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Padmashree Dr. D. Y. patil

University`s Department Of
Business Management


MIS Assignment
Topic - Enterprise Resource Planning (ERP)
Group Members:
Meet Bhanushali 013098
Akshay Pillai 013100
Ashwini Jawale 013140
Swapnil Mahabare 013175
Tushar Naik 013187
Nupur Singh- 013054
Sagar -013157
Ritik Dighaskar - 013190
Pratik - 013011
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Enterprise Resource Planning - ERP
A process by which a company (often a manufacturer) manages and integrates the important
parts of its business. An ERP management information system integrates areas such as planning,
purchasing, inventory, sales, marketing, finance, human resources, etc.



ERP is most frequently used in the context of software. As the methodology has become more
popular, large software applications have been developed to help companies implement ERP in
their organization.
Think of ERP as the glue that binds the different computer systems for a large organization.
Typically each department would have their own system optimized for that division's particular
tasks. With ERP, each department still has their own system, but they can communicate and
share information easier with the rest of the company.

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Enterprise resource planning (ERP) is business management softwareusually a suite of
integrated applicationsthat a company can use to collect, store, manage and interpret data from
many business activities, including:-
Product planning, cost and development
Manufacturing or service delivery
Marketing and sales
Inventory management
Shipping and payment
ERP provides an integrated view of core business processes, often in real-time, using common
databases maintained by a database management system. ERP systems track business
resourcescash, raw materials, production capacityand the status of business commitments:
orders, purchase orders, and payroll. The applications that make up the system share data across
the various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the
data. ERP facilitates information flow between all business functions, and manages connections
to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces components that
support a variety of business functions. IT investments have become the largest category of
capital expenditure in United States-based businesses over the past decade. Though early ERP
systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
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The ERP system is considered a vital organizational tool because it integrates varied
organizational systems and facilitates error-free transactions and production. However, ERP
system development is different from traditional systems development. ERP systems run on a
variety of computer hardware and network configurations, typically using a databases
an information repository

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History
Origin of "ERP"
In 1990, Gartner Group first used the acronym ERP

as an extension of material requirements
planning (MRP), later manufacturing resource planning and computer-integrated manufacturing.
Without replacing these terms, ERP came to represent a larger whole that reflects the evolution
of application integration beyond manufacturing.
Not all ERP packages developed from a manufacturing core. Vendors variously began with
accounting, maintenance, and human resources. By the mid1990s ERP systems addressed all
core enterprise functions. Governments and nonprofit organizations also began to use ERP
systems.


A screenshot of an ERP software application


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Expansion
ERP systems experienced rapid growth in the 1990s, because the year 2000 problem and
introduction of the euro disrupted legacy systems. Many companies took the opportunity to
replace their old systems with ERP.
ERP systems initially focused on automating back office functions that did not directly
affect customers and the general public. Front office functions, such as customer relationship
management (CRM), dealt directly with customers, or ebusiness systems such as ecommerce,
egovernment, etelecom, and efinanceor supplier relationship management(SRM) became
integrated later, when the Internet simplified communicating with external parties.
"ERP II" was coined in 2000 in an article by Gartner Publications entitled ERP Is Dead Long
Live ERP II. It describes webbased software that provides realtime access to ERP systems to
employees and partners (such as suppliers and customers). The ERP II role expands traditional
ERP resource optimization and transaction processing. Rather than just manage buying, selling,
etc.ERP II leverages information in the resources under its management to help the enterprise
collaborate with other enterprises. ERP II is more flexible than the first generation ERP. Rather
than confine ERP system capabilities within the organization, it goes beyond the corporate walls
to interact with other systems. Enterprise application suite is an alternate name for such systems.
Developers now make more effort to integrate mobile devices with the ERP system. ERP
vendors are extending ERP to these devices, along with other business applications. Technical
stakes of modern ERP concern integrationhardware, applications, networking, supply chains.
ERP now covers more functions and rolesincluding decision making, stakeholders'
relationships, standardization, transparency, globalization, etc.

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Characteristics
ERP (Enterprise Resource Planning) systems typically include the following characteristics:
An integrated system that operates in (or near) real time without relying on periodic
updates
A common database that supports all applications
A consistent look and feel across modules
Installation of the system with elaborate application/data integration by the Information
Technology (IT) department, provided the implementation is not done in small steps




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Functional Areas
An ERP system covers the following common functional areas. In many ERP systems these are
called and grouped together as ERP modules:
Financial accounting: General ledger, fixed asset, payables including vouchering,
matching and payment, receivables, cash application and collections, cash
management, financial consolidation
Management accounting: Budgeting, costing, cost management, activity based costing
Human resources: Recruiting, training, rostering, payroll, benefits, 401K, diversity
management, retirement, separation
Manufacturing: Engineering, bill of materials, work orders, scheduling,
capacity, workflow management, quality control, manufacturing process, manufacturing
projects, manufacturing flow, product life cycle management
Order Processing: Order to cash, order entry, credit checking, pricing, available to
promise, inventory, shipping, sales analysis and reporting, sales commissioning.
Supply chain management: Supply chain planning, supplier scheduling, product
configurator, order to cash, purchasing, inventory, claim processing, warehousing
(receiving, putaway, picking and packing).
Project management: Project planning, resource planning, project costing, work
breakdown structure, billing, time and expense, performance units, activity management
Customer relationship management: Sales and marketing, commissions, service,
customer contact, call center support - CRM systems are not always considered part of
ERP systems but rather Business Support systems (BSS).
Data services : Various "selfservice" interfaces for customers, suppliers and/or
employees.

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Components
Transactional database
Management portal/dashboard
Business intelligence system
Customizable reporting
Resource planning and scheduling
Analyzing the product
External access via technology such as web services
Search
Document management
Messaging/chat/wiki
Workflow management







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Best Practices
Most ERP systems incorporate best practices. This means the software reflects the vendor's
interpretation of the most effective way to perform each business process. Systems vary in how
conveniently the customer can modify these practices. Companies that implemented industry
best practices reduced timeconsuming project tasks such as configuration, documentation,
testing, and training. In addition, best practices reduced risk by 71% compared to other software
implementations.
Use of best practices eases compliance with requirements such as IFRS, Sarbanes-Oxley,
or Basel II. They can also help comply with de facto industry standards, such as electronic funds
transfer. This is because the procedure can be readily codified within the ERP software, and
replicated with confidence across multiple businesses who share that business requirement.



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Connectivity to plant floor information
ERP systems connect to realtime data and transaction data in a variety of ways. These systems
are typically configured by systems integrators, who bring unique knowledge on process,
equipment, and vendor solutions.
Direct integration ERP systems have connectivity (communications to plant floor
equipment) as part of their product offering. This requires that the vendors offer specific support
for the plant floor equipment their customers operate. ERP vendors must be experts in their own
products and connectivity to other vendor products, including those of their competitors.
Database integration ERP systems connect to plant floor data sources through staging tables
in a database. Plant floor systems deposit the necessary information into the database. The ERP
system reads the information in the table. The benefit of staging is that ERP vendors do not need
to master the complexities of equipment integration. Connectivity becomes the responsibility of
the systems integrator.
Enterprise appliance transaction modules (EATM) These devices communicate directly
with plant floor equipment and with the ERP system via methods supported by the ERP system.
EATM can employ a staging table, Web Services, or systemspecific program interfaces (APIs).
An EATM offers the benefit of being an offtheshelf solution.
Customintegration solutions Many system integrators offer custom solutions. These
systems tend to have the highest level of initial integration cost, and can have a higher long term
maintenance and reliability costs. Long term costs can be minimized through careful system
testing and thorough documentation. Customintegrated solutions typically run on workstation
or server-class computers.


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Implementation
ERP's scope usually implies significant changes to staff work processes and practices.
[

Generally, three types of services are available to help implement such changesconsulting,
customization, and support. Implementation time depends on business size, number of modules,
customization, the scope of process changes, and the readiness of the customer to take ownership
for the project. Modular ERP systems can be implemented in stages. The typical project for a
large enterprise takes about 14 months and requires around 150 consultants. Small projects can
require months; multinational and other large implementations can take years Customization can
substantially increase implementation times.
Besides that, information processing influences various business functions e.g. some large
corporations like Wal-Mart use a just in time inventory system. This reduces inventory storage
and increases delivery efficiency, and requires up-to-date-data. Before 2014, Walmart used a
system called Inforem developed by IBM to manage replenishment.

An ERP accounting software
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Process preparation
Implementing ERP typically requires changes in existing business processes. Poor understanding
of needed process changes prior to starting implementation is a main reason for project
failure. The problems could be related to the system, business process, infrastructure, training, or
lack of motivation.
It is therefore crucial that organizations thoroughly analyze business processes before they
implement ERP software. Analysis can identify opportunities for process modernization. It also
enables an assessment of the alignment of current processes with those provided by the ERP
system. Research indicates that risk of business process mismatch is decreased by:
Linking current processes to the organization's strategy
Analyzing the effectiveness of each process
Understanding existing automated solutions
ERP implementation is considerably more difficult (and politically charged) in decentralized
organizations, because they often have different processes, business rules, data semantics,
authorization hierarchies, and decision centers. This may require migrating some business units
before others, delaying implementation to work through the necessary changes for each unit,
possibly reducing integration (e.g., linking via Master data management) or customizing the
system to meet specific needs.
A potential disadvantage is that adopting "standard" processes can lead to a loss of competitive
advantage. While this has happened, losses in one area are often offset by gains in other areas,
increasing overall competitive advantage.

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


Ascent ERP Software


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Two tier enterprise resource planning
Two-tier ERP software and hardware lets companies run the equivalent of two ERP systems at
once: one at the corporate level and one at the division or subsidiary level. For example, a
manufacturing company

uses an ERP system to manage across the organization. This company
uses independent global or regional distribution, production or sales centers, and service
providers to support the main companys customers. Each independent center or subsidiary may
have its own business models, workflows, and business processes.
Given the realities of globalization, enterprises continuously evaluate how to optimize their
regional, divisional, and product or manufacturing strategies to support strategic goals and
reduce time-to-market while increasing profitability and delivering value. With two-tier ERP, the
regional distribution, production, or sales centers and service providers continue operating under
their own business modelseparate from the main company, using their own ERP systems.
Since these smaller companies' processes and workflows are not tied to main company's
processes and workflows, they can respond to local business requirements in multiple locations.
Factors that affect enterprises adoption of two-tier ERP systems include:
Manufacturing globalization, the economics of sourcing in emerging economies
Potential for quicker, less costly ERP implementations at subsidiaries, based on selecting
software more suited to smaller companies
Extra effort, (often involving the use of Enterprise application integration) is required where data
must pass between two ERP systems.

Two-tier ERP strategies give enterprises agility in
responding to market demands and in aligning IT systems at a corporate level while inevitably
resulting in more systems as compared to one ERP system used throughout the organization.

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Customization
ERP systems are theoretically based on industry best practices, and their makers intend that
organizations deploy them as is. ERP vendors do offer customers configuration options that let
organizations incorporate their own business rules, but often feature gaps remain even after
configuration is complete.
ERP customers have several options to reconcile feature gaps, each with their own pros/cons.
Technical solutions include rewriting part of the delivered software, writing a homegrown
module to work within the ERP system, or interfacing to an external system. These three options
constitute varying degrees of system customizationwith the first being the most invasive and
costly to maintain. Alternatively, there are non-technical options such as changing business
practices or organizational policies to better match the delivered ERP feature set. Key differences
between customization and configuration include:
Customization is always optional, whereas the software must always be configured
before use (e.g., setting up cost/profit center structures, organizational trees, purchase
approval rules, etc.).
The software is designed to handle various configurations, and behaves predictably in
any allowed configuration.
The effect of configuration changes on system behavior and performance is predictable
and is the responsibility of the ERP vendor. The effect of customization is less
predictable. It is the customer's responsibility, and increases testing activities.
Configuration changes survive upgrades to new software versions. Some customizations
(e.g., code that uses predefined "hooks" that are called before/after displaying data
screens) survive upgrades, though they require retesting. Other customizations (e.g.,
those involving changes to fundamental data structures) are overwritten during upgrades
and must be reimplemented.


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Customization advantages include that it:
Improves user acceptance
Offers the potential to obtain competitive advantage vis--vis companies using only
standard features
Customization disadvantages include that it:
Increases time and resources required to implement and maintain
Inhibits seamless communication between suppliers and customers who use the same
ERP system uncustomized
Can create over reliance on customization, undermining the principles of ERP as a
standardizing software platform

Recording a sales order in an ERP software
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Extensions
ERP systems can be extended with thirdparty software. ERP vendors typically provide access to
data and features through published interfaces. Extensions offer features such as:
Archiving, reporting, and republishing
Capturing transactional data, e.g., using scanners, tills or RFID
Access to specialized data and capabilities, such as syndicated marketing data and
associated trend analytics
Advanced planning and scheduling (APS)
Managing resources, facilities, and transmission in real-time



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Data migration
Data migration is the process of moving, copying, and restructuring data from an existing system
to the ERP system. Migration is critical to implementation success and requires significant
planning. Unfortunately, since migration is one of the final activities before the production
phase, it often receives insufficient attention. The following steps can structure migration
planning:
Identify data to migrate
Determine migration timing
Generate data templates
Freeze the toolset
Decide on migration-related setups
Define data archiving policies and procedures



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Advantages of ERP
The fundamental advantage of ERP is that integrating myriad businesses processes saves time
and expense. Management can make decisions faster and with fewer errors. Data becomes
visible across the organization. Tasks that benefit from this integration include:
Sales forecasting, which allows inventory optimization.
Chronological history of every transaction through relevant data compilation in every
area of operation.
Order tracking, from acceptance through fulfillment
Revenue tracking, from invoice through cash receipt
Matching purchase orders (what was ordered), inventory receipts (what arrived),
and costing (what the vendor invoiced)
Complete visibility into all the important processes, across various departments of an
organization (especially for senior management personnel).
Automatic and coherent workflow from one department/function to another, to ensure a
smooth transition and quicker completion of processes. This also ensures that all the
inter-departmental activities are properly tracked and none of them is missed out.
A unified and single reporting system to analyze the statistics/status etc. in real-time,
across all functions/departments.
Certain ERP vendors can extend their ERP systems to provide Business Intelligence
functionalities that can give overall insights on business processes and identify potential
areas of problems/improvements.
Advanced e-commerce integration is possible with ERP systems most of them can
handle web-based order tracking/ processing.
Since ERP is a modular software system, its possible to implement either a few
modules (or) many modules based on the requirements of an organization.
If more modules implemented, the integration between various departments may be
better.
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Since a Database system is implemented on the backend to store all the information
required by the ERP system, it enables centralized storage/back-up of all enterprise
data.
ERP systems are more secure as centralized security policies can be applied to them. All
the transactions happening via the ERP systems can be tracked.
ERP systems provide better company-wide visibility and hence enable
better/faster collaboration across all the departments.
It is possible to integrate other systems (like bar-code reader, for example) to the ERP
system through an API (Application Programming Interface).
ERP systems make it easier for order tracking, inventory tracking, revenue tracking,
sales forecasting and related activities.
ERP systems centralize business data, which:
Eliminates the need to synchronize changes between multiple systemsconsolidation of
finance, marketing, sales, human resource, and manufacturing applications
Brings legitimacy and transparency to each bit of statistical data
Facilitates standard product naming/coding
Provides a comprehensive enterprise view (no "islands of information"), making real
time information available to management anywhere, any time to make proper decisions
Protects sensitive data by consolidating multiple security systems into a single structure.



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Benefits
ERP can improve quality and efficiency of the business. By keeping a company's internal
business processes running smoothly, ERP can lead to better outputs that may benefit the
company, such as in customer service and manufacturing.
ERP supports upper level management by providing information for decision making.
ERP creates a more agile company that adapts better to change. ERP makes a company
more flexible and less rigidly structured so organization components operate more
cohesively, enhancing the businessinternally and externally.
ERP can improve data security. A common control system, such as the kind offered by
ERP systems, allows organizations the ability to more easily ensure key company data is
not compromised.
ERP provides increased opportunities for collaboration. Data takes many forms in the modern
enterprise. Documents, files, forms, audio and video, emails. Often, each data medium has its
own mechanism for allowing collaboration. ERP provides a collaborative platform that lets
employees spend more time collaborating on content rather than mastering the learning curve of
communicating in various formats across distributed systems.

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Disadvantages of ERP
Customization is problematic. Compared to the best-of-breed approach, ERP can be seen as
meeting an organizations lowest common denominator needs, forcing the organization to find
workarounds to meet unique demands.
Re-engineering business processes to fit the ERP system may damage competitiveness or
divert focus from other critical activities.
ERP can cost more than less integrated or less comprehensive solutions.
High ERP switching costs can increase the ERP vendor's negotiating power, which can
increase support, maintenance, and upgrade expenses.
Overcoming resistance to sharing sensitive information between departments can divert
management attention.
The cost of ERP Software, planning, customization, configuration, testing,
implementation, etc. is too high.
ERP deployments are highly time-consuming projects may take 1-3 years (or more) to
get completed and fully functional.
Too little customization may not integrate the ERP system with the business process &
too much customization may slow down the project and make it difficult to upgrade.
The cost savings/payback may not be realized immediately after the ERP implementation
& it is quite difficult to measure the same.
The participation of users is very important for successful implementation of ERP
projects hence, exhaustive user training and simple user interface might be critical. But
ERP systems are generally difficult to learn (and use).
There may be additional indirect costs due to ERP implementation like new IT
infrastructure, upgrading the WAN links, etc.
Migration of existing data to the new ERP systems is difficult (or impossible) to achieve.
Integrating ERP systems with other stand alone software systems is equally difficult (if
possible). These activities may consume a lot of time, Money & resources, if attempted.
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ERP implementations are difficult to achieve in decentralized organizations with
disparate business processes and systems.
Once an ERP systems is implemented it becomes a single vendor lock-in for further
upgrades, customizations etc. Companies are at the discretion of a single vendor and may
not be able to negotiate effectively for their services.
Evaluation prior to implementation of ERP system is critical. If this step is not done
properly and experienced technical/business resources are not available while evaluating,
ERP implementations can (and have) become a failure.
Integration of truly independent businesses can create unnecessary dependencies.
Extensive training requirements take resources from daily operations.
Due to ERP's architecture (OLTP, On-Line Transaction Processing) ERP systems are not
well suited for production planning and supply chain management (SCM).
Harmonization of ERP systems can be a mammoth task (especially for big companies)
and requires a lot of time, planning, and money.
Recognized ERP limitations have sparked new trends in ERP application development.
Development is taking place in four significant areas: more flexible ERP, Web-enabled ERP,
inter-enterprise ERP, and e-business suites.


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Proprietary ERP Software List
1C:Enterprise from 1C Company
24SevenOffice Start, Premium, Professional and Custom from 24SevenOffice
abas Business Software from ABAS Software AG
Access SupplyChain from the Access Group
Activant acquired by Epicor
Acumatica Cloud ERP from Acumatica
AddonSoftware from BASIS International
Agresso Business World from Unit4
AIVA 9001 from AIVA SISTEMA
AXIS ERP from Consona Corporation
BatchMaster ERP from BatchMaster Software
CGI Advantage from CGI Group (formerly American Management Systems)
CGram Enterprise from CGram Software
Cimnet Systems from Consona Corporation
Ciright ERP from Ciright Systems
COA Solutions Ltd - Smart Business Suite
Coda Financials from Unit4
Comarch Altum from Comarch
Comarch Semiramis from Comarch
Compass ERP from Transtek
Compiere professional edition from Consona Corporation
DEACOM ERP from Deacom
ebizframe ERP from Eastern Software Systems
EFACS from Exel Computer Systems and RAD Software.
Encompix ERP from Consona Corporation
ENFOS
EnterpriseIQ from IQMS
Log-net from LOG-NET, Inc.
Maximo (MRO) from IBM
Made2Manage ERP from Consona Corporation
MECOMS from Ferranti Computer Systems
Microsoft Dynamics AX (formerly Axapta) from Microsoft
Microsoft Dynamics GP (formerly Great Plains) from Microsoft
Microsoft Dynamics NAV (formerly Navision) from Microsoft
Microsoft Dynamics SL (formerly Solomon) from Microsoft
Momentum from CGI Group
mySAP from SAP
MyWorkPLAN from Sescoi
NAV-X from Microsoft and NAV-X LLC
NetSuite from NetSuite Inc.
Openda QX from Openda
OpenMFG from xTuple
Opera (I, II and 3) from Pegasus Software
Oracle E-Business Suite from Oracle
Oracle Fusion from Oracle
OSAS from Open Systems Accounting Software
PeopleSoft from Oracle
Plex Online from Plex Systems
ProfitKey from ProfitKey International
Pronto Software from Pronto Software
Prophet 21 from Epicor
Quintiq
QAD Enterprise Applications (formerly MFG/Pro) from QAD Inc
Ramco Enterprise Series 4.x from Ramco Systems
Ramco e.Applications from Ramco Systems
Ramco On Demand ERP from Ramco Systems
Rapid Response Manufacturing from ProfitKey International
TeamWox from MetaQuotes Software corp.
Sage PFW ERP from Sage Group
Sage Pro ERP from Sage Group
Sage 100 ERP (formerly Sage ERP MAS 90 and 200) from Sage Group
Sage 300 ERP (formerly Accpac) from Sage Group
Sage 500 ERP from Sage Group
Sage ERP X3 from Sage Group
SAP Business All-in-One from SAP
SAP Business ByDesign from SAP
SAP Business One from SAP
SAP Business Suite from SAP
SohoOS
SYSPRO from Syspro
Tally.ERP 9 from Tally Solutions
Technology One from Technology One
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Epicor Enterprise from Epicor
Epicor ERP from Epicor
Retail ERP from Erply
Exact MAX from Exact Software
Exact Macola ES from Exact Software
Exact Globe Next from Exact Software
Exact Online from Exact Software
Financial Force ERP from FinancialForce.com
Fishbowl Inventory from Fishbowl
Greentree Business Software from Greentree International
IFS Applications from Industrial and Financial Systems
Ignition MES and OEE Module Inductive Automation
Infor10 Barcode from Infor Global Solutions
Infor10 Discrete iEnterprise (XA) (aka MAPICS) from Infor Global Solutions
Infor10 Distribution Business (aka SX.Enterprise) from Infor Global Solutions
Infor10 Distribution Express (aka FACTS) from Infor Global Solutions
Infor10 ERP Business (aka SyteLine) from Infor Global Solutions
Infor10 ERP Ln (formerly Baan ERP, Baan IV and Triton) from Infor Global Solutions
Infor VISUAL (formerly known as VISUAL Manufacturing, VISUAL Enterprise, Infor VISUAL ERP) from Infor Global Solutions
Infor10 ERP Process Business (aka Adage) from Infor Global Solutions
Infor ERP Blending (aka BLENDING) from Infor Global Solutions
Intacct Intacct and Intacct Accountant Edition
Intuitive ERP from Consona Corporation
JD Edwards EnterpriseOne from Oracle
JD Edwards World from Oracle
Jeeves from Jeeves Information Systems AB
JustFoodERP from IndustryBuilt Software Corp.
kVASy4 from SIV.AG
TradeXpress from TradeCard
TRAVERSE from Open Systems Accounting Software
UFIDA NC from UFIDA
UFIDA ERP-U8 All-in-one from UFIDA
UFIDA U9 from UFIDA
Visibility.net from Visibility
Workday from Workday, Inc.
WorkPLAN Enterprise from Sescoi

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ERP for Information Technology
Enterprise Resource Planning for Information Technology (ERP for IT, or ERP4IT) describes
the automation of information technology (IT). Therefore ERP4IT focuses on the automated IT
itself and not on the automation of business processes by IT
Accordingly, an entire ERP for IT approach and adequate solutions touch various IT disciplines
such as:
Application Lifecycle Management (ALM)
Project Portfolio Management
IT Governance
IT Service Management (ITSM)
Application Performance Management (APM)
Business Activity Monitoring (BAM)
Enterprise Architecture Management (EAM)
Service-Oriented Architecture (SOA)
IT Asset Management (ITAM)
Information Security
Knowledge Management
Enterprise Content Management (ECM)
Business Service Management (BSM)
The term Enterprise Resource Planning (ERP) might be a little confusing because of the way it is
used for business solutions. Enterprise resource planning software is software that can
comprehensively manage the needs of a major enterprise resource area (money, productive
capital, people, stock of goods or information). Of the major resource areas, only information
(i.e. IT) lacks integrated vendor solutions such as those offered by SAP ERP or Oracle E-
Business Suite for all the other resource areas.

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Respectively, ERP4IT focuses on a broader sense as well as on the comprehensive integration of
different modules like the ERP system do. ERP4IT provides a process centric solution in
complex information structures, implemented in relational databases for the IT organization to
manage the IT itself. Due to the given complexity of the domains involved, IT services should
become transparent and enable the IT to manage organizational and technical dependencies.
ERP4IT shows the cost but also the benefit of the provided services. They should be measurable
and contribute as single parts to the overall business vision and strategy.
With the right foundation on industry standards, a de facto, federated, ERP4IT solution could
start to emerge - that would radically improve the efficiency of enterprise IT
Many companies have a wide range of nonintegrated solutions covering several aspects of IT
Governance such as: Project Management, Portfolio Management, Time Management, Service
Management, Enterprise Architecture, System Management, Security Management or Asset
Management.
Unfortunately, to this day there are no known standards for such an integrative overall solution
that supports what the emerging subject of ERP4IT claims to be. In the past there have been
several proprietary attempts to solve various pieces of the IT puzzle.)
In Europe, ERP for IT and ERP4IT are registered community trademarks of Efecte Corp.


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ERP System Selection Methodology
Software selection starts with an understanding of Critical Success Factors (CSFs) which is
defined as those things an organization we must do well in order to be successful. By facilitating
a management/executive meeting where the CSFs are identified as well as the key requirements
and Key Performance Indicators (KPIs). There are many ways to achieve CSFs but the focus is
through systems.
An ERP system selection methodology is a formal process for selecting an enterprise resource
planning (ERP) system. Existing methodologies include:
SpecIT Independent Vendor Selection Management
Kuiper's funnel method
Dobrin's 3D decision support tool
Clarkson Potomac method
An overview of system selection:
Irrespective of whether the company is a multi-national, multi-million dollar organization
or a small company with single digit million turnover, the goal of system selection is to
source a system that can provide functionality for all of the business processes; that will
get complete user acceptance; management approval and, most importantly, can provide
significant return on investment for the shareholders.
Since the mid-1970s, when there was widespread introduction of computer packages into
leading companies to assist in material requirements planning software companies have
striven, and for the most part succeeded, to create packages that assist in all aspects of
running a business from manufacturing; supply chain management; human resources;
through to financials. This led to the evolution of ERP Systems.
Accordingly, a significant number of packages purporting to be ERP systems have
entered into the marketplace since 1990. There are packages at the upper end of the
market and a vast quantity of other packages that vendors claim to be ERP Systems.
There are also packages that claim to be best of breed for certain processes [such as
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planning] and sold merely as an add-on to an ERP System. The options are many and
this, in reality, creates a problem for the company who has to make a decision.
Attempting to select an ERP system is further exacerbated by the fact that some systems
are geared for discrete manufacturing environment where a distinct amount of items
make up a finished product while others are more suited to process industries such as
chemical and food processing where the ingredients are not exact and where there might
be re-work and byproducts of a process.
In the last decade, companies have also become interested in enhanced functionality such
as customer relationship management and electronic commerce capability.
Given all of the potential solutions, it is not uncommon for companies to choose a system
that is not the best fit for the business and this normally leads to a more expensive
implementation. Thus "ERP Costs can run as high as two or three percent of revenues". A
proper ERP system selection methodology will deliver, within time and budget, an ERP
system that is best fit for the business processes and the user in an enterprise. It is used in
small scale Enterprises for implement their organization towards the MIS.


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Proper System Selection Methodology
To address the common mistakes that lead to a poor system selection it is important to apply key
principles to the process, some of which are listed hereunder:
Structured approach
The first step in selection of a new system is to adopt a structured approach to the process. The
set of practices are presented to all the stakeholders within the enterprise before the system
selection process begins. Everyone needs to understand the method of gathering requirements;
invitation to tender; how potential vendors will be selected; the format of demonstrations and the
process for selecting the vendor. Thus, each stakeholder is aware that the decision will be made
on an objective and collective basis and this will always lead to a high level of co-operation
within the process.
Focused demonstrations
Demonstrations by potential vendors must be relevant to the business. However, it is important
to understand that there is considerable amount of preparation required by vendors to perform
demonstrations that are specific to a business. Therefore it is imperative that vendors are treated
equally in requests for demonstrations and it is incumbent on the company [and the objective
consultant assisting the company in the selection process] to identify sufficient demonstrations
that will allow a proper decision to be made but will also ensure that vendors do not opt out of
the selection process due to the extent of preparation required.
Objective decision process
"Choosing which ERP to use is a complex decision that has significant economic consequences,
thus it requires a multi-criterion approach." There are two key points to note when the major
decision makers are agreeing on selection criteria that will be used in evaluating potential
vendors. Firstly, the criteria and the scoring system must be agreed in advance prior to viewing
any potential systems. The criteria must be wide-ranging and decided upon by as many objective
people as possible within and external to the enterprise. In no circumstance should people with
affiliations to one or more systems be allowed to advise in this regard.

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Full involvement by all personnel
The decision on the system must be made by all stakeholders within the enterprise. "It requires
top management leadership and participation it involves virtually every department within the
company".

Representatives of all users should:
Be involved in the project initiation phase where the decision making process is agreed;
Assist in the gathering of requirements;
Attend the Vendor Demonstrations;
Have a significant participation in the short-listing and final selection of a vendor.