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Presented by

Shivaraj C.
 Background of ERP
 Overview
 Merits & Demerits
 ERP Market
 Implementation
 Example: Tata Power
 ERP Trends
 An ERP solution aims to provide a single
software which will integrate all the
divisions in an organization—
manufacturing, sales, marketing, finance,
HR—and yet fulfill each division’s
information and planning needs.

 Though ERP began as something internal to

the enterprise, today most systems are
Web-enabled, allowing them to extend to
external suppliers and end users.
 Inventory control systems
o 1960s
 MRP (Material requirement planning)
o 1960s, 1970s
o Inventory + purchasing + production scheduling
 MRP II (Manufacturing Resource
o 1970s, 1980s
o MRP + finance, HR
o 1990s
o MRP II + other functions of marketing and sales

Source: Davenport (1998) and Chen (2001)

A/P and
 Based on DBMS platform. A/R
 Eases exchange of Order Mgt
information and data among
ERP Production
different corporate divisions.
 Unites major business
practices within a single Control
group of software modules.
 Modules run on client/server DBMS
 Each module works
separately, performing data
processing functions. DB
Dimension Benefits
Operational • Cost reduction
• Cycle time reduction
• Productivity improvement
• Quality improvement
• Customer services improvement

Managerial • Better resource management

• Improved decision making and planning
• Performance improvement

IT Infrastructure • Build business flexibility for current and

future changes
• IT cost reduction
• Increased IT infrastructure capability

Source: Shang and Seddon (2000)

Dimension Benefits
Strategic • Support business growth
• Support business alliance
• Build cost leadership
• Generate product differentiation
(including customization)
• Build external linkages (customers and
• Worldwide expansion
• Enabling e-commerce
Organizational • Support organizational changes
• Facilitate business learning
• Empowerment
• Build common visions
• Change employee behavior
 Expensive

 Time Consuming

 Needs Proper Implementation

 Security Issues
# Vendor Revenue (mn Market share (%)
1 SAP 4726 28.7
2 Oracle Applications 1674 10.2
3 The Sage Group 1221 7.4
4 Microsoft Dynamics 616 3.7
5 SSA Global 464 2.8

Market share 2005 according to Gartner Dataquest

 Define your goals
 Explore the market
 Go modular
 Participate
 Expect hidden costs
 Analysis
 Modeling of Business Processes
 Integration
 Data Conversion
 Staff Training
 Testing
is Tough


 The Tata Power Company Founded in 1868 by Jamshedji Tata
Limited is India's largest private
sector power utility with an Mumbai, Maharastra, India
installed generation capacity of
over 2300 MW. Key people Prasad Menon, MD
 The Company has emerged as
a pioneer in the Indian power Electricity generation
sector, with a track record of Industry Electricity transmission
performance, customer care Electricity distribution
and sustained growth.
 The thermal power stations of Revenue INR 21.9 billion (FY 2005)
the company are located at
Trombay in Mumbai, Jojobera in
Jharkhand and Belgaum in Net income INR 7.5 billion (FY 2005)

 Tata Power tied up with Tata Technologies for the ERP
implementation. It begun early 2001 and the entire
process is completed by May 2003.
 The implementation of SAP R/3 covered

Complete supply chain Budgeting and monitoring

Centralized procurement Work order management

Vendor management HR organizational and

personnel administration
Complete cash cycle Customer management

Centralized accounting Bill-processing

Project management

Source :
 Benefits happened in four major areas - cycle
time reduction, inventory reduction, manpower
reduction, and provided better quality
Processes Before After
Procurement cycle times (material) 41 days 17 days
Capital Procurement 90 days 14 days
Accounts closing cycle time 38 days 8 days
Billing integrity index 3% 1.83 %
Billing complaints response index 90 % 99 %

Stock reduction by Rs. 28 cr. at major stocking location.

Manpower savings due to centralization and automation processes

Source :
 Small to midsize companies are targeted.

 Adding more decision support tools.

 Reduction in implementation time and cost.

 Adding more functionalities such as CRM and

o ERP II (named by Gartner Group)
 Toward more open, flexible Internet-based
technologies (e.g., XML, HTTP) that makes a firm
o to integrate with other systems in the company, and
o to collaborate with its business partners

 Freestanding components, not interdependent

modules, that enable firms to
o Choose different vendors for each of the components
o Manage the integration of components of multiple