UNDERSTANDING ERP

OBJECTIVE OF THE COURSE

To provide a brief Introduction about ERP To give a Snapshot of the Current Happenings in the ERP world Develop a new perspective of ERP as a Career Option

TABLE OF CONTENT
1. Introduction 1. IT Industry in India 2. ERP Growth in India 2. ERP Basics 1. Understanding ERP 2. Evolution of ERP 3. Central Concepts 4. Industry Verticals 5. Major Modules and Best Practices 3. ERP Implementation 1. ERP Implementation Life Cycle 2. Common Myths and Pit falls 4. Pros and Cons 1. Benefits of ERP 2. The Flip Side 5. ERP Market Condition 1. Current Market Scenario 2. Comparing top 5 ERP Players 6. Food for Thought 1. Challenges / Future Trends 2. ERP and Japanese Management 3. Case Study and Presentation

IT INDUSTRY IN INDIA
IT Industry emerging as Knowledge Industry Sectoral contribution to GDP increased from 1.2 % in 1998 to 7.1 % in 2011 Share of IT in total Indian exports increased fto about 25% in FY2012 Direct and Indirect Job Opportunities were estimated to approx. 10.8 million in 2010-11 TCS, Infosys, Cognizant, Wipro and HCL are top 5 Indian IT Players

Do You Know ?

First IT Park was set up at SEEPZ in 1973 and contributed to about 80 % of Indias S/W exports in 80s

ERP GROWTH IN INDIA

What Statistics and Research say : ERP market to grow at 25 % CAGR reaching INR 983.4 Bn by 2015 India - third fastest growing enterprise software market by 2016 IT Spend by Indian companies estimated to touch Rs.1,910 billion in 2012, 16.4 % increase from 2011 Strong Ecosystem : Rich presence of all international software and hardware providers, backed by system integrators, service providers, business partners and IT professionals 1 out of every 10 software Do You Know ? dollars is spent on ERP

What is ERP ?

UNDERSTANDING ENTERPRISE RESOURCE PLANNING (ERP)

APICS (American Production and Inventory Control Society): ERP(Enterprise Resources Planning) as an accounting-oriented computer information system that assists enterprises to define and plan on the resources required during the operation process of purchase, production, distribution, and strategic planning to satisfy customers orders. It also effectively integrates and manages these resources so as to enhance overall performance and reduce costs. ERP is a way to integrate the data and processes of an organization into one single system for improving the Business Objectives

CENTRAL CONCEPTS

Central Features:
Business

process reengineering : Database integration Enhanced user interfaces Data transport between companies Extended and distributed applications

ERPs integrates the Applications, Databases, Interfaces and Tools.

Good to Know

For any software system to be considered ERP, it must provide an organization with functionality for two or more systems

ERP BUSINESS FLOW

Front Office Corporate

Back Office

Reporting
C U S T O M E R S

Financial

Applications Sales and Distribution

Central Database

Manufacturing
Applications

Service Applications Inventory Human Resource

Management Management

S U P P L I E R S

T i e r I & 2

EVOLUTION OF ERP

Emerged as a strategic tool because of continuous improvement in the available techniques to manage business and the fast growth of information technology.

EVOLUTION OF ERP
2000
Extended ERP / ERP II / ERP on Cloud

1990s
ERP

1980s
MRP II (Manufacturing Resource Planning)

1970s
MRP (Material Requirement Planning)

1960s
Inventory Control Packages

INDUSTRY VERTICALS

ERP MAJOR MODULES :

HRM

ERP MAJOR MODULES :

Supply Chain Management

ERP MAJOR MODULES :

Finance

ERP MAJOR MODULES :

CRM

ERP MAJOR MODULES :

Manufacturing

ERP MAJOR MODULES :

Project management :

IMPLEMENTING ERP, A GROUND REALITY

30% of those surveyed did not realize any sort of staff reductions after go-live 18% did not measure benefits after go-live Atleast 1 in 4 companies have operational problems and/or stoppages because of the disruptions caused by ERP. So what does this mean ????

ERP benefits are by no means guaranteed Risk of ERP disrupting an organization's core operations is a significant business risk

ERP IMPLEMENTATION LIFE CYCLE

Short List

Assessing

Prepare

Gap Analysis

Scrutiny

In-house Guidance

Designing

Business process reengineering

Training

Support

BENEFITS OF ERP

Improved customer service Reduced operating expenses Increased accuracy of costing Increased market shares Reduced inventories Shortened product lifecycles Streamlined communication Faster decision making Increased competitive advantage

FLIP SIDE Limitation of ERP includes:

Loss of Competitive Advantage due to Business Process Re-engineering. Problems associated with Customisations Over-engineered system relative to the actual needs. Huge Implementation Costs Direct as well as Indirect

Good to Know ?

Studies have indicated that only 6% out of 500 companies felt that there ERP systems were effective

MYTHS AND PITFALLS

One size fits all Current system defines your needs All functionality is created equal You will have a no modification policy ERP Implementation is an is an IT project ERP is just for Manufacturing Organizations

COSTS INVOLVED

Total Cost of ERP =

Cost of Software + Cost of Hardware Cost of Professional Services

Customization Cost + Integration Costs + Data Conversion + Testing Costs +

Cost of Delays, Costs of Rework, Cost of turbulence ???

HOW TO MAKE ERP IMPLEMENTATION A SUCCESS STORY Make ERP to Complement The Business Have a strongly determined organizational structure Cultural Readiness Involve all Stakeholders Use ERP

ERP IN INDIA
The Trickle Effect ERP Survey Findings :

Indian Companies implement ERP due to :

thrusts

from parent collaborators, to revamp in order to meet increased load, to reduce lead times and inventory levels and improve customer satisfaction.

Major Hurdles for Indian Companies are :

Resistance

to change Huge Customizations Initial Extra Efforts Cost Overruns Discussion

Point

Is ERP a Business Necessity ?

ERP IN INDIA

Scope in India
Service

Sector, an area to be watched out Matured Indian Economy demands Advanced Technology Indian railways, UID Homecare Business Logic for Japan

Good to Know

India to be third fastest growing enterprise software market by 2016

ERP MARKET

Fortune 2000 Enterprise ERP Leaders (SAP, Oracle)

Small Business ERP Leaders (Microsoft)

Medium Market Leaders (Epicor, Infor)

SAP
SAP is the largest and most recognized Fortune 1000, Global 5000 and enterprise market share leader. The company has achieved its success due to its extremely deep accounting and distribution software suites along with tightly integrated financials, manufacturing, human resource, payroll and customer relationship management software systems. While the company claims that its retains significant middle market share, its definition of 'middle market' is more in lines with other definition of the enterprise market Over 37,000 application customers More than 35,000 customers, 120 countries Claim #1 CRM market share leader Definite #1 ERP market share leader Very impressive distribution/SCM Several industry solutions Netweaver, SQL and a chasm of technologies

ORACLE
Oracle is the world's second largest business applications maker - and is clearly out to take the lead role from SAP. Bolstered by its acquisitions of PeopleSoft (with JD Edwards) and Siebel Systems, Oracle has collected an impressive customer list and portfolio of intellectual property. Now the real work to keep those customers and integrate those products (project Fusion) is underway with results expected very soon. Expect several more acquisition and integration project announcements from Oracle over the coming months. Over 37,000 application customers Claim #1 CRM market share leader #2 ERP market share leader 30 year proven credibility Outrageous flexibility Technology is the Oracle stack Priced at the high end

FUTURE TRENDS / CHALLENGES

Combine ERP with CRM Cloud deployment models change application economics Mobile technology accelerates business processes

ERP AND JAPANESE MANAGEMENT

ERP an enemy of Streamlined Production ?

ERP
Based on Sales Forecast

LEAN
Based on Actual Demand

Aims to track every activity and material

Aims to eliminate all kinds of Waste Emphasis is on setting Processes right and then Continual Improvement

Emphasis is on Planning

Data Dependent

Action Oriented

Years of Streamlining efforts can be washed by ERP Business Process Re-engineering, Streamline Business through Lean and then standardise it with ERP

CASE STUDY

China telecom