Enterprise Resource Planning (ERP) System

ERP is an integrated, real-time, cross-functional enterprise application, an

enterprise-wide transaction framework that supports all the internal business
processes of a company.

It supports all core business processes such as sales order processing, inventory
management and control, production and distribution planning, and finance.

Why ERP?

ERP is very helpful in the following areas −

 Business integration and automated data update

 Linkage between all core business processes and easy flow of integration
 Flexibility in business operations and more agility to the company
 Better analysis and planning capabilities
 Critical decision-making
 Competitive advantage
 Use of latest technologies
Features of ERP

The following diagram illustrates the features of ERP −

Scope of ERP

 Finance − Financial accounting, Managerial accounting, treasury

management, asset management, budget control, costing, and enterprise
control.
 Logistics − Production planning, material management, plant maintenance,
project management, events management, etc.
 Human resource − Personnel management, training and development, etc.
 Supply Chain − Inventory control, purchase and order control, supplier
scheduling, planning, etc.
 Work flow − Integrate the entire organization with the flexible assignment
of tasks and responsibility to locations, position, jobs, etc.

Benefits of ERP Systems

Today’s ERP solutions have rich feature sets that bring countless benefits to
businesses. This software has become universally adopted by almost all
companies of a certain size because it drives real improvements. While what
an individual firm sees as the greatest value of this technology will vary, here
are key universal advantages ERP delivers:
1. Cost savings. Perhaps the biggest value proposition of ERP systems is
they can save your organization money in a number of ways. By automating
many simple, repetitive tasks, you minimize errors and the need to add
employees at the same rate as business growth. Cross-company visibility
makes it easier to spot inefficiencies that drive up costs and leads to better
deployment of all resources, from labor to inventory to equipment. And with
cloud ERP, companies may quickly see incremental value from the software,
over and above what they’re spending.

2. Workflow visibility. With all workflows and information in one place,

employees with access to the system can see the status of projects and the
performance of different business functions relevant to their jobs. This visibility
may be particularly valuable to managers and leaders, and it’s far faster and
easier than searching for the right documents and constantly asking
colleagues for updates.

3. Reporting/analytics. Data is useful only if companies can analyze and

understand it, and an ERP helps with that. Leading solutions have impressive
reporting and analytics tools that allow users to not only track KPIs, but
display any metrics or comparisons they can dream up. Since an ERP is all-
encompassing, it can help a business understand how a change or problem
with a process in one department affects the rest of the company.

4. Business insights/intelligence. Because ERPs can access real-time data

from across the company, these systems can uncover impactful trends and
provide extensive business insights. This leads to better decision-making by
organizational leaders who now have easy access to all relevant data.

5. Regulatory compliance & data security. Financial reporting standards

and governmental and industry-specific data security regulations change
frequently, and an ERP can help your company stay safe and compliant. An
ERP provides an audit trail by tracking the lifecycle of each transaction,
including adherence to required approval workflows. Businesses may also
reduce the chance of errors and related compliance snafus with automation.
ERP software provides financial reports that comply with standards and
regulations, and SaaS applications are well-equipped to help companies with
PCI-DSS compliance.

6. Risk management. ERP technology reduces risk in a few ways. Granular

access control and defined approval workflows can strengthen financial
controls and reduce fraud. Additionally, more-accurate data heads off
mistakes that could lead to lost sales or fines. And finally, the ability to see the
status of the entire operation enables employees to quickly handle risks posed
by business disruptions.

7. Data security. ERP providers understand that your system houses critical,

sensitive data and take necessary steps to ensure it is secure. This diligence
is more important than ever as the volume and scale of cyberattacks increase.
Vendor-managed cloud ERP software, in particular, uses cutting-edge
security protocols to ensure your company doesn’t fall victim to a damaging
attack.

8. Collaboration. Employees are most effective when they work together.

ERP solutions make it easy to share information — like purchase orders,
contracts and customer-support records — among teams. It knocks down
walls between departments by giving employees appropriate access to real-
time data on related business functions.

9. Scalability. The right ERP system will be scalable and flexible enough to

meet your company’s needs today and for the foreseeable future. Cloud
systems in particular adapt to minor and major operational changes even as
the amount of data the organization captures and demand for access
increase.

10. Flexibility. While ERP software helps businesses follow best practices, it

also offers the flexibility to support unique processes and objectives. The
system gives administrators the ability to build out company-specific
workflows and create automatic reports important to different departments and
executives. An ERP enhances your organization’s innovation and creativity.

11. Customization. While most companies find that modern ERPs support

their businesses “out of the box,” some firms need to add to the extensive
built-in functionality. If you have a lot of specialized processes, look for an
extensible system that allows your integrator or IT staff to write code that adds
needed features, or that can integrate with homegrown or legacy solutions.
However, before going the custom route, take a close look at your processes
— the prebuilt functionality and configurations modern ERP solutions support
are based on best practices gathered from thousands of companies. Aim to
minimize customizations.

12. Customer & partner management. An ERP can strengthen a company’s

partner and customer relationships. It can provide insights on suppliers,
shipping carriers and service providers, with the cloud enabling even better,
more convenient information exchange. When it comes to customers, the
solution can track survey responses, support tickets, returns and more so the
organization can keep its finger on the pulse of customer satisfaction.

Disadvantages of ERP Systems

Despite all the value ERP brings, there are challenges companies may
encounter in building the business case for a system or implementing it. It’s
important to be aware of these potential roadblocks before you adopt a
system so you can adequately prepare and temper doubts from stakeholders.
At the same time, realize that many of these can be avoided by creating a
detailed plan and selecting the right ERP vendor.

As you prepare for an ERP project, keep these concerns in mind:

1. System cost. Because they were expensive to purchase, implement and

maintain, early ERP systems were accessible only to large companies.
However, that hasn’t been the case for two-plus decades. While ERPs still
require a time and financial investment, the technology has become much
more affordable thanks to both SaaS systems that charge a recurring fee and
more solutions designed for small and midsize businesses entering the
market. Organizations can use tools to calculate estimated savings after one
and three years, for instance, to find out when returns will surpass costs.

2. Need for training. Like any new tech, ERP has a learning curve. Anyone
who will use the software — that is, ideally, most or all of your employees —
requires some level of training. Although there may be resistance at first, that
should fade away as people realize how much the technology will help them.
Newer systems that receive frequent updates are more intuitive and user-
friendly, reducing training requirements and increasing adoption.

3. Data conversion costs. When moving to a new ERP, you may need to

convert some data into a format that’s compatible with the new platform. This
can lead to unexpected costs and delays, so review your databases, and work
with your IT team or an integration partner to identify potential data
compatibility issues early on. Then, you can factor conversion efforts into
the ERP implementation plan.

4. Complexity. An ERP system is loaded with features, and that can be

daunting to your workforce. But the software available today is far easier to
use than legacy systems because vendors have focused on improving the
user experience. Additionally, employees need access to only the modules
and dashboards required for their jobs, which can make it more approachable.
Thorough training should temper concerns about complexity.

5. Maintenance. In the past, maintenance was a large expense that deterred

lower-revenue businesses from adopting ERP. Not only did a company need
an IT staff to handle patches, security and required system upgrades, it often
had to pay the vendor or a third-party service provider for its expertise. This is
less of a concern with a SaaS system because the provider takes care of all
maintenance and regularly moves all customers to the latest version — and
it’s all built into the subscription price. Companies concerned about
maintenance should thoroughly vet a potential supplier to ensure it offers a
true vendor-managed SaaS system.

6. Doesn’t solve process and policy issues. If you have error-prone or

inefficient processes, an ERP won’t necessarily fix them, even though it may
increase accuracy. It can, however, uncover problems in your operations and
help you brainstorm better ways to do business. The same goes for policies
that hold the organization back — it’s up to you to adjust those and then
configure the system to support better ways of doing business.

Benefits of ERP

1. Better management of resources reducing the cost of operations.

2. Planning at function and process level increase in productivity of the business.
3. Customer satisfaction increase due to shorter delivery cycle, closer contact with
the customer
4. Simultaneous launching of the decision centers because of instant inducement
through triggers or updates.
5. Business operations transparency between business partners cutting down the
execution time of critical business operation.
6. Intelligent ERP download the decision making at the lower level, releasing the
burden on the middle management.
7. Due to strong interface capabilities, the human resources can be utilized better
due to access to information across the databases distributed over the organization.
8. Since, the ERP design is practice; it makes the management alert at a number of
points demanding the decision the decision or action.
9. The processes become faster due to work group technology and application of
work flow automation.
10. Due to the support technologies like EDI, E-mail, office automations, paperless
office is a newer possibility as communication is faster and systems get connected
directly.
11. The ERP still remain a valid solution with the expansion of business as it is a
scalable architecture.
12. Due to the client/server architecture, the application of the object technology
and use at the front and tools, the process changes can be easily the user service
can be maintained at higher level.
13. The ERP implementation automatically leads to the usage of the best business
procedures bringing the consistency of operation in the world of business.
14. With the use of data warehousing and data reverse engineering, management
becomes knowledge driven and the organization becomes a learned one.
15. The ERP scope can be enlarged through the internet/intranet access, making
the ERP sensitive to the date of events in the business, market and technology.
16. The quantity of decision making improves as the user decision maker is made
alert and knowledgeable and better informed dynamically.
17. The tools available to the decision maker are friendly whereby he is equipped
to make decision and execute it simultaneously.
ERP Lifecycle Framework

1. Adoption Decision Phase

In this phase, the need of a new ERP system is examined for the organization. The
business requirements, the nature of the operations and the goals and objectives of the
company are carefully studied. What impact the ERP system will have on the company is
also determined before deciding to go for ERP adoption. It is necessary to assess the
organization’s readiness, management’s support and IT skills required before the ERP
adoption decision is taken.

2. Acquisition Phase
This phase involves selecting the vendor and the ERP software that best addresses the
needs of the business. The pricing models offered by different vendors, the functionality
of different ERP products, training required are some of the factors that are considered
for selecting an ERP package from a vendor.

The selection of a right ERP package for the organization will minimize the risk often
associated with ERP implementation and increase the likelihood of success.

3. Implementation Phase
In this phase, efforts are made to synchronize existing business process with the ERP
software package. Customization of the acquired ERP software may be required to meet
the specific needs of the business. This phase also involves testing the ERP system and
providing training on the new system. It is necessary to test data, procedures and processes
before launch of ERP system in order to minimize errors after deployment.
4. Use and Maintenance Phase
In this phase, the ERP system is up and running. The system needs to be corrected in
case of any malfunctions in the system. End-users are trained to use ERP system efficiently
so that benefits from the system are obtained.

5. Evolution Phase
Upgradation and changes in ERP system is important and essential to improve the
performance of business. Here, additional capabilities are integrated into the company’s
ERP system to obtain additional advantages. In “upwards” evolution, functionality in the
ERP system is provided in such a way that it enables decision making with applications
such as advanced planning and schedule, data warehouses and business intelligence systems.
In “outward” evolution, ERP system is integrated with web and E-Commerce. It delivers
added value to the traditional business ERP system.

6. Retirement Phase
An ERP system may become vulnerable to legacy system problems in the long run as
technologies and the business state of art change with time. It is advisable to retire the
ERP system when the ERP system begins to provide difficulty in modifying and evolving
itself to meet new and constantly changing business requirements. The manager may decide
to replace ERP system with another newer ERP system with latest functionalities required

ERP SYSTEMS ARCHITECTURE

The architecture of the ERP system plays a major role to determine its success and durability for
the institute. Today there are four major known architectures for the EPR systems [3][4][5]; each
has its own advantages and weaknesses. The first is the Three-Tier architecture which is a scale
up of the client/server Two-Tier architecture. It is composed of three layers Presentation,
Application, and Database layer. Figure 1 shows a comparison of one, two, and three-tier
architectures. As can be seen in the three-tier architecture the client is no longer directly
communicating with the database, as a layer responsible for carrying out the business logic is
introduced. In this architecture, the presentation layer is only responsible for browsing the data
and providing a user-friendly interface, which allows the user to have less powerful machines.

However, the application layer is where the data get retrieved and transferred to the database
servers in the database layer. The application layer is also where the logic and the business rules
are implemented.
 Another architecture is the web-based; its mean goal is to
allow remote users to access the ERP system. As can be
seen in Figure 2, the web architecture has application and
database layers same as the three-tier architecture. However,
the presentation layer is split into two parts, the web
services and web browser to support the mobility of the
devices through the internet. Many institutes don’t build
their ERP as a web - based architecture as the accessibility
outside the organization may not be a requirement at first.
But with the growth of the institute the remote access
becomes a necessity, in which a web-enabled architecture is
a solution. A web enabled architecture is an architecture that
was not originally webbased but with additional new
demands modification are made to make it web-enabled.
This will surely limit the remote functionalities and
capabilities.

Unlike the three-tier and web based architectures; the SOA is not based on a certain technology
or networking technique. SOA or service-oriented architecture is an approach used to create an
architecture based upon the use of services, regardless of the networking methodologies used.
With the growth of institutes the number of services it’s required to deliver increase. With that a
single system would not be able to keep up with the number of transactions. Therefore, a system
for each service is lunched. SOA allows organizations to customize and modify their ERP
system easily. In addition to that SOA encourages reusing existing services. It’s worth
mentioning that the communication across the different systems could be hard if regular
interfaces are used, as they would be very expensive and intensive to develop; hence came the
concept to standardize messages. In the IT landscape of an organization extensible markup
language or XML is a way to standardize messages communicated between systems, as shown in
Figure 3. XML is a way of describing information or data and is shed electronically disallows
sharing of information in a consistent manner to support a concept of SOA. With XML, service
oriented architecture becomes probable.

Even though cloud computing is becoming increasingly popular whether a well-established

institute is willing to trust a third body to store and manage all of its information is still the
question. New technologies demand for a new way of thinking and cloud computing is not the
exception. As internet connections become faster and more reliable at least in the so called first
world, difference of access in terms of speed and conservation between local store and web-
based data is decreasing considerably. As a result of access reliability this new technology has
risen and is making its way into the technological arena. Figure 4 below shows a basic
abstraction of the cloud computing architecture.

Stages of Implementation ERP

As with other initiatives, companies can avoid major challenges by taking the
time to create a detailed implementation plan. Preparation pays off.

Here are the seven key stages of an ERP implementation:

1. Discovery and planning. To start, pull together a cross-functional team to

determine what, exactly, the company needs from an ERP system. This team
should identify inefficient processes and other roadblocks to business growth.

2. Evaluation and selection. Now that the team has a requirements

document, it’s time to evaluate leading offerings and select the platform that
can best resolve existing problems, meet all departments’ needs and promote
the company’s growth.

3. Design. At this stage, the implementation team figures out whether the
system can support existing workflows and which processes may need to
change. This is also the time to identify any required customizations.

4. Development. Internal and/or external technical professionals configure

the software to meet your defined needs and begin migrating the company’s
data to the new solution. Now is also the time to decide how you will train
employees on the system and begin scheduling sessions and producing or
acquiring needed training materials.
5. Testing. This is not a step to be skipped — it’s crucial to make sure
everything works as expected and fix any unforeseen problems. Include users
from across the company when testing the platform.

6. Deployment. It’s time to go live. There are often hiccups early on, and
businesses should prioritize employee training to mitigate resistance to
change. Some firms opt for a phased rollout, while others push all modules
live at once.

7. Support. Ensure users have everything they need to take advantage of the

new system. This is an ongoing process and could include additional
configurations, often with the help of the vendor or specialized consultants.

Features of ERP Systems

So you know why ERP software is so critical to companies and the key
benefits it provides them. But what is it that makes an ERP system an ERP
system and distinguishes it from other types of business software? There are
a few key features critical to realizing the full value of ERP, including:

1. Common database. Many of an ERP’s advantages stem from a common

database that allows organizations to centralize information from numerous
departments. This single source of real-time data eliminates the need to
manually merge separate databases, each controlled by the business
functions they serve. A common database enables a consistent, cross-
functional view of the company.

2. Consistent UX/UI. Across departments and roles, everyone uses the same

user interface (UI) and has a similar user experience (UX) with an ERP.
Modules for inventory management, HR and finance all have the same look
and feel and shared functionality, provided you get them from the same
vendor. This increases the software’s adoption rate and can make it easier for
staff to move between departments. A consistent UX and UI also result in
efficiency gains because users can quickly find and understand information
from all corners of the business.

3. Business process integration. An ERP must be able to support and

integrate the processes that make your business successful, whether related
to accounting, supply chain management or marketing. The right platform will
have the ability to unify a diverse set of processes — connecting workflows
that play crucial roles in the company’s success boosts productivity and
visibility, and that translates to lower costs.

4. Automation. Another basic feature of ERP software is the ability to

automate repetitive tasks like payroll, invoicing, order processing and
reporting. This reduces manual, and sometimes duplicative, data entry, saving
time and minimizing errors. Automation frees up your staff to focus on value-
added work that takes advantage of their special knowledge and skills.

5. Data analysis. One of the most valuable aspects of an ERP is that it

breaks down information siloes. When you can mix and match data from just
about any part of your business into insightful reports, you uncover areas that
are performing exceptionally well and those that are failing to meet
expectations. Leaders can analyze problems and get to work resolving them
right away.

E-CRM Meaning: Marketing definition

The development of the Internet and e-commerce has changed CRM to a new, more "trendy"
term, ECRM or Electronic Customer Relationship Management. Basically, this tool is the 4.0
technology adaptation of CRM to help companies approach and build customer relationships
through online channels such as websites, email, etc…

Accordingly, ECRM provides all records and histories of interactions the organization has with
its customers, payments, and information about products/services that interest customers: it’s an
effective way to increase customer loyalty!

E-CRM application is becoming important for all companies in all fields. An effective ECRM
will help improve interaction with customers. At the same time, it allows businesses to choose
products and services that satisfy customers’ requirements.

The features of the ECRM systems

ECRM has the following features:

 Customer management: Grant access to all customer information, containing the

request status and other similar information
 Account management: Provide access to customer data and history, supporting the sales
team to function in an effective way
 Administrative management: A centralized database that manages and shares customer
information
 Case management: Notify inquiries, priority cases, and unresolved issues to the
management department
 Back-end integration: Integrate with other systems such as billing, inventory, and
logistics through websites and call centers
  Reporting and analysis: Create reports on customer behavior and business criteria

Benefits of an E-CRM system

Service level improvements: Using an integrated database to deliver consistent and improved
customer responses

Revenue growth: Decreasing costs by focusing on retaining customers and using interactive service
tools to sell additional products

Productivity: Consistent sales and service procedures to create efficient work processes

Customer satisfaction: Automatic customer tracking and detection will ensure enquiries are met and
issues are managed. This will improve the customer’s overall experience in dealing with the
organisation.

Automation: E-CRM software helps automate campaigns including

 Telemarketing
 Telesales
 Direct mail
 Lead tracking and response
 Opportunity management
 Quotes and order configuration

Supply chain management (SCM

Supply chain management (SCM) is the collection of tactics and tools that help companies
understand and optimize the performance of their entire supply chain from raw materials through
product returns. Supply chain management gives companies insight into how efficiently each of
their suppliers, logistics partners, and manufacturing plants work together to deliver final
products to consumers.

Who uses supply chain management?

Supply chain management techniques are used by companies of all sizes and in every industry.
Manufacturing, retail, restaurant, agriculture, hospitality, technology, transportation, utilities, oil
and gas, and healthcare all rely on other companies for raw materials, products, parts, or delivery
systems. SCM software helps companies make sense of connections to suppliers and purchasers.

A supply chain has many moving parts and often combines the efforts of several different
companies. As a result, SCM tools must include many customization features and integrations
with other software. These features allow up to date information to pass between the
interconnected parts of the supply chain.

What are the five basic components of supply chain management?

There are five main parts of supply chain management, and each of these parts create data that
should be centralized in a single SCM software. The five main parts of supply chain management
and the types of tools used in each part are:

 Plan: Project management, product development, and data analytics tools are used to research and
develop new products or improve existing processes.
  Source: Customer relationship management (CRM), invoicing, contracting, and price compare
tools are used to find and contract with the best quality suppliers at the best price.
 Manufacture: Plant management, product development, and account management tools ensure the
on-time receipt of raw materials and delivery of completed products.
 Deliver: Logistics and route planning tools optimize the movement of raw materials, parts,
supplies, and finished products to all points on the supply chain.
 Return: These features return unwanted, unused, or faulty products and materials to the correct
provider for a refund or exchange and collect data that may be useful for regulatory compliance.

The benefits of SCM software reach beyond reactionary efforts to contain the effects
of a pandemic. Companies that implement supply chain management software find that they:

 Reduce costs: Companies spend less on raw materials, parts, labor, and logistics because
they can quickly pivot between suppliers, get ahead of changing market conditions, and
negotiate for better contracts
 Improved time to market: SCM platforms reduces bottlenecks at every stage of a
product’s life cycle by smoothing organizational communication
 Greater flexibility under stress conditions: While we can’t predict every disaster,
companies that have recovery plans and backup providers on hand to cover lapses are
better able to successfully pivot under stressful conditions
 Improved customer relations: Companies with organizational insight into their full supply
chains are in the position to make promises they can keep regarding product delivery,
levels of service, and communication about delays
 Data centralization: Tomorrow’s technological advancements rely on the data companies
can collect today. Using a centralized SCM system can improve data quality

What is ESCM? And factor contribute to the transition from SCM to e-SCM

Supply chain management is coordination of all supply activities of an organization

from its suppliers and partners to its customers efficiently and effectively (Chaffey,
2015; Turban et al., 2012). Electronic supply chain management (e-SCM) is
collaborative use of technology to improve the operations of supply chain activities
as well as the management of supply chains (Turban et al., 2012).

The main factors that contributed to the transition from SCM to e-SCM are as
follows:

 The need for additional reduction in the costs as well as improvements in the
processes through the expansion of the tools for modern management in the
organizations from the supplier channels to the customer channels.
 The introduction of computerization and digitalization of the internal functions
of the organizations with new techniques, tools, and management methods.
 The need for efficiency and agility of the organizations in order that they can
respond to the higher demands of the customers whose growing demands and
bargaining power continually increases.
 The effort to optimize the organization by having lower inventory levels both in
manufacture and distribution by, in parallel, offering supreme quality and
service.
 The deserting of vertical integration and functional oriented organizations.
  The tendency for outsourcing of some operational functions that are not the core
of the business to other organizations specialized in that field.
 The explosive expansion of global commerce and the opening of new markets
that only few years ago were closed.
 The e-business technologies, particularly internet, have enabled organizations of
all sizes to have a network and be closely connected with their partners and
conquer and compete for market share which was only possible before for the
large corporations.
The success of an e-SCM depends on ability of all supply chain partners to view
partner collaboration as a strategic asset; a well-defined supply chain strategy;
information visibility along the entire supply chain; speed, cost, quality, and
customer service; integrating the supply chain more tightly. Application of e-SCM
can reduce some problems in SCM through sharing of demand by customers with
suppliers as part of efficient consumer response (ECR), suppliers become
responsible for item availability through vendor-managed inventory, human error
reduced (checks and balances can be built into system), inventory reduced
throughout the supply chain through better demand forecasting and more rapid
replenishment of inventory, improved availability of information about potential
suppliers and components (for example through online marketplaces). 

Advantages of e-supply chain management

Companies implementing E-SCM can enjoy the following advantages:

1. It improves efficiency

2. It reduces inventory

3. It reduces cost

4. It helps to take competitive advantage over competitors.

5. It increases ability to implement just-in-time delivery, increases on-time deliveries, which

enhances customer satisfaction.

6. It reduces cycle time, increases revenue, by providing improved customer service.

7. It improves order fulfillment, order management, decision making, forecasting, demand

planning, and warehouse/distribution activities.

8. It reduces paperwork, administrative overheads, inventory build-up, and the number of hands
that handle goods on their way to the end-user i.e., the customer.