Enterprise Systems

Amit Agrahari
Information Technology and Systems

Indian Institute of Management, Lucknow

Evolution of ERP

1960s: Software packages with inventory control

1970s: MRP systems

Production schedule with materials management

1980s: MRPII systems

Financial accounting system

1990s: MRPIII
Integrated systems for manufacturing execution

Late 1990s: ERP

Integrated manufacturing with supply chain

Indian Institute of Management, Lucknow

What is ERP?

Manages business systems

Traditional business organization (Mfg V/S Procurement)

Supply chain, receiving, inventory, customer orders,
production planning, shipping, accounting, HR

Enables data and information sharing (or forces?)

Allows automation and integration of business

processes

Introduces best practices (Dell, Microsoft, Apple)

Software tools

Best of Breed V/S Standardization

Indian Institute of Management, Lucknow

The Evolution of ERP

Future
ERP?

Indian Institute of Management, Lucknow

Enterprise Resource Planning

At the heart of all ERP systems is a database,
when a user enters or updates information in
one module, it is immediately and automatically
updated throughout the entire system

Indian Institute of Management, Lucknow

Implementation Strategies
Big bang

Cutover approach
Rapid
Requires many resources
Small firms can employ

Mini big bang

Partial vendor implementation

Phased by module

Module-by-module
Good for large projects

Phased by site

Location-based implementation

Indian Institute of Management, Lucknow

 Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

Issues to Consider When Implementing ERP

ERP dictates the way business is run -- its
design reflects a series of assumptions about
the way companies operate in general
limited customization and configuration
ONGC

Increase ubiquity of enterprise system -dissolve sources of comparative advantages

Compaq Computer - writing its own proprietary applications
to support its forecasting and order management processes
Air Products and Chemical - not installing ERP to reduce
operating costs

Indian Institute of Management, Lucknow

ERP is costly and takes a long time to implement

Prentice Hall, 2005: Enterprise Resource Planning, 1st Edition by Mary Sumner

Issues to Consider When Implementing ERP

Impact on organization - on one hand ERP
Centralizes control over information
Increases standardization of processes
Creates uniform culture

On the other hand, ERP

Injects more discipline into an organization (Freewheeling
entrepreneurial culture)
Breaks down hierarchical structures (More access to information)

For multinational corporation, extent of uniformity in

doing business in different regions or countries
OneCRM at Pfizer
Indian Institute of Management, Lucknow

Issues to Consider When Implementing ERP

Need to determine the right balance between
commonality and variability
Global financial and administrative processes (Dow Chemical)
Global procurement enabling international contract (Owens
Corning replaced 211 legacy systems)

In selecting the ERP system, consider the strategic and

organizational implications, not just based on technical
criteria - stress the Enterprise, not the system

Indian Institute of Management, Lucknow

Role of a Manager
Directly involve in planning and implementing
an ES - oversee, review and approve
Think through the business implications

Process, Structure, Culture, Strategy

Provide full support

ES as KRA

Avoid offloading implementation responsibility to

technologists
Indian Institute of Management, Lucknow

Indian Institute of Management, Lucknow