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ERP MUP Report

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I, BIPIN BHARDWAJ, Hereby declare that this MUP report is the record of authentic work carried out and has not been submitted to any other University or Institute for the award of any degree / diploma etc.

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ERP MUP Report

  2. 2. 2 DECLARATION I, BIPIN BHARDWAJ, Hereby declare that this MUP project report is the record of authentic work carried out and has not been submitted to any other University or Institute for the award of any degree / diploma etc. BIPIN BHARDWAJ Date: Place:
  3. 3. 3 Enterprise Resources Planning (ERP) for Energy & Environment Industry (Using SAP as Solution) 1. Enterprise Resources Planning (ERP) – Introduction a. ERP Concept b. Characteristics of an ERP system c. Components of a typical ERP System 2. Evolution – from MRP to ERP 3. Advantages of ERP systems 4. Enterprise Resources Planning (ERP) – Implementation Lifecycle a. Steps in a typical implementation life cycle b. ASAP Methodology (Copyright SAP AG) c. Other Important Terms related to ERP implementation d. Key differences between customization and configuration include: e. Consulting Services f. Role of an ERP Consultant 5. Impact of an ERP Implementation 6. Cautions for an ERP Implementation a. Cautions b. Measures for Handling Daily (Administrative) Issues 7. Change Management a. Components of Change Management b. Initiating & Managing Change Management In ERP 8. The Ideal (Typical) ERP System a. Functional Scope b. Core Processes 9. Major ERP Vendors & Packages 10. Business Process a. Importance b. List of characteristics for a typical business process c. Business Process - Types. d. Example e. Business Process Documentation – Importance f. Essential Elements of A Business Process 11. Specialized Solutions Related to ERP a. CRM b. SCM c. PLM d. SRM 12. ERP in Energy & Environment Industry
  4. 4. 4 1. Enterprise Resources Planning (ERP) – Introduction a. ERP Concept The opening up of the global economy has provided opportunity to the small and mid size companies to expand their businesses. This growth has been across all industry verticals such as manufacturing, retail, energy, telecommunication and information technology sectors. This growth has brought in the new competition for these companies. Quest to enhancing the market share has led the companies to re-look at its processes and procedures. The companies are now trying to utilize their all resources effectively to make business more efficient and effective. At some point in the growth cycle visibility over operations becomes unmanageable and the left hand doesn't know what the right hand is doing. Multiple locations and varied plant philosophies compound the problem, and inefficiency increases. A good ERP system provides the visibility and control over operations ERP – Some Definitions  Enterprise Resource Planning (ERP) is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources.  An ERP system is designed to integrate all processes and information within an organization into a single consolidated system. ERP systems generally utilize a single unified database for storage and maintenance of data derived from a variety of system modules.  ERP is the acronym of Enterprise Resource Planning. ERP utilizes ERP software applications to improve the performance of organizations' resource planning, management control and operational control. ERP software is multi-module application software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, and product distribution, to order tracking. ERP software may include application modules for the finance, accounting and human resources aspects of a business. b. Characteristics of an ERP system • An integrated system that operates in real time, without relying on periodic updates. • A common database, which supports all applications. • A consistent look and feel throughout each module. • Installation of the system without elaborate application/data integration by the Information Technology (IT) department.
  5. 5. 5 c. Components of a typical ERP System ERP Software - Module based ERP software is the core of an ERP system. Each software module automates business activities of a functional area or provides integration links to other functional areas within an organization. Business Processes – Every organization runs on the business processes designed as the best fit for their business. Business processes within an organization generally falls into three levels - strategic planning, management control and operational control. ERP has been promoted as solutions for supporting or streamlining business processes at all levels. ERP Users - The users of ERP systems are employees of the organization at all levels, from workers, supervisors, mid-level managers to executives. Hardware and Operating Systems – Computer hardware is necessary to store the data generated by the users of the system. It is the physical existence of the ERP system in an organization. Many large ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems. Cloud Computing Three categories of services: Infrastructure-as-a-service (IaaS): It provides virtual server to start, stop, access & configure servers and storage. It also allows companies to pay for only as much capacity as needed. Platform-as-a-Service (PaaS): Set of software and product development tools hosted on the provider’s infrastructure. Developer creates applications on the provider’s platform over internet. The two key ERP platforms are DotNet & J2EE. Software-as-a-Service(SaaS): Vendor supplies the hardware infrastructure, the software product and interacts with the user through a frontend portal. Business Process Reengineering (BPR) - Concept According to Michael Hammer father of BPR, “Reengineering is the fundamental rethinking and radical redesigning of business process to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed Fundamental Rethinking: Not about small changes to the process but to but about complete new way of thinking about the process Radical redesign: New process should be very different from the old one. Dramtic Improvements: Significant improvements in process performanc
  6. 6. 6 2. Evolution – from MRP to ERP ERP has evolved as a strategic tool because of continuous improvement in the available techniques to manage business and the fast growth of information technology. Prior to 1960s, business had to rely on the traditional ways of inventory management to ensure smooth functioning of the organization. The most popularly known amongst them is EOQ (Economic Order Quantity). In this method, each item in the stock is analyzed for its ordering cost and the inventory carrying cost. A trade off is established on a phased out expected demand of one year, and this way the most economic ordering quantity can be decided. Along with EOQ, we find various inventory models such as fixed order quantity, periodic order method, optional replenishment method, etc., which were in practice earlier. These theories were very popular in pre-MRP era. Most of the software packages then (usually customized) were designed to handle inventory based on traditional inventory concepts. MRP - In 1960-70s, focus shifted to Material Requirement Planning systems. A new technique of Material Requirements Planning, popularly known as MRP, was evolved. This was a proactive manner of inventory management. This technique fundamentally explodes the end product demand obtained from the Master Production Schedule (MPS) for a specified product structure (which is taken from Bill of Material) into a detailed schedule of purchase orders or production orders, taking into account the inventory on hand. MRP is a simple logic but the magnitude of data involved in a realistic situation makes it computationally cumbersome. If undertaken manually, the entire process is highly time-consuming. MRP successfully demonstrated its effectiveness in reduction of inventory, production, and delivery lead times by improving coordination and avoiding delays, thus making commitments more realistic. MRP proved to be a very good technique for managing inventory, but it did not take into account other resources of an organization. Later the capacity of the organization to produce a particular product is also taken into account by incorporating a module called capacity requirements planning (CRP). MRP – II - In 1980s, the need was felt to integrate the financial resource with the manufacturing activities. From this evolved an integrated manufacturing management system called Manufacturing Resource Planning (MRP II). Transition from MRPII to ERP happened during 1980-90. The basic MRP II system design was suffering from a few inherent drawbacks such as limited focus to manufacturing activities, assumption of the mass or repetitive production set ups, and poor budgetary and costing controls. The shortcomings of MRP II and the need to integrate new techniques led to the development of a total integrated solution called ERP, which attempts to integrate the transactions of the organization to produce the best possible plan. Today we see further development in the ERP concept and evolution web-based ERP.
  7. 7. 7 3. Advantages of ERP systems Many organizations all around the world are increasing their reliance on ERP systems as an alternative to develop maintain & support number of software applications. Some of the advantages of ERP are: a. The fundamental advantage of ERP is that integrating the business processes by which businesses operate saves time and expense. b. An ERP package should provide an organization with a solid foundation, incorporating all of the fundamental aspects of running a business. c. If the ERP solution is a good fit for an organization then it can gain tremendous cost savings and service improvements across the enterprise. d. Manual processes are automated, production scheduling is more efficiently managed and inventory is more accurately assessed. e. It can help executives with real-time visibility into all business processes, enabling them to make better strategic decisions. Decisions can be made more quickly and with fewer errors as required data becomes visible across the organization. f. An ERP implementation can reduce costs in three primary categories: inventory costs, manufacturing operating costs and administrative costs. g. It can improve an organization's customer service and response time when solving issues. h. It can solve issues of interoperability among multiple manufacturing locations. It can standardize and accelerate manufacturing processes in all of a company's manufacturing sites. i. It can streamline a manufacturer's order-fulfillment processes. It can facilitate connecting with partners' and suppliers' enterprise systems. j. ERP can even help an organization maintain compliance with government regulations, from hiring practices to environmental laws. k. Because an ERP solution has its fingers in all aspects of running a business, its benefits are myriad and go beyond tangible cost reductions. 4. Enterprise Resources Planning (ERP) – Implementation Lifecycle THE process of ERP implementation is referred as d as "ERP Implementation Life Cycle". Each ERP solution provider has its own steps/phases of implementation life cycle. Below are the a. Steps in a typical implementation life cycle i. Define business scope of implementation and shortlist ERP solution This exercise will involve defining business functions which will be replaced by the ERP system ad choosing few applications suitable for the company from the whole many. ii. Assessing the chosen packages A team of Experts with specialized knowledge in their respective field will be asked to make the study on the basis of various parameters. Each expert will not only test and certify if the package is apt for the range of application in their field but also
  8. 8. 8 confirm the level of coordination that the software will help to achieve in working with other departments. In simple terms they will verify if the synergy of the various departments due to the advent of ERP will lead to an increased output. iii. Preparing for the implementation this stage is aimed at defining the implementation of ERP in all measures. It will lay down the stipulations and criteria to be met. A team of officers will take care of this, who will report to the person of the highest hierarchy in the organization. iv. Gap Analysis & Business process reengineering This stage helps the company to identify the gaps between company business practices and the practices suggested (Best Practices) by the ERP solution provider. This has been reported as an expensive procedure but it is inevitable. Business process reengineering is referred to the changes/ restructuring in employee roles, technical details, business processes, etc to suit the ERP implementation. v. Designing the System This step requires lot of meticulous planning and deliberate action. This step helps to decide and conclude the areas where restructuring have to be carried on. A choice is to be made from ERP implementation models. vi. Develop in-house Expertise & Preparing the employees to use ERP Every company needs to develop expertise in its employees about the ERP solution to face crisis and make minor corrections to the implemented system. The company may not afford the services of an ERP vendor at all time. This is regarded as a critical step in ERP implementation. The employees in the organization will be taught to make use of the system in the day to day and regular basis so as to make sure that it becomes a part of the system in the organization. vii. Testing This stage observes and tests the authenticity of the use. The system is subjected to the wildest tests possible so that it ensures proper usage and justifies the costs incurred. This is seen as a test for ERP implementation. viii. Post Implementation support The process of implementation will find meaning only when there is regular follow up and proper instruction flow thereafter and through the lifetime of ERP. This will include all efforts and steps taken to update and attain better benefits once the system is implemented. ix. Errors in ERP implementation ERP implementation failure is a major concern for companies. ERP implementation needs to be done without allowing any scope for limitations and mistakes. If it is not done perfectly then the success of ERP system will remain a question mark. The first and foremost factor that discourages ERP in an organization is the exorbitant costs and investment. The second one is the drafting of an ERP implementation plan to ensure ERP implementation success.
  9. 9. 9 Cloud Computing Three categories of services: Infrastructure-as-a-service (IaaS): It provides virtual server to start, stop, access & configure servers and storage. It also allows companies to pay for only as much capacity as needed. Platform-as-a-Service (PaaS): Set of software and product development tools hosted on the provider’s infrastructure. Developer creates applications on the provider’s platform over internet. The two key ERP platforms are DotNet & J2EE. Software-as-a-Service(SaaS): Vendor supplies the hardware infrastructure, the software product and interacts with the user through a frontend portal. b. ASAP Methodology (Copyright SAP AG)
  10. 10. 10 ASAP Phase Description Project Preparation (Phase – I) The purpose of this phase is to provide initial planning and preparation for any SAP project. Although each SAP project has its own unique objectives, scope, and priorities, the steps in Phase 1 help identify and plan the primary focus areas to be considered. As you prepare for your SAP implementation, there are important issues you must address at the beginning of the project, such as: − Defining your project goals and objectives − Clarifying the scope of your implementation − Defining your implementation strategy − Defining the overall project schedule and implementation sequence − Establishing the project organization and committees − Assigning resources By addressing these issues early in your implementation, you help ensure that the project proceeds efficiently, and that you have established a solid foundation for a successful SAP implementation. Business Blueprint (Phase – II) The purpose of this phase is to create the Business Blueprint, which is a detailed documentation of the results gathered during requirements workshops. Furthermore, the Business Blueprint documents the business process requirements of the company. On this basis, you achieve a common understanding of how the company intends to run its business within the SAP System. During this phase, you also:  Refine the original project goals and objectives  Define the Baseline scope  Refine the overall project schedule and implementation sequence
  11. 11. 11 Realization (Phase – III) The purpose of this phase is to implement business and process requirements based on the Business Blueprint. The objectives are final implementation in the system, an overall test, and the release of the system for production (live) operation. The project team receives relevant knowledge. Configure the system in two work packages, Baseline (major scope), and Final (remaining scope). This lets you work on the other work packages after Baseline confirmation. Final Preparation (Phase – IV) The purpose of this phase is to complete the final preparation (including testing, end user training, system management and cut-over activities), to finalize your readiness to go live. The Final Preparation phase also serves to resolve all crucial open issues. On successful completion of this phase, you are ready to run your business in your live SAP system. Go Live and Support (Phase – V) The purpose of this phase is to move from a pre-production environment to live production operation. You must set up a support organization for end users, not just for the first critical days of your production operations, but also to provide long-term support. During this phase, end users of the SAP system have many questions. There must be a solid end user support organization easily accessible to all end users. This phase is also used to monitor system transactions and to optimize overall system performance. Finally, the completed project is closed.
  12. 12. 12 c. Other Important Terms related to ERP implementation Best Practices: This means that the software reflects the vendor's interpretation of the most effective way to perform each business process - reduces time–consuming project tasks for config and documentation – reduces risk of implementation Modularity: Most systems are modular to permit automating some functions but not others. Some common modules, such as finance and accounting, are adopted by nearly all users. example, a service company probably has no need for a manufacturing module. Configuration: typically build many changeable parameters that modify system operation. For example, an organization can select the type of inventory accounting—FIFO or LIFO—to employ, or whether to pay for shipping costs when a customer returns a purchase. Customization: When the system doesn't offer a particular feature, the customer can rewrite part of the code, or interface to an existing system. Customization may offer the potential to obtain competitive advantage vis-à-vis companies using only standard features. d. Key differences between customization and configuration include: Customization is always optional, whereas the software must always be configured before use (e.g., setting up cost/profit center structures, organizational trees, purchase approval rules, etc.) ERP software is designed to handle various configurations, and behaves predictably in any allowed configuration. The effect of configuration changes on system behavior and performance is predictable and is the responsibility of the ERP vendor. The effect of customization is less predictable, is the customer's responsibility and increases testing activities. Configuration changes survive upgrades to new software versions. Some customizations (e.g. code that uses pre–defined "hooks" that are called before/after displaying data screens) survive upgrades, though they require retesting. Other customizations (e.g. those involving changes to fundamental data structures) are overwritten during upgrades and must be implemented again.
  13. 13. 13 Customization Advantages:  Improves user acceptance  Offers the potential to obtain competitive advantage vis-à-vis companies using only standard features. Customization Disadvantages:  Increases time and resources required to both implement and support  Inhibits seamless communication between suppliers and customers who use the same non customized ERP system. Data migration: Data migration is the process of moving/copying and restructuring data from an existing (Legacy) system to the ERP system. Migration is critical to implementation success and requires significant planning. The following steps can be used for data migration.  Identify the data to be migrated  Determine migration timing  Generate the data templates  Freeze the toolset  Decide on migration-related setups  Define data archiving policies and procedures. Extensions: ERP systems can be extended with third–party software. ERP vendors typically provide access to data and functionality through published interfaces.  capturing transactional data, e.g. using scanners, tills or RFID  access to specialized data/capabilities, such as syndicated marketing data and associated trend analytics. e. Consulting Services Organizations generally use ERP vendors or consulting companies to implement their customized ERP system. There are three types of professional services that are provided when implementing an ERP system, they are Consulting, Customization and Support.  Consulting Services – are responsible for the initial stages of ERP implementation where they help an organization go live with their new system, with product training, workflow, improve ERP’s use in the specific organization, etc.  Customization Services – work by extending the use of the new ERP system or changing its use by creating customized interfaces and/or underlying application code. While ERP systems are made for many core routines, there are still some needs that need to be built or customized for a particular organization.  Support Services – include both support and maintenance of ERP systems. For instance, trouble shooting and assistance with ERP issues.
  14. 14. 14 f. Roles of an ERP Consultant The role of an ERP consultant is to analyze the client business, oversee the design and implementation of the to-be system and make sure the solution is delivered successfully. The role of an ERP consultant is evident when one understands the complexity of the business processes addressed by an ERP package and the proficiency required in order to manage the day to day functions of an ERP system. The responsibilities of the consultant however differ based on whether his expertise lies in the domain or functional field or the technical field. The functional and technical require different sets of competencies and expertise and have their respective well defined roles in the projects. In order to conceptualize, design, implement and maintain an ERP system, there is a need for competent functional as well as technical consultants. A technical consultant on the other hand is proficient in the technical implementation details of the product. They have an accurate understanding of how the system behaves in all scenarios not as a concept but as the exact technical behavior. He has to therefore understand the as-is system focusing on its detailed technical implementation. A technical consultant drives the designing of the to-be system. With his thorough knowledge of technical architectures, varied platforms, firsthand experience with several databases, and clear understanding of the industry standards a technical consultant is fully equipped to propose the architecture of all the modules of the ERP; however he has to work closely with the functional consultant in order to realize the functional scope of each of the components. He carries out the actual coding, unit testing, regression testing, UAT testing, patch testing of the system. The technical consultant provides issue resolution support during the testing phase. He makes sure the deployment and workflow is aligned with the industry process' standards. The role of a functional consultant begins before start of the implementation phase, in order to decide the scope of business functions that the ERP package will implement. He makes a thorough study of the as-is system of the client and enumerates the existing business functions. Records of all the findings are noted and used when judging the extent of changes that need to be carried out to get to the desired or the to-be system. He is required to highlight upfront the complications that could occur during implementation. A functional consultant by virtue of his industry experience also plays an imminent role in suggesting improvements that can be made to the current business processes of the client.
  15. 15. 15 A functional consultant too plays a part in the designing and documenting the ERP architecture and is instrumental in making the technical ERP expertise stay aligned with the exact functionality as required by the client. The functional consultant provides support to the technical team whenever necessary. Functional consultants are typically also involved in the validation testing of the system. Finally, after the system goes alive at the client site, the functional consultant, by virtue of his industry experience and package expertise is required to step in and set the expectations of the users at various levels, keeping in mind the various business Thus the technical consultant is accountable for the timely delivery of the customized package. The functional consultant makes sure the system delivered is as desired by the client. 5. Impact of an ERP implementation There are both positive and negative impacts of an ERP implementation at various levels of an organization Impact on stakeholders Stakeholders of an organization such as employees, management, customers, vendors, etc get influenced by an ERP implementation because it deals with evaluation, modification or changes to the established business process. Impact of an ERP implementation needs to be studied/analyzed on the role of stakeholders right from the beginning of an implementation. Impact on overall business functions ERP implementation has a significant impact on the way of an organization functions. It helps decision makers in the organization to come to consensus on the issues like changes in business processes, restructuring of the organization, introduction of new technology, etc. Impact on Business Units (Divisions/Departments) ERP implementation tends to improve interaction and healthy relationship among business units of an organization which otherwise may remain isolated. Problems in co-ordination are brought up to the management and solutions can be discussed/implemented to solve the problems.
  16. 16. 16 Impact on Employment ERP implementation creates employment opportunities for individuals (consultants), whom the organizations hire during the implementation. The organization may absorb the consultants on permanent roles once ERP goes live in the organization. ERP implementation also provides opportunity to IT professionals who are currently employed with the organization to update their knowledge with the new technology. Impact on the information access With the help of latest versions of web based tools, available in an ERP package, information of an organization is available with few clicks of a mouse. With appropriate access to the system no one has to go through the hassle of obtaining permission and following stringent procedures to access information. Impact due to a third party ERP consultant A third party consultant brings in an experience not only of ERP implementation but also of best practices available in the ERP solution and of other implementations the consultant earlier worked on. An ERP Consultant will help to identify issues in existing business processes in an organization and will guide in designing better solutions. Cautions for an ERP Implementation In many cases flaws in ERP implementation have resulted in the vast majority of companies failing to unleash the benefits of ERP software. This has led to lot of problems right from litigations to misinterpretations in business media. Enterprise resource planning phases are very important in this regard. Probable reasons behind Failure The actual problems lie in choosing the right software for your company. Chances of successful ERP implementation are rate if selection of an ERP package is done hastily. Some of the reason for failure could be exorbitant costs, inadequate training, longer time, and failure of strategy and the lack of attitudinal change on the part of employees to accept and manage change. a. Cautions ERP is a technology and not a miracle that will fix all issues in an organization after implementation. What is more important is the implementation of the necessary changes at all levels in the organization. Effective execution of the laid down procedures joined with organizational changes will result in success. Many organizations implement ERP with misunderstanding that it will rejuvenate their business. ERP is not an answer to the errors in business plans and tactics. ERP is a software package that assists and facilitates the business process by being a part of it.
  17. 17. 17 ERP gap analysis and business process reengineering should be performed properly and thoroughly. This will reduce changes of failure of an implementation and also ensure that other steps are followed systematically and in accordance to the company's need. They are otherwise referred as enterprise resource planning phases. IT infrastructure in the organization should be at par with market standards and international reputation. This will enable the operation people to constantly modify and update as and when it is necessary in order to stay in tune with the competition. The process of ERP implementation should be carried on by a team of competent personnel (in-house or third party) so as to ensure perfection, accountability and transparency. b. Measures for Handling Daily (Administrative) Issues ERP should become a part of the daily routine. If that does not happen then the company cannot expect any fruitful results in spite of having followed the above mentioned steps meticulously in order to ensure the successful implementation of ERP. User Training Formal training of the implemented ERP system is very essential. Organization needs to develop and execute a detail plan for user training. In many successful firms key system users receive intense training about the ERP solution early in the implementation process. System maintenance & support team This is important after successful implementation of an ERP solution. Most of the time consulting companies who were involved in the implementation take out their resources soon after the implementation. A company should build it its own system maintenance and support team for the post implementation support to the users. The support team should at least provide level I support. Authorized access to required information ERP is integrated solution which uses common database for all functional areas of an organization. It is because of that becomes essential to provide appropriate access to users so that they can perform their tasks efficiently. Access to additional information may result in chaos and on the other hand no accesses to required information may result in inefficiency. Simplification and standardization This helps users to complete their tasks efficiently by following a business process. It is a smarter way of working than laboring with an activity.
  18. 18. 18 Knowledge Warehouse An organization must maintain a knowledge warehouse for users after successful implementation. Knowledge warehouse should hold all the data about business processes, decisions made during implementation, white papers, training contents, and tips to complete a task efficiently, etc from planning phases of the implementation. Appropriate access to the information should be provided to the users. Business Process Reengineering (BPR) - Concept According to Michael Hammer father of BPR, “Reengineering is the fundamental rethinking and radical redesigning of business process to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed Fundamental Rethinking: Not about small changes to the process but to but about complete new way of thinking about the process Radical redesign: New process should be very different from the old one. Dramtic Improvements: Significant improvements in process performance . 6. Change Management Change Management is an essential part of ERP implementation. In fact, because of the level of complexity of an ERP system, change management has always been a continuing process required throughout ERP implementation. ERP will not be successfully implemented without “a massive dose of change management otherwise the organization will likely not be positioned to best use the new system” (Gerald Thompson and Winford (Dutch) Holland, 2001). ERP is an integrated complex cross-departments application. That is why its implementation is a very costly and lengthy process. The main issue in any new system implementation especially ERP is changing the existing system with a new one. In a minor environment, change can be done quite easily. However, for a compound system such as ERP, change management became a crucial component to manage the changes systematically. Changes must be efficiently planned, scheduled, carried-out and documented to minimize the cost and disruption during ERP implementation. As many other types of system implementation, change management in ERP implementation are established to build an understanding throughout business components so that they are well prepared to accept the change and clearly understanding how the changes may affect them.
  19. 19. 19 When initiating changes during new system implementation including ERP system, it is nearly impossible to get absolute affirmative feedbacks from all components of business. The problem will get even more serious when the percentage of rejection is far higher than the tolerable amount. This is happen as the nature of human which “resistant to have their expectation disrupted”. There are two primary reasons why people resist change: lack of motivation and lack of ability. Many employees within organisation usually have not been informed enough the purposes of change and how an ERP system may beneficial for them. That is why many of them are not motivated to support this new system. This can be resolve by initiating a good communication and vision sharing. a. Components of Change Management There are various tasks need to be done before initiating changes as part of change management strategy. Island Consulting define them as: Communications Strategy Communication in this phase is far more complex than just asking the employees to do things. Key persons in managerial level need to discuss their strategies. Included in the strategies are preparing project plan, project costs analysis, progress report and some other important issues such as preparing trainings for employees. The important point in delivering information is timing. As each component of the business may have different priorities, working in collaboration will result a better outcome. Managerial levels as the decisions maker are often enforced to make such decisions which may not make everyone happy. That is why it would be wise if they keep their hands open for possible cooperation. Another important part in communication strategy is allotting the correct messenger to the audience in order to the get the message through. Different personnel will have different approach which will be suitable for different audiences. Impact Analysis This is a method to thoroughly determine the current business system and analysis on how ERP system will affect the business environment. Current business processes needs to be systematically documented especially for the area which may be affected by the new system. As a standard method of documentation, many experts are using data flow / work flow diagram. Included in those diagrams is how formal and informal information flows within the organisation and what tasks are carried out by specific functions. Another information that needs to be documented is job description and job history which will construct an organized comparison on how the real business processes may vary from what has been documented. From all above information, business can start to analyse how significant the ERP implementation may affect the system, who will be the most affected by the implementation and what training may be required to ensure the smoothness of this new system implementation.
  20. 20. 20 Skills Analysis One of the main issues during ERP implementation is training. As this is a new system, most of the operator / user will require a certain specific training for their job purposes. To find out who needs to be trained and what kind of training required, the company need to perform skills analysis. Every individual employee who may work in ERP system will be audited their qualification, skills, internal and external experiences to find the best position for each of them and to find out whether the company will need to hire new staff or external consultants to ensure the business operates adequately. The final result of analysis will produce a detailed list of appropriate operator for each position, training required for each personnel and overall calculation on training costs. b. Initiating & Managing Change Management In ERP Summarising stages of initiating change management described by John Kotter in his book ‘Leading Change” and implementing them into ERP implementation.  Understanding company pressure As most of enterprises now are using ERP system for their technology support, implementing ERP is no longer an option for this kind of business. Businesses are enforced by the environment to implement the same system as their competitors, or back-off from this aggressive market. Developing a sense of urgency will normally bring the whole components in the company into one voice.  Preparing qualified team as pioneer When a company plans to implement ERP, the first main task that must be prepared is establishing a pioneer team. This team must be consist of highly qualified personnel, they must carry one absolute voice and capable to conduit and accommodate the curiosity of other employees to the new ERP system. They will work together as a solid team to lead the change.  Establish a clear vision and strategy Nothing worse than planning a new system such as ERP without clear vision, where the company will lead to and / or without understanding the whole strategy how to achieve the aims. By drawing a clear vision and strategy in how to achieve that vision, the employees will understand how the new system will benefit them and they will progressively change their effort to support the implementation.  Constantly communicate the vision and strategy Once the vision and its strategy established, the company needs to constantly communicate them to the employees. Since ERP system has been built as an integrated system which require a collaboration between employer and its employees, harmonic communication is playing an important role in the success of the system which leads to the success of the business.
  21. 21. 21  Strengthen ERP implementation plan Get rid of anything which may weaken ERP implementation plan, including any unsuitable ideas, company structures, activities as well as existing system which may potentially undermining or threatening the new system implementation. However in doing so, company must try to keep its existence and avoid any obstruction to their foundation.  Build short term implementation wins Many ERP implementation failures happened because long term wins / aims are too abstract for most people. In most of the time “increasing productivity and efficiency by integrating information system between production plant and ordering system from sales department” is more understandable than just “increasing production and sales” as company’s future win.  Formulate short term wins as guidance and implement new ERP approach Use the understanding of short term wins and imposed by new ERP system approach, the company will start to increase their performance “through customer and productivity oriented behaviour, better leadership and more effective management”. Benchmarking is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost. In the process of benchmarking, management identifies the best firms in their industry, or in another industry where similar processes exist, and compare the results and processes of specific areas or targets to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful. There is no single benchmarking process that has been universally adopted. The wide appeal and acceptance of benchmarking has led to the emergence of various benchmarking methodologies. Process benchmarking - focuses on selected processes within an organization rather than on the organization as a whole. The initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is to benchmark cost and efficiency; increasingly applied to back-office processes where outsourcing may be a consideration. Performance benchmarking - allows the initiator firm to assess their competitive position by comparing products and services with those of target firms. Product benchmarking - the process of designing new products or upgrades to current ones. This process can sometimes involve reverse engineering which is taking apart competitors products to find strengths and weaknesses.
  22. 22. 22 7. The Ideal (Typical) ERP System An ERP system would qualify as the best model for enterprise wide solution architecture, if it chains all the below organizational processes together with a central database repository and a fused computing platform. a. Functional Scope • Manufacturing: Engineering, resource & capacity planning, material planning, workflow management, shop floor management, quality control, bills of material, manufacturing process, etc. • Financials: Accounts payable, accounts receivable, fixed assets, general ledger, cash management, Costing, and billing (contract/service) • Human Resource: Recruitment, benefits, compensations, training, payroll, time and attendance, labor rules, people management • Materials/Inventory management: Inventory management, supply chain planning, supplier scheduling, claim processing, sales order administration, procurement planning, transportation and distribution • Projects: Costing, billing, activity management, time and expense • Sales: Sales and marketing, service, commissions, customer contact and after sales support • Data/ Knowledge Warehouse: Generally, this is an information storehouse that can be accessed by organizations, customers, suppliers and employees for their learning and orientation b. Core Processes The 3 Core Processes that an ERP must support out of the box are: 1. Order-To-Cash – The blood flowing through every commercial entity is customers orders. All businesses are exist to make money from selling products (or a service, which can be considered as a type of product in our context). Like other core processes, Order-To-Cash can be broken down into sub-processes – creating a customer and product master records, opening a customer order, allocating stock to that order, picking and shipping, invoicing and finally getting paid. When you go to your local grocery store, the entire Order-To-Cash process can take about 30 seconds from start till end. If you would have ordered an airplane, it might take 10 years until the order was completed.
  23. 23. 23 2. Procure-To-Pay – Unless you found a way to produce products from thin air, you would probably have to get the products you sell from a supplier. There are two types of suppliers – one is external – a vendor, the other one is internal – your production plant. The Procure-To-Pay process refers to the first type. It usually starts with a purchase requisite from one of the departments in your organizations (for smaller companies that step is often omitted), which is converted, after some price and terms negotiation with your vendor, to a purchase order which is sent to your vendor. The vendor, usually upon receiving your order will ship you the ordered products (not necessarily all the products you ordered are shipped to you as it depends on the products’ availability) together with an invoice. The invoice will be paid by your accounting team, and the process will be completed. 3. Make-To-Stock – The other way you might get products to sell to your customers is by producing them. Many companies constantly consider weather they should purchase products from vendors or manufacture them internally. An open source ERP system should support both processes as stand-alone process but should also be able to integrate them. Even if a company is manufacturing all the products it is selling, it will still need to procure raw materials, sub-parts or accessories associated with their products. The Make-To-Stock process will start with purchasing or producing internally the raw materials or components of the finished product, followed by some processing along a route – different processing activities in different work centers, following a pre – determined order, followed by inspection, packaging of the finished goods and either stocking of the finished goods or sending it directly to a customer to fulfill a specific customer order (in that case, the process is often called Make-To-Order). 8. Major ERP vendors and packages Major ERP vendors in today’s world are grouped into 3 categories: Tier I, Tier II and Tier III as shown in the table below: Sample Vendors Tier I Tier II Tier III SAP Oracle Oracle eBusiness Suite Oracle JD Edwards Oracle Peoplesoft Misrosoft Dynamics Epicor Sage Infor IFS QAD Lawson CDC Software ABAS Activant Solutions Inc. Bowen and Groves Compiere Exact NetSuite Visibility CGS Hansa World Consona Syspro
  24. 24. 24 Small companies which usually have less than 30 users and less demanding needs prefer using Tier III software. Mid-size companies (between 30-100 users) that have outgrown Tier III packages often become Tier II clients. Tier I software is targeted for large enterprise company. 9. Business Process a. Importance Businesses are constantly seeking ways to improve performance, react to changing market demands, and achieve their long & short term goals. Backbone of this constant effort to increase efficiency is business process. In many cases ‘a business process’ cuts across the whole organization and may not focus on an individual department. Business Process – Definitions A business process is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities. Hammer & Champy’s (1993) ”A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.” Johansson et al. (1993) ”A set of linked activities that take an input and transform it to create an output. Ideally, the transformation that occurs in the process should add value to the input and create an output that is more useful and effective to the recipient either upstream or downstream.” A business process begins with a mission objective and ends with achievement of the business objective. A business process can be decomposed into several sub-processes, which have their own attributes, but also contribute to achieving the goal of the super- process. Business Processes are designed to add value for the customer and should not include unnecessary activities. The outcome of a well designed business process is increased effectiveness (value for the customer) and increased efficiency (less costs for the company). Useful business processes make and save money for the enterprise. b. List of characteristics for a typical business process. 1. Definability : It must have clearly defined boundaries, input and output. 2. Order : It must consist of activities that are ordered according to their position in time and space. 3. Customer : There must be a recipient of the process' outcome, a customer. 4. Value-adding : The transformation taking place within the process must add value to the recipient, either upstream or downstream. 5. Embeddedness : A process cannot exist in itself, it must be embedded in an organizational structure. 6. Cross-functionality : A process regularly can, but not necessarily must, span several functions.
  25. 25. 25 c. Business Process - Types. There are three types of business processes: 1. Management processes, the processes that govern the operation of a system. Typical management processes include "Corporate Governance" and "Strategic Management". 2. Operational processes, processes that constitute the core business and create the primary value stream. Typical operational processes are Purchasing, Manufacturing, Advertising and Sales. 3. Supporting processes, which support the core processes. Examples include Accounting, Recruitment, Call center, Technical support. d. Business Process - Example
  26. 26. 26 e. Business Process Documentation - Importance It is well worth the time and effort it takes to define and document business processes.  Prevents re-inventing the wheel (business process)for each project  Assures continuity of process and, therefore, the continuity of quality that the process represents  Makes the process knowledge person independent.  Makes training new employees and contractors easier; it gets them to productivity faster.  Makes possible a conscious examination of the processes to improve them. Makes it possible for an organization to learn from the past  Preserves the intellectual property of the organization. When it comes time to sell or merge, the existence of documented procedures facilitates the process, increases the value of the company. f. Essential elements of a business process Who? Who are the participants involved in the flow of the business process? What roles do they play in the organization? Are more entities than just people such as Organizations, applications, web services, etc. are part of the process? What? What tasks to the participants of a business process (People, applications, etc.) perform? How do they do what they do? Are the tasks automatic or manual? When? How do participants know when to start? When is the work finished? In what order do participants do their tasks? Do they do them sequentially or in parallel? If only sometimes, under what conditions? How long should each task take? Are there hard deadlines or not? If a task is not successfully completed, should it be tried again? When a business process contains tasks that are currently done by people only during the day, and examination of those tasks results in changing them to be automated and performed at any time, the people are then freed up for other tasks and the newly-automated tasks don't have to wait for a person to perform them.
  27. 27. 27 10. Specialized solutions related to ERP a. CRM Customer relationship management (CRM) is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes— mainly sales activities, but also those for marketing, customer service, and technical support. The overall goals are  To find, attract, and win new clients  Nurture and retain those the company already has  Entice former clients back into the fold  Reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments. Measuring and valuing customer relationships is critical to implementing this strategy. CRM Solutions: CRM systems are available in different flavors to satisfy different customer needs. Some of the types of CRM software are as given below: Sales force automation Sales force automation (SFA) involves using software to streamline all phases of the sales process, minimizing the time that sales representatives need to spend on each phase. This allows a business to use fewer sales representatives to manage their clients. At the heart of SFA is a contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Marketing CRM systems for marketing help the enterprise identify and target potential clients and generate leads for the sales team. A key marketing capability is tracking and measuring multichannel campaigns, including email, search, social media, telephone and direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. Alternatively, Prospect Relationship Management (PRM) solutions offer to track customer behavior and nurture them from first contact to sale, often cutting out the active sales process altogether. In a web-focused marketing CRM solution, organizations create and track specific web activities that help develop the client relationship. These activities may include such activities as free downloads, online video content, and online web presentations.
  28. 28. 28 Customer service and support Recognizing that service is an important factor in attracting and retaining customers, organizations are increasingly turning to technology to help them improve their clients’ experience while aiming to increase efficiency and minimize costs. Analytics Relevant analytics capabilities are often interwoven into applications for sales, marketing, and service. Sales analytics let companies monitor and understand client actions and preferences, through sales forecasting and data quality. These types of analytics are increasing in popularity as companies demand greater visibility into the performance of call centers and other service and support channels, in order to correct problems before they affect satisfaction levels. Support-focused applications typically include dashboards similar to those for sales, plus capabilities to measure and analyze response times, service quality, agent performance, and the frequency of various issues. SAP CRM The SAP CRM application is an integrated customer relationship management (CRM) software manufactured by SAP AG that targets business software requirements of midsize and large organizations in all industries and sectors. SAP's CRM solution is fully integrated with other components of SAP. It has several modules that support key functional areas including:  SAP CRM Sales Helps sales professionals become more knowledgeable, efficient and effective to retain profitable relationships. The application helps organizations plan, execute, and analyze sales operations throughout the sales cycle.  SAP CRM Marketing Marketers gain the essential business insights needed to make intelligent decisions, sharpen their focus on customers to drive demand and increase customer retention, and better manage marketing resources to do more with less.  SAP CRM Service Helps to reduce your service costs while enhancing customer satisfaction by streamlining your service operations and delivering exceptional customer service.  SAP CRM Analysis  SAP CRM Interaction Center  SAP CRM Web Channel (which includes E-Commerce, E-Marketing and E- Service)  SAP CRM Partner Channel Management
  29. 29. 29 b. SCM Supply Chain Management (SCM): Management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain and focusing attention on adding value. Throughout efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements. SAP-SCM SAP SCM offers customers a complete set of tools and capabilities that enable customers to perform supply chain networking, planning, execution, and coordination. SAP's SCM solution includes several modules that support key functional areas including: Planning Helps model your existing supply chain; set goals; and forecast, optimize, and schedule time, materials, and other resources with these planning activities. Execution Helps respond to demand through a responsive supply network in which distribution, transportation, and logistics are integrated into real-time planning processes. Collaboration Helps to do business in regions and countries where costs are lower, develop and maintain relationships with global suppliers, or outsource nonstrategic activities to suppliers. SAP SCM Collaboration helps foster collaborative relationships with suppliers, outsource manufacturers, and customers.
  30. 30. 30 c. PLM Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. Within PLM there are five primary areas; Systems engineering (SE) Systems engineering is focused on meeting all requirements, primary meeting customer needs, and coordinating the systems design process by involving all relevant disciplines. Product and portfolio management (PPM) Product and portfolio management is focused on managing resource allocation, tracking progress vs. plan for projects in the new product development projects that are in process. Portfolio management is a tool that assists management in tracking progress on new products and making trade-off decisions when allocating resources. Product Data Management (PDM) Product data management is focused on capturing and maintaining information on products and/or services through their development and useful life. Product design (CAx) Manufacturing process management (MPM) SAP PLM The SAP Product Lifecycle Management (SAP PLM) application provides you with a 360-degree-support for all product-related processes - from the first product idea, through manufacturing to product service. With SAP-PLM software, you can: Innovation Management can connect key functions including planning, innovation management, complex project execution, and product portfolio management. SAP solutions support the following processes related to innovation management: Strategy and planning, Managing innovative ideas, Program and project management & Portfolio management Integrated product development helps you support the whole product development process – from collaborative product development, component and task sourcing, to ramp-up to production. Product Compliance help you embed compliance controls across purchasing, development, manufacturing, sales, distribution, servicing, and recycling – to minimize your risk and protect your brand.
  31. 31. 31 d. SRM Supplier Relationship Management (SRM) is about developing two-way, mutually beneficial relationships with your most strategic supply partners that deliver greater levels of innovation and competitive advantage than could be achieved by operating independently. Stakeholder engagement & business support Strong and active support for SRM provided by C-level/senior executives and senior management, and broad support for SRM from key stakeholders at a functional level. Tools & systems IT systems are used widely and consistently across the organization to manage the contract lifecycle and capture supplier performance data. Value & measurement Lower costs for both customer and supplier are delivered by tackling waste and inefficiency in the supply chain. People & skills Cross-functional teams are assigned to oversee relationships with strategic suppliers and are led by the procurement/SRM function. SAP-SRM The SAP Supplier Relationship Management (SAP SRM) application automates, simplifies, and accelerates procure-to-pay processes for goods and services. With SAP SRM, you can reduce procurement costs, build collaborative supplier relationships, better manage supply bases, and improve your bottom line with innovative offerings and a faster time to market. SAP SRM enables key business processes, including: Procure to pay – Execute the operational activities of procurement, including self- service, plan-driven, and services procurement. With SAP SRM, you can integrate catalog-based requisitioning with your traditional procure-to-pay process and gain the benefits of e-procurement without losing your back-end enterprise resource planning processes. Centralized sourcing – Gain visibility into the demand for goods and services from multiple back-end systems, aggregate spend and streamline bidding processes, and collaborate with suppliers for faster and more efficient savings capture. SAP SRM can help you tap into new value through better business planning, improved supplier qualification, and more efficient supplier negotiation. Centralized contract management – Consolidate contract information across multiple systems and regions, distribute contract usage, ensure optimal contract selection and pricing, and track compliance and savings realization.
  32. 32. 32 Supplier collaboration – Link suppliers to your purchasing processes through the supplier portal. With SAP SRM, you can choose the optimal interaction channel for numerous business processes and documents and collaborate more effectively with suppliers in supplier-facing processes. Supplier evaluation – Manage your suppliers and reduce risk through supplier scorecarding. 11. ERP in Energy & Environment Industry How TXU Energy Uses ERP to Give Power to Customers By Kim S Nash Fri, Nov 19, 2010 Published at www. CIO — The electricity market in Texas is one of the most competitive in the United States. While electric utilities in other states dominate specific geographic regions, those in Texas compete across most of the state. TXU Energy, a subsidiary of $9.5 billion Energy Future Holdings, knew it couldn’t win on price alone. “On any given day, a customer can choose who to buy energy from,” says Kevin Chase, the company’s vice president and CIO. Executives decided they would meet this challenge by transforming the arm’s-length relationship TXU Energy had with its customers. In 2009, it launched the Customer Acquisition Relationship Engine (CARE), an SAP-based system that replaced 179 mainframe and client/server applications. CARE supports more than 2 million customers, delivering more and better data about their electricity usage to sales and customer-service agents, and to customers themselves. According to a study by Accenture, consumers increasingly want to control and reduce their electricity consumption, whether to save money or help the environment. Through CARE, TXU Energy has opened up account data to customers so that they can refine their electricity use and meet their budget goals. TXU Energy also sells iThermostat, an Internet-enabled thermostat that lets customers adjust their heat through an online portal, saving up to $360 per year.
  33. 33. 33 Power to the People Meanwhile, TXU Energy and other Texas energy companies are about one-third of the way through a five-year project to install digital “smart” meters for all customers. The meters measure a customer’s electricity use in 15-minute increments. TXU Energy customers can go online to query the company’s SAP system about this usage data, and may access billing information online or through an interactive voice- recognition phone system. A customer can ask, for example, how much electricity he uses between 8 p.m. and midnight or, using the iThermostat portal, pose what-if questions to see the financial impact of changing thermostat settings. He can also ask a customer-service agent to walk him through various scenarios. Once customers get used to these features, Chase says, “they won’t want to leave, not for half a cent less in price for a given month.” Self-service transactions at the website have tripled and use of the voice-recognition system has grown 35 percent since CARE was deployed, Chase says. Customers can use an iPhone, BlackBerry or other smartphone to access their iThermostat data. But the company is also building systems to let customers text requests for account information, Chase says. (He declines to say when that project will be done). “The burden is on us to make sure we’re interfacing with customers in ways they want.” URL: Customers Maintenance-oriented ERP solution for reliable wind energy Wind turbines and wind farms are costly and complex energy generation facilities. Wind turbines are subjected to very many different and strongly fluctuating loadings. The regular checking of their condition and the maintaining of their safe and reliable operation is the task of regular servicing and maintenance. These maintenance tasks are increasingly frequently transferred to the manufacturers or to companies which specialise in them.
  34. 34. 34 Company Figures & Costs in Control If you are such a wind turbine service provider you have to ensure the smooth operation of your customers’ turbines. In addition to qualified employees you will need a suitable and approved IT solution. More and more small to medium-sized enterprises (SMEs) are recognising that an integrated software solution to Enterprise Resource Planning (ERP) makes the day-to-day running of a business easier. This enables you to achieve your objectives significantly more quickly and cost-effectively. Concentrating on the essentials of your business You wish to use the software to the extent that suits you from the outset, without a great effort being necessary just to get familiarised with it? You also wish to structure your business processes in a flexible and clear way? Of course you do – so that you can concentrate on the essentials of what your business is about! Discover – as many of your counterparts already have – the advantages of Software On Demand, thus switching to automatic mode when it comes to information technology (IT): you use a comprehensive business software via the Web, paying a monthly amount per user – and the software provider takes care of the rest. That way, expensive servers and internal IT resources are simply a thing of the past. You can afford this solution! The comprehensive SaaS (Software as a Service) solution for SMEs is called SAP® Business ByDesign™. It is aimed at companies who wish to keep the amount of resources that they allocate to IT as low as possible, while nevertheless benefitting from the advantages of a comprehensive business solution. The software brings together classic ERP functions with efficient Customer Relationship Management (CRM) and easy-to-operate tools of analysis. What you receive from us now is SAP® Business ByDesign™, a maintenance-oriented software solution. That way, as an SME or as a start-up, you benefit from the more than 25 years of expertise that we have acquired in the area of maintenance and management of operations, and can use a fully integrated software solution for your commercial tasks, but also for the maintenance management and project management of your wind turbines URL:
  35. 35. 35 Information about the Energy and Environment Industry The environmental impact of the energy industry is diverse. Energy has been harnessed by human beings for millennia. Initially it was with the use of fire for light, heat, cooking and for safety, and its use can be traced back at least 1.9 million years. In recent years there has been a trend towards the increased commercialization of various renewable energy sources. Consumption of fossil fuel resources leads to global warming and climate change. In most parts of the world little change is being made to slow these changes. If the peak oil theory proves true, and more explorations of viable alternative energy sources are made, our impact could be less hostile to our environment. Rapidly advancing technologies can achieve a transition of energy generation, water and waste management, and food production towards better environmental and energy usage practices using methods of systems ecology and industrial ecology. Problems faced by the industry Climate change The scientific consensus on global warming and climate change is that it is caused by anthropogenic greenhouse gas emissions, the majority of which comes from burning fossil fuels with deforestation and some agricultural practices being also major contributors. Although there is a highly publicized denial of climate change, the vast majority of scientists working in climatology accept that it is due to human activity. The IPCC report Climate Change 2007: Climate Change Impacts, Adaptation and Vulnerability predicts that climate change will cause shortages of food and water and increased risk of flooding that will affect billions of people, particularly those living in poverty. One measurement of greenhouse gas related and other Externality comparisons between energy sources can be found in the ExternE project by the Paul Scherrer Institut and the University of Stuttgart which was funded by the European Commission. According to that study, hydroelectric electricity produces the lowest CO2 emissions, wind produces the second-lowest, nuclear energy produces the third-lowest and solar photovoltaic produces the fourth-lowest.
  36. 36. 36 Biofuel use Biofuel is defined as solid, liquid or gaseous fuel obtained from relatively recently lifeless or living biological material and is different from fossil fuels, which are derived from long-dead biological material. Various plants and plant-derived materials are used for biofuel manufacturing. Firewood Unsustainable firewood harvesting can lead to loss of biodiversity and erosion due to loss of forest cover. An example of this is a 40 year study done by the University of Leeds of African forests, which account for a third of the world's total tropical forest which demonstrates that Africa is a significant carbon sink. A climate change expert, Lee White states that "To get an idea of the value of the sink, the removal of nearly 5 billion tonnes of carbon dioxide from the atmosphere by intact tropical forests is at issue. According to the U.N. the African continent is losing forest twice as fast as the rest of the world. "Once upon a time, Africa boasted seven million square kilometers of forest but a third of that has been lost, most of it to charcoal." Fossil fuel use The three fossil fuel types are coal, petroleum and natural gas. It was estimated by the Energy Information Administration that in 2006 primary sources of energy consisted of petroleum 36.8%, coal 26.6%, natural gas 22.9%, amounting to an 86% share for fossil fuels in primary energy production in the world. The burning of fossil fuels produces around 21.3 billion tonnes (21.3 gigatonnes) of carbon dioxide per year, but it is estimated that natural processes can only absorb about half of that amount, so there is a net increase of 10.65 billion tonnes of atmospheric carbon dioxide per year (one tonne of atmospheric carbon is equivalent to 44/12 or 3.7 tonnes of carbon). Carbon dioxide is one of the greenhouse gases that enhances radiative forcing and contributes to global warming, causing the average surface temperature of the Earth to rise in response, which climate scientists agree will cause major adverse effects.
  37. 37. 37 Coal The environmental impact of coal mining and burning is diverse. Legislation passed by the U.S. Congress in 1990 required the United States Environmental Protection Agency (EPA) to issue a plan to alleviate toxic pollution from coal-fired power plants. After delay and litigation, the EPA now has a court-imposed deadline of March 16, 2011, to issue its report. Petroleum The environmental impact of petroleum is often negative because it is toxic to almost all forms of life. The possibility of climate change exists. Petroleum, commonly referred to as oil, is closely linked to virtually all aspects of present society, especially for transportation and heating for both homes and for commercial activities. Gas Natural gas is often described as the cleanest fossil fuel, producing less carbon dioxide per joule delivered than either coal or oil. and far fewer pollutants than other fossil fuels. However, in absolute terms it does contribute substantially to global carbon emissions, and this contribution is projected to grow. According to the IPCC Fourth Assessment Report, in 2004 natural gas produced about 5,300 Mt/yr of CO2 emissions, while coal and oil produced 10,600 and 10,200 respectively but by 2030, according to an updated version of the SRES B2 emissions scenario, natural gas would be the source of 11,000 Mt/yr, with coal and oil now 8,400 and 17,200 respectively. (Total global emissions for 2004 were estimated at over 27,200 Mt.) In addition, natural gas itself is a greenhouse gas far more potent than carbon dioxide when released into the atmosphere but is released in smaller amounts. Electricity generation The environmental impact of electricity generation is significant because modern society uses large amounts of electrical power. This power is normally generated at power plants that convert some other kind of energy into electrical power. Each such system has advantages and disadvantages, but many of them pose environmental concerns.
  38. 38. 38 Reservoirs The environmental impact of reservoirs is coming under ever increasing scrutiny as the world demand for water and energy increases and the number and size of reservoirs increases. Dams and the reservoirs can be used to supply drinking water, generate hydroelectric power, increasing the water supply for irrigation, provide recreational opportunities and to improve certain aspects of the environment. However, adverse environmental and sociological impacts have also been identified during and after many reservoir constructions. Whether reservoir projects are ultimately beneficial or detrimental—to both the environment and surrounding human populations— has been debated since the 1960s and probably long before that. In 1960 the construction of Llyn Celyn and the flooding of Capel Celyn provoked political uproar which continues to this day. More recently, the construction of Three Gorges Dam and other similar projects throughout Asia, Africa and Latin America have generated considerable environmental and political debate. Nuclear power The environmental impact of nuclear power results from the nuclear fuel cycle, operation, and the effects of accidents such as the Chernobyl disaster (1986) and Fukushima I nuclear accidents Wind power Compared to the environmental effects of traditional energy sources, the environmental effects of wind power are relatively minor. Wind power consumes no fuel, and emits almost negligible air pollution, unlike fossil fuel power sources. The energy consumed to manufacture and transport the materials used to build a wind power plant is paid back with a typical energy return on investment of about 20, placing wind in a favorable position relative to other forms of power generation such as fossil fuels, nuclear and solar. While a wind farm may cover a large area of land, many land uses such as agriculture are compatible, with only small areas of turbine foundations and infrastructure made unavailable for use Energy conservation Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources. Energy conservation can result in increased financial capital, environmental quality, national security, personal security, and human comfort Individuals and organizations that are direct consumers of energy choose to conserve energy to reduce energy costs and promote economic security. Industrial and commercial users can increase energy use efficiency to maximize profit.
  39. 39. 39 Energy policy Energy policy is the manner in which a given entity (often governmental) has decided to address issues of energy development including energy production, distribution and consumption. The attributes of energy policy may include legislation, international treaties, incentives to investment, guidelines for energy conservation, taxation and other public policy techniques. Sustainable energy Sustainable energy is the provision of energy that meets the needs of the present without compromising the ability of future generations to meet their needs. Sustainable energy sources are most often regarded as including all renewable energy sources, such as hydroelectricity, solar energy, wind energy, wave power, geothermal energy, bioenergy, and tidal power. It usually also includes technologies that improve energy efficiency. Economic instruments Various economic instruments can be used to steer society toward sustainable energy. Some of these methods include ecotaxes and emissions trading. Green consumerism is enhanced on free energy markets. In Europe environmental NGOs have developed EKOenergy label to help consumers to choose more sustainable electricity products. Ecological economics aims to address some of the interdependence and coevolution of human economies and natural ecosystems over time and space. Environmental economics, is the mainstream economic analysis of the environment, which views the economy as a subsystem of the ecosystem, while ecological economics emphasis is upon preserving natural capital. Biophysical economics sometimes referred to as thermoeconomics is discussed in the field of ecological economics and relates directly to energy conversion, which itself is related to the fields of sustainability and sustainable development especially in the area of carbon burning.
  40. 40. 40 Few examples of companies using ERP products/ solutions Microsoft Dynamics ERP is enterprise resource planning (ERP) software primarily geared toward midsize organizations as well as subsidiaries and divisions of larger organizations. Its applications are part of Microsoft Dynamics, a line of business management software owned and developed by Microsoft. Microsoft Dynamics ERP comprises four primary products: Microsoft Dynamics AX, Microsoft Dynamics GP, Microsoft Dynamics NAV, and Microsoft Dynamics SL. Products Microsoft Dynamics ERP includes five primary products: Microsoft Dynamics AX (formerly Axapta) is designed to help organizations do business across locations and countries by standardizing processes and helping to simplify compliance. The latest version is Microsoft Dynamics AX 2012. Microsoft Dynamics GP (formerly Great Plains Software) can help companies adapt to new opportunities and growth by managing changing markets, enabling unique business requirements, and connecting business processes across the organization. The latest version is Microsoft Dynamics GP 2010 (version 11.0). Microsoft Dynamics NAV (formerly Navision) is designed to help organizations streamline specialized and industry-specific business processes. The latest version is Microsoft Dynamics NAV 2013. Microsoft Dynamics SL (formerly Solomon IV) can help project-driven organizations obtain reports and business analysis and automate projects across company divisions and locations. The latest version is Microsoft Dynamics SL 7.0. Microsoft Dynamics C5 (formerly Concorde C5) can assist with finance, manufacturing, supply chains, analytics and electronic commerce for small and medium-sized enterprises. The latest version is Microsoft Dynamics C5 2010.