ADVANTAGES OF ERP

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:
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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 lead time 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-break-even 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

CRM is a customer-focused business strategy designed to optimize revenue, profitability, and customer loyalty.CRM gives the most value to customers by tightly integrating their sales, marketing and support efforts. CRM's primary objective is to provide the entire organization with a complete, 360-degree view of the customer, no matter where the information resides or where the customer touch-point occurs. CRM manages every point of contact with the customer to ensure that each customer gets the best level of service and that no sales opportunities are lost. By implementing a CRM strategy, an organization can improve the business processes and technology solutions around selling, marketing and servicing functions across all customer touch-points (for example: Web, e-mail, phone, fax, in-person).

ERP Systems - ERP Software, Business Processes, Users and Hardware ERP Systems - ERP Software, Business Processes, Users and Hardware From a systems perspective, the components of an ERP system are the common components of Management Information Systems (MIS) - software, business processes, users and hardware. AN ERP system is more than sum of its parts or components. Those components interact together to achieve a common goal - streamline and improve organizations' business processes. ERP Software ERP software applications are module-based. Each software module automates business processes within a functional department. ERP applications can be

implemented and deployed module-by-module. Major ERP software modules cover the major functional areas of organizations. Common ERP modules include product planning module, parts and material purchasing module, inventory control module, product distribution module, order tracking module, finance module, accounting module, marketing module, and HR module. Organizations often selectively implement the ERP modules that match their business needs. Reengineering of Business Processes Anthony, R. A classifies organizational processes into three levels - strategic planning, management control and operational control. The driving force behind the acceptance of ERP was to streamline and automate enterprise-wide resource planning at strategic planning level. In reality, much of ERP success has been in facilitating operational coordination across departments. The success of ERP at strategic planning, management control calls for the integration of ERP with other enterprise applications and demand long term management commitment. ERP Users Following Anthony, R. A's classification of organizational processes, workers can be classified into 1) those who execute strategic planning, 2) those who perform managerial control, and 3) those who do operational control. Even though ERP applications have been mostly beneficial to the operational control, the users of a ERP system include workers from all levels of an organization. Operating Systems for ERP ERP software runs on various operating systems and hardware, from UNIX, Linux, Windows to mainframe. Since one organization may acquire ERP and other enterprise software from many different vendors, the requirements for running ERP applications are common - security, stability, scalability and open standards.

ERP Implementation Methodologies

Different companies may install the same ERP software in totally different processes. The same company may implement different ERP software in the same approach. There are three commonly used methodologies for implementing ERP systems. The Big Bang

Companies layout a grand plan for their ERP implementation. The installation of ERP systems of all modules happens across the entire organization at once. The big bang approach promised to reduce the integration cost in the condition of thorough and careful execution. This method dominated early ERP implementations, it partially contributed the higher rate of failure in ERP implementation. Today, not many companies dare to attempt it anymore. The premise of this implementation method is treating ERP implementation as the implementation of a large-scale information system, which typically follows SDLC (Systems Development Life Cycle). But an ERP system is much more than a traditional information system in the fact that the implementation of ERP continuously calls for the realignment of business processes. Many parties involved in ERP software systems are not IT professionals. ERP more than automates existing business processes. ERP transforms the business processes. Modular Implementation The method of modular implementation goes after one ERP module at a time. This limits the scope of implementation usually to one functional department. This approach suits companies that do not share many common processes across departments or business units. Independent modules of ERP systems are installed in each unit, while integration of ERP modules is taken place at the later stage of the project. This has been the most commonly used methodology of ERP implementation. Each business unit may have their own "instances" of ERP and databases. Modular implementation reduces the risk of installation, customization and operation of ERP systems by reducing the scope of the implementation. The successful implementation of one module can benefit the overall success of an ERP project. Process-Oriented Implementation The process-oriented implementation focuses on the support of one or a few critical business processes which involves a few business units. The initial customization of the ERP system is limited to functionality closely related to the intended business processes. The process-oriented implementation may eventually grow into a fullblown implementation of the ERP system. This approach is utilized by many small to mid-sized companies which tend to have less complex internal business processes.

With or Without ERP

An enterprise that has no ERP according to its needs can find many kinds of software that do not allow interaction, and that cannot be customized. For that matter they are not able to optimize the organizational business activities. The engineering design of the software will be needed in order to improve the product, and to follow the clients behavior and choices since the first contact is quite important. Administration of the different receipts interdependence will be very complex, such as invoices regarding materials purchases, general expenditures or salaries.

All of these things change when you implement ERP. Information flows constantly and allows you to follow a clients processes at any moment, no matter which part of the process they are going through. Purchases and expenditures are registered in a centralized database which allows you to have close control over these activities. In this regard ERP helps you to prevent possible abuse.

Marketing, sales, quality control, products processes, supply lines, stocks and many other areas can be integrated in one single database with ERP. This will help in avoiding the occasional loss of information and retyping mistakes. It integrates all departments and functions across a company in a single computer system that is able to serve all those different department's particular needs.

ERP systems also implement and automate business processes by putting them into a useful format that is standardized and common for the whole organization, and it could even be used between their suppliers and customers. It captures data about historical activity, current operations and future plans and organizes it into information that every staff member can use to help develop business strategies.

ERP integrates financial data. Managers try to understand the companies performance, and they may find many different versions of the truth. Financial department have their own set of revenue numbers, and the sales department has its own as well.

The different business units may have their own versions of how much they contributed to revenues. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system, giving managers correct and complete information.

A special case is found in manufacturing enterprises. These companies - especially those with an appetite for mergers and acquisitions - often find that multiple business units across the company make the same kind of work using different computer systems. Standardizing those processes and using a single, integrated computer system can save time, increase productivity and reduce head count besides improving the quality of information.

Something alike happens in non manufacturing organization when they acquire new companies or merge with others. A sole software is needed to increase the right flow of work through all of them, inside and between each other.

In companies with multiple business units, Human Resources may not have a unified, simple method for tracking employee time and communicating with them about benefits and services, disciplinary measures or even suspensions. ERP can fix that. To fix these problems, companies often forget the fact that ERP packages are generic representations of the ways in which a typical company does business.

Time-sharing refers to sharing a computing resource among many users by multitasking. Because early mainframes and minicomputers were extremely expensive it was rarely possible to allow a single user exclusive access to the machine for interactive use. But because computers in interactive use often spend much of their time idly waiting for user input it was suggested that multiple users could share a machine by using one user's idle time to service other users.

How does ERP create value

LEGACY information system have been functionally based and not integrated across multiple locations or functional areas. The same information was captured multiple times, in multiple places and was not available in real time. Jobs and processes were narrowly defined in concert with the division of labour and the industrial revolution. As a result, some information never made it out of different pockets of the corporation. Processes and job definitions saw to it that information remained a local good. When information did go global, often there were different informational reports of the same events. Thus, there were information asymmetries between the different local and functional groups and top management. Enterprise resource planning systems provide firms with transaction-processing models that are integrated with other activities of the firm, such as production planning and human resources. By implementing standard enterprise processes and a single database that spans the range of enterprise activities and locations, ERP systems provide integration across multiple locations and functional areas. As a result, ERP systems have led to improved decision-making capabilities that manifest themselves in a wide range of metrics, such as decreased inventory (raw materials, in-process and finished goods), personnel reductions, speeding up the financial close process and others. Thus, ERP can be used to help firms create value. In particular ERP facilitates value creation by changing the basis nature of organizations in a number of different ways, such as:

Integrate the organization's activities Force the use of 'best practices' Enable organizational standardization Eliminate information asymmetries Provide on-line and real-time information Allow simultaneous access to the same data for planning and control Facilitate intra-organization communication Enable inter-organization collaboration

Facilitates Intra-organization Communication

Enterprise Resource Planning also facilitates intro-organization (between different functions and locations) communication and collaboration. The existence of interlocking processes brings functions and locations into communication and forces collaboration. The standardization of processes also facilitates collaboration, since there are fewer conflicts between the processes. Further, the single database facilitates communication by providing each location and function with the information that they need.