A business that has totally different departments for handling every function such as Finance, Material Management, Production Planning or Sales and Distribution, requires consistency in data across transactions. For example, the purchase amount and order details for a product ought to be same across the finance, sales and inventory databases. However, where consistency in data should be maintained, redundancy needs to be avoided. Therefore, there arises the need for a central system that allows simultaneous updates across all the departmental databases in real time. This is where Enterprise Resource Planning (ERP) software solutions come in. Major ERP software providers include SAP, Oracle, Microsoft, Infor, Epicor, QAD, Sage, IFS and Aptean.
Today, several ERP software providers have an array of off-the-shelf, standalone ERP modules, that a company can pick and choose from, based on their needs. The most widely used ERP modules are:
Production and Planning
Majorly used by manufacturing companies where projection and sales forecast for Production Planning is used for identifying the manufacturing capacity, parts, components and material resources.
Involves sales data management via order placement, order scheduling, shipping and invoicing.
Finance and Accounting
Used for managing all the financial transactions in an organization and for generating financial reports and statements.
Facilitates processes for effective management of the warehouse stock and inventory by identifying inventory requirements, setting targets, monitoring usages and identifying inventory balances.
Used for effective management of employee data such as employee ID, name, department, performance reviews, leave tracker etc. Most importantly, the HR module is used to manage payroll. The payroll system is a submodule of the HR module. It helps in managing employee salaries and payment documents. All employee expenses such as travel, food, accommodation, etc. are also managed via payroll module.
Customer Resource Management
Used for managing client information for effective follow-up and sales management by tracking customer details such as communication history, meetings, and details of purchases made by customer etc.
Used for procurement of all items and materials required by the organization. Purchase module comprises supplier/vendor listing, supplier and item linking, sending quotation requests to vendors, receiving and recording quotations, analysis of quotations, preparing purchase orders, tracking purchase items, preparing GRNs(Goods Receipt Notes) etc. This module is often linked with Inventory and production Planning modules for maintenance of stock.
The ERP architecture is separated into three tiers. This enables extraction of important data necessary for a user at each level separately. Three-tier architecture allows any one of the three tiers to be upgraded or replaced independently of the others. The three tiers are:
The Presentation tier is meant for fulfilling user requests. This is the tier which application users access, via a webpage or a GUI, to retrieve data from the software.
Application or Logical Tier:
The Application tier (center level) acts as a bridge between the Presentation and the Database tier. This is where the software code is stored which fulfills user requests for data retrieval.
This tier comprises of the database servers from which information is retrieved and where information is stored. Providing data its own tier improves the scalability &performance of an ERP software. Often, relational databases such as Oracle and SQL Server are used. Currently, SAP HANA database is gaining popularity as it provides in-built database that reduces the load on the system. It uses open SQL queries that are easier to use and understand. HANA studio also provides AMDP programming environment.
Based on the needs of the organization, an ERP software can be deployed via the following methods:
Local or On-premise deployment
Local deployment was the norm back when the cloud was not popular. Local ERP deployment is a resource and cost-intensive process that requires a lot of time due to the complexity of the software and the need for customization. A complete data center needs to be set up including servers, database, network etc. All maintenance and management are handled by the user. However, all user data is secure as it lies solely on a local server.
Public cloud deployment of ERP is the go-to strategy for a lot of companies, due to the low investment costs and the availability of pay-as-you-go models. These also require less manpower (IT team) to manage and maintain the ERP. Further, users always have the latest software available to them since upgrades are managed by the ERP software provider.
This type of deployment is suitable for companies that already have an on-premise ERP and are looking to expand/upgrade its capabilities by utilizing the cloud-based ERP’s features.
Author: Ravi Shankar