ERP growth is skyrocketing
DEMAND for Enterprise Resource Planning (ERP) solution growing day by day. Experts are forecasting a huge growth of demand for ERP mostly in mid-sized organizations. The demand is due to the specialty of an ERP system to manage the increased customer service, efficient distribution system and reduced operational costs, Majority of CEOs/Senior managers share the same view that ERP is an important tool to achieve competitive advantage. The number of employees in an organization using the ERP system is increasing and organizations that have started with the basic modules are now expanding their system with subsequent applications. This is also another reason for the growth of ERP. Another factor for the growth is many organizations replace customized system with standard application packages. Most of the medium ERP vendors are targeting the mid-sized organizations. This is because many of the mid sized organizations are working with applications which are non-integrated and on disparate technology architectures, built in-house. This has resulted redundant technology, loss of support, non availability of critical information at the right time resulting in overall business loss. ERP vendors in India have found it an ideal market by exploring the SME segment. There are lot of demand persisted in this market, which on the other hand helped to growth the ERP market in substantially. Knowing that majority of Indian manufacturers are small by global standards and requiring easy-to-use ERP solutions to meet their specific process requirements, ERP vendors in India have come out with ideal solutions which can not only match their needs but also their budget. Now almost all small and medium enterprises across industry verticals and micro verticals, such as pharmaceuticals, chemicals, fleet management, automotive, modular kitchen, construction, infrastructure, and textiles, are leveraging ERP solutions to gain sustainable competitive advantages. With the advent of on-demand deployment of ERP software and also web-enabled ERP solution, the user can access the software through license as a Web-based service. The increasing popularity of the Web-based applications account for the growth of ERP, as the enterprise resources are maintained by a service provider. Growth factor also includes the competition prevailing in Indian ERP market. With the entry of international companies in the local market, the local vendors also steadied their products which are going to be a good sign as far as mid-sized organizations are concerned. Now they can find a wider market with ERP product suitable to their needs also in their limited budget. As the market is getting more competitive reliability and compatibility about the smaller players are unwanted. Today SME can choose the right ERP at their will with confidence. Indeed, a good sign.
Continuous ERP training is a must
Organizations must realize that there is a need for continuous training programs and refresher courses for the ERP success. There will be occasional new recruitments of employees and these employees should be properly trained in the basics of ERP and how to use the ERP system before they can be allotted to different departments. So there must be an induction, orientation and training program that is conducted on a regular basis. It is very important that new employees undergo these programs before start work as they will have an opportunity to imbibe the correct work culture and learn the correct work practices, so that they will be doing things in the correct way from day one. Once the ERP system is introduced, the way in which the companies conduct business will change. With the ERP systems will come, automation and new technologies. The company should make it a point to familiarize users with these technologies and find ways to motivate them to use these technologies. It is also a good idea to conduct refresher programs for the employees to reinforce the basics, correct working practices and also to update them on the latest developments. When a new module or a system upgrade is done new capabilities and features become available and the employees should be trained on these new features so that they will be a position to make the best use of them and their capabilities. For example, most ERP systems have the facilities to send automatic notifications to managers regarding some issues as and when it arises. The company managers have the facility to see the details of the problems and then query the ERP database to analyze its implications. So the managers can communicate with their peers to resolve the issues as soon as possible. But for this to happen, the managers should make use of these technologies. One member abstaining from this process can delay the problem resolution. The company should therefore, have a plan to train and then motivate its employees to get the best out of the new features and facilities that are available to them. Most systems can be configured to have an escalation mechanism - a mechanism that can escalate the issue to a higher authority if something does not happen within a specified period of time. For example, the system could be configured to send a mail notification to the superior of a manager if that manager has not taken an action regarding an issue within a specified period. In such cases, senior managers should find out why the person is not using the technology and take the steps necessary to get him involved. Many people are dazzled by the technology or are afraid to use it. These fears should be alleviated for the proper functioning of the ERP system and to get the maximum benefit from the system.
ERP - A business intelligence application
ERP (Enterprise Resource Planning) is a way to integrate the data and processes of an organization into one single system, using sub-systems that include hardware, software and a unified database in order to achieve integration, to store the data for various functions found throughout the organization. The term ERP used to refer about how large organizations of the industrial type planned to use organizational wide resources. Today ERP is used in almost any type of organization it doesn't matter whether its large, small or what industry it falls in. How do we know what software system can be considered ERP? First, it must provide an organization with functionality for at least two systems or more. However, many of today's ERP systems can cover more than just two functions and integrate them into one unified Data Base. Human Resources, Supply Chain Management, Customer Relations Management, Financial, Manufacturing functions and Warehouse Management functions can be found on modern companies under one umbrella - the ERP system. The Key to ERP is integration. Its main goal is to integrate data and processes from all areas of the organization and unify it, to provide ease of access and an efficient work flow. ERP Systems usually accomplish this through one single database that employs multiple software modules. The ideal configuration is then to have one ERP system for an entire organization, but organizations that are very large have been known to create an ERP system and then add external interfaces for other stand alone systems considered more powerful or able to fulfill the organization's needs in a better way. The Ideal ERP System The ideal ERP system would have a single database for all areas of the company and contain all of the data for various software modules, such as:
Workflow management, quality control, bills of material, manufacturing process, engineering, etc. Accounts (payable & receivable), general ledger and cash management, fixed assets. Training, payroll, time and attendance, benefits. Purchasing, Inventory, supplier scheduling, claim processing, order entry, supply chain planning. Activity management, time and expense, billing, costing. Call Center Support, service, commissions, customer contact, sales & marketing.
ERP and Productivity Before ERP systems appeared, in most organizations each department had their own operating system, data and database. The problem was that many of those systems
would not be able to communicate with each other, so for example the financial of a company would have been on a separate computer system than the Human Resources information, thus complicating the processing of certain functions. When a company sets up an ERP system, all aspects of the organization can work in harmony. As a result the organization enjoys increased productivity and may use less types of software. Implementation of an ERP System Implementing an ERP system is not an easy task. It takes considerable planning and consulting. The timeline for an ERP implementation may range between 3 months and more than 1 year. ERP systems are extraordinarily wide in scope and can be extremely complex for many organizations. For instance, Changes on staff and work practices might be required. It is advisable (and more cost effective) to use specially trained ERP implementation consultants and not only the "in-house" IT staff. Ownership of the project of the most important traits that an organization should have when implementing an ERP system. So many changes take place and it has such an effect on almost every individual in the organization, that it is important to make sure everyone is on board and will help make the new ERP system a success. Organizations may implement their customized ERP system using ERP vendors or consulting companies. 3 types of professional services are needed when implementing an ERP system: Consulting, Customization and Support. Consulting: responsible for the initial stages of ERP implementation, training, workflow, etc. Customization: extend the use of the new ERP system or change its use creating customized interfaces and/or underlying application code. Some things may still need to be built or customized for an organization's specific needs. Support: Technical support and maintenance of ERP systems. Advantages of ERP Systems There are many advantages of implementing an EPR system: It's totally integrated. It has the ability to streamline different processes and workflows. It is easy to share data across various departments in an organization. It improves efficiency and productivity levels. It provides better tracking and forecasting. Its costs are lower. It provides improved customer service. Disadvantages of ERP Systems
ERP's advantages outweigh disadvantages but here are some of the most common obstacles experienced by organizations: Lack of skills and the inexperience of the workforce may delay its adaptation to the new system. Customization can be limited. The organization might need to reengineer some business processes.
ERP Benefits: ERP helps midmarket businesses
BUSINESSES all around the world are increasing their reliance on ERP systems as a cost efficient alternative to their software applications. However, high cost involved in deployment of this marvelous technology prevents the small/mid size organizations enjoy the tremendous benefits of ERP. Since the introduction of an affordable, low-cost ERP from eresource ERP, many of the midmarket organizations also started to administer their businesses effectively using this latest technology. An ERP package should provide an organization with a solid foundation, incorporating all of the fundamental aspects of running a business. Expectations run high when an organization deploys an ERP package - if the solution is a good fit for the company, the company stands to gain tremendous cost savings and service improvements across the enterprise. Manual processes are automated, production scheduling is more efficiently managed and inventory is more accurately assessed. Also, business performance can be measured in a much more holistic fashion than ever before. This gives executives real-time visibility into all business processes, enabling them to make better strategic decisions. In short, with the right ERP package, a midmarket company can compete more aggressively in global markets. According to a survey an ERP implementation can reduce costs in three primary categories: inventory costs, manufacturing operating costs and administrative costs. The survey's best-in-class respondents reported a 21 percent decrease in inventory costs, a 17 percent decrease in manufacturing operating costs and a 16 percent decrease in administrative costs. The average respondents' reductions were 11 percent, 8 percent and 9 percent, respectively. Because an ERP solution has its fingers in all aspects of running a business, its benefits are myriad and go beyond tangible cost reductions. It can improve an organization's customer service and response time when solving issues. It can solve issues of interoperability among multiple manufacturing locations. It can standardize and accelerate manufacturing processes in all of a company's manufacturing sites. It can streamline a manufacturer's order-fulfillment processes. It can facilitate connecting with partners' and suppliers' enterprise systems. ERP can even help an organization maintain compliance with government regulations, from hiring practices to environmental laws. Case studies done on specific ERP implementations reveal a variety of different business-specific benefits. One of the case studies revealed that by replacing legacy systems with an integrated ERP package, one travel-accessories manufacturer reduced its inventory levels by 30 percent, reduced its warehouse space requirements by 38 percent, improved its month-end close process by five days, reduced its DSO (Days Sales Outstanding) by 44 percent and increased sales by 100 percent without hiring new employees.
IN today's competitive world many major companies have decided to use a popular tool that has evolved over the past few decades. ERP, the descendant of MRPII offers the "answer" to the economic and productivity troubles of manufacturing and service enterprises. Thus, the ERP system has become very popular as an enterprise management software tool. In order for a software system to be considered ERP, it must provide an organization with functionality for two or more systems. While some ERP packages exist that only cover two functions for an organization (QuickBooks: Payroll & Accounting), most ERP systems cover several functions. The term ERP originally referred to how a large organization planned to use organizational wide resources. In the past, ERP systems were used in larger more industrial types of companies. However, the use of ERP has changed and is extremely comprehensive, today the term can refer to any type of company, no matter what industry it falls in. In fact, ERP systems are used in almost any type of organization large or small. ERP systems today can cover a wide range of functions and integrate them into one unified database. For instance, functions such as Human Resources, Supply Chain Management, Customer Relations Management, Financials, Manufacturing functions and Warehouse Management functions were all once stand alone software applications, usually housed with their own database and network, can now fit under one umbrella As in any integrated System or Unit, the performance of each one of the parts of an Enterprise has an impact in his cumulative performance results. Specifically, we can say that a 95% performance in independent vital enterprise elements (Item master, Bills of Materials, Production Master Schedule Adherence, Inventories Accuracy, Production Orders Accuracy and Purchase Orders Accuracy), will reflect a cumulative 75% in a ERP environment. This means a percentage of failure possible in productivity terms. Here is where we should support and combine this useful tool with a business strategy based on the desired administration tendency or theory. On this sense, it is vital to note the point on administration before deciding which ERP software is the one you will be using, you need to have solid administration principles (no matter which administration tendencies you decide to choose) and strong knowledge of ERP methodology. This will translate into synergy between areas that will allow organizations to have highly effective processes with a continuous success. Only by creating a deep understanding of this philosophy you will have the certainty of obtaining the best results, as well as being in position to face and take proactive actions for any obstacle you could find in the road. If you have not this reference point, your efforts will deliver the wrong results.
Basic ERP Features
COMPARING midmarket ERP packages is not exactly an apples-to-apples type of exercise. Each vendor wraps its midmarket offering with different functionality, tailored to the needs of the kinds of companies the solution is intended for and based on the vendor's particular areas of expertise. However, almost every midmarket ERP suite shares several common modules: BI, CRM, financial management, HCM, manufacturing operations and SCM. The differences among solutions tend to be quite granular within these modules. Also, even if different packages offer the same feature - say, sales-order management - it might not be bundled in the same module; some vendors include sales-order management in their CRM suites while others package it in their SCM suites. Key to an ERP package is tight integration between modules, so that all of the core business modules are related. For instance, manufacturing operations are integrated with customer service, logistics and delivery. Business Intelligence One of the newer components of most modern midmarket ERP packages, BI shines a bright light into the heart of a company's performance. In general, an ERP suite's analytics or BI tools allow users to share and analyze the data that the ERP applications collect from across the enterprise from a unified repository. The end result is more informed decision making by everyone from executives to line managers to human-resources professionals to accountants. A variety of automated reporting and analysis tools can help streamline operations, as well as improve an organization's business performance. With greater control and visibility of data across the enterprise, business leaders can better align the company's operations with its overarching strategic goals. CRM (Customer Relationship Management) CRM has long been a core component of any ERP offering, giving manufacturers a way to improve customer service by pulling together tools to fulfill customers' orders, respond to customers' service needs, and often, create marketing campaigns to reach customers. Most vendors include sales tools to provide customers with sales quotes, process their orders and offer flexible pricing on their products. Another important CRM component is service management, which may arm customer-service agents with scripts for talking to customers, as well as allow them to authorize product returns and search a knowledge base of support information. The third main component is usually marketing, which may include tools to manage campaigns, create sales literature and develop a library of marketing collateral. Additionally, CRM often has tools for account management, SFA, and opportunity or lead management, as well as self-service tools for customers and an e-commerce storefront builder. Financial Management
Of all the ERP modules, the financials applications tend to be the most frequently utilized. Across the board, these include general ledger, accounts receivable and accounts payable, billing, and fixed asset management. Because many midmarket companies deploy ERP to support efforts at breaking into global markets, it is imperative that their ERP packages support multiple currencies and languages. The financial-management applications may also include tools for creating and adhering to budgets, cash-flow management, expense management, risk management and tax management. HCM (Human Capital Management) For the most part, the HCM module includes tools for human-resources management, performance management, payroll, and time and labor tracking. Some vendors also provide functionality for administering benefits, managing compensation, dealing with salary taxes, recruiting new employees and planning workforce needs. Some also include self-service tools for managers and employees. Even though HCM is generally considered core ERP functionality, some vendors offer it as an add-on module. Manufacturing Operations The manufacturing module is where much product differentiation happens, including industry-specific functionality. In general, these applications are intended to make manufacturing operations more efficient and simple. Most vendors support different modes of manufacturing, include configurable product capabilities, perform different types of job costing and offer a BOM (bill of materials) tool. Applications often include PDM (Product Data Management), CRP (Capacity Requirements Planning), MRP (Materials Requirements Planning), forecasting, MPS (Master Production Scheduling), work-order management and shop-floor control. SCM (Supply Chain Management) Of all the ERP modules, SCM has the greatest variability between vendors: It is vast and varied, yet often adapted to the needs of specific industries. In general, SCM improves the flow of materials through an organization's supply chain by "managing planning, scheduling, procurement, and fulfillment for optimum service levels and maximum profitability," according to Lawson Software. Some vendors segment their SCM into smaller modules. Oracle's JD Edwards, for instance, breaks it down into Supply Chain Planning, Supply Chain Execution (Logistics) and Supply Management (Procurement). SCM features tend to include also production scheduling, demand management, distribution management, inventory management, warehouse management, procurement, sourcing and order management.
Web-based ERP: Advanced features
As complex and customizable as even midmarket ERP solutions are, they don't share many advanced features - that's where the industry-specific functionality often comes into play. But three advanced features do set some midmarket ERP solutions above the rest: support for lean manufacturing, SOA capabilities and on-demand delivery. Lean Manufacturing Support As the name implies, lean manufacturing is essentially using less of everything. For midsize manufacturers with limited resources, this waste reduction in production and business processes can be an especially critical cost saver. With lean manufacturing, an organization can avoid overproduction, excess inventory, wasted motion, unnecessary processes and idle time. Lean manufacturing can also help an organization deliver products more quickly to customers, be more flexible and, ultimately, succeed in a global marketplace. SOA SOA - also called Web services - has been called the next big thing in enterprise architecture. SOA allows software capabilities to be easily connected and reused, making it quicker and cheaper to assemble, deploy and sustain enterprise-grade technology. With an SOA, organizations can more quickly adapt to changing business processes. Web-based ERP solution: A clear advantage of the web-based ERP solution is that remote users like executives and sales represenatives can access the company system with any browser, which is much more convenient than going through a laptop configured for Terminal Services. A quick and on-time implementation of the solution can be done on your existing configuration set up. That means you do not need to upgrade your network for Windows/Exchange Server and SQL Server database. As you would have come across more suggestions on ERP, selecting the right one is crucial. The term "Hosted Solution" is rapidly catching up, on account of its own benefits. A web-hosted solution ensures a lower outlay and predictive spread of cost over time. You have a substantial saving in cost (on both the software and hardware, licensing) that can be better invested in your business process. Web-based ERP removes your headache from the Investment made towards Time and Cost in the maintenance of the server & other hardware. Web-based ERP also removes your worry about the new functions and features (service packs and fixes). When you go in for a web-based ERP, you can start using it from day one (avoids the worry towards implementation time, which has been cited as one major reason for ERP failure). Optimized performance & Support
Most of the hosted applications are like off-the-shelf software. The web-based ERP application is available to you anywhere and at any time from a simple browser. Access through hand-held devices made easy.
AN ERP package can streamline and automate an unlimited number of important functions such as accounts payable, accounts receivable, activity management, benefits administration, and billing, invoicing and cost tracking (for project-based businesses). With ERP, companies can also improve cash management, while manufacturing firms can practice more effective capacity planning and cost containment. Additionally, many ERP packages on the market today provide robust and comprehensive business intelligence and decision support capabilities, leveraging a data warehouse or operational data store to make centralized, timely business information readily available to all those who need it. There are variety of ERP modules for businesses to choose from, including engineering, finance (which includes powerful forecasting and general ledger functionality), and human resources/human capital management. Each of these ERP components is designed to improve the way these vital back office departments operate, collaborate, and share information. Manufacturing was the very first industry to benefit from the use of ERP applications, implementing the world's first ERP systems more than forty years ago. For the past few decades, these companies have been utilizing ERP to improve production processes and reduce related costs with enhanced inventory management, intellectual property tracking, and input/output control, which enables more effective implementation of popular and proven best practices such as just-intime manufacturing models and kaizen techniques, which are the Japanese processes of continuous improvement using problem-solving and analysis. Companies can also optimize labour utilization, eliminate lag times in production schedules, and improve the effectiveness of materials management through the use of ERP manufacturing applications. At the core of many of today's most popular ERP applications lies powerful and complete financial management, which allows accounting staff members to more effectively track net cash flow, accelerate and manage order to cash cycles, and better negotiate and execute purchasing agreements. An ERP system can also deliver significant improvements in other areas, enhancing many non-financial processes such as payroll, quality control, resource allocation and scheduling for project management teams, supplier relationship management for purchasing and procurement departments, and training and time and attendance tracking for human resources groups. An ERP system also enables companies to maximize the utilization of both human and financial resources, better track vendor managed inventory and other off-site or remote stock, and significantly improve workflow management by better planning, mapping, and executing key processes across the business. With ERP companies can achieve and maintain a solid competitive edge, reaching the zenith of productivity and cost-efficiency.