Erp program examples. ERP systems: what is it in simple words, the pros and cons of ERP, an overview

The group of criteria "needs of the organization" may include:

• Compliance with the business processes of the organization. An ERP system should be able to be customized to the organization's processes. This criterion determines the flexibility of the system in case of changes in the company's activities.
• Scalability. An ERP system should allow replicating solutions for several departments or several types of company activities. Also, it should be able to adapt to the scale of the organization.
• Alignment with the organization's strategy. The operation of the ERP system is carried out for a long period of time. Therefore, it should help the implementation of the company's strategic plans. The choice of the system must be carried out taking into account the prospects for development.
• Availability of industry solutions. The processes of an organization depend on the industry and the market in which it operates. When choosing a system, these factors must be taken into account.

The group of criteria "applied technologies" may include:

• Software architecture. Depending on the needs and capabilities of the organization, it is necessary to choose the appropriate software architecture of the ERP system, such as "cloud services", "client-server" architecture or "object-oriented" architecture.
• Technical architecture. This selection criterion is related to the previous one. The choice of technical architecture may require the organization to update communication channels, hardware, and computer equipment.
• ERP system implementation technology. This criterion depends on the service provider. As a rule, large manufacturers of ERP systems offer to use implementation technology for their software product. SAP, ORACLE, Microsoft, etc. have such technologies.

The group of criteria "functionality" may include:

• The composition of the modules. The choice of ERP system modules must be made depending on the current and future needs of the organization. The system should be able to expand in functionality.
• Integration. When choosing a system, it is necessary to take into account the possibility of integration with existing control systems in interrelated areas.
• visibility. An essential element of the functionality of the ERP system is the simplicity of the interface and the convenience of users. When choosing, it is necessary to take into account the possibility of customizing the interface to the needs of users.
• Regulatory Compliance. The ERP system affects many areas of the enterprise, which are regulated by law. Therefore, an important selection criterion will be the ability of the system to adjust to the requirements of local legislation.

The group of criteria "support" may include:

• support cycle. When choosing an ERP system, it is necessary to determine how long the supplier will support the system. Is there a possibility of switching to a new version of the ERP system, is there a possibility of refining the system to the needs of the organization.
• Availability of a support service. In the course of work, users of the ERP system will always have questions and difficulties. For the efficient operation of the system, it is important that the supplier can guarantee the support of the users of the system.
• Implementation experience. This criterion is related to the performance of the ERP system provider. It is necessary to pay attention to the number of successful implementations of ERP systems from a particular supplier.

The group of criteria "cost of ownership" may include:

• Software cost. For the operation of the ERP system of the organization, it is necessary to purchase licenses for its use. When choosing, you need to take into account the method of calculating the cost of these licenses (for example, per user group or per workstation, etc.).
• Hardware cost. Depending on the architecture used, the cost of hardware can vary significantly. An organization may need to purchase server hardware, update the fleet of computing facilities.
• Service cost. This criterion is also significant in the cost of acquiring an ERP system.
• The cost of upgrading and updating. For some ERP system vendors, the cost of upgrades and upgrades may equal or exceed the cost of the original purchase.

Implementation of an ERP system

The implementation of an ERP system is usually a lengthy and complex process. Each major ERP system manufacturer has developed its own technologies and implementation methods. These techniques are somewhat different from each other, but the general procedure is basically the same. In addition, the order of implementation of the ERP system may vary depending on the software and hardware architecture of the ERP system. These techniques should be considered when choosing a service provider.

An organization that has decided to implement an ERP system must, for its part, take a number of actions for the successful implementation of the implementation project.

These actions include:

1. Preparation for implementation. At the stage of preparation of the organization, it is necessary to determine the main goals for which the ERP system will be implemented. This will allow you to clearly understand the results and expectations from the implementation of the ERP system. Since the implementation of an ERP system is a rather expensive project, it is necessary to estimate the estimated budget that the organization can allocate for implementation. Also, at this stage, the person responsible for the project is determined, and key specialists (members of the project team from the organization) are identified, the order of their interaction is determined.

2. Business analysis. These activities are among the most critical in the entire project. As a rule, an ERP system should work for a decade or more. Therefore, it is necessary to determine the development prospects of both the organization itself and the market for a long period.

At this stage, the organization should evaluate:

• prospects for the development of the market and the company for several years;
• composition and possibility of development of business processes of the organization;
• automation needs.

3. Choosing an ERP system. System selection should be based on current and future business needs. When evaluating the various options, it is necessary to be guided by the criteria indicated above (criteria for selecting ERP systems). To choose the system most suitable for the needs of the business, it is advisable to select at least 3 options for systems from different manufacturers.

4. Choice of supplier. As a rule, there are many suppliers of the same ERP system on the market. These are vendors or system integrators. They offer a range of services for the technical implementation of the ERP system. When choosing an ERP system supplier, you need to pay attention to its specialization. There are three types of supplier specialization.

Each type of provider has its own advantages and disadvantages:

• horizontal specialization. These companies have a large number of customers who work in different industries. As a rule, such providers have developed support services. However, their approach to implementation is “typical” for all customers.
• vertical specialization. These vendors specialize in working with customers from a limited number of industries (from one to three). This allows them to create solutions specifically tailored to the specifics of the industry. The approach to implementation of such companies is “tailored” for a specific industry.
• customer-oriented specialization. These vendors typically implement an ERP system to suit the needs of the customer. During implementation, they take as a basis the basic functionality of the ERP system and modify it to suit the customer's business conditions. This option has a significant drawback associated with updating the system and the stability of its work.

5. Project management. Responsible for the implementation of the ERP system and the organization's specialists must manage the project within the company. They must maintain a project plan, control the timing, budget, scope of work, compliance with the implementation goals. Another important project management task is to coordinate the interaction of the employees of the organization with the representatives of the supplier (the implementation team from the supplier).

6. Testing. Even with the best organization of implementation, there is a risk of errors in the system. Therefore, during the commissioning of the ERP system functionality, it is necessary to provide for mandatory testing of the operation of processes, departments and modules of the ERP system. The best way to test is to run parallel work in the old system and in the implemented ERP system. This will get rid of the main errors.

7. Training and education. Employee training is a prerequisite for the operation of an ERP system. Depending on the complexity of the system, it may take several weeks. Before starting training, you need to make sure that the ERP system has been tested. One bad option is when the service provider combines testing and user education. In this option, employees of the organization (future users of the system) act as system testers.

8. Commissioning. Commissioning is an important moment in the process of implementing an ERP system. There are two options for putting the system into operation: launching the system at once in the entire organization, and phased introduction. The second option is more preferable, because. allows you to gradually move to new working conditions. In the event of errors or problems in operation, only a part of the business (individual processes or departments) will be affected, and not the entire organization.

The main mistakes when implementing an ERP system

Implementing an ERP system is one of the most complex, time-consuming and expensive business improvement tasks. In the course of implementation, problems and errors always arise, to one degree or another affecting the timing, cost, and effectiveness of the project.

The main mistakes of the ERP system implementation project include:

• bad planning. For the successful implementation of the project, the implementation of the ERP system must be carefully planned. Poor planning often leads to loss of priorities, confusion with process automation, poor understanding of the current and future state of processes.
• insufficient assessment of ERP system vendors. Organizations are not working out the issue of selecting ERP system vendors. As a result, the choice is made in favor of the suppliers who offered the lowest price. Often, the supplier reduces the price in order to get at least one client and work out the implementation of a new system for him. As a result, after the completion of the project, it may turn out that the functionality of the ERP system is severely limited or the system works with errors.
• lack of understanding of needs. Starting the implementation of the ERP system, many organizations do not understand what functions and modules they need, what needs of the organization can be automated through the ERP system. This leads to the fact that a lot of unnecessary and unused functions and modules are being introduced, or vice versa, the necessary functions are applied to a limited extent.
• insufficient understanding of time and resource costs. Typically, organizations underestimate the time and resources required to implement an ERP system. This leads to high expectations from the system. Employees of the organization begin to believe that the ERP system will begin to work in full in a short time and it will not require much effort to work.
• lack of qualified personnel in the implementation team. A common mistake of ERP system implementation projects is to involve simple performers in the project team. The project team on the part of the organization should include highly qualified specialists (key employees) in each area of ​​the organization's activities: finance, management, procurement, production, warehouse, etc.
• lack of priorities. Organizations do not prioritize achieving goals before starting a project. This leads to the fact that during the implementation of the ERP system, you have to solve many tasks, constantly switching between them. As a result, implementation time increases, additional errors and problems appear.
• employees are not trained. Insufficient or complete lack of employee training is a common reason for the unsuccessful implementation of an ERP system. Employees do not understand how to work in the system and this causes rejection. The system will be unclaimed, its functionality will be used to a limited extent.
• underestimation of data accuracy. At the heart of the ERP system is data processing. Therefore, the accuracy and efficiency of the system will depend on the reliability and accuracy of the data that is entered into the ERP system. To reduce errors, it is necessary to initially enter reliable and accurate data into the system. Employees working with the system must carefully check the data before entering it into the system.
• using outdated applications. Another problem leading to the low efficiency of the implementation of the ERP system is the continued use of legacy applications. The work is duplicated in the ERP system and old applications. Organizations continue to use them because paid for their support and renewal of licenses. This leads to the fact that the transition to work in the ERP system is delayed.
• there is no effective testing of the system. Often, ERP system vendors offer to test on a limited number of users. Such testing will not be able to reveal all the shortcomings and will not allow simulating a real user load.
• lack of maintenance and modernization strategy. If a company does not develop a strategy for maintaining and upgrading its ERP system, then it will quickly become obsolete. The technical (hardware) part of the ERP system requires modernization, because over time, the volume of data grows, and new computing power is required. The software part must be constantly upgraded in accordance with the changing requirements of the legislation and the market.

The above implementation problems are the most common and frequently encountered. In addition to these, there are always problems specific to each particular enterprise or organization. "An effective method to avoid or minimize losses from such errors is to carefully prepare and plan each stage of the ERP system implementation project.

Four times lower than in the US. The task of modernizing the economy has been set at the state level, and enterprises, especially those using high technology, need to look for internal optimization reserves.

ERP solutions are systems for managing key business processes of an enterprise. ERP system includes modules: company planning, budgeting, logistics, accounting, personnel management, production management, customer management. Corporate, managerial, accounting reporting allows top management to get a comprehensive picture of the company's activities, which makes the ERP system an indispensable tool for automating operations and supporting current and strategic management decisions. In essence, an ERP system is a complex storage and use of information, the ability to obtain data on the activities of an organization within the framework of work in one system.

The project for the implementation of the ERP system can be divided into the following stages: project planning, goal setting; diagnostics and requirements analysis; selection and justification of a platform, a ready-made solution; information system design; documentation and coordination of design decisions; software development; information system testing; system deployment; user training; operation and support; and evaluation of results. Project management is based on best practices and methodologies. Depending on the wishes, needs and scale of the customer's project, the implementation of ERP systems can take from three months to 24 months.

The cost of the project for the implementation of ERP systems includes the cost of purchasing licenses (there is also the possibility of renting licenses) and the cost of services for setting up and implementing a system or industry solution. The cost of the project, of course, depends on the implementation methodology, on the volume of consulting services, on the desires and needs of the customer. You also need to consider the costs of IT infrastructure, team motivation and system operation.

The introduction of an ERP system allows companies to increase their revenues by keeping old customers loyal and attracting new ones; reduce management and operating costs by an average of 15%; reduce commercial costs by 35%; save on working capital; reduce the implementation cycle; reduce the insurance level of warehouse stocks; reduce accounts receivable; increase the turnover of funds in settlements; increase inventory turnover; improve the utilization of fixed assets.

It is necessary to implement an ERP system in cases where the purpose of implementation is clearly defined, there is an interest of TOP management in the clarity and automation of business processes in the organization, the company has resources for implementation and motivation, the customer has decided on the platform and the team of implementers - developers.

ERP concept

Historically, the ERP concept has evolved from the simpler concepts of MRP (Material Requirement Planning) and MRP II (Manufacturing Resource Planning). The software tools used in ERP systems allow for production planning, modeling the flow of orders and evaluating the possibility of their implementation in the services and divisions of the enterprise, linking it with sales.

One of the important questions is whether the system belongs to the ERP class, or is it accounting. To answer this question, we should not forget that an ERP system (as the name suggests) is primarily a resource planning system. It describes not only the situation “as it was” and “as it is”, but also “as it will be”, “as it should be”. ERP systems not only store data about what is happening in the enterprise, but also include planning and optimization modules for all types of resources (financial, material, human, temporary, etc.), and most of the accounting functions implemented in the system are aimed to support these modules.

To implement the planning and optimization functions, it is necessary to have feedback in the system. Those. Based on the goals of management, a plan is drawn up, then, in the course of the work, real indicators are recorded, analyzed, and based on a comparison of the goals set and the results achieved, a corrective action is developed. The accounting system only allows you to record the results. It, unlike the ERP-system, does not include functions for automating planning, and comparing `plan - fact`. In other words, with the help of accounting systems, it is possible to perform only some analytical part of management, but not synthetic. This is the fundamental difference between an ERP system and an accounting system.

Functions of ERP systems

ERP systems are based on the principle of creating a single data warehouse containing all corporate business information and providing simultaneous access to it by any required number of employees of the enterprise, endowed with the appropriate authority. Data is changed through the functions (functionality) of the system. Main functions of ERP systems:

• maintenance of design and technological specifications that determine the composition of manufactured products, as well as material resources and operations necessary for their manufacture;
• formation of sales and production plans;
• planning the needs for materials and components, terms and volumes of deliveries to fulfill the production plan;
• inventory and procurement management: maintaining contracts, implementing centralized purchases, ensuring accounting and optimization of warehouse and workshop stocks;
• planning of production capacities from enlarged planning to the use of individual machines and equipment;
• operational financial management, including drawing up a financial plan and monitoring its implementation, financial and management accounting;
• project management, including scheduling milestones and resources.

Implementation features

Classical ERP-systems, in contrast to the so-called "boxed" software, belong to the category of "heavy" software products that require quite a long setup in order to start using them. The choice of CIS, the acquisition and implementation, as a rule, require careful planning as part of a long-term project with the participation of a partner company - a supplier or consultant. Since CIS are built on a modular basis, the customer often (at least at the early stage of such projects) does not purchase a full range of modules, but a limited set of them. During the implementation, the project team, as a rule, adjusts the delivered modules within several months.

Any ERP-system, as a rule, is designed for a certain market segment. So, SAP is more often used in large industrial enterprises, Microsoft Dynamics - in medium-sized companies and different profiles, 1C - in small companies, as well as in the case of a limited budget.

The cost of implementing ERP, depending on the size of the company, the complexity and the chosen system, can range from 20 thousand USD to several million USD. This amount includes software licenses, as well as services for implementation, training and support at the stage of launching the system into operation.

The concept of ERP introduced by analyst Gartner Lee Wylie in 1990 in a study on the development of MRP II. Wiley predicted the emergence of replicable multi-user systems that provide balanced management of all resources of the organization, not only related to the main activity of the manufacturing enterprise, but also combining data on production, purchasing, sales, finance, personnel through a common data model. In the early 1990s, the concept gained prominence through support from application software vendors.

Thus, ERP - Enterprise Resource Planning(English) - an information system created to process business transactions (business processes), the use of which helps to increase the competitive advantages of the company. In a broader sense, an ERP system is understood as a methodology for effective planning and management of company resources.

If in the early 1990s ERP systems were implemented primarily in industry, and, as solutions that implement MRP II as a component, by machine-building enterprises, then in the second half of the 1990s, the use of ERP systems became widespread in the service sector. , including telecommunication companies, power supply companies, and even government authorities and non-profit organizations. By the same time, due to the rapid growth in the number of modules in ERP systems and their functionality, the idea of ​​ERP systems as a comprehensive software for organizations, fundamentally replacing all other application programs, was replaced by the early 2000s with the allocation of such functions as CRM and PLM into software packages separate from ERP and outlining the scope of ERP as universal systems for back office processes and resource management.

As a characteristic feature of an ERP strategy there is a fundamental approach to the use of a single transactional system for the vast majority of operations and business processes of the organization, regardless of the functional and territorial fragmentation of the places of their occurrence and passage, the obligation to bring all operations into a single database for subsequent processing and obtaining balanced plans in real time.

Replicability, that is, the ability to apply the same software package for different organizations (possibly with different settings and extensions), appears as one of the prerequisites for an ERP system. One of the reasons for the widespread use of replicated ERP systems instead of custom development is the possibility of introducing best practices through business process reengineering according to the solutions applied in the ERP system. However, there are also references to integrated systems developed for a particular organization to order as ERP systems.

The need for a comprehensive application of the ERP system in geographically distributed organizations requires the support of multiple currencies and languages ​​in a single system. Moreover, the need to maintain several organizational units (several legal entities, several enterprises), several different charts of accounts, accounting policies, various taxation schemes in a single copy of the system turns out to be a necessary condition for use in holdings, TNCs and other distribution enterprises.

Applicability across industries imposes on ERP systems, on the one hand, the requirements for universality, on the other hand, support for extensibility by industry specifics. The main large systems include ready-made specialized modules and extensions for various industries (specialized solutions are known within the framework of ERP systems for engineering and manufacturing industries, mining enterprises, retail, distribution, banks, financial organizations and insurance companies, telecommunications enterprises, energy, organizations public administration, education, medicine and other industries).

Capabilities and functions of ERP-systems.

Enterprise resource planning processes are cross-functional, pushing the firm beyond traditional, functional, and local boundaries. In addition, various business processes of an enterprise are often interconnected. Moreover, data previously located on various heterogeneous systems is now integrated into a single system.

ERP systems use "best practices".

Enterprise resource planning systems have incorporated more than a thousand of the best ways to organize business processes. These best practices can be used to improve the performance of firms. The selection and implementation of ERP systems requires the implementation of such best practices.

ERP systems make organizational standardization possible.

Enterprise resource planning systems enable organizational standardization across geographically separated divisions. As a result, departments with non-standard processes can be made the same as other departments with effective processes. Moreover, the firm can appear to the outside world as a single organization. Instead of receiving different documents when a firm deals with different branches or enterprises of a given company, this company can be presented to the world in the form of a single common image, which leads to an improvement in its image.

ERP systems eliminate information asymmetry.

Enterprise resource planning systems put all information into the same master database, eliminating numerous information inconsistencies. This leads to several results. First, it provides increased control. If one of the users does not do his job, the other sees that something has not been done. Secondly, access to information is opened for those who need it; ideally, improved information for decision making is provided. Thirdly, information ceases to be the subject of mediation, as it becomes available to both management and employees of the company. Fourth, the organization can become "flat": since information is widely available, there is no need for additional low-value employees whose main activity is preparing information for distribution to the management and employees of the company.

• - ERP-systems provide information in real time. In traditional systems, a large amount of information is recorded on paper and then transferred to another part of the organization, where it is either reformulated (usually aggregated) or transferred to a computer format. With ERP systems, a large amount of information is collected from the source and placed directly on the computer. As a result, the information immediately becomes available to others.
• - ERP systems provide simultaneous access to the same data for planning and control.

Enterprise resource planning systems use a single database where most of the information is entered once and only once. Because the data is available in real time, virtually all users in an organization have access to the same information for planning and control. This can lead to more consistent planning and management than traditional systems.

ERP systems facilitate communication and collaboration within an organization.

Enterprise resource planning systems also facilitate communication and collaboration within an organization (between different functional and geographically separated divisions). The presence of interrelated processes brings functional and geographically separated units to interaction and cooperation. Process standardization also encourages collaboration, as there is less conflict between processes. In addition, a single database facilitates collaboration by providing each geographically separated and functional unit with the information they need.

ERP systems facilitate interaction and collaboration between organizations.

The ERP system provides an information highway for organizing interaction and cooperation with other organizations. Firms are increasingly opening their databases to partners to facilitate procurement and other activities. For this system to work, a single archive is needed that partners can use; and ERP systems can be used to facilitate such exchanges.

Most modern ERP systems are built on a modular basis, which gives the customer the opportunity to select and implement only those modules that he really needs. Modules of different ERP-systems may differ both in name and content. However, there is a certain set of functions that can be considered typical for ERP class software products. Such typical functions are:

• Maintaining design and technological specifications. Such specifications define the composition of the final product, as well as the material resources and operations necessary for its manufacture (including routing);
• Demand management and formation of sales and production plans. These functions are intended for demand forecasting and production planning;
• planning of material requirements. They allow to determine the volumes of various types of material resources (raw materials, materials, components) necessary to fulfill the production plan, as well as delivery times, batch sizes, etc.;
• management of stocks and purchasing activities>. They allow organizing the maintenance of contracts, implementing a scheme of centralized purchases, ensuring accounting and optimization of warehouse stocks, etc.;
• planning of production capacities. This function allows you to control the availability of available capacities and plan their loading. Includes advanced capacity planning (to assess the feasibility of production plans) and more detailed planning, down to individual work centers;
• financial functions. This group includes the functions of financial accounting, management accounting, as well as operational financial management;
• project management functions. Provide planning for project tasks and the resources needed to implement them.

The structure and main functions of ERP systems are also clearly shown in the figure. (Fig. 1)

Fig.1

The main features of ERP-systems can be represented as four blocks: planning, accounting, analysis, management.

Planning. Planning the activities of the enterprise at various levels means:

• · Develop a sales program.
• · Carry out production planning (a refined and approved sales program is the basis of the production plan, the integration of these plans data greatly facilitates the production planning process and ensures their inseparable connection).
• · Form the main production schedule (detailed operational production plan, on the basis of which the planning and management of purchase and production orders is carried out). Build purchasing plans.
• · Carry out a preliminary assessment of the feasibility of the formed plans at various planning levels in order to make the necessary corrections or make a decision on attracting additional resources.

Accounting. If the plans have been confirmed, they acquire the status of current plans, and their implementation begins. The previously modeled flow of dependent orders turns into a real one, generating needs for materials, labor resources, capacities and money. Satisfaction of these needs gives rise to accounting activities that ensure prompt registration of direct costs related to manufactured products (material, labor, operating costs in relation to tasks, technological operations, design work, maintenance work), and indirect costs distributed by financial responsibility centers. All operations for registering direct costs are entered, as a rule, in kind of standard consumption (material - in the appropriate units of measurement, labor - time, etc.). To reflect the corresponding financial result, ERP-systems offer powerful tools for setting up financial integration, which allow automatic conversion of consumed resources into their financial equivalent.

Analysis. Due to the prompt reflection of the results of activities, management personnel get the opportunity to carry out a comparative analysis of plans and results in real time, and the presence of additional modules for calculating key indicators and building mathematical models greatly simplifies the business planning process.

Control. The presence of operational information feedback about the state of the control object, as you know, is the basis of any control system. ERP-systems provide this kind of feedback (reliable and operational) information about the status of projects, production, stocks, availability and cash flow, etc., which, as a result, allows you to make informed management decisions.

Thus, we can talk about the extensive naming of the functions and capabilities of ERP systems that allow modern companies to manage their activities efficiently, stably and reliably.

Four times lower than in the US. The task of modernizing the economy has been set at the state level, and enterprises, especially those using high technology, need to look for internal optimization reserves.

ERP solutions are systems for managing key business processes of an enterprise. ERP system includes modules: company planning, budgeting, logistics, accounting, personnel management, production management, customer management. Corporate, managerial, accounting reporting allows top management to get a comprehensive picture of the company's activities, which makes the ERP system an indispensable tool for automating operations and supporting current and strategic management decisions. In essence, an ERP system is a complex storage and use of information, the ability to obtain data on the activities of an organization within the framework of work in one system.

The project for the implementation of the ERP system can be divided into the following stages: project planning, goal setting; diagnostics and requirements analysis; selection and justification of a platform, a ready-made solution; information system design; documentation and coordination of design decisions; software development; information system testing; system deployment; user training; operation and support; and evaluation of results. Project management is based on best practices and methodologies. Depending on the wishes, needs and scale of the customer's project, the implementation of ERP systems can take from three months to 24 months.

The cost of the project for the implementation of ERP systems includes the cost of purchasing licenses (there is also the possibility of renting licenses) and the cost of services for setting up and implementing a system or industry solution. The cost of the project, of course, depends on the implementation methodology, on the volume of consulting services, on the desires and needs of the customer. You also need to consider the costs of IT infrastructure, team motivation and system operation.

The introduction of an ERP system allows companies to increase their revenues by keeping old customers loyal and attracting new ones; reduce management and operating costs by an average of 15%; reduce commercial costs by 35%; save on working capital; reduce the implementation cycle; reduce the insurance level of warehouse stocks; reduce accounts receivable; increase the turnover of funds in settlements; increase inventory turnover; improve the utilization of fixed assets.

It is necessary to implement an ERP system in cases where the purpose of implementation is clearly defined, there is an interest of TOP management in the clarity and automation of business processes in the organization, the company has resources for implementation and motivation, the customer has decided on the platform and the team of implementers - developers.

ERP concept

Historically, the ERP concept has evolved from the simpler concepts of MRP (Material Requirement Planning) and MRP II (Manufacturing Resource Planning). The software tools used in ERP systems allow for production planning, modeling the flow of orders and evaluating the possibility of their implementation in the services and divisions of the enterprise, linking it with sales.

One of the important questions is whether the system belongs to the ERP class, or is it accounting. To answer this question, we should not forget that an ERP system (as the name suggests) is primarily a resource planning system. It describes not only the situation “as it was” and “as it is”, but also “as it will be”, “as it should be”. ERP systems not only store data about what is happening in the enterprise, but also include planning and optimization modules for all types of resources (financial, material, human, temporary, etc.), and most of the accounting functions implemented in the system are aimed to support these modules.

To implement the planning and optimization functions, it is necessary to have feedback in the system. Those. Based on the goals of management, a plan is drawn up, then, in the course of the work, real indicators are recorded, analyzed, and based on a comparison of the goals set and the results achieved, a corrective action is developed. The accounting system only allows you to record the results. It, unlike the ERP-system, does not include functions for automating planning, and comparing `plan - fact`. In other words, with the help of accounting systems, it is possible to perform only some analytical part of management, but not synthetic. This is the fundamental difference between an ERP system and an accounting system.

Functions of ERP systems

ERP systems are based on the principle of creating a single data warehouse containing all corporate business information and providing simultaneous access to it by any required number of employees of the enterprise, endowed with the appropriate authority. Data is changed through the functions (functionality) of the system. Main functions of ERP systems:

• maintenance of design and technological specifications that determine the composition of manufactured products, as well as material resources and operations necessary for their manufacture;
• formation of sales and production plans;
• planning the needs for materials and components, terms and volumes of deliveries to fulfill the production plan;
• inventory and procurement management: maintaining contracts, implementing centralized purchases, ensuring accounting and optimization of warehouse and workshop stocks;
• planning of production capacities from enlarged planning to the use of individual machines and equipment;
• operational financial management, including drawing up a financial plan and monitoring its implementation, financial and management accounting;
• project management, including scheduling milestones and resources.

Implementation features

Classical ERP-systems, in contrast to the so-called "boxed" software, belong to the category of "heavy" software products that require quite a long setup in order to start using them. The choice of CIS, the acquisition and implementation, as a rule, require careful planning as part of a long-term project with the participation of a partner company - a supplier or consultant. Since CIS are built on a modular basis, the customer often (at least at the early stage of such projects) does not purchase a full range of modules, but a limited set of them. During the implementation, the project team, as a rule, adjusts the delivered modules within several months.

Any ERP-system, as a rule, is designed for a certain market segment. So, SAP is more often used in large industrial enterprises, Microsoft Dynamics - in medium-sized companies and different profiles, 1C - in small companies, as well as in the case of a limited budget.

The cost of implementing ERP, depending on the size of the company, the complexity and the chosen system, can range from 20 thousand USD to several million USD. This amount includes software licenses, as well as services for implementation, training and support at the stage of launching the system into operation.

When financial resources were added to the resources taken into account in planning, the term ERP (Enterprise Resource Planning) appeared - enterprise-wide resource planning. The difference between the concepts of MRP II and ERP is that the first is focused on production, and the second is business-oriented. For example, the terms of crediting a customer for the shipment of finished products fall into the field of view of ERP, but not MRP II. OLAP tools, decision support tools belong to ERP, but not to MRP/MRP II systems.

ERP is an accounting-oriented information system for identifying and planning across an enterprise the resources needed to receive, manufacture, ship, and account for customer orders. The ERP system differs from the typical MRP II system in technical requirements such as graphical user interface, relational database, use of fourth generation language and latest computer design software, client/server architecture and open system mobility. ERP-systems automate the internal activities of the enterprise (back-office).

Since the second half of the 90s, there has been a need for the development of ERP systems, including tools for automating outward-facing functions (front-office). As a result, CRM (Customer Relations Management) and SCM (Supply Chain Management) systems appeared - relationship management with customers and suppliers, respectively.

CRM (customer relationship management) is an enterprise resource management methodology focused on sales and customer relationships. In a more general sense, it is the management of individual functions of the sales service (sales forces) and technologies for automating these functions (for example, HelpDesk).

To expand the functionality when organizing the sphere of interaction between an enterprise and its customers, the concept of CSRP (Customer Synchronized Resource Planning) is aimed. The corporate resources covered by the CSRP system serve such stages of production activities as the design of a future product, taking into account the specific requirements of the customer, warranty and service.

ERP II-systems (Enterprise Resource and Relationship Processing) is the development of ERP-systems, management of internal resources and external relations of the enterprise. The relationship of all subsystems is shown in Figure 10.2.

Fig.10.2. Interrelation of subsystems of planning and enterprise resource management

6. Classification of erp systems

There are quite a lot of classification features by which both domestic and Western ERP systems can be divided. These include:

functionality (first of all, the difference is manifested in the presence or absence of a production control module);

the scale of the enterprise to which the solution is oriented;

cost of the system implementation project (licenses and services);

terms of implementation;

used software and hardware platform (technical platform, operating system, DBMS server);

the availability of industry solutions (it is advisable to use for ERP systems with a production module) and a number of others.

In this regard, the most interesting classification of systems based on integral indicators. In accordance with this classification, all systems can be conditionally divided into 3 groups.

1)Local systems. As a rule, they are designed to automate activities in one or two areas. Often they can be the so-called "boxed" product. The cost of such solutions ranges from several thousand to several tens of thousands of dollars.

2)Financial management systems. Such systems have much greater functionality, but their distinguishing feature is the absence of production modules. And if only Russian systems are represented in the first category, then here the ratio of Russian and Western is approximately equal. The timing of the implementation of such systems can vary around the year, and the cost can reach hundreds of thousands of dollars.

3)Medium and large integrated systems. The difference between these systems is rather conditional and lies in the presence or absence of industry solutions depending on the scale of the enterprise, including its territorial distribution. The implementation time of such systems can be several years, and the cost ranges from several hundred thousand to several tens of millions of dollars. It should be noted that these systems are designed primarily to improve the management efficiency of large enterprises and corporations. In this case, the requirements of accounting or personnel records fade into the background.

In table. 10.1 shows some of the Russian and Western systems available on the domestic market, which, to one degree or another, can be attributed to ERP systems.

Table 10.1. Characteristics of ERP systems

Continuation of the table. 10.1

The end of the table. 10.1

As can be seen from this table, the range of possible solutions is quite large. It should be noted that modern ERP systems are characterized by the development of new functionality associated with going beyond the traditional framework of optimizing and automating transactional processes within the enterprise. This mainly concerns the automation of supply chains (the so-called Supply Chain Management procedures, SCM - supply chain management) and customer relationships (Customer Relationship Management, CRM - customer relationship management). At the same time, the traditional control loop inherent in the ERP system is now called back-office applications (or internal system), and extensions directed “outside” of the enterprise are called front-office applications.

Control questions and tasks for topic 10

What tasks are assigned to corporate IS?

What are the requirements for the development and implementation of CIS?

List the main tasks of MRP systems.

What functions do MRP II systems perform?

Describe the MRP II processes.

What are the tasks of an ERP system?

What is the difference between MRP II and ERP systems?

What subsystems support work with customers and suppliers?

Give a classification of ERP-systems.

What ERP systems do you know? Give them a brief description.