- Functional Areas
- Best Practices
- Connectivity to Plant Floor Information
- Postmodern ERP
- See Also
The Gartner Group first used the acronym ERP in the 1990s to include the capabilities of material requirements planning (MRP), and the later manufacturing resource planning (MRP II), as well as computer-integrated manufacturing. Without replacing these terms, ERP came to represent a larger whole that reflected the evolution of application integration beyond manufacturing. Not all ERP packages are developed from a manufacturing core; ERP vendors variously began assembling their packages with finance-and-accounting, maintenance, and human-resource components. By the mid-1990s ERP systems addressed all core enterprise functions. Governments and non–profit organizations also began to use ERP systems. An "ERP system selection methodology" is a formal process for selecting an enterprise resource planning(ERP) system. Existing methodologies include:
ERP systems experienced rapid growth in the 1990s. Because of the year 2000 problemmany companies took the opportunity to replace their old systems with ERP. ERP systems initially focused on automating back office functions that did not directly affect customers and the public. Front office functions, such as customer relationship management (CRM), dealt directly with customers, or e-business systems such as e-commerce, e-government, e-telecom, and e-finance—or supplier relationship management(SRM) became integrated later, when the internet simplified communicating with external parties. "ERP II" was coined in 2000 in an article by Gartner Publications entitled ERP Is Dead—Long Live ERP II. It describes web–based software that provides real–time access to ERP systems to employees and partners (such as suppliers and customers). The ERP II role expands traditional ERP resource optimization and transaction processing. Rather than just manage buying, selling, etc.—ERP II leverages infor...
ERP systems typically include the following characteristics: 1. An integrated system 2. Operates in (or near) real time 3. A common database that supports all the applications 4. A consistent look and feel across modules 5. Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps 6. Deployment options include: on-premises, cloud hosted, or SaaS
An ERP system covers the following common functional areas. In many ERP systems, these are called and grouped together as ERP modules: 1. Financial accounting: general ledger, fixed assets, payables including vouchering, matching and payment, receivables and collections, cash management, financial consolidation 2. Management accounting: budgeting, costing, cost management, activity based costing 3. Human resources: recruiting, training, rostering, payroll, benefits, retirement and pension plans, diversity management, retirement, separation 4. Manufacturing: engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management 5. Order processing: order to cash, order entry, credit checking, pricing, available to promise, inventory, shipping, sales analysis and reporting, sales commissioning 6. Supply chain management: supply chain planning, supplier sch...
Most ERP systems incorporate best practices. This means the software reflects the vendor's interpretation of the most effective way to perform each business process. Systems vary in how conveniently the customer can modify these practices.In addition, best practices reduced risk by 71% compared to other software implementations. Use of best practices eases compliance with requirements such as IFRS, Sarbanes-Oxley, or Basel II. They can also help comply with de facto industry standards, such as electronic funds transfer. This is because the procedure can be readily codified within the ERP software and replicated with confidence across multiple businesses that share that business requirement.
ERP systems connect to real–time data and transaction data in a variety of ways. These systems are typically configured by systems integrators, who bring unique knowledge on process, equipment, and vendor solutions. Direct integration—ERP systems have connectivity (communications to plant floor equipment) as part of their product offering. This requires that the vendors offer specific support for the plant floor equipment their customers operate. Database integration—ERP systems connect to plant floor data sources through staging tables in a database. Plant floor systems deposit the necessary information into the database. The ERP system reads the information in the table. The benefit of staging is that ERP vendors do not need to master the complexities of equipment integration. Connectivity becomes the responsibility of the systems integrator. Enterprise appliance transaction modules (EATM)—These devices communicate directly with plant floor equipment and with the ERP system via me...
ERP's scope usually implies significant changes to staff work processes and practices. Generally, three types of services are available to help implement such changes: consulting, customization, and support. Implementation time depends on business size, number of modules, customization, the scope of process changes, and the readiness of the customer to take ownership for the project. Modular ERP systems can be implemented in stages. The typical project for a large enterprise takes about 14 months and requires around 150 consultants. Small projects can require months; multinational and other large implementations can take years. Customizationcan substantially increase implementation times. Besides that, information processing influences various business functions e.g. some large corporations like Wal-Mart use a just in time inventory system. This reduces inventory storage and increases delivery efficiency, and requires up-to-date data. Before 2014, Walmart used a system called Infore...
The term "postmodern ERP" was coined by Gartner in 2013, when it first appeared in the paper series "Predicts 2014". According to Gartner's definition of the postmodern ERP strategy, legacy, monolithicand highly customized ERP suites, in which all parts are heavily reliant on each other, should sooner or later be replaced by a mixture of both cloud-based and on-premises applications, which are more loosely coupled and can be easily exchanged if needed. The basic idea is that there should still be a core ERP solution that would cover most important business functions, while other functions will be covered by specialist software solutions that merely extend the core ERP. This concept is similar to the so-called best-of-breed approach to software execution, but it shouldn't be confused with it. While in both cases, applications that make up the whole are relatively loosely connected and quite easily interchangeable, in the case of the latter there is no ERP solution whatsoever. Instead...Clemons, Eric. K. (1986). "IS for Sustainable Competitive Advantage". Information & Management. 11 (3): 131–136. doi:10.1016/0378-7206(86)90010-8.Grant, David; Richard Hall; Nick Wailes; Christopher Wright (March 2006). "The false promise of technological determinism: the case of enterprise resource planning systems". New Technology, Work an...Head, Simon (2005). The New Ruthless Economy. Work and Power in the Digital Age. Oxford UP. ISBN 978-0-19-517983-5.Henderson, Ian ERP from the Frontline MBE ISBN 978-1-898822-05-9 Making ERP Work