<imgalt="One student one ERP programme"title="One student one ERP programme"src="http://img.erp5.cn/user-OSOE.Website.Homepage?format=png">
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by <ahref="http://www.osoe-project.org/contact">OSOE Project</a>
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<p>This visual guide is part of a collection of documents created by the One Student One ERP (OSOE)
project in collaboration with Institut Mines Telecom, Telecom Bretagne, Dresden University of Technology and
the South Westfalia University of Applied Sciences. It can be used to teach modern ERP theory and practice
to undergraduate students or professionals.
</p>
<p>This chapter introduces the lecture goal, organisation and evaluation.</p>
<p><b>Copyright</b>: You are free to copy, distribute, display, and perform the work under the following conditions: you must attribute
the work in the manner specified by the author or licensor; you may not use this work for any commercial purposes including training,
consulting, advertising, self-advertising, publishing, etc.; you may not alter, transform, or build upon this work. For any
reuse or distribution, you must make clear to others the license terms of this work. Any of these
conditions can be waived if you get permission from the copyright holder through a commercial license
or an educational license. For more information, contact info@nexedi.com
</p>
</details>
</section>
<section>
<h1>Agenda</h1>
<ul>
<li>What are the objectives of the course</li>
<li>How the sessions are organised</li>
<li>Student evaluation process</li>
</ul>
<detailsopen="open">
<p>In this presentation, we are going to explain how this lecture was designed. First, we define the goals of the course and especially what students can expect to learn by
attending the course. Second, we explain the organisation of the lecture as a sequence of theory and tutorials that cover the different aspects of an ERP. Last we introduce
the student evaluation process based on a case study and questionnaire.
</p>
</details>
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<sectionclass="">
<h1>Course Objectives</h1>
<ul>
<li>Learn universal and fundamental workflow of companies</li>
<li>Understand what is an ERP by practicing an ERP instance</li>
<li>Learn to perform a consulting process for an ERP implementation</li>
<li>Being capable of configuring an ERP</li>
</ul>
<detailsopen="open">
<p>"ERP: Theory, Practice and Configuration" is a lesson which has four main goals.</p><ul>
<li>The first one is to teach you the universal and fundamental workflow of the companies. By doing so, you will be able to understand how companies are organised and how ERP systems help companies to improve their performance by managing their business process.</li>
<li>The second step is to see how the theoretical workflow is applied in an ERP. For this we will use ERP5 instances delivered to each student of this course. You will then be able to use it as companies do everyday.</li>
</ul></p>
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<p><ul>
<li>The third goal is to teach how to perform an initial consulting process for an ERP implementation. We will show an interview example with the most important questions that should be asked to a company during this process. The objective of the questions is to identify those business processes which are not successful enough and which can be improved using an ERP. The objective is to understand how to set the priorities for an ERP implementation.</li>
<li>The fourth goal is to teach how to configure an ERP through the definition of so-called categories. Since the configuration is made through a spreadsheet, no programming skills are needed and the focus is kept on management and organization rather than on technical details.</li>
<p>Six sessions of three hours each organised as described on the picture above.</p><p>Every session will be organised in the same manner:</p><p>We will begin with a presentation of the theoretical and universal workflow of the company. Then you will have time to work on the following ERP5 tutorials related to the studied workflows. </p><p>We will now see the program of the six sessions.</p>
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<h1>Session 1: Carreers and Assignments</h1>
<imgalt="Session 1: Carreers and Assignments"title="Session 1: Carreers and Assignments"src="http://img.erp5.cn/P-OSOE-ERP.Configuration.Introduction.Carreers.And.Assignments?format=jpg"type="image/png">
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<p>During session one, we will see how to handle career and assignment in today's ERP systems.</p><p>These two notions "Careers" and "Assignments" are here to help people to manage human resources.</p><p>The career workflow is very simple since careers are made of career steps which come one after the other.</p><p>Assignments are a little bit different since a person can have many assignments in the same time.</p><p>Once career and assignment be studied, we will then spend time on the first five ERP5 Tutorials which are:</p>
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<ul>
<li>"How to create Persons" will teach you how to create a document in ERP5 which will represent the person.</li>
<li>"How to create new User" will teach you how to create user account in ERP5 which will authorize the other team members to access to your ERP5 instance.</li>
<li>"How to create Organisations" will teach you how to create a document in ERP5 which will represent the organisation.</li>
<li>"How to create Bank Accounts" will teach you how to add bank accounts to an existing organisation or person so that they can be used in trade module in ERP5.</li>
<li>"How to link Persons and Organisations" will teach you how to link the document which represents the person to the document which represents the organisation which the person is working for.</li>
</ul>
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</section><sectionclass="illustration">
<h1>Session 2: CRM Tickets and Events</h1>
<imgalt="Session 2: CRM Tickets and Events"title="Session 2: CRM Tickets and Events"src="http://img.erp5.cn/P-OSOE-ERP.Configuration.Introduction.CRM.Tickets.And.Events?format=jpg"type="image/png">
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<p>Session two is the Customer Relationship Management (CRM).</p><p>We will study Tickets and Events, and their specific workflows. Events are documents in the system which represent every interaction we have with our customers, our suppliers etc.</p><p>Recording every "Event" which occurred during the company's activity will help us to learn more about our customers and our suppliers. Further information about what have been done with or said to a specific person will be available to persons who need it.</p><p>Tickets are documents in ERP5 which can contain other documents such as Events or documents from the Document Management System (DMS).</p><p>Having such records will help you to organise and follow your interaction with persons outside the company. Specific workflows are applied to Tickets depending on their nature.</p>
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<p>In ERP5 we have four kinds of Tickets: Campaigns, Sale Opportunities, Support Requests and Meetings. Five tutorials will be presented:</p><ul>
<li>"How to create Campaigns" will teach you how to create new Campaigns in ERP5.</li>
<li>"How to create Events in Campaigns" will teach you how to create new Events from an existing Campaign in ERP5, you will then see how phone calls, emails, fax etc., look like in such systems.</li>
<li>"How to post outgoing Events" will teach you how you can send Events such as emails directly from ERP5.</li>
<li>"How to process incoming Events" will introduce the standard process of incoming Events in ERP5.</li>
<li>"How to manage Support Requests" will use the Support Requests-a kind of Ticket created from incoming Events, as an example to explain in detail to you how to apply the standard process of incoming Events to ERP5 CRM.</li>
</ul>
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<h1>Session 3: Sale Orders</h1>
<imgalt="Session 3: Sale Orders"title="Session 3: Sale Orders"src="http://img.erp5.cn/P-OSOE-ERP.Configuration.Introduction.Sale.Orders?format=jpg"type="image/png">
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<p>Session 3 will teach you the universal workflow of a Sale/Purchase Order.</p><p>The Sale/Purchase order document in an ERP is the one which will handle trade from the early phase of an offer to the final order made by you or the client.</p><p>We will then follow the following three tutorials:</p><ul>
<li>"How to create Products" will teach you how to create a document in ERP5 to represent a product.</li>
<li>"How to create Trade Conditions" will teach you how to create trade conditions to apply on sale/purchase orders.</li>
<li>"How to create Sale Orders" will teach you how to create a Sale Order with ERP5.</li>
</ul>
</details>
</section><sectionclass="illustration">
<h1>Session 4: Packing Lists</h1>
<imgalt="Session 4: Sale Packing Lists"title="Session 4: Sale Packing Lists"src="http://img.erp5.cn/P-OSOE-ERP.Configuration.Introduction.Sale.Packing.Lists?format=jpg"type="image/png">
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<p>Session 4 is about packing lists.</p><p>Packing lists are used to trace the movements of products or services. Once an order has been made, products or services have to be delivered. In the case of products, either to send the products to the customer, or to receive them from the supplier.</p><p>We will then follow the following three tutorials:</p><ul>
<li>"How to manage Packing Lists" will introduce you to Packing Lists module in ERP5.</li>
<li>"How to manage Invoices" will teach you how invoices can be generated from existing packing lists.</li>
<li>"How to create a Payment" will teach you how to create a payment related to a specific invoice.</li>
<p>Session 5 will be about IFRS accounting.</p><p>During this session we will see what is IFRS accounting and what is the workflow of an accounting transaction (eg, invoice transaction).</p><p>We will follow the following two tutorials:</p><ul>
<li>"How to create Invoice Transaction from Scratch" will teach you how to create sale or purchase invoice transactions manually when you need, instead of generating from an existing Packing List.</li>
<li>"How to create Accounting Report" will teach you which type of report you can generate with ERP5, and how to generate them.</li>
<p>Document management is a very important point of ERP system. It allows companies to organise and share their knowledge. This session will be a quick tutorial of how to manage electronical documents in this orders:</p><ul>
<li>"How to create a document"</li>
<li>"How to release the document"</li>
<li>"How to prepare the second version"</li>
<li>"How to publish the second version"</li>
<li>"How to use fast contribution"</li>
</ul>
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</section><sectionclass="illustration">
<h1>Session 7: ERP Consulting and Configuration</h1>
<imgalt="Session 7: ERP Consulting and Configuration"title="Session 7: ERP Consulting and Configuration"src="http://img.erp5.cn/P-OSOE-ERP.Configuration.Introduction.ERP.Consulting.Configuration?format=png"type="image/png">
<detailsopen="open">
<p>During the last session you will learn how to perform an initial consulting process for an ERP Implementation and how to configure ERP5 Categories. </p>
<p>This lecture about consulting and configuration has been simplified for Coursera MOOC environment.
For this purpose you will be provided with a sample interview of a small business CEO
and a sample configuration case. Based on these materials, you will have to fill a last quiz.</p>
<p>We also provide some extra materials as a reference, so that everyone can understand the general idea of configuration.</p>
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<ul>
<li>"How to fill the Questionnaire" explains the initial consulting process, how to use an on-line questionnaire in order to find out the successful and unsuccessful business processes of the company. This helps to define the priorities for the ERP implementation.</li>
<li>"How to fill the Category Spreadsheet" teaches you how to use the answers to the questionnaire to perform an initial category configuration of ERP5 for the implementation field. Since the configuration is made through a spreadsheet, no programming skills are needed and the focus is kept on management and organisation rather than on technical details.</li>
</ul>
<p>The 10 best students of this MOOC will then be offered to receive a personal coaching to apply the configuration
principles to the company of their choice, use the online questionnaire system and build their own categories.
</p>
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</section><sectionclass="">
<h1>Case Study</h1>
<ul>
<li>Zawee interview</li>
<li>Small fashion retail chain store in Paris</li>
<li>Sample questionnaire</li>
<li>Sample spreadsheet</li>
</ul>
<detailsopen="open">
<p>The case study presents Zawee, a small retail fashion shop in Paris. An example of complete interview is provided. You will see the answers to the most important questions in the questionnaire for this company and learn which category configuration results from these answers.</p>
<p>Evaluation is then be conducted with a standard quiz, which should be fairly easy to fill.</p>
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</section><sectionclass="">
<h1>Reward: one more evaluation</h1>
<ul>
<li>Prepare and configure an ERP</li>
<li>Real case</li>
<li>Fill the questionaire to perform the initial consulting process</li>
<li>Fill the category spreadsheet to configure the ERP</li>
</ul>
<detailsopen="open">
<p>As a reward, the best students on Coursera MOOC will be offered... one more evaluation in the form of a personal coach. This coach
will guide them to configure an ERP for the company of their choice by filling an online questionnaire and defining categories.
The coach will help the student to improve its configuration until it has reached sufficient quality</p>
<p>This online education process has been described in Dr. Klaus Woelfel's PhD: <ahref="http://www.qucosa.de/recherche/frontdoor/?tx_slubopus4frontend[id]=20032">Automatisierungsansätze zur Unterstützung der ERP-Kategorienkonfiguration für KMU</a> (partly in English). In the mid-term, we hope that it can be integrated to Coursera platform, once the number of sample cases is sufficient.</p>
<p>For students who can not participate to this coaching, they should simply study in detail the Zawee case and in particular how categories were configured for Zawee. </p>
<p>This visual guide is part of a collection of documents created by the One Student One ERP (OSOE)
project in collaboration with Institut Mines Telecom, Telecom Bretagne, Dresden University of Technology and
the South Westfalia University of Applied Sciences. It can be used to teach modern ERP theory and practice
to undergraduate students or professionals.
</p>
<p><b>Copyright</b>: You are free to copy, distribute, display, and perform the work under the following conditions: you must attribute
the work in the manner specified by the author or licensor; you may not use this work for any commercial purposes including training,
consulting, advertising, self-advertising, publishing, etc.; you may not alter, transform, or build upon this work. For any
reuse or distribution, you must make clear to others the license terms of this work. Any of these
conditions can be waived if you get permission from the copyright holder through a commercial license
or an educational license. For more information, contact info@nexedi.com
</p>
</details></section><section>
<h1>Agenda</h1>
<ul>
<li>Practice on real case</li>
<li>ERP facts</li>
<li>What is an ERP</li>
</ul>
<detailsopen="true">
<p>ERPs are usually considered as a difficult matter to learn or to teach. ERP classes can be so general, that nothing is really learned.
Or they can be based on case studies, and thus lack of any strong teaching in terms of theoretical principles. Or they can be so much linked
to a given product that what people learn is the product, rather than universal and permanent principles. ERPs are also considered to be such
a huge, complex pipe factory, that many people even believe that they can not be taught. In this class, we are going to change the way that ERPs were taught.</p>
<p>
We are going to introduce some basic facts that every student should know before starting the course: such as who needs an ERP, the cost of
an ERP implementation, the key players in this field, ect. Then we will give a very specific definition on ERP. By knowing all these information, student
will be able to start searching for a suitable organisation/company for his/her case study at the end of the course.
</p>
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<h1>Practice on real case</h1><imgsrc="http://img.erp5.cn/osoe-erp.101.requirements-screenshot?format=png"type="image/png"title="Requirements"alt="Requirements"/><detailsopen="true">
<p>The best way to understand ERPs is to learn how to configure an ERP. And the best way to learn the configuration of ERPs is to actually configure it on a real case. We therefore suggest each student of this class to find a small business, a non profit organisation, a public administration, etc. which will serve as an implementation field.</p>
<p>The configuration process will only require to fill a spreadsheet, which means that it is quite straightforward from a technical point of view. However, from the user point of view, this simple configuration will completely change the way the ERP is perceived. At the end ERP will match the business environment of the implementation field and become usable and very useful.</p>
<p>Students of this class are therefore offered the unique possibility to make a major gift to a small company or a non profit organisation, by providing lean organisation and order for better productivity and better information sharing.</p>
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<p>It is now time to think about who you are going to help in the next few days. Do not wait. Start searching for someone immediately because many organisations will hesitate adopting ERPs. In case they worry, just tell them that 3500 organisations in 140 countries are using it, mostly small businesses, that it is easy, compatible with any operating system and completely free. It is also based on the same technology as ERP5, a major ERP used inside EADS, a central bank and various governments and industries.</p></details></section><sectionclass="screenshot">
<p>Enterprise sales of ERP systems will grow to $32.9B in 2016, attaining a 6.7% CAGR in the forecast period of 2011 to 2016. CRM is projected to be an $18.6B global market by 2016, attaining a CAGR of 9.1% from 2011 to 2016.</p>
<p>Who needs an ERP, who are the market leaders, how much does it cost, how long does it take to implement, is it risky and is there an alternative. These are some questions which we are going to try to answer before defining what is an ERP.</p></details></section><sectionclass="illustration">
<h1>Who needs an ERP ?</h1><imgalt="Who needs an ERP"title="Who needs an ERP"src="http://img.erp5.cn/osoe-who.needs.an.erp-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>Every business, every government, every non-profit organisation needs an ERP.</p>
<p>Usually, most people believe that they need an ERP in order to track what is going on from a financial point of view. This is what usually happens in large companies which use the ERP mostly as a large accounting software capable of consolidating accountings from various branches and subsidiaries. However, this is a very partial view.</p>
<p>Businesses, NGOs and governments need an ERP because they need to manage staff, materials, purchases and sales, and it can become a nightmare to relate all of these pieces of information if they are handled by using paper or using separate applications.</p>
<p>Of course, companies which are small and issue just a few invoices with big amounts can live without an ERP. In such case, the ERP is probably the brain of the CEO.</p>
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<p>However, as soon as the business activity grows, that colleagues need to work together, that some traceability is required between departments or that some automation between sales, delivery and finance must be put in place, people end up using an ERP or disappearing.</p>
<p>That being said, the ERP can take the form of a "Common Off the Shelve Package" or a custom software. It can take the form of a centralised piece of software or of a collection of components with interfaces. This is after all a matter of implementation. What remains as a common is the fact that as soon as the business activity grows, people need a common place to share and relate business documents: the ERP.</p></details></section><sectionclass="illustration">
<h1>Who does not need an ERP ?</h1><imgalt="Who dont need an ERP"title="Who dont need an ERP"src="http://img.erp5.cn/osoe-who.dont.needs.an.erp-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>Some people do not need an ERP.</p>
<p>Families probably do not need, right?</p>
<p>Individual businesses who do not need to share information with partners probably do not need an ERP, as long as the number of business documents they handle remains small. For example, a consultant who sells alone 5 contracts per year with 3 clients does not really need an ERP. His own brain is faster.</p>
<p>Small businesses which can be organised using simple tools such as a cash register and a physical inventory can live without an ERP. Very often, physical tools are more efficient than software, as long as people trust each other. The "Kanban" system which was introduced in Japan is a perfect example of a management system based on tangible tools which beats an approach based on software and mathematics.</p>
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<p>Having these examples in mind is essential when considering the implementation of an ERP. Not everything needs to be put into the ERP. Some parts of a business can be kept outside the ERP, using paper, binders, drawers or, simply, human brain. The more features an ERP configuration has, the more time it takes to teach it and to make users adopt it. Keeping an ERP configuration lean and simple, using only parts of an ERP can sometimes be more efficient than trying to do everything with it.</p>
<p>Our advice for ERP implementation is simple: first implement what the organisation could not survive without, and make it used fully (a.k.a. "Less is More"). Once this is achieved, consider extending the ERP configuration with new features based on a R.O.I. rationale.</p></details></section><sectionclass="screenshot">
<p>The leader of ERPs is SAP. It is a German company and it is considered as the 2nd or 3rd software company in the world after Microsoft. The challenger of SAP is Oracle, which is also considered the 2nd or 3rd software company in the world after Microsoft.</p>
<p>SAP is definitely the reference ERP. It is used in most large corporations. However, that does not mean that corporations which use SAP do not use another ERP. EADS for example is an SAP shop. However, Infoterra, a subsidiary of EADS uses ERP5, an open source ERP, for part of its business. In reality, implementing the same single ERP for all business units and subsidiaries of a large company is nearly impossible due to the perpetual changes of the corporate structure and business processes. The common case in large companies is the existence of “plurality of ERPs”, sometimes of the same brand and sometimes of different brands. Only the financial part of the ERP is usually consolidated in the same ERP instance across business units and subsidiaries.</p>
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<p>In the case of small and medium size companies, things are different. Because there is more consistency in a middle sized business than in a large multinationals, it is possible to unify all business activities within the same ERP and make the company more efficient through that unification.</p></details></section><sectionclass="illustration">
<h1>How much does an ERP cost?</h1><imgalt="The Cost"title="The Cost"src="http://img.erp5.cn/osoe-the.erp.cost-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>An ERP software is anything between 0 EUR / seat for open source software to 2,000 EUR / seat or more for proprietary ERPs. The license must be often renewed every year for a cost which amounts between 10% and 25% of the initial license cost.</p></details></section><sectionclass="illustration">
<h1>How much is an implementation?</h1><imgalt="The Implementation"title="The Implementation"src="http://img.erp5.cn/osoe-how.mush.implementation-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>Most of the costs of an ERP actually lie in the implementation.</p>
<p>Implementing an ERP requires to do some configuration, which is what we are going to learn later on. It requires teaching users how to use it and how to organise their business with the ERP. It also requires sometimes to develop some custom scripts and interfaces so that the ERP matches the technical or business environment of the customer.</p>
<p>The total implementation cost of an ERP is usually estimated between 2 man days and 6 man days per employee in a company. This is usually equivalent to 1% to 3% of the company turnover or to 1,000 EUR to 3,000 EUR per employee.</p>
<p>If we translate these figures to a small company (6 people), we will find that implementing an ERP costs about 10,000 EUR in a small company or 20 man days. In a large organisation with 1,000 employees, an ERP will implementation will quickly reach 2,000 man days or 1,000,000 EUR. In a large multinational with 100,000 employees, an ERP implementation can quickly surpass 100,000 man days and 100,000,000 EUR.</p>
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<p>At the same time, the cost of selling an ERP, which is mostly the time spent in convincing prospects to adopt a given ERP, does not change so much between a small company and a mid size company.</p>
<p>As a result, ERPs are not used very often by small companies, only because nobody is willing to spend time convincing them to adopt it and make no profit out that.</p></details></section><sectionclass="illustration">
<h1>What is the success rate?</h1><imgalt="What is the success rate?"title="What is the success rate?"src="http://img.erp5.cn/osoe-what.is.success.rate-screenshot?format=png"type="image/png"/><br/><ahref="https://www.erp5.com/allerp.pdf">mourlon-neyer.pdf</a><detailsopen="true">
<p>The “Mourlon Neyer” report is one of the best sources to understand the risk of ERPs. As a rule of thumb, 50% ERP projects fail, they cost 3 times as much as expected and take twice longer than planned.</p>
<p>The reasons for failure are very seldom related to the ERP software itself, but rather to the abnormal behavior of clients or consultants. However, because clients and consultants seldom accept to recognize their own mistakes, the ERP software is often blamed for the failure of the project by either the client or the consultant.</p>
<p>In this environment, where the one which is not to blame is blamed and those who should be blamed are not, only those ERPs with a strong brand can survive a 50% failure rate, together with ERP software which implementation is strictly controlled by the software publisher.</p>
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<p>
The reasons of failure are diverse. But they mostly relate to the fact that the clients do not know and <u>can not know</u> what they want precisely and the consultants do not know and <u>can not know</u> precisely what the ERP can do. This problem is well known in management under the name “<u>Limited Rationality</u>”, a decision theory which explains how and why organisations do not take the most rational decisions.
</p>
<p>
One of the most striking aspects of this “<u>Limited Rationality</u>” happens whenever a company, which knows its own business perfectly, outsources the ERP requirement specification to a junior consultant who knows little about their business if not about business. The requirement specification is then used to select an ERP vendor. The ERP is implemented according to that document and, obviously, is unusable. Then comes the moment of truth... which leads to triple budget and double time.
<h1>Are there alternatives?</h1><imgalt="ERP5 alternatives"title="ERP5 alternatives"src="http://img.erp5.cn/osoe-are.there.alternatives-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>The reasons which lead to ERP project failure are fundamental-failures related to human nature rather than to technology. ERP failures make some managers so afraid that they reject the adoption of any ERP at all, and instead they build an information system out of independent components which are then integrated in a way or another. Each component works usually very well but interfaces are always a cause of trouble (and a source of turnover for service companies). The SOA approach (or fashion?) can be considered as one of the examples of interfacing components rather than implementing an integrated ERP.</p>
<p>However, what we get in the end is an integrated system made of independent components. After all, many ERPs, including SAP itself, originate from the aggregation of independent components. Adopting the SOA approach is thus not really an alternative, since it is only a technical answer and the problem of ERP failure is actually not technical.</p>
</details>
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<p>In short: whatever the way, there is no alternative in a company to the implementation of an integrated management system, whether integration is achieved through interfaces or through a common data model, through web services or through database tables.</p>
<p>
However, <strong>there is an alternative nowadays to closed source ERPs: open source ERPs</strong>
. They can help certain project succeed by providing more flexibility. They can also lead to failure whenever this flexibility is abused by unskilled consultants. Open Source ERPs are also an excellent way to create a simple prototype in short time at low cost, because there are no license costs. Using an Open Source ERP to create a “Less is More” prototype is therefore probably the safest way to adopt an ERP.
<h1>What is an ERP?</h1><imgalt="What is an ERP?"title="What is an ERP?"src="http://img.erp5.cn/osoe-what.is.an.erp-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>The definition of an ERP is quite vague. For some people, it is only a matter of using the same database. So, what happens if an ERP is based on distributed web services, is it still an ERP? For others, it is a matter of using only a single data model. So what happens for ERPs which share the same database yet use 100 different data models for the same thing.</p>
<p>For some people, MRP is the key criteria. However MRP is only for production usually. Is an ERP used in trade still an ERP? Is CRM part of ERP? What about knowledge management and e-commerce?</p>
<p>As we can see, the definition of an ERP is very vague. So let us analyse one by one different approaches to characterize an ERP.</p></details></section><sectionclass="illustration">
<p>Some people consider that a software is an ERP as soon as it hosts inside a single database all the different kinds of business informations of an organisation.</p>
<p>However, that does not say how many tables are used and how they are used.</p>
<p>If we follow this definition, the combination of an online shop, of an accounting software and of a HR software which all use the same MySQL database is an ERP. The combination of 100 independent software, all of which use 100 tables, is also an ERP in that sense. Well, this definition is at least consistent with the way leading “legacy” ERPs are built: a collection of independent software, relying on more than 22,000 tables in a database with an integration system based in a batch technology which copies information between tables.</p>
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<p>However, any computer architect is hoping probably for more integration, if not the use of database technologies which are not necessary based on tables. Just as a reminder, an ERP like ERP5 uses less than 10 tables, yet can do the same as those which are using 22,000 tables. The only difference is in the level of integration. And some management systems are not based on relational database but on object database (ex. ZODB) or even on distributed object databases (ex. Erlang based systems).</p>
<p><u>We could therefore claim that “a unified access to business data” is a required characteristic of an ERP, without saying how data is accessed.</u></p></details></section><sectionclass="illustration">
<p>Some people consider that an ERP is an integrated business software which combines at least accounting, purchase, sales, invoicing, inventory and possibly human resources, project management, production management, customer relation management, document management, etc.</p>
<p>In short, an ERP is a software which can be used to “do everything in the same place”.</p>
<p>This definition is in line with the kind of integration which is provided by leading ERPs and ERP brands. It excludes however integrated business systems which are made of the collection of various components from different suppliers.</p>
<p>At the same time, it is not because we “do everything in the same place”, with a common appearance and a common user interface that the software is well integrated. Some business systems, made of the collection of independent software, can be better integrated than single brand ERPs and provide better productivity thanks to better automation of workflows.</p>
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<p><u>We could therefore claim that “a wide functional coverage” is a required characteristic of an ERP, without saying how this coverage is achieved.</u></p>
</h1><imgalt="Everyonce <u>Must</u> Use it"title="Everyonce <u>Must</u> Use it"src="http://img.erp5.cn/osoe-everyone.must.use.it-screenshot?format=jpg"type="image/png"/><detailsopen="true">
<p>Accounting software is used by accountants. Sales software is used by sales. And shipping software is used by warehouse people.</p>
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On the other hand, <u>an ERP is used by many different kinds of people with different functions</u> in the company. This is another characteristics of ERP vs. specialised business software.
<p>The term workflow is a key term in ERP land. It has different meanings, although all meanings are represented mostly in the same way: a state diagram.</p>
<p>Some work-flows, a.k.a. “activity work-flows” or “business process models” are related to the sequence of activities which can start for example with an order, then the delivery of goods, the invoicing, the payment.</p>
<p>Some work-flows, a.k.a. “supply chain work-flows”, define how materials circulate in a production workshop, between a company and its suppliers or partners, how components are assembled and where.</p>
<p>Some work-flows, a.k.a. as “Document work-flows” are used to track the decision process related to a given business document such as an order or an invoice.</p>
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<p>All ERPs implement the 3 different types of work-flows, either in an implicit and hard coded way, or in an explicit and configurable way.</p>
<p><u>We could therefore claim that “providing work-flows for BPM, Supply Chain and Decision Making” is a required characteristic of an ERP, without saying whether such work-flow is implicit or explicit</u>. Obviously, explicit and configurable work-flows are much more flexible.
<h1>Past, Present and Future</h1><imgalt="Past, Present and Future"title="Past, Present and Future"src="http://img.erp5.cn/osoe-past.present.future-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>ERPs are supposed to report to the head of the company the current state of everything and possibly help the management to predict the future based on the current state. Incidentally, this is probably why CEOs of large companies are so much interested in implementing a group-wide ERP which spreads across all subsidiaries and business units. ERP vendors are well aware of this “interest” and often sell ERPs as an enabling tool for big brother wannabes. If ERP could satisfy the same “interest” of governments, ERP vendors would probably try to craft of version of their product for e-governement...</p>
<p>Besides providing a unified access to business data, ERP usually offer various reporting features which can synthesize the current status of a corporation and provide an overview of the future based on various business rules. The first part (present) provided by ERP is usually well implemented but is available always a bit too late. The second part (future) provided by ERP is seldom reliable because the data which is stored in the ERP is not reliable enough.</p>
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<p><u>We could therefore claim that “providing synthetic reports on the past, present and future” is a required characteristic of an ERP</u>. The reality is that only the past is usually provided by ERP. If the present is available by ERP, it is the sign of a successful implementation. If the future is provided by ERP, we are the realm of exceptional implementations.
<h1>MRP: What Makes ERP So Different</h1><imgalt="MRP: What Makes ERP So Different"title="MRP: What Makes ERP So Different"src="http://img.erp5.cn/osoe-what.makes.erp.different-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>What makes an ERP so different from anything else is that is has been originally built around a management theory know as “MRP”, which means Material Resource Planning.</p>
<p>In 50s and 60s, industry was booming and was always looking for new ways of organising production. It was a time when mathematics in general, operational research in particular, were expected to solve all management problems.</p>
<p>MRP was one of the simple, yet mathematical, models which was adopted and implemented using software in the field of production management. It is at the core of any ERP software nowadays.</p>
<p>Other more complex models, such as constraint programming, operation research, linear programming are not as widely used and often failed. Nowadays, management of companies is increasingly based on more ad-hoc lean management techniques, such as “kan ban” and “just in time”, created and implemented by the Japanese industry, rather than on pure mathematical approaches which were initiated in Europe and US.</p>
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<p>Yes, MRP is the one remaining mathematical model which is widely accepted.</p>
<p><u>We could therefore claim that “implemented a kind of MRP” is a required characteristic of an ERP</u>.
<p>The first kind of MRP is also called “MRP1”. M stands for Material.</p>
<p>The idea is simple. If we know that clients will order 100 goods, we have to produce 100 goods. If producing 1 good requires 10 components of type A and 20 components of type B, then producing 100 goods requires 1000 of A and 2000 of B.</p>
<p>If the inventory of A is 500 and if we know that we must produce 100 goods, we must at least order 500 items of A.</p>
<p>Things become a bit more complex whenever we already have a planning of purchase orders, parallel productions. But the principles are the same. The MRP calculation can be used to know how much must be purchased and when so that production can happen on time.</p>
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<p>The MRP calculation can be based on different assumptions. One way is to try to optimise the cash, by ordering as late as possible. This is the “just in time” way. Another way is to try to issue large purchase orders to get reduced price. This is more the way MRP was created in the 60s, at a time when cash was not a problem in US and Europe, at a time when price and profit mattered more than cash.</p>
<h1>MRP2: Resources at Large</h1><imgalt="MRP2: Resources at Large"title="MRP2: Resources at Large"src="http://img.erp5.cn/osoe-mrp2.resources.large-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>The idea MRP2 was introduced later. Some say that the meaning of “M” changed from “Material” to “Management” or “Manufacturing”.</p>
<p>Rather than only considering materials, MRP2 takes into account cash, machines, workers, etc. It also provides a framework to optimise resources based on numerous management goals.</p>
<p>With MRP2, it is for example possible to consider that if a company orders 500 items of A, then it will need to pay those 500 items 8 weeks after ordering them. If a client purchases 10 goods, payment for the 10 goods will be received 12 weeks after the order. Knowing sales orders, purchase orders, prediction orders and the current state of the bank account, a company can predict not only its inventory but also the future of its cash.</p>
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<p>The combination of MRP2 with global optimisation can be useful for example to take decisions whether to order big batches soon or small batches later. Constraints, such as cash constraints, workforce constraints are introduced in the equation to help making better decisions. This is called “finite resource planification” in ERPs. It is considered as the most advanced planning tool and, sadly, is rarely usable or used. The reasons are the same: too much mathematics, too far from reality.</p>
<p>This is why another approach is often considered: user interface tools which represent with graphs and colors the different constraints which apply to production.</p>
<p>We have now finished to review the core characteristics of an ERP. However, modern ERPs include much more than unified database, wide functional coverage, work-flows, predictions and MRP. They also extended functional scope which is known with different acronyms: CRM, KM, etc.</p>
<p>CRM means “Customer Relation Management”. The idea of CRM is quite simple: making sure that all information related to a client are presented at the same place.</p>
<p>In a pure ERP, such information are the person contact, orders and invoices. CRM extends this view of the customer with events and tickets. Events represent each contact made with a customer: a phone call, a visit, an email, etc. Tickets represent the interaction with a customer. After a customer orders some products, a problem can happen. The customer requests some support. A support ticket is opened in the CRM. All events which may happen after that (email, phone, etc.) are attached to that support ticket. Once the problem is solved the ticket is closed.</p>
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<p>Obviously, it is quite natural to host such information in the same location as orders, packing lists and invoices because human relations with the customer (events & tickets) are directly related to trade relations with the customer (order, packing list, invoice). What is also interesting is that CRM can be used for many other things than customers: it can be used for purchase, for public relations, for sales management, etc.</p>
<p><u>We could therefore claim that “keeping track of the relation history with people” is a frequent characteristic of a modern ERP</u>.
<p>KM means knowledge management. One definition of KM, which many consider as a creation of IBM, is “the right information to the right person at the right time”. Since the ERP is the central piece of software which is used to manage a business, it is quite obvious to help users reach the right information at the right time in order to make the appropriate decisions.</p>
<p>Moreover, many pure documentary informations, such as PDF files, office files, images, videos, are needed to support certain activities such as the creation of a catalog of products to be sold, or to track the tasks in a project in relation with customer specification of committee reports. Documents are nowadays an essential part in the management of companies, and in particular in the management of the relation with customers or suppliers.</p>
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<p>Many ERPs nowadays include a document management module, a.k.a. Knowledge Management. The difference between “Document Management” and “Knowledge Management” is subtle: the first one means that documentary information is “available or archived somewhere” while the second means that it was “provided to the right person at the right time”. This is commonly achieved by integrating the ERP work-flows with the human resource management subsystem and the document management system. In short: display relevant documents at the relevant time (ex. a link to the operation manual of a machine tool on the production order which requires that machine).</p>
<p><u>We could therefore claim that “handling multimedia documents in relation with people and work-flows” is a frequent characteristic of a modern ERP</u>.
<h1>ERP + Web = e-business</h1><imgalt="ERP + Web = e-business"title="ERP + Web = e-business"src="http://img.erp5.cn/osoe-erp..web-ebusiness-screenshot?format=png"type="image/png"/><detailsopen="true">
<p>E-commerce is in 2010 one of the very few fast growing businesses in IT and in industry. More than 1000 different solutions of e-commerce are available, with fantastic open source packages available.</p>
<p>However, e-commerce integration is still a dream: people get orders from one place (ex. Ebay), follow clients on another place (ex. SalesForce CRM) and keep their accounting with Quickbooks. Integration between the different aspects of business, on the Web or offline, is made by human beings, possibly with low wages in distant countries.</p>
<p>E-commerce tool are therefore trying to do more and more: CRM, accounting, etc. and are evolving towards ERPs. However, their architecture and design was not really made for that and, 10 years after the raise of e-commerce, the fully integrated solution which combines ERP, CMS, CRM and e-commerce is still far away (ERP5 does it for example with a few others).</p>
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<p>If one notices that e-commerce is after all sales on the Web, that e-procurement is after all purchase on the Web, e-recruitment is HR on the Web, one can foresee what the combination of Web and an ERP could be: e-business, which is opening through the Web the corporate ERP to all partners of a company. Since business are increasingly distributed and relying on outsourcing and outside partners, it is a natural tendency for ERPs to become e-business tools.</p>
<p><u>We could therefore claim that “support of e-business” is a frequent characteristic of a modern ERP</u>.
<h1>One ERP per student programme</h1><imgalt="One ERP per student programme"title="One ERP per student programme"src="http://img.erp5.cn/user-OSOE.Website.Homepage?format=png"type="image/png"/>
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This closes the introduction session about the ERP concept. However, this introduction can only be undertsood by <strong>patiently</strong> practicing on
a real ERP system and going into the details of each of its main modules. Many managers dream about ERPs as a magical tool that eventually
solves all management problems. Their dream could easily turn into a nightmare because of exagerated expectations and lack of clear
understanding of what a real ERP does or does not. The follow-up sessions of this course are designed to provide students with the basic knowledge
that will let them approach ERP implementation with realistic expectations.
