Enterprise Resource Planning Final Project

8/6/2019 Enterprise Resource Planning Final Project

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MANAGEMENT INFORMATION SYSTEM

FINAL PROJECT

Submitted to:

MADAM KAUSUR KHAWAJA

Submitted by:

Sana Razaq

Sehrish Zahid

Ramla Gul

Noormah Anum Naeem

Sidra Wahid

Wajeeha Razaq



TABLE OF CONTENT:

ERP«««««««.««««««««««««««.««.. Page #

Origin««««««««.««««««««««««.««. Page #

Characteristics of ERP««««.«««««««««.««. Page #

Process of implementation ERP««««..«««««.««. Page #

Risks factors of ERP implementation««««.«««.««. Page #

Success factors for ERP implementation««««..«.««.. Page #

Important Vendors of ERP«««««««««.««.«« Page #

Important factors of ERP vendors««««««««.«.« Page #

Advantages of ERP «««««««««««««««.....Page #

Disadvantages of ERP «««««««««««................ Page #



ABSTRACT:

The purpose of writing this report is to explain the ERP systems in detail and all

aspects related to the implementation of ERP in business firm. This report explains

the whole process of ERP implementation in business organization. Also give the

reader information about the ERP vendors that supply the best system to the

customers. In the report the risk and success factors of the ERP implementation

also explain through which the reader.

This report cover all the aspects related to ERP briefly tell the reader advantages

and disadvantages of ERP systems in the business organizations. By explaining the

characteristics of ERP systems give the full detail about this system.



AKNOLEDGEMENT :

First of all, we would like to say Alhamdulillah to ALLAH ALMIGHITY, for

giving us the strength and health to write this report work until it done Not

forgotten to our families for providing everything, such as money, to buy anything

that are related to this project work and their advise, which is the most needed for

this project. Internet, books, computers and all that as my source to complete this

project. They also supported us and encouraged us to complete this task so that we

will not procrastinate in doing it.

I would like to acknowledge and extend my heartfelt gratitude MADAM

KAUSUR KHAWAJA, she help us a lot in writing the report on the

implementation of erp. With her help we are able to complete our research on the

topic and write a report with full detail. We had some difficulties in doing this task,

but she taught us patiently until we knew what to do. She tried and tried to teach us

until we understand what we supposed to do with the project work.

We would also like to thanks MADAM SUMAIRA working in ESOL.PK, BLUE

AREA, ISLAMABAD. She helps us a lot in this research and gives us her precious

time; give all the detail of erp working and many information about erp

implementation in PAKISTAN¶s business organizations.

Last but not least, to all group members who were doing this project and sharing

our ideas. They were helpful that when we combined and discussed together, we

had this task done.



ENTERPRISE RESOURCE PLANNING:

ERP is comprehensive software that integrates and automates all the processes of

the firm like operations, production and distribution. It is a common database

system. It is central information system of the firm. Successful implementation of

ERP system requires the commitment of the top management, reengineering,

employees training, employee¶s morale implementation time and cost. Large scale

of integration of ERP implementation make it very complex, it needs technical

persons for installation and proper working. ERP software packages are

commercial base, they purchase from the software houses. ERP implementation

needs strategic changes in the policies and procedures of the firm. Also requires

developmental changes in the human capitals and organizational culture.

Origin of "ERP"

In 1990 Gartner Group first employed the acronym ERP as an extension of

material requirements planning (MRP), later manufacturing resource planning and

computer-integrated manufacturing. Without supplanting these terms, ERP came to

represent a larger whole, reflecting the evolution of application integration beyond

manufacturing. Not all ERP packages were developed from a manufacturing core.

Vendors variously began with accounting, maintenance and human resources. By

the mid±1990s ERP systems addressed all core functions of an enterprise. Beyond



y An ERP system should be flexible to respond to the changing needs of an

organization.

y ERP system has to have open system architecture. This means that any

module can be interfaced or detached whenever required without affecting

the other modules.

y It should be support multiple hardware platforms for the companies having

different collection of system. It must support some third party add-ons also.

It must have collection of the best business processes applicable world-

wide.

y It must simulate the reality of business processes on the computers. In no

way it should have the control beyond the business processes and it must be

able to assign accountabilities to the users controlling the system.

y ERP bridges the information gap across the organization.



PROCESS OF IMPLEMENTATION OF ERP:

1) Pre-Evaluation

Before an ERP is implemented, the organization's heads meet and discuss the

organization's needs and goals and determine how an ERP assists in fulfilling these

factors. The desired performance, technology and functionality of any ERP should be discussed.

2 ) Personnel

A project manager and core team are appointed at the beginning of any ERP

implementation. These individuals should be familiar with the organization's

history, goals and needs.

3 ) Budget and Timeline

After the core ERP implementation team has been organized, this team and the

organization's heads, or a representative for this body, should meet to prepare a

budget for the ERP purchase and implementation; the budget should specifically

itemize what costs will be covered.

A time line of the phases and deadlines for the project must also be drafted. The

team and organization must be cognizant that it takes one to three years to

implement an ERP.

4 ) Planning

It is essential for the project manager and core team members to plan the overall

project once a budget and time line have been established. The technological

systems and applications that will interface with the ERP and the organization's



current processes need to be identified, evaluated and documented. This

information provides data to the core team in terms of how well the ERP will

interact with the organization's current processes. The project's scope, risks (such

as exceeding budgetary and time resources) and the effects on processes for

different departments also should be evaluated.

5 ) GAP Analysis

The core team evaluates several ERPs by running the top ERPs through GAP

analysis (an acronym for Good, Average and Poor). This process helps the team

determine how each ERP fits within the organization's current performance andcompare this with the organization's potential performance, particularly in terms of

desired productivity or gain. Based on the results, the core team will determine

which ERPs are a good, average or poor fit. The ERP best suited to the

organization will be acquired.

6) Data Evaluation

The core team proceeds to identify and evaluate all data to be imported into the

ERP system as well as identify any data that is missing. All data should be "clean"

free of bugs accurate and complete. Any unnecessary data should be eliminated.

7 ) Q uality Assurance and Documentation

The ERP is tested to ensure it functions as required and is free of programming

issues or holes in terms of how it works within the organization's processes. TheERP implementation process is documented for future reference.



8 ) Training

The core team and all relevant individuals are trained in the ERP's use. The

organization will employ or have an already existing team experienced inconducting training sessions.

9 ) Integration

The ERP is integrated into the organization's current systems and will serve all

applicable departments¶ needs.

10) Troubleshooting and Post-Implementation

Several employees go through training to troubleshoot any issues that may arise.

As technology evolves, the organization will update the ERP as necessary. The

ERP should be evaluated annually to ensure it continues to fulfill its functions.

RISKS IN ERP IMPLEMENTATION:

1) Technical Failures

Technical difficulties arise from performance constraints imposed by the project.

These constraints are usually caused by the project team's .Your end product is

only as good as the technical expertise available. The technical aspect also creates

risk because there is no way of ensuring the secrecy of information. If the project is

not technically implemented completely, this might cause failure of big

investment.

2 ) Project Scope

Defining the project scope is an important part of any IT project, including ERP

implementations. You do not want to make the project scope too big and make the

project unmanageable and expensive. If the project scope is too small, you might



miss some important requirements and implement the ERP incorrectly.

Management makes the project scope controllable so that they can easily control

the project.

3 ) Change Management

Change creates the risk of instability among employees. People are afraid of

change for different reasons such as fear of the unknown and fear of losing their

job. Change also creates the risk of losing potential business while employees are

training for the new system. Involving the staff in the ERP implementation is

important, if staff do not accept this change at the work place this is the biggest

risk for the erp implementation.

4 ) Communications:

One of the important functions of change management process is communication

of scope, purpose, progress of the ERP project all across the organization. This

may be in the form of news letter (on notice board or website of firm). The news

letter should include up to date news of the project, upcoming milestone,

individual / group achievement and should highlight benefit of the project.



5 ) Dealing with the people factor:

Resistance to change is usually encountered from employees with longer years of

service. There may also be apprehension of redundancy. User buy in of the ERP

system is a critical success factor and there is always difficulty in adapting to a

new culture of computerized environment. Recognizing such behavioral issues and

developing a plan to address, is one of the most important responsibility of change

agent.

6) Training:

For user understanding of the new system, organizing multiple and ongoing

training is an important function of change management process. Training

methodology includes classroom training, workshop, hands on practice, streaming

video etc. User feedback at the end of any training programmed is effectiveness of

the training.

7 ) Risk analysis:

At the outset, detailed analysis of perceived risk is drawn with active participation

of change agent, project manager, consultants and key users. Perceived risks are

classified into different categories. After deliberation of their likely impact, what

action is to be taken by whom and when, are agreed upon. Some of such risk

categories are:



Risks perceived by key users and project sponsor.

Risks resulting from project size, excess customization and multi location

implementation.

Risks resulting from organizational structures, general motivation and

procedures.

Risks resulting from communication structure.

Risks resulting from stuffing availability.

Risk arising from knowledge and expertise of users.

Risks arising from knowledge and experience of project manager,

consultants and project team.

Risks arising from supply of hardware and software and network bottleneck.

SUCCESS FACTORS FOR ERP

IMPLEMENTATION:



1) Project Planning

ERP implementation starts with project planning - setting project goals, identifying

high level business requirements, establishing project teams and estimating the project costs. The project planning offers the opportunity to re-evaluate the project

at great details. If the ERP project is not justified at the planning phase,

organizations should not hesitate to cancel the project.

2) Organization Commitments

The involvement of ERP implementation goes far beyond IT department to many

other functional departments. The commitment and smooth coordination from all

departments of the organization is the key to the success of ERP project. Thecommitments come from the understanding of how ERP can benefit each

functional department. All the employees of the organization are committed to

understand and make the implementation of the ERP successful.

3) Good project scope management:

It is important to define and limit the scope of the project. This scope must match

with the organization¶s mission and strategic goals. If new goals and objectives are

defined, their benefits must be evaluated against their cost and the risks.

4) Adequate ERP implementation strategy:

An adequate ERP implementation strategy must be chosen. Any strategy chosen

for the implementation of ERP but before this, advantages and disadvantages of the

strategy should b analyze? Compare the implementation strategy with the business

strategy of the organization.

5) Adequate software configuration:

Customization of the new system must be avoided whenever possible, in order to

take advantage of new versions and releases without the need to implement a lot of



changes at every update. The process of the organization needs to be adapted as

much as possible to the ERP implementation.

6) Adequate ERP version:

It must be determined which ERP product best suits the needs of the organization.

Depending on factors tike the type of organization, vertical market, size and so

forth an ERP product must be chosen. The systems update frequency must be

considered also. It is also important to consider cultural aspects when choosing an

ERP product. Most vendors are targeted at the Anglo-American market. Cultural

differences can cause unexpected problems.

7 ) Adequate project team composition: An ERP implementation project requires knowledge of the ERP product itself,

implementation experience and knowledge of the current organizational process.The project team will be composed of internal staff of the ERP implementation,

consultants and vendor-experts. The team working on the implementation should

be capable, know the ERP systems completely and also know the organization¶s

culture. The team should contain the best persons from the organization and



implementation software house. The success depends mainly on the capability of

the team.

IMPORTANT VENDORS OF ERP:

Popular systems are

1) Saps

2) Oracle

3) Microsoft.

Saps is implemented in large scales, recently it is implemented in ptcl

Oracle n Microsoft work in smaller firms it is at medium level.



Important factors of ERP vendors:

1. Industry e xperience .

Select vendors that have many years of industry experience, various customers

and also extensive knowledge of market. With such experience typically they are

able to give good advices how to get maximum benefit of ERP implementation based on company¶s business process. We can also consult with them regarding

which existing business process still can be implemented and which ones should be

changed / customized.

2. ERP Vendors Credibility .

In my opinion we can know the credibility based on how many implementation

they have accomplished and how many customers that satisfied with the service.

An indicator you may use is the market share. For example you would like to

implement SAP software and there are five SAP vendors in your list. You should

check the market share between those vendors. If a vendor leads the share in recent

consecutive years, you may use it as an indicator that the vendor has good

credibility because we generally assume they have many good references that

prompt customer to choose them rather than the others. You will get better result if



the market share is in same industry. The honest review of their clients is very

important. If you can get it, go ahead.

3. Implementation Methodology .

Some ERP vendors may have different methodology approach in implementation. I

think the methodology is an important factor to take into consideration because in

addition to determine the business process, we can know how they will transfer

their knowledge so that users will be able to use the software independently. The

user knowledge and skill are two important components that make sure the

continuity of software usage. Usually they will train a number of key users to be

trainers for other users. But it may different between vendors. You should choose

the methodology that fit with your company¶s environment.

4. Customer service .

Customer service is very important in ERP implementation because it¶s

complicated software that integrates information from several departments. We

usually find few unexpected errors or a situation that was not covered in training

scenario. That¶s why we need support from vendor to solve it. It is so important

you have to check out how solid customer service department they have.

5. Competitive edge:

Today the competition between ERP vendors is very tight. The competition is not

only between different ERP software but also between vendors that offer similar

ERP software. Usually they compete in implementation rate and extra features.

This situation presents you an advantage to get good price or additional features /

service. Credibility of vendors is still more important. You will waste the ERP

investment if the implementation is fail. It would be great if you can get reputable

ERP vendor with low price without reducing service quality.



ADVANTAGES OF ERP:

ERP is software which integrates all functionalities of organization in

a single database. It streamlines all the business processes and gives

desired result on a click of a button.

ERP software incorporates a large amount of industry specific

business functionalities which will ensure less customization or some

time no customization except reports to make the package suitable to

your business operations.

ERP software is integration of all the business solution in a single platform which reduces unnecessary paper work, documentation,

repeated entry, cycle time etc.

The software also comes with its framework of upgrades to changing

technologies.

In the ERP software business functionalities and operation processes

are built into standard software codes, thus it require lesser time to

understand process related issue of implementation and gives industry

specific best practices.

ERP software automates the business processes and also forces its

own logic industry specific on the businesses.

ERP integrates the costing, profit & revenue information of sales that

are made.

ERP speeds up the whole manufacturing process.



Better and systematic inventory handling with ABC analysis.

Work in progress control.

Accessing the status of goods on a click of a button.

Fast transmission commodities through online transactions.

Fasten the creation reports.

Quick processing of information.

Serving the customer efficiency in time.

Solve the customer problem quickly.

Information based decisions.

Better finance reports.

Better supply chain manufacturing.

Better vendor management. Reduce process cycle time.



DISADVANTAGES OF ERP:

It has some disadvantages due to inadequate investments in regular training for

users, testing charges, limited customization, reengineering of business process up

to some extent. AMC charges for the software and up to dates, difficulties to use

etc.

Complete system can be expensive for your organization, although they are

coming for SMEs at lower cost too, but organizations should be very careful

in selecting the appropriate software that fulfills the requirements in a

budget. There are some limitations in customizations. Some customizations

may involve changing of software structure which is usually not allowed.

Re-engineering of business processes to fit the industry standards prescribed

by ERP system may create some problems to the users to understand they

may do some mistakes. New system can be too complex measured against

the actual needs of customers.

There is a risk of loss of data in the event of a security breach, because of

centralized database in the system.

It has some limitations and do not allow much flexibility in implementation

and usage.

The new system may be over-engineered relative to actual needs of

customer. If implementation fails, due to any reason, all the work done by

organization in this project will be zero.

Organization should be very careful about implementation process.

There may be some compatibility problem because new technology and old

legacy system like organization may have to buy new database, new PCs,

new servers to implement the software. This will increase the cost of project.

If organization does not have IT department, they may require a new IT

manager to implement the system. 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.

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.

The system can suffer from the "weakest link" problem inefficiency in one

department or at one of the partners may affect other participants.

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 other disadvantages seen by the organizations who have

implemented ERP system but they are very happy with advantages aver disadvantages cannot effect the organization if planned well to implement

the software.

RECOMMENDATIONS FOR SUCCESSFUL

IMPLEMENTATION:

Following are the important recommendations for successful implementation in the

business organization.

set the objectives and goals of implementation.This will help you to remain

focused, and keep the project running smoothly and on time

make a design and full detail report of the project before implementation.

This documentation give the guidline during the implementation. Project

team will not deviate from the main objectives and goals.

strong and capable project team is very important for the successful

implementation. So Even the best solutions can fail if you do not have the

right internal team members on the project. A strong management team

must have the ability to both manage effectively and centralize project focus.



the testing of the ERP system is also very important. Test and retesting of

the system at every stage of the implementation is necessary for successful

ERP implementation.

Last, but not least, is the importance of training. I find that a one-time

training is not enough. In most situations, you will need to train, train, and

then retrain. Start training at the beginning of the project with the

expectation that you will be retraining them at the end. Come back in six

months to a year and train the users again.

Enterprise Resource Planning Final Project

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