Enterprise Resource Planning

Presented by Shivaraj C. Murali Priyanka Udaya Veena

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Background of ERP

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Overview

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Merits & Demerits

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ERP Market

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Implementation

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Example: Tata Power

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ERP Trends

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An ERP solution aims to provide a single software which will integrate all the divisions in an organization— manufacturing, sales, marketing, finance, HR—and yet fulfill each division’s information and planning needs.

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Though ERP began as something internal to the enterprise, today most systems are Web-enabled, allowing them to extend to external suppliers and end users.

 Inventory

control systems

o 1960s  MRP

(Material requirement planning)

o 1960s, 1970s o Inventory + purchasing + production scheduling  MRP

II (Manufacturing Resource Planning) o 1970s, 1980s o MRP + finance, HR

 ERP

o 1990s o MRP II + other functions of marketing and sales

Typical ERP System

Source: Davenport (1998) and Chen (2001)

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Based on DBMS platform. Eases exchange of information and data among different corporate divisions. Unites major business practices within a single group of software modules. Modules run on client/server environment. Each module works separately, performing data processing functions.

A/P and A/R Order Mgt

ERP

Production Planning Inventory Control

DBMS

Purchasing Payroll

DB

Dimension

Benefits

Operational

• • • • •

Managerial

• Better resource management • Improved decision making and planning • Performance improvement

Cost reduction Cycle time reduction Productivity improvement Quality improvement Customer services improvement

IT Infrastructure • Build business flexibility for current and future changes • IT cost reduction • Increased IT infrastructure capability Source: Shang and Seddon (2000)

Dimension

Benefits

Strategic

• • • •

Organizational

• • • • •

Support business growth Support business alliance Build cost leadership Generate product differentiation (including customization) • Build external linkages (customers and suppliers) • Worldwide expansion • Enabling e-commerce Support organizational changes Facilitate business learning Empowerment Build common visions Change employee behavior

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Expensive

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Time Consuming

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Needs Proper Implementation

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Security Issues

#

Vendor

Revenue (mn $) 4726

Market share (%)

1

SAP

2

Oracle Applications

1674

10.2

3

The Sage Group

1221

7.4

4

Microsoft Dynamics

616

3.7

5

SSA Global Technologies

464

2.8

Market share 2005 according to Gartner Dataquest

28.7

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Define your goals

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Explore the market

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Go modular

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Participate

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Expect hidden costs

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Analysis

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Modeling of Business Processes

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Integration

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Data Conversion

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Staff Training

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Testing

Transition is Tough Work!

HELP!!

Source: http://link.unm.edu

Source: http://link.unm.edu

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The Tata Power Company Limited is India's largest private sector power utility with an installed generation capacity of over 2300 MW. The Company has emerged as a pioneer in the Indian power sector, with a track record of performance, customer care and sustained growth. The thermal power stations of the company are located at Trombay in Mumbai, Jojobera in Jharkhand and Belgaum in Karnataka.

Founded Headquarter s Key people

in 1868 by Jamshedji Tata Mumbai, Maharastra, India Prasad Menon, MD

Industry

Electricity generation Electricity transmission Electricity distribution

Revenue

INR 21.9 billion (FY 2005)

Net income

INR 7.5 billion (FY 2005)

Source: www.tatapower.com

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Tata Power tied up with Tata Technologies for the ERP implementation. It begun early 2001 and the entire process is completed by May 2003. The implementation of SAP R/3 covered Complete supply chain

Budgeting and monitoring

Centralized procurement

Work order management

Vendor management

HR organizational and personnel administration

Complete cash cycle

Customer management

Centralized accounting

Bill-processing

Project management

Source : www.ciol.com

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Benefits happened in four major areas - cycle time reduction, inventory reduction, manpower reduction, and provided better quality information. Processes Before After Procurement cycle times (material)

41 days

17 days

Capital Procurement

90 days

14 days

Accounts closing cycle time

38 days

8 days

Billing integrity index

3%

1.83 %

Billing complaints response index

90 %

99 %

Stock reduction by Rs. 28 cr. at major stocking location. Manpower savings due to centralization and automation processes

Source : www.ciol.com

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Small to midsize companies are targeted.

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Adding more decision support tools.

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Reduction in implementation time and cost.

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Adding more functionalities such as CRM and SCM o ERP II (named by Gartner Group)

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Toward more open, flexible Internet-based technologies (e.g., XML, HTTP) that makes a firm easier o to integrate with other systems in the company, and o to collaborate with its business partners

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Freestanding components, not interdependent modules, that enable firms to o Choose different vendors for each of the components o Manage the integration of components of multiple vendors