Karnataka State Open University

EMBA- July 2014 Batch

Name
Enrolment No
Subject
Planning
Semester

Areeba Zaki
PRVENO-5734
Enterprise Resource
2

Ques 1) Define ERP and its technology with ERP

marketplace and marketplace dynamics?
Ans) Enterprise resource planning (ERP) is process
management software that allows an organization to use a system
of integrated applications to manage the business and automate many back
office functions related to technology, services and human resources. ERP
software integrates all facets of an operation, including product planning,
development, manufacturing, sales and marketing.
ERP software is considered an enterprise application as it is designed to be
used by larger businesses and often requires dedicated teams to customize
and analyze the data and to handle upgrades and deployment. In
contrast, Small business ERP applications are lightweight business
management software solutions, customized for the business industry you
work in.
A process by which a company (often a manufacturer) manages and
integrates the important parts of its business. An ERP management
information system integrates areas such as planning, purchasing, inventory,
sales, marketing, finance, human resources, etc.
ERP is most frequently used in the context of software. As the methodology
has become more popular, large software applications have been developed
to help companies implement ERP in their organization.
Think of ERP as the glue that binds the different computer systems for a
large organization. Typically each department would have their own system
optimized for that division's particular tasks. With ERP, each department still
has their own system, but they can communicate and share information
easier with the rest of the company.
The central feature of all ERP systems is a shared database that supports
multiple functions used by different business units. In practice, this means

that employees in different divisionsfor example, accounting and sales

can rely on the same information for their specific needs.
ERP software also offers some degree of synchronized reporting and
automation. Instead of forcing employees to maintain separate databases
and spreadsheets that have to be manually merged to generate reports,
some ERP solutions allow staff to pull reports from one system. For instance,
with sales orders automatically flowing into the financial system without any
manual re-keying, the order management department can process orders
more quickly and accurately, and the finance department can close the
books faster. Other common ERP features include a portal or dashboard to
enable employees to quickly understand the business' performance on key
metrics.

Q) Write Short Note on:

A. Functional Modules of ERP software

B. ERP package evaluation and selection

Ans) A. Functional Modules of ERP software

Organizations are implementing Enterprise Resource Planning system to
streamline their internal business process and for smooth flow of data
between the different functional departments like inventory, purchase,
production, accounts, etc. The different functional modules of the ERP
software look after the respective functional department. Some of the
functional modules in the ERP are as follows:

1. Production Planning Module: The Enterprise Resource Planning system

has evolved from Material Resource Planning which was used for the
manufacturing requirements of the companies. ERP is more robust software
for production planning as it optimizes the utilization of the manufacturing
capacity, material resources and the parts using production data and sales
forecasting.
2. Purchasing Module: This module aids in streamlining the procurement
of required raw materials. It is integrated with the inventory control and
production planning modules and often with the supply chain management
software. This module automates the process of identifying potential
suppliers, supplier evaluation. It is used for automation and management of
purchasing
.
3. Inventory Control Module: This module aids in managing the
company's resource inventory and the product inventory. It helps in handling
the replenishment of the product and maintenance of the stock levels of the
products. The inventory control module monitors the inventory stock present
at the different locations like at the warehouse, office and stores. The module
can manage the inventory of raw materials used for product planning. It
enables the company to plan the future production and keep a stock of
products which go below critical level.
4. Sales Modules: This module automates the sales tasks, customer orders,
invoicing and shipping of products. It is integrated with the company's
ecommerce websites and many vendors provide with online storefront as a
part of this module. The sales department is an important area for the
organization.
5. Accounting and Finance Modules: Accounting and finance are the core
areas of an organization. This module interacts with the other functional
modules to collect the financial data for the general ledger and other

financial statements of the company.

6. Human Resource Module: This can be used as an independent module.
It is used for integrating the recruitment process, payroll, training and the
performance evaluation process. The module handles the history of the
employee, tracks the employees laid off and aids in rehiring of the
employees.
7. Manufacturing Module: This module includes product designing, bills of
material, cost management, workflow, etc.
8. Marketing Module: The ERP marketing module supports lead generation
and the promotional activities.
Each of these above functional modules of ERP software plays an important
role. The organizations can choose to implement some of the modules or all
according to their requirements. The companies opt for the modules which
are technically and economically feasible to them. These modules streamline
the flow of the communication across the company by integrating the
various functional departments. The enterprise resource system is bound
with all these functional modules. These distinct yet seamlessly integrated
modules cover most of the functional needs of an organization. The
functional modules of ERP software help to achieve efficiency of operations,
cost savings and help to maximize the profits.

B. ERP package evaluation and selection

Evaluation and selection of ERP package is an essential criterion for
successful ERP implementation. Quality of selection will have a long term
impact on the processes of the organization. It is also not easy to switch to

another product with concomitant scale of investment and complexities. This

evaluation and selection process should be properly directed and normally
comprises of following activities:

Formation of an evaluation committee: An ERP implementation is not an

IT project but a business oriented development. Therefore, in addition to
Chief Information Officer, this committee should comprise of all functional
heads and driven by a top management representative. Since all business
functions are represented in selection process, the chosen package would
have wide acceptance subsequently.
Requirement Analysis: This analysis should outline functional expectations
of various business divisions, such as warehouse, finance, procurement, from
potential ERP package. Vital requirements specific to the company should be
highlighted e.g.

Must have Distribution Requirement Planning (DRP) functionality.

In transit inventory and pallet tracking, as a part of shipping

requirement.

Multiple purchase orders linked to one bill of lading.

Multi-currency and multi locations functionality.

Requirement analysis forms a base for preparing a Request for Proposal

(RFP), where important technical and commercial perquisites are
incorporated. Common examples of technical perquisites: flexibility,
Upgradability, User friendliness, field level security, Operating system and
database compatibility. Common examples of commercial perquisites: cost,
reference sites, high level project plan, resumes of consultants, post
implementation support, financial health of the company, local presence,
number of installation and upgrade.
Selection Criteria: A pre-determined selection Criteria should be ready
before actual selection process commences. Selection criteria are normally in
the form of questionnaire and point system, where each question represents
a business or technical need. Weightage for each point or a group of points
are predetermined which varies according to criticality of the issue. These
processes help in making the selection process objective and transparent.
Selection Process: Selection process constitutes various stages as
mentioned below:
1. Short listing of vendors: Hundreds of ERP packages are available in
the market, which have different concept, architecture and sets of
functionalities. Analyzing all the packages is not feasible. Organization
need to identify a few best suited packages by looking at product
literatures of vendor, finding out which product is being used by their
peer organizations and getting help from external consultants. Once a
few packages are short listed, respective vendors should be asked to
respond to the RFP, as per its format.

2. Demo and Presentation: Responses from shortlisted vendors are

evaluated by the selection committee after collating scores obtained
by them and a consensus is reached about their final ranking. Anyone
not fulfilling a predetermined vital requirement is eliminated at this
stage. Top two or three vendors, are then invited for demo and
presentation. Mode of presentation should be carefully scripted and
send to the vendors in advance. They should be asked to walkthrough
a particular business cycle through their vanilla software. They should
be specifically asked to clarify any area of concern about their
proposal, which may expose weak/ problem area of their offer.
3. Site visit and contract negotiations: After the committee has
reached a decision on best suited package, visits to reference sites are
imperative. The vendor should provide reference sites of similar size
and industry, identical version and belonging to same geographical
location. Team members should have look and feel of the systems
operating at reference sites and ask pertinent questions covering
overall satisfaction, functionality, cost/ time over run, support concerns
etc. After site visit, if the committee members feel that their selection
is right, they proceed with final negotiation and procurement.
Negotiations are normally held on license and annual maintenance
cost, payment plan including a leasing option, support issues and other
commercial and legal terms.
Conclusion
The most important point of selection process is that it should be based on a
consensus and have maximum buy in as an ERP system belongs to all
functions and departments. Another important issue is that over expression
of requirement during requirement planning should be avoided as this will
lead to incurring unnecessary expenditure.