ENTERPRISE RESOURCE PLANNING

Transcription

1 ENTERPRISE RESOURCE PLANNING Enterprise Resurce Planning is the latest high end slutin, infrmatin technlgy has lent t business applicatin. The ERP slutins seek t streamline and integrate peratin prcesses and infrmatin flws in the cmpany t synergies the resurces f an rganizatin namely men, material, mney and machine thrugh infrmatin. Initially implementatin f an ERP package was pssible nly fr very large Multi Natinal Cmpanies and Infrastructure Cmpanies due t high cst invlved. Tday many cmpanies in India have gne in fr implementatin f ERP and it is expected in the near future that 60% f the cmpanies will be implementing ne r the ther ERP packages since this will becme a must fr gaining cmpetitive advantage. In the present business envirnment, rle f a Chartered Accuntant is cnsidered t be very imprtant and inevitable. Chartered Accuntants as managers, cnsultants, advisrs r auditrs play an imprtant rle in cntrlling, managing, and supprting the business. As the business needs are very cmplex in nature, the implementatin f an ERP package needs Chartered Accuntants with functinal skills fr evaluatin, Business Prcess Reengineering (BPR), Mapping f Business requirements, Reprt designing, ensuring Business cntrls, custmizatin f the package fr the specific requirements, Dcumentatin etc., Sner r later a Chartered Accuntant withut the knwledge f ERP may feel as if he is a fish ut f the bwl. By this article it is attempted t highlight varius aspects f ERP and specific areas f ERP that are relevant fr Chartered Accuntants. Evlutin f ERP In the ever grwing business envirnment the fllwing demands are placed n the industry: Aggressive Cst cntrl initiatives Need t analyze csts / revenues n a prduct r custmer basis Flexibility t respnd t changing business requirements Mre infrmed management decisin making Changes in ways f ding business Difficulty in getting accurate data, timely infrmatin and imprper interface f the cmplex natured business functins have been identified as the hurdles in the grwth f any business. Time and again depending upn the velcity f the grwing business needs, ne r the ther applicatins and planning systems have been intrduced int the business wrld fr crssing these hurdles and fr achieving the required grwth. They are:

2 Management Infrmatin Systems (MIS) Integrated Infrmatin Systems (IIS) Executive Infrmatin Systems (EIS) Crprate Infrmatin Systems (CIS) Enterprise Wide Systems (EWS) Material Resurce Planning (MRP) Manufacturing Resurce Planning (MRP II) Mney Resurce Planning (MRP III) The latest planning tl added t the abve list is Enterprise Resurce Planning. Need fr ERP Mst rganizatins acrss the wrld have realized that in a rapidly changing envirnment, it is impssible t create and maintain a custm designed sftware package which will cater t all their requirements and als be cmpletely up-t-date. Realizing the requirement f user rganizatins sme f the leading sftware cmpanies have designed Enterprise Resurce Planning sftware which will ffer an integrated sftware slutin t all the functins f an rganizatin. Features f ERP Sme f the majr features f ERP and what ERP can d fr the business system are as belw: ERP facilitates cmpany-wide Integrated Infrmatin System cvering all functinal areas like Manufacturing, Selling and distributin, Payables, Receivables, Inventry, Accunts, Human resurces, Purchases etc., ERP perfrms cre crprate activities and increases custmer service and thereby augmenting the Crprate Image. ERP bridges the infrmatin gap acrss the rganizatin. ERP prvides fr cmplete integratin f Systems nt nly acrss the departments in a cmpany but als acrss the cmpanies under the same management. ERP is the nly slutin fr better Prject Management. ERP allws autmatic intrductin f latest technlgies like Electrnic Fund Transfer (EFT), Electrnic Data Interchange (EDI), Internet, Intranet, Vide cnferencing, E-Cmmerce etc. ERP eliminates the mst f the business prblems like Material shrtages, Prductivity enhancements, Custmer service, Cash Management, Inventry prblems, Quality prblems, Prmpt delivery etc., ERP nt nly addresses the current requirements f the cmpany but als prvides the pprtunity f cntinually imprving and refining business prcesses. ERP prvides business intelligence tls like Decisin Supprt Systems (DSS), Executive Infrmatin System (EIS), Reprting, Data Mining and Early Warning Systems (Rbts) fr enabling peple t make better decisins and thus imprve their business prcesses Cmpnents f ERP

3 T enable the easy handling f the system the ERP has been divided int the fllwing Cre subsystems: Sales and Marketing Master Scheduling Material Requirement Planning Capacity Requirement Planning Bill f Materials Purchasing Shp flr cntrl Accunts Payable/Receivable Lgistics Asset Management Financial Accunting BPR and ERP Business Prcess Reengineering is a pre-requisite fr ging ahead with a pwerful planning tl, ERP. An in depth BPR study has t be dne befre taking up ERP. Business Prcess Reengineering brings ut deficiencies f the existing system and attempts t maximize prductivity thrugh restructuring and re-rganizing the human resurces as well as divisins and departments in the rganizatin Business Prcess Engineering evlves the fllwing Steps: Study the current system Design and develp new systems Define Prcess, rganizatin structure and prcedure Develp custmize the sftware Train peple Implement new system The principle fllwed fr BRP may be defined as USA principle (Understand, Simplify Autmate) i.e., Understanding the existing practices, Simplifying the Prcesses and Autmate the Prcess. Varius tls used fr this principle are charted belw: Understand Simplify Autmate Diagramming Eliminating EDI Stry-barding Cmbining ERP Brain strming Rearranging Selectin f ERP Once the BPR is cmpleted the next task is t evaluate and select a suitable package fr implementatin. Evaluatin f the right ERP package is cnsidered as mre crucial step. Evaluatin and selectin invlves: checking whether all functinal aspects f the Business are duly cvered checking whether all the business functins and prcesses are fully integrated checking whether all the latest IT trends are cvered checking whether the vendr has custmizing and implementing capabilities checking whether the business can absrb the cst

4 checking whether the ROI is ptimum Implementatin f ERP Implementing an ERP package has t be dne n a phased manner. Step by step methd f implementing will yield a better result than big-bang intrductin. The ttal time required fr successfully implementing an ERP package will be anything between 18 and 24 mnths. The nrmal steps invlved in implementatin f an ERP are as belw: Prject Planning Business & Operatinal analysis including Gap analysis Business Prcess Reengineering Installatin and cnfiguratin Prject team training Business Requirement mapping Mdule cnfiguratin System interfaces Data cnversin Custm Dcumentatin End user training Acceptance testing Pst implementatin/audit supprt The abve steps are gruped and sub-divided int fur majr phase s namely 1) detailed discussins, 2) Design & Custmizatin, 3) Implementatin and 4) Prductin. The phases f implementatin vis-a-vis their tasks and respective deliverables are as belw: Detailed Discussin Phase: Task: - Prject initializatin, Evaluatin f current prcesses, business practices, Set-up prject rganizatin Deliverables: - Accepted nrms and Cnditins, Prject Organizatin chart, Identity wrk teams Design and custmizatin Phase: Task: - Map rganizatin, Map business prcess, Define functins and prcesses, ERP sftware cnfiguratin and Build ERP system mdificatins. Deliverables: - Organizatin structure, Design specificatin, Prcess Flw Diagrams, Functin Mdel, Cnfiguratin recrding and system mdificatin. Implementatin Phase: Task: - Create g-live plan and dcumentatin, Integrate applicatins; Test the ERP custmizatin, Train users Deliverables: - Testing envirnment reprt, Custmizatin Test Reprt and Implementatin reprt Prductin Phase: Task: - Run Trial Prductin, Maintain Systems Deliverables: - Recnciliatin reprts, Cnversin Plan Executin

5 Benefits f ERP The benefits accruing t any business enterprise n accunt f implementing are unlimited. Accrding t the cmpanies like NIKE, DHL, Tektrnix, Fujitsu, Millipre, Sun Micrsystems, fllwing are sme f the benefits they achieved by implementing ERP packages: Gives Accunts Payable persnnel increased cntrl f invicing and payment prcessing and thereby bsting their prductivity and eliminating their reliance n cmputer persnnel fr these peratins. Reduce paper dcuments by prviding n-line frmats fr quickly entering and retrieving infrmatin. Imprves timeliness f infrmatin by permitting, psting daily instead f mnthly. Greater accuracy f infrmatin with detailed cntent, better presentatin, fully satisfactry fr the Auditrs. Imprved Cst Cntrl Faster respnse and fllw up n custmers Mre efficient cash cllectin, say, material reductin in delay in payments by custmers. Better mnitring and quicker reslutin f queries. Enables quick respnse t change in business peratins and market cnditins. Helps t achieve cmpetitive advantage by imprving its business prcess. Imprves supply-demand linkage with remte lcatins and branches in different cuntries. Prvides a unified custmer database usable by all applicatins. Imprves Internatinal peratins by supprting a variety f tax structures, invicing schemes, multiple currencies, multiple perid accunting and languages. Imprves infrmatin access and management thrughut the enterprise. Prvides slutin fr prblems like Y2K and Single Mnitry Unit (SMU) r Eur Currency. Rle f a CA in ERP implementatin. A pertinent questin ne Chartered Accuntant may ask is "Hw des an ERP matter fr me? As mentined earlier the rle f a Chartered Accuntant in any business either as a Cnsultant, Auditr, Advisr r Manager is inevitable. CA as a Cnsultant: Implementatin f ERP slutins is ne f the largest drivers f grwth in the cnsultancy business. The intrductin f such large and cmplex sftware like ERP, which enables an rganizatin t integrate their manufacturing, finance and marketing peratins at all levels, is in itself a challenge, since it calls fr technical and functinal skills and a change in user mindsets. And therein cmes a rle f a cnsultant. CA as a Cnsultant will play a majr rle in implementatin f an ERP slutin. CA as an auditr: Assuming a situatin where the client has implemented an ERP slutin. If the auditr is aware f ERP he can make use f the features f ERP and thereby: Ensures that the internal cntrls and checks are cnsistently maintained.

6 ensures that the prvisins f Incme tax r ther fiscal laws are nt ignred e.g., ne can cntrl the payment f cash in excess f Rs fr expenses r Rs as lans and advances, The TDS deductins and payments are autmated etc., ensures that the Accunting Standards are cnsistently fllwed acrss the cmpany. Imprves the quality f the reprting. CA as an Advisr: As an advisr t a cmpany a Chartered Accuntant can participate in varius stages f ERP implementatin. It ges withut saying that advising withut the knwledge f the current trends and mdern management techniques will prve t be a wrng advice and may have a negative impact n the grwth f the client. CA as a Manager: By nw ne shuld knw that the ERP is a high end sphisticated sftware slutin that reduces the pressure and wrk lad f the Managers and prvides accurate, timely infrmatin fr taking apprpriate business decisins. Chartered accuntants as managers with knwledge f ERP will be able t achieve their targets and gals by prper implementatin f ERP system in their rganizatin. In fact Managers are expected t translate the business rules and requirements fr mapping them int ERP sftware. Managers as representatives f the Organizatin have t crdinate with Vendrs, Cnsultants, Auditrs etc., fr a prper implementatin f ERP package. Cnclusin The grwing infrmatin needs f an enterprise make it imperative t imprve r replace ld systems. Especially under the present Indian business envirnment, where the glbalizatin has been initiated, full cnvertibility is cined, Infrastructure Prjects are nearing cmpletin, and it is expected that the whle business system will underg a majr shift. Thus by being a prficient ERP cnsultant, Chartered Accuntants will prve their cmmitment t the business wrld and mdern management.