Overview of enterprise systems
ERP is an
acronym that stands for Enterprise Resource Planning. ERP software saw
phenomenal interest from the corporate sector during the period 1995-2000. The
ERP market is estimated to be in excess of USD 80 Billion in the year 2000 Many
analysts feel that today’s global business environment - products and services
customized to suit the individual needs of millions of customers, delivered
over multiple timelines in a 24X7 basis - would have been impossible without
such enterprise software. Undoubtedly ERP represents one of the most complex
and demanding application software in the corporate environment.
2 What is
ERP is a
package software solution that addresses the enterprise needs of an
organization by tightly integrating the various functions of an organization
using a process view of the organization.
software is ready-made generic software; it is not custom-made for a specific
firm. ERP software understands the needs of any organization within a specific
industry segment. Many of the processes implemented in an ERP software are core
processes such as order processing, order fulfillment, shipping, invoicing,
production planning, BOM (Bill of Material), purchase order, general ledger,
etc., that are common to all industry segments.
B. ERP does
not merely address the needs of a single function such as finance, marketing,
production or HR; rather it addresses the entire needs of an enterprise that
cuts across these functions to meaningfully execute any of the core processes.
integrates the functional modules tightly. It is not merely the import and
export of data across the functional modules. The integration ensures that the
logic of a process that cuts across the function is captured genuinely. This in
turn implies that data once entered in any of the functional modules (whichever
of the module owns the data) is made available to every other module that needs
this data. This leads to significant improvements by way of improved
consistency and integrity of data.
D. ERP uses the
process view of the organization in the place of function view, which dominated
the enterprise software before the advent of ERP.
of heavy investments involved in ERP implementation, many organizations around
the world have gone in for ERP solutions. A properly implemented ERP solution
would pay for the heavy investments handsomely and often reasonably fast. Since
ERP solutions address the entire organizational needs, and not selected islands
of the organization, ERP introduction brings a new culture, cohesion and vigor
to the organization. After ERP introduction the line managers would no longer
have to chase information, check compliance to rules or conformance to budget.
What is striking is that a well-implemented ERP can guarantee these benefits
even if the organization is a multi-plant, multi- location global operation
spanning the continents.
sense ERP systems can be compared to the “fly-by-wire” operation of an
systems similarly would relieve operating managers of routine decisions and
leave them with lots of time to think, plan and execute vital long-term
decisions of an organization. Just as “fly-by-wire” operation brings in amazing
fuel efficiency to the aircraft operation by continuous monitoring of the
airplane operation, ERP systems lead to significant cost savings by
continuously monitoring the organizational health. The seemingly high initial
investments become insignificant in the face of hefty long-term returns.
another level, organizations today face the twin challenges of globalization
and shortened product life cycle. Globalization has led to unprecedented levels
of competition. To face such a competition successful corporations should
follow the best business practices in the industry. Shortened life cycles call
for continuous design improvement, manufacturing flexibility and super
efficient logistics control; in short a better management of the entire supply
chain. This in turn presupposes faster access to accurate information both
inside the organization and from the entire supply chain outside. The
organizational units such as Finance, Marketing, Production and HRD need to
operate with a very high level of integration without losing flexibility. ERP
systems with an organizational wide view of business processes, business needs
of information and flexibility meet these demands admirably.
4 Need for Enterprise Resource Planning
today face twin challenges of globalization and shortened product life cycle.
Globalization has led to unprecedented levels of competition. To face such
competitions, successful corporations should follow the best business practices
in the industry. Shortened life cycles call for continuous design improvements,
manufacturing flexibility, super-efficient logistics control and better
management of the entire supply chain. All these need faster access to accurate
information, both inside the organization and the entire supply chain outside.
The organizational units such as finance, marketing, production, human resource
development etc. need to operate with a very high level of integration without
losing flexibility. ERP system with an organization-wide view of business
processes, business need of information and flexibility meet these demands
admirably. One of the developments in computing and communication channels is
providing tighter integration among them.
5 Definition of ERP
and practitioners have defined ERP in many different ways.
(1998) defines ERP as a complex software system that ties together and
automates the basic processes of a business. ERP has been defined by various
authors but with few differences.
al. (2000) define enterprise resource planning (ERP) systems as “configurable
information systems packages that integrate information and information-based
processes within and across functional areas in an organization”
and Zairi (2000) states that ERP represent an optimal enterprise-wide
technology infrastructure. The basic architecture of an ERP system builds on
one database, one application, and a unified interface across the entire
al. (2001) defines ERP as “An enterprise resource planning (ERP) system is
typically defined as a packaged business software system that facilitates a
corporation to manage the efficient and effective use of resources (materials,
human resources, finance, etc.) by providing a total integrated solution for
the organization’s information-processing requests, through a process-oriented
view consistent across the company.”