Enterprise Resource Planning is the latest high end solution, information technology has lent to business application. The ERP solutions seek to streamline and integrate operation processes and information flows in the company to synergise the resources of an organisation namely men, material, money and machine through information. Initially implementation of an ERP package was possible only for very large Multi National Companies and Infrastructure Companies due to high cost involved. Today many companies in India have gone in for implementation of ERP and it is expected in the near future that 60% of the companies will be implementing one or the other ERP packages since this will become a must for gaining competitive advantage.
In the present business environment, role of a Chartered Accountant is considered to be very important and inevitable. Chartered Accountants as managers, consultants, advisors or auditors play an important role in controlling, managing, and supporting the business.
As the business needs are very complex in nature, the implementation of an ERP package needs Chartered Accountants with functional skills for evaluation, Business Process Reengineering (BPR), Mapping of Business requirements, Report designing, ensuring Business controls, customization of the package for the specific requirements, Documentation etc.,
Sooner or later a Chartered Accountant without the knowledge of ERP may feel as if he is a fish out of the bowl. By this article it is attempted to highlight various aspects of ERP and specific areas of ERP that are relevant for Chartered Accountants.
Evolution of ERP
In the ever growing business environment the following demands are placed on the industry :
Need for ERP
Most organizations across the world have realized that in a rapidly
changing environment, it is impossible to create and maintain a custom
designed software package which will cater to all their requirements and
also be completely up-to-date. Realizing the requirement of user organizations
some of the leading software companies have designed Enterprise Resource
Planning software which will offer an integrated software solution to all
the functions of an organisation.
Features of ERP
Some of the major features of ERP and what ERP can do for the business system are as below:
To enable the easy handling of the system the ERP has been divided into the following Core subsystems:
There are many numbers of ERP suppliers who are very active in the market. Some of the companies offering renowned international ERP products include:
BPR and ERP
Business Process Reengineering is a pre-requisite for going ahead with a powerful planning tool, ERP. An in depth BPR study has to be done before taking up ERP. Business Process Reengineering brings out deficiencies of the existing system and attempts to maximize productivity through restructuring and re-organizing the human resources as well as divisions and departments in the organisation
Business Process Engineering evolves the following Steps:
i.e., Understanding the existing practices, Simplifying the Processes and Automate the Process. Various tools used for this principle are charted below:
Understand Simplify Automate
Diagramming Eliminating EDI
Story-boarding Combining ERP
Brain storming Rearranging
Selection of ERP
Once the BPR is completed the next task is to evaluate and select a suitable package for implementation. Evaluation of the right ERP package is considered as more crucial step. Evaluation and selection involves:
Implementation of ERP
Implementing an ERP package has to be done on a phased manner. Step by step method of implementing will yield a better result than big-bang introduction. The total time required for successfully implementing an ERP package will be anything between 18 and 24 months. The normal steps involved in implementation of an ERP are as below:
The above steps are grouped and sub-divided into four major phases
namely 1)detailed discussions, 2) Design & Customisation, 3) Implementation
and 4) Production. The phases of implementation vis-a-vis their tasks and
respective deliverables are as below:
Detailed Discussion Phase:
Task :- Project initialization, Evaluation of current processes, business practices, Set-up project organization
Deliverables:- Accepted norms and Conditions, Project Organisation chart, Identity work teams
Design and customisation Phase:
Task :- Map organisation, Map business process, Define functions and processes, ERP software configuration and Build ERP system modifications.
Deliverables :- Organisation structure, Design specification, Process Flow Diagrams, Function Model, Configuration recording and system modification.
Task :- Create go-live plan and documentation, Integrate applications, Test the ERP customisation, Train users
Deliverables :- Testing environment report, Customisation Test Report and Implementation report
Task:- Run Trial Production, Maintain Systems
Deliverables:- Reconciliation reports, Conversion Plan Execution
Benefits of ERP
The benefits accruing to any business enterprise on account of implementing are unlimited. According to the companies like NIKE, DHL, Tektronix, Fujitsu, Millipore, Sun Microsystems, following are some of the benefits they achieved by implementing ERP packages:
CA and ERP
A pertinent question one Chartered Accountant may ask is "How does an ERP matter for me?". As mentioned earlier the role of a Chartered Accountant in any business either as a Consultant, Auditor, Advisor or Manager is inevitable.
CA as a Consultant:
Implementation of ERP solutions is one of the largest drivers of growth in the consultancy business. The introduction of such a large and complex software like ERP, which enables an organisation to integrate their manufacturing, finance and marketing operations at all levels, is in itself a challenge, since it calls for technical and functional skills and a change in user mindsets. And therein comes a role of a consultant. CA as a Consultant will play a major role in implementation of an ERP solution.
CA as an auditor:
Assuming a situation where the client has implemented an ERP solution. If the auditor is aware of ERP he can make use of the features of ERP and thereby:
As an advisor to a company a Chartered Accountant can participate in various stages of ERP implementation. It goes without saying that advising without the knowledge of the current trends and modern management techniques will prove to be a wrong advice and may have a negative impact on the growth of the client.
CA as a Manager:
By now one should be knowing that the ERP is a high end sophisticated software solution that reduces the pressure and work load of the Managers and provides accurate, timely information for taking appropriate business decisions. Chartered accountants as managers with knowledge of ERP will be able to achieve their targets and goals by proper implementation of ERP system in their organisation. In fact Managers are expected to translate the business rules and requirements for Mapping them into ERP software. Managers as representatives of the Organisation have to coordinate with Vendors, Consultants, Auditors etc., for a proper implementation of ERP package.
The growing information needs of an enterprise make it imperative to improve or replace old systems. Especially under the present Indian business environment, where the globalization has been initiated, full convertibility is coined, Infrastructure Projects are nearing completion, and it is expected that the whole business system will undergo a major shift. Thus by being a proficient ERP consultant, Chartered Accountants will prove their commitment to the business world and modern management.