Enterprise Resource

Planning
(ERP)
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 Presentation - Flow

ERP – General Concepts


ERP based applications - Options

Building ERP solutions using Internal Sources

Adapting Tailor-made ERP Solutions

Developing ERP applications using External Sources

Brainstorming on the Options

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ERP

General Concepts

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 ERP – General Concepts
Enterprise Resource Planning

 What is ERP?
 The Current Scenario
 Why ERP?
 Definition
 Evolution
 Expectations
 BPR & ERP
 BPR – The Steps

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 What is ERP?
Enterprise Resource Planning

ERP is a solution, which

facilitates company-wide integrated
information systems, covering all
functional areas

performs core Corporate activities and

increases customer service augmenting
Corporate Image

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 The Current Scenario
Enterprise Resource Planning

Islands of Information
Difficult to get timely & accurate information
Heterogeneous Hardware & Software
platforms & practices
Poor connectivity between different
organizational locations
Sticking with obsolete technology
Resist to change
Lack of proven man-power to develop
integrated software

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Information Islands

B
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 Why ERP?
Enterprise Resource Planning

For Management – to know what is happening

in the company
One solution for better Management
For cycle time reduction
To achieve cost control & low working capital
To marry latest technologies
To shun the geographical gaps
To satisfy the customers with high expectations
To be Competitive & for survival

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 ERP - Definition
Enterprise Resource Planning

“Software solution that addresses the

Enterprise needs, taking a process view of
the overall organization to meet the goals,
by tightly integrating all functions and
under a common software platform”

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 Evolution of ERP
Enterprise Resource Planning

1960’s - Systems Just for Inventory Control

1970’s - MRP – Material Requirement Planning
(Inventory with material planning & procurement)
1980’s - MRP II – Manufacturing Resources Planning
(Extended MRP to shop floor & distribution Mgnt.)
Mid 1990’s - ERP – Enterprise Resource Planning
(Covering all the activities of an Enterprise)
2000 onwards – ERP II – Collaborative Commerce
(Extending ERP to external business entities)

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 ERP – Expectations
Enterprise Resource Planning

Integrating all the functions

Integrating the systems running in all the locations

Transparency of information using a single

data source across the organization

Software must be responsive

Modular
Flexible
Easy to add functionalities
Provide growth path

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 BPR & ERP
Business Process Re-engineering

Just automating the existing business practices

will not help ERP to achieve the anticipated results
because, OO + NT = EOO
Business Process Re-engineering [BPR] brings out the
deficiencies of the existing setup
BPR and ERP will give way to implement new
systems and the long pending improvements in the
existing systems
BPR may be time consuming but the scope can be
restricted & controlled by the Management

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 BPR - Steps
Business Process Re-engineering

Step 1 Step 2 Step 3

Understand Simplify/Improve Automate

Understand the Draft & frame the Implement
existing possibilities & ways with the help
systems to simplify or of ERP
associated with Improve or
all the eliminate the
functionalities processes

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 ERP – Options
OPTION 1 – MAKE [Using Internal resources]
Enterprise Resource Planning

Developing a custom-built ERP package, specific to the

requirements of the organization, with the help of the
in-house IT department

OPTION 2 - BUY
Going for Tailor-made ERP packages available in the market like
SAP, Oracle applications, Baan, PeopleSoft etc.

OPTION 3 – MAKE [using External resources]

Developing a custom-built ERP package, specific to the
requirements of the organization, with the help of a
software solution provider

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Building ERP solutions
using
Internal Sources

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ERP – Building using Internal
resources – The Facts
 Lack of adequate & qualified manpower
 Not driven with clear focus on expectations,
time & cost
 Poor software project management
 Lack of seriousness with the Management & the
IT Team
 High employee turnover
 Lot of schedule gaps during Project execution
 Normally project life is more
 Frequent change in the scope with the approval
of the Management

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Tailor-made

ERP

Solutions

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 Tailor-made ERP solutions
 About this option
Tailor-made ERP solutions

 Execution Phases
 ERP product selection phase
 Product selection - Parameters
 Preparation Phase
 ERP product acceptance - Options
 Gap Analysis
 Production Phase
 Implementation Phase
 Post-Implementation Phase
 Pitfalls & Points of Concern
 Critical Success factors
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 About

Generalized off the shelf application s/w packages

Tailor-made ERP solutions

Modules based on rich functionalities for all business

functions
User tested with lot of installations
No lead time requirement for software development
Tuned for more users/networks with adequate & in-
built security
Parameterized for flexibility
Can sit on latest hardware & software platforms
Upgradation of functionalities with version control

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 Execution phases

 ERP product selection

Tailor-made ERP solutions

 Preparations
 Production
 Implementation
 Post-Implementation

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 ERP Product selection Phase

 ERP Team formation for selection

Tailor-made ERP solutions

 Appointment of Consultants [if needed]

 Scoping study
 Product selection
 Implementation partners selection
 Hardware/Communication cost estimation

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 Product Selection - Parameters

 Reputation of the ERP product

Tailor-made ERP solutions

 No.of installations in the geographical vicinity

 % of the overall functional availability
 Customization possibilities
 After sales support
 Your investment plan & budget
 Implementation partner’s track record

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ERP Product selection Criteria
Goal:
Functionality
To select the
Most Suitable Software 5 Strategic
Package Solution Requirement
Levels Technology

Vendor

Support

Costs
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 Preparation Phase

 Framing ERP Implementation Strategies

Tailor-made ERP solutions

 Formation of Apex & Steering committees

 Functional & IT team formation
 Training on ERP functions & features
 Scope finalization
 GAP analysis
 Action plan to resolve the gaps

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 ERP product acceptance - options

1. Adapting directly, all the functions available in

Tailor-made ERP solutions

the ERP Product [Applicable for startup companies]

2. Change the way the firm does the business to fit

the product [Compromising]

3. Customize the ERP product to suit the business

Processes. [Customization]

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 GAP Analysis

This is the process to identity the gaps by mapping

Tailor-made ERP solutions

the expectations of the company with the

capabilities of the ERP product

Results of Gap Analysis

Directly Supported
Workaround suggested
Extension required
Change in business process – suggested
Not full supported
Manual – not under the scope of ERP

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 Production Phase

 Installing the software & hardware

Tailor-made ERP solutions

 Tuning the software to meet the

customization needs
 Master & Control data arrival as per
the Product data structures
 Location & people specific roles & rights
allocation for module access & security

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 Implementation Phase

 Conference Room Pilot [Parallel run]

Tailor-made ERP solutions

 Resolving the Parallel run issues

 Training the end users
 Live run

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 Post-Implementation Phase

 Regular monitoring
Tailor-made ERP solutions

 Tuning [hardware/software] for patching

the performance issues
 Maintenance

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 Pitfalls & Points of concern

 Costly comparing to custom-built options

Tailor-made ERP solutions

 Lot of hidden costs

 Chances of cost & time overrun are high
 The Level of customization/Indianization
 Compulsion to pay for redundant modules/features
 Vigorous involvement of all during implementation
 Non-availability of special practices like Customer
Complaint, Logistics
 Linking historical data – offline & painful
 The requirement of Change Management is a must
 Dependency on outsiders is high
 IT department – Poor grip on the Implemented systems

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 Critical Success Factors

 The firm & optimistic approach of the Management

Tailor-made ERP solutions

- on adapting the ERP product driven methodologies

- on customization
- on monetary commitments
 The dedicated Team
 Good Training
 Strict adherence to the Project schedules
 Right technical infra-structure
 Change Management

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Custom-built
ERP
Solutions
using external resources

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Building ERP using Ext.sources

 About this option

 The Principle!
 The Steps
 Why?
 Points of Concern
 Software Vendor selection
 Critical Success factors

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 About

Here the whole package is designed & built

Custom-Built ERP solutions

 by keeping a specific enterprise & its business

Practices in mind
 by incorporating the improvements/additions
 with due integration
 without compromising or changing the current way
of doing the business and
 providing flexibility to accommodate your business
fluctuations

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 The Principle!
Custom-Built ERP solutions

The best as seen elsewhere, need not be the

the best for you.
What is your best is what
can be successfully implemented

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 The Steps

1. Software vendor selection

Custom-Built ERP solutions

2. Detailed study by the vendor

3. Scope & platform finalization
4. Freezing the commercials
5. Development
6. Hardware addition/upgradation
7. Old master/transaction data migration
8. Parallel run with Integration & connectivity check
9. Implementation
10. Maintenance

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 Why?

 Very economical while comparing the cost of implementing

Custom-Built ERP solutions

tailor-made ERP solutions

 Less prone for hidden-cost hits
 The company can opt for its choice of Hardware, Software &
communication platforms based on the skill availability
 The company and the software vendor have the direct
relationship during the project execution. The proximity
would be high & convenient.
 IT department has good control over the Project
 What is required only would be considered under the scope –
No redundancy

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Why? - Cont.

 The requisite flavor of E-Biz & work-flow components

can be embraced towards value edition
 The existing practices & applications can be tuned and
linked with the proposed package
 Maintenance & improvements are easy & less costlier.
Even IT team can maintain the setup after getting the
source code

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Points of Concern

 Software development vendor selection

 Requirement/scope finalization [high chances of
retaining the islands as it is]
 Less chances of Value addition
 Not time tested
 Chances of Prolonged project duration

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Software Vendor Selection

The following traits should be considered while

selecting the software vendor for building the ERP
application
 Technical expertise
 Domain knowledge
 Adequate manpower
 Project management skills
 Long existence in the field
 Extra skills [e-biz & workflow]
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 The Critical Success Factors

• Clear Vision & support of the Management

Custom-Built ERP solutions

• Capabilities of the software development vendor

• Scope & Expectations finalization towards
meeting the ERP concepts
• Strict implementation schedules & periodical
monitoring
• The involvement of the IT & functional teams

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Beyond ERP

Supplier
Supplier
Collaboration
Collaboration

Supply
Supply Chain
Chain
Management
Management

Key
Key Process
Process
Integration
Integration via
via
ERP
ERP
Product
Product
Lifecycle
Lifecycle Customer
Customer
Management
Management Management
Management

Consumers
Consumers and
and
Design
Design Partners
Partners Channels
Channels

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 Thank You

SOSE! SITE Open Source ERP

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