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Enterprise Resource Planning


What is ERP?
Enterprise Resource Planning (ERP) is a term applied to integrated software systems used to
manage the internal and external resources of an organization. These include the physical assets,
financial resources, materials and human resources (or staff).
The key objective of implementing an ERP system is to bring together the disparate functions of
the organization into a single system environment and therefore make the operations run more
efficiently.
Benefits of ERP for your Business:
1. Integration across all business processes
2. Automation enhances productivity
3. Increase overall performance
4. Quality Reports and Performance Analysis
5. Eliminate data silos by creating a single, centralized repository of timely, accurate
business data
6. Enable more effective resource allocation and management
7. Reduce overhead costs
Drawbacks with ERP:
Buying and implementing ERP can be expensive and time consuming, with many high profile
examples of issues with projects going significantly over time or budget, or both.
Fundamental Components of ERP:
Module Description Functions
1 SCM (supply
chain
management)
Concerned with ensuring timely supplies
of acceptable quality materials by
improving inventory control and
purchasing functions, supplier
performance monitoring, etc.
Supply Chain Planning
Supplier Scheduling
Product Configurator
Order to Cash
Purchasing
Inventory
Claim Processing
Warehousing
2 HR (human
resource)
Streamlines the management of human
resources and human capitals. It routinely
maintains a complete employee. It provides
support for variety of HR tasks including
benefits, training, recruiting and
Recruiting
Training
Rostering
Payroll
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compliance.
Benefits
Diversity Management
Retirement
Separation
3 Project Provides an effective solution for project
managers in construction, job service,
and other professional industries who
require a time-and-material system. It
delivers the tools necessary to manage
the simplest to most complex contract or
job. It makes the estimating, tracking,
costing and billing of projects easy and
manageable-simplifying cost control and
planning.
Project Planning
Resource Planning
Project Costing
Work Breakdown Structure
Billing
Time and Expense
Performance Units
Activity Management
4 Finance The core of many ERP systems. It can
gather financial data from various
functional departments, and generates
valuable financial reports such as balance
sheet, general ledger, trail balance, and
quarterly financial statement.
General Ledger
Account Payables
Account Receivables
Fixed Asset
Cash Management
Financial Consolidation
5 Payroll Manages all aspects of payroll
processing. Users can run weekly,
quarterly, or annual reports directly from
this module. In addition, you can manage
vacation time and direct deposits from
the Payroll module, as well.
Salary Payment
Tax Withholdings
Deductions from a
paycheck

Figure 1: Relationship between ERP Modules
ERP Tiers:
1. Tier 1
The Tier 1 ERP solutions are basically SAP and Oracle. They are designed to service the
most part are complex, large businesses that have many departments and global locations.
Finance
Project
Payroll
SCM
HR
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Tier 1 ERP solutions generally take a long time to implement and are equipped with a
wealth of features at a pretty high price.

2. Tier 2
Steps down in complexity and cost from Tier 1, Tier 2 ERP products are on offer from
several vendors. Epicor, Infor, Microsoft, Sage and many players fall into this
group. Tier 2 ERP systems fit well with mid-size companies.
3. Tier 3
At the lowest cost level, youve got Quickbooks and Sage 50, formerly known as
Peachtree. These products do not offer the functionality of Tier 1 and 2 solutions, and
may not even qualify as ERP systems. Youre getting basic accounting abilities with
these small business tools.
Top Three ERP Solutions:
There are many different enterprise resource planning systems available. Finding what system
that best fits your business can be difficult but with a little research you can find the system that
best benefits your unique business. Some of the top systems available include Microsoft
Dynamics AX, Oracle, and SAP.
1. Microsoft Dynamics AX
User friendly.
If you have other Microsoft programs on your computer, such as Word, Excel
and Outlook, it works seamlessly with them allowing for an easy transfer of
information.
Collaboration both external and internal is quite easy with this system as
companies can share information with each part of the business quite simply.
For large, international businesses the system works very well due to multi-
language and multi-currency capabilities.
It also works equally well with companies that have only one location.
It has a shorter implementation
The system also allows users to make changes more rapidly.
2. Oracle
It integrates many different modules very seamlessly into one system allowing
for easy use.
Allows for customization.
The automation of many processes, so that manual data entry by employees is
no longer required from other systems. Rather, employees can focus on other
areas to spend their time on, making the company much stronger.
Less user-friendly.
3. SAP
Have very integrated and user friendly system which includes dashboards,
report writing, and data warehousing.
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The implementation process tends to take longer than other alternatives.
More expensive than other systems.
Advantages and disadvantages of SAP and Oracle:
Table 1: Advantages and Disadvantages of SAP and Oracle
SAP Oracle
Advantages Integration with different modules is
the main advantage over oracle
Suitable for all type of business
Compatible with other non-SAP
systems for data transfer
It had faster growth
Allow for customized solutions to suit
your business
Largest Market Share
Highest short listing rate
Medium Project Duration
Shortest Delay
Medium market share
Medium short listing
rate
More Frequently
chosen
Disadvantages Perceived as more expensive and
complicated to implement.
Lowest selection rate from a short list
For mobile systems, it works with IOS
only
Longest Project
Duration
Longest Delay
Cannot work with
MAC OS
References:
[1] Business-Software.com. What Is ERP?. [ONLINE] Available at: http://www.business-
software.com. [Accessed 14 June 14].
[2] CompuData Blog. 2013. The difference between Tier I, Tier II, and Tier III ERP. [ONLINE]
Available at: http://blog.compudata.com. [Accessed 11 June 14].
[3] ERP Software Blog. 2013. A Look At Microsoft Dynamics AX, Oracle, and SAP.
[ONLINE] Available at: http://www.erpsoftwareblog.com. [Accessed 11 June 14].
[4] FindTheBest. Oracle E-Business Suite vs. SAP. [ONLINE] Available at: http://erp-
software.findthebest.com. [Accessed 14 June 14].
[5] RKV IT Solutions. Enterprise Resource Planning. [ONLINE] Available at:
http://www.rkvitsolutions.com. [Accessed 11 June 14].
[6] SAB Community Network. 2007. Advantage of SAP over other ERP's. [ONLINE]
Available at: http://scn.sap.com. [Accessed 12 June 14].
[7] Slideshare. 2012. Erp--functional-modules. [ONLINE] Available at: http://www.slideshare.net.
[Accessed 11 June 14].
[8] Syspro. What is ERP - Enterprise Resource Planning?. [ONLINE] Available at:
http://www.syspro.com. [Accessed 10 June 14].
[9] TechAdvisory.org. 2012. Four Fundamental Components of ERP. [ONLINE] Available at:
http://www.techadvisory.org. [Accessed 11 June 14].
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[10] Unit4. What is ERP software and how can it benefit your business?. [ONLINE] Available
at: http://www.unit4.com. [Accessed 10 June 14].
[11] Webopedia. ERP-enterprise resource planning. [ONLINE] Available at:
http://www.webopedia.com. [Accessed 11 June 14].
[12] Wikipedia. Enterprise resource planning. [ONLINE] Available at:
http://en.wikipedia.org. [Accessed 16 June 14].
[13] YouTube. (2012). SAP vs Oracle vs Microsoft. [Online Video]. 14 December.
Available from: http://www.youtube.com. [Accessed: 14 June 2014].