ERP Prelims PDF

IS20 – ENTERPRISE RESOURCE PLANNING 3. Project Roadmaps: basic visual representation of what is expected to happen during a project, and MODULE 1: INTRODUCTION TO ERP when....

IS20 – ENTERPRISE RESOURCE PLANNING 3. Project Roadmaps: basic visual representation of what is expected to happen during a project, and MODULE 1: INTRODUCTION TO ERP when. 4. Total Cost of Ownership (TCO): overall Information silos occur when different individuals or consideration of all costs associated with the groups generate or record new data, but don’t purchase and operation of a service or product. integrate or aggregate that information for other 5. Peer References parts of the business to view or use in a strategic 6. Partner Relationships way. Partnership: A formal arrangement by two or more parties to manage and operate a business and EVOLUTION OF ERP share its profits. 1. Material Requirement Planning (MRP) 7. Deployment Flexibility: Refers to a new - developed in 1970s generation of software that allows complete - widely used approach for production flexibility on how and where your applications run. planning and scheduling in industry. 2. Manufacturing Resource Planning (MRP II) ERP MODULES AND THEIR FEATURES - developed in 1980s Finance: The finance and accounting - is an expansion of closed loop MRP for managing module is the most important ERP module an entire manufacturing company. because it allows businesses to understand 3. Enterprise Resource Planning (ERP) their current financial state and future - developed in 1990s outlook. - foundation system for domestic and global Procurement: also known as the purchasing operations, supporting most or all functional areas module, helps an organization secure the in their daily operations. materials or products it needs to 4. Enterprise Resource Planning (ERP II) manufacture and/or sell goods. - developed 2000s Manufacturing: helps manufacturers plan - successor of ERP production and make sure they have - It is a business strategy and set of collaborative everything they need for planned operational and financial processes internally and production runs, like raw materials and beyond enterprise. machinery capacity. Inventory Management: enables inventory Enterprise Resource Planning control by tracking item quantities and - It is an application that automates business location down to individual SKUs. processes and provides insights and internal Order Management: tracks orders from controls, drawing on a central database that receipt to delivery. collects inputs from departments including Warehouse Management: can deliver a accounting, manufacturing, supply chain rapid return on investment for businesses management, sales, marketing and human that operate their own warehouses. resources (HR). Supply Chain Management: tracks each - A software system that helps you run your step in the movement of supplies and goods entire business, supporting automation and throughout the supply chain, from sub- processes in finance, human resources, suppliers to suppliers to manufacturers to manufacturing, supply chain, services, distributors to retailers or consumers. procurement, and more. Customer Relationship Management (CRM): stores all customer and prospect REASONS WHY ERP LEADS TO GROWTH information. 1. Globalization Professional Services Automation (Service 2. Advancement in technology Resource Management): allows an 3. Increased focus on high efficiency organization to plan and manage projects. Efficiency: Using the least amount of inputs to Workforce Management: similar to a human achieve the highest amount of output resource management module but is 4. Incredible ROI designed for companies with more hourly Return on Investment (ROI): A popular profitability than salaried employees. metric used to evaluate how well an investment Human Resources Management: or human has performed capital management (HCM) module usually 5. Rich Analytics encompasses all the features of a workforce 6. Increased Customer Satisfaction management application and offers 7. Simplify Compliance and Risk Management additional capabilities. across your business E-commerce: allows companies to quickly 8. Synergistic Production Planning and Resource launch a business-to-business (B2B) or Management business-to-consumer (B2C) ecommerce Bill of Materials: An extensive list of raw materials, website. components, and instructions required to construct, Marketing Automation: manages marketing manufacture, or repair a product of service. campaigns across digital channels like email, web, social media and SMS. ERP EVALUATION PROCESS 1. System Requirements: clearly articulated ADVANTAGES OF ERP statements of what a system must be able to do in Data Security: process of safeguarding order to satisfy stakeholder needs and requirements digital information throughout its entire life and are derived from business requirements and cycle to protect it from corruption, theft, or user requirements, as per the “Requirements unauthorized access. Hierarchy” shown. Standardized/Centralized Data: ERP can be 2. Senior Management’s Support: You need to traced back to the fact that all information make sure you have the buy-in from your senior from different departments is stored in one leadership. place.  Compliance: Having accurate, up-to-date marketing professionals who need real-time records that are easy to find and information on customer data and company searchable can really reduce the work processes. required to comply with any regulations Personalized ERP Solutions: Buyers are relinquishing your company must adhere to. most of the control over their systems in exchange Increased Productivity for low-cost yet specialized solutions. Visibility: It enables faster and better Increased ERP Adoption in Additive Manufacturing: decisions because managers have all Many businesses are leveraging additive relevant context that can assist them manufacturing to reinforce their operations. Scalability: is the ability of an ERP system to IoT Integration handle increasing or changing business - With the need for speed and mobility in modern demands without compromising production processes, IoT integrations for ERP performance, functionality, or reliability. systems are seen as a solution to fast-track Mobility: extends the power of your system operations while reducing costs. by enabling workers to access, update and input new data at the point-of-work using MODULE 2: AN OVERVIEW OF ENTERPRISE wireless handheld devices Cost Savings: For business owners and Enterprise: any organization that has a set of leaders, the most convincing reason to buy common goals an ERP system is that it lowers overall costs. Organized Workflows: ERP can help in that Resource: Resources can be in the form of: way, cutting out steps and making other ◦ human resource (manpower), improvements to make it faster and easier ◦ capacity (machine, plants, warehouses, etc.), to get things done. ◦ Inventory resources (finished goods, raw Real-time Reporting: The possibilities are material stock), etc. endless with the ability to customize Planning: For effective utilization of resources, an reporting across all functions — finance, enterprise needs to plan and undertake a variety of inventory, orders, procurement, sales and activities like: marketing, HR and anything else you can ◦ Demand planning, dream up. ◦ Distribution planning, Operational Efficiency: can reduce ◦ Production planning, operating costs in a big way and generate ◦ Capacity planning, higher profits. ◦ Material planning, Better Customer Service: By using ◦ Maintenance planning, information about the products, available ◦ Financial planning, inventory, and information about the ◦ New product planning, etc. customer, your ERP system can help you avoid delivery delays. ERP: an enterprise-wide information system Collaboration: bringing together teams from designed to coordinate all the different departments such as IT, finance, ◦ resources, and operations to work towards successful ◦ information, implementation of an ERP system. ◦ activities needed Flexibility: refers to an ERP system's ability to to complete business processes such as: adjust to changing business processes, ◦ order fulfillment workflows, rules, or regulations. ◦ billing Accurate Forecasting: uses a wide range of ERP delivers a single database that contains all historical data and sometimes other inputs data for the software modules. to predict future demand, revenue, expenses and other numbers. BENEFITS OF THE ERP SYSTEMS OVER LEGACY SYSTEM Online Data Flow decreases the process time Cloud Acceleration: Legacy ERP solutions are too Fast & Online Confirmation expensive to implement and maintain. As a result, Less Paperwork more and more businesses are now opting for No need for folder storage cloud-based solutions. Database Security Integration of AI and Other Intelligent Tech Less Employee needed - The use of AI transforms business data into Easy Financial Management actionable insights. Better Inventory Management - AI provides new ways of analyzing massive, complex, and unstructured data. Integrated Management System (IMS): combines Mobile Application multiple management system standards to which - Mobility also means having a more accurate and an organization is registered. convenient data capture process. - Mobile ERP also lessens the risk of production delay BENEFITS OF AN IMS because of better communication. Performance More Powerful Analytics: ERP systems have always Speed and cost-effectiveness been great in terms of collecting and organizing Consistency data. Support for Real-Time Data: Smarter business QMS – Quality Management System: decisions are derived from accurate and timely set of policies, processes and procedures required information. for planning and execution in the core business More Involvement in Finance: It provides finance- area of an organization. related functionalities such as general ledger, EXAMPLES OF QMS currency management, payroll management, fixed ISO 9001 Quality Management Systems assets, cash management, and more. AS9100 Aerospace and Defense More Attention to Digital Marketing: Many ERP ISO 13485 Medical Devices systems now offer marketing modules to cater to IATF 16949 Automotive International Organization for Standardization (ISO): order is received. It is also known as mass worldwide federation of national standards bodies customization. EMS – Environmental Management System: This type of manufacturing strategy is referred to as determines and continuously improves an a pull-type supply chain operation because organization’s environmental position and products are only made when there is firm performance. customer demand. ISO 14001 sets out the criteria for an environmental management system and Limitations of Make to Order (MTO) can be certified to. Timeliness SMS – Safety Management System: Cost of customization (or OHSMS) determines and continually improves an organization’s Health and Safety position and Business Model performance. The Business Model in Enterprise Resource ISO 45001 is the world’s international Planning (ERP) is a framework that captures standard for occupational health and the essential components of a company’s safety, issued to protect employees and operational and financial structure. visitors from work-related accidents and It defines processes, tasks, and resources diseases. needed to deliver goods and services to EnMS – Energy Management System: customers. determines and continually improves an Business Process Mapping is a framework used to organization’s energy usage and impact. create visual representations of business processes. ISO 50001:2018 is the newly revised Business process maps reveal the relationship international standard for Energy between operational steps and inputs to produce Management providing the most robust an end-product or service. framework for optimizing energy efficiency in public and private sector organizations. STEPS: ISO 50001 certification demonstrates an 1. Define Current State Business Processes organization’s commitment to continual 2. Define Future State Business Processes improvement in energy management, 3. Evaluate Technology Requirements to Guide ERP allowing them to lead by example within Software Selection their respective industries and ensure related legislative and regulatory 3 POTENTIAL WAYS TO SET UP YOUR ERP SYSTEM requirements are met. On-premise ERP software refers to an FSMS – Food Safety Management System: enterprise resource planning (ERP) system Confirms that corporations in the food industry that is installed and runs on the premises of follow certain procedures and guidelines to ensure an organization, rather than being hosted in their products for customer safety. the cloud or on a remote server. FSSC 22000 used to control food safety risks. Public Cloud In this model, IT resources are ISO 22000 is a Food Safety Management not made available internally, but online by System that can be applied to any an external service provider. organization in the food chain, farm to fork. Hybrid Cloud The hybrid scenario combines Safe Quality Food (SQF) Program is a Global the on-premise and public Cloud operating Food Safety Initiative (GFSI) models: companies continue to operate benchmarked food safety standard based business-critical applications and on Hazard Analysis Critical Control Points applications that, for example, have very (HACCP). specific requirements or technical ISMS – Information Security Management System: limitations, under their own control – with Determines how your organization should organize their own hardware in their own data and manage its information security. centers or in a private Cloud. ISO/IEC 27001 is the world’s best-known The best hybrid cloud provider companies standard for information security are Amazon, Microsoft, Google, management systems (ISMS) and their Cisco, and NetApp. requirements. Additional best practice in data protection MODULE 3: ERP IMPLEMENTATION and cyber resilience are covered by more than a dozen standards in the ISO/IEC 27000 Business Process Management (BPM) family. is a crucial component of successful ERP implementation. It involves analyzing, SIX COMMON DRAWBACKS OF SELECTING ERP designing, implementing, and continuously SOFTWARE FOR YOUR BUSINESS improving business processes to enhance 1: Selecting A Software Based on Capabilities efficiency and effectiveness. 2: Not Factoring in Cost of Use systematic approach to making an 3: Forgetting The Costs of Software Training organization's workflow more effective, 4: Not Investing in Software Maintenance efficient, and adaptable to changes. 5: Emphasizing Price Over Business Needs 6: Not Testing the ERP Software KEY ASPECTS OF BPM IN ERP IMPLEMENTATION: Process Mapping Make to Order (MTO) - Identifying and documenting existing Make-to-order (MTO), or made-to-order, is a business processes business production strategy that typically allows - technique used to visually map out consumers to purchase products that are workflows and processes customized to their specifications. It is a Process Analysis manufacturing process in which the production of - Evaluating current processes for an item begins only after a confirmed customer inefficiencies and improvement opportunities  - the exercise of analyzing processes to Technical Requirements: Compatibility with existing identify opportunities to improve the systems and infrastructure way they operate. Vendor Reputation and Support: Evaluating the Process Redesign vendor's track record and support services - Modifying processes to align with ERP Total Cost of Ownership: Considering both initial and best practices long-term costs - process of restructuring and streamlining Scalability: Ability to accommodate future growth existing business processes to improve and changes efficiency, reduce costs, and increase customer satisfaction. Software vendor selection: process of identifying Process Monitoring and choosing the most suitable - Continuously tracking and measuring vendor or software solution to meet an process performance organization’s specific business needs. - activity of continuously assessing if a system is operating under normal BEST PRACTICES FOR VENDOR SELECTION: conditions and to rapidly detect any Conduct a thorough needs assessment deviation from this state as soon as it Request detailed proposals from multiple takes place. vendors Evaluate vendor demonstrations and proof ERP Implementation Life Cycle: structured of concept approach to implementing an ERP system. Check references and case studies ERP implementation, also known as enterprise Consider long-term partnership potential resource planning, is a crucial step in business operations. It helps reduce costs and streamlines ERP VENDORS the process. – SAP: Known for comprehensive solutions across ERP implementation life cycle: process of industries automating business processes. o (Systems, Applications, and Products in Data Processing) It is a German multinational ERP IMPLEMENTATION PROCESS STEPS corporation that develops enterprise Planning: a successful ERP implementation software to manage business operations process starts with a proper project plan. and customer relations. It's one of the Project plans involve assigning a project largest ERP vendors globally, known for its team that will take care of the comprehensive suite of applications suitable implementation process. The team decides for large enterprises across various industries. the scope and objective of the project plan – Oracle: Offers cloud-based and on-premise ERP based on the specific requirements. options Budgeting: the team should identify the real o Oracle Corporation is an American cost involved in implementing the software multinational technology company to include hardware, training, specializing in developing and marketing development and software. The project database software, cloud engineered management team should also consider the systems, and enterprise software products. indirect cost such as data migration and – Microsoft Dynamics: Integrates well with other team member`s salary. Microsoft products Developing: the project team needs to o Microsoft Dynamics is a line of enterprise review and provide training on every aspect resource planning and customer relationship of ERP software and develop and management software applications document standard operating procedures. developed by Microsoft. Analysing & Migrating: team members – Infor: Provides industry-specific ERP solutions should analyse all the business data and o Infor is a multi-national enterprise software decide the data that needs to be migrated. company that provides industry-specific Training: User Acceptance Training (UAT) is cloud applications. very important in a successful – Epicor: Focuses on manufacturing and distribution implementation process. Project team sectors members should develop effective user o Epicor Software Corporation is a global training plan to achieve it. business software company that designs Testing: team members should test all the and develops industry-specific software for migrated data for its accuracy and check if manufacturing, distribution, retail, and everything is working correctly. service industries. Going Live: the final step is going live and providing constant support. The project OPERATIONS AND POST-IMPLEMENTATION team needs to closely watch the – User Training and Adoption: Ensuring employees performance and accuracy of the software are proficient in using the new system during the initial days. They need to make – Continuous Improvement: Regularly assessing and sure that they are closely observing and optimizing processes troubleshooting if any problems arise. – System Maintenance: Applying updates and patches to maintain system performance SOFTWARE AND VENDOR SELECTION – Performance Monitoring: Tracking KPIs to measure Software vendor: also known as an Independent the ERP system's impact on business operations Software Vendor (ISV), is a company that develops, – Change Management: Addressing organizational produces, and sells software. and cultural changes resulting from ERP implementation FACTORS TO CONSIDER WHEN CHOOSING THE RIGHT ERP SOFTWARE AND VENDOR KEY POST-IMPLEMENTATION CHALLENGES: Functional Requirements: Ensuring the software Resistance to change from employees meets the organization's specific needs Data quality and integrity issues Integration with legacy systems  Balancing customization with system Risk: Identify the possible risks and plan for risk Upgrades mitigation. Quality: Define the Quality standards that need to KEY TERMS AND DEFINITIONS be achieved for the success of the project. Enterprise Resource Planning (ERP): An integrated software system that manages and coordinates KEY PROJECT MANAGEMENT PHASES IN ERP various business processes across different IMPLEMENTATION departments within an organization. 1. Initiation: Define project goals, scope, and Implementation Life Cycle: The series of stages stakeholders. involved in planning, designing, developing, testing, 2. Planning: Develop a detailed project plan, and deploying an ERP system. including timelines, resources, and risk Total Cost of Ownership (TCO): The complete cost management strategies. of implementing and maintaining an ERP system, 3. Execution: Implement the ERP system according including software licenses, hardware, training, and to the project plan. ongoing support. 4. Monitoring and Controlling: Track progress, Change Management: The process of preparing manage changes, and ensure quality. and supporting individuals, teams, and 5. Closing: Evaluate project success, document organizations in making organizational lessons learned, and transition to operations. changes, such as adopting a new ERP system. System Integration: The process of connecting Phase 1: Project Initiation different subsystems or components to work Project Initiation phase marks the formal beginning together as a unified system. of the project. It usually involves creating a high- Customization: Modifying the ERP software to meet level document that marks the foundation of the specific business requirements that are not ERP Implementation Project. addressed by the standard system features. Key activities: Cloud ERP: ERP systems that are hosted on cloud Define Project Goals servers and accessed via the internet, as opposed Determine Project Scope to on-premise systems installed locally. Identify Stakeholders KPI stands for key performance indicator, a Conduct Feasibility Study quantifiable measure of performance over time for Develop Project Charter a specific objective. Phase 2: Planning Phase The planning phase is crucial for laying out a MODULE 4: PEOPLE AND ORGANIZATION roadmap for the ERP implementation. Key activities: KEY ROLES IN ERP IMPLEMENTATION Create Detailed Project Plan Allocate Resources Executive Sponsors: These high-level decision- Develop Risk Management Strategy makers provide strategic direction and secure Establish Communication Plan necessary resources. Set Quality Standards Project Managers: They oversee the day-to-day Plan for Change Management aspects of the implementation, coordinating Phase 3: Execution Phase between different departments and ensuring The execution phase is where the actual timelines are met. implementation of the ERP system takes place. IT Specialists: These technical experts handle the Key activities: complexities of system integration, data migration, Configure ERP System and customization. Data Migration End Users: The employee who will interact with the Customize and Integrate ERP system daily. Conduct User Training Change Companions: These influential individuals Perform System Testing help promote the new system and support their Manage Vendor Relationships colleagues through the transition. Phase 4: Monitoring and Controlling Phase This phase runs concurrently with the execution ORGANIZATIONAL CHALLENGES AND SOLUTIONS phase. Prioritize clear communication about the Key activities: benefits of the new system Track Project Progress Provide comprehensive training programs Manage Changes for all users Ensure Quality Control Encourage feedback and address concerns Monitor Risks promptly Manage Stakeholder Expectations Celebrate small wins and milestones Performance Reporting throughout the implementation process Phase 5: Closing Phase The closing phase marks the completion of the ERP Organizational Culture: set of values, beliefs, implementation project. attitudes, systems, and rules that outline and Key activities: influence employee behavior within an Evaluate Project Success organization. Document Lessons Learned Conduct Post-Implementation Review CORE AREAS OF ERP PROJECT MANAGEMENT Transfer to Operations Scope: Define the requirements that to be Close Contracts achieved for successful completion of project Celebrate Success Timelines: How much time is allocated for this project? KEY PROJECT MANAGEMENT TOOLS Resources: Allocating proper resources & team Gantt Charts: visual representations of a project's members for every area of project. timeline, tasks, and dependencies. Named after Budget: Specifying a proper budget and securing Henry Gantt, who popularized this tool approvals from all stakeholders. in the early 1900s, these charts provide a clear 2. Build a guiding coalition overview of project schedules. 3. Form a strategic vision and initiatives Work Breakdown Structures (WBS): hierarchical 4. Enlist a volunteer army decomposition of the project's total scope into 5. Enable action by removing barriers smaller, more manageable components. 6. Generate short-term wins Risk Management Plans: essential documents 7. Sustain acceleration that outline how potential risks will be identified, 8. Institute change analyzed, and addressed throughout the project lifecycle. ADKAR Model Stakeholder Analysis: process of identifying and The ADKAR Model of Change Management is an assessing the individuals, groups, or organizations outcome-oriented change management method that may impact or be impacted by the that aims to limit resistance to organizational project. change. Created by Jeffrey Hiatt, the founder of Prosci, ADKAR is one of two officials Prosci change Project Management: The application of management methodologies. knowledge, skills, tools, and techniques to project ADKAR Model (Hiatt & Creasey, 2015): activities to meet project requirements. – Awareness of the need for change Change Management: The process of preparing – Desire to support the change and supporting individuals, teams, and – Knowledge of how to change organizations in making organizational changes. – Ability to implement new skills and behaviors Scope creep: The uncontrolled expansion of project – Reinforcement to sustain the change scope without adjustments to time, cost, and resources. Best Practices in Change Management Agile Methodology: An iterative approach to Communication project management and software development Stakeholder Engagement that emphasizes flexibility, collaboration, and rapid Training and Support delivery. Measuring Progress BEST PRACTICES IN ERP IMPLEMENTATION PROJECT Business Process Re-engineering: involves the MANAGEMENT fundamental rethinking and radical redesign of Clear Communication business processes to achieve dramatic Change Management improvements in critical measures of performance Realistic Expectations such as cost, quality, service, and speed. Agile Approach Risk Management KEY CONSIDERATIONS IN BPR FOR ERP User Training IMPLEMENTATION CHALLENGES IN ERP IMPLEMENTATION PROJECT Process Mapping: Thoroughly document and MANAGEMENT analyze existing processes to identify areas for Scope Creep improvement Data Migration Gap Analysis: Compare current processes with Integration with Legacy Systems ERP system capabilities to identify discrepancies Resistance to Change and opportunities for optimization. Resource Allocation Process Standardization: Streamline and RECENT TRENDS IN ERP IMPLEMENTATION PROJECT standardize processes across different departments MANAGEMENT or business units to maximize ERP efficiency Cloud-based ERP Customization vs. Adaptation: Decide whether to AI and Machine Learning customize the ERP system to fit existing processes or Mobile ERP adapt processes to the ERP system's standard Continuous Updates functionality Change Impact Assessment: Evaluate how Change management process changes will affect different stakeholders process of helping individuals and and develop strategies to manage the impact organizations transition from their current state to a desired future state. BPR Methodology in ERP Context structured approach to transitioning 1. Identify the need for change. individuals, teams, and organizations from a 2. Define the scope. current state to a desired future state. 3. Analyze existing processes. Principles of Change Management: 4. Redesign the processes. – Create a sense of urgency 5. Communicate and gain buy-in. – Form a powerful coalition 6. Implement the new processes. – Create a vision for change – Communicate the vision Challenges – Remove obstacles Resistance to change from – Create short-term wins Employees – Build on the change Lack of top management support – Anchor the changes in corporate culture Inadequate resources or budget Misalignment between BPR goals and KEY CHANGE MANAGEMENT MODELS overall business strategy Critical Success Factors Kotter’s 8 Step Change Model: framework for Strong leadership and clear vision implementing change in organizations. Developed Effective change management strategies by John Kotter, a professor at Harvard Business Comprehensive training and support School, the model is based on years of research programs and practical experience. Robust project management Kotter's 8-Step Change Model Continuous communication and 1. Create a sense of urgency stakeholder engagement