) are built with the People Tools technology. A benefit of

the technology is that all the code which makes up a module can be customized

to suit the owners business needs. An auxiliary product, People Code, is an

(ool) object-oriented proprietary language used to express business logic for

PeopleSoft applications.

J.D. Edwards

In 2003, PeopleSoft performed a friendly merger with smaller rival J.D.

Edwards software. The former rival's similar product line was differentiated by

its target audience; mid-sized companies who could not hope to afford the

original PeopleSoft applications. J.D. Edwards product lines, formerly J.D.

Edwards World on the AS/400 and OneWorld was and continues to be

differentiated by its Configurable Network Architecture or CNCArchitecture.

This architecture is designed to shield applications from both the operating

system of the database backend servers as long as some flavour of the SQLlanguage is used. Thus, IBM's DB2/UDB, Microsoft's SQL 2000 and Oracle's

databases are supported. J.D. Edwards also continued to support thousands of

customers on AS/400s running its original J.D. Edwards WorldorWorldSoft"

product.

Likewise servers can run on a host of operating systems including Linux,

Windows and IBM's AS/400 operating system. In addition, PeopleSoft remains

committed to supporting J.D. Edwards's original AS/400-based World software,

also called WorldSoft, the old-style "green screen" application the same

application which drove Duffield to branch out and create PeopleSoft in the first

place.


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Oracle Corporation

Beginning in 2003, PeopleSoft battled with Oracle over control of the

PeopleSoft company. In June 2003, Oracle made a $7 billion bid ($19.50/share)

in a hostile corporate takeover attempt. In February 2004, Oracle increased their

bid to approximately $9.4 billion ($26/share), a 33% increase; this offer wasalso rejected forthwith by PeopleSoft's board of directors. Later that month, the

U.S. Department of Justice filed suit to block Oracle, on the grounds that the

acquisition would break anti-trust laws; however, in September 2004, the suit

was rejected by a U.S. Federal judge, who found that the Justice Department

had not proven its anti-trust case; in October, the same decision was handed

down by the European Commission. Though Oracle had reduced its offer to

$7.7 billion ($21/share) in May, it again raised its bid in November to $9.4

billion ($24/share), marking a 14% increase.

In December 2004, Oracle announced that it signed a definitive merger

agreement to acquire PeopleSoft for approximately $10.3 billion ($26.50/share).

In January 2005, Oracle made drastic cuts to the PeopleSoft ranks. Although

these cuts affected approximately 9% of the 55,000 staff of the combined

companies, they have maintained at least 90% of PeopleSoft's product

development and support staff.

After its acquisition of PeopleSoft, Oracle rebranded the original J.D.

Edwards products to once again include the J.D. Edwards name in order tocapitalize on the strong brand loyalty that was perceived to exist within the J.D.

Edwards user community. Thus, PeopleSoft EnterpriseOne was rebranded JD

Edwards EnterpriseOne and PeopleSoft World was rebranded JD Edwards

World.

PeopleSoft has merged with Oracle and a new product Fusion is to be

released by Oracle in the near future. Oracle says Fusion will take the best

aspects of the PeopleSoft, JD Edwards and Oracle Applications and merge them

into a new product suite.

Oracle is, however, offering to maintain support for the existing Oracle

and PeopleSoft product lines for customers who wish to continue with what

they have. The line they are taking appears to be an attempt to prevent customer

defections to rival ERP vendors by making it attractive to retain current

applications or move to Fusion when appropriate.


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PeopleSoft in use

PeopleSoft software has been successfully implemented by many of its

customers. However there have been several instances of litigation. As with any

ERP software, the implementation process (including analysis, planning and

development), performance (load) testing and various other types of softwaretesting is absolutely critical towards the success of the project.

Although Student Administration and Higher Education systems make up

only a small proportion of the company's user base, they seem to have attracted

a degree of adverse comment.

In 1997, Cleveland State University licensed PeopleSoft's software for

tracking student records. They initially had an implementation partner, Kaludis

Consulting Group Inc. After seven years of difficulties, CSU sued - initially

naming Kaludis, but later (after Kaludis countersued) naming PeopleSoft as the

main defendant and including Kaludis. The suit was for $510 million, claiming

breach of contract, fraud, negligent misrepresentation and four other counts.

The university claimed that software developed by PeopleSoft was missing

specified features, and as a result caused disruption to their admissions process.

PeopleSoft claimed that they had followed industry best practices. Court

documents available online show the case was settled in 2005. The settlement

agreement mentions a payment from Kaludis to CSU, as part of the settlement.

There is no mention of any payment by PeopleSoft.

In December 1999, seven of the eight "Big Ten" Midwestern universities

which licensed PeopleSoft's software wrote a joint, open letter to the PeopleSoft

CEO complaining about quality and performance issues.

The California State University system adopted PeopleSoft in the early

2000s. The university spent $500 million on this system in a process so

deficient that it resulted in an investigation and a rebuke by the state legislature.

The Report of the California State Auditor criticised the University, amongst

other things, for not having a business case for the implementation. When askedwhy it never conducted a formal return -on investment analysis on the CMS

project, the university explained that the magnitude of potential savings

estimated by its consultants, IBM and Pacific Partners Consulting Group

(Pacific Partners), led them to believe that such a formal analysis was

unnecessary.


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Arizona State University, one of the largest universities in the western

region, recently migrated to an Oracle database and PeopleSoft solution.

PeopleSoft timeline

y1987: PeopleSoft, Inc. founded by David Duffield and Ken Morris inWalnut Creek, CA, USA.

y 1988: PeopleSoft HRMS released.y 1991: Begins opening international offices.y 1994: Public distribution of Distribution and Financials modules.y 1995: Launch of Student Administration System.y

1996: Releases Manufacturing and PeopleSoft 6, their first ERP package.y 1997: PeopleSoft 7 is released within upgraded ERP modules.y 1998: PeopleSoft 7.5 is released with improved client/server technology.

Acquired Intrepid Systems.

y 1999: Craig Conway named new CEO; release products to enable Internettransactions.

y 2000: Acquired Vantive Corporation.y 2000: Deliver PeopleSoft 8 with an in -house application service provider.y 2003: Acquired J.D. Edwardsy 2005: Acquired by Oracle Corporation.y 2007: PeopleSoft HCM 9.0 is released.


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Some Recommendations

The top 20 ERP implementation tips

Planning

1. Know your goals for your ERP implementation. Choose the product thatpromises to meet those goals and put measurement tools and processes in placeto gauge your success. In particular set goals for performance, response timeand downtime.

2. Don't do any project without a plan, particularly an ERP project whichtouches almost every part of your organization. Be sure to test, test, test, all the

way through. All of these things seem like 'nice-to-haves' rather than criticalelements in a project, but can make the overall project much more successful.

3. Involve users in your ERP project planning phase. The software is not goingto do you much good if you don't have employee buy -in.

4. Don't do the planning and implementation alone if you don't have the in-house skills to make it happen. Determining which options and features to userequires experience. If the in-house team doesn't have that experience finds alocal ERP expert who is trustworthy and who collaborates well with your team.

5. Be realistic in your cost projections. Double the consulting firm's estimate.Be realistic about training costs. Even at the largest level, companiesunderestimate the training costs.

6. Don't keep adding to your project. In the planning and evaluation stage, people see the capabilities of products and want to use each new one theydiscover. Commit to what you want to do initially. Get your return oninvestment and then expand. Otherwise, you'll have a never -ending andunsuccessful project.

To host or not to host?

7. If you'd prefer the hosting model for your ERP, then scrutinize yourapplication service provider (ASP) well. First of all, you must be able to trustthis ASP with your data. Find out if that hosting company provides cookiecutter solutions or can customize the ERP suite to fit your needs. Manyoutsourcers don't know enough about ERP to customize it. Then again, if a


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cookie cutter solution is okay for you, then fine, use an outsourcer and you don'thave to take care of your ERP.

8.Hosting should take out a lot of internal costs of labor. It should save youmoneyby spreading payments over a period of time. You should be paying

less over a period of time for hosting than you would do it yourself. If you'renot paying less, don't use an ASP, he said

Evaluation

9.Choose an ERP package that is industry-standards based. You don't want tofind yourself out on a limb with customers who can't interact with yourproprietary, out-of-standard implementation.

10. Look closely at maintenance costs. You can pay a great purchase price andfind that it costs a fortune to maintain.

11. Evaluate your processes and decide if changing them to fit a particular ERPsuite would be beneficial. Either you're looking for customization or going forout-of-the-box. With the latter, people have to change how they do things inorder to conform to the package. That may work for a company that needs tomake changes anyway. Often, however, it's better to choose a suite that canconform to your needs.

12. Discuss a vendor's stability with the vendor reps and outside experts. Findout if the company is losing market share, which might make it a candidate for a

takeover or failure.

13. Whenever a company and its ERP package are acquired, it's not usuallygood news for the customer. Often, the vendor is buying the client base and isnot that interested in the software itself. Instead, they'll try to get clients to moveto their own platform. In this situation, customers may have to migrate withoutgood business reasons.

14. Get empirical evidence of return on investment from the vendor and/or aconsultant. Also, simulate the ERP suite in your company and make your own

calculations.

15. Get vendors to come clean about their upgrade cycles. Once they get you asa customer, their goal is to sell you new features and upgrades. You want acompany that upgrades and adds necessary features and doesn't lock you into anexpensive upgrade cycle.


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16. Find out how much customization assistance the vendor will offer. If youcustomize the ERP package to fit your business scenarios without vendorsupport, you can limit your support options from that vendor down the road.

17. Be efficient in contract negotiations. Don't spend too much time analyzing

details to the Nth degree. If vendor can answer 25 critical questions and givemost of what you want, you're going to be in good shape. Focus more on criticalitems to get through negotiations more quickly.

18. You can't get everything you want. Do accept that there is always going tobe a functionality gap. Usually, you have to let 10% go. If the gap is more than10%, keep shopping.

After the implementation

19. Pay attention to the quality of your data and the daily workflow. This isespecially important during the transition time after implementation and duringperiods when your business is changing or growing. Watch for seasonalvariations, too. For example, Christmas can cause big jumps in data volume fora retail company.

20. Don't sign up for long training sessions. Instead, do some initial, condensedtraining on your own site, and then set up a regular class schedule that givesusers time to learn before they move on. By the time the class is over, thetrainees have forgotten the first half of the lessons.


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Conclusion

The growing information needs of an enterprise make it imperative toimprove or replace old systems. Especially under the present Indian businessenvironment, where the globalization has been initiated, full convertibility iscoined, Infrastructure Projects are nearing completion, and it is expected thatthe whole business system will undergo a major shift. Thus by being a proficient ERP consultant, ERP will prove their commitment to the businessworld and modern management.


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References

yFrom

CTS, VIT

y Maximizing your ERP system-HAMILTONy Management Information Systems-OBrien Marakasy ERP tools,techniques,and applications for integrating the supply chain -Carol A.Ptak

y www.wikipedia.orgy www.ebsco.comy www.peoplesoft.comy www.erpsupersite.comy " http://findarticles.com/p/articles/mi_m4153/is_6_57/ai_69759746/ y http://www.roseindia.net/blog/2008/01/04/erp-inventory-

management/

y http://en.wikipedia.org/wiki/Inventoryy http://www.google.co.in/images?hl=en&gbv=2&tbs=isch

%3A1&sa=1&q=inventory+management+form&aq=f&aqi=&aql=&oq=&gs_rfai=&start=0


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BIBLIOGRAPHY

1.Shashi K. Gupta, R.K. Gupta, FINANCIALMANAGEMENT (Kalyani Publication)

Documents

Khagendra Project