5 Minute Guide to ERP

Natalie Aranda

Information technology has transformed the way we live and the way we do business. ERP, or Enterprise Resource Planning, is one of most widely implemented business software systems in a wide variety of industries and organizations. In this short article, well try to concisely explain the basic yet important concepts relevant to ERP.

What is ERP – ERP is the acronym of Enterprise Resource Planning. ERP definition refers to both ERP software and business strategies that implement ERP systems. ERP implementation utilizes various ERP software applications to improve the performance of organizations for 1) resource planning, 2) management control and 3) operational control. ERP software consists of multiple software modules that integrates activities across functional departments – from product planning, parts purchasing, inventory control, product distribution, to order tracking. Most ERP software systems include application modules to support common business activities – finance, accounting and human resources.
ERP Systems – ERP is much more than a piece of computer software. A ERP System includes ERP Software, Business Processes, Users and Hardware that run the ERP software. An ERP system is more than the sum of its parts or components. Those components interact together to achieve a common goal – streamline and improve organizations business processes.
History of ERP – The history of ERP has been more than 20 years. Enterprise Resource Planning (ERP) is the evolution of Manufacturing Requirements Planning (MRP) II in 1980s, while MRP is the evolution of Inventory Management & Control conceived in 1960s. ERP has expanded from coordination of manufacturing processes to the integration of enterprise-wide backend processes. In terms of technology, ERP has evolved from legacy implementation to more flexible tiered client-server architecture.
Benefits of ERP – ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system. The major ERP benefits are improved coordination across functional departments and increased efficiencies of doing business. The implementation of ERP systems help facilitate day-to-day management as well. ERP software systems is originally and ambitiously designed to support resource planning portion of strategic planning. In reality, resource planning has been 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 couldnt conclude our brief guide to ERP without mentioning ERP failures. The failure of multi-million dollar ERP projects are reported once in a while even after 20 years of ERP implementation. We have identified the four components of an ERP System – 1) ERP software, 2) Business Processes that ERP software supports, 3) Users of ERP systems, and 4) Hardware and Operating Systems that run ERP applications. The failures in one or more of those four components could cause the failure of an ERP project.
Natalie Aranda writes about business and information technology.

Are Most Enterprise Technology Selection Exercises Flawed?

The following discusses the ways often used in selecting systems. Actually, one area not expanded upon is the combination of an RFI/RFP combined with a Scripted Demonstration process.  Using the RFI to narrow the field and the Scripted business process to show the stakeholders how the system will function for them.
Sam Lowe’s blog on Enterprise Architecture & IT Strategy: Are Most Enterprise Technology Selection Exercises Flawed?
Are Most Enterprise Technology Selection Exercises Flawed?

ERP – Army Style

Stumbling around the web, we came across a great ERP reference site. This site is the US Army’s ERP/SOA Resource Center. Its own description is as follows:
As the Army embarks on transforming its warfighting capabilities, it is imperarive that the Business Capabilities / Enablers / Processes transform to support the warfighter. ERP systems provide an integrated suite of Information Techonology applications that support the end-to-end business operations of an entire organization. The ERP Resource Center is designed to provide Enterprise Process Owners, Program Executive Officers, Program Managers, and others involved in the Business Transformation of the Army with detailed information, supporting documents, and tools and techniques regarding the use of ERP systems.

This site is filled with useful information. It is not helpful if you are a small company looking for an ERP system other than to guide you in an overview of what ERP is and does. There is a glossary online there too, but it is government focused. If however you are implementing a Tier 1 package, then this gives a lot of good information.

You may also be interested in: The fourth “R”: Navy ERP.(Enterprise Resource Planning): An article from: Navy Supply Corps Newsletter

We especially liked the “Bolt On” section that discusses Business Intellegence, CRM, and PLM. They even have the Gartner Magic Quadrants to show you (as of 2005) who plays where.

Be sure to check it out at http://www.army.mil/ESCC/erp/index.htm

Revenue and Receivables Management: Myths and Truths About ERP

Do you take best of breed or do you find a single source? The question of whether to implement multiple solutions that fit the specific niche areas of your business or to implement a single platform, single database solution of a modern ERP system.

There is an interesting article that debunks the myths of going best of breed. Taken with an accounting slant, this article does point out some of the key considerations an IT manager must make when considering whether to implement specialized solutions or to roll out a single ERP system:

Revenue and Receivables Management: Myths and Truths About ERP

By Sanjay Srivastava

Six myths about ERP debunked

Enterprise resource planning ERP technology has a proven history of delivering value to todays corporations by enabling a centralized information warehouse to be leveraged enterprise-wide. However, ERP has a broad focus, and best-of-breed BoB applications have been developed to provide the depth of functionality required by key functional areas, such as accounts receivable. As a result, corporations have long recognized the need for best-of-breed applications to bridge fill the void of ERPs functional limitations.

With ERPs broad focus, it is easy to believe that it can provide a single solution to all of your corporations challenges. However, it is important to know where the lines of reality and myth collide. There is no doubt that ERP plays a very crucial role in todays enterprise, but as with any technology, naturally there are functional limitations. It is crucial to understand what these limitations are.

Read the Article here…

Enterprise Knowledge The Wiki Way

Today, the Web is influencing many things. One key element of life is communication. People are no longer meeting at cafe’s but rather they are meeting on MySpace. The web is also collecting a vast database of information. One of the key points is Wikipedia. According to Wikipedia, Wikipedia is a Web-based free-content multilingual encyclopedia project. It exists as a wiki, a website that allows any visitor to freely edit its content. ”

Now that technology is finding its way into corporations and is weaving itself into ERP. The following article examines this new trend.

Enterprise Knowledge The Wiki Way
By Michael Hickins

NEW YORK — Web 2.0 is finding its way into the enterprise by way of a Wiki.

Wikis (define), collaborative Web sites on which all members of a community can contribute and post, have become commonplace on the consumer Web. Read the Article here…

Microsoft Plans More Links From Office To ERP

Microsoft Plans More Links From Office To ERP

Eight new Snap modules will connect the upcoming Microsoft Office 2007 front end to Microsoft’s ERP and CRM software packages.

By Barbara Darrow
CRN

May 4, 2006 12:30 PM

Microsoft is touting its Duet links from Microsoft Office to SAP ERP, but Microsoft Business Solutions (MBS) doesn’t want its own Office-to-ERP links to get lost in the hubbub.

Microsoft has eight new Snap modules in the works. These software nuggets will link the upcoming Microsoft Office 2007 front end to MBS’ ERP and CRM back end, said James Utzschneider, general manager of Microsoft Dynamics marketing.

Read more…

Manufacturers Don’t User Most of Their ERP Software’s Features, Says Aberdeen

Manufacturers Don’t User Most of Their ERP Software’s Features, Says Aberdeen

Published: September 18, 2006

by Timothy Prickett Morgan

Based on a detailed report put together by Aberdeen Group and commissioned by a bunch of ERP software suppliers, companies with ERP software don’t use most of the features that have been painstakingly woven into their software.

Aberdeen based its analysis on a study of more than 1,000 manufacturers. The study was underwritten by Infor, Lawson Software, Plexus Systems, QAD, and SoftBrands, and presumably they provided some of the customers that Aberdeen talked to as well as the cash to do the survey and report that resulted from it. Aberdeen also talked to customers using other ERP suites, including those who have deployed Oracle and SAP suites.

According to the study, called “The ERP in Manufacturing Benchmark,” two thirds of the manufacturers surveyed said that they make their choice of which ERP software to use based on features and functionality, but then, on average, they use only … Read More