What are the Factors to Consider When choosing ERP Software? (MIS 15.06.2021)

What are the Factors to Consider When choosing ERP Software?

Suppose you already weighed the cost-benefit ratio of getting an ERP, and you’re convinced it’ll drive overall profitability. You now need to consider these key factors to ensure you optimize your ROI.

 

1. Upgrade vs. Replacement.

Evaluate first if you need to get a new ERP system or just an upgrade. Many ERP solutions today are modularized. You can simply integrate a module, for instance, payroll, with your current applications. This way, you minimize disruption and costs. But if your ERP system is ten years or older, it may be wise to replace it. You can leverage today’s ERP solutions for mobility, integration, scalability, and deployment options. Similarly, machine learning, predictive analysis, and advanced reporting are pushing ERP to the next level.

 

2. Training and Setup.

On-premise ERP solutions need to be installed by someone with technical know-how. If you lack a tech team, make sure you understand your service level agreement. Installation is often charged separately from the license, but some vendors offer all-in bundled plans. For SaaS ERP, setup is as easy as activating an account to access the vendor’s server. Likewise, ERP is more complex than most business solutions, so it requires user training. Does your vendor provide this service? Whether bundled in or exclusive to the plan, the kind of training you’ll receive should serve for average users to adopt the system.

 

3. Reporting and Dashboards.

Go beyond spreadsheets and PDF exports. ERP solutions today feature advanced reporting that can generate compliant financial statements based on your region. The latest ERP reporting tools also allow in-system queries and smart filters, coupled with real-time data. Likewise, look for agile and ad hoc reporting to quickly adjust to evolving business needs and disruptions. Dashboards, on the other hand, should let you mash up quantitative vs. qualitative data at user, role, and department levels. Look for the standard dashboard function of displaying KPIs (Key Performance Indicator) with drill-down links.

 

4. Integration.

ERP should work seamlessly with your existing business applications. There are several integrations points you need to consider from top to bottom. These include system-to-system (example, ERP to your existing CRM or HRMS), module-to-system (example, ERP payroll to your existing HRMS), and file transfer capabilities (example, exporting/importing PDF, JPG, DOC, CSV files). An ERP with flexible integration can work with existing infrastructure, expand its functionalities or, in fact, replace it while ensuring smooth records and file migration.

 

5. Customization.

Aside from ensuring the ERP processes match your key business workflows, look closely at your departments. They may have different priorities and cultures, which may even be contradictory. For example, marketing spends, while accounting saves, or production lives by daily output, while sales live by monthly quota. All these lead to uncountable workflows that won’t fit into a one-size solution. Look for an ERP solution with customization tools, localized dashboards, and configurable workflows, among others, that allow departments to define their goals and set the ERP based on their parameters.

What Does ERP Software Do? (MIS 14.06.2021)

What Does ERP Software Do?

ERP can be fully integrated or customized to specific processes. A typical ERP system covers key business processes and consists of the following modules:

 

1. HRM (Human Resource Management)

This module features standard HRMS tools like time tracker, timesheet, and database for employee records, job profiles, and skills matrix. HRM modules may also include performance reviews and payroll systems. The HRM is closely integrated with the financial management module to manage wages, travel expenses, and reimbursements. Some ERP solutions also feature a training or LMS (Learning Management System) function under HRM.

 

2. Financial management.

This module manages organisation’s capital inflow and outflow. It covers standard accounting and finance transactions like expenditures, general ledger, balance sheet, bank reconciliation, tax management, and payments. This also generates financial reports for different departments and business units.

 

3. Sales and Marketing.

This module handles sales workflows like sales inquiries, quotations, sales orders, and sales invoices. The more advanced ERP also features taxation rules and shipping tracker. The Sales and CRM modules work together to speed up the sales cycle and earn the company more profits.

 

4. CRM (Customer Relationship Management)

The CRM module helps us to boost customer service and, eventually, profit per capita. It manages leads, opportunities, and customer issues. Likewise, it provides a 360-degree profile of our customers by consolidating data like their social media activities, purchase history, and past interactions with support reps. In an ERP setup, CRM is closely integrated with the Sales module to fast-track conversions.

 

5. Manufacturing.

Sometimes referred to as engineering or production, this module helps businesses make manufacturing more efficient in areas such as product planning, materials sourcing, daily production monitoring, and product forecasting. Some of the key functionalities in this module are the bill of material, production scheduling, shop floor control, and distribution planning. The module is tightly integrated with SCM and inventory modules, especially in areas like product planning and inventory control.

 

6. SCM (Supply Chain Management)

This module covers key aspects of your supply chain, including purchase order management. It manages product flow from production to consumer and, occasionally, vice-versa for returns or recalls. A key feature of the SCM module is process automation, which streamlines your entire supply chain and makes it adaptive to sudden market shifts.

 

7. Inventory

Also called material management module, it helps you measure stock targets, standardize replenishments, and other inventory goals. It uses product serial numbers to track and locate items in your organization. This module is closely integrated with the Purchase module.

 

8. Purchasing

This module manages the processes involved in materials procurement. These include supplier listings, quotation requests and analysis, purchase orders, Good Receipt Notes, and stock updates. As such, it functions closely with SCM or Inventory modules.

 

In addition to these basic functions, there are more advanced ERP platforms that also include business intelligence, asset management, and ecommerce.

 

Moreover, ERP can be vertical with industry-specific features for, among others, retail, healthcare, government, and non-profits.

Examples of ERP Software (MIS 12.06.2021)

Examples of ERP Software

Here are examples of ERP software / systems:

1. NetSuite

Integrated ERP software NetSuite is built for fast-growing companies. The platform offers a scalable interface equipped with everything we need from financial management and inventory management to payment processing and vendor management. It is capable of automating a wide range of front- and back-office processes so that streamlining operations is much simpler. Moreover, it gives users robust reporting tools that offer actionable insights into our performance.

 

2. Scoro

Cloud-based business management software Scoro is a powerful solution designed for professional services businesses, primarily those in the consulting, IT, and advertising industries. The platform provides robust tools, including work scheduling and tracking, project management, financial management, quote management, CRM, reporting, and customization. Businesses leverage these tools to plan projects and team time usage, send invoices, build client relationships, and monitor results, from one integrated system.

 

3. Odoo

ERP software Odoo is unique because of its open-sourced, modular architecture. It provides us with best-in-class sales and project management functionalities to start. As our business grows, we can choose to extend the platform’s capabilities by choosing from their extensive selection of applications. They offer a variety of applications for MRP, POS, accounting, ecommerce, and other business processes. Moreover, the system is capable of seamlessly integrating with third-party applications so we can use our existing systems.

 

 

4. Sage Intacct

Cloud accounting software Sage Intacct is created for small and medium businesses. This platform features ERP capabilities via integration, such as financial management, wholesale distribution, and retail management. Also, it comes with workflow management options that let us perform bank reconciliation, automated journal entries, and trial balance.

 

5. SYSPRO

Powerful ERP software SYSPRO is designed specifically for companies in the manufacturing industry.  Interestingly, the solution has been providing ERP solutions to companies for over 40 years. It comes with robust tools for accounting, document planning, work order management, project management, as well as inventory control so that it is easier to keep all data in one place and manage all processes from one platform. It is also known for its use of BOT agents that are in charge of automating redundant processes and giving us fast support for all aspects of our operations.

 

6. Oracle ERP Cloud

Business management platform Oracle ERP Cloud is an end-to-end solution that provides users with an integrated system for large businesses ranging from telecommunication and sales firms to pharmaceutical and manufacturing companies. It comes with financial planning features, risk management tools, project execution capabilities, as well as compliance monitoring options. In addition, Oracle ERP Cloud also offers users a performance management module to help us gauge productivity within our enterprise and pinpoint how to improve overall operations.

 

7. Microsoft Dynamics GP

Business management solution Microsoft Dynamics GP offers a robust set of features that tackle financial management, human resource management, supply chain management, and workspace collaboration. Coming from an industry leader, it is also known for its top-notch business intelligence feature that lets users get actionable insights on their ERP data. Another claim to fame of this particular platform is that it seamlessly integrates with third-party partners, both cloud-hosted and on-premise.

 

 

 

8. SAP ERP

Powerful ERP software SAP is designed by a prominent software provider, SAP ERP. Used by over 172,000 companies globally, this platform comes with supply chain management and customer relationship management functionalities and can integrate with various applications and modules for other business processes. Other than its highly scalable interface, another thing that makes this platform unique is that it can be deployed on-premise, on the cloud, or as a hybrid model for our convenience.

 

9. ADVANTAGE 365

Integrated business system ADVANTAGE 365 unifies a plethora of core functionalities to simplify the way we run our business operations. With core features for accounting, rental, inventory, credit card processing, sales, and other tools available within a single system, we can handle more demanding tasks and smoothly execute our operations. Furthermore, with all core capabilities easily accessible with a few clicks, you can significantly bolster your operational efficiency without suffering from the headaches of using separate business systems.

 

10. Z Suite ERP

ERP software Z Suite is a suite of business applications that houses the core functionalities of CRM, POS, and HRM. This system equips us with all the essential tools to centralize our data and streamline interdepartmental operations. Specifically built for SMBs, Z Suite ERP comes with all the essential functionalities needed to drive growth to our businesses, but without the bloat that comes with advanced tools. With all information unified from within a single platform, we can rest assured that everyone in our organization is working with a single version of the truth.

 

 

Scope, Advantage, Disadvantage & Need of ERP

Scope of ERP

1. Finance − Financial accounting, Managerial accounting, treasury management, asset management, budget control, costing, and enterprise control.

 

2. Logistics − Production planning, material management, plant maintenance, project management, events management, etc.

 

3. Human resource − Personnel management, training and development, etc.

 

4. Supply Chain − Inventory control, purchase and order control, supplier scheduling, planning, etc.

 

5. Work flow − Integrate the entire organization with the flexible assignment of tasks and responsibility to locations, position, jobs, etc.

 

Advantages of ERP

1. Reduction of lead time

2. Reduction of cycle time

3. Better customer satisfaction

4. Increased flexibility, quality, and efficiency

5. Improved information accuracy and decision-making capability

6. Improved resource utilization

7. Improve supplier performance

8. Reduced quality costs

9. Quick decision-making

10. Forecasting and optimization

11. Better transparency

 

Disadvantage of ERP

1. Expense and time in implementation

2. Difficulty in integration with other system

3. Risk of implementation failure

4. Difficulty in implementation change

5. Risk in using one vendor

 

Need for Enterprise Resource Planning - Why ERP?

Separate systems were being maintained during 1960 - 70 for traditional business functions like Sales & Marketing, Finance, Human Resources, Manufacturing, and Supply Chain Management. These systems were often incongruent, hosted in different databases and required batch updates. It was difficult to manage business processes across business functions e.g., procurement to pay and sales to cash functions. ERP system grew to replace the islands of information by integrating these traditional business functions.

 

The successful implementation of an ERP system will have many advantages, as indicated below:

1. Business Integration and Improved Data Accuracy: ERP system is composed of various modules / submodules 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. Duplicate of data is minimized. The centralized structure of the database also enables better administration and security provisions, which minimizes loss of sensitive data.

 

2. 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.

 

 

3. 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 fulfilment, 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.

 

4. Establishment of Standardized Procedures: ERP system is based on processes of international best practices, which are adopted by the organizations during implementation. Because of top-down view available to management, chances of theft, fraud and obsolescence (become old) are minimized.

 

5. Flexibility and technology: Due to the globalized environment, where production units, distribution centres, 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.

 

Conclusion

Although ERP provides many advantages; its implementation is a strategic decision, involving significant resources (both financial and human), proper evaluation and business process re-engineering. There must be a commitment from all levels. A failed implementation may lead to bankruptcy of an organization.

 

The Business Value of ERP

It’s impossible to ignore the impact of ERP in today’s business world. As enterprise data and processes are corralled into ERP systems, businesses can align separate departments and improve workflows, resulting in significant bottom-line savings.

 

Examples of specific business benefits include:

1. Improved business insight from real-time information generated by reports

 

2. Lower operational costs through streamlined business processes and best practices

 

3. Enhanced collaboration from users sharing data in contracts, requisitions, and purchase orders

 

4. Improved efficiency through a common user experience across many business functions and well-defined business processes

 

5. Consistent infrastructure from the back office to the front office, with all business activities having the same look and feel

 

6. Higher user-adoption rates from a common user experience and design

 

7. Reduced risk through improved data integrity and financial controls

 

8. Lower management and operational costs through uniform and integrated systems

Enterprise Resource Planning ERP (MIS 10.06.2021)

Enterprise Resource Planning

Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations.

 

A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.

 

ERP systems tie together a multitude of business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.

 

Today, ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, ERP is as indispensable as the electricity that keeps the lights on.

 

ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide transaction framework that supports all the internal business processes of a company.

 

It supports all core business processes such as sales order processing, inventory management and control, production and distribution planning, and finance.

 

There are various ways in defining an Enterprise Resource Planning System. This is how it has been defined by American Inventory and Production Control System (APICS) dictionary:

“Enterprise Resource Planning: An accounting-oriented information system for identifying and planning the enterprise-wide resources to make, ship and account for customer orders.”

Internet encyclopaedia, it has defined as “An enterprise planning system is an integrated computer-based application used to manage internal and external resources, including tangible assets, financial resources, material and human resources”.

 

Basically, an ERP combines several traditional management functions into a logically integrated system and facilitate the flow of information across these functions. It is designed to model and automate basic processes across the organization over a centralized database and eliminates the need of disparate systems maintained by various units of the organization.

 

Enterprise resource planning (ERP) is defined as the ability to deliver an integrated suite of business applications. ERP tools share a common process and data model, covering broad and deep operational end-to-end processes, such as those found in finance, HR, distribution, manufacturing, service and the supply chain.

 

ERP applications automate and support a range of administrative and operational business processes across multiple industries, including line of business, customer-facing, administrative and the asset management aspects of an enterprise. ERP deployments are complex and expensive endeavours, and some organizations struggle to define the business benefits.

 

Look for business benefits in four areas: a catalyst for business innovation, a platform for business process efficiency, a vehicle for process standardization, and IT cost savings. Most enterprises focus on the last two areas, because they are the easiest to quantify; however, the first two areas often have the most significant impact on the enterprise. 

 

 

Why of ERP? Importance

ERP is very helpful in the following areas −

1. Business integration and automated data update

2. Linkage between all core business processes and easy flow of integration

3. Flexibility in business operations.

4. Better analysis and planning capabilities

5. Critical decision-making

6. Competitive advantage

7. Use of latest technologies

 

Features of ERP

The following are the features of ERP −

1. Accommodating variety

2. Seamless integration

3. Resource Management

4. Integration Management Information

5. Supply Chain Management

6. Integration Data Model

 

Feasibility Study (MIS 09.06.2021)

Feasibility Study

Feasibility is defined as the practical extent to which a project can be performed successfully.

To evaluate feasibility, a feasibility study is performed, which determines whether the solution considered to accomplish the requirements is practical and workable in the software.

1. Information such as resource availability,

2. cost estimation for software development,

3. benefits of the software to the organization after it is developed and

4. cost to be incurred on its maintenance are considered during the feasibility study.

 

The objective of the feasibility study is to establish the reasons for developing the software that is acceptable to users, adaptable to change and conformable to established standards.

 

Various other objectives of feasibility study are listed below.

1. To analyse whether the software will meet organizational requirements.

2. To determine whether the software can be implemented using the current technology and within the specified budget and schedule.

3. To determine whether the software can be integrated with other existing software.

Types of Feasibility

Various types of feasibility that are commonly considered include (1) technical feasibility, (2) operational feasibility, and (3) economic feasibility.

 

1. Technical feasibility assesses the current resources (such as hardware and software) and technology, which are required to accomplish user requirements in the software within the allocated time and budget. For this, the software development team ascertains whether the current resources and technology can be upgraded or added in the software to accomplish specified user requirements.

 

Technical feasibility also performs the following tasks. 

a) Analyses the technical skills and capabilities of the software development team members.

b) Determines whether the relevant technology is stable and established.

c) Ascertains that the technology chosen for software development has a large number of users so that they can be consulted when problems arise or improvements are required.

 

2. Operational feasibility assesses the extent to which the required software performs a series of steps to solve business problems and user requirements. This feasibility is dependent on human resources (software development team) and involves visualizing whether the software will operate after it is developed and be operative once it is installed.

 

Operational feasibility also performs the following tasks.

a) Determines whether the problems anticipated in user requirements are of high priority.

b) Determines whether the solution suggested by the software development team is acceptable.

c) Analyses whether users will adapt to a new software.

d) Determines whether the organization is satisfied by the alternative solutions proposed by the software development team.

 

3. Economic feasibility determines whether the required software is capable of generating financial gains for an organization. It involves the cost incurred on the software development team, estimated cost of hardware and software, cost of performing feasibility study, and so on.

 

For this, it is essential to consider expenses made on purchases (such as hardware purchase) and activities required to carry out software development.

 

In addition, it is necessary to consider the benefits that can be achieved by developing the software. Software is said to be economically feasible if it focuses on the issues listed below.

a) Cost incurred on software development to produce long-term gains for an organization.

b) Cost required to conduct full software investigation (such as requirements elicitation and requirements analysis).

c) Cost of hardware, software, development team, and training.

 

Feasibility Study Process

Feasibility study comprises the following steps.

1. Information assessment: Identifies information about whether the system helps in achieving the objectives of the organization. It also verifies that the system can be implemented using new technology and within the budget and whether the system can be integrated with the existing system.

 

2. Information collection: Specifies the sources from where information about software can be obtained. Generally, these sources include users (who will operate the software), organization (where the software will be used), and the software development team (which understands user requirements and knows how to fulfill them in software).

 

3. Report writing: Uses a feasibility report, which is the conclusion of the feasibility study by the software development team. It includes the recommendations whether the software development should continue. This report may also include information about changes in the software scope, budget, and schedule and suggestions of any requirements in the system.

 

4. General information: Describes the purpose and scope of feasibility study. It also describes system overview, project references, acronyms and abbreviations, and points of contact to be used.

 

a) System overview provides description about the name of the organization responsible for the software development, system name or title, system category, operational status, and so on.

 

b) Project references provide a list of the references used to prepare this document such as documents relating to the project or previously developed documents that are related to the project.

 

c) Acronyms and abbreviations provide a list of the terms that are used in this document along with their meanings.

 

d) Points of contact provide a list of points of organizational contact with users for information and coordination.

 

For example, users require assistance to solve problems (such as troubleshooting) and collect information such as contact number, e-mail address, and so on.