erp basics

UBIS Roadmap 1Confidential All Rights Reserved Ernst & Young 2009

ERP Basics

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EOrganisation wide

Across all geographic & functional divisions

R PAll Resources

Man

Money

Material

Machines

Planning

Means looking at the long term view rather than just current

Enterprise Resource Planning (ERP)


Introduction to ERP

An ERP is a packaged business software system that allows

organization to

Automate and integrate the business processes

Share common data and practices across the enterprise

Produce and access information in a real time mode

Lays the foundation for intelligence, integration, extended

enterprise

Forms the basis for business growth and expansion

Enterprise Resource Planning

Most of the products are internet enabled

ERP systems typically feature workflow management, intelligence

and controls

Componentized architecture

Industry specific products are the reality

Fast becoming extended enterprise applications

E-business has made procurement and CRM as competitive edges

The present picture

ERP packages have evolved over decades and are currently classified through international research

Tier 1: Large enterprise, large user base, multi site, multi national implementation, group companies, complex business architecture, more inclusive products (SAP,

Oracle (+JD Edwards) , BaaN, Microsoft dynamics AX is in transition)

Tier 2: Limited sites and companies, less user base, module and industry focused products in mid-tier, limited geographical reach (QAD, Orion, Microsoft NAV,

Epicor Vantage, Marshall, IFS, Mfgpro)

Tier 3 & 4: Single site, accounting packages, start ups (Microsoft GP, Accpac, Peach tree)

Tier classification


An ERP system is a packaged business software system that allows an organization to:

What is ERP?

Automate and integrate the majority of its business processes

Share common data and practices across the entire enterprise

Produce and access information in a real-time environment


ERP is a combination of business management practice and technology, where Information technology integrates with organization's core business processes to enable the achievement of specific business objectives. It is used to manage and coordinate the resources, information, and functions of a business from integrated business application.

All the departments are being served by the same integrated application through one point of entry. Information need only be entered or updated once, reducing errors, time and labor for reports, analysis, and planning and program management. Ultimately, time and resources are shifted to innovation, problem solving and enhances service to customers rather than inputting, processing, organizing and verifying, leading to greater efficiency and saving potential.

Complete Suite of integrated application

Financial & Accounting Materials Management Production Planning Order Entry Purchasing Financial Control Distribution/Logistics Asset Management Quality Management Human Resource Management R&D Management

Single Database

Same Master data objects

Data integrity

Data sharing

Modular Structure

Similar Interfaces

Cross functional Reports

Cross functional Tracking

Cross functional workflows

Finance

HR

Purchase

Inventory Sales

ArchitectureLegacy Applications Enterprise Resource Planning

Function specific Application Different Technology No integration Redundant Data Entry

Function Specific Modules Modules are fully integrated Same technology platform All modules use same master data Data Sharing

What is ERP?


Key dimensions of ERP

Reference data

One time entry

Non-transactional in nature

Key to the operation of business

Example: Item, Employees, Suppliers

Masters

Day to day entries

Refers master data

Example: Purchase Order, Goods

receipt note, Delivery Note

Transactions

Quick Search

Key (Input Parameter) Driven

Examples : Item Status Query,

Purchase Order Status

Query

Routine set of procedures to convert one

form to another,

Example : Month end Processing, Goods

Receipt Note Processing, Loan

Processing

Processing

The purpose is to inform

Example : Slow moving item report,

Monthly Receipts

Report

M

P

T

R

Q

The purpose provide hard copy to

acknowledge.

Example : Goods receipt note,

Payment voucher

Document PrintD


Sample (Procurement) flow in ERP

Comparison Report

Material Requisition Purchase Requisition Enquiry to Supplier

Quotation from SupplierPurchase OrderGoods Receipt Note

Inspection

Purchase Order Document PrintGRN Document Print

Payment Voucher(Accounts Payables)

Excess/Shortage/Quality Report

Payment Voucher

Approval Approval

ApprovalApproval

ApprovalProcessing

Item Master

VendorMasterItem Status

Create/Refer

Create/ReferQuery

GL

(Inventory goes up)Liability for supplier is created

Approval

Liability is paid

Approval

M Q M

T

T T T

T T

D D R

T

R D

TP

Transactional Flow


Key benefits

Standardization of master data

Reduced redundant entries

Data sharing between modules

Increased access to available data for

decision making

Information

Cross functional MIS reporting

Cross functional performance

measurement

Better reporting, e.g. purchase

forecasting

Reports

Provides greater and effective control.

Approval and authorizations

Greater accuracy of information.

Controls

Timely information

Searching is faster

Faster response and follow up

Alerts, e.g. stock below lead time

quantity

Time

Improved vendor performance

Reduced response time

Improved efficiency

Increased flexibility

Improved over all accuracy

Intangible

Streamlined processes and workflows

Reduced direct cost

Reduced quality cost

Improved productivity levels

Improved resource utility

More


Establish steering committee

Allocate resource

Share, communicate and market the

initiative within the company

Initiate & Plan

Collect data on current processes and

systems (ASIS preparation)

Changes to business process

Data Coding and Classification

Highlight objectives and issues

Document/reports gathering, submit

correction

Product & Process Mapping

Support the implementing partner during

configuration process

Prepare participants for training

Prepare business test cases .

Configuration

Data Cleansing

Perform readiness check

Cut over preparation

Formulate go-live strategy

Go Live

Conduct user acceptance testing

IT team to perform network testing

Testing

Champions and support team of

functional and IT

Ensure availability of the participants

Training

ERP Implantation & Expectations

Expectations from participating teams & users


Challenges

Inability to foresee all project related

risks.

Installing appropriate review

mechanism.

Risk

Unrealistic project plan

Initiate & Plan

Challenges

Communicating key expectations

Addressing business requirements with

least application customization

Managing change management

Risk

Poor scoping and documentation

Lack of assessment of process controls

Product & Process Mapping

Challenges*

Risk*

Configuration

Challenges

Timely quality data migration

Installing back-up, contingency and

recovery plans

Risk

Datacenter availability

Completion of sub projects on time.

Go Live

Challenges

Testing all the business scenarios

Following testing plan

Risk

Missing long cycle cases like year ending

Testing

Challenges

Ensuring participants availability

Making users ready for the transformation

Risk

Inadequate training to key users

Improper support from implementer

Training

Key Implementation : Risk and Challenges

*Implementation partner activity


Success factors

Establish Effective and Efficient Business Processes

Balance application functionality and process improvements with appropriate level of internal control

Provide effective application and infrastructure security to enhance business processes while protecting corporate information systems assets

Establish Data Integrity

Provide reliable data for accurate and complete financial reporting

Provide reliable data for sound business decision making

Provide reliable data to ensure the timely and efficient processing of transactions

Establish Financial Controls and Monitoring Procedures

Establish key project objectives

Define KPIs and metrics with clear targets

Quantify expected benefit from implementing an ERP system

Align processes with KPIs to achieve strategic benefits

Maintain costs


Frequently asked questions

How to prepare an organization for ERP implementation?

What is an ERP project team?

Who are the project champions?

What is the role of implementation partner?

What is the role of process-modeling tools ERP implementation?

What are drawbacks of over customization?

Changing business practice to suit the ERP software rather than customizing the software?

How is "data migration" managed for ERP implementation?

What does "going live" mean?

erp basics

Documents

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business growth

complex business architecture

access information

information technology

sharing of information

large enterprise

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