INTRODUCTION

ERP (Enterprise Resource planning) covers the technique and concepts employed for the integrated management of business as a whole, from the viewpoint of the effectiveness use of management resources, to improve the efficiency of an enterprise. ERP packages are integrated software packages that support the ERP concepts. An Enterprise Resource Planning (ERP) system is a software infrastructure embedded with "best practices", thus providing the best ways to do business based on common business practices or academic theory. The aim of an ERP is to improve the co-operation and interaction between all departments in organizations (such as product planning, manufacturing, purchasing, marketing and customer service department). ERP is a fine expression of the inseparability of IT and business. As an enabling key technology, as well as being an effective managerial tool, ERP systems allow companies to integrate at all levels and to utilize important ERP applications such as supplychain management, financial and accounting applications, human resource management and customer relationship management. They represent large, complex, computerized and integrated systems which can strongly influence long-term business success. Enterprise Resource Planning is the latest high end solution, information technology has lent to business application. The ERP solutions seek to streamline and integrate operation processes and information flows in the company to synergies the resources of an organization namely men, material, money and machine through information. Initially implementation of an ERP package was possible only for very large Multi National Companies and Infrastructure Companies due to high cost involved. Today many companies in India have gone in for implementation of ERP and it is expected in the near future that 60% of the companies will be implementing one or the other ERP packages since this will become a must for growth.

EVOLUTION OF ENTERPRISE RESOURCE PLANNING In the ever growing business environment the following demands are placed on the industry: Aggressive Cost control initiative. Need to analyze costs / revenues on a product or customer basis. Flexibility to respond to changing business requirements. More informed management decision making. Changes in ways of doing business

Difficulty in getting accurate data, timely information and improper interface of the complex natured business functions have been identified as the hurdles in the growth of any business.Time and again depending upon the velocity of the growing business needs, one or the other applications and planning systems have been introduced into the business world for crossing these hurdles and for achieving the required growth. They are: Management Information Systems (MIS) Integrated Information Systems (IIS) Executive Information Systems (EIS) Corporate Information Systems (CIS) Material Resource Planning (MRP) Manufacturing Resource Planning (MRP II) Money Resource Planning (MRP III)

OVERVIEW OF AN ERP SYSTEM Some organizations typically those with sufficient in-house IT skills to integrate multiple software products choose to implement only portions of an ERP system and develop an external interface to other ERP or stand-alone systems for their other application needs. For example, one may choose to use human resource management system from one vendor, and the financial systems from another, and perform the integration between the systems themselves. Enterprise resource planning (ERP) systems attempt to integrate several data sources 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. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. The two key components of an ERP system are a common database and a modular software design. A common database is the system that allows every department of a company to store and retrieve information in real-time. Using a common database allows information to be more reliable, accessible, and easily shared. Furthermore, a modular software design is a variety of programs that can be added on an individual basis to improve the efficiency of the business.

DEVELOPMENT OF AN ERP SYSTEM Enterprise Resource Planning is a term originally derived from manufacturing resource planning (MRP II) that followed material requirements planning (MRP). MRP evolved into ERP when routings became a major part of the software architecture and a companys capacity planning activity also became a part of the standard software activity.[citation needed] ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities, like sales, marketing, delivery, billing, production, inventory management, quality management, and human resource management.ERP systems saw a large boost in sales in the 1990s as companies faced the Y2K problem in their legacy systems. Many companies took this opportunity to replace their legacy information systems with ERP systems. This rapid growth in sales was followed by a slump in 1999, at which time most companies had already implemented their Y2K solution. 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 e-Business systems such as e-Commerce, e-Government, e-Telecom, and e-Finance, or supplier relationship management (SRM) systems. ERPs are cross-functional and enterprise wide. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and information technology, this would include accounting, human resources, marketing, and strategic management.ERP II means open ERP architecture of components. The older, monolithic ERP systems became component oriented.[citation needed] EAS Enterprise Application Suite is a new name for formerly developed ERP systems which include (almost) all segments of business, using ordinary Internet browsers as thin clients.

NEED FOR ERP Most organizations across the world have realized that in a rapidly changing environment, it is impossible to create and maintain a custom designed software package which will cater to all their requirements and also be completely up-to-date. Realizing the requirement of user organizations some of the leading software companies have designed Enterprise Resource Planning software which will offer an integrated software solution to all the functions of an Organization.

FEATURES OF ERP ERP facilitates company-wide Integrated Information System covering all functional areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory, Accounts, Human resources, Purchases etc., ERP performs core corporate activities and increases customer service and thereby augmenting the Corporate Image. ERP bridges the information gap across the organization. ERP provides for complete integration of Systems not only across the departments in a company but also across the companies under the same management. ERP is the only solution for better Project Management. ERP allows automatic introduction of latest technologies like Electronic Fund Transfer

(EFT), Electronic Data Interchange (EDI), Internet, Intranet, Video conferencing, E Commerce etc. ERP eliminates the most of the business problems like Material shortages, Productivity enhancements, Customer service, Cash Management, Inventory problems, Quality problems, Prompt delivery etc. ERP provides business intelligence tools like Decision Support Systems (DSS), Executive Information System (EIS), Reporting, Data Mining and Early Warning Systems (Robots) for enabling people to make better decisions and thus improve their business processes.

IMPLEMENTATION OF ERP SYSTEM Implementing an ERP package has to be done on a phased manner. Step by step method of implementing will yield a better result than big-bang introduction. The total time required for successfully implementing an ERP package will be anything between 18 and 24 months 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 delivered within 3-9 months; however, a large, multi-site or multi- country implementation may take years. To implement ERP systems, companies often seek the help of an ERP vendor or of thirdparty consulting companies. These firms typically provide three areas of professional services: consulting, customization and support, data migration is one of the most important activities in determining the success of an ERP implementation. Since many decisions must be made before migration, a significant amount of planning must occur

LIMITATIONS OF ERP Despite of its potential benefits, ERP also have a number of drawbacks. The disadvantages are so much related with the costs in implementation - in term of money and time. ERP systems can be very expensive, some may vary from few hundreds thousand to few millions. Once a system is established, switching costs are very high for the company. At the moment, only large corporations can truly take advantage of the benefits that are offered by this technology. Most micro and small companies tend to avoid it. The success of the system is also wholly dependent on how the employees utilize it. This means that employees must be properly trained and continually trained on how to use it. The cost of pre and post training for users is a huge sum. 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 employees on the process of using it. It is also important to note the time taken to implement the system in the company. These means large amounts of employees have to shun their regular labor and undertake training. In addition, because ERP systems affected most major departments in a company, it tended to create changes in many business processes. Putting ERP in place thus required new procedures, employee training, and both managerial and technical support. The Implementation required an enormous time commitment. As a result, many companies found the changeover to ERP a tedious and time consuming process. Once the implementation phase was complete, some businesses had trouble quantifying the benefits they gained from ERP. Not to forget many large companies may have several departments with each having the own strategic planning, thus integrating all departments and functions across a company onto a single computer system may yield limited benefits. Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, but, when come to intangible data, this will surely reduce the reliability of some applications. Another problem with ERP is that it is hard to customize. Very few companies can effectively use ERP right out of the box. Modification is needed to suit their needs, and this process can be both expensive and tedious. Even when a company does begin changing the system, they are limited in what they can do. Despite its few disadvantages, EDI has proven to be a powerful system that helps support the functionality of the business process and bring significant benefits to companies. The crucial key to success in venturing into ERP is to have a clear and precise plan - preparation for a successful roll-out that can eliminate the drawbacks.