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Enterprise resource planning erp

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Anonim

It is true that the technology in force at the time, based on the gigantic mainframes (large computers), does not even compare to the ease of use of today's computers.

However, it was these machines that rolled the first stock control systems - a pioneering activity in the insertion between management and technology. Automation was expensive, slow but already less time consuming than manual processes and few.

enterprise-resource-planning-erp

José Luis Figueroa (1998) mentions that «the intensity of global competition has created a volatile business environment, which implies that companies are concerned with:

  • Faster response times for new product development and customer delivery orders Customer satisfaction Custom product and service design Cost reduction Consistent products and simplified orders and payment processes for multinational customers.

To meet these demands, planning systems have had to evolve over time.

History of the emergence of ERP systems

Manufacturing Planning and Control (MPC) systems have been around since the early days of the industrial revolution to automate various tasks and improve the accuracy, reliability, and predictability of manufacturing. After reorder point (ROP) was given importance, these systems were automated with the introduction of mainframes in the late 1950s and early 1960s (Orlicky, 1975).

In the mid-1960s, computerized Material Requirement Planning (MRP) systems slowly began to replace ROP systems as a manufacturing control system. MRP systems presented a clear advantage in that they offered a search-forward, demand-driven approach to planning and ordering of product manufacturing and inventory.

MRP systems introduced basic computerized production reporting tools, which could be used to assess the feasibility of the master schedule against projected demand for materials. In the mid-1970s, Manufacturing Resource Planning (MRP II) systems gradually began to replace MRP systems as the main manufacturing control system. These systems developed with the demand-based management capabilities of MRPs, adding the capability of requirements planning, (CRP), capabilities to create an integration. For the first time MRP II systems did their best to integrate both material and production capacity requirements and constraints in the calculation of all production capacities.

The Information Technology that characterized the manufacturing environments in the 1960s, 70s, and 1980s was primarily focused on automating the power of technology that could be used to make large manufacturing operations more efficient. The ROP, MRP, and MRP II systems that eventually evolved were characterized by using mainframe computers, hierarchical databases, and complex transaction processing systems, mainly adjusting towards managing a low-product, high-volume production environment under conditions. of constant demand. Although efficiency was high, these systems were often inflexible when it came to producing variable quantities of more products from the customer on short orders.

In the late 1980s, with the growth of manufacturing instability facing the United States, companies could be directly linked to the natural change in information technology and the advent of time-based competition. Technology creates and transforms both options, which in turn transforms the market through revolutionary shifts towards the capabilities of customers and suppliers.

Rapid advances in information technology have rendered the old rules of competition and the long-standing understanding of the customer-supplier relationship obsolete. This "new reality" translates into the need for a dynamic production environment in which products and processes can change weekly and production schedules can change daily. MRP-II systems require a high degree of human intervention, in making appropriate adjustments to schedules and in determining the optimal sequence of manufacturing orders that best suit the dynamic and often volatile environment. The solution to this problem came during the early 90's, in the way of running manufacturing systems.

The exit of the MES (Manufacturing Execution Systems), represent the development of a critical interface between the MRP-II systems of the companies and the control systems. The most important contribution of MES systems is that it unifies the core manufacturing processes with a delivery value system focused on customer requirements and demand. Provides for flexibility, real-time execution, feedback and control of a wide range of processes related to manufacturing, a better match with future market requirements (Rondeau, Litteral; 2001).

In the late 1990s, the increase in global competitiveness levels, combined with market and technology changes, caused many companies to rethink and reinvent their products and services, including their organizational structure and operational controls. Globally operating companies soon realized that the more flexible the development of resources and the better the approach to extracting the value of their enriching information from the environment were needed to align companies with customer needs. (Reary, 2000).

Although the introduction of MES systems greatly improved the degree of vertical integration with the production functions of the 90s, ERP (Enterprise Resource Planning) systems generate a better degree of horizontal integration of companies now. ERP systems mark a significant point in the development of MPC systems since they enable companies towards the global guideline of continuous improvement of chain processes with the supplier through flexible administration with the client.

The successful implementation of an ERP system allows the identification and implementation of a set of best practices, procedures and tools designed to achieve organizational excellence through functional integration. (Mabert, Ashok, Venkataramanan; 2000).

ERP systems promise to deliver an increase in sales over their MPR-II predecessors in the form of a suite of integrated products running under a common IT architecture that can be highly coupled and integrated with any other application of legacy systems (legacy). (Tetu, 1998).

Definition of ERP systems

Ramesh (1998) cited by Alejandra Recio (1998) defines an ERP as a "software solution that addresses the needs of the company taking the point of view of the organization's process to achieve its objectives by integrating all its functions." Recio also mentions that an ERP system facilitates the integration of the company's information systems, since it covers all functional areas. The systems that it integrates are databases, applications, interfaces, tools and the Business Process Redesign (BPR). The main objectives of ERP systems are:

  1. Optimization of business processes Access to reliable, accurate and timely information The possibility of sharing information among all the components of the organization Elimination of unnecessary data and operations Reduction of time and costs of processes.

The fundamental purpose of an ERP is to provide support to business customers, quick response times to their problems as well as efficient information management that allows timely decision-making and reduction of total operating costs.

There are three characteristics that distinguish an ERP and that is that they are integral, modular and adaptable systems:

  • Integral, because they allow to control the different processes of the company, understanding that all the departments of a company are related to each other, that is, that the result of one process is the starting point of the next. For example, in a company, the fact that a customer places an order represents that a sales order is created that triggers the production process, inventory control, product distribution planning, collection, and of course their respective accounting movements.. If the company does not use an ERP, it will need to have several programs that control all the aforementioned processes, with the disadvantage that by not being integrated, the information is duplicated, the margin of contamination in the information grows (especially due to capture errors). and a favorable scenario for embezzlement is created. With an ERP,the operator simply captures the order and the system takes care of everything else, so the information is not manipulated and is protected.Modular. ERPs understand that a company is a set of departments that are interrelated by the information they share and that is generated from their processes. An advantage of ERP, both economically and technically, is that the functionality is divided into modules, which can be installed according to customer requirements. Example: Sales, Materials, Finance, Warehouse Control, etc. Adaptable. ERPs are created to adapt to the idiosyncrasies of each company. This is achieved through the configuration or parameterization of the processes according to the outputs that are needed from each one. For example, to control inventories, one company may need to manage the batch partition but another company may not.

ERP features

Among the main characteristics of ERP systems we highlight:

  • Centralized database. ERP components interact with each other consolidating all operations. In an ERP system data is entered only once and must be consistent, complete and common. Companies that implement it must modify some of their processes to align them. with those of the ERP system. An ERP system includes a set of ERP applications or modules. There is usually one software for each functional unit. The current trend is to offer specialized applications for certain industries.

Benefits, Advantages and Disadvantages of ERP

Davenport (1998) mentions that among the benefits that ERP systems offer companies are:

  1. Provide real-time access to operations and financial data Modernize administrative structures Centralize control over information Standardize processes

Other benefits for the business according to Davenport (2000) are:

  1. Reduction in costs and times in key business processes Faster information transactions Better financial administration Establish the bases for electronic commerce Make the knowledge of the processes explicit.

Piturro (1999) explains that when ERPs work excellent:

  1. Business processes can be accelerated Reduce costs Increase sales opportunities Improve quality and customer satisfaction Measure results continuously

In addition to the above, the implementation of an ERP system is highly beneficial for the organization since it allows the possibility of automating those processes that are managed under pre-established rules or policies, thus avoiding human intervention always prone to errors.

Another advantage is that through the implementation of an ERP, companies improve and update the packages they use to manage corporate resources and gain control of those processes that are critical to the business, executives can make well-informed decisions because the The data they have is the same that line employees use at that precise moment (real information in real time) and in turn employees avoid rework by sharing the same database, for their part, IT departments can provide more maintenance. easily to the ERP system than to traditional systems that required knowledge of different programming languages ​​and databases, while ERP is based on standard technology.

Speaking of the disadvantages or problems when using an ERP, a typical problem when adopting software packages has been the issue of misfits, that is, the gap that exists between the functionality offered by the package and what is required to make it happen. embrace the organization. As a result, organizations have had to choose between adapting to new functionality, living with a deficit, establishing extra work, or making modifications to the package. ERP software, as a class of software packages, also presents this problematic option to organizations.

The problem is more critical, since the implementation of an ERP is more complex during the integration of the different modules, standardization of the data, adopting the most relevant of the business model ^ best practices »), limited implementation agenda, and involvement of a large number of people. The knowledge gap among implementation personnel is usually significant. Few users in the organization understand ERP functionality well enough to appreciate the adoption implications.

Similarly, few ERP consultants understand their clients' business processes well enough to spot the critical areas that don't fit the package. (Soh, Siew, Tay, Yap; 2000). Referring to Scheer and Habermann (2000), standardized ERP systems have certain disadvantages.

High storage needs, network requirements, and extra training are frequently mentioned as ERP problems. However, the scale of business process reengineering and the customizing activities involved in the software implementation process are the main reasons for dissatisfaction.

Companies such as Baan, Peoplesoft, as well as SAP estimate that customers spend between 3 and 7 times more money in the implementation of the ERP and associated services, compared to the purchase of the software license. From their own experiences, they validate that the ratio between ERP implementation efforts and software purchase is roughly 5 to 1. With rapidly decreasing hardware and software costs, the ratio will be worse.

This high reason is due to the fact that ERP systems are more or less easy to install, however users must determine what objectives (strategies) they want to achieve with the system, how the functionality of the system can achieve this and how to adapt, configure and technically deploy the package.

Small and medium-sized companies in particular do not have the ability to pay consultants millions of dollars for ERP implementation. Therefore, model methods, architectures and tools have become increasingly popular as they can help reduce costs while increasing user acceptance of ERP.

Planning an ERP

The greater the integration of ERP modules, the more efficient a company's processes will be. That equation can make a difference when it comes to serving and even retaining a customer. However, how do you know if a corporation is ready to use an integrated management system? The answer can evolve from the extremely complex to the simpler approaches.

It is important to understand that ERP is not simply software that you buy, install, and use like Windows or a computer game. More than that, it consists of a revolution that involves all internal processes and must be preceded by an extensive and, many times, delayed reassessment of all departments, their functions, decision mechanisms and forms of action. However, it is not worth waiting for the system alone to change business management. It is necessary to keep in mind that it is an important and decisive tool, but who controls it, the way in which data is inserted and how information is subsequently managed are aspects of utmost importance.

To find out if a company is suitable to work with an ERP, it is interesting to have the external help of specialists in the matter, especially consultants. They will evaluate and radiograph the company and identify what needs to be done so that the system does not collide with the internal organizational culture, producing studies that indicate possible actions and adaptations. It is essential, for example, that a team of internal professionals and from different departments participate in the project for its definition. In the end, it is not enough to buy a Boeing; It is also necessary to obtain a pilot's license and place the people and parts in the correct places so that it stays in the air.

Normally, some internal processes need to be redefined or redesigned before the ERP system actually comes into operation. Furthermore, just as the company needs a preparation to receive the system, the software must also undergo adjustments in order to become compatible with the reality of the corporation, its objectives and profile. The union must be as perfect as possible, but just as in human relationships, adjustments and course corrections are inevitable and must be implemented in the most transparent way possible.

It is interesting to note that many times the most sensitive and most committed department when purchasing an ERP system is the human resources department. People, their functions and characteristics are a fundamental part of the whole process, even due to the daily changes in the company, and they need to be prepared for the new form of operation.

Choosing an ERP

As with any product, the choice of the ERP goes from the pure and simple functionality to how was the attention of the seller, market references or even a better marketing performance of the supplier. However, the ideal is to do a detailed investigation that can involve from external sources - Internet, sites and publications of specialized information, companies of the same segment or of similar profile and consultants - to investigations made by information technology professionals (IT), going through the main areas of the company, with their motivations, demands and ideas.

Again, the presence of a consultant or specialist can reduce the distance between the idea of ​​acquiring an ERP and the conclusion of the project, but it is not essential since you have a dynamic IT area that can be dedicated exclusively to this task. Simultaneously with the evaluation and understanding of the processes to identify if the company is ready or not for ERP, the products available in the market and the approaches can be investigated.

Never leave the responsibility of choosing the system to be installed to a third party, since the company is the one who knows your day-to-day life and needs. In the 90s it was not uncommon to find companies that started using ERP out of sheer idiom and, instead of a careful process surrounded by reliable information channels, speed was the keynote, which was expensive.

The economic aspect counts a lot, but it must be considered not only from the perspective of cost and benefit as well as investments already made. A company that has an efficient accounting system or human resources and that has not yet been amortized can evaluate whether it is worth buying the equivalent module of the ERP system, it is important to fully exploit the characteristic of modularity of the software, evaluating the acquisition of the software. whole package or in parts and also if the system that the corporation owns can be adapted to operate in conjunction with the business management software, and at what price will all this be done. Need, adequacy, and costs must walk together.

Many times, a product composition can also be interesting. See the example of the Brazilian air transport company Gol. With no time for prolonged analysis due to competition, the company entered into activity supported by a business management system of its controlling group, the Áurea holding, but it did not take long to identify the very particular profile and demand. Through a report made in 60 days by a consulting firm, Gol selected the Oracle / RM Sistemas duo as the corporate platform. The technological base - applications in three layers with the Oracle database - had already been prescribed by the IT team, which went to the market to identify the ERPs that met the proposed prerequisites. In that place, two options remained that were presented and approved by users.Both were installed. The human resources (HR) department preferred the RM systems package and the finance department chose Oracle Financial.

However, this combination is not always possible, either due to the corporate profile or the incompatibility and cost of the product. In times of lack of budget, of course, the cost ends up being preponderant. It is then necessary to address all the details involved in acquiring an ERP system: the price of the system, whether it is the complete package or divided into modules; the consulting or partnership values ​​of the implementation process; maintenance and even what is the discount for future acquisition of a new version.

It is not by chance that there are evaluations and metrics that count how many months it will take for the amount spent to return in the form of an improvement in business and economy of resources. But, like any forecast, it is interesting to read carefully and carefully what this evaluation proposes. The numbers on the paper can reflect a reality far removed from what is known.

In addition to values, a company can have its strategy as the main motivator of choice. In it, the desired management levels are explored and how products and services can benefit in the process. The trade-off is studying how ERP packages can provide it. Detailed reporting of actions and internal evaluations can be time consuming, but they are rewarding and can reflect the result of a better choice.

Implementation of an ERP

Information technology (IT) infrastructure adjustments are common to receive business management packages (ERP). However, before making any decision towards the total replacement of computers, servers and network equipment, it is necessary to observe what can be reused. Experts recommend that you take full advantage of what has already been implemented at home and your own previous experience with integrated systems of the ERP type.

But how can you do that? The first action is to take an x-ray of the infrastructure, not only of what we have today but also of what would be desirable with the entry of the management package, as a way of planning the necessary investments. Well-defined technology processes for the adoption of the management package are extremely important, as they facilitate infrastructure adjustments; as processes understand technological approaches and guidelines, among them the standardization of operating systems and the uniformity of equipment purchase.

A possible negative impact of legacy systems and machines - which already exist in the company - can be minimized with the purchase of software called integration and responsible for the bridge between the ERP and what the corporation already has. Another important aspect for the introduction of a management system is security. It is not necessary to create a specific policy for this area - if the corporation does not have one, of course - but it is essential to create guidelines for granting access. Ultimately, not all employees need or should access ERP. Another universal indication is that, regardless of the infrastructure, the corporation maintains an ERP implementation development / testing environment and a production environment for the current systems until it is certain that the project is ready to make the change.

Operating systems

When we talk about the best operating system - which can be applied to the infrastructure as a whole - to work with an ERP solution, three words emerge as the most important: cost, culture and availability. The cost must be approached as the need to preserve the investment made or dimension what will need to be done; culture refers to the history and experiences of the corporation with this or that system; while availability refers to what the operating system can offer compared to ERP.

In general, the indication of an operating system to work with the ERP is a strategic matter for the corporation and follows the orientation of the equipment chosen and those already installed. However, if the aspect of the experience of the corporation can and should be emphasized, and the issue of cost generation cannot be neglected, the operating system should be viewed as a support to ERP and not the opposite.

For some consultants, the management package should not influence the adoption of an operating system but it should be adapted to the one the corporation already uses. However, an analysis of the ERP system requirement depends on the size of the company itself and the scope of the project - closely related to the number of modules (parts of the management system) and the number of people going to access the system. If this study, for example, targets multiple platforms, this will be the best orientation.

Traditionally, the preferred operating system for installation of management packages was Unix, especially when Windows NT was not yet robust enough to handle processing that involved larger machines, in the same way as Linux, a more accessible cousin of Unix. With different flavors or versions according to the providers, the Unix world provides more security and large-scale processing with fewer glitches, ideal for those who use systems with multiple operations or accesses, such as ERP.

Many providers of management systems, including due to the proximity and business relationship with Microsoft, have bet heavily on NT. It is a fact that after version 2000 the system evolved and is more suited to the demands of processing and reducing problems of continuity in processing, but a thorough evaluation of the operating system should be carried out taking into account the most suitable hardware platform for the corporation. The conservatism, culture and services provided over the last decade by the Unix family - still predominant according to market research - may speak louder according to the partner chosen for implementation.

Cousin or half brother of Unix, the Linux open development system - which means that people from all over the world participate in its development and there is no owner of the system - has evolved a lot in performance, becoming today evaluated as an option for processing of applications even in large companies. The environment not only grew in volume of operations that can be carried out but also in the decrease in the frequency of failures and problems. The most obvious positive is the reduction in licensing costs. Due to its characteristics, however, the support - made by few companies specialized in the system - does not have the breadth and experience of companies that work with Unix or Windows NT.

A recommendation is a priority: the implementation of the ERP should not be seen as a test bed to test the operating system, since the experience itself speaks louder. A safe environment that has been tested and approved by the corporation is much more important than feeling the taste of a project loaded with characteristics typical of modernity.

Databases

As with operating systems, the most suitable database to operate with ERP depends much more on the client's taste than on compatibility or adherence between the systems. The days when one solution depended the most on another and the suppliers chose a database to develop the business management environment is over. It is clear that the development of some solutions may still have loopholes in that relationship, but the issue is that the package works well with any brand of database.

The most important manufacturers in the database market - Oracle, Microsoft and IBM - have guaranteed compatibility with all ERP systems, which ensures environments with good adherence capacity. As a rule of thumb, it is more interesting to take advantage of and adapt the databases to the management package than vice versa.

What determines the performance of the database is the way in which ERP accesses the information stored there. Ultimately, as a concept, management systems can be translated as the standardization and universalization of information, and for this to happen it is important that the database act in conjunction with the system, allowing information to be entered in a single time and, in real time, can be distributed to all parts of the system with which it is related. With this common base, both redundancy and rewriting are eliminated (this being understood as redigitalization, "type it" again).

Normally, an ERP system is built, used and integrated into a relational database, which can be understood as the establishment of information links between different data. An example of integration between systems is when a purchase order - which is included only once - triggers information for other modules and databases such as parts stock, manufacturing, logistics, etc., and that order is followed and accompanied in its entirety, until it ends, normally, with the payment of the invoice. All without redundancy or overlap of information.

In some cases, it is necessary to mount an application layer, a mask between the management package and the database system, so that they talk to each other more dynamically and securely. Depending on the size of the company, the number of accesses and the people who use it, the use of a centralized database can have performance consequences. One of the ways to solve the problem is to create access hierarchy levels, that is, the finance department can see all the modules of the package and their respective databases, but an industrial area must be restricted to what really interests it.

Another way out for sectors or data that do not need online updating, such as information from the personnel department, is the creation of an off-line replacement system - without the need to be, at that time, connected to the set of ERP operations; in this way, in times of lower volume of accesses, the integration or reapplication of the information for the main database is carried out.

Hardware platform

The platform - configuration and homologation (training) of the machines - most recommended by ERP specialists to process integrated management applications - is the client / server platform. A client is understood as a computer used by the user to access the information on another machine with the same profile but with higher configurations that houses the management modules and / or databases. Contrary to mainframes, which centralize data and limit the number of simultaneous users and the interaction of those who use it, this configuration allows the use of various equipment that converse with each other with distributed information.

As with other aspects of infrastructure, the idea of ​​reuse is also predominant in the hardware item for ERP. The options to operate the system are multiple, from equipment with Risc and Intel processors to machines that approach the processing power of mainframes such as the IBM AS-400.

A heterogeneous environment - with different machines and systems - is not a seven-headed bug. Most of the corporations use this salad that can be preserved at the time of using the ERP. However, it is advisable to hire an external consultant to study the environment option and carry out tests with concrete results so as not to be surprised when the management system actually comes into operation.

One point is true, whoever still works with mainframes should know that it is necessary to invest in servers. And, even those who already work on the client / server architecture, need to evaluate and resize their machine park periodically to know if said architecture meets the performance requirements that ERP and the user demand.

To support the number of people accessing the data in the management package and the amount of information that travels through the network, the recommendation is for servers with at least two processors. The machines must have 1 GB or more of RAM - the memory that works with the processing -, in addition, of course, of disks with high storage capacity and backup mechanisms, either by means of other disk units inside or outside the machine or by sending data to a partner that works with external storage such as a datacenter.

Among the existing architecture options, we find the Risc and Intel worlds. The first Risc machine emerged in 1975, at IBM, but it was released commercially only in 1981. In the 1980s and first half of the 1990s it was dominant in the ERP environment, invariably sold with the Unix operating system. It valued its processing performance in machines such as Alpha - from Digital, bought by Compaq which in turn was acquired by Hewlett-Packard - with simplified instructions, a reduction in the number of transistors and therefore the heat produced. Today, they do not have as much space in the market, their price is higher, and their performance and processing speed are equivalent to Intel platforms.

With Itanium, Intel consolidated its rise among corporations, already verified in the days of Pentium. A latent sign is Itanium's developing partnership with HP, formerly the sole advocate of the Risc platform for corporate servers. The largest space in the world for management packages is fundamentally due to the permanent increase in the speed and quality of its chips and its constant decrease in prices. When the corporation thinks in TCO (Total Cust of Ownership) or total cost of ownership, which adds the expenses to the equipment and the values ​​of its maintenance, the price makes the difference. In addition to running older programs and operating systems ranging from Linux to Windows NT, the platform - which is starting to gain scale in sales - adds programs written for the 64-bit environment.

Communication network

A computer network is ready to operate with an ERP after an extensive review of the users, the numbers and location of the points that are going to be involved with the management system. Probably, the traffic that will be generated is greater than the contracted band speed, but only a capacity planning - as those reports are called - will be able to say for sure.

Even in the face of an X-ray that indicates changes in the local networks and in the long distance communication infrastructure - used when the company has facilities distributed in buildings, cities, provinces or different countries -, the additional investment must be made according to the implementation of the management package. As the process is carried out in the sequence of modules, (pieces of the global ERP system), it is possible to save resources according to the input demand of users and localities.

Some consultants reveal that there is a certain exaggeration when talking about the increase in traffic generated by ERP, and that before hiring these systems, corporations were already working in some way with the exchange of data on the network. Leaving aside the controversy, it is true that, for the transfer of data in a corporate network, communication technology does not matter so much as the speed and redundancy of network connections.

The preference still falls on hiring providers with different technologies for the main link and the contingency or backup link. In the same way that the user / band ratio to define the speed of the connections, it must follow parameters and studies that consider peak situations in operations and not work on the average of the available band.

Corporations with different geographic action points must have fast and redundant connections, but the best question that a company should ask is: What does that locality represent and how to guarantee a good flow of data - sending and access to information? For Novartis' Pharma division in Brazil, for example, the answer was everything. The professionals in the information technology (IT) area of ​​this division have until 2005 to replace the ERP (Enterprise Resource Planning) system BPCS, from SSA, with the SAP R / 3 management package and, in parallel, implement the infrastructure communication that will support the transactions generated by these programs, the exchange of messages in Lotus Notes,WEB access and the intermediation of all communication made from 11 Latin American countries with the headquarters in Europe.

Without a redoubled care, Novartis would run the risk of increasing its communication expenses, considering the increase in the volume of data that transits the network and the need for redundancy to guarantee the integrity of the information sent to the parent company. But, different from what it seems, the company managed to reduce its costs by more than 40% after the review and renegotiation of the contract with the communication service provider, and managed to start the migration of the entire environment for an MPLS network (Multiprotocol Label Switching) with links of up to 2 Mbps for each country in Latin America where it has facilities. The implementation of ERP was initiated by Brazil and continues for the rest of Latin America, preceded by the new communication network

ERP operation and control

After the moment of choosing the best business management system and even the definitions regarding the implementation of the software package, the next step is the operation and maintenance of the solution. It is not enough just to choose the floor plan of the "house" and do its construction, it is necessary to know how it should be managed and cared for. Continuing with the analogy, it is interesting to know if it is better to have that house in a closed condominium, in which a third party is responsible for a series of administrative, security and conservation actions, or if it will be all done by its employees.

Outsourcing, also called outsourcing, of the ERP system is no longer something strange or without purpose. Once taboo in IT as a whole, hiring a partner to manage a technology environment is now a trend. An option that has seduced many corporations, as the evolution numbers of the outsourcing market in Brazil can illustrate.

According to the IDC studies institute, only in 2003 the modality increased its business by 6.8% in Brazil, with a total turnover of R $ 10.4 billion, a growth far above any IT segment. In the AMR Research reports, the number of companies that use outsourcing in the world will rise between 20% and 50% until 2005. The main justification is the reduction in costs that the modality guarantees.

This decrease in expenses appears in many topics when the topic is ERP projects. First, you don't need to buy specific machines or upgrade them. In other cases, even the hiring of the software can be simplified, but the most striking impact is on the policy of hiring people qualified to manage the set of systems. With outsourcing it is not necessary to form a team, invest in training and still suffer with the constant process of substituting people, among other details.

Some CIOs (Chiefs Information Office), however, fear the large-scale use of outsourcing, especially in areas that are related to business, that is, that go through ERP systems. The Brazilian Parmalat, for example, outsourced its area of ​​data communication and infrastructure of the factories, but prefers to have the management of the management system as well as the electronic commerce activities in its hands. The justification is that they are sectors that are extremely sensitive to the company's business.

Aspects to consider to implement an ERP

To assess the complexity of an ERP implementation, we must take into account that the following six elements interact in an implementation:

1.- The ERP (management information system).

2.- The people and the culture of the organization.

3.- The strategy.

4.- The hardware.

5.- The processes.

6.- The rest of the existing management applications in the organization

In any ERP implementation there are two totally different phases:

  1. The "pre-implementation", that is, the prior analysis to define the project objectives, functional scope, total cost, necessary resources, specific needs of the organization, schedules, etc. in order to evaluate the profitability that the ERP implementation will entail. The implementation project itself, including developments, parameterisations, training, etc.

The analysis prior to implementation must contain at least the following sections:

  1. Initial analysis of the strategy, technology, processes, people and organization Definition of the functional scope of the ERP implementation, that is to say which areas and functions the implementation will comprise as well as a first planning approach Definition of objectives of the ERP implementation Definition of improvements in the processes and organization that will provide the ERP implementation.Definition of the change management plan to achieve the change in a non-traumatic way Choice of the most appropriate technological solution and implanter based on the analysis carried out in the first phase as well as the necessary modules and parameters Definition of an approximate schedule and associated budget Define the return on the investment (ROI) of the project and the key KPI parameters to define the monitoring of the implementation as well as a sensitivity analysis to the variation of certain parameters Implementation of the ERP Monitoring and strict control of the previously defined objectives as well as the critical elements for profitability of the projectcritical elements for the profitability of the projectcritical elements for the profitability of the project

An example of application: Foreign Transport Bus Company

The systems that the company used before Intélesis were Accounting with Exactus and Payroll with Meta4, the most relevant characteristics of both Information Systems are shown below:

Exactus General Accounting:

This Exactus module allows you to manage an up-to-date, accurate and reliable accounting. As the center of the financial activities of the system, General Accounting helps to capture and integrate the transactions carried out from the other modules, allowing to see their influence in financial terms on the company as a whole.

Benefits:

  • Provides great support in decision-making as it ensures reliability and total security on accounting information Provides a real and updated view of the company with fully updated information Provides your company with great operational flexibility It is a great tool Useful for multinational companies and corporate entities, because it allows for fiscal and corporate closing. It facilitates internal and external audit work. It provides flexibility to consult historical information.

Characteristics:

  • The system allows the management of units of measure in the accounting movements. The journal accounting entries records are displayed in a friendly and complete way. It allows the recording of accounting entries in closed annual periods. Blocking accounting entries in packages. This functionality allows two users to work on different accounting entries within the same accounting package. Export of bulk entries to ASCII files. Access security in the use of MS-Excel macros. Two-way macro connection:
    • By means of an MS-Excel book (connection to different companies) By means of a single electronic sheet (connection to different databases).
    Maintenance of journal entry templates from Exactus modules. Complete audit data on wholesale entries. Data are incorporated such as: who and on what date / time increased an accounting entry, who created and modified it last time) Filter by date range of accounting entries in queries Privileges to control the majority of entries with zero units in the case that units are managed. Programming of the block in the modification of accounting account data from General Accounting, since they are defined as restricted use for auxiliaries, so it can only be modified from the auxiliary. Flexibility in consolidation accounting in terms of configuration in such a way that it is possible to consolidate accounting information crosswise.For example, in the event that the consolidating company uses dollar currency only and the consolidated company uses local currency and dollar. Blocking of movements to accounting accounts used by auxiliary modules. Visualization of entries prior to their cancellation. Issuance of trial balances in two currencies: local and reporting or dollar. It works based on the list of accounting accounts that will be involved in the generation of entries due to the transactions carried out in the company. It integrates with the other modules of the system for the automatic receipt of entries accounting. It allows the accounting consolidation of an unlimited number of companies, in an unlimited number of levels, which make up a hierarchical structure that can be represented as a “tree”.Management of the accounting accounts of each company by cost center that can integrate the sections of a company into a whole User-defined cost center structure that allows the association of one or multiple cost centers per accounting account. User-defined accounting account of up to 25 alphanumeric characters. The system allows the user to define entry types according to the types of financial activities carried out by the company, as well as annulments and reversals of entries in the ledger and the record of recurring entries. It allows to generate multiple transactions queries in the journal and in the ledger. The system can create graphs of the queries on the ledger accounts related to the transactions in the Journal and in the Ledger.The system makes adjustments to the accounting for differences in the exchange rate used in the accounts that participate in the accounting movements. The accounting periods are flexible, fully defined according to particular requirements. Optional dual currency, local and corporate reporting management, with automatic and flexible conversions, which are implemented based on the FASB52. It does not require special closings, except the end-of-period closure, a feature that allows the introduction of retroactive entries. The system offers the possibility of generating two types of reports: Trial Balance and a Transaction Report applied to the major.Compatibility with Microsoft Excel for generation of financial statements and consolidation of accounting.Ability to carry out double accounting closing (local and corporate).It allows the recording of movements in new fiscal periods even without having made the closing of the previous period. Keeps accounting information of multiple years online without affecting performance. Extensive data validation and verification controls that ensure valid transactions for accounts that accept movements.It has functions to leave audit trails that allow determining the origin of transactions.It has functions to leave audit trails that allow determining the origin of transactions.It has functions to leave audit trails that allow determining the origin of transactions.

Meta4 Payroll

The Payroll was managed with Meta4 Payroll, which is a program with which it manages the payroll and all the economic aspects of the personnel, from the calculation of the payroll to retroactivities, through budgets. This application has been developed under the client / server architecture and can be adapted to the legislation of any country and translated into any language.

Meta4 is one of the world's leading providers of solutions for the management and development of human and intellectual capital (HICM). Based on the most advanced technology, these applications maximize the potential of knowledge to give real support to the business and increase productivity, providing organizations with greater efficiency and competitiveness.

Intéálisis SA de CV

It is a Mexican company in charge of the development, sale and implementation of the ERP Intéálisis. Currently this company is making a greater effort to meet and exceed the expectations of its customers and business partners, due to this it is in the development and internal implementation of two avant-garde models in terms of quality, under which they will be obtained in a medium-term ISO 9001: 2000 and CMM level 3 certifications.

What is ERP Intéálisis

The ERP Intéálisis software is an intelligent administrative system, it integrates the data and operations of all functional areas and departments in the same information flow and allows a timely control of the organization.

This tool is specially designed for the Mexican market, using SQL Client-Server technology in order to satisfy the way of working of national companies and avoid adaptations or translations of other systems outside our country that are difficult to understand and use.

ERP structure

The basic conformation of ERP Intéálisis is based on six processes:

  1. Commercial
    1. SalesServicesReturnsShipmentsPrices and CostsVouchersCustomer service
    Finance
    1. Treasury Accounts receivable Accounts payable Commissions and piecework Expenses
    Inventories
    1. InventoriesFixed assetsPurchasingImportsQuality controlAttention to suppliers
    Manufacture
    1. Order planningProductionProjects
    Human Resources
    1. Payroll Access control Assistance Human resources Personal attention Internal services
    Accounting
    1. Accounting

Survey and Results

The survey that was carried out to the Engineer who works on the implementation of the ERP system of the Foráneos company is added below.

General inquiries

Respondent's name:

Name is omitted at the request of the respondent

Company name:

Name is omitted at the request of the respondent

Years in the company:

1 year 6 months

Actual position:

Support Applications

Years in the position:

1 year 6 months

Specialized Questions
What system did you use previously?

The previous ERP we used was a version of Exactus. Specifically the Accounting, payroll, and human resources modules. This was a very old version that has been used for a long time, it also worked on oracle 8.

Generally, when an ERP implementation is made, a business analysis and a reengineering of the processes are done to make it work properly. Was such reengineering necessary? (but because

A total reengineering was not necessary, because the decision to adopt the new ERP comes from the corporate, and they commented that it would work without major problem, because they already have it implemented in other places and it has worked very well for them and without major problems..

If the previous answer was affirmative, what were the problems that you faced when doing it?

Have the changes been communicated?

Only discussed with staff, but no meetings or other activities are held to fully communicate these changes. Approximately 5% of all users are informed.

Is there resistance to change?

Previously an ERP (goal 4) was used through outsourcing, we do not know if there will be resistance to change, because it has not yet been used by users. In the specific case of payroll, outsourcing will be withdrawn and staff will be hired by the company itself.

What ERP does the company use?

The new ERP that is being implemented is called INTELISIS (www.inteálisis.com.mx)

Why did you decide to use this ERP?

This ERP has been used by the Group's corporate, since the company belongs to that group. The corporate decided to implement it in the company.

What were they based on for their selection?

This ERP is already implemented in other companies, which also belong to the Toluca group, and it has worked very well for them and without major problems.

What have been the disadvantages?

- One problem has been that SQL does not have password encryption, therefore we do not have security directives in this regard.

- Information searches are somewhat complicated, several sub-searches sometimes have to be made to find the information that is needed.

- The information cubes are dynamic table type, which is a risk, because it allows users to see more information than they need.

- Using the new ERP requires a certain degree of specialization, which makes us more dependent on the provider and which also implies more expense.

- Another disadvantage is that the points of sale cannot be managed which is also part of what we would like to cover.

What are the advantages?

- Using the payroll module we will no longer depend on outsourcing, which is a fairly heavy expense (costs would be reduced).

- Offices and departments can now consult information in real time.

- Which leads to having more flexible information and without availability problems.

- The accounting module will allow to have all the information centered.

- The ERP has some access controls for users. For example, the control of the entry and exit of work schedules.

What problems did you face at the time of its implementation?

- The new ERP requires more updated hardware, for example that the users' PCs have a Pentium IV processor, and the servers must have a Xeon processor. In our case we had to acquire new hardware.

- When configuring the modules you must be very careful when registering the information you want to display, if you miss any data or do not configure correctly, you do not get the results you want.

- ERP is very generalized, you have to make many modifications so that it works according to your needs. Something we struggled with, for example, was to define rounding in taxes.

How long have you been using ERP?

From January to date, the implementation has been taking place in Monterrey and Tamaulipas.

What part of the business is ERP in charge of?

So far only the Human Resources and Payroll modules have been implemented.

What was the order of implementation of ERP modules?

The two modules have been implemented in parallel. Soon it is intended to implement the accounting, purchasing, warehouses, workshop and other services modules.

Why did they decide that order?

One of the things we needed was not to depend on outsourcing since it is something expensive for the company. Using the new modules we can withdraw outsourcing. Which would reduce our costs.

Did you require external personnel to manage the ERP?

We currently have a consultant who is carrying out the implementation. In addition, a person was hired for the position of head of payroll.

If the previous answer was yes, what was your selection based on?

The person hired has the skills for the position and was someone you know.

Are they satisfied with the ERP selection (yes / no, why)?

In what has been 70% satisfied so far, due to the inconveniences that have been found.

Conclusions

The ERP is an information system that brings together, through various modules (for example, production, human resources, finance), the different functional areas of the company, trying to provide a comprehensive and unique solution to the operation of an organization. Its main characteristic is the mechanization of most of the functions within the coverage provided, significantly reducing the workload and non-value-added activities. On the other hand, by reducing the need to enter data manually, you eliminate potential sources of error. ERPs also involve the automation of most of the information flows within a company and integrate them, allowing a more exhaustive analysis of the information. And analyzing the information will lead the company to make decisions according to its strategy.

Communication, agreement and commitment between the different related departments are of utmost importance to ensure that each of the parts that make up the ERP has its process, its inputs and outputs well established. As the relationships between individuals are important, conflict management is essential to achieve collaboration in the integration of the parts of the ERP.

As observed in the interview, there are different advantages that the use of ERP provided them with those found in the literature, such as:

  • Modernized administrative structures Centralized control over information Standardized processes Reduced costs and times in key business processes Information transactions are faster Better financial management

As for the disadvantages that they found were mainly the lack of security which depends a lot on the type of database they use, as well as the use of dynamic tables which allow users to see more information than they require and finally the lack of experience in the use of the system so they have to depend on a specialist, in this case the provider generating more expenses.

  • If there was a gap between the functionality offered by the package and what was required for the organization to adopt it The ERP implementation was more complex during the integration of the different modules, data standardization Few ERP consultants understand the business processes of their clients enough to spot critical areas that don't fit the package Implementation was costly and difficult The company had to adapt its processes to the system A dependency on a single vendor was created

There are many considerations that must be analyzed before and after ERP implementation. Although when implementing ERP it is important for the company to analyze the cost-benefit ratio of its implementation since not all companies can assume the costs derived from said comprehensive management system. Also, you must consider the costs generated for its maintenance and proper operation.

We can conclude that ERP systems definitely provide more advantages than disadvantages to companies that choose to use them and that although they are expensive in the long term, they provide significant advantages to the user both in time and money.

Annexes.

Letter to the surveyed company.

Monterrey, NL, March 15, 2005

To whom it May concern:

This questionnaire is of an academic nature for the subject of Administration of the computer function that is studied in order to obtain a Master's degree in information technology administration at ITESM.

The research that is carried out is on ERP's systems, their operation and implementation, so the questions mentioned below are exclusively to determine the degree of use and use of ERP's in order to generate a conclusion fully keeping the confidentiality of the company.

Thank you in advance for your attention and cooperation, but not before sending you a cordial greeting.

Atte.

Ing. Erika Montalvo

Ing. David Tapia

Ing. Federico Plancarte Sánchez

General inquiries

Respondent's name:
Company name:
Years in the company:
Actual position:
Years in the position:
Specialized Questions
What system did you use previously?
Generally, when an ERP implementation is made, a business analysis and a reengineering of the processes are done to make it work properly. Was such reengineering necessary? (but because)
If the previous answer was affirmative, what were the problems that you faced when doing it?
What ERP does the company use?
Why did you decide to use this ERP?
What were they based on for their selection?
What are the disadvantages?
What problems did you face at the time of its implementation?
How long have you been using ERP?
What part of the business is ERP in charge of?
What was the order of implementation of ERP modules?
Why did they decide that order?
In what phase have you worked (selection, implementation, development, etc.)?
Did you require external personnel to manage the ERP?
If the previous answer was yes, what was your selection based on?
Are they satisfied with the ERP selection (yes / no, why)?
Were there any issues not taking into account?

Bibliographic references

  • Bosse Mark, ERP for Beginners.URL (http://www.iqms.com/news/ERP_For_Beginners_Reprint1.pdf), March 2005, Chase RB; Aquilano NJ; Jacobs FR (2000): Production and Operations Management. 8th Edition. McGraw-Hill. Navarra European Business and Innovation Center, URL (www.cein.es), February 2005. Conclusions of the Corporate Applications study. Situation in Spain and future trends. Davenport Thornas, David De Long, Michaer Beers; «Successful Knowledge management projects», Sloan Management Review, Cambridge winter 1998.ERP / Supply Chain.Figueroa José Luis, «Organizational Redesign: The imperatives for IT Areas», XXI Meeting of the State Public Administration Informatics Committee and Municipal (CIAPEM), Guanajuato, Guanajuato, September 3, 1998. ERP implementations:How to achieve success? Part 1, URL (http://www.improven-consultores.com/paginas/documentos_gratuitos/implantacionesERP1.php), March 2005. Koch Christopher, ERP Basics.Maturana V. Sergio, How much help ERP systems in planning and scheduling the activities of a supply chain? URL (www2.ing.puc.cl/gescopp/pdf/ERPyCAba.pdf). March 2005. Mavert Vincent A. Ashok Soni and Venkataramanan M. (2000), "Enterprise Resource Planning survey or US firms", Production and Inventory Management Journal 41, no 2, 2000. Next Generation Center, ERP Induction Course. Orlicky, J. (1975), «Material Requirements Planning», New York, Mc Graw Hill, 1975. Piturro Marlene, (1999), «How midsize companies are buying ERP», Journal of Accountancy, New York, September 1999. Polito José Sirahuen (1999),"Critical Success Factors in ERP Systems Implementations in the Monterrey metropolitan area", Thesis, Instituto Tecnológico y de Estudios Superiores de Monterrey, April 1999. Redy, B. (2000), "The 360 ​​degree Customer", Apics, The Performance Advantage 10, no 7, July 2000.Recio, Alejandra, Study of the process of change and resistance due to the implementation of ERP systems - Enterprise Resource Planning, Thesis (Master of Information Technology Administration), ITESM, 1998. Rondeau, Patrick J, Litteral Lewis A., (2001), "Evolution of manufacturing planning and control systems From reorder point to enterprise resource planning". Production and Inventory Management Journal, Alexandria, 2001Scheer August-Wilhelm; Habermann Frank, (2000), "Making ERP a success", Association for Computing Machinery, Communications of the ACM, New York,April 2000: Oh Christina, Siew Kien Sia, Tay-Yap Joanne; (2000), “Cultural fits and misfits: IS ERP a universal solution?”, Association for Computing Machinery, Communications of the ACM; New York, April 2000. Information technology as a tool to increase the productivity of a company.Tetu L. (1998), «Supply Chain Planning and Synchronization». Apics, The Performance Advantage 8, no 6, June 1998.Weightman Clive, The top 10 ERP mistakes. voiding these pitfalls puts you along way toward your ERP goals."Supply Chain Planning and Synchronization". Apics, The Performance Advantage 8, no 6, June 1998.Weightman Clive, The top 10 ERP mistakes. voiding these pitfalls puts you along way toward your ERP goals."Supply Chain Planning and Synchronization". Apics, The Performance Advantage 8, no 6, June 1998.Weightman Clive, The top 10 ERP mistakes. voiding these pitfalls puts you along way toward your ERP goals.
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