ITM- ASSIGNMENT

BY:SUKRITI SETHI

MBA SEM 1-C

ROLL NO. -135

ERP - DEFINATION
 It is a company-wide computer software system used to manage and coordinate all the
resources, information, and functions of a business from shared data stores.
 ERP relates to the integrated software infrastructure that supports the entire company
business process.
 ERP refers to a view of a company and all its parts as connected whole, rather than small silos
of activity

The term of ERP is originally derived from Manufacturing Resource Planning (MRP II) and Material
Resource Planning (MRP). MRP evolves into ERP when capacity planning activity and routing
become a part of the standard software activity.ERP system typically handles company’s accounting,
logistic, distribution, shipping, manufacturing, procurement and sales order.ERP software can aid in
the control of many business activities such as sales, marketing, finance management, inventory
management, delivery, production, quality management and so on.

Features of ERP

Some of the major features of ERP and what ERP can do for the business system are as below:

o ERP facilitates company-wide Integrated Information System covering all functional

areas like Manufacturing, Selling and distribution, Payables, Receivables, Inventory,
Accounts, Human resources, Purchases etc.,
o ERP performs core Corporate activities and increases customer service and thereby
augmenting the Corporate Image.
o ERP bridges the information gap across the organisation.
o ERP provides for complete integration of Systems not only across the departments in
a company but also across the companies under the same management.
o ERP is the only solution for better Project Management.
o ERP allows automatic introduction of latest technologies like Electronic Fund
Transfer(EFT), Electronic Data Interchange(EDI), Internet, Intranet, Video
conferencing, E-Commerce etc.
o ERP eliminates the most of the business problems like Material shortages,
Productivity enhancements, Customer service, Cash Management, Inventory
problems, Quality problems, Prompt delivery etc.,
o ERP not only addresses the current requirements of the company but also provides
the opportunity of continually improving and refining business processes.
o ERP provides business intelligence tools like Decision Support Systems (DSS),
Executive Information System (EIS), Reporting, Data Mining and Early Warning
Systems (Robots) for enabling people to make better decisions and thus improve their
business processes
 
Components of ERP

To enable the easy handling of the system the ERP has been divided into the following Core
subsystems:

o Sales and Marketing

o Master Scheduling
o Material Requirement Planning
o Capacity Requirement Planning
o Bill of Materials
o Purchasing
o Shop floor control
o Accounts Payable/Receivable
o Logistics
o Asset Management
o Financial Accounting

ROLE of ERP software for businesses:

ERP softwares business solutions are designed for companies that work in a wide variety of
areas. IT combines a large number of different elements into a single unit. Three of the most
important ERP tools available today are manufacturing, human resources, and finance.
 The finance tools allow companies to successfully maintain their financial information like
that of the assets, accounts, budgets and cash. ERP can also assist a company in managing
internal as well as external factors affecting it. A company that uses ERP financial products
can save a great deal of money over the long term, the reason being, the productivity of the
organization will be improved. Enterprise Resource Planning is instrumental in getting rid of
time consuming activities as paper management. A company is able to study their processes,
earnings, and performance by merging their operational information with their financial
information. Once this information is connected together, a company can become more
competitive and productive. Synergy is an important part of ERP solutions. The concept of
combining multiple processes into a single whole will allow the company to become
successful in the long term.
 In addition to finance and business processes, it is also important to look at materials
maintenance. Enterprise Resource Planning will allow a company to successfully automate
the process of buying materials and maintaining them. There are modules that track the
supplies that are purchased and can also make calculations about how these materials should
be distributed. It also becomes possible for a company to predict the demand of the market
based on history, economic statistics, and data from their employees. They can even decide
when a product should be produced, and they can do this based on the raw material that is
available.

MODULES

Production Planning and Control :

 Planning
o Resource planning
o Material planning
o Manpower planning
 o Machine planning
 Production
o Monitor WIP – work in progress
o Monitor production phasewise for every unit
o Line rejections
o Monitor daily production
o Daily production and dispatch report
o Monitor standard vs actual consumption

Sales and Marketing :

 Product Information:
o Competitor Database
o Comparison Chart
o Competitor Database
o Comparison Chart
o Features
o Price
o General
o Discount Structure
o Schemes
 Sales Force Management
o Executive Management
o Activities Tracking, Agenda & Schedule, Daily Call Report
o Conveyance Maintenance
o Training Details
o Territory Management >> Lead Tracking >> Target and Incentive Calculation
>> Monitor Distribution Network (Product, Distributor, Zone)
o Monitor Sales Budget
 Client Management
o Prospective
o Existing >>Quotation and Proposal >> Installment Plan >> Terms and
Condition >> Order Receipt >> Order Processing >>Check Stock Status >>
Monitor Dispatches Pending / Overdue >> Dispatch Material >> Raise Invoice
>> Monitor Sales Quantity and its Valuation
 Credit and Collection:
o Monitor Payments and Receipts >> Daily, Weekly, Monthly, Quarterly, Yearly
o Advance / Pending / Overdue
o Cheques Bounced

Cost of ERP

The total cost of ERP ownership includes the costs of packaged software, hardware, professional
services (for ongoing maintenance, upgrades and optimization) and internal costs. Based on the ERP
survey conducted by Meta Group in 2002, the average cost of ERP ownership was $15 millions
ranging from half millions to $300 millions. The average cost per user per year could be as high as
$20,000.

Costs of Software

The cost of packaged ERP software depends on the scope of implementation (the # of ERP modules
and the number of end users), complexity of software and ERP vendors. ERP software that involves
the integration with external business entities generally costs more. ERP vendors offer discount for
organizations who invest in a suite of ERP software systems. Mid-sized organizations typically
commit a few million dollars to packaged ERP software.

Costs of Hardware

Implementation of ERP systems routinely requires purchase of new computer hardware, systems
software, network equipment and security software. The costs of hardware varies in a wide range
dependent on the scope of implementation and platforms. The hardware typically costs about half
million dollars for mid-sized organizations that implements ERP systems.

Costs of Professional Services

Customization The big chunk of costs of Professional Services is customization. The cost of
customization can easily out-run the cost of packaged ERP software, but it is the customization of
ERP software that makes an ERP a success or a failure.

Integration ERP systems won't demonstrate its full potentials unless they are properly integrated with
other enterprise software application:

1. the integration of various functional ERP modules,

2. the integration of ERP with other e-business software applications, and
3. the integration of ERP with legacy systems.

Data Conversion The cost of data conversion depends on the format and the media that store the
historical data. Data conversion from legacy systems to RDBMS is a time-consuming process. Data
conversion may lead to further data gathering to fill the missing links in data requirements.

Testing ERP systems are thoroughly tested before they go into production. ERP testing includes unit
testing, component testing, regression testing, performance testing and user acceptance testing.

Training Workflow and UI design in ERP software are more complex than average business software.
ERP training is expensive because workers almost invariably have to learn a new set of processes of
doing their daily tasks besides learning how to use the ERP software. To reduce the cost of ERP
training and to ease the transitions from old processes to new, organizations often seek the help from
training companies which are specialized in coaching workers on using ERP software from particular
vendors.
Suppliers of ERP

There are many numbers of ERP suppliers who are very active in the market. Some of the companies
offering renowned international ERP products include:

o Baan
o CODA
o D&B
o IBM
o JD Edwards
o Marcarn
o Oracle
o Peoplesoft
o Platinum
o Ramco
o SAP
o SMI
o Software 2000