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On-line Analytical Processing
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Supply Chain Management
1.1 INTRODUCTION
.
ERP is an abbreviation
for Enterprise Resource
planning
.
ERP offers solutions for all business functions
'
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a set of tools and processes that integrates departrnents
and functions
across a company into onecomputer syste,,r.
----
'
ERP integrates all business functions into a single, integrated
software program
that runs on a single database so that the various deparhrents
can more easily
share information
and communicate with each other.
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Information
r through ERP System
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ERP is a method of effective planning of all the resources in an organi zaaon.
ERP is used for the effective use of management resources to improve the
efficimcy, productivity, and competitiveness
of the organization.
ERP is an enterprise reengineering solution that uses new business computing
paradigms to integrate IT processes across a company,s division and
departments.
For each resource ERP can identify what is required, when it is needed and how
much is neede4 thus making the operation of the organization efficient and
effective.
Different ERP systems have bem made to facilitate organizations in Enterprise
Resource Plarrring. Leading ERP giants are Microsoff oracle,
peoplesoft
and
ID
Edwards, sAP AG etc. These systems link the order, inventory, sales, purchase,
manufacturing, supply chain and warehouse management modules in an
enterprise for better, fast and accurate information availability.
t
1.2 IMPORTANCE OF ERP SYSTEMS
ERP is a Rising Need of Enterprises. is a strategic tool helping an organization to
gain and edge over its competitors by helping in successfully integrating its key
business operations, synchronizing, planning and optimizing the resources
available in the existing extremely competitive environment.
ERP systems makes the business process automated and more streamlined and
makes the organization more agile and competitive so that it can respond to the
changing customer needs and competition quickly and efficiently.
ERP has the effect of making an enterprise more time-sensitive.
1.3 CHARACTERISTICS OFERP SYSTEMS
1. lt affechs almost ail organiz4iions
+
2. It forces the competif"ft" change their business strategies and processes
3. It influences business partners to become more competitive and agile
4. It improves the profits of the organizations engaged in implementation
consultancy
5. It helps the business process reengineering process
6. It enforces best practice business processes in organizations
7. lt fully utilizes the true potential of client/server computing and other latest
technologies
8. It changes the information systems function and
iob
profiles of IT
professionals
9' It changes the nature of jobs
in all functional business areas of the organization
10. It is very expensive and its implementation is very costly and risky
11. Its implementation is a long and complex project
12. It requires the cooperation of arl in the organization for succeed
1..4 ERP AND VALIIE CREATION
ERP changes the basic nature of orgatizations in a number of different ways:
1. It integtates the organizations' activities
2. It eliminates data redundancy
3. It prorrides accurate, timely, relevant and up-to-date information to the
decision makers
4. It provides on-Iine and real-time information
5. It enables better and faster deeision-making
6. It forces the use of best practices
7. It enabies organizational standardization
8. It eliminates information
asymmetries
9. It a-llows simultaneous access to the same data for planning
and control
10. It facilitates inha-organization
communication
11. It enables inter,organization
collaboration
12' It enables the organization
to be more agile and competitive.
1.5COMMON
MYTHS ABOUT
ERI'
1. ERP means more work and procedures
2, Et{P will make many employees
redundant
and
iobless
3. ERP is the sole responsibility
of the management
4. ERP is just
for the managers/
decision_makers
5. ERP is just
for manufacturing
organizations
6. ERP is justfor
the ERp implementation
team
7. ERP slows d_own the organjzation
8. ERP is just
to impress customers
9. ERP package
will take care of everything
10. One ERP package
will suit everybody
11. ERP is very expe4sive
l2.Oryanizations
can succeed without ERp
1.6 HISTORY
OF ERP
'
ERP is the evolutior,
or M*rrfacturing
Requirements
pranning
(MRp) II.
'
From business
perspective,
ERp has expanded
from
coordination
of
manufacfuring
processes
to the integration
of enterprise.wide
backend
Processes.
:
'
From technological
aspecf rERP
has evolved from
legacy implementati,on,to
more
flexible tiered client-server
architecfure.
The following table summarizes the evolution of ERP from 1960s to 1990s.
Timeline System Description
7960',s Inventory
Management &
Control
Inventory Management and control is the combination
of information technology and business processes of
maintaining the appropriate level of stock in a
warehouse. The activities of inventory management
include iclentifying inventory requirements, setting
targets, providing replenishment techniques and
options, monitoring item usages, reconciling the
inventory balances, and reporting inventory status.
7970',s Material
Requirement
Planning
(Ivffi.P)
Materials Requirement Planning (MRP) utilizes
software applications for scheduling production
processes. N{RP generates schedules for the operations
and raw material purchases based on the production
requirements of finished goods, ile structure of the
production system, the current inventories levels and
the lot sizing procedure for each operation.
1980',s Manufacturing
Requirements
Planning
(MRP rr)
Manufacturing Requirements Planning or MRP
utilizes software applications for coordinating
manufacturing processes, from product planning,
parts purchasing, inventory control to product
distribution.
19)0's Enterprise
Resource Planning
(ERP)
Enterprise Resource Planrring or ERP uses multi-
module application software for improving the
performance of the internal business processes. ERp
systems often integrates business activities across
functional departments, from product plarming, parts
purchasing, inventory control, product distribution,
fuUillment, to order tracking, ERP software systen.s
I
may include application modules for supporting
marketing, finance, accounting and human resources.
1.7 REASONS FOR THE GROWTH OF ERP
.
ERP improves business performance - cycle time reductio4 inventory reduction,
faster tesponse times, strearnlined and faster order fulfillment, etc,
.
ERP supports business growth requirements - new products, product lines,
customers, multiple language and multiple currency support etc.
. ERP provides flexible, integrated, real-time decision support
.
ERP eliminatm limitations in the legacy systems
.
ERP takes advantage of the untapped mid-market of medium-srzed organizations
1.8 ADVANTAGES OF ERP
.
Business integration - ERP packages integrates the infgmation processing and
automates data updating (automatic data exchange among applications) between
related business components.
.
Flexibility - Diverse multinational environments such
accounting standards, etc. are covered in one system,
systems very flexible.
.
Better analysis and planning capabilities
-
ERP systems enables the
compretrensive and unified management of related businesses and its data. This
unification makes it possible to fully utilize many types of decision support
systems and simul,ation functions.
.
Use of latest technology - ERP vendors uses the latest developmente in the fietd
of information technology. This technolog5r
adcption benefits the organizations
usirr-g iiie packages as thev get better products and with better capabilities.
as language, currency,
which makes the ERP
lr\
E
1-9 LIMITATIONS OF ERP
ERP systems have three significant limitations:
1. Managers cannot generate custom reports or queries without help from a
programmer and this inhibits managers from obtaining information
quickly so that they can act on it for competitive advantage.
2. ERP systems provide current stafus only, such as open orders. Managers
often need to look past the current stafus to find trencls and patterns that
aid better decision-making.
3. The data in the ERP application is not integrated with other enterprises or
division systems and does not include external intelligence.
Overcoming the Limitations
-
.
There are mrny technologies that help ERp systems to overcome the
limitations, that reduces its usefulness
These technologies, when used in conjunction with the ERp package will help in
overcoming the limitations of a standalone ERP system and thus help the
employees in making better decisions.
organizations are constanfly innovating methods to improve operational
efficienry, reduce costs, provide high-quality and personalized customer servicg
improve customer satisfaction and increase profit margins.
.
ComPanies that use technology, integrate it into the core of their business
planning and are ready to face the challenge of conducting business in this
Internet age are called e-businesses.
1.1.0 SUCCESSFUL ERP IMPLEMENTATIONS
.
conduct Gap analysis to find out company requirements and the
functions a package possesses.
Select experienced and professional consultants
Select the right package
.
select employees with the right attitude for implementation team
.
Ensure that knowledge transfer happens between consultants and
employees as well as between vendors and employees
.
Ensute that there is enough in-house carnsultanb and integrators during
the operation and maintenance phase.
1.11 OVER EXPECTATIONS ABOUT ERP - REASONS FOR FAILED
IMPLEMENTATIONS
.
Insufficientpre.implementationpreparation
.
Lack of awareness among employees
.
Lack of awareness among management about costs
1.12 PHASES OF ERPLIFE CYCLE
-
Adoption decision:
This phase includes the definition of system requirements, its goals and benefits and an
analysis of the impact of adoption at a business and orgqnizational level.
Acquisition
This phase involves selecting the product that best fits the requirements
of the
organization to minimize the need for customization-
Implementation
This phase deals with the customization or parameteilzation
and adaptation of the ERp
package acquired, to meet the needs of the organization.
Use and maintenance
This phase
censists of the use of the product in a way that retur1.ao
expected benefits and
minimizes disruption.
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a
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.'
Evolution
in this phase, additional capabilities are integrated into the ERP system to obtain
additional benefits.
Retirement
When new tgchnologies appear or the ERP system or approach becomes inadequate to
the needs of the business, managers decide if they will substitute another information
system approach that is more adequate to the organizational needs of the moment.
2.1 INTRODUCTION
.
An enterprise is a group
resources (people money,
achieve this goal.
.
Examples: IBI\4, Ford, Tata Motors, Accenfure, Microso$ Indian Railways,
Ramu's Teashop, etc.
.
The enterprise acts as a single entity.
.
The resources are considered the inputs, and the attainment of the goals the
output of the process.
'
The degree of success of the enterprise is often measured. by the ratio between
the outputs and inputs. This ratio is called productivity.
Role of Enterprise in ERP Implementation
ERP implementation
projects an enterprise in its or,r,n right.
Common goal: successful implementation
of the project
Resources: ERP package, hardware, money, peoplg etc.
People: Employees, management,
consultants, ERp vendors, etc.
of people with a cortmon goal, which has certain
nerglf, maErials,
ipoce,
time) at itsjisposal to
Enterprise
PeoPld :
Godi AObiccfiv?-8
Organization's
ResPonsibilities:
o
Own and sponsor the ERP implementation
project (usually done by the senior
managemmt)
Designate the right people to lead the project'
Select and assign the right people to the implementation
team
Select the ERP package best suited for the organization
Make available the necessary infrastructure (resources)
Ersure top management
support ancl participation
Manage package vendors and- external corrsultanLs
Manage and deal with empioyee resistance
Motivate the employees to change and to learn new technologies
Re-train and re-Iocate employees and ensure the complete participation
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a
a
a
l0
Operate the ERP system in the best possible mElnner
Maintain the ERP system at its peak efficiency
Traditional Approach of an Organization
The organization is divided into different units based
perform - finance, manufacturing, production planning,
distribution, R&D, HR, etc.
The various departments have their own goals.
The different departments function in isolation and
collection & analysis systems.
The result is that, instead of taking the organization towards the common goal
the various departments end up pulling it in dilferent directions as one
department does not know what the other does and for what
PurPose'
.
So unless all the departments know what the others are doing and for what
pur'pose, the inter-deparhrrental conflicts will arise
glus
di.srupting the normal
functioning of the organization.
.
The solution is to have a centralized inJormation storage and maragement
facility.
Enterprise Approach of an Organization
.
In the enterprise rt'ay, the errtire organization is considered as a single system.
. Information about all the aspects of the organization is stored centrally and is
available to all departments, thus avoiding conflicts.
.
ERP systems help to make this task easier by integrating the information
systems, enabling smooth and sea-urless flow of information across departrnental
barriers, and automating business
Process
and functions.
. ERP systems help the organization to work and move forward as a single entity.
a
a
a
a
on the functions theY
purchasing, sales and
have their own data
ll
Enterprise
\May"..
Au Euierprise rt'here all Departrreuts lcron'rt:hat otlrels ale Doilr8
Traditional Organization
OrgaDizetion tghere there !s no or llttle Conrnlurlcatio$ lietrreelr Departine$ts
I-
t2
Business Function
.
Organizations that make products to sell have the following functional areas of
operation
-
purchasing, production and materials management, marketing and
sales, accounting and finance, human resources, etc.
.
Each functional area comprises a variety of business functions and business
activities within that functional area of operation.
.
Earlier business systems functioned in isolation. What happens in one functional
area was not communicated with other functions.
.
'Ihe
information system of one function had no impact other functional areas.
.
This mode of functioning caused many problems including disruption of the
functioning of the organization.
Business Process
.
Business Process is a collection of interrelated tasks, which solve a particular
issue.
.
There are three types of business processes-Management Operationaf and
Supporting
Management processes govern the operation of a system. Typical management
processes include " corporate governance" and "stfategic management".
Operational processes create the primary value stream and are part of the core
business. Typical operational processes are purchasing, manufacturing,
marketing and sales.
Supporting processes support the core processes. Examples include accounting,
recruitment, IT-support.
A business process can be decomposed into several subprocesses, which have
their own attributes, but a-lso contribuie to achieving the goal of the suPer-
process.
.
The analysis of business processes typically includes the mapping of processes
and sub-processes down to activity level.
l3
F
Activities are parts of the business process that do not
making and thus are not worth decomposing such as
"prepare the invoice", "send the fax", etc.
include any decision
"anslyer the phone",
Business Function vs. Business Processes
'
Recently organizations have started focusing on business processes rather than
business functions.
'
A business process is a collection of activities that takes one or more kinds of
input and creates an output that is of value to the customer.
'
The difference between a BF and a BP is that a process cuts across more than one
busi:ress function to get a task don_e.
'
Organizatiora are now trying to view their business operations from the
perspective of a satisfied customer.
'
Sharing data effectively and efficienfly between and within functional area*s leads
to more efficient business processes.
2.2 INTEGRATED
MANAGEMENT
INFORMATION
Information Islands
No organization can function as islands of different departmenb.
AII the departments should have access to the organization,s information.
.
In today's competitive
business environmen!
the key resource of every
organization is information.
'
If all the information islands, which are functioni.g in isolation, are integrated
into a single system, the impact of that would be dramatic.
'
If ihe organization
does not have an efficient and effective mechanism
.rhen
the
.
chances of that organization
succeeding are very remote.
Integrated Inf ormation Systems
.
Information is refined data.
.
An information system is an open, purposive system that produces information
using the " input-process-output" cycle.
The minimal information system coruists of three elements
-
peopie, procedures
and data.
People follow the procedures to manipulate data to produce information.
Information systems can be designed so that accurate and timely data are shared
between functional areas. These systems are called integrated information
systems.
Information activities are find, create, Ieceive, acquirq monitor, classify,
safeguard, organize, use, publish, collaborate, disseminate, archive, dispose,
transfer, etc.
Management information system (MIS) produce information products that
support rnany of the day-to-day decision making needs of the management.
'I'he
problem with traditional Mls is that they operate at a departmental
level and
they give only information that has been predefined'
Traditional information systems fail to capture the information needs of the
entire organization as they concentrate on capturing departurent
level
fu{ormation
-
isolated information gathering.
No decision-maker can take good decisions with the isolated inJormation
that
they can get from the in-formation produced by individual departments.
For a company to provide customer satisfaction, it must make sure that its
functional areas of operation are integrated-one departrrent should know what
the other departments are doing.
For example the people in sales and marketing should know the up-to-date
details of the latest products, their prices, their feafures and so on so that they
can provide this information tc the customers.
Similarly, the people in the manufacturing plants should know which models are
being ordered in large quantities so that they can buy the necessary materials
and start manufacturing those items to deliver to the customers.
15
.
This type of inter-departrnental information sharing through the use of
integrated information systems will help the organizations in achieving customer
satisfaction while improving their productivity and efficiency.
Integrated Management Information system
Also called as lnformation reporting System
The three fundamental characteristics of information are accuracy, relevancy,
and timeliness.
To survive, the organization must always be on its toes, gathering and analyzing
the data-both internar and external. Aoy mechanism that will automate the
informafion gathertr'.g and aaalysis process rill enhance the chances of th.e
organization to beat the competition.
what is needed is a system is, that treats the organization as a single entity and
caters to the inJormation needs of the whole organization.
If this is possible, and if the information that is generated is accurate, timely and
relevant, then these systems will go a long wry in helping the organization to
realize its goals.
Integrated mtrnagement information provides the decision makers with accurate,
relevant, timely, and.up-to-the minute information so that they can make better
and informed decisions much faster.
Integrated management information will enable the organization to become
more competitive, agile and respond quickly to the changes in the business
environment, customer interests and trends.
2.3 BUSINESS MODELING
'
Business modeling or creating a business model is one of the first activities in any
ERI' project. ERP systems shoulcl mirror the business processes.
a
a
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A business model is a representation of the business as one large system,
showing the interconnections and interdependencies of the various subsystems
and business processes.
Based on the organizatiorls goals, objectives and strategic plans, a business
model consisting of the business processes is developed.
Based on the blsiness model, the ERP systen is developed with the aim of
providing the required information and necessaiy assistance to the various
individuals to perform their business processes more effectively and efficiently.
The business is modeled as an integrated system.
Information is a very irr.portant resource and is very critical in managing all the
other resources.
The business model is usually represented in the graphical forur using flowcharts
and flow diagrams.
2.4 INTEGRATED DATA MODEL
The most critical step in the ERP implementation is the creation of an integrated
data model as all the employees from the different deparknents get access to the
integrated data and this will help in better decision making.
With the implementation of EI{P systems all the data will be from the integrated
database.
Maintaining and managing the integrated data constanfly updated and upto-
date is one of the biggest challenges of ERP implementation and to-operation.
a
a
17
T-
Real-rr.orlrl aud Btsiiress,Modd
The integrated database will reduce data redundancy and give all employees
access to the updated and up-to-the minute information about the entire
organization.
when designing the data model for the ERP system, the most important thing
that should be kept in mind is the information integration and the process/
procedure automation.
The data model should reflect the entire organization and should successfuIly
depict and integrate the data stuctures of the errtire organization.
t
Irrtegrated Data Moclel
0# Iod.l
T$hs
FicHr
Uie*s
DomairE-.1a.
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Data l.Iodel ancl its Re]atiorrslrip rrith the Real]trorld
Installing an ERP system has many advantages-both direct and indirect.
The direct advantages include improved efficiency, information integration for
better decision- making, faster response time to customer queries, etc.
The indirect benefits include better corporate image, improved customer
goodwiil, customer satisfaction and so on.
Some of the benefits are quantitative (tangible) while many others are qualitative
(intangible).
l9
?
The main benefits of the ERP system include
Inf ormation Inte gration
reduction of lead-time
on-time shipment
reduction in cycle time
b etter customer satisf action
improved supplier
Performance
increased
iiexibilitY
reduction
in qualitY costs
improved resource utilitY
imprcved inforrr.ation acc'rrracy and enhanced decision making capability
Use of latest technologY
INFORMATION
INTEGRATION
Promotion of integration
has lot of advantages in ERP'
ERP systems are integrated because they have the ability to automatically update
data between related business functions and components'
Information updating happens instantaneously'
It leads to better decision making and routine problems
People involved in a project:are connected to each other'
It has tremendous potential for improving productivity'
REDUCTION OF LEAD-TIME
) The elap
e leail-
time.
--
rn+ rnra in nrrrnhaei,.o I.
D It plays a signi{icant role in purchasing and inventory contro'
a
a
a
a
a
a
a
a
a
a
R
20
Squetky Wheel Prilrciple: - Buyers who expect the shortest lead-times complain
the loudest when deliveries are late and thereby receive the most attention from
suppliers. So the company should find out the minimum lead-time and should
attempt to correct supplier's delivery delays instead of automatically increasing
existing lead-times.
In order to reduce the lead-time, the organization should have an efficient
inventory managernent system, which is integrated with the purchasing,
production planning and production departments.
In this era, the knowledge of the exact lead-time for each and every item is of
paramount importance for uninterrupted production.
For a company dealing with hundreds and thousands of raw materials and
components, keeping track manually of the lead-time for each and every
individual item is practically an impossible task.
F The ERP systems help in automating this task and thus, make the
,inventoryr
m.Inagement more efficient and effective. Also since the ERP system is integrated
and the materials managertent module is integrated with other modules like
sales, marketing, purchasing, manuJacturing artd production planning, the
demand for a particular item can be known as early as an order is received.
ON -TIME SHIPMENT
) Companies must be able to deliver customer-specific products with the lead-
time.
21
) Since different functions (purchasing, materials management, production
planning, plant maintenance, sales and distribution) are involved in the tim"ly
delivery of the finished goods to the customer, all the functions are integrated
and the procedures automated, the chances of errors are minimal and the
production efficiency will be high.
F By integrating the various business functions and automating the procedures
and tasks, the ERP systems ensure on-time delivery of goods to the customers.
?
Si:rce ali the infarrnation is available to the management at Bte desired ievel of
detail, and since the system has exceptional handling features, the management
can keep track of things and can take corrective actions at the appropriate time.
REDUCTION IN CYCLE TIME
Cycle time reduction is one of the most important elements of successful
manuJacturing today.
More and more customers are demanding that manufacturers quickly respond to
their wants and needs, deliver perfect quality products on time. This trend,
which will continue, has led companies to focus more attention on their order-to-
delivery cycle time,
Cycle time is the time between receipt o t
can be reduced by the ERP systems.
Suppose a customer places an order. The order entry clerk has to check whether
the' order is available in the warehouse nearest to the customer. If it is not
available there, he will have to check whether it is available in any other
warehouse or with any of the distributors. Then he will have to process the
order, infornn the concerned warehouse or distributor to ship the item, and
22
inform the finance department to raise the invoice, and so on. All this used to
take a lot of time-few days or sometimes even lveeks.
system checks the availability of the items. If it is not available with the nearest
manufacfurer, then the warehouse that is closest to the customer and which has
the item in stock is identified. The warehouse is informed about the order and
the shipment details are sent to the distribution module,which will perform the
necessary tasks, so that delivery is affected. This efficiency of EIIP systems helps
?
in reducing the
rycle
time.
3.4 IMPROVED RESOURCE UTILIZATTON
As manufacturing process become more sophishicated and as the philosophies of
eiimination of waste and constraint management achieve broader acceptance,
manufacturers place increased emphasis upon planning and controlling capacity.
The creation of an accutate, achievable production schedule requires the
availability of both material and capacity. It is useless, and wasteful, to have
financial resources tied up in material, if the capacity is iasufficient or
improperly planned. Waste not only raises costs, it also affects customer service
Ievels and customer goodwill.
The ERP systems have simulation capabilities that help the capacity and resource
planners to simulate the various capacity and resource utilization scenarios and
choose the Lrest option.
The efficient functioning of the different modules in the ERP system ensures that
the in-"'entory is kept to a minimum level, the machine down time is minimum,
J)
.+,rtb
the goods are produced orrly as per the demand and the finished goods ate
delivered to.the customer in the most efficient way.
F Thus, the ERP systems help the organization in drastically improving the
capacity and resource utilization.
3.5 BETTER CUSTOMER SATISFACTION
D Customer satisfaction means meeting or exceeding the customers requirefent
for product or service.
) Assessment of the degree of satisfaction is usually made on three measures:
(1) whether the product ot service includes the feahrres that are most
important to the customer
(2) whether the company can respond to the customers demands in a
tim"ly mEurner
(3) whether the product or service is free of defects and performs as
expected.
ERP systems have proved that they can provide the customers with individual
attention and the feafures that they want, without spmding more money or
waiting for long periods.
Also the introduction of web enabled ERP systems, the customers can place
orders, track the status of order & make payment sitting at home .
The customer can also get technical support Since all the details of the product
and the customer are available to the person at the technical support department,
the company willbe able to bettet support the sustomer.
All this is possible because of the use of the latest developments in the IT by the
ERP systems and this improves customer satisfaction.
24
3.6 IMPROVED SUPPLIER PERFORMANCE
F The quality of the raw materials or components and the capability of the vendor
to deliver them on time, are of critical importance for the success of any
organization.
) So, an organization needs to choose its suppliers or vendors very carefullrnnd
monitor their activities closely, so that the problems can be corrected before it can
disrupt the functioning of the comPany.
D To realize these benefits, corporations rely heavily on supplier management and
conttol system to help plan, manage and control the complex
Processes
associated with global supplier partrerships.
D The ERP systems provide vendor management and procurement support tools
designed to coordinate aE aspects of the procurement process.
D Supplier quotations and contracts can be created to support the procurement of
all products and sewices required by the enterprise.
F They support the organization in its efforts to effectively negotiate, monitor and
!
control procurement costs schedules while assuring superior product quality.
) The supplier management and control processes are comprised of features that
will help the organization in managing the supplier relations, monitoring the
vendor activities and managing the supptier quality.
D The
Quality
Management System in the ERP systems, provide all the tools
needed to implement total quality management programs within an
organization's procurement fu nction
25
INCREASED FLEXIBILITY
Because competition is growing, the companies
must learn to respond more
rapidly to customers' wishes as well as changes
in the market'
They will need to design new products are redesign old products quickly'and
efficienfly. Only then will companies
have the chance tcapitalize on
opportunities
while they are available, The window of opportunity is often quite
small.
The manufaciuring
process must be flexible enough to accommodate
new
product designs with minimal disruption or time loss'
Flexibility is a key issue in the formulation
of strategic plans rn companies'
some times flexibility means quickly changing something that is being done, or
completely changing to adjust to new product designs. At other times flexibility
is the ability to produce in small quantities in order to produce a product mix
that may better approximate actual demands and reduce work-in-progress.
ERP systems improves the flexibility of the manufacturing operations, but also
the flexibility of the organizatton
as a whole.
A flexible orgarrization is one that can adapt to the changes in the environment
rapidly.
3.8 REDUCED
QUALITY
COSTS
Quality
is defined in many different ways - excellence, conformance to
specifications, fitness fot use, value for the price, and so on'
ManuJachrring and desigr engineers are typically responsible for some of the
technological issues in the quality assurafice for products. Operation- managers
often conduct the analysis of quality-related costs, which is an imporiant task'
Strategic opportunities, ol threats, frequently motivate the launch of aggressive
quafity management initiativ es.
26
Analyzing the cost of quality can provide the financial justification
for
implementing them. Carefully planning quality improvement activities not only
improves quality, but lowers quality-related costs.
A typology of quality related costs are provided:
lnternal
failure
costs
-
Costs of scraps, rework, re-inspection, low
productionyield.
?
External
failure
costs
-
Warranty claims, repairs and service costs
Appraisal costs
-
Cost of inspecting upon arrival, during manufacture, in
laboratory tests
Preaention costs
-
Design and development of new quality
equipment, evaluation costs of a new product or
service, training of quality personnel
F To achieve q.,ality levels, manufachrers must focus on identifying and
correcting defects in product designs and production methods.
D The ERP systems provide tools for implemmting total quality management
system and specification control systems within an organization.
F The
Quality
Management System in the ERP packages support the
benchmarking and use of optimal product design, process mgineering and
quality assurance data by all functional departments thereby facilitating
definition of repeatable processes, root cause analysis and the continuous
improvement.
) The Specification Control Systems in ERP packages offers approach for
documenting specifications and enable an organization to standardize and
simplify its quality assurance and control functions.
)
'Ihe
ERP systems central database eiimiirates redundant specifications and
ensures that a single change to standard procedures takes effect immediately
throughout the organization.
27
TMPROVED INFORMATION ACCURACY AND DECISION MAKING
CAPABILITY
F We have seen that in today's competitive business environment the key resource
of every organization is information.
enables it to give the decision makers the right information at the right time, then
the chances of that organization succeeding are vdry less.
/
F The thlee fundamental characteristics of information are accuracy, relevanry and
timeliness. The information has to be accurate, it must be relevant for decision
maker and it must be available when he needs it.
F To survive,
tJ"-rive
and beat the competition, the organization has to manage the
information.
) In order to manage the information, in order to deliver high quality information
to the decision makers at the right time, in order to automate the process of data
collection, collation and refinemenf organizations have to make fuIl potential use
of IT, in the best wdy possible. Any organization that has a mechanism to do so,
will always be one step ahead of the competition.
ERP is the central or the core component around which the various technologies are
integrated to build an organization that works at the speed and efficiencies of the
Internet age and where most processes are automated and things happen at Internet
speed.
ENABLIN G TECH}.IOLOGIES
Some of the technologies whicl when integrated with the ERP system-, will enable trre
companies to do business at Internet speed.
These technologies used are:
1. Business Process Reengineering (BPR)
L-
28
2. Management Information System (MIS)
3. Decision Support System (DSS)
4. Execution Information Systenr (EIS)
5. Data warehousing & data marts
6. Data Mining
7. On-line analytical processing (OLAP)
8. Supply chain management (SCM)
BUSINESS PROCESS REENGINEERING (BPR)
.
BPR is the analysis and redesign of workflow within and between enterprises.
BPR promotes the idea that sometimes radical redesign and reorganization of an
enterprise (wiping the slate clean) was nece$sary to lower costs and increase
quality of service and that information technology was the key enabler for that
radical change.
o
Hammer and Champy, the founders of this concept, suggested seven principles
of reengineering to streamline the work process and thereby achieve significant
Ievels of improvement in quality, time, management and cost.
.
According to Hammer, lack of sustained management commitment and
leadership, unrealistic scope and expectations, and resistance to change
prompted management to abandon the concept of BPR and embrace the next
new methodology, Enterprise ftesoulce Planning (ERP).
Principles of reengineering
1. Organize around outcomes, not tasks.
2. Identify all the processes in an organization and prioritize them in order of
redesign urgency.
3. Integrate information processing work into the real work that produces the
hformation.
4. Treat geographically dispersed resources as though they were centralized.
/
29
5. Link parallel activities in the workflow instead of just integrating their
results.
5. Put the decision point where the work is performed, and build control into
the process.
7. Capture information once and at the source.
4.2 MANAGEMENT INFORMATION SYSTEMS (MIS)
/
MIS is a computer based system that optimizes the collection, collation, transfer
and presentation of information throughout an organization, tluough an
integrated structure of databases and information flow.
MIS
-uses
a::r integrated database and supports a variety of f,rr.ct'onal areas. The
integrated database of MIS enables greater flexibility in meeting the information
needs of the management.
MIS integrates the information flow betwem functional areas- accounting,
marketin g manufacturing, etc
MIS caters to the information needs of all levels of management.
MIS provides operational
.,tactical
and strategic levels of the organization
MIS is flexible and can be adapted to the changing needs of the organization.
4.3 DECTSTON SLTPPORT SYSTEM (DSS)
DSS are interactive information systems that rely on an integrated set of user-
friendly software and hardware tools, to produce and present information
targeted to support n-ranagement in decision making.
DSS facilitates
flr-e decision rrraking process, helping ille decrsion mak-ers to
choose beiween alternatives.
LE
30
.
DSS serve the management, operations, and planning levels of an organization
and help to make decisions, which may be rapidly changing and not easily
specified in advance.
.
A DSS can help close the information gap and allow mangers to improve that
quality of their decisions.
.
Examples of a decision support application are:
o inventories of information asseb
o comparative sales figures between one period and the next,
/
o projected revenue figures based on product sales assumptions.
.
DSS are designed to support decision-making processes involving semi-
structured and unstrucfured problems.
4.4 EXECTJTIVE INFORMATION SYSTEM
.
EIS is a decision support system especially made for senior level executives to
analyze, compale, and highlight trends in important variables so that they can
monitor performance and identify opportunities and problems-
.
Top level executives and decision makers face many problems and pressures.
They have to make the right decisioru at the right time to take the company
forward.
.
An EIS is concemed with how the decisions affect anentire organization.
. An EIS takes the following into considerations:
,/
The overall vision and mission of the company and the company
goals.
{
Strategic planning and objectives.
,/
Organizational sftucture,
r'
Crisis management/ contingency plalrning.
{
Strategic control and monitoring of overall operations.
.
Successful EIS are easy to use, flexible and customiiable and use the latest
technological innova tioru.
3t
4.5 DATA WAREHOUSING & DATA MARTS
,
A datq warehouse is database designed to support decision making in an
organization.
.
Data from the production databases are copied to the data warehouse so that
queries can be performed without disturbing the performance or the stability of
the production systems. I
.
Data warehouses contain a wide variety of data that present a coherent picfure of
business conditions at a single point in time.
.
The term data watehousing generally refers to the combination of many ciifferent
databases across an entire enterprise.
.
The primary concept of data warehousing is that the data stored for business
analysis can most effectively be accessed, by separating it from the data in the
operational systems.
.
A ilata mart is a database, or collection of databases, designed to help managers
make strategic decisions about their business. Whereas a data warehouse
combines databases across an entire enterprisg data marts are usually smaller
and focus on a particular subject or department. Some data marts, called
dependent data marLs, a-re subsets of larger data warehouses.
4.5 DATA MINING
Data mining is defined as the process of identifying valid, novel, potentially
useful and ultimately comprehensible information from databases that is used to
make crucial business decisions.
Data mining is processing ihe data to idmtify patterns and estabiish
relationships. Data rnining is a class of database applications that look for hidden
patterns in a group of data that can tre u,sed to predict future behavior.
E
)Z
For example, data mining software can help retail companies find customers
with common interests. fhe term is commonly misused to describe software that
presents data in new ways-
True data mining software does not just change the presentation, but actually
discovers previously unknown relationships among the data. I
Data mining is popular in the science and mathematical fields but also is utilized
increasingly by marketers h'ying to distill useful consumer data from Web sites.
Data mrning techniques are used in a many research areas, including
mathematics, cybemetics, and genetics. Web mining, a qpe of data mining used
in customer relationship management (CRM), takes advantage of the huge
amount of information gathered by a Web site to look for patterns in user
behavior.
Data mining parameters include:
1. Association - Iooking for patterns where one event is connected to
another event
2. Sequence or path analysis - looking for patterns where one event
leads to another later event
3.Classification -looking for new patterns (May result in a change in
the way the data is organized but that's ok)
4. Clustering - finding and visually documenting groups of facts not
previously known
5. Eorecasting - discovering patterns in data that can lead to reasonable
predictions about the future .
4.7 ON - LrNE ANALYTICAL PROCESSTNG (OLAP)
.
OLAP is a decision support software that allows the user to quickly analyze
information that has been summartzed into multidimensional
.,,ielvs
and
hierarchies.
.
OLAP can be defined in five words
-
Fast Analysis of Shared Multi-dimensional
Information.
33
OLAP is a category of software tools that provides analysis of data stored in a
database.
OLAP tools are used to perform trend analysis on sales and financial
information. They enable usets to drill down into masses of sales statistics in
order to isolate products that are the most volatile, I
OLAP tools enable users to analyze different dimensions of multidimensional
data.
For example, it provides time series and trend analysis vielvs. OLAP often is
used in data mining.
The chief component of OLAP is the OLAP server, which sits between a client
and a database maxagement systems (DBMS). The OLAP server understan-ds
how data is organized in the database and has special functions for arralyzing'fie
data. There are OLAP servers available for nearly all the major database systems.
4.8 SUPPLY CHAIN MANAGEMENT (SCM)
Supply chain management (SCM) is the process of planning, implementin& and
controlling the operations of the supply chain as efficienfly as possible.
SCM spans all movement and storage of raw materials, work-in-process
inventory, and finished goods from point-of-origin to point-of consumption.
SCM is the oversight of materials, information, and finances as they move in a
process from supplier to manufacfurer to wholesaler to retailer to consumer.
SCM involves coordinating and integrating these flows both within and among
companies.
The ultimate goal of arry efiective supply chain management system is to reduce
inventory (with the assumption that products are availa-ble when needed).
A supply chain is a network of facilities and distribution options that performs
the functions of procurement of materials, transformation of these materials into
34
intermediate and finished
proclucts to customers.
.
Supply chains exist in both
the complexity of the chain
to {irm.
products and the distribution of these finished
service and manufacturing organizations, although
may vary greatly from industry to industry and firm
strategy, focusing on
to an orgarization's
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
o
Customer relationship management is a corporate level
creating and maintaining relationships with customers.
o
It is not a technology itself, but a holistic approach
philosophy, piacing the emphasis fumly on the customer.
.
It governs an organization's philosophy at all levels.
o
CRN{ systems are integrated end- to
-end
across marketing, sales artd customer
service.
.
CRM system should identify factors important to clients, promote a customer
-
oriented philosophy, adopt customer-based measures.
.
CRM system develop end to
-
end processes to serve customets, to provide
customer support, to handle customer complaints, to track all aspects of sales,
to create a holistic view of customer's sales and service information.
.
CRM applications track customer interests and requirements and buying habits
which can be used to target customers selectively.
r
Repeat purchase rely on customer satisfaction, which in tum comes from a
deeper understanding of each customer and their infividual needs.
r
CRM is an alternate to the "one size fits all" approach.
GEOGRAPHICAL INFORMATION SYSTEMS (GTS)
.
Geographical information system is a computer
-
based tool for mapping and
analyzing that exists and events that happen on earth.
35
o
It integrates common database operations such as query and statistical analysis
and unique visualization and geographical benefits offered by maps.
.
These abilities distinguish GIS from other inJormation systems and make it
valuable to a wide range of public and private enterprises for explaining
events, predicting outcomes and planning strategies
o
The main functions of an organization like procurement, distribution, logistics
management etc to have critical geographic dimension.
.
GIS gives power to create maps, integrate information, visualize scenarios, solve
complicated problems, present powerful ideas and develop effective solutions
like never before.
.
GIS is a tool by in<iividuals and organizations, schools, governments and
business seeking innovative way to solve their problems.
INTRANETS AND EXTRANETS
o
Intranets, extranets and e-commerce have in common the use of internet
prctocols to connect business users.
o
Intranets are more localized and can therefore move data faster than more
riistributed extranets.
r
The amount of control that the network managers can exert over users is
different for the three technologies.
.
On an intranet, administrators c,rn prescribe access and policy for a fixed
group of users,
The company could write work flow applications that leverage the uniform
computing environment over which it exercises strong control.
On a business
-
to
-
business extranet, system architects at each of the
participating companies must collaborate to ensure a common interface and
consistent
36
t
5,1. INTRODUCTION
Business Reengineering is the fundamental rethinking and radical r+design of business
processes to achieve dramatic improvementqQ@iUcal,
contemporary measures of
performance such
ilgf
UuatiW
service and speed.
5,2 PHASES OF BPR
The tasks that experts agree upon to successfully perform BpR, can be grouped in to
seven steps, or phases. All successful BPR projects begin with the most critical
requirement communication tfu ou ghout the organization
1. Begin organizational change
2. Building the reengineering organization
3. Identifying BPR opportunities
4. Understanding the erjsting process
5. Reengineer the process
5. Blueprint the new business system
7. Perform the transformation
PHASE 1 : BEGIN ORGANIZATIONAL
CHANGE
.
The fust step is to take a long hard look how the organization operates.
o
The
PurPose
df analysis should be to deterrrine whether dramatic changes
are possible or marginal changes are needed, which involves lesser risk.
o
Next step is to look for harmful operating prodedures, l1[, any within the
organization.
o
The future vision of how the business must operate will serve as a clear and
concise guide lvith measurable goals tbr employees to focus on.
'
Because an organization BPR can potentially rdtluire significant changes
throughout an organization, it must begin with a communication campaign
to educate all those who will be impacted by this change.
37
\,
.
Communication
to all levels of personnel must remain active from start to
finish keeping every one involved and working towards a common goal'
.
Without a cornmon understanding about what is happening, confusion and
uncertainty about the future can result in resistance that is strong enough to
stop any re engineering
work.
.
In order for change to be embraced, every one must understand where the
organization is today, what it needs to change, and where it should be in
order to survive, thrive and beat the competition
PHASE 2 : BUILD THE REENGINEERING
ORGANZATION
.
Major activities of the phase are, eshblish a BPR organization structure,
establish the rotres fcr performing BPR and choose the personnel who will
reerrgineer it.
.
One of the most important members of reengineering effort is lhe exec,utioe
leailer.
He must be a high level executive who has necessary authority to make
people listen and motivational power to make them follow'
Without the commitment of substantial time and effori from toP
xnanagerr,.ent, no BPR project can orJercome the internal folces and will never
reach implemenbabion. The executive leader usually appoints
Process
owners.
A process owner is responsible for a specific
Process
and the reengineering
effort focused on it.
The reengineering team must be small, usually five to ten people and as they
will be ones who diagnose the existing
Process,
and oversee the redesign and
implementation.
In some BPR initiative it is helpful to institute a steering committee, which
can controi the chaos by developing an overall reengineering strategy and
monitoring its progress.
I-rst1y a reengineering specialist or cor-rsultant can be an invaluable adclition.
L.-
38
\
PHASE 3: IDENTIFY BPR OPPORTUNITIES
This phase consists of following activities
.
Identify core/ high level processes
.
Recognize potential change enabler
.
Gather performance metrics within industry
.
Gatlter performance metrics out side industry
o
Select processes that should be reengineered
.
Prioritize selected processes
.
Evaluate pre existing business strategies
.
Consult with customers for their desires
o
Determine customer's acfual needs
.
Formulate new process performance objectives
o
Establish key process characteristics
o
Identiff potential barriers to implementation
Picking a process which has high success potential and which can show success fast is
very important to build the necessary momentum and enthusiasm at all level of
organization
PHASE 4: UNDERSTANDING THE EXISTING PROCESS
The main activities of the phase are
o
Understanding why current steps are performed
.
Model the current process
o
Understand how technology is currently used
o
Understand how information is currently used
e
Understand current organization structure
.
Compare current process with the new objectives
Modeling current process heips to better understand the existing process, but also helps
with planning migration from the old to the new process and executing the physicai
kansformation of personlel, organizational strucfures, information requirements, and
how technology is used. Information that should be included in the models are process
39
t
inputs (such as task times, data requirements, resources, demand etc) and process
outputs (such as data output cost, throughput, cycle time, bottleneck etc)
PHASE 5: RE-ENGINEER THE PROCESS
The major activities in this phase are
.
Ensure the diversity of reengineering team
.
Question
current operating assumptions
.
Brainstorm using change levers
.
Brainstorm using BPR principles
.
Evaluate the impact of new technologies
.
Consider the perspectives of stakeholders
.
lJse customer value as the focal point
The reer.gineering tear. should consist of designers and implementers and include both
insiders and outsiders of existing process. Have people who will be future process
owners or those responsible for future process. Brainstorming sessions are most
successful when the following BPR principles are corsidered.
.
Severaliobs are combined into one
.
Workers make decisions
.
The steps is
a
process are
performed
in a natural order
.
Processes have multiple versions
.
Work is performed where it makes most sense
.
Checks and controls are reduced
.
A case manager provides a single point contact
.
Hybrid centralized
/
decentralized operations are prevalent
During the brainstorming sessions, the Reengineering team must consider technologies
that are considered enablers of reengineeriog,
".g.
.
ERP qr/stems
.
InternetTechnologies
.
Distributed computing plafforms
.
Client/ server architecture
\
.
Work flow automation technologies
.
Groupware
It may be found at this stage that a new process simply will not fit into the current
organization without a new process
-
oriented organizational structure
PHASE 5: BLUEPRINT TIIE NEW BUSINESS SYSTEM
The activities of the phase are
.
Define the new flow of work
.
Model the new process steps
.
Model the new information requirements
.
Document the new organizational structure
.
Describe the new technology specfications
.
Record the new personnel management systems
.
Describe the nern' values and culture required
Blueprints are detailed plans required to build something in accordance with the
desi gner's intentions.
Blueprinting involves modeling the new process flow and the information required to
support it.
Just
as we modeled the "as-is" process and information requirements
,
we need to
create "tobe" models to illustrate how the work flow be different .
The information models, or data models, will indicate where the new process will use
information that is shared across functional areas of the business.
The blueprints should also contain models of redesigned organizational structure" This
chart rvill show the new process flow along with process team members, the process
owrrers, the case managers, and the process facilitatots.
The chart should also indicate parts of the organization, which interact with the process
personnel. [n addition detai]ed technology specifications that are required to support
the new process should be defined.
The redesign may require an entirely different culture or atmosphere, than what is
prevalent in the organization.
41.
PHASE 7: PERFORM THE TRANSFORMATION
The activities of the phase are
.
Develop a migration strategy
.
Create a migration action plan
.
Develop metrics for measuring performance during implementation
.
Involve the impacted staff
.
Implement in an iterative fashion
.
Establish the new organizational strucfure
.
Asses current skills and capabilities of workforce
.
Map new tasks and skills requirements to staff
.
Re-allocater,vorkforce
.
Develop a training curriculum
.
Educate the staff about the new process
.
Educate the staff about new technology used
.
Educate management on facilitation skills
.
Decide how new technologies will be introduced
.
Transition to new technologies
.
Incorporate prccess improvement mechanism
6.l INTRODUCTION
r
A data warehouse is a database designed to support decision making in an
organization.
o
Data from the production databasqs are copied to the data warehouse so that
queries can be performed without disturbing the performance or the stability of
the production systems.
'
The term Data Warehouse was coined by Bill Inmon in 1990, which he defined in
the foilowing way:
"A
warehouse is a subject-oriented, integrateri,
time-variant
42
and nonvolatilq collection of data in support of management's decision making
----
processrr.
.
Data warehousing emphasizes the capture of data from diverse scurces for
useful analysis and access, but does not generally start from the point-of-view of
the end user or knowledge worker who may need access to specialized,
sometimes local databases. The latter idea is known as the data mart.
6.2 CONCEPTS & GOALS
o
The primary concept of data warehousing is that the data stored for business
analysis can most effectively be accessed, by separating it from the data in the
operational systems.
o
This separation allows business analysis and queries to be performed rrr.ithout
disturbing the performance or the stability of the production systems.
.
The primary goals of a data warehouse are the following:
1. Provide access to the data of an organization
2.Data consistency
3. Capacity to separate and combine data
4. Inclusion of tools set up to query, Ntalyze and present
information
5. Publish used data
6. Drive business re.engineering
r
Data from various online tuansaction processing (OLTP) applications and other
sources is selectively exkacted and organized on the data warehouse database
for use by analytical applications and user queries.
6.3 CHARACTERISTICS OF A DATAWAREHOUSE
Subject-oiented
The data in the data warehouse is organized so that all the data elements
relating to the same real-world event or object are linked together.
Non-oolatile
/
43
I
Data in the data warehouse are never orrer-written or deleted - once
committed, the data are static, read-only, and retained for future
reporting.
lntegrateil
The data warehouse contains data from most or all of an organization's
operational systems and these data are made consistent.
Time-aaiant
The top-down design methodology generates highly consistent
dimensional views of data across data marts since all data marts are
loaded from the centralized repository. The up-front coet for
implementing a data warehouse using the top-do-nn nnethodclogy is
significant, and the duration oi time from the start of project to the point
that end users experience initial bendib can be substantial.
5.4 COMPONENTS OF DATA WARE HOUSE
The major components of a data warehouse architechrre are
.
Summarized data (lightly summarized and highly summarized)
.
Current detail
.
Operational systems of reeord
.
hrtegration and transformation
Programs
.
Data warehouse Architecture or Metadata
.
Archives
Summarized data
Summarized data is classified into two :
Lightly surumeizeil and highly summarized.
.
Lightly summarized data are the hallmark of the dw. all entelprise
elernents (departmen+.s) do not ha';e the sar'.e info requirement. So
effective data warehouse design provide for every enterprise element may
have access to both detail and summarized data but there will be much
less then total storing cunent detail.
44
I
Highly Sunmtrized
Dala
Opsdixd
@
dlLcord
Hrrrbn,
TrmNBrn
PrDgEs
CrltlrDeLi
Highly summarized data are primary for errterprise o(esrtives. Highly
summarized can either come from the lightty summarized data used by the
enterprise element or from current details
Operational systems of record
A system of record is a source of the data that feed the data warehouse.
Data in data warehouse differ from operational system. Data in that they
can only be read not modified. Thus it is necessary that a data warehouse
be populated with higher quality data available that is data that are most
timely complete, accurate and have the best structured conformance to the
data warehouse.
Integrationy' Transformation prograrns
Even the highest quality operation data can't usually be copied as it is into
a data warehouse. Raw operational data are virfually unintelligible to
most users. As operational data item passes from their system to record
into a data warehouse integration and transforrration program convert
t
45
I
them from application specification data into enterprise data .this
integration and transformation program perform functions such as
(i) Reformatting
(ii) Recalculating or nodifying key structures
(iii) Adding time element
(iv) Identifying default value
(v) Supplying logc to choose between multiple data sources
(vi) Summarizing and merging data from various sources.
Current detail
The heart of a data warehouse is its current detail, where the bulk of data
resides. Current detail comes Cirecfly from operational systems ar.d may
be storeci as raw data or as aggregations of raw data.
Data warehouse architecture or metadata
Metadata is the data about data and is used by data warehouse developers
to manage and control data warehouse creation and maintenance. To a
data warehouse usier, metadata is like a "cand catalog" of the subjects
available.
Archives
Data rrrarehouse architecture contains old data of significant continuing
interest and value to the enterprise. there is uzually massive amount of
data stored in the data warehouse archives with a lower incidence of
access. Archives data are most oftm used for forecasting and trend
analysis. An archive includes not only old data but they also include the
metadata that desctibes the characteristics of old data.
STRUCTURE OF DATA WAREHOUSE
Physical Data Warehouse
Physical database in which all the data for the Warehouse are stored,
along. with metadata and processing logic for scrubbing, organizing,
packaging and processing the detail data.
46
Logical data Warehouse
AIso contains metadata, including enterprise rules processing logic for
scrubbing, organizirg, packaging and processing data, but does not
contain actual data. Instead, it contains the information necessary to access
the data whenever they reside. This structure is effective only when there
is a/.single source for the data and when the data in the source is accurate
and timely.
Data Mart
Data Mart is a subset of an enterprise - wide data warehouse, which
typically supports and enterprise element (department region, function,
etc.). As part of an iterative Data Warehouse development process/ an
enterprise build a series of physical (or logical) data marts over time and
links them via an enterprise - wide logical Data Waretrouse or feeds them
from a single physical warehouse.
6.6 DATA WAREHOUSE PROCESS
The five essential stages of the data warehousing
Process
are:
.
Modeling data for the data warehouse
o
Extracting data from operational databases
"
Cleansing extracted data
o
Transforming data into the warehouse model
.
Loading the data into the data warehouse database
Stage L - Modeling data for the data warehouse
Because of the vast size of a data warehouse, the warehouse database
consists of de-normalized data.
Relational theory does not apply to a data warehousing system.
Wherever possible normalized tables pertaining to selected events May be
consolidated into de-norm alized tables.
Stage 2 - Exhacting data from operational databases
J
41
The process of collecting data from operational databases, flat-files,
archives, and external data sources.
Snapshots vs. Stabilized Data: A key feature of a data warehouse is that
the data contained in it are in a non:volatile (stable) state.
Stage 3 -Cleansing extracted data
Involves fiitering out or repairing invalid data prior to being stored in the
warehouse.
Operational data are " dity' for many reasons: clerical, data entry,
computer program errors, misspelled names, and blank fields.
Also involves traruforming data into standard business terms with
standard data values
Stage 4 -Transforming data into the warehouse model
To improve efficiency, data is transformed into summary views before
they are loaded.
Unlike operational views, which are virtual in nature with underlying
base tables, data warehouse views are physical tables.
Stage 5 -Loading the data into the data warehouse database
Data warehouses must be created and maintairred separately from the
operational databases.
Internal Efficiency
Integration of Legacy Systems
ConsoUdation of Global Data
6.7 ADVANTAGES OF A DATA WAREHOUSE
More cost effective decision making
A data warehouse allows reduction of staff and computer resources
reqrrired to support queries and reports
Better enterprise intelligence
Increased quality and flexibility of enterprise analysis arises from high
quaiity data in the warehouse
48
-r
Enhanced customer service
Better customer relationships by correlating all customer data via a single
data warehouse architecfu re.
Business Reengineering
Allowing unlimited analysis of enterprise information provides an insight
into enterprise processes that yields breakthrough ideas for reengineering
those processes.
Information system reen gineering
Data warehouse development can be an effective first step in re-
engineering the enterprise's legacy systems.
5.8 TEN MISTAKES TO BE AVOIDED IN A DATA WAREHOUSE
PROIECT
.
Starting a ware housing project without the right sponsorship and top
m;rnagement support
.
Setting expectations that you can not meet and causing frustration to executives
at the moment of truth
.
Pronnoting the value of their data warehouse with arguments such as "this will
help managers make better decisions ", which can back fire
.
Loading the warehouse with information' just because it was available'
.
Believing that data warehouse database design is the same as transactional
database design
.
Choosing a data warehouse manager who is technology oriented rather than
user oriented
.
Focusing on traditional internal record oriented data and ignoring the potential
value of external data and text, images
,
and potentially sound and video
.
Delivering data overlapping and confusing definitions
.
Believing the performance, capacity and scalability promises
.
Believing that once the data warehouse is up and rulning, your problems are
finished
49
Some challenges facing data warehouse could be described as follows
.
Complex extract transformation and load characteristics including source vs
target, data foansfonrrations, transaction based loading
.
Immense volume of daily data
.
Load methodology (load control and auditing)
.
Data warehouse recovery (load recovery)
.
Data warehouse validation
.
Data warehouse read performance including database structural design and
summarization
.
Metadata management
6.9 USES OF A DATAWAREHOUSE
.
Standard reports and queries
.
Queries
against summarized data
.
Data Mining
.
Interface with other data warehouses
7.1 INTRODUCTION
o
Data mining has been defined as
"the
nontrivial extraction of imptci! previously
unknown, and potentially useful information from data" and
"the
science of
extracting useful information from large data sets or dafabases"
o
Data mining, the extraction of hidden predictive information from large
databases, is a powerful new technology with great potential to help companies
focus on the most important information in their data warehouses.
o
Data mining tools predict future trends and behaviors, allowing businesses to
make proactrve, knowledge-drivm decisions.
o
The automated, prospective analyses offered by data mining move beyond the
analyses of past events provided by retrospective tools typical of ciecision
support systems.
50
o
Data mining tools can answer business questions that traditionally were too time
consuming to resolve. They scour databases for hidden patterns, finding
predictive in{ormation that experts may miss because it lies outside their
expectations.
r
Modern data mining systems self leam from the previous history of the
investigated system, formuiating and testing hypotheses about the rules, which
the system obeys,
7.2 EVALI=IION OF DATA MINING
o
Data mining techniques are the result of a long process of research and product
development.
.
This evolution began when business data was first stored on computers,
continued with improvements in data access, and more recently, generated
technologies that allow users to navigate through their data in real time-
o
Data mining takes this evolutionary process beyond retrospective data access
and navigation to prospective and proactive information delivery.
o
Data mining is ready for application in the business community because it is
supported by three technologies that are now sufficiently mature:
1. Massive data collection
2. Powerfu I multiprocessor computers
3. Data mining algorithms
.
The evolution of data mining has the following phases:
1. Data collection (1960s)
2.Data access (1980s)
3. Data warehousing & decision support (1990s)
4.Data mining (1990s onwards)
7.3 KNOWIEDGE VERIFICATION AND DISCOVERY
.
Traditions decision support systems (DSS) and executive information systems
(EIS) uses tools like queries, multidimensional analysis and visualization to
gather information.
51
-
o
In the above tools, the user is guiding the information gathering and is
basically trying to find out the causes of problems. This kind of information
processing is known as knousledge anificatiotr.
.
In the above cases, the amount of new information created is very little: the
user's hypothesis is either verified, or it is negated.
o
The user processes the information by successive iterations upon examining the
results of query after query and linking the verified and refined hypotheses.
This is the essence of a verification model.
.
Data mining uses a different model for the creation of information about data.
We call this the iliseoaery moilel.
r
Data mining uses methodologies that can sift through the data in search of
frequently occurring patterns, detect trends, produce generalizations about the
data, etc.
.
These tools can discover these types of information with very little (or no)
guidance from the user.
7.4 ADVANTAGES OF DATA MINING
Data mining derives its name from the similarities between searching for valuable
business informafion in a iarge database and mining a mountain for a vein of valuabie
ore. Both processes require either sifting through an immmse amount of material or
intelligently, probing it to find exactly where the value reside.
Tasks solved by Data Mining
Preilicting
A task of learning a pattern from examples and using the developed
model to predict future values of the target variable.
Classification
A task of finding a function that maps an exampie into one of several
discrete classes.
Detection of rclatiotts
52
A task of searching for the most influential independent variables for a
selected target variable
Erplicit Moileling
A task of finding explicit formulate describing dependencies between
various variables.
Clustuing
A task of identifying a finite set of categories or clusters that describe data.
Deoiation Detection
A task of deternrining the most significant changes in some key measures
of data from previous or expected values-
Given databases of sufficient size and quality, data mining technology can generate
new business opportunities by providing the following capabilities:
Automateil prcilictiott of trends anil behaviots
Data mining automates the process of finding predictive information in
large databases.
Automateil discoouy of preoiously unknoran palt*ns
Data mining tools sweep through databases and identify previously
hidden patterns in one steP.
Databases can be larger in both ilepth and bteailth
High performance data mining allows users to explore the full depth of a
database, without pre-selecting a sub-set of variables. The data *it ir,g
,
databases contains larger samples (more rows) as they yield lower
estimation errors and variance, and allow users to make inferences about
small but important segments of a population.
7.5 TECHNOLOGIES USED IN DATA MINING
The most commonly used techniques in data mining are:
1. Statistics and Regression
2. Neural networks
3. Clustering
53
4. Rule induction
5. Evolutionary programming
6, Case-based reasoning (CBR)
7. Memory-based reasoning (MBR)
8. Decision trees
9. Link analysis
10. Genetic algorithms
11. Association rules
12. Non-linear regression methods
8"1 INTRODUCTION
o
The term OLAP was coined by E.F.Cotid ll:.79DE., to refer to a type of application
that allows a user to interactively analyze data.
.
OLAP is a class of applications that require multi-dimensional analysis of
business data.
multiple time periods, with the airt of uncovering the business information
concealed with-in
t-he
data.
OI-A.P systems enable managers and analysts to rapidly and easily examine key
pefformance data and perform powerfirl comparison and trend analyses, even
on very Large data volumes.
OLAP is used in a wide variety of business areas, including sales and marketing
analysis, financial reporting, quality tracking, profitability analysis, manpower
and pricing applications and many others.
OLAP is often ccnfused with data warehousing. OLAP provides the facility- to
'analyze
the data ireld within the data warehouse in a flexible manner. Ii is an
integral component of a successful data warehouse solution; it is not in itself a
data n'arehousrng meth.odology or s,vstem.
OLAP is a method of analyzing data in a multi-dimmsional
54
-Fr
.
OLAP uses a multi-dimensional view of aggregate data to provide quick access
to strategic information for further analysis.
8.2 RULES OF OLAP
Dr.E.F.Codd lists the 12 rules for OLAP systems.
The rules are given below:
1. Multidimensional conceptual views
This supports EIS "slice-and-dice"
operatiorrs and is usually required in
financial modeling.
2. Transparency
OLAP systems should be part of an open system that supports
heterogeneous data sources. Further more, the md user should not have
to be concerned about the details of data access or conversions-.
3. Accessibility
The ALAP should present the user with a single logical schema of the
data.
4. Consistent reporting performance
Performance should degrade as the number of dimensions in the model
increases.
5. Client/server architecture
Requirement for open, modular systems.
6. Generic dimensionality
Not limited to 3 D and biased towards any particular dimension.
'A
function applied to one dimension should also be able to be applied to
another.
7. Dynamic sparse-matrix handling
Related both to the idea of nulls in relational databases and not to the
notion of compressing large files, a sparse matrix is one in which not
every cell contains data. OLAP systems should accommodate varying
storage and data-handling options.
tl
55
ET
B. Multi-user
suPPort
OLAPsystems,likeElses,needtoSuppoltmultipleconcurrentusels,
including
their individual
views or slices of a common
database'
9, Unrestricted
cross-dimensional
operations
Similar
to rule 6; all dimensions
are created equal and operations
across
datadimensionsdonotresEictrelationshipsbetweencells.
10. Intuitive
data maniPulation
Ideally,
users shouldn't
have to use menus or perform complex ultiple-
stepoperationswhenanintuitivedrag-arrd-dropactionwilldo.
11. Flexible rePorting
Usersshouldbeabletoprintjustwhattheyneed,andanychangestothe
underlying
financial
model should be automatically
reflected
in reports'
12. Unlimited
dimensional
and aggregation
levels
Aserioustoolshouldsupportatleast15anpreferablyZ}dimensions
8.3 USES OF OLAP
OLAP applications
sPan a variety of organizational
functions:
1. Finance departrnents
use OLAP for applications
such as budgeting'
activity based costing
(allocations),
financial performance
analysis and
financial modeling.
2. Sales analysis and forecasting
are two of the OLAP applications
found in
sales deParhents.
3. Marketing
departments
use oLAP for market research analysis, sales
forecasting,promotionsanalysis,customeranalysisandmarket/customer
segmentation.
4. Ir{anufacturing
oLAF
applications
include production planning and deject
analYsis.
OLAP transforms
rart, data so that it refleClS the real dimensionality
of the enterprise
as
understood
by th-g ;5s1.
l
t\,
-
While OLAP systems have the ability to answer "who?" and "what?" questions, it is
their ability to answer "what 1f?" and "';vhy?" that sets them apart from data
warehouses.
A truly flexible data model ensures that OLAP systems can respond to changing
'
b,rsiness requirements as needed for effective decision-making.
8.4 KEY FEATURES OF OLAP
.
OLAP enables managers to model problems that would be impossible using less
flexible systems with lengthy and inconsistent response times.
.
More controls and timely access to strategic information are equal to more
effective decision-making.
.
OLAP enables the organization as a whole to respond more quickly to market
demands. Market responsiveness, in turn, often yields improved revenue and
profitability.
.
Although OLAP applications are found in widely divergent functional areas,
th"y ,11require the following key features:
L. Multi-dimensional views of data
A multi-dimensional view of data provides more than the abitity to
"slice and dice"; it provides the foundation for analytical
I
processing through flexible access to information.
2. Calculation-intensive capabilities
Analytical processing systems are judged on their ability to create
information from data. To perform complex analysis like trend
analysis, sales forecasting etc. OLAP applications should have
calculation intensive capabilities.
3. Time intelligence
True OLAP systems understand the sequential nature of time.
Concepts such as year-to-date and period over period comparisons
can be easily defined in an OLAP system.
8.5 DIFFERENT STYLES OF OLAP
57
.
',
The four major alternatives
for implementing
OLAP applications
are:
1. Multi-dimensional
OLAP
Multi-dimensional
OLAP (MOLAP) is based on a multi-dimensional
data
base architecture.
MOLAP is suitable for applications
requiring only pre-
defined analysis on multiple
dimensions'
2. Hybrid OLAP
Hybrid oLAP products primarily
integrate specialized
multidimensional
data storage with relational
database management
technology.
HOLAP is
bestsuitedtoapplicationsthatrequireheavyanaiysis,mustprovide
predictableresponsetimestoresourceintensivequeties,willhaveasmall
number of concurrent
users'
3. Desktop OLAP
The desktop style of oLAP allows users to perform limited analysis,
directly against data held within a reLational database,
while avoiding
many of the problems that affect the hybrid and relational OLAP styles'
The desktop oLAP is suitabie for an enterprise that wants to provide pre-
defined analysis capabiJities
to business
users without incurring the
higher purchase and maintenance
cost of more functional
products.
4. Relational
OLAP
RelationalOLAP(ROLAP)jsthefastestgrowingareaofoLAP
technology,
with new vendors entering the market at an accelerating
pace'
The RoLAP is suitable for situations
where users require uruestricted
analysis of a large volume of data'
.
Supply chain management
(rcM) is the oversight of matetials, informatio4
and
finances as they move in a
Plocess
from supplier to manufacturer
to wholesaler
to retailer to consumer'
TNTRODUCTION
58
.
SCM involves coordinating and integrating these flows both within and among
comparues.
.
SCM enables collaboration, planning, execution and coordination of the entire
supply chain, empowering companies to adapt their supply chain processes to an
ever changing competitive environment.
r
An SCM system ensures more visibility throughout the supply chairu fewer
surprises and less need to stock back up raw materials or finished goods.
o
With better slmchronization across the entire supply chain, the business partrers
achieve the following major benefits:
1. Lower inventoties and therefore, lower financing costs
2. Shorter receivables cycles
3. Optimal use of resources, costly work forces and transportation
4. Faster response to market changes
5. Greater satisfaction and loyalty among customers
6. Greater profitability
.
Strategists realized that delivering the right manpower and material on schedule
to
just the right spot was the key to battlefield supremacy.
.
Supply chain management is mainly a matter of building new communications
paths and interlocking feedback loops that help business parhrers share
i:rformation and ultimately, more fully trust each other to maximize the mutual
benefits.
r
The SCM systems have become more efficient and intelligent with the use of
computers, artificial intelligence and other advancements in the field of
information techno logy.
o
SCM solutions transform tradifional supply chains from linear, sequential steps
into an adaptive supply chain network in which communities of customer-
centric, demand driven companies share knowledge, intelligently adapt to
changing market conditions and proactively respond to shorter, less predictable
life
rycles.
s9
I
I=-
.
Today, almost all organizations-military,
manufacturing, service industries,
retailers, and so on-use SCM systems to improve their efficiency and
effectiveness.
o All businesses that involve complex flows of material can take advantage of the
global optimization and efficient execution offered by scM systems.
9.2 ADVANTAGES OF SCM
Supply chain management mables:
Supply chain planning and collaboration
Supply chain planning functionality enables you to maximize return on
assets and ensures a profitable match of supply and demand'
Supply chain execution
scM enables you to carry out supply chain planning and generate high
efficiency at the lowest po*sible cost.
Supply chain visibility design and analytics
SCM gives you network-wide visibility across your extended supply chain
to perform skategic as well as day-te day planning.
Business benefits
SCM can help you transform a traditional linear zupply chain into an
adaptive network with the following bmefits:
1. Faster resPonse to changes in supply and demand
2. Increased customer satisfaction
3. Compliance with regulatory requirements
4, Improved cash flow
5, Higher margins
5. Greater synchronization with business priorities___Y
UNIT II. ERP IMPLEMENTATION
Implementation Life Cycle
-
Implementation Methodolory
-
Hidden Costs Organizing Implementation Vendors,
Consultants and Users
-
Contracts
-
Proiect Management and
Monitoring
L. OBIECTTWS OE ERP TMPLEMENTATTON
Objectives are the major highJevel characteristics that can have a great impact upon the
success.
The objectives of ERP projects include characteristics such as
7. Speeil - The speed of the project is how much time the company would like to
take in implementing the system.
2. Scope - The scope of the project includes all of the functional and technical
characteristics that the company warts to implement.
3. Resources - Reources are everything that is needed to support the project including
people, hardware systems, software systems, technical support and
consultants.
4- Risk - The risk of a project is a factor that impacts the overall success of the
ERP implementation.
5. Complexity - Complexrty is the degree of dfficulty of implementing operating
and maintaining the ERP system.
6l
6. Benefits - Benefits are the extent to which the company will utilize functionality of
the ERP system for software development,
maintenance and other
support activities.
The ERp implementation
lifecycle follows a similar path to the software development
lifecycle. The stages can be defined as planning, evaluation,
implementation,
integration,
acceptance and maintenance.
Companies that are undertaking ERP
implementation
need to be aware of this when adoptit g u project management
framework.
Th_e different phases of
tfre
ERJ} rmplementadon
are given below:
S.No
Phase
Description
t. Pre-evaluation
screening The purpose of this phase is to eliminate those
packages that are not at all suitable for the
company's business
Processes.
2. Package evaluation
In this phase the ERP package that is best suited
for the organization is selected.
3. Project planning
Phase
(-
In this phase the details of how to go about the
implementation are decided. In this phase the
time schedules, deadlines, etc. for the project,
are arrived at.
4. Gap analysis
This is the process through which companies
create a complete model of where they are now
and where they want to be headed.
5. Reen-gineertn-g
It is in this phase that human factors are ta.km
into account.
6 Configuration
In this phase, the ERP is modified to suit the
business processes of the organization.
62
7. Implementation team
training
This is the phase where the company trains its
employees to implement and later run the
system.
8. Testing This is the phase were the system that is being
implemented is tested for any problems, bugs,
errors, etc.
9. Going live This is the phase where ERP is made available to
the entire organization,
1.0 End-user training This is the phase where the actual users of the
system will be given training on how to use the
system.
11. Post implementation This is the phase where the ERP system is used
for conducting the business.
2.1. PRE. EVALUATION SCREENING
.
Pre-Evaluation Screening is the phase which starts when company decides to
go for an ERP System. The search for perfect ERP package starts.
.
There are many ERP packages available. Analyzing all the packages and
deciding is not easy and it is a very time consuming process. So, it is better to
limit the number of packages to be evaluated (max 5).
.
It is always better to do a thorough and detailed evaluation of a small number
of packages.
.
Not all packages are same - each has its own r,l'eakness and strength. Some
packages can be good in some areas while in other sectors they may not.
.
The pre-evaluation process should eliminate those packages that are not
suitable for the company's business processes.
.
Once few packages are screened, detailed evaluation process starts.
63
2.2. PACKAGE EVALUATION
.
The Package Evaluation/selection process is one of the most important phases
of the ERP implementation, because the package you seiect will decide failure
or success ofproject.
.
Since ERP packages are so expensive, once purchased, it is not an easy task to
switch to another one. So, do it ight the
first
time.
.
While making the analysis, the important point that should be kept in mind is
that, none of the ERP package is perfect.
.
The objective of the selection process is to find whether it is a perfect
fit
or a
goodft.
D Perfect fit - To identify a package that covers each and every
iequiremerrt
F Good fit
-
To find a package, that is flexible enough to meet the
company's needs-
.
Once the packages to be evaluated are identified, the company needs to
develop a selection criteria that will permit the evaluation of all the available
packages.
.
Few important points to remember while evaluating the ERP software
includes
(l) Functional fit with the company's business processes
(ii) Degree of integration between the various components of the ERP
system
(iii) Flexibility and scalability
/irr\ Cnmnlowihr
\" ,f
(") User friendliness
(vi)
Quick
implen-rentation
(vii) Abiiig to support multi-site planning and control
(viii) Teclurolory
-
client/ server capabilities, database independence,
64
security
(ix) Availability of regular upgrades
(x) Amount of customization required
(xi) Local structure inJrastructure
(xii) Availability of reference sites
(xiii) Total costs - including cost of license, training, implementation,
maintenance, customization and h/w requirements
2.3. PROTECT PLANNING PHASE
.
This is the phase that designs the implementation process.
.
In this phase detaiJs of how to go about implementation, schedules and
deadlines etc are decided.
.
This phase will decide about when to begin, how to do it and when the project
is supposed to be completed and what to do whm things get out of control.
'
r The project planning is usually done by a committee constituted by the team
leaders of each implementation group.
.
Implementation team members are selected and their roles and
responsibilities are identified and assigned.
.
This committee will meet periodically through out cycle to review process and
chart the future course of action.
2.4.GAP ANALYSIS
.
Gap analysis is a phase in the ERP implementation, where the organization
tries to find out the gaps between the company's existing business practices &
those supported by the ERP package.
.
This is the process through which companies create a complete model of where
they are now and where they want to head in the future.
65
.
The main objective is to design a model, which both anticipates & covers .rny
functional gap.
'
It has been estimated that even the best ERP package meets only 80% of the
company's fulctional gaps'
.
One of the most affordable, but most difficult solution is to alter the business to
fit the ERP package.
.
Another solution is that the company can simply agree to live without a
particular function.
.
Other solutions include:
) Upgrading or updating the software (low cost but risky)
) Identifying a third-party product that might fill the gap
F Designing a custom
Program'
F Altering the ERP source code.
2.5. RE-ENGINEERING
. It is in this phase that the human factors are taken into account-
. Reengineering has two different implications
.
The L"t one is the involving the use of ERP to aid in downsizing efforts.
) There have been occasions where high level executives have
invoked the reengineering slogan and purchased an ERP package
with the aim of reducing number of employees.
.
\Alhile every implementation is going to involve some change in job
responsibilities, so it is the best to treat ERP as an investment as well as
cost-cufting measure, rattrer than a downsizing tool.
.
The 2.d use of the word re-engineering in the ERP field refers to an ERP
implementation model initially designed and
.used.
66
.
The BPR approach to an ERP implementation implies two separate, but
closely linked implementations involved on an ERP site i.e. a technical
implementation and a business process implementation.
.
The BPR approach emphasis the human element of necessary changes
within the organization, which is generally more time consuming and has
received its share of criticism for creating bloated budgets & extended
projects.
"
The ERP market shifts to a mid-market focus & as all implementation are
becoming more cost sensitive; the BPR approach has come under some real
rutiny.
2.6. CONFIGURATIO}']
.
This is the main functional area of the ERP implementation.
.
Business processes have to be understood and mappd in such a way that
the arrived solution matches with the overall goals of the company.
.
Hencg a protoffie - a simulation of the actual business processes of the
company - will be used.
.
The prototype allows for thorough testing of the 'to be' model in a
controlled environment.
.
As the ERP consultanb configure and test the prototype, they attempt to
solve any logistical problems inherited in the BPR before the actual go-live
implementation.
.
Configuri^g a company's system reveals not onJy the strengths of a
company's business process but also- & perhaps more importantiy- its
weakness.
.
It is vital to the health of the company & to the success of the ERP
implementation that those configuring the system are able to explain what
won't fit into the package and where the gaps in functionality occur.
67
. ERP vendors are constantly striving to lower configuration costs. Current
strategies iflclude automation and pre-configuration'
.
. A kind of question
-
.rnswer format can be used to find out the kinds of
business process information addressed through the configuration process.
.
pre-configured
tools can save time and money, but every business is unique
and unique configuration
is needed for each proiect'
2.7. IMPLEMENTATION
TEAM TRAINING
.
This is the phase where the company trains its employees to implement and
later run the system.
. When the configuration is taking place, the implementation team is being
trained - not how to use the systeur, but how to implement it'
.
'Ihe
ERp vendors and the hired consultants wilI Ieave after the
implementation
is over.
.
But for the company to be self sufficient in running the ERP system, it should
have a good in-house team that can handle the various situations.
. Thus, it is very vital that the company recognizes the importance of this phase
and selects those employees who have the right aftitude - people who are
willing to change, learn new things and are not afraid of technology and good
functional knowledge.
2.8. TESTING
.
This is the phase where we try to break the systerr-
.
Here we reach a point where we are testing real case scenarios.
.
'Ihe
system is configured and now we must come up with extreme case
scenarios - system overloads, multiple users logging on at the same time with
the same query, users entering invalid data, hackers trying to access reskicted
areas and so on.
68
'
The test case must be designed
specifically to find the weak links in the system
and these bugs should be fixed before going live.
2.9. GOING LIVE
'
On the technical side, the work is almost complete
- data conversions
is done,
databases are up and running, and on the functional
side, the prototype
is fuIly
configured & tested and ready to go operational.
'
The system is officially proclaimed
operational,
even though the implementation
team must have been testing it & running successfuIry
for some time.
'
But once the system is 'live',
the o1d system is removed & the new system is used
for doing business.
2.10. END USERTRNNING
The success or failure of an ERp system depends on how the act,al users use
the system.
This is the phase where the actuar users of the system wil be given training
on how to use the system.
This phase starts much before fhe system goes live.
The most successful
implemented
ERp packages
fail due to lack of end user
training.
ERP system changes the job
descriptions
of the people - so it is important
to
identify the people who are going to use the system.
The current skills of the people are identified and they are divided into
grouPS.
Every group is provideC
training on the new systeur-
The training section gives the overall view of the system
individual
actions will be affecting
the entire system.
'and
how the
69
.
Every employee is also provided with the training of the job profile which
he/she is going to perforur once the system goes live.
. The training session shouid address about the new technologies and how
people will be successful in making the change over.
2.11. POST IMPLEMENTATION
(OPERATION & MAINTENANCE
\4ODE)
.
One important factor that should be kept in mind is that the post
implementation phase is very critical.
. Once the implementation is over the vendors and the hired consultants will
go.
. There should be people within the company who have the technical processes
to make the necessary enhancements to the system as and when required.
. The system must be upgraded as and when new versions or technologies are
introduced-
.
Everyone who uses these systems needs to be trained on how they work, how
they relate to the business process and how a transaction ripples through the
entire company whenever they press a key.
. The training will never end; it is an ongoing process; new people will always
be conning in and new functionality will always be entering the organization.
.
Living with ERP system will be totally differmt from installing them.
.
Projects for implementing the ERP systems get a lot of resources and
attention.
. However, an organization can only get the maximum value of these inputs if
it successfully adopts and effectively uses the system.
Reasons for failure of ERP implementation
.!
Lack of
'Iop
}vlanagement buy-in, commitment and support
* Important planning and budgeting
* Use of wrong ERP tool
+ Lack of training
70
A Work culture of the organization
Lack of Top Management
buy-in, commitment
and support
The top mrnagement
must be clearly
convinced about the importance
of ERp and
how ERP could be used as a competirive
weapon and how the company can fail if an
ERP system is not available to manage and control the business
operations.
when the employees know
that the ERp implementation
has full management
backing, they will also want the system to succeed. There will be a lot of issues like
change of procedures,
reassignment
of employees,
etc. when the ERp svstem is
implemented.
If the management
can assure the emproyees
that their jobs
are secure, that
assurance will ensure in employee
co_operation.
The top managers shJu1d also talk to the employees
regarding the benefits of the
ERP system and how the company
can get ahead of the competition
by reaping the
benefits of the system.
Important planning and budgeting
Before starting
the ERP implementation
project, detailed planning
involving all
the major stakeholders
is necessary
for the success of the project.
It is during this phase that the decisions
regarding
procedures
to be followed
tool to be bough! the budget to be alocated for implementation
and
maintenance,
etc. are decided.
If this planning is not done property; thm there is every chance that many factors
would be overlooked
resulting
in selecting the wrong tool, insufficient
funds,
and inadequate
team members and so on. All these can Iead to the failure of the
nroiecf
r_-r---'
In order to avoid this, Lhe planning phase should be taken very seriously and
meticulous research should be done before taking any action.
AIso, there should
I
71
be a provision m the plan to revise and update it as the implementation
progresses.
Use of wrong ERP tool
.
ERP planning team should research the available tools, match them with the
organization's requirements, visit companies where the tools are installed to see
them in action, should discuss about end-user training, tool updates and
upgrades and soon.
.
Only when all the members of the team are convinced that a specific tool is best
suited for tJre organization, the purchasing decision must be taken.
Lack of training
.
ERP fails due to ignorance and fear-ignorance about the tool and fear of additional
work or unemployment.
These factors can be corrected by giving
ProPer
training.
.
The top management should address the employees' fear of losing their jobs, as the
tool automates manY tasks.
.
ERP system is essential for the success of the organization in this highfy competitive
business environment. The ERP implementation team members, tool vendors and
external consultants should explain the objectives and goals of the ERP system, the
advantages on a day-to-day basis, how it reduces rework and defect sand so on.
.
The in-house experts should hain the users in how to efficiently use the tool and
should explain to them how the ERP tools make their lives easier and help them
create high-quality products without chaos and confusion.
Work Culture of the Organization
.
The work culture of the organization is very important for the success of ERP.
.
If the organization has a workforce that is wrliing to learn new things anci change
to new technologies, then there will be no problems for ERP implementation.
72
But if the employees resist change and see the introduction
of formal methods as
a means to assign accountability;
they will perceive the new technology
as
something
negative. so, the basic mindset of the workforce needs to be changed.
To change the employee mindset, the two critical factors required are top
management
support and proper training.
3. IMPLEMENTATION
METHODOLOGY
INTRODUCTION
.
At the first glance, all implementation
methodologies
look very much alike.
'
The company should look into minute details when comparing the different
methodologies,
'
The minute details include the conduct of the consultants
during the presentation
and the practical experience of the consultants
in dealing with similar situations
before.
.
If the consulting
firm has practical
experience, the methodology
for the
irrplen-tentation
will have been adapted to include tasks or activities specificaily
tailored to the specific application berng an_alyzed.
.
The most criiicai of phases of ihe ERp life cycle_
F adoption decision,
) acquisition,
) implementation,
) use and maintenarce,
) evolution and retirement.
Adoption decision
'
In this phase., m;rnagers
must question the need of a new ERp system while
seiecting the general information system approach that will best address their
critical business challenges
and improve the organizational strategy.
r
IJ
.
This decision phase includes the definition of system requirements, its goals and
benefits and an analysis of the impact of adoption at a business and organizational
level.
Acquisition-
.
This phase involves selecting the product that best fits the requirements of the
organization to minimize the need for customization'
.
A consulting company is also selected to help in the phases of the ERP life cycle
that follow, especially in the implementation phase'
.
Factors such as functionality, price, training and maintenance services are analyzed
and the contractual agreements are defined.
.
It is important to analyze the return on investment of the product selected.
Implementation-
.
This phase deals with the custorrization or parameterization and adaptation of the
ERP package acquired, to meet the needs of the organization-
.
This task is performed with the help of consultants who provide implementation
methodologies. Although training is present in all the phases, the largest training
investment is made during the implementation phase.
Use and maintenance
.
This phase consists of the use of the product in a way that retums expected benefits and
minimizes disruption.
.
Functionality, usability a.d adequary to the organizational and business
Processes
are
irnportant.
.
Once a system is implemented it must be maintained. Because malfunctions have to be
corrected special optimization requests must be met and general systems
improvements have to be implemented.
Evolution
74
'
In this phase, additional capabilities are integrated into the ERp system to obtain
additional benefits.
Retirement
'
When new technologies aPPear or the ERP system or approach becomes inadequate to
the needs of the business, managers decide if they will substitute another information
system approach that is more adequate to the organizational
needs of the moment.
MANAGING THE IMPLEMENTATION
'
The nature of the ERP implementation is such that it is best handled within a
project rnanagement context.
'
The implementation invoives a series of activities ihat do not fit naiurally into
the normal business of
rycle
evmts. The activities are of finite duration.
'
They have an end point, after which any future work should be added into
normal business activity.
It is multidisciplinary and team oriented.
It requires resource and development of specific skills.
Effective
project management should have right environmenl
ORGANTZATION
OF THE ERP PROJECT TEAM
'
The person who manages the implementation is the project manager. The project
manager reports to a Steering Comrrittee, who reviews progress and resolves
any territoriaf resource or policy disputes. The CEO leads the steering committee
and sponsors the project.
.
working for the project millager are the members of the project team, who
develop the processes using
t-he
new software. They then roll the new processes
out in readiness
for go-live da-y, producing, documentation and training end-
users.
I
L
75
The vendor will appoint one of its consultants
to provide support to the project
manager/
manage the client account
and coordinate
other vendor resources.
Trainingisprovidedinthefirstinstancebythevendortotheprojectteam
through either the consultants
or specialist
trainers'
Once the project team have developed
and proven the new way of doing things'
they produce the procedural
documentation
and train the end users'
IMPLEMENTATION
STRATEGY
The implementation
strategy
should be based on
F Speed or urgency of implementation
) Availability of people for carrying out the implementation
tasks
) Availability
of time for training all users
) Cost
) Confidence in the new sYstem
D Disruption to oPerations
F Total timescale
IMPLEMENTATION
PLAN
.
Before implementing
an ERP system in an organization
or projecL it is very
crucial that implementation
process be planned'
Implementation
planning
includes developing implementation
strategy and implementation
schedule and
organizing the implementation
team.
.
It should be realistic, otherwise if timescales are too short, potential disruption
will be built into the plan and if timescale
are too long, the momentum can lost'
.
The plan provides a guide to the proiect and is used to monitor progress. It
enables peopie carry out a set of interconnected
tasks in a coordinated manner'
.
Setbacks are highlighted and remedial action established.
If necessary, dates are
rescheduled. Importantly, the plan communicated
to all who need to know about
the project making them aware of progress and changes'
76
-.......-
The implementation plan should address all concerns such as the existing
procedures, the effect the ERP implementation on the procedures, how it wilt
affect the employees, the work environment of the organizatiorL the ERP
awareness of the employees, creation of ERP user manuals and so on.
A project plan can be handwritten or produced using some comPutel
application. A spreadsheet offers simplicity and is readily available. costs,
resource usage and overdue activities'
The key concern is the amount of complexity to be organized, manipulated and
updated; a function of the amount of detail required. So it is necessary to what to
distribute and how.
Risk Assessment, Buriget, Cost
.
Even the most detailed of project plans can go astray for events that could have been
anticipated and prevented and hence it is prudent to carry out a risk analysis.
.
The aim of risk analysis is to anticipate possible problems, assqss their likelihood of
occurrence and their intensity of impact and finally, to establish how tl-rey can be
prevented or best handled il prevention is not possible'
.
Risk assessmer'.t shculd. be carried out at the outset of the project a:r.d should be
regularly reviewed, revised and updated. Process developments and changes in project
conditions may raise the profile of risks that were previously viewed as insignificant.
.
After the costs of the ERP implementation are identified (during the planning stage), a
budget is be established. The budget should have provisions for unanticipated
problems and unforeseen issues that are like$ to result in additional expendifure.
.
The total cost of ERP ownership includes the costs of packaged software, hardware,
professional services (for ongoing maintenance, upgrades and optimization) and
ir-rternal costs (tlairrirtg cost, re-loca'uon costs, Cost of temporary employees, etc.)
.
The costs of the ERP impLementation, operation and maintenance should be
budgeted
and all budget should be reviewec and revised periodically.
L
'77
Performance Measurement
Performance measurements are carried out to measure the success of the ERP
implementation and the effectiveness of its operation. Three performance related
measures are costs, time and benefits.
.
The project plan have detailed list of the tasks, the people responsible for each tasks
and the timeframe for the completion of the tasks. The proiect plan can be used to
measure the progress of an ERP implementation.
.
For each step or series of steps of the implementatiory objectives can be defined
which, if achieved, represent progress. By achieving these deliverables there is less
likelihood of problems arising at a later date as a result of an earlier event.
.
The four measurables
-
cost, time, benefits and deliverables are the measures for the
performance of an implementation'
.
These measurables provide means to assess progress and attainnent which alone do
not determine success.
.
Performance measurement only provide reference points for further action.
.
Performance measurements are not a substitute for managing people in such a way
that they give their best and more.
Problems and System Issues
.
During the implementation there will be many issues which are raised and which
will require resolution. The danger is that some of these issues, having been
identified are forgotten, only to surface at a later date, perhaps after the system is
live. Thus, it is desirable that there is an agreed procedure for recording issues and
their resolution.
.
The technical issues include the installation and comrnissioning of both hardware and
software.
.
Some of the technical issues are:
1. How does the system perform when the ERP application is under heavy use?
2. How quickly will storage space be consumed when the system is live?
78
3, What is the back-up procedure?
4. Does the system lock and if so how is it unlocked?
5. Do the locations of PCs and printers require to be changed?
5. How are passwords
managed?
T.whatuser
menus need to be generated and how wil this be handled?
8. What is the disaster recovery procedure?
'
The technical issues should be detected earlier and should be resolved as a small
problem
like lack of pre-printed
stationary
can prevent
the system from operating
smoothly.
ERF Implementation
Methodologies
by vendors
and Consultants
'
A meihodoiogy is a roadmap to an implementation.
The purpose of a methodology
is
to deliver an implementation
on time, according
to specifications
and within budget.
'
Most vendors, especially in the software industr5z,
have developed their own
methodologies'
Consulting companies
also developed
their own methodologies
in
relation to a product.
'
Some of the ERP implementation
methodologies
by vendors and consultants are:
1. Accelerated SAP (ASAP) from SAp
2. The Total Solution from Ernst &
young
LLp
3. Fast Track Workplan from Deloitte & Touch6
'
Methodologies are expensive and even though methodologies
are customized,
they
are still roadmaps.
'
An experienced
project manager
must manage the projects so that he can use the
methodology
to implement the ERP system in the best possible way axd in the best
interests of the organization.
Accelerated SAprM (ASAP)
The ASAP Roadmap is a detailed project plan by SAp that describgs
all activities in an
implementation.
It includes the entire technical area
t(r
support technical project
management
and address things like interfaces, data conversions and authorizations
earlier than in most traditional implementations.
The ASAP Roadmap consisb of five
phases:
1. Project preparation
2. Business bluePrint
3. Realization
4. Final preparation
5. Go-live and support continuous change
ASAP provides examples, checklists or templates as samples' They are used as a
starting point to avoid re-inventing the wheel. ASAP calls these things Accelerators.
Project preParation
proper
piarming and organizational
readiness assessment are essential and give rise to
the determination of the following:
1. Full agreement that all company decision-makers are behind the project
2. Clear project objectives
3. An efficient decision-making process
4. A company culture that is willing to accept change
ASAP's uses Project Estimator to guide the project team through a series of pre-defined
questions and drives interviews with senior executives and key operating managers
about their expectations of mySAP and the speed of its deployment.
Business blueprint
.
During this phase training begins on mySAP's integrated business systems.
.
Level 2 hands-on training provides a step-by-step education of mySAP business
,
process skills.
.
The business blueprint is a visual model of your business' future state,
.
It will allow the project team to clearly define the scope, and only focus on the
mySAP processes needed to run the business.
80
Realizatio
.
I.-irst the baseline
system
will be configured.
'
second'
the system
is fine-tuned
to meet all of the business
process
requirements.
since the initial configuration
is based on the blueprint,
the baseline
system
gives
a real-worrd
vierv
of how the business
transactions
w,r
acfuary
run,
Final preparation
.
The mySAp system
should
be fine_tuned.
' Necessary
adjustments
are made in order to prepare
the system
and the business
for production
start-up'
Final
system
tests are conducted
and end-user
training
is
completed.
Irritial audit procedures
are developed.
Go-live
and support
'
Procedures
and measurements
are deveroped
to review
the benefits
of the
mysAp
inveshent
on an ongoing
basis.
sAp support
and
services
are provided
to ensure that the system
continues
to run smoothly.
The online
service
system
(oss) provides
erectronic
support
using a remote
connection-.
It is easy
to use
store house of information
defining
what to do, who should
do it and how Iong
it
should ta-ke.
The Total solution
The five components
are
The Value
proposition
'
This component
builds
the businms
case. The key before
any process
can begin is
to make sure it makes sound
business
sense.
' Reality
check
This component
assesses
an orgirnization,s
readiness
for change.
sirr'ce many people
oPPose
change,
it is something
that needs
to be anticipated.
Status
quo is easy; change
is not.
'
Aligned
Approach
The
expec+;ations
regarding
derivering
short_term
and iong_
term value
are set. short-term
as well as rong-term
benefits
are the key to ,ny
t
8l
proiectrs success. Even if change is uncomfortable for some, it is easier to accept if
progress is visible. In this approach, the following tasks are performed:
Evaluate alternatives to a comprehensive reengineering project.
Craft a
"best-fit"
approach that allows the implementation to proceed in well-
defined module
throughout the project so no surPlises surface at the end. This approach helps
keep the entire project on-time, on budget and on management's agenda for
success
.
Success Dimension The right blend of people, skills, methods and management
is important to the project's success. The implementation team should include
people with skills in-process management, change management, knowledge
management and industry skills. Teamwork is very important.
.
Delivering Value Measuring results and celebrating success. A project that does
not show measurable results throughout the process is going to flounder. People
will lose enthusiasm and the expectations of a new way of doing business
become
just another broken promise
.
The Fast Track Work plan
The five-phase Fast Track work plan with its specific activities helps achieve a
rapid high-quality business transformation:
.
1. Scoping and planning: project planning is initiated
.
2. Visioning and targeting: vision and targets are identified
.
3. Re-design: software design and development are started
.
4. Configuration: integration is planned
.
5. Testing and delivery: system is delivered
.
Fast Track is designed to reflect and integrate decisions: regarding business re-
design, organizational change and performance, training,
Process
and systems
integrity, client/ server technologies and technical architectute. Fast
'Irack
82
a
a
idenffies five areas (groups) as an individual thread to be woven into a cohesive
fabric through its five'phase work plan. The areas and a list of the functions
performed
are as follows:
1. Proiect management, which includes project organization,
risk management,
planning monitoring, commu,ications,
budgeting,
staffing and quatity
assurance
2' Information technology architecture, which includes hardware a11d network
selectiory procuremenf installation,
operations, software desigo development
and installation
3. Process and systems integrity, which includes security and audit control
4. Change leadership, which includes organizations
design, change readiness,
poticies and procedures and perforrrance
measurements
5, Training and documentation, which includes training design and delivery for
project team, managemerrt end-users, operations and helpdesk
Although different companies find different hurdles and traps in the budgeting
process, those who have implemented
ERp packages agree that some costs are
more commonly overlooked or underestimated
than others.
The hidden costs of ERP implementation
are:
1. Training
2. Customization
3. Integration and Testing
4.Data Conversion
5. Data Analysis
6. ERP Consultants
7. Brain drain (Employee Turnover)
8. Continuing Maintenance
83
.
To avoid getting blindsided by unexpected expenses, veterans recommend
assembling cross-functional
teams to identify the costs up-front.
4.l TRAINING
.
Training is the unanimorrs choice of experienced ERP implementers as the most
elusive budget item.
.
It is not so much that this cost is completely overlooked, as it is consistently
un'lerestimated.
.
Training expenses are high because workers almost have to learn a new set of
processes, not
just a new software interface. ERP is not so much about technology
implementation; it is a lot of work to setup the software.
. It forces to a huge amount of change management. And change management
appears in the budget on the training line.
. A successful training rvill account for a minimum of 70-75% of the total project
budget.
.
Although training cannot be avoided, there are ways to keep its cost under
control.
. One way is to train an initial batch of employees who can then, in turn, train their
colleagues-'fhis solves two problems :
F The huge training costs of the consultants,
) Since training is by their own colleagues, there will be less resistance to
changes and people will be more ready to accept the new system.
4.2 CUSTOMIZATION
.
Customization of the ERP system happens when it cannot support one or more
of the business processes and the company decide to make it do what it want.
"
It has to be done all over again in the new version'
.
The big chunk of costs for professional services is customization.
.
The cost of customization can easily out-run the cost of packagecl ERF software,
but it is the customization of ERP software that makes an ERP a success or a
failure-
84
4.3 INTEGRATION
AND TESTING
'
ERP systems will not demonstrate
their full potential unless they are properly
integrated
with other enterprise software applications.
.
There are three main areas that need integration:
D The integration of the various functional ERp modures
) The integration of ERP with other e-business software applications
)' The integration
of ERp with legary systems
'
Most ERP packages
are very complex systems.
Interfacing with those systems is
not an easy task.
'
Testing the links between ERP packages and other corporate software links that
have to be built on a case-by-case
basis is another essential
cost that is easily
missed.
'
Most companies will have some system that will not fit into the ERp packages
functionality
and which wilr have to be interfaced
with the ERp package.
.
In most cases such integration can be costly.
{t4 DATA CONVERSION
'
It costs money to move corporate infonrration, including
customer
and supplier
records, product design data and the like from old sisteurs to a new ERp system.
'
Most data in most legacy systems is red.undant.
But most companies
seem to
deny their data is useless until they actually have to move it to the new
client/sewer setups that popular ERp packages require.
'
As a result, those companies are more likely to underestimate
the cost of the
move. But even clean data may demand some cost to match the process
modifications necessitated
or inspired
by the ERp implemmtation.
4.5 DATAANALYSIS
'
There is a misconception that the ERP vendors perpetuate
that you can do aII the
analysis you will want within their product.
85
.
But often, the data from the ERP system must be combined with data from
external systems for analysis purposes.
.
flsers with heavy analysis needs should include the most of a data warehouse in
the ERP budget and should do quite a bit of work to make it run smoothly.
4.6 ERP CONSULTANTS
.
The cost of ERP consultants is a well-known fact. Like training exPenses, this cost
is hard to avoid.
.
Choosing a lesser-known EI(P package to avoid premium priced consultants
won't necessarily help either.
.
When users fail to plan for disengagement from the existing system, consulting
fees will overshoot the budget.
.
To avoid this, companies should identify obiectives for which its consulting
partners must aim when training internal staff.
.
It is a good practice to include performance metrics and time schedules for the
consultants.
'
For example, a specific number of the company's staff should be trained to a
certain specified level in a particular time period.
4.7 BRArN DRAIN (EMPLOYEE TURNOVER)
.
It is accepted that ERP success depends on staffing the project with the best and
brightest from the business.
.
The software is too complex and the business changes too dramatic to trust the
project to just anyone-
.
The bad news is that a company must be prepared to replace many of these
people when the project is over.
.
Though the ERP market is not as hot as it once was, consulting firms and other
companies that have lost their best people.
.
It is necessary to develop a retention bonus program and to create new salary
skucture for ERP veterans. If not the company has to hire consultants for twice
the amount of the salaries.
e.A
4.8 CONTINLIING MAINTENANCE
.
Most companies intend to treat their ERP implementations as they would do for
any other software project.
.
Once the software is installed, the team and every one will go back to their
routine job.
.
Every
Person
involved in the ERP is too valuable. Because they have worked
intimately with ERI', they know more about the sales process than the salespeople
do and more about the manufacturing process than the manufacfuring people do.
.
Companies cannot affotd to send their project people back into the business
because there is so much to do after the ERP software is installed.
.
]ust
writing reports to pull information out of the new ERP system will keep the
project team busy for at least a year.
5. ORGANIZING THE IMPLEMENTATION
ERP IMPLEMENTATION TEAM
. The ERP implementation is a joint
effort of many groups of people. AII the
internal resources of the company should be organized for the successful
implementation of the ERP project.
.
The petson who manages the implementation is the project manager. Project
m;rnager reports to an executive committee, who reviews progress and
resolves any territorial, resource or poliry disputes. CEO or MD leads
executive committee and sponsors the project.
.
The project manager heads
tJre
project managerrent team which includes head
of the vendor representatives, the chief consultant and the work team leaders.
.
The work teaut sets up infrastructure, produce documentation, and train
employees.
87
The package vendor appoints one or more consultants to provide support to
the project manager, manage the client and account and coordinate the other
resources.
Venrlor consultanb ad.vise about the best working practices, software
functionality and assist the technical
issues'
The company will need an owrler for the project to lead the implementation
(COO or CIO) and at-least one professional from each department to carry out
a specific project function'
T'hey are the key peopie who will make the ERP system acceptable to everyone
in their own departments.
It is the responsibility of the top management to see that the people who are
designated to the implementation
team are not interrupted in any way or with
any other r,r'ork.
5.1 COMPOSITION OF THE IMPLEMENTATION
TEAM
.
The success of the implementation
and the continued functioning of the system
will depend on the key people and their ability to grasp the new tasks and
technoiogies.
.
For a company, employee loyalty is very important. The key members who are
assigned to the implementation team will suddenly find that the training and
experience that they have gained have dramatically increased their market value.
Hence the temptation for leaving the company fot higher salary will be there. So
while choosing the people for the implementation team, the company
uranagement should take these things into corrsideration.
.
Once the ERP system is implemented, the current
Processe-c
and proceclrrres will
be replaced by new ones. The
job descriptions responsibilities will change.
.
The inJormation islands that existed throughout the company - in the form of the
clepartmental systerns and databases - will be replaced by a central database and
there rvill be information integration.
8B
An action taken by an employee can trigger a lot of procedures and affect a lot of
other functions - almost instantaneously.
The technology will bring with it a series of new concepts and resources that must
be mastered and correcfly used to get the best out of the ERp systems.
The format, the speed and the content of the management information systems
will change.
The decision-making processes will change as the decision-makers can get
accurate informatiorL in the form the want and when.they want it.
ERP packages will institute new business models and practices.
The company should depute its best and most efficient employees to the
implen-r en'r.a Eorr team.
The company should invest in these people and should create opportunities for
them to excel within the company so that they can grow with the company. These
are the people who are actually
running the business.
The ERP implementation is a very complex and sophisticated project, which
rnrrolves technological as well as cultural changes.
who have an mind to new technologies and concepts ald w-ho love
a
challenges and should be capable of working as a team.
These men will be pioneers and their ability to think quickly, improvise
effortlessly, innovate fast and act without hesitation is critical for the success of
the project.
5.2 ORGANiZATICN OF THE IMPLEMENTATION
TEAM
The brganization chart of a typical implementation team is shown below. It consists of
the following people:
F Chief Executive Officer
F Executive Comir-.ittee
I
a
89
) Project Manager
F Work Teams and knplementation
Teams
) TechnicalSuPPortTeam
At the top is the Executive Commibtee
headed by somebody from the top management'
Then there is the Project Management
Team and the Technical and Administrative
Support Personnel followed by Work team.
Chief Executive Officer (CEO)
.
The most senior role is that of the CEO. This person has two key responsibilities.
.
The first is to promote the vision that has been achieved using the
implementation
as the opportunistic catalyst for change. This vision depends
upon the individual
and senior colleagues, for these colleagues will share and
make their own contribution
towards this vision'
.
The other responsibiiity
is sponsorship of the project. This means that support is
given to the project in such e way that promotes its importrnce, suPPorts the
position of the project manager, brings into line dissenting middle/senior
m;rnagers, acts as liaison or delegate and carries out any other activities that
ensures that the project does not flag, including replacing the project manager if
necessary.
.
The CEO needs to ensure that the gap is bridged between speech making and
action if suspicion is to be avoided.
Executive Committee
.
The executive comrnittee is a group of senior managers who represent the
interests of the company management and is headed by the person who is in
charge of the ERP project implementation.
.
CEO or a very senior manager will be the sponsor for the ERP implementation.
90
I
In the case of large corporations, the CEO or top management may not be
mernbers of the executive committee as they will be busy with strategic planning
and decision-making. In such cornpanies, the responsibility of EP.P sponsorship
will be entrusted to somebody in the top or middle managemenf usually to
somebody who reports to the CTO (chief technology officer) or CIO (chief
information officer).
The executive committee will consist of senior meLnagels of the organization.
The committee should also include the external consultant's representative.
A consultant from the package vendor should also be part of the committee to
establish the overall high-levei strategy of the ERP system in relationship to their
company anri to establish visions.
The responsibility of the project sponsor is to provide the full company backing
for the ERP implementation project.
The project sponsor serves as a source of motivational, inspirational and
sometimes financial support for the overall ERP project.
When there is more than one project sponsor (in the case of very large ERP
implementation projects), the distinction between project sponsor and executive
committee becomes clear-er as the communication channels becorne spiit betrrr,een
the sponsors.
In such cases, it is important that the project sponsors communicate with each
other, coordinating and creating consistent uniform messages to the executive
committee and others in the organization.
Their primary function is to make sure that everybody knows that ERP has
strong management backing and support, Also these people should have enough
authority (oi direct access to people who have authority) to make and implement
decisions that are required for ihe smooth progress of the implementation.
Contingerrcy plans shouiri be in place to ensure continuity in case the sponsor
leaves the oiganizatron or is un-atle to perform his function.
91
.
A second-in-command,
who is part of the top managemmt and has sufficient
authority, must be elected and should be ready to take charge of things in the
absence or non-availability of the sponsor.
. The executive committee defines the o$ectives, monitors
Progress
and quickly
resolves the issues that are brought to their attention. They ensure that the
conditions are right for the implementation.
.
They elirrrinate any possible conflicts of interest, which the project team members
may experience.
. The executive committee also ensures that comers are not cut for the sake of
convenience and are committed to removing any barriers that may hinder both
progress and the realization of benefits'
. The committee should be aware of, and adjust for possible discord between the
discipline of project management and its own management style, particularly if
project management is not a familiar practice within the organization.
.
The executive committee is responsible for the monitoring and evaluation of the
project and its progress.
. The committee is the body that approves budgets and initiates corrective action
when things are not going according to plan. So, the committee should establish
a reporting and monitoring mechanism by which it wiII be kept abreast of
Progress.
.
The monitoring mechanism should have facilities to alert the committee about
impending disasters and delays well in advance so that corrective and
preventive measures can be taken.
.
The committee should meet at least once a week with a provision of emergency
meetings in case of emergencies. The project, rumager rqrorts to the executive
committee at the weekly business review meetings to enable the required
discussions to take place.
External Consultants
I
l
l
l
92
o
The role of the external consultants in the implementation
is to advise the project
manager and the implementation team in all areas where there are no in-house
experts.
.
The cost of using the external consultanb is a huge flow on the implementafion
budget and hence should be kept to a minimum.
'
If the comPany is already using an ERP system or has previous experience in
implementing ERP systems or has employees who have the necessary expertise
then the number of external consultants could be limited to the minimum.
.
But in the case of companies who are doing the ERP implementation for the first
time and whose employees do not have much experience, it is absolutely
essentia-l to get professional help as otherwise the result can be failed
irrplententations, pooriy riesigned and implemented ERp system. so, the
principle should be use external experts when the company does not have in-
house expertise, otherwise use the in-house experb.
Project Manager
.
The pivotal role in an ERP implementation project is that of the project
manager.
.
The project manager is the catalyst making things happen.
.
The project manager is also an administrator, keeping records about project
progless/ maintaining the project plan, handling correspondence
and checking
invoices.
.
Project manager's responsibilities vary widely depending upon how the ERp
team is forrred. All project mmagers are involved urith communication and
coordination of resources. Communications and coordination may include t^kirg
ERP team meeting notes, issue resolutiorl developing budgets and timelines,
performing updates for executive sponsors and steering committees and
docunentation.
.
An ERP project manager must unclerstand both- the business and the technologl,.
93
. An ERP project manager must understand the impact of the ERP
implementation on the business and work with business managers to ensure a
smooth transition from the "as-is" to the
''to
be" buSiness operating envi-ronment.
Project managers are selected based on a variety of criteria including availability,
technical expertise, product knowledge, organizational knowledge, political
power, software knowledge, technology knowledge, cos! authority, availability,
people skills, communication skills, maturity, computer literacy and
organizational respect.
Good project managers have an adequate blend of management and leadership
skills.
Too often companies look to project m.magers to perform basic management
functions, such as scheduling and tracking issues related to an ERP project
without providing the necessary leadership skills.
A project meinager must be flexible enough to roll with the changes as the project
progresses, and not to lose it when unpleasant su4>rises popup-
He must be able to work with nearly every individual in the organization.
A strong project manager exercises authority and power over the people and
resources in and around the project.
Project managers use their authority and power in persuading others to
enthusiastically pursue the visions and missions related to the ERP project.
A combination of education, technical expertise and business knowledge allows
the ERP project managel to carry out the function of management related to the
project, These skill sets allow the ERP project managel to be more effective.
An ERP project manager must also be highly disciplined. He must be able to
clearly envision (visualize) the project end game, and then hold the entire
organizatron on the road that leads to that successtul end. This means bringing
other team members back on track when deviations occur or distractions arise.
He must also be willing to make tough decisions, and understand that those
decisions will upset some and please others.
94
. The project manager can become ineffective if there is no demonstrable support
from the top. The project mallager may require people over whom he has no
authority to do things. If the person is well liked then this may sWay people to
co-operate. Problems will arise in the case where members of the project team
split their time between their normal duties and those of the project. Operational
demands will prevail when it comes to deciding which takes priority.
Project Management Team
.
The project management team is headed by the project manager and is
comprisecl of the technical leader(ieader of the external consultant team), the
vendoi, project managu and the i[rplementation team leaders.
.
The project manager will report the project's progress, problems and other issues
to the executive committee.
.
The project management team is responsible for conducting the scheduled
work,
administering the project, communicating
with the in-house team and the
consultants.
. The team members should monitor the implementatron teams'
Progressr
assess
tfre amount and quality of the contribution of the team members-both in-house
and consultants and resolve the issues that exist. Since the project management
team has the project manager, the consultant team's head the vendor team's
head and the work team leaders, most problems could be resolved at this level. If
any problems cannot be resolved at this level, then the project manager will step
up to the executive committee for resolution.
.
The project management
team should also ensure that the comPany
personnel
and the consultants are
.wcrking
toge+.her as a team and that th.ere is full co-
opera-tion between the two grouPs.
.
They are also responsible
for ensuring that the consultants are transferring their
knowledge to the in-house team and aII the documentation is done properly.
95
The project management tearn should make sure that even after the external
consultants and vendor representatives leave, the system will run smoothly.
The project management team is comprised of the technical leader (leader of the
consultants (team) and the executive committee head, a senior representative
from the vendor's team.
These people are responsible for conducting the scheduled work, administering
the projec! communicating with the in-house team and the consultants, and
reporting to the executive committee.
The executive committee head should monitor the implementation team's
progress, assess the amount and quality of the contribution of the team members
(both in -house and consultants) and discuss the issue with the consulting team's
head.
This person should also ensure that the company personnel and the consultants
are working together as a team and there is full cooperation between the two
groups.
The same person is responsible for enzuring that the consultants are transferring
their knowledge to the in-house team and that all the documentation is being
done properly.
He/she should make sure that even after the consultants leave, the system should
be able to run smootlly.
Work Teams or Implementation Teams
.
The work teams or implementation teams .ue composed of people who will
actually perform the tasks assigned in the project plan. These tasks range from
migrating the project information to the new system, to user training, to
monitoring the start-up of the new system.
.
The people on this team should be the best in the company and should dedicate
their full-time and attention to the ERP implementation project.
96
The number of work teams in a project depends on the size and complexity of
the project and can vary from one to a dozen.
In the case of projects with more than one work team, each work tearn will be
allotted different areas of the ERP implementation.
Each work team will have a team leader who will report to the project manager.
The work team will perform all the day-to-day tasks of the ERP implementation
from installing the hardware, software, performing customizations if required,
documenting the procedures, conduct end-user training, etc.
The work team normally includes hired consultants and the in-house team.
These consultants should have a good understanding of the software that is
being implemented. That is wiry flrey are hired in the first place.
These consultants most certainly must have participated in the implementation
of similar projects before.
They help configure the software and serve as ongoing support for the rest of the
functional area.
The tean's job requires knowledge of the company's u,ork culture and
environmenf awareness of compary policies and regulations, good analysis
skills, team spiril a co-operative attj,f.rde, good communication skills, patierrce,
persistence, selJ-confidence and above all sound corunon sense.
The company's in-house team (work team members) consisbs of the people with
the knowledge of how the company works. They are the people who are going to
use and runthe system in the fufure.
The in-house team rnembers will be the first people to receive training on how to
operate the software. They must know how the system works in order to
evaluate the impact of the software on the company's current business processes.
They will also discuss with the consultanis and the package vendor the level of
customization that the product will require in order to function properly in the
company.
The work teams will do the testing of the system once the system is installed.
9',I
The work teams will also participate in the training of the end-users of the
system.
The in-house team will contain people from the company's various
functions/ departments. The work teams wiII also have hardware engineers who
will manage the technical requirements of hardware, network and software.
The work team leaders should hold regular meetings with their teart members in
order to bring the team togefher so that they are all aware of what is happenirg.
This is an opportunity for progless to be reviewed, for issues to be highlighted
and for problems to be shared.
They will also have regular meetings rt'ith the project managel to review the
profJress, resolve the problems and decide hon' to proceed.
Consideration should be given to the teams' work environment. The ideal setup
is a dedicated room where people can work undisturbed is called the war room,
which is a multi-functional dedicated area where team members can come to
train, hold meetings, perform testing and develop solutions.
The need for a war room incleases proportionally to the cortplexity of the
projecf the number of team members and the speed with which the system will
be installed.
Extremely rapid and smali installations generally go without a war room. Large
and complex installations alrrtost always have a war room. The war room should
have plenty of wall space so that charts can be hung on the walls. It should be
equipped with networked PCs, tables, shelving for documentation and flip
charts. Laptop links should be available so that consultants can link their
equipment into the network.
This room will serve as the nerve centre for the project. This room should not be
abandoned after the implementation is over.
It can serve as an operations room for continuous improvement teams and also
as a training venue for new recruits, those wishing to upgrade their skills or
those wishing to test out refinements to process.
98
Technical Support Team
'
The function of the technical support team is to create an environment that is
suitable for the implementation of the software.
'
This team works very closely with the work team and takes care of issues like
data migratiorl data back-up and recovery, hardware infrastrucfure, performance
tuning of the databases and so on.
.
In short, the technical support staff is responsible that the machines will be up
and nurning, the network is functional and the hardware condition for the rvork
team to implement the software package.
.
These are the people who will be doing these activities once the implementation
is over an-d the system is live.
.
They should interact with the consultants and the package vendor to assess
whether any special arr;Ingements or hardware or maintenance and back-up and
recovery procedures are requiled for the system.
Administrative support Team
.
The job
of the administrative support team is to make the life of a1l the others in
the implementation team easier, so that they can eoncentrate on their ta-sks a:rcl- be
more productive and efficient.
'
They are resPonsible for making available workspace, conference rooms,
telephones, stationery and any other resources that is required by the project
team.
'
The duties aiso include arranging meetings and conferences, informing the
people, taking photocopies of the documents, circulating them to the right people
and any oiher aciminiskative iasks ihat couid make the life of the work tearr-
pacinr
HOW THE IMPLEMENTATIONTEAM
WOR.I(S
99
.
One of the main roles of the members of the executive committee is to check and
verify that the work that is being done
js
satisfactory and that the momentum,
morale and enthusiasm of the work team who are performing the tasks are
maintained.
. During executive committee meetings, the members should receiver ports and
other information from the project mallager as to how the work is progressing
and whether everything is going according to schedule.
.
Before the implementation starts, the extemal consultants and comPany
representatives prepare a work plan. This plan details each and every activ5ty that
needs to be carried out and when they should be carried out.
The consultants should lead the
Process
of work plan preparation.
The in-house team should point out the issues that are specific to the comPany
and help the consultants create a realistic work plan.
The work plan or the project plan forms the basis for project tracking and
monitoring.
The project contains numerous activities, the person-hours required to complete
them, and the resources needed to perform the tasks.
The project ptan is often built using a project management package (such as MS
Irroject) that permits one to focus on planned activities from various perspectives-
the chronological sequence or timetable, specific activities and who is responsible
for them, the pre-requisites for carrying out a specific task, or a PERT chart of the
activities.
Preparing the project plan using such a tool helps improve the quality of the plan
and makes it easier to make changes and adjustments.
Once the project is under way the plan can be updated on a regular basis and the
"planned
velsus actual" reports can be produced in varying detail and in varying
formats inciuding graphical ones.
The project management software can generate comparisons between ttre actual
and planned completion dates, expenses and so on. These software tools allow
100
responsibilities to be assigned to different persons and so it is easy to find out
rvho is lagging behind.
Keep in mind however, that irrespective of whether the plan is created manually
or by using a software package, all the parties involved-the executive committee,
the vendor, the consultants and the in-house team-should be in agreement with
the contents of the plan.
During the final stages of the projec! when the system is being tested the
committee might need to meet more frequently to discuss the various issues that
could arise.
It is the task of the project management tea-ur to report to the executive committee
and present the facts and figures.
Because these meetings are managerial in nature, the project management team
should prepare a presentation that describes the situation at a level of detail
appropriate to the audience.
Another objective of the executive committee meetings is to address the issues
that involve decisions by top managemc:nt.
The project m,rnagemmt team should circulatre details about the issues well in
ad','ance so that the ccr.mittee mernbers can do their home work and come
prepared for the discussions.
It is the duty of the project mmagement team to analyze alternative solutions and
their advantages, disadvantages and consequences and circulate them to the
committee members well in advance of the meeting.
so, in nn ERp
implementation project, the work plan or the project plan is of paramount
importance. Adherence to the plan, along with constant monitoring and the
taking of appropriate corrective actions before the project gets out of controL will
errsure the success of the project.
The key players in project tracking and monitoring are the project management
team and the exectrtive comrr.it+ee.
101
6. VENDORS, CONSULTANTS
AND USERS
6.I INTRODUCTION
Why can't companies develop their own ERP Packeges?
. To develop an ERP package is a complex and time consuming activity which
.)
requires 6 lot of skilled manPower and other resources'
.
Many companies
have personnel in their IT/IS department
who can absorb
the necessary knowledge and who have experience
in developing
sophisticated sYstems,
. The problem is that such specialized computer
work is not the main business
of these companies.
(
.
They should be directing ail their available resources into improving their
own products or services so that they can remain competitive
serve their
customers better and continue to grow.
equal in quality, scope, functionality
or
S
These software firms can produce sophisticated packages and provide their
clients with products that allow them to maintain focus on their own chief
activities, thus improving revenues, profits and share-holder returns.
can't the
.
To setup and im
out the
is not an easy task. We can also not
setup a tria-l and error method of implemmtation because a large amount of
investm.ents are involved.
ttnsequences of a failed ERP implementation will put the organization
out of business and also the ERP implementation process cannot go on for a
long period of time.
To successfully carry out the implementation within a reasonable timeframe,
(In-House Implementation -
Pros & Cons)
102
i. The people who are given the
job
of implementing ERP package
should have good knowledge skills.
ii. They must be familiar with the ERP package and the technical
issues.
iii. They must have at least one year experience and hands-on practical
training.
.
The people who are going to implement the ERP package should have the following
skills:-
Knowledge of how to organize & rurr a proiect:
He must have organization skills, project management skills, team management
skills and proiect management skills.
implementation:
During implementation, process problem such as cost ovefrun, time overrun
occurs it is very important to knory what kind of decisions are to be taken so that
there is success to the project.
Good
people
skills:
Whenever an ERP implementation takes place there is a fear in *.e mind of
*.he
employees of unemployment, training, technology, so we must have good people in
the implementation team, so that they can handle such situations.
Good leadership skills:
During ERP impiementation we have to interact with a lot of people. So the
implementation team must have effective communication skills and good leadership
I stills.
I
I
nxcellenlhain:ngSkills:
l-
1
Orring ERP implementation we have to provide trairring at the various levels of the
organization. As the end users are handling the whole system, the success of ar,
ERP ir'.plementation is in their hands, so it is necessary that the implementatron
team must have excellent training skills.
103
If the company
P1ans
to do ERP implementation in-house?
.
Hire experts & have them on the company roles or positions'
.
This is expensive proposition as once the implementation is over, there is no
need to keep the experts in the business.
.
Wastage of resources and spending a Iot of money on training
.
It is better to give to those who are specialized into it and focus on comPany's
effort that how to manage after ERP implementation'
.
Better to train employees during implementation - it will save money
5.2 VENDORS
.
Vendors are the people who have developed the ERP packages.
.
They are the people who have invested a huge amount of time and effort
in research & development to create the packaged solutions, that is flexible,
efficient and easY to use.
.
Nowadays, the ERP packages have all the feahrres and functions, which
can satisfy the needs of all the businesses in all the sectors'
.
AIso with the evolution of new technologies, the vendors have to
constantly upgrade their product to be able to use the best and latest
advancements in technologY.
Vendor and Vendor Management
.
ERP implementation teams include vendor representatives.
r
The vendor should supply the product and its documentation as soon as the
contract is signed.
.
Once the contract has been exchanged the vendor will guide the project ma.nager
and his team through a series of events culminating in the use of the tooi.
r
The vendor potentially has the upper hand in the client-vendor relationship. The
client, having signed the contract and perhaps having given a preliminary
104
payment will be reluctant to terminate the relationship should the vendor fail to
meet expectations.
Consultants may not be available due to split commitments. Software bugs may
not be fixed when required. Software links may simply not work. These all
contribute to delay. It is the project manager's task to manage this.
The vendor appoints, the vendor's project manager to provide support to the
project mzurager, advise upon and agree to the project plan, manage the client
account and coordinate vendor provided resources.
A procedure should be agreed between the two managers about how work done
by the vendor is to be authorized by the client.
The vencior's project manager wili be the first point of contact for resoiution of
problems whether they are technical, best practice related or to do with vendor
lnvolces.
Within the contract there should be a clause defining how problems are to be
handled and the timescale allowed. If problems are not resolved then an
escalation path should be defined ider.tifying the people to be contacted.
Communication should be backed-up in writrng. This redrrces the lil<elihood of
misunderstandings.
Only after the software is delivered can the company develop the training and
teting environment for the implementation team.
The vendor is responsible for fixing any problems that the implementation team
encounters in the software. So the vendor should have a liaison officer who
constantly interacts with the implementation team.
The vendor should provide a trainerto provide the initial training for the
company's key users and for the people who will play lead roles in the
inplementation of the system.
Vendor training should achieve the goal of showing the key users (in
-
house
e:<prts) how- ttre package works, what the major components are, how the data
and information flow across the system, what is flexible and what is not, what
105
can be configured
and what culnot, what can be customized
and what should
not, the limitations,
the strengths and weaknesses, and soon'
r The objective of vendor training is to demonstrate
the product as it exists and
highlights the available
options'
o The external
consultants
(or the package/ ERP expens) should participate in the
vend.or. Consultants
should
also ask questions that the vendors are trying to
avoid and the users are unaware of. This is the best way to present the real
picture to the users and will also prwmt the vendors from making false claims'
Role of the Vendor
. First arrd foremost, the vendor should supply the product and its documentation
as soon as the contract is signed'
. The vendor is responsible
to fix the errors which are found during the
implementation
process. so it becomes
necessary, that the vendor should have a
liaison officer who should constantly
interact with the implementation
team'
. The vendor also has to provide the initial training to the company's key users and
also to the people who are involved in the inplemmtation
Process.
. The vendors training should explain how the package works, what are major
components,
how the data and information flows across the system, what is
flexible and what is not, what can be configured and what cannot, what can be
customized and what should not, what are the limitations,
what are the strengths
and weaknesses and so on-
.
The main objective of the vendor training is to show how the system works and
not to show how itis imPlemented'
.
The vendor demonstrates
the product as it exists and highlights
what are the
possible oPtions available'
.
The trainees should use these training sessions to question the vendor on all
aspects of the sYstem.
. The vendor gives the project support function and also takes care of the quality
control factor with respect to how the product is implemented.
106
e
The vendors participate in all the phases of an implementation in which he gives
advices, answers to technical questions about the product and technology.
.
In case, there is gap between the package and the actual business process then it
is the job of a vendor to customize(alter to suit the company's purpose) the
product and make necessary modifications.
.
It is the vendor who understands the finer details of the product and can make
valuable suggestions and improvements that could improve the performance of
the system
53 CONSULTANTS
.
Business consultants are professional people who specialize in developing
techniques and methodologies to ded with the implementation and with the
various problems that will crop up during the irrplernentation.
.
They are experts in the area of the administatiorl management and control
activities.
.
They have experience of implementation and various methods that ensures
successfu I implementation.
.
They will be good at all phases of the implementation lifecycle
-
from package
evaluation to end-user training.
.
The only limitation with consultant is they are very er<pensive.
.
The consultants have to make the ERP implementation for an organization as
their own business.
.
They have to make a plan to carry the activities in the right direction during
the implementation process.
.
Since they are expensive the company should formulate a plan regarding best
optimum utilization of the money spent on consultants.
Role of Consultants
.
The consultants are involved in the implementatlon process of the organization.
101
They consultant should guarantee ihe success of the project and should be able to
show the results snch as reduction in cycle time, increased response time,
improved productivity, etc to the satisfaction of the comPany management.
They are responsible for the administration of all the phases of the
implementation so that the required activities occur at the scheduled time and at
the desired level of quality with effective participation with all those who must
participate.
:
The consultants have to transform their approaches and methodologies into
detailed work plans. The methodology will have to be converted into tasks and
should be allocated to the right people. The time schedule for each phase and
each task has to be determined and the project plan has to be finalized.
They should add value to the project. They provide knowledge about the
packages and the implementation process, which gives the employees the
practical experience.
They will know what will work and what will not. Thus by eliminating the trial-
and-error method of irnplementation, and by doing it right the first time, the
consultants help in saving huge amounts of money, time and effort.
They should strive to improve the company's business
Processes.
Refining the
company's processes can optintize the performiulce of the system and maximize
future user satisfaction.
They should present the real picture to the users. They should ask questions that
the vendors are trying to avoid and &e users are unaware of.
The consultants are also responsible for analyzing and clearly addressing the
customization needs. It is the duty of the consultants to present the advantages
and drawbacks of each area and reach a good decision.
Maintaining technical documentation of the project is also the duty of the
consultant.
The consultant will leave once the project is complete but the knowledge of the
project must stay within the organization. So, the consuitant should crate a
r08
knowledge base and should train enough people so that the work they have
started is continued.
5.4 END USERS
.
End users are the people who use the ERp system once it has been developed.
'
They are the people who will be doing the functions, which are being automated
by the ERP system.
'
The fear among the employees of unemployment
will be taken out with the
training sections.
'
The end user should be given the training as how to use the various functions
that are automated in
+Jre
s/w.
r
Thr erd users are provided with the necessary skills set and more opporfunities
to work in a challenging environment
using the modem technologies.
'
They also analyze and provide the suggestion where customization
needs to take
place.
.
They should be able to balance their loyalty to the client and the project.
'
They should have a clear-cut context and scope of the work so that they can
provide the management
with the decision that is to be taken for tle
implementation
process.
7. CONTRACTS
WITH VENDORS,
CONSULTANTS
AND EMPLOYEES
'
ConfoacLs are very important in an ERP implementation
project- before, during
and after implementation.
.
Contract is defined as an agreement
between two or more people to do
something, formally setforth in writing and enforccable
by iaw.
109
.
The company should sign a contract with the package vendor, the hardw'are and
peripheral vendors, the networking people, the consultants, the employees who
are being trained in ERP package implementation (not the end users) or the
employees
who are part of the implementation team.
7.1 CONTRACT
WITH PACKAGE VENDOR
. Most software vmdors w'ill have standard contracts, drafted by their legal
department. The contracting company should go through the contact and if they
find the terms and conditions agreeable, should sign the contract.
.
In realiry, the contract signing process is not that much smooth. Many times, the
lavqrers from both sides may have to sit together and check out the differences.
.
It is to be remembered that the relationship between the vendor anci the
contracting company is not a one time affair.
.
The vendor should be made partner in the company's future plans.
.
The vendor will be upgrading their product as advances are made in technology,
by adding new modules and features
. The contracting company, being an existing customer, should get benefit of these
updates. The contracting company should include all these things in their
contract.
. The major points that should be in the contract with the package vendor are:
1. Value of the software and conditions of payment
2. List of deliverables (software, documents, etc.)
3. Mode of delivery and installation help
4. Copyright and ownership issues
5. Software license
6. Third-party software compatibility, integration or interfacing and
integration support
7. Operating system
110
8. Hardware/ liabiliry
9. Conditions and concessions for acquiring complementary modules
10. Cost of increasing the number of end-users
11. Cost of implementation
training
12. Cost of end-user training
13. Annual maintenance fee
14. Warranty or guarantee terms
15. Terms and conditions for the receipt of new versions, upgrades...
15. Details of technical support-on-site, telephonic and so on
17. Ter:grs and conditions for customization
18. The profile of the vendors team who will be assisting the company
in inplementation
19. Other specific responsibilities assigned to thevmdor
20. Cancellation of license
7.2 CONTRACT WITH CONSULTANTS
.
The objective of the compaly is to make the ERP package work successfully as
documented.
.
Consultants are another group of people in the ERp implementation
project.
.
The comPany erpects from the consultants is to make the project success by
eruuring that the implementation will be completed in time and avoid costs
overrun and the user haining will be done to everybody's satisfaction.
.
The following are some of the points that should be included in the contract with
the consultants:
1. Profile of the consultant's team with resume of each merrber
2. Consulting fee and payment conditions
3. The time schedule and the implemurtation budget
4. The projected improvements in quantifiable terrrs and the time required for
showing the results
111
5. Implementation methodolo gy
5. Terms and conditions of knowledge transfer and employee training
7. Ijst of deliverables (reports, manuals, knowledge bases, etc.)
8- Other specific aciivities the consultants are supposed to do
9. Reporting mechanism to the company management
10. Project monitoring and status reporting systems
7.3 CONTRACT WITH EMPLOYEES
"
An employee who have undergone ERP training will have increased market
value and would be able to find jobs in other companies that are willing to pay
more as the employee is already qualified and experienced.
.
In order to avoid such situation, the company should ask the employees to sign a
contract before they are put on the implementation team and given training.
.
The main clause of the contract with the employee should be that they should not
put the company in a position where the smooth running of the ERP system is
interrupted.
.
The contract should make it mandatorv for employees who leave the company for
better opportunities that they should give advance notice and should train
another person to a level where he can handle the duties of the person leaving.
.
The contract can also stipulate that no employee can leave the company in the
middle of the implementation project, whether it be his first or fifth,
.
If the company can retain the employees by other means like offering attractive
salaries, stock options, challenging and comfortable work environment, etc., then
adopting such a strategy is a much better way than enforcing a contract.
8.
pnoIECT
MANAGEMENT
& MONITORING
ERP Project Management Is The Key To Successful Implementation
.
ERP systems have fundamentally changed the work of IT organizations.
112
The sheer size and complexity
of ERp implementations
makes managing these
projects dfficult. There are really two basic sides to ERp management
-
people
and Technology.
An ERP package touches the entire organization and can affect nearly every
employee.
It's also dfficult to get a clear vision of the technological portion of the
implementation because of the vast combination of hardware and software
involved.
8.1 ERP IMPLEMENTATION PROIECT
An ERP implementation project is complex in nature, involves a lot of people,
requires the coordinated effort of a number of groups, involves a lot of money
and has a long cono.pletion period (typically 10
-
1g months).
'
To successfully implement an ERP systerr is a very difficult task and requires
huge efforts from all the stakeholders backed by efficient project management
and monitoring.
.
The major problein areas for the ERp implementation project are:
1. Employee resistance and non_cooperation
2. Project size
3. Employee tumover
4. Risk managemmt
5. Unrealistic deadlines
6. Inadequate funding and resources
7 . Or gantzatronal po litics
8. Organizational culfure
9. Scope creep
10. Unexpected gaps
I 13
8.2 ERP PROJECT MANAGER
.
The one person who shoulders the maximum responsibility in an ERP
implementation project is the project manager.
.
'Ihe
single most decisive element of ERP success or failure is the knowledge,
skills, abilities, and experience of the project manager.
.
The project manager is the key decision-maker in the ERP inplementation.
.
An ERP project manager must understand both the business and the technology.
.
The project manager must cope with thousands of parts.
.
Whether implementing one module or multiple modules, he must ensure
consistency and full integration across the various subprojects, which is an
enormous effort.
.
An ERP project manager must understand the impact of the ERP implementation
on the business, and work with business managers to ensure a smooth transition
from the
"as
is" to the
"to
be" business operating environment.
. A project manager must be flexible enough to roll with the changes as the project
progresses, and not lose it when unpleasant surprises pop up as they always do
during ERP implementations.
.
They must be able to work with nearly every individual in the organizatioru from
the most technical IT staff or plant engineer, to the mailroom and building
maintenance staff.
.
They must also possess the ability to learn extremely fast, because they will need
to understand business issues in areas of the organization with which they are
unlarrriliar.
.
An ERF project manager must also be highly disciplined. They must be able to
clearly envision the project end game, and then hold the enfue organization to the
road that leads to that successfui end. This mean-s bringing other team members
back on track when deviations occur or distractions arise.
114
'
They must also be willing to make tough decisions, and understand that those
decisions will upset some and please others. The project manager must be capable
of making defmding and standing by every decision.
.
Qualities
of project manager:
1. Team player
2. Should recognize individuals and their efforts
3. Abilify to inspire trust and commurricate the vision
4. Excellmt technical expertise
5. Computer skills
5- Good communication skills
7. Leadership qualities
8. Positive attitude
9. Capability to anticipate the probleurs and resolve them
10. Good listener
11. Leads by example
12. Excellent organizational knowledge
13. Ready to accept blame for his mistakes
14. should trust his subordinates and delegate work effectively
8.3 PROIECT MANAGEMENT
.
Project management is key to a succesfirl implementation.
.
Project management processes and tools are designed to
(1) keep the implementation
on schedule,
(2) manage project costs,
(3) m-arrage the project vendors,
(a) help the company's avoid problems and ensure a successful
implementation or upgrade of enterprise resource planning
applications.
115
Inadequate project management has played a major role in fuiled
implementations. A qualified, dedicated project manager is rule number one in all
ERP implementations
to a broad of activities in order to meet the requirements of a particular
project. (PMBOK - Project Management Body of Knowledge).
PMBOK identifies nine knowledge areas on which project m,rnagement is based.
The nine knowledge areas are:
1. Project Integration Management
1.1 Projoct Pli,n nevfopment
1.2 Project trlan Execuiion
1.3 {n{Fgreted Chang* Conlrol
2. Project Scope Management
2"1 [nitieiion
2.2Seope Planning
2.3 ft:srre Dafailiriorr
2.4 Seopo Verillcation
2,5 6cope Clr*nge Conlrol
3. Project Time Management
3 1 ActiYity De"finition
3.2 Activity Sequerrcing
3 3 Activily Duraiion Estimating
3
",t
$eheduls D ev+loprzen t
3 5 Sched$!e Control
Project Cost Management
ii6
4.''l Ressurce fl fanoin g
4,2Co$t Estlrnatln*
4.3Cost Budgeting
4.4 Cosl 0ontro{
5. Proiect
Quality
Management
5-1 QudiEy Planning
5-2 Qudity Asruranco
5.3qudity Conho!
5. Project Human Resource Management
6. 1 Grga*isatimal Plwrning
6.2 Sta$l Acqutriton
8.3Toam Derreloprnent
7. Project Communications Management
?-t Comrnunbaliona
planning
72 hilannaim Dlstrlbuttoft
7.3 Performence Reporfl ng
7.4 Adrn[nistrslirn
8. Project Risk Management
S.'t Rislr I
dentificatio-B
8J Qu*ntit*riw Riek Anatysls
8.3 Risk Bsspoilaa Plannirrg
8-4 Risk
M+nitufinE and CmtroE
9. Proiect Procurement Management
n7
9-
j
Procurerrr+nt Planning
9"? Solicttation Plannlng
9 3 Sdicitatian
9.4 Source Seleotion
0.f) Cofl tralct Atlrni nislrsti oo
Benefits
Organizations that implements the PMBOK methodology can expect the following
benefits:
. Improved productivity due to using a standard methodology.
.
Increased project profitability due to improved project resources planning and
control.
.
Reduced resources applied in non-value added projects.
.
Standardize practices across departments.
.
Standardized system across companies and industries.
. Its process-oriented methodology states the knowledge needed to manage the
lifecycle of any project, program and porffolio throughout their processes.
8.4 PROJECT MONITORTNG
.
One of the main roles of the members of the executive committee is project
monitoring
-that
is to check and verify that the work that is being done is
satisfactory and that the momentum, morale and enthusiasm of the work team
who are performing the tasks is maintained.
.
The key players in the project tracking and monitoring are the project
management team and the executive cornmittee.
.
Before implementation starts the consultants and the company representatives
will sit together and prepare a work plan or project plan.
.
The work plan contains numerous activities, the man-hours required to complete
them and the resources need perform the tasks.
ll8
7
The work plan or the project plan forms the basis for project tracking
and
monitoring.
All the parties involved-the
executive committee,
the vendor, the consultants
and the in-house team-should
be in agreement with the contents of the plan.
The adherence
to the plan, and constant
monitoring
and taking appropriate
cotrective actions before the project gets out of control will ensure the success of
the project.
'
The frequency of monitoring by the executive
committee
depends on the
situation-
'
If the comPany has really assigned its best personnel
to do the job,
then there will
be a natural monitoring
of the project's
daily activities.
The company professional
assigrad to serve as the project owner or sponsor is in
an ideal position
to evaluate how things are going.
since the ERP implementation
project runs into months, it is quite adequate that
the executive
committee meets once in a week or once in two weeks.
Another way is to setup milestones
in the project plan and to have a meeting
when the milestone,s
planning completion date is over.
But there are no hard and fast rules regarding
how frequmtly the executive
committee
should meet.
'
During the final stages of the projecf
when the system is being tested the
to discuss the various issues that
ll9
I
.
Since these meetings will be of a managerial nature, the project management team
should prepare a presentation that describes the sifuation at a level of detail
appropriate to the audience.
.
It is a good idea that the material used in the presentation should also sewe to
document in the status of the project till that date.
.
This is important because, in order to track the progress at fugue meetings, it may
become necessary to recall the issues presented in a previous meeting, so as to
explain why the evolution of the work has taken a particular note.
120
PANIMALAR
ENGINEERING
COLLEGE
DEPT. OF M.C.A
MC9285 ENTERPRISE
RESOURCE
PLANNING
PART
-
A
1-Define ERP.
4nterprise
Resource
pranning
(ERp)
covers
the techniques
and
concepts
en'.ploye.d
for the integrated
management
of businesses
as a
whole' from the viewpointof
the effec ve of manafementresources,
to improvethe
efficienry of an enterprise
2.What is an Enterprise?
An enterprise
is a group of people with a common
goar, which
has certain
resources at its disposal to acfueve that.goal.
I4trhen used gJnericaily,
an enterprise
is
defined as the aggregate
of all functional
elements
pfrticipating
in a brisiness
process improvement
action, regardless
of the organizatiJnal
structure
housing those functional
elemenls.
It is a comprete
business
consisting
of functions,
divisions
or other c rmponents
used to accomplish
specific
objectives and defined goals.
3. What are the main misconceptions
about ERp?
'First
i's that ERP is a contputer
system.. Even though computers
and IT are integral
parts
of an ER-P system,_ ERP is primarili,
an-enterpiise-,ar.ide
system, *friof",
encompasses
corpotate mission, objectives,
attitudes,
beliefs, valuo,
op"rutir,g
style ana
people who make the organization.
'
second is ERP * f:1
T11fficturing
organizations
alone. This assumption
is basically
due to the way in which ERP was hlstorically
developed
from the methods of Material
Requirements
Planning (MRp)and
Manufacturing
Re^source
planning
Orfnf
Ui*f.ri.f,
are relevant to manufacturing
organizations.
MRP became the fundamental
concept in 1970s. At this stage BoM (Bill of materials)
was the pr""uiii"g
trend. It further got unfolded
as ERp II and now it has resurted
in ERp
4. What are ERP packages?
ER" packages
are_ integiated
(covering
all bu
sof tware packages
that support the ERp cor,.cipts,
ERp
to model and automate
many of the basic processes
of u .o-p
shop floor, with the goal of integrating
information
across
the company
and eliminating
comprex,
expensive
hr-,k, b"t*een
computer
systems
that
h'ere never meant to each other
121
5. Who are the main players in the ERP market?
sAP AG, Peoplesoft, oracle, Baan.
JD
Edwards,
QAD,
Ramco, IFS, DataWorks etc
5. when do the ERP system's set of generic
Processes
p ro duce dram atic imProvements?
Unp roftware is a mirror image of the maj or business processes
of an organization,
such as custorner order fulfillment and manufacturing-
Its success depends upoll reach
-
a circumscribed
ERP system isn't
much better than the legacy system it replaces. ERP system's set of
generic processes produce the dramatic improvements they are capable of, only
when used to connect parts of an organization and integrate its various plocesses
seamlessly.
7. What are the reasons for the explosive growth of the ERP market?
(i)They enable improved business performance by achieving: cycle'time reduction,
increased business agilrty, inventory reduction, order fulfillment improvement
etc'
(ii) They support business growth requirements'
(iii)ERP systems provide flexible integrated, real time decision suPPort
inf pu"t
"gut
can now be afforded by even small and medium sized
businesses and offers increased functionality at a reasonable cost.
(iv) They help companies in supporting new products and new customers by meeting
their global requirements,
including multiple languages and currencie'
8. What are the direct benefits of ERP systems?
Business lntegration,
Flexibility, Better analysis and planning capabilities, tlse of latest
technology.
9. Why is it said that ERP systems are flexible?
Different languages, accounting standards can be covered in one system, and functions
that comprehensively manage multiple locations of a company can be packaged
and can be implemented automatically. To coPe with
c o m p a n y globalization and system unification, this flexibility is essential
10. What is cycle time?
Cycle time is the time between receipt of the order and delivery of the product
11. What are the factors that are critical for the success of the ERP implementation?
Selection of the right package, Commitment of top management, Participation and
dedication of the system's future users, Backing, support and cooperation of the IS/IT
personnel, Development of interfaces with current operational systems and with those
t22
under development,
Effort of consurtants,
who have respect for the company,s
know-how-
and work cultule, spirit and collaboration
on the part of all
12. How do conventionar
apprication
packages and ERp packages
differ?
(i) First, ERP packages
cannot have only individual
business
functions such
as accounts
and inve,tory,
but arso the entire range of main
business functions
necessary for thecompany's
operations
(ii)
second, ERP packages
are targeted
at everything
from
small businesses
to the,largest
organizations,
and that they can be compJsed
of a
highly flexible decentralized
database and an information
system cluster linked
by a network
(iii) Third, is global adaptation, represented
by ERP packages'
multilingual
and multi-
currency capacity
13. I4rhat are
+.he
li:r.itations
of ER.p?
(i) Managers
cannot generate
custom reports
or queries without herp
from a
Programmer
and this inhi:its
then from oitaining
information
quickly, so that they can act on it for compefitive
advantages.
(ii) ERP systems provide
current status
onry, such as open
orders'
Managers often need to look past the current
status/ to find trends
and patterns that aid better decision_makingl
(iii) The data in the ERP application is noi integrated
with other enterpriser
division
systems and does not include
external intetligence
u.rffinutis
BpR?
BPR or Business
Process Reengineering
is the fundamental
rethinking
and radical
redesign of business
Processes
to acl ieve dramatic
improvements
in critical,
contemporary
measures of performance
such as cost, quality, service and speed
15. Vf,hat is MIS?
MIS or Management Information
System is a computer based system that optim izes
the collection,
coration,
transfer
and presentation
of
information
throughout
an organization
through
an integrated
structure of databases and information
flow.
16. What are the main characteristics
of Ir4IS?
(i)
tvtts supPorts the data processing
functions
of transaction
handling
and record
keeping
(ii) MIS uses an integrated
database
and supports a variety of
(iii)
IvfIS provides
operational,
tacticai
an
I ev els of th e organizationwithtimelyinformation
functional areas
d strategic
123
(i") MIS
needs of
IS
an
flexible and can be adapted to changing
organization
17. What is DSS?
DSS or Decision Support System is an information and planning system that
provi des the ability to interrogate computers on an ad-hoc basis,
analyze information and predict the impact of decisions before they are
made. A DSS is a cohesive and integrated set programs that share data and
information.
18. What is EIS?
EIS or Executive Information System is an information system
that consolidates and summaries the ongoing transactions within an
organization. It should provide management with all the information it requires, at
all times, from internal as well as external sources. A successful EIS is easy to
us7 flexible and customizable
/,Whatis
OLAP?
JOLAP
or On-Line Analytical Processirg is a decision support software that allows
the user to quickly analyze information that has been summarized
into multidimensional views and hierarchies, These
multidirm.ensional views are supported by multidimensional database
technology and provide the technicai basis for the calculations and analysis required by
Business Intelligence application s.
2\/hatis a data warehouse?
A data warehouse is a database designed to support decision-making in an
organization. It is updated batch-wise and is structured for fast online queries and
summaries for managers. Data warehouses can contain sromrous amounts of data.
ztfrnaus data mining?
Vata mining is the process of
comprehensible knowledge
decisioru.
identifying valid, novel, potentially useful and ultimately
from databases that is used to make crucial busines
22. What is supply chain?
A supply chain is a network of facilities and dishibution options, that performs the
functions of procurement of materials, transformation
of these materials into
intermedi.ate an finished products, and the distribution of these finished products to
customss
23. What is SCM?
sCM or supply Chain Management is a generic term that encompasses the
coordination of order generation, order taking and offer
f u I f i I lm. en t/ d i s tr i bu ti on of producb, services or infomution
t24
7
24. What are the different
phases
of ERp implementation?
(i) P
ckage
G"p
Confi
phase
(iv)
(viii)
user tr
m training
25. VWrat is gap analysis?
Gup
anarysis
is the
most
crucial
phase
f or the success
o f th e E R
p
imprementation.
It fu al".pro."rr
ail-"gr,
*r,ich
companies
create a
model of where they are now, and in which
dir""tioi
tn"fwant
to head in the future.
The tnick is to design
a model which
anticipates
ui-ra'"orr"rs
any functionar
gaps. It is true that
even the
fst
ERp package,
c^ustom
tailorea
to a company,s
needs,
meets only 80%of the compaay,s
functional
re{uirements.
,^9
_1[a,
are
+.he
g-*eral
four phases cf an ERp implementation
3"#-*#t-tding
the problem
(ii) Defining
"olr'tio.,
liriy
c"ni.g
down to work (iv)
27. Give the hidden costs in ERp implementation?
Training,
Integration
and testing, D^ata conversion,
Data
analysis,
ERp consurtant
8. StaE the rrain
members of animplemertation
team.
(i) Executive
committee
(ii)
project
management
team (iii) work team
(irz) Technical
suppo rt team (v
j
A d minislati"
"
r"ppo)*--"uoi
^ "
D.
(i)
ERPshouldPossess?
[1o,"*"*oo
handrins
,,"0,"?,"SfliilHTif
arise durins
the
(iii)
Good people skills and excellent
training
skills
(iv) Good leadership
skills
30. Who are vendors
and give their role?
Vendors
are people
who have invested
huge amounts
of time
and effort
in
research-
and developmentto
create packaged
1r"nr;
sotuioos.
First and foremost,
tt*
vendor
should
supply fl're prroduct and ittocumerrtation
as soon as tre contract
is signed.
Next
the vendor
should impart training
to its clients
31. Who are business
consultants
and specify
their role?
Business
consultants
are
developing
techniques
a-r.C
Ptofessionals who
specialr:.2e
in
methodologies
for dealin;
*i,h the
125
implementation
and vvith the various ptoblems that will clop uP during the
implementation.Consultantsshouldguaranteethesuccessoftheprojectand
should
be able to satisfy the company
management
with its needs' They should
add value to the
Project.
32.StateSomek"ypointsofthecontractwiththevendor,which
should
be addressed-
value
of the software
and conditions
of payment,
List- of
.deliverables
(softwarq
documents
etc.),
Cost of implementation
training, Cost of end-user
training' Annual
maintenance
fee, Warranty
or guarantee
terms
33. state some key points of the contract
with the consultant,
which should be
addrcssed.
profile
of the
consultants'
team with the resume of each member,
Consulting
fee and
p"y*"".details,Imp,Timescheduleandtheimplementation
budget,
Terms and
transfer and employee
training,
List of
deliJerables
(rePorb,
ases etc)'
Project monitoring
and status reporting
systems
34. Why is the pre-evaluation
screening
required?
There
are hund,reds
of vendori ciaiming
a solution
that is ideal
for
youlComPany.Analyzingthesepackages,trrougrratime<onsumingProcesswould
give a viable solution
needed'
35. Define action
Plan
Adocumentusedtoguidetheimplementationofbusiness
processimprovements'Itcontainstackassignments'schedules'
,"roor."allocations,assignmentsandevaluabioncriteria'
35. What is an activitY?
A *u*"d process,
function or task that occurs over time and has recognizable
results'
Activities
use up assigned
resources
to produce products
and services'
Activities
combine
io formlosiness
processes.18.
Define BOA.BOA or BilI of Activity is
the listing of activities
involved
in-the production of acertain
output,
together
with thJ number of times each component
activity is perfomred.
37. What is BOM?
BOM or Bill of Materials
is a list of direct materials required
to manufacture
a given
product
or
Provide
a given service
38. Who are BPR
Professionals?
t26
BPR prof
essionars
are individuars
necess ary f.or a Business
essential
to
been idenffied
as being
data and
strategic
planners,
(FAC)
I ActivitY
Coordinators
39. Definebusiness.
Busin
as the activities
of individuals
or
involv
ducing and distributing
the goods and
satisfy
tt0.I&ratare
the lhree reources of business?
Land, labour and capital
ce, Sales &
plarrning
42. State the finance
modules in most ERp systelns.
Financial
accounting,
Investment
management,
Controlting,
Treasury,
Enterprise
controlling
43. Write about financial
accounting.
It provides comPany
wide control and integration
of financial
information
that is
essential
to strategic
decision
making. It gives the ability to centralry
track financial
accounting
data within
an international
framework
of multiple
companies,
languagm,
currencies
and charts of accounts.
44. What is General ledger?
General ledger is essential
both to the financial
accounting
system and to
strategic decision
making. It provides
document
parking,
postirrg,-reporting
and an
integrated
financial
carendar for automahng
periodic
acuvities.
45. What is asset accounting
and legal consolidation?
Asset
acccunting
manager
ttre company's
fixed assets,
whereas
legal
consolidation
permitJ
direct data transfer,
from individual
statements
into the consolidated
report.
46, What is cost
Cerrfue accou,ntingf
Ccst
center accounting
anaryses where
overheads
occu_i
within
the organization
Costs are assigned to the sub-areag
ci the
organization
where
lirey are originated.
groups
that are
services needed
to
distribution
t27
47.What is EIS?
EIS or Executive
Information
System is an information
system
that consolidates
and summaries
the ongoing transactions
within an
organization.
It should provide management with all the information it requires, at
a[1imes, from internal as well as external sources. A successful EIS is easy to
use, flexible and customizable.
48. State some major subsystems of manu{acturing
module'
Material anti capacity plaflning, shop floor contol
Quality
management,
[T /
Repetitive
manuf acturing, Cost mana gemenf Tooling
49. What are the various subsystems
in HR module?
persorurel
management,
otganizational
management, Payroll accounting, Time
managemenf
Personnel management
50. what are the
yarious
subsystems of a plant maintenance module?
Prevenbive mainterrance
control, Equipment tracking, Component trackinp Plant
maintenance calibration tracking, Plant maintenance
warranty daims tracking
51. what are the main modules of Materials Managementmodule?
Pre-purchasing
activities,
IfurchasinpVendoi
evaluation, Inventory management
Invoice verification and material inspection
52. State the sub activities in pre-purchasing'
Requirements calculation, Requisition
for quotations, Vendor ratings
53. Who are the main players in the ERP market?
sAP AG, PeopleSoft, oracle, Baan,
]D
Edwards,
QAD,
Ramco, [FS, DataWorksetc
54. Whatis SAP?
sAP means systems Applications
and Products in Data Processing
55 . State the versions of SAP's ERP package.
.Mainframe
version (SAP R/2) and Client/server version
56. What are the three different Iayers of SAP R/3?
Database layer, Application
layer, Presentation layer
57 Expand the term'SAP'. What are SAP R/2 and SAP R/3?
128
was
rver
manvmorecompanies
than R/2as,
o.#*TH,;::iHilrIT
sorution
is avairabre
to
58' what is impact
of free open source software
in ERp implementation?
Traditionally,
ERp powerbrokers
such as
market with expensive
proprietary
softw
manufacturing
fums to fall back on_ In
source
RP software
companies,
with
eme.rged
with
hopes of changing
the ER
application
must:
.
be distributed
to anyone without
restrictions.
o
make the source code available
to users.
.
allow a modified
version
of
59. I4lhat are the reasons for explosive
growth of ERp market?
.
To Support
business
growth
requirements
'
To provide
flexibre{Capable
of being bent or flexed;
pliable},
integrated,
real_time
decision
support
.
To eliminate limitation
in legacy
systems
'
To take advantage
of thg untapped
mid-market
(medium
size
organizations)
60. List the ERP implement
strategies.
o Ptocess
preparation
o Configuration
o Customization
o Extensions
o Data migration
51' ERP is a catalyst
of fundamentar
changes
in organization
-
Comment.
ERP causes fundamental
changes in organizations
because
it requires
business
models and process"iJgli
redesigneduoa
rt **tir,"a.
This
is required
for
firms to have successful
ERp.
62.
tl//hatis
the significance
of IT in ERp?
To reduce the amount of time taken
to acquire
and use information,
to learn
to
make decisions,
to initiate action
,
to deproy'roorr.""*Jto
r,norate.
63 . State about
the three layers
of SAp I{/3,
129
.
Database
layer -
resides on central
severs or urainf rame
host comPuters
j
Appli*tion
layer
-
holds the processing
loglc of the system, preparing and formatting
data for individual
offices or departments
.
Presentation
layer -
handlei all the tasks related to the presentation ofdata'
including
user interfaces
that enable easy access to complex
applications
and data
64. What are the general R/3 modules?
.Financial
accounting
.
Treasury
.
Controlling
.
Enterprise controlling
o
Investmentmanagement
r Production
Planning
r
Materials management
o Plant maintenance
and service management
o
Quality
management
.
Project system
.
Sales and distribution
o
Humanresourrcesmanagernst
65 Write about SAP's business engineer?
Business engineer
d,elivers
a complete toolkit that greatly facilitates
the implemer*ation
of R/3 and the engineering
of your business
Processes.
It ensures
quick and high quality customjzation
of R/3
66 . State some areas of business
management
solutions, provided by Peoplesoft'
.
HR management,
Aaounting
and confrol Treasury managemort, Performance
management,
Project *u.ug"*"nt,
Sales and logistics, Materials management, Supply
chain planning, Service revenue maJragement,
Procurement
67. What are four strategies incorporated
by PeopleSoft
implementation toolkit?
'GeograPhicai
.Departmental
.
Core and support
Process
.No
phasing
68. lVlrat is tJaanDEMSE?
BAAN
-
Dynamic Enterprise
Modeling Strategy Executionll. what are the ERP
modules of Baan ERP?
.Manufacturing
module
.Finance
module
"Project
module
r30
ffi
*_;&;
-
.Distibutiqrmodule
59. Whatis
the,,THREE
I,, philosophy?
lntegrity,
Innovation,
Initiative
,O:
"y":g*e
categories
of Oracle software
applications.
.Oracle
Finandials
.
Oracle
Human
Resources
'Oracle
Projects
.Oracle
Manufacfuring
.Oracle
Supply
Chain
.Oracle
FrontOffice
!l_Yl"t
is the flagship
product
of
eAD?
MFG/PRO
72. WhatisSSA?
SSA means
System
Software
Associates
73. What are the six key goals of SSA?
.
Best client satisfaction
i**"worldwide
rofessionars
T4t//hat
is lead time?
The elapsed
time between placing
an order and receiving
it is known
as the lead time.
75. Whatis
Extended
ERp?
Extended
ERp
is a set
of enterprise
modeling
tools
for
effective
implementation.
Ia r_r_1 concept-promoted
by Baan
for
rapid,
flexible
and quality implerrentatiorofmpsysftil,s:
r '
of the operation
to efficiently
produce
highly
cusbmized
77'who is the leadcr in the ERp market and what are its products?
SAP AG is the market
leader
"it
i^t:
ERp products
are SAp
R/2
f o r th e mainframe
environment
and sAp R/3 for *,"
"ri*y"erver
environment.
131
78 . What are quality - related costs?
Overhead costs, Activity based costs, Product cost, Costs of control, Costs of failure
of control, Tangible costs, Intangible costs
79. Statehow Client\Server technology is used in commercial ERP packages.
To deliver self-service and e-commerce capabilities
80 .Brief about the role of System control Interfaces in an ERP package
SCI describes the interface of interfaces to a system or subsystem. The purpose of the
SCI is to communicate all possible inputs to and all potential outputs from a system
for some potential or actual user of the system.
81. What does BIS allow?
Customer service, Manufacturing and purchase, Sales
82. What are the general traditional business processes?
Fulfillment, Payment, Procuremert Replarislunmt
83. State the steps in retail fulfillment process.
.Initiate
order
.
Verify idenlQ' or paymertt
.Anange
drop shipment
'Acknowledge
order
.
Track order stafus
84. State the steps in corporate procurement
Process.
.lnitiate
requisition
.Verify
item data
.
Tralsmit purchase order
.
Confirm receipt
.
Track purchase status
85. State the steps in inventory replenishment process.
.Item
reorder limit reached
.Purchase
order approved
.Item
shipped
.
Item received
.Payment
received
132