Information technology has not only changed the way we live in modern society, but also the way we do business. Enterprise Resource Planning, often referred to as ERP, becomes one of the most commonly used software systems in several industries and organizations. The purpose of this article is to provide relevant highlights on exactly what ERP is.
The definition of Enterprise Resource Planning refers not only to software, but also to the business strategies used as part of the implementation of ERP systems. This deployment uses various software applications to enhance organizations’ performance in resource planning, operations control and management management.
ERP software includes several software modules that work to integrate vital activities across operations departments. An ERP system includes not only the ERP software, but also the business processes and hardware that make this system work. These systems are more than the sum of their parts as the many components work together to achieve a common goal – to give an organization a much improved and streamlined business process.
History of ERP
ERP has been well over 20 years in operation. This system is the result of the trial, error and growth of Manufacturing Requirements Planning (MRP) during the 80’s. MRP was the development of Inventory Management and Control, which was conceived in the 1960s. ERP has grown beyond the coordination of manufacturing processes to integrate backend processing on very large scales. From its origins as a legacy implementation, ERP has been transformed into a new and improved client server architecture.
Benefits of ERP
This software tries to bring every aspect of the business into a single business-wide database or information system. This makes it possible to share immediate information and communication between multiple departments. The primary benefit of this is a greatly improved business operations efficiency. Implementation of this system will not only help the communication between the departments, but also in the day-to-day management functions. ERP is an ambitious design that also supports the resource planning part of business planning, as this is often the weakest part of strategic planning as a result of the inadequate integration of ERP software with Decision Support Systems.
It would be quite rude to conclude without at least mentioning the occasional failure of this system in one of the four components of an ERP system. These systems are: ERP software, Business processes supported by the ERP system, Users of the ERP systems and hardware and / or operating systems on which the ERP applications are actually run. The failure of one or more of these components may cause the entire ERP project to fail.