Types of ERP

SAP, BAAN, JD Edwards, Oracle Financials, Sibel, People Soft. Among all the ERP?s most of the companies implemented or trying to implement SAP because of number of advantages over other ERP packages.

There are two types of ERPs
1.Horizontal ERP
2.Vertical ERP
Horizontal ERP:Horizontal ERP will fit for any sort of organization there is no industrial specific ex:SAP,ORACLE Apps

Vertical ERP:Vertical ERP is Industrial specific this will not fit for all types of industries
ex:DTR(Plastic industy),Axis(Steel industry)

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Limitations of ERP

Success depends on the skill and experience of the workforce, including training about how to make the system work correctly. Many companies cut costs by cutting training budgets. Privately owned small enterprises are often undercapitalized, meaning their ERP system is often operated by personnel with inadequate education in ERP in general, such as APICS foundations, and in the particular ERP vendor package being used.

• 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 to 500,000,000 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.
  
• 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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Disadvantages of ERP Systems

While advantages usually outweigh disadvantages for most organizations implementing an ERP system, here are some of the most common obstacles experienced:

• The scope of customization is limited in several circumstances
• The present business processes have to be rethought to make them synchronize with the ERP
• ERP systems can be extremely expensive to implement
• There could be lack of continuous technical support
• ERP systems may be too rigid for specific organizations that are either new or want to move in a new direction in the near future

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Advantages of ERP Systems

There are many advantages of implementing an EPR system. A few of them are listed below:

• A perfectly integrated system chaining all the functional areas together
• The capability to streamline different organizational processes and workflows
• The ability to effortlessly communicate information across various departments
• Improved efficiency, performance and productivity levels
• Enhanced tracking and forecasting
• Improved customer service and satisfaction
  

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What Is ERP

ERP (enterprise resource planning) is an industry term for the broad set of activities that helps a business manage the important parts of its business.

The information made available through an ERP system provides visibility for key performance indicators (KPIs) required for meeting corporate objectives.

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Implementation of an ERP System

Implementing an ERP system in an organization is an extremely complex process. It takes lot of systematic planning, expert consultation and well structured approach. Due to its extensive scope it may even take years to implement in a large organization. Implementing an ERP system will eventually necessitate significant changes on staff and work processes. While it may seem practical for an in-house IT administration to head the project, it is commonly advised that special ERP implementation experts be consulted, since they are specially trained in deploying these kinds of systems.

Organizations generally use ERP vendors or consulting companies to implement their customized ERP system. There are three types of professional services that are provided when implementing an ERP system, they are Consulting, Customization and Support.

• Consulting Services – are responsible for the initial stages of ERP implementation where they help an organization go live with their new system, with product training, workflow, improve ERP’s use in the specific organization, etc.
• Customization Services – work by extending the use of the new ERP system or changing its use by creating customized interfaces and/or underlying application code. While ERP systems are made for many core routines, there are still some needs that need to be built or customized for a particular organization.
• Support Services – include both support and maintenance of ERP systems. For instance, trouble shooting and assistance with ERP issues.

The ERP implementation process goes through five major stages which are Structured Planning, Process Assessment, Data Compilation & Cleanup, Education & Testing and Usage & Evaluation.

1. Structured Planning: is the foremost and the most crucial stage where an capable project team is selected, present business processes are studied, information flow within and outside the organization is scrutinized, vital objectives are set and a comprehensive implementation plan is formulated.
2. Process Assessment: is the next important stage where the prospective software capabilities are examined, manual business processes are recognized and standard working procedures are constructed.
3. Data Compilation & Cleanup: helps in identifying data which is to be converted and the new information that would be needed. The compiled data is then analyzed for accuracy and completeness, throwing away the worthless/unwanted information.
4. Education & Testing: aids in proofing the system and educating the users with ERP mechanisms. The complete database is tested and verified by the project team using multiple testing methods and processes. A broad in-house training is held where all the concerned users are oriented with the functioning of the new ERP system.
5. Usage & Evaluation: is the final and an ongoing stage for the ERP. The lately implemented ERP is deployed live within the organization and is regularly checked by the project team for any flaw or error detection.

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ERP Structure

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