JAYESH SANGHRAJKA & CO.

Chartered Accountants

From the Research Desk______________________________________

Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP) is one of the latest high end solutions that seek to simplify and integrate operation processes and information flows in the company. An ERP system is fully integrated business management system that integrates the core business and management process to provide to an organisation a structured environment in which decisions concerning demand, supply, operational, personnel, finance, logistics etc., are fully supported by accurate and reliable real-time information.

CharacteristicsofanERPsystem
1. ERP is a flexible system which may cover different languages, currencies, accounting standards etc., 2. ERP system is modular and open which implies that any module can be interfaced or detached, whenever required, without affecting the other modules. 3. ERP is an integrated system, as data can be automatically exchanged among different applications that take place between related business components. 4. ERP aims at adopting best business practices applicable worldwide and imposes its own logic on an organisations strategy and its implementation. 5. It eliminates most of the business problems like material shortage, productivity enhancement, customer service, cash management, inventory management, quality management etc.,

BenefitsofanERP
1. ERP enables an organisation to make better use of its resources which are scarce by their nature. 2. ERP results into lower operating cost to the organisation, through cycle time reduction, inventory reduction etc., which in turn leads to profitability for the organisation. 1

his letter is for private circulation only. The letter is brought by a group of professionals Batgach. These professionals represent several well established Chartered Accountancy Firms. The letter is being brought onlywiththeintentiontogiveinformation&nottosolicitclientsorbusinessagainsttheguidelinesissuedby TheInstituteofCharteredAccountantsofIndia.

JAYESH SANGHRAJKA & CO.

Chartered Accountants

From the Research Desk______________________________________

3. In current scenario, there is a need for proactive decision making rather than the reactive decision making and ERP helps you in taking those decisions. 4. ERP enables an organisation to decentralize its decision- making, thereby releasing the burden on higher management levels and freeing them for strategic thinking. 5. To compete effectively in todays marketplace, organisation must focus on their customers. ERP provides the way for this in the form of effective processing of requests and emphasizing customer relationship management.

LimitationsofanERP
1. Customization of an ERP is problematic. 2. ERP can cost more than less integrated or less comprehensive solutions. 3. High ERP switching costs can increase the ERP vendor's negotiating power, which results in upgraded expenses. 4. Methods used in the ERP applications are not integrated with other organisational or divisional systems.

Conclusion
ERP packages are integrated software packages, covering all business finances that support the ERP operations. An ERP software is designed to model and computerize many of the basic processes of the company with the objective of integrating information across the company. Some of the major ERP packages available in Indian market are SAP, Oracle Applications, Tally, QuickBooks, Ramco Marshals, Baan ERP etc.,

his letter is for private circulation only. The letter is brought by a group of professionals Batgach. These professionals represent several well established Chartered Accountancy Firms. The letter is being brought onlywiththeintentiontogiveinformation&nottosolicitclientsorbusinessagainsttheguidelinesissuedby TheInstituteofCharteredAccountantsofIndia.