According to the Wikipedia, Enterprise resource planning (ERP) systems integrate internal and external management of information across an entire organization; embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. The information made available through an ERP system provides visibility for key performance indicators (KPIs) required for meeting corporate objectives. ERP abounds in government, but if it is to survive in the future, some analysts say, it will have to change dramatically. An effective ERP system provides the integration across multiple functions within your business needed to establish the foundation for any of these methods. Additionally, the ERP system provides the ongoing business intelligence to drive the decisions that are the key to the success of the method.
An ERP is an integrated set of applications and middle-ware designed to manage enterprise resources, including finances, human resources, assets and inventories. “The days of the $36 million, 28-month ERP implementations are gone,” said Michael Fauscette, group vice president for software business solutions at IDC. ERP implies the use of modules of packaged software rather than proprietary software written by or for one customer, and typically an ERP system is integrated with a relational database system. The central feature of all ERP systems is a shared database that supports multiple functions used by different business units. In practice, this means that employees in different divisions, for example, accounting and sales, can rely on the same information for their specific needs. ERP systems constantly change due to upgrades, additional features, or addition of new functionality. In addition, knowledge leakage due to employee attrition can be as high as 25% in any given year. ERP modules may be able to interface with an organization’s own software with varying degrees of effort, and, depending on the software, ERP modules may be alterable via the vendor’s proprietary tools as well as proprietary or standard programming languages.
Performance with ERP is to marry new ways of working with new technology. ERP software typically consists of multiple enterprise software modules that are individually purchased, based on what best meets the specific needs and technical capabilities of the organization. Each ERP module is focused on one area of business processes, such as product development or marketing.
- Create a common language.
- Keep the best of the old; Discard the worst of the new.
- Develop enterprise metrics.
- Plan for the long term relationship.
Today, ERP has expanded to encompass business intelligence (BI) while also handling “front-office” functions such as sales force automation (SFA), marketing automation and eCommerce. ERP systems are still evolving as advances in Web services enabled organizations to integrate business functions and processes across the enterprise more tightly.
Advantages of ERP
- Cost reduction
Disadvantages of ERP
- Customization of the ERP software is limited.
- The cost savings/ payback may not be realized immediately after the ERP implementation & it is quite difficult to measure the same.
- The system may be too complex measured against the actual needs of the customer.
- Once an ERP system is implemented it becomes a single vendor lock-in for further upgrades, customizations etc.