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McGraw-Hill/Irwin

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

ERP is a cross-functional enterprise backbone that integrates and automates processes within
Manufacturing Logistics Distribution Accounting Finance Human resources

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ERP integrates management information by managing the flow of data across an entire organization.

Implements a common enterprise-wide database as well as a range of application modules to support everyday business activity.

Exp: finance, accounting, distribution, inventory management, sales, marketing, planning, manufacturing, project management, human resource and so forth.

An ERP system is utilized for standardizing process and storing information as well as recalling that data when it is required in real time environment.

Enterprise resource planning is a crossfunctional enterprise system


An integrated suite of software modules Supports basic internal business processes Facilitates business, supplier, and customer information flows

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1960s, inventory control was the focus of manufacturing systems. Therefore,


inventory control software were designed, modified and applied in order to automate inventory control based on conventional inventory principles.

1970s MRR or Material Requirements Planning systems were created during


1970s and primarily involved planning product or parts requirements based on BoM or Bills of Materials and MPS of Master Production Schedules.

1980s Evolution of Manufacturing Resource Planning (MRP II), an extension of


MRP with stress on manufacturing process optimization by synchronizing production requirements with material delivery. MRP II involved area, like finance, distribution management, shop floor, project management and human resource.

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Inefficiencies of business process. Business process automation Eenhanced operational efficiencies and Easier accessibility of information To deal with complex and interrelated business troubles.

Achieving companys financial goals from productivity gains as well as efficiency resulting from business process automation.

Managing and streamlining the large-scale of companys operational processes, (may be raised in complexity due to acquisitions in the recent past or current significant organic growth, and also acquiring multi-currency, multi-office, multi-geography support)

Replacing or upgrading the existing ERP system that is out of date Enhanced information accessibility, reduced data duplication and also better forecasting features.

No exact fit:
No ERP package provides features that can precisely fulfill all requirements. Small level of customization and configuration of the ERP & the business process are needed in ERP implementation.

Modules vs. suite


You can implement only few modules as they required or the entire ERP system suite. (alone or in conjunction with other modules)

Mix and match modules:


Lots of ERP system modules and functionalities are contained in different ERP packages. ERP modules are often broadly classified into 3 categories: sector-specific, cross-industry and extended ERP system modules.

Add-on features / functionalities drive ERP:


Because of the commoditization of core ERP features (for instance financial accounting), add-on features, applications of industry-specific and improvements are be more important and are the actual drivers of the ERP market.

Options to On-Premise:
The traditional on-premise ERP implementation has been joined by open source ERP and also on-demand / SaaS ERP as feasible ERP alternatives. (Open source ERP systems have yet to really carve out a place on the market while SaaS ERP systems, particularly pertaining to HCM and CRM, have started getting traction).

Pricing models
The most common pricing model is Licensed-based pricing whereas software expenses paid in advance. A variety of options available in this model consist of user-based (concurrent user and named user) pricing, package-based pricing, location-based. Subscription-based pricing is typically used for on-demand ERP systems where service fees are paid on a periodic or monthly basis.

ROI:
ROI is recognized from process enhancements and not only from ERP software. Realignment of business process in any company is determined by factors, like the process complexity, number of stakeholder involved and the proposed change user acceptance, and these normally take time for being effective.

ERP Configuration:
ERP system usually needs to be configured to make it perform the way you would like to the extent the system allows. To modify or customize the source code or creating software to fulfill its requirements.

Modifications or customization must always be the last effort, since it could potentially cause the system being complex, hard to maintain, complicated to integrate with different system and also nonviable for support of ERP vendor.

Implementation:
Inadequate implementation, flawed data migration or conversion and insufficient support of post implementation can cause even feature-rich software perform poorly. Comprehensive implementation along with good support of post

implementation obviously can make ERP software an excellent fit.

Cost components: Along with fees for standard license and implementation services, other small
unpredicted cost components which can get out of hand as well as can take customers by surprise. Big unforeseen modification cost, high and recurring cost of training, data migration / conversion costs, key ERP team members replacement cost and maintaining parallel systems cost.

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ERP Business Benefits


Quality and efficiency Decreased costs Decision support Enterprise agility

ERP Costs
Risks and costs are considerable Hardware and software are a small part of total costs Failure can cripple or kill a business

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Under-estimating the complexity of planning, development, training

Failure to involve affected employees in planning and development

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Trying to do too much too fast Insufficient training Insufficient data conversion and testing Over-reliance on ERP vendor or consultants
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ERP consultants segment Top ERP into small business, middle market and enterprise. Each market has its own top ERP vendor. For instance, SAP and Oracle are top ERP vendors for enterprise market while Microsoft is for small and medium business. May be in the future people will establish short-list Top ERP vendor according to industry type, such as agriculture, aerospace and defense, automotive, computer/electronic, transportation and so on. SAP, Oracle and Microsoft are the most top ERP vendor based on their market share. SAP market share is 31%, Oracle 25% and Microsoft Dynamic 15%.

1.

Small Business
Microsoft Dynamics is considered as top ERP for SMB (small medium business) because the features are ideally suited to the requirements of small and medium organizations. Microsoft has more than 83,000 ERP customers.

The family of Microsoft ERP products are as follow : ` Microsoft Dynamics AX (Axapta) ` Microsoft Dynamics GP (Great Plains) ` Microsoft Dynamics NAV (Navision) ` Microsoft Dynamics SL (Solomon)

2.Middle
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Market

Epicor

Epicor has 20,000 customers in more than 150 countries. It offers solid ERP functionality together with a number of impressive Industry solutions for Professional Services Automation (PSA), hospitality management, pharma, manufacturing, distribution and non profit.
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Infor

Infor has more than 70,000 customers and 3rd largest ERP manufacturer, behind only Oracle and SAP. Infor has several different ERP software systems and particularly strong distribution, lean manufacturing, and complex chain

manufacturing, process management (SCM).

manufacturing

solutions

supply

3. Enterprise ERP Leader


Obviously SAP and Oracle are the most top ERP in this segment.

They are #1 and #2 ERP market share leader.

Today SAP has released ERP solution for small and midsize business (SMB):

SAP Business One and they claim that they have helped more than 75,000 SMB companies.