Enterprise Resource Planning

What is ERP?

ERP

Lets find out what is ERP in a plain and simple language.

THE TERM ERP

The term “ERP” stands for “Enterprise Resource Planning”

ERP Stands for Enterprise Resource Planning

TYPE OF SOFTWARE

ERP is not a name of any Software , instead it is a class (or type) of Software.

ERP

software

A Brief History of ERP

The term ERP was coined in 1990 by Gartner1, but its roots date to the 1960s. Back then, the concept applied to inventory management and control in the manufacturing sector. By the 1970s, this had evolved into Material Requirements Planning (MRP) systems for scheduling production processes.In the 1980s, MRP grew to encompass more manufacturing processes. By 1990, these systems had expanded beyond inventory control and other operational processes to other back-office functions like accounting and human resources.Today, ERP has expanded to encompass business intelligence (BI) .

FUNCTIONALITYAn ERP software provides an end to end information management solution for a company. The Software could be used by all departments of the company to manage the information.

company

Enterprise Resource Planning Software

Department 1 Department 2 Department 3

company

OBJECTIVE

The goal is that right information is available to the right person at the right time.

The right information is available to the right person at the right time.

Goal

BUSINESS AREASERP software integrates all areas of operations

Including:• Product planning• Manufacturing Process• Sales• Marketing• Finance• Human Resources• Procurement

Product planning

Manufacturing Process sales marketing

Finance Human Resource

Procurement

Why ERP Systems are Important

• Saving Money• Improved Collaboration• Better Analytics• Improved Productivity• Happier Customers• Simplified Regulatory Compliance• Improved Inventory and Production Management

MODULAR AND INTEGRATED

An ERP software is typically modular but integrated .Meaning it consists of multiple module that are connected to each other.

Module 2

Module 3

Module 1

FOCUS OF A MODULE

Each module is focused on one area of business processes e.g. finance, human resources etc.

Product Planning Manufacturing Process

sales Marketing

Finance Human Resource Procurement

Module 1 Module 2 Module 3 Module 4

Module 5 Module 6 Module 7

COMMUNICATION AMONG MODULES

Module 2Module 1

Table

When we say modules are integrated that means:• A modules could share information stored in another modules

e.g. list of suppliers etc.• Also information could flow from one module to the other e.g.

accounting entries etc.

Read

Module 1

Table

Module 2

TableTransfer

MANAGEMENT REPORTINGSince modules are connected, management of a company could run reports on aspects of the business to get a complete view of activities. Reports help executives make strategic decisions.

Reports

Module 1 Module 2

Module 3

management

LICENSING

Modules could be individually purchased based on what best meets the specific needs and technical capabilities of the company.

Module 1 Module 2 Module 3 Module 4

TYPE OF USERS

The end users of ERP software could be divided into these groups:• Business Users: Performs day to day

operations e.g. data entry, operational reports etc.

• Management and Executives: Run reports and perform inquiries that would help them in decision making.

IMPLEMENTATIONTerm “Implementation” is used to make the ERP software ready to be used by the company.

Study Requirements Perform Setup Customize Software

Install Software

IMPLEMENTATION PROCESS

• Study the business requirement .Find out how the ERP system should be behaving.

• Setup and Configure the software such that it starts working as per business requirements. By this time the software must be installed and available for setup.

• Fill the gaps between business requirements and the functionality offered by ERP software.

INDUSTRY BEST PRACTICES

The software is configured to honor company’s current business processes. However the company also alters processes where necessary, to bring them align to industry best practices. Company do take the implementation of ERP as an opportunity to streamline their business process.

ERP IMPLEMENTATION PROJECT

A project is initiated to perform ERP implementation.

ERP configuration Project

ROLES IN A PROJECT

Various roles play part in a typical ERP project. A role may be filled by one or more people depending on the needs. Sometimes one person may be given more than one roles.

Network Administrator

Operating System

administrator

Database Administrator

Project Manager

ERP System administrator

Functional Consultant

Technical Consultant

Business Analyst

DATABASE MANAGEMENT SYSTEM

ERP software connects to a database software at the back end. The data is managed in the database.

ERP Application Database Management system

DATABASE ADMINISTRATOR

Database Administrator also known as DBA is the person who looks after the health of the database. He also performs installation of ERP software.

Database Administrator(DBA) looks after

Database Management System

ERP SYSTEM ADMINISTRATOR

ERP system administrator is the person who looks after the health of the ERP software. ERP system administrator looks after

ERP Application

OPERATING SYSTEM

Both database and ERP software runs on an operating system like Linux, Unix, or Windows.

operating system

ERP Application Database Management System

OPERATING SYSTEM ADMINISTRATOR

Operating system administrator is the person who looks after the health of the operating system .

networkMachine 1 Machine 2

NETWORK ADMINISTRATOR

Network Administrator is the person who looks after the health of the network connecting all the computers together. Network Administrator looks after

Network

FUNCTIONAL CONSULTANT

Functional Consultant gathers the business requirements and performs ERP setup accordingly. Functional Administrator configures

performs

Requirement Gathering

ERP system

BUSINESS ANALYST

Business analyst is the person who is an expert of business knowledge. He is in touch with the business users and verifiers.

FUNCTIONAL GAPS

In almost all the cases some business requirements are so unique that the ERP system has no built-in functionality to handle those unique cases. The term “Gap” is used for such business requirements.

differences

Business requirement ERP functionality

Gaps

mapping

CUSTOMIZATIONS

This is where technical consultants comes in. They modify the software by going under the hood and add the missing functionality e.g. new reports are created in the system that were needed by the business. This step is called customization or extension.

Gaps Custom solutions

COMMUNICATON AMONG APPLICATION

In most cases ERP system talks to other third party system running with the same company or in an external company e.g. suppliers and customers.

ERP system Third Party Applicationinterfaces

INTERFACES

Technical consultants assists in writing programs that help communicate information back and forth between the ERP software and the third party software either within the company or outside it. Programs that aids communication between two software is called “interfaces”.

PROJECT MANAGER

Project manager is the person who is managing the project. All other team members report to the project manager during the project. For example, a database administrators will be reporting to the manager or direction of the IT department as well as to the project manager during the life of the project.

WARRANTY AND SUPPORT PERIODS

After the go-live, warranty period begins. Any problems that come up will be handled by the implementation team.

Implementation Go live Warranty period Regular support period

Support provided

by project team

Support provided

by support

staff

time

TRAINING

Consultants would provide training to the new person or team who will be providing support.

Functional consultants

Future support staff

Performs knowledge transfer to

Three Tier Environment

One computer hosts the application and another one hosts the database. Users connect to the computer running ERP system through their browsers, this called a three tier environment.

network networkpc

Application server

Database server

Environments

ERP systems usually keep 3 sets of environments:• Development• Test• Production

development test production

TRANSPORTING SETUP

The configuration is performed in the development environment first by the team, copied over the test environment where user perform testing. The term used for copying configuration from one environment to other is “transport”.

STAGE ENVIRONMENT

REFRESH

All environment are periodically refreshed with recent production data.

PROJECTS DOCUMENTATIONS

Documents are created through the project and are stored in the central place for the project.

STATUS REPORTS

Document: period status reports by all.Contents: what was completed last week and what is due next week.

IMPLEMENTATION METHODOLOGY

A methodology dictates:• Which document will be created at which

point.• How the documents will look like.• What will be the sequence of configurations

tasks.

IMPLEMENTATION METHODOLOGY AND PROJECT PLAN

• The steps are incorporated in desired sequence. As dictated by the methodology. In the over all project plan managed by project manager.

SIGN-OFF

Written sign-offs are required from the business at various stages e.g. before moving configuration from test to production.

TYPES OF TESTING

UNIT TESTING

Unit testing refers to testing of one module individually.

SYSTEM TESTING

System testing refers to the testing of the whole system(all module together)

USERS ACCEPTANCE TESTING

Users Acceptance Tasting is a mandatory testing. Here users drive the system. The consultants train and guide the users. The testing takes places in test environment dedicated for the purpose.

PERFORMANCE TESTING

In some projects where heavy data is involved, a separate performance testing is performed. Performance testing could take place in the same test environment when UAT is finished, or on a separate environment.

LEADING ERP SOFTWARELeading ERP products are:• SAP ECC from SAP AG• Oracle E-Business suite from oracle corporation• PeopleSoft from oracle corporation• J D Edwards from oracle corporation• Great plains

THE END