Primer to ERP

Enterprise resource planning (ERP) is a company-wide computer software system used to manage and coordinate all the resources, information, and functions of a business from shared data stores.

The origins of ERP lie with MRP systems which was primarily focused on production planning, inventory control and manufacturing processes. Over the last 20 years, the industry has matured and adopted a number of best practices and has significantly increased the scope and functionality offered. Today the higher end ERP systems offer an integrated package or a suite of functionality which includes Product lifecycle management, Supply chain management (e.g. Purchasing, Manufacturing and Distribution), Warehouse Management, Customer Relationship Management (CRM), Sales Order Processing, Online Sales, Financials, Human Resources, and Decision Support System.

In a number of companies, ERP systems form the backbone of the IT application infrastructure. In terms of architecture most ERP systems have 3 tiers, a presentation layer, a business logic layer and a database layer. Some of the software vendors offer a number of options for the presentation layer like windows based GUI or a web based interface. In terms of business logic or application layer, proprietary code is used in addition to some common standards. Programming might have to be done in the proprietary language…recently most of the vendors have embraced J2EE standards and allow programmers access to their APIs to enhance capabilities.


Some of the benefits of ERP systems include
(1) real time information for all functional areas of the enterprise
(2) data standardization and accuracy
(3) best practices and one location for all business process execution
(4) analysis and reporting to support strategic planning

Popular ERP Vendors
• Microsoft Dynamics
• Oracle e-Business Suite
• SAGE
• SAP Business One
• Infor Global Solutions
• NetERP from NetSuite
• Lawson Software
Overall revenue of the ERP software market is in excess of $21.4 billion worldwide. This is a huge space, with a lot of consolidation occurring. As SaaS adoption grows, hosted solutions are becoming increasing competitive and look very attractive to CIO’s under pressure to reduce costs.
This is a mature space and a number of software providers offer a wide portfolio of capabilities which encompass the whole enterprise including
(1) financials (general ledger, accounts payable, accounts receivable, cost accounting, project accounting, fixed assets…)
(2) human resources (workforce management, payroll, benefits, personnel management, training)
(3) sales management
(4) quality management
(5) Supply chain management
(6) Manufacturing management (product costing, shop floor control, production planning…)
(7) Quality management
(8) Field service and repairs

In addition, most of the ERP software vendors have invested heavily into technologies/modules to support PLM, CRM, and Portals to increase their footprint within customers by offering integrated solutions.

"Disclaimer: The views and opinions expressed here are my own only and in no way represent the views, positions or opinions - expressed or implied - of my employer (present and past) "
"Please post your comments - Swati Ranganathan"

Best of Breed vs. Integrated Systems

You have probably had to make this decision several times in your professional and personal lives…for example a vacation plan where you have to decide if you want to create your own itinerary and define the trails that would provide you with maximum comfort or adventure (whatever floats your boat) or be part of an overall tour targeted at a group of people who have varied interests…
The decision needs to be based on what each package offers you, cost benefit, return on investment, future value/costs etc.
For most of the processes used within the enterprise, a number of software solutions exist. If you are in the market for a software solution to address current problems / revamp existing application framework or implement a solution based on future requirements you will have to make this decision!
Integrated systems provide multiple applications with a common architecture and consistent user interface so that all modules/functionality have a familiar look and feel. The downside is that some applications may not have the maturity or capability to address all functional areas, causing users in these areas to become disgruntled or slow down adoption.
Best of breed systems, designed specifically to address processes and common problems in certain functional areas, generally provide the maximum functionality to a set of business process. They pose challenges, such as increased training and support, complex integrations with other systems, possible duplicate data entry / redundant data.
There a number of factors to be considered if you want to thoroughly assess the differences between “best of breed” and integrated systems. These factors are
(1) Implementation Cost
a. Software cost / licenses
b. Integration
c. Customization
d. Hardware
e. Resources
f. Consulting
(2) Implementation timeline
(3) Value to business
(4) Return on investment and Payback period
(5) Fit / Adaptability to company specific business processes
(6) Quality
(7) Maturity
(8) Vendor capability and lifecycle
(9) User
(10) Future Support costs
a. Need for additional hardware
b. Software maintenance fees
c. Need for additional headcount
“Best of breed” applications typically have a shorter implementation cycle with an accelerated payback period. I have seen numbers like 6-12 month implementation time as opposed to 18-24 month for integrated systems…12 month payback for best of breed as opposed to 2-4 years for integrated systems.
In summary, the decision needs to be based on business needs and constraints placed by budget and resource availability. Be mindful that each system has its own benefits and shortcomings and plan accordingly.

"Disclaimer: The views and opinions expressed here are my own only and in no way represent the views, positions or opinions - expressed or implied - of my employer (present and past) "
"Please post your comments - Swati Ranganathan"

How many applications do you need to run your business?

Over the last 10+ years, a number of acronyms have popped up in the enterprise application space. Traditionally most companies started out with in an ERP system and depending upon their business added additional applications to support the business.
What is ERP?
ERP stands for Enterprise Resource Planning. ERP is a way to integrate the data and processes of an organization into one single system. This seems to be the commonly accepted definition of ERP systems, if that is true then why do we need so many other applications?
I am going to post a series of blogs on the different applications and describe their roles, capabilities, maturity and why the need for them appeared and who the “big players” of these markets are.
In this post, I am going to list out the applications seen in the landscape and briefly describe their function.
Some of the applications that you would see in the IT landscape are
• CAD (Computer aided design) to support modeling of hardware and electrical/electronics
• PDM (Product data management) systems to support data management
• PLM (Product lifecycle management) systems to support workflow, engineering change, bill of material management, release to manufacturing etc.
• MES (Manufacturing execution systems) to manage work in progress on the manufacturing floor
• CRM (Customer relationship management) systems manage, track and organize its data / contacts with its current and prospective customers
• BPM (Business process management) systems provide process management capability with workflows
• SCM (Supply chain management) systems provide the ability to manage the entire supply chain and support planning, sourcing, manufacturing, delivery and return logistics.
• KM (Knowledge management) to support knowledge sharing of best practices and lessons learned.
• SRM (Supplier relationship management) to support managing vendor relations and lifecycle.
• PPM (Project Portfolio Management) systems used for analyzing and collectively managing a group of current or proposed projects.
• BI (Business intelligence) systems help the business acquire a better understanding of its commercial context.
• EMM (Enterprise Marketing Management) systems manage marketing’s end-to-end internal processes including Web Analytics, Campaign Management, Digital Asset Management, Web Content Management, Marketing Resource Management, Marketing Dashboards, Lead Management, Event-driven Marketing, Predictive Modeling etc.
• HRMS (Human resource management system) or HRIS (Human resource information system) manage all processes within human resources.
Though this list is long, this list is not complete. Depending upon the industry many other applications exists for e.g. LIMS (Laboratory Information Management System) is important to healthcare, drug and the food industry…In addition, almost all companies have a suite of internal applications to manage issue tracking and resolution, portals to share information with their customers, suppliers and different organizations…
Now if you step back and wonder why so many systems exist, and perform a root cause analysis the usual culprit is lack of capability to support all facets of the business within one application resulting implementation of best of breed / internal applications as opposed to one integrated systems.
In later posts, I will describe the factors driving “best of breed” Vs integrated systems.
With all these different applications, IT organizations are challenged with (1) integration and seamless of flow of information (2) managing application portfolio and associated costs (3) managing platform obsolescence and ensuring that the whole application portfolio is on the current/latest release levels. These challenges would make an interesting post as well :)

"Disclaimer: The views and opinions expressed here are my own only and in no way represent the views, positions or opinions - expressed or implied - of my employer (present and past) "
"Please post your comments - Swati Ranganathan"

Keep Your IT Project On Time

3 succinct tips from HBS on how to keep projects on time.

Key takeaways:

(1) align with your projects to business needs and strategy or you will lose
(2) Focus on immediate and pressing needs, "nice to haves" can follow. I have found the 80/20 rule to work well. This aligns well with my mantra "Think Big, Act Small, Move Quickly"
(3) Anticipate delays and plan well. Risk Mitigation and proper project planning always help in successful project implementation and execution.

Happy Reading! http://hbdm.harvardbusiness.org/email/archive/managementtip.php?date=092109

"Disclaimer: The views and opinions expressed here are my own only and in no way represent the views, positions or opinions - expressed or implied - of my employer (present and past) "
"Please post your comments - Swati Ranganathan"