ERP Software Delhi Tips Custom ERP Application Development India
ERP is a platform that facilitates the
database control in a company. The working mechanism of ERP is simple and easy
to understand. ERP aims to unite the data processed in various departments and
division of a company. The central unit referred as the platform controls the
entire system. It aims at providing connectivity in order to access the
information from all faculties. The benefit of ERP is largely felt nowadays
when operations are becoming global in the true sense.
With the intervention of ERP it
becomes equally easy for the other departments of the company to check the
information regarding the order. Similarly it is not necessary for departments
to keep working on it all through to know their chance or in other words
discharging their respective area of work in the whole process. On the contrary
ERP intimates them as soon as it is their chance. ERP software solution is the
one step answer. Implementing ERP in an organization depends upon that whether
it could yield necessary benefits rather than the troublemaker.
is
an integrated computer-based system used to manage internal and external
resources including tangible assets, financial resources, materials, and human
resources. It is a software architecture whose purpose is to facilitate the
flow of information between all business functions inside the boundaries of the
organization and manage the connections to outside stakeholders. Built on a
centralized database and normally utilizing a common computing platform, ERP
systems consolidate all business operations into a uniform and enterprise wide
system environment.
An
ERP system can either reside on a centralized server or be distributed across
modular hardware and software units that provide "services" and
communicate on a local area network. The distributed design allows a business
to assemble modules from different vendors without the need for the placement of
multiple copies of complex, expensive computer systems in areas which will not
use their full capacity.
Origin of the term
The initialism ERP was
first employed by research and analysis firm Gartner Group in 1990 as an
extension of MRP (Material Requirements Planning; later manufacturing resource
planning) and CIM (Computer Integrated Manufacturing), and while not
supplanting these terms, it has come to represent a larger whole. It came into
use as makers of MRP software started to develop software applications beyond
the manufacturing arena. ERP systems now attempt to cover all core functions of
an enterprise, regardless of the organization's business or charter. These
systems can now be found in non-manufacturing businesses, non-profit
organizations and governments.
To be considered an ERP
system, a software package should have the following traits:
?
It should
be integrated and operate in real-time with no periodic batch updates.
?
All
applications should access one database to prevent redundant data and multiple
data definitions.
?
All modules
should have the same look and feel.
?
Users
should be able to access any information in the system without needed
integration work on the part of the IS department
ERP Components
Transactional Backbone
- Financials
- Distribution
- Human Resources
- Product lifecycle management
Advanced Applications
- Customer Relationship Management (CRM)
- Supply chain management
- Purchasing
- Manufacturing
- Distribution
- Warehouse Management System
Management
Portal/Dashboard
- Decision Support System
These
modules can exist in a complete system or utilized in an ad-hoc fashion.
Commercial Applications
Manufacturing
Engineering, bills of material, scheduling, capacity,
workflow management, quality control, cost management, manufacturing process,
manufacturing projects, manufacturing flow
Supply
chain management
Order to cash, inventory, order entry, purchasing,
product configurator, supply chain planning, supplier scheduling, inspection of
goods, claim processing, commission calculation
Financials
General ledger, cash management, accounts payable,
accounts receivable, fixed assets
Project
management
Costing, billing, time and expense, performance units,
activity management
Human
resources
Human resources, payroll, training, time and attendance,
rostering, benefits
Customer
relationship management
Sales and marketing, commissions, service, customer
contact and call center support
Data
services
Various "self-service" interfaces for
customers, suppliers, and/or employees
Access
control
Management of user privileges for various processes
Implementation
Businesses have a wide
scope of applications and processes throughout their functional units;
producing ERP software systems that are typically complex and usually impose
significant changes on staff work practices. Implementing ERP software is
typically too complex for "in-house" skill, so it is desirable and
highly advised to hire outside consultants who are professionally trained to
implement these systems. This is typically the most cost effective way. There
are three types of services that may be employed for - Consulting,
Customization, Support. The length of time to implement an ERP system depends
on the size of the business, the number of modules, the extent of customization,
the scope of the change and the willingness of the customer to take ownership
for the project. ERP systems are modular, so they don't all need be implemented
at once. It can be divided into various stages, or phase-ins. The typical
project is about 14 months and requires around 150 consultants. A small project
(e.g., a company of less than 100 staff) can be planned and delivered within
3?9 months; however, a large, multi-site or multi-country implementation can
take years. The length of the implementations is closely tied to the amount of
customization desired.
To implement ERP
systems, companies often seek the help of an ERP vendor or of third-party
consulting companies. These firms typically provide three areas of professional
services: consulting; customization; and support. The client organization can
also employ independent program management, business analysis, change
management, and UAT specialists to ensure their business requirements remain a
priority during implementation.
Data migration is one
of the most important activities in determining the success of an ERP
implementation. Since many decisions must be made before migration, a
significant amount of planning must occur. Unfortunately, data migration is the
last activity before the production phase of an ERP implementation, and
therefore receives minimal attention due to time constraints. The following are
steps of a data migration strategy that can help with the success of an ERP
implementation
- Identifying the data to be migrated
- Determining the timing of data migration
- Generating the data templates
- Freezing the tools for data migration
- Deciding on migration related setups
- Deciding on data archiving
Process preparation
ERP vendors have
designed their systems around standard business processes, based upon best
business practices. Different vendor(s) have different types of processes but
they are all of a standard, modular nature. Firms that want to implement ERP
systems are consequently forced to adapt their organizations to standardized processes
as opposed to adapting the ERP package to the existing processes neglecting to
map current business processes prior to starting ERP implementation is a main
reason for failure of ERP projects. It is therefore crucial that organizations
perform a thorough business process analysis before selecting an ERP vendor and
setting off on the implementation track. This analysis should map out all
present operational processes, enabling selection of an ERP vendor whose
standard modules are most closely aligned with the established organization.
Redesign can then be implemented to achieve further process congruence.
Research indicates that the risk of business process mismatch is decreased by:
- linking each current organizational process to the
organization's strategy;
- analyzing the effectiveness of each process in light
of its current related business capability;
- understanding the automated solutions currently
implemented.
ERP implementation is
considerably more difficult (and politically charged) in organizations
structured into nearly independent business units, each responsible for their
own profit and loss, because they will each have different processes, business
rules, data semantics, authorization hierarchies and decision centers.
Solutions include requirements coordination negotiated by local change
management professionals or, if this is not possible, federated implementation
using loosely integrated instances (e.g. linked via Master Data Management)
specifically configured and/or customized to meet local needs.]
A disadvantage usually
attributed to ERP is that business process redesign to fit the standardized ERP
modules can lead to a loss of competitive advantage. While documented cases
exist where this has indeed materialized, other cases show that following
thorough process preparation ERP systems can actually increase sustainable
competitive advantage.
Configuration
Configuring an ERP
system is largely a matter of balancing the way you want the system to work
with the way the system lets you work. Begin by deciding which modules to
install, then adjust the system using configuration tables to achieve the best
possible fit in working with your company?s processes
Modules ? Most
systems are modular simply for the flexibility of implementing some functions
but not others. Some common modules, such as finance and accounting are adopted
by nearly all companies implementing enterprise systems; others however such as
human resource management are not needed by some companies and therefore not
adopted. A service company for example will not likely need a module for
manufacturing. Other times companies will not adopt a module because they
already have their own proprietary system they believe to be superior.
Generally speaking the greater number of modules selected, the greater the
integration benefits, but also the increase in costs, risks and changes
involved
Configuration
Tables ? A configuration table enables a company to tailor a particular
aspect of the system to the way it chooses to do business. For example, an
organization can select the type of inventory accounting ? FIFO or
LIFO ? it will employ or whether it wants to recognize revenue by
geographical unit, product line, or distribution channel.
So what happens when
the options the system allows just aren't good enough? At this point a company
has two choices, both of which are not ideal. It can re-write some of the
enterprise system?s code, or it can continue to use an existing system and
build interfaces between it and the new enterprise system. Both options will
add time and cost to the implementation process. Additionally they can dilute
the system?s integration benefits. The more customized the system becomes the
less possible seamless communication between suppliers and customers
Consulting services
Many organizations do
not have sufficient internal skills to implement an ERP project. This results
in many organizations offering consulting services for ERP implementation.
Typically, a consulting team is responsible for the entire ERP implementation
including
1.
selecting
2.
planning
3.
training
4.
testing
5.
implementation
6.
delivery
of any customized
modules. Examples of customization includes creating processes and reports for
compliance, additional product training; creation of process triggers and
workflow; specialist advice to improve how the ERP is used in the business;
system optimization; and assistance writing reports, complex data extracts or
implementing Business Intelligence
For most mid-sized
companies, the cost of the implementation will range from around the list price
of the ERP user licenses to up to twice this amount (depending on the level of
customization required). Large companies, and especially those with multiple
sites or countries, will often spend considerably more on the implementation
than the cost of the user licenses?three to five times more is not uncommon for
a multi-site implementation
Unlike most
single-purpose applications, ERP packages have historically included full
source code and shipped with vendor-supported team IDEs for customizing and
extending the delivered code. During the early years of ERP the guarantee of
mature tools and support for extensive customization was an important sales
argument when a potential customer was considering developing their own unique
solution in-house, or assembling a cross-functional solution by integrating
multiple "best of breed" applications
"Core system" customization vs configuration
Increasingly, ERP
vendors have tried to reduce the need for customization by providing built-in
"configuration" tools to address most customers' needs for changing
how the out-of-the-box core system works. Key differences between customization
and configuration include
- Customization is always optional, whereas some
degree of configuration (e.g., setting up cost/profit centre structures,
organisational trees, purchase approval rules, etc.) may be needed before
the software will work at all.
- Configuration is available to all customers, whereas
customization allows individual customer to implement proprietary "market-beating"
processes.
- Configuration changes tend to be recorded as entries
in vendor-supplied data tables, whereas customization usually requires
some element of programming and/or changes to table structures or views.
- The effect of configuration changes on the
performance of the system is relatively predictable and is largely the
responsibility of the ERP vendor. The effect of customization is
unpredictable and may require time-consuming stress testing by the
implementation team.
- Configuration changes are almost always guaranteed
to survive upgrades to new software versions. Some customizations (e.g.
code that uses pre-defined "hooks" that are called before/after
displaying data screens) will survive upgrades, though they will still
need to be re-tested. More extensive customizations (e.g. those involving
changes to fundamental data structures) will be overwritten during
upgrades and must be re-implemented manually.
By this analysis,
customizing an ERP package can be unexpectedly expensive and complicated, and
tends to delay delivery of the obvious benefits of an integrated system.
Nevertheless, customizing an ERP suite gives the scope to implement secret
recipes for excellence in specific areas while ensuring that industry best
practices are achieved in less sensitive areas.
Extensions
In this context,
"Extensions" refers to ways that an ERP environment can be
"extended" (supplemented) with third-party programs. It is
technically easy to expose most ERP transactions to outside programs that do
other things, e.g:
- archiving, reporting and republishing (these are
easiest to achieve, because they mainly address static data);
- performing transactional data captures, e.g. using
scanners, tills or RFIDs (also relatively easy because they touch existing
data);
However,
because ERP applications typically contain sophisticated rules that control how
data can be created or changed, some such functions can be very difficult to
implement.
Advantages
In the absence of an
ERP system, a large manufacturer may find itself with many software
applications that cannot communicate or interface effectively with one another.
Tasks that need to interface with one another may involve.
- ERP systems connect the necessary software in order
for accurate forecasting to be done. This allows inventory levels to be
kept at maximum efficiency and the company to be more profitable.
- Integration among different functional areas to
ensure proper communication, productivity and efficiency
- Design engineering (how to best make the product)
- Order tracking, from acceptance through fulfillment
- The revenue cycle, from invoice through cash receipt
- Managing inter-dependencies of complex processes
bill of materials
- Tracking the three-way match between purchase orders
(what was ordered), inventory receipts (what arrived), and costing (what
the vendor invoiced)
- The accounting for all of these tasks: tracking the
revenue, cost and profit at a granular level.
ERP Systems centralize
the data in one place. Benefits of this include:
- Eliminates the problem of synchronizing changes
between multiple systems - consolidation of finance, marketing and sales,
human resource, and manufacturing applications
- Permits control of business processes that cross
functional boundaries
- Provides top-down view of the enterprise (no
"islands of information"), real time information is available to
management anywhere, anytime to make proper decisions.
- Reduces the risk of loss of sensitive data by
consolidating multiple permissions and security models into a single
structure.
- Shorten production leadtime and delivery time
- Facilitating business learning, empowering, and
building common visions
Some security features
are included within an ERP system to protect against both outsider crime, such
as industrial espionage, and insider crime, such as embezzlement. A
data-tampering scenario, for example, might involve a disgruntled employee
intentionally modifying prices to below-the-breakeven point in order to attempt
to interfere with the company's profit or other sabotage. ERP systems typically
provide functionality for implementing internal controls to prevent actions of
this kind. ERP vendors are also moving toward better integration with other
kinds of information security tools.
Disadvantages
Problems with ERP
systems are mainly due to inadequate investment in ongoing training for the
involved IT personnel - including those implementing and testing changes - as
well as a lack of corporate policy protecting the integrity of the data in the
ERP systems and the ways in which it is used.
Disadvantages
- Customization of the ERP software is limited.
- Re-engineering of business processes to fit the
"industry standard" prescribed by the ERP system may lead to a
loss of competitive advantage.
- ERP systems can be very expensive (This has led to a
new category of "ERP light" solutions)
- ERPs are often seen as too rigid and too difficult
to adapt to the specific workflow and business process of some
companies?this is cited as one of the main causes of their failure.
- Many of the integrated links need high accuracy in
other applications to work effectively. A company can achieve minimum
standards, then over time "dirty data" will reduce the
reliability of some applications.
- Once a system is established, switching costs are
very high for any one of the partners (reducing flexibility and strategic
control at the corporate level).
- The blurring of company boundaries can cause
problems in accountability, lines of responsibility, and employee morale.
- Resistance in sharing sensitive internal information
between departments can reduce the effectiveness of the software.
- Some large organizations may have multiple
departments with separate, independent resources, missions,
chains-of-command, etc, and consolidation into a single enterprise may
yield limited benefits.
Cell : +91 - 9911720780
Email : sanganaktechnologies@gmail.com
Url : http://sanganak-technologies.blogspot.com
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