The information and communications technology is the way we live and how we operate. ERP or enterprise resource planning systems is one of the most implemented business software in a wide range of industries and organizations. In this article we will try to explain briefly the basic yet important concepts related to ERP.
What is ERP – ERP is the acronym of Enterprise Resource Planning. ERP definition refers to both the ERP and business strategies that implement ERP systems. ERP implementation utilizes various ERP software to improve performance of organizations for 1) resource planning, 2) management control and 3) operational control. ERP software consists of several software modules that activity in the functional departments – from product planning, parts purchasing, inventory management, product distribution, integrated policy to follow. Most ERP systems include application modules for common activities – finance, accounting and human resources.
ERP – ERP is much more than a piece of software. An ERP system includes ERP software, business processes, users and hardware that run the ERP software. Such a system is more than the sum of the parts or components. These components together for a common goal – streamline and optimize business processes of organizations to achieve.
History of the ERP – Enterprise Resource Planning (ERP), the evolution of Manufacturing Requirements Planning (MRP) II in 1980, while MRP is the evolution of inventory management and control designed in 1960 . ERP increased coordination of manufacturing processes for the integration across the back-end processes. In terms of technology, has evolved from the legacy ERP implementation more flexible client-server architecture on several levels.
Benefits of ERP – ERP attempts to integrate business processes across all departments in one enterprise information system. The main advantages of ERP is to improve coordination between functional departments and increased efficiency of doing business. The implementation of ERP systems to facilitate the daily management. ERP system was originally designed for the ambitious and the party planning resources to support strategic planning. In reality, resource planning is the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration of ERP with Decision Support Systems (DSS).
ERP Failures – we can not conclude our brief to ERP without mentioning ERP failures. The failure of multi-million dollar ERP projects are reported from time to time, even after the ERP implementation 20 years. We have the four components of an ERP system – 1) ERP software, 2) business process support software, ERP 3) Users of ERP systems, and 4) equipment and operating systems that run ERP applications. The failures in one or more of these four elements could cause the failure of an ERP project.