Enterprise Resource Planning : A Managerial & Technical Perspective [1 ed.] 9788122422986, 9788122420135

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ISBN (10) : 81-224-2298-5 ISBN (13) : 978-81-224-2298-6

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Dedicated to My Beloved Mother

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Preface Enterprise Resource Planning (ERP) is primarily an enterprise-wide system, which encompasses corporate mission, objectives, attitudes, beliefs, values, operating style and people who make the organization. In recent times more and more organizations have started looking into ERP packaged solutions. The reasons for this shift are the inadequacy of the existing systems to address the changing business requirements and the organizations’ need to focus on the core business in today’s competitive environment. This textbook Enterprise Resource Planning (ERP) - A Managerial and Technical Perspective will address both managerial issues and technical issues along with some case studies. ERP is a packaged software and it needs to be addressed both from the view point of technology and of management. There are only a few text books on ERP and all these textbooks are presented only from the managerial point of view. This motivated us to prepare this textbook which focuses ERP both from the managerial and the technical points of view. This is the significant feature of the book. This textbook is presented as follows. There are twelve chapters. They are: Evolution of ERP, ERP Modules, ERP Software Selection, ERP Implementation Lifecycle, Impact of Operating System on ERP, Supply Chain Management (SCM), Customer Relationship Management (CRM), .NET Technology, an overview of ERP Vendors, Business Modeling using UML and ERP Case Studies. The first chapter provides a brief introduction to ERP. Then the evolution of the ERP system is discussed. Then the various modules in an ERP software package, the various phases in ERP implementation, the need for an operating system to provide an efficient integrated system, the scope of Supply Chain Management in an integrated system, the concept of Customer Relationship Management, building packaged software using .NET technology, constructing business models using Unified Modeling Language are all presented. A few case studies are also included to enable the readers to get better understanding and better insight into the subject. Each chapter consists of review questions which are left to the readers as an exercise. Due care is taken to figure, all the concepts and features behind ERP in this textbook. Being the first edition, this book is prepared and presented in such a way that everybody, even a beginner, will find it easy to have a quick glimpse of the various concepts associated with ERP. The book is targetted at the undergraduate and post-graduate students of any branch, those who aspire to enter the field of Information Technology (IT) and get positioned as IT solution architect, Business Analyst, Functional and Technical Consultants etc. This textbook will cover the syllabus of the subject Enterprise Resource Planning (ERP) prescribed to the students of the following courses: B.E/B.Tech/M.Sc/MBA/MCA/B.Com/M.Com. A list of books, research papers and websites that helped us to prepare this textbook is given in the references. Though great care has been taken in editing this book, I would wholeheartedly accept

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suggestions for improvement offered by the readers. If you have the patience to go through all the chapters, I am hopeful that the purpose of the book would be served. My wholehearted thanks and acknowledgements are due in no small measure to Dr. (Mrs.) Radha Thiagarajan, Chairman, Thiagarajar College of Engineering (TCE), Mr. T. Kannan, Vice-Chairman & Correspondent of the College, Dr. V. Abhaikumar, Principal, Dr. R. Rajaram, Head of the Department of Computer Science & Engineering and my colleagues of the TCE, friends and family. I am thankful to Professor V. Sankarasubramanian, Head of the Department of English, The Madura College, Madurai, for his invaluable comments and suggestions during the preparation of this book. I sincerely acknowledge the support extended by my father, who is the motivating force behind this project. Finally, I am thankful to New Age International (P) Limited, Publishers, New Delhi, for their support and encouragement. S. Parthasarathy

Contents Preface

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Chapter-1 Introduction to ERP ...................................................................................... 1 1.1 Benefits of an ERP System .......................................................................................................................2 1.2 Limitations of the ERP System ...............................................................................................................5 1.3 What do ERP systems cover? ..................................................................................................................5 1.4 Challenges for Small and Midsize businesses today ..........................................................................7 Chapter-2 Evolution of ERP ........................................................................................... 9 2.1 Manufacturing Strategies ...................................................................................................................... 10 2.2 Material Requirements Planning (MRP) ............................................................................................ 10 2.3 Manufacturing Resource Planning (MRP II) ..................................................................................... 12 2.4 Conceptual Framework of ERP ............................................................................................................ 14 Chapter-3 ERP Modules ................................................................................................ 17 3.1 Finance Module ...................................................................................................................................... 18 3.2 Human Resource Management (HR) Module ................................................................................... 21 3.3 Materials Management (MM) Module ............................................................................................... 23 3.4 Sales and Distribution Module ............................................................................................................ 26 Chapter-4 ERP Software Selection .............................................................................. 31 4.1 Issues in ERP Software Selection ......................................................................................................... 31 4.2 ERP Software Selection Criteria .......................................................................................................... 31 4.3 Methods in ERP Software Selection ................................................................................................... 32 4.4 Cost Benefit Analysis ............................................................................................................................. 32 4.5 ERP Software Selection Process ........................................................................................................... 32 Chapter-5 ERP Implementation ................................................................................... 35 5.1 Approaches to Study ERP Implementation ....................................................................................... 36 5.2 Different Perspectives in ERP Implementation ................................................................................. 36 5.3 Minimizing Customization .................................................................................................................. 38 5.4 Characteristics of ERP Systems ............................................................................................................ 39 5.5 Critical Success Factors for ERP Implementation ............................................................................ 40 5.6 Astonishing Facts in ERP Implementation ........................................................................................ 40 5.7 ERP Implementation Strategy .............................................................................................................. 41 5.8 Phases in ERP Implementation ............................................................................................................ 43 5.9 Benefits Realization in ERP Implementation ................................................................................... 47 5.10 Change Management Issues ............................................................................................................... 47

(viii) Chapter-6 Impact of Operating System on ERP ......................................................... 50 6.1 Functions of an operating system ........................................................................................................ 50 6.2 Unix and Linux – An Overview ............................................................................................................ 51 6.3 Linux in an ERP World .......................................................................................................................... 51 6.3.1 ERP Users in Linux Environment ............................................................................................ 53 6.4 How ERP vendors view different operating system? ....................................................................... 54 6.5 Migrating the ERP from one operating system to another ............................................................. 55 6.6 Manag ing new ERP environment ........................................................................................................ 56 6.7 Impact of operating system on ERP .................................................................................................... 56 Chapter-7 Supply Chain Management (SCM) ............................................................. 59 7.1 Objectives of Supply Chain Management ......................................................................................... 59 7.2 Computer-Integrated Supply Chain Management Systems ........................................................... 60 7.3 CAD and CAM ........................................................................................................................................ 60 7.4 Elements in Supply Chain Management ............................................................................................ 61 7.5 Roadmap to Better Supply Chain Management ............................................................................... 61 7.6 Decision Making in Supply Chain Management ............................................................................. 62 7.7 Supply Chain Management Model ..................................................................................................... 63 7.8 Impact of ERP on SCM .......................................................................................................................... 64 7.9 ERP, SCM and E-Business .................................................................................................................... 65 7.10 SCM and IT ............................................................................................................................................. 65 7.11 ERP and SCM - A Comparison ............................................................................................................ 66 Chapter-8 ERP and CRM ............................................................................................... 68 8.1 Introduction to CRM .............................................................................................................................. 68 8.2 Need for CRM .......................................................................................................................................... 69 8.3 Components of CRM ............................................................................................................................. 70 8.4 Different Dimensions of CRM .............................................................................................................. 71 8.5 CRM Environment .................................................................................................................................. 72 8.6 Data Mining and Data Warehousing in CRM ................................................................................... 73 8.7 Features of Dynamic CRM system ...................................................................................................... 75 8.8 Features of CRM from SAP ................................................................................................................... 76 8.9 An ERP- CRM Business Solution ....................................................................................................... 77 Chapter-9 ERP and .NET............................................................................................... 81 9.1 .NET Technology -- An overview ........................................................................................................ 82 9.2 Why .NET software is better software? ............................................................................................... 82 9.3 What makes a good ERP system? ........................................................................................................ 83 9.4 The fusion of .NET technology and ERP ........................................................................................... 84 9.5 Impact of .NET technology on ERP .................................................................................................... 85 9.6 An ERP product built using .NET - A Discussion ............................................................................ 86 Chapter-10 ERP Vendor ................................................................................................ 91 10.1 SAP ........................................................................................................................................................ 91 10.2 Oracle Corporation ............................................................................................................................. 94 10.3 J.D. Edwards ......................................................................................................................................... 94 10.4 The Baan Co. ....................................................................................................................................... 94 10.5 System Software Associates (Ssa) .................................................................................................... 94 10.6 MK Group/Acacia Technologies ..................................................................................................... 95 10.7 JBA International ................................................................................................................................ 95

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Marcam Corp./Mapics Inc. ................................................................................................................ 95 Intentia .................................................................................................................................................. 96 QAD Inc. ............................................................................................................................................... 96 Intuitive Manufacturing Systems .................................................................................................... 96 Compiere .............................................................................................................................................. 97 Ramco Systems ................................................................................................................................... 97

Chapter-11 ERP Case Studies ..................................................................................... 101 Chapter-12 Business Modeling Using UML ............................................................... 120 12.1 Business Modeling ........................................................................................................................... 120 12.2 Business Modeling with the UML ................................................................................................ 121 12.3 UML Business Use Case .................................................................................................................. 122 12.4 UML Business Activity Diagram ................................................................................................... 123 12.5 UML Class Diagrams ....................................................................................................................... 123 12.6 UML Sequence Diagram ................................................................................................................. 124 12.7 Application ........................................................................................................................................ 124 Acronyms and Abbreviations ..................................................................................... 127 Glossary ....................................................................................................................... 131 References ..................................................................................................................... 137 Index

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1 Introduction to ERP OBJECTIVE • To introduce the concept of Enterprise Resource Planning (ERP). • To describe benefits of ERP. • To describe the limitations of ERP. • To describe “What an integrated system is.”

EXPECTED OUTCOME The readers will be able to:

ü Understand the concepts behind an ERP system. ü Visualize ERP as packaged software. ü Understand the information integration through the ERP system. Enterprise Resource Planning Software or ERP doesn't live up to its acronym. Forget about planningit doesn't do much of that-and forget about resource, a throwaway term. But remember the enterprise part. This is ERP's true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments' particular needs. That is a tall order, building a single software program that serves the needs of people in finance as well as answering the needs of the people in human resources and in the warehouse. Each of those departments typically has its own computer system optimized for the particular ways in which the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with one another. That integrated approach can have a tremendous payback if companies install the correct software. Enterprise Resource Planning (ERP) covers the techniques and concepts employed for the integrated management of businesses as a whole, from the viewpoint of the effective use of management resources, to improve the efficiency of an enterprise. ERP packages are integrated software packages that support these ERP concepts. In the beginning, they were targeted at the manufacturing industry, and consisted mainly of functions for planning and managing core businesses such as sales management, production management, accounting and financial

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affairs, etc. However, in recent years, adaptation not only to the manufacturing industry, but also to diverse types of industry has become possible and the expansion of implementation and use has been progressing on a global level. ERP software standardizes an enterprise's business processes and data. The software converts transactional data into useful information and collates the data so that they can be analyzed. In this way, all of the collected transactional data become information that companies can use to support business decisions. The perspective that ERP software is simply a means of cutting cost is still prevalent. As a result, organizational resistance to ERP implementation has often been high, and not all ERP implementation programs delivered the promised enterprise improvements.

1.1 BENEFITS OF AN ERP SYSTEM Installing an ERP system has many direct and indirect advantages. The direct advantages include improved efficiency, information integration for better decision making, faster response time to customer queries, etc. The indirect benefits include a better corporate image, improved customer goodwill, customer satisfaction, and so on. The following are some of the direct benefits of an ERP system: • Business Integration • Flexibility • Better Analysis and Planning Capabilities • Use of Latest Technology Integration is the first and most important advantage of implementing ERP. The reason why ERP packages are considered to be integrated is the automatic data updation that is possible among the related business components. Since conventional company information systems were aimed at the optimization of independent business functions in business units, almost all of them were weak in terms of the communication and integration of information that transcended the different business functions. In the case of large companies in particular, the timing of system construction and directives differs for each product and department/function and sometimes, they are disconnected. For this reason, it has become an obstacle in the shift to new product and business classification. In the case of ERP packages, the data of related business functions are also automatically updated at the time a transaction occurs. For this reason, one is able to grasp business details in real time, and carry out various types of management decisions in a timely manner, based on that information. The second advantage of ERP packages is their flexibility within the business functions. Different languages, currencies, accounting standards and so on can be covered in one system, and functions that comprehensively manage multiple locations of a company can be packaged and implemented automatically. To cope with company globalization and system unification, this flexibility is essential, and one can say that it has major advantages, not simply for development and maintenance, but also in terms of management. Another advantage is the boost to the planning functions. By enabling the comprehensive and unified management of related business and its data, it becomes possible to fully utilize many types of decision support systems and simulation functions. Furthermore, since it becomes possible to carry out, flexibly and in real time, the filing and analysis of data from a variety of dimensions, one is able to give the decision makers the information they want, thus enabling them to make better and informed decisions. The fourth advantage is the utilization of the latest developments in Information Technology (IT). The ERP vendors were very quick to realize that in order to grow and to sustain that growth, they

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had to embrace the latest developments in the field of Information Technology. Therefore, they quickly adapted their systems to take advantage of the latest technologies like open systems, client/server technology, Internet/Intranet, electronic-commerce, etc. It is this quick adaptation to the latest changes in Information Technology that makes the flexible adaptation to changes in future business environments possible. It is this flexibility that makes the incorporation of the latest technology possible during system customization, maintenance and expansion phases. ERP includes many of the functions that will be necessary for future systems. However, undertaking reforms to company structures and business processes, so as to enable the full use of these major features, is the greatest task for companies that will use them. It is necessary to take note that casually proceeding with the implementation of ERP merely for reasons of system reconstruction is likely to result in turning the advantages into disadvantages. The most important aspect to consider when installing an ERP system in a company is the attitude to reform of the employees at all levels of the company. How managers use information systems and information technology as strategic management methods is likely to become the turning point of the change. Other benefits of an ERP system include reduction of lead-time, on-time shipment, reduction in cycle time, better customer satisfaction, improved supplier performance, increased flexibility, reduction in quality costs, improved resource utility, improved information accuracy and enhanced decisionmaking capability. The elapsed time between placing an order and receiving it is known as the lead-time. It plays a significant role in purchasing and inventory control. In order to reduce the lead-time, the organization should have an efficient inventory management system, which is integrated with the purchasing, production planning and production departments. In this era of just-in-time manufacturing, the knowledge of the exact lead-time for each and every item is of paramount importance for uninterrupted production. For a company dealing with hundreds and thousands of raw materials and components, keeping track manually of the lead-time for each and every individual item is practically an impossible task. Companies must be able to deliver customer-specific products (make-to-order). The ERP systems provide the freedom to change manufacturing and planning methods as needs change, without modifying or reconfiguring the workplace or plant layouts. With ERP systems, businesses are not limited to a single manufacturing method, such as make-to-stock or make-to-order. Cycle time is the time between receipt of the order and delivery of the product. It can be reduced by the ERP systems, but the reduction will be more in the case of make-to-order systems. In the case of make-to-stock, the items are already manufactured and kept in warehouses or with distributors for sale. Here, the cycle time is reduced not on shop floor, but during order fulfillment. In earlier days, even for the make-to-stock items, the cycle time used to be high. This was because the process was manual and if computerized, not integrated. In the case of make-to-order items, the ERP systems save time by integrating with CAD/CAM systems. The creation of an accurate, achievable production schedule requires the availability of both material and capacity. It is useless, and indeed wasteful, to have financial resources tied up in material, if the capacity is insufficient or improperly planned. Waste not only raises costs, it also affects customer service levels and customer good will. The capacity planning features of most ERP systems offer both rough-cut and detailed capacity planning. The system loads each resource with production requirements from Master Production Scheduling, Material Requirements Planning, and Shop Floor Control (detailed capacity planning). The ERP systems also have simulation capabilities that help the capacity and resource planners to simulate the various capacity and resource utilization scenarios and choose the best option.

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ERP systems have proved that they can produce goods at the flexibility of make-to-order approach without losing the cost and time benefits of make-to-order operations. This means that the customer will get individual attention and the features that he/she wants, without spending more money or waiting for long periods. Also, with the introduction of the web-enabled ERP systems, customers can place the order, track the status of the order and make the payment sitting at home. The customer could get technical support by either accessing the company's technical support knowledge base (help desk) or by calling the technical support. Since all the details of the product and the customers are available to the person at the technical support department, the company is able to provide better support to the customer. All this is possible because of the use of the latest developments in Information Technology by the ERP systems, and this will go a long way in improving customer satisfaction. ERP systems provide vendor management and procurement support tools designed to coordinate all aspects of the procurement process. They support the organization in its efforts to effectively negotiate, monitor, and control procurement costs and schedules while assuring superior product quality. The supplier management and control processes comprise of features that will help the organization in managing the supplier relations, monitoring the vendor activities and managing the supplier quality. Flexibility is a key issue in the formulation of strategic plans in companies. Sometimes, flexibility means quickly changing something that is being done, or completely changing to adjust to new product designs. At other times, flexibility is the ability to produce in small quantities, in order to produce a product mix that may better approximate actual demands and reduce work-in-progress inventories. Quality is defined in many different ways--excellence, conformance to specifications, fitness for use, value for the price, and so on. ERP packages support the benchmarking and use of optimal product design, process engineering, and quality assurance data by all functional departments within the manufacturing enterprise, thereby facilitating definition of repeatable processes, root cause analysis, and the continuous improvement of manufacturing methods. This documentation supports the job functions of the quality assurance and production managers in validating the manufacturer's conformance to ISO 9000, Good Manufacturing Practices (GMP) worldwide, and a variety of country specific standards of quality assurance. We have seen that in today's competitive business environment, the key resource of every organization is information. If the organization does not have an efficient and effective mechanism that enables it to give the decision-makers the right information at the right time, then the chances of that organization succeeding in the next millennium are very remote. ERP relates to the software infrastructure that holds the entire company together internally, on the one hand, and supports the external business processes the company engages in, on the other. ERP solutions are designed to grow with the company. Unlike some stand-alone applications, they do not "top out" without transition paths to other solutions, leaving us to start over from scratch with a new and different application. And there are some key traits in ERP solutions: • Scalability. • Vendor management. • Functionality. • Reliable service and support. • Integrated modules. The beauty of an ERP application is that it is a suite in which all work together--without this capability, we can't have seamless business processes. Modularity comes to play mainly in how we purchase and implement our ERP system. We may not need all applications at once, or we may want to

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deploy one application at a time. They are different from separate applications in that when more than one is implemented, they fit together and work automatically.

1.2 LIMITATIONS OF THE ERP SYSTEM ERP applications have succeeded in integrating data from multiple functional areas, resulting in an incremental addition of value over previous "legacy" point solutions. However, their scope is limited to the single enterprise, they are typically slow and they are transaction-based, not intelligence based, so they fail to encapsulate the complexity required in cases where multiple courses of action are available. In contrast to ERP systems, APS (Advanced Planning & Scheduling) systems are “intelligent” (that is, they provide modeling and analysis capabilities for intelligent decision support). Some of the shortcomings of the ERP software are given below: • ERP systems are basically meant for recording what has already happened, rather than planning for what will be. These systems can process orders, but they do not analyze business situations to provide insight into future courses of action. • ERP systems allow an enterprise to design complex and sophisticated workflows, but are far too rigid in their ability to continually reshape and restructure workflows as business challenges and opportunities arise. • While ERP systems integrate multiple business functions, they lack the ability to expand their scope to multiple enterprises. This gap has to be filled. Some risks to watch out for in implementing an ERP system include: • User Resistance/Revolt - Users who fear being downsized may sabotage the system. • Mismatch between ERP system and Organizational Culture--If a system attempts to implement best practices inappropriate to the organization, the system may suffer from "culture clash" consequences. • Inability to manage technology. • Illogical processing. • Inability to stop processing quickly. • Cascading errors. • Repetition of Errors. • Concentration of data. The limitations and pitfalls of the Enterprise Resource Planning are as follows. The systems can be too expensive to install and maintain. ERP is often seen as too rigid and difficult to adapt to the specific Workflow and Business process of some companies. This is cited as one of the main cause of their failure.

1.3 WHAT DO ERP SYSTEMS COVER? A fully integrated ERP system will satisfy the following features: • Reduces the complexity in the business processes. • Delivers requirements satisfactorily. • Has common “ways of working” (uses standard processes for transactions). • Adheres to a common set of financial standards and product coding.

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• Integrated across a large portion of the organizations internal procedures, i.e. covers the main internal functions such as finance, distribution, manufacturing, sales and HR. ERP is a packaged software solution that addresses the enterprise needs taking the process view of an organization to meet the organizational goals, tightly integrating all functions of an enterprise. It is a set of application software that integrates manufacturing, finance, sales, distribution, HR and other business functions with a single comprehensive database that collects data from and feeds data into modular applications supporting all the company's business activities, across these functions, across business units, across the world.

An information system is an open, purposive system that produces information using the 'inputprocess-output' cycle. The minimal information system consists of three elements--people, procedures and data. People follow procedures to manipulate data to produce information. In today's computer world, the definition of information systems has undergone a slight change. Today, an information system is an organized combination of people, hardware, software, and communication networks and data resources. ERP systems typically handle the manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting for a company. Enterprise Resource Planning or ERP software can aid in the control of many business activities like sales, delivery, billing, production, inventory management, and human resources management. ERPs are often called back-office systems indicating that customers and the general public are not directly involved. This is contrasted with front-office systems like customer relationship management systems that deal directly with the customer. ERPs are cross-functional and enterprise wide information system. All functional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, and shipping, this would include accounting, human resources, marketing, and strategic management. In the early days of business computing, companies used to write their own software to control their business processes. This is an expensive approach. Since many of these processes occur in common across various types of businesses, common reusable software may provide cost-effective alternatives to custom software. Thus some ERP software cater to a wide range of industries from service sectors like software vendors and hospitals to manufacturing industries and even to government departments.

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ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and the warehouse, and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems. Finance, manufacturing and the warehouse all still get their own software, except that now the software is linked together so that someone in finance can look into the warehouse software to see if an order has been shipped. Most vendors' ERP software is flexible enough for us to install some modules without buying the whole package. Many companies, for example, will just install an ERP finance or HR module and leave the rest of the functions for another day.

1.4 CHALLENGES FOR SMALL AND MIDSIZE BUSINESSES TODAY Smaller enterprises ducked the ERP wave of the mid--1990s and did not succumb to the cost structures or the risks that their larger brethren undertook. Now, these firms often have outdated or overloaded applications and need to invest in new technology to achieve or retain competitiveness in their markets. Today, many small and midsize businesses are in need of upgrades, more or different software applications, more current or robust technology, and often more sophisticated business solutions.

SUMMARY At its simplest level, ERP is a set of best practices for performing different duties in a company, including finance, manufacturing and the warehouse. To get the most from the software, we have to get people inside our company to adopt the work methods outlined in the software. If the people in the different departments which will be using ERP don't agree that the work methods embedded in the software are better than the ones they currently use, they will resist using the software or will want IT to change the software to match the ways they currently do things. This is where ERP projects break down. Customizations make the software more unstable and harder to maintain when it finally does come to life. The horror stories we hear everyday about ERP can usually be traced to the changes the company made in the core ERP software to fit its own work methods. Because ERP covers so much of what a business does, a failure in the software can bring a company to a halt, literally.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9.

What is ERP? Carefully examine the technological and nontechnological limitations of ERP software. Is ERP packaged software? “ERP software is meant for manufacturing industries.”- Comment. Distinguish between conventional application packages and ERP packages. How does ERP software standardize the existing business processes? Why do ERP projects fail so often? “ERP has got nothing to do with planning.”- Justify. “ERP is known for information integration.” Explain.

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10. What are the issues to consider when we go for an integrated system? 11. How will you ensure that ERP software purchased will fit into your organization? 12. What are the gaps in the development of packaged software? 13. Will ERP software eliminate clerical jobs? If so, how can the existing man power be effectively utilized? 14. How will you measure the performance of an organization before and after ERP implementation? Propose suitable metrics. 15. “ERP is a catalyst of fundamental changes in organizations.” - Comment. 16. What are the salient features of an integrated system like ERP? 17. Select an organization of your choice (say a school, college, software company, etc) and identify their major functions. Classify their functions into various modules. Now, develop a diagram that shows the information integration of the organization and propose an ERP solution.

2 Evolution of ERP OBJECTIVE • To discuss the evolution of ERP. • To describe benefits of ERP.

EXPECTED OUTCOME The readers will be able to: ü Understand the concepts of Materials Requirements Planning (MRP), Manufacturing Resource Planning (MRP-II), Enterprise Resource Planning (ERP) and Supply Chain Management (SCM). One way of looking at ERP is as a combination of business processes and information technology. For instance, J.D. Edwards, an American ERP system vendor, defines ERP as an umbrella term for integrated business software systems that power a corporate information structure, controlling a broad range of activities, from the procurement of supplies to shop floor control and financial accounting. It provides the glue that binds management functions across geographic sites and complex heterogeneous networks. From a more strategic perspective, JBA, a British consulting firm, views ERP as a business approach that starts in the boardroom and permeates the entire organization. Figure 1 shows the evolution of Enterprise Resource Planning (ERP).

Figure 1

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2.1 MANUFACTURING STRATEGIES The following are the three manufacturing strategies in practice. They are: 1. Make-to-Stock 2. Make-to-Order 3. Assemble-to-Order In Make-to-Stock, the production process allows the user to complete the products before the receipt of an order from the customer. Customer orders can be filled from the existing stocks and the purchase orders are used to replenish those stocks. The production department will keep track of the finished goods, components and raw materials. Optionally, back flushing provides efficient relieving of component inventory. In Assemble-to-Order system, all the components used in the assembly, packaging or finishing process are planned and stocked in anticipation of an order from the customer. The receipt of order will initiate the assembly of products. In this system, the customer demand is converted to a suitable assembly work order, which is then finished to the specifications of the customer. The planning is primarily driven by forecasts of the features and models. In Make-to-Order system, the product is developed and delivered only when the customer places an order. The final product is usually a combination of standard items and items custom designed to meet the special needs of the customer. Upon receipt of the sale order, planning is triggered to finish the items to the specifications of the customer.

2.2 MATERIAL REQUIREMENTS PLANNING (MRP) Material Requirements Planning (MRP) is a software based production planning and inventory control system used to manage manufacturing processes. An MRP system is intended to simultaneously meet three objectives: • Ensure materials and products are available for production and delivery to customers. • Maintain the lowest possible level of inventory. • Plan manufacturing activities, delivery schedules and purchasing activities. In a typical manufacturing environment, the Master Production Schedule (MPS) specifies the quantity of each finished product required in each planning period; it is a set of time-phased requirements for end items. The firm, however, also needs a set of time-phased requirements for the parts and raw materials that make up those end items. Therefore, MRP is a production planning and control technique in which the MPS is used to create production and purchase orders for lower-level components. In the 1970s, manufacturers began to use techniques such as MRP in recognition of the importance of the distinction between independent and dependent demand items. MRP is continually evolving and expanding to include more business functions. In the early 1980s, MRP expanded from a material planning and control system to a company-wide system capable of planning and controlling virtually all the firm's resources. This expanded approach was also fundamentally different from the original concepts of MRP. A main purpose of MRP-II is to integrate primary functions (i.e. Production, Marketing and Finance) and other functions such as personnel, engineering and purchasing into the planning process. MRP is a technique for determining the quantity and timing for the acquisition of dependent items needed to satisfy master schedule requirements. The basic inputs for Material Requirements

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2.3 MANUFACTURING RESOURCE PLANNING (MRP II) Manufacturing Resource Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars and has a simulation capability to answer "what-if" questions. Manufacturing resource planning is a direct outgrowth and extension of closed-loop MRP. It is made up of a variety of functions, each linked together: • Business planning • Sales and operations planning • Production planning • Master scheduling • Material requirements planning • Capacity requirements planning • Execution support systems for capacity and material Output from these systems is integrated with financial reports such as: • Business plan • Purchase commitment report • Shipping budget • Inventory projections in dollars In the 1990s, MRP-II was further expanded into ERP. It is intended to improve resource planning by expanding the scope of planning to include more of the supply chain than MRP-II. Thus, the key difference between MRP-II and ERP is that while MRP-II has traditionally focused on the planning and scheduling of internal resources, ERP strives to plan and schedule supplier resources as well, based on the dynamic customer demands and schedules. The popularity of ERP systems started to soar in 1994 when SAP, a Germany based company, released its next generation software known as R/3. In the following years, companies began to pour billions of ERP systems offered by SAP and its major competitors such as Oracle, Baan, J.D. Edwards, etc. By the late 1990s, industry prognosticators were forecasting that the ERP market would sustain an industry growth rate of 30 to 40 percent. From a technical perspective, ERP can be seen as the logical extension of Material Requirements Planning (MRP) systems of the 1970's and of Manufacturing Resource Planning (MRP II) systems of the 1980's. ERP's impact, however, has been much more significant. A recent survey by Fortune magazine revealed that seven out of the top ten global pharmaceutical and petroleum companies, nine out of the top ten global computer companies, and all of the top ten global chemical companies are using SAP’s R/3. The number of local IT systems to be replaced by an integrated ERP system usually runs into the dozens upto a hundred or more in multinational companies. ERP systems provide an enterprise transaction backbone that constitutes the glue between all kinds of best-of-breed solutions for specific processes, business areas, etc. It allows these best-of-breed solutions to leverage the investments made in the ERP systems, and partly explains the impressive ROI's achieved by these solutions. ERP systems can be instrumental in transforming functionally oriented organizations into process oriented ones. The very nature of the ERP system forces one to think process-wise, rather than department-wise. Indeed, some of the unexpected benefits of ERP implementations may well stem from improved communication between different departments across business processes.

Evolution of ERP

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In 1997 approximately 20,000 companies world-wide paid $10 billion to ERP vendors, which were up by 40% from 1996. The market is dominated by SAP, Oracle, JD Edwards, Peoplesoft and Baan who between them enjoy greater than 60% of the total market. ERP software automates core corporate activities such as manufacturing, human resource, finance and supply chain management. The benefit of such software is that it can speed decision making, reduce costs and give managers control over the whole business. Implementing a fully integrated ERP system requires the organization to be process oriented and for all parts of an organization to adhere to the same precise processes. This forces the organization to undergo organization-wide reengineering, with ERP software merely being an enabler of the change. The actual benefits that can be achieved from a successful ERP implementation come from what is changed in the business and therefore ERP should be considered a business project rather than a technology initiative. There is a growing recognition that business and IT strategies should be linked and a high degree of alignment created between them. An ERP system links IT with a new, process oriented business model that is required in order for a business to remain competitive in today's unstable business environment. Globalization, deregulation and new technology are all interrelated business pressures, which were not present to the same extent in the 1970s and 1980s and are changing the competitive environment for organizations. It is estimated that at least 90% of ERP implementations end up late or over budget. However, this may be due to poor cost and time estimation rather than a failure in project management. The very concept of ERP software being integrated makes it complex. Enterprise consensus is required to reengineer an organization's core business processes and to take advantage of the software. Software configuration is also more complex and intricate. There are as many different methodologies for implementing ERP as there are consultants who will partner an organization through an ERP project. It has been recognized that the track record for IT implementation is not good and it is believed that the benefits of IT are not being attained because investment is biased toward technology rather than managing changes in processes, organization structure and culture. IT-enabled change is different from other forms of change in that technology, business processes and the organization must be integrated in order to achieve the goals expected from the technology. In MRP systems, the Master Production Schedule (MPS) represents a plan for the production of all end-items over a given planning horizon. It specifies how much of each end-item will be produced in each planning period so that future component production requirements and materials purchases can be calculated using MRP component-explosion logic. As such, the MPS has to be feasible so that components can be produced within the capacity available in each time period. It is clear that there is a role here for a planning tool that efficiently takes capacity and the MRP explosion into account at the same time. MPS must be optimizers, balancing conflicting goals such as low inventories and efficient utilization of capacity. In this spirit, the MIP model aims to minimize the total cost of component & end-item inventory and backorders while keeping within available production capacity. The decision variables are primarily the MPS production quantities, but an MRP plan is also identified at the same time. The capacity requirements of the MPS depend upon the MRP component production plan which in turn depends on the lot-sizes used in the MRP explosion. Manufacturing is the transformation, by means of a tool and/or processing medium of raw materials into finished goods for sale, or intermediate processes involving the production or finishing of semimanufactures. It is a large branch of industry and of secondary production. Some industries, like semiconductor and steel manufacturers use the term fabrication. Although handicraft production has been with us for many millennia, modern-style manufacturing is generally regarded as beginning

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around 1780 with the British Industrial Revolution, spreading thereafter to Continental Europe and North America, and subsequently around the world. Originally, the term applied to commodities or artifacts which were “made by hand”. While it remains a huge part of the modern world economyperhaps a quarter of aggregate world production of goods and services-many of the world's wealthier nations devote an ever smaller proportion of their workforce to manufacturing activity owing to relocation of enterprises to lower-wage countries and the rising proportion of economic activity devoted to service activity.

2.4 CONCEPTUAL FRAMEWORK OF ERP A typical ERP application supports cross-functional business processes by linking the following six primary business functions: 1. Accounting and Controlling 2. HR Management 3. Production and Materials Management 4. Project Management 5. Quality Management and Plant Maintenance 6. Sales and Distribution. Recently, ERP vendors are branching into new areas such as supply chain management (SCM), ecommerce, customer relationship management (CRM) and business intelligence (BI). The arrival of ERP systems introduced a new software concept. A data structure was added to the software packages, which eliminated the redundancy within organizations created by departmental software. Instead of interfacing information between departmental systems, a central repository was developed to store transactions from one department that could automatically be used by another department.

Figure 4

Evolution of ERP

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Supply Chain Management (SCM) is perhaps the most critical logistics issue in the majority of today's businesses. The challenge of SCM is to integrate and to coordinate activities across organizational boundaries in order to manage the entire supply chain as a whole. Various enterprise systems (ES) and above all the most recent ERP systems from the major vendors include new technologies to integrate the supply chain. The ERP system provides a platform for SCM and businesses can adopt the new functions offered by the new generation of enterprise systems, thus taking advantage of the technological innovations. Figure 4 shows the Conceptual Framework of ERP II. The relations between the following components are highlighted in the figure 4.

Central Components • Enterprise Resource Planning (ERP)

Corporate Components • • • • • •

Supply Chain Management (SCM) Customer Relationship Management (CRM) Supplier Relationship Management (SRM) Product Lifecycle Management (PLM) Employee Lifecycle Management (ELM) Corporate Performance Management (CPM)

Collaborative Components • Business-to-consumer (B2C) • Business-to-business (B2B) • Business-to-employee (B2E) • Enterprise Application Integration (EAI) The ERP market experienced a hype triggered by companies rushing to solve the Y2K problem, but after Y2K the ERP market soured. Back in those days the Internet boomed and the Gartner Group, which originally named ERP, redefined ERP into ERP II. ERP II includes six elements that touch on business, application and technology strategy. They are: (i) The role of ERP II. (ii) Its business domain. (iii) The functions addressed within a domain. (iv) The kinds of processes required by those functions. (v) The system architectures that can support those processes and the way in which data are handled within those architectures. These ERP II elements represent an expansion of traditional ERP and ERP II is essentially componentized ERP, e-business and collaboration in the supply chain.

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SUMMARY The fundamental structure of ERP has its origin in the fifties and sixties with the development of the early inventory control (IC) systems and bill of material (BOM) processors. The progress continued during the seventies and eighties with the development of the material requirement planning (MRP) systems and the manufacturing resource planning (MRP II) systems. Traditional MRP and MRP-II applications may not be up to the challenges presented by manufacturers seeking to capitalize on the competitive advantage offered by an integrated supply chain, ERP, therefore, has evolved from its predecessors to play an integrated role in the creation of a value chain.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

What is the origin of ERP? What are the pros and cons of MRP and MRP II? Compare and Contrast MRP and MRP II. How does ERP aid in better Supply Chain Management? What is Master Production Schedule? What are the functions of MRP and MRP II? How does the Bill of Materials influence MRP? What are the technical requirements of ERP? How is CRM related to ERP and SCM? Is ERP the same as SCM? Explain. What are the inputs to MRP and MRP II? Propose a model to integrate ERP, SCM and CRM enabled with Internet. What is the purpose of Bills of Materials? What will be the next evolution to SCM in your opinion? Explain. MRP MRP II ERP SCM ?

3 ERP Modules OBJECTIVE • To highlight the various modules in an ERP system. • To describe the functions of various ERP modules.

EXPECTED OUTCOME The readers will be able to: ü Understand the Business Environment. ü Utilize the functionality of various ERP modules. ü Effectively use ERP software through appropriate modules. All the ERP software is provided with either a single module or a set of modules based on the requirements of the client/customer. It all depends on the organization going for ERP implementation. The number of modules will also vary from one ERP package to another. If the organization decides to completely replace its existing system with a complete integrated system it will pick up an ERP package with all functionalities. If it decides to replace a part of its existing system, then it will pick up the required ERP module enabled with the required functionality. Then due customization is done to the selected module to meet the exact requirements of the customer. This is how the ERP modules selection takes place. Among the ERP vendors also, there is huge competition in developing specialized individual modules with excellent features for all the functions of the organization like finance, sales, HR etc. The important reasons for selecting a particular ERP module and not preferring a complete integrated system with all the ERP modules are as follows: • Cost reduction • Specialized module • Reduced project duration • Less risk • Reduced resistance to change • The possibility of purchasing different modules from different vendors • More features, less training and easy maintenance

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In the following sections we will discuss the functionalities of some of the important and common ERP modules offered by all the ERP vendors. They are Finance Module, Materials Management Module, Human Resource Management (HRM) Module and Sales and Distribution Module.

3.1 FINANCE MODULE Finance pervades all activities of business - production, marketing, planning and the like. A knowledge of economics, accounting, production and marketing is necessary to understand the finance function of the business. Finance includes investment decision, finance decision and dividend decision. There are traditional and modern approaches to financial management. Financial management is concerned with not only the adequate acquisition of funds at the appropriate time but also its proper utilization in the interest of one and all. Financial management as an independent discipline has become important in recent years. The size of the business and the importance of financial management of business go hand in hand. The health of a business can be compared with the health of human beings. Blood is required to keep the human body in good health. In a similar way business requires finances to maintain its financial health. Hence, the study of the finance of the business and the management of finances become significant. All aspects of the business may be broadly classified into finance, production and marketing. Profit maximization is the financial objective of the firm wherein it takes into consideration total operating profit, accruing to shareholders which are in other words emphasis on total earnings per share, which is financial welfare only without considering the owners economic welfare which is ultimately objective of any shareholders. The Wealth maximization brings in economic welfare to the shareholders. The wealth maximization means maximizing the net present value. Financial management is an integral part of the overall management and is not a totally independent area. It draws heavily on related descriptions and fields of study, namely, economics, accounting, marketing, production and quantitative methods. A knowledge of economics is necessary for financial managers to understand both the financial environment and the decision theories which underlie contemporary financial management. The output of the financial management is the financial statements such as the balance sheet, the income statement, the statements of funds acquired, etc. This information will help the finance manager to assess the past performance and the future directions of the firm.

3.1.1 Financial Management and Other Related Disciplines Figure 1 shows the relationship of financial management with the Accounting and other disciplines. It also highlights the functions of financial management. The marketing, production and quantitative methods are, thus, only indirectly related to day-to-day decision making by financial managers and are supportive in nature while economics and accounting are the primary disciplines on which the financial manager draws substantially. Although the importance of the financial management depends largely on the size of the firm, financial management is an integral part of the overall management of the firm. Figure 2 shows the organization of the financial management function in a large typical firm. Since finance is a critical functional area, the ultimate responsibility for carrying out financial management functions lies with the top management. However, the exact nature of the organization of the financial management function differs from firm to firm depending upon factors such as the size of the firm, the nature of its business, the type of financing operations, the ability of financial officers and the financial philosophy and so on.

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2. Investment management 3. Cost controlling 4. Treasury management 5. Planning and forecasting Accounting deals with ledger, trial balance, balance sheet, fixed asset, liabilities, accounts receivable and accounts payable, etc. Investment management deals with investment planning, investment budgeting, depreciation, simulation, monitoring the investment and controlling investment, etc. Cost controlling deals with controlling the cash flow, funds flow, overhead cost, product cost and profitability analysis, etc. Treasury management deals with cash management, risk analysis, risk planning, risk management, funds management, etc. Planning and forecasting deals with preparation of budget, forecasting the business expenditure, capital required, decision making, better business planning, and financial report of the company to top management, etc. Of all the subsystems of the Finance Module, treasury management and cost controlling are very much essential. The report provided by the software on these two domains of financial management will help the top management in decision making and creates a path for the organization to move in the right direction and to improve its financial strength. The main concern of the treasury management is with the financing activities of the firm. The functions of the treasury management are: (i) Financial report preparation (ii) Banking relationship (iii) Investor relationship (iv) Short-term and Long-term financing (v) Cash management (vi) Credit administration (vii) Investments and (viii) Insurance. The cost controlling subsystem of the Finance Module provides the necessary information to the top management at the right time. It monitors the accounting activities and controls it through proper measures. The functions carried out by this module are: (i) Financial accounting (ii) Internal Auditing (iii) Tax calculation (iv) Introducing various cost control parameters and monitoring them (v) Preparation of Budget (vi) Planning for future investments (vii) Economic appraisal (viii) Controlling cash flow and funds flow (ix) Maintenance of accounts, and so on. Every enterprise will be interested to find its financial position and operational results periodically. This module provides a platform to get this information very easily and accurately. The data initialization is done through voucher entry. This further helps to create quotations and order acceptance. There is a facility for creating and deleting the entries. Once the data is entered, the cash account is updated and we can find the balances every day readily. Another advantage in the Finance Module of ERP software

ERP Modules

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is that if an enterprise has multi-currency dealings one can monitor and record them separately. This also helps in report to various agencies which are an obligation of the enterprise. The recorded transaction by virtue of the software gets posted automatically into the respective account heads in the ledger. While ledger accounts are posted, the trial balance report can be generated any time. The advantage of Finance ERP Module is that the operating results of an enterprise can be ascertained department-wise and product-wise. The break up of profit and loss can also be maintained and reports can be generated. The assets and liabilities can be measured through this module. Effective budgetary control can be maintained using this module. Effective financial management also helps us to know where the money is due and payable which was very difficult in manual operations. Ratio analysis can be done as per the needs of the enterprise and the performance of the enterprise can be determined. Further, a good security system is available wherein data entered in computer cannot be accessed or modified without authorization. The finance module also accounts for quick and effective preparation of the payroll as and when there is a need. The significance of the finance module is that it helps the top management in evaluating their impact and provides suitable guidelines. Several financial decisions are taken based on timely and reliable data. The finance module enables the top management for decision making. It also enables the management to ascertain its financial status. It provides the features to maintain the records, processes and provides reliable information whenever required.

3.2 HUMAN RESOURCE MANAGEMENT (HR) MODULE An HR module is an important module in an ERP package. Many organizations prefer to replace their existing system by an HR module of ERP package. The HR module aims at automating the Human Resource Management activities and helps the organization to have a continuous monitoring over thousands and thousands of their employees. The HR module of an ERP package also helps the organization to speed up the process, reduce the manpower in the HR team, effective decision making, significant forecast of human resource requirements, and interface with financial management, appraising the employees, training, and career advancement and so on. The HR module can do wonders to the organization if it is used effectively. Human resources are heterogeneous. Human beings behave in widely different and complicated ways. Hence the need for packaged software like the HR ERP Module which reaches the organization as a pack and provides all that it requires and deserves.

3.2.1 Functions of HR Module Two kinds of functions are carried out by HR module. They are: (1) Managerial functions (2) Operative functions. The Managerial functions of HR involve the following: 1. Planning 2. Organizing 3. Directing 4. Controlling The Operative functions of HR involve the following: (a) Employment (b) Human Resource Development (HRD) (c) Compensation Planning is an outline of the future course of action. Failure to plan is equivalent to planning to fail. Planning in HR involves determination of personnel programmes and changes in advance that

ERP Modules

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Employment is the first operative function of the HR module. It covers functions such as job analysis, human resource planning, recruitment, selection, placement, induction and internal mobility. Job analysis is the process of study and collection of information relating to the operations and responsibilities of a specific job. Human Resource Planning is a process for determining and ensuring that the organization will have an adequate number of qualified persons, available at proper times, performing jobs which would meet the needs of the organization and which would provide satisfaction for the individuals involved. Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization. Selection is the process of ascertaining the qualifications, experience, skill, knowledge, etc of an applicant with a view to appraising their suitability to a job. Placement is the process of assigning the selected candidate to the most suitable job. Induction and orientation are the techniques by which a new employee is introduced to the practices, policies, purposes, people, etc. of the organization. HRD is the process of improving, changing and developing the skills, knowledge, creative ability, aptitude, attitude, etc. based on present and future job and organizational requirements. Performance appraisal is the symbolic evaluation of individuals with respect to their performance on the job and their potential for development. Training is a systematic process by which employees learn skills, knowledge, abilities or attitudes to further organizational and personal goals. Management development is the process of designing and conducting suitable executable development programmes so as to develop the managerial and human relations skill of employees. Career Planning and Development is the planning of one's career and implementation of career plans by means of education, training, job search and acquisition of work experience. Incentive is the process of formulating, administering and reviewing the schemes of financial incentives in addition to regular payment of wages and salary. Fringe benefits include housing facilities, educational facilities, conveyance allowance, etc. The management provides social security to its employees in addition to the fringe benefits. Nowadays, the trend in project management is toward people management. Today, Human Resources Management (HRM) plays a strategic role in business. Implementing an ERP project involves numerous individuals, internal and external experts, and integrates different interest groups across locations. Companies agree that people challenges are more difficult to manage than any technical difficulties they encounter. Today, HRM is being renewed in organizations and becoming one of the fundamental functions of project management. HRM has changed from an inactive and problemsolving role to a strategic, focusing on the retention and development of the best human resources. Traditional HR practices consisted of activities such as payroll, hiring activities, records management, and reporting and termination activities and their similar activities. Nowadays, HRM takes more of a full service role providing employee support beyond pension planning and career development. With the arrival of ERP systems, HR functions became fully integrated with the other operations of the organization.

3.3 MATERIALS MANAGEMENT (MM) MODULE The Materials Management (MM) Module is the preferred module for most of the manufacturing companies than any other ERP module. The main difficulties faced by these organizations are the poor maintenance of stock, inabilities to meet the deadlines and to provide smooth services to the suppliers

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Enterprise Resource Planning

and to ensure proper service to the customers and so on. The MM Module of the ERP package is provided with all these features and helps the organization to have its inventory properly managed and monitored. Based on the MM Module reports, the top management can take suitable steps to improve its position to retain suppliers and customers, who are the backbone of any manufacturing company. The MM Module is the central point of operating logistics containing the essential integrated functions for: • Inventory management • Material requirements planning (MRP) • Purchasing • Warehouse management • Vendor evaluation • Invoice verification • Product costing Materials Management could be regarded as the function responsible for the co-ordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a predefined service to the customer at a minimum cost. The objective of the Materials Management module is: (a) Reducing cost of material (b) Extending full support to suppliers (c) Ensuring right quantity, right quality and right price at right time for purchase (d) Effective controlling of inventories leading to release of working capital to other useful purposes without disturbing the production schedule for want of materials (e) Materials planning (f) Purchasing of materials (g) Receiving and warehousing (h) Store administration (i) Inventory control (j) Standardizing variety reduction (k) Simplification, product development (l) Make or buy decisions (m) Quality control for inspection (n) Disposal of scrap surplus and obsolete materials Materials Management is an area of management which helps the manager to improve the productivity of capital by reducing material costs, preventing or minimizing large amounts of capital being blocked up for long periods and improving the overall capital turnover ratio. If Materials Management is done poorly then it has the potential to eat away a major portion of the capital of the company leading to a loss situation and eventually to winding up the company. The Materials Management Module helps in Inventory planning. Inventory planning is the information repository for all planned material transactions. It has information on all expected receipts and demands. This information is the basis for planning supplies to meet future demand. All material transactions that affect the stock either by inventory, sales, purchase, production, maintenance affect the disposition. Disposition facilitates the supply of material against expected demand and this acts as

ERP Modules

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an aid to JIT (Just-in-Time). Using disposition the user can address the business needs like online stock availability, earliest available date for a given quantity, viewing the demand and supply details for an item or variant. All the organizations are striving to have a balance between inventory levels and customer satisfaction. The Inventory management of any enterprise needs to ensure the following: 1. Adequate inventories of finished goods to meet the demand for prompt customer services. 2. Adequate inventory of materials to maintain smooth flow of production operations and 3. Keeping the money blocked in inventories at a reasonable level. Poor inventory management can cause much drain on profits. Funds frozen in excessive stocks are denied for current operations which have to be finished by borrowing at substantial costs. Extra inventories would involve additional storage space and extra costs on insurance, handling and inspection. These categories of costs known as 'carrying costs', tend to move in proportion to the quantity of inventory holdings and excess inventories will necessarily depress the profits, Inadequate levels of inventories can cause stoppages of production affecting sales and profits. The objectives of effective inventory management are as follows: • Ensuring regular supply of materials to facilitate uninterrupted production • Maintaining adequate stocks of raw materials to meet situations of scarcity or mounting prices • Ensuring prompt delivery to the customer through ensuring adequate stock • Optimizing inventory ordering, carrying and stock-out costs There are three motives identified behind holding inventories. They are: • Transactions motive • Precautionary motive • Speculative motive The transactions motive is to facilitate smooth production and sales operations. The Precautionary motive is meant for protection against unexpected changes in demand and supply. The Speculative motive is meant for utilizing the advantage of price fluctuations by increasing or reducing inventories. Effective inventory management can be carried out by the following procedures. They are: (a) Preparing a list of classified items in inventories. (b) A.B.C (Always Better Control) analysis of inventory items. (c) Maintaining stock levels for all items. (d) Continuous process management and monitoring (e) Introducing evaluation process through inventory ratios.

3.3.1 Organization of Materials Management There are three ways of organizing the materials department. They are: (a) Based on commodities (b) Based on locations (c) Based on functions In (a) the classification is based upon the nature of the items like raw materials, spares, finished goods, imported items, etc. In (b) there are two ways of organizing the materials department namely centralized, decentralized and the combination of the two. In (c) the internal structuring of the materials

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Enterprise Resource Planning

department is done keeping in mind the function to be carried out. The basis can be (i) stores, (ii) purchase, (iii) transport, etc. In an integrated set up, the materials manager who is responsible for many interrelated functions is in a position to exercise control and to coordinate. This will result in proper balance of conflicting objectives of individual functions. The Materials Management Module accounts for proper Inventory Management. Inventory management is a continuous process. Inventory control is the process of maintaining the optimum needed quantity that is sufficient for smooth operation of the organization. Once the items that are to be manufactured are identified, and once the production planning system has prepared a production plan, the material management module will prepare purchase orders for each and every item taking into account the lead-times and when the items are required for production. If the purchasing process has to go through the invitation of quotations, vendor selection etc. the system also does that. Since most suppliers are also connected to the organization's system as soon as a purchase order or requisition is issued, the supplier's system is updated with that information. Hence the supplier knows what items are to be supplied and when. Since activities like preparation of contracts, issuing of purchase orders and payments happen through the system electronically, the time saved is phenomenal. ERP 'systems, by virtue of their integrated nature and by the use of latest technologies, reduce the lead-times and make it possible for the organizations to have the items at the time they are needed.

3.4 SALES AND DISTRIBUTION MODULE The Sales and Distribution Module of an ERP package helps the organization to achieve its business targets through its key elements mentioned below. The organization needs to maintain its customers' details, order details and supplier details. Then, the product once billed, it has to be properly delivered. Determining the cost of the product involves pricing strategies adopted by the company. Based on the customer's order suitable purchase orders have to be placed to the suppliers at right time to ensure proper delivery to the customers. All these activities will take place continuously and should be monitored and necessary directions have to be given to the concerned departments of the organization for smooth functioning of the sales and distribution process. The key elements of the Sales and Distribution module are: (i) Selling (ii) Shipping (iii) Billing of Product/Service to Customer (iv) Master Data Management (v) Customer's Order Management (vi) Pricing Strategies Figure 6 shows the activities involved in the Sales and Distribution Module. It shows the relationship of the Sales and Distribution Module with the Materials Management Module and the Finance Module. The three major processes involved in the Sales and Distribution Module are: [1] Sales [2] Shipping and [3] Billing. In this process, the shipping activity is linked to Materials Management and the billing is linked to the Finance Module. The set of events that takes place between a customer and a supplier is coined as Sales. From figure 6, we find that the customer first conducts an inquiry about a product. Then, he gets the quotation from the supplier. After scrutinizing the quotation, he places an order with the supplier. Then the supplier delivers the product through the materials management department and billing is

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Enterprise Resource Planning

The task of the marketing manager is to make use of the Sales and Distribution Module of ERP package to decide the objectives of pricing. Pricing objectives provide guidance to decision makers in formulating price policies, planning pricing strategies and setting actual prices. The most important objective of the companies is to have maximum profits. The sales and distribution module of the ERP package will enable the top management evaluate the following: (1) Market penetration (2) Price stabilization (3) Market share (4) Profits maximization (5) Cash flow (6) Funds flow (7) Forecasting demand (8) Analyzing the market and (9) Discounts etc. The sales department receives orders from customers. Generally for a manufacturing organization, there are one or more sales points for receiving customer orders from different geographical locations. All these sales orders are routed to the production department. It may also take orders that are expected within a short time from prospective customers. These orders are segregated under the following types and sent to production as demands for the current period. Sales orders are usually classified as Normal Sales Orders, and Abnormal Sales Orders. The role of the sales department is vital. The effective utilization of the Sales and Distribution module of the ERP package depends solely on how these people scrutinize the orders from the customers. Sales team members may take all the orders that are almost finalized from the customers or expected to be finalized in the near future and raise sales orders from them. These are translated into sales demands and are placed on production. Even though the orders are still in a planned stage, the production department would make itself ready to service these demands. They are firmed up once the users confirm their orders. The planning done based on the sales forecast is used to service these demands. The Sales and Distribution module of the ERP package also accounts for forecasting the demand from the customers. Only based on this forecast, the Sales Department can give necessary directions to other relevant departments in the organization. The Sales Department also classifies the orders from the customers to provide them better services and to retain the bulk orders from the customer and give them higher importance than the usual orders. Sometimes there can be a sudden rise in the demand for products. There could be more customers' orders than forecasts. Such orders are termed as abnormal sales orders. These orders may be given priority over the planned and firmed up sales orders. Based on the importance of the customer also, we can classify a sales order from a customer as an abnormal sales order.

SUMMARY ERP is very complex, as a subject. It marries technology, business practices and organizational structures. ERP systems are commercially developed software applications that integrate a vast array of activities and information necessary to support business operations and operations planning at the tactical level. ERP is software and not a business process or a set of business processes. Although often presented as a single package, an ERP system is an envelope around numerous applications and related information. For manufacturers, those applications typically support the operation processes of materials sourcing, manufacturing planning, and product distribution. Given their broad organizational and functional scope, ERP systems are unlike any other contemporary commercial manufacturing applications. They provide transaction management from both the business perspective and a database perspective. Additionally, they enable the top management for decision making at right time.

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REVIEW QUESTIONS 1. Name the various ERP modules and their significant features. 2. Why are the HR module and the Finance Module of ERP package preferred mostly by the customers? 3. How does the Finance ERP module help the top management in decision making? 4. What are the functions of the Finance Module? 5. What are the activities in the Sales and Distribution Module? 6. What is Material Management? How does this module help the organization to increase its profitability? 7. What are the objectives of Inventory Management? 8. How does an effective Inventory Management system aid an organisation? 9. What is HRM? How does it differ from HRD? 10. What are the subsystems of an HR Module? Explain. 11. What are the functions of an HR Module? How does it execute the recruitment process? 12. List the applications of Information Technology in Financial Management. 13. Suggest suitable measures to evaluate a particular ERP module. 14. What are the factors influencing customers while selecting an ERP module? 15. Prepare guidelines for improving the functionality of the various ERP modules. 16. What are the factors influencing the Sales and Distribution module? 17. What are the major types of Financial Management decisions that business firms take? Explain. 18. What are the limitations of Finance Module? 19. What is the role of Financial Manager in Management of Inventory? 20. Arrange the following modules of ERP software in terms of complexity, cost, features/ importance and percentage of usage. (a) Finance Module (b) HRM Module (c) Sales and Distribution Module (d) Materials Management Module

4 ERP Software Selection OBJECTIVE • To highlight the issues in selecting an ERP software • To learn the guidelines in ERP software selection

EXPECTED OUTCOME The readers will be able to:

ü Address the challenges in ERP software selection ü Provide consultancy to customers in the process of ERP software selection ERP software selection has become a buzz word in the IT industry. Earlier there were only a few ERP vendors. But nowadays there are so many ERP vendors providing solutions to the companies at less cost. Hence the question of selecting a right ERP vendor is becoming complex. Selecting the right vendor will solve most of the problems and will also help the customer to very easily get through the various phases of ERP implementation. There are customers doing different business and using different ERP products for each one of them. This shows the competition that exists among various ERP vendors. The customers are of the opinion that it is difficult to have a single vendor to provide solutions to all their businesses and hence the selection of ERP vendors includes the main criterion as the area of specialisation of the various ERP vendors. There is general agreement in the industry that software components will bring profound changes in the way that software is delivered. The application package vendors have started to respond to this challenge and those that are successful will in time become true component providers themselves, having rearchitected their products into sets or kits of components. The service layers that many of the vendors have introduced to date will rapidly become inadequate, as componentized products exhibit vastly superior adaptability characteristics demanded by the fast-moving e-business and e-commerce environments. Tomorrow's customers will demand the ability to buy, reuse, and build their competitive edge solutions to fit their needs, because they know this is a key business differentiation. Componentization will become a key business productivity action for suppliers and consumers in the application market.

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4.1 ISSUES IN ERP SOFTWARE SELECTION The consultants have got a major role to play in selecting the ERP product offered by various ERP vendors. The company deploys functional consultant and technical consultant in this process. The functional consultant takes up the role of looking into the business processes of the organization going for ERP implementation. The technical consultant takes up the role of resolving the technical defects arising during the ERP implementation. In order to make the ERP software selection process simpler, more peopler at various capacities are deployed namely the solution architect, the functional consultant and the technical consultant. These people work together and ensure that the ERP product chosen for implementation will meet the challenges put forth by the customer and will serve their needs. As the cost of the project is high and the volume of the project when compared to the traditional software project is high, these resource people's role is becoming mandatory. There are various reasons that make the ERP software selection process complex. They are: • Lack of clarity about the customers' requirements. • Complexity in the business processes. • Increased number of ERP vendors. • Lack of better planning. • Resistance to change. • Project cost. • Integration, Upgradability, Adaptability and Applicability of software.

4.2 ERP SOFTWARE SELECTION CRITERIA The ERP software selection criteria vary from one organization to another based on their size (small, medium and large). Based on the existing system, exact requirements, project cost, and nature of business process, the ERP software selection will vary. There are numerous factors to consider while choosing an ERP product from an ERP vendor. They are: • Increased transparency and better information flow. • Easy maintenance, adaptability and flexibility of software. • Reduced cycle time and lead time. • Process improvement. • Enabled with multi-lingual and multi-currency features. • Increased customer satisfaction. • Modular architecture of software. • Higher software reliability. • Market position of vendor. • Implementation of desired business processes. • Operating system independency. • Ergonomic software. • Highly user friendly. • Improved innovation capabilities. • Meeting Customer Needs. • Improved E-Commerce support and Improved Internet services. • Reduced customization.

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4.3 METHODS IN ERP SOFTWARE SELECTION There are four different ways by means of which an ERP product can be selected. They are: 1. The decision is made by top management with the inclusion of external consultants. 2. There is a centralized type of selection process in place, characterized by a strong focus on the IT and organizational department with only little participation of other internal departments and no employment of consultants. 3. The decision is made taking into considerations the suggestions given by several departments of the organization whether they are going to be a user of the ERP system or not. 4. Using a combination of all the three steps given above as when there is a need.

4.4 COST BENEFIT ANALYSIS As soon as the top management is confident that they have a reasonable understanding of the new planning process in an overall sense, it is time to carry out a cost and benefits analysis. It should be stressed that this is an analysis, not a justification, because the team will not proceed if the analysis is unfavourable. It should also be made clear that they will re-visit the analysis after the project is complete to ensure they have cashed all the benefits. First there will be hardware and software costs. At this stage the choice of the system may not have been made. It would do no harm to put in a fairly high estimate obtained by talking to any of the software companies. There will be a one time capital cost and an on-going annual fee for new releases. Every effort should be made to resist the temptation to customize the package. There will also be an ongoing maintenance cost to install the upgrades along with further customization. The programming cost will depend on the size of the company. Many companies do not go any further than these costs to arrive at the cost of the project. It would, indeed, be possible to change the current planning system for the new planning system without any additional costs. Unfortunately, such implementations fail to reap the benefits of the ERP system. Allowance should be made for external education and training in the initial phase. As well as the initial cost of education and training, there will be an on-going cost of training new recruits and for adjusting the process as the business changes. An allowance of 25% per annum of the start up training and education cost is a good estimate. Many companies start out with the intention of not having a full time project leader. As a rule of thumb, a project team of three people is necessary for companies with upto 300 employees. One more project team member is needed for every 200 employees. Finally there should be a miscellaneous allowance of about 10% of the cost so far. This is one cost that is almost always overspent! One of the most common causes of delay is the decision on which software package to use. The fact is that success or lack of it has almost nothing to do with software. It all depends on the guidelines that we follow in selecting an ERP software package.

4.5 ERP SOFTWARE SELECTION PROCESS The ERP software selection process is divided into four phases: Phase 1 - Initial requirements. Phase 2 - Developing the short list of candidate solutions. Phase 3 - Final selection. Phase 4 - Implementation planning.

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Phase 1 - Initial requirements We first want to get to know our team, tour the plant, and discuss the big picture concerning the project. Next, we administer a series of questionnaires and conduct interviews with our project team. The information gathered during these sessions is used to develop a profile of the requirements of our business. This profile will be used in later phases, as we determine specifications to be used in selecting from the literally hundreds of ERP products available. The outcome for Phase 1 is the “Top Ten List”. This is a list of the ten ‘best’ ERP systems for our company. The great thing about this process is that, after we have created our requirements profile, it can be used to help us evaluate any software product. Phase 1 should take less than 3 weeks, depending on the availability of our management staff and project team.

Phase 2 - Developing the short list of candidate solutions This phase helps us establish a list of high-level differentiators, which will be used to compare the candidate solutions. These will include quantitative factors, drawn from the critical requirements gathered during the questionnaire and interview process, as well as qualitative factors, drawn from more general concerns. Examples of qualitative factors could be: a number of installations of the product, availability of training, availability of support, etc. These differentiators will then be applied to all candidate solutions. The intent is to narrow the field from 10 candidates to 2-4. These remaining 2-4 candidates will be the ones that will be scheduled for detailed demonstrations. Phase 2 should take less than 1 month, once again depending on the availability of staff.

Phase 3 - Final selection Demonstrations are arranged and conducted, negotiations take place, and the final selection is made. The requirements profile, established in Phase 1, comes into play strongly here. When it's time to arrange for software demonstrations we take control from the beginning. We tell the vendor what functionality we expect to see demonstrated based on our high-level requirements. This puts us in control of the demonstration process. We can let it be known up front that our list of 50, 75, or 100 functions must be included in the demonstration. Phase 3 could take between 1 and 2 months depending on how aggressively we go about demonstrations and negotiations.

Phase 4 - Implementation planning Every software vendor has a plan to make their implementation succeed. And after going through the first three phases, they will have a better understanding of their business processes and the challenges that lie ahead. Although no one can predict how long the ERP implementation will take, one can say with confidence that it will happen faster, safer and more accurately if suitable methods are used during the ERP software selection phase. The following factors are identified as the important factors influencing the ERP vendor selection. (Source: ERP Vendors) Factors considered Functionality of the ERP package Vendor’s reputation Vendor’s ability to provide a complete solution Project costs Future software maintenance provided by the ERP vendor

Percentage of importance 24 26 16 23 11

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SUMMARY In this chapter, we have highlighted the issues in selecting the right ERP package. There are so many ERP vendors' available nowadays providing effective ERP solutions. Both the role of functional and technical consultants seems to be of higher importance and holding knowledgeable consultants will hopefully provide solutions to so many issues discussed here. As there are so many factors to consider in selecting an ERP package from an ERP vendor, it is suggested that the customers stick to the methods/guidelines generated through research conducted in this context and use it to reap the full benefits of ERP implementation. The ERP software selection also gets its importance from the view point of the cost benefit analysis. Thus it is evident that ultimately it is the right ERP team which is going to guide us starting from planning till implementation during the ERP project. We also find that the criteria for selection of a particular ERP system also show different priorities. Further research is needed to detail the differences in the implementation process and the actual usage of the selected package later on.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Define the term "software". What is cost benefit analysis? What are the different phases in ERP software selection? List the critical success factors in ERP software selection. Examine the role of technical and functional consultant in ERP implementation. List the factors influencing the ERP vendor's selection. What are the different ways by which ERP software selection is carried out? What is meant by candidate solution? How will you identify it? What makes the ERP software selection process critical? What is the role of solution architect in ERP implementation? Visit the websites of a few ERP vendors and find out how they convince and impress their customers' during the ERP software selection process. 12. If you happen to be the top management for an organization, list the factors and issues which you will consider while selecting an ERP package. 13. What are the check points you have identified to ensure that you are on the right track during ERP implementation?

5 ERP Implementation OBJECTIVE • To describe the different phases in ERP implementation. • To discuss the issues and challenges in ERP implementation. • To describe “What is customization in ERP?”

EXPECTED OUTCOME The readers will be able to:

ü Understand the ERP implementation lifecycle. ü Visualize ERP implementation from three perspectives-Organization, Business and Technology. ü Turbo charge the ERP system. The rules for doing business are redefined; the need for new business concepts have emerged and new business goals are changing the demand towards the organization, the planning and the IT systems themselves. This raises a need for extending our understanding of the implementation process of the IT systems. Organizational change has always been the barrier for the application of new technology, and the full yield cannot be expected unless new integrated work processes are implemented as well. The concept of implementation is ordinarily related to installation of hardware and software. In the world of ERP systems, “implementation” is often used as a term to describe a well-defined project spanning from the choice of the systems through the configuration and the training until going live, where the system is becoming operative. This is in reality the vendors and the consultant's view on the implementation. In the company's view, implementation means a continuous learning cycle where the organizational process supported by the ERP systems is gradually aligned with the business objectives. Concurrently the business objectives are taken even further, driven by the market dynamics but also by the new internal opportunities. The practice of implementation of ERP systems is flooded with stories of devastating implementation. It seems to be an accepted fact that ERP implementations never are on time, within the budget, and meeting the desired business outcome. This fact is supported by a number of surveys, and at the same time, we see increasing attention to the extended implementation process, the so called

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“second wave”. This is why an understanding of the phenomena of implementation is an important issue in the industry. Going live is not the end of the ERP journey. The comparies claim that change management, training and BPR are deemphasized over the hard technical issues like project management, configuration and IT architecture. Only 20% of the companies see Cost/Benefit analysis as a relevant activity and evidently 96% have difficulties in estimating the success of the project. The main positive results from the implementations are the foundation for improving the internal integration and the possibilities for business improvements.

5.1 APPROACHES TO STUDY ERP IMPLEMENTATION There are mainly three different approaches to ERP implementation. They are: [1] ‘BIG BANG’ APPROACH. [2] LOCATION-WISE APPROACH. [3] MODULE-WISE APPROACH. In the ‘Big Bang’ approach, the organization decides to implement all relevant modules at the same time. This approach will help the organization to reap the full benefits of the ERP system, because all the required modules to reflect the business processes of an organization are included in this approach. On the other hand, when we use this approach, the risk factors are also high. As the organization is going to be completely replaced with a complete integrated system, the risk factors are high when the new system fails. Hence due care is necessary to ensure that the ERP implementation goes successfully. This approach is also preferred by a few companies as they can bring in new business processes as well as refine their existing system through the installation of a complete integrated system. In the ‘Location-wise’ approach, the organization chooses a specific location, say, regional office, zonal office, head office, etc. This approach will enable the organization to reduce the cost of the project and risk factors also. The duration of the project will also be considerably less as only a part of the organization is to be replaced by a new system. An advantage of this approach is that the company gets the feedback on the installation of the new ERP system into one of their branches/offices and on this basis, the company will be able to make its future decisions on further investments on the ERP project. In the ‘Module-wise’ approach, individual modules are considered for ERP implementation. After reviewing the existing system, cost of the project, project duration, exact requirements, etc. the company shall decide to choose any individual module, say, the Finance module, the HR module, the Materials Management module, etc. of their choice to suit their organization.

5.2 DIFFERENT PERSPECTIVES IN ERP IMPLEMENTATION Now we shall discuss the ERP implementation from three different perspectives. They are: [1] Organizational perspective [2] Business perspective [3] Technological perspective

Organizational Perspective The implementation of an ERP system is often said to be more organizational development than technological development, and it is more about people than about processes and technology. This

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implies that seeing the implementation from an organizational perspective will contribute to a broader understanding of the implementation process. Required skills and competencies are different from what they were before the implementation, which implies that learning and knowledge are interesting issues to elaborate. Another issue within the organizational perspective is the understanding of the ERP system as an actor participating in the interaction within the organization, representing another discourse than the ones existing in the organization, and thereby results in organizational changes. The power and culture are a part of the implementation context and an implementation cannot be fully understood separated from the context from which the system emerged. The term context will be used to cover the historical, the organizational and the economical issues.

Business Perspective The Implementation of ERP can change the processes and the organization, and/or it can lead to completely new business. This implies that seeing the implementation from a business perspective can be a valuable contribution in the process of getting an understanding of the complexity. The implementation of ERP systems paves the way for a BPR. BPR is not a process done without problems, and a critical evaluation of BPR will take place. The implementation of ERP changes the organization, both radically and continuously. Managing these changes or Change Management (CM) can be difficult, and is often neglected by companies when implementing ERP systems. Change management is often used in the literature, but a clear definition is hard to find. Instead of giving a clear definition of the term, we will present the themes within CM we find valuable in relation to ERP implementation. The implementation of ERP systems is done within companies which have visions, and the system can support those visions. This implies that the systems should be planned, prioritized, designed and built according to the vision of the organization or an IT/ IS strategy. The final issue within the business perspective, which we want to elaborate on, is therefore IT/IS strategies.

Technological Perspective The technological challenges when implementing ERP systems are great and an elaboration on what has been written about technological issues in regard to ERP implementation is believed to contribute to a better understanding of the complexity in ERP implementation. The companies face challenges in regard to the architecture, infrastructure, configuration, customization, and the system itself. The technological perspective will therefore elaborate on the system, the architecture and the infrastructure, the configuration and the customization of the systems and finally on how to organize the implementation before the system can go into operation. Not all processes can be supported by the ERP system, which means that other software applications are necessary to add to the system. The architecture and infrastructure of the system has to do with how the IT systems should be designed and built and since the ERP system easily becomes a large infrastructure the architecture of the system should be sufficient. The configuration of the systems can later on cause problems, because when once set it can be almost impossible to change it. The configuration of the system can then be a disabler for organizational change. The customization of the system can prolong the time it takes to set-up the ERP system, raise the costs and last but not least make the updating and collaboration with other systems more difficult. In relation to the technical set-up of the system Project Management is needed. This will be the final issue elaborated on in the technological perspective.

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Technology sees business as a set of performance objectives to be used as a design criterion for developing a purposive system. Organization sees the business as one contextual parameter of the organization. Business sees technology as a means to create competitive advantage. Organization sees the technology as a tool for automating working procedures. Business sees the organization as something which should be modeled and managed to serve the processes, the strategy and the overall business. Technology sees the organization as a structural parameter in the systems design. The underlying assumption is that a given organizational behavior can be designed using the proper mechanisms.

5.3 MINIMIZING CUSTOMIZATION Customization is the core process for adjusting the software to fit the organization. In general, the team should avoid more radical approaches such as building interfaces to legacy systems or adding bolt-on systems, although these measures are sometimes unavoidable. The team should never modify the base of the system. More drastic forms of customization are critical because changes move the system away from a packaged solution–and the organization away from the benefits it seeks to achieve. Also, technical changes are costly and can lead to schedule slippage because they are complex and need significant testing. In addition, the team must reimplement them for each package release, which increases longterm maintenance costs. After the blueprints creation, the customization phase of the ERP platform begins. Through the customization procedure, corporations are allowed to customize the deployment of the ERP platform to a sufficient level of detail, in order to meet their specific business needs. As in the blueprints creation stage, a number of problems exist here as well. A limited amount of available project time is again the big issue. Problems that may occur can be summarized thus: During the customization stage, consultants are tailoring the system according to the blueprints, while employees keep conducting their usual business tasks. As it is the case, consultants are a unique source of information regarding the ERP platform, mainly due to their experience. It would be best for employees to have the chance to take full advantage of them. As the employees are not allowed to devote the necessary time to cooperate with consultants, important details that could be drawn from their knowledge are lost. It is also highly possible that the end users would not even be able to work productively with the new system in a majority of cases. Effectively, the limited training that would be offered during the training stage (the stage that follows customization) would not be able to cover all the ERP system details. Because of that, external help from consultants may be asked again, something that will cost time, effort and possibly money. Employees due to their workload may not allow themselves to test the system at this preliminary stage and find customization problems or blueprints mistakes. Employees may easily become afraid that they will not be able to understand and use the ERP platform. In addition, they may become more afraid that they will not be able to finish a number of critical business tasks on time. In the HR module for example, there isn't any way to postpone tasks such as calculation of the employees' overtimes, and effectively not allow payroll to pay on time. Since in such a case the impact on the organization's normal operation may be severe, fears such as the previously described ones may bring significant problems to the deployment phase since employees may not cooperate correctly with consultants. Even worse, they may not even try to use the new system and continue to contact their business tasks with the proprietary systems previously employed.

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Consultants, on their side, have deadlines to keep in order to honor the contract. This fact may tempt them to omit correcting errors that should be done in the system or in the blueprints, in order not to allow any project delays (of course they may come back to correct mistakes after the project end, but then, time would be on their side and the possibility of a negotiation about a small contract about customization may arise as well). Common errors include minimal or no ERP customization at all, in the business tasks that seem to be not very much in use. System limitations are an additional factor that may delay the project considerably. Sometimes, for example, organizations in order to be able to operate in critical situations, may not take into account law legislation to its strictest limit. It is a strong case that customization errors would be discovered constantly, since customization is based on blueprints which are limited to the point of specifications that each employee had in mind at the particular time of the interview. Effectively, after sales support if allowed will ensure, that any problem concerning the ERP platform will not distract normal business operation and a good working system would be used to realize the business process.

5.4 CHARACTERISTICS OF ERP SYSTEMS When most people refer to the “core” ERP applications or “modules,” they mean the back-office capabilities to manage human resources, accounting and finance, manufacturing, and project-management functions. However, major ERP suites from Oracle, PeopleSoft, and SAP now provide much more– including modules for sales force automation, business intelligence, customer relationship management, and supply chain management. Although the objectives of our review, evaluation, and testing of the control framework are the same, there are some significant differences between ERP and non-ERP systems. These differences are: • In ERP systems, certain control procedures leave no documentary evidence of performance. For some other procedures, the evidence of performance is indirect; it may be included in the program logic or in the operator's instructions. Therefore, compliance tests may have to be structured differently in an ERP environment and the observation of the client's procedures may become more important. • In ERP systems, information is often recorded in a form that cannot be read without the use of a computer. • Financial and business information is often generated automatically by ERP systems based on data previously entered, without further human instructions. • Errors that might be observed in non-ERP systems may go undetected because of the reduced human involvement in computerized processing. There is a danger that errors in processing may be applied to a large number of transactions without being noticed. • With proper controls, ERP systems can be more reliable than non-ERP systems. Non-ERP systems are subject to random human error. Although computer processing will usually be consistent, errors may still occur; for example, if the computer is incorrectly programmed. • It is difficult to make changes after an ERP system has been implemented. Therefore, we should be aware of the organization's plans to introduce significant new systems or to make major modifications to existing systems. • It is advisable to review new systems or modifications before implementation so that a preliminary assessment can be made of the adequacy of control procedures, in order to ensure an adequate audit trial, and to plan any necessary changes in the audit approach. ERP

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systems vary from the simplest, batch-controlled type to complex integrated applications that perform a number of functions simultaneously.

5.5 CRITICAL SUCCESS FACTORS FOR ERP IMPLEMENTATION Companies are radically changing their information technology strategies by purchasing prepackaged software instead of developing IT systems in-house. It was predicted that by 2000, two-thirds of all business software will be bought off the shelf. More specifically, organizations prefer to replace legacy systems with enterprise resource planning systems. According to AMR Research, the ERP systems market was $15.68 billion in 1997 and $72.63 billion in 2002. These statistics clearly indicate a shift in the ERP market. There are mixed reports concerning the outcome of ERP projects. ERP software automates core corporate activities, such as manufacturing, human resource, finance, and supply chain management, by incorporating best practices to facilitate rapid decision-making, cost reductions, and greater managerial control. These factors make ERP software integration complex, because consensus is required from an entire enterprise to reengineer a core business process and take advantage of the software. ERP systems are now the most common IT strategy for all organizations, and this framework has been designed to help management plan this difficult and complex task. There are different approaches to ERP strategy ranging from skeleton implementations to full functionality. There are also important differences in how organizations manage the gap between their legacy systems and the ERP business processes. It appears easier to mould the organization to the ERP software rather than vice versa. Managers considering an ERP project should address the following issues: Ø Status of the company's legacy systems. Ø Impact of new ERP system on their business processes. Ø Whether all the business processes are well defined and could be delivered through the ERP system. Ø Whether to go for a complete integrated system or to implement any one ERP module for the time being. Ø Duration of the ERP project and expected service from the ERP system to the customers. Ø Level of cooperation from the top management throughout the project. Ø Resource availability. Ø Project Scheduling and Change Management.

5.6 ASTONISHING FACTS IN ERP IMPLEMENTATION Some companies implemented ERP software because they were concerned about Y2K Compliance. Others wanted to replace their aging IT infrastructure. One firm found that spending $30 million to implement SAP would meet their Y2K-compliance goals and also support future business needs. For other companies, systems integration was the critical issue. Mergers and acquisitions had left them with an inefficient and unreliable collection of incompatible systems. For example, one company found that it had 23 different accounting systems, while another had 14 bills of material. This incompatibility made competing in a global environment almost impossible. Most companies expected an ERP to reduce their operating costs. They also expected it to produce improvements in specific processes, such as logistics, production scheduling, or customer service. In

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other companies, management was more concerned about customer responsiveness. They wanted to standardize processes to ensure quality and predictability in their global business interests by reducing cycle times from order to delivery. Figure 1 shows the performance of the organization before and after ERP implementation and the time taken to achieve the performance. All ERP packages provide choices about how to configure the software, but they also make some assumptions about data flow through the system. During the design stage, you have to decide whether to accept these assumptions. This is different from traditional systems development in which you decide on processes and then build systems to support them. Most legacy transaction processing systems have linkages that serve as a bridge between systems. System users control the access to the bridge and determine when and how systems share data. But ERP assume process integration. The system absorbs the data, and users lose control over its flow. Management sometimes resists the process changes an ERP requires. They may want to change their technology platform but not their organizational processes. But process change is inevitable with an ERP because you have to fit the organization around the software. Even with careful planning and training, going live usually is highly disruptive. Don't expect to implement the system and then go back to life as usual; an ERP is a commitment to a new way of doing business. Employees need training beforehand to understand how the ERP will change business processes. They may say, "Go away and let me do my job." But they need to know that's not going to happen. Because ERP implementation is expensive, the management is usually anxious to declare victory and move on to other things. But the post-implementation stage is your opportunity to redesign and reengineer processes to make them more functional. Some of these changes could be viewed as hurting the business in the short run. For example, sometimes processes that were automated become manual, which actually increases resource requirements in some areas. Throughout the stages of ERP implementation, expect to encounter resistance. It's hard for people to change from doing things they know well and are good at.

5.7 ERP IMPLEMENTATION STRATEGY Now we will look into the ERP implementation strategy for small and medium sized companies. For many companies, implementing an ERP package gives the impression that it is the answer to their prayers because it promises so much-higher sales, better management, and reduced cost. On the contrary, implementing an ERP package could bring more headaches to the company because it may involve many internal changes that require new business processing and employees have a hard time breaking their old habits. It is not recognizing the environmental and human factors that cause failure in ERP implementation. The major reasons for failure of an ERP project are as follows: • Most companies experience failure in their implementation because they had ambiguous objectives and unclear expectations on what the implementation would bring to them. • Lack of management commitment can occur because the top management has little understanding of information technology and the value it could bring to the workplace. • One of the key responsibilities of a project manager is to execute the project to its completion and meet deadlines through timely resolution of a multitude of conflicts. • If the project manager fails to persuade the resisting party into providing support or at least into remaining neutral during the project, there will be constant introduction of issues and conflicts, and the project will fail.

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• Inadequate levels of skill, experience, or teamwork of the project team members impede progress. Deploying an ERP solution means that the company will no longer depend on existing business processes and will adopt new and improved methods and processes offered by the ERP system. To achieve successful ERP implementation, the project team must persuade the top management for their full support with the following guidelines in mind: 1. The top management must declare that all departments unconditionally adopt the processes and functions provided by the ERP system. 2. The top management must approve all major modifications to existing functionality, and the corresponding section head must submit the reasons for modification and the plan directly to the top management. 3. To consider the following factors for process innovation: (a) Adding new business processes (b) Eliminating existing business processes (c) Modifying the business processes

Figure 1

These three guidelines will help the organization to have a successful ERP implementation. When a new integrated system is to be introduced, applying these guidelines will help the company to identify the redundant processes, refine the existing processes and modify the existing processes to get better features and value. Thus we find that it is the sole responsibility of the top management to ensure that the different phases of ERP implementation go smoothly and successfully. Normally in case of small and medium sized companies, the employees will show resistance to use new systems like ERP software, which includes new business processes and require adequate training to carry out their operations. As the system is capable of reducing the human resources, the employees' may not like the system. It is quite natural, but the top management has to bring into their

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minds that the new system is meant for improving the performance of the organization and not for reducing the manpower. Also until adequate training is provided to the employees, it is difficult to reap the benefits of the new ERP system. It is the sole responsibility of the top management to bring their employees into their fold and ensure that they feel comfortable with the new system.

5.8 PHASES IN ERP IMPLEMENTATION The System Development Lifecycle (SDLC) used for developing a software consists of the following four phases. (1) Analysis (2) Design (3) Coding and (4) Testing. The ERP implementation is different from the SDLC. In ERP implementation, the software is not going to be developed from the scratch. The software exists as a pack and all that is required is to customize as per the requirements to some extent. The most important aspects considered are identification of the ERP vendor who could deliver a right ERP package, evaluating the package, suitability of the package to meet the requirements, identification of ERP project team, identification of consultants, training, maintenance, etc. The different phases in ERP implementation are: • Project Planning • Identification of ERP Vendor • Evaluation of ERP Package • Gap Analysis • Reengineering • Customization • ERP Team Training • Testing the Product • Going Live • Training to End-Users • Maintenance

Project Planning This is the first phase in the ERP implementation. In this phase the top management will prepare the project plan for ERP implementation. This phase will provide the details on the commencement of the project, project duration, project cost, budget, ERP team to be deployed from the organization, technical and functional consultants, ERP vendors in the market, ERP packages available, training requirements, change management, etc. It is the top management which will be the motivating force behind the ERP implementation. The top management cooperation and ability to execute decisions dynamically will help the implementation to go smoothly and healthily. Planning is an outline about the future course of action. There is a statement "Failure to plan is equivalent to planning to fail". Most of the ERP projects fail miserably because of poor planning and improper coordination from the top management. The planning must be done ahead of the implementation and the last minute preparation will not work out in case of the larger software projects like ERP software implementation. Most of the projects fail as the project extends beyond the fixed date and deviates from the project schedule. Whenever the project schedule is not maintained, most probably the team will crash the various activities and compress the rest of the activities to meet the deadline fixed for going live. This is the area where the project is getting weakened and starts reacting as and when the project is completed and delivered to the end-users.

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ERP has to provide timely and accurate production-oriented information for long-range planning and day-to-day operational planning and control. It has to improve productivity and enhance the competitive edge by optimizing the use of resources. A well-designed and implemented ERP system should help reduce the production manager's problem. However, not all ERP implementations succeed fully. The top management should involve itself in all the stages of the implementation of ERP, review the results and take appropriate follow-up actions. Only then ERP will be effective in any organisation. It is essential to have a 'road map' in mind in terms of how and when ERP would address each part of the organisation. The factors to be considered in this process are: the organisation's readiness and willingness to change, top management's commitment, data status and readiness, competency development, strategic planning and vision for the project, ability to deploy top class professional for implementation. "Understanding the problem" is the first phase in ERP implementation and the goal of this phase is to establish the foundation that permits the software package to be implemented in the best possible manner. It is necessary to understand the kind of business the company conducts and how the package will fit in with the business's processes. The most common reason that companies walk away from multimillion-dollar ERP projects is that the software does not support one of their important business processes. At that point they can change the business process to accommodate the software, which will mean deep changes in long-established ways of doing business and shake up important people's roles and responsibilities. Or they can modify the software to fit the process, which will slow down the project.

Identification of ERP Vendor There are so many ERP vendors nowadays in the market. Each and every vendor has his own way of developing packaged software and some of them are known for certain ERP modules also. Hence a tough competition exists and identifying the right ERP vendor will provide solutions not only to the business process of the organization but also will help the ERP team to carry out the ERP implementation successfully. The following factors are considered while choosing an ERP vendor. They are: [1] Reliability of the vendor [2] Ability to meet customer’s requirements [3] Functionality of the ERP package [4] Vendor’s reputation [5] Vendor’s ability to provide a complete solution [6] Project costs [7] Future software maintenance provided by the ERP vendor [8] Ability to handle customization [9] Project duration [10] Training facilities

Evaluation of ERP Package This phase enables the top management and the ERP team to evaluate the ERP product from various ERP vendors from the organizational, technical and business perspectives. The role of technical and functional consultants will be on a large scale during this phase and the evaluation has to be done carefully. Proper evaluation will lead to the identification of the right ERP package and will help the ERP team to carry all the rest of the phases in ERP implementation successfully.

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Gap Analysis Gap Analysis is the step of negotiation between the company requirements and the functions a package possesses. In order for persons with differing viewpoints involved in a project to function as a team, and to push ahead smoothly, it is effective to invite outside consultants who can act as a neutral person to resolve conflicts and can push the project ahead, while giving direction on the whole. Gap Analysis is a phase in the ERP implementation, where the organisation tries to find out the gaps between the company's existing business practices and those supported by the ERP package. Solutions for Gap analysis exist in different forms like identifying a third-party product that might fill the gap, designing a custom program and altering the ERP source code.

Figure 2

Reengineering and Customization Dr. Michael Hammer defined Business Process Reengineering (BPR) as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. One of the most important members of the reengineering effort is the executive leader. The leader must be a high-level executive who has the authority to make people listen, and the motivational power to make people follow. Without the commitment of substantial time and effort from executive-level management, most BPR projects cannot overcome the internal forces against them and will never reach implementation. After having completely studied the existing system, the business process of the organization will be refined during the reengineering phase. The additions of new processes, elimination and/or modification of existing processes are all possible during reengineering phase. Customization is the most important process which has to be executed very carefully. One of the main causes for the high degree of customization is the poor change management adopted by the company. Resistance to change will always be there in any organization and it is the sole responsibility of the top management to ensure that the new systems like ERP software are deployed with little customization, failing which the ERP product at one stage will be turning into a non-ERP product and the implementation will not help the organization to reap the full benefits of an integrated system. The poor customization is another reason for ERP failure. The customization process has to take into account the following parameters; 1. End-users’ requirements 2. Technical requirements of the product and 3. Vision of top management. The higher the degree of customization, the lower will be the benefits from the ERP system, because the packaged software is purchased and installed mainly to refine the existing business processes,

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standardize the existing system and to improve the overall performance of the organization. Higher customization will close the doors for the organization to enjoy these features of integrated software.

ERP Team Training Figure 3 shows the organization of the ERP Implementation team. The Project Management Team comprises of the technical leader and the executive committee head. The team can also have a senior representative from the vendor's team. These people are responsible for conducting the scheduled work, administering the project, communicating with the in-house team and the consultants, and reporting to the executive committee. The executive committee head should monitor the implementation team's progress, assess the amount and quality of the contribution of the team members-and discuss the issues with the consulting team's head. This person should also ensure that the company personnel and the consultants are working together as a team. Each implementation project is different and will have its own characteristics. To get the most from the software, we have to get people inside our company to adopt the work methods outlined in the software. If the people going to use the ERP find that the work methods embedded in the software are not better than the ones they currently use, then they will resist using the software or will want IT to change the software to match the ways they currently do things. This is where ERP projects break down.

Figure 3

Delivery and Going Alive After the reengineering and customisation phase, the product will be getting ready for going live through the testing phase. The product will be put into test to check for its consistency, integrity, validating and verifying the requirements of the customers, reliability, etc. Once the going live date is identified, the product will be delivered and the necessary training will be given to the end-users. Once the product starts functioning the maintenance activity will also commence in parallel at the site of the organisation. After a few months from the date of going live, the organisation will be able to reap the benefits of the ERP software.

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5.9 BENEFITS REALIZATION IN ERP IMPLEMENTATION

Figure 4

The end users will not be able to reap the full benefits of the ERP software immediately after the implementation. It will take some time and even a year to realize the benefits. When the end users are in the going live phase of the ERP implementation, the first and foremost realization of ERP implementation will be the automation of existing processes. Unlike the existing manual system with so many redundant processes, the new system will enable the end users to complete a particular process in a short time and even some of the procedures followed earlier could be avoided. This is the visible and tangible benefit an employee can expect from the ERP software immediately after its implementation. Step by step as the days go the other benefits can be realized. At the second level, the end users will be able to see the improved processes getting reflected from the ERP software. All the existing processes will be pumped through ERP software only after complete refinement and re-engineering. Hence the employees will be visualizing the improvement in the existing business processes. At the third level, the end users will get the directions from their ERP software in the process of decision making. Now, the middle and top levels of management are enabled with decision support system to make suitable decisions for the benefit of the organisation based on records and data available from the ERP system. Once an integrated system like ERP software is installed, the employees will be able to fetch any data at any point of time at their door step and can make suitable decisions as and when there is a requirement. This is an added advantage in an integrated system. Only after passing through all these three levels, the end users will be able to recognise the tangible and intangible benefits of ERP software. Once it is realized, the employees can do wonders with it and can get data from the software at any point, at any level from anywhere and can use it to arrive at a decision. This will also help them to monitor a set of activities, to meet the deadlines of customers' orders, to reduce the cycle time, to reduce the lead time, to increase the speed of various tasks, to eliminate the duplications and in total, this will help the organisation to take Information Technology (IT) to all their employees'.

5.10 CHANGE MANAGEMENT ISSUES Whenever a change has to be made, it is necessary to analyze its impact on various parts of the software. Imagine modifying the value of a global variable. Every function that accesses the variable will be affected. Unless care is taken to minimize the impact, the software may not behave as expected. Change management is one of the core problems of software development. Management of changes to

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any software document means (1) managing the process of change as well as (2) managing all artifacts of an evolving software system. Both aspects serve as motivation for an integrated modeling approach to support process and configuration management in a process-centered software engineering environment. The technical view of Software Configuration Management (SCM) provides mechanisms and functions to control versions of software objects, to build derived versions, and to construct consistent software configurations. On a technical level, it supports performing changes by different mechanisms like workspace control, long transactions, or sub-databases. But all of them lack sophisticated process support, although some process-oriented features have sometimes been added. Currently, process support is of growing interest in software configuration management. The management view of SCM focuses on the organizational and administrative aspects of SCM. As part of the overall management of a software project, SCM provides methods to handle change requests, and to perform changes in a controlled manner by introducing well-defined change processes. Furthermore, it supports monitoring the status of the software components.

SUMMARY The purpose of the ERP implementation is to shed light on the processes of an organisation in order to gain competitive advantages of new technologies and to improve the performance. The process focus allows us to say something about the plethora of problems and challenges that managers face and have to solve in order to gain sustained ERP advantages. We need to know more about the processes, which the organisations go through when they invest in, nurturing and exploiting ERP systems. ERP has to provide timely and accurate production-oriented information for long-range planning and dayto-day operational planning and control. It has to improve productivity and enhance the competitive edge by optimizing the use of resources.

REVIEW QUESTIONS 1. How will you minimize the resistance and manage the process of change during ERP implementation? 2. What is BPR? 3. What is change management? 4. How will you evaluate ERP software? 5. How will you rate an ERP vendor? What are the factors considered? 6. List the critical success factors for ERP implementation. 7. What are the three approaches in ERP implementation? Explain them. 8. What are the challenges and opportunities for small and medium sized companies when they go for ERP implementation? 9. What is meant by customization? 10. “The higher the degree of customization, the lower will be the benefits from ERP system."Comment.

ERP Implementation

11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.

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What are the responsibilities of top management in an ERP project? How will you ensure that the ERP package purchased will fit into your organization? What is gap analysis? How do you overcome gap analysis? Will ERP software enable the top management in decision making? How will you carry out identification of new processes and the implementation of them? How should the system be configured to be able to handle flexibility? What are the different phases in ERP implementation? Explain. Which is the most crucial phase in ERP implementation? Why? What are the factors behind the failure of ERP projects? Select an organization of your choice and discuss its ERP implementation from three perspectives–Organization, Technology and Business. What are some common pitfalls during an ERP implementation? How were these problems solved? How could they have been prevented? Which are the factors that mostly influence the ERP system? What are the effective strategies for addressing an organization's reluctance to embrace a new system? What key factors are transforming ERP systems and the solutions they are providing to clients? When can you say that the ERP implementation is done?

6 Impact of Operating System on ERP OBJECTIVE • To introduce the concept of operating system. • To describe the impact of operating system on ERP software. • To discuss the issues in migrating from one operating system to another.

EXPECTED OUTCOME The readers will be able to address the following:

ü What an operating system is. ü ERP software under different operating system environments. ü Scope for packaged software in migrating from one operating system to another. An operating system may be viewed as an organized collection of software extensions of hardware, consisting of control routines for operating a computer and for providing an environment for execution of programs. The primary objective of an operating system is to increase the productivity of a process resource. The two services provided by an operating system are command-language users and systemcall users irrespective of the type of operating system being used. An operating system is a software program designed to act as an interface between a user and a computer. It controls the computer hardware, manages system resources, and supervises the interaction between the system and its users. The operating system also forms a basis on which application software is developed and executed.

6.1 FUNCTIONS OF AN OPERATING SYSTEM An operating system is expected to perform the various functions given below: (a) Command Interpretation (b) Peripheral Management (c) Memory Management (d) Process Management The CPU cannot understand the commands keyed in by a user. It is the function of the operating system to translate these commands into a language that the CPU can understand. Operating systems

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are of two types: single-user and multi-user. Multi-user operating system handles users as well as multiple devices simultaneously. Such an operating system is more efficient and more sophisticated than a single-user operating system.

6.2 UNIX and LINUX - An overview Unix is a multi-user operating system and has a number of features that make it ideal as a multi-user operating system. It is a multi-programming, time-sharing and multi-tasking system. The three components of Unix are kernel, utilities and application programs. For organizing data on the disk, Unix provides a file system which allows us to group files in a convenient manner. The Unix file system has a hierarchical structure where the files can be stored under directories. Unix was designed to be portable, multi-tasking and multi-user. The Unix systems are characterized by various concepts: plain text files, command line interpreter, hierarchical file system, treating devices and certain types of inter-process communication as files, etc. Unix provided the TCP/IP networking protocol on relatively inexpensive computers, which later resulted in the Internet explosion of worldwide real-time connectivity. This quickly exposed several major security holes in the Unix architecture, kernel, and system utilities. Linux was originally developed for Intel 386 microprocessors and now supports all popular computer architectures. It is deployed in applications ranging from embedded systems to personal computers to supercomputers. In 1983, Richard Stallman founded the GNU project which today provides an essential part of most Linux systems. In the past, the difficulty of installation was a barrier to wide adoption of Linux-based systems, but the process has been made easier in recent years. Many distributions are at least as easy to install as a comparable version of Windows. It is unnecessary to file license numbers and enter them during installation. Also, personal computers that come with Linux distributions already installed are readily available from numerous vendors including large mainstream vendors like Hewlett-Packard and Dell.

6.3 LINUX IN AN ERP WORLD For those who are looking for inexpensive automation tools, Linux can provide various point solutions toward a more comprehensive ERP capability. Even complete ERP systems are beginning to be built in the Linux and Open Source communities. An example is Compiere, an open source ERP software application developed by Jorg Janke in 1999. The current version of the system is 2.5.1c. The major ERP vendor SAP believes that Linux and the Open Source movement will change the nature of all software development including their own. While some aspects of their ERP product suite may remain forever proprietary, they see clear advantages for both their customers and themselves in adopting Open Source practices. Advantages include practical cost-effectiveness as well as global-scale cooperation between developers, vendors and customers for building better and more accessible software. Linux users are accustomed to standards and a culture of software collaboration, but these trends are only now slowly beginning to permeate the rest of the software industry. The entire ERP trend does pose some tough questions for Linux advocates. First of all, Linux's infiltration into enterprise has often come at the departmental level, usually on departmental web servers. As more companies adopt ERP systems and insist that internal and public web content feed into the same enormous data stream, Linux may be harder to push in the workplace. Also, for Linux to move from the web server to the application server environment, it will often need to go head-to-head

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edge. This is a strong argument for decentralized computing. If Linux is to use this argument, it will have to provide a powerful system for managing business rules and incorporating them into enterprise systems, as described in Figure 1. Note that once broken down to the departmental level, Linux has the capability and competitiveness to host all of the functions displayed. ERP is a very profitable business, in contrast to the plummeting margins in shrink-wrap software. Much of the recent effort in the Linux world has gone toward making Linux a feasible desktop replacement. To observers of modern enterprise-wide computing, this seems almost like misplaced energy. Intranets and other such developments are slowly turning front ends into commodities, and the real power is shifting from the client back to the server, although the server does not have to be as monolithic as a mainframe. It is important for Linux developers to turn their attention to the infrastructure which is increasingly being demanded by enterprise-class computing and the executives who demand it. To ensure the encouraging growth of Linux and the associated improvements in business attitudes toward information technology, developers would best address some of the needs of enterprise computing. Commercial developers will certainly fill in the gaps. Then perhaps the promise offered by the client/ server movement, more flexible and decentralized computing, will stand in a little less danger from huge, single-source ERP systems.

6.3.1 ERP users in LINUX environment Linux is beginning to expand beyond its traditional role as an edge server into the core of the enterprise applications stack. Although Unix and Windows server will retain their majority share through at least the middle term future, evidence demonstrates conclusively that from the customer point of view the server operating system choice for ERP is now a three way race. The ERP partisans of Linux believe that the open source operating system has achieved rough technological parity with Unix and Windows Server. It runs on cheaper hardware than Unix and costs less to buy than Windows server. It is more secure than Windows server. It enjoys the active technical support and strategic commitment of such major vendors as IBM, Hewlett-Packard and Oracle. The belief among our respondents that Linux has fewer security vulnerabilities than the Windows server is also significant, although we note that there is no obvious technical reason why there should be a fundamental difference between the two operating systems, at least not over the long term. The security issues that have persistently dogged Windows appear in part to be a sociological phenomenon, driven by widespread anti-Microsoft sentiments in the hacker sub-culture sentiments that unfortunately motivate a criminal minority to put their animus into practice. Microsoft very rightly argues that security is everyone's concern and then goes on to suggest that as Linux market share grows it too is likely to be struck by hacker attacks. There are reasons cited by the ERP users for not considering Linux for their ERP stack. Some of them are really significant barriers to Linux growth. If the obstacles to Linux will diminish in importance, the result could very well be a pronounced acceleration in Linux adoption sometime between late 2005 and mid 2006. Some of the reasons cited by the ERP users regarding the usage of Linux are: • ERP users worry about the propriety of using "free" software to run their business. • Scalability of Linux, particularly for large back end transactional databases. • Linux sometimes has a higher total cost of ownership (TCO) than one would expect for a nominally free operating system, due to the high cost and relative scarcity of experienced Linux system administrators.

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center. The survey results showing the shares of the various operating systems among the ERP vendors determined by the Peerstone research group (www. peerstone.com) are given above. Among the operating systems Unix, Windows and Linux, in 2004 Unix has performed well. Of course, the producers of each of these operating systems are releasing new versions with increased features to overcome the competition.

6.5 MIGRATING THE ERP FROM ONE OPERATING SYSTEM TO ANOTHER IT organizations face significant challenges and business requirements as they move key applications to new platforms. Enterprise resource planning systems bind together various company functions including human resources, inventories, and financials - while simultaneously linking the company to customers and vendors. The Migration of these systems poses specific issues for both the information technology organization and the business functions. Carrying out the process of migration in an ERP environment is a little bit tedious task and hence the different phases involved in the migration process have to be carefully executed. It requires cooperation both from the IT professionals and business analyst. There are various reasons for migrating from one operating system to another. There exists a huge competition among the various operating systems and new versions are being introduced every year. This brings the pressure among the ERP vendors to utilize the features of these new versions resulting in migration from one operating system to another. The six migration phases identified by the META group (www.metagroup.com) are: Ø Analysis of current systems, processes, staff requirements, and costs against business requirements and alternative solutions. Ø Definition of the scope and budget requirements of the ERP migration, taking into consideration the skill, process, and culture fit of existing and alternative technologies. Ø Coordination and completion of the migration effort up to the point of deployment including development, tuning and quality assurance. Ø The point of transition to the new ERP platform. Ø Ongoing management of the ERP system on the new platform. Ø Meeting Change Management requirements. The first and foremost step in the process of migration is to consider the overall organizational involvement in the ERP migration effort. The highest percentage of IT staff resources is committed during the deployment phase of migration. IT management stated that time requirements to manage the Unix platform took more staff time than preferred across the areas of support, training, performance monitoring and vendor management. After the migration, time savings were achieved in all areas. The average migration period was only about seven months, which is in line with expectations. In order to recommend ERP migration, each organization faces the need to justify its pursuit. The major reason is found to be the upgradation of ERP application, which stands as the key motivating factor behind this migration process. For the most part, the IT organization approaches justification of the migration from a technology-centric view, pointing at operational issues and outdated technology as primary motivators. The major reasons for migrating from one operating system to another from the perspective of IT professionals as found by META group is presented below:

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Ø First, the Unix leavers. They are already leaning to Linux rather than Windows and Linux will probably make it impossible for Microsoft to recapture its lost ground here. Ø Second, new enterprise application installations. Here, it is believed that Windows server will continue to hold its own, but Linux competition will pressure its pricing model and its margins, putting a ceiling both on growth and profitability. Ø Finally, the existing Windows installed base itself. We find that the Linux will unquestionably be the fastest growing server operating system in the enterprise applications market for the future. The ERP server operating system market is moving towards a permanent state of diversity where Unix, Windows server and Linux will have substantial user bases. To ensure the encouraging growth of various operating systems and the associated improvements in business attitudes toward Information Technology, developers would best address some of the needs of enterprise computing. Commercial developers will certainly fill in the gaps. Then perhaps the promise offered by the client/server movement, more flexible and decentralized computing, will stand in a little less danger from huge, single-source ERP systems.

SUMMARY With the increase in the tendency in the organizations to measure customer profitability and retain customers, many customer-focused applications and analyses have begun moving from theory to implementation through creative, innovative and motivated organizations that aim to provide a tremendous and unbeatable strategic advantage. Some of the ERP issues with respect to the operating system are discussed and it is hoped you will also agree that much research is still needed to better understand the ERP phenomenon from an operating system perspective. Both IT organizations and business units should plan to spend more time on migration projects. The IT organization has seen improvements in many areas, including performance and scalability, while the business functions gain flexibility and cost savings in support of ERP systems. Therefore, as the evolution of ERP continues at a rapid pace, platform decisions add an additional dimension to consider for organizations that want to maximize ERP manageability and business impact.

REVIEW QUESTIONS 1. 2. 3. 4.

What is an operating system? Examine the limitations of the migration process in an ERP environment. Why are ERP users choosing Linux? Compare and contrast any two operating systems of your choice and do a little bit of research on how they could influence an ERP system. 5. Is the operating system an issue from the customer's point of view? 6. Highlight the features of an operating system of your choice (say, Windows/Linux/Unix) from three perspectives namely business, organizational and technological. 7. What is meant by migration? How is it carried out?

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8. Which of the following keeps a high pressure on the ERP vendor to migrate from one operating system to another? Justify. (a) Customer (b) Competition (c) Performance (d) Technical issues 9. Discuss the impact created by the different operating systems on ERP software. 10. If you are an ERP vendor or ERP consultant, will you recommend carrying out the process of migration from one operating system to another? If so, why? 11. Do you really think that the operating system is an issue for packaged software like ERP? 12. How will you measure the performance of ERP software under different operating systems? 13. What are the salient features of the Linux operating system? 14. Select an operating system of your choice and list its features. Identify an ERP product which is using your operating system. Evaluate the ERP product from the view point of an operating system and present the pros and cons of the ERP product. Based on your study, the vendor must be able to customize his product and add better features, thereby making the users reap the full benefits of his product (i.e.) the ERP software.

7 Supply Chain Management (SCM) OBJECTIVE • To introduce the concept of Supply Chain Management (SCM). • To describe the benefits of SCM. • To describe the modeling approaches in SCM.

EXPECTED OUTCOME The readers will be able to:

ü Reap the benefits of an ERP system coupled with SCM. ü Use ERP and SCM to generate optimal solution. Supply Chain Management (SCM) is the practice of coordinating the flow of goods, services, information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. This process includes order generation, order taking, information feedback and the efficient and timely delivery of goods and services. The rapid pace of today's business, the giant strides made in the field of Information Technology, the ever-increasing expectations of the customer and the stiff competition among firms have resulted in the evolution of several new paradigms. One of the widely used paradigms is Supply Chain Management (SCM). Integrating operations from sourcing to customer via manufacturing, packaging, warehousing, distribution and retailing, SCM has emerged a powerful tool for a wide variety of manufacturing and service industries. For most businesses, greater profitability and better customer service are important goals. However, there is a long list of benefits that can be derived through SCM. These include faster time to market, lower development costs, and common business framework with partners, rapid exchange of information, availability of analytic and management tools, reduced inventories and assured delivery schedules. "At the highest level, SCM is helping companies make their own operations more efficient," said the President of a software company.

7.1 OBJECTIVES OF SUPPLY CHAIN MANAGEMENT • Decrease inventory cost by more accurately predicting demand and scheduling production to match it.

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• Reduce overall production costs by streamlining production process and by improving information flow between enterprise, suppliers and distributors. • Improve customer satisfaction by offering better quality, variety and speed.

7.2 COMPUTER-INTEGRATED SUPPLY CHAIN MANAGEMENT SYSTEMS Information Technology (IT) plays a vital role in coordinating various activities between companies, which form a supply chain. In a supply chain, materials move downstream from the initial supply source to the end customers and the information moves upstream from the end customers to the initial supply source. IT helps to convey precise demand data from one member to another in the supply chain in a hierarchical manner. Manufacturers (members of supply chain) need to concentrate on core competencies, and outsource products/services to other companies, to make their products cost effective. Manufacturers need to change focus from their computer-integrated manufacturing systems to computer-integrated supply chain management systems. They need to install programmable hardware, which is able to respond quickly to changes. The hardware used for automation is as follows: • Computerised Numerical Control (CNC) machine tools to manufacture individual parts of a product. It utilises software for automatic control of machine operations. It is important for automation because it reduces production time and provides improved quality. • Specialised robots to load and unload machine tools, inspect parts, assemble products, or to perform manufacturing tasks like painting and welding. Material transfer systems such as a network of Automated Guided Vehicles (AGVs) to move raw materials, work pieces, finished and partly finished components, and tools across the manufacturing facility. • Automated Material Transfer System (AMTS) to move finished parts into Automated Storage and Retrieval System (ASRS) and various materials, components, and tools out of it. • A storage and retrieval system to organise storage space by providing high-rise and highdensity storage.

7.3 CAD AND CAM The Computer-Aided Design (CAD) systems are interactive computer graphics systems used for product design. The parts, products, or systems can be simulated using an interactive computer animated model. CAD technology therefore significantly reduces the time required for product design, and provides tremendous flexibility in design. Computer-Aided Manufacturing (CAM) software integrates the operations of all computer-controlled machines. CAM can have on-line and off-line applications. Online applications involve control and integration of all operations on computer-controlled hardware for product manufacture. Offline applications involve preparation of software for the above, planning activities that influence the manufacture of a product such as production, inventory, materials and cash flow planning. Manufacturers can therefore shorten the time between product conception and product completion by integrating automated manufacturing process with the programmable design of a product. Swift changes lead to cost reduction and increased profitability. Manufacturers can therefore integrate themselves to the dynamics of the supply chain.

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7.4 ELEMENTS IN SUPPLY CHAIN MANAGEMENT A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chain exists both in service and manufacturing organizations and the complexity varies from one industry to another. There are various elements influencing the SCM:

[1] Location It's important to know where production facilities, stocking points and sourcing points are located; these determine the paths along which goods will flow.

[2] Production An organization must decide what products to create at which plants, which suppliers will service those plants, which plants will supply specific distribution centers, and, sometimes, how goods will get to the final customer. These decisions have a big impact on revenue, costs and customer service.

[3] Inventory Each link in the supply chain has to keep a certain inventory of raw materials, parts, subassemblies and other goods on hand as a buffer against uncertainties and unpredictabilities. Shutting down an assembly plant because an expected part shipment doesn't arrive is expensive. But inventory costs money too, and so it's important to manage deployment strategies, determine efficient order quantities and reorder points, and set safety stock levels.

[4] Transportation How do materials, parts and products get from one link in the supply chain to the next? Choosing the best way to transport goods often involves trading off the shipping cost against the indirect cost of inventory. For example, shipping by air is generally fast and reliable. Shipping by sea or rail will likely be cheaper, especially for bulky goods and large quantities, but slower and less reliable. So if you ship by sea or rail, you have to plan further in advance and keep larger inventories than you do if you ship by air.

7.5 ROADMAP TO BETTER SUPPLY CHAIN MANAGEMENT Managing the supply chain involves three main paths: (i) Product flow which includes the movement of goods from a supplier to a customer, as well as customer returns. (ii) Information flow which involves transmitting orders and updating the status of delivery. (iii) Financial flow which consists of credit terms, payments and payment schedules, plus consignment and title ownership. Supply Chain Management falls into the following four main areas: with a number of sub headings that can be used alone or integrated.

(a) Supply Chain Networking This utilises the Internet and the new Microsoft. NET technology, to enable your supply chain and provide visibility of the business ecosystem, in a collaborative environment with your customers, suppliers and business partners. This framework needs to be more flexible than the traditional sequential, linear relationships and relies on the use of e-business tools to adapt to this networked dynamic model.

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(b) Supply Chain Planning Supply Chain Planning allows us to synchronise our supply chain to leverage the best value for the business by optimising procurement, lead time, purchasing and pricing decisions.

(c) Supply Chain Execution Supply Chain Execution relies on the visibility through the supply chain of all components from supplier's inventory and delivery capabilities, to materials management, warehousing and distribution policies, procurement timing and pricing.

(d) Supply Chain Co-ordination Supply Chain Co-ordination is primarily the conjoint of all the above elements in a collaborative framework with suppliers, which not only relies on the supplier becoming a partner, but also relies on an integrated information network which allows the rapid evaluation of supplier performance.

7.6 DECISION MAKING IN SUPPLY CHAIN MANAGEMENT Supply Chain Management can broadly be classified into strategic, tactical and operational decision making. Strategic decisions are long-term decisions that are linked to top-level strategy and guide the supply chain policies from a design perspective. Tactical decisions are resource allocation decisions over medium-term planning horizons. Operational decisions are short-term decisions focusing on dayto-day decision making. Operational decisions are designed to effectively manage the product flow in the strategically planned supply chain. The four main areas of decision making in supply chain management are as follows:

Step 1 The first step in creating a supply chain is the choice of the geographical placement of production facilities, stocking points and sourcing points. This decision has long-term consequences. Since it governs the basic strategy for accessing customer markets it has an impact on revenue, cost and level of service.

Step 2 The second step concerns classical production planning decisions such as “what to produce”, “when to produce” and “how much to produce”. Strategic decisions include the choice of production facilities and sourcing points. Tactical decisions concern aggregate production planning. Operational decisions include detailed production scheduling, quality control measures and workload balancing.

Step 3 The third step is to determine how the finished or semi-finished goods will be stored. Since holding of inventories can cost anywhere between 20-40 percent of their value, their efficient management is critical in SCM. While policies that guide inventory management may be viewed as strategic decisions, day-to-day management of incoming and outgoing materials/products constitute operational decisions.

Step 4 The final step is the choice of the mode of transportation of the finished goods to the customer market. These decisions are closely linked to the inventory control decisions since the best choice of transport

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(c) Financial flows It represents credit terms, payment schedules and consignment and title ownership arrangements. The network, in turn, is supported by three pillars:

(a) Processes This embeds the firm's capabilities in logistics, new product development and knowledge management.

(b) Organizational structures These encompass a range of relationships from total vertical integration to networked companies as well as management approaches and performance measurement and reward schemes.

(c) Enabling technologies This include both process and information technologies.

7.8 IMPACT OF ERP ON SCM First, we will look into the following key SCM issues for the coming years: 1. Further integration of activities between suppliers and customers across the entire supply chain. 2. On-going changes in the supply chain needs flexibility from IT. 3. More mass customization of products and services leading to increasing assortments while decreasing cycle times and inventories. 4. The locus of the driver's seat of the entire supply chain and 5. Supply chains consisting of several independent enterprises. It is identified that only a modest role exists for ERP in improving future supply chain effectiveness and a clear risk of ERP actually limiting progress in supply chain management. ERP seem to provide a positive contribution to the following issues only: 1. More customization of products and services 2. More standardized processes and information 3. The need for worldwide IT systems and 4. Greater transparency of the marketplace. The limitations of ERP systems in providing effective SCM support are as follows: 1. Insufficient extended enterprise functionality in crossing organizational boundaries, 2. Inflexibility to ever-changing supply chain needs, 3. Lack of functionality beyond managing transactions, and 4. Closed and non-modular system architecture. These limitations stem from the fact that the first generation of ERP products has been designed to integrate the various operations of an individual firm. In modern supply chain management, however, the unit of analysis has become a network of organizations, rendering these ERP products inadequate in the new economy. Thus we find that one should not expect too much from ERP for supply chain management in extended enterprises. ERP systems have become a de facto standard in business because they replace a patchwork of local legacy systems. But ERP systems were never designed just to support SCM and

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cover all the tools used to deliver software, including project management packages. Without integration between the software development lifecycle and the IT ERP capability • Effective portfolio and program management will remain elusive, • Development will continue in fragmented and nonstandard ways, • Deployment and software inventory processes will continue to be haphazard, and • Traceability between software projects and their delivered runtime code will remain weak, perpetuating poor quality software. Managers can no longer abdicate the responsibility of leveraging IT for supply chains to products currently available in the market. Generic products only use information and insights publicly available or known and hence cannot be a source of competitive advantage. The key is to look deep within our own supply chain ecosystems, understand how the technological advances could be applied and build customized solutions. It is important to understand that a single company could adopt different strategies for the inbound supply chain and a separate strategy for outbound supply chain. Within the same enterprise, collaboration strategies could vary, depending on the category of products it buys or sells. Hence, it is important that an enterprise adopts a portfolio approach to collaboration, choosing the set of tools most relevant to its supply chain ecosystem. Internet has reduced the costs of integrating, coordinating and transacting across organizations. This has forced enterprises to reevaluate their strategies, processes and organizational structures in order to enable effective collaboration and move away from inefficient activities that do not add value. The most significant impact of the internet has been to change the way enterprises relate to their trading partners and customers. The new Internet enabled business model is based on collaboration. Technologies that enable increased collaboration within and across businesses reduce integration costs, transaction costs and redundancies, thereby enabling them focus on their core competencies, outsource non-core activities and build strong differentiators based on Quality of Service (QoS) parameters. An optimal IT solution for an optimal supply chain has to integrate decision-making processes, collaborative opportunities with existing business processes and systems. Various technology trends enable companies to realize this vision of a real-time, responsive and collaborative supply chain.

7.11 ERP AND SCM - A COMPARISON Enterprise Resource Planning (ERP) is a software solution that addresses the enterprise needs taking the process view of an organization to meet the organizational goals tightly integrating all its functions. ERP is a set of application software that integrates manufacturing, finance, sales, distribution, HR and other business functions with a single comprehensive database that collects data from and feeds data into modular applications supporting all the company's business activities, across these functions, across business units, across the world. Supply Chain Management (SCM) is the method of creating products for the end user. It spans the suppliers of raw materials, the manufacturing units, warehouses, transporters, distributors, retailers and finally selling. ERP excels in transaction management. SCM affords forecasting and decision support. ERP links processes within the organization. SCM spans the entire supply chain. ERP’s primary function is to generate transaction data whereas SCM can make sense out of the data to help you make decisions. ERP Systems are linear and interactive, whereas SCM is constraint based and optimized. SCM's optimize Processes, increases revenue, reliability and responsiveness, whereas ERP automates processes, reduce cost, cycle time and inventories. SCM differentiates the processes, strategic in nature, applicable to

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more than one organization at a time, whereas ERP standardizes the processes. SCM is prescriptive, enables decision support and is a bi-directional planning process whereas ERP is evaluative, transaction focused and is a unidirectional process.

SUMMARY Supply Chain Management is a paradigm that is popular in the business world today. It represents a thought process that emphasizes customer service. It requires a break from a mindset that does not recognize globalization, the role of IT in managing businesses or the importance of the customer. Incredible as it may seem, much of this has actually happened. In order to have a successful Supply Chain Management policy, the retailer needs to be able to monitor key data historically in order to be able to forecast requirements that can be shared with suppliers and allow both parties to gain from planned economies of scale and reduced inventory costs. Computer-Integrated Supply Chain Management Systems provide the ability to deliver timely, accurate information to the manager's desktop to enable the correct decisions to be taken at the right time. This has to be implemented in the knowledge that the organisation can generate Key Performance Indicators based on historical data that can be refined over time.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

What is SCM? Examine the limitations of SCM. Is ERP the same as SCM? How can Information technology be effectively used for SCM optimization? Distinguish between CAD and CAM. Explain briefly Computer Integrated SCM. Name the elements of Supply Chain Management. Prepare the roadmap to successful Supply Chain Management. What are the steps involved in the process of decision making in SCM? Explain briefly the Supply Chain Management model. What is the impact of ERP on SCM? Propose a model to reap the benefits of ERP, SCM and E-Business. Who are most benefited from SCM - Customers or Suppliers? How will you manage the flows in Supply Chain? What is the role of Information Technology in SCM? How will you achieve an Integrated Supply Chain?

8 ERP and CRM OBJECTIVE • To introduce the concept of Customer Relationship Management (CRM) • To describe the benefits of the CRM enabled ERP software • To highlight the features of CRM coupled with Data Mining and Data Warehousing

EXPECTED OUTCOME The readers will be able to: ü Use CRM with the latest technologies

ü Provide CRM consultancy to an organization ü Use CRM with ERP In today's business application market, focus has shifted from internal business process and resource integration to external sales, procurement and supplier resources. SCM and CRM are the enlarged concept of ERP and they embrace a much broader sense of business management. Sales with the most leading companies are very sluggish. However, there are still a score of local players that are doing well in this market. The objective of CRM is to add value for customers through those processes that involve direct contact with customers before, during and after sales. CRM encompasses marketing and sales activities related to the identification and characterization of markets, the characterization of product opportunities within those markets that are consistent with the strategies and expertise of the enterprise and the development of those markets into a customer base that generates recurring demand for the products of the enterprise. ERP systems may support demand planning activities which make projections for existing products with target volumes and time requirements as well as projections for new products or product modifications. ERP systems may also support customer inquiries as to product lines and company capabilities as well as inquiries and negotiations for alternative supply arrangements. ERP systems always support customer orders for existing products, customer order changes and cancellations and inquiries about customer order status.

8.1 INTRODUCTION TO CRM The customer is the backbone of any organization. The objective of any business done by an organization is to meet the requirements of the customers. The customers' details, their requirements, their

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expectations, etc. have to be taken care by the organization to get their goodwill. With this broader objective, the CRM evolves and it improves marketing effectiveness. CRM is nowadays coupled with the other systems like ERP, SCM and so on. These new integrated systems are able to perform better than earlier as they take care of all the business operations, technical requirements, resource optimization and the customer. In fact the requirements of the customer are broadly classified as: (1) Normal requirements (2) Expected requirements and (3) Exciting requirements. Customer relationships can be maintained effectively only if the organization is able to understand their requirements and meet their needs at the earliest. The fundamental theory behind CRM is to identify profitable customers, attract and retain them, and maximize their useful life span and the profits from them by establishing and fostering good relationships with them. This theory is similar to relationship marketing but CRM adds the aspect of IT to implement relationship marketing. Besides retaining profitable customers, the theory espouses removing unwanted customers from the organization, as these customers not only cause administrative hassle for the organization but also reduce its overall profits.

8.2 NEED FOR CRM CRM works by gathering information about customers and analyzing the information collected. An example of this would be supermarket discount cards. When a consumer scans the cards and then their items, the items that the customers have bought are entered into a database. This gives an accurate idea of which customers buy what. This enables the organization to analyze these data later. Based on this analysis, the organization can change their marketing strategy; thereby the Customer Relationship Management (CRM) brings the company closer to the customer. There are many goals that businesses have when implementing CRM techniques and applications. The organization wants to improve customer service which will subsequently improve customer satisfaction. The business also wants to maximize revenue by advertising the right products to the right people. In other words, the organization is interested to find what the exact requirements of the customers are. Once this is done then the organization not only can retain the existing customers but also can gain new customers. CRM processes are designed to monitor all of the contacts between customers and companies. Maintaining a positive relationship with the customers is an essential element in any business. Customer relationships are vital business assets and the benefits of CRM to customers are increased convenience and speed of service and they help the organization to increase their ability to develop profitable customer-focused strategies. The first and foremost step for establishing CRM lies in establishing the required changes and planning for their implementation. CRM is a strategy used to learn more about customers' needs and behavior in order to develop better relationships with them. Customer relationships are at the core of business success. Coupling CRM with other technologies like (Enterprise Resource Planning) ERP, Supply Chain Management (SCM), Management Information System (MIS) and Decision Support System (DSS) will yield better results to the organization. The concept of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. With an effective CRM strategy, a business can increase revenues by: • providing services and products that are exactly what the customers want • providing better customer service • selling products more effectively • retaining existing customers and gaining new customers

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• providing guidelines to explore new marketing strategy • expanding the business and reaching all the customers through the web. The following factors account for successful CRM implementation: • Developing a customer-focused strategy first before considering the kind of technology we need. • Developing prototypes and making use of business models to understand the business processes effectively. • Ensuring that the CRM provides a scalable architecture framework. • Ensuring that necessary data is available to make analysis and change the business strategy accordingly to meet the expectations of the customers. • Storing unwanted and useless data wastes time and money which CRM eliminates. • Addressing the CRM system from three perspectives--Business, Technology and Customer.

8.3 COMPONENTS OF CRM Pleasing the customers has been the priority of most organizations. CRM is that face of business process that aims to establish enduring and mutually beneficial relationship with the customers in order to derive customer retention, value and profitability. CRM entails acquiring and developing knowledge of one's customers and using this information across various touch points to balance revenue and profit with maximum customer satisfaction. CRM aims at capturing pertinent data about the current and prospective customers. The objective of Customer Relationship Management (CRM) is the optimization of profitability. It focuses the issue that not all the customers are equal and need priority while providing services to the deserving customers. The company grows only if it has reliable customers and it is in the hands of the company to catch and retain valuable customers. This can be done once the company identifies the needs of the customers, their desire and the area where the company has to improve to fulfill the needs. Executing this process is not such an easy task and those who have done that lead the market in the industry. CRM provides a solution to address these points through the following components: (a) Operational CRM (b) Analytical CRM (c) Collaborative CRM The operational CRM looks at the business processes of an organization. It considers the automation of various business processes and providing a smoother interface among these processes. This will involve integration of the front-office and the back-office of an organization. The analytical CRM will analyze the data and provide effective reports for decision making. This is the component of CRM which will help the organization to improve its system and provide better services to the customers. Techniques like data mining and data warehousing are used to aid the CRM to analyze the collected data and generate reports to the top management. The combination of CRM with ERP is also important. Resource allocation for everything like maintaining sufficient product stock, satisfying customer demand and sufficient inventory for marketing direct mail promotions will eventually be important constraints to incorporate into any CRM system that is trying to optimize customer profitability. This will also help the organization to change its marketing strategy to improve the business. Collaborative CRM deals with applications of collaborative services including email, chat, websites, e-communities, internet, intranet, e-commerce, e-business and similar other vehicles driving the organization. These three

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components of CRM not only help to retain the existing customers and add new customers; it aids the organization to define its marketing strategy, pricing, introducing new products, identifying the competitors, locating valuable customers and above all keeping a database of customer information which is an asset to any organization.

8.4 DIFFERENT DIMENSIONS OF CRM The CRM can be viewed from three perspectives namely Business, Technology and Customer. Customer Relationship Management aims at improving the relationship of the customer with the organization. The existing CRM literature focuses heavily on the technology and business perspectives of CRM. Yet the importance of the customer perspective of CRM cannot be neglected. As customers develop loyalty and opinions of an organization through interactions with it, organizations would need to pay attention to these interactions and understand what customers want to see in a CRM system.

Technology Perspective From the view point of technology, the Customer Relationship Management (CRM) must be enabled with latest technologies like Data Mining, Data Warehousing and OLAP. Technology forms the base for any system and if this technology is applied effectively the users can reap the full benefits of CRM. The technology helps the CRM system to achieve information integration, collection of data, analyzing the data, preparing reports, providing suitable guidelines to the top management for decision making and so on. Usage of Information Technology (IT) will bring greater impact of CRM on the customers. From the organization point of view, introducing new latest technologies will require training to be given to the employees' and changing management is required to streamline the system and re-engineer the business process. Usage of Information Technology with CRM will help both the organization and the customer.

Business Perspective From the business perspective we find that the strategy of CRM must be identifying, understanding and predicting consumer behavior to foster long-term profitable relationships. The organization must use the CRM to identify the requirements of the customer, predict the expectation of the customer, to design new business strategy and to evolve new marketing strategy. Recording the needs of customers alone is insufficient; analyzing it, conveying it to the different levels of employees through proper channel and generating action plan to overcome the defects identified is the most essential and desired outcome of a successful CRM system. It is recommended to have medium-level use of Information Technology to analyze consumer patterns, customer segmentation and one-to-one marketing to generate win-win situations for both parties. It is necessary to bring into the minds of the employees that the customer is the inner core for any business.

Customer Perspective From the customer perspective, the CRM stands focusing on all interaction points between the customer and the organization. The CRM is mainly established in an organization to bring the customers and organization into one fold. Customer perspective requires the CRM system to take into the services required by the customers, to estimate the required level of customization of products and services for the customers. It also requires the organization to change the mindset of the employees to provide better services to the customers. It requires that the changes in organizational structure is allowed for more value-adding interaction points for customers thereby bringing mindset changes like employee

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SYSPRO CRM can develop, execute and track marketing campaigns encompassing five components: target audience, offer, content, channel and call to action. All can be tested or re-used. "Triggers" automatically generates communication pieces, or fulfillments, based on responses. The CRM Marketing features include analytics for measuring results and developing new strategies. CRM facilitates total collaboration of inside and outside sales teams and streamlines sales strategies to achieve sales objectives. SYSPRO CRM is a critical link in enabling and empowering a true extended enterprise strategy. The 3600 view of all contact touch-points coupled with the strategic advantage of an integrated solution deliver tangible, intrinsic and bottom line value to the enterprise. From this discussion on the CRM environment supported at the back-end by ERP, it is identified that a perfect CRM system must possess the following properties: Ø Integrated Accessible Data Ø Eliminating Duplicate Data Entry Ø Automating and Increasing Productivity Ø Internet enabled and Wireless Access feature Ø Flexible Customization Ø Secure & User Focused Ø Scalable Ø Enabled with Dynamic Selling Tools Ø Scope for Easy Data Integration Ø Dynamic Sales Management Ø Automated Marketing Process Ø Integrated Knowledge Base Ø Complete Customer Service Ø Ability to manage Remote Users

8.6 DATA MINING AND DATA WAREHOUSING IN CRM A data warehouse is a subject-oriented, integrated, time-variant, nonvolatile collection of data in support of management decisions. Data mining is the process of efficient discovery of nonobvious valuable patterns from a large collection of data. A data warehouse can be viewed as an information system with the following attributes: • It is a database designed for analytical tasks, using data from different applications • It contains current as well as historical data to provide a historical perspective of information • It contains a set of tables • Every query results often in a large result set and involves frequent full table scan and multitable joins Data mining is not specific to any industry. It requires intelligent technologies and the willingness to explore the possibility of hidden knowledge that resides in the data. Most organizations engage in data mining to do the following: (a) Discover knowledge (b) Visualize data (c) Correct data. From the CRM point of view, data mining applications include the following: • Retaining the existing customers and gaining new customers • Enhanced Sales and customer service • Effective marketing

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• Reduction of risk • All operations scanned for fraud detection There is an opportunity today given the new technologies like Data Warehousing with analytical extensions to refocus accounting systems to reflect what measures of performance are important to your organization. The development of data warehouses is just one of the technological advances that have improved the ability of marketers to tailor marketing strategies to customers. Data warehouses collect, clean and store customer information for later analysis. A survey conducted by the consultants reveals that 83% of clients in the IT industry are expected to have a data warehouse by 2008, more than double the number who considered it relevant in 2002. Data warehouses are normally dedicated to 'off line' analysis and not the day-to-day processing of transactions. They contain existing customer transaction records and may also incorporate information from other sources, both within and outside the organization. Once the data warehouse is built, the next step is to mine the data and try to discover previously unknown patterns. Data mining comprises a range of data analysis techniques, including cluster analysis and neural networks. Patterns uncovered in the data can be used to develop new marketing strategies. Data mining helps end users extract useful business information from large databases. Data mining is the process of finding trends and patterns in data. The objective of this process is to sort through large quantities of data and discover new information. The benefit of data mining is to turn this newfound knowledge into actionable results, such as increasing a customer's likelihood to buy or decreasing the number of fraudulent claims. A Data Warehouse can also help a company to get a view of its entire relationship with a customer. This can be revolutionary, particularly in organizations that are organized along product lines rather than by customer. It also allows an organization to track the history of its relationship with each customer and thereby increase its customer responsiveness. CRM involves building a relationship with your customers and prospects by understanding their needs and responding with products and services through multiple channels. CRM will thereby enable a targeted, ongoing, mutually beneficial, profitable relationship with individuals and groups. Most companies' CRM approaches are therefore characterized by understanding CRM as a longterm business strategy, focusing on individual customer demand, aligned to a customer's value, allowing for segmentation and analysis of customer needs, preferences and behavior, and being based on an organization-wide database. Accordingly, the key problems to be solved within such a CRM approach are: • Differentiation of customers • Focus on retaining existing customers • Maximizing customer lifetime value • Increasing customer loyalty Although several new technological solutions have been developed, there is still no general problem solver for Data Warehousing in CRM. Soon after the first users started entering data, analytical CRM was only a step away. Implementing an analytical database using Data Warehouse and Online Analytical Processing (OLAP) technology in a CRM environment leads to: (a) Number of stakeholders and people affected (b) Many data sources (c) Different ways of doing business

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(d) Diversification and acquisitions (e) Different possible views on customer data The most commonly used techniques in Data Mining are Neural networks, Rule induction, Evolutionary programming, Case based reasoning, Decision trees, Genetic algorithms and Nonlinear regression methods. Neural network is a complex nonlinear modeling technique based on a model of a human neuron. Rule induction is based on the extraction of useful if-then rules from data based on statistical significance. Evolutionary programming is that system which automatically formulates hypotheses about the dependence of the target variable on other variables, in the form of programs expressed in an internal programming language. Case based reasoning is used to forecast a future situation or to make a correct decision. This method is also called the nearest neighbour method. The decision tree represents sets of decisions which will involve classification of data set. The genetics algorithm is a computer-based method of generating and testing combinations of various input parameters to find an optimal solution. The various methods involved here are genetic combination, mutation and natural selection. Nonlinear regression methods are based on a Non-Linear model which is an analytical model that does not assume linear relationships in the coefficients of the variables being studied.

8.7 FEATURES OF DYNAMIC CRM SYSTEM In this section, the Dynamic CRM product from Microsoft (www.microsoft.com) is discussed to enable the readers to realize the better services and support extended by the CRM system. Microsoft Dynamics CRM 3.0 was designed to give businesses what they want most in a CRM system–a customer relationship management that people will use. It works the way your business does. Your information technology (IT) staff can integrate Microsoft CRM with existing systems. Your sales force can use Microsoft CRM without ever leaving Microsoft Outlook. The Microsoft CRM has the following features: (a) Improved Microsoft Office Outlook integration (b) Creating sales and marketing campaigns fast (c) Helping your staff sell more while improving customer service (d) Easier customization (e) Drilling into the details fast The Microsoft Dynamics CRM 3.0 is enabled with the features sought by the customers. The purpose of a CRM system is to provide improved sales and customer service. This target has been achieved by the Microsoft Dynamics CRM 3.0. Provision for changing the marketing strategy and enabling the sales under different patterns will help the organization to grow faster. Customization is a major factor deciding the fate of a product. Reduced customization will help the end users to reap the full benefits of a software product. Getting information out of Microsoft CRM is just as easy as putting it in. It is possible to export any subset of Microsoft CRM data to Microsoft Office Excel spreadsheet software for analysis. Microsoft CRM also provides a number of reports using Microsoft SQL Server Reporting Services as the underlying report engine. You can create custom reports that are accessible from within Microsoft CRM through an e-mail subscription service. Users can save frequently used reports, which are refreshed with current data every time they're opened. Best of all, security is well structured and users only have access to the data they're authorized to see. This will help the organization to maintain data integrity and data are secured. Microsoft Dynamics CRM 3.0 includes a built-in Service Scheduling and dispatch system that provides a centralized, consolidated view of your professional service workers' calendars and schedules.

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Your service dispatcher and service delivery staff can use the Service Scheduling functionality to easily search for available time slots, specialized talents and capital resources and to promptly schedule service appointments for customers. Microsoft CRM 3.0 helps you reduce resource inefficiencies and deliver prompt, accurate service to customers, strengthening customer satisfaction. The following are the features of Service Scheduling in Microsoft CRM: • Automating service scheduling and centralizing dispatching of resources and services • Enhancing productivity, optimization of resources and lower operational costs • Improving customer satisfaction through timely delivery of products • Keeping customers informed by setting initial expectations and keeping them apprised of scheduling updates if circumstances change • Adjusting resource assignments in real time to meet high priority requests Microsoft CRM lets the user work the way they want to work with features such as: • Allowing employees to easily pull information from Microsoft CRM into any other office applications such as Microsoft Excel spreadsheet software and Word • Quick and easy access to data without changing screens a number of times • Customized workspaces that allow users to create, save and reuse favorite views of customer data without the distraction of unwanted information. • A service calendar that allows service schedulers and dispatchers to schedule activities • Powerful reporting and analysis tools • Enabled with mobile support that allows field workers to get instant access to customer data from any personal digital assistant (PDA), laptop or browser The customer service module of Microsoft CRM includes the following features: • Customer service requests can be created, assigned, and managed from a central location • Complete view of customer information promotes better understanding of specific customer needs and other account-related issues • Automated routing and queuing of service requests is achieved using customizable workflow rules • Automatic responses to customer requests • E-mail management automatically records customer communications and associates e-mail messages with appropriate customer records • Service scheduling makes it easy to manage service resources and to better understand resource and equipment allocation, usage and effectiveness • Service contracts can be created, maintained, and updated automatically

8.8 FEATURES OF CRM FROM SAP The previous section explained the features of the CRM product from Microsoft. The present section will address the features of CRM product from the major ERP vendor SAP (www.sap.com). Transforming the business into a customer-centric enterprise is essential to derive revenue and profit. mySAP CRM is a CRM product from the major ERP vendor SAP. It is a solution that can reliably enable customer-centric, end-to-end business processes to deliver value around each customer. The solution enables integrated industry-specific processes to support customer-facing departments in marketing, sales and service. In addition, it gives us a 360-degree view across all customer touch

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points. mySAP CRM is enabled with the following features: 1. It orchestrates all customer-related tasks across departmental boundaries, seamlessly incorporating activities such as fulfillment, shipping, invoicing and accounts receivable 2. It brings together all relevant sources of customer data across the enterprise for faster and better decision-making 3. Enables us to accomplish business objectives quickly mySAP Customer Relationship Management (mySAP CRM) includes the following functions to support core business processes in the following areas: • Marketing mySAP CRM provides comprehensive support for marketing resource management, segment and list management, campaign management, trade promotion management, lead management, and marketing analytics. • Sales mySAP CRM empowers sales professionals with comprehensive support for sales planning and forecasting, territory management, account and contact management, lead and opportunity management, quotation and order management, configuration, contract management, incentive and commission management, time and travel management, and sales analytics. • Service Transforms service into a profitable line of business with a broad range of functionality to enable customer service and support, service-contract management, warranty and claims management, depot repair, channel service and service analytics. • E-commerce mySAP CRM delivers broad functionality to enable business processes in the areas of emarketing, e-selling, e-service and e-analytics. • Channel management It optimizes the indirect channels with support for partner management, channel marketing, channel sales, channel service and channel commerce.

8.9 AN ERP- CRM BUSINESS SOLUTION In this section, an ERP-CRM business solution provided by a company “compiere” (www.compiere.org) is presented. The ERP-CRM business solution provided by this company is named COMPIERE. This product is based on open source software. Hence all the features of open source software are available in this ERP-CRM business solution. The CRM as an independent system has got only a few functions to carry out, whereas after getting enabled with an integrated system like ERP, the new business solution gets additional flavour and is able to meet the expectations of the customers. An ERP-CRM business solution will address these two questions, “How well can we see our customers?” and then, “How well can they see us?” The solution to these two questions will bring the company and the customer into the same circle and reduces the gap. The goal is to achieve barrier-free visibility between the company and the customers. The benefits of CRM enabled ERP systems are as follows: • Enhanced operational efficiency • Increased productivity

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• • • • •

Reduced cost Easy to deploy Ability to push enterprise data to departments that have been isolated from ERP functionality Forecasting the demand for certain products Smooth interface among all the departments of an organization

Technology behind ERP- CRM Business Solution This section will address the technology behind ERP - CRM Business Solution with the help of open source software Compiere. Compiere is an open source ERP software application with fully integrated CRM software solutions. It is an ERP-CRM business solution developed using J2EE. It requires an oracle database installation. The database independence will reduce the system's cost of deployment. This product provides a combination front-office/back-office suite that offers sales and contact management and customer support capabilities. The product can be installed on Windows or Linux systems. It is highly customizable and incorporates work rules that can be modified to meet particular business needs and practices. The product offers two parallel user interfaces: a browser based Dynamic Hypertext Markup Language (DHTML), a web based interface designed to reach our application from anywhere on the Internet and a high performance Windows application with a rich user interfaceallowing high speed data entry. This ERP-CRM business solution provides integrated CRM, Partner Relations Management (PRM), SCM, ERP and Online Analytical Processing (OLAP). The application was designed to be web hosted. Compiere provides multiple views of business information based on the transactions that have taken place. The product is enriched with easy customization by the customers as the business evolves. The application integration modes considered by this product are as follows: • Data can be imported from XML, fixed records in specified formats • A scanner interface is provided for data entry and inventory transactions • Java Enterprise Edition Connectors are available for integrating EIS applications • Support Electronic Data Interchange (EDI) to execute various transactions • Easy customization through external development toolkits • Ability to develop your own information structure • Usage of SQL-based tools to generate custom reports

Functions of ERP- CRM Business Solution The ERP-CRM business solution will have all the functionality required by the customers and completely integrated with one another for seamless transaction data flows. The various functions of an ERP-CRM business solution found in the product compiere. They are: v Authentication The users are properly classified and separate user id and password are provided. The administrator will have control over all the users. v Quote to Cash It covers the business process for creating a quotation for a customer, order management, invoicing and cash receipt and is also integrated with SCM and customer management. v Requisition to pay It involves creating requisitions, purchase order, invoice receipt and payment processing.

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v Customer service It forms part of all the business processes. v Partner relations management It connects different clients to each other, allowing them to manage lead distribution and marketing expenses. It enables the system to have centralized services. v Supply Chain Management It involves material management and smoothens the activities between suppliers and customers. v Report generation It involves the generation of reports to analyze the performance and covers the costing and accounting dimension of the application. v Internet enabled All the processes can be carried out by the users staying at any place at any time.

SUMMARY Business moves at lightning speed today, requiring that every company continuously re-examine direction, strategies, suppliers, partners–literally every variable and relationship that might lead to complacency. For any business, successful Customer Relationship Management Navigation is becoming increasingly important in today's competitive business world. Customer expectations are increasing day by day and business services must increase along with these expectations. It is the sole responsibility of the organization to meet the requirements of the customer through latest technologies like CRM, ERP, etc. CRM is the method through which businesses can connect with their customers and therefore serve them better. Businesses with successful CRM strategy and applications will be able to record a large increase in sales, customer satisfaction and profit thereby improving the performance of the organization. A CRM system will fail if corporate culture and organisation are not part of planning. Companies are increasing customer value through successfully gathering, analyzing and understanding customer data. To manage these data efficiently, data mining and data warehousing tools are used to increase customer value and help to initiate new opportunities.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9.

What is CRM? Carefully examine the limitations of a CRM product. How can CRM be effectively used with packaged software? "CRM is product oriented and not process oriented."- Comment. Distinguish between conventional application packages and CRM. Will CRM help the organization to standardize the existing business processes? Why do CRM projects fail so often? What are the three dimensions of a CRM system? Will CRM account for information integration? Explain.

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10. What are Data Mining and Data Warehousing? Explain it in the context of CRM environment. 11. What is the need for CRM? How was it managed by the companies earlier? 12. Describe the CRM environment with ERP as back-office and CRM as front-office. 13. Describe the features of SYSPRO's CRM product. How does it handle remote users? 14. Compare the CRM from Microsoft and SAP. Identify the features that could be added to these products to provide better services to the customers. 15. What is Dynamic CRM? 16. What are the salient features of an integrated system like ERP enabled with CRM? 17. What are the advantages in choosing open source software for a CRM environment? 18. List the various CRM vendors and describe the significance of their CRM product. 19. How can a CRM system be enabled with Internet? Propose a suitable architecture with its features. 20. Study the operations of an organization of your choice and present your CRM Business Solution through business models.

9 ERP and .NET OBJECTIVE • To explain what .NET is. • To describe the features of .NET • To illustrate the usage of .NET in ERP platform.

EXPECTED OUTCOME The readers will be able to:

ü Understand the benefits of using .NET ü Visualize an ERP product build using .NET ü Spell the impact of .NET on today's business Enterprise resource planning (ERP) is designed to manage and automate vast swaths of business activity, but it's an incomplete solution. For instance, ERP may handle most transactions with aplomb, but when problems do crop up, ERP systems may not be able to access crucial documents needed to clear things up. In some instances, planning and collaboration take place before ERP comes into the picture, yet the activities must be managed as part of the complete transaction lifecycle. Filling yet another gap is archiving, which is at the core of document technologies. Many ERP users are finding archiving a valuable asset for offloading data, yet keeping it accessible. One of the most compelling reasons to marry ERP and document technologies is to link the internal (generally back-office) processes of ERP to the outside world. According to ERP vendors, during the past decade, ERP focused inside the four walls of the enterprise. “In this century, we will start to move out of the four walls, into the extended enterprise that requires us to work virtually, connected to external organizations, to create strategic partnerships,” a CEO of an ERP vendor says. This means we need to move ERP, and also all the processes of content management, out to the extension. But even inside the boundaries of ERP, actual business practices do not always map precisely onto the ERP model. These systems sometimes fail to include all the people who are part of a process. Expert opinion is that “Everybody in finance and accounting will have an SAP [ERP system] seat, but the manager of engineering who reviews and approves purchase invoices for the department probably isn't going to be an SAP user. Business processes have many touch-points, many of which

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will not have access to the ERP system.” There are many critical operations--human resources, supply chain management, customer relations--that need to be connected to both structured ERP data and the unstructured realm of documents, email, faxes and Web content.

9.1 .NET TECHNOLOGY -- AN OVERVIEW .NET is a comprehensive family of products, built on industry and Internet standards that provide for each aspect of developing (tools), managing (servers), using (building block services and smart clients) and experiencing (rich user experiences) XML Web services. .NET will become part of the Microsoft applications, tools, and servers you already use today - as well as new products that extend XML Web service capabilities to all of your business needs. The .NET platform enables the creation and use of XML-based applications, processes, and Web sites as services that share and combine information and functionality with each other by design, on any platform or smart device, to provide tailored solutions for organizations and individuals. Business benefits include increased integration through rapid development and deployment of business applications; creating new revenue streams by turning existing processes into XML Web services as well as finding new business by exposing those services; and by empowering employees through access to information when and where they need it. Microsoft .NET (pronounced “dot net”) is a completely new approach to how software will operate. Microsoft defines .NET as “a set of software technologies designed to connect your world of information, people, systems, and devices.” While Microsoft .NET is a huge global change, there are several specific benefits for the manufacturing industry: (a) promise of lower IT costs (b) new features that will allow manufacturing companies to leverage the Internet and (c) more efficient manufacturing software development. In essence, by choosing .NET you are choosing software systems to run your business that are more innovative and robust, faster, less costly to administer, safer and more secure, and easier to use. Don Richardson, group manager of .NET evangelism at Microsoft Corp. further explains the significance of this new technology: “The change to the Microsoft .NET Platform is as dramatic as the change from DOS to Windows. The software vendors that get in on the ground floor of this shift will have a huge advantage over the competition, and Intuitive has been on board from the start.” The expected impact on the manufacturing industry is significant. “Within two years, educated manufacturers will not buy an enterprise solution that is not one-hundred percent .NET-based,” said Chuck Gillam, president of Intuitive. The essence of Microsoft .NET is a relatively small bundle of software that you install on your computer. It is about 21MB in size, and installing it is about like installing a new version of Internet Explorer. In fact, by installing .NET, you will be installing Internet Explorer 6.0. It takes just a few minutes for your computer to join the .NET age. You can download the whole package free from Microsoft.

9.2 WHY .NET SOFTWARE IS BETTER SOFTWARE? .NET is not another version of Microsoft Windows; it is the next-generation computing platform from Microsoft. At the core of the .NET hype is a new layer of software that sits above the Windows

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operating system. This new .NET platform is a better platform for building and running applications software than the Windows operating system that we know today. .NET insulates software developers and computer users from the deficiencies and incompatibilities of operating systems. And .NET provides a new set of tools and prefabricated components of unprecedented power that can be used to write a new type of software called "managed code." Over time, managed code will become recognized as clearly superior because it • is more robust • is has side-by-side versions • is has better security • is has better connectivity • is faster software with easier deployment • has lower cost of ownership .NET managed code is about better software. It's faster, smaller and lighter, more hacker-resistant, and easier to deploy, install, maintain, upgrade and (if necessary) remove from your computer. Managed code side-steps the root causes of many of the bugs and security problems we suffer from today. So applications written in managed code, like Intuitive ERP, will not only be better software, but they will also be cheaper to own, providing you with the strategic advantage you'll need in the years ahead. Less code, faster development time, new toolsets and managed code are the key features of .NET. NET software minds its own business. It stays together in one place rather than smearing itself all around our systems. And in doing so, it sidesteps the old Component Object Model (COM) -based mechanisms that allowed software packages to collide with and harm one another. In fact, .NET allows two versions of a managed code application to run side by side on the same computer without any interaction or conflict. .NET thus eliminates the need to remove an old version of a software product just to install and try out a new version. .NET is a completely new software technology, created from scratch, both to leverage groundbreaking technologies such as XML and to eliminate the old inefficient internal layers that have been built up over the last 20 years in Windows software. Managed code is lean, speedy, and lightweight. These traits enable innovation in application development and deployment.

9.3 WHAT MAKES A GOOD ERP SYSTEM? A good ERP system should be able to provide you with solid, measurable financial benefits, even in the first year. Customer satisfaction should measurably increase based on improved on-time delivery, increased quality, shortened delivery times, etc. Inventory carrying costs generally decrease substantially due to better planning, tracking and forecasting of requirements. Shop Floor down time should be minimized based on visibility into how to best schedule the floor. Vendor pricing should decrease by taking better advantage of quantity breaks and tracking vendor performance. Collections should be turned faster based on better visibility into accounts and fewer billing and/or delivery errors. In addition, there are many less tangible benefits, including a reduced time to close a fiscal period, more expedient data entry across the board, immediate management visibility into critical data elements, etc. An ERP system provides the solid operational backbone manufacturers need to improve the volume of production and fulfillment of orders while reducing costs. By optimizing your manufacturing operations with ERP, you'll also be able to focus on new business opportunities. Please note that it is important to select and use the right system for your business in order to achieve the full benefits of ERP.

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Modern software architecture for ERP is all about efficiently implementing business rules. It's all about how those rules are packaged and invoked within the system and how easily they are exposed to partner systems. That’s why .NET and the new standards-based world warrant a redesign of ERP systems from the ground up. The characteristic features of a perfect ERP system are given below: • 100% managed code • Standardized business rules • Bundle validation rules with processing rules • Dynamic choreography of business rules • Distributed processing • Readily customizable • Native support for standards-based connectivity • Loosely coupled • Expose a rich standards-based set of data to the outside world • Single focal point for inbound data • Provide event-based communication • Easy maintenance • Data integrity

9.4 THE FUSION OF .NET TECHNOLOGY AND ERP Today’s ERP systems integrate all business management functions, including planning, inventory/ materials management, engineering, order processing, manufacturing, purchasing, accounting and finance, human resources and more. One characteristic is common to all software: the software must be installed – somewhere. While it is readily possible to put a modern face on old technology, the software installation process must land all the components of the software product on the target computer hardware. Even web browser-based and Web Service applications need to be installed; they're installed on a server. As the licensee of an ERP software product, you are entitled to ask exactly what software components will be installed on your hardware systems. These questions should be asked when you are shopping for your new system to allow you to learn the true nature of the technology you are purchasing. .NET presents a platform-independent target for software development, with many built-in features including Internet integration and features intended to enhance security. It relies fully on software components and the component-oriented programming paradigm. The two primary components of .NET are the common language infrastructure (CLI) and the common language runtime (CLR). The CLI is a set of specifications for a runtime environment, including a common type system, base class library, and a machine-independent intermediate code known as the common intermediate language (CIL). .NET is a mammoth undertaking by the world’s largest software company. It will impact all users of Microsoft products over the next few years as it ushers in a new wave of software innovation. Unfortunately, like many of the Microsoft technical initiatives before it, the shift in core thinking that is central to .NET may become lost in the marketing hype. As the various Microsoft divisions jump on the bandwagon, everything at Microsoft will quickly become .NET-this and .NET-that. This dilution of the message has already begun with Microsoft’s release of new .NET versions of its family of

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enterprise server products. As soon as a Microsoft product becomes friendly with Extensible Markup Language (XML), it seems to get the .NET label. The epicenter of the .NET world is a small chunk of exotic software called the Common Language Runtime (CLR) and a bundle of foundation components and basic services called the .NET Framework. Together, the CLR and Framework provide the powerful infrastructure and rich set of built-in features necessary for objects to readily and securely communicate over the Internet. This year, Microsoft and its partners will release new versions of all the popular computer languages and compilers to support the CLR and Framework. The beauty is that software developers can continue to write software code in their favorite language. The code they write, in their chosen language are then compiled by the new .NET compilers into a standard format called Intermediate Language (IL). The IL is then executed at runtime by the CLR. Objects written and compiled in one of these new .NET languages will be able to run on any operating system platform that supports the CLR and Framework. Let’s consider the more specific benefits that .NET is intended to deliver and how the manufacturing industry in particular will benefit. • Lower cost of system administration • Installed by Copying Files • Reach and Rich at the Same Time • Better internal systems through better tools Improvements in processing speeds will be particularly applicable to manufacturing planning. Old approaches to MRP and CRP concepts will yield to previously unthinkable computing power. In the end, .NET will enable blindingly fast executions of production planning, shop floor tracking, and order handling processes, order promising, dynamic inventory status, and order status analysis. Couple these advances with web services developed using .NET and we will see a new wave of dynamic realtime simultaneous material and capacity planning that may span the boundaries of individual companies, forming integrated planning webs across the supply chain.

9.5 IMPACT OF .NET TECHNOLOGY ON ERP In the mid-1990’s, it became clear to Microsoft that the Internet would change the computing landscape in a big way. While the public was being dazzled by new websites and the promise of dotcom business plans, the architects at Microsoft were envisioning the next generation of Internet usage. As they saw it, software that operates independently on individual computers would give way to a future filled with cooperating applications running in a rich soup of web-based services. Microsoft formed a grand plan to rework the core languages and tools used to develop Windows software. Microsoft aimed to leverage Windows to stake the high ground in the new computing landscape. The task for Microsoft and other software companies will be to recompile their applications using the new .NET tools and components and then enhance their applications to make use of the newfound freedom to roam the Internet landscape. In addition to the business pressures that most businesses are currently facing the technology environment in which businesses operate is also undergoing some fundamental transformations. The ongoing increases in computing power and connectivity, the proliferation of devices, and the desire for standardization are combining to create a tidal wave of fundamental change that will sweep over virtually every industry and change the underlying structures and assumptions of every business.

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Microsoft is creating the .NET platform to help you transform your business to respond to these imperatives. It is based on the XML Web services model, which is a natural outgrowth of the increases in computing power, connectivity, and movement towards standards that characterize the whole technology industry. Microsoft .NET allows users to quickly establish connections and complete transactions that until now have required hours of time and the frustrating re-entry of data from one application to the next. By allowing multiple secure data feeds to be merged into a single user interface the .NET architecture frees users from the limitations imposed by the data silos that populate the Web today. This radically new approach to constructing applications illustrates a key concept. Today, application development usually involves integrating existing applications. You don't want to have to develop lots of new code. Instead, application development involves the integration of existing applications such as email, Customer Relationship Management (CRM) systems, Enterprise Resource Planning (ERP) applications, mainframe applications, and so on. It also often involves technologies such as message queuing, components, and Web services that you might develop using the Visual Studio. Companies must compete on their ability to adapt quickly to changing business conditions. Microsoft .NET supports high levels of integration with existing infrastructures and applications. It provides new technologies and develops existing ones, enabling you to draw upon the existing experience of your staff. It also uses your existing hardware and supports scaling up and scaling out as your needs demand. • SOAP (Simple Object Access Protocol) is a protocol defining the way that applications (Web services) communicate with one another over the Internet. A SOAP request includes all the information required to call a remote procedure over the Internet. It is transmitted to the server, using HTTP as the transport protocol. As firewalls are generally configured to allow HTTP requests to pass through, SOAP requests will also usually be allowed to pass through firewalls. A key premise of Microsoft .NET is integrating applications. As a result managing integration is critical to its success. By enabling customers to better monitor and control their computing resources, Microsoft is providing the basis for managing distributed computing as an integral part of all Windows-hosted environments. This Management Platform for Windows consists of: • Microsoft Operations Manager. • .NET Management Services. This is an extended range of infrastructure services including a management portal supporting XML and SOAP, created for the development of solutions that integrate with the .NET platform.

9.6 AN ERP PRODUCT BUILT USING .NET - A DISCUSSION Intuitive Manufacturing Systems offers intuitive and flexible enterprise solutions that help small and midsize manufacturers achieve greater operational efficiency and profitability by integrating business processes on an enterprise-wide level. Since 1994, Intuitive has been a technology leader, dedicated to providing customers with software solutions that add value to their business. Intuitive's enterprise solution is designed to deliver superior functionality, rapid implementation, high levels of usability and a technology standard that is unmatched in the industry. To better understand an ERP product developed based on .NET technology, an ERP product developed by Intuitive Manufacturing Systems called “Intuitive ERP” is discussed below. The information on the ERP software “Intuitive ERP” presented below is found from their website

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www.intuitivemfg.com to enable the readers to get better clarity on ERP developed using .NET technology. The first ERP released on a 100 percent Microsoft .NET architecture is Intuitive ERP 6.0. Intuitive ERP v6.0 is built on Microsoft .NET architecture and includes Intuitive CRM, Service and Repair module, Freight Management system and Ad Hoc Report Wizard. CRM includes ability to create and track opportunities and prospects to manage all contacts and to integrate fully with Outlook. Web Catalog allows orders to be placed over the internet. Report Wizard includes field layouts, calculations and presentation options. The new Service and Repair module allows for incident tracking, warranty tracking, and full visibility into the life of a product. The freight management functionality allows customers to automatically calculate freight amounts, "shop" for freight rates based on different carrier options, etc. The Freight Manager is integrated into scales and label printing as well to complete the suite of freight needs. The Ad Hoc Report Wizard offers another dimension of ease of use in reporting to our customers. You can report on any field in any table without knowing a single query or table layout. This extremely easy reporting tool includes field layouts, calculations, presentation options, and more. Perhaps the most exciting of all is the new form layout. Now that the architecture of Intuitive is complete in .NET, With each new release, more and more functionality is now offered in the new .NET format. This revolutionizes the user's experience with an extremely intuitive user interface. Ease of use, speed, and dramatic new functionality are available as each Intuitive function is adopted into the .NET world. The release of 6.0 laid the groundwork, but also put out the first feature set in the .NET framework. These exciting new forms are just the beginning of the functionality coming from Intuitive in the coming months. More importantly, the fusion of .NET and ERP technology will enable dramatic changes in how commerce is conducted in the manufacturing industry. Small and mid-sized manufacturing organizations will gain new competitive advantages as commercial enterprise software packages introduce new .NETenabled features. Intuitive ERP's Microsoft .NET-based software technology marks a quantum leap forward in enterprise software. Exclusive use of Microsoft technology establishes a seamless interaction between all elements of the Intuitive ERP architecture. Coupled with the administrative tools from Microsoft, a set of intuitive system tools restricts administration chores to an absolute minimum. Source code for the software is included in the cost of the system, giving you full control over any customizations you might desire. Intuitive ERP utilizes an automated deployment process that installs all server and client systems from a single CD-ROM. Any custom modifications are also automatically deployed. Intuitive ERP provides a rich, highly visual client user interface experience. The familiar Windows interface reduces the learning curve and makes Intuitive ERP extremely easy to use. Intuitive ERP also takes advantage of the power and performance of common Microsoft desktop applications, seamlessly integrating with Microsoft Office, Internet Explorer for enterprise communication and access to the Internet. The Intuitive ERP AlertMessenger tool allows you to automate the process of sending e-mails and/or on-screen messages to employees, customers, and partners in response to specific events. Import Wizards quickly and efficiently load your legacy data into the Intuitive ERP database. The Intuitive ERP system provides an intuitive and flexible tool set that can handle all the frontoffice and back-office operations of a discrete manufacturing company. The Intuitive ERP offers the following functions: Planning, Inventory, Engineering, Purchasing, Manufacturing, Finance, Quoting/

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Estimating, Order Processing, Advanced Configurator, Quality, Intuitive SPC (Statistical Process Control), Return Material Authorization, Intuitive Forecasting, Payroll/Human Resources, AlertMessenger, Project Management and Intuitive Mobile. These functions are described briefly below. • Planning Generates plans on demand, analyzes material requirements, controls production costs and scheduling, and manages resource efficiency. • Inventory Manages detailed inventory records, maintains optimal inventory levels, simplifies inventory transactions, automate frequently performed tasks, ships and receives goods, tracks material location/lot information, track serial numbers, utilize bar coding, and performs cycle counting and physical inventories. • Engineering Creates and maintains multi-level visual bills of material, manages product data, designs routings and standard processes, and tracks and controls engineering changes. • Purchasing Manages procurement, organizes and maintains detailed vendor information, maintains a bid matrix, creates purchase orders or generates purchase orders from planned orders, manages requisitions, and receives and inspects vendor shipments. • Manufacturing Plans and schedules production enters and tracks work orders, controls the shop floor, monitors production status, manages material and equipment capacity, promises deliveries, and track time and attendance. • Finance Creates budgets and monitors cash flow, processes accounts payable and accounts receivable, generates general ledger activities, reconcile financial accounts, and tracks material, labor and production costs, creates professional presentations with your financial statements. • Quoting/Estimating Provides quotes and estimates to customers and automatically converts quotes to sales orders. Easily create new items (and associated bills of material and routings), copies and modifies existing items, or quickly configure an item on-the-fly. • Order Processing Provides quotes and estimates, enters and maintains complex sales orders or converts quotes directly to sales orders, creates new items, bills of material and routings on-the-fly, maintains price matrices, and ship finished product. • Advanced Configurator Quotes, sells and delivers complex, custom-configured products, compresses the quote to delivery cycle, views design and pricing changes automatically, and simplifies the collection and management of critical product data. • Quality Inspects incoming (purchased) and outgoing (manufactured) materials, inspects returned materials, traces defective parts to their original location/lot, and maintains data on instruments and equipment.

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• Intuitive SPC (Statistical Process Control) Performs real-time Statistical Process Control at all inspection points throughout the system, including work-in-process, purchasing, and material review/return. • Return Material Authorization Handles the return of materials, automatically de-books sales, commissions and taxes, and creates customer credits and request and document RMA samples. • Intuitive Forecasting Generates forecasts based on usage data and multiple forecasting methodologies, generates demand requirements based on forecasts, and analyzes forecasts compared to actual data. • Payroll/Human Resources Manages your employees' salary and job histories, benefit eligibilities and uses, and processes payroll. • AlertMessenger Maintains real-time workflow communication by automating customized messages to vendors and customers as well as employees for specific system events, via e-mail, on-screen messaging, or pager. • Project Management Establishes projects and master projects, associates Project IDs with all facets of the system, maintains a Project ID in multi-level manufacturing and procurement orders tied to a given sales order, reports on revenues, expenses and profit/loss for any project, and reports on progress billing. • Intuitive Mobile Uses wireless handheld devices for shop floor and inventory transactions.

SUMMARY With .NET, the Internet becomes a platform for business. Microsoft .NET addresses most of today's computing deficiencies to realize the vision of enabling access to all user's data and applications anywhere and from any device; allowing users to interact with their data through handwriting, speech, and vision technologies. Businesses benefit from radically increased efficiency and productivity as .NET brings employees, customers, data, and business applications intelligently interactive. The Microsoft .NET makes is explicitly designed to enable the rapid development, integration, and orchestration of any group of XML Web services and applications into a single solution. The opportunities and advantages for manufacturing companies and ERP software companies that embrace .NET will be outstanding. Companies that quickly harness .NET will gain clear advantages. .NET will bring new competitive capabilities to smaller manufacturing organizations. Larger manufacturing organizations will apply their corporate IT muscle to leverage .NET in-house. They will reduce their administration costs and solve old business problems in new and innovative ways.

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REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

16. 17.

What is .NET? Evaluate the features of an ERP product using .NET technology. List the salient the features of .NET. How does the .NET technology influence the business process reengineering? How do ERP vendors view the .NET Technology? “The impact created by the fusion of ERP and .NET on the manufacturing industry is significant.” - Comment. What about the failure of ERP projects with respect to .NET? How is customization handled in .NET based ERP system? Suppose you are provided with a few technologies including .NET to develop an ERP system. With which technology, will you proceed? Why? What are the issues to consider when we select a technology for a large scale project like ERP software development? Develop a list of technical ingredients of an ERP product based on .NET. What are the specific benefits enjoyed by the manufacturing industry using ERP software based on .NET? ".NET acts as a catalyst in the development of packaged software." - Comment. What are the characteristic features of a good ERP system? Determine your business needs and the appropriate solution both from a functional and a technological standpoint. There are many ERP vendors available. Select an ERP vendor who could meet your challenges and add value to your business. What are your suggestions and guidelines to the technical and functional consultants of ERP in the process of choosing a technology for developing ERP software? Provide guidelines to the customers/organizations to enable them to select a right ERP vendor/ERP system which will suit to their business best.

10 ERP Vendors OBJECTIVE • To give an overview of the various ERP vendors and their products.

EXPECTED OUTCOME The readers will be able to: ü Understand the features of ERP products from various ERP vendors. Note: The details on various ERP vendors presented here are compiled from various sources including the Internet and the ERP vendors' websites. The main purpose of this presentation is to enable the reader to get a focus on the ERP market. The main players in the ERP market are SAP, Oracle, Baan, JD Edwards, QAD, Ramco, etc. SAP is the market leader and its ERP products are SAP R/2 for the mainframe environment and SAP R/3 for the client/server environment. Hence, an overview of the various ERP vendors and the features of the major ERP vendor SAP's ERP product mySAP are discussed below.

10.1 SAP SAP (Systems, Applications and Products in Data Processing) has been selling manufacturing software for 25 years. It operated in relative obscurity before introducing in 1993 its R/3 product, the first threetiered client/server enterprise resource planning (ERP) software to hit the market. The technological breakthrough quickly propelled SAP to the number one spot in terms of ERP software sales. The next version of R/3 released recently is expected to be easier to install and use. SAP is launching several initiatives that are geared toward making its products more customer-focused. These programs include the expansion of R/3's supply-chain management functions and the broadening of its electronic commerce and internet capabilities. SAP also is developing business templates containing features, functions, and configuration tools to make R/3 easily adaptable to businesses in specific vertical markets. SAP R/3 is the market leader for integrated business administration systems. It integrates all business processes of a company and provides modules for finance, human resources, material management, etc. SAP R/3 is based on a relational database system which serves as an integration platform for all components of SAP R/3.

mySAP ERP mySAP ERP (Source:www.sap.com) combines the world's most complete, scalable, and effective software for enterprise resource planning (ERP) with a flexible, open technology platform that can

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leverage and integrate SAP and non-SAP systems. mySAP ERP includes four individual solutions that support key functional areas: [a] mySAP ERP Financials [b] mySAP ERP Human Capital Management [c] mySAP ERP Operations [d] mySAP ERP Corporate Services mySAP ERP is enhanced by industry-specific features and best practices based on three decades of SAP experience. The solution enables organizations to reduce total cost of ownership, achieve a faster return on investment, and benefit from a more flexible IT infrastructure that helps drive innovation. And mySAP ERP offers complete solutions designed to support international operations so that businesses can efficiently and successfully operate and compete on a global scale.

[a] mySAP ERP Financials mySAP ERP Financials provides a complete financial management solution for a broad range of industries. It's the leading enterprise software solution for accounting, financial reporting, performance management, and corporate governance. With mySAP ERP Financials, you can transform finance from an administrative department into a strategic business partner. It is a system that provides deep operational insight, unifies strategic action, and measures results quickly. The solution offers a depth of functionality in accounting, reporting, analysis, financial supply chain, and treasury management. Robust financial and management reporting, plus internal controls and documentation of all financial processes and transactions, ensure the highest levels of business analysis and governance. mySAP ERP Financials provides industry-leading support for local market requirements, languages, and currencies. It also supports a broad range of industry-specific processes and is compatible with all SAP industry solutions. Its scalable and open architecture is built for multinational organizations and connects financial management with existing business systems. mySAP ERP Financials powers the highest-performing finance organizations in the world. It offers a unique advantage to companies by providing marketleading financial management tools that work harmoniously with your operational systems.

[b] mySAP ERP Human Capital Management To compete effectively, you need to align all corporate resources, including employees, with business objectives. You need to transform traditional HR functions into a comprehensive program for Human Capital Management (HCM). With mySAP ERP Human Capital Management (mySAP ERP HCM), you can maximize the value of your most important asset--your employees--aligning their skills, activities and incentives with business objectives and strategies. mySAP ERP HCM also provides the tools to manage, measure, and reward individual and team contributions. With mySAP ERP HCM, you can find the best people, develop and leverage their talent, align their efforts with corporate objectives, maximize the impact of training efforts, and retain top performers. The solution provides integrated, enterprise wide functionality that • Automates HCM processes and seamlessly integrates them across global operations; • Provides real-time information access that accelerates workforce decision-making; • Allows you to assign the right people to the right projects at the right time; • Supports both employees and managers throughout the employee life cycle; and • Empowers employees to manage processes in a collaborative environment

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Designed for global business, mySAP ERP HCM supports payroll functions, regulatory requirements and best practices for more than 50 countries. It integrates with existing business systems and can be customized to meet your requirements. It's no wonder more than 9,000 companies around the world rely on mySAP ERP HCM to manage more than 54 million employees.

[c] mySAP ERP Operations mySAP ERP Operations provides an extensive operations solution for automating and streamlining procurement and logistics execution, product development and manufacturing, and sales and service. The solution also provides powerful analytic tools for better decision-making, as well as innovative self-services and role-based functionality for increased productivity. With mySAP ERP Operations, you can • convert time-consuming manual steps into streamlined, online processes to improve overall enterprise planning; • support the planning and deployment of assets, manage assets over their complete life cycle, and reduce order cycle times and excess inventories; • streamline processes at warehouses and distribution facilities; • manage transportation and distribution efficiently; • extend collaboration with both customers and suppliers; • enable a collaborative project management environment that includes external parties to manage both simple and complex projects; • provide personalized interfaces, portals, mobile applications, and tools that enable employees to do their jobs more effectively; • enable enterprise-wide visibility, forecasting, and performance management--reducing planning cycles and lead times, and enabling continuous process improvements and faster response to new opportunities; and • improve customer service and respond quickly to customer demand;

[d] mySAP ERP Corporate Services mySAP ERP Corporate Services supports and streamlines the administrative processes that are standard to most businesses--those business-critical support processes that you must execute with maximum efficiency and control. You can tailor mySAP ERP Corporate Services to meet your requirements for transparency and control, as well as reduced financial and environmental risk, in the following areas: • Real estate management--mySAP ERP Corporate Services supports the administration of commercial and residential real estate, enabling automation and process control to help you avoid vacancies and reduce the costs associated with real estate development, rentals, and property management. Real estate management is enabled by the SAP Real Estate Management application. • Project and portfolio management--mySAP ERP Corporate Services provides a flexible and comprehensive solution for managing a portfolio of projects--from strategic portfolio management to project planning, execution, and accounting. • Travel management--mySAP ERP Corporate Services helps you reduce costs, streamline travel administration processes, monitor compliance with travel policies, and manage changes in compensation and pricing models from suppliers, global distribution systems, and travel agencies.

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• Environment, health, and safety (EH&S) management--mySAP ERP Corporate Services helps you manage complex, rapidly changing EH&S regulations and their consequences across your organization. • Quality management--mySAP ERP Corporate Services enables a unified approach to total quality management, delivering efficiencies that result from fewer product returns and improved asset utilization.

10.2 ORACLE CORPORATION Since introducing its first application modules approximately three years ago, Oracle Corp. has vaulted to the top of the manufacturing software market both in terms of revenues, and in the depth and breadth of its product offerings. Oracle now has more than 35 modules covering every facet of enterprise computing-from manufacturing and production control to human resources and sales force automation functions. Oracle expects the Windows NT announcement to enhance its efforts at winning more customers among the ranks of mid-sized manufacturers, while its supply-chain initiative should help its overall manufacturing marketing efforts.

10.3 J.D. EDWARDS Historically restricted to being an AS/400 shop, J.D. Edwards now offers all its software products on multiple platforms--including Unix, Windows NT and MVS, as well as a variety of databases. This branching out is directly attributable to the One World philosophy, which is based on a programming structure that J.D. Edwards calls configurable network computing (CNC). With the one world methodology gaining market acceptance, J.D. Edwards is now focusing on adding value to its product suites, primarily in terms of new functions. That initiative is expected to begin showing results with the release of a full compliment of Java applets and a browser screen that will enable the use of J.D. Edwards' applications over the Internet.

10.4 THE BAAN CO. The Baan Co. appears to subscribe to the adage that actions speak louder than words. Baan's action over the last three years is clearly indicative of its desire to be the dominant force in the worldwide manufacturing software market. Baan launched its quest for worldwide market dominance in 1994. Since then Baan has established its presence in every possible sector of the manufacturing world. Its Baan IV enterprise resource planning suite is used in the automotive industry, by numerous process manufacturers, as well as various types of discrete manufacturers, in addition to make-to-order and contract manufacturing companies. Baan also unveiled the first of its Web-based products, a suite of supply-chain functions that includes a Web-enabled sales configuration. Baan, on the other hand, is historically stronger in manufacturing than in finance and so on.

10.5 SYSTEM SOFTWARE ASSOCIATES (SSA) A company with a long history of success, SSA shows great resilience by swiftly overcoming unanticipated problems with the revamped version of its widely known BPCS enterprise resource planning package. Released in April 1996, the object-oriented version of BPCS, officially known as BPCS 6.0, easily surpassed its predecessors in terms of the number of functions and features offered.

ERP Vendors

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But BPCS 6.0 lacked the horsepower necessary to drive the large networks on which many of its early customers wanted to run. SSA expects most of its client base to make the switch to the object-based version of BPCS eventually. The tools are in place to support those customers who cannot make the jump right away.

10.6 MK GROUP/ACACIA TECHNOLOGIES Following a buying binge that spanned much of the late 1980s and early 1990s, Computer Associates (CA) had accumulated more than 500 software products covering every facet of business computing. CA had enterprise applications, systems and network management programs, databases, application development tools, and individual manufacturing and financial applications. In the enterprise resources planning arena, the CA reorganization effort spawned two new business units designed to tackle the market for mid-sized manufacturers-loosely defined as companies with $50 million to $500 million in annual revenues. Acacia Technologies has taken control of all of CA's AS/ 400-based manufacturing and distribution packages. These include CA-PRMS, a broad-based system designed to handle a variety of manufacturing modes: CA-KBM, a comprehensive, knowledge-based package designed for engineer and make-to-order manufacturers; and CA-Warehouse Boss, which covers the full spectrum of warehouse management functions. CA will officially drop the CA prefix from these product names to reflect Acacia's status as a separate business, even though it will remain a wholly owned subsidiary of Computer Associates. The CA prefix has already been removed from the names of the products offered by the Manufacturing Knowledge, or MK Group. MK offers MK Manufacturing, a suite of software modules primarily for discrete, repetitive manufacturing environments; MK Logistics, which is designed for warehouse and distribution management functions; and MK Enterprise, a 40-module package designed to run every aspect of a manufacturing enterprise.

10.7 JBA INTERNATIONAL JBA International has posted record revenues and corresponding profits, each year for the past 15 years. This is attributed to JBA's focus on meeting its customers' needs. The technology piece starts with JBA's flagship System 21, a complete set of manufacturing, financial, customer service and logistics applications. Originally designed for IBM's AS/400, System 21 is now available on the Unix and Windows NT platforms as well. In keeping with its customer-centric approach, JBA has equipped System 21 with a complement of market-specific solutions for key vertical markets like food and beverage, automotive, footwear and apparel, and service management.

10.8 MARCAM CORP./MAPICS INC. Marcam Corp. has a history of setting trends, particularly in the development of ERP solutions for process manufacturers. But this year, the company decided to follow a broad industry trend and divide itself into two separate companies. In establishing distinct companies for its products aimed at process and discrete manufacturers, Marcam is merely placing an official stamp on a business practice that it has been following for years. Marcam recently combined the organizations that had managed its Prism and Protean processmanufacturing suites into a single business unit. Prism, primarily a AS/400 based offering, remains

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Marcam’s flagship product, currently running in more than 1100 process manufacturing sites worldwide. MAPICS, an AS/400-based solution that Marcam purchased from IBM in 1993, is believed to be the most widely used manufacturing software in the world today, with various versions of it operating in more than 14,000 manufacturing sites around the world.

10.9 INTENTIA Intentia has been experiencing rapid growth in USA and worldwide in recent years. The company’s package, Movex, is supposed to be a very broad and very deep product that provides benefits not often provided by standard enterprise resources planning offerings. Among these benefits are rapid deployment and quick return on investment. With the AS/400 as a primary operating platform, Intentia has built Movex into a 62-module package that addresses every aspect of a manufacturing operation--from actual manufacturing and production control to distribution, financials, human resources and executive decision-support functions. While taking this broad approach to functionality, Intentia has also managed to equip Movex with modules that meet the specific needs of various vertical markets. The verticals Intentia focuses on include process--industries like apparel, food and beverage, pulp and paper, as well as several discrete manufacturing industries.

10.10 QAD INC. For several years, QAD Inc. has been doing all the things that are essential for enterprise resources planning Software Company to sustain a healthy growth rate. It has clearly identified its target markets. It has concentrated on expanding the functionality of its products to meet the specific needs of companies in those markets. And it has continually broadened its products' technology base, offering its client/ server-based systems on a variety of platforms, including Unix, Novell and Windows NT. QAD has dispatched its research and development team to work on a new product line, tentatively called On/Q. This series of modules would extend the research of QAD's product offerings into the supply-chain. On/Q which is built with object-oriented technology, will add functions, such as logistics, order management, advanced pricing, procurement, and vendor/ supplier relations to QAD's product arsenal. Such functions would provide a complement to the broad ERP functionality users now get from QAD’s MFG/PRO and MFG/NT suites. Each of these systems contains over three dozen modules covering various manufacturing and distribution management functions. MFG/PRO is a multisite system that runs on either Unix or Novell Netware. MFG/NT is a full 32-bit, object-oriented system that can run either single- or multisite installations on the Windows NT platform. QAD has established a sterling reputation in the marketplace by tailoring these products to run mixed-mode manufacturing companies in five key vertical markets: automotive, food and beverage, electronics/industrial, consumer packaged goods, and medical/pharmaceuticals.

10.11 INTUITIVE MANUFACTURING SYSTEMS Intuitive Manufacturing Systems (http://www.intuitivemfg.com) offers intuitive and flexible enterprise solutions that help small and midsize manufacturers achieve greater operational efficiency and profitability by integrating business processes on an enterprise-wide level. Since 1994, Intuitive has been a technology leader, dedicated to providing our customers with software solutions that add value to their business. Intuitive’s enterprise solution is designed to deliver superior functionality, rapid

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implementation, high levels of usability and a technology standard that is unmatched in the industry. Intuitive develops full-integrated ERP software for discrete manufacturers. Intuitive ERP v6.0 is built on Microsoft .NET architecture and includes Intuitive CRM, Service and Repair module, Freight Management system, iCustomer Web catalog, and Ad Hoc Report Wizard. CRM includes the ability to create and track opportunities and prospects, to manage all contacts, and to integrate fully with Outlook. Web Catalog allows orders to be placed over the Internet. Report Wizard includes field layouts, calculations, and presentation options. Intuitive is committed to making Intuitive ERP the first ERP software product on the market to be 100 percent “pure” .NET. Only a goal of being a “pure” .NET solution will deliver to customers all the benefits of .NET. To reach this goal, Intuitive started from the ground up and spent 18 months designing a new architecture that takes full advantage of .NET, XML, Web Services and the new features of Microsoft SQL Server. Current product has a pure .NET managed code framework and 50% of the standard product functionality has been completely rewritten in .NET. .

10.12 COMPIERE The software Compiere was originally designed and written by Jorg Janke. Jorg has 20+ years experience in packaged ERP systems, is an Oracle Certified DBA and Java Certified. In 1982, Jorg founded his first company “SoftCream” developing and distributing an integrated retail solution. Compiere Inc. is the lead developer of the Compiere product and is solely funded by providing Support and Services for Compiere. As a (profitable) Professional Open Source company it concentrates on providing “back office” services to its partners and users of Compiere. Compiere, Inc. is a private company based in Portland, Oregon, USA. Compiere provides a comprehensive solution for small-to-medium sized enterprises (SME) in distribution and services on a global basis and covers all areas from customer management and supply chain to accounting. Compiere makes Fortune 500 functionality accessible to companies of all sizes. Quite a few benefits come automatically with Open Source environment, but Compiere has significant product benefits over its traditional, older competitors. Compiere is an Open Source software and by definition is free. Implementation services, training, support and documentation are available as extras if you need them.

10.13 RAMCO SYSTEMS Founded in 1938, Ramco Group is a well-diversified industrial conglomerate. Ramco Group has seen its turnover multiply ten-fold and also become one of India's most respected business groups, achieving international recognition for its quality products and services. The group is one of the most efficiently managed Indian business houses with a track record of high and consistent profitability. Highly respected for its consistent rewards to its shareholders, the group employs over 7000 people. Established in 1989, Ramco Systems is a part of the Ramco Group. Ramco's Adaptive Enterprise Solutions, developed using Ramco VirtualWorks®, a Virtual Software Factory, allows organizations to address their Unique & Next Practices over and above standard Best Practices. Ramco VirtualWorks is a Process to Application Platform that incorporates several breakthrough concepts (multiple patents filed), a first for an Indian Software company. Ramco is a global provider of Enterprise Solutions and Services in key areas such as Manufacturing, Aviation, Asset Management, Trading & Logistics, Healthcare, eGovernance, Banking & Financial Services, Corporate Performance Management and

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Human Resources Management. It is also a Siebel Alliance Partner and provides CRM implementation services to global customers. Ramco provides Converged Networking Solutions, Information Security Services and total Contact Centre Solutions. In the Factory Automation space, Ramco provides Engineering Process Optimization solutions to the Cement, Chemical and Power sectors. Ramco Systems is listed on BSE, NSE & MSE. Its software development practices are ISO 9001 Certified and Development Centers assessed at SEI CMMI-SW Level 5. Ramco has a global presence with 16 offices in 9 countries across USA, Europe, Asia-Pacific, Middle East and South Africa. Ramco employs more than 1,700 professionals serving in 1,000 customer locations across 40 countries, representing 70 industry segments. Its customers include Citigroup, Conair, ICI, PHI, Intel, ICICI, Ericsson, Moser Baer, Philips, Reliance Energy, Revertex, AEC, Seagate, eThekwini, Savage Arms, Amara Raja Batteries, Schlumberger, Rakbank, Ruag Aerospace, Swatch Group, GOAP, CavinKare, MJB Wood, Essex Crane, MMTC, Columbia Helicopters, Kardex, Madras Cements, Tropical Cheese, Preferred Meals, Agilent, Radisson Edwardian, Bemis and more.

SUMMARY Table 1 shows the “Top 5” Worldwide ERP Software Application New License Revenue Market Share Estimates. It (Source: IJEIS International Journal) illustrates the “top 5” ERP vendors, 2001 and 2002 market shares and we see one dominant actor, a handful of major vendors and a large number of insignificant vendors. To conclude the discussion on enterprise systems we believe that ERP has evolved from being a state of the art technology towards being a state of practice. The new package offered by the major vendors has been extended by adoption of the e-business technologies into the ERP systems. Thus we have got some new insight into the ERP market. We find that ERP is an institutionalized component of enterprise infrastructure. The implications to research are that the time is now ripe to rethink the concept of enterprise systems. Table 1 ERP Vendor SAP AG

2002 Market share

2001 Market share

25.1%

24.7%

ORACLE

7.0%

7.9%

PEOPLESOFT

6.5%

7.6%

SAGE

5.4%

4.6%

MICROSOFT BUSINESS SOLUTIONS

4.9%

4.6%

OTHERS

51.1%

50.3%

TOTAL MARKET SHARE

100%

100%

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REVIEW QUESTIONS 1. What is the role of an ERP vendor? 2. Carefully examine the features of all the ERP vendors and rank them in the order of their strengths and weaknesses. 3. Project the market share of the top ERP vendors for the next five years. 4. Name the various products of all the vendors and specify their pros and cons. 5. How does ERP vendor ensure reliability to their product? 6. Suggest a methodology to enable the ERP vendors to measure the performance of their product. 7. What are the reasons for ERP failure? Propose suitable solutions.

11 ERP Case Studies OBJECTIVE • To enable the readers to visualize ERP implementation. • To describe the benefits of ERP. • To describe the challenges faced by the organization. • To discuss how the various organizations utilizes the ERP solution.

EXPECTED OUTCOME The readers will be able to:

ü Understand the features of an ERP system. ü Understand how an ERP system can improve the performance of an organization. Note: The case studies presented here are compiled from various sources including the Internet, the ERP Vendors' Websites, and the websites of organizations who implemented the systems. The purpose of these case studies is to enable the reader to get hands on experience in various ERP projects. The readers are directed to visit the websites of all the major ERP vendors like SAP, Intuitive, Baan, etc to get the details about their ERP product and its implementation in various organizations.

CASE – 1 About the Company ABC Private Limited, an electronics contract manufacturer specializing in high mix, low volume circuit board assemblies, faced a daunting challenge. In a short period, the company needed to launch a brand new production facility and implement a business infrastructure that would support CRM.

Challenges faced by the Company ABC Private Limited provides an outsourcing solution to other manufacturing companies that do not want to tie up assets and overhead in electronics manufacturing, but still need high quality, complex assemblies. To meet the demands of manufacturers in the industrial systems, medical instruments,

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networking systems and telecommunications industries, ABC Private Limited built a state-of-the-art Surface Mount Technology (SMT) production facility in Bothell, Washington. And, to pull it all together, to manage accounting and manufacturing activities, keep their own costs down and provide flexibility in meeting customer demands, they needed an infrastructure.

Solution ABC Private Limited selected Intuitive ERP by Intuitive Manufacturing Systems for material planning, procurement, inventory and production management, shop floor scheduling and general accounting functions. A team consisting of members of executive management and key personnel from materials and IT selected Intuitive ERP after reviewing several other ERP systems. Their decision is based on five major criteria: production and inventory control, functionality, ease of use, integration of accounting and manufacturing functions, system scalability and technical support services.

Outcome of ERP Implementation Intuitive ERP implementation only took about 60 days. The inventory and planning functions of Intuitive ERP, including integration of forecasts, detailed MRP analysis, vendor management reporting and inventory control, provided the information needed to make the right business decisions quickly and accurately. Integrating accounting and manufacturing was also a high priority for the company. General ledger, product costing capabilities and management reporting were all major requirements. The ERP implementation was more focused towards quality and excellence. Those two elements enabled the company to be extremely efficient and provided the ability to respond quickly to customer needs.

REVIEW QUESTIONS 1. 2. 3. 4. 5.

What does a SWOT analysis reveal about ABC Private Limited? Is the company in your opinion in an attractive position and situation? Why or why not? Does the company require ERP software? How did the company select Intuitive ERP? Assess the performance of the company before and after ERP implementation.

CASE – 2 About the Company Since 1985, ABC Private Limited has provided the agriculture, construction and transportation industries with state-of-the-art trailer equipment. Manufacturing approximately 2,500 units a year, ABC's 90 employees were experiencing growing pains. BOM (Bill of Material) inaccuracies created inventory discrepancies, material shortages, manufacturing bottlenecks, missed delivery dates and substandard productivity. Employee frustration over BOM inaccuracies created a tense working environment.

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Challenges faced by the Company ABC Private Limited needed an ERP package that provided accurate real-time information to keep up with the rapid sales growth. Existing software did not provide ABC's engineers with an efficient method to create Bill of Materials. An inaccurately engineered Bill of Materials negatively affected the entire manufacturing process. Inventory inaccuracy due to bad Bill of Materials led to material shortages and panic purchasing. Inefficient use of machinery caused unnecessary shop floor bottlenecks. Finished goods were not coming off the production line on time, creating consistent delinquent delivery dates. Resulting financial statements did not accurately reflect a true picture of the company. As the company grew, without an adequate business system, ABC's problems were growing with it.

Solution After three months of system evaluation the selection committee opted for Intuitive’s 100 percent Microsoft Technology-based solution. The fully integrated functionality along with the layout of the user interface assured ABC Private Limited of a quick and easy learning curve. A diligent reference review provided additional assurance of system reliability and support. It was imperative for ABC Private Limited to implement a system capable of accurate and timely BOM creation. With accurate BOM information available, dramatic improvements in inventory levels and production on the shop floor were possible.

Outcome of ERP Implementation After implementing Intuitive ERP, ABC Private Limited enjoyed a reduction in the manufacturing cycle. Intuitive ERP provided ABC’s engineers with the ability to create BOMs quickly and accurately. This allowed ABC Private Limited to install an orderly release of work orders to the shop floor, making production more consistent. “Within a month we could see considerable improvements on shop floor flow,” said the general manager of the company. The production bottlenecks of the past have been eliminated. ABC Private Limited delivery dates are now shorter and more reliable. Additionally, customer complaints of delinquent deliveries have been dramatically reduced, improving stress levels throughout the plant. Improved inventory accuracy has resulted in reduced inventory shortages and the elimination of panic purchasing. Financial Statements now reflect a more accurate view of sales growth and the resulting bottomline improvement. With Intuitive ERP in place, both ABC's customers and employees have felt its impact. “We were experiencing a lot of frustration prior to implementation. Delivery promises to our customers were not being met. This created a tense work environment,” said the general manager of the company. “All of our customers appreciate the increased reliability of delivery dates,” he added. The impact has also been felt at the higher levels of the organization. “Senior management is appreciative of the stability of production, the reliability of delivery dates and the increased accuracy of the financials,” said the general manager of the company. In addition to the operational benefits, ABC’s management is now able to accurately track the health of their company with Intuitive ERP's reporting and Business Intelligence tools. The general manager added that the reports that the system can generate are excellent. The ease with which queries can be created and converted into Pivot tables or OLAP cubes is also a great feature. Implementing Intuitive ERP has helped ABC Private Limited to stabilize their growth. Now, they can focus on enabling new business and growth strategies.

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REVIEW QUESTIONS 1. 2. 3. 4. 5.

What is the primary objective of ABC Private Limited? What is the outcome of ERP implementation? What are the challenges faced by the company before ERP implementation? What are the features of ABC's ERP software? Assess the performance of the ERP software chosen by ABC with other ERP software.

CASE – 3 About the Company Founded in 1984, medical device manufacturer XYZ Private Limited is a provider of Lacrimal Occlusion Therapies to physicians, hospitals and distributors around the world. Lacrimal Occlusion is a treatment for Dry Eye Syndrome and related Ocular Surface Diseases.

Challenges faced by the Company When XYZ Private Limited decided to replace their accounting and manufacturing systems, they wanted an integrated enterprise resource planning (ERP) solution that would support their growth and address a number of operational problems. After 15 years in business, inventory was growing faster than revenue, on-time delivery was slipping and a general lack of information was negatively impacting financial and operational performance. A successful ERP implementation, and for that matter a successful business, not only requires a vision, but also a plan. According to the Director of Operations for XYZ Private Limited, “a vision without a plan is only an illusion.” Any solution would ultimately have to support three important corporate objectives: the ability to rapidly respond to customer needs, deliver high quality products and empower employees. Adding more challenges to the project, XYZ Private Limited operates in a heavily regulated industry and has to comply with FDA Quality System Requirements (QSR), ISO9000 requirements and European EN46001 requirements.

Solution XYZ Private Limited looked at several ERP systems targeted at small and mid-sized manufacturers and systems from industry giants SAP, Baan and J.D. Edwards. The systems were judged based on overall functionality, ease of use, scalability and underlying technology. “Cost plus utility equals' value and Intuitive ERP from Intuitive Manufacturing Systems provided the best value by offering the right features at a very affordable price,” said a Director of the company. “The company is looking at a return on investment of over 200 percent and we are very happy with the choice”, he added. For XYZ Private Limited, the core functionality relating to purchasing, materials management and sales operations had the most impact.

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Outcome of ERP Implementation More than ten Key Performance Indicators (KPIs) were established to measure improvements. They included metrics for inventory, delivery, supplier performance, financial performance and quality. Significant improvements were realized in all areas. Total inventory, including external locations, has declined from 90 days on-hand to 15 days on-hand. On-time delivery improved from 75 to 99 percent. Another area experiencing improvement has been supplier performance. With in-house and external operations, integrating sales forecasts and managing inventory in multiple locations became critical. The ERP implementation has given them much better visibility and allowed the suppliers to improve their own scheduling. According to a Director of this company, on-time supplier delivery performance has improved from 30 percent to more than 80 percent in less than a year. Implementation was dominated by two main factors. First, the company had a very aggressive timeline. It was moving to a new facility and everything needed to come together at the right time without impacting revenue. Second, implementation and maintenance of the system had to fit an environment with very little IT resources available. Intuitive ERP implementation actually took only 45 days and required only one day of consulting services. All employees were asked to keep track of procedures and reports from their old system in case the new system did not meet all their needs. In the end, literally no modifications were required. XYZ Private Limited believes strongly in empowering its employees. Financial and operational information is shared with all employees, not just the management staff. "If employees have access to the information, they can make better decisions", says a Director of the company. Unique for a company of its size, XYZ Private Limited has geographically diverse operations and remote access has become an important part of the business. "We needed a system that would allow us to work any time of day, from anywhere in the world," said the President of XYZ Private Limited. Intuitive offers an option that gives users a direct, real time connection to the system. Sales executives can review their account histories and have the ability to enter orders remotely. The management team can track and analyze the overall company performance from any country in the world. "As the company grows, we see more and more benefits from the integrated solution Intuitive provides," said a Director of the XYZ Private Limited. After ERP implementation, the company has become very successful and continues to experience at least 10 percent revenue growth year to year, added the executive director of the company.

REVIEW QUESTIONS 1. 2. 3. 4. 5.

What are the critical success factors of ERP implementation? What is the feedback given by the director and the president of XYZ Private Limited? Propose suitable metrics for measuring the performance of ERP implementation. Evaluate the growth of the company after ERP implementation. How did the company choose Intuitive as their ERP software?

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CASE – 4 About the Company An aerospace industry decided to go for an ERP system. When the manual inventory management process and stand-alone accounting system failed to keep up with the company's growth, the industry decided it was time to implement an integrated enterprise resource planning application. It needed a system that could survive and thrive in an environment regulated by the Federal Aviation Administration (FAA). They selected Intuitive ERP from Intuitive Manufacturing Systems.

Challenges faced by the Company As the aerospace industry began to experience rapid growth it realized they were facing a number of problems. They had no clear view of product costs, productivity was frequently impacted by stock outs on the production floor, accounting accuracy was poor and inventory turnover was exceedingly slow.

Solution The aerospace industry moved forward implementing the core modules of Intuitive ERP, including general ledger material planning and procurement capabilities, as well as the optional modules for Shop Floor Control and Location/Lot Tracking for 25 concurrent users. Intuitive ERP's MRP and bill of material capabilities have provided material planners with a better view of requirements and more control over inventory management for the company's 4,000 parts and 2,500 bills of material. Work order functionality and shop floor scheduling allow production controllers to better manage labor and equipment capacity and also react to changing customer needs without disrupting the entire factory.

Outcome of ERP Implementation One measure of the impact Intuitive ERP has had on the aerospace industry is the number of inventory turns they experience. Prior to implementation, inventory turned over about twice per year. After implementing Intuitive ERP, inventory turns increased to six times per year, allowing the company to improve cash management, reduce scrap, and rework write-offs as well. With the improved inventory management, the aerospace industry is also now able to offer just-in-time delivery of product without excessive inventory levels. The Location/Lot tracking option is critical to the aerospace industry. Online traceability proved to be beneficial recently when one of its customers received some products that failed upon assembly. They found the root cause was a bad batch of adhesive that had degraded over time. The aerospace industry was able to quickly trace the original lot and take corrective action to prevent the problem from recurring. Ease of customization and access to data were also issues for the team at the aerospace industry. While standard Intuitive ERP reports satisfy most of their needs, the industry has been able to create additional reports easily, customized to specific job functions, with unique selection and sorting criteria. Additionally, Intuitive ERP's use of 100 percent Microsoft technology provides users with a familiar interface and user-friendly architecture that can be easily managed and modified without specialized IT resources. Short implementation time was one key factor in the decision to go with Intuitive ERP. The ERP team completed the system implementation in less than one month with only two days of consultation from an Intuitive implementation service provider (ISP). Here even more impressive is the fact that within a month after implementation the employees were comfortably using the system without any major training. The impact of the

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implementation of Intuitive ERP was felt almost immediately. In accounting, for example, operational benefits were apparent within the first month. “From an accounting point of view, we have been able to dramatically reduce the time it takes to close the books each month,” an employee said. “What used to be a painful three week ordeal is now easily completed in less than one week.” The accounting group also found that the financial drill down capabilities of Intuitive ERP provided a way to easily perform financial analysis and resolve issues. Prior to implementation, it was nearly impossible to dig into the details of issues. Since Intuitive ERP was implemented, the aerospace industry's sales revenues have doubled. During that time, production and administrative efficiencies have enabled the aerospace industry to maintain the same level of staffing–effectively doubling the sales per employee.

REVIEW QUESTIONS 1. 2. 3. 4.

Does the aerospace industry really require an ERP system? What are the factors influencing the ERP software selection process? What is the impact created by ERP implementation in the aerospace industry? What sort of training is required to the employees of the aerospace industry to use ERP software? 5. List the features of Intuitive ERP in the context of the aerospace industry.

CASE – 5

About the Company XYZ private limited is a leading supplier of 3D/6D measurement products used in industries as diverse as image guided surgery, robotics, aeronautics and biomechanics. The company employs 90 and generates over $20 million in annual revenue.

Challenges faced by the Company XYZ Private Limited faced a challenge when rapid growth and aging technology threatened to stand in the way of company goals. Instead of enabling operational improvements, XYZ's existing systems were impeding progress. Existing technology was causing missed deliveries and creating a high number of back orders. With customer satisfaction at risk and internal morale slipping, the management team at XYZ decided it was time to act.

Solution The decision to invest in a new system was not undertaken lightly. With almost twenty years in business, XYZ Private Limited has firmly established a reputation for high quality, high performance products.

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The company is a past winner of the Canada Export Award and the Global Traders Award. XYZ's selection of Intuitive ERP™ from Intuitive Manufacturing Systems was based on factors that directly supported corporate objectives. Intuitive ERP provided a level of system functionality that could immediately improve inventory management and the expandability and flexibility to support XYZ’s growth. Equally important was the system's level of ease of implementation and ease of use.

Outcome of ERP Implementation After implementing Intuitive ERP, XYZ Private Limited has experienced continued success in improving inventory management and increasing revenue. Prior to implementation, the company struggled to achieve even two inventory turns per year. Inventory turns have now more than doubled and expectations are that the company will better that in the near future. Since implementation, XYZ's revenue has increased from $10 million to over $20 million with little increase in inventory value. In addition, the company has reduced their order cycle time for their flagship product from four months to four weeks, an improvement of almost 80 percent. Improvements in production control and inventory management have had a direct impact on customer delivery. The Material Requirements Planning and Forecasting capabilities of Intuitive ERP have allowed XYZ Private Limited to better service their customers. With some customers expecting shipment in early nine months and others expecting shipment in as little as nine days or even less, more sophisticated and accurate planning had been critical. The addition of better planning capabilities had an immediate impact on labor and materials. “We were able to better understand what was in stock, what we were buying and what was needed,” said the Production Manager. He also added that “Improved planning has made a huge difference in improving delivery.” Ease of use and system scalability have been important in utilizing Intuitive ERP to improve operations. When the system was first implemented, only five user seats were required. As the company grew, that number increased to twenty-five. Significantly increasing the number of users, and doing so without a lot of training, allowed the company to expand without worrying about putting constraints on their business infrastructure. XYZ Private Limited was interested in upgrading their operations by leveraging Intuitive ERP's standard functionality but also had some unique conditions that required modification of the system. With a relatively small IT staff, it was important that modification and customization could be done with limited resources. According to the Systems Administrator for XYZ Private Limited, Intuitive ERP's “ability to customize easily” made the implementation process go smoothly. “The system is easy to modify and customize to make it work for your business,” added the Production Manager. For XYZ Private Limited, improving operations is more than just a way to reduce expenses. With the implementation of the Intuitive ERP, the company has found a way to increase the value they provide to customers while also improving financial performance. “Intuitive ERP was instrumental in assisting XYZ Private Limited to achieve the growth that we have seen over the past three years,” said the Production Manager.

REVIEW QUESTIONS 1. How did the production manager rate the Intuitive ERP software? 2. Apply cost-benefit analysis to the ERP implementation of XYZ Private Limited.

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3. What are the various modules used in the ERP implementation of XYZ? 4. What are the challenges and opportunities of XYZ Private Limited? How did they manage them using ERP software? 5. Discuss the pros and cons of ERP implementation in XYZ Private Limited from the view point of the employees.

CASE - 6

About the Company A Company has been exporting machines all around the world, including Brazil, Germany, the United Kingdom and the United States. But with growth, their manual systems started breaking down. They had no centralized purchasing department or means of sharing information. So groups were paying different amounts for the same part from the same vendor. Delivery dates were missed because of lack of inventory control, and top management had so little visibility to the manufacturing process they couldn't set pricing that was competitive. Hence the company decided to go for an ERP system.

Challenges faced by the Company The Company needed a complete information system built around an ERP solution that would help manage every aspect of their manufacturing process - from purchasing and inventory to manufacturing and planning - as well as prepare them for ISO certification.

Solution The company commissioned a comprehensive survey of the ERP market and Intuitive ERP software was selected for four major reasons: 1) a 100 percent Microsoft platform, 2) an easy-to-use graphical interface, 3) excellent support, and 4) scalable open-architecture features that permitted the addition of users at any time. The consultants that evaluated Intuitive ERP concluded: “Intuitive ERP is easy to install, interface, customize, and maintain. It can be integrated seamlessly into any manufacturing environment and has a good scheduling flexibility and versatile options. It also has a definite ISO 9000 facilitation orientation.”

Outcome of ERP Implementation The company started module-wise implementation of Intuitive ERP in four phases, which were completed in just four months. Intuitive ERP's graphical interface and integration with Microsoft Office and Access made it easy for staff-who prior to this had virtually no computer experience–to learn and use the new system. Using the Microsoft SQL Server as the database engine delivered the speed and robustness necessary for their mission-critical applications. “We transformed the company from a practically nil computer culture to a total computerized system,” said the General Manager of the company. “The learning curve for Intuitive ERP is reduced to well below that of other manufacturing

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systems because of graphical and interactive flow charts and complete context-sensitive online help”, he added. Implementing Intuitive ERP has led to the following advantages: • Intuitive ERP provides accurate data for making manufacturing decisions through reports that include online machine utilization, online work order status monitoring, online labor utilization, etc. • Planning has improved. With the previous manual planning system, it was difficult to coordinate customer requirements and design changes with production and assembly functions to meet the manufacturing schedule. Now there is seamless coordination between all departments. • Prior to Intuitive ERP, there had been virtually no inventory management; information on non-moving or slow-moving items and stock values was unavailable. With the new tools in place, the manufacturing inventory has been reduced by 20 percent. • With reports such as Purchase Price Variance, there is visibility of the cost of every purchased item. This has resulted in better price negotiation with suppliers resulting in a 20 percent price reduction. • Managers now have the most current inventory and costing models available to them at all times, and so they can set competitive pricing that ensures profitability as well. They are also able to monitor online the status of work orders for components, sub-assemblies and final assemblies.

REVIEW QUESTIONS 1. 2. 3. 4. 5.

How was the ERP software selection process carried out? What are the advantages the company enjoys due to ERP implementation? What were the problems faced by the company before ERP implementation? How did the consultants rate the Intuitive ERP software? What are the technical requirements in ERP implementation?

CASE – 7 About the Company A leading producer of copper components and brazed copper assemblies for use in the air conditioning and refrigeration industries decided to go for ERP implementation. With revenues exceeding $10 million, the company is a make-to-order shop with more than 150 employees, producing parts to individual customer specifications and prints.

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Challenges faced by the Company Prior to implementing Intuitive ERP, the company faced a problem familiar to many manufacturers– scheduling. Customers were demanding shorter lead times and the company's existing ERP system was not capable of providing the information necessary to respond quickly. As a result, the company was losing business. The company was also moving their equipment away from manual operation toward automation and they required a system that could schedule efficiently and had machine loading capability. It was imperative for the company to view their shop floor load at any point in time, allowing them to determine where potential problems existed and to create corrective solutions on the production line before slowdowns occurred.

Solution The management of the company contemplated rewriting their existing system in-house while they searched for other system solutions. Then they learned about Intuitive ERP from Intuitive Manufacturing Systems–an ERP software system that offered a 100 percent Microsoft solution. Because the Microsoft platform was already in place at the company and employees were accustomed to the interface, the management realized implementation and training would be quick and straightforward. These factors, coupled with the price, ease of maintenance and administration, and the ability to make modifications on their own convinced the management that Intuitive ERP would have a substantially lower total cost of ownership than any other system. After a visit to Intuitive Manufacturing Systems, the company determined the system functionality of Intuitive ERP would be a perfect fit for their business and licensed the Intuitive ERP base system with the Location/Lot Tracking and Shop Floor Control (SFC) options for 25 concurrent users.

Outcome of ERP Implementation The company believed it was important for their own growth to be involved with the technology from the beginning. "To date, there has not been an upgrade made available that we have not considered taking the time to install as soon as we could," said the General Manager of the company. "New versions are always faster and more feature-rich," he added. Within the first year of implementing Intuitive ERP, the company experienced a dramatic drop in overtime. Intuitive ERP gave the company the ability to view their shop floor load at any given point in time and allowed them to schedule hours by department, rather than the entire shop. Additionally, Intuitive ERP enabled the company to prepare better reports. The system previously used by the company did not assist managers in the preparation of consistent reports for scheduling purposes, whereas Intuitive ERP supports report consistency throughout the system. The company considers the Intuitive ERP a perfect fit to their business. It is a dynamic system that can expand as the company grows. The company finds the ERP implementation to be a thorough system that considers the various ways of going about its business. It is also a very flexible system, allowing the company to customize without compromising data.

REVIEW QUESTIONS 1. Define the business process of the company. 2. What made the company to go for an ERP system?

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3. If you happen to be a consultant, how will you carry out the ERP software selection process? 4. Perform the cost-benefit analysis and present your report to the company to enable it assess its performance. 5. List the various functions of the ERP system of the company.

CASE – 8 About the Company A company produces high quality, hand-made, salt-glaze pottery and tiles for commercial and residential use. The company decided to have an ERP system and purchased the Intuitive ERP software.

Challenges faced by the Company As the company grew, the accounting and manufacturing systems they had in place could not support their needs. “We knew that if we were going to survive as a company, we needed to upgrade our business systems,” said the President of the company.

Solution After mapping out company objectives and analyzing several ERP solutions, the company selected Intuitive ERP from Intuitive Manufacturing Systems. The main criteria for selecting Intuitive ERP included integrated accounting and manufacturing functionality, product costing capabilities, strong shop floor control features and the ability to easily make modifications.

Outcome of ERP Implementation Prior to implementation of Intuitive ERP, the management team found it difficult to get the information they needed to make good business decisions. There was no real integration of manufacturing data and accounting information. With Intuitive ERP, the integration of accounting and manufacturing information provided the company with new insights into product line profitability. Company managers were able to see that one of their product lines was not pulling its weight and they made a decision to outsource that line so they could expand in other areas. “Intuitive ERP enabled us to identify issues and make better product decisions,” said the President of the company. Manufacturing pottery and tiles is a delicate balance of materials, labor and curing time. The right kind of clay, the perfect glaze, experienced craftsmanship and the appropriate time in the kiln contribute to the end product–and the end cost. Determining accurate costing had been a serious problem for the company prior to Intuitive ERP. Intuitive ERP product costing capabilities have allowed the company to distribute costs more accurately across different products. “The system is very straightforward and the data is now very accurate,” the general manager of the company added. This not only allows the company to do a better job of product costing, but also a much better job of setting prices. The cumulative impact of Intuitive ERP has been significant. Work instructions are more clearly communicated, scheduling is more accurate, and, more importantly, rescheduling can be done without

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completely disrupting the whole factory. Intuitive ERP Material Planning and Shop Floor Control capabilities have also had a major impact on quality and productivity at the company. Intuitive's work order process, multi-level bills of material, and detailed routings have provided structure and discipline while adding flexibility at the same time. The result is two-fold. The company's old process for manufacturing frequently required that data be entered two or three times. Now, information is entered once and it is available throughout the system. This allowed the company to free a full-time employee for other duties. A second benefit is that fewer errors are made in the production of pottery and tiles and custom projects are handled with ease. One of the reasons the company selected Intuitive ERP was the underlying technology. Even more important for the company is the ability to make minor modifications without outside resources. Developed solely with 100 percent Microsoft technology, Intuitive ERP is easy to implement and requires very little system administration. One report provided by the ERP software provided information on production efficiency that gave the company greater insight into daily operations and helped identify opportunities for improvement.

REVIEW QUESTIONS 1. 2. 3. 4.

Define the business process of the company. What made the company to go for an ERP system? If you happen to be a consultant, how will you carry out the ERP software selection process? Perform the cost-benefit analysis and present your report to the company to enable it assess its performance. 5. List the various functions of the ERP system of the company.

CASE – 9 About the Company Manufacturing approximately 800 make-to-order units a year, a company with 200 employees was conducting duplicate data entry to standalone sales order, MRP and financial systems. Data integrity was compromised due to a lack of system integration. The inconsistent data integrity created excess inventories, production delays and customer shipping delays. Hence the company decided to have ERP software to improve their business.

Challenges faced by the Company The company needed a fully integrated ERP package that would provide accurate real-time information and alleviate duplicate data entry. It was also imperative to include a product configurator to ensure accurate production builds. The lack of accurate builds resulted in the company having to give away

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options installed that were not selected. The loss of data integrity between the incompatible existing MRP system and existing Sales Order Entry system adversely affected purchasing. Resulting inventory errors caused delays in both production and shipment to customers. The existing financials did not integrate with the other existing systems, again resulting in inconsistent data integrity.

Solution After six months of system evaluation, the company's selection committee opted for the 100 percent Microsoft solution of Intuitive ERP. The fully integrated functionality along with Intuitive ERP's robust Advanced Configurator assured the company the ability to produce units accurately. Additionally, Intuitive ERP's ability to handle multi-currency and the flexibility of costing were also key considerations. Intuitive ERP met 80 percent of the company's requirements out of the box with the lowest cost of ownership. By working with their local Intuitive representative, system modifications were easily made to tailor the system to the company's particular requirements.

Outcome of ERP Implementation Intuitive’s Advanced Configurator provided the company the ability to create accurate bills of material, which reduced 26,000 lines of BOM down to 13,000. The company expects to further optimize its BOMs in the future. The Advanced Configurator has also helped the company streamline production. “It allows us to set the rules necessary to make sure a configured unit can actually be built,” said the Manager, Materials Management section, of the company. With the Intuitive ERP system integrating their sales, finance, materials and production information, the company has completely eliminated the duplicate entry of data. Fewer order entry errors have been a result of orders entered only once through the Advanced Configurator. It is important to note that the company now has the ability to pull out any information needed, from one source, for decision making. The integration of information has also resulted in operational benefits across the organization. The visibility of information gives the company the ability to streamline their business processes. From eliminating data entry to implementing configuration rules, an integrated enterprise system has provided the company with the opportunity to restructure its business for optimum efficiency and growth opportunity.

REVIEW QUESTIONS 1. 2. 3. 4. 5.

Develop a business model to reflect the business process of the company. How does the ERP software benefit the company? Is the ERP software meant for reducing clerical jobs and automating the business process? How did the company improve its financial position after the ERP implementation? Perform the feasibility analysis for deploying the ERP software and present your report.

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CASE – 10 About the Company An electronics manufacturer earned $2.85 million in revenue. Just one year later, after implementing a new business model and the Intuitive ERP system, the company's revenue exploded 471 percent to $12.89 million. The company decided to update their technology using Intuitive ERP software.

Challenges faced by the Company Before that 10 million-dollar increase in revenue, the company's revenue had been growing 30 to 40 percent a year, but their existing systems weren't expandable or comprehensive enough to support new business strategies and as a result the company couldn't keep up with growing demand.

Solution After considering several mid-range ERP packages, the company selected Intuitive ERP from Intuitive Manufacturing Systems. Intuitive ERP's one hundred percent Microsoft technology infrastructure initially prompted company's decision to implement Intuitive ERP. The benefits of Intuitive ERP's Microsoftstandardized architecture include an extremely flexible and easy to use interface and integration with other Microsoft programs. Also important to the company was Intuitive ERP's high level of configurability and ease of modification. These factors ensure efficient implementation and on-going management of the company's Intuitive ERP system.

Outcome of ERP Implementation Other contributing factors included Intuitive's low total cost of ownership, planning and procurement features, and the functionality to enable a turnkey business strategy. Implementing Intuitive ERP was a significant step in the company's strategy to modernize their operations. Implementing Intuitive ERP enabled the company to make a dramatic change to their business model. In January of 2001, they began entering one million dollars' worth of turnkey orders. And, instead of relying on customers to supply materials (as they had done in the past), the company began to procure and manage their own materials with the planning and purchasing features of Intuitive ERP, in addition to assembling the products. With the infrastructure in place to keep up with new demand, the company has been able to reduce costs, increase customer satisfaction, shorten cycle times, and is experiencing faster inventory turns. They can now forecast demand to suppliers, and even send suppliers forecasts out to a year. They have dramatically reduced lead times, and increased on-time delivery to ninety percent, up from thirty percent beforehand. These kinds of benefits have resulted in increased profitability and have allowed the company to provide more competitive services to their customers. Intuitive ERP provided new ways for the company to improve their business processes. The company can now use multi-level bills of material, something they weren't able to do before. They implemented Intuitive's Shop Floor Control module and now utilize bar coding in their operations. The company was also pleased with how smoothly Intuitive ERP data could be exported to Microsoft Excel or Word. In addition to the operational and procedural benefits provided by Intuitive ERP, the most significant measure of the company's success with their new system was the quadrupling of the company's revenue in just one year. For the company, however, implementing Intuitive ERP was more than just a way to increase revenue.

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REVIEW QUESTIONS 1. 2. 3. 4. 5.

Compare the existing system and proposed ERP system of the company. What is meant by multi-level bills of material? What is the impact of the new ERP system over the employees of the company? What are the technical requirements for an ERP system? What is the purpose of Intuitive's Shop Floor Control module?

Note: Read the following two cases (CASE 11 & CASE 12) carefully. For each case prepare a comprehensive report in the following format by addressing the review questions. 1. About the Company 2. Challenges faced by the Company 3. Solution 4. Outcome of ERP Implementation

CASE – 11 A company dealing with giant food and pharmaceuticals carried out its operations through its branches opened all over the world. The company had in 1999 revenues of $50 billion and more than 250,000 employees at 500 facilities in 90 countries. Best known for its chocolate, coffee and milk products, the company sells thousands of other items, most of which are adapted to fit local markets and cultures. Traditionally this huge firm has allowed each local organization to conduct business as it saw fit, taking into account the local conditions and business cultures. To support this decentralized strategy, it has had 80 different Information Technology units that run nearly 1000 IBM AS/400 midrange computers, 20 main frames and 200 UNIX systems, enabling observers to describe its infrastructure. Interestingly, despite its size, the company has had no corporate computer center. However, the company's management has found that allowing these local differences created inefficiencies and extra costs that could prevent the company from competing effectively in E-Commerce. The lack of standard business processes prevented the company from growing to a large scale though they had better resources. Several years ago, the company embarked on a program to standardize and coordinate its information systems and business processes. The company initially installed ERP (Enterprise Resource Planning) software to integrate material, distribution and accounting applications in the United States, Europe and Canada. The company is working on extending its enterprise systems to all its facilities to make its 500 facilities act as a single-minded e-business. Once this project is completed the company will be able to use sales information from retailers on a global basis to measure the effectiveness of its promotional

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activities and reduce overstocking caused by letting products sit around too long on grocery shelves. At first the project team decided not to use supply chain software available with their ERP package because that module was brand new and appeared to be risky. The team decided to use the following ERP modules: purchasing, financials, sales and distribution modules. All of these modules would be installed throughout every division of the company. The company later contracted with a major ERP vendor to purchase and deploy the new version of their software. The new system will not only standardize and coordinate the whole company's information systems and business processes, but it also will extend the ERP software to the web. The new system will allow each employee of the company to start work from a personalized webpage linked to his or her job function. The employees' job is structured to conform to the "best practices" defined by the ERP software for 300 work roles. The company decided to create up to five computer centers around the world to run the new ERP package containing financial, accounts payable, accounts receivable, planning, production management, supply chain management and business intelligence software. The problem started when the stakeholders of the company at abroad failed to realize how much the project would change their business processes. They could not reap the real benefits of an integrated software system. The ERP implementation also suffered a lot due to change management and Y2K problem. Many of the employees’ do not want to learn new processes. Training given to the end users was also insufficient. The lower level workers did not understand how to use the new system and did not understand the changes. Nobody had been prepared for the new ways of doing things, and their only hope was to call the project help desk. As the implementation took place in full swing, the team failed to integrate the various modules completely. The ERP team then decided to halt the project. The team members’ roles were also shuffled. They also agreed to educate those affected so that all employees would know not only what changes were taking place but also why, how, and when those changes would happen. The team also began taking repeated surveys of the effect of the project on employees and how they were dealing with it. They needed to take care of all the employees' spread all over the world. The process of ERP implementation continues.

REVIEW QUESTIONS 1. 2. 3. 4.

What were the problems and issues that caused the company to choose an ERP system? How is the company managed by the top management in your opinion? Do you think it was appropriate for the company to distribute the decision making so widely? Why did the company’s enterprise system project encounter so many problems? What management, organization and technology factors contributed to those problems? 5. If you had been director of the company’s enterprise system project, what could you have done to implement the system successfully?

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CASE – 12 The ABC Private Limited was started in 1933. Today it is a Rs:750 crore enterprise with diverse business lines. In 1964 the company began manufacturing, in technical collaboration with the UK, steam turbines for mill drives and power generation. It now has over 2,500 installations across a range of industries including sugar, fertilizers, petrochemicals, chemicals, carbon black, solvent extraction, paper, pig iron and sponge iron. Deploying SAP R/3 has enabled ABC Private Limited to control inventory costs, track projects online and estimate the total project cost. With a production capacity of over 300 turbines a year, the company has emerged as a leader in the Indian market for turbines rated at a capacity of up to 6 MW. The company now manufactures turbine models up to 15 MW. It also makes high-speed gearboxes. The Spares Sales Division of the company sells spares for steam turbines that are used in power plants of companies. These businesses directly depend on keeping their power plants available 24x7x365/ 6. An hour of downtime could cost them pots of money. Since the shelf-life of the machines is highbetween 25-30 years-they need to be supported by new spares and maintained on a regular basis (at least every three months). The task was not easy. There were three areas where the company wanted to improve. The first area of concern was customer support. Critical information such as the case history of spares at the customers’ premises was maintained manually, and the systems were paper-based. Occasionally, spares changed were not recorded. Other areas such as the number of complaints closed, number of open complaints and preventive maintenance schedule were all paper-based. In the absence of the engineer who attended to the last problem, follow-up action could not be planned in advance, nor could the root cause of the problem be traced. Since data was not available online the company could not analyze the root cause of the problem. The second area of concern was systems for tackling projects. A purchase order is issued against each item/spare bought directly. The company had to deal with a large number of items at a time (on an average, 80 to 90); there was no means of tracking these projects. The cost of the project was the third area that the company wanted to calculate. It was necessary to determine how much the company was investing in a given project. The director of the company explains, “It was easy for us to calculate the cost of the spares, but because of their longer shelf life (25-30 years), it was difficult for us to calculate the travel expenses incurred while getting to the customers’ premises, the value of spares supplied during warranty conditions, etc.” For over a decade the company spent money on in-house legacy applications prepared by a software company with Sybase on UNIX. These applications (such as inventory, production planning, purchase and spares) were not integrated with finance. Tally 6.3 version was used for accounting. While the range of applications covered almost every facet of business operations, the mechanism to integrate islands of computing was rather crude. No standard or unifying process could be established to provide seamless integration; besides, the methodology was paper-based and depended on manual entries. Because of this, every application system became function-specific. This resulted in a great deal of resources being spent on reconciling functional figures. Due to non-integration of data across various functions, sometimes an item was booked twice or it was difficult to trace where material was lying.

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In 1999, with the help of a software company, ABC Private Limited decided to go in for business process re-engineering to improve its customer support and project systems, and to analyse project costs. The company took the decision to have an ERP system in place to solve business problems. Three enterprise application software vendors were identified-SAP, Baan and Oracle. Although the solutions from SAP, Baan and Oracle were equally good, the company was looking for a solution that needed the least amount of customization. The director of the company says: "Customization of the package meant shelling out more money and delaying the implementation, which we wanted to avoid. Besides, we wished to deal with a company that could provide future upgrades and whose solution gelled with our future plans. Hence SAP was the natural choice since we had plans to invest in a PLM and CRM solution soon after implementing ERP." SAP R/3 was identified as the ERP package that could provide the company with the following: (i) Ability to provide full visibility of information as against pockets of information. (ii) Modular, scalable and integrated architecture based upon the best practices in the consumer products industry. (iii) In-built features to support optimization of the supply chain, richness in functionality (including India-specific requirements of excise and taxation), and a growth platform. After the first round of assessment, the company took a call on the modules it wanted to implement. It was decided that the company would implement 11 modules taking the Big Bang approach. The modules picked were sales, distribution, project systems, financial, cost accounting, product planning, quality management, customer support, executive information, workflow and payroll. The implementation began in January 2001. The first step of the implementation was to convert all existing data from the legacy applications into SAP's preferred format. Due to a large inventory of bill of materials (60,000-70,000 items), it took five months for data conversion. Nearly 120 people from various departments (and their functional heads) were trained on the new SAP environment. The company went live with the SAP R/3 on March 2003 after an implementation that took all of two years. The director of the company justifies the delay stating that the company is into the ETO (engineering to order) business, and very little has been done to understand its requirements. "It took time for SAP to understand our requirements and make adjustments accordingly. Additionally, we picked up 11 full-fledged modules to implement in one go instead of implementing fewer modules in phases. We wanted to avoid unnecessary costs and delays, and hence decided to take the Big Bang route for implementation," says the director of the company. The company invested Rs 2 crore, including the cost of the package, hardware, software, training and implementation of ERP software SAP. Seven months into implementation, the company started noticing the benefits. Since data is now available online, the company can trace where its materials are lying in the factory. The company no longer needs to overstock spares; this has led to a reduction in inventory cost. Duplication of entries has stopped. The core objective–to improve project systems, project cost analysis and customer support experience–is already being attained. The company is now able to get to the root cause of a particular problem, rectify it, and leave behind follow-up instructions that need to be looked at during the next visit. From the time a tender is floated till the time an item is manufactured, each item is tracked online on a project basis, thus helping to calculate the total cost of the project. The company is now able to reduce inventory costs, to identify the root cause of any problem and troubleshoot, the company is now able to track projects online and avoid duplication of entries in the bill of materials. The ERP

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implementation has helped the company to calculate the total lifecycle cost of a project, including travel trips to customer premises, warranty replacements and the like.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Discuss the existing system of ABC private limited. How does the director of the company describe the benefits of their ERP implementation? Describe the business processes of the company using a business model. How did the company choose SAP as their ERP software? What forced the company to go for ERP implementation? What is meant by customization in ERP? What is the significance of the Big Bang route of ERP implementation? How did the company improve its performance after ERP implementation? Describe the hardware and software configurations of the new system. Perform Cost-Benefit Analysis and SWOT analysis for ABC Private Limited before and after ERP implementation and present a report.

12 Business Modeling using UML OBJECTIVE • To briefly state the concept of Business Modeling • To give an overview of the Unified Modeling Language (UML)

EXPECTED OUTCOME The readers will be able to:

ü Understand the concepts behind a Modeling Language ü Develop Business Modules using the UML ü Execute Enterprise Modeling using the UML Enterprise Resource Planning (ERP) is an integrated system and business modeling forms the basis for packaged software like ERP. The underlying concept of ERP is based on the holistic nature of the organization. This requires a systemic perspective where the enterprise is not viewed as the sum of its component elements, but the product of their interactions. A systems approach to business decisions is a prerequisite to ERP implementation. It is critical to understand how different decisions affect and influence one another. In this chapter, the business modeling using the Unified Modeling Language (UML) is discussed through UML diagrams. Business processes are defined with varying degrees of flexibility and precision, from unstructured adhoc processes to precisely defined production processes. The Unified Modeling Language defines a standard notation for object-oriented systems. Using UML enhances communication between domain experts, workflow specialists, software designers and other professionals with different backgrounds. Using the UML to build a Business Model provides ways of expressing the business processes in terms of business activities and collaborative behaviour, thereby reducing the complexity of the business processes.

12.1 BUSINESS MODELING Business modeling is a technique to model business processes. Business models provide ways of expressing the business processes in terms of business activities and collaborative behaviour. Models are helpful to document and comprehend complexity. The systems that we build are deployed into organisations that already have business processes in place. Whether we sell a Customer Relationship

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Management System, a Library Information System, a Billing System, Online Analytical Processing (OLAP) system, Online Transaction Processing (OLTP) system, or any other, that system will be used by an individual during the course of a specific task-interacting with a customer, looking for articles, billing a customer, etc. One of the great benefits of business modeling is the possibility of eliciting better system requirements. Once business models are specified, establishing relationships between the system requirements and the business models enables business change to be incorporated in the definition of the system to build.

12.2 BUSINESS MODELING WITH THE UML One of the primary requirements to build a perfect integrated system like ERP is modeling the business processes and refining it. The UML acts as an interface between the business analyst and the system analyst. The UML possesses all the notations required to model a business process. It has the capability to provide all the details to the developer, customer and the business analyst. Only if the existing business process is studied, analysed and understood by the ERP development team, Reengineering can be executed and the existing system can be enhanced. Otherwise only automation of the existing system will take place and no optimisation could be seen. The end users cannot reap the benefits of packaged software. Hence the needs for modeling language like UML which has all the features required to model a system. Modeling the business is not something new. However, a problem that frequently surfaces is how difficult it can be for business analysts to effectively communicate their findings to the system folks on the team. The Unified Modeling Language (UML) has been providing system architects, working on system analysis and design, with one consistent language for specifying, visualising, constructing and documenting software systems. The UML is used to model a broad range of systems (software systems, hardware systems, databases, real-time systems and real-world organisations). By sharing a single notation and a single tool across system and business, business analysts and system analysts can better communicate their needs, which is the key to building a system that solves the customers' problems. Table 1 that follows describes the business modelling notation and the icons used in the UML. The business-specific icons help distinguish business elements from system elements in the visual models. Table 1 UML Business Modeling Notation Modeling Icon

Name

UML Definition

Business actor

Someone or something, outside the business that interacts with the business.

Business worker

Role or set of roles inside the business. A business worker interacts with other business workers and manipulates business entities.

Business entity

A “thing” handled or used by business workers.

Business use case

A sequence of actions a business performs that yields an observable result of value to a particular business actor.

Organizational unit

A collection of business workers, business entities, relationships and business use case realizations and other organization units. Used to structure the business model by dividing it into smaller parts.

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The value of using the UML to model a business is to reuse an established standard notation (the UML) to provide a common language and potentially a common tool (a UML visual modelling tool) for all modeling needs. The UML provides different diagrams. Each UML diagram provides a different view of the business as follows: Table 2 Use Case Diagram

Describes the business context

Activity Diagram

Describes the business workflows

Class Diagram

Describes the static structure in the business

Sequence Diagram

Describes the interaction between a process step and other business objects

12.3 UML BUSINESS USE CASE The broad requirements of a business process may be elicited and documented with “use cases”. Use Case models describe what is required of a system by defining how it will be used by external actors. An actor, which is usually but not necessarily human, causes the system to perform its functions by means of use cases. A business use case may be thought of as a collection of related process steps, and actors may be thought of as the organisation roles that execute the process steps. Because a business process defines how a purpose is to be achieved, a business use case should also be directed to satisfy a business purpose. In Figure 1, the process is initiated by a sales inquiry from a customer, to which the supplier responds with a quotation. This in turn may result in an order from the customer, and subsequent delivery and invoicing by the supplier. The process involves two distinct kinds of actors namely a customer and a supplier–who play different roles with respect to the process.

Inquire

Customer Role Quote

Order

Deliver

Figure 1 Business Use Case

Supplier Role

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12.4 UML BUSINESS ACTIVITY DIAGRAM A Business Activity Diagram provides a graphical way to document a business workflow. It provides a simple and intuitive illustration of: • What happen in a workflow • What activities can be done in parallel? • Whether there are alternative paths through a workflow? Activity diagrams also describe the roles and areas of responsibilities in the business (i.e.) to describe who is responsible for doing what in the business. Roles and areas of responsibilities are documented as columns (UML swimlanes) in the activity diagram. Swimlanes show which business workers participate in the realisation of the workflow. From figure 2, we note that the activities are assigned to roles that correspond to the actors in the use case diagram and are in swimlanes separated by the dashed vertical line. A diagram that has activities partitioned between roles in this way is a role activity diagram.

Figure 2 Role Activity Diagram

12.5 UML CLASS DIAGRAMS Business class diagrams document the internal structure of the business. Each class in this diagram either represents a business worker (employee of the business) or a business entity (a 'thing' that the business manipulates). The purposes of business class diagrams are to document the relationships between business workers and business entities. It provides a way to visualise who interacts with whom and who is responsible for what. Business class diagrams are used for two main purposes: • To show which business workers and business entities are collaborating to implement a business process • To show static structure and relationships among business entities. A class diagram would be used to represent the organisation chart of a business (using organisation units and business workers)

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maintenance, description of work flow, bringing the development environment and the business environment into the same circle, defining the business processes, fixing the roles of various actors, and so on.

REVIEW QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

What is UML? List the various notations of the UML. Is the UML a designing language OR a modeling language? Explain. Is Enterprise Modeling same as Business Modeling? Explain. What is a Class Diagram? Which of the UML diagrams describes the business processes? Explain. “UML is process oriented and not product oriented.”–Comment. What is need for business Modeling? Explain the UML Sequence diagram for an Inventory Management system. Apply the UML Business Case diagram to the sales and distribution process of an organization and explain its merits. 11. How will you ensure that all the business processes of an organization are included in a business modeling? 12. How do UML diagrams help you to identify the business objects of an organization?

Acronyms and Abbreviations API ATM ATO BAM BI B2B B2C BOM BPR C2B CTO C2C CAD CAM CASE CBD CBSE CGI CMM CMMI COM COQ CPM CRC CRM CSPM CSQA CSQE

Application Programming Interface Automatic Teller Machine Assemble-to-Order Business Activity Monitoring Business Intelligence Business-to-Business Business-to-Consumer Bill of Material Business Process Reengineering Consumer-to-Business Configure-to-Order Consumer-to-Consumer Computer Aided Design Computer Aided Manufacturing Computer Aided Software Engineering Component Based Development Model Component Based Software Engineering Common Gateway Interface Capability Maturity Model Capability Maturity Model Integration Component Object Model Cost of Quality Critical Path Method Class Responsibility Collaborator Modeling Customer Relationship Management Certified Software Project Manager Certified Software Quality Analyst Certified Software Quality Engineer

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CSTE DBA DBMS DES DDBMS DDL DES DFD DHTML DLL DML DRP DNS DOM DSN DSS ETO EDI EFT EII EFT EIA EIS ERP FTP FTR GIS GUI HTML HTTP IDC IIS ISDN ISO ISTQB IT KM JIT

Certified Software Testing Engineer Database Administrator Database Management System Data Encryption Standard Distributed Database Management System Data Definition Language Data Encryption Standard Data Flow Diagram Dynamic Hypertext Markup Language Dynamic Link Library Data Manipulation Language Distribution Requirements Planning Domain Name System Document Object Model Data Source Name Decision Support System Engineer-to-Order Electronic Data Interchange Electronic Funds Transfer Enterprise Information Integration Electronic Funds Transfer Enterprise Integration Application Executive Information System Enterprise Resource Planning File Transfer Protocol Formal Technical Review Geographical Information System Graphical User Interface Hypertext Markup Language Hypertext Transfer Protocol Internet Database Connector Internet Information Server Integrated Service Digital Network International Organization for Standardization International Software Testing Qualifications Board Certified Information Technology Knowledge Management Just-in-Time Delivery

Acronyms and Abbreviations

LAN MTO MPS MTS MIS MODEM MRP MRP-II NSP OLAP OSI PCMM PDT PDM PERT PSP PSPEC QFD QOS RAD RAID RDBMS RIP RIS RMMM SADT SAP SCM SCM SDLC SEI SGML SMS SQA SQL SRS SSL SOAP

Local Area Network Make-to-Order Master Production Schedule Make-to-Stock Management Information System Modulator-Demodulator Materials Requirements Planning Manufacturing Resource Planning Network Service Provider On Line Analytical Processing Open System Interconnection People Capability Maturity Model Partition Description Table Product Data Management Program Evaluation and Review Technique Personal Software Process Process Specification Quality Function Deployment Quality of Service Rapid Application Development Redundant Arrays of Inexpensive Disks Relational Database Management System Routing Information Protocol Risk Information Sheet Risk Mitigation Monitoring and Management Plan Structured Analysis and Design Technique Systems, Applications and Products in Data Processing Supply Chain Management Software Configuration Management Software Development Lifecycle Software Engineering Institute Standard Graphic Markup Language Short Messaging Service Software Quality Assurance Structured Query Language Software Requirements Specification Secure Socket Layer Simple Object Access Protocol

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SSPI STD TCL TCP/IP TQM TSL TSP UDP UML URL VAN VPN VRML WAN WMS WBS WML WMS XML XSL

Statistical Software Process Improvement State Transition Diagram Transaction Control Language Transmission Control Protocol/Internet Protocol Total Quality Management Test Script Language Team Software Process User Datagram Protocol Unified Modeling Language Uniform Resource Locator Value Added Network Virtual Private Network Virtual Reality Model Language Wide Area Network Warehouse Management System Work Breakdown Structure Wireless Markup Language Warehouse Management System Extensible Markup Language Extensible Style Language

Glossary Application Consolidation – It deals with merging two or more applications together to reduce the number of applications in an enterprise. Application Programming Interface (API) – The formally defined programming language interface between a program and its user. Assemble-to-Order (ATO) – In Assemble To Order system, all the components used in the assembly, packaging or finishing process are planned and stocked in anticipation of an order from the customer. Business Activity Monitoring (BAM) –It deals with monitoring of all of an enterprise’s business processes and IT activities through the use of specialized software components. BAM solutions can be used to alert individuals to changes in the business that may require action. Bill of Material (BOM) – Bill of Material provides a hierarchical classification of the items which form a product. Biometric Controls – Biometric controls provide access procedures that match every valid user with a unique user identifier (UID). They also provide an authentication method to verify that users requesting access to the computer system are really those whom they claim to be. Browser – It is a client program used to access the web and other internet resources. Business Intelligence (BI) –Business intelligence is a category of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions. BI applications include decision support systems, query and reporting, online analytical processing, statistical analysis, forecasting and data mining. Business Model –Business modeling is a technique to model business processes. Business models provide ways of expressing the business processes in terms of business activities and collaborative behavior. Business Process Reengineering (BPR) – Business Process Reengineering is defined as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. Business-to-Business E-Commerce (B2B) – Business-to-Business EC is an electronic trading where both the buyers and the sellers are organizations. Business-to-Consumer E-Commerce (B2C) – Business-to-Consumer EC is a situation where a business is selling online to an individual consumer.

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Computer-Aided Software Engineering (CASE) – Computer-Aided Software Engineering tools assist software engineering managers and practitioners in every activity associated with the software process. Project managers and software engineers use CASE. Computer-Aided Design (CAD) – The Computer-Aided Design systems are interactive computer graphics systems used for product design. Computer-Aided Manufacturing (CAM) – Computer-Aided Manufacturing software integrates the operations of all computer-controlled machines. Change Management – Change management is one of the core problems of software development. Management of changes to any software document means (1) managing the process of change as well as (2) managing all artifacts of an evolving software system. Closed Loop MRP – It is a Materials Requirements Planning (MRP) process that uses capacity planning and feedback to improve the ability of the production system to complete work as per schedule. Consumer-to-Business (C2B)– This category includes individuals who sell products or services to organizations as well as individuals who seek sellers, interact with them, and conclude a transaction. Consumer-to-Consumer (C2C) – In this category, consumer sells directly to consumers. Examples are individuals selling in classified ads and selling residential property, cars, and so on. Configure-to-Order (CTO) – It is the convergence of Assemble-to-Order and Engineer-to-Order. This will simplify the order entry process and retain Engineer-to-Order easily. Customer Relationship Management (CRM) – The fundamental theory behind CRM is to identify profitable customers, attract and retain them, and maximize their useful life span and the profits from them by establishing and fostering good relationships with them. Customization – Customization is the core process for adjusting the software to fit the organization. Cycle time – Cycle time is the time between receipt of the order and delivery of the product. Data Encryption Standard (DES) – Data encryption standard is a published federal encryption standard created to protect unclassified computer data and communications. Data Dictionary – It is an organized listing of all data elements that are pertinent to the system, with precise, rigorous definitions so that both user and system analyst will have a common understanding of inputs, outputs, components of stores and intermediate calculations. Data Flow Diagram (DFD) – The data flow diagram enables the software engineer to develop models of the information domain and functional domain at the same time. The DFD takes an inputprocess-output view of a system. Data Integration (DI) – The process of combining two or more data sets together for sharing and analysis, in order to support information management inside a business. Data Mart – A database, or collection of databases, designed to help managers make strategic decisions about their business. Whereas a data warehouse combines databases across an entire enterprise, data marts are usually smaller and focus on a particular subject or department. Some data marts, called dependent data marts, are subsets of larger data warehouses. Data Mining – Data mining is the process of efficient discovery of valuable patterns from a large collection of data. It requires intelligent technologies and the willingness to explore the possibility of hidden knowledge that resides in the data.

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Data Warehousing – A data warehouse is a subject-oriented, integrated, time-variant, nonvolatile collection of data in support of management decisions. Database – The Collection of data, usually referred to as the database, contains information about one particular enterprise. Decision Support System (DSS) – Decision support system is an information and planning system that provides the ability to interrogate computers on – ad hoc basis, analyze information and predict the impact of decisions before they are made. Distribution Requirements Planning (DRP) – Distribution Requirements Planning provides the capability to model distribution bills, and translates time-phased demand into supply requirements. E-Business – It is the entire transformation of the whole value chain of the business into an electronic form of business. E-Commerce becomes E-Business when a company connects its business system directly to its critical constituents. E-Commerce – Electronic commerce (E–Commerce) means doing business online or selling and buying products and services through web. Electronic Data Interchange (EDI) – Electronic Data Interchange is the electronic communication of transactions between organizations such as orders, confirmations and invoices. Enterprise Information Integration (EII) – An integration technology that pulls and combines data from multiple systems “real time”, without storing it on a disk, creating a “virtual” data warehouse; eliminating the need to store or move data. Electronic Funds Transfer (EFT) – Transferring funds from one account to another through Internet. Engineer-to-Order (ETO) – This process of manufacturing will involve developing any product as per the order at a price. Products are manufactured for each customer in ETO. Enterprise Application Integration (EAI) – Enterprise Application Integration is a pertinent approach to integrating core business processes and data processing in the organization. Enterprise Resource Planning (ERP) – The ERP package aims to integrate all key business activities through improved relationships at all levels to achieve a competitive advantage. ERP systems can be considered as an IT infrastructure with the ability to facilitate the flow of information between all business processes in an organization. Executive Information System (EIS) – An Executive Information System is an information system that consolidates and summarizes the ongoing transactions within an organization. Extranet – An Extranet is an extended intranet, which links the remote intranets, or individuals, over the virtual private network built on the internet. Firewall – Firewalls (software or hardware) protect a server, a network and an individual PC from attack by viruses and hackers. Forward Engineering – It not only recovers design information from existing software, but uses this information to alter or reconstitute the existing system in an effort to improve its overall quality. Gap Analysis – Gap Analysis is the step of negotiation between the company requirements and the functions an ERP package possesses.

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Genetic Algorithm – It is referred as the optimization techniques that use processes such as genetic combination, mutation and natural selection in a design based on the concepts of evolution. Grid Computing – Grid computing is a model for allowing companies to use a large number of computing resources on demand, no matter where they are located. Information System – An information system is an open, purposive system that produces information using the ‘input-process-output’ cycle. Intelligent Agent – Intelligent Agents and their subset software agents are computer programs that help the users to conduct routine tasks, search and retrieve information, support decision making and act as domain experts. Internet – A collection of interconnected networks is called an INTERNET. Intranet – It is a corporate LAN (Local Area Network) or WAN (Wide Area Network) that functions with internet technologies behind the company’s firewall. Just-in-Time Delivery (JIT) – It refers to delivering the ordered items at a designated time. This is essential as it will aid the suppliers to go for Just-in-time manufacturing. Knowledge Management (KM) – Knowledge is a derivative of symbols, data, and information. Knowledge management is defined as the management of information and knowledge and their usage in organizational routines/processes within organizations. Lead Time – The elapsed time between placing an order and receiving it is known as the lead-time. Logistics – Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements. Make-to-Order (MTO) – In Make To Order system, the product is developed and delivered only when the customer places an order. Make-to-Stock (MTS) – In Make To Stock, the production process allows the user to complete the products before the receipt of an order from the customer. Management Information System (MIS) – Management information system is a computer–based system that optimizes the collection, collation, transfer and presentation of information throughout an organization through an integrated structure of databases and information flow. Master Production Schedule (MPS) – In a typical manufacturing environment, the Master Production Schedule specifies the quantity of each finished product required in each planning period; it is a set of time-phased requirements for end items. Materials Requirements Planning (MRP) – MRP is a technique for determining the quantity and timing for the acquisition of dependent items needed to satisfy master schedule requirements. Manufacturing Resource Planning (MRP II) – Manufacturing Resource Planning is defined as a method for the effective planning of all resources of a manufacturing company. Microsoft .NET – Microsoft defines .NET as “a set of software technologies designed to connect your world of information, people, systems, and devices”. Network Topology – It is the representation of physical connectivity of the computers.

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135

On Line Analytical Processing (OLAP) – It is used for applications such as product profitability, activity based costing, manpower planning and quality analysis. Operating System – An operating system may be viewed as an organized collection of software extensions of hardware, consisting of control routines for operating a computer and for providing an environment for execution of programs. Product Data Management (PDM) – This system allows us to create and maintain multiple revisions and versions of any design in the database. Quality – Quality is defined in many different ways—excellence, conformance to specifications, fitness for use, value for the price, and so on. Reliability – The amount of time that the software is available for use as indicated by the following attributes: maturity, fault tolerance and recoverability Reengineering – The process of Reengineering normally occurs at two levels: At the business level, reengineering focuses on the business process with the intent of making changes to improve competitiveness in some area of business. At the software level, reengineering examines information systems and applications with intent of restructuring or reconstructing them so that they exhibit higher quality. Reverse Engineering – It is a process of design recovery. Reverse engineering tools extract data, architectural and procedural design information from an existing system. Risk Management – Risk Analysis and Management are a series of steps that help a software team to understand and manage uncertainty. Everyone involved in the software process participates in risk analysis and management. Software Quality – Software quality is defined as conformance to explicitly stated functional and performance requirements, explicitly documented development standards, and implicit characteristics that are expected of all professionally developed software. Software Quality Assurance (SQA) – Software Quality Assurance is an umbrella activity that is applied throughout the software process. Simple Object Access Protocol (SOAP) – Simple Object Access Protocol is a protocol defining the way that applications (Web services) communicate with one another over the Internet. Software Engineering – It is a discipline that integrates process, methods and tools for the development of computer software. Software Process – It is the step-by-step procedure to convert a problem definition into a software product. This procedure is divided into different stages such as requirements engineering design, coding, testing and maintenance. Software Project Management – It is an umbrella activity within software engineering. It begins before any technical activity is initiated and continues throughout the definition, development and support of computer software. Shopping Cart Technology – It is a virtual shopping cart that enables consumers to collect items as they browse an online sales site until they are ready to purchase the items. Software Configuration Management (SCM) – Software Configuration Management is an umbrella activity that is applied throughout the software process. SCM is developed to identify change,

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to control change, to ensure that change is being properly implemented and to report changes to concerned member in the development team. Supply Chain Management (SCM) – Supply chain management is the practice of coordinating the flow of goods, services, information and finances as they move from raw materials to parts supplier to manufacturer to wholesaler to retailer to consumer. Software Testing – It is a critical element of software quality assurance and represents the ultimate review of specification, design and code generation. Total Quality Management (TQM) – Total Quality Management is both a philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. It is a strategic, integrated management system for achieving customer satisfaction. Unified Modeling Language (UML) – Unified Modeling Language defines a standard notation for object-oriented systems. Using UML enhances communication between domain experts, workflow specialists, software designers and other professionals with different backgrounds. Uniform Resource Locator (URL) – It is a way of naming resources and is used mainly to link pages in the World Wide Web (WWW). This gives us the type and the location of the resource. Warehouse Management System (WMS) – Warehouse Management System is software that integrates mechanical and human activities with an information system to effectively manage warehouse business processes and direct warehouse activities. Web Engineering – It is the process that is used to create high-quality web application. Webcasting – It is an internet-based broadcasting of audio and video content.

References 1. Enterprise Resource Planning Systems : A Research Agenda, Majed Al Mashari, Industrial Management & Data Systems, 2003 2. A Stage Maturity Model for Enterprise Resource Planning Systems Use, Christopher P. Holland, The DATA BASE for Advances in Information Systems, Springer, 2001 3. How i2 Integrates Simulation In Supply Chain Optimization, P. A. Farrington, H. B. Nembhard, D. T. Sturrock, and G. W. Evans, Proceedings of the 1999 Winter Simulation Conference 4. Planning for ERP: Analysis and Future Trends, Injazz J. Chen, Business Process Management Journal, 2001 5. Componentizing the Enterprise Application Packages, David Sprott, Communications of ACM, 2000. 6. A Research Framework for Studying the Implementation of ERP systems, Pernille Krammergaard & Charles Moller, Proceedings of IRIS 23, 2000. 7. Is Supply Chain Management the same as ERP, Jim Ayers, Project Management, Springer, 2001. 8. Focusing the Customer: A Critical Approach Towards Design and Use of Data Warehousing in Corporate CRM, Martin Schwartz, Experience Paper for the DMDW’2002 Workshop, May 27, 2002. 9. An Exploratory Case Study of Enterprise Resource Planning Implementation, Girish H. Subramanian, Christopher S. Hoffer, International Journal of Enterprise Information System (IJEIS), 2005. 10. Customer Perspective of CRM Systems: A Focus Group Study, Shan L. Pan, International Journal of Enterprise Information System (IJEIS), 2005. 11. Enterprise Modeling with UML, Chris Marshall, Addison-Wesley, 2001 12. UML in an Instant, Thomas A. Pender, WILEY- Dreamtech India Pvt. Ltd., 2002 13. Introduction to Business Modeling with UML from www.therationaledge.com 14. Software processes are Business Processes Too, Peter Henderson, 3rd International Conference on the Software Process, IEEE Computer Society Press, 1994. 15. ERP II extended enterprise resource planning, Moller, C, The Seventh World Multi-Conference on Systemics, Cybernetics and Informatics, Orlando, U.S., 2003.

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16. Financial Management, M Y Khan, P K Jain, Tata McGraw-Hill, 2000 17. Building Data Mining Applications for CRM, Tata McGrawHill, 2001 18. www.bitpipe.com 19. www.bizentro.com 20. www.bpic.co.uk 21. www.computer.org 22. www.informatica.com 23. www.intuitivemfg.com. 24. www.linuxjournal.com 25. www.metagroup.com 26. www.microsoft.com 27. www.sap.com 28. www.softselect.com 29. www.syspro.com

Index Accounting 19 AGVs 60 AMTS 60 Analytical CRM 70 Approach 36 APS 72 ASRS 60 Assemble-to-Order 10 BAAN 94 BIG BANG 36 BIG BANG APPROACH 36 Bill of Material (BOM) 11 Business 38 Business Activity Diagram 123 Business Integration 2 Business Modeling 120 Business Perspective 37 Business Process Reengineering (BPR) 45 Candidate solutions 32 CHANGE MANAGEMENT 47 Change Management (CM) 37 CHANGE MANAGEMENT ISSUES 47 CLI 84 CNC 60 Collaborative CRM 70 COM 83 Common Intermediate Language (CIL) 84 Common Language Runtime (CLR) 85 compiere 77

COMPIERE 97 Computer-Aided Design (CAD) 60 Computer-Aided Manufacturing (CAM) 60 Controlling 22 Cost Benefit Analysis 32 Cost controlling 20 CRM 68 Customer Relationship Management (CRM) 14 Customization 31 Customization 38, 45 Cycle time 3 Data mining 73 Data warehouse 73 Decision Support System (DSS) 69 DHTML 78 Directing 22 Dynamic CRM 75 E-Business 65 e-commerce 14 E-Commerce 31 E-Commerce 65 Economic Order Quantity (EOQ) 11 EDI 78 Effective inventory management 25 EIS 78 Employment 23 Enterprise Resource Planning (ERP) 1 Enterprise Systems (ES) 15 ERM 65

140

ERP environment 56 ERP IMPLEMENTATION 43 ERP Package 44 ERP software 2 ERP software 30 ERP software selection 30 ERP Software Selection Process 32 ERP systems 6 ERP Team Training 46 Extensible Markup Language (XML) 85 Failure 41 Finance 18 Finance Module 18 financial objective 18 GAP Analysis 45 HR module 21 HRD 21, 23 HTTP 86 Human Resource Management (HR) Module 21 Human Resources 6 Information System 6 Information Technology (IT) 65 INTENTIA 96 Intermediate Language (IL) 85 Intranet 70 INTUITIVE 96 Intuitive ERP 87 Inventory 11 Inventory management 25 Investment management 20 IT 60

Enterprise Resource Planning

Maintenance 43 Make-to-Order 10 Make-to-Stock 10 Management Information System (MIS) 69 Manufacturing 13 Manufacturing Resource Planning (MRP II) 12 Marketing 6 Master Production Schedule (MPS) 10 Material Requirements Planning (MRP) 10 Materials Management (MM) 23 Memory Management 50 MODULE-WISE APPROACH 36 mySAP CRM 77 .NET 81, 82, 91 Objectives 25 OLAP 71 Online Analysis Processing (OLAP) 78 Operating System 50 Operational CRM 70 ORACLE 94 Organization 22 Organizational Perspective 36

J.D. EDWARDS 94 J2EE 78

Packaged Software 6 Peripheral Management 50 Personal Digital Assistant (PDA) 76 Planning 2 Planning 21 Planning and forecasting 20 PLM 15 PRM 78 Process Management 50 Profit maximization 18 Project Management 14 Project Management 89

Lead-time 3 Linux 51 LOCATION-WISE APPROACH 36

Quality 4 Quality of Service (QoS) 66 RAMCO 97

141

Index

Recruitment 23 Reengineering 45 Requirements 32 Sales and Distribution 14 Sales and Distribution Module 26 SAP 51 Selection Criteria 31 SOAP (Simple Object Access Protocol) 86 Software Reliability 31 SPC 89 Supply Chain 61 Supply Chain Co-ordination 62 Supply Chain Execution 62 Supply Chain Management (SCM) 14 Supply Chain Model 63

Supply Chain Networking 61 Supply Chain Planning 62 SYSPRO CRM 72 System Development Lifecycle (SDLC) 43 Technological Perspective 37 Treasury Management 20 UML Class Diagrams 123 UML Sequence Diagram 124 Unified Modeling Language (UML) 120 Unix 51 Wealth Maximization 18 XML 78 XML 82