ENTERPRISE

RESOURCE
PLANNING
~ S ECOND E DITION ~
 ENTERPRISE
RESOURCE
PLANNING
~ S ECOND E DITION ~

Alexis Leon
L&L Consultancy Services Pvt Ltd
Kochi

Tata McGraw-Hill Publishing Company Limited

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Copyright © 2008, Alexis Leon

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 Contents

Preface to the Second Edition vii

Preface to the First Edition ix

Part I INTRODUCTION
1. Enterprise—An Overview 3
Introduction 3
Business Functions and Business Processes 5
Integrated Management Information 5
Role of the Enterprise in Implementing the ERP System 7
Business Modeling 8
Integrated Data Model 9
Summary 10
Review Questions 11
Selected Bibliography 13
2. Introduction to ERP 14
Introduction 14
Common ERP Myths 14
A Brief History of ERP 18
The Advantages of ERP 21
Why ERP Packages Now 22
Over Expectations in ERP 23
Roadmap for Successful ERP Implementation 23
The Role of CIO 24
The Future of ERP Packages 24
Summary 25
Review Questions 25
3. Basic Concepts of ERP 29
Introduction 29
Will ERP Fit the Ways a Company does Business? 29
Why is ERP Important to a Company 30
ERP Market has Grown and will Continue to Grow 34
How does ERP Create Value 35
NEE  

Summary 37
Review Questions 37
Selected Bibliography 40
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Justifying ERP Investments 41
Quantifiable Benefits from an ERP System 42
The Intangible Benefits of ERP 42
Other Factors 44
Risks of ERP 44
Risk Factors of ERP Implementation 46
People Issues 47
Process Risks 48
Technological Risks 49
Implementation Issues 49
Operation and Maintenance Issues 51
Managing Risk on ERP Projects 51
Benefits of ERP 52
Summary 63
Review Questions 64
Selected Bibliography 69
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  *
   +
Introduction 71
Business Process Reengineering (BPR) 72
Data Warehousing 73
Data Mining 74
On-line Analytical Processing (OLAP) 75
Product Life Cycle Management (PLM) 75
Supply Chain Management (SCM) 76
Customer Relationship Management (CRM) 76
Geographical Information Systems (GIS) 77
Intranets and Extranets 77
Advanced Technology and ERP Security 78
Technological Advancements 79
Middleware 80
Computer Crimes 81
Security and ERP 81
Computer Security 82
Crime and Security 83
Summary 83
Review Questions 84
References 85
   NEEE

Part II ERP MARKETPLACE AND FUNCTIONAL MODULES

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Market Overview 89
Marketplace Dynamics 89
The Changing ERP Market 94
Indian Scenario 94
Summary 96
Review Questions 96
Selected Bibliography 96
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Introduction 97
Functional Modules of ERP Software 100
Integration of ERP, Supply Chain and Customer Relationship Applications 104
Summary 104
Review Questions 105

Part III ERP IMPLEMENTATION

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Introduction 109
Why ERP 109
Technological, Operational, and Business Reasons for Implementing ERP 112
Implementation Challenges 113
Summary 120
Review Questions 121
References 123
Selected Bibliography 123
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Introduction 124
Objectives of ERP Implementation 125
Different Phases of ERP Implementation 126
Why do Many ERP Implementations Fail 133
Summary 134
Review Questions 135
Selected Bibliography 138
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Introduction 139
Why Many ERP Package Implementations Fail 140
ERP Package Evaluation and Selection 141
NEL  

ERP Packages: Make or Buy 146

Summary 147
Review Questions 147
Selected Bibliography 148
 
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Introduction 149
Transition Strategies 149
Big Bang Strategy 150
Phased Implementation 153
Parallel Implementation 154
Process Line Transition Strategy 156
Hybrid Transition Strategy 157
Choosing a Strategy 157
Summary 157
Review Questions 158
Selected Bibliography 161
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Introduction 162
Importance of Preparation 162
Before you Leap 163
Implementation Methodologies 165
Managing the Implementation 166
Organization of the ERP Project Team 167
Implementation Strategy 167
ERP Implementation Plan 168
Risk Assessment 169
Budget 169
Cost 170
Performance Measurement 172
Problem Resolution 172
System Issues 173
ERP Implementation Methodologies by Vendors and Consulting Firms 173
ERP Implementation—The Hidden Costs 174
ERP Training and Education 177
Data Migration 178
Summary 180
Review Questions 181
Selected Bibliography 185
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Introduction 186
ERP Package Implementation 186
People Involved in the ERP Implementation 188
   NL

ERP Implementation Team 190

Composition of the Implementation Team 191
Organization of the Implementation Team 192
How the Implementation Team Works 199
Summary 200
Review Questions 201
Selected Bibliography 204
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Introduction 205
In-house Implementation—Pros and Cons 205
Vendors 207
Consultants 209
Employees and Employee Resistance 212
Reasons for Employee Resistance 212
Dealing with Employee Resistance 213
Contracts with Vendors, Consultants and Employees 216
Summary 220
Review Questions 221
Selected Bibliography 223
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Introduction 225
Success Factors 225
Failure Factors 230
Summary 232
Review Questions 232
Selected Bibliography 232
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Introduction 234
After Going Live… 234
Ongoing Implementation Efforts 236
Upgrading versus New Software 237
Operation and Maintenance of the ERP System 237
Operation of the ERP System 239
ERP Maintenance Phase 243
Summary 243
Review Questions 244
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Introduction 246
Business Analytics, Reporting and Intelligence 247
Extend the Power of ERP using Internet 249
Training and Learning 249
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Summary 250
Review Questions 250
Selected Bibliography 251

Part IV PRESENT AND FUTURE

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Introduction 255
ERP and eBusiness 255
eBusiness—Supply Chain Integration 256
The eBusiness Process Model 256
Components of the eBusiness Supply Chain 258
ERP/eBusiness Integration 258
Summary 260
Review Questions 260
Selected Bibliography 261
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Introduction 263
The Internet Explosion 263
ERP, Internet and WWW 265
ERP to ERP II—Bringing ERP to the Entire Enterprise 266
Best Practices of ERP II 269
Summary 270
Review Questions 271
Selected Bibliography 273
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Introduction 274
New Markets 274
New Channels 274
Faster Implementation Methodologies 275
Easier Customization Tools 275
Business Models and BAPIs 275
Application Platforms 276
New Business Segments 276
Need-based Applications 276
Expenditures 276
Reduction in Implementation Time 277
Open Source, Web-enabled and Wireless Technologies 277
Enterprise Application Integration 277
Market Snapshot 277
Shifting Revenue Models 278
The SOA Factor 279
   NLEE

Summary 279
Review Questions 279
Selected Bibliography 281

Part V APPENDICES


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Index 363