ERP is a term coined in the early 1990s. It began as a group of applications or software focused on combining multiple systems in to one integrated system where data could be shared across the enterprise, reducing redundant data entry and processes. It was originally proposed for manufacturing and production planning.
ERP’S commenced in the manufacturing environment of old and was known as Manufacturing Resource Planning (MRP II), the ability to produce the product was the focus. As manufacturing evolved over time, the number of difficult questions increased. Such questions largely focused on the areas of component procurement for the finished product and on the material necessary to make the products. Organization were trying to understand both the finished manufacturing totals and how to get to the finished product
MRP II added a focus on the planning aspects of these processes and system. Many organizations that implemented this approach instituted mechanisms to correlate the planning and forecasting process with the actual production numbers this allowed the organization to achieve higher level of overall efficiency in the manufacturing arena.
The real issue is that while the organization had a better handle on the manufacturing aspect of the business, it was still missing integration to other components of finance, sales, marketing, customer satisfaction and distribution to name a few. This is where ERP systems flourished and today there are numerous systems available, some industry specific, while others are more generic based on best practices. Many of the early providers of ERP’s can today be considered legacy systems as they have not been able to keep up with the pace and introduction of new technologies. This has been evidenced by the number of new players in the market, and the continuing trend that most enterprises using ERP systems have been changing their systems every 5 to 7 years. This is due to the fact that the original system no longer matches what the underlying business of the Enterprise. It is often more cost effective to change systems rather than customizing “Older Technology”
ERP is a massive software engine that seeks to provide one seamless interface to all departments, systems and existing data within an organization. This allows each department the understanding how it fits within the big picture. Such understanding is crucial in facilitating enhanced communication between departments and people, improving knowledge management and processes. ERP is the foundation for fundamental business changes.
ERP sits between all of the systems and users regardless of where they are in the pipeline. It knows all the different data collection points, and it must interface with all the different formats of the particular data through the Web, on the desktop, using a point of sale terminal or a mobile device. It also takes care of the mundane and repetitive tasks by intelligently routing orders to the appropriate department at the appropriate time; reducing the number of times a human has to enter data will dramatically reduce errors (*remember information - where ever possible should only be entered once). ERP also takes all the data and formats it so that each person or department can perform its required function without having to refer back to any other department or person.
Today, ERP has gone beyond its original limits to evolve into ‘eBusiness ERP’ eBusiness ERP includes (Customer Relation Management) CRM, (Content Management Systems) CMS, Web stores, Sales Quoting, Order Management, (Supplier Relationship Management) SRM, (Human Resources Management) HRM and (Supply Chain Management) SCM, Inventory Management, Financial Management, Business Intelligence, Accounting and Document Management Applications.
Although there is a huge focus on the technological aspects of an ERP deployment, there must be an equal focus on changing the way an organization functions. Deploying ERP for the sake of ERP can be dangerous. ERP is not simply the reengineering of systems; it is reengineering the way organizations do business.
While the benefits of ERP can be impressive, deploying an ERP system is a major undertaking for any organization. Some of the real issues that occur during an ERP deployment centre on job function. Changing the mentality of the organization’s employee is critical to changing the business process. The organization can spend a great deal of money and time, with negligible results. If all stake holders do not understand the benefits of such an undertaking, they need further research before moving forward.