Corporates with ever increasing pressures worldwide from investors as well as consumers are relying more and more on IT and specifically ERP’s (Enterprise Resource Planning).
We have heard a lot of ERP, SCM, CRM, BI etc - lots of jargons are fed to us day-in and day-out but do we know exactly what they are ? How they work ? Why are they so resource intensive ?
I will try to answer most of these questions with reference to BaaN IV ERP. Do not worry, this information comes to you from a person who has spent close to 6 years on ERP implementation specialisation being Finance and Tools development & Administration (that person is me).
What is ERP ?
Corporates have to perform various functions for their daily management; funtions like finance, sales, purchase, manufacturing, planning, inventory management, advertising, HR etc. And definately all these functions are inter-related and an activity in any of these affects the other.
ERP is nothing but an enterprise wide integrated software application which runs across all these functions exactly as we want and providing information on-tap. Functions are inter-connected and an activity done say in sales will directly create an impact in say finance and inventory module.
Why is it so BIG ?
Earlier we have had software applications specifically for each function ie they were islands and never talked to the other function or spoke very restrictively. The new set of applications overcame these problems and developed applications that provided a lot more flexibility and fused with each other seamlessly.
Big names like SAP, QAD, BaaN, Oracle, Peoplesoft etc invested heavily in these to cater to industries and were an instant success. This stirred up a race between corporates to implement ERP’s to achieve efficiencies and there are many success as well as failure stories. But the end result is every company wants to have one now.
ERP now roughly includes Supply-Chain management, Customer Relation Management, Product Lifecycle management, Business Intelligence etc all ofcourse to be bought seperately.
What is the architecture of ERP ?
ERP mostly have a 3 tier architecture (BaaN has) ie. a client which runs on individual user desktops, a database which runs centrally on the server and the BaaN application itself which can reside in the same server as database or can be seperate depending on the needs of the enterprise.
ERP’s are very complex & huge systems catering to all kinds of functionalities and industries - one can easily get lost in a software of this kind.
What are the resources required ?
The software cost for BaaN is licence based and on top of it one has to pay an annual maintenance fee for as long as we use the software. This AMC includes new fixes which cater to localisation content arising due to finance budgets (Ex. the cess introduced this year), known bugs, introduction of new functionality etc.
The Hardware costs include the kind of application server one uses and the kind of setup you have(discussed above). Apart from this the kind of Operating System(OS) one uses, the choice of database and the number of users using the application adds to the cost. One also needs to factor in on the AMC costs for OS and Database.
Most of the ERP’s are platform independent ie they run on Windows, Unix, Novell etc. The same can be said for databases; BaaN runs with Oracle, Informix, SQL Server etc.
But the most important and the highest in terms of value is the cost of implementation of the ERP (which is both one time and can be recurring also as employees become dependent on consultants). Human resource cost is in terms of the training to be provided to employees, creation of technical team & functional team etc
Timeframe for implemetation can vary from 6 months to 2 years depending on various factors like the kind of existing IT setup the company has, the knowledge level of employees, management commitment, expertise of implementors etc
BaaN ERP History
BaaN was born in 1978 in Holland created by Jan Baan to provide financial and administrative consulting services. I think it was called Triton at that time. Overtime Baan corporation faced financial problems (caused by the owner himself) and was sold to Invensys and now to SSA Global.
About BaaN ERP product
To begin with its my bread and butter and honey and cream and milk ;--)
BaaN can be setup centrally or have multiple servers/setup’s spread over different geographical locations (this becomes complex). Once the OS, database & Baan application are in place, one has the choice of having a multi-company structure(either multi-logistic or multi-finance or single logistic/finance).
BaaN has several modules all in a Drill down tree-type menu. These modules are Finance(AR, AP, GL, CMG etc), Projects, Manufacturing(MPS/CRP), Distribution(Sales-Purchase-Inventory etc), Process, Transporatation(Fleet management / Fuel Control), Service, Constraint Planning, Tools, Utilities etc.
Various functional as well as technical parameters need to be setup to define the working of the application. Security constraints are available company, user as well as database wise.
The tools module is where the databases are managed, users created, cutomisation / programming done, reports written, backups taken etc. This module rights are to be given very very selectively.
Once the whole master data, parameters and integration is defined the ERP is ready to be used provided the user knows how to ..
The above process though very vague and simple is very very complex and time consuming and comes thru with trial and error sometimes.
BaaN - Flip side
~ BaaN though very strong in functionality in Manufacturing and SCM lacks a lot in terms of Finance functionality.
~ It has a thick client making it very difficult to use it via the web.
~ Poor marketing (Have you seen any advertisements in the last 10 years ?) is killing a product which ranked with SAP as the 2nd best in 90’s.
BaaN - Strengths
~ Easy to use and implement
~ Very strong Manufacturing & Supply chain
~ Comes with India Localisation (Excise, ST, Octroi etc)
Baan Customers
In India, BaaN sites include L&T, Dabur, Godrej & Boyce, Samsonite, BlueStar, Pantaloon, Vulcan, Unichem, Rallis, Goa Shipyard, Bharat Bijlee, Birla Yamaha, Fedders Lloyd, Kirloskar-Copeland etc - more than 100 companies in India.
BaaN - The Future is SSA GLOBAL
BaaN has now been merged and will no more have the name BaaN. The new version of ERP LN 6.1 as it is named now, has just been released in USA 2 weeks back. It will take more than a year for it to be released in India as the localisation needs to be developed.
ERP implementation methodology continued in comments ..
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I have tried to use very simple language to describe ERP & BaaN ERP - hope it was useful to you all.