Copyright © 2007 New Age International (P) Ltd., Publishers Published by New Age International (P) Ltd., Publishers All rights reserved. No part of this ebook may be reproduced in any form, by photostat, microfilm, xerography, or any other means, or incorporated into any information retrieval system, electronic or mechanical, without the written permission of the publisher. All inquiries should be emailed to [email protected] ISBN (10) : 81-224-2298-5 ISBN (13) : 978-81-224-2298-6 PUBLISHING FOR ONE WORLD NEW AGE INTERNATIONAL (P) LIMITED, PUBLISHERS 4835/24, Ansari Road, Daryaganj, New Delhi - 110002 Visit us at www.newagepublishers.com Dedicated to My Beloved Mother THIS PAGE IS BLANK Preface Enterprise Resource Planning (ERP) is primarily an enterprise-wide system, which encompasses corporate mission, objectives, attitudes, beliefs, values, operating style and people who make the organization. In recent times more and more organizations have started looking into ERP packaged solutions. The reasons for this shift are the inadequacy of the existing systems to address the changing business requirements and the organizations’ need to focus on the core business in today’s competitive environment. This textbook Enterprise Resource Planning (ERP) - A Managerial and Technical Perspective will address both managerial issues and technical issues along with some case studies. ERP is a packaged software and it needs to be addressed both from the view point of technology and of management. There are only a few text books on ERP and all these textbooks are presented only from the managerial point of view. This motivated us to prepare this textbook which focuses ERP both from the managerial and the technical points of view. This is the significant feature of the book. This textbook is presented as follows. There are twelve chapters. They are: Evolution of ERP, ERP Modules, ERP Software Selection, ERP Implementation Lifecycle, Impact of Operating System on ERP, Supply Chain Management (SCM), Customer Relationship Management (CRM), .NET Technology, an overview of ERP Vendors, Business Modeling using UML and ERP Case Studies. The first chapter provides a brief introduction to ERP. Then the evolution of the ERP system is discussed. Then the various modules in an ERP software package, the various phases in ERP implementation, the need for an operating system to provide an efficient integrated system, the scope of Supply Chain Management in an integrated system, the concept of Customer Relationship Management, building packaged software using .NET technology, constructing business models using Unified Modeling Language are all presented. A few case studies are also included to enable the readers to get better understanding and better insight into the subject. Each chapter consists of review questions which are left to the readers as an exercise. Due care is taken to figure, all the concepts and features behind ERP in this textbook. Being the first edition, this book is prepared and presented in such a way that everybody, even a beginner, will find it easy to have a quick glimpse of the various concepts associated with ERP. The book is targetted at the under- graduate and post-graduate students of any branch, those who aspire to enter the field of Information Technology (IT) and get positioned as IT solution architect, Business Analyst, Functional and Technical Consultants etc. This textbook will cover the syllabus of the subject Enterprise Resource Planning (ERP) prescribed to the students of the following courses: B.E/B.Tech/M.Sc/MBA/MCA/B.Com/M.Com. A list of books, research papers and websites that helped us to prepare this textbook is given in the references. Though great care has been taken in editing this book, I would wholeheartedly accept (vi) suggestions for improvement offered by the readers. If you have the patience to go through all the chapters, I am hopeful that the purpose of the book would be served. My wholehearted thanks and acknowledgements are due in no small measure to Dr. (Mrs.) Radha Thiagarajan, Chairman, Thiagarajar College of Engineering (TCE), Mr. T. Kannan, Vice-Chairman & Correspondent of the College, Dr. V. Abhaikumar, Principal, Dr. R. Rajaram, Head of the Department of Computer Science & Engineering and my colleagues of the TCE, friends and family. I am thankful to Professor V. Sankarasubramanian, Head of the Department of English, The Madura College, Madurai, for his invaluable comments and suggestions during the preparation of this book. I sincerely acknowledge the support extended by my father, who is the motivating force behind this project. Finally, I am thankful to New Age International (P) Limited, Publishers, New Delhi, for their support and encouragement. S. Parthasarathy Contents Preface ...............................................................................................................v Chapter-1 Introduction to ERP......................................................................................1 1.1 Benefits of an ERP System.......................................................................................................................2 1.2 Limitations of the ERP System ...............................................................................................................5 1.3 What do ERP systems cover? ..................................................................................................................5 1.4 Challenges for Small and Midsize businesses today..........................................................................7 Chapter-2 Evolution of ERP ...........................................................................................9 2.1 Manufacturing Strategies......................................................................................................................10 2.2 Material Requirements Planning (MRP)............................................................................................10 2.3 Manufacturing Resource Planning (MRP II).....................................................................................12 2.4 Conceptual Framework of ERP............................................................................................................14 Chapter-3 ERP Modules ................................................................................................17 3.1 Finance Module ......................................................................................................................................18 3.2 Human Resource Management (HR) Module...................................................................................21 3.3 Materials Management (MM) Module...............................................................................................23 3.4 Sales and Distribution Module ............................................................................................................26 Chapter-4 ERP Software Selection ..............................................................................31 4.1 Issues in ERP Software Selection.........................................................................................................31 4.2 ERP Software Selection Criteria ..........................................................................................................31 4.3 Methods in ERP Software Selection ...................................................................................................32 4.4 Cost Benefit Analysis.............................................................................................................................32 4.5 ERP Software Selection Process...........................................................................................................32 Chapter-5 ERP Implementation...................................................................................35 5.1 Approaches to Study ERP Implementation.......................................................................................36 5.2 Different Perspectives in ERP Implementation.................................................................................36 5.3 Minimizing Customization ..................................................................................................................38 5.4 Characteristics of ERP Systems............................................................................................................39 5.5 Critical Success Factors for ERP Implementation............................................................................40 5.6 Astonishing Facts in ERP Implementation........................................................................................40 5.7 ERP Implementation Strategy..............................................................................................................41 5.8 Phases in ERP Implementation ............................................................................................................43 5.9 Benefits Realization in ERP Implementation...................................................................................47 5.10 Change Management Issues...............................................................................................................47 (viii) Chapter-6 Impact of Operating System on ERP.........................................................50 6.1 Functions of an operating system........................................................................................................50 6.2 Unix and Linux – An Overview............................................................................................................51 6.3 Linux in an ERP World..........................................................................................................................51 6.3.1 ERP Users in Linux Environment ............................................................................................53 6.4 How ERP vendors view different operating system?.......................................................................54 6.5 Migrating the ERP from one operating system to another.............................................................55 6.6 Managing new ERP environment........................................................................................................56 6.7 Impact of operating system on ERP ....................................................................................................56 Chapter-7 Supply Chain Management (SCM) .............................................................59 7.1 Objectives of Supply Chain Management.........................................................................................59 7.2 Computer-Integrated Supply Chain Management Systems...........................................................60 7.3 CAD and CAM ........................................................................................................................................60 7.4 Elements in Supply Chain Management............................................................................................61 7.5 Roadmap to Better Supply Chain Management...............................................................................61 7.6 Decision Making in Supply Chain Management.............................................................................62 7.7 Supply Chain Management Model.....................................................................................................63 7.8 Impact of ERP on SCM..........................................................................................................................64 7.9 ERP, SCM and E-Business....................................................................................................................65 7.10 SCM and IT.............................................................................................................................................65 7.11 ERP and SCM - A Comparison............................................................................................................66 Chapter-8 ERP and CRM...............................................................................................68 8.1 Introduction to CRM..............................................................................................................................68 8.2 Need for CRM..........................................................................................................................................69 8.3 Components of CRM .............................................................................................................................70 8.4 Different Dimensions of CRM..............................................................................................................71 8.5 CRM Environment..................................................................................................................................72 8.6 Data Mining and Data Warehousing in CRM...................................................................................73 8.7 Features of Dynamic CRM system ......................................................................................................75 8.8 Features of CRM from SAP...................................................................................................................76 8.9 An ERP- CRM Business Solution .......................................................................................................77 Chapter-9 ERP and .NET...............................................................................................81 9.1 .NET Technology -- An overview........................................................................................................82 9.2 Why .NET software is better software?...............................................................................................82 9.3 What makes a good ERP system?........................................................................................................83 9.4 The fusion of .NET technology and ERP...........................................................................................84 9.5 Impact of .NET technology on ERP....................................................................................................85 9.6 An ERP product built using .NET - A Discussion ............................................................................86 Chapter-10 ERP Vendor ................................................................................................91 10.1 SAP........................................................................................................................................................91 10.2 Oracle Corporation.............................................................................................................................94 10.3 J.D. Edwards.........................................................................................................................................94 10.4 The Baan Co........................................................................................................................................94 10.5 System Software Associates (Ssa) ....................................................................................................94 10.6 MK Group/Acacia Technologies.....................................................................................................95 10.7 JBA International................................................................................................................................95 (ix) 10.8 Marcam Corp./Mapics Inc.................................................................................................................95 10.9 Intentia..................................................................................................................................................96 10.10 QAD Inc. ...............................................................................................................................................96 10.11 Intuitive Manufacturing Systems....................................................................................................96 10.12 Compiere ..............................................................................................................................................97 10.13 Ramco Systems ...................................................................................................................................97 Chapter-11 ERP Case Studies ..................................................................................... 101 Chapter-12 Business Modeling Using UML............................................................... 120 12.1 Business Modeling...........................................................................................................................120 12.2 Business Modeling with the UML................................................................................................121 12.3 UML Business Use Case..................................................................................................................122 12.4 UML Business Activity Diagram...................................................................................................123 12.5 UML Class Diagrams .......................................................................................................................123 12.6 UML Sequence Diagram .................................................................................................................124 12.7 Application........................................................................................................................................124 Acronyms and Abbreviations ..................................................................................... 127 Glossary ....................................................................................................................... 131 References..................................................................................................................... 137 Index ....................................................................................................................... 139