INTRODUCTION

“ERP comprises of a commercial software package that promises the seamless integration of all
the information flowing through the company - financial, accounting, human resources, supply
chain and customer information.”
T.J. Davenport
Harvard Business Review

ERP, which is an abbreviation for Enterprise Resource Planning, is principally an integration

of business management practices and modern technology. Information Technology (IT)
integrates with the core business processes of a corporate house to streamline and accomplish
specific business objectives. Consequently, ERP is an amalgamation of three most important
components; Business Management Practices, Information Technology and Specific Business
Objectives.
In simpler words, an ERP is a massive software architecture that supports the streaming and
distribution of geographically scattered enterprise wide information across all the functional
units of a business house. It provides the business management executives with a
comprehensive overview of the complete business execution which in turn influences their
decisions in a productive way.
At the core of ERP is a well managed centralized data repository which acquires information
from and supply information into the fragmented applications operating on a universal
computing platform.
Information in large business organizations is accumulated on various servers across many
functional units and sometimes separated by geographical boundaries. Such information
islands can possibly service individual organizational units but fail to enhance enterprise wide
performance, speed and competence.
The term ERP originally referred to the way a large organization planned to use its
organizational wide resources. Formerly, ERP systems were used in larger and more
industrial types of companies. However, the use of ERP has changed radically over a period
of few years. Today the term can be applied to any type of company, operating in any kind of
field and of any magnitude.
Today's ERP software architecture can possibly envelop a broad range of enterprise wide
functions and integrate them into a single unified database repository. For instance, functions
such as Human Resources, Supply Chain Management, Customer Relationship Management,
Finance, Manufacturing Warehouse Management and Logistics were all previously stand
alone software applications, generally housed with their own applications, database and

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network, but today, they can all work under a single umbrella - the ERP architecture.
In order for a software system to be considered ERP, it must provide a business with wide
collection of functionalities supported by features like flexibility, modularity & openness,
widespread, finest business processes and global focus.

Integration is Key to ERP Systems

Integration is an exceptionally significant ingredient to ERP systems. The integration

between business processes helps develop communication and information distribution,
leading to remarkable increase in productivity, speed and performance. The key objective of
an ERP system is to integrate information and processes from all functional divisions of an
organization and merge it for effortless access and structured workflow. The integration is
typically accomplished by constructing a single database repository that communicates with
multiple software applications providing different divisions of an organization with various
business statistics and information. Although the perfect configuration would be a single ERP
system for an entire organization, but many larger organizations usually deploy a single
functional system and slowly interface it with other functional divisions. This type of
deployment can really be time-consuming and expensive.

In other words

Enterprise resource planning (ERP) is an integrated computer-based system used to manage

internal and external resources including tangible assets, financial resources, materials, and
human resources. It is a software architecture whose purpose is to facilitate the flow of
information between all business functions inside the boundaries of the organization and
manage the connections to outside stakeholders. Built on a centralized database and normally
utilizing a common computing platform, ERP systems consolidate all business operations
into a uniform and enterprise wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular
hardware and software units that provide "services" and communicate on a local area
network. The distributed design allows a business to assemble modules from different
vendors without the need for the placement of multiple copies of complex, expensive
computer systems in areas which will not use their full capacity.

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WHAT IS ERP

ERP (Enterprise Resource Planning) is a strategic tool helping an organization to gain an

edge over its competitors by helping in successfully integrating its key business operations,
synchronizing, planning and optimizing the resources available in the existing extremely
competitive environment..

Its use has a much broader scope in today's world rather than of just planning the use of the
enterprise resources.

Organizations (especially those which are borderless) face many difficulties in quickly
making out the information required. The integration of the business processes improves
coordination between bodies, streamlines workflows and processes and benefits them in
terms of retaining and satisfying customers by delivering their orders "just-in-time" and
keeping them well informed about their orders' current status rather than keeping them
waiting for just a small piece of information. ERP has the effect of making an enterprise more
time-sensitive. Another benefit is of better marketing opportunities. ERP penetrates one
segment after the other and addresses solutions to many debacles existing in an enterprise.

Different ERP systems have been made to facilitate organizations in Enterprise Resource
Planning. Leading ERP giants making ERP systems are Microsoft, Oracle, PeopleSoft and JD
Edwards, SAP AG etc. These systems link the order, inventory, sales, purchase,
manufacturing, supply chain and warehouse management modules in an enterprise for better,
fast and accurate information availability to every single person which is its 'primary
objective' because every single operation and action taken at any place by any person depends
on consistent and updated information availability. Whatever a person needs can be
immediately accessed by him subject to the delegated authority. ERP function has thus
helped individuals.

They also enhance management decision making by making future projections about sales
during a certain period of a certain product. Management would then be able to make
decisions whether to increase/decrease production of that particular product which in turn
would help save resources from being wasted which could be used for other purposes e.g for
making other products. They also help managers make decisions about introducing some new
value added features to an existing 'hot-demand' product to enhance sales further. This is how

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product quality is also enhanced. Inventory costs reduction must be given a great importance
in every organization. ERP helps reduce inventory costs by better planning and forecasting of
requirements. ERP system helps getting higher return on investments (ROI) in a fast manner.

While there are absolute benefits, an ERP system also poses significant challenges in the
areas of information security and business continuity planning. Above mentioned things point
to a very critical step, the right choice of an ERP for your enterprise! Off all the ERP systems
exiting in the market, all seem to be performing the same function but the one best suiting
your requirements needs to be picked up in order to achieve required results. The choice
depends upon the structure and type of the organization e.g financial, manufacturing etc. This
is why some organizations experience higher benefits as compared to others because they've
made the right choice and are able to make the right use of their system.

To summarize, ERP has a great importance and ERP systems have become the biggest need
of today's organizations to survive. They provide tremendous benefits provided the Critical
Success Factors of ERP system implementations are kept in mind.

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EVOLUTION OF ERP
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 systems providers in preparation for this push are described. The
chapter 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.

The unprecedented growth of information and communication technologies (ICT) driven by

microelectronics, computer hardware and software systems has influenced all facets of
computing applications across organization. Simultaneously the business environment is
becoming increasingly complex with functional units requiring more and more inter-
functional data flow for decision making, timely and efficient procurement of product parts,
management of inventory, accounting, human resources and distribution of goods and
services. In this context, management of organizations needs efficient information systems to
improve competitiveness by cost reduction and better logistics. It is universally recognized by
large and small-to medium- size enterprises (SME) that the capability of providing the right
information at the right time brings tremendous rewards to organizations in a global
competitive world of complex business practices.

Starting in the late 1980s and the beginning of the 1990s new software systems known in the
industry as enterprise resource planning (ERP) systems have surfaced in the market targeting
mainly large complex business organizations. These complex, expensive, powerful,
proprietary systems are off the- shelf solutions requiring consultants to tailor and implement
them based on the company’s requirements. In many cases they force companies to
reengineer their business processes to accommodate the logic of the software modules for
streamlining data flow throughout the organization. These software solutions, unlike the old,
traditional in-house-designed company specific systems, are integrated multi-module
commercial packages suitable for tailoring and adding “add-ons” as and when required. The

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phenomenal growth of computing power and the Internet is bringing ever more challenges for
the ERP vendors and the customers to redesign ERP products, breaking the barrier of
proprietorship and customization, and embracing the collaborative business over the intranet,
extranet and the Internet in a seamless manner. The vendors already promise many “add-on”
modules, some of which are already in the market as a sign of acceptance of these challenges
by the ERP vendors. It is a never-ending process of reengineering and development bringing
new products and solutions to the ERP market. ERP vendors and customers have recognized
the need for packages that follow open architecture, provide interchangeable modules and
allow easy customization and user interfacing.

During the 1960s most organizations designed, developed and implemented centralized
computing systems, mostly automating their inventory control systems using inventory
control packages (IC). These were legacy systems based on programming languages such as
COBOL, ALGOL and FORTRAN. Material requirements planning (MRP) systems were
developed in the 1970s which involved mainly planning the product or parts requirements
according to the master production schedule. Following this route new software systems
called manufacturing resources planning (MRP II) were introduced in the 1980s with an
emphasis on optimizing manufacturing processes by synchronizing the materials with
production requirements. MRP II included areas such as shop floor and distribution
management, project management, finance, human resource and engineering. ERP systems
first appeared in the late 1980s and the beginning of the 1990s with the power of enterprise-
wide inter-functional coordination and integration. Based on the technological foundations of
MRP and MRP II, ERP systems integrate business processes including manufacturing,

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distribution, accounting, financial, human resource management, project management,
inventory management, service and maintenance, and transportation, providing accessibility,
visibility and consistency across the enterprise.
During the 1990s ERP vendors added more modules and functions as “add-ons” to the core
modules giving birth to the “extended ERPs.” These ERP extensions include advanced
planning and scheduling (APS), e-business solutions such as customer relationship
management (CRM) and supply chain management (SCM). Figure 2 summarizes the
historical events related with ERP.

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ERP SYSTEMS AND ORGANIZATIONS

It is generally a misleading perception that implementing an ERP system will improve

organizations’ functionalities overnight. The high expectation of achieving all-round cost
savings and service improvements is very much dependent on how good the chosen ERP
system fits to the organizational functionalities and how well the tailoring and configuration
process of the system matched with the business culture, strategy and structure of the
organization. Overall an ERP system is expected to improve both backbone and front-end
functions simultaneously. Organizations choose and deploy ERP systems for many tangible
and intangible benefits and strategic reasons. In many cases the calculation of return on
investment (ROI) is weighted against the many intangible and strategic benefits. The benefits
that an industry standard ERP system may bring to organizations To reap the benefits of ERP
systems, however, organizations need to overcome certain problems and disadvantages,
It was estimated that the spending on ERP systems in 1998 was about US$17 billion
following annual growth rates ranging from 30% to 50%. Companies also spend a multiple of
licensing costs on services related to implementation and maintenance of the software. The
worldwide license and maintenance revenue for ERP systems was US$21.5 billion in 2000,
which represented a growth of 13.1% from the 1999 market value of $US19 billion (Broatch,
2001). The continued growth of the ERP systems market is attributed to the fact that the
vendors are adding applications such as supply chain management, customer relationship
management and the integration of Internet-enabled applications for e-business. More than
60% of the Fortune 1000 companies have installed or are in the process of implementing
packaged ERP systems to support their back-end business activities (Kraft, 2001). These
packages implemented by the Fortune 1000 companies run well over the IT budgets for most
SMEs. ERP vendors are targeting this untapped SME market with supposedly scaled-back
systems suitable for smaller firms by offering simple, cheaper and pre-configured easy-to-
install solutions within budget and time constraints. For some vendors this may lead to
offering centrally managed Internet-enabled ERP-system-based services for SMEs to access
and use anytime from anywhere.

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ERP SYSTEMS ARCHITECTURE

ERP vendors, mostly experienced from the MRP and financial software services fields,
realized the limitations of the old legacy information systems used in large enterprises of the
1970s and 1980s. Some of these old systems were developed in-house while others were
developed by different vendors using several different database management systems,
languages and packages, creating islands of no compatible solutions unfit for seamless data
flow between them. It was difficult to increase the capacity of such systems or the users were
unable to upgrade them with the organization’s business changes, strategic goals and new
information technologies. An ERP system is required to have the following characteristics:

1. Modular design comprising many distinct business modules such as financial,

manufacturing, accounting, distribution, etc.
2. Use centralized common database management system (DBMS)
3. The modules are integrated and provide seamless data flow among the
4. modules, increasing operational transparency through standard interfaces
5. They are generally complex systems involving high cost
6. They are flexible and offer best business practices
7. They require time-consuming tailoring and configuration setups for
8. integrating with the company’s business functions
9. The modules work in real time with online and batch processing capabilities
10. They are or soon they will be Internet-enabled
11. Different ERP vendors provide ERP systems with some degree of specialty but the
core modules are almost the same for all of them.

Some of the core ERP modules found in the successful ERP systems is the following:
1. Accounting management
2. Financial management
3. Manufacturing management
4. Production management
5. Transportation management
6. Sales & distribution management
7. Human resources management

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 8. Supply chain management
9. Customer relationship management
10. E-Business

The modules of an ERP system can either work as stand-alone units or several modules can
be combined together to form an integrated system. The systems are usually designed to
operate under several operating platforms such as UNIX, MS Windows NT, Windows 2000,
IBM AIX, and HP-UX systems. SAP AG, the largest ERP vendor, provides a number of
modules with its famous R/3 ERP system, which are shown in Table 3. New modules are
introduced by SAP and other vendors in response to the market and technological demand
such as the Internet technology.
Enterprise systems employ thin client/server (C/S) technology or client/fat server (C/FS)
architecture, creating a decentralized computing environment. In a C/S system a number of
client devices operated by end users such as desktop PCs request services from application
servers, which in turn get the requested service-related information from the database servers.
The requests may be simple data files, data values, communication services, transaction
processing or master file updates. The general practice is to have three-tier architecture such
as in Figure 3. In this three-tier system the user interface runs on the client. To run ERP
systems relatively powerful PCs (clients) and powerful servers are required where most of the
hundreds of thousands of operations are performed. The client/server system functions are
performed following three layers of logic:
1. Presentation Layer: Graphical user interface (GUI) or browser for data entry or
accessing system functions
2. Application Layer: Business rules, functions, logic, and programs acting on data
received/transferred from/to the database servers
3. Database Layer: Management of the organization’s operational or transactional data
including metadata; mostly employs industry standard RDBMS with structured query
language (SQL) provisions This logical arrangement helps the ERP user interface to
run on the clients, the processing modules to run on the middle-tier application
servers, and the database system to run on the database servers.

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COMMERCIAL ERP SYSTEMS

The five dominating ERP software suppliers are SAP, Oracle, PeopleSoft, Baan and J.D.
Edwards. Together they control more than 60% of the multibillion dollar global market. Each
vendor, due to historic reasons, has a specialty in one particular module area such as Baan in
manufacturing, PeopleSoft in human resources management, SAP in logistics and Oracle in
financials. There are also about 50 established and a few more newly emerging smaller and
midsize ERP vendors including third-party developers competing for the ERP market. The
result is stiff competition and feature-overlapping products difficult to differentiate. Due to
keen competition for control of the lucrative ERP market share, the vendors are continuously
updating their products and adding new technology-based features. Long-term vision,
commitment to service and support, module features, specialty, experience and financial
strength for R&D is considered the major vendor qualities for product selection and turnkey
implementation. In the following sections we provide brief profiles of these five ERP giants.

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 1. SAP AG–Flagship Products R/3, mySAP.COM:

SAP AG (“Systeme, Anwendungen, und Produkte in Datenverarbeitung”), or Systems,

Applications and Products in Data Processing, was started by five former IBM engineers in
Germany in 1972 for producing integrated business application software for the
manufacturing enterprise (SAP, 2001). Its first ERP product, R/2, was launched in 1979 using
a mainframe-based centralized database that was then redesigned as client/server software
R/3 in 1992. System R/3 was a breakthrough and by 1999 SAP AG became the third largest
software vendor in the world and the largest in the ERP sector.
Many large corporations use several different and separate information systems, often
because they have merged with and/or acquired other companies with varied systems. An
ERP system integrates these separate information systems and results in improved data
reliability and processing efficiency. ERP systems are not only used by large corporations but
becoming popular with small to mid-sized companies also.

Some of the main advantages of using SAP R/3 are listed below:

SAP's R/3, introduced in 1992, is the most used ERP system in the world. The R/3 software
package is designed to allow businesses to effectively and efficiently operate a variety of
business processes within a single integrated information system.

The software is customizable using SAP's proprietary programming language, ABAP/4. R/3
is scalable and highly suited for many types and sizes of organizations and runs on six
different platforms.

SAP’s R/3 has been designed to be the best ERP system in the four areas of human resources,
financial, supply chain management, and marketing. R/3 is also an international product, and
meets the local fiscal, language, and tax requirements of most countries.

SAP’s R/3 is very versatile, as it will operate on six different platforms, including the
recently added Microsoft NT.

The R/3 package includes several very attractive features like it has a three-tier client/server
system. Providing three tiers offers scalability and easier adaptation to the specific needs of
large companies and fast-growing companies.

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SAP’s R/3 is available in 14 different languages (German, English, Spanish, etc.) and also
incorporates multiple currency features that provide essential information processing
capabilities for multinational corporations.

R/3’s modules are organized by the functional areas of financial, human resources, supply
chain management, and marketing. While information is entered separately for each specific
module, the modules are fully-integrated and provide real-time applications. This means that
data entered into one module is immediately and automatically updated and reflected in all
the functional areas.

R/3 is composed of a single, virtual file structure with no subsystems.

In addition, SAP has released “MySAP.com” which is software that provides for data
interaction and processing connections with the Web.

Financial and managerial accounting tools in SAP R/3 are contained in the financial
accounting (FI) and the controlling (CO) modules. The General Ledger function in the FI
module provides a comprehensive record of all information needed for external financial
reporting. The accounting data is complete and accurate because the SAP system fully
integrates all business transactions that were entered from all the operational areas of a
company. In addition to the FI and CO modules, the SAP system includes the Investment
Management (IM), Sales and Distribution (SD), Materials Management (MM), and Human
Resources (HR) modules.

Management accounting tools in SAP R/3 are cost center accounting, internal orders, product
costing, and activity based costing, profitability analysis and profit center accounting.

SAP R/3’s accounting features are modeled on German approaches to accounting, and thus
they are well-organized and very efficient in processing accounting information and
providing accounting statements and financial reports.

As stated previously, R/3 offers multiple currency features and a three-tier system that is
capable of meeting very high demands from the accounting system for either transaction
processing or financial reporting.

SAP was the first to implement integrated treasury capabilities. This attractive feature allows
a corporate treasury department to function as an in-house bank by automating the control of
cash flow, investment trades, and portfolio management.

R/3 provides check writing capability in its Accounts Receivable component which very few
other programs offer.

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Additionally, there is equal access to all data in the system. This means that personnel can
access financial data directly from a computer screen rather than physically meet with the
treasurer, controller, or some other similar person. In other words, R/3 offers real-time,
immediately updated reporting.

R/3 also provides for a "single data entry point" where the data entered from any location is
instantly sent to all other appropriate modules in the ERP system.

The accounts payable component of SAP R/3 contains four types of transaction blocks
namely:

1. The Audit Block

2. The receiving Block
3. The Vendor Block
4. A manual Block

These blocks make it much less likely that improper payments will occur.

SAP R/3 is organized with the concept that a business operates as a series of processes, which
means that the company implementing R/3 may have to change and reorganize itself to
properly fit with R/3 and use it effectively.

Minimum operating costs: no retention of redundant data in the back office.

High level of stability and performance: response times are consistently under one second.

Good user interface available which makes system user friendly and requires no training for
the end user.

2. Oracle Corporation–Flagship Product Oracle Applications

Oracle (Oracle, 2001), founded in 1977 in the USA, is best-known for its database software
and related applications and is the second largest software company in the world after
Microsoft. Oracle’s enterprise software applications started to work with its database in 1987.
It accounts for $2.5 billion out of the company’s $9.3 billion in 1999, which places Oracle
second to SAP in the enterprise systems category with over 5,000 customers in 140 countries.
Oracles ERP system is known as Oracle Applications, having more than 50 different modules
in six major categories: finance, accounts payable, human resources, manufacturing, supply
chain, projects and front office. Oracle has other strong products in the software field
including DBMS, data warehousing, work flow, systems administration, application
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development tools (APIs), and consulting services. A notable feature of Oracle is that it is
both a competitor and a partner to some of the industry leaders in the ERP market such as
SAP, Baan and PeopleSoft because of the use of Oracle’s DBMS in their ERP systems.
Oracle has integrated its ERP solutions with the Internet and has introduced several
applications in the electronic commerce and Internet based commerce areas. Oracle’s Internet
infrastructure is created around two powerful products: Oracle9i Database and Oracle9i
Application Server. Another significant feature of Oracle is its OSBS, or Oracle Small
Business Suite which provides consistent financials, payroll, inventory control, order entry,
purchase orders, and CRM functionality–all delivered as a Web service. Oracle also offers an
easy-to-activate Web presence that helps companies to sell their goods via the Internet.

Advantages of Oracle:
Oracle has many advantages and features that makes it popular and thereby makes it as the
world's largest enterprise software company. Oracle comes with new versions with new
features implemented in new version while the features of earlier versions still being
maintained. One important aspect is Oracle databases tend to be backwards compatible. Also
when Oracle releases a new version, their documentation contains a list of all the features
new to that version thus makes it user friendly for one to learn the new features. 

Oracle takes a lead role because of some of the following reasons:

Oracle is used for almost all large application and one of the main applications in which
oracle takes its major presence is banking. In fact ten of the world’s top 10 banks run Oracle
applications this is because oracle offers a powerful combination of technology and
comprehensive, pre-integrated business applications, including key functionality built
specifically for banks.

Some similar databases like Sybase, SQL-Server one have facilities for using loops,
conditions, arrays and so on in a program and also facilities like cursors and temp tables but
all this would be used in a convoluted fashion which are very slow and resource consuming
operations. The operations are not implemented as in Oracle which is efficient enough.

Also with the features available in oracle with the earlier versions in market the oracle
company keeps upgrading and releasing new products into market, new versions releases
which serves better than the earlier versions and thus the performance is improved much in

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later versions and thereby retaining the market growth and thus proves greater satisfaction to
the customers using this technology. Thus the advantage of a higher version is that one would
have more features and better capabilities.

For instance oracle 8i version has many new features which helped users namely like with
oracle 8i one could run Java in the database, had features like new features on partitioning to
support large database and so on. With the next version 9i oracle had these facilities
maintained and had more new facilities added to it namely like new features added to help the
DBA to handle change database configuration and so on.
Oracle is a database that responds very well with excellent performance in demanding
environments. Oracle is a major database which along with its added features passes the
ACID test, which is important in insuring the integrity of data. This is very important because
data is the heart of any system in organization. A reliable and adequate database system has
the following properties:

Atomicity:
That is Results of a transaction's execution are either all committed or all rolled back. 

Consistency:
The database is transformed from one valid state to another valid state. Illegal transactions
aren't allowed and, if an integrity constraint can't be satisfied then the transaction is rolled
back. 

Isolation:
The results of a transaction are invisible to other transactions until the transaction is complete
thus increasing the security on data. 

Durability:
Once committed (completed), the results of a transaction are permanent and survive future
system and media failures and thus ensuring maintenance and protection of data.

All the above are well maintained by Oracle database.

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The latest version oracle 10g has many features and one new feature is the introduction of
recycle bin. This option when enabled could be used by users just like Windows recycle bin
or Mac Trash. Dropped tables go "into" the recycle bin, and can be restored from the recycle
bin.

One of the main advantage of oracle over other databases is in its recent version oracle has
the concept of Flashback technology. That is we all know that data is the heart of any
application or organization and thus this requires careful maintenance. But sometimes
application outage can occur and mostly DBA claim the reasons for this as hardware failure
and apart from this the reason would be human errors like accidental deletion of valuable
data, deleting the wrong data, or dropping the wrong table. So it is very essential to take care
of such situation and this is done in oracle's latest technology called flash introduced in its
latest version. By Flash technology it helps in recovery by working just on the changed data.
Thus Flashback provides an

1. Efficient recovery from human errors 

2. Faster database recovery 
3. Helps in simplifying the management and administration processes and so
on.  

3. PeopleSoft Inc.–Flagship Product PeopleSoft8

PeopleSoft is one of the newest ERP software firms started in 1987 in Pleasanton, California,
with specialization in human resource management and financial services modules.
PeopleSoft quickly managed to offer other corporate functions and attained revenue of $32
million in 1992. Enterprise solutions from PeopleSoft include modules for manufacturing,
materials management, distribution, finance, human resources and supply chain planning.
SAP AG and Oracle–with longer experience, stronger financial base and worldwide
presence–are the main competitors to PeopleSoft. Many customers comment that PeopleSoft
has a culture of collaboration with customers, which makes it more flexible than its
competitors. One of the strengths of PeopleSoft is the recognition by its customers that it is
flexible and collaborative. The flagship application PeopleSoft8 with scores of applications
was developed by PeopleSoft with an expenditure of $500 million and 2,000 developers over

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2 years as a pure Internet-based collaborative enterprise system. “Our revolutionary
eBusiness platform is the first open XML platform to offer scalability and ease of use for all
users. PeopleSoft 8 requires no client software other than a standard Web browser, giving you
the ability to securely run your business anytime, anywhere” (PeopleSoft, 2001). “Our
eBusiness applications and consulting services enable true global operations–managing
multiple currencies, languages, and business processes for more than 4,400 organizations in
109 countries” (PeopleSoft, 2001). PeopleSoft with about 10% market share is the third
largest ERP vendor after SAP AG and Oracle.

4. The Baan Company–Flagship Product BaanERP

Founded in 1978 in The Netherlands, Baan (Baan, 2001) started with expertise in software
for the manufacturing industry and by 1997 claimed an ERP market share of roughly 5%.
Bann’s revenue in 1998 was roughly $750 million and while facing a slight slowdown in
1999 started growing again in 2001 with sales up 12% at £7,231million and operating profit
of £926 million. Baan has more than 15,000 customer sites all over the world and more than
3,000 employees. Baan believes that “the Internet is the ultimate enabler” and “Internet
technologies help companies become order-driven and customer focused by enabling
collaboration across the ‘value chain.’ Suppliers, distributors, manufacturers and customers
can work together to deliver the right product at the right price.” ERP solution areas that
Baan covers include finance, procurement, manufacturing, distribution, integration and
implementation, planning, sales, service and maintenance, business portals, collaborative
commerce and business intelligence. Bann’s flagship product is BaanERP (formerly called
Triton, then Baan IV), launched in 1998. One innovative product from Baan is the Orgware
tool that can cut implementation cost significantly by automatically configuring the enterprise
software. Baan’s ERP software is best known in the aerospace, automotive, defence, and
electronics industries.

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 5. J.D. Edwards & Co.–Flagship Product OneWorld

J.D. Edwards was founded in 1977 in Denver (cofounded by Jack Thompson, Dan Gregory
and C. Edward McVaney) with long experience of supplying software for the AS/400
market. J.D. Edwards’ flagship ERP product called OneWorld is “capable of running on
multiple platforms and with multiple databases revolutionizes enterprise software by
liberating users from inflexible, static technologies” (JD Edwards, 2001). The product
includes modules for finance, manufacturing, distribution/logistics and human resources,
quality management, maintenance management, data warehousing, customer support and
after-sales service. J.D. Edwards’ revenue jumped to $944 million in 1999 from $120 million
in1992, having more than 5,000 customers in over 100 countries. The OneWorld system is
considered to be more flexible than similar competing products and within the reach of
smaller enterprises. J.D. Edwards’ Internet-extended version of OneWorld was launched
recently as OneWorld Xe (“Xe” stands for “extended enterprise”).

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ERP'S SCOPE, PENETRATION FUTURE
OPPORTUNITIES AND CHALLENGES IN INDIA

India is a well known player in the ERP market. India occupies a promising position in the
whole of IT market .The governments, educational institutions and companies are constantly
working towards promoting and expanding the IT market. In this context ERP holds lot of
promises both in terms of supply and demand. There are some issues to worry about and
some others which deserve appreciation.

Some of the issues concerning ERP in Indian Market are as follows:

How did ERP penetrate on a vast scale in India?

The Y2K problem and other diminishing opportunities of IT professionals were seen as a big
challenge to the IT market. This was not only the case in India but else elsewhere in the
globe. This proved to be a biggest challenge to the nation who were banking (and are still) on
IT skills for development aspects (individual, economical and overall). The slump of the IT
sector would add drudgery and smash the hopes of so many individuals and companies.

This problem in itself helped to get another important solution. Firstly this paved way for
more prospects in ERP market. The demand and supply gradually transformed from general
to enterprise resource market. Once this got stabilized there was no looking back. It was well
evident that ERP market could boom and give the necessary impetus to stakeholders.
However this did not mean that mediocre could survive in the market. There was demand
only for top notch services and professionals. This naturally led to improvement in the quality
of services offered. Such an improvement increased the competition among various players.
The end user was getting assured that he would be receiving the best services for the money
invested. Case ERP in India got more and more competitive. The ERP implementation in
India demanded more than the custom erp India module.

ERP software programs were initially used only for back office functions. They were not
given the due importance and treated just like another supporting function. Reasons like lack
of awareness formed one part while other reasons were costs and technical difficulties. As

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explained earlier the gradual demand for ERP increased with a slump in the software market.
Since this led companies to go in for ERP they automatically started to learn more about it
either by force or felt need as they were left with no alternative. This indirectly created the
awareness among companies. They learned more on ERP and realized its diverse
applications. Finally they resorted to use ERP for the whole of the company and stopped the
idea of restricting it to mere back office functions.

Pressures mount on the industry

The industry is facing two major challenges when it comes to dealing with ERP in the current
context:

Sudden change
Firstly they are bound to increase the scope of ERP in enterprise operations. As discussed
earlier ERP was initially restricted to back office functions and later spread its wings to all
the operations in the enterprise. This naturally meant that the ERP manufacturers and vendors
had to increase the functionalities and scope of the application. There are practical difficulties
when it comes to this issue. The ERP experts will definitely be able to restructure the ERP
systems with the help of resources and expertise available with them. However doing it all on
sudden is a difficult task. They must have been working with different requirements till then.
Compelling them to suddenly change will land things in a mess because there will be lot of
confusions for the vendors, manufacturers and end-users. The unrealistic deadlines and time
pressures further add agony to this menace.

Technical factors
Secondly ERP in the nation calls for a restructuring in the technical aspects. This is definitely
appreciable. The fate of the businesses that have already implemented and deployed ERP
remains a big question mark. No doubt change is inevitable and an element for growth.
However it would be next only to impossible to change even before the current change has
stabilized in the market. This is advantageous for the companies that go for ERP at the first
instance .But when it comes to companies that already run successful ERP systems they have
to stick on to the technical changes or ship out from the market. They can decide to stick on
to change but it will cost them heavily. They can work on to find some replacement
technology rather than going for an all round change. The effectiveness of the replacement is
an important issue.

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Finance
This is another important determinant of ERP market in India. Some bigger companies still
hesitate to invest in ERP due to the exorbitant costs. It is indeed encouraging to find that a
vast majority of them have realized its benefits and have determined to go for it. However
some of them are keeping quiet due to the risks involved besides the unforeseen expenses and
losses.

Conclusion
The ERP market in India is definitely promising. However India has got a long way to go
when it comes to Improving ERP in terms of technology, scope and applicability in terms of
opportunities and venues, penetration in terms of sectors like education, employment and the
state run offices.

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 Most organisations do not understand the costs associated with an ERP system when they
first commence the implementation. The benefits are usually well understood. The Vendor
will make sure of this. The costs do not surface until well into the implementation - and why
should the Vendor talk to an organisation about the costs and difficulties when they are trying
to make a sale?

On the surface, there are very attractive reasons for going ERP. Benefits include:

 A single system to support rather than several small and different systems
 A single applications architecture with limited interfaces
 Access to management information unavailable across a mix of applications
 Access to best practice systems and procedures
 More integration hence lower costs
 More "automation" of tasks Generic Costs and Impacts

The costs and impacts are understandably not played up by the Vendors. Some of those are:

 Implementation effort will be bigger then ever talked about or even imagined. We are
yet to hear from an organisation who have implemented ahead of schedule and under
budget.
 Because of the richness of functionality, the "toy box effect" can take over. Users see
all the functionality available and suddenly they want it now. The scope can grow out
of control.
 The existing environmental mix between what is done manually and what is done by
the system will swing dramatically after implementation. Many more tasks will be
automated. Automation will significantly reduce the flexibility of how you operate as
a business.
 Users need to become more computer literate. Many see this as personally
challenging - even beyond their ability - and will not cope, or leave the company.
 The word "Enterprise" in ERP means that whatever happens in one area has a ripple
effect in other areas. Understanding the implications of actions of one area, on other
areas of the company, is not something that happens overnight. Training tends to
focus on how do I do my job. It should also focus on what are the impacts of my job,
in other areas.

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  Near enough is no longer good enough. Data integrity becomes critical. The computer
cannot make human judgments. If stock is moved, it is no good somebody
remembering where they put it. The information needs to be put into the system or
there will be a domino effect. E.g. Stock is moved from location A to location B and
the information is not put into the system. The system will tell someone to get the
material from A and when it is not there, they have to go looking. At the same time it
is telling someone else to put new material in B, but B is full. The first person finds
the original material in B and logs it into the system. We now have double the
quantity in the system again and it doesn't reorder. And so it goes on and everyone is
blaming the system.
 ERP systems tend to replace old systems. As such it is a quantum leap for all areas of
the company. It is replacing the trusty Ford with a high performance Ferrari. This
happens at a Technical level as well as a Business Level. New ways need to be learnt
in a very short space of time.
 Things have to be done consistently. No longer are we able to do something one way
in one branch and another way in another branch. The system is going to determine
how we do things in all locations. Even within one location, special treatment may not
be possible any more without changing the configuration of the system. If the system
says you can either have 0, 15, 30 or 60 day credit terms, you can no longer offer 45
day terms without changing configuration. If consistency can be implemented, there is
good potential for cost savings as well as getting rid of special arrangements that
reduce profit.

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SUMMARY AND THE FUTURE

The major industrial information systems manufacturers that emerged from the 1980s and
early 1990s defined the history of the development of ERP systems. Hence the major
providers are representatives of certain industries as much as competitors in a common
marketplace. To this extent there are still opportunities for new ERP vendors to emerge from
industries that so far have not contributed to the ERP phenomenon. Some obvious examples
are the aerospace industry, the finance industry and the logistics industry. Analysis of the
market penetration of ERP systems shows clearly that the current players have to downsize
their products and offerings to be attractive to SMEs. There appears to be no public
discussion as to how this will be achieved and whether it requires a significant change in
software architecture. This situation again is an opportunity for smaller players to seize the
day and offer smaller systems running on smaller hardware platforms more efficiently. These
innovators will ultimately take the lead in the ERP software market as large systems will not
produce the continual income stream that small, robust, easy-to-use systems can achieve.
Importantly these attributes contribute to a system becoming ubiquitous in the same way that
Microsoft has achieved ubiquity for its operating system. Future successful vendors will
capture large markets of smaller businesses, which will provide a more consistent and
enduring income stream.

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