ERP (Enterprise Resource Planning)

PCBizness Technosoft Pvt. Ltd.

Enterprise resource planning (ERP) is a business management software—usually a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities, including:

Product planning, cost

Manufacturing or service delivery

Marketing and sales

Inventory management

Shipping and payment

ERP provides an integrated view of core business processes, often in real-time, using common databases maintained by a database management system. ERP systems track business resources—cash, raw materials, production capacity—and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data. ERP facilitates information flow between all business functions, and manages connections to outside stakeholders.

Enterprise system software is a multi-billion dollar industry that produces components that support a variety of business functions. IT investments have become the largest category of capital expenditure in United States-based businesses over the past decade. Though early ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.

The ERP system is considered a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, ERP system development is different from traditional systems development. ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository.

Charactersitics:-

ERP (Enterprise Resource Planning) systems typically include the following characteristics:

1. An integrated system that operates in (or near) real time without relying on periodic   updates[citation needed]

2. A common database that supports all applications

3. A consistent look and feel across modules

4. Installation of the system with elaborate application/data integration by the Information       Technology (IT) department, provided the implementation is not done in small steps

Components:-

1. Transactional database

2. Management portal/dashboard

3. Business intelligence system

4. Customizable reporting

5. Resource planning and scheduling

6. Analysing the product

7. External access via technology such as web services

8. Search

9. Document management

10.Messaging/chat/wiki

11.Workflow management

Implementation:-

ERP's scope usually implies significant changes to staff work processes and practices.Generally, three types of services are available to help implement such changes—consulting, customization, and support. Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise takes about 14 months and requires around 150 consultants. Small projects can require months; multinational and other large implementations can take years.[citation needed] Customization can substantially increase implementation times.

Besides that, information processing influences various business functions e.g. some large corporations like Wal-Mart use a just in time inventory system. This reduces inventory storage and increases delivery efficiency, and requires up-to-date-data. Before 2014, Walmart used a system called Inforem developed by IBM to manage replenishment.

Process preparation:-

Implementing Enterprise Resource Planning typically requires changes in existing business processes.Poor understanding of needed process changes prior to starting implementation is a main reason for project failure. The problems could be related to the system, business process, infrastructure, training, or lack of motivation.

It is therefore crucial that organizations thoroughly analyze business processes before they implement ERP software. Analysis can identify opportunities for process modernization. It also enables an assessment of the alignment of current processes with those provided by the ERP system. Research indicates that risk of business process mismatch is decreased by:

Linking current processes to the organization's strategy

Analyzing the effectiveness of each process

Understanding existing automated solutions

ERP implementation is considerably more difficult (and politically charged) in decentralized organizations, because they often have different processes, business rules, data semantics, authorization hierarchies, and decision centers.This may require migrating some business units before others, delaying implementation to work through the necessary changes for each unit, possibly reducing integration (e.g., linking via Master data management) or customizing the system to meet specific needs.

A potential disadvantage is that adopting "standard" processes can lead to a loss of competitive advantage. While this has happened, losses in one area are often offset by gains in other areas, increasing overall competitive advantage.

Configuration:-

Configuring an ERP system is largely a matter of balancing the way the organization wants the system to work with the way it was designed to work. ERP systems typically include many settings that modify system operations. For example, an organization can select the type of inventory accounting—FIFO or LIFO—to use; whether to recognize revenue by geographical unit, product line, or distribution channel; and whether to pay for shipping costs on customer returns.