Enterprise resource planning (ERP) is business management software that allows an organization to use a system of integrated applications to manage the business. Being Specific ERP systems are large computer systems that integrate application programs
in accounting (i.e., accounts receivable), sales (i.e., order booking), manufacturing (i.e., product shipping) and the other functions in the firm.
This integration is accomplished through a database shared by all the application programs. A typical ERP system will use multiple components of computer hardware and software to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for various system modules.
Broken down into business processes
- HRM
- Distribution
- Financials
- Manufacturing
Reasons for adopting ERP
- Integrate financial information.
- Integrate customer order information.
- Standardize and speed up operations processes.
- Reduce inventory.
- Standardize Human Resources information
- Common definitions
- Common database
- Update one module, automatically updates others.
- ERP systems reflect a specific way of doing business.
- Must look at your value chains, rather than functions
Limitations of ERP
- High cost.
- Forced change of processes
- Very complex software
- Lack of trained people
- Flexibility of software system upgrades.
- Implementation timelines
- Availability of internal technical knowledge and resources
- Education and training
- Implementation strategy and execution
- Resistance to change
New Developments in ERP
- Availability of web-based and wireless ERP systems
- Adoption of easy-to-install ERP systems
- Linkage to other software systems, e.g., supply chain management system, ecommerce, customer relationship management system
