ERP Definition - Basic Definition

ERP ( Enterprise Resource Planing )

Enterprise - An organisation or company

Resource - Man , Methods , Materials , Machine , Money ( 5M's)

Planing - It is know as the management of the resources of the organisation
so that we can get profit.

DEFINITION-

"ERP is a concept which integrates all the component of an organization and maps them in such a manner so that proper information goes to proper person in proper time. "

" Enterprise resource planning (ERP) is the industry term used to describe a broad set of activities supported by multi-module application software that helps a manufacturer or other business manage the important parts of its business. These parts can include product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. ERP can also include application modules for the finance and human resources aspects of a business. "


USE OF ERP

I. ERP utilizes software applications to improve the performance of organization's resource planning, management control and operational control.

II. ERP software is multi-module application software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking.

III. ERP software may include application modules for the finance, accounting and human resources aspects of a business.

IV. An ERP system has a service-oriented architecture with modular hardware and software units and "services" that communicate on a local area network. The modular design allows a business to add or reconfigure modules (perhaps from different vendors) while preserving data integrity in one shared database that may be centralized or distributed.

ERP available Companies -

Some of the bigger players in the ERP outsourcing market are SAP, Peoplesoft, and J. D. Edwards. New comers include Oracle, IBM, and Microsoft.


Next Related:

ERP as Medical Analogy ? ERP = Medical analogy

History or Origin of ERP

ERP as Medical Analogy ? ERP = Medical analogy

Body drive by their brain muscle and heart.

As ERP is also compare to medical Body mean about their brain , muscle and heart.

so we are taking about ERP as medical analogy

Medical analogy --> ERP system

1. Brain --> 1. Process logic

2. Muscle --> 2. Business Transactions.

3.Heart --> 3. Business Policy

Note :- ERP system communicates as madical body nervous system across bussiness function.

Next Related:
ERP Definition - Basic

History or Origin of ERP

General understanding The Attributes of ERP Systems

History or Origin of ERP- Evolution of ERP

The initials ERP originated as an extension of MRP (material requirements planning; later manufacturing resource planning) and CIM (Computer Integrated Manufacturing). It was introduced by research and analysis firm Gartner in 1990. ERP systems now attempt to cover all core functions of an enterprise, regardless of the organization’s business or charter. These systems can now be found in non-manufacturing businesses, non-profit organizations and governments.

To be considered an ERP system, a software package must provide the function of at least two systems. For example, a software package that provides both payroll and accounting functions could technically be considered an ERP software package

Examples of modules in an ERP which formerly would have been stand-alone applications include: Product lifecycle management, Supply chain management (e.g. Purchasing, Manufacturing and Distribution), Warehouse Management, Customer Relationship Management (CRM), Sales Order Processing, Online Sales, Financials, Human Resources, and Decision Support System.

Table summarizes the evolution of ERP from 1960s to 1990s.

Timeline	System	Description
1960s	Inventory Management & Control	Inventory Management and control is the combination of information technology and business processes of maintaining the appropriate level of stock in a warehouse. The activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status.
1970s	Material Requirement Planning (MRP)	Materials Requirement Planning (MRP) utilizes software applications for scheduling production processes. MRP generates schedules for the operations and raw material purchases based on the production requirements of finished goods, the structure of the production system, the current inventories levels and the lot sizing procedure for each operation.
1980s	Manufacturing Requirements Planning (MRP II)	Manufacturing Requirements Planning or MRP utilizes software applications for coordinating manufacturing processes, from product planning, parts purchasing, inventory control to product distribution.
1990s	Enterprise Resource Planning (ERP)	Enterprise Resource Planning or ERP uses multi-module application software for improving the performance of the internal business processes. ERP systems often integrates business activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking. ERP software systems may include application modules for supporting marketing, finance, accounting and human resources.

Next Related:

ERP as Medical Analogy ? ERP = Medical analogy

General understanding The Attributes of ERP Systems

Implementation ERP Software in Businesses of processes

General understanding The Attributes of ERP Systems | ERP Software

1. Leading ERP systems supports industry standards and best practices.  

 The Oracle Applications and SAP supports recommendations of the American
Production and Inventory Control Society (APICS) and Generally Accepted
Accounting Practices (GAAP).  

2. The ERP system is composed of many modules called applications.  

2.1.The core applications support functions, such as financial, distribution,
 manufacturing, and human resource transactions.   

2.2.The financial applications, for example, are General Ledger,
  Accounts Payable, Accounts  Receivable, and Fixed Assets. 

2.3 You may license only the applications you need.

2.4. The applications are integrated. They work together to pass individual
     transactions through an 

     entire business process.
    This is called modularization approach.  

2.5. It gives flexibility.  

2.6. The modules interact by passing data through program interfaces and by
    sharing the commonly stored data. 

2.7. A single manual transaction in one application can initiate transactions
  in other applications.

3. ERP systems are complex. The more applications you use, the more complexity
  you have.  

Thousands of configuration parameters interact with each other and change the

 logic of the programs to fit your unique business situation.   

4. It could take months to set up and learn how the ERP operate.  

5. The ERP documentation is voluminous.

6. Although an ERP system is complex but the upside is flexibility.  

7. Oracle and SAP has thousands of customers in hundreds of industries.

 They are all over the world.  Each of them is using EPR in their own special way.   

8. Manufacturing companies, utilities, service companies, governments, and
 others have configured applications to meet their specific business needs.

9. ERP systems use sophisticated databases at the back end. Oracle Relational
  Database  Management System (RDBMS) is a famous database.

10. The database gives the ERP system the performance and scalability.  

11. Thousands of transactions per hour can be processed.  Data could be stored
   for years.  Large ERP databases can go more than 300GB in size.

12. There is a fierce competition going on in ERP market. Two big players are
   SAP AG and Oracle Corporation.
13. EPR systems are mixture of online and batch processes.   

For example, you can apply cash receipts to your Receivables modules by keying
  the data into a form, or you can configure the system to use the AutoLockbox
  program to process a data file from your bank.

Next Related:

General understanding The Attributes of ERP Systems

Implementation ERP Software in Businesses of processes

Process preparation of ERP software

Implementation ERP Software in Businesses of processes

Organisation Businesses have a wide scope of applications and processes throughout their functional units. producing ERP software systems that are typically complex and usually impose significant changes on staff work practices. Implementing ERP software is typically too complex for "in-house" skill, so it is desirable and highly advised to hire outside consultants who are professionally trained to implement these systems.This is typically the most cost effective way. There are three types of services that may be employed for - Consulting, Customization, Support.The length of time to implement an ERP system depends on the size of the business, the number of modules, the extent of customization, the scope of the change and the willingness of the customer to take ownership for the project. ERP systems are modular, so they don't all need be implemented at once. It can be divided into various stages, or phase-ins. The typical project is about 14 months and requires around 150 consultants. A small project (e.g., a company of less than 100 staff) may be planned and delivered within 3-9 months; however, a large, multi-site or multi-country implementation may take years. The length of the implementations is closely tied to the amount of customization desired.

To implement ERP systems, companies often seek the help of an ERP vendor or of third-party consulting companies. These firms typically provide three areas of professional services: consulting, customization and support. The client organisation may also employ independent program management, business analysis, change management and UAT specialists to ensure their business requirements remain a priority during implementation.

Data migration is one of the most important activities in determining the success of an ERP implementation. Since many decisions must be made before migration, a significant amount of planning must occur. Unfortunately, data migration is the last activity before the production phase of an ERP implementation, and therefore receives minimal attention due to time constraints. The following are steps of a data migration strategy that can help with the success of an ERP implementation:

1.Identifying the data to be migrated

2.Determining the timing of data migration

3.Generating the data templates

4.Freezing the tools for data migration

5.Deciding on migration related setups

6.Deciding on data archiving

Next Related:
General understanding The Attributes of ERP Systems

Process preparation of ERP software

Configration of ERP Software

Process preparation of ERP software

ERP vendors have designed their systems around standard business processes, based upon best business practices. Different vendor(s) have different types of processes but they are all of a standard, modular nature. Firms that want to implement ERP systems are consequently forced to adapt their organizations to standardized processes as opposed to adapting the ERP package to the existing processes. Neglecting to map current business processes prior to starting ERP implementation is a main reason for failure of ERP projects. It is therefore crucial that organizations perform a thorough business process analysis before selecting an ERP vendor and setting off on the implementation track. This analysis should map out all present operational processes, enabling selection of an ERP vendor whose standard modules are most closely aligned with the established organization. Redesign can then be implemented to achieve further process congruence. Research indicates that the risk of business process mismatch is decreased by:

• linking each current organizational process to the organization's strategy;
• analyzing the effectiveness of each process in light of its current related business capability;
• understanding the automated solutions currently implemented.

ERP implementation is considerably more difficult (and politically charged) in organizations structured into nearly independent business units, each responsible for their own profit and loss, because they will each have different processes, business rules, data semantics, authorization hierarchies and decision centers. Solutions include requirements coordination negotiated by local change management professionals or, if this is not possible, federated implementation using loosely integrated instances (e.g. linked via Master Data Management) specifically configured and/or customized to meet local needs.

A disadvantage usually attributed to ERP is that business process redesign to fit the standardized ERP modules can lead to a loss of competitive advantage. While documented cases exist where this has indeed materialized, other cases show that following thorough process preparation ERP systems can actually increase sustainable competitive advantage.

Next Related:

5. Implementation ERP Software in Businesses of processes

7. Configration of ERP Software

8. Consulting services by ERP

Configration of ERP Software

Configuring an ERP system is largely a matter of balancing the way you want the system to work with the way the system lets you work. Begin by deciding which modules to install, then adjust the system using configuration tables to achieve the best possible fit in working with your company’s processes.

Modules — Most systems are modular simply for the flexibility of implementing some functions but not others. Some common modules, such as finance and accounting are adopted by nearly all companies implementing enterprise systems; others however such as human resource management are not needed by some companies and therefore not adopted. A service company for example will not likely need a module for manufacturing. Other times companies will not adopt a module because they already have their own proprietary system they believe to be superior. Generally speaking the greater number of modules selected, the greater the integration benefits, but also the increase in costs, risks and changes involved.

Configuration Tables – A configuration table enables a company to tailor a particular aspect of the system to the way it chooses to do business. For example, an organization can select the type of inventory accounting – FIFO or LIFO – it will employ or whether it wants to recognize revenue by geographical unit, product line, or distribution channel.

So what happens when the options the system allows just aren’t good enough? At this point a company has two choices, both of which are not ideal. It can re-write some of the enterprise system’s code, or it can continue to use an existing system and build interfaces between it and the new enterprise system. Both options will add time and cost to the implementation process. Additionally they can dilute the system’s integration benefits. The more customized the system becomes the less possible seamless communication becomes between suppliers and customers.

Next Related:

6. Process preparation of ERP software

8. Consulting services by ERP

9. Core system in ERP

Consulting services by ERP

Many organizations did not have sufficient internal skills to implement an ERP project. This resulted in many organizations offering consulting services for ERP implementation. Typically, a consulting team was responsible for the entire ERP implementation including planning, training, testing, implementation, and delivery of any customized modules. Examples of customization includes additional product training; creation of process triggers and workflow; specialist advice to improve how the ERP is used in the business; system optimization; and assistance writing reports, complex data extracts or implementing Business Intelligence.

For most mid-sized companies, the cost of the implementation will range from around the list price of the ERP user licenses to up to twice this amount (depending on the level of customization required). Large companies, and especially those with multiple sites or countries, will often spend considerably more on the implementation than the cost of the user licenses -- three to five times more is not uncommon for a multi-site implementation.

Unlike most single-purpose applications, ERP packages have historically included full source code and shipped with vendor-supported team IDEs for customizing and extending the delivered code. During the early years of ERP the guarantee of mature tools and support for extensive customization was an important sales argument when a potential customer was considering developing their own unique solution in-house, or assembling a cross-functional solution by integrating multiple "best of breed" applications.

Next:

7. Configration of ERP Software

9. Core system in ERP

10. Maintenance and support services of ERP System

Core system in ERP

Increasingly, ERP vendors have tried to reduce the need for customization by providing built-in "configuration" tools to address most customers' needs for changing how the out-of-the-box core system works. Key differences between customization and configuration include:

• Customization is always optional, whereas some degree of configuration (e.g. setting up cost/profit centre structures, organisational trees, purchase approval rules, etc.) may be needed before the software will work at all.
• Configuration is available to all customers, whereas customization allows individual customer to implement proprietary "market-beating" processes.
• Configuration changes tend to be recorded as entries in vendor-supplied data tables, whereas customization usually requires some element of programming and/or changes to table structures or views.
• The effect of configuration changes on the performance of the system is relatively predictable and is largely the responsibility of the ERP vendor. The effect of customization is unpredictable and may require time-consuming stress testing by the implementation team.
• Configuration changes are almost always guaranteed to survive upgrades to new software versions. Some customizations (e.g. code that uses pre-defined "hooks" that are called before/after displaying data screens) will survive upgrades, though they will still need to be re-tested. More extensive customizations (e.g. those involving changes to fundamental data structures) will be overwritten during upgrades and must be re-implemented manually.

By this analysis, customizing an ERP package can be unexpectedly expensive and complicated, and tends to delay delivery of the obvious benefits of an integrated system. Nevertheless, customizing an ERP suite gives the scope to implement secret recipes for excellence in specific areas while ensuring that industry best practices are achieved in less sensitive areas.

Extension

In this context "Extension" refers to ways that the delivered ERP environment can be extended with third-party programs. It is technically easy to expose most ERP transactions to outside programs, e.g.

• Scenarios to do with archiving, reporting and republishing (these easiest to achieve, because they mainly address static data).
• Transactional data capture scenarios, e.g. using scanners, tills or RFIDs, are relatively easy (because they touch existing data).

....however because ERP applications typically contain sophisticated rules that control how master data can be created or changed, some scenarios are very difficult to implement.

Next:

8. Consulting services by ERP



10. Maintenance and support services of ERP System

11. Advantages of ERP for Implementation Projects

Maintenance and support services of ERP System

Maintenance and support services involves monitoring and managing an operational ERP system. This function is often provided in-house using members of the IT department, or may be provided by a specialist external consulting and services company.

Next:

9. Core system in ERP

11. Advantages of ERP for Implementation Projects

12. ERP Disadvantages for organisation or company

Advantages of ERP for Implementation Projects | Advantages of ERP for organisation

Companies implement ERP systems for various reasons.

The reasons could be tangible, intangible, or strategic. 

Due to these intangible and strategic benefits most companies do not even try to calculate a total

 return on investment from an ERP system. 

An ERP system could result in following benefits:  

A. Reduce the amount invested in inventory. 

B. Improve worker productivity. 

C. Reduce processing costs per business transaction. 

D. Reduce the time it takes to perform a financial close and prepare financial statements. 

E. Reduce procurement costs. 

F. Install systems with vendor-supported maintenance. 

E. Improve the scalability of business systems to support future growth. 

G. Upgrade systems to support global accounting transactions 

     (for example, Euro currency requirements). 

H. Obtain better reporting and information about your business. 

I. Get rid of troubles of old systems, and install new or improved business processes. 

J.  Improve fiscal controls. 

K. Integrate and standardize processes among your business units and trading partners in your 

supply chain. 

L. Improve system performance, reliability, and fault tolerance. 

M. Reduce the costs of Information Technology. 

N. Improve order management, customer service, and on-time delivery.

Advantages
  

In the absence of an ERP system, a large manufacturer may find itself with many software applications that cannot communicate or interface effectively with one another. Tasks that need to interface with one another may involve:

• Integration among different functional areas to ensure proper communication, productivity and efficiency
• Design engineering (how to best make the product)
• Order tracking, from acceptance through fulfillment
• The revenue cycle, from invoice through cash receipt
• Managing inter-dependencies of complex processes bill of materials
• Tracking the three-way match between purchase orders (what was ordered), inventory receipts (what arrived), and costing (what the vendor invoiced)
• The accounting for all of these tasks: tracking the revenue, cost and profit at a granular level.

ERP Systems centralize the data in one place. Benefits of this include:

• Eliminates the problem of synchronizing changes between multiple systems
• Permits control of business processes that cross functional boundaries
• Provides top-down view of the enterprise (no "islands of information")
• Reduces the risk of loss of sensitive data by consolidating multiple permissions and security models into a single structure.

Some security features are included within an ERP system to protect against both outsider crime, such as industrial espionage, and insider crime, such as embezzlement. A data-tampering scenario, for example, might involve a disgruntled employee intentionally modifying prices to below-the-breakeven point in order to attempt to interfere with the company's profit or other sabotage. ERP systems typically provide functionality for implementing internal controls to prevent actions of this kind. ERP vendors are also moving toward better integration with other kinds of information security tools.

Next:

10. Maintenance and support services of ERP System


12. ERP Disadvantages for organisation or company

13. ASP - Application Service Provider

ERP Disadvantages for organisation or company

ERP disadvantages must be overcome.ERP systems come with their share of headaches.  

They are usually difficult to implement. Sometimes they are difficult to operate.In the past few years, 

odds of success have improved. 

1.  Everyone in your organization from the database administrator to the receiving 

clerk to the CEO needs new skills to work with the new technology and business 

processes. 

2. Most companies must hire outside consultants to help accelerate and improve the 

implementation. 

3. In the early 1990s, almost half of the MRP/ERP implementation projects failed. 

Many of these early projects were either abandoned or were finished late and over 

budget. An industry of software implementation specialists was created to assist 

businesses with implementation projects. 

4. Many large and costly implementation projects have produced little or no return 

on investment for their owners other than to solve the Y2K problem. Several 

companies have actually observed a reduction in productivity in the first six to 

twelve months after starting their new systems. 

5. Many companies are surprised to discover the ERP implementation wasn't just a 

software replacement project, but the start of a continuous process of change, 

evolution, and improvement. 

6. Many implementation team members have discovered after the ERP project is over 

that their old jobs either no longer exist or are dull and insignificant. 

7. Package software can force you to make certain choices about how your business 

will operate, and you might introduce some constraints on your traditional business

 processes.

More Disadvantages ERP Systems
Problems with ERP systems are mainly due to inadequate investment in ongoing training

 for the involved IT personnel - including those implementing and testing changes - as

 well as a lack of corporate policy protecting the integrity of the data in the ERP 

systems and the ways in which it is used.

Points 
  A.Customization of the ERP software is limited.
B.Re-engineering of business processes to fit the "industry standard" prescribed
    by the ERP system may lead to a loss of competitive advantage.
C.ERP systems can be very expensive (This has led to a new category of 
    "ERP light" solutions)
D.ERPs are often seen as too rigid and too difficult to adapt to the specific
    workflow and business process of some companies—this is cited as one of the 
    main causes of theirfailure.
E.Many of the integrated links need high accuracy in other applications to 
    work effectively. A company can achieve minimum standards, then over time 
     "dirty data" will reduce the reliability of some applications.
F.Once a system is established, switching costs are very high for any one
     of the partners (reducing flexibility and strategic control at the corporate 
     level).
G.The blurring of company boundaries can cause problems in accountability, 
    lines of responsibility, and employee morale.
H.Resistance in sharing sensitive internal information between departments can
     reduce the effectiveness of the software.
I.Some large organizations may have multiple departments with separate, 
    independent resources, missions,chains-of-command, etc, and consolidation 
    into a single enterprise may yield limited benefits.
J.The system may be too complex measured against the actual needs of the 
    customers.
K.ERP Systems centralize the data in one place. This can increase the risk 
    of loss of sensitive information in the event of a security breach.
  
 

Next:
11. Advantages of ERP for Implementation Projects 

13. ASP - Application Service Provider

14.  ERP  AS Application Service Providers (ASP)
 

ASP - Application Service Provider

most of us know what an ISP is (Internet Service Provider), but what's an ASP?

The concept is simple. Applications software is, in the future, to be provided as a service, not a product. An Application Service Provider would be a business that leases access to software applications to your company. Access to these applications is over the Internet, and maintenance of the applications is done by the ASP, not your own IT staff.

This is a very attractive possibility to many companies, especially those that are undergoing rapid growth or other changes. Rather than purchasing and deploying all those software applications to individual PCs, a contract would be signed for the needed capabilities and the PCs would get their applications as needed over the Internet.

Actually implementing this concept is not so easy. Fortunately there are some successful examples, as Web hosting and e-mail services can be considered to be ASPs. The big problem is that most of the desktop applications businesses use run on individual PCs. It can be difficult to get them to run in a more distributed environment.

Sun Microsystem's main purpose in acquiring the Star Office productivity suite was to get the Web enabled version designed to be served over networks. Some startup ASPs have already adopted Star Office, since it won't be as easy to deploy Microsoft Office as an ASP service. Star Office has now been released as Open Source software under the name Open Office.

Microsoft has long drooled over the concept of software as service to keeping revenue flowing without having to develop "upgrades" all the time, but they didn't see it happening quite this way. They have announced they will be the ASP market leader (to discourage others), but it remains to be seen how well they can adapt their single user PC based software to this new environment.

Software that is not Web enabled can be served up over the Web using products like Tarantella and Citrix Metaframe. Both will soon release versions aimed specifically at ASPs and their unique needs.

One of the first major markets being set up for ASP is ERP (Enterprise Resource Planning) software. This sort of software (provided by SAP, Baan, PeopleSoft and others) is extremely expensive and difficult to deploy. If it can be implemented as an ASP service, many more companies would be able to take advantage of it.

Expect to see ASPs promoting their services to small business (and even individuals) in the very near future. Use caution in adopting their services, nobody knows how this is going to work yet.

A major downside of the ASP concept is that, should you get in trouble and fall behind on your ASP payments, your business software and data will be held hostage. If the ASP cuts you off.

Another downside is the posibility of ASPs selling information extracted from the business data they host. There is evidence this is already being done. Since it would be extremely difficult to prove, and since the ASP model has not yet proven profitable, it is a strong temptation for the ASP to make use of your data.

Security is also a significant concer. Will your ASPs keep your data secure from outside raiders, and what will be the liability be if their security fails?

What happens to your business if an ASPs you depend on folds up? We already have the case of a major e-commerce design and hosting service, Pandesic which created and ran on-line stores for many mid-size retailers. The service had the financial backing of two industry heavyweights, Intel and SAP, so it had the full trust of its customers. Then the backing companies decided the profits weren't going to be high enough so they just shut it down.

If an ASP shuts down involuntarily, your business data may be seized by creditors as part of the assets of the ASP. In cases like this it can be months before the courts release assets to their proper owners. Will your business still be alive by then.

All in all, we can see the logic in using ASP services for a startup or very fast growing company where setting up and expanding in-house IS services would be a serious destraction. You can get a lot more a lot faster from the ASP. Trusting ASP services for the long haul is a lot less logical in our opinion.


Next:

12. ERP Disadvantages for organisation or company

14. ERP AS Application Service Providers (ASP)

15. ERP is Online Transaction Processing (OLTP) software

ERP AS Application Service Providers (ASP)

Application Service Providers

Recently the Application Service Providers (ASP) business model is
becoming popular as a way to implement and operate your ERP applications. 

1. An application service provider (ASP) is a company that offers individuals
or enterprises access over the Internet to applications and related services that
 would otherwise have to be located in their own personal or enterprise computers.

2. Sometimes referred to as "apps-on-tap," ASP services are expected to become
 an important alternative, not only for smaller companies with low budgets for information
technology, but also for larger companies as a form of outsourcing and for many services
 for individuals as well.

3. Early applications include:

    * Remote access serving for the users of an enterprise

    * An off-premises local area network to which mobile users can be connected, with a
    common file server
    * Specialized applications that would be expensive to install and maintain within your
     own company or on your own computer 

4. While ASPs are forecast to provide applications and services to small enterprises and
individuals on a pay-per-use or yearly license basis, larger corporations are essentially
providing their own ASP service in-house, moving applications off personal computers
and putting them on a special kind of application server that is designed to handle the
stripped-down kind of thin client workstation.

5. This allows an enterprise to reassert the central control over application cost and
usage that corporations formerly had in the period prior to the advent of the PC.
Microsoft's terminal server product and Citrix's WinFrame products are leading thin-client
application server products.

6. Hewlett-Packard, SAP, and Qwest have formed one of the first major alliances for providing
ASP services. They plan to make Sap’s popular R/3 applications available at “cyber centers“
that will serve the applications to other companies. Microsoft is allowing some companies to
offer its BackOffice products, including SQL Server, Exchange and Windows NT Server on a
 rental, pay-as-you-use basis.

7. Oracle Corporation offers ASP model. They call it Business On-Line (BOL).Oracle launched
this service on October 1999.Oracle expected it to become a significant part of its future growth.
Oracle is perhaps disappointed that BOL has not performed as expected. They business may
improve in coming years though. Probably BOL will never create billions of dollars in revenue
for Oracle,  but it still might become a viable alternative for several customers.

8. In Application Service Provider model, a service provider is establed to host ERP applications.

ERP Applications are hosted in a centralized data center over an Internet/intranet connection.
 A monthly fee is charged.

9. Important considerations under this model are similar to the issues and concerns you would
 have with any outsourcing arrangement:
* You want to make sure the application implementation meets the needs of your business.
* The support expertise of the service provider must exceed the expectations of the users.
* Data center management must be better than your own data center.
* The ASP must provide an acceptable level of security and performance.
* Costs of the service must be reasonable.
10. When the economics of the ASP model is evaluated, you need to compare the monthly
charge per user of the system to the initial investment in software, hardware, support,
services, and the continuing costs of operating your own systems. 

11. Lets say you have 100 users at a monthly subscription cost of $500/user.
The ASP model costs might be $50,000/month and might grow or shrink proportionately
as the business changes. 

12. Compare that monthly charge with a $2 million up-front investment in hardware,
software, and consulting, and add annual direct operating costs of $300,000+ for system
administrator, support, and data center costs. 
Usually you must sign a multiyear deal for the ASP services. However you pay by
month.

Note: - Consider the following advantages and disadvantages when you evaluate
 companies as an Application Service Provider.

Next:

13. ASP - Application Service Provider



15. ERP is Online Transaction Processing (OLTP) software

16. Advantages of the ASP model ( Business On-Line)

ERP is Online Transaction Processing (OLTP) software

A transactions in one module could start coordinated transactions in other modules.   

For example:-
when shipping dock clerk records the transaction that goods have shipped to a customer,
related changes are made in other modules: order management, billing, and inventory systems.  

New transactions for revenue recognition and cost of goods sold are started

About OLTP

Online transaction processing, or OLTP, refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing. The term is somewhat ambiguous; some understand a "transaction" in the context of computer or database transactions, while others (such as the Transaction Processing Performance Council) define it in terms of business or commercial transactions. OLTP has also been used to refer to processing in which the system responds immediately to user requests. An automatic teller machine (ATM) for a bank is an example of a commercial transaction processing application.

The technology is used in a number of industries, including banking, airlines, mailorder, supermarkets, and manufacturing. Applications include electronic banking, order processing, employee time clock systems, e-commerce, and eTrading. The most widely used OLTP system is probably IBM's CICS.

OLTP Requirements

Online transaction processing increasingly requires support for transactions that span a network and may include more than one company. For this reason, new OLTP software uses client/server processing and brokering software that allows transactions to run on different computer platforms in a network.

In large applications, efficient OLTP may depend on sophisticated transaction management software (such as CICS) and/or database optimization tactics to facilitate the processing of large numbers of concurrent updates to an OLTP-oriented database.

For even more demanding decentralized database systems, OLTP brokering programs can distribute transaction processing among multiple computers on a network. OLTP is often integrated into SOA service-oriented architecture and Web services. Because there is a need for transactions you will need online processing.

Benefits Of OLTP

Online Transaction Processing has two key benefits: simplicity and efficiency. Reduced paper trails and the faster, more accurate forecasts for revenues and expenses are both examples of how OLTP makes things simpler for businesses.

Next :
14. ERP AS Application Service Providers (ASP)

16. Advantages of the ASP model ( Business On-Line)

17. Disadvantages of ASP Model (Business On-Line)

Advantages of the ASP model ( Business On-Line)

The advantages of the ASP model come from your relationship with the hosting company and your 

ability to avoid the initial costs of starting up the system. 

Consider the following benefits of ASP: 

A. You know who is responsible with the single vendor solution for system operations, 

   configuration, administration, and performance. 

B. This architecture moves complexity off the desktop and on to the managed server located in a 

professionally managed data center. 

C. You avoid a large, up-front investment in hardware, software, and implementation costs. 

D.You avoid the cost of support (which can be 20+% of the software costs). 

E.You don't have to find and retain talented technical staff to run these systems.

Next Related:

15. ERP is Online Transaction Processing (OLTP) software

17. Disadvantages of  ASP Model (Business On-Line)

18. ERP Vendors in 2005

Disadvantages of ASP Model (Business On-Line)

The disadvantages of the ASP model come from your relationship
with the hosting company and the loss of control and flexibility
 you need to meet current and future business requirements. 
Evaluate the following issues before considering  the Business
On-Line service: 

A.The solution might proprietary. If you want to rent the ERP and e-commerce applications, you

 must get them from specific vendor partners. 

B. Hosting ERP applications is still a relatively new business for it. If it can't make its normal 

growth rate and profit margins, it might not sustain the business as you expect. 

C. You are locked into specific applications.  It will be hard to switch vendors because you would

 have to switch applications, too. 

D.You will be restricted to the types of customizations and extensions available. Are there 

additional pieces of software you need to run your business? 

E. There will be little price competition or flexibility after you commit. 

F.You will be locked in to a long-term contract with limited flexibility to change or terminate.

G. Application performance issues might be a concern.

 H. Consider the ASP capability to implement and administer the applications. 

I. When you use an ASP, security concerns must be resolved. You must be sure your business 

data remains private and secure.

J.The ASP business model is unproven. (If it doesn't work out, where are you in three years?)

 Next :

15. ERP is Online Transaction Processing (OLTP) software

16. Advantages of the ASP model ( Business On-Line)

18. ERP Vendors in 2005

ERP Vendors in 2005

Market share 2005 according to Gartner Dataquest

Vendor                         Revenue (million $)    Market share(%)  

1 SAP                                             4726                      28.7

2 Oracle Applications                 1674                      10.2

3 The Sage Group                       1221                      7.4

4 Microsoft Dynamics                   616                      3.7

5 SSA Global Technologies        464                    2.8

Free ERP Tutorial:

1. Definition - Basic 

2. ERP as Medical Analogy  ? ERP = Medical analogy

3. History or Origin of ERP

4. General understanding  The  Attributes of ERP Systems

5. Implementation ERP Software in Businesses of processes

6. Process preparation of ERP software

7. Configration of ERP Software

8. Consulting services by ERP

9. Core system  in ERP

10. Maintenance and support services of ERP System

11. Advantages of ERP for Implementation Projects 

12. ERP Disadvantages for organisation or company

13. ASP - Application Service Provider

14.  ERP  AS Application Service Providers (ASP)

15. ERP is Online Transaction Processing (OLTP) software

16. Advantages of the ASP model ( Business On-Line)

17. Disadvantages of  ASP Model (Business On-Line)