Planning Programming and Budgeting Understanding Term Paper

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  • Subject: Business
  • Type: Term Paper
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..ERP combines them all together into a single, integrated software program that runs of a single database so that the various departments can more easily share information and communicate with each other." (Pang, 2001) the work of Les Pang (2001) entitled: "Manager's Guide to Enterprise Resource Planning (ERP) Systems" published in the Information Systems Control Journal informs this study that over the past ten years an organizations have significantly experienced "changes in their core business applications. These applications have moved from a centralized mainframe platform towards distributed client-server architecture, changed from monolithic customized software systems to commercial off-the-shelf (COTS) system modules with graphical development tools and expanded from a local area network environment to one with the broad reach of the World Wide Web. Business applications have changed to support the globalization of their organization with the addition of multisite and multicurrency functionalities." (Pang, 2001)

The desire of a great number of managers is to have along with the aforementioned changes "integration among functional applications that support data flow among the business units and have a common look and feel among the modules." (Pang, 2001) Environmental limitations have been long acknowledged to exist among managers in the 'stove-piped systems and databases." (Pang, 2001) the need for data that flowed through departments and able to flow in slow batches and "repackaged and even manually reentered because of the differences in format, platform and data meaning among the functional departments." (Pang, 2001) in order to address the needed changes and accompanying challenges "a new type of software system was developed - enterprise resource planning (ERP) system. These systems are applications of integrated software solutions that support enterprise-wide business requirements. They consist of modules that focus on specific aspects of the enterprise business such as finance, human resources, logistics and procurement." (Pang, 2001) Specifically, the ERP is a software system that fully integrates "all departments and functions across an organization onto a single computer system that aims to serve practically everyone's particular needs." (Pang, 2001) Data exchange is easier and communication among departments is done with much more ease as well. The ERP system runs on client-server networks.

VII. EXAMPLES of ERP MODULES

Examples of ERP modules provided in the work of Pang (2001) include those as follows:

Human resource management

Financial management

Supply chain management

Procurement

Logistics and materials management

Planning and budgeting

Sales and distribution

Student administration (Pang, 2001)

VIII. ERP VENDORS

ERP vendors are stated by Pang (2001) to be those as follows:

SAP (Systems, Applications and Products in Data Processing) is the global market leader in ERPs; it has approximately 30 to 60% of the world market. The strengths of its R/3 product include support for multi-country, multicurrency environments and wide scalability. The company spends a large percentage of its revenues in research and development.

Oracle is the second-largest software company in the world. Its ERP product, Oracle Applications, includes the popular Oracle Financials module. It has the reputation for developing a product that can be interfaced with others to create a best-of-breed ERP package. It should be pointed out that Oracle Applications should be distinguished from the Oracle relational database management system, which often is part of other ERP products such as PeopleSoft and SAP.

PeopleSoft has its origins in human resource management software that evolved to a full feature product with the addition of other modules. However, its strength remains its human resource management systems. PeopleSoft has a major presence in the U.S. federal government.

Baan has developed a number of componentized products. Recently, it has struggled financially because of questionable financial reporting practices and changes in leadership. However, it is still a relatively dominant player in the ERP market.

JD Edwards has a product called OneWorld with origins in the as/400 environment. Its target customers are primarily smaller organizations with less than 2,000 users. (Pang, 2001)

The following figure illustrates the ERP Market Share as related in Pang (2001).

ERP Market Share

Source Pang (2001)

IX. BENEFITS of ERP

Benefits of ERP are stated to include integration of the activities of the organization while employing "best practices that have been proven in the real world." (Pang, 2001) ERP's additionally enable standardization of the organization. ERPs further bring about improvement to management of information through "a single database as opposed to multiple, often duplicative systems. Because of this centralized data source, ERP's provide online and real-time information and facilitate intra -- and inter-organization communication and collaboration." (Pang, 2001),Drivers of ERP are stated to include: (1) customer satisfaction; (2) more efficient processes; (3) meeting business process reengineering requirements; (4) competitive challenges; and (5) labor shortages. (Pang, 2001)

X. ORGANIZATIONS IMPLEMENTING ERP

ERPs are being used in the private sector by 70% of the largest 1,000 companies. ERP is stated by Pang (2001) to have been implemented within the United States federal government, the U.S. Department of Defense, and soon will the implemented in the following:

Defense Logistics Agency -- Business systems modernization

National Security Agency/Defense Intelligence Agency/National Imagery and Mapping Agency -- Integrated human resources and payroll solution across all three agencies

Defense Finance and Accounting System (DFAS) -- Defense procurement pay system -- Contract and vendor pay entitlements; DFAS corporate database (DCD) -- Standard general ledger for the Air Force

Navy -- Interim modernization for the Navy -- Accounting, payroll, human resources, acquisitions, procurement, operations

Army -- Wholesale logistics modernization program (Pang, 2001)

ERPs are stated to either recently been implemented in the following non-defense agencies:

Interior, Health and Human Services, General Services Administration, Labor, Veteran Affairs -- Human resources

Treasury's U.S. Mint -- Consolidated information system (COINS) and human resources

NASA Jet Propulsion Lab -- Financial and human resources including payroll

Energy -- Administration and resource management

Transportation, Commerce -- "Financials (Pang, 2001)

XII. STEPS to ERP IMPLEMENTATION

Steps to implementation of the ERP system includes the steps listed as followed:

Project preparation -- Determine the implementation strategy, organize the project team, define the system landscape, identify technical demands, select the hardware and database vendors and gain consensus among stakeholders.

Business blueprint and realization -- Create the technical design and, based on this design, configure the ERP software. Based on the requirements, test the software, install the production system and start planning the data migration strategy from the legacy systems.

Final preparation -- Check the system settings, test the system throughput for key business processes and establish a help desk.

Go live and support -- Start the production system, ensure its availability, monitor key business processes, manage the help desk and define the long-term release strategy. (Pang, 2001)

Types of ERP implementation include the following with accompanying descriptions:

'Big Bang' Implementation: This type of implementation of ERP "involves having all modules at all locations implemented at the same time. Benefits of this type of implementation include:."..a smoothing of resources requirements, an ability to focus on a particular module availability of existing legacy systems as a fall-back, reduced risk, the knowledge gained with each phase and the usefulness of a demonstrable working system." (Pang, 2001)

The wave approach: This approach involves the application of different waves of change to different business units or regions.

Parallel implementations: This approach involves both ERP and an existing system running together for a period. Its attributes include: having a basis of comparison; existing system serves as backup; requires more computing and human resources -- more costly; existing system may not be properly maintained during the period; and reengineering not supported by existing systems.

Instant cutovers (flip-the-switch): This approach is lower in cost, motivates users to seriously convert to the new system and reduces the need for redundant systems. However, it tends to be risky, stressful to users and requires a high level of contingency planning. (Pang, 2001)

XII. FOUR FACTORS ERP SELECTION SHOULD BE BASED UPON Stated as four factors an organization should select an ERP package based upon are the four of: (1) Functioning capabilities; (2) Technical attributes; (3)Partnership; and (4) Cost. (Pang, 2001) Detailed consideration is stated to be needed in the following areas:

Functional fit with the organization's business practices;

Degree of integration among components of the ERP system;

Flexibility and scalability;

User friendliness;

Quick implementation;

Ability to support multisite planning and control;

Technology -- Client-server capabilities, database independence, security;

Availability of regular upgrades;

Amount of customization required;

Local support infrastructure;

Costs, License, training, implementation, maintenance, customization, hardware requirements. (Pang, 2001)

SUMMARY and CONCLUSION

While certainly the traditional processes and functions are still steadily at work within the organization in terms of planning, programming, and budgeting it is just as certain that Enterprise-Wide Systems that link knowledge in a real-time environment is a more effective and streamlined manner of collecting and recording data for the company in all areas of its business processes and its human resources functions. The primary considerations for the business in the implementation of ERP across the organization are…

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