Posts tagged ‘ERP’

Art and Science of Software Selection

Well, software selection is really a tough task. Be it an ERP, CRM or BI software. Experts advise to follow a structured methodology for selecting the right software. Here it goes:
1.    Identify your needs and document those
2.    Circulate Request for Information to the vendors and ask them to provide product information
3.    Evaluate vendor responses to the RFI
4.    Shortlist a few vendors (at least 10) based on the RFI
5.    Make a request for proposal and circulate it to the shortlisted vendors
6.    Evaluate vendor responses to the RFP
7.    Shortlist 3 top vendors based on the RFP responses
8.    Prepare Sample Data and Demo Script and circulate it to the shortlisted vendors
9.    Arrange for Demo Session
10.    Evaluate Vendor Demonstrations
11.    Shortlist the top 2
12.    Negotiate till you find the right price and terms
13.    Make legal agreement (Take help of experts, most of the vendors draft the agreement in the terms most beneficial to them)
14.    Award the contract
Sounds simple? No way. You need a professional consultant to help you find a matching solution. What is the use of software that doesn’t work the way it was promised? Software selection is an art and science.

Art in the sense that you need to be really well versed with the software industry, human problems, the way humans work.

Science in the sense that you should know the structured methodology of software selection, man days estimation, technological jargons, customization needs and strengths and weaknesses of a software platform.

In my view, no software is good or bad. Software works the way it is designed and intended to be used. We humans expect either too little or too much from it and create problems. It really requires introspection before judging whether it is the software to be blamed for or our ignorance about the requirements and the features that the software is intended to offer.
The reasons for this include:

  • An inability to analyze processes and/or systems that make a business work
  • A lack of a general knowledge of IT
  • A lack of expertise to computerize the business processes
  • There is the sub-optimal use of IT through the non-identification of the information needs of the business, resulting in the mismatching thereof to IT requirements
  • Finally, a lack of a formal, affordable means to assist in the decision-making process as to what IT to use where, when and how within the business environment.

Often, an organization will have a business problem that it moves to solve with a specific technical solution. They then install new software without considering whether the solution is an apt one and without knowing what it will take to make the technology work.

Many great initiatives never reach their full potential. The initiatives fail to meet their stakeholder expectations, return on investment targets, and more importantly, the expectations for customer impact. Common pitfalls include:

  • Flawed design of strategies
  • Inadequate risk management and mitigation plans
  • Competing or misaligned initiatives
  • Inability to facilitate and manage the project

Often the source of these missed opportunities is a lack of experience and an inability to remain focused on the objectives while balancing the ongoing needs of the business.
To be continued… Hopefully!!!


November 16, 2008 at 7:17 am Leave a comment


Technology plays a key role in today’s business environment. Many companies greatly rely on computers and software to provide accurate information to effectively manage their business. It is becoming increasingly necessary for all businesses to incorporate information technology solutions to operate successfully. One way that many corporations have adopted information technology on a large scale is by installing enterprise resource planning (ERP) systems to accomplish their business transaction and data processing needs.
Enterprise resource planning (ERP) systems are software packages that use relational database technology to integrate various units of an organization’s information system. ERP systems provide several separate, but integrated, modules that can be installed as a package for any organization.
Many large corporations use several different information systems, often because they have merged with and/or acquired other companies with varied systems. An ERP system integrates these diverse information systems and results in improved data reliability and processing efficiency. ERP systems quickly became popular with large corporations that needed a seamless integration of their business, but are now frequently used by small to midsized companies. The excellent ability of ERP systems to simplify business transaction processing, eliminate work that adds little or no value and simultaneously improve customer service are the main reasons for the outstanding success and popularity of these systems.

What is ERP
•    ERP software is a suite of applications from a single vendor intended to integrate all of a company’s processes.
•    The software provides a universal user interface, shared reporting and analysis tools, and a common architecture.
•    ERP systems operate via integrated databases and one set of data. Thus, information can be accessed across the enterprise, rather than looking at separate operating units.

Evolution of ERP:

1970’s: Custom developed systems
1970’s – 1980’s: Highly customized package from one software vendor
1980’s – 1990’s: Interfaced packages from multiple software vendors
Present: Integrated solution from one vendor

ERP Modules:
Financial Modules: (G/L, A/P, A/R, etc.)
Human Resource Modules (Payroll, Benefits, etc.):
Distribution Module: (Sales Order, Procurement, etc.)
Manufacturing Modules (Planning, Shop Floor, etc.)

General expectations from ERP System
•    Enterprise Integration
•    Integrated components or modules create functional breadth
•    Functionality within modules create functional depth
•    Technical architecture facilitates integration
•    One instance of data (no replicas)
•    Real-time updating
•    One-time updating

•    Integration also allows drill-down and ad-hoc reporting capability

•    Windows-based GUI
•    Workflow
•    Drill-Down and Ad-Hoc Reporting
•    Security
•    International Features
•    Internet-Enabled ERP

ERP Life Cycle
•    Evaluation of current systems
•    Development of a business case for the new system
•    Evaluation of potential systems
•    Selection of a system
•    Implementation of a system
•    Support of system

Strategic benefits of implementing an ERP
•    Improved customer responsiveness
•    Strengthened supply chain partnership
•    Enhanced organizational flexibility
•    Providing a “single face” to the customer
•    Improved decision-making capabilities
•    Reduction in time to market

Operational Benefits of an ERP
1.    Reduction in inventories
2.    Reduction in personnel
3.    Reduction in total logistics costs
4.    Reduction in manufacturing costs
5.    Reduction in outside warehousing
6.    Reduction in procurement costs
7.    Increased production capacity
8.    Improved order cycle time/accuracy/cost

Financial Benefits of an ERP
1.    Increased shareholder value
2.    Reduced assets deployed
3.    Increased return on equity
4.    Improved cash flow

Technical Benefits of an ERP
•    Leverage IS dollars instead of “reinventing the wheel”
•    Integrated package forces a process focus approach during implementation
•    Integrated package eliminates the need to maintain version control and interfaces associated with separate packages
•    Integrated package reduces the level of training necessary

Disadvantages of ERP

1.    Implementation cost
a.    Software and hardware
b.    Expertise
c.    Opportunity costs
2.    Time to implementation
a.    Lengthy and difficult process
3.    MOC (management of change) challenges
4.    System integration difficulties
5.    Vendor dependence

ERP Vendors
•    SAP
•    SSA Global
•    PeopleSoft/Oracle/J. D. Edwards
•    Manugistics
•    Ramco Systems

ERP Packages
•    SAP:
•    ORACLE:
•    Microsoft:
•    RAMCO:
•    Compiere :
•    OpenBravo :

ERP Trends:
•    Improvements in integration and flexibility
•    Extensions to e-business applications (CRM, supply chain)
•    Broader reach to new users (vendors, suppliers, self-service)
•    Adoption of internet technologies (web servers, Java, XML)
•    Mergers, acquisitions and divestitures of software vendors
•    General to Industry Specific Focus Transition
•    Pricing Trends

Causes of ERP failures
1.    Underestimating the complexity of the planning, development, and training required
2.    Failure to involve affected employees in the planning & development phases and change management programs
3.    Trying to do too much, too fast
4.    Insufficient training
5.    Believing everything the software vendors and/or consultants say

ERP Success Factors
1.    Senior management involvement
2.    Cross-functional implementation team
3.    Extra effort up-front defining detailed plan
4.    Clear guidelines on performance measures
5.    Clear guidelines on using outside consultants
6.    Detailed plans to train users


Pronounced “S  A  P.” Like you say: “I B M”

SAP Functionality
• SAP consists of 70 complex software modules for business applications.
• Each module can access over 1,000 business processes.
• Each module uses over 8,000 tables of data and business rules and contains a set of sub applications.

SAP Architecture
1.    SAP R/3 has a three-tier, thin-client architecture that uses proprietary components.
2.    The client provides the user interface to the next layer, which is the application server.
3.    The application server is proprietary to SAP R/3. A transaction initiated by the client sends data to the application server, which invokes the correct application service, to apply the business functions to the transaction.
4.    The database is the third tier. It may run on the same machine as the application server or on its own processor.
5.    The database server is closely coupled to the application server, with one data server for every application server.
6.    A third party database can be used, (updating through means other than the application server is discouraged).
7.    Communication between the layers is carried out by remote function calls (RFCs), which are equivalent to Remote Procedure Calls (RPCs)
8.    The 3-tier architecture can be used to provide failover capability and load balancing, where the workload is divided equally between servers.
9.    Data caching allows repeated requests to be served without having to repeat access to the database.

Features of SAP
•    Seamless Integration
•    Functionally rich
•    Uses open systems to communicate with other systems
•    Brings knowledge of business across the world
•    Designed for all types of business
•    Client/Server Architecture

SAP Platforms
RDBMS Supported: Oracle, Informix, SQL Server, DB2
OS Supported: Unix, Windows NT or higher, AS/400 etc

October 27, 2008 at 8:58 am Leave a comment

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