Business Process Re‐Engineering Shivaji University Syllabus

B.P.R. ishWAR Page 1
CHAPTER 1
Business process re-engineering
Business process re-engineering (BPR) is a business management strategy, originally
pioneered in the early 1970s with pioneer Philip Crosby, focusing on the analysis and design
of workflows and business processes within an organization. BPR aimed to
help organizations fundamentally rethink how they do their work in order to dramatically
improve customer service, cut operational costs, and become world-class competitors.
BPR seeks to help companies radically restructure their organizations by focusing on the
ground-up design of their business processes. According to early BPR proponent Thomas
Davenport (1990), a business process is a set of logically related tasks performed to achieve
a defined business outcome. Re-engineering emphasized a holistic focus on business
objectives and how processes related to them, encouraging full-scale recreation of
processes rather than iterative optimization of sub-processes.
Business process reengineering is also known as business process redesign, business
transformation, or business process change management.
Business process reengineering (BPR) is the practice of rethinking and redesigning the way
work is done to better support an organization's mission and reduce costs. Organizations
reengineer two key areas of their businesses. First, they use modern technology to enhance
data dissemination and decision-making processes. Then, they alter functional organizations
to form functional teams. Reengineering starts with a high-level assessment of the
organization's mission, strategic goals, and customer needs. Basic questions are asked, such
as "Does our mission need to be redefined? Are our strategic goals aligned with our
mission? Who are our customers?" An organization may find that it is operating on
questionable assumptions, particularly in terms of the wants and needs of its customers.
Only after the organization rethinks what it should be doing, it does go on to decide how
best to do it.[1]
Within the framework of this basic assessment of mission and goals, re-engineering focuses
on the organization's business processes—the steps and procedures that govern how
resources are used to create products and services that meet the needs of
particular customers or markets. As a structured ordering of work steps across time and
place, a business process can be decomposed into specific activities, measured, modelled,
and improved. It can also be completely redesigned or eliminated altogether. Re-
engineering identifies, analyzes, and re-designs an organization's core business processes
with the aim of achieving dramatic improvements in critical performance measures, such as
cost, quality, service, and speed.
Re-engineering recognizes that an organization's business processes are usually fragmented
into sub-processes and tasks that are carried out by several specialized functional areas
within the organization. Often, no one is responsible for the overall performance of the
entire process. Reengineering maintains that optimizing the performance of sub-processes
can result in some benefits, but cannot yield dramatic improvements if the process itself is
fundamentally inefficient and outmoded. For that reason, re-engineering focuses on re-

designing the process as a whole in order to achieve the greatest possible benefits to the
organization and their customers. This drive for realizing dramatic improvements by
fundamentally re-thinking how the organization's work should be done distinguishes the re-
engineering from process improvement efforts that focus on functional or incremental
improvement.
Need for Business Process Reengineering
“Business Process Reengineering” or “process reengineering” (or process redesign) or simply
“reengineering” is focussed on “breakthrough” improvement to dramatically improve the
quality and speed of work and to reduce its cost by fundamentally changing the processes
by which work gets done.
For organisations that want to survive and grow, improvement is not an option but a
compulsion. For organisations that seek to thrive, dramatic improvement is often the only
key to success. Small improvements are always necessary, but sometimes quantum leaps
are needed if an organisation is to forge ahead. (Ten percent improvement can be created
by tinkering, but 50 percent improvements call for process redesign).
Whether an organisation realises that the old ways of doing things needs changing or its
customers are demanding a change or competitors are taking over its market share, or not,
many processes in the organisation may need reengineering, not a minor tweak, but a major
overhaul.
Some of the symptoms that signal that it is time to start reengineering are:
(i) It takes too long for an organisation to move its products from conception to the market
place as compared to its competitors.
(ii) The budgeting process may be too complex and
(iii) The services provided by the organisation are not compatible with its customers’ needs.
Business process reengineering is a refreshing new approach to do business. There is plenty
of evidence that it works well – perhaps with performance gains of 100 to 300 percent for
some recognised processes.
Success in reengineering requires fundamental understanding of processes, creative
thinking to break away from old tradition and assumptions and effective use of information
technology. Pepsi-Cola, for example, had embarked on a program to reengineer all of its key

business processes such as selling and delivery, equipment service and repair, procurement
and financial reporting.
Objectives Of Business Process Reengineering
The following are the objectives for entities to opt for BPR:
 BPR enable the entity to increase effectiveness and thereby deliver higher quality
products to the customer.
 BPR enables the company to improve efficiency in the production processes
involved.
 Cost saving can be achieved in the long run with the help of BPR.
 BPR provides more meaningful work to employees.
 BPR enables a company to be more adaptable and flexible towards changes in the
future.
 BPR enables new business growth and expansion.
The Role of information technology in BPR
Information technology (IT) has historically played an important role in the reengineering
concept. It is regarded by some as a major enabler for new forms of working and
collaborating within an organization and across organizational borders
BPR literature identified several so called disruptive technologies that were supposed to
challenge traditional wisdom about how work should be performed.
 Shared databases, making information available at many places
 Expert systems, allowing generalists to perform specialist tasks
 Telecommunication networks, allowing organizations to be centralized and
decentralized at the same time
 Decision-support tools, allowing decision-making to be a part of everybody's job
 Wireless data communication and portable computers, allowing field personnel to work
office independent
 Interactive videodisk, to get in immediate contact with potential buyers
 Automatic identification and tracking, allowing things to tell where they are, instead of
requiring to be found
 High performance computing, allowing on-the-fly planning and revisioning
Now the IT comes into picture in the process implementation stage. For example, in case of
automobile manufactures, they used to have design centres in one location and
manufacturing centres in another location and marketing offices in another location. In this
scenario, once the marketing executive takes the requirements from the customer, he has
to send them by surface mail to the design centre. The design centre drafts are sent through
surface mail to the manufacturing plant. This used to take several weeks, before the product
comes out of the plant. With the advent of IT and communications technology, this is
possible to roll out the product in days time in current days. The marketing executive
gathers the requirements and sends them to the design centre through Internet. Then the

design centre sends the designs through Internet or email to the manufacturing plant. Some
of the companies even went ahead and developed distributed systems and databases using
data and voice communication systems. Like this the turnaround time can be reduced using
information technology. The output of process reengineering assignment becomes input to
the IT implementation team. It is better to have IT experts in process implementation stage
in BPR assignments. As explained in the above example, the IT is reducing the cycle time in
attending to the customer requests. Following are the advantages we get if we use IT in
combination with BPR.
•Information Technology can be used to reduce the turn around time, which was taking
long time using manual approaches
•Less chance for fraud
•Less chance for corruption
•More accuracy and precision assured, if the IT systems are implemented properly
•More quantity of work (reports) in less time
•Good quality of work results, services or products
•Quick communication in the team
•Faster communication with customer and other stakeholders
•Efficient progress tracking with IT tools
To get all these benefits out of IT and BPR combination, the team and employees of the
organization are properly trained in IT applications and related technologies. Once business
process reengineering is over in the organization, the redesigned processes of the
organization are to be implemented in the systems. There are two ways to implement them.
That is either manual or automation. It is better to automate if the work is complex and
needs accuracy. Payroll maintenance in organizations is an example of automation activities.
Once processes are identified to automate, the Information Technologies such as hardware,
software and tools can be used in implementing the activities of processes. This part of IT
implementation will be taken care by the IT project managers and project leaders.
Programmers, database experts, application specialists, test engineers and quality experts
are part of the information technology systems implementation. Once these IT systems are
ready they will be given to the actual users and the employees of the organization. The
team, which implemented the IT systems, should provide the necessary training to the users
and the employees of the organization. Project management tools, database technologies,
and data and voice communication technologies, networking technologies, e-commerce and
web technologies can be used in implementing IT systems.
The BPR comprises of following steps/Phases:
1. Define Objectives and Framework: First of all, the objective of re-engineering must be
defined in the quantitative and qualitative terms. The objectives are the end results that the
management desires after the reengineering. Once the objectives are defined, the need for
change should be well communicated to the employees because, the success of BPR
depends on the readiness of the employees to accept the change.

2. Identify Customer Needs: While, redesigning the business process the needs of the
customers must be taken into prior consideration. The process shall be redesigned in such a
way that it clearly provides the added value to the customer. One must take the following
parameters into the consideration:
 Type of Customer and customer groups.
 Customer’s expected utilities in product and services
 Customer requirements, buying habits and consuming tendencies.
 Customer problems and expectations about the product or service.
3. Study the Existing Process: Before deciding on the changes to be made in the existing
business process, one must analyze it carefully. The existing process provides a base for the
new process and hence “what” and “why” of the new process can be well designed by
studying the right and wrongs of the existing business plan.
4. Formulate a Redesign Business Plan: Once the existing business process is studied
thoroughly, the required changes are written down on a piece of paper and is converted
into an ideal re-design process. Here, all the changes are chalked down, and the best among
all the alternatives is selected.
5. Implement the Redesign: Finally, the changes are implemented into the redesign plan to
achieve the dramatic improvements. It is the responsibility of both the management and the
designer to operationalize the new process and gain the support of all.
Thus, the business process reengineering is collection of interrelated tasks or activities
designed to accomplish the specified outcome.

Business Process
A business process or business method is a collection of related, structured activities
or tasks by people or equipment which in a specific sequence produce a service or product
(serves a particular business goal) for a particular customer or customers. Business
processes occur at all organizational levels and may or may not be visible to the
customers. A business process may often be visualized (modelled) as a flowchart of a
sequence of activities with interleaving decision points or as a process matrix of a sequence
of activities with relevance rules based on data in the process. The benefits of using business
processes include improved customer satisfaction and improved agility for reacting to rapid
market change. Process-oriented organizations break down the barriers of structural
departments and try to avoid functional silos.
The three types of business processes are:
 Management Processes: The processes that govern the operation of a system.
 Operational Processes: The processes that constitute the core business of the
organization and create the primary value stream.
 Supporting Processes: The processes that support the core processes. Examples
include accounting and technical support.
Rethinking in BPR
BPR is the fundamental rethinking and radical redesign of business processes to achieve
dramatic improvements in critical contemporary measures of performance, such as cost,
quality, service, and speed.” Instead of starting with an activity flowchart, corporations are
advised to start with a clean slate. They are then told to look into why they perform the
tasks the way they do. A Process Engineer will look at the activities to be performed and
how they can be engineered to invest minimum resources and get maximum returns.
To illustrate the point, let us consider the example of Apple iPod. Apple rethought the way
music ought to be made available to the consumers. The changes it brought were:
 Radical: While all other music labels were selling music via brick and mortar stores,
Apple developed its iTunes software to sell music digitally. (Napster had made digital
music available through a P2P platform earlier, but was sued by music labels for
copyright violation)
 Fundamental: Apple sold single tracks as opposed to whole albums being sold at
brick and mortar shops.
Apple just kept in mind the end need of the consumer and reconsidered whether
conventions were required.

Process identification and mapping
In order to effectively analyze business processes, reviewers need a tool that takes into
account the objectives of the business, the actual work being accomplished, and, most
importantly, the impact of processes on customers. Business process mapping is just that
tool. Process identification is a part of process mapping.
The Four Major Steps of Process Mapping
 Process identification -- attaining a full understanding of all the steps of a process.
 Information gathering -- identifying objectives, risks, and key controls in a process.
 Interviewing and mapping -- understanding the point of view of individuals in the
process designing actual maps .
 Analysis -- utilizing tools and approaches to make the process run more effectively
and efficiently.
The process map should give the following details for any business process:
The total time the business process takes to complete. The total number of on points
involved. The number of departments that the business process involves. The flow of
information. The number of reporting points.
Benchmarking
In process visioning we are dealing with our own processes and strategies. But in
benchmarking we see how other people do it. This related to the idea of adopting “best
practices’. We are not copying the ideas, so we may look for benchmarks in quite different
types of organizations. Benchmarking is a tool to help you improve your business processes.
Any business process can be benchmarked. Benchmarking is a process of identifying,
understanding and adopting outstanding practices from organizations anywhere in the
world to help your organization improve its performance.
The findings we will get after benchmarking:
Who performs the business process very well and has process practices which are adaptable
to your own organization.
Who is the most compatible for you to benchmark with?
Why Do Benchmarking?
To identify quantifiable measures of relative performance.
To develop an understanding of what works well in other/related industries.
Establish what is achievable from an improvement perspective.

Understand how other companies have designed their processes.
s (on
a scale of 1–10)
TYPES of Benchmarking
Internal: comparisons among similar operations within the same organisation - different
site/countries.
External – Competitive: comparison to the ‘best in class’, ‘best in industry’, or direct
competitors.
External – Functional: comparison of practices of companies with similar processes in the
same function but in different industry sectors.
Generic process: comparison of similar processes, eg. order fulfilment, with those in
organisations who are known to have innovative work processes.
Where Can It Be Used?
 Products
 Services
 Costs
 Labour utilisation
 Technology utilisation
 Workflow time to do a job
 Revenue/Profit/Profit margin
 Customers
 Suppliers
Business Process Improvement (BPI)
Business Process Improvement (BPI) is an approach designed to help organizations redesign
their existing business operations to accomplish significant improvement in production.
Effective BPI helps to generate promising results in operational efficiency and customer
focus.
BPI, when implemented by means of a structured methodology, helps companies to reduce
their operational costs and cycle time, enhance customer service and improve the quality of
their products or services.
The significance of BPI is remarkable in today’s competitive market as work processes are
extensively affected by technology. An effective way to achieve a successful Business
Process Improvement is to concentrate more on the business requirement than on the

technology used to achieve the solution.
BPI aims to reduce waste and/or variation in processes to achieve the desired outcome by
using existing resources in a better way. The ultimate goal of BPI is to bring out a drastic
change in an organization’s performance, rather than bringing out the changes in
incremental steps.
Because BPI implementation is a project, all project management principles apply. This
ensures well-organized improvement processes without any conflicts. The steps are as
follows:
1. Define the existing processes and structure in the organization.
2. Identify the outcomes that would add value in achieving the organization's
objectives and the best ways to align the organization’s processes to achieve these
outcomes.
3. Reorganize the workforce in the organization based on the desired outcomes by
means of the various tools available in the BPI process.
BPR & ERP
Business process reengineering (BPR) and enterprise resource planning (ERP)
implementation go hand-in-hand. But which should be done first: BPR, ERP, or both
concurrently?
Performing business process reengineering first ensures that business processes are
optimized before software is configured and also ensures that software functionality will
closely match the actual process steps. This optimization can improve the ERP
implementation by the inclusion and configuration of relevant software features and the
elimination the unnecessary ones. Conducting a BPR exercise provides a common
understanding of business processes for employees, as well as process documentation that
can facilitate ERP education and implementation efforts.
The implementation of ERP software, by its very nature, will require a review and
adjustment of business processes in order to properly install and configure the software.
While such a review and adjustment is not the equivalent of BPR, it can accomplish some
measure of process improvement and can do so more efficiently, cost effectively, and with
less prolonged disruption of personnel.
Doing BPR independently, before ERP implementation, can identify software modifications
to make “the software fit the process.” The modification of a tightly integrated ERP system
can complicate upgrades to future releases and diminish the useful life and ROI of the
overall ERP investment.
Performing BPR in conjunction with ERP implementation may not only be more cost
effective but may lead to a better end result. Most ERP systems incorporate “best practices”
within a specific industry or in general. ERP software may offer process alternatives that

were not considered in the BPR exercise. Additionally, the ERP consultants employed to
implement the software may provide process and industry expertise that was not available
during a separately performed BPR exercise.
Whether you do BPR first or concurrently with ERP implementation, you may get to the
same place. However, doing BPR as an integral part of ERP implementation may bring
together more expertise and alternatives, which can yield a better result.
CHAPTER 2
Evolution of ERP
1960s
1960 Inventory Management andControl
 It + Business Processes
 Maintain Level Of Stock
 Identify Requirements & Set Targets
 Provide Replenishment Techniques & Options
 Monitor Item Usage
 Reconcile Balances
 Report Status
1970 Material Requirements Planning (MRP)
 Scheduling Production Processes
 Operations
 Raw Material Purchases
 Production Structure
 Inventory Levels
 Lot Sizing Procedure
1980 Manufacturing ResourcesPlanning (MRP II)
 Coordinating Manufacturing Processes
 Product Planning
 Parts Purchasing
 Inventory Control
 Product Distribution
1990 Enterprise Resource Planning (ERP)
 Multi-Module Application Software
 Improve Internal Business Processes Performance
 Cross Functions
 Integrated With
 Marketing

 Finance
 Accounting
 Human Resources
2000 ExtendedERP
 Based On Erp
 Connected To Value Chain And More
 Supply Chain Management
 Customer Relationship Management
 Product Lifecycle Management
 E-Commerce
 Ip Based Infrastructure
Introduction
Enterprise resource planning (ERP) is the integrated management of main business
processes, often in real-time and mediated by software and technology.
ERP is usually referred to as a category of business management software — typically a suite
of integrated applications—that an organization can use to collect, store, manage, and
interpret data from these many business activities.
ERP provides an integrated and continuously updated view of core business processes using
common databases maintained by a database management system. ERP systems track
business resources—cash, raw materials, production capacity—and the status of business
commitments: orders, purchase orders, and payroll. The applications that make up the
system share data across various departments (manufacturing, purchasing,
sales, accounting, etc.) that provide the data. ERP facilitates information flow between all
business functions and manages connections to outside stakeholders.
Enterprise system software is a multibillion-dollar industry that produces components
supporting a variety of business functions. IT investments have become the largest category
of capital expenditure in United States-based businesses over the past decade. Though early
ERP systems focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system integrates varied organizational systems and facilitates error-free
transactions and production, thereby enhancing the organization's efficiency. However,
developing an ERP system differs from traditional system development. ERP systems run on
a variety of computer hardware and network configurations, typically using a database as
an information repository.
Need an ERP System
ERP Helps Process Automation
ERP systems allow companies to achieve actual business process automation, managing
important tasks on a daily basis across an organization and freeing up staff to focus their

efforts on more critical initiatives which require personal attention. This not only boosts the
productivity, but also dramatically reduces operating and overhead costs. Without ERP
systems, you can’t have cross departmental collaboration and prudent workflow execution.
Less Errors, More Efficiency
Another reason to deploy an ERP system is to achieve operational efficiency. Error-prone,
awkward, manual processes, etc. can drain company’s money and time. And therefore,
companies must automate critical activities and augment the business process efficiency.
No matter how big or small your business is, or what type of business it is; requiring
different teams and departments to operate as a single can be quite challenging.
Better Communication, Higher Productivity
ERP solutions can help intensify the internal interaction; the solutions also improve
interaction between customers and suppliers. If suppliers can coordinate easily with finance,
marketing and sales or even integrate with an ERP system, then productivity is sure to
increase. Thus, the availability of real-time communication for different groups within an
organization allows rapid responses and managed coordination.
Better Information Management
Many organizations still have inconsistent information across the business. For instance, if
accounts department and call center access two different databases that are not integrated,
customers with a billing question is not likely to get a precise answer if they approach the
call center for help. Such problems may look small on the surface but can add up over time,
resulting in bigger customer satisfaction and retention issues which can adversely affect
revenues and market share.
An ERP system automatically processes transactions and generates audit and financial
reports. By implementing ERP solutions, you can make accounting process more accurate,
faster and smoother than before.
Better Performance Measurement
Above all, an ERP system makes it easier for company staff at all levels, from front end
employees and team supervisors to senior executives and managers – to measure
company’s performance and understand the impacts within the company. The Enterprise
Resource Planning system also empowers organizations to be more receptive to shifts,
rapidly changing tactics to address new customer requirements as they emerge.
Business Integration and Improved Data Accuracy: ERP system is composed of various
modules/ sub modules where a module represents a particular business component. If data
is entered in one module such as receiving, it automatically updates other related modules
such as accounts payable and inventory. This updating occurs at real time i.e. at the time a
transaction occurs. Since, data needs to be entered only once at the origin of the
transaction, the need for multiple entries of the same data is eliminated. Likelihood of
duplicate/ erroneous data is, therefore, minimized. The centralized structure of the
database also enables better administration and security provisions, which minimizes loss of
sensitive data.

Planning and MIS: The various decision support tools like planning engines and simulations
functions, form an integral part of an ERP system that helps in proper utilization of
resources like materials, human resources, and tools. Constrained based planning help in
drawing appropriate production schedules, thereby improving the operation of plant and
equipment. As a part of MIS, an ERP system, contains many inbuilt standard reports and also
a report writer that produce ad hoc reports, as and when needed.
Improved Efficiency and Productivity: In addition to provision of improved planning, ERP
system provides a tremendous boost to the efficiency of day to day and routine transactions
such as order fulfillment, on time shipment, vendor performance, quality management,
invoice reconciliation, sales realization, and cash management. Cycle time is reduced for
sales to cash and procurement to pay sequences.
Establishment of Standardized Procedures: ERP system is based on processes of
international best practices, which are adopted by the organizations during implementation.
Department silos are purged, and maverick practices are done away with. Because of top-
down view available to management, chances of theft, fraud and obsolescence are
minimized.
Flexibility and technology: Due to the globalized environment, where production units,
distribution centers, and corporate offices reside in different countries, organizations need
multi-currency, multi-language and multi-accounting modes, in an integrated manner. These
provisions are available in most of the ERP systems, particularly in products offered by tier 1
and tier 2 vendors. ERP vendors are also quick to adopt latest technologies, from mainframe
to client server to the internet. Unlike a bespoke system, Upgrading to latest technology for
a running ERP system is uncomplicated, involving mostly adoption of service packs and
patches.
Advantages and Disadvantages of ERP
The advantages presented by the ERP are:
 Optimization of business processes.
 Accurate and timely access to reliable information.
 The ability to share information between all components of the organization.
 Elimination of unnecessary operations and data.
 Reduction of time and costs of litigation
 Then, as each module of the ERP system enters the same real-time database, another
advantage is that no duplicate records or playback operations, ie, redundancy is avoided.
 The performance of all work units that make up their business because better use time is
increased. If you previously had to make reports and take them from one place to another,
now the time is spent on other activities.
 To improve performance and save time, optimize the control and analysis of management
decisions there in the long term, reduced costs for the company.
 Another obvious advantage is in terms of customer service, because the response time is
reduced attention to them.

 When a company has an ERP system is more competitive in the environment in which it
operates.
Disadvantages of ERP are:
 The installation of the ERP system is costly. ERP consultants are very expensive take
approximately 60% of the budget.
 The success depends on the skills and experience of the workforce, including education and
how to make the system work properly.
 Resistance in sharing internal information between departments can reduce the efficiency
of the software.
 The systems can be difficult to use.
 Change of staff, companies can employ administrators who are not trained to manage the
ERP system of the employing company, proposing changes in business practices that are not
synchronized with the system.
 Having an ERP system has many advantages, but does not guarantee the total success of the
company. Organizational culture, know how to involve staff and anticipate changes that will
suffer the organization using this system of administration, are important elements for the
completion of the implementation.
 The effectiveness of the ERP system may decrease if there is resistance to share information
between business units or departments. Due to strong changes that implementation of the
ERP system brings in the culture of work, there may be poorly trained or disinterested in
making use of the same staff...
 The benefits of having an ERP system are not presented immediately with the
implementation of the software, they will be evident long after the system is running.
 The culmination of the implementation depends on the ability and skill of the workforce,
also involves education and training, to make the system is correctly applied.
ERP modules
ERP software is made up of many ERP modules. Each ERP module corresponds to a major
area of an organization. Some common ERP modules includes module for finance,
manufacturing, production planning, sales and distribution order tracking etc.
1. ERP Financial module-
For all kind of organizations small scale or large scale organizations benefit from the
implementation of ERP finance module. The financial module is the heart of many ERP
software systems. It can collect financial data from various functional departments and
generated valuable financial reports such as balance sheet and quarterly financial
statements.
2. ERP HR module-
Human resources is another widely applied ERP module. ERP HR module schedules the
management of human resources and human capabilities. HR module maintain a complete
database of employees including contact information, salary details, attendance,
performance, evaluation and promotion of all employees etc.

3. ERP Production Planning Module/ERP Production Module-
Production planning module contains the utilization of manufacturing capacity, parts,
components and material resources using historical production data.
Production planning helps an organization plan production with optimum utilization of all
available resources.
4. ERP purchasing module-
ERP purchasing module schedules the required raw materials. It automates the list of
identifying potential suppliers, negotiating price, awarding purchase order to the supplier
and the billing processes. Purchasing module is built upon inventory control and production
planning modules.
5. ERP inventory module-
ERP inventory module support processes of maintaining the appropriate level of in a
warehouse. It involves-
 Identifying inventory requirements
 Setting targets
 Providing replenishment techniques
 Monitoring item usages
 Reconciling the inventory balance
 Reporting inventory balances
 Reporting inventory status.

6. ERP sales and marketing module-
ERP sales module implements functions or order placement, shipping and invoice order
scheduling. Sales module is integrated with organizations ecommerce websites.
Activities of sales and marketing module-
 Handle pre-sales activities of the organization.
 Complete stock to dock tracking of sales
 Order processing cycle.
 Target setting for executives
 Order amendment history
 Over scheduling over a period of time and tracking delivery schedule.
7. Plant and Machine Maintenance Module-
The plant and machine maintenance module in ERP provides a combined solution for
supporting the operational needs of an enterprise wide system.
ERP plant and machine maintenance module support various options for structuring
technical system with objects, type, function-related views.
8. Quality Management Module-
Quality management module allows the quality department of define its own quality test
cases required at different stages of production, beginning from quality check which is
required during the purchasing of raw materials.
Tasks of Quality management module-
 Quality inspection
 Quality control
 Quality planning
9. Material management module-
Material management module supports the process of maintaining the appropriate level of
stock in a warehouse.
It comes under the activities of inventory control it includes-
 Inventory requirements
 Setting targets
 Providing replenishment
 Techniques
 Monitoring item usages
 Reconciling the inventory balances and inventory status.

ERP life cycle Phases
ERP life cycles, which encompass entire 10 to 20 years of effective operating life, are often
confused with ERP Implementation Life Cycle. Some of the phases of ERP life cycle is shown
in following diagram.
1. ERP Roll out: your chosen software is first implemented in the workplace after going
through an extensive evaluation. The initial roll out of an ERP system itself consists
of various phases commencing with Request for Proposal (RFP) and vendor selection
and ending with go live and hand holding phase. Some important matter concerning
this phase, as given below, will have direct bearing on subsequent phases of ERP
lifecycle:
 Degree of matching of vanilla ERP product to current business need and
extent of customization done, particularly source code customization.
 Commitment of the vendor for future development and their financial health
 Support issues including License fees and escalation thereof.
2. Optimization: the system is configured to business needs. This includes a
customization process. this is to ensure that productivity is increased from a fluid
workflow. After the system is live and rolled out, there will be a period of turmoil.
Due to lack of understanding, a lot pf confusion will prevail amongst users. There will
be teething problems and some software bugs will invariably appear. With
retraining, some tweaking of the system and assistance from a responsive help desk,
this phase should be over within six months to one year and the system should start
stabilizing.
3. Maintenance: this involves taking care of the system on a day to day basis. Creating
new reports, changing the values of taxation to comply with legislation, responding
to user requests. This is the longest period of life cycle, when the organization start
realizing value of their investment. Users will get familiar and start owning the
system. Some changes will be continuing such as new reports, different workflows,

some localisation on taxes etc. Maintenance will be covered by service level
agreement, entailing payment of license fee to the vendor. For a complicated
system, there may be a third party vendor, helping maintenance at site. The license
fee, due to provision of escalation, gets escalated at regular intervals and after some
years, adversely effects Total Cost of Ownership (TCO).
4. Extending Values: running in parallel with maintenance this involves adapting to
business, legislation, and technological changes as necessary. This phase overlap
with the phase of maintenance. New or changed business processes necessitate
minor or moderate changes in the system. There may be extensive changes under
scenario such as i) implementing a new accounting system e.g. International Finance
Reporting standard (IFRS) ii) A new regulatory requirement like Sarbanes=Oxley iii)
Margers and acquisitions/ restructuring. iv) Extending the system with add on
products such as Customer Relationship Management and Business Intelligence (BI).
Sometime the cost changes may be prohibitive, particularly for systems where a lot
of customization has been done during implementation phase.
Parallel to business changes, technological changes also occur. New release and
versions appear for underlaying technological platforms like Operating System and
Data Base. ERP vendors release patches and versions of their products at regular
intervals which needed to be incorporated in the existing system. This usually
involves minor or moderate efforts. But, problem arises where many software
objects were customized during implementation. Retrofitting these objects for
making them compatible with later versions, may turn out to be a major migration
exercise involving exorbitant cost and effort.
5. Decaying Performance: the first signs that the system is coming to an end. Hard to
update, harder to maintain. It simply can't keep up with demand. For an enterprise,
business need and technological requirement, continue to evolve. Cost, Complexity
and difficulty to modify and update the existing system mount. Fixing existing system
is no more viable and provides diminishing return. Alternatives are investigated and
decision of reimplementation is taken.
6. Reimplementation: similar to the initial rollout phase. Based on experience most
businesses try and get the features they need from a vanilla ERP. This reduces
customization needs, time, and cost. Similar to Roll Out phase as mentioned above.
However, the organizations are better organized now. Initial process will be carried
out more professionally. It is likely that they will adopt more of a vanilla version with
minimum need of customization, so that the next cycle gives a better Return on
Investment (ROI).
Objectives of ERP implementation
a. Speed: Speed of ERP system is directly related to time used for implementation or ERP
System
b. Scope: Scope of project is functional and technical features that the company wants to
implement.
c. Resources: Resources includes hardware systems human resource. Software system
technical support and consultants.

d. Risk: The risk of a project is a factor which affects the overall success of ERP
implementation.
e. Complexity- meaning of complexity here is level of difficulty in implementation operating
and maintaining the ERP system
f. Benefits: To get the maximum benefit out of an ERP implementation the software should
be built according to the software development process and all organizational needs.
Different stages of ERP implementation-
1. Pre evaluation screening- Once enterprise has decided to apply ERP system the search
for perfect package start. But there are several of ERP vendors-off many sizes and shapes.
Analyze all the packages before reaching a decision is not an easy process, its very time
consuming. Company should do per-evaluation screening to limit the number of ERP
packages that are to be evaluated by the committee.
2. Package Evaluation: The selection process is the most important stage of the ERP
implementation because the selection will decide the success or failure of the project. ERP
system cost huge investment, once a package is purchased then it is not easy to switch to
another one. The objective of selection process is not to identify a package that covers each
and every need but also find a package that is flexible enough that covers enterprise needs.
Important points to be kept in mind while evaluating ERP software includes:-
 Functional fit with company’s business process
 Flexibility and scalability

 Complexity
 User friendliness
 Quick implementation
 Technology- client server capabilities, database independence, security.
 Amount of customization required
 Total cost, cost of license, implementation, maintenance, customization and
hardware requirements.
3. Project planning phase: The project planning phase is the phase that designs the
implementation process. This phase directs about how follow implementation. Such as time
schedules, deadlines etc. In this phase roles are identified and responsibilities assigned.
The organizational resources that will be utilized for implementation process are decided
and people who are supposed to head the implementation are identified. The
implementation team members are selected and task allocation is done.
4. GAP analysis: In the gap analysis stage companies create a complex model of their
current status i.e. where they are now and where they want to reach. The trick of gap
analysis is vendor covers functional gaps. It is also estimated that ERP package is fulfilling
companies need or not. If not or partially solutions are-
4.1) Pinning your hopes on an upgrade
4.2) Search third party product that might fill the gap.
4.3) Design a custom program.
4.4) Altering the ERP source code. (Most expensive alternative)
5. Reengineering: Implementation of an ERP system involves reengineering of the existing
business processes to the best business process standard. ERP systems are built upon best
processes followed in the industry. Reengineering exhibits the existing way of doing
business.
6. Customization: This is the main functional area of the ERP implementation. In this process
the existing business processes synchronized with ERP package. For a good synchronization
between processes and ERP, all processes have to be understood and mapped in such a way
that the solutions match up with the overall goals of the company.
7. Implementation team training: In this phase of ERP life cycle implementation team is
being trained. At the same time customization is taking place. Training is given to the team
on how to implement ERP system. In the training, company trains its employees to
implement and later run the system. The ERP vendors and consultants will leave after the
implementation of ERP systemis over.
8. Testing: This is the phase where you try to test and break the system. Here we will try to
test the system with real case scenarios like- system overloads, multiple users logging on at
the same time with the same query, users entering invalid data, hackers trying to access
restricted areas and so on.

Test case should be designed in such a way that it can identify the weak links in the system.
All the problems should be fixed before living.
9. Going live- In this phase ERP is made available for all employees and for the entire
organization. The technical side is almost complete, database is ready and running on the
functional side the model is fully configured and tested and ready to go operational.
10. End-user training: In this phase the actual users are given training how to use the
system. The phase starts much before the system goes live. The employees who are going to
use the ERP system are identified, their current skills are noted and they are divided into
groups. Each group is given training on the new system. This training is very important for
the ERP System because now its in the hand of end users.
11. Post implementation/operation and maintain- This post implementation phase is the
most important phase and critical also. Once the implementation is over the vendors and
the hired consultants will go. To get full benefit from the ERP system, it should get
enterprise wide acceptance. There should be sufficient employees who are trained to
handle problem that might arise after implementation. People also required who has
technical knowledge that can make necessary enhancement to the system when ever
required.
ERP Selection Process
Now that you’ve had a chance to think about some of the key ERP selection criteria you
should consider when buying an ERP, it’s time to talk about the formal ERP vendor selection
process. This easy-to-follow. four-stage approach helps you determine your business needs,
evaluate and compare solutions, validate your technical requirements, and negotiate a great
contract.
If you want to select ERP software correctly, you should not just consider features, but go
through the formal ERP selection process as follows:
1. Requirements and Research
You can think of your list of requirements as an ERP selection criteria checklist.
Requirements are what your business needs from a software solution. This will help you
decide whether ERP is the right fit for your business.
Requirements Gathering
When evaluating business requirements, keep in mind that ERP’s greatest advantages lie in
comprehensive data analysis, thorough and accurate reporting functions, and multiple
process automation capabilities. We’ve outlined some excellent questions to ask above as
well as in this ERP requirements list. Here are some additional ideas:

 Evaluate your current business operations and how ERP software can fit into them.
For example, do you need a responsive solution to accommodate your employees
using mobile devices? What are the reporting and metrics that will be most useful to
you when running your business?
 Consult with senior-level executives who can engage and encourage employees in
the process of implementation. If possible, appoint a team to oversee the process of
selection and installation, including an executive and a project manager.
 Take honest stock of the ways your business could and should change. Determine
the ways ERP capabilities can transform your operations and improve business
performance.
Preliminary Research
Armed with your specific business requirements, you can now perform preliminary research
to see which ERP system meets your needs. You can do most of this research online, but you
can also contact ERP vendors and seek informed opinions from colleagues who use ERP
software systems. Also, consider ERP consultants as potential resources to find the right fit
for your business.
2. Vendor ComparisonAnd Sourcing
Informal Enquiries
Use the information you’ve obtained from requirements gathering and research to help you
get relevant, informative answers from potential vendors. This makes it very easy to
determine whether a vendor fits your needs.
 Make sure the vendor’s product works with your existing legacy systems.
 Check whether the vendor has experience in your industry, which increases the
likelihood of a smooth transition.
 Verify that the vendor completely understands your business needs and provide the
vendor with any project plan you’ve drawn up.
3. Technical Validation
Once you’ve submitted information requests to vendors and received responses, it’s time to
thoroughly evaluate the available ERP systems.
Technical Evaluation Scorecards
Tech evaluation scorecards are an invaluable tool when it comes to selecting ERP software.
Comprehensive scorecards accurately and thoroughly evaluate ERP systems, providing a
detailed breakdown of every function and capability. You should assess the ERP system
using at least four criteria: cost, supporting user needs, improvement of internal processes
and flexibility.

Demos, Proof of Concept and More Questions to Ask
After you’ve narrowed down your list of vendors by using tech evaluation scorecards and
proposal information, it’s time to request demos from the vendors. It’s very important to
see an ERP system in action, and a reputable vendor won’t have any trouble arranging a
thorough demonstration. In addition to demos, request documentation that addresses how
the ERP systemwill meet your business needs.
 Can the software be implemented in phases?
 How are technical problems handled?
 How is training handled?
 What are the costs of hardware and software replacements/updates?
 What features does the software have for managing inventory and logistics?
 Can the software streamline customer service?
 How can the software be used in the human resources department?
 What are the mobile capabilities of the software?
 How long should the ERP last?
4. Financial Due Diligence
Business Case Review
Evaluate the capabilities and cost of an ERP system against your business processes and
needs, your organization’s budget, and the projected savings to ensure the ERP system will
benefit your business and that it is financially viable at this time. Budgeting concerns and
expenses ultimately determine the long-term viability of an ERP system.
Consider what the true cost of ownership of implementing an ERP project will be. Will fees
be one-time or recurring? If recurring, will they be annual or monthly fees? What are the
costs of installing the solution on-premise versus in the cloud? What would the estimated
costs be to update the software if your business underwent a restructuring? Also consider
whether the vendor will provide support and training during and after the installation,
which may affect your costs.
Evaluating Potentially Hidden Expenses
Before choosing an ERP, you should calculate the costs of replacing hardware, updating the
software program and performing routine maintenance. Proprietors frequently evaluate

expenses related to helping inexperienced representatives use the software and connecting
the system to existing equipment.
Vendor Viability and References
Before investing in an ERP system, ensure potential ERP software vendors are responsible
and respected within the industry. You may want to perform additional research at this
point. If you haven’t already, request information from the vendor’s other clients and seek
opinions from your professional network.
Contract Negotiation and Close
After you’ve chosen your vendor, received your quote, reviewed your proposal and
completed your case review, it’s time to negotiate your contract. Approach negotiations
confidently, armed with your business needs, required ERP capabilities and financial
constraints.
This strategy allows you to easily find and select your ideal ERP system. While it may be
time-consuming and labor-intensive, your meticulous ERP software selection process will
pay off. But to make things a little bit easier, we provide technical evaluation scorecards for
extra diligent documentation. Before long, you’ll find the perfect ERP solution for your
business.
Problems in ERP selection
Selecting the right ERP package is one of the most important factors in a successful ERP
implementation. Trying to implement the wrong package increases the cost and time of
implementation. More importantly, it also increases the chances of project failure. There
are several ways an ERP selection can go wrong. Here are some things to avoid.
No Structured Selection Process
An ERP system represents a major application of resources to a complex product. This is not
something you can select haphazardly. At the very beginning of the selection process you
need to establish a method for handling the selection and then stick to it.
Not Knowing What You Need
One of the first steps in selecting an ERP system is developing a list of your needs. Prepare a
detailed list of user needs you can use as a yardstick to measure your candidate systems.
Look both at existing processes and new, revised processes in determining what should be
on the list.
Not Matching The Product To Your Needs
There are a large number of ERP systems available and most of them are more-or-less
specialized toward various industries and businesses. It's important to select a product
which is strong in your areas.

Confusing Must-Haves With Nice-To-Haves
There are some features you must have in your ERP system and there are some features it
would be nice to have. In examining candidates it's important not to mix up the two. You
should have lists of must-have features and nice-to-have features and keep the two
separate when you're looking at potential candidates. You also need to be aware of the
difference between an item on a list and a feature which is actually useful in a production
environment. Vendors tend to add as many features as possible to their products, often
without concern for how practically useful they are.
Relying On Canned Vendor Demos
Because of the expense and time involved in preparing customized demonstrations, vendors
like to rely on prepared demos that show off their product to its best advantage. This is
convenient for the vendor, but it doesn't necessarily give you the information you need.
Insist on a realistic demonstration in the context of your company's needs. This should
include exception conditions, such as product out of stock and other potential problems.
In the demonstration pay close attention to ease of use and intuitive operation. Remember
your people will be repeating these operations dozens or hundreds of times a day. Pay
special attention to the servers and desktops the demo is running on. ERP systems require a
lot of system resources and it's important to get an idea if your current equipment can
support the package effectively.
Over Emphasis On Cost
Cost is an important factor in selecting an ERP package, but it shouldn't be the determining
factor. The functionality of the system and its ability to meet your needs comes first.
Remember that most of the cost of an ERP project is not in the cost of the system. It is in
the cost of implementation, including auxiliary jobs such as data migration. A poorly chosen
system can significantly increase the cost of the implementation and wipe out any savings in
system cost.
Failure To Use Objective Professional Services
With so many choices and so many factors, you need help in making a selection. Ideally you
want a consultant with wide experience with ERP packages and no connection with any of
the vendors. The consultant should be able to help you understand your needs and how
they match up with the available ERP packages. He or she should also be able to help you in
all phases of the selection process, especially evaluating the offerings. Choose your
consultant carefully, as who you choose will have a major impact on your ERP selection.

ERP implementation team structures
There are typically three team structures within an ERP implementation team:
 The Executive Steering Team (EST)makes up the highest level of management for the
project. The EST consists of senior managers who head the various departments
impacted by the project. One of the key responsibilities of this team is to define the
scope in terms of time and budget. Team members may include the Chief
Implementation Officer, implementation partners from outside consulting firms, and the
other department heads such as the Sales or Accounting Manager.
 The Project Management Team (PM) reports directly the EST. Experts in the field
recommend that project managers are not recruited directly from the IT department
because ERP implementations should not be confused with IT projects; they are a much
more collaborative and dynamic and therefore should not be led by the IT team,
although the PM team should most definitely include an IT Project Lead. The PM team
should also include a Consulting Project Manager, as well as a Site Manager if the
implementation is a multi-site project.
 The Core Team takes on the actual execution of the project, including business analysis,
consulting, and development. As head of the Core Team, the Team Lead is in charge of
communicating with the PM team. Other team members consist of one or more
Application Consultants, Functional Analysts, and Internal Developers. The combination
of these roles depend on the size of the project. A Site Coordinator will also be necessary
if the project involves multiple sites.
Role of an ERP Consultant
Offering Experience, Independence: Drawing on decades of experience in enterprise
technology, the role of an ERP consultant is to view the project from an outside perspective
based on industry best practices. Independent consultants are not software resellers and do
not receive compensation from software companies. They keep up-to-date on the vendor
landscape, technology platforms and offerings of modern ERP and can provide unbiased and
vendor-neutral guidance.

Sharing Industry Knowledge: The role of an ERP consultant is to offer experience
implementing ERP software in a specific industry or with other similar businesses. A good
consultant will also suggest best practices from outside of the industry that could be of help
to the business if incorporated.
Providing Specialized Skill Set: The role of an ERP consultant also involves project
management, functional expertise, risk mitigation and scores of other specific skills.
Leading Business Process Transformation: There’s value in obtaining unbiased opinions
about what’s working or not working regarding business processes. This expert outsider’s
perspective can be invaluable throughout the project to counter the team’s personal biases,
based on their job roles and how things have been done in the past.
Driving Change Management: Selecting and implementing an ERP system results in big
changes for the entire business. These changes can be overwhelming for your team and the
rest of your workforce. An ERP consultant draws on organizational change
management skills to help in user adoption and acceptance of the project.
Managing Implementation: When the role of an ERP consultant is involved in
implementation, the project has a higher likelihood of success when led by resources with
experience in setting the plan, project management, ERP data conversion, and all aspects
of ERP implementation. Once again, the involvement of an independent resource helps keep
the project on time, within scope and on budget – and helps mitigate any conflicts with the
vendor.
Providing Training: In many projects, the role of an ERP consultant is to help develop and
deliver user training, ERP education and support during the entire project – from selection
to go-live.
Preparing Test Cases: Sometimes Functional consultants are also expected to prepare test
cases for testing the current ERP system. Testing may also include Unit testing, System
Integration Testing, Performance Testing, User Acceptance Testing, Regression Testing, or
any client specific software testing.
Reporting: Consultant helps in performing daily activities with respect to ERP software and
provide complete activity reports on the plan, schedules, demo, go live, support phases.
Documentation: Consultant helps in preparing the system design and documentation
including forms, workflows, processes, fields and every other areas which companies are
looking out in their ERP system. Documentation also includes the project plan and phases of
ERP system. This helps business to create a proper goals of go live.

Hardware and Software requirements of ERP
To implement SAP ERP, we need to find out the minimum hardware and software
requirements. The minimum systemrequirements should be met to perform the
implementation successfully.
The following are the minimum requirements for SAP R/3 installation −
Minimum hardware requirements
CPU: Intel PIII 500 MHZ
HDD: 30 GB
RAM: 256MB
Ethernet Card for LAN connectivity
Minimum software requirements
Windows Server
Windows Server Service Pack
Internet Explorer
Database Software Ex: Microsoft SQL Server
SAP R/3 System
Report Data CD
Export CDs
SAP GUI
SAP R/3 Kernel CD
Dynamic Link Libraries or DLL
Active Directory Service Interface or ADSI
Microsoft Management Console or MMC
Hardware requirements to install SAP ECC 6.0
HDD − 250GB + 45GB Hard Disk Space
RAM − Minimum 4 GB of RAM — The more the capacity of RAM, the less time it takes for
installation

CPU − Intel Dual Core or Core 2 Duo Processor — If you have a 64-bit processor, you can go
for ECC 6.0 EHP4 instead of ECC 6.0 SR2.
CD Drive to copy the software
Software requirements to install SAP ECC 6.0
Windows server 2003 32-bit SP 2 or Windows Sever 2003 64-bit OS.
Driver CDs
Adobe Acrobat Reader for Installation Manual
System Requirements
CLOUD/SAAS
Please note that this page describes the server requirements if you elect to run Fitrix on
your premise based server or via private hosting. Fitrix is also available in a Cloud/Software-
As-A-Service (SAAS) model which does not require any server.
SERVER HARDWARE REQUIREMENTS
The following specifications are the minimum recommended for a physical or virtual server
that will support up to the indicated number of users for a typical Fitrix ERP implementation.
A useful system life of 3-5 years is anticipated. Hardware resources of less than those
recommended below may provide more than adequate performance for some
implementations; however, growth should be considered. Another factor not
comprehensively addressed by these recommendations is upgrade capability. Remember
that hardware technology and prices change rapidly and these recommendations are based
on readily-available products on the date this document was last updated.
Require-
ments
10 Users 25 Users 50 Users
100
Users
CPU Type Pentium
4
Pentium
4
Pentium
4 or Xeon
Xeon
# of
CPU’s(1)
1 Single
Core
1 Dual
Core
1 Quad
Core
2 Quad
Core
CPU
Speed
2.8ghz+ 2.8ghz+ 2.8ghz+ 2.0ghz+

Require-
ments
10 Users 25 Users 50 Users
100
Users
RAM(2) 2 GB+ 8GB 16GB 32GB
Processor
Bits
64 bit 64 bit 64 bit 64 bit
Video(3) Any Any Any Any
Disk
Storage
32GB
SATA or
SCSIhard
drivesw/
RAID
64GB
SATA or
SCSIhard
drivesw/
RAID
128GB
SATA or
SCSIhard
drivesw/
RAID
160GB
SATA or
SCSIhard
drivesw/
RAID
Backup
Device
Internet
or NAS
withoff-
site
Internet
or NAS
withoff-
site
Internet
or NAS
withoff-
site
Internet
or NAS
withoff-
site
Network
Card
Ethernet
10/100
/1000
Ethernet
10/100
/1000
Ethernet
10/100
/1000
Ethernet
10/100
/1000
Remov-
able
Media
CD or
DVD and
USB
Drive
CD or
DVD and
USB
Drive
CD or
DVD and
USB
Drive
CD or
DVD and
USB
Drive
Power
Protection
U.P.S.
and
surge
protector
U.P.S.
and surge
protector
U.P.S.
and surge
protector
U.P.S.
and surge
protector
SERVER OPERATING SYSTEM REQUIREMENTS
Fitrix is supported on a native Linux Server or can be shipped as a ready to use pre-
installed VMware virtual environment that can be hosted on a Windows server or any Intel
based server that supports VMware (Windows, Linux, ESX, ESXi)
Linux ServerSoftware Requirements – Overview

Development or Professional version of Linux software
Supported Linux Distributions (click complete requirements link below for supported
versions)
Red Hat Enterprise Series
CentOS
SUSE
Debian
Ubuntu
For all others, please contact Fourth Generation Software
VMware Server (Pre-Installed Fitrix Server Virtual Environment) Software Requirements –
Overview
Server Options:
Windows
Linux
ESX
ESXi
Server chipset must be Intel
VMware version 2.02 or later
CLIENT HARDWARE AND O/S REQUIREMENTS
Windows Client: (Minimum Requirements)
Intel processor (pentium and up)
10 MB available hard drive space
32 MB RAM
TCP/IP and Telnet connection to Linux Host
Windows XP or better (Win XP/7/8)
X11 (X-Windows) Client (Client must be Intel processor based and support WINE)

ERP implementation strategies
Big Bang Implementation Approach
A big bang ERP implementation happens in a single major event. The installation ofERP
systems and all the modules happens across the entire organization at once, hopefully after
a great amount of proper planning. Of course, there are many pre-implementation activities
that need to be carefully planned and carried out in preparation for this big bang event but
once these activities are carried out then the old system will be turned off so the new
system can take over. This implementation methodology was commonly used in the earlier
days of ERP -- and also contributed to the higher rate of failure – but it is also quick and
often less costly in the long run. Here is a quick look at the advantages and disadvantages.
Advantages:
• Shorter implementation cycle
• Cost effective in the long run
• From an employee perspective this is much easier to use as they don’t need to use two
different systems for different needs
• Implementation date is fixed and everybody is mentally prepared
Disadvantages:
• Needs very meticulous planning in terms of fall back options
• More difficult to manage and there may be multiple dependencies
• Employees may have less time to familiarize themselves with the new system
•Planning has to be absolutely flawless as the risks associated with this approach are very
high
• Any failures on one systemcan have a cascading effect on others
• There could be an “Initial Dip Phenomenon” which happens shortly after any
implementation because users are struggling with the new system and organizational
performance suffers
Phased Rollout Approach
This is different from the Big Bang because the changes do not happen all at once but rather
in a series of pre-determined steps and over a period of time. For example, a phased rollout
might be approached by module, business unit, or location:

Phased Rollout by Module –
This is the most commonly approach. The modules are implemented one by one. The critical
ones are implemented first and then the rest get added over time. In this approach the
recommendation is to begin with core business functions – those necessary for daily
operations -- and then slowly add in more modules and functionality with each phase. The
reasoning behind this is that you are going to gather a great amount of learning and the
necessary experience since the nuances of the system are exposed to you much earlier
which makes you better prepared for the implementation in each subsequent phase of the
project.
Phased Rollout by Business Unit –
This approach is usually done by larger organizations. Here, implementation is carried out in
one or more business units or departments at a time. For example, you begin with
implementation in Material Management and then move to Inventory, Accounting, Payroll
etc. As the team gains more experience with each implementation, the subsequent phases
become more efficient.
Phased Rollout by Geography –
For organizations with multiple locations, a phased rollout by geography is a common
approach. For example, you begin with implementation in APAC, and then slowly you move
to EMEA, Americas and other geographic locations. Each of the geographies will have their
own business process defined and the challenge here is to agree on a common business
process at least 80% and the other 20% could be customized depending upon the specific
needs of the geography. This approach is also called pilot approach. Again, there are
advantages and disadvantages for phased implementations.
Advantages:
• Very helpful if the team is new and less experienced in the given technology
• Provides enough time to consolidate all the learning and thus allow subsequent phases
can go smoother
• It may not need such meticulous planning in terms of fall back options
• Less difficult to manage as the focus is limited
• Employees have enough time to familiarize themselves with the new system
• In case of any failure on one system, it may not have an adverse cascading effect on others
• With conversion occurring in parts, time is available for adjustments

Parallel Run Approach
This is one of the least risky ERP implementation methodologies as it includes running of the
old and the new ERP system together. This has also been referred to as “parallel
conversion,” “parallel running,” or “parallel cutover.” As both of the systems work in
parallel, users can learn the new system while performing regular work activities on the old
system. Once the new system meets all the requirements, the old system is discontinued.
Here are the advantages and disadvantages.
Advantages:
• It is the least risky implementation
• Pace of change is much slower than big bang but faster than phased approach
• In case of any unforeseen failure with the new system, the old systemstill continues
• It allows overlap and fall-back controls
• Does not need very meticulous planning in terms of fall back options
Disadvantages:
• In terms of pure financial terms, this is the most expensive solution
• Employee has to enter data into both the system.
• Employee may continue to use the old system thus making the new system least effective
• Users tend to compare the old and new and take an unnecessarily negative stance against
the unfamiliar
• Users have psychological issues letting go off the old system
There is no one single ERP methodology that covers all the disciplines required for an ERP
implementation. There is no one-size-fits-all when it comes to implementing an ERP system.
The trick is to learn how to integrate these different methodologies together. Every
company has unique goals, and an implementation requires careful planning and analysis.
ERP Costs
1. Implementation
2. Training
3. Development for Customization
4. Process Redesign
5. Maintenance
6. Upgrades
7. Support

To give you a estimate, the average would be between 1 - 20 lakh depending on number of
users and amount of customization.
Licensed v/s Open Source
There are basically two major types of ERP, proprietary and open source. For proprietary
ERPs, you pay a license cost + implementation upfront. Apart from that the company will
charge you an AMC + cost of ongoing services like hosting. If you go for an Open Source ERP,
there is no license cost, so it will immediately result in a saving of 50%.
On Premise v/s Hosted
You can either choose an on-premise of hosted option. Even with hosting you can either
host your own cloud via Amazon etc or host on your own physical servers. These days, you
would mostly host an ERP on a public cloud service rather than setup your own servers.
You can also go for a subscription model, where you will pay based on the number of users
that you can use. This can reduce your upfront cost. For example, ERPNext comes at cost of
Rs 20,000 per year for 5 users. This might be the most affordable option available anywhere.
Customization
The biggest cost for an ERP is the customization cost. Based on my experience of more than
500 companies, it is my strong recommendation to absolutely minimize the customization in
the initial implementation. Customizations are expensive and can increase the life time cost
of an ERP and lead to maintenance headaches.
Try going with the standard features and do the first round of data migration and going live.
Then after a year or so, identify the best opportunities for automation and build your
customization around that.

Microsoft Dynamics
Desktop ERP from Microsoft. Does most of the work for you. Widely used and large
customer base
Price
Starts Rs. 50,000/- per year for a user
100% Annual Renewals
Sage
Global ERP Provider. Desktop and Mid priced. Can automate businesses quite well.
Price
Starts Rs. 120000/- per year.
100% Annual Renewals
Reach ERP
Online ERP Software ideal for any business. Saves money by leveraging the power of the
Cloud. No Investment in Servers. Information is shared across departments realtime
Price
Starts Rs. 6000/- per year.
20% Annual Renewals

CHAPTER 3
ERP Vendors
 Microsoft Dynamics
The Microsoft Dynamics ERP suite includes Microsoft Dynamics AX, an accounting and
finance, HR and CRM tool; Microsoft Dynamics GP, a mid-market accounting suite; and
Microsoft Dynamics NAV and Microsoft Dynamics SL, both SME ERP platform.
 Oracle e-Business_Suite
A modular ERP platform, the Oracle e-Business Suite has many elements including Oracle
CRM, Oracle Financials, Oracle Logistics, Oracle Order Management and Oracle
Warehouse Management Systems. The software makes use of the Oracle database.
 SAGE
Sage Line 500 and Sage 1000 are the cornerstone ERP solutions for thousands of UK
businesses. Developed for the UK mid-market from day one, the Sage Line 500 and Sage
1000 Suites offer customers a broad range of capabilities including CRM, HR, Payroll and
Business Intelligence.
 SAP Business_One
Aimed at SMEs, SAP Business One contains over a dozen core modules, such as
Financials, Sales Opportunities, Purchasing Banking, Human Resources, E-commerce and
WebCRM.
 Infor Global_Solutions
Infor is a large business software provider which has several ERP suites, such as Infor ERP
LN, Infor ERP SyteLine, Infor ERP VISUAL, Infor ERP Adage and Infor ERP LX. They are built
on an open, flexible, service-oriented architecture (SOA) with web-based user interfaces.
 NetERP from_NetSuite
NetSuite supplies on-demand, integrated business management software suites aimed at
mid-market enterprises and divisions of large companies. It offers hosted accounting,
CRM, ERP, e-commerce and web site development software.
 Lawson Software
Lawson merged with business software firm Intentia International in 2006, to offer mid-

market business an alternative to larger ERP vendors. The vendor’s ERP packages are
Lawson S3 (broadly for service firms) and Lawson M3 (broadly for manufacturers and
distributors.
 SAP: They are the largest ERP solution provider with more than 75.000 customers
and 12 million users and holding around 30% of market share. The flagship Solution,
R/3 is unmatched for its sophistication and robustness. R/3 software gives an option
of around 1000 pre-configured business processes. This solution is available in all
major currencies and languages and can be hosted on several Operating Systems and
Databases. As mid market option, SAP has brought out, Business All in One, a
solution with industry tailored configurations. SAP offering for smaller organization is
SAP Business One. SAP offers a hosted solution, namely SAP Business by Design, for
organizations lacking IT resources.
 Oracle: Oracle is next to SAP in ERP market breadth, depth and share. It offers a
comprehensive, multilingual and multi currency solution, mostly through its channel
partners.. It is the first to implement internet computing model for developing and
deploying its product. Oracle also took over various ERP solution providers during
2000 such as People Soft, JD Edwards, Retek (retail industry solution), and Siebel
(customer relationship management software). It has taken up project Fusion (based
on Service Oriented Architecture) to integrate various products, outcome of which is
keenly awaited.
 Infor: Infor is of recent origin and expanded through a number of acquisitions. Its
acquisition of SSA global during 2006 made it a forerunner as ERP solution provider.
SSA global had two strong product lines, BPCS and BaaN. SSA also made a number of
other acquisitions, such as MAPICS, Lily Software Associate and GEAC. SSA is focused
on building, buying and integrating best of breed solutions.
 Microsoft Dynamics: Microsoft, which did not have an ERP portfolio, started by
acquiring a host of ERP products like Navision, Solomon, Great Plain and Axapta.
Excepting Axapta, which is strong in manufacturing and suitable for mid market,
other products are meant for smaller organizations. Microsoft is much dependent on
channel partners, not only for sales and consulting but also for add on development.
Their solutions are closely integrated with their office suit.
ERP Market
Enterprise resource planning (ERP) markets help businesses, as well as nonprofits and
government agencies, increase productivity. ERP applications are information systems that
bind closely various corporate functions, including human resources, finance and
inventory management, while enabling a company to efficiently manage its customers and
suppliers.
Definition
The ERP market is a global exchange in which software providers and support technicians
sell enterprise resource management software to businesses. The market is global in

nature and includes businesses of all sizes, according to ERPWwire.com, an online ERP
resources provider.
Significance
The ERP market plays a key role not only in corporate decision-making processes but in
global transactions. A company may be at a competitive disadvantage if it cannot find
adequate resource planning applications to boost competitiveness and improve operating
processes in the short and long terms, according to CIO Magazine, an information
technology publication.
Participants
ERP market participants vary by economic stature, industry and operating strategy, notes
CIO Magazine. Large organizations typically purchase ERP software with broad
applicability, including corporate fields such as accounting, finance, human resources
management, sales and purchasing management. Smaller clients, however, buy limited-
scope resource planning software for operating needs.
ERP Market
•The ERP market is a very competitive and fast growing market.
• According to Research, the enterprise resource planning (ERP) market is experiencing
double-digit growth in 2007, and is expected to continue to grow at an average of 10% over
the next five years.
•The ERP market continues to benefit from a widespread acceptance of the idea that
business must have integrated information systems to be competitive.
•SAP continues to be the biggest player in the market with an estimated 43% of the market
share, or about $12.5 billion in revenue in 2006.
•The top players of the ERP market are SAP, Oracle, Sage Group, Microsoft Business
Solutions, Infor Global Solutions, Geac, Intentia, QAD, Lawson Software, etc.
•The popular operating systems for ERP software are Windows and Unix.
•The most popular databases for ERP software are Oracle and MS-SQL Server.
ERP & Related Technology
BPR:
BPR stand for Business Process Re-engineering. It can be define as a management approach
aiming at improvement by means of elevating efficiency and effectiveness of process that

exits within and across the organization. Its main focus is on better business processes. It is
a radical transition that a company must make to keep pace with today’s ever changing
global market and to achieve dramatic improvement in critic contemporary measures of
performance such as quality, cost, service etc. One of the main tools for making this change
is IT. IT and BPR goes together and merger of these two concepts is known as business
engineering.
ERP system helps in integrating various business processes with the help of modern
development in IT and with a good ERP system an organization will be capability of greater
achievement in improvement in cost, quality, and service. The main requirement of BPR
decentralize decision making to decision maker to be responsive to customer needs and also
use of IT, facilitating newly re-engineering process.
Principles of BPR:
 It assumes that current process is irrelevant and does not work.
 To break away from outdated rules.
 Linking of parallel activities.
 Capture information once and at source.
Elements of BPR:
 Business Process
 Integration of business process
 Technology to redesign business process
 Cross functional coordination
 Timing improvement process continuously
 Complement market driven strategies designed to provide a competitive
edge
OLAP:
OLAP stands for Online Analytical Processing. According to business intelligence ltd. OLAP
can be define in five words i.e. fast analysis of shared multidimensional information.
Fast: fast mans that system is targeted to deliver most fast response to user within a few
seconds.
Analysis: IT means that system can cope with any business logic and statistical analysis that
is relevant for application and user.
Shared: It means that system implements all security requirements for confidentiality i.e.
system is prevent from unauthorized person and competitors.
Multidimensional: It means that system must provide multidimensional conceptual view of
data.

Information: It means that data is refined i.e. data is accurate, timely and relevant to user.
OLAP can be used in variety of business area including sales, marketing, financial reporting,
profitability analysis budgeting and planning and many others.
Data Warehouse:
Since operational data can’t be kept in the database of ERP system because as time passes
volume of data will increase and this will affect the performance of ERP system, thus need
arise to save this data.
The primary concept of data warehouse is that data stored for business analysis can be
accessed most effectively by separating it from the data in operational system. Thus Data
warehouse provides the analytical tools. It combines data from sales, marketing, finance,
and other departments.
In other words it can be define as copy of business transaction data specially structured for
query and analysis.
If operational data is kept in database then it will create a lot of problem by affecting the
performance of ERP system. So it is better to archive operational data once its use is over.
‘Use is over’ does not mean that archived data is useless rather it is one of the most
valuable resources of organization. However once the operational use of data is over it
should be removed from operational database. Once the data is imported into Data
warehouse it becomes non-volatile i.e. no modification can be made afterward once data
has been imported in data warehouse. Data warehouse is a blending of technologies
including multidimensional and relational databases because it is integrated data from
different sources and is transformed into a single data format which make it possible to
analyze data in a consistent way.
A well implemented data warehouse is key for understanding business decisions so care
must be taken in entering data into data warehouse otherwise invalid data will produce the
wrong results.
Advantages of Data warehouse:
 Increased quality and flexibility of enterprise analysis as
multidimensional database is used.
 More cost effective decision making.
 Enhanced customer service by maintaining better customer
relationship.
 Better enterprise intelligence.

Data Mining:
Data mining can be defines as extraction of hidden predictive information from large
databases and is a new powerful technology with great potential to help company’s focus
on most important information in data warehouse. It uses advance algorithms,
multiprocessor computations, massive database etc.
Today, for a business organization quality decision making is very important for its success
and decision making is depend upon availability of information. Data mining is the process
of identifying valid, novel, potentially useful and ultimately comprehensible information
from database that is used to make crucial business decision.
Advantages of data mining:
 Automated prediction of tends and behavior: It automate process of finding
predictive information in large databases.
 It has a much lower cost than hiring highly trained professional statistician.
 It can be incorporated with DSS (Decision Support System) which helps the manager
to take wise and quality business decision.
Oracle ERP
It is a suit of back office software modules designed to integrate and streamline a
company’s transaction and process. ERP system causes great benefits.
Oracle applications comprise the application software or business software of oracle
corporation.
Oracle ERP is a complete cloud based set of integrated business applications which manages
and automates processes whole of your enterprise. Processes included in modules like:
1. Finance and accounting
2. Human Resources
3. Production and materials management
4. Customer relationship management (CRM)
5. Supply chain management.
These usually operate using database as a repository of information they generate about all
transactions.
Oracle is direct competition of SAP and is intent on snaring the lead from SAP.

•The latest moves of the software giant that include the acquisition of PeopleSoft and Siebel
Systems allowed for Oracle to position its software well.
•This software is known for the flexibility it offers to customers.
ORACLE software runs on the network computers, work stations & micro computers, mini
computers, etc.
•ORACLE 8i is the leading database for internet computing.
•ORACLE database ALLOWS the corporation to access on any data, on any service, over any
network, from any client device
▫Oracle application consists of 45 plus software modules which are divided into following
categories
– Oracle Financials
– Oracle Human Resource
– Oracle Projects
– Oracle Manufacturing
– Oracle Supply Chain
– Oracle Front Office
Oracle's E-Business Suite (also known as Applications/Apps, EB-Suite/EBS, or "E-Biz"[4])
consists of a collection of enterprise resource planning (ERP), customer relationship
management (CRM), and supply-chain management (SCM) computer applications either
developed or acquired by Oracle. The software utilizes Oracle's core Oracle relational
database management system technology. The E-Business Suite contains several product
lines often known by short acronyms.
Significant technologies incorporated into the applications include the Oracle
database technologies, (engines for RDBMS, PL/SQL, Java, .NET, HTML and XML), the
"technology stack" (Oracle Forms Server, Oracle Reports Server, Apache Web Server, Oracle
Discoverer, Jinitiator and Sun's Java). Oracle Corporation brands the on-line technical
documentation of E-Business Suite as eTRM – "E-Business Suite Technical Reference
Manuals".
It makes the following enterprise applications available as part of Oracle eBusiness Suite:
 Asset Lifecycle Management
– Asset Tracking
– Property Management
 Customer Relationship Management
 Enterprise Resource Planning
– Financial Management
– Human Capital Management
– Project Portfolio Management
 Procurement

– Oracle Advanced Procurement
– Oracle Sourcing
 Product Life-cycle Management
 Supply Chain Management[10]
– Supply Chain Planning
– Logistics & Transportation Management
– Order Management
– Price Management
 Manufacturing
– Discrete Manufacturing
– Process Manufacturing
Oracle ERP Cloud Features
 Financial planning and analysis
 Accounting
 Order management
 Enterprise performance management
 Risk management
 Revenue recognition
 Compliance and governance
 Procurement
 Inventory and supply chain
 Financial close
 Project planning and execution
 Product lifecycle
Major Modules in Oracle
Customer Relationship Management
The Oracle CRM (Customer Relationship Management) is a set of applications that gives
you information-driven sales, service, and marketing. Oracle CRM is built on an open,
standards-based architecture that streamlines business processes, improves data quality,
and allows all your key divisions to draw from the same source of data. With Oracle CRM,
your company owns the single best tool for customer success—accurate information.
Services
Oracle’s E-Business Suite family of Service Applications provides true information-driven
customer service. It enables an organization to meet and exceed customer expectations by
empowering them with information that is consistent, accurate, and actionable.
Financial
The Oracle Financials application includes General Ledger, Cash Management, Payables,
Receivables, Fixed Assets, Treasury, Property Management, Financial Analyser and a self-
service expenses function.

Oracle Human Resource Management
The Oracle Human Resource Management System (HMRS) module helps companies
manage the entire recruitment process and provides a real-time view of all HR activities
such as recruitment, training, benefits, and payroll. The HRMS suite fully integrates with all
E-Business Suite applications and offers users an analytics package that allows for easy
extraction of HR data.
Oracle Project
Oracle Projects Portfolio of applications supports the full lifecycle of project and portfolio
management. It provides a single, accurate view of all project-related activities. It allows
users to select the best portfolio of initiatives, execute projects in adherence with
methodologies, assign the right global resources, proactively streamline project delivery,
and track profitability via accurate budgeting, forecasting, and Billings/charge-backs.
Supply Chain Management
The Oracle Supply Chain applications allow organizations to predict market requirements,
innovate in response to volatile market conditions, and align operations across global
networks. There are several industry-specific solutions available that incorporate demand
management, sales, and operations planning, transportation management etc.
Procurement
Oracle Advanced Procurement is an integrated suite of applications that dramatically cuts
all supply management costs. The solution helps you to reduce spending on goods and
services, streamline procure-to-pay processes, and drive policy compliance.
Value Chain and Planning
Oracle’s Value Chain Planning solution enables companies to become more information-
driven with best-in-class supply chain planning applications built around a core of
optimization, sales and operations planning, and performance management.
Oracle Transportation Management
Transportation management (TMS) provides transportation planning and execution
capabilities to shippers and third party logistics providers. It integrates and streamlines
transportation planning, execution, and freight payment.
The TMS function delivers functionality for all modes of transportation, from full truckload
to complex air, ocean, and rail shipments. The benefits of the TMS function include
reduced transportation costs, improved customer service, and greater asset utilization.
Oracle Warehouse Management Systems
Oracle’s Warehouse Management System allows coordinated movement of goods and
information throughout the extended distribution process. The module provides business
processes that can deliver efficient utilization of employees, equipment, and space in the
distribution process.
Benefits include an acceleration of the flow of products through the supply chain while
reducing lead times and releasing working capital, real-time inventory management, cross-
docking, pick-by-line, advanced ship notices (ASN), inbound planning and yard
management.

Configure, Don’t Customize Highly configurable global system lets you tailor the system
without programming.
List of some of the key applications are:
 Oracle HRMS
 Oracle Payroll
 Oracle CRM
 Oracle Financials
 Oracle Mobile Supply Chain Management
 Oracle Order Management
 Oracle Procurement
 Oracle Project Portfolio Management
 Oracle Quotes
 Oracle Transportation Management
 Oracle Enterprise Asset Management
 Product Life Cycle Management
 Manufacturing
CHAPTER 4
ERP in supply chain management
What role does ERP play in a supply chain management strategy?
The integration of Supply chain management and ERP allows manufacturing and distribution
businesses the ability to gain greater visibility into all operations while increasing speed,
efficiency and overall customer satisfaction.
A growing number of businesses recognize the many potential benefits of Enterprise
Resource Planning (ERP) when it comes to managing business information, integrating
various systems and working processes, and ensuring optimal operational efficiency.
When it comes to Supply Chain Management (SCM), businesses need to interact with
numerous suppliers and partners in order to obtain the raw materials and resources needed
to bring finished goods to market. ERP plays a vital role in combating inefficiency; reducing
waste and ensuring that workers are better able direct their efforts. The integration of both
systems may pose some unique challenges. It is in your company’s best interest to ensure
that you and your staff fully understand the role of ERP within the SCM process.
Benefits of Combining Supply Chain Management and ERP Systems
The feature-rich working environment of ERP combined with the more streamlined and
efficient workflow of an effective SCM can provide a range of important advantages,
including:

 Improved efficiency across multiple departments and organizations working within the
supply chain
 Improved customer service for increased customer retention and greater chance of repeat
business opportunities
 Automation of workflow for reduced overhead and operational costs
 IT issues and problems that are less likely to create bottlenecks to impede efficiency
 More flexible supply chain solutions that may be readily adapted to meet the needs of
changing circumstances or future business growth and expansion
Utilize ERP Systems to Ensure Superior Supply Chain Management
A Supply Chain Management system is essential for accessing real-time operational
information across multiple departments and businesses. Lacking clear insight into the
various activities and working processes that constitute your supply chain can leave you
unable to create procedures that offer a sustainable competitive advantage. ERP systems
play a key role in several aspects of the creation and maintenance of a superior Supply Chain
Management process, which may include:
1. Supply Chain Planning
Supply chain planning includes the selection of marketing channels, promotions,
determining the quantities of stock and inventory required and ensuring replenishment and
production policies are able to keep up with demand. ERP systems offer an easier and more
flexible way to establish and alter the parameters within which a supply chain is required to
operate.
2. Purchasing, Procurement and Execution
Feature-rich ERP software applications provide a more effective way to handle procurement
and supply of the goods, services and other resources that are needed across the supply
chain. From manufacturing and warehouse resources to transportation and execution
processes, ERP systems offer cross-platform visibility on all aspects of the supply chain.
3. Monitoring and Maintenance
The ability to monitor, review and alter supply chain efforts and activities in real-time is
essential for ensuring your business is able to maintain the flexibility needed to stay
competitive and ensure cost-effective operations.
4. Measurement and Assessment
Comparing actual activity against projected goals and targets can be all but impossible for
those who rely upon a supply chain that utilizes multiple stand-alone systems and workflow
processes. ERP systems offer superior information aggregation and organization to ensure
that any undesirable variances throughout the supply chain are quickly identified and
effectively addressed.

Business Process Re‐Engineering Shivaji University Syllabus

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