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Concept of erp system. What is an ERP system? Enterprise financial resource planning

Concept of erp system. What is an ERP system? Enterprise financial resource planning

11.10.2019

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.

The abbreviation ERP comes from the English expression Enterprise Resource Planning which literally means enterprise resource planning. Theoretically, such a system is a general strategy for the company, which takes into account the following areas:

Management of financial resources - tax reporting, accounting, budget planning;
Human resources management;
Asset Management;
Interaction with partners and accounting for the history of customer transactions.

On the practical side, speaking of ERP business systems, they mean software for automating each of the listed areas, as well as other processes of the company's activities to bring them into a common interconnected database necessary for the operation of the enterprise.

In simple terms, ERP systems are sets of activities that include: information flow management models in the enterprise, equipment for its storage and processing, software, IT department and technical support specialists, as well as directly users.

The structure of the enterprise resource planning IT system

Being a complex software, an ERP system consists of the following elements:

Platform- the main environment (core) that ensures the operation of the program components, as well as the basic functionality (reference information, functions) of the company. This is the basis of the system, without which its work is impossible.
Data management tools- this includes storage on the server, programs for processing information and transferring them for the operation of modules.
Plugins- programs independent of each other that connect to the platform and use the main databases in their work. It is the presence of independent modules that can be disconnected and connected without disturbing the operation of the entire complex that distinguishes ERP systems from other types of software used in automating business processes.

Modules connected to the main platform of the production resource planning system are conventionally divided into three groups:

Internal- programs used within the enterprise, to which employees have access.
External- programs that customers and partners have access to (for example, a personal account of a dropshipper intermediary).
Connectors- programs for connecting with other software products that are not part of the ERP system, but used by the company in its activities. They perform data exchange.

Where to get an ERP system for an enterprise

There are three ways to purchase resource planning software:

Creating your own product. It often turns out to be an irrational method, since the lack of a professional approach can lead to a situation where only one direction will be taken into account, which will not give a tangible effect. At the same time, the system introduced in this way, as a rule, is difficult to replace or supplement.
Purchase of a ready-made platform and its implementation in the work of the enterprise. Here you need to make the right choice in accordance with the activities of your company. High-quality and well-known products are quite expensive and require constant support from the developer.
Professional development of ERP systems individually for the company. Only 20% of programs created on the domestic market are successfully integrated into the work of enterprises. This means that the company's risk of receiving a low-quality product at an inflated cost is quite large.

How to choose and implement an ERP system

There is no universal resource planning system suitable for all companies. For each production, its most optimal product is selected, which is then adjusted during the implementation process.

Types of ERP systems for enterprises

Classification of enterprise resource planning systems is carried out according to several parameters, the consideration of which will help you in choosing the right product. So, according to their purpose, they can be sectoral and general. The first option is suitable for very large companies, as well as for enterprises that produce a unique product or use non-standard business practices.

By type of organization, systems of the following formats are distinguished:

public- access to the general functionality of the program has many users, but your data is available only to employees of your company.
Private- the program is isolated and can be changed and finalized according to the tasks of the company.
hybrid is a combination of two types.

By type of information storage:

Cloud- databases are located on external servers.
Internal- data is stored on the company's own server.

By user interface format:

Stationary (desktop)- software for connecting to databases is installed on a PC and can work autonomously from the Internet, using only internal communications.
Browser (working only online)- access to the system is carried out through the company's website and the personal account of an employee, client or partner.

By software architecture:

Modular- consist of many components (modules) designed to solve various problems.
Monolithic- uniform complex programs.

By license class for use:

Proprietary- closed software, for the use of which you need to pay for a license.
open source- free open source programs.

Errors in choosing a resource planning system

The wrong choice of ERP enterprise management system will not only entail additional costs, but may also adversely affect the operation of the enterprise. To avoid mistakes, you need to know the main ones:

Lack of a well-chosen and clearly articulated goal. It is important to understand that ERP - should improve the work of the company, adopting the positive aspects and compensating for the negative ones. Therefore, when choosing, it is necessary to determine exactly what effect from the implementation should be obtained. If your goal is to optimize the business as a whole, you will not get the desired result. All tasks must be specified in the terms of reference (TOR). At the same time, the system should be adapted to the company, and not vice versa. It is a mistake to completely rebuild a business, especially if it is profitable, under an ERP system.
Wrong choice of methodology for solving tasks. Each ERP system is built for a specific area of business. It can be adapted for the manufacturing sector or exclusively for trade.
One-sided view of system selection. The team of specialists who make up the technical specifications, who select and control the process of implementing the system, should include representatives of various departments of the company (IT, sales, personnel, production). Otherwise, the final product will be chosen from the standpoint of the convenience of only one link of users and will not bring proper efficiency to the enterprise as a whole.
Insufficient qualifications of the developer and specialists implementing the implementation. The process of creating and integrating a resource planning system is expensive and many companies, in an effort to reduce costs, turn to firms with little experience or use free ERP systems, which is quite risky.
Low level of control over the process of integrating the program into the system.
Interface complexity. If the program is too complex to understand intuitively, you may face the problem of having to train your staff on how to use it. It also increases the risk of accidental errors when entering data, which entails incorrect planning and all the ensuing consequences.

What functions should a resource planning system provide

The main tool in business planning that allows you to make a decision is reporting documentation. It is she who is the basis of the work of ERP, which in turn should provide the ability to analyze report data from various positions. Therefore, an effective ERP system should have a number of the following functions:

Providing convenient document flow. The main purpose of ERP systems is to provide quick documentation (invoices, invoices, reports, price lists), as well as subsequent operations with them (search, access, forwarding, editing).
Planning. The algorithm of the system, especially for production, should allow planning payments, deliveries, warehouse operation, seasonal changes, production volumes. For each company, production planning is individual and is tied to a volume-calendar strategy.
Information transparency. The program should record all transactions, parties, volumes and dates of their implementation, which will make the company's work more transparent for analysis.
Access control for different levels. Since the system covers a very large amount of information about the work of the company, most of which must remain closed to lower-level employees, customers and partners, it must allow part of the data to be closed to users with different permissions.
Unified data network. The ERP system should provide the ability to track all processes separately (for example, transactions) at all levels from the purchase of raw materials and production, to the registration of the sale and the payment of tax.
Personnel accounting. The program should provide for the possibility of controlling the number of personnel, planning the schedule of exits and hours worked, taking into account the level of qualifications of employees and scheduling vacations, taking advanced training courses. Also, an effective planning system provides for the possibility of calculating salaries and bonuses, taking into account the form of remuneration.
Work with providers. The functionality of the system should allow you to store and process the database of suppliers, send requests for availability, plan the formation of orders, release working capital and pay bills, control the delivery process, and keep records on purchases.
Work with clients. The system should allow keeping a complete record of data for each client, regardless of how many legal entities are included in the structure of the latter. This implies not only the possibility of allowing the client to work through his own account, but also the storage of data on completed transactions, receivables, supply planning, invoice processing, cooperation history. This allows you to study the demand and the level of profit received from each client.
Service and repair. If we are talking about production, this part of the program should ensure the planning of technical inspection of equipment, the schedule for scheduled repairs, modernization or replacement of enterprise equipment. For trade enterprises, the system should provide for the possibility of accounting for service maintenance of sold goods and repair under warranty.

Features of ERP implementation

The resource planning system operates with databases, which, as a rule, are very numerous. The information itself can be located on various media, including paper documentation, and therefore its transfer to an electronic format is a huge job. The data itself is divided into two groups:

Important- information that is the basis of the enterprise. These are data on the work and management of production, reporting from the sales department and personnel officers. They must be used in the ERP system without fail.
Are common- information that is relevant to a particular company, which is not used by the company constantly, but is also important. This data is added to the system as needed or at the request of the company's management.

The ideal ERP should include the ability to use all types of data, but in practice, to simplify the implementation process, the important ones are taken into account first, and then the common ones are gradually integrated.

Based on what data should be used and the required functionality of the system, a technical task is drawn up. It is an official document (instruction) demonstrating what tasks and goals need to be implemented in the implementation process. On the basis of the TOR, a calendar plan of work on integration is drawn up.

There are three strategies for implementing an enterprise resource planning system:

Step by step integration- first, the main modules are launched into operation (for example, accounting for finance, accounting and document management), and then, after debugging their work, the rest are gradually being introduced. This method is very time consuming and may not show results immediately. It is often used by companies in the independent development of the system.
Integrated implementation- the system is applied immediately in all directions and in full, and then a gradual debugging of work is carried out. This method allows you to quickly integrate an enterprise resource planning system. It is used when buying ready-made software.
Combined method- The introduction of ERP systems occurs immediately in all areas of activity, but in stages. This strategy allows you to minimize the time for implementation with the least loss of quality of work. Most often, this technique is used by private companies offering services for the development of individual software.

How an ERP system works and who needs it

Given the complexity and high cost, the introduction of ERP will be appropriate only for large companies, where the amount of data for accounting is very large and requires systematization. Such systems demonstrate high efficiency for large-scale production, in various corporations and holdings. If the company does not produce a wide range or is engaged in the manufacture of small batches, it does not need such a serious resource planning system, and it will only slow down the process and lead to unjustified losses.

The only exception, according to specialists of consulting agencies, is the use of ERP systems by small companies operating in a very competitive environment, where automation of all processes creates an additional advantage.

To understand whether you need such a system, you need to calculate the economic efficiency of its implementation. It can be determined by various parameters (decrease in stocks, speed of production, reduction in staff, increase in labor productivity), and as a result, for the enterprise itself, it should bring additional profit or, at least, cost reduction.

A Brief Overview of Popular ERPs

Most often, the main ERP systems of companies are finished products, adjusted to the activities of the enterprise. They can be paid and free. With proper implementation, you can achieve efficiency in both cases.

Popular Free Products:

ERPNext- a minimalistic program for the work of a private entrepreneur (IP). The main disadvantage is the limited disk space, which can be increased for an additional fee.
Galaxy ERP- designed for the domestic market and allows you to take into account frequent changes in legislation.

Paid programs:

SAP ERP- one of the most popular systems offering wide functionality and user-friendly interface.
1C:Enterprise- a fairly popular and affordable system that offers a large number of specialized solutions.
OpenBravo ERP- a program for the middle level with convenient scaling and affordable cost.

Advantages and disadvantages of ERP

Most of the shortcomings of ERP systems stem from its basic qualities, since the main problems that companies face when implementing a program are related to making mistakes when deciding whether to use and directly choose software.

Negative aspects of integrating a resource planning system

Despite the fact that the purpose of ERP systems is to improve the process of production activities, they have their drawbacks. Among the latter:

Program complexity and, as a consequence, the high cost of purchase and implementation.
Increased requirements for data storage and processing equipment, including servers for storing backups. It must be reliable and fast, which determines the high cost.
The need for additional data protection, careful control of the security system and setting up an access hierarchy. Storing information in an electronic format, and especially when accessed via a network, increases the risk of the theft or destruction (intentional or accidental) of important documents.
Dependence on the energy supply of the company. If there is a problem with the electrical network in the offices, warehouses or trading floors of the company, the work of the company can completely stop.

Practical advantages of an ERP system

The implementation of a strategy and software for accounting and resource planning is an effective way to achieve improvements in the work of the company, which has the following advantages:

The ability to integrate into various types of production and quickly adapt to a wide range of enterprise activities. The ERP system is suitable for industrial complexes, banking organizations, trade enterprises, service industries.
Support for planning methods in various areas of the company's activities.
Ability to build a virtual enterprise.
High-quality financial accounting for all departments.
The ability to manage corporations with a large number of international divisions and remote employees.
Scalability and flexibility for implementation in enterprises of various sizes.
Ability to work with other programs and applications used in the enterprise.
Integration of data into a single system, which makes it available to multiple departments.

Understanding the features of the ERP system, what it is in simple terms and how to choose for your company, you will be able to prevent yourself from mistakenly buying an expensive product you do not need, choosing the most effective one, you will be able to competently implement it, achieve an increase in efficiency and company profits.

An ERP system is an effective way of doing business that helps manage the workflow as a whole, plan the activities of individual business elements of the enterprise, and improve the operation of all production facilities.

You will learn:

What is an ERP system and when is it needed.
What are the advantages and disadvantages of an ERP system.
What functions does the ERP system perform in the enterprise.
How to choose an ERP system.
How to properly implement an ERP system in an enterprise.
What kind of training is needed for personnel who will work with the ERP system.
What determines the cost of an ERP system?

What is an ERP system and when is it needed?

To better understand the meaning of the ERP system, it is not enough just to know the decoding of these letters (Enterprise Resources Planning) and the translation of this definition into Russian (enterprise resource planning), it is better to study the history of its occurrence.

At the end of the 20th century, mass business process automation: PCs were rapidly spreading, programs for financial and accounting, electronic document management, checking the functioning of machinery and equipment were developed for them.

The difference in the principles of doing business was not only in the digitization of information, but also in the emergence of new methods for analyzing and exchanging data, combining initially different types of information. The result of this was the opportunity to see the entire work of the enterprise as a whole and to analyze the functioning of its individual areas (the work of the main production, warehouse, accounting). The information obtained made it possible to more competently distribute the use of production capacities and make the right decisions.

It was this way of doing business that was called ERP, and the software used for this purpose was defined as an EPR system.

Thus, all programs designed for accounting, personnel management, etc., are parts of the ERP system, while CRM (customer relationship management system) also refers to ERP and translates as "customer relationship management system."

Currently, all of the above components of the basic configuration of the ERP system are often used as separate programs. For example, only accounting can be automated at an enterprise, while all other information is stored in various programs of the standard MS Office package.

There is no point in arguing about whether CRM and electronic accounting are components of an ERP system, however, it is clear that over time, the level of automation of business workflows will only grow along with the number of software licenses sold, as well as the volume of services for installation and further maintenance.

In a situation where the company started its activities quite recently, there is no need for deep automation of work processes. Documents can be prepared in standard computer applications, and the director will be able to clarify the necessary information from one of the staff. However, along with the expansion of the entire business, the number of operations, documentation, and employees increases, which entails the need to store and analyze all information in electronic form.

If the company as a whole does not use an ERP system, then, as a rule, all information is stored randomly, which makes it difficult to find it. Sometimes there are situations in which the work of the ERP system is established only in some separate division.

What functions does the ERP system perform in the enterprise

The functionality within which it is possible to use an ERP system depends on the scale and direction of a particular company, the specifics of its work, but in general it should be aimed at general business management. The standard functionality is:

1. Production

drawing up specifications for manufactured goods or services to calculate the volume of necessary consumables and hours of work of employees;
planning and managing the work of the company at various scales: from specific production equipment to entire divisions.

2. Finance

drawing up plans for the use of the organization's financial resources and tracking results;
current accounting, accounting for taxes and other payments to the budget and extra-budgetary funds, financial reporting and controlling;
work with company assets, which include cash in bank accounts, securities, fixed assets (for example, real estate).

3. Logistics

management of the supply of materials and shipment of finished products: maintaining a database of contracts and counterparties, drawing up plans and reports on goods in stock, etc.;
preparation of data on all necessary consumables in order to fulfill previously calculated production standards.

4. Frames

personnel records and maintaining timesheets, staffing, payroll;
search and registration of employees;
preparing workforce plans.

drawing up plans for the sale of products;
preparation and implementation of advertising campaigns and marketing communications;
calculation of prices for manufactured products, development of discount programs, sales, etc.

6. Projects. Reporting

the presence of a large number of standard reporting forms for all areas of the organization's activities, as well as the ability to create additional reports;
verification and performance analysis enterprises;
development of a general policy for the work of the organization, including the setting of deadlines for each of the tasks set, the calculation of the resources required for these purposes (cash, materials, working personnel).

ERP-system in the enterprise: 4 stages of implementation

A full-fledged implementation of an ERP system in an organization can take from a couple of weeks to several years (depending on the volume and scale of the company's activities). At the same time, both the company's own IT specialists and employees of the developer company can install the ERP system.

The implementation of an ERP system can be divided into the following steps:

Stage 1. Primary organization

The stage in which tasks are defined, goals are set, after which a technical project plan.

Stage 2. Project development

Further, the work of the enterprise is studied: development plans, production processes. This information is the basis for selecting the structure of the ERP system, as well as for making adjustments to the technical plan (if necessary).

Stage 3. Project execution

The procedure for implementing business processes in the enterprise will be based on the installed ERP system, so at this stage it is necessary to transfer data from the accounting systems that were used earlier to the ERP system, unify them with each other. In a situation where it turns out that the modules of the ERP system are not enough for a given enterprise, at this stage it is possible to refine it. Upon completion of the installation, the basic principles of the ERP system are brought to the employees of the organization and trial tests are carried out.

Stage 4. Commissioning

At the final stage, you can find and fix problems that arise during the operation of the ERP system.

What methods are used to implement an ERP system

The following methods can be used to implement an ERP system:

Phased implementation, when the implementation of the ERP system is carried out in turn in some interconnected processes, which minimizes risks of problems.
"Big bang" - the entire system is installed at once. This approach can be used in a small organization with simple manufacturing processes. At the same time, special attention should be paid to the testing stage in order to identify all possible errors in the operation of the ERP system.
Deployment is a partial installation of software with subsequent distribution to other enterprise structures. On a separate site, the deployment method can be applied both in stages and simultaneously, since, in general, the risks of unsuccessful implementation are small.

The choice of the method of implementing an ERP system for each enterprise should be made very carefully, by analyzing the possible costs, as well as taking into account the experience of other companies.

Who trains staff about what an ERP system is

Explaining the basics of working with an ERP system is one of the most difficult stages of its implementation. Doing business using an ERP system can change business processes in an enterprise, which entails the need to carry out on a par with official duties as well as the functionality associated with the use of this software package. Thus, the main point for the company's management is to prepare the staff morally to work with the ERP system.

When implementing an ERP system, there may be a problem with the lack of desire among ordinary employees to learn how to work with it, because such automation makes the work of management easier. In this situation, the way out is the transfer of such workers to other positions. Most of the staff, as a rule, thinks in the future and understands the need for training in order to use the acquired knowledge in work.

From the quality of the learning will depend on the efficiency of using the ERP system. Employees should have a good understanding of the basics of its work and have the appropriate motivation, because if the staff does not understand for what purposes such innovations are used, then the results of the implementation of the ERP system will not be noticeable. Thus, employees should understand that the use of this software package can be an important lever to improve the efficiency of the entire enterprise.

Training employees in the basics of working with an ERP system should begin in advance. You can conduct an internal advertising campaign, prepare accessible information about the goals that will be achieved after the start of using this software package. In a specially developed document - "Personnel Training Strategies" - this task is designated first. In this document, all employees of the enterprise are divided into groups depending on the amount of necessary training activities, and all other training steps are listed.

As a rule, several groups are allocated into which the entire staff is divided. For example, a separate group can be distinguished company management and middle managers who will directly manage the operation of the enterprise and make the necessary decisions. Another group is that part of the users who perform the main functionality in working with the ERP system, without delving into the details of business processes, but having deep knowledge of the software package. And the third group is the main part of the employees who will enter the primary data into the program.

The first two groups should be trained by employees of the organization that developed the ERP system, while the bulk of the personnel from the third group can learn the basics of the program remotely or through colleagues who have already received the necessary knowledge.

Training can be carried out both in the training centers of consulting agencies, and directly at the enterprise. In some cases, the developers of the ERP system determine the obligatory condition for obtaining the appropriate certificate from employees of the second group.

Consulting agencies enter into agreements with major vendors such as SAP, Microsoft, Oracle, Sun, Cisco, which gives them the right to train how to work with the program and issue supporting documents upon completion of training. Information about this can be found on the official websites of such companies. Domestic developers - "Sail" and "Galaktika" - have their own training centers.

ERP system: an example of successful implementation

One of the enterprises engaged in the production and sales of refrigeration equipment - Howe Corporation(USA) - in order to more efficiently conduct business, it decided to implement an ERP system based on a service-oriented architecture (SOA) of the 2nd generation. This made it possible to immediately get results and see the benefits of using this ERP system, since the quality and profitability of all business processes have significantly increased.

This organization got the opportunity to more qualitatively analyze the volume of material reserves and the need for their replenishment. After the implementation of the ERP system, Howe Corporation has all the necessary tools for planning activities both in the short and longer term, which eliminates the use of an unreliable calendar method of planning.

Also, all the possibilities of using the ERP system were evaluated by an international company Alfa Laval, which has set itself the goal of achieving improved performance by improving the efficiency of business processes. In one of the Alfa Laval offices in Bulgaria, the Epicor iScala ERP system was used, which helped to carry out a detailed analysis of the use of materials and raw materials, control the timing of their purchase to fulfill the relevant orders, which affected reduction of industrial waste. At the same time, since the ERP system fully automated all business processes, this made it possible to reduce the volume of excess products in warehouses, as well as to minimize downtime in production.

Another company is IO Electronics- can also serve as an example of the successful use of an ERP system. Their goal was to successfully achieve the targets set for the next 4 years.

According to the director of IO Electronics, with the rapid development of activities and the development of other production areas, the profitability of the enterprise can significantly decrease if there are failures in the exchange of information between internal divisions. However, when using an ERP system, all information becomes available online. Upon completion of the task, the ERP system undergoes updates, which allows you to trace the entire production process and see the actual availability of a particular product, as well as avoid an overabundance of inventories in warehouses.

Practitioner tells

How an ERP system reduced the need for working capital by 40%

Sergei Sukhinin,

Since earlier our company did not have an ERP system, it was impossible to quickly note changes in the business process, which entailed a lack of materials for the assembly of finished products, uncoordinated activities of workshops, deterioration in the quality of the final product and increased consumption of raw materials. All these unnecessary costs could only be reduced by implementing an ERP system.

The main activity of our organization is production, so the tasks of automating planning and managing business processes were top priorities. Having determined that an ERP system would help us in solving our tasks, we wanted to achieve such goals as:

Increasing the efficiency of spending working capital.
Reduction of inventories stored in warehouses.
Creation of a production program taking into account the available capacities.
Reducing the level of work in progress.
Creation of a general list of materials used in production.
Improved material rate calculation process.
Increasing the accuracy of procurement plans, which will help reduce the volume of illiquid stocks in warehouses.

Only after the introduction of the ERP system, we were able to correctly plan the volume of materials needed for production based on the analysis of stocks in warehouses, which led to a reduction in working capital costs by 40%. Further, such an analysis helps to purchase only those materials that are necessary for a particular business process. The organizational structure of the company was also optimized, which contributed to the reduction of employees in the production and dispatching department by 50% without compromising the quality of work.

We can sum up the following results of the implementation of the ERP system in our company:

Production balances in warehouses decreased by 60 million rubles.
In all areas of activity, control is carried out based on the results of the analysis of measured indicators. Employees' incomes depend on the work they have done or not done, and they are solely responsible for this.
The purchase of production raw materials and their further distribution to the workshops are fully controlled.
The balance of illiquid materials decreased by 20 million rubles.
The procurement plan has become optimal; changes are made to it in a timely manner if such a need arises.
It became possible to plan the load on production facilities and, accordingly, the number of workers required for this.

What ERP system is in demand among Russian companies

Software systems that currently exist on the IT technology market can be developed by domestic and foreign companies. At the same time, they differ not only in the country of development, but also in the built-in functionality.

Foreign ERP systems, such as programs from SAP, Oracle, PeopleSoft, Sage, Baan, Microsoft Business Solution, can be used in enterprises of any category and are examples to follow. However, when working with such systems in Russia, some difficulties may arise:

the absence of the required number of specialists trained at the appropriate level for the implementation and further maintenance of the ERP system;
the unwillingness of domestic organizations to rebuild established business processes, since foreign management systems have significant differences from those used in Russia;
high implementation cost.

However, Russian developers are also trying to expand the capabilities of their own software systems in accordance with the needs of customers. Such ERP-systems successfully cope with the tasks set in the case when it is necessary to automate certain areas of the organization's work and it is not necessary to introduce a software package into the work of the entire enterprise as a whole. An example is the software of 1C and Galaktika companies.

11 ERP Implementation Mistakes

To improve the efficiency of the enterprise, installing an ERP system is almost the most expensive and most difficult task. The final price of implementation, as well as the time required for this, will depend on the number of errors that occur in the process.

Mistake 1. Poor planning.

This fact may lead to a misunderstanding of the present and future state of the ERP system, incorrect automation of business processes.

Mistake 2. Superficial analysis of organizations-developers of ERP-systems.

As a rule, the main criterion is low cost, but sometimes developers deliberately underestimate the cost of services in order to test the implementation process on the first customer. Upon such an installation, serious flaws and failures in the system can be identified.

Mistake 3. Misunderstanding the needs of the enterprise.

After deciding that it is still necessary to implement an ERP system, the customer company does not fully understand which software modules they need to install. This can be used by unscrupulous vendors who will include a lot of unnecessary components in the ERP system or, on the contrary, the installed functionality will not be enough.

Error 4. Underestimation of time and material costs.

Incorrect determination of the timing of implementation and the cost of installing an ERP system can lead to unreasonable expectations of a rapid increase in the efficiency of business processes.

Mistake 5. Lack of qualified employees at the customer enterprise.

The team of the enterprise should include employees with a sufficient level of knowledge in any field, from management and accounting to accounting in a warehouse, purchasing materials, etc.

Mistake 6. Lack of priorities.

If you do not set the right priorities initially, then during the installation of an ERP system you will often have to switch between different tasks, and this can lead to a delay in the installation process, unforeseen problems, etc.

Mistake 7. Insufficient staff training.

If you do not show employees all the functionality of the ERP system and how to use it, the staff of the organization may refuse to work in the system altogether or use its capabilities only partially.

Mistake 8. Underestimating the accuracy of primary information.

Since the key point of the ERP-system is the analysis of information, the result of its work will largely depend on the correctness of the initial data. Avoid typing errors and carefully check the information provided.

Mistake 9. Using outdated applications.

Very often, enterprises use both an ERP system and previously installed software in parallel - there is a duplicate data entry. Thus, the time for the final implementation of the ERP system is increased.

Mistake 10. Lack of a test period.

Sometimes testing of the installed software package is carried out only on a few users, which does not allow you to see all the shortcomings and the current load on the ERP system in a timely manner.

Mistake 11. Lack of a plan for maintenance and implementation of updates.

Without this, the software package will very soon become irrelevant. For the hardware component of the ERP system, it is necessary to regularly increase production capacity, since the volume of information processed will also grow. The program component may require adjustment in the event of, for example, changes in legislation.

These mistakes are the most common, but each company may have individual problems. To minimize them, you need to carefully prepare a plan for installing an ERP system at each stage.

What determines the cost of an ERP system

The final price of the ERP system will be a combination of the following components:

The prices of the software complex itself: the main set of modules and additional components.
Installation service cost.
Making improvements and adjustments to the program based on the needs of the customer company.
Further service and support.

To reduce the cost of implementing an ERP system, it is necessary first of all to pay attention to Russian suppliers, since foreign programs have a higher acquisition price and require significant changes to comply with domestic legislation.

Expert opinion

The implementation of the ERP system cost the company $ 2.5 million

Sergei Sukhinin,

Head of the Department of Automated Control Systems of OJSC Scientific and Production Complex Elara, Chuvashia

The license to install the ERP system cost us $470,000, and the total implementation cost was $2,500,000. However, already in the process of using the ERP system, a positive effect was achieved, while the costs were fully reimbursed 1.5 years after the installation of this software package.

Information about experts

Sergey Bratukin, director of practice "Distribution" Columbus IT&Russia, Moscow. Sergey Bratukin in 1997-2005 worked as a consultant in the Russian division of Columbus IT. Participated in the implementation of large-scale projects for the implementation of ERP systems in companies such as Torgovaya Ploshchad, MVO, Starik Hottabych, Formula Kino, Avtomir, etc. The international consulting company Columbus IT provides consulting services for the selection, implementation and support of corporate information systems, as well as management consulting. Founded in 1989 in Denmark, currently has offices in 28 countries around the world. Over the eight years of Columbus IT's work in Russia, more than 200 enterprises have become clients of the company, including SSM-Tyazhmash, Trade House Perekrestok, Dixy, L'Etoile, Unimilk, Istok, Toyota and many others

Sergei Sukhinin, Head of the Department of Automated Control Systems of OJSC Scientific and Production Complex Elara, Chuvashia. Elara Research and Production Complex OJSC is a leading Russian manufacturer of flight and navigation systems, automatic and remote control systems, on-board computers and display systems for military and civil aviation aircraft. Within the framework of the cooperation agreement with JSC Russian Railways, JSC Elara is preparing for the production of devices and systems for Russian railway transport.

Recently, interest in integrated business process management systems has been growing in Russia. It is due to many factors, including the government's active support for the introduction of modern technologies into the Russian economy. In particular, there is an objective need to automate the operation of an enterprise in order to optimize management and control processes. The solution of such problems within the enterprise can be taken over by ERP systems.

ERP (English Enterprise Resource Planning - Enterprise Resource Planning System) is an integrated system based on a wide class of disciplines and areas of activity related to data creation and processing technologies for managing internal and external enterprise resources. Simply put, ERP is an enterprise resource management system. For the first time this term was used by the consulting company Gartner Group in the early 90s. Since then, the concept of ERP has gone through many stages of development.

The main tasks solved by ERP systems are as follows:

General and structured planning of the enterprise;

Company financial management;

Personnel management;

Accounting for material resources;

Accounting and management of supply and sales;

Operational management of current activities and control over the implementation of plans;

Document flow of the enterprise;

Analysis of the results of economic activity.

At a certain stage of development, a business is faced with the need to automate the processes and functions of a company, especially when it comes to a large corporation or holding company. Then there is a need for specialized software that can organize the management process as efficiently as possible. ERP systems are based on the principle of creating a single repository of the enterprise information base accumulated in the course of doing business, in particular, financial information, data related to production, personnel, etc.

Modern business practice requires, as a rule, an individual approach. This fully applies to accounting and planning. Therefore, the most effective software is adapted directly to the complex tasks of a particular enterprise. The cost of such development is quite high due to the individual approach and implementation features, but, as a rule, the economic effect justifies the costs.

The process of implementing an ERP system in an enterprise is a technically complex event that takes a long period of time. In addition to installing software and training personnel, one should take into account the psychological factors of introducing a new system into the corporate culture, as well as the importance of the smooth functioning of each link.

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.

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 necessary number of employees of the enterprise, endowed with the appropriate authority. Data is changed through the functions (functionality) of the system. The ERP system consists of the following elements:

Model of information flow management (IP) in the enterprise;

Hardware and technical base and means of communications;

DBMS, system and application software;

A set of software products that automate IP management;

Regulations for the use and development of software products;

IT department and supporting services;

Actually users of software products.

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 milestone and resource planning

The difference between ERP systems and electronic document management systems(SED) is that, as a rule, in ERP documents are machine-readable, and they are not “maintained”, but “conducted” - after they have completed their life cycle, that is, they have been created, discussed, checked, agreed , approved, etc. And the EDMS supports such a life cycle of human-readable documents in the enterprise.

Advantages.

The use of an ERP system allows you to use one integrated program instead of several disparate ones. A single system can manage processing, logistics, distribution, inventory, delivery, display invoices And accounting.

The information access control system implemented in ERP systems is designed (in combination with other enterprise information security measures) to counter both external threats (for example, industrial espionage), and internal (for example, embezzlement). Implemented in conjunction with CRM-system and quality control system, ERP-systems are aimed at maximum satisfaction of the needs of companies in business management tools.

Flaws.

The main difficulties at the stage of implementation of ERP systems arise for the following reasons:

Distrust of company owners in high-tech solutions, as a result - weak support for the project on their part, which makes the implementation of the project difficult to implement.

Departmental resistance to providing sensitive information reduces the effectiveness of the system.

Many problems associated with the functioning of ERP arise due to insufficient investment in staff training, as well as due to the underdevelopment of the policy for entering and maintaining the relevance of data in ERP.

Restrictions.

Small companies cannot afford to invest enough money in ERP and adequately train all employees.

Implementation is quite expensive.

The system may suffer from the "weak link" problem - the effectiveness of the entire system may be compromised by one department or partner.

Compatibility issue with legacy systems.

There is a misconception that sometimes ERP is difficult or impossible to adapt to document flow companies and their specific business processes. In fact, any implementation of an ERP system is preceded by the stage of describing the company's business processes, most often associated with the subsequent stage business reengineering. In fact, the ERP-system is a virtual projection of the company.

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 take into account 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

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

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.