www.lpude.in DIRECTORATE OF DISTANCE EDUCATION ENTERPRISE RESOURCE PLANNING Copyright © 2011 Y. Venugopala Rao All rights reserved Produced & Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for Directorate of Distance Education Lovely Professional University Phagwara Directorate of Distance Education LPU is reaching out to the masses by providing an intellectual learning environment that is academically rich with the most affordable fee structure. Supported by the largest University1 in the country, LPU, the Directorate of Distance Education (DDE) is bridging the gap between education and the education seekers at a fast pace, through the usage of technology which significantly extends the reach and quality of education. DDE aims at making Distance Education a credible and valued mode of learning by providing education without a compromise. DDE is a young and dynamic wing of the University, filled with energy, enthusiasm, compassion and concern. Its team strives hard to meet the demands of the industry, to ensure quality in curriculum, teaching methodology, examination and evaluation system, and to provide the best of student services to its students. DDE is proud of its values, by virtue of which, it ensures to make an impact on the education system and its learners. Through affordable education, online resources and a network of Study Centres, DDE intends to reach the unreached. 1 in terms of no. of students in a single campus SYLLABUS Enterprise Resource Planning Objectives: The objective of ERP is: l To provide the real time information. l To enrich students with concepts and knowledge of ERP. l To prepare them to become knowledgeable ERP user professionals suitable to Industry and Information Technology Companies. DCAP302 ENTERPRISE RESOURCE PLANNING Sr. Topics No. 1. Tools to Understand the Course: Awareness of ERP softwares SAP/CRM. ERP Overview: Introduction, Business Function and Business Processes, Integrated Management Information, Business Modelling, Integrated Data Model, Common ERP Myths, History, Advantages, The Future of ERP Packages. 2. Risks and Benefits of ERP: Risks Factors of ERP Implementation, Technological Issues, Implementation Issues, Benefits of ERP. 3. ERP and Related Technologies: Business Process Reengineering, Management Information System, Decision Support System, Executive Information System. Databases: Data Warehousing, Data Mining, On-line Analytical Processing, Supply Chain Management, Customer Relationship Management. 4. ERP Marketplace and Functional Modules: The Changing ERP Market, Functional Modules of ERP Software, Integration of ERP, SCM and CRM. 5. ERP Implementation: Basics, Technological, Operational, Business Reasons for ERP implementation, ERP Implementation Life Cycle, Objectives, Phases. 6. ERP Transition Strategies: Transition Strategies, Big Bang Strategy, Phased, Parallel Implementation, Process Line Transition Strategy, Hybrid Transition Strategy. 7. ERP Project Teams: Organization of the Implementation Team. ERP Vendors, Consultants & Users: Pro & Cons of In-house Implementation, Vendors, Consultants, Employees and Employ Resistance, Reasons for Resistance, Contract with Vendors, Consultants and Employees. 8. ERP Future Directions: New Markets, New Channels, Faster Implementation Methodologies, Application Platforms, New Business Segments, Web Enabling & Snapshot. 9. ERP and eBusiness: e-Business-SCM, Process Model, ERP, Internet and WWW-ERP II. 10. ERP-A Manufacturing Perspective: ERP, CAD/CAM, MRP, BOM, MTO, MTS, ATO, ETO, CTO Case Studies: SAP at TATA Steel, J D Edwards At HP. DCAP514 ENTERPRISE RESOURCE PLANNING Sr. No. Topics 1. Tools to Understand the Course: Awareness of ERP Softwares SAP/CRM. ERP Overview: Introduction, Business Function and Business Processes, Integrated Management Information, Business Modelling, Integrated Data Model, Common ERP Myths, History, Advantages, The Future of ERP Packages. 2. Risks and Benefits of ERP: Risks Factors of ERP Implementation, Technological Issues, Implementation Issues, Benefits of ERP. 3. ERP and Related Technologies: Business Process Reengineering, Management Information System, Decision Support System, Executive Information System. Databases: Data Warehousing, Data Mining, On-Line Analytical Processing, Supply Chain Management, Customer Relationship Management. 4. ERP Marketplace and Functional Modules: The Changing ERP Market, Functional Modules of ERP Software, Integration of ERP, SCM and CRM, Cloud Computing. 5. ERP Implementation: Basics, Technological, Operational, Business Reasons for ERP Implementation, ERP Implementation Life Cycle, Objectives, Phases. 6. ERP Transition Strategies: Transition Strategies, Big Bang Strategy, Phased, Parallel Implementation, Process Line Transition strategy, Hybrid Transition Strategy. 7. ERP Project Teams: Organization of the Implementation Team. ERP Vendors, Consultants & Users: Pro & Cons of In-house Implementation, vendors, Consultants, Employees and Employ Resistance, Reasons for Resistance, Contract with Vendors, Consultants and Employees. 8. ERP Future Directions: New Markets, New Channels, Faster Implementation Methodologies, Application Platforms, New Business Segments, Web Enabling & Snapshot. 9. ERP and e-Business: e-Business-SCM, Process Model, ERP, Internet and WWW-ERP II 10. ERP-A Manufacturing Perspective: ERP, CAD/CAM, MRP, BOM, MTO, MTS, ATO, ETO, CTO Case Studies: SAP at TATA Steel, J D Edwards At HP CONTENTS Unit 1: ERP Overview 1 Unit 2: ERP and Related Technology 19 Unit 3: Business Process Re-engineering 49 Unit 4: Manufacturing Perspective of ERP 69 Unit 5: ERP Modules 90 Unit 6: ERP Benefits 107 Unit 7: ERP Market 122 Unit 8: ERP Implementation Lifecycle 140 Unit 9: ERP Vendors, Consultants and Users 166 Unit 10: ERP Future Directions 176 Unit 11: ERP-II 185 Unit 12: Building and Deploying an Information System 199 Unit 13: Case Study – ERP SAP Implementation 215 Unit 14: Case Study – ERP Application on Supply Chain 220 Unit 1: ERP Overview unit 1: erp overview notes contents Objectives Introduction 1.1 Introduction to ERP 1.2 Overview of ERP 1.3 What is ERP? 1.3.1 The Ideal ERP System 1.3.2 Implementation of an ERP System 1.4 Evolution of ERP 1.5 Reasons for Growth of ERP 1.6 Benefits of ERP 1.7 Failure of ERP Implementation 1.8 Integrated Data Model 1.9 Integrated Management Information 1.10 Business Modeling 1.11 Summary 1.12 Keywords 1.13 Self Assessment 1.14 Review Questions 1.15 Further Readings objectives After studying this unit, you will be able to: lz Describe enterprise resource planning lz State the growth reasons of ERP lz Explain the ERP benefits lz Discuss integrated data model and business modeling introduction ERP systems are now ubiquitous in large businesses and the current move by vendors is to repackage them for small to medium enterprises (SMEs). This migration has many consequences that have to be addressed through understanding the history and evolution of ERP systems and their current architectures. The advantages and disadvantages of the ERP systems will impact their penetration in this new market. The market position and general strategy of the major LoveLy professionaL university 1 Enterprise Resource Planning notes systems providers in preparation for this push are described. The unit concludes that the growth and success of ERP adoption and development in the new millennium will depend on the legacy ERP system’s capability of extending to Customer Relationship Management (CRM), Supply Chain Management (SCM) and other extended modules, and integration with the Internet- enabled applications. 1.1 introduction to erp Today, Enterprise Resource Planning (ERP) systems have come to signify a never-before opportunity for organisations to gain a clear edge over their competitors. In order to compete and grow, many organisations in India either have already implemented or are at the threshold of acquiring ERP systems. 1. ERP is a high-end sophisticated software solution that reduces the pressure and workload of the managers and provides accurate, timely information for taking appropriate business decisions. 2. Enterprise Resource Planning is the latest high end solution that information technology has lent to business application. Information technology has transformed the way we live in and the way we do business. Since the last decade, IT has made a drastic change in our life. As compared to earlier stage, when computer was used just as a typewriter, nowadays users have become more intelligent and IT literate. Now the user knows that a PC can do many more things rather then just typing a letter in a word processing software or making balance sheets in Excel. They expect more things out of their PC. During this phase of industry, every one of us must have heard the word ERP in one or the other form. It may be in the title of any IT magazine or may be a point of discussion in any IT Seminar or may be in an advertisement of big IT Company. Thus in any form, we all have been through this word. In fact, ERP software consists of multiple software modules that integrate activities across functional departments - from production planning, parts purchasing, inventory control and product distribution to order tracking. Most ERP software systems include application modules to support common business activities like finance, accounting and human resources. figure 1.1: planning for erp 2 LoveLy professionaL university Unit 1: ERP Overview 1.2 overview of erp notes ERP is much more than just a computer software. An ERP System includes ERP Software, Business Processes, Users and Hardware that run the ERP software. An ERP system is more than the sum of its parts or components. Those components interact together to achieve a common goal - streamline and improve organizations’ business processes. Most important factor for ERP system is the users. Successful implementation of any ERP System depends more on intelligent users who are going to use them, because any standard ERP Software would consist hundreds of input information for any particular business activity. Thus good knowledge of each entity of system by the users is the most important factor in ERP Software. figure 1.2: functional Departments of erp Enterprise Resource Planning (ERP) is the evolution of Manufacturing Requirements Planning (MRP) II in 1980s, which was mainly related to Manufacturing Industry and was designed to control manufacturing process and planning the required production with efficient output. MRP is the evolution of Inventory Management & Control conceived in 1960s, which was mainly designed for management of Stocks in any particular industry. ERP has expanded from coordination of manufacturing processes to the integration of enterprise-wide backened processes like production planning and scheduling of delivery. In terms of technology, ERP has evolved from legacy implementation to more flexible tiered client-server architecture. 1.3 What is erp? It serves as a Cross-functional Enterprise Backbone that Integrates and Automates many Internal Business Process and Information Systems covering all functional areas. LoveLy professionaL university 3 Enterprise Resource Planning notes figure 1.3: erp The term ERP originally implied systems designed to plan the use of enterprise-wide resources. Although the initialism ERP originated in the manufacturing environment, today’s use of the term ERP systems has a much broader scope. ERP systems typically attempt to cover all basic functions of an organization, regardless of the organization’s business or charter. Businesses, non-profit organizations, nongovernmental organizations, governments, and other large entities utilize ERP systems. To be considered an ERP system, a software package must provide the function of at least two systems. Example: A software package that provides both payroll and accounting functions could technically be considered an ERP software package. However, the term is typically reserved for larger, more broadly based applications. The introduction of an ERP system to replace two or more independent applications eliminates the need for external interfaces previously required between systems, and provides additional benefits that range from standardization and lower maintenance (one system instead of two or more) to easier and/or greater reporting capabilities (as all data is typically kept in one database). 4 LoveLy professionaL university