Project on

ERP Global Opportunities & Challenges

SY MMS By CHARUTA JAGTAP ABHIJEET SHINDE

Under the guidance of Mr. Virendra Patil

Shivajirao S. Jondhale College of Management Science and Research Asangaon 2013-2014

ACKNOWLEDGEMENT
Apart from our efforts, the success of this project depends largely on the encouragement and guidelines provided to me by our Distribution and Supply Chain Management lecturer from time to time. We take this opportunity to express our gratitude to the person who has been instrumental in the successful completion of this project. We would like to shower our greatest appreciation to Mr. Virendra Patil under the guidance of whom, we felt motivated and encouraged to undertake this project.

Without his encouragement and guidance this project would not have materialized. We cant say thank you enough for his tremendous support and help. We are also grateful for every small effort he has put in to see to it that our project is a grand success.

We would also like to thank all those people who have directly or indirectly contributed to the successful completion of this project.

Thanking you all, for your kind anticipation in my project.

Abstract
Enterprise resource planning (ERP) systems are commercial software systems that can be defined as customizable, standard application software which integrates business solutions for the core processes (e.g. product planning and control, warehouse management) and the main administration function (e.g. accounting, human resource management) of an enterprise.

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TABLE OF CONTENTS

Sr. No. 1 2 3 4 5 6

Name of topic Introduction Conceptual components of ERP Factors to consider for global ERP implementation ERP global opportunities ERP global challenges Bibliography

Page No. 4 5 7 8 10 12

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Introduction
Enterprise resource planning (ERP) systems are commercial software systems that can be defined as customizable, standard application software which integrates business solutions for the core processes (e.g. product planning and control, warehouse management) and the main administration function (e.g. accounting, human resource management) of an enterprise.

Why ERP is so important Enterprise Resource Planning provides many benefits to business such as 1. Enhance productivity, flexibility and customer responsiveness By integrated core business processes together in one single application, it helps company maximize the efficiency of business process across the entire organization. Plant manufacturing can produces product faster. Increase on time delivery, Increase productivity, Increase ability to forecast demand to supplies, Increase order capacity, and improve customer service (Customer Relationship Management (CRM)). 2. Eliminate costs and inefficiencies Using an ERP system to standardize business processes can dramatically improve companys operation. ERP enable company to manage relationship with vendor results in lower cost for purchased items. Better resource management results in more inventory turns and decrease the level of inefficiencies. 3. Data consistency Because an ERP system integrates all business management functions, it decreases level of inconsistency information from different systems. Thus, by using ERP system, managers can gather correct information and make a right decision. 4. Extend your business using the Internet By integrating all business functions together in one system, it increases ability of a company to use internet as part of the business strategy. Web-enabled technology allows you to access information, sell product, run business processes, and communicate with customers and partners at any time and from anywhere in the world.

Conceptual Components of ERP Before we begin to implement ERP system, we should to understand the high concept or ERP model.

The ERP model is consists of four components which are implemented through a methodology. All four components are 1. The software component is the component that is most visible part and seen as the ERP Product which is not true. It consists of several modules such as Finance, Human resource, Supply chain management, supplier relationship management, customer relationship, and business intelligent. 2. Process Flow is the model that illustrates the way how information flows among the different modules within an ERP system. By creating this model makes it easier to understand how ERP work. 3. Customer mind-set by implementing ERP system, the old ways for working which user understand and comfortable with have to be changed and may lead to users resistance. Employee-raised facts, beliefs, and values are good indicators of what may cause their resistance to change. For example, some users may say that they have spent many years doing an excellence job without help from ERP system. This is the value and belief that users have toward new ERP system. In order to lead ERP implementation to succeed, the company need to eliminate this kind of negative value or belief that users have toward new system. At Pratt & Whitney Canada, top management not only provide the resource, but they also formulated a clear vision of goals that they wished to achieve from the project. By doing so, it helped to guide employee expectations the benefits of new system. 4. Change Management in ERP implementation, Change needs to be managed at several levels 4.1 User attitude Resistance to change is a big problem that can lead to project failure. If the company need to success in implementing new system, users need to be understand
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what the new system is and give a commitment to new system. By doing so, a company need to have a good management plan and implementation. 4.2 Business process changes when new system is implements, the business processes are also changed (Legacy systems are removed). Thus, a company should have a plan for these changes. ERP methodology refers to a systematic approach to implement an ERP system that will ensure the proper integration of the four components.

Enterprise Resource Planning

Factors to Consider for a Global ERP Implementation ERP implementation projects for large, multi-national organizations are much different from those of smaller or less global companies. Although any ERP software project is full of challenges, global rollouts require focus on a number of additional variables like: 1. Global vs. Localized Business Processes. Companies with global offices, particularly those acquired from another company, often have very non-standardized business processes. A global ERP software implementation provides an opportunity to standardize processes across locations, such as in a global shared services ERP model, but such changes can be difficult. A global ERP implementation needs to find the right balance between standardized vs. localized business processes and system. Often times, these decisions boil down to identifying processes that are crucial to staying close to the customer vs. those that are not adding as much value. 2. Big Bang vs. Phased Implementation. Once the system and corresponding business processes have been defined, it is important to define how to rollout to end-users. For example, do you go-live with all functions and geographies at one time? Do you rollout in multiple phases based on region and/or function? Or is it some combination of both? Most of our clients take some sort of a hybrid approach, largely based on their tolerance for risk, resource availability, and legacy system constraints. 3. Global vs. Localized ERP Support Structure. The actual ERP implementation is only one step in a longer-term ERP process. Before the first go-live is completed, it is important to define how and where your ERP software is going to be managed going forward. Many companies look to centralize ERP support and help desk functions, while others choose to offer decentralized support to cater to a diverse end-user base. The sooner this support structure is defined and established, the sooner end-users will fully adopt the business software and start realizing the expected business benefits. 4. Language and Currency. One of the key business benefits of ERP software for global organizations is the ability to standardize business processes and provide global visibility into operations. However, local requirements often create a competing force to allow for flexibility to manage data and transactions in local languages and currencies. Finding the right balance between standardizing to English and US dollars across the globe vs. allowing multiple languages and currencies is an important decision point. 5. Master Data Management. Master data is an important but often overlooked aspect of an effective ERP initiative. Not only does master data need to be cleansed and migrated to the new system, but global companies need to define how it will be managed going forward. For example, will local entities have the flexibility to manage their own local chart of accounts, or will changes require centralized and global governance? The same needs to be decided for other types of master data, including customer, supplier, and inventory master records. It is clear, that companies need to start making decisions related to the above issues sooner rather than later to provide direction and focus to their global ERP implementation.

ERP Global Opportunities Companies need greater technology capabilities and agility to compete in todays highly competitive global economy, and is looking to boost the power and scope of their enterprise application suites (often referred to as enterprise resource planning or ERP systems). While enterprise/ERP systems are complex, with many moving parts, a new survey of enterprise application managers finds that the vast majority of ERP upgrade efforts tend to be short in duration, fall within reasonable budgets, and rarely disrupt the business at large. In addition, contrary to perceptions, many ERP upgrades benefit the entire business, not just IT departments. Once properly executed, initiatives to improve and update ERP systems can be far-reaching, providing enterprises with improved productivity, greater streamlining, and more robust capabilities for reaching out and serving new markets and constituencies. Global ERP projects can be an expensive and time consuming investment into your organization; however, the benefits of improved processes and better decisions far outweigh "standing still" while the competition evolves.
Global

Integration: Access to business critical data, no matter where it's located, is needed for rapid, effective decision making. Global ERP solutions need to integrate all departments and locations into one business system, giving companies accurate, up-tothe minute information about costs, trends, margins, and more. They also need to support multi-language, multi-currency, and multi-compliance requirements - enabling employees to work in their local languages while corporate reporting can be done in another language - all in real-time. Standardized Business Processes: In order to benefit from global supply chains, organizations need to standardize business processes across multiple geographies to improve efficiency and reduce operating costs. Global ERP systems need to support standardized processes like intercompany trade, multi-site planning, inventory control, and order management to enable better supply chain collaboration with departments, locations, customers, and partners across the globe. Decentralized Business Processes: At the same time, global companies also need to decentralize certain business processes and manage them at a local level. This is especially important when maintaining compliance with local legislation requirements. Decentralized processes in areas like ordering, shipping, invoicing, and accounting can enable companies to improve responsiveness and customer satisfaction. Adaptable and Supports Business Growth: As organizations expand, the ability to quickly adapt processes and rapidly scale systems and processes to support new users, new locations, and new lines of business is critical to sustaining profitable growth. Flexible ERP systems that keep pace with growing businesses can minimize growing pains and enable companies to take advantage of new revenue streams, market opportunities, or operating units. The Right Partner: Global ERP implementations are not IT projects; they are enterprise wide business transformation projects. They are projects that align a company's people, processes, and technology investments more closely together, globally, to achieve
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more efficient and effective processes, and to gain information insight advantages. Organizations going through a business transformation project need more than a software reseller; they need a partner that can drive transformation and unlock more value from people and processes. BENEFITS OF GLOBAL ERP SYSTEMS AND PROCESSES All businesses at one time or another have to weigh the costs and benefits of retaining an older ERP system (or systems) against the costs and benefits of selecting and implementing a new one. Legacy systems, although on older technology, provide companies a level of comfort - comfort that is likely at the sacrifice of increased efficiency, visibility, and growth.

Single Business Management System: Global organizations need a way to move out of silos of data and systems, especially considering the vast differences in geography and culture, and operate with the best processes and people working together across locations. Globally adopted systems allow a business to break down these cultural and geographic barriers and get people working together in an efficient manner. Global Adoption of Best Practices: A global ERP solution helps companies optimize and standardize business processes while encouraging the adoption of best practices throughout the organization. Streamlined processes lead to better performance and more efficient people. Globally adopted best practices also supports cost-effective expansion, enabling organizations to use company-wide standards, templates, and best practices to "cookie-cut" new locations, regardless of geography. Faster Financial Reporting: The ability to more quickly close the books and provide much more timely financial results to corporate management is a great benefit to global organizations. Global ERP solutions provide much greater visibility to individual global entities and the ability to view the entire enterprise with multiple currencies and multiple locations; this positions organization to quickly grow and expand as the market dictates. Compliance and Risk Management: Global visibility and control of compliancerelated processes and activities are key factors in enforcing effective compliance and risk management practices. A Global ERP solution can enable your organization to streamline and comply with a variety of global and local compliance requirements and customer mandates, including financial, legal, and environmental. By utilizing a single solution for policies and procedures, process documents, database logs, reports, charts, and key risk indicators, global organizations can see the whole picture, take control of processes, mitigate risks, and ultimately reduce the cost of compliance. Reduced Operating Costs: Organizations that successfully adopt global systems and processes see reduced operating costs in a number of areas. With a single global ERP system, companies benefit from reduced IT costs, including staff, support, infrastructure, and applications. Standardized processes also enable organizations to continuously improve efficiency, productivity, and decision making - enabling volumes to increase without needing an equal increase in operating costs.

ERP Global Challenges ERP implementations face a number of risks and challenges due to their complexity and the transformational impact they have on companies. These risks can be further amplified in global ERP implementations where distributed teams, cultural differences, local requirements, and other factors provide additional threats to the implementation. By understanding and managing the challenges below, companies can improve the probability that their ERP implementation will drive the expected results. Transformational Project vs. IT project The largest challenge facing organizations implementing a global ERP system is that it is commonly considered an IT project with executive decision makers absent throughout the entire project. A global ERP implementation should not be viewed simply as changing software systems. Instead, it should be viewed as an opportunity to transform and align an organization people, processes, and technologies across multiple departments, locations, and countries. And due to the enormous impact on the day-to-day operations of the business for example, many locations that previously worked separately in silos of data now have to be tightly integrated together it is critical that executives take an active role during the selection of vendors, through systems and process blueprinting, change management, implementation, and training. Reengineering Business Processes: As mentioned above, global ERP implementations involve more than just replacing a business management system(s); they also require the reengineering of current business processes for implementing globally adopted best practices and standards. The most fundamental driving force for a company's business success is their people. However, the way people perform the tasks and processes necessary to complete their workloads can make the difference between success and failure in todays markets. In order to successfully transform their business, organizations need to identify opportunities to streamline processes, reduce waste, and automate paper-based or manual procedures. At the same time, they need to successfully manage changing processes with employees, ensuring that their day-to-day activities are easier, more efficient, and more productive. Project Management: Youve got a lot riding on the successful implementation of your new business systems and processes. Effective project management is critical to ensuring a successful implementation. All projects are constrained by four factors: time, costs, quality and scope. For any project to be successful, these four constraints must be in equilibrium. If any constraint is out of balance, the project is headed for disaster. Make sure you work with a partner that has a consistent, repeatable, and flexible methodology that provides a better implementation experience and less risk to your company. Also choose a partner that has a track record for providing consistent communication and reporting to help keep you informed and up-to-date with the projects status.

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Differences in Culture, Language, and Compliance When undertaking a global ERP implementation, customers need to be concerned about whether their implementation consultant and ERP system can enable the company to be successful in multiple countries. From a systems standpoint, the ERP software needs to be able to handle multi-compliance, multi-currency, and multi-language requirements where you and your partners operate (or intend to operate). Implementation consultants also must be able to manage differences in culture, language, and local compliance regulations to successfully implement the solution across the globe. This requires working with partners that can find the proper balance between using enterprise best practices and global templates with local requirements knowledge and experience. Selecting the Right Partner: Global ERP implementations are not IT projects; they are enterprise wide business transformation projects. Organizations going through a business transformation project need more than a software reseller; they need subject matter and industry experts that have deep experience and a successful track record of aligning processes with the people and technology solutions that support them. The right resource can provide the right services and support to ensure that your process and technology investments help you and dont leave you in the 50% of customers who never realize the benefits of their investments. Todays world is increasingly flattened by technology, global complexity and new global competition - making it critical for a business to be able to rapidly see and react to signals, threats and opportunities. Going one step further, in this world where the pace of business is constantly accelerating, imagine being able to anticipate rather than react to those signals. Success today and tomorrow increasingly depends on information insight and efficient business processes. When implemented correctly, globally adopted systems and processes can allow a business to overcome the challenges of globalization and operate more efficiently, effectively, and profitably. Different counties adopt different reporting and accounting practices and therefore an ERP implementation cannot solve all problems that a global corporation may have in multiple countries in the scope of the project due to the absence of standard global processes across the organization. We can conclude that the most important critical success factor of these international implementations is how quickly these corporations can reengineer existing business process to adopt best practices of using an ERP system.

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Bibliography
S. L. Gupta: Sales and Distribution Management (Excel)
http://www.backbonemag.com/Backblog/five-things-to-consider-for-a-global-erpimplementation.aspx http://www.umsl.edu/~sauterv/analysis/f06Papers/Wonglikphai/ http://www.meritsolutions.com/products/global-erp-implementation-consultant.html http://community.dynamics.com/ax/b/meritmatters/archive/2013/07/31/traditionalchallenges-in-global-erp-implementations.aspx

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