Sunday, March 9, 2008

erp software

Keyword Name:erp software
AVG CPC:$8.90

Abount erp software
Enterprise Resource Planning (ERP) systems attempt to integrate all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules.

Implementation
Because of their wide scope of application within a business, ERP SOFTWARE systems are typically complex and usually impose significant changes on staff work practices.[citation needed] Implementing ERP SOFTWARE is typically not an "in-house" skill, so even smaller projects are more cost effective if specialist ERP implementation consultants are employed.[citation needed] The length of time to implement an ERP system depends on the size of the business, the scope of the change and willingness of the customer to take ownership for the project.[citation needed] A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3-9 months; however, a large, multi-site or multi-country implementation may take years.[citation needed]

To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting, customization and support.


Process preparation
ERP vendors have designed their systems around standard business processes, based upon best business practices. Different vendors have different types of processes but they are all of a standard, modular nature. Firms that want to implement ERP systems are consequently forced to adapt their organizations to standardized processes as opposed to adapting the ERP package to the existing processes.[5] Neglecting to map current business processes prior to starting ERP implementation is a main reason for failure of ERP projects.[6] It is therefore crucial that organizations perform a thorough business process analysis before selecting an ERP vendor and setting off on the implementation track. This analysis should map out all present operational processes, enabling selection of an ERP vendor whose standard modules are most closely aligned with the established organization. Redesign can then be implemented to achieve further process congruence. Research indicates that the risk of business process mismatch is decreased by:

- linking each current organizational process to the organization's strategy;

- analyzing the effectiveness of each process in light of its current related business capability;

- understanding the automated solutions currently implemented.[7] [8]

A disadvantage usually attributed to ERP is that business process redesign to fit the standardized ERP modules can lead to a loss of competitive advantage. While documented cases exist where this has indeed materialized, other cases show that following thorough process preparation ERP systems can actually increase sustainable competitive advantage.[9][10]


Configuration
Configuring an ERP system is largely a matter of balancing the way you want the system to work with the way the system lets you work. Begin by deciding which modules to install, then adjust the system using configuration tables to achieve the best possible fit in working with your company’s processes.

Modules - Most systems are modular simply for the flexibility of implementing some functions but not others. Some common modules, such as finance and accounting are adopted by nearly all companies implementing entERPrise systems; others however such as human resource management are not needed by some companies and therefore not adopted. A service company for example will not likely need a module for manufacturing. Other times companies will not adopt a module because they already have their own proprietary system they believe to be superior. Generally speaking the greater number of modules selected, the greater the integration benefits, but also the increase in costs, risks and changes involved.

Configuration Tables – A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. For example, an organization can select the type of inventory accounting – FIFO or LIFO – it will employ or whether it wants to recognize revenue by geographical unit, product line, or distribution channel.

So what happens when the options the system allows just aren’t good enough? At this point a company has two choices, both of which are not ideal. It can re-write some of the entERPrise system’s code, or it can continue to use an existing system and build interfaces between it and the new entERPrise system. Both options will add time and cost to the implementation process. Additionally they can dilute the system’s integration benefits. The more customized the system becomes the less possible seamless communication becomes between suppliers and customers.


Consulting Services
Consulting team is typically responsible for your initial ERP implementation and subsequent delivery of work to tailor the system beyond "go live". Typically such tailoring includes additional product training; creation of process triggers and workflow; specialist advice to improve how the ERP is used in the business; system optimization; and assistance writing reports, complex data extracts or implementing Business Intelligence.

The consulting team is also responsible for planning and jointly testing the implementation. This is a critical part of the project, and one that is often overlooked.

Consulting for a large ERP project involves three levels: systems architecture, business process consulting (primarily re-engineering) and technical consulting (primarily programming and tool configuration activity). A systems architect designs the overall dataflow for the entERPrise including the future dataflow plan. A business consultant studies an organization's current business processes and matches them to the corresponding processes in the ERP system, thus 'configuring' the ERP system to the organization's needs. Technical consulting often involves programming. Most ERP vendors allow modification of their SOFTWARE to suit the business needs of their customer.

For most mid-sized companies, the cost of the implementation will range from around the list price of the ERP user licenses to up to twice this amount (depending on the level of customization required). Large companies, and especially those with multiple sites or countries, will often spend considerably more on the implementation than the cost of the user licenses -- three to five times more is not uncommon for a multi-site implementation.[citation needed]


Customization Services
The Customization is the process of extending or changing how the system works by writing new user interfaces and underlying application code. Such customisations typically reflect local work practices that are not currently in the core routines of the ERP system SOFTWARE.

Examples of such code include early adopter features (e.g., mobility interfaces were uncommon a few years ago and were typically customised) or interfacing to third party applications (this is 'bread and butter' customization for larger implementations as there are typically dozens of ancillary systems that the core ERP SOFTWARE has to interact with). The Professional Services team is also involved during ERP upgrades to ensure that customizations are compatible with the new release. In some cases the functions delivered via a previous customization may have been subsequently incorporated into the core routines of the ERP SOFTWARE, allowing customers to revert back to standard product and retire the customization completely.

Customizing an ERP package can be very expensive and complicated, because many ERP packages are not designed to support customization, so most businesses implement the best practices embedded in the acquired ERP system. Some ERP packages are very generic in their reports and inquiries, such that customization is expected in every implementation. It is important to recognize that for these packages it often makes sense to buy third party plug-ins that interface well with your ERP SOFTWARE rather than reinventing the wheel.

Customization work is usually undertaken as bespoke SOFTWARE development on a time and materials basis. Because of the specialist nature of the customization and the 'one off' aspect of the work, it is common to pay in the order of $200 per hour for this work. Also, in many cases the work delivered as customization is not covered by the ERP vendors Maintenance Agreement, so while there is typically a 90-day warranty against SOFTWARE faults in the custom code, there is no obligation on the ERP vendor to warrant that the code works with the next upgrade or point release of the core product.

One often neglected aspect of customization is the associated documentation. While it can seem like a considerable -- and expensive -- overhead to the customization project, it is critical that someone is responsible for the creation and user testing of the documentation. Without the description on how to use the customisation, the effort is largely wasted as it becomes difficult to train new staff in the work practice that the customization delivers.


Maintenance and Support Services
Once your system has been implemented, the consulting company will typically enter into a Support Agreement to assist your staff to keep the ERP SOFTWARE running in an optimal way. To minimize additional costs and provide more realism into the needs of the units to be affected by ERP (as an added service to customers), the option of creating a committee headed by the consultant using participative management approach during the design stage with the client's heads of departments (no substitutes allowed) to be affected by the changes in ERPs to provide hands on management control requirements planning. This would allow direct long term projections into the client's needs, thus minimizing future conversion patches (at least for the 1st 5 years operation unless there is a corporate-wide organizational structural change involving operational systems) on a more dedicated approach to initial conversion.

A Maintenance Agreement typically provides you rights to all current version patches, and both minor and major releases, and will most likely allow your staff to raise support calls. While there is no standard cost for this type of agreement, they are typically between 15% and 20% of the list price of the ERP user licenses.


Advantages
In the absence of an ERP system, a large manufacturer may find itself with many SOFTWARE applications that do not talk to each other and do not effectively interface. Tasks that need to interface with one another may involve:

design engineering (how to best make the product)
order tracking from acceptance through fulfillment
the revenue cycle from invoice through cash receipt
managing interdependencies of complex Bill of Materials
tracking the 3-way match between Purchase orders (what was ordered), Inventory receipts (what arrived), and Costing (what the vendor invoiced)
the Accounting for all of these tasks, tracking the Revenue, Cost and Profit on a granular level.
Change how a product is made, in the engineering details, and that is how it will now be made. Effective dates can be used to control when the switch over will occur from an old version to the next one, both the date that some ingredients go into effect, and date that some are discontinued. Part of the change can include labeling to identify version numbers.

Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data tampering scenario might involve a disgruntled employee intentionally modifying prices to below the breakeven point in order to attempt to take down the company, or other sabotage. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other kinds of information security tools.[11]


Disadvantages
Many problems organizations have with ERP systems are due to inadequate investment in ongoing training for involved personnel, including those implementing and testing changes, as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and how it is used.

Limitations of ERP include:

Success depends on the skill and experience of the workforce, including training about how to make the system work correctly.
Small entERPrises are often undercapitalized & are also not updated about the latest offerings in the market
Personnel turnover; companies can employ new managers lacking education in the company's ERP system, proposing changes in business practices that are out of synchronization with the best utilization of the company's selected ERP.
Customization of the ERP SOFTWARE is limited. Some customization may involve changing of the ERP SOFTWARE structure which is usually not allowed.
Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.
ERP systems can be very expensive to install often ranging from 30,000 US Dollars to 500,000,000 US Dollars for multinational companies.
ERP vendors can charge sums of money for annual license renewal that is unrelated to the size of the company using the ERP or its profitability.
Technical support personnel often give replies to callers that are inappropriate for the caller's corporate structure. Computer security concerns arise, for example when telling a non-programmer how to change a database on the fly, at a company that requires an audit trail of changes so as to meet some regulatory standards.
ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure.
Systems can be difficult to use.
Systems are too restrictive and do not allow much flexibility in implementation and usage.
The system can suffer from the "weakest link" problem—an inefficiency in one department or at one of the partners may affect other participants.
Many of the integrated links need high accuracy in other applications to work effectively. A company can achieve minimum standards, then over time "dirty data" will reduce the reliability of some applications.
Once a system is established, switching costs are very high for any one of the partners (reducing flexibility and strategic control at the corporate level).
The blurring of company boundaries can cause problems in accountability, lines of responsibility, and employee morale.
Resistance in sharing sensitive internal information between departments can reduce the effectiveness of the SOFTWARE.
Some large organizations may have multiple departments with separate, independent resources, missions, chains-of-command, etc, and consolidation into a single entERPrise may yield limited benefits.
There are frequent compatibility problems with the various legacy systems of the partners.
The system may be over-engineered relative to the actual needs of the customer.


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