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Enterprise Resource Planning (ERP)

 Contents
1.1 Introduction
1.2 What is ERP?
1.3 Why ERP Required?
1.4 Definitions of ERP
1.5 Benefits of ERP
1.1 INTRODUCTION
Enterprise Resource Planning, or ERP, is a system that is used to combine all of the
information or operations of a company into a single unit. The goal of ERP is to unify the
various functions of an institution.

However, the use of Enterprise Resource Planning is not simply limited to corporations. It
is commonly used by non-profit organizations government agencies, and other institutions.
The ERP System Module
1.2 What is ERP?
Enterprise Resource Planning
(ERP) covers the techniques and
concepts employed for the
integrated management of
businesses by the effective use of
management resources, to
improve the efficiency of an
enterprise.

ERP packages are integrated

(covering all business functions)
software packages that support
the above ERP concepts.
 1.2 What is ERP?
ERP software applications can be
used to manage product planning,
parts purchasing, inventories,
interacting with suppliers providing
customer service, and tracking
orders.

ERP can also include application

modules for the finance and human
resources aspects of a business.
Typically, an ERP system uses or is
integrated with a relational database
 ERP Application Tools
Large ERP vendors are competing with
their smaller counterparts by either
buying them out or forming
strategic alliances with them.

A number of consultants within large

firms are specializing in various areas.
They will analyze the process that needs
to be reengineered, and once this is
done, they will decide how the
ERP software must be used.
 “
The most important areas for ERP applications
are finance, human resources, and
manufacturing
 ERP Benefits
Any company investing in any
new tools or equipment will want
to know that the investment will
pay off—have sufficient return on
investment (ROI) to justify the
expenditure.

Most companies will identify

inventory reduction as one of the
biggest benefits of an ERP
system
 ERP Benefits

Many companies also achieve

significant cost savings through
increased productivity, better
control of material acquisition,
improved quality and reduced
lead time.
Key Benefits of ERP

Integration:

The first and far most benefit of

ERP is integration. Our ERP
solution helps in reducing data
redundancy and redundant data
Day 2entry, which will lead to structured
services approach and active
project management.
Key Benefits of ERP
Improved work efficiency:

Our solution helps in enhancing

the efficiency of your organization
as it integrates various processes
very smoothly. It will help in
reducing your paper work.
Day 2
Our ERP module is designed for
quick response to changes
in market conditions and
improves the productivity of the
company.
Key Benefits of ERP
Reduction in cost:

The major benefit of ERP is

improved coordination across
functional departments. It
reduces the operational cost i.e.
inventory control cost, production
Day 2costs, Marketing costs and Help
desk support costs.
1.3 Why ERP Required

A number of trends drove the growth

of the enterprise software market.

First, integrated information

architecture improves business
performance. Once a major company
in an industry adopts enterprise
software, competitors may be
compelled to follow suit to stay
competitive.
1.3 Why ERP Required

Second, there has been a

major shift towards the use of
packaged applications.

This is partly related to the “Y2K bug”

and the European Union’s conversion
to a single currency, which induced
companies to replace their legacy
systems with packaged software
effectively “outsourcing” the solution
to the ERP vendor.
1.3 Why ERP Required

Third, many companies were

abandoning legacy software due to
the demands of electronic commerce
and front office applications on the
front end and linking to suppliers and
business partners at the back end.
1.3 Why ERP Required

Finally, rapid advances in computer

and software technologies combined
with the explosive growth of the
Internet have led many companies to
rethink their business practices, to put
a greater emphasis on their use of
IT, and to invest in more robust
enterprise architecture
1.4 Definition of ERP

The term ERP abbreviated from

“Enterprise Resource Planning”,
was introduced by the Gartner
Group in the early 1990s and
represent computer and software
systems that combine and
integrate all related processes of
the enterprise, and serve users for
the management of all functions
within the enterprise.
1.4 Definition of ERP

Kumar et al. (2000) define

enterprise resource planning
(ERP) systems as “configurable
information systems
packages that integrate
information and information-
based processes within and
across functional areas in an
organization”.
 1.4 Definition of ERP

Nah et al. (2001) defines ERP as “An

enterprise resource planning (ERP)
system is typically defined as a
packaged business software system
that facilitates a corporation to manage
the efficient and effective use of
resources (materials, human resources,
finance, etc.) by providing a total
integrated solution for the organization’s
information- processing requests,
through aprocess-oriented view
consistent across the company.
 1.4 Definition of ERP

Botta-Genoulaz and Millet(2006)

described ERP system as an
integrated software packages
comprising of set
of functional modules (Production,
Human resources, Sales, Finance
etc.) and integrate all departmental
functions across organizations into
one single system fulfilling the needs
of all departments
 1.4 Definition of ERP

Davenport(1998) also described ERP

an information strategy that merge all
information within an organization
and create a comprehensive
information infrastructure involving
all organizational units and functions.
 Based on the different viewpoints of the authors, the concept of ERP system
may be expressed as “Business management systems, comprises of set of
integrated software packages, with a common database that controls the flow
of integrated information in real time and manage all processes across
functional areas within the organization.
 1.5 Benefits of ERP

Some of the benefits are

quantitative (tangible) while others
are non-quantitative (intangible).
Tangible benefits are those
measured in monetary terms and
intangible benefits cannot be
measured in monetary terms but
they do have a very significant
business impact.
Tangible benefits: Intangible benefits:

 Improves the productivity of process  Increases organizational

and personnel transparency and responsibility
 Lowering the cost of products and  Accurate and faster access to data
services purchased for timely decisions
 Paper and postage cost reductions  Can reach more vendors, producing
 Inventory reduction more competitive bids
 Lead time reduction  Improved customer response
 Reduced stock obsolescence  Saves enormous time and effort in
 Faster product / service look-up and data entry ;
ordering saving time and money  More controls thereby lowering the
 Automated ordering and payment, risk of miss-utilization of resources
lowering payment processing and  Facilitates strategic planning
paper costs  Uniform reporting according to
global standards
Installing an ERP system has many advantages both direct and
indirect. The direct advantages include improved efficiency,
information integration for better decision making, faster response
time to customer queries, etc. The indirect benefits include better
corporate image, improved customer goodwill, customer
satisfaction, and so on.

The following are some of the direct benefits of an ERP system:

1. Business Integration
2. Flexibility
3. Better Analysis and Planning Capabilities
4. Use of Latest Technology.
 Did you know?
In 1990 Gartner Group first
employed the acronym ERP as an
extension of material requirements
planning
(MRP), later manufacturing
resource planning and computer-
integrated manufacturing.
 Caution
High switching costs associated with
ERP can increase the ERP vendor's
negotiating power which can result in
higher support, maintenance, and
upgrade expenses.
THANK YOU!