Information Technology and Systems
<< Previous Chapter
Chapter 18 : Enterprise Resource Planning
ERP: An Overview
Rationale for ERP
Enterprise Architecture Planning
Implementing ERP
Understanding Corporate Needs and Culture
Complete Business Process Changes
Communicate Across the Organization
Strong Project Leadership
Efficient and Capable Project Leader
Balanced Teams
Approaches to ERP Implementation
Effect of ERP on the Company
Lead Time Reduction
Punctuality in Shipment
Reduction in Cycle Time
Enhanced Customer Satisfaction
Improved Supplier Performance
Flexibility and Reduction in Quality Cost
Improved Resource Utility
Improved Information Accuracy
Overview of ERP Modules
Finance and Accounting Module
Manufacturing Module
Sales and Distribution Module
Human Resource Management Module
Plant Maintenance Module
ERP Investments in the US
Industry-specific Extensions
Business Intelligence
General ERP Upgradations
ERP Market – The Indian Scenario
ERP Implementation Problems
Emerging Trends in the ERP Industry
Service-Oriented Architecture
XERP Products
Problems of XERP Vendors
Future of XERP
Future of ERP Applications
ERP - Evolving to Link with Supply Chain Planning
Chapter Summary
|
ERP is an organization-wide management system that helps companies automate
their processes, integrate various functions, enable optimum planning and
utilization of resources and improve process efficiency. ERP packages
initially focused on large corporations that operated in various businesses
in various countries. The various traditional applications used by these
organizations served as information islands and did not facilitate exchange
of data between departments. ERP solved this problem by facilitating
integration of various functions. However, the implementation of an ERP
system needs a huge amount of investment, and if the application is not
suitable for the organization, it can do more harm than good.
There are instances when profitable organizations have become bankrupt after
the failed implementation of ERP. Thus, it is advisable for organizations to
analyze the organization's needs and develop a detailed architecture for ERP
prior to ERP implementation. The architecture should be derived from a
holistic analysis of the organization. |
|
An integrated process view rather than a data or function view may be adopted
for the purpose. By adopting the process view, the organization can develop
an architecture supporting all the functional modules required in an ERP
package. The architecture helps the management evaluate different packages
available in the market and select the one that suits the organization.
ERP packages are not implemented in an organization as easily as installing
software in a PC. ERP implementation involves managing changes in the
corporate culture, business processes, and communication and feedback
systems. Only an efficient project leader with strong leadership skills can
implement an ERP system in an organization effectively. However, without the
cooperation of employees, he cannot achieve anything. ERP, when implemented
properly, can offer many benefits to organizations such as lead time
reduction, on-time shipment, cycle time reduction, enhancement of customer
satisfaction, improved supplier performance, flexibility in processes, cost
reduction, and improved resource utilization and information accuracy. It is
essential for companies to take adequate measures during ERP implementation
to ensure that the ERP application integrates with existing applications.
Investments on ERP systems form a major part of IT investments made by
organizations. The investments on ERP can be broadly studied as industry
specific extensions, business intelligence, and general ERP upgradations.
Industry specific extensions enhance the productivity of operating
processes. Application BI tools help organizations in data extraction and
maintaining up-to date information. General upgradations aim at achieving
regulatory compliance. Emergence of service-oriented architecture (SOA) and
Extended ERP (XERP) products are some of the trends witnessed by the ERP
market. SOA is described as an approach towards the design, implementation,
and deployment of information systems. XERP products are dependent on
connectivity and web services. They emphasize sharing of Application
Programming Interface (API) for easy working on products of different
companies.
An ERP solution is effective only when it integrates all the
components/modules (like finance, logistics and HR) and is flexible enough
to accommodate changes in the business environment. The major limitation of
most ERP solutions is that while they excel at transaction management, they
have poor support capabilities for intelligent decision-making. Another
limitation is that many of them limit integration to the enterprise level,
and do not extend it to external business partners. ERP vendors are
upgrading their packages to overcome these limitations. Moreover, as
organizations find it difficult to manage complex ERP systems, ERP vendors
are starting to supplement their ERP packages with application management
tools.
An ERP package consists of a number of modules such as finance and
accounting, manufacturing, sales and distribution, human resource
management, plant maintenance, marketing, and inventory control. Each module
further consists of sub modules. An ERP solution is effective only when it
integrates all modules and is flexible enough to accommodate changes in the
business environment. An organization may encounter certain problems while
implementing ERP systems. It will need to change its corporate culture and
manage employees if they resist change.
Next Chapter>>
|
|
Short Case Studies / Caselets