ERP & Business Organization

What is ERP?

• Enterprise resource planning (ERP) is an enterprise-wide information system designed to coordinate all the resources, information, and activities needed to complete business processes.


• ERP is a way to integrate the data and processes of an organization into one single system. Usually ERP systems will have many components including hardware and software, in order to achieve integration, most ERP systems use a unified database to store data for various functions found throughout the organization.

The Ideal ERP System
An ideal ERP system is when a single database is utilized and contains all data for various software modules. These software modules can include:
Manufacturing: Some of the functions include; engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etc.

• Financials: Accounts payable, accounts receivable, fixed assets, general ledger and cash management, etc.
• Human Resources: Benefits, training, payroll, time and attendance, etc
• Supply Chain Management: Inventory, supply chain planning, supplier scheduling, claim processing, order entry, purchasing, etc.
• Projects: Costing, billing, activity management, time and expense, etc.
• Customer Relationship Management: sales and marketing, service, commissions, customer contact, calls center support, etc.
• Data Warehouse: Usually this is a module that can be accessed by an organizations customers, suppliers and employees.

Advantages of ERP Systems
There are many advantages of implementing an EPR system; here are a few of them:

• A totally integrated system
• The ability to streamline different processes and workflows
• The ability to easily share data across various departments in an organization
• Improved efficiency and productivity levels
• Better tracking and forecasting
• Lower costs
• Improved customer service

Disadvantages of ERP Systems

• Problems with ERP systems are mainly due to inadequate investment in ongoing training for the involved IT personnel - including those implementing and testing changes - as well as a lack of corporate policy protecting the integrity of the data in the ERP systems and the ways in which it is used.
• Customization of the ERP software is limited.
• Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may lead to a loss of competitive advantage.
• ERP systems can be very expensive (This has led to a new category of "ERP light" solutions)