What is ERP and why do companies need ERP Software?

What is ERP and why do companies need ERP Software?

ERP means Enterprise Resource Planning. A more practical thought is that if an “Enterprise” (an organization or a company) is “Planning” to increase productivity and efficiency by integrating the “Resource”, then it is ERP.

What are the resources? It is called as 4M’s in any type of organization like Man, Machine, Method, and Materials.

Every ERP Software in the globe is built based on this concept in mind. Every company needs an Accounting or ERP solution which is a fact of any business.

Depending on the needs of each department, a company may utilize one or many pieces of software.For instance, the finance department might use budgeting software made with Microsoft technologies, the accounts department might use accounting software made with Oracle technologies, the personnel department might use payroll software made with Java, the inventory department might use IBM warehousing software, and so on.

In addition to the technologies, every software is unique. Additionally, the database utilized to store the data is not the same as Oracle, SQL Server, DB/2, etc

Most importantly, the data available in one department is not available for the other department, as the data is not stored in a centralized location. This situation raises many complexities in a business scenario of an enterprise organization and reduces the productivity of the company as well as impacts the efficiency of the employees.

For instance, the sales manager doesn’t know the inventory stock in the warehouse for committing the sales order with a customer and the Vice President of the company doesn’t know the financial status of the company until unless visiting the department or have a phone call with them.

ERP software takes into account all of these different business scenarios and functional flow scenarios and provides enterprise clients with a solution by centralizing the database through a server infrastructure and connecting the workflows of several departments within the company.

As a result, daily data from each department will be kept on a consolidated server. To carry out their daily tasks, each authorized employee will be able to examine real-time data online without having to communicate with anyone. Lastly, a single mouse click allows the company’s vice president to examine all of the organization’s data. Fantastic work, huh?

The worldwide ERP software market per year is more than $25Billion which grows 10-20% every year and the demand will be increased in small and medium enterprise business segments through SaaS (Software-as-a-Service) and Cloud (Off-Premises Infrastructure) platforms.

Subsequently, the demand for ERP testing professionals is also increasing in the IT industry. Many ERP implementation projects spent more than 50% of their budget on testing and related activities.

Even though we call it ERP Software, it is not “just software” and the ERP vendor’s job is not completed by selling ERP software to the customer. ERP is actually a “business solution” to an organization by automating the business process and workflow inside the company. This will not be achieved by just installing the software and setting up the infrastructure, rather the success of ERP implementation requires a lot of dedicated workaround and people involvement.

In this ERP world, how to select and evaluate the best ERP software, which is having the quality and performance as expected is a big question and dilemma amongst the enterprise customers.

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Recommended Tools:

#1) Oracle NetSuite

Suggested read => Best AP Automation Software Solutions

Oracle NetSuite has an ERP solution to streamline mission-critical processes. Its features and functionalities will give you clear visibility and control over the business.

Oracle NetSuite offers a Quality Management solution. This platform has functionalities to define the tests, set parameters for evaluating the results, and apply them to relevant items and operations for receiving and in-process testing.

Features:

• NetSuite provides the features of Test Definition that will let you specify the type of inspection, tests that need to be performed, acceptable limits, minimum qualifications, etc.
• You will have a centrally managed list of tests or inspections.
• The tool can capture measurements and compare them to pass or fail limits.
• It has features for Data Collection.

=> Get Oracle NetSuite Free Product Tour Here

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#2) Avo Assure

You can accomplish end-to-end testing with Avo Assure, a 100% no-code and heterogeneous test automation solution. Additionally, businesses may produce high-quality SAP and non-SAP apps in half the time thanks to the user-friendly and intuitive user interface. This makes SAP migrations and upgrades even quicker and easier.

With Avo Assure, you can:

• Ensure seamless cross-platform testing across web, mobile, desktop, ERP applications, mainframes, associated emulators, and more without downloading and installing plugins individually for each platform.
• Achieves more than 90% test automation coverage without writing a single line of code.
• Migrate from ECC to S/4HANA by running end-to-end tests thoroughly and as often required.
• Leverage 100s of pre-built test cases with SAP test accelerators and fast forward SAP releases using SAP test accelerators.
• Easily visualize SAP test flows through Mindmaps. Define test plans and design test flow with a few clicks of the buttons.
• Use the Mindmap extension to reuse existing test constructs to build new individual scenarios or stitch together end-to-end business process flows.
• With a single click of a button, enable accessibility testing. It supports WCAG standards, Section 508, and ARIA.
• Through the Smart Scheduling and Execution feature, execute multiple scenarios simultaneously
• Leverage seamless integrations with SDLC and continuous integration systems like Jira, Sauce Labs, ALM, TFS, Jenkins, and QTest.
• Analyze the reports easily because Avo Assure offers screenshots and videos of each step of execution.

=> Visit Avo Assure Website

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A snapshot of the ERP enabled business organization will be captured as below.

Importance of ERP Testing

The majority of ERP Implementation projects fail because of improper test planning and testing. To understand the importance of ERP testing, testing professionals need to understand the variations of the ERP systems.

Further Read => Best ERP Automation Software for 2023

ERP systems may be available in multiple versions for multiple domains targeting multiple customers. For example, major ERP vendors are having different versions and flavors of their ERP software as below.

• Microsoft Dynamics NAV: Designed for small and medium enterprise customers
• Microsoft Dynamics AX: Designed for large enterprise customers
  • System testing, performance testing, and load testing are important, apart from functional testing.
• SAP Insurance: Designed for Insurance companies
• SAP Banking: Designed for Banking sectors
• SAP Chemical: Designed for Chemical companies
  • Domain knowledge and industry experience are important, apart from functional testing.

Similarly, the products from Oracle viz., E-Business Suite, PeopleSoft, Siebel and JD Edwards etc, have different features, target customers, and industries, where the testing team needs to understand the purpose and functionalities of the complete systems.

There are two types of testing teams available in ERP companies:

• “Core testing team” to test the ‘base ERP software’ with the static functionalities.
• “Implementation testing team” to test the ‘implementation project’ with dynamic and customized functionalities.

When a feature and functionality is customized as per the customer requirements, the modified impact will be on multiple modules and systems. The testing team should capture each and every change and the related impact for the complete traceability.

Automated ERP testing

ERP firms test their systems with a specialized testing team. Testing a system this size necessitates “automated” test execution. ERP firms create their automated testing framework and set up their testing infrastructure based on the needs.

Since it takes a long time to finish one round of manual testing, automated testing is recommended for ERP testing. It is clear that ERP implementation fails if all system components are not tested and 100% quality is guaranteed.

Also Read = >> Best MRP (Manufacturing Resource Planning) Tools

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Below is the list of different types of ERP testing as most of the ERP systems are being built in an SOA (Service Oriented Architecture).

• Functional testing
• Data Handling testing
• Integrity testing
• System testing
• Security testing
• Reliability testing
• Adaptability testing
• Scalability testing
• Usability testing
• Performance testing
• Load testing
• Interface testing
• Interoperability testing
• Regression testing
• Infrastructure testing
• Image testing
• Installation testing
• Parallel testing

ERP Vendors

There are many ERP vendors in the International market.

Below is a quick list of ERP software and its vendors based on market share, cost, implementation model, average time for deployment, platform, and delivery, technology, features, and functionalities. Each vendor offers different flavors of the product depending on the customer’s domain and industry verticals.

• SAP (#1) – From SAP since 1972, to major market shareholders and millions of users worldwide.
• Microsoft Dynamics (#2) – From Microsoft Corporation, millions of users worldwide.
• Oracle E-Business Suite (#3) – From Oracle Corporation to millions of users worldwide.
• Epicor ERP
• Sage ERP
• NetSuite
• Infor ERP
• Ramco ERP
• Focus ERP
• Tally ERP

ERP Modules

The ERP Modules: What Are They? An ERP module is a collection of features and functionalities tailored to a particular set of departmental operations or processes.

A company’s sales order, payment, and customer management processes, for instance, can be grouped as a unique functional workflow under the “Sales & Distribution” module. Likewise, employee attendance, payroll, and personnel management can be grouped as a unique functional workflow under the “HR & Payroll” module.

Understanding the features, functions, and workflow is crucial for testing. ERP module testing can be difficult and crucial if one lacks the necessary expertise.

ERP vendors may have different module names for grouping the functionalities, but the concept will be the same. For example, let us have a quick look at a few SAP modules to have an idea if we are performing SAP Testing.

• SAP FICO (for Financial and Cost Accounting)
• SAP HR (for Human Resources)
• SAP MM (for Materials Management)
• SAP PP (for Production Planning)
• SAP SD (for Sales and Distribution)
• SAP CRM (for Customer Relationship Management)
• SAP SCM (for Supply Chain Management)

Similarly, all ERP software have such modules as per their functionality grouping and naming conventions.

Why is ERP Testing Critical?

If the testing plans do not cover the entire implementation phase roadmap, ERP testing becomes extremely important. Since every module in the system is fully interconnected and integrated, every function depends on the functionality of every other module or system.

For instance, the system must verify the customer’s credit limit in the “Customer” module and the stock level in the “Inventory” module before creating a sales order in the “Sales” module.

The functionality depends not only on other modules but also on external systems. For example, a system that supports multiple currencies receives the current exchange rate from an external live system, and it may be necessary to obtain the shipping rate for the sales order from an external live system. Additionally, the sales tax of the inventory items may be required from a government agency etc.

When a test case is written based on the above business use case, a tester needs to understand the complete workflow of the functionality and the dependency of the workflow, otherwise, the test case will fail or remain incomplete.

Below diagram gives an overview of a sales order process and the dependency of internal and external systems.

In addition to functional testing, as in the business use case mentioned above, the more crucial “ERP Implementation” phase of testing comes next. Many adjustments and customizations are made throughout the ERP implementation process based on the infrastructure and needs of the client.

This type of testing includes user acceptability and performance testing in addition to standard functional testing. The live system is interacted with by a number of internal and external components.

To create test plans and a test suite that covers all possible use cases for the application being tested, testing professionals must have a thorough understanding of all the components and their functionalities.

The successful ERP testing professionals are trained and worked on a lot of different ERP implementations for many years and gather experience to become a capable ERP tester with an additional credential as a “subject matter expert” or a “domain expert”.

The heart of many ERP systems is in Accounting or Finance modules, where most of the testers lack accounting knowledge and find it hard to understand the financial concepts and the general ledger system. The complexity in the inter-related and the outer-related workflow of the ERP systems demotivates the testing professionals in writing a proper ERP test suite.

In particular, the implementation of ERP systems requires various forms of system testing, multiple user acceptance testing, multiple levels of performance and load testing with millions of “live test data” from the existing systems which need to be imported to the new ERP system.

The primary difficulty lies in gathering input data for feature testing and evaluating the accuracy of the output data, both of which call for domain expertise.

For instance, gathering information to test sales order or general ledger transactions in ERP systems is not that simple. Understanding and evaluating the accuracy of output data in accordance with financial standards such as IFRS is crucial, even when the data is gathered for input purposes.

For instance, regular testers who are not familiar with balance sheets or trial balances are unable to comprehend a “balance sheet” that is constructed from general ledger transactions. The rationale is that the general ledger’s “balance sheet” is produced using numerous transactions from every module.

Can I Test ERP Software?

“Can I test the ERP system with the knowledge and experience I have?” is a crucial question for testing specialists. This question demands self-evaluation rather than a straightforward “Yes or No” response.

ERP systems are built for a variety of users, target a variety of domains, support a variety of currencies, and are available in different languages. Additionally, the testers will not test the entire ERP system by themselves.

Nobody is expected to be fully knowledgeable about all of the ERP modules, proficient in numerous languages, or exposed to various industries. To help them become ready for the ERP road-map, testing experts should ask themselves the following questions.

• May I know the ERP and ERP Modules?
• Have I written test cases for ERP before?
• Have I executed test cases for ERP before?
• Do I have any technical knowledge like Scripting, HTML, XML, and SQL?
• Do I have any industrial exposure like Pharmaceutical, Chemical, and Banking, etc?
• How many ERP modules am I going to test?
• Do I need training for ERP testing?
• Is the ERP testing manual or automated?
• Am I part of the Core testing team or the Implementation testing team?

ERP Testing Road-map

Let’s prepare ourselves with a road-map with a checklist for ERP testing. The point to note is that the “testing effort” might be almost equal to “development effort” for ERP testing and the ERP companies are trying to set up a platform and infrastructure to reduce the effort, but increasing the efficiency and productivity.

This is a quick checklist and may vary on a case-to-case basis.

ERP Testing Checklist:

Sl.No.	Action Item	Status
1.	Identify the scope of testing and check the ERP testing is for the base product or for the implementation project.
2.	Identify the total modules available / released in the product for the application under testing.
3.	Identify the target customers, system users, and industry verticals of the product to be implemented.
4.	Estimate the testing effort for writing testing plan, test suite, test cases, test execution and test reports.
5.	Check the status of previous testing strategy, test execution plans for the application under testing.
6.	Identify the business process to be tested and identify the business process to be automated.
7.	Identify the test scenarios to be tested and identify the test scenarios to be automated.
8.	Analyze the existing testing framework for manual and automated testing for the ERP application under testing.
9.	Check the existing / proposed automated testing tool is configured and the framework is well tested for execution.
10.	Setup the Quality Assurance strategy with the quality metrics identified for the ERP testing for both manual and automation.
11.	Analyse the automation test scripts for all the business use case scenarios are well reviewed and approved.
12.	Identify the best practices for improving the efficiency and productivity of testing efforts for both manual and automation.
13.	Form a testing team with the group of experienced professionals with the right skill set for both manual and automated ERP testing.
14.	Setup the testing framework for maintaining the test scripts which can be reusable in automation process.
15.	Escalate the test scenario / business use cases which are not feasible to test or not feasible for automation framework.
16.	Identify the process of collecting test data for both input and output and check the availability of domain expert to analyze the output data.

Conclusion

The principles, procedures, tactics, and criticalities of ERP testing must be understood by testing experts prior to beginning ERP testing. Yes, with a brief roadmap in hand, we are now prepared to begin the testing process.

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