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Introduction to ERP
Managing and automating the business processes is one of the core errands of any given enterprise. Conventionally enterprises created their own software packages to manage their automation needs and the software used to be strict to their own business functions; until the concept of standard customize-able software came into the market.
The thought was to create a software package that would cater to all kind of businesses and processes. The software should be customize-able and scale-able enough to make sure any given enterprise can pick it and tweak it based on their requirements. That thought gave birth to the ERP. Software, which is created keeping various industries in mind, in order to satisfy the business needs on a global platform, still being adaptable to support any further extensions / customization. But before that, it is essential to understand the requirement of software to manage the business process. So what all processes are involved in an enterprise that needs automation / management? To answer this question,
Lets take an example. Suppose you are running a small grocery shop named "Raja Grocery", so the typical operation as a shop owner is you basically buy groceries from some big seller and stock it in your shop. Now people come to your shop for day-to-day needs and buy stuff from your shop at a slightly higher price than what you originally bought and stocked it in your shop.
Occasionally you may not be carrying items or run out of stock that people ask for so you make a note of it and promise the person to come back tomorrow and they will get their item. So far so good, now let’s name some entities before we proceed and things get complicated. The big seller from whom you buy stock is called as Vendor, the people who come to your shop to buy things are known as customers, the stock in your shop is known as inventory.
So far we have identified few entities that play an active role in your day-to-day operations. As time goes by, your business expands and now you take orders over the phone and provide service to deliver the items to your customers, so you hire people to help you out in maintaining the inventory, do the delivery part and all the necessary stuff to keep the business running smoothly. The people you hire are known as employees.
So in this small shop, you typically manage the bookkeeping activities by hand using a notepad or something similar. Now imagine the same setup on a larger scale where you have more than 10,000 customers, have more than 1000 vendors, have more than 1000 employees and have a huge warehouse to maintain your inventory. Do you think you can manage all that information using pen and paper? Absolutely no way! Your business will come to a sudden stop sign.
To facilitate big businesses, companies like Oracle Corporation have created huge software known in the category of ERP (Enterprise Resource Planning) as Oracle Applications. Now coming to think of it, Oracle Apps is not one huge software, instead it is a collection of software known as modules that are integrated and talk to each other.
Now what is meant by integrated? First let us identify the modules by entities. For e.g Purchasing and Account Payables deal with the vendors since you typically purchase from vendors and eventually have to pay the dues. Oracle Purchasing handles all the requisitions and purchase orders to the vendors whereas Oracle Accounts Payables handles all the payments to the vendors.
Similarly Oracle Inventory deals with the items you maintain in stock, warehouse etc. Dealing with customers is handled collectively with the help of Oracle Receivables and Oracle Order Management. Order Management helps you collect all the information that your customer is ordering over the phone or web store etc. whereas Receivables help you collect the money for the orders that are delivered to the customers.
Now who maintains the paychecks, benefits of the 1000 employees? right! it is managed by Oracle Human Resources. So you get the idea by now that for each logical function there is a separate module that helps to execute and maintain that function.
So all the individual functions are being taken care but how do I know if I am making profit or loss? That's where integration comes into play. There is another module known as Oracle General Ledger. This module receives information from all the different transaction modules and summarizes them in order to help you create profit and loss statements, reports for paying Taxes etc.
Just to simplify the explanation, when you pay your employees that payment is reported back to General Ledgers as cost i.e money going out, when you purchase inventory items the information is transferred to GL as money going out, and so is the case when you pay your vendors. Similarly when you receive items in your inventory it is transferred to GL as money coming in, when your customer sends payment it is transferred to GL as money coming in. So all the different transaction modules report to GL (General Ledger) as either "money going in" or "money going out", the net result will tell you if you are making a profit or loss.
All the equipment, shops, warehouses, computers can be termed as Assets and they are managed by Oracle Fixed Assets.
If we see, as they have the business to run, they will need software to automate all their work. The one that should save all the transactions, and should be able to tell the business management, how much did they spend on what, what is the net profit, how much did they pay to their employees etc. The more information they have, the better is the grip on their business, because with the detailed information, they can make budget forecasting, budget management etc with ease.
To automate the books, some company might give them a software that will be made just for their business need, which will have different modules, like Purchasing (to track the raw material cost), Inventory (to manage the entire stocks of materials), Human resource (to enable them manage their Employees and Ex-employees with automated pay checks and benefits), Order management (to manage all the orders and deliveries), and finally a General Ledger (to give them an eye on the entire financials) combined together. This one will be like a jackpot, everything together. But yes, they will have to pay a lot for it, just because it’s made just for their business need with their business rules embedded on to it.
So what’s the solution now? Let someone come up with a software package, which will be very generic in nature, however intelligent enough to be able to be customized based on any business need and business rule.
We just discussed a software product that is similar to ERP. ERP is very generic software that can be customized based on any business need. Although the design will be constant, it will still have handles, so that the enterprises can tweak it, based on their business needs. Again fail proof, as it’s tested and being used by a lot of other firms with a broad spectrum of industries. It will also be capable of Inter-communications of Modules, which solves a lot of the business logic implementation issues. Another big advantage of ERP is that, it is frangible. The enterprise can pick modules that they want, club them together and then start using it. They don't have to buy everything in an ERP. For an example, if someone does not want a Material Management module, they just wouldn’t buy it. Buy everything else and start using them. Oracle E-Business suite, PeopleSoft, SAP, Sage, MS Dynamics, JD Edwards, Baan are few big names in the ERP space today.
History of ERP
It was the early 60s where enterprises made software to handle their material management needs. Although the software inured to be highly customized, it was used to handle the Materials and Inventory of the given firm. Later in 70s they came up with something called MRP (Materials Resource Planning), this was better software that could manage the Procurement and Inventory with the logic of timeliness. Then in the 80s MRP-II came. It was just an extension of MRP with the advantage of managing shop floors and Distribution. Finally they started involving all other functionalities as well, like Finance, Order management, Human Resource etc, and then the software were named more suitably as ERP.
Oracle has been a big name in the software industry since 1980s. Because of its robust hold on the database management and Business intelligence sector, it was one of the leading software industries that time. It started off with Oracle financials as one of its products in 1980s. It was a software product that was capable of managing the financial ledgers of a firm. That incepted the role of Oracle in ERP market. Gradually with time, it started adding different other modules to its ERP sphere. Products like Supply chain management and Human Resource Management increased its visibility and made it a big name in the ERP market.
It started introducing oracle forms and reports as tools to create and extend GUI for its products, they named it, Oracle developers 2000; very popularly known as Oracle D2K. D2K brought in a fantastic GUI and reporting capability to the ERP world, and made the Oracle ERP, one of its kinds back then. The entire package was then called Oracle E-Business Suite and came with the first release as Oracle 10i. Eventually, based on the requirements, a lot of modules and sub-modules are added to the product. Along with that, came in a lot of tools like Oracle Workflow, AME, XML Publisher. These tools increased the scalability of the entire Product. Oracle released its E-Business Suite version 11i in the mid of 1990s. It had near about 50 modules and many more sub-modules. In 2006 Oracle released Release 12, popularly termed as Oracle R12.
While the E-Business Suite track kept on challenging its own brand with wonderful new features release by release, Oracle never stopped working on the supporting tool. It released the Oracle Developer suite 6i, which was an advanced and sophisticated version of the D2K. Later Oracle Developer suite 10g and 11g came up with an amazing product embedded to it. The new addition were called Oracle Fusion Middleware and Oracle Applications framework. These two products changed the look and feel of the ERP line of Products. Finally grabbing a strong base in market, with the acquisitions of PeopleSoft, JDE and sun Microsystems, Oracle was capable of synthesizing its ERP line of products into a large-scale emblem. They called it Oracle Fusion Applications. It was released in late 2010, and still being piloted on a major set of its clients. The embellishment through innovation continues and so does the chronicle of Oracle E-Business Suite.
Rest of the Market
E-Biz holds the second largest chunk of market share in this field, followed by SAP. After the Acquisition of PeopleSoft Inc, Sun and JDE, Oracle is measured to be one of the Prime stake holders in this market. It’s considered to be the one and only package in market with 360 degrees business support. Looking at the other contenders in Market, SAP has the biggest pie. It has its own flavors to the segments it serves. Apart from Oracle and SAP, some other notable names are Bann, PeopleSoft, JDE, Microsoft Dynamics and Sage.
R12.x Oracle E-Business Suite Essentials for Implementers
Overview of Oracle Applications
Oracle E-Business Suite is the most comprehensive suite of integrated, global business applications that enable organizations to make better decisions, reduce costs, and increase performance.
Oracle E-Business Suite (EBS) version 12 is an internet enabled product that can be managed from a single site. A company can operate a single data center with a single database, similar to other ERP products. This release was launched in February 2007 and contains a number of product lines which users can implement for their business. Oracle EBS includes the company’s enterprise resource planning (ERP) product as well as Human Capital Management, supply chain management (SCM) and customer relationship management (CRM) applications. Each application is licensed separately so companies can select the combination that is suitable for their business processes.
The applications found in the Oracle EBS include:
Oracle Human Resource Management System (HRMS)
Oracle Supply Chain Applications
Oracle Order Management
Oracle Transportation Management
Oracle Warehouse Management System
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