What is ERP?
ERP is the short form of Enterprise Resource Planning. ERP utilizes ERP software applications to advance the performance of organizations' resource planning, management control and operational control. ERP software is multi-module appliance software that integrates activities across functional departments, from product planning, parts purchasing, inventory control, product circulation, to order tracking. ERP software may include application modules for the finance, accounting and human resources aspects of a business.
Enterprise Resource Planning systems (ERPs) integrate (or attempt to integrate) all data and processes of an organization into a unified system. A typical ERP system will use multiple components of computer software and hardware to achieve the integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. ERP is an amalgamation of a company's information systems designed to bind more closely a variety of company functions including human resources, inventories and financials while simultaneously linking the company to customers and vendors.
ERP vs. CRM and SCM
CRM (Customer Relationship Management) and SCM (Supply Chain Management) are two other categories of enterprise software that are widely implemented in corporations and non-profit organizations. While the chief aim of ERP is to get better and modernize inner commerce processes, CRM attempts to improve the association with consumers and SCM aims to make easy the partnership between the organization, its suppliers, the manufacturers, the distributors and the partners.
ERP Definition - A Systems Perspective
ERP, frequently like other IT and commerce concepts, are defined in many different ways. A sound definition should contain several purposes:
* It gives answer to the question of "what is ... ?".
* It provides a foundation for defining more detailed concepts in the field - ERP software, ERP systems, ERP realization etc.
* It provides a common ground for comparison with related concepts - CRM, SCM etc.
* It helps to answer the essential questions in the field - benefits of ERP, the causes of ERP failure etc.
A definition of ERP based on Systems Theory can server those purposes. ERP is a system which has its aim, components, and borders.
The Aim of an ERP System - The aim of ERP is to advance and modernize inner business processes, which characteristically requires reengineering of current business processes.
The Components of an ERP System - The components of an ERP system are the common components of a Management Information System (MIS).
*ERP Software - Module based ERP software is the core of an ERP system. Each software module automates business activities of a functional area within an organization. Common ERP software modules include product planning, parts purchasing, inventory control, product distribution, order tracking, finance, accounting and human resources aspects of an organization.
*Business Processes - Business processes within an organization falls into three levels - strategic planning, management control and operational control. ERP has been promoted as solutions for sustaining or streamlining business processes at all levels. Much of ERP success, however, has been limited to the integration of various functional departments.
*ERP Users - The users of ERP systems are workforce of the organization at all levels, from workers, supervisors, mid-level managers to executives.
*Hardware and Operating Systems - Many huge ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems.
The Boundary of an ERP System - The boundary of an ERP system is usually smaller than the boundary of the organization that implements the ERP system. In contrast, the boundary of supply chain systems and ecommerce systems extends to the organization's suppliers, distributors, partners and consumers. In practice, however, many ERP implementations engage the integration of ERP with exterior information systems.